Ashford Annual Report 2017

FY2017 Annual Report · Ashford

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2 0 1 7 A N N UA L R E P O RT

14185 Dallas Parkway I Suite 1100 I Dallas, Texas 75254 I 972.490.9600 I www.ashfordinc.com

2802727-2_Cover.indd 1

5/22/18 11:02 AM

Dear Fellow Shareholder,

2017 was a year of considerable achievement for Ashford as we delivered solid
ﬁnancial results, successfully executed our high-growth, fee-based business
model and continued to leverage our hospitality and investment experience to
identify and invest in hospitality-related opportunities where we can leverage
our management expertise and the size and diversity of the hotel portfolios at
our managed REITs to accelerate substantial growth. We are conﬁdent in our
long-term strategy and believe we have signiﬁcant opportunities to continue to
accelerate Ashford’s growth and create meaningful value for our shareholders.

We delivered very strong ﬁnancial and operating performance for 2017 –
driving signiﬁcant growth in revenue and earnings -- and we are very pleased
with the groundwork we are laying for the continued success of our platform.
During the year, revenues increased by 21% over the prior year and Adjusted
EBITDA increased by 27% over the prior year. Also, during the year, Adjusted
Net Income and Adjusted Net Income per Share increased 24% and 19%,
respectively. We enter 2018 well positioned for further growth and we expect
that a lower effective tax rate will have a signiﬁcant positive impact on our
earnings in 2018 and future years.

Ashford is a global asset management company focused on the lodging industry
that currently serves as advisor to two NYSE-listed real estate investment trusts,
Ashford Hospitality Trust (NYSE: AHT) (“Ashford Trust” or “Trust”) and Ashford
Hospitality Prime (NYSE: AHP) (“Ashford Prime” or “Prime”). Combined,
Ashford Trust and Ashford Prime had 132 hotels with approximately 29,000
rooms and approximately $7.4 billion in gross assets at year end 2017.

Our business model and strategy is built around our ability to leverage the
combined expertise of our management team to both grow our company and
the platforms we advise. Not only do I believe we have the best management
team in the business, but our strong alignment with shareholders through both
our revolutionary advisory agreement structure as well as the high level of
insider ownership at each of the Ashford entities sets us apart. First, the structure
of the advisory agreements Ashford has in place incentivizes this management
team to outperform its peers. Additionally, to further align Ashford with each
of its managed platforms, the Ashford principals have signiﬁcant ownership
of each company. This includes holding 27% of Ashford Inc., 19% of Ashford
Trust and 15% of Ashford Prime. As the majority of our management team’s
net worth is invested in the stock of the Ashford group of companies, we are
invested right alongside all of you and our management team’s sole focus is on
maximizing shareholder returns across all of the Ashford platforms.

A tremendous amount of opportunity exists for our Company, as the Ashford
companies’ multiple platforms offer us numerous avenues for growth. Within
our managed platforms, we can grow through the expansion of the asset
bases of the companies we currently advise both organically as well as through
accretive acquisitions. The lodging industry in the U.S. continues to experience
solid growth, and, in 2017, the U.S. hotel industry’s occupancy rose to 65.9%,
ADR increased 2.1%, and RevPAR was up 3.0%. Industry pundits expect these
positive industry trends to continue through 2018 and 2019 with historically
strong occupancy levels expected to support continued pricing power and rate
growth for the hotel industry, which bodes well for the continued growth of
our REIT platforms.

Both of our advised platforms were active during the year on both the capital
markets and transaction fronts. On the debt capital markets front, Trust
completed several ﬁnancings to address debt maturities as well as lower
its cost of capital, reduce its interest and principal payments, strengthen its
balance sheet and improve its liquidity. Trust reﬁnanced four mortgage loans,
representing twenty-one hotels, totaling approximately $705 million that
resulted in approximately $74 million of excess proceeds as well as expected
annual principal payment and interest expense savings of approximately $13
million. Additionally, on the equity capital markets side, during the year, Trust
completed the public offerings of its Series H and Series I Preferred Stock that
raised $230 million. Trust used the proceeds from these two preferred raises to
complete the redemption of all of its issued and outstanding shares of its Series A
Preferred Stock as well as the partial redemption of 7,079,313 shares of its Series
D Preferred Stock, which together resulted in annual dividend payments savings
of over $1.2 million. Additionally, on the transaction front, Trust entered into an
agreement with the developers of the Nashville Convention Center to acquire a
permanent fee interest in the meeting space at its Renaissance Nashville hotel.
Trust also completed the conversion of the Marriott DFW from brand-managed
to a franchise agreement, and installed Remington, our afﬁliated property
management company, as the manager of the property.

On the transaction front, Prime made signiﬁcant progress on both its reﬁned
strategy to acquire additional luxury properties as well as its goal to reposition
or divest of four non-core properties. During 2017, Prime acquired the Park
Hyatt Beaver Creek in Beaver Creek, Colorado for $145.5 million, the Hotel
Yountville in Yountville, California for $96.5 million and earlier this year, the
company announced an agreement to acquire the Ritz-Carlton Sarasota in
Sarasota, Florida for $171 million. These acquisitions have the dual beneﬁt
of increasing the size and quality of the Prime platform as well as increasing
the overall RevPAR for the portfolio, which is already the highest in the hotel
REIT space. On the non-core hotel initiative, during the year, Prime announced
that it had reached an agreement with Marriott to convert both its Courtyard
Philadelphia Downtown and its Courtyard San Francisco Downtown hotels to
Autograph Collection hotels. Both of these upbrandings will better align these
properties with Prime’s luxury strategy. Additionally, the company completed
the sale of the Marriot Plano Legacy in Plano, Texas and is currently marketing
for sale the Renaissance Tampa in Tampa, Florida.

On the capital markets front, Prime reﬁnanced four mortgage loans with two
new loans totaling approximately $405 million that are expected to result in
annual interest savings of approximately $13 million. Also, Prime secured two
new loans totaling approximately $119 million to ﬁnance the Park Hyatt Beaver
Creek and Hotel Yountville acquisitions. On the equity front, Prime completed
public offerings of both its common stock as well as its convertible preferred
stock that raised net proceeds of approximately $105 million that were used to
fund the acquisitions of the Park Hyatt Beaver Creek and the Hotel Yountville.

Looking ahead, we are well positioned to grow Ashford not only through the
internal or external growth of Ashford Trust and Ashford Prime, but also by
adding additional investment platforms or by acquiring or managing other
hospitality or real estate related businesses.

To that end, in 2017, we completed the acquisition of an 85% stake in J&S Audio
Visual, a leading integrated single-source audio visual service provider with a
well-diversiﬁed geographical presence and customer base, for approximately
$9.2 million in cash, $4.3 million of Ashford common stock, and $9.5 million in
assumed debt. J&S currently has multi-year contracts in place with approximately
64 hotels and convention centers in addition to regular business representing
over 2,500 annual events and productions, 500 venue locations, and 650 clients.
J&S currently has contracts in place at only nine hotels owned by Trust and Prime.
Going forward, we expect signiﬁcant revenue and operational cost synergies not
only through further growing the business through J&S’ current sales channels
but also with the addition of contracts between J&S and Ashford asset-managed
hotels. Since our investment in November through the end of the year, revenues
increased 22% and Adjusted EBITDA increased by approximately $690,000
over the prior year period. Additionally, on a pro forma basis, J&S would have
increased our reported revenue by over 90% for the full year 2017 highlighting
the scale we expect J&S to provide to the platform. Also, J&S executed 18 new
hotel contracts during 2017 with half of the growth coming from non-Ashford
hotels as we continue to remain focused on increasing market share outside of
Ashford asset-managed hotels.

We also acquired a controlling interest in a privately held company - Pure Rooms
– which is a leading provider of hypo-allergenic rooms in the hospitality space.
There is growing demand for health and wellness offerings in the hospitality
industry and we are excited to integrate our deep operating experience with
the innovation of Pure Rooms. We believe the business case for adopting
the Pure Rooms product at hotel properties is compelling and that with our
resources and expertise, it is poised for substantial growth in the coming years.
The company currently has contracts in place with 177 hotels representing
approximately 2,700 rooms throughout the United States, including 52 Ashford
asset-managed hotels. Furthermore, on a pro forma basis, for the full year 2017,
Pure Rooms achieved revenue growth of 31% and Adjusted EBITDA growth of
60% over the prior year.

Additionally, we are pleased to introduce Lismore Capital, which has been
providing debt placement services to our advised REIT platforms. Beginning in
the third quarter, Lismore Capital began placing debt, a service that otherwise
would have been provided by third parties, for Ashford Trust and Ashford Prime
on competitive pricing terms related to property-level debt ﬁnancings. Lismore
Capital generated $1.1 million of revenue for the full year 2017 and fourth
quarter revenue growth was over 300% compared to the prior quarter. We are
excited about the prospects for future growth at Lismore Capital.

We also continue to be excited about our strategic investment in privately held
OpenKey, the universal, industry-standard smartphone App for keyless entry in
hotel guestrooms. We believe there is signiﬁcant growth potential for OpenKey
given there are nearly 18 million hotel rooms globally, many of them in
independent hotels that need a mobile key solution. Not only are there millions
of rooms globally that need a mobile key solution, but OpenKey currently has
little competition in this space. While we have already installed OpenKey at
several hotels owned by our managed REITs, and anticipate additional hotels
coming online this year, OpenKey has also made signiﬁcant traction in non-
Ashford hotels. Finally, OpenKey achieved four consecutive quarters of revenue
growth in 2017 with the fourth quarter growth at an all-time high of 153%
relative to the prior quarter and 1,054% year-over-year. For the full year,
OpenKey achieved 647% revenue growth.

Subsequent to year end, in January, we acquired an 80.75% stake in RED
Hospitality & Leisure, a leading provider of watersports activities and other travel
& transportation services in the U.S. Virgin Islands and beyond for approximately
$1 million in cash. We see a tremendous opportunity for growth of this business
as we expand the breadth of services they offer and bring their services to other
hotels. Additionally, we will continue to seek further opportunities to invest in
other hospitality-related businesses, such as J&S Audio Visual, Open Key, Pure
Rooms, Lismore Capital and RED Hospitality & Leisure, to build out the Ashford
platform.

By deploying differentiated investment platforms, we believe Ashford enjoys
a signiﬁcant competitive advantage and is strongly situated to beneﬁt from
favorable hospitality sector trends. Our intention is to leverage this competitive
advantage to its fullest as we pursue attractive investment opportunities for
Ashford Trust, Ashford Prime, as well as future Ashford platforms that may arise.

To further enhance our ﬁnancial ﬂexibility, in March 2018, we entered into a
new $35 million senior revolving credit facility with Bank of America, N.A. The
new credit facility will be beneﬁcial as we execute our growth strategy going
forward and includes the opportunity to expand the borrowing capacity by up
to $40 million to an aggregate size of $75 million.

In summary, we have accomplished a great deal over the last year and we are
excited about our progress and our plans for 2018. We believe the structure
of the Ashford group of companies will continue to beneﬁt investors as our
managed companies provide the ﬂexibility to choose the investment strategies
that best ﬁt their needs and objectives. Our team’s main goal has always been
building shareholder value, ﬁrst over the last 15 years in Ashford Trust and now
in the various platforms we advise.

In closing, as I mentioned in last year’s letter, it is important to us that we
have a strong dialogue with our shareholders. As part of that effort, I have a
Twitter proﬁle and you can follow me at www.twitter.com/MBennettAshford or
@MBennettAshford. Additionally, we have an Ashford App, a mobile app
for the hospitality REIT investor community. The Ashford App offers users
the ability to quickly and concisely get up to speed with what is happening
in the hospitality REIT industry from a macro level as well as review detailed
information on speciﬁc companies in the sector. The app is available for
free download at Apple’s App Store and the Google Play Store by searching
“Ashford.” I hope that our shareholders will take advantage of these avenues
to gain further insight into our Company and the industry in general.
Thank you for your continued investment in Ashford.

Sincerely,

Monty J. Bennett
Chairman of the Board & Chief Executive Ofﬁcer

Ofﬁcers and Directors

Corporate Information

Annual Meeting

The annual meeting of shareholders will be

held on June 15, 2018, at 9:00 a.m. CT

at the Dallas/Fort Worth Airport Marriott

8440 Freeport Parkway Irving, TX 75063

Shareholders of record as of the close

of business on May 4th, 2018 will be

entitled to vote at this meeting.

Corporate Ofﬁce

Ashford

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Telephone: (972) 490-9600

www.ashfordinc.com

Registrar and Transfer Agent

Computershare Trust Company, N.A.

Canton, Massachusetts

Independent Auditors

BDO USA, LLP

Dallas, Texas

Legal Counsel

Hunton Andrews Kurth, LLP

Dallas, Texas

Annual Report on Form

10-K/Investor Contact

A copy of the Ashford Annual Report

on Form 10-K for ﬁscal 2017, was ﬁled with

the Securities and Exchange Commission

on March 12, 2018 and is included with this

report. Additional copies of the report and

copies of the exhibits referenced therein are

available from the Company. Requests for

these items and other investor contacts should

be directed to Joseph Calabrese of Financial

Relations Board at (212) 827-3772.

OFFICERS

Monty J. Bennett

Chief Executive Officer and

Chairman of the Board

Douglas A. Kessler

Senior Managing Director

Deric S. Eubanks

Chief Financial Officer

Mark L. Nunneley

Chief Accounting Officer

Jeremy J. Welter

Co-President and

Chief Operating Officer

J. Robison Hays III

Co-President and

Chief Strategy Officer

Monty J. Bennett

Chief Executive Officer and

Chairman of the Board

J. Robison Hays III

Co-President and

Chief Strategy Officer

Radisson Hotel Group

Darrell T. Hall

President

Women’s A.R.C., LLC

John Mauldin

Owner

Mauldin Economics

Brian Wheeler

Chief Technology Officer

Nieman Printing

BOARD OF DIRECTORS

Dinesh P. Chandiramani

Regional Vice President,

Franchise Sales & Development, Americas

Uno Immanivong

Chef and owner of Chino Chinatown

and RedStix

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities

laws. Ashford (the “Company” or “we” or “our”) cautions investors that any forward-looking

statements presented herein, or which management may make orally or in writing

from time to time, are based on management’s beliefs and assumptions at that time.

Throughout this report, words such as “anticipate,” “believe,” “expect,” “intend,” “may,”

“might,” “plan,” “estimate,” “project,” “should,” “will,” “result,” and other similar expressions,

which do not relate solely to historical matters, are intended to identify forward-looking

statements. Such statements are subject to risks, uncertainties, and assumptions and are not

guarantees of future performance, which may be affected by known and unknown risks, trends,

uncertainties, and factors beyond our control. Should one or more of these risks or uncertainties

materialize, or should underlying assumptions prove incorrect, actual results may vary materially

from those anticipated, estimated, or projected. We caution investors that while forward-looking

statements reflect our good faith beliefs at the time they are made, such statements

are not guarantees of future performance and are impacted by actual events that occur after

such statements are made. We expressly disclaim any responsibility to update forward-looking

statements, whether as a result of new information, future events, or otherwise. Accordingly,

investors should use caution in relying on past forward-looking statements, which are based on

results and trends at the time they are made, to anticipate future results or trends.

Some of the risks and uncertainties that may cause our actual results, performance, or

achievements to differ materially from those expressed or implied by forward-looking statements

include, among others, those discussed in our Annual Report on Form 10-K under the heading

“Risk Factors.” These risks and uncertainties continue to be relevant to our performance and

financial condition. Moreover, we operate in a very competitive and rapidly changing environment

where new risk factors emerge from time to time. It is not possible for management to predict all

such risk factors, nor can it assess the impact of all such risk factors on our business or the extent

to which any factor, or combination of factors, may cause actual results to differ materially from

those contained in any forward-looking statements. Given these risks and uncertainties, investors

should not place undue reliance on forward-looking statements as a prediction of actual results.

2802727-2_Cover.indd 2

5/22/18 11:02 AM

Dear Fellow Shareholder,

2017 was a year of considerable achievement for Ashford as we delivered solid

ﬁnancial results, successfully executed our high-growth, fee-based business

model and continued to leverage our hospitality and investment experience to

identify and invest in hospitality-related opportunities where we can leverage

our management expertise and the size and diversity of the hotel portfolios at

our managed REITs to accelerate substantial growth. We are conﬁdent in our

long-term strategy and believe we have signiﬁcant opportunities to continue to

accelerate Ashford’s growth and create meaningful value for our shareholders.

We delivered very strong ﬁnancial and operating performance for 2017 –

driving signiﬁcant growth in revenue and earnings -- and we are very pleased

with the groundwork we are laying for the continued success of our platform.

During the year, revenues increased by 21% over the prior year and Adjusted

EBITDA increased by 27% over the prior year. Also, during the year, Adjusted

Net Income and Adjusted Net Income per Share increased 24% and 19%,

respectively. We enter 2018 well positioned for further growth and we expect

that a lower effective tax rate will have a signiﬁcant positive impact on our

earnings in 2018 and future years.

Ashford is a global asset management company focused on the lodging industry

that currently serves as advisor to two NYSE-listed real estate investment trusts,

Ashford Hospitality Trust (NYSE: AHT) (“Ashford Trust” or “Trust”) and Ashford

Hospitality Prime (NYSE: AHP) (“Ashford Prime” or “Prime”). Combined,

Ashford Trust and Ashford Prime had 132 hotels with approximately 29,000

rooms and approximately $7.4 billion in gross assets at year end 2017.

Our business model and strategy is built around our ability to leverage the

combined expertise of our management team to both grow our company and

the platforms we advise. Not only do I believe we have the best management

team in the business, but our strong alignment with shareholders through both

our revolutionary advisory agreement structure as well as the high level of

insider ownership at each of the Ashford entities sets us apart. First, the structure

of the advisory agreements Ashford has in place incentivizes this management

team to outperform its peers. Additionally, to further align Ashford with each

of its managed platforms, the Ashford principals have signiﬁcant ownership

of each company. This includes holding 27% of Ashford Inc., 19% of Ashford

Trust and 15% of Ashford Prime. As the majority of our management team’s

net worth is invested in the stock of the Ashford group of companies, we are

invested right alongside all of you and our management team’s sole focus is on

maximizing shareholder returns across all of the Ashford platforms.

A tremendous amount of opportunity exists for our Company, as the Ashford

companies’ multiple platforms offer us numerous avenues for growth. Within

our managed platforms, we can grow through the expansion of the asset

bases of the companies we currently advise both organically as well as through

accretive acquisitions. The lodging industry in the U.S. continues to experience

solid growth, and, in 2017, the U.S. hotel industry’s occupancy rose to 65.9%,

ADR increased 2.1%, and RevPAR was up 3.0%. Industry pundits expect these

positive industry trends to continue through 2018 and 2019 with historically

strong occupancy levels expected to support continued pricing power and rate

growth for the hotel industry, which bodes well for the continued growth of

our REIT platforms.

Both of our advised platforms were active during the year on both the capital

markets and transaction fronts. On the debt capital markets front, Trust

completed several ﬁnancings to address debt maturities as well as lower

its cost of capital, reduce its interest and principal payments, strengthen its

balance sheet and improve its liquidity. Trust reﬁnanced four mortgage loans,

representing twenty-one hotels, totaling approximately $705 million that

resulted in approximately $74 million of excess proceeds as well as expected

annual principal payment and interest expense savings of approximately $13

million. Additionally, on the equity capital markets side, during the year, Trust

completed the public offerings of its Series H and Series I Preferred Stock that

raised $230 million. Trust used the proceeds from these two preferred raises to

complete the redemption of all of its issued and outstanding shares of its Series A

Preferred Stock as well as the partial redemption of 7,079,313 shares of its Series

D Preferred Stock, which together resulted in annual dividend payments savings

of over $1.2 million. Additionally, on the transaction front, Trust entered into an

agreement with the developers of the Nashville Convention Center to acquire a

permanent fee interest in the meeting space at its Renaissance Nashville hotel.

Trust also completed the conversion of the Marriott DFW from brand-managed

to a franchise agreement, and installed Remington, our afﬁliated property

management company, as the manager of the property.

On the transaction front, Prime made signiﬁcant progress on both its reﬁned

strategy to acquire additional luxury properties as well as its goal to reposition

or divest of four non-core properties. During 2017, Prime acquired the Park

Hyatt Beaver Creek in Beaver Creek, Colorado for $145.5 million, the Hotel

Yountville in Yountville, California for $96.5 million and earlier this year, the

company announced an agreement to acquire the Ritz-Carlton Sarasota in

Sarasota, Florida for $171 million. These acquisitions have the dual beneﬁt

of increasing the size and quality of the Prime platform as well as increasing

the overall RevPAR for the portfolio, which is already the highest in the hotel

REIT space. On the non-core hotel initiative, during the year, Prime announced

that it had reached an agreement with Marriott to convert both its Courtyard

Philadelphia Downtown and its Courtyard San Francisco Downtown hotels to

Autograph Collection hotels. Both of these upbrandings will better align these

properties with Prime’s luxury strategy. Additionally, the company completed

the sale of the Marriot Plano Legacy in Plano, Texas and is currently marketing

for sale the Renaissance Tampa in Tampa, Florida.

On the capital markets front, Prime reﬁnanced four mortgage loans with two

new loans totaling approximately $405 million that are expected to result in

annual interest savings of approximately $13 million. Also, Prime secured two

new loans totaling approximately $119 million to ﬁnance the Park Hyatt Beaver

Creek and Hotel Yountville acquisitions. On the equity front, Prime completed

public offerings of both its common stock as well as its convertible preferred

stock that raised net proceeds of approximately $105 million that were used to

fund the acquisitions of the Park Hyatt Beaver Creek and the Hotel Yountville.

Looking ahead, we are well positioned to grow Ashford not only through the

internal or external growth of Ashford Trust and Ashford Prime, but also by

adding additional investment platforms or by acquiring or managing other

hospitality or real estate related businesses.

To that end, in 2017, we completed the acquisition of an 85% stake in J&S Audio

Visual, a leading integrated single-source audio visual service provider with a

well-diversiﬁed geographical presence and customer base, for approximately

$9.2 million in cash, $4.3 million of Ashford common stock, and $9.5 million in

assumed debt. J&S currently has multi-year contracts in place with approximately

64 hotels and convention centers in addition to regular business representing

over 2,500 annual events and productions, 500 venue locations, and 650 clients.

J&S currently has contracts in place at only nine hotels owned by Trust and Prime.

Going forward, we expect signiﬁcant revenue and operational cost synergies not

only through further growing the business through J&S’ current sales channels

but also with the addition of contracts between J&S and Ashford asset-managed

hotels. Since our investment in November through the end of the year, revenues

increased 22% and Adjusted EBITDA increased by approximately $690,000

over the prior year period. Additionally, on a pro forma basis, J&S would have

increased our reported revenue by over 90% for the full year 2017 highlighting

the scale we expect J&S to provide to the platform. Also, J&S executed 18 new

hotel contracts during 2017 with half of the growth coming from non-Ashford

hotels as we continue to remain focused on increasing market share outside of

Ashford asset-managed hotels.

We also acquired a controlling interest in a privately held company - Pure Rooms

– which is a leading provider of hypo-allergenic rooms in the hospitality space.

There is growing demand for health and wellness offerings in the hospitality

industry and we are excited to integrate our deep operating experience with

the innovation of Pure Rooms. We believe the business case for adopting

the Pure Rooms product at hotel properties is compelling and that with our

resources and expertise, it is poised for substantial growth in the coming years.

The company currently has contracts in place with 177 hotels representing

approximately 2,700 rooms throughout the United States, including 52 Ashford

asset-managed hotels. Furthermore, on a pro forma basis, for the full year 2017,

Pure Rooms achieved revenue growth of 31% and Adjusted EBITDA growth of

60% over the prior year.

Additionally, we are pleased to introduce Lismore Capital, which has been

providing debt placement services to our advised REIT platforms. Beginning in

the third quarter, Lismore Capital began placing debt, a service that otherwise

would have been provided by third parties, for Ashford Trust and Ashford Prime

on competitive pricing terms related to property-level debt ﬁnancings. Lismore

Capital generated $1.1 million of revenue for the full year 2017 and fourth

quarter revenue growth was over 300% compared to the prior quarter. We are

excited about the prospects for future growth at Lismore Capital.

We also continue to be excited about our strategic investment in privately held

OpenKey, the universal, industry-standard smartphone App for keyless entry in

hotel guestrooms. We believe there is signiﬁcant growth potential for OpenKey

given there are nearly 18 million hotel rooms globally, many of them in

independent hotels that need a mobile key solution. Not only are there millions

of rooms globally that need a mobile key solution, but OpenKey currently has

little competition in this space. While we have already installed OpenKey at

several hotels owned by our managed REITs, and anticipate additional hotels

coming online this year, OpenKey has also made signiﬁcant traction in non-

Ashford hotels. Finally, OpenKey achieved four consecutive quarters of revenue

growth in 2017 with the fourth quarter growth at an all-time high of 153%

relative to the prior quarter and 1,054% year-over-year. For the full year,

OpenKey achieved 647% revenue growth.

Subsequent to year end, in January, we acquired an 80.75% stake in RED

Hospitality & Leisure, a leading provider of watersports activities and other travel

& transportation services in the U.S. Virgin Islands and beyond for approximately

$1 million in cash. We see a tremendous opportunity for growth of this business

as we expand the breadth of services they offer and bring their services to other

hotels. Additionally, we will continue to seek further opportunities to invest in

other hospitality-related businesses, such as J&S Audio Visual, Open Key, Pure

Rooms, Lismore Capital and RED Hospitality & Leisure, to build out the Ashford

platform.

By deploying differentiated investment platforms, we believe Ashford enjoys

a signiﬁcant competitive advantage and is strongly situated to beneﬁt from

favorable hospitality sector trends. Our intention is to leverage this competitive

advantage to its fullest as we pursue attractive investment opportunities for

Ashford Trust, Ashford Prime, as well as future Ashford platforms that may arise.

To further enhance our ﬁnancial ﬂexibility, in March 2018, we entered into a

new $35 million senior revolving credit facility with Bank of America, N.A. The

new credit facility will be beneﬁcial as we execute our growth strategy going

forward and includes the opportunity to expand the borrowing capacity by up

to $40 million to an aggregate size of $75 million.

In summary, we have accomplished a great deal over the last year and we are

excited about our progress and our plans for 2018. We believe the structure

of the Ashford group of companies will continue to beneﬁt investors as our

managed companies provide the ﬂexibility to choose the investment strategies

that best ﬁt their needs and objectives. Our team’s main goal has always been

building shareholder value, ﬁrst over the last 15 years in Ashford Trust and now

in the various platforms we advise.

In closing, as I mentioned in last year’s letter, it is important to us that we

have a strong dialogue with our shareholders. As part of that effort, I have a

Twitter proﬁle and you can follow me at www.twitter.com/MBennettAshford or

@MBennettAshford. Additionally, we have an Ashford App, a mobile app

for the hospitality REIT investor community. The Ashford App offers users

the ability to quickly and concisely get up to speed with what is happening

in the hospitality REIT industry from a macro level as well as review detailed

information on speciﬁc companies in the sector. The app is available for

free download at Apple’s App Store and the Google Play Store by searching

“Ashford.” I hope that our shareholders will take advantage of these avenues

to gain further insight into our Company and the industry in general.

Thank you for your continued investment in Ashford.

Sincerely,

Monty J. Bennett

Chairman of the Board & Chief Executive Ofﬁcer

Ofﬁcers and Directors

Corporate Information

OFFICERS

Monty J. Bennett
Chief Executive Officer and
Chairman of the Board

Douglas A. Kessler
Senior Managing Director

Deric S. Eubanks
Chief Financial Officer

Mark L. Nunneley
Chief Accounting Officer

Jeremy J. Welter
Co-President and
Chief Operating Officer

J. Robison Hays III
Co-President and
Chief Strategy Officer

BOARD OF DIRECTORS

Monty J. Bennett
Chief Executive Officer and
Chairman of the Board

J. Robison Hays III
Co-President and
Chief Strategy Officer

Dinesh P. Chandiramani
Regional Vice President,
Franchise Sales & Development, Americas
Radisson Hotel Group

Darrell T. Hall
President
Women’s A.R.C., LLC

John Mauldin
Owner
Mauldin Economics

Brian Wheeler
Chief Technology Officer
Nieman Printing

Uno Immanivong
Chef and owner of Chino Chinatown
and RedStix

Annual Meeting
The annual meeting of shareholders will be
held on June 15, 2018, at 9:00 a.m. CT
at the Dallas/Fort Worth Airport Marriott
8440 Freeport Parkway Irving, TX 75063
Shareholders of record as of the close
of business on May 4th, 2018 will be
entitled to vote at this meeting.

Corporate Ofﬁce
Ashford
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
Telephone: (972) 490-9600
www.ashfordinc.com

Registrar and Transfer Agent
Computershare Trust Company, N.A.
Canton, Massachusetts

Independent Auditors
BDO USA, LLP
Dallas, Texas

Legal Counsel
Hunton Andrews Kurth, LLP
Dallas, Texas

Annual Report on Form
10-K/Investor Contact
A copy of the Ashford Annual Report
on Form 10-K for ﬁscal 2017, was ﬁled with
the Securities and Exchange Commission
on March 12, 2018 and is included with this
report. Additional copies of the report and
copies of the exhibits referenced therein are
available from the Company. Requests for
these items and other investor contacts should
be directed to Joseph Calabrese of Financial
Relations Board at (212) 827-3772.

Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities
laws. Ashford (the “Company” or “we” or “our”) cautions investors that any forward-looking
statements presented herein, or which management may make orally or in writing
from time to time, are based on management’s beliefs and assumptions at that time.
Throughout this report, words such as “anticipate,” “believe,” “expect,” “intend,” “may,”
“might,” “plan,” “estimate,” “project,” “should,” “will,” “result,” and other similar expressions,
which do not relate solely to historical matters, are intended to identify forward-looking
statements. Such statements are subject to risks, uncertainties, and assumptions and are not
guarantees of future performance, which may be affected by known and unknown risks, trends,
uncertainties, and factors beyond our control. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated, or projected. We caution investors that while forward-looking
statements reflect our good faith beliefs at the time they are made, such statements
are not guarantees of future performance and are impacted by actual events that occur after
such statements are made. We expressly disclaim any responsibility to update forward-looking
statements, whether as a result of new information, future events, or otherwise. Accordingly,
investors should use caution in relying on past forward-looking statements, which are based on
results and trends at the time they are made, to anticipate future results or trends.
Some of the risks and uncertainties that may cause our actual results, performance, or
achievements to differ materially from those expressed or implied by forward-looking statements
include, among others, those discussed in our Annual Report on Form 10-K under the heading
“Risk Factors.” These risks and uncertainties continue to be relevant to our performance and
financial condition. Moreover, we operate in a very competitive and rapidly changing environment
where new risk factors emerge from time to time. It is not possible for management to predict all
such risk factors, nor can it assess the impact of all such risk factors on our business or the extent
to which any factor, or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction of actual results.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2017

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)

Maryland

(State or other jurisdiction of incorporation or organization)

46-5292553
(IRS employer identification number)

14185 Dallas Parkway, Suite 1100
Dallas, Texas
(Address of principal executive offices)

75254
(Zip code)

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

(972) 490-9600
(Registrant’s telephone number, including area code)

Title of each class

Common Stock

Name of each exchange on which registered

NYSE American

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes

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.

Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted 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 and post such files)

Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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,” “small reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company) 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) if 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

As of June 30, 2017, the aggregate market value of 1,600,587 shares of the registrant’s common stock held by non-affiliates was approximately $81,597,925.

As of March 8, 2018, the registrant had 2,102,518 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement pertaining to the 2018 Annual Meeting of Stockholders are incorporated herein by reference into Part III
of this Form 10-K.

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ASHFORD INC.
YEAR ENDED DECEMBER 31, 2017
INDEX TO FORM 10-K

PART I

Item 1.

Business................................................................................................................................................................

Item 1A. Risk Factors..........................................................................................................................................................

Item 1B. Unresolved Staff Comments ................................................................................................................................

Item 2.

Properties..............................................................................................................................................................

Item 3.

Legal Proceedings ................................................................................................................................................

Item 4. Mine Safety Disclosures.......................................................................................................................................

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities ..............................................................................................................................................................

Item 6.

Selected Financial Data ........................................................................................................................................

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations...............................

Item 7A. Quantitative and Qualitative Disclosures About Market Risk .............................................................................

Item 8.

Financial Statements and Supplementary Data ....................................................................................................

Page

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..............................

101

Item 9A. Controls and Procedures.......................................................................................................................................

101

Item 9B. Other Information.................................................................................................................................................

101

PART III

Item 10. Directors, Executive Officers and Corporate Governance...................................................................................

101

Item 11. Executive Compensation......................................................................................................................................

101

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters............

102

Item 13. Certain Relationships and Related Transactions, and Director Independence.....................................................

102

Item 14. Principal Accounting Fees and Services ..............................................................................................................

102

Item 15. Financial Statement Schedules and Exhibits........................................................................................................

102

Item 16. Form 10-K Summary ...........................................................................................................................................

102

PART IV

SIGNATURES

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As used in this Annual Report on Form 10-K, unless the context otherwise indicates, the references to “we,” “us,” “our,”
the “Company” refer to Ashford Inc., a Maryland 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” and Ashford Hospitality Holdings LLC, a Delaware limited liability company, which we refer to as “Ashford
Holdings.” “AIM” refers to Ashford Investment Management, LLC, a Delaware limited liability company. “Ashford Prime” or
“AHP” refers to Ashford Hospitality Prime, Inc., a Maryland corporation, and, as the context may require, its consolidated
subsidiaries, including Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership, which we refer to as
“Ashford Prime 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.” “Remington Lodging” refers to
Remington Lodging and Hospitality LLC, a Delaware limited liability company, and, as the context may require, its consolidated
subsidiaries, a property management company owned by Mr. Monty J. Bennett, our chief executive officer and chairman, and his
father, Mr. Archie Bennett, Jr., chairman emeritus of Ashford Trust.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K and documents incorporated herein by reference contain 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:

•

our business and investment strategy;

our projected operating results and dividend rates;

our ability to obtain future financing arrangements;

our understanding of our competition;

• market trends;

•

projected capital expenditures;

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 factors referenced, including those set forth under the sections captioned “Item 1. Business,” “Item 1A. Risk Factors”
and “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations;”

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;

the degree and nature of our competition;

actual and potential conflicts of interest with or between Remington Lodging, Ashford Trust and Ashford Prime, 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;

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in
this annual report. The matters summarized under “Item 1A. Risk Factors” and elsewhere, 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 Annual Report on Form 10-K. Furthermore, we do not intend to update any of our forward-
looking statements after the date of this annual report to conform these statements to actual results and performance, except as
may be required by applicable law.

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Item 1. Business

Our Company

PART I

Ashford Inc. is a Maryland corporation formed on April 2, 2014 that provides asset management, advisory and other products
and services primarily to clients in the hospitality industry. Ashford Inc. currently provides asset management and advisory services
to Ashford Hospitality Trust, Inc. (“Ashford Trust”) and Ashford Hospitality Prime, Inc. (“Ashford Prime”). Ashford Trust
commenced operating in August 2003 and is focused on investing in full service hotels in the upscale and upper-upscale segments
in the U.S. that have revenue per available room (“RevPAR”) generally less than twice the national average. Ashford Prime invests
primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Ashford Prime became a publicly
traded company in November 2013 upon the completion of its spin-off from Ashford Trust. Each of Ashford Trust and Ashford
Prime is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code, and the common stock of each of Ashford
Trust and Ashford Prime is traded on the NYSE. The common stock of Ashford Inc. is listed on the NYSE American Exchange.
Ashford Trust held approximately 598,000 shares of Ashford Inc. common stock, which represented an approximate 28.6%
ownership interest in Ashford Inc. Ashford Prime held approximately 195,000 shares, which represented an approximate 9.3%
ownership interest in Ashford Inc. as of December 31, 2017.

On April 6, 2017, Ashford Inc. entered into the Amended and Restated Limited Liability Company Agreement (the “Amended
and Restated LLC Agreement”) of Ashford Hospitality Holdings LLC, a Delaware limited liability company and a subsidiary of
the Company (“Ashford Holdings”), in connection with the merger (the “Merger”) of Ashford Merger Sub LLC, a Delaware
limited liability company, with and into Ashford Hospitality Advisors LLC, a Delaware limited liability company and the operating
company of the Company (“Ashford LLC”), with Ashford LLC surviving the Merger as a wholly-owned subsidiary of Ashford
Holdings. Ashford Holdings is owned approximately 99.8% by Ashford Inc. and approximately 0.2% by noncontrolling interest
holders. The terms of the Amended and Restated LLC Agreement are consistent with the terms of the Amended and Restated
Limited Liability Company Agreement of Advisors LLC. The Merger was effectuated in order to facilitate our investments in
businesses that provide products and services to the hospitality industry. After the Merger, Ashford Inc. serves as the sole manager
of Ashford Holdings.

In our capacity as the advisor to Ashford Trust and Ashford Prime, we are responsible for implementing the investment
strategies and managing the day-to-day operations of Ashford Trust and Ashford Prime, in each case subject to the supervision
and oversight of the respective board of directors of such entity. We provide the personnel and services necessary to allow each
of Ashford Trust and Ashford Prime to conduct its respective business. We may also perform similar functions for new or additional
platforms. We are not responsible for managing the day-to-day operations of the individual hotel properties owned by either
Ashford Trust or Ashford Prime, which duties are the responsibility of the hotel management companies that operate the hotel
properties owned by Ashford Trust and Ashford Prime.

We conduct our advisory business through an operating entity, Ashford LLC. We conduct our hospitality products and services
business through an operating entity, Ashford Hospitality Services, LLC (“Ashford Services”). We own our assets through Ashford
LLC and Ashford Services.

Our Business Strategy

In our asset management and advisory business, we earn advisory fees from each company that we advise. The fees for the
REIT companies we advise include a base fee, payable in cash, quarterly for Ashford Trust and monthly for Ashford Prime, for
managing the respective day-to-day operations of the companies we advise and the day-to-day operations of the respective
subsidiaries, in each case in conformity with the respective investment guidelines of such entity. The base fee is determined as a
percentage of each entity’s total market capitalization, subject to a minimum fee. We may also be entitled to receive an incentive
fee, payable in cash or a combination of cash and stock, from each of Ashford Trust and Ashford Prime based on their respective
out-performance of their peers, as measured by the annual total stockholder return of such company compared to its peers. For

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the year ended December 31, 2017, we earned advisory services revenues of $55.2 million and $10.8 million from Ashford Trust
and Ashford Prime, respectively. For the year ended December 31, 2016, we earned advisory services revenues of $51.0 million
and $16.2 million from Ashford Trust and Ashford Prime, respectively.

Separate from our advisory agreements, Lismore Capital, our wholly-owned subsidiary, provides mortgage placement services
to our REIT clients. During the year ended December 31, 2017, Lismore Capital earned $1.1 million in debt placement fees. No
debt placement fees were earned during the years ended December 31, 2016 and 2015.

In our hospitality products and services business, we provide products and services to clients primarily in the hospitality
industry, including Ashford Trust and Ashford Prime. Ashford Services generates revenue from customers in various forms
depending on the particular product or service provided and the general accepted market condition for pricing such products or
services. For the year ended December 31, 2017, we earned audio visual revenue and other services revenue of $9.2 million and
$2.4 million, respectively. For the year ended December 31, 2016, we earned other services revenue of $44,000.

Business Segments

We have two business segments: (i) REIT Advisory, which provides asset management and advisory services to other entities
and (ii) Hospitality Products and Services, which provides products and services to clients primarily in the hospitality industry. A
discussion of our operating segments is incorporated by reference to note 19 to our consolidated financial statements set forth in
Part II, Item 8. Financial Statements and Supplementary Data.

Our Advisory Agreements

We advise Ashford Trust and Ashford Prime pursuant to our advisory agreements. The terms of the two advisory agreements
are substantially similar, except as otherwise described below. The following summary of the terms of our advisory agreements
does not purport to be complete and is subject to and qualified in its entirety by reference to a copy of the actual agreements, as
amended, entered into with Ashford Trust or Ashford Prime, which have been included as exhibits to other documents filed with
the Securities and Exchange Commission (the “SEC”) and incorporated by reference in this Form 10-K.

General. Pursuant to our advisory agreements with Ashford Trust and Ashford Prime, we provide, or obtain on their behalf,
the personnel and services necessary for each of these entities to conduct its respective business, as they have no employees of
their own. All of the officers of each of Ashford Trust and Ashford Prime are our employees. We are not obligated to dedicate any
of our employees exclusively to either Ashford Trust or Ashford Prime, nor are we or our employees obligated to dedicate any
specific portion of time to the business of either Ashford Trust or Ashford Prime, except as necessary to perform the service
required of us in our capacity as the advisor to such entities. The advisory agreements require us to manage the business affairs
of each of Ashford Trust and Ashford Prime in conformity with the policies and the guidelines that are approved and monitored
by the boards of such entities. Additionally, we must refrain from taking any action that would (a) adversely affect the status of
Ashford Trust or Ashford Prime as a REIT, (b) subject us to regulation under the Investment Company Act, (c) knowingly and
intentionally violate any law, rule or regulation of any governmental body or agency having jurisdiction over us, (d) violate any
of the rules or regulations of any exchange on which our securities are listed or (e) violate the charter, bylaws or resolutions of
the board of directors of each of Ashford Trust and Ashford Prime, all as in effect from time to time. So long as we are the advisor
to Ashford Prime, Ashford Prime’s governing documents permit us to designate two persons as candidates for election as director
at any stockholder meeting of Ashford Prime at which directors are to be elected. Such nominees may be our executive officers.

Our Duties as Advisor. Subject to the supervision of the respective boards of directors of each of Ashford Trust and Ashford
Prime, we are responsible for, among other duties: (1) performing and administering the day-to-day operations of Ashford Trust
and Ashford Prime, including all of the subsidiaries and joint ventures of such entities, (2) all services relating to the acquisition,
disposition and financing of hotels, (3) performing asset management duties, (4) engaging and supervising, on behalf of such
companies, third parties to provide various services included but not limited to overseeing development management, property
management, project management, design and construction services and other professional services, (5) performing corporate
governance and other management functions, including financial, capital markets, treasury, financial reporting, internal audit,
accounting, tax and risk management services, SEC and regulatory compliance, and retention of legal counsel, auditors and other
professional advisors, as well as other duties and services outlined in the advisory agreements.

Any increase in the scope of duties or services to be provided by us must be jointly approved by us and either Ashford Trust

or Ashford Prime, as applicable, and is subject to additional compensation as outlined in the advisory agreements.

We are generally, the exclusive asset manager for each of Ashford Trust and Ashford Prime.

We also have the power to delegate all or any part of our rights and powers to manage and control the business and affairs of
such companies to such officers, employees, affiliates, agents and representatives of ours or such company as we may deem

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appropriate. Any authority delegated by us to any other person is subject to the limitations on our rights and powers specifically
set forth in the advisory agreement or the charter of such company.

We have agreed, from time to time, to make mutually agreed upon “key money investments” in the subsidiaries and affiliates
of each of Ashford Trust and Ashford Prime to facilitate such companies, subsidiaries or affiliates’ acquisition of one or more
properties, if the independent directors of Ashford Trust or Ashford Prime, as applicable, and Ashford Inc. determine that without
such an investment, the acquisition of such property would be uneconomic to Ashford Trust or Ashford Prime. Any such assets
are referred to as “key money assets.” Any key money investment will be in the form of, but not limited to, cash, notes, equity of
Ashford Inc., the acquisition of furniture, fixture and equipment for use at the subject hotel, or as agreed to at the time a key money
investment is made. Upon any such key money investment, Ashford Trust or Ashford Prime will engage Ashford LLC as the asset
manager for the related key money asset and will pay the key money asset management fees, which are included in the base fees.
Ashford Trust or Ashford Prime may also agree to additional incentive fees based on the performance of any key money asset.
Ashford Trust or Ashford Prime will be obligated to pay us the “key money clawback amount,” which is equal to the difference
between a per annum return of 5% on a key money asset together with the initial key money investment amount and the amount
actually received by us (through key money asset management fees and key money incentive fees, if applicable) related to such
key money asset, if the Advisory Agreement (or the applicable asset management agreement) is terminated by Ashford Trust or
Ashford Prime for any reason or such companies dispose of such key money asset (calculated on an investment by investment
basis).

We have agreed to require our employees and officers who provide services to the companies we advise to comply with the

codes and the policies of such companies.

Relationship with Ashford Trust and Ashford Prime. We advise both Ashford Trust and Ashford Prime. We are also permitted
to have other advisory clients, which may include other REITs operating in the real estate industry or having the same or substantially
similar investment guidelines as Ashford Trust or Ashford Prime. If either Ashford Trust or Ashford Prime materially revises its
initial investment guidelines without our express written consent, we are required only to use our best judgment to allocate
investment opportunities to Ashford Prime, Ashford Trust and other entities we advise, taking into account such factors as we
deem relevant, in our discretion, subject to any of our then existing obligations to such other entities. Ashford Prime has agreed
not to revise its initial investment guidelines to be directly competitive with Ashford Trust. Ashford Trust agrees, pursuant to the
terms of the Ashford Trust advisory agreement, that it will revise its investment guidelines as necessary to avoid direct competition
with (i) any entity or platform that Ashford Trust may create or spin-off in the future and (ii) any other entity advised by us,
provided that in the case of clause (ii), we and Ashford Trust mutually agree to the terms of such revision of Ashford Trust’s
investment guidelines. The advisory agreements give each of Ashford Trust and Ashford Prime the right to equitable treatment
with respect to other clients of ours, but the advisory agreements do not give any entity the right to preferential treatment, except
as follows:

• Any new individual investment opportunities that satisfy Ashford Trust’s investment guidelines will be presented to its
board of directors, which has up to 10 business days to accept any such opportunity prior to it being available to Ashford
Prime or another business advised by us.

• Any new individual investment opportunities that satisfy Ashford Prime’s investment guidelines will be presented to its
board of directors, which has up to 10 business days to accept any such opportunity prior to it being available to Ashford
Trust or another business advised by us.

To minimize conflicts between Ashford Trust and Ashford Prime, the advisory agreements require each such entity to designate
an investment focus by targeted RevPAR, segments, markets and other factors or financial metrics. After consultation with us,
such entity may modify or supplement its investment guidelines from time to time by giving written notice to us; however, if either
Ashford Trust or Ashford Prime materially changes its investment guidelines without our express written consent, we are required
only to use our best judgment to allocate investment opportunities to Ashford Trust, Ashford Prime and other entities we may
advise, taking into account such factors as we deem relevant, in our discretion, subject to any then existing obligations we have
to such other entities.

When determining whether an asset satisfies the investment guidelines of either Ashford Trust or Ashford Prime, we must
make a good faith determination of projected RevPAR, taking into account historical RevPAR as well as such additional
considerations as conversions or reposition of assets, capital plans, brand changes and other factors that may reasonably be
forecasted to raise RevPAR after stabilization of such initiative.

If Ashford Trust or Ashford Prime elect to spin-off, carve-out, split-off or otherwise consummate a transfer of a division or
subset of assets for the purpose of forming a joint venture, a newly created private platform or a new publicly traded company to
hold such division or subset of assets constituting a distinct asset type and/or investment guidelines, Ashford Trust and Ashford

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Prime have agreed that any such new entity will be advised by us pursuant to an advisory agreement containing substantially the
same material terms set forth in our advisory agreement with Ashford Trust or Ashford Prime, as applicable.

Limitations on Liability and Indemnification. The advisory agreements provide that we have no responsibility other than to
render the services and take the actions described in the advisory agreements in good faith and with the exercise of due care and
are not responsible for any action the board of directors of either Ashford Trust or Ashford Prime takes in following or declining
to follow any advice from us. The advisory agreements provide that we, and our officers, directors, managers, employees and
members, will not be liable for any act or omission by us (or our officers, directors, managers, employees or members) performed
in accordance with and pursuant to the advisory agreements, except by reason of acts constituting gross negligence, bad faith,
willful misconduct or reckless disregard of our duties under the applicable advisory agreement.

Each of Ashford Trust and Ashford Prime has agreed to indemnify and hold us harmless (including our partners, directors,
officers, stockholders, managers, members, agents, employees and each other person or entity, if any, controlling us) to the full
extent lawful, from and against any and all losses, claims, damages or liabilities of any nature whatsoever with respect to or arising
from any acts or omission by us (including ordinary negligence) in our capacity as advisor, except with respect to losses, claims,
damages or liabilities with respect to or arising out of our gross negligence, bad faith or willful misconduct, or reckless disregard
of our duties set forth in the applicable advisory agreement (for which we have indemnified Ashford Trust or Ashford Prime, as
applicable).

Term and Termination of our Advisory Agreement with Ashford Trust. The term of our advisory agreement with Ashford
Trust is 10 years, commencing from the effective date of the amended advisory agreement on June 10, 2015. Our advisory agreement
with Ashford Trust provides for automatic five-year renewal terms unless previously terminated as described below. Following
the 10-year initial term, our advisory agreement with Ashford Trust may be terminated by Ashford Trust, as applicable, with 180
days’ written notice prior to the expiration of the then current term, on the affirmative vote of at least two-thirds of the independent
directors of such entity, based upon a good faith finding that either (a) there has been unsatisfactory performance by us that is
materially detrimental to such company and the subsidiaries of such company taken as a whole, or (b) the base fee and/or incentive
fee (each as defined in the advisory agreements) is not fair based on the then-current market for such fees (and we do not offer to
negotiate a lower fee that at least a majority of the independent directors determine is fair). If the reason for non-renewal specified
by such company in the termination notice is (b) in the preceding sentence, then we may, at our option, provide a notice of proposal
to renegotiate the base fee and incentive fee not less than 150 days prior to the pending termination date. Thereupon, each party
has agreed to use its commercially reasonable efforts to negotiate in good faith to find a resolution on fees within 120 days following
receipt by such company of the renegotiation proposal. If a resolution is achieved between us and at least a majority of the
independent directors of such entity, within the 120-day period, then the applicable advisory agreement will continue in full force
and effect with modification only to the agreed upon base fee and/or incentive fee, as applicable.

If no resolution on fees is reached within the 120-day period, or if Ashford Trust terminates the advisory agreement by reason
of clause (a) above, or terminates the advisory agreement upon a change in control of such companies, the related advisory
agreement will terminate and Ashford Trust will be required to pay us all fees and expense reimbursements due and owing through
the date of termination as well as a termination fee equal to 1.1 times the greater of either:

•

12 multiplied by our Net Earnings for the 12-month period preceding the termination date of our advisory agreement.
For purposes of this calculation, “Net Earnings” is defined in the advisory agreement as (A) our reported Adjusted EBITDA
(as defined in the advisory agreement) for the 12-month period preceding the termination of the advisory agreement
(adjusted to assume the advisory agreement was in place for the full 12-month period if it otherwise was not), as reported
in our earnings releases less (B) our pro forma Adjusted EBITDA (as defined in the advisory agreement) assuming our
advisory agreement was not in place during such period plus (C) all EBITDA (Net Income (per Generally Accepted
Accounting Principles (“GAAP”)) plus interest expenses, income taxes, depreciation and amortization) of ours and any
of our affiliates and subsidiaries from providing any service or product to the applicable company, its operating partnership
or any of its affiliates or subsidiaries, exclusive of EBITDA directly resulting from the advisory agreement;

the earnings multiple (calculated as our total enterprise value divided by our adjusted EBITDA) for our common stock
per the 12-month period preceding the termination date multiplied by our Net Earnings (as defined in the advisory
agreement) for the 12 months preceding the termination; or

the simple average of our earnings multiples for the three fiscal years preceding the termination (calculated as our total
enterprise value divided by our adjusted EBITDA for such periods) multiplied by our Net Earnings (as defined in the
advisory agreement) for the 12 months preceding the termination;

plus, in either case, a gross-up amount for federal and state tax liability, based on an assumed combined tax rate of 40%. Any such
termination fee will be payable on or before the termination date.

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Ashford Trust may also terminate the advisory agreement with 60 days’ notice upon a change of control of such entity, if the
change of control transaction is conditioned upon the termination of the advisory agreement. In such a circumstance, Ashford
Trust would be required to pay the accrued costs and termination fee described above.

Ashford Trust may also terminate the applicable advisory agreement at any time, including during the 10-year initial term,
without the payment of a termination fee, upon customary events of default and our failure to cure during certain cure periods,
such as our default in performance of material obligations, the filing of bankruptcy or a dissolution action and other events, as
outlined in the advisory agreement.

Upon any termination of the advisory agreement, we are expected to cooperate with and assist Ashford Trust in executing an
orderly transition of the management of its assets to a new advisor, providing a full accounting of all accounts held in the name
of or on behalf of such company, returning any funds held on behalf of such company and returning any and all of the books and
records of such company. Ashford Trust will be responsible for paying all accrued fees and expenses and will be subject to certain
non-solicitation obligations with respect to our employees upon any termination of the applicable advisory agreement other than
termination as a result of change of control of our company.

Following the 10-year initial term, we may terminate the advisory agreement prior to the expiration of each successive then-
current term with 180 days’ prior written notice. Additionally, we may terminate the advisory agreement if Ashford Trust defaults
in the performance or observance of any material term, condition or covenant under the applicable advisory agreement; provided,
however, before terminating the advisory agreement, we must give Ashford Trust written notice of the default and provide Ashford
Trust with an opportunity to cure the default within 45 days, or if such default is not reasonably susceptible to cure within 45 days,
such additional cure period as is reasonably necessary to cure the default (not to exceed 90 days) so long as such entity is diligently
and in good faith pursuing such cure. In the event of such a termination, we will be entitled to all accrued fees and expenses.

Base Fees under our Advisory Agreement with Ashford Trust. The total base fee per annum is based on a declining sliding
scale percentage of the total market capitalization of Ashford Trust plus the Key Money Asset Management Fee (defined in our
advisory agreement as the aggregate gross asset value of all key money assets multiplied by 0.7%). This amount is then divided
by four to calculate the quarterly base fee; provided, however in no event shall the base fee for any quarter be less than the Minimum
Base Fee (as defined by the advisory agreement). The “total market capitalization” for purposes of determining the base fee is
calculated on a quarterly basis as follows:

(i)

average of the volume-weighted average price per share of common stock for Ashford Trust for each trading day of the
preceding quarter multiplied by the average number of shares of common stock and common units outstanding during
such quarter, on a fully-diluted basis (assuming all common units and long term incentive partnership units in Ashford
Trust OP that have achieved economic parity with common units in the applicable operating partnership have been
redeemed and Ashford Trust has elected to issue common stock in satisfaction of the redemption price), plus

(ii)

the quarterly average of the aggregate principal amount of the consolidated indebtedness of Ashford Trust (including
its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate
share of consolidated debt), plus

(iii) the quarterly average of the liquidation value of any outstanding preferred equity of such company, and

(iv) multiplying the sum of (i), (ii), and (iii) above by the Key Money Asset Factor (defined in our advisory agreement as 1
minus the quotient resulting from dividing the aggregate gross book value of all key money assets by the aggregate
gross book value of such entity’s assets (including key money assets)).

The minimum base fee for Ashford Trust for each quarter beginning January 1, 2016 is equal to the greater of:

(i) 90% of the base fee paid for the same quarter in the prior year; and

(ii) the “G&A ratio” multiplied by the total market capitalization of Ashford Trust.

The “G&A ratio” is calculated as the simple average of the ratios of total general and administrative expenses, including any dead
deal costs, less any non-cash expenses, paid in the applicable quarter by each member of a select peer group, divided by the total
market capitalization of such peer group member. The peer group for each company may be adjusted from time-to-time by mutual
agreement between us and a majority of the independent directors of Ashford Trust, negotiating in good faith. The base fee is
payable quarterly in arrears in cash.

Term and Termination of our Advisory Agreement with Ashford Prime. The term of our advisory agreement with Ashford
Prime is 10 years, commencing from the effective date of the amended advisory agreement June 21, 2017. Our advisory agreement
with Ashford Prime provides for seven successive additional ten-year renewal terms upon written notice to Ashford Prime, given

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at least 210 days prior to the expiration of the then current term. The advisory agreement may be terminated by the Ashford Prime,
with no termination fee due and payable, under the following circumstances: (i) upon our conviction (including a plea or nolo
contendere) by a court of competent jurisdiction of a felony; (ii) if we commit an act of fraud against Ashford Prime, convert the
funds of Ashford Prime or act in a manner constituting gross negligence in the performance of our material duties under the
advisory agreement (including a failure to act); (iii) if we undergo a Bankruptcy Event (as defined by the advisory agreement); or
(iv) upon the entry by a court of a final non-appealable order awarding monetary damages to Ashford Prime based on a finding
that we committed a material breach or default of a material term, condition, obligation or covenant of the advisory agreement,
which breach or default had a material adverse effect.

If Ashford Prime terminates the advisory agreement upon a change in control, the related advisory agreement will terminate
and Ashford Prime will be required to pay us all fees and expense reimbursements due and owing through the date of termination
as well as a termination fee equal to the greater of:

•

12 multiplied by (a) our Net Earnings for the 12-month period preceding the termination date of our advisory agreement
and (b) to the extent not included in Net Earnings, any incentive fees under the advisory agreement that have accrued or are
accelerated buy have not yet been paid at the time of termination of the advisory agreement;

•

(a) the quotient of (i) our total market capitalization on the trading day immediately preceding the date of payment of the
termination fee, divided by (ii) our Adjusted EBITDA for the 12-month period preceding the termination date of our advisory
agreement plus, to the extent not included in Net Earnings, any incentive fees under the advisory agreement that have accrued or
are accelerated buy have not yet been paid at the time of termination of the advisory agreement; and

•

the simple average, for the three years preceding the fiscal year in which the termination fee is due of (a) the quotient of
(i) our total market capitalization on the trading day immediately preceding the date of payment of the termination fee, divided
by (ii) our Adjusted EBITDA for the 12-month period preceding the termination date of our advisory agreement plus, to the extent
not included in Net Earnings, any incentive fees under the advisory agreement that have accrued or are accelerated buy have not
yet been paid at the time of termination of the advisory agreement

For purposes of this calculation, “Net Earnings” is generally defined in the advisory agreement as (A) the total base fees and
incentive fees, plus any other revenues reported on our income statement as pertaining to the advisory agreement (in each case,
in accordance with GAAP) including all of EBITDA of us and our affiliates and of our subsidiaries from providing any additional
services to Ashford Prime and its affiliates, less (B) the total incremental expenses determined in accordance with the advisory
agreement, in each case for the 12-month period preceding the termination date of our advisory agreement.

Any such termination fee will be payable on or before the termination date.

Upon any termination of the advisory agreement, we are expected to cooperate with and assist Ashford Prime in executing
an orderly transition of the management of its assets to a new advisor, providing a full accounting of all accounts held in the name
of or on behalf of such company, returning any funds held on behalf of such company and returning any and all of the books and
records of such company. Ashford Prime will be responsible for paying all accrued fees and expenses and will be subject to certain
non-solicitation obligations with respect to our employees upon any termination of the applicable advisory agreement other than
termination as a result of change of control of our company.

Base Fees under our Advisory Agreement with Ashford Prime. The total base fee per annum is an amount equal to 0.70%
of the sum of (i) the Total Market Capitalization (as defined by the advisory agreement) for the prior month, and (ii) the Key
Money Gross Asset Value (as defined by the advisory agreement), if any, on the last day of the prior month. This amount is then
divided by 12 to calculate the monthly base fee; provided, however in no event shall the base fee for any month be less than the
Minimum Base Fee (as defined by the advisory agreement). The “total market capitalization” for purposes of determining the base
fee is calculated on a monthly basis as follows:

(i)

the average of the volume-weighted average price per share of common stock for Ashford Prime for each trading day
of the preceding month multiplied by the average number of shares of common stock and common units outstanding
during such month, on a fully-diluted basis (assuming all common units and long term incentive partnership units in the
applicable operating partnership which have achieved economic parity with common units in the applicable operating
partnership have been redeemed and Ashford Prime has elected to issue common stock in satisfaction of the redemption
price and assuming any shares of common stock issuable upon conversion of any convertible preferred stock of Ashford
Prime have converted where the conversion price is less than such volume-weighted average price), plus

(ii)

the monthly average of the aggregate principal amount of the consolidated indebtedness of Ashford Prime (including
its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate
share of consolidated debt), plus

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(iii) the quarterly average of the liquidation value of any outstanding preferred equity of such company (excluding any shares
of common stock issuable upon conversion of any convertible preferred stock of Ashford Prime where the conversion
price is less than the volume-weighted average price per share of common stock for Ashford Prime for each trading day
of the preceding month), and

(iv) multiplying the sum of (i), (ii), and (iii) above by the Key Money Asset Factor (defined in our advisory agreement as 1
minus the quotient resulting from dividing the aggregate gross book value of all key money assets by the aggregate gross
book value of such entity’s assets (including key money assets)).

The minimum base fee for Ashford Prime for each month will be equal to the greater of:

(i) 90% of the base fee paid for the same month in the prior year; and

(ii) the “G&A ratio” multiplied by the total market capitalization of Ashford Prime.

The “G&A ratio” is calculated as the simple average of the ratios of total general and administrative expenses, including any dead
deal costs, less any non-cash expenses, paid in the applicable month by each member of a select peer group, divided by the total
market capitalization of such peer group member. The peer group for each company may be adjusted from time-to-time by mutual
agreement between us and a majority of the independent directors of such company, negotiating in good faith. Each month’s base
fee is determined based on prior month results and is payable in cash on the fifth business day of the month for which the fee is
applies.

Incentive Fee under the Advisory Agreements with Ashford Trust and Ashford Prime. Incentive advisory fees are measured
annually in each year that Ashford Trust’s and/or Ashford Prime’s annual total stockholder return exceeds the average annual total
stockholder return for each company’s respective peer group, subject to the FCCR Condition, as defined in the advisory agreements.
Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition. For purposes of this
calculation, the TSR of such entity is calculated using a year-end stock price equal to the closing price of its common stock on the
last trading day of the year as compared to the closing stock price of its common stock on the last trading day of the prior year, in
each case assuming all dividends on the common stock during such period are reinvested into additional shares of common stock
of such entity. The average TSR for each member of such company’s peer group is calculated in the same manner and for the same
time period, and the simple average for the entire peer group is used.

The annual incentive fee is calculated as (i) 5% of the amount (expressed as a percentage but in no event greater than 25%)
by which the annual TSR of Ashford Trust or Ashford Prime, as applicable, exceeds the average TSR for its respective peer group,
multiplied by (ii) the fully diluted equity value of such company at December 31 of the applicable year. To determine the fully
diluted equity value, we assume that all units in the operating partnership of Ashford Trust or Ashford Prime, as applicable,
including Long-Term Incentive Plan (“LTIP”) units that have achieved economic parity with the common units, if any, are redeemed
and the applicable company has elected to issue common stock of such company in satisfaction of the redemption price and that
the per share value of each share of common stock of such company is equal to the closing price of its stock on the last trading
day of the year. The incentive fee, if any, subject to the FCCR Condition (defined below), is payable in arrears in three equal
annual installments with the first installment payable on January 15 following the applicable year for which the incentive fee
relates and on January 15 of the next two successive years. Notwithstanding the foregoing, upon any termination of the advisory
agreement for any reason, any unpaid incentive fee (including any incentive fee installment for the stub period ending on the
termination date) will become fully earned and immediately due and payable without regard to the FCCR Condition defined below.
Except in the case when the incentive fee is payable on the date of termination of this Agreement, up to 50% of the incentive fee
may be paid by each Ashford Trust or Ashford Prime, at the option of such entity, in shares its common stock or common units
of the applicable operating partnership of such entity, with the balance payable in cash, unless at the time for payment of the
incentive fee:

(i) we or our affiliates own common stock or common units in an amount (determined with reference to the closing price
of the common stock of each Ashford Trust or Ashford Prime, as applicable, on the last trading day of the year ) greater
than or equal to three times the base fee for the preceding four quarters,

(ii) payment in such securities would cause us to be subject to the provisions of the Investment Company Act, or

(iii) payment in such securities would not be legally permissible for any reason; in which case, the entire Incentive Fee will

be paid by Ashford Trust or Ashford Prime in cash.

Upon the determination of the incentive fee, except in the case of any termination of the advisory agreement in which case
the incentive fee for the stub period and all unpaid installments of an incentive fee shall be deemed earned by us and fully due
and payable by Ashford Trust and Ashford Prime, as applicable, each one-third installment of the incentive fee shall not be deemed

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earned by us or otherwise payable by Ashford Trust or Ashford Prime, as applicable, unless such entity, as of the December 31
immediately preceding the due date for the payment of the incentive fee installment, has an FCCR of 0.20x or greater (the “FCCR
Condition”). For purposes of this calculation, “FCCR” means such entity’s fixed charge coverage ratio, which is the ratio of
adjusted EBITDA for the previous four consecutive fiscal quarters to fixed charges, which includes all (i) such entity and its
subsidiaries’ interest expense, (ii) such entity and its subsidiaries’ regularly scheduled principal payments, other than balloon or
similar principal payments which repay indebtedness in full and payments under cash flow mortgages applied to principal, and
(iii) preferred dividends paid by such entity.

Equity Compensation. To incentivize our employees, officers, consultants, non-employee directors, affiliates and
representatives to achieve the goals and business objectives of each of Ashford Trust and Ashford Prime, as established by the
boards of directors of such entities, in addition to the base fee and the incentive fee described above, the boards of directors of
each of Ashford Trust and Ashford Prime have the authority to make annual equity awards to us or directly to our employees,
officers, consultants and non-employee directors, based on achievement of certain financial and other hurdles established by such
board of directors.

Expense Reimbursement. We are responsible for all wages, salaries, cash bonus payments and benefits related to our employees
providing services to Ashford Trust or Ashford Prime (including any of the officers of Ashford Trust or Ashford Prime who are
also officers of our company), with the exception of any equity compensation that may be awarded by Ashford Trust or Ashford
Prime to our employees who provide services to Ashford Trust and Ashford Prime, the provision of certain internal audit, asset
management and risk management services and the international office expenses described below. Ashford Trust and Ashford
Prime are each responsible to pay or reimburse us monthly for all other costs we incur on behalf of such entities or in connection
with the performance of our services and duties to such companies, including, without limitation, tax, legal, accounting, advisory,
investment banking and other third-party professional fees, director fees, insurance (including errors and omissions insurance and
any other insurance required pursuant to the terms of the advisory agreements), debt service, taxes, underwriting, brokerage,
reporting, registration, listing fees and charges, travel and entertainment expenses, conference sponsorships, transaction diligence
and closing costs, dead deal costs, dividends, office space, the cost of all equity awards or compensation plans established by such
companies, including the value of awards made by companies to our employees, and any other costs which are reasonably necessary
for the performance by us of our duties and functions, including any expenses incurred by us to comply with new or revised laws
or governmental rules or regulations that impose additional duties on Ashford Trust or Ashford Prime or us in our capacity as
advisor to such entities. In addition, each of Ashford Trust and Ashford Prime pays a pro rata share of our office overhead and
administrative expenses incurred in the performance of our duties and functions under the advisory agreements. There is no specific
limitation on the amount of such reimbursements.

In addition to the expenses described above, each of Ashford Trust and Ashford Prime are required to reimburse us monthly
for its pro rata share (as reasonably agreed to between us and a majority of the independent directors of such company or its audit
committee, chairman of its audit committee or lead director) of all reasonable international office expenses, overhead, personnel
costs, travel and other costs directly related to our non-executive personnel who are located internationally or that oversee the
operations of international assets or related to our personnel that source, investigate or provide diligence services in connection
with possible acquisitions or investments internationally. Such expenses include but are not limited to, salary, wage payroll taxes
and the cost of employee benefit plans. We also pay or reimburse Ashford Trust for the costs associated with Ashford Trust’s
current chairman emeritus, which includes a $700,000 annual stipend and the cost of all benefits currently available to him, as
well as reimbursement for reasonable expenses incurred by him in connection with his service to Ashford Trust.

Additional Services. If, and to the extent that, either Ashford Trust or Ashford Prime requests us to render services on behalf
of such company other than those required to be rendered by us under the advisory agreement, including, but not limited to, certain
services provided by Ashford Services, such additional services will be compensated separately, at market rates, as defined in the
advisory agreements.

The Ashford Trademark. We have a proprietary interest in the “Ashford” trademark, and we agreed to license its use to each
of Ashford Trust and Ashford Prime. If at any time Ashford Trust or Ashford Prime ceases to retain us to perform advisory services
for them, within 60 days following receipt of written request from us, such entity must cease to conduct business under or use the
“Ashford” name or logo, as well as change its name and the names of any of its subsidiaries to a name that does not contain the
name “Ashford.”

Our Mutual Exclusivity Agreement

We and Ashford LLC, our operating company, entered into a mutual exclusivity agreement with Remington Lodging, that
was consented and agreed to by Mr. Monty J. Bennett, regarding potential future advisory clients for us and property management
clients for Remington Lodging. Mr. Monty J. Bennett and his father Mr. Archie Bennett, Jr. are the sole owners of Remington
Lodging, and Mr. Monty J. Bennett is the chief executive officer of Remington Lodging. Pursuant to this agreement, we have

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agreed to utilize Remington Lodging to provide property management, project management and development services for all
hotels that future companies we may advise or may acquire, to the extent that we have the right, or control the right, to direct such
matters, subject to certain exceptions.

Regulation

General. We, AIM and each of Ashford Trust and Ashford Prime, as applicable, are subject, in certain circumstances, to
supervision and regulation by state and federal governmental authorities and are subject to various laws and judicial and
administrative decisions imposing various requirements and restrictions, which, among other things regulate public disclosures,
reporting obligations and capital raising activity. As an advisor to companies that own hotel properties, the operations and properties
of such entities are subject to various federal, state and local laws, ordinances and regulations, including regulations relating to
common areas and fire and safety requirements.

REIT Regulations. Each of Ashford Trust and Ashford Prime has elected and is qualified and expects to continue to qualify
to be taxed as a REIT under Section 856 through 860 of the Code. As REITs, such companies must currently distribute, at a
minimum, an amount equal to 90% of their taxable income. In addition, such companies must distribute 100% of taxable income
to avoid paying corporate federal income taxes. REITs are also subject to a number of organizational and operational requirements
in order to elect and maintain REIT status. These requirements include specific share ownership tests and assets and gross income
composition tests. If either Ashford Trust or Ashford Prime fails to continue to qualify as a REIT in any taxable year, it is subject
to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate tax rates. Even
if such companies continue to qualify for taxation as REITs, they may be subject to state and local income taxes and to federal
income tax and excise tax on their undistributed income. Under the Protecting Americans from Tax Hikes Act of 2015, enacted
on December 18, 2015, several Internal Revenue Code provisions relating to REITs and their stockholders were revised. These
new rules were enacted with varying effective dates, some of which were retroactive.

Tax Cuts and Jobs Act. The Tax Cuts and Jobs Act ("TCJA") was enacted on December 22, 2017. The TCJA reduced the US
federal corporate tax rate from 35% to 21% effective January 1, 2018. As a result, we revalued our net deferred tax assets and
valuation allowance using the 21% U.S. federal income tax rate. In addition, the TCJA repealed the provisions that provided for
carryback of losses generated in taxable years ending after December 31, 2017, and we increased our valuation allowance because
we cannot consider tax paid in prior years as a source of taxable income to support realization of a portion of our net deferred tax
assets. The impact of other provisions of the TCJA are still being evaluated by the Company.

Americans with Disabilities Act. As the advisor to Ashford Trust and Ashford Prime, we are responsible for ensuring that the
hotels owned by such entities comply with applicable provisions of the Americans with Disabilities Act, or “ADA,” to the extent
that such hotels are “public accommodations” as defined by the ADA. Non-compliance with the ADA could result in imposition
of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing
one, and we continue to assess the hotels and to advise Ashford Trust or Ashford Prime, as applicable, to make alterations as
appropriate in this respect.

Affordable Care Act. We could be subject to penalties under the employer mandate provisions of the Affordable Care Act
("ACA") if we did not offer affordable, minimum value health care coverage to substantially all of our full-time equivalent
employees and their dependents. Any such penalty would be based on the number of full-time employees. We do not anticipate
being subject to a penalty under the ACA; however, even in the event that we are, any such penalty would be less than approximately
$652,000 based on our number of full-time employees. As of December 31, 2017, we had 102 full-time domestic corporate
employees and approximately 300 employees at our consolidated subsidiaries that provide products and services to the lodging
industry.

Environmental Matters. Under various laws relating to the protection of the environment, a current or previous owner or
operator (including tenants) of real estate may be liable for contamination resulting from the presence or discharge of hazardous
or toxic substances at that property and may be required to investigate and clean up such contamination at that property or emanating
from that property. These costs could be substantial and liability under these laws may attach without regard to whether the owner
or operator knew of, or was responsible for, the presence of the contaminants, and the liability may be joint and several. The
presence of contamination or the failure to remediate contamination at the hotels owned by Ashford Trust or Ashford Prime may
expose such entities, and potentially us, to third-party liability or materially and adversely affect the ability to sell, lease or develop
the real estate or to incur debt using the real estate as collateral.

The hotels owned by Ashford Trust and Ashford Prime are subject to various federal, state, and local environmental, health
and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions
from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew and waste management.
These hotels incur costs to comply with these laws and regulations, and we or the property owners could be subject to fines and
penalties for non-compliance.

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Some of these hotels may contain or develop harmful mold or suffer from other adverse conditions, which could lead to
liability for adverse health effects and costs of remediation. The presence of significant mold or other airborne contaminants at
any of the hotels owned by Ashford Trust or Ashford Prime could require a costly remediation program to contain or remove the
mold or other airborne contaminants from the affected hotel or increase indoor ventilation. In addition, the presence of significant
mold or other airborne contaminants could expose us to liability from guests or employees at the hotels and others if property
damage or health concerns arise.

In the judgment of management, while we may incur significant expense complying with the various regulation to which we
are subject, existing statutes and regulations will not have a material adverse effect on our business. However, it is not possible
to forecast the nature of future legislation, regulations, judicial decisions, orders or interpretations, nor their impact upon our future
business, financial condition, results of operations or prospects.

Distributions and Our Distribution Policy

Evaluation of our distribution policy and the decision to make a distribution is made solely at the discretion of our board of
directors and is based on factors including, but not limited to, our ability to generate income, availability of existing cash balances,
the performance of our business, capital requirements, applicable law, access to cash in the capital markets and other financing
sources, general economic conditions and economic conditions that more specifically impact our business or prospects and other
factors our board of directors deems relevant.

Future distribution levels are subject to adjustment based upon any one or more of the factors set forth above, the matters
discussed under “Item 1A. Risk Factors” in this Annual Report on Form 10-K or any other document we file with the SEC under
the Exchange Act and other factors that our board of directors may, from time to time, deem relevant to consider when determining
an appropriate distribution. Our board of directors may also determine not to make any distribution.

Competition

The asset management industry is highly competitive. We compete on an industry, regional and niche basis based on a number
of factors, including ability to raise capital, investment opportunities and performance, transaction execution skills, access to and
retention of qualified personnel, reputation, range of products, innovation and fees for our services. Our clients compete with
many third parties engaged in the hotel industry, including other hotel operating companies, ownership companies (including hotel
REITs) and national and international hotel brands. Some of these competitors, including other REITs and private real estate
companies and funds may have substantially greater financial and operational resources than Ashford Trust or Ashford Prime and
may have greater knowledge of the markets in which we seek to invest. Such competitors may also enjoy significant competitive
advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Future competition
from new market entrants may limit the number of suitable investment opportunities offered to Ashford Trust and Ashford Prime.
It may also result in higher prices, lower yields and a more narrow margin over the borrowing cost for Ashford Trust and Ashford
Prime, making it more difficult to originate or acquire new investments on attractive terms. Certain competitors may also be subject
to different regulatory regimes or rules that may provide them more flexibility or better access to pursue potential investments
and raise capital for their managed companies. In addition, certain competitors may have higher risk tolerance, different risk
assessment or a lower return threshold, which could allow them to consider a broader range of investments and to bid more
aggressively for investment opportunities that we may want to pursue.

Ashford Trust and Ashford Prime each compete with many third parties engaged in the hotel industry. Competition in the
hotel industry is based on a number of factors, most notably convenience of location, brand affiliation, price, range of services,
guest amenities or accommodations offered and quality of customer service. Competition is often specific to the individual markets
in which properties are located and includes competition from existing and new hotels. We believe that hotels that are affiliated
with leading national brands, such as the Marriott or Hilton brands, will enjoy the competitive advantages associated with operating
under such brands. Increased competition could have a material adverse effect on the occupancy rate, average daily room rate and
RevPAR of the hotels owned by Ashford Trust or Ashford Prime or may require capital improvements that otherwise would not
have to be made, which may result in decreases in the profitability of Ashford Trust or Ashford Prime and decreased advisory fees
to us. Since the fees we receive are based upon total equity market capitalization and total shareholder returns, such fees are
impacted by relative performance of the share price of Ashford Trust and Ashford Prime compared to competitive REITs.

Insurance

We are required to have insurance programs to comply with our contractual obligations and as reasonably necessary for our

business.

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Shareholder Rights Plan

On November 16, 2014, we adopted a shareholder rights plan by entering into a Rights Agreement, dated November 17, 2014,
with ComputerShare Trust Company, N.A., as rights agent (the “Rights Agreement”). We intend for the shareholder rights plan
to improve the bargaining position of our board of directors in the event of an unsolicited offer to acquire our outstanding shares
of common stock. Our board of directors implemented the rights plan by declaring a dividend of one preferred share purchase
right that was paid on November 27, 2014, for each outstanding share of our common stock on November 27, 2014, to our
stockholders of record on that date. Each of those rights become exercisable on the Distribution Date (defined below) and entitles
the registered holder to purchase from the Company one one-thousandth of a share of our Series A Preferred Stock, par value
$0.01 per share, at a price of $275 per one one-thousandth of a share of our Series A Preferred Stock represented by such a right,
subject to adjustment.

Initially, the rights will be attached to all certificates representing our common stock, and no separate certificates evidencing
the rights will be issued. The Rights Agreement provides that, until the date on which the rights separate and begin trading separately
from our common stock (which we refer to as the “Distribution Date”), the rights will be transferred only with the shares of our
common stock. The Distribution Date will occur, and the rights would separate and begin trading separately from the shares of
our common stock, and certificates representing the rights will be issued to evidence the rights, on the earlier to occur of:

(i)

10 business days following a public announcement, or the public disclosure of facts indicating, that a person or group
of affiliated or associated persons has acquired beneficial ownership (as defined in the Rights Agreement) of 10% or
more of the outstanding shares of common stock, (referred to, subject to certain exceptions as “Acquiring Persons”) (or,
in the event an exchange of the rights for shares of our common stock is effected in accordance with certain provisions
of the Rights Agreement and our board of directors determines that a later date is advisable, then such later date that is
not more than 20 days after such public announcement); or

(ii) 10 business days (or such later date as may be determined by action of our board of directors prior to such time as any
person becomes an Acquiring Person) of 10% or more of the outstanding shares of our common stock following the
commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group of 10% or more of the outstanding shares of our
common stock.

The rights also become exercisable if a person or group that already beneficially owns 10% or more of our common stock
acquires any additional shares of our common stock without the approval of our board of directors, except that the Distribution
Date will not occur as a result of our company, one of our subsidiaries, one of our employee benefit plans or a trustee for one of
those plans, or Mr. Monty J. Bennett and certain of his affiliates and associates (so long as they own 20% or less of our outstanding
common stock), acquiring additional shares of our common stock, and those persons will not be Acquiring Persons.

If a person or group becomes an Acquiring Person at any time, with certain limited exceptions, the rights will become exercisable
for shares of our common stock (or, in certain circumstances, shares of our Series A Preferred Stock or other of our securities that
are similar) having a value equal to two times the exercise price of the right. From and after the announcement that any person
has become an Acquiring Person, if certificated rights are or were at any time on or after the earlier of (i) the date of such
announcement or (ii) the Distribution Date acquired or beneficially owned by an Acquiring Person or an associate or affiliate of
an Acquiring Person, such rights shall become void, and any holder of such rights shall thereafter have no right to exercise such
rights. In addition, if, at any time after a person becomes an Acquiring Person, (i) we consolidate with, or merge with and into,
any other person; (ii) any person consolidates with us, or merges with and into us and we are the continuing or surviving corporation
of such merger and, in connection with such merger, all or part of the shares of our common stock are or will be changed into or
exchanged for stock or other securities of any other person (or of ours) or cash or any other property; or (iii) 50% or more of our
consolidated assets or earning power (as defined in the Rights Agreement) are sold, then proper provision will be made so that
each holder of a right will thereafter have the right to receive, upon the exercise of a right at the then current exercise price of the
right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the right. Upon the occurrence of an event of the type described in this paragraph, if our
board of directors so elects, we will deliver upon payment of the exercise price of a right an amount of cash or securities equivalent
in value to the shares of common stock issuable upon exercise of a right. If we fail to meet that obligation within 30 days following
of the announcement that a person has become an Acquiring Person, we must deliver, upon exercise of a right but without requiring
payment of the exercise price then in effect, shares of our common stock (to the extent available) and cash equal in value to the
difference between the value of the shares of our common stock otherwise issuable upon the exercise of a right and the exercise
price then in effect.

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Computershare Trust Company, N.A.) until the date of the Company’s 2018 annual meeting of stockholders, at which time the
stockholders will vote on a further extension of the Final Expiration Date. If the stockholders do not approve such further extension,
the Rights will expire on the date of the 2018 annual meeting of stockholders.

Employees

At December 31, 2017, Ashford Inc. had 102 corporate employees that directly or indirectly perform various acquisition,
development, asset and investment management, capital markets, accounting, tax, risk management, legal, redevelopment, and
corporate management functions for Ashford Inc., Ashford Trust and Ashford Prime. Certain of our consolidated subsidiaries have
a total of approximately 300 employees as of December 31, 2017, that provide hospitality products and services to the lodging
industry, including audio visual and other services.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and we are
eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies.” These exemptions include not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our
periodic reports, proxy statements and registration statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Although we are still evaluating the JOBS Act, we may take advantage of some or all of the reduced regulatory and reporting
requirements that are available to us as long as we qualify as an emerging growth company, except that we have irrevocably elected
not to take advantage of the extension of time to comply with new or revised financial accounting standards available under
Section 102(b) of the JOBS Act.

We, in general, remain as an emerging growth company for up to five full fiscal years following our separation from Ashford
Trust. We would cease to be an emerging growth company and, therefore, become ineligible to rely on the above exemptions, if
we:

•

have more than $1 billion in annual revenue in a fiscal year;

issue more than $1 billion of non-convertible debt during the preceding three-year period; or

become a “large accelerated filer” as defined in Exchange Act Rule 12b-2, which would occur after: (i) we have filed at
least one annual report pursuant to the Exchange Act; (ii) we have been an SEC-reporting company for at least 12 months;
and (iii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business
day of our most recently completed second fiscal quarter.

Access To Reports and Other Information

We maintain a website at www.ashfordinc.com. On our website, we make available free of charge our annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we
electronically file such material with the SEC. In addition, our Code of Business Conduct and Ethics, Code of Ethics for the Chief
Executive Officer, Chief Financial Officer, and Chief Accounting Officer, Corporate Governance Guidelines, and Board Committee
Charters are also available free-of-charge on our website or can be made available in print upon request.

All reports filed with the SEC may also be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E.
Washington, D.C. 20549-1090. Further information regarding the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330. In addition, all of our filed reports can be obtained at the SEC’s website at www.sec.gov.

Item 1A. Risk Factors

Risks Related to Our Business

The asset management, advisory and hospitality product and services businesses are highly competitive.

The asset management, advisory and hospitality product and services businesses are highly competitive. Competition in these
businesses is driven by a variety of factors including: asset and investment performance; the quality of service provided to the
companies we advise; investor perception of an asset and investment manager’s drive, focus and alignment of interest; terms of
investment, including the level of fees and expenses charged for services; our actual or perceived financial condition, liquidity
and stability; the duration of relationships with investors; brand recognition; and business reputation. We expect to face competition
15

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primarily from other asset, service and investment management firms, private equity funds, hedge funds, other financial institutions,
sovereign wealth funds, corporate buyers and other parties. A number of factors serve to increase our competitive risks:

•

other asset managers or advisors may have greater financial, technical, marketing and other resources and more personnel
than we do;
other asset managers or advisors may offer more products and services than we do or be more adept at developing,
marketing and managing new products and services than we are;

• Ashford Trust, Ashford Prime, and other companies that we may advise may not perform as well as the clients of other

asset managers;

•

several other asset managers or advisors and their clients have significant amounts of capital and many of them have
similar management and investment objectives to ours which may create additional competition for advisory opportunities;

some of these other asset managers’ or advisors’ clients may also have a lower cost of capital and access to funding sources
that are not available to us or the companies that we advise, which may create competitive disadvantages for us with
respect to funding opportunities;

some of these other asset managers’ or advisors’ clients may have higher risk tolerance, different risk assessment or a
lower return threshold, which could allow them to facilitate the acquisition and management by their clients of a wider
variety of assets and allow them to consider a broader range of investments and to advise their clients to bid more
aggressively for investment opportunities on which we would advise our clients to bid;

there are relatively few barriers to entry impeding new asset management or advisory companies and the successful efforts
of new entrants into the asset management businesses are expected to continue to result in increased competition;

some other asset managers or advisors may have better expertise or be regarded by potential clients as having better
expertise with regard to specific assets or investments;

other asset managers or advisors may have more scalable platforms and may operate more efficiently than us;

other asset managers or advisors may have better brand recognition than us and there is no assurance that we will maintain
a positive brand in the future;

other industry participants may from time to time seek to recruit members of our management or investment teams and
other employees away from us;

an increase in the allocation of capital to our asset strategies by institutional and individual investors could lead to a
reduction in the size and duration of pricing inefficiencies that we may seek to exploit;

a decrease in the allocation of capital to our asset strategies could intensify competition for that capital and lead to difficulty
in raising new capital; and

the market for qualified professionals is intensely competitive and our ability to continue to compete effectively will also
depend upon our ability to attract, retain and motivate our employees.

Our inability to effectively compete on these and other areas may have an adverse effect on our business, results of operations

and financial condition.

The investments of the entities we currently advise and provide other products and services to are concentrated in the hotel
industry. Our business would be adversely affected by an economic downturn in that sector, and we will be significantly
influenced by the economies and other conditions in the specific markets in which our asset management clients operate.

Substantially all of the investments of Ashford Trust and Ashford Prime and the investments of clients we provide other
products and services to are concentrated in the hotel industry. These concentrations may expose such entities, and therefore us,
to the risk of economic downturns in the hotel real estate sector to a greater extent than if the investments of such entities were
diversified across other sectors of the real estate or other industries. Similarly, we are particularly susceptible to adverse market
conditions in areas in which our asset management clients have high concentrations of properties. Industry downturns, relocation
of businesses, any oversupply of hotel rooms, a reduction in lodging demand or other adverse economic developments in the hotel
industry generally or in areas where our asset management clients have a high concentration of properties could adversely affect
us.

Failure of the hotel industry to exhibit sustained improvement or to improve as expected may adversely affect us.

A substantial part of our business plan is based on management’s belief that the lodging markets will continue to experience
stable or improving economic fundamentals in the future. There can be no assurance as to whether or to what extent, lodging
industry fundamentals will remain stable or continue to improve. If conditions in the industry do not remain stable or improve as
expected, or deteriorate, we may be adversely affected.

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We are subject to substantial regulation, numerous contractual obligations and extensive internal policies and failure to
comply with these matters could have a material adverse effect on our business, financial condition and results of operations.

We and our subsidiaries will be subject to substantial regulation, numerous contractual obligations and extensive internal
policies. Given our organizational structure, we are subject to regulation by the SEC, the Internal Revenue Service, and other
federal, state and local governmental bodies and agencies. We also will be responsible for managing the regulatory aspects of
Ashford Trust and Ashford Prime, including compliance with applicable REIT rules. These regulations are extensive, complex
and require substantial management time and attention. If we fail to comply with any of the regulations that apply to our business
or the businesses of Ashford Trust, Ashford Prime or other entities that we advise, we could be subjected to extensive investigations
as well as substantial penalties, and our business and operations could be materially adversely affected. We also will have numerous
contractual obligations that we must adhere to on a continuous basis to operate our business, the default of which could have a
material adverse effect on our business and financial condition. While we have designed policies to appropriately operate our
business and the entities we advise, these internal policies may not be effective in all regards and, further, if we fail to comply
with our internal policies, we could be subjected to additional risk and liability.

We may do business internationally, which may subject us to numerous political, economic, market, reputational, operational,

legal, regulatory and other risks that could adversely impact our business and results of operations.

We have limited experience operating internationally but we may do so in the near future, in our capacity as advisor to an
entity with international operations. As a result of any future international operations conducted by us, our business and financial
results in the future could be adversely affected due to currency fluctuations, social or judicial instability, acts or threats of terrorism,
changes in governmental policies or policies of central banks, expropriation, nationalization and/or confiscation of assets, price
controls, fund transfer restrictions, capital controls, exchange rate controls, taxes, inadequate intellectual property protection,
unfavorable political and diplomatic developments, changes in legislation or regulations and other additional international
developments or restrictive actions. These risks are especially acute in emerging markets. Many non-U.S. jurisdictions in which
we may do business have been negatively impacted by recessionary conditions. These jurisdictions may continue to experience
increasing levels of stress. In addition, the risk of default on sovereign debt in some non-U.S. jurisdictions could expose us to
substantial losses. Any such unfavorable conditions or developments could have an adverse impact on our businesses and results
of operations.

We may also experience difficulty entering new international markets due to regulatory barriers, the necessity of adapting to
new regulatory systems and problems related to entering new markets with different cultural bases and political systems. These
difficulties may prevent, or significantly increase the cost of, our international expansion.

In addition, changes in policies or laws of the U.S. or foreign governments resulting in, among other things, higher taxation,
currency conversion limitations, restrictions on fund transfers or the expropriation of private enterprises, could reduce the
anticipated benefits of our international expansion. Any actions by countries in which we conduct business to reverse policies that
encourage investment could adversely affect our business. If we fail to realize the anticipated growth of our future international
operations, our business and operating results could suffer.

Our ability to raise capital and attract investors for our existing and potential advisory clients and our performance is critical

to our ability to earn fees and grow our businesses.

The base advisory fees that we earn in our asset management business are based on the total market capitalization of the
entities that we advise. Accordingly, our base fees are expected to increase if we are able to successfully raise capital in the equity
markets for our existing and potential clients. Further, the incentive fees we earn in our asset management business will be primarily
driven by the outperformance of our clients as compared with their respective peers, based on total stockholder return.

Our ability to earn these fees is subject to a number of risks, many of which are beyond our control, including monetary and
fiscal policies, domestic and international economic conditions, political considerations and capital markets. To the extent that
general capital markets activity slows down or comes to a halt, our clients may have difficulty growing. This risk is based on
micro- and macro-economic market factors including but not limited to disruptions in the debt and equity capital markets, resulting
in the lack of access to capital or prohibitively high costs of obtaining or replacing capital. Despite recent improvements, the
markets could suffer another severe downturn and another liquidity crisis could emerge.

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We are predominantly dependent on Ashford Trust and Ashford Prime as our only current asset management clients for a
substantial portion of our operating revenue, the loss of either of which, or their failure or inability to pay any amounts owed
to us, including under their advisory agreements, could adversely affect our business, financial condition, prospects and results
of operations. Ashford Trust and Ashford Prime are also customers of our consolidated subsidiaries that provide products and
services to the hospitality industry.

Ashford Trust and Ashford Prime are the only companies for which we currently provide asset management advisory services.
Ashford Trust and Ashford Prime are also customers of our consolidated subsidiaries that provide products and services to the
hospitality industry. Therefore, our business is subject to the risks of the businesses of each entity. The loss or failure of either
company, termination of either advisory agreement, the failure or inability of either company to pay us any amounts owed under
their respective advisory agreements or other contracts, and particularly their failure or inability to pay all or a portion of any
applicable termination fee, would adversely affect our business, financial condition, prospects and results of operations.
Additionally, these companies could sell assets over time, decreasing their market capitalization, and thereby cause our advisory
fees and other revenues to decrease, which would adversely affect our results of operations and financial condition.

We depend on our key personnel with long-standing business relationships. The loss of such key personnel could threaten

our ability to operate our business successfully.

Our future success depends, to a significant extent, upon the continued services of our management team and key employees
of the businesses we have acquired and may in the future acquire. In particular, the hotel industry and/or investment experience
of Messrs. Monty J. Bennett, Douglas A. Kessler, Richard J. Stockton, David A. Brooks, Deric S. Eubanks, Jeremy J. Welter, Mark
L. Nunneley and J. Robison Hays, III, and the extent and nature of the relationships they have developed with hotel franchisors,
operators, and owners and hotel lending and other financial institutions are critically important to the success of our business. The
loss of services of one or more members of our management or investment teams could harm our business and our prospects.

The prior performance of Ashford Trust and Ashford Prime is not indicative of our future performance.

We have presented information in this Annual Report on Form 10-K regarding the historical results of Ashford Trust and
Ashford Prime. When considering this information you should consider that the historical results of Ashford Trust and Ashford
Prime are not indicative of the future results that you should expect from us or our common stock. There are significant differences
between Ashford Trust and Ashford Prime and us, and our financial condition and results of operations could vary significantly
because our investment, financing, business and other strategies differ from those of Ashford Trust and Ashford Prime.

As described elsewhere in this document, our future results are subject to many uncertainties and other factors that could

cause our financial condition and results of operations to be materially different than that of Ashford Trust and Ashford Prime.

If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act or our internal control over financial

reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.

Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws
to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with
this statute, we will eventually be required to document and test our internal control procedures, our management will be required
to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required
to issue an opinion on their audit of our internal control over financial reporting. The rules governing the standards that must be
met for management to assess our internal control over financial reporting are complex and require significant documentation,
testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management
may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-
Oxley Act. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our
auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our
stock price may suffer.

Our platform may not be as scalable as we anticipate and we could face difficulties growing our business without significant

new investment in personnel and infrastructure.

While we believe our platform for operating our business is highly scalable and can support significant growth without
substantial new investment in personnel and infrastructure on a relative basis, we may be wrong in that assessment. It is possible
that if our business grows substantially, we will need to make significant new investment in personnel and infrastructure to support
that growth. We may be unable to make significant investments on a timely basis or at reasonable costs, and our failure in this
regard could disrupt our business and operations.

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If our portfolio management techniques and strategies are not effective, we may be exposed to material unanticipated losses.

Our portfolio management techniques and strategies may not fully mitigate the risk exposure of our operations in all economic
or market environments, or against all types of risk, including risks that we might fail to identify or anticipate. Any failures in our
portfolio management techniques and strategies to accurately quantify such risk exposure could limit our ability to manage risks
in our operations and could result in losses.

We may grow our business through the acquisition of asset management services contracts, assets or companies, which

entails substantial risk.

We may determine to grow our business through the acquisition of asset management, services contracts, assets or companies.
Such acquisitions entail substantial risk. During our due diligence of such acquisitions, we may not discover all relevant liabilities
and we may have limited, if any, recourse against the sellers. We also may not successfully integrate the asset contracts or companies
that we acquire into our business and operations, which could have a material adverse effect on our results of operation and financial
condition. Additionally, to the extent such acquisitions result in us entering new lines of business, we may become subject to new
laws and regulations with which we are not familiar, or from which we are currently exempt, potentially leading to increased
litigation and regulatory risk. Moreover, we may grow our business through joint ventures, in which case we will be subject to
additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating
to systems, control and personnel that are not under our control.

Certain provisions of Maryland law could inhibit changes in control.

Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of inhibiting a third party
from making a proposal to acquire us or impeding a change of control under circumstances that otherwise could provide our
stockholders with the opportunity to realize a premium over the then-prevailing market price of our common stock, including:

•

“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an
“interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares
or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and
thereafter impose special stockholder voting requirements on these business combinations, unless certain fair price requirements
set forth in the MGCL are satisfied; and

•

“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated
with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power
in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control
of outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote
of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

Our bylaws opt out of the “control share” provisions for certain persons and entities, but we may later amend our bylaws to

modify or eliminate these opt-out provisions.

Our charter provides that a director may be removed only for cause and only upon the affirmative vote of the holders of at
least 80% of the voting power of the then issued and outstanding shares of capital stock entitled to be cast in the election of directors.
Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange
Act and at least three independent directors to elect to be subject, notwithstanding any contrary provision in the charter or bylaws,
to any or all of the following five provisions: a classified board; a two-thirds stockholder vote requirement for removal of a director;
a requirement that the number of directors be fixed only by vote of the directors; a requirement that a vacancy on the board of
directors be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the
vacancy occurred; and a requirement that the holders of at least a majority of all votes entitled to be cast request a special meeting
of stockholders. Through provisions in our charter and bylaws unrelated to Subtitle 8, we already require that the number of
directors be fixed only by our board of directors and require, unless called by the Chairman of our board of directors, our chief
executive officer or a majority of our board of directors, the written request of the holders of at least a majority of the voting power
of the then issued and outstanding shares of capital stock to call a special meeting. Additionally, our charter currently provides
that directors are elected annually and does not currently provide for a classified board.

Our charter, bylaws and Maryland law contain other provisions that may delay, deter or prevent a transaction or a change of

control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

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We have adopted a shareholder rights plan which could make it more difficult for a third-party to acquire us while the plan

remains in effect.

We have in effect a shareholder rights plan that is intended to protect us from efforts to obtain control of our company that
our board of directors believe are inconsistent with the best interests of our company and our stockholders. The rights will be
exercisable ten days following the earlier of the public announcement that a stockholder (other than us, one of our subsidiaries or
employee benefit plans or Mr. Monty J. Bennett and certain of his affiliates and associates (so long as they beneficially own 20%
or less of our common stock)) has acquired beneficial ownership of 10% or more of our common stock without the approval of
our board of directors or the announcement of a tender offer or exchange offer that would result in the ownership of 10% or more
of our common stock by a person or group of persons (other than one or more of the excluded persons described above). The rights
also become exercisable if a person or group that already beneficially owns 10% or more of our common stock (other than one or
more of the excluded persons described above) acquires any additional shares of our common stock without the approval of our
board of directors. If the rights become exercisable, all rights holders (other than the person/entity triggering the rights) will be
entitled to acquire certain of our securities at a substantial discount. The rights may substantially dilute the stock ownership of a
person or group attempting to take over our company without the approval of our board of directors, and the rights plan could
make it more difficult for a third-party to acquire our company or a significant percentage of our outstanding shares of common
stock, without first negotiating with our board of directors. The rights are set to expire on the date of the 2018 annual meeting of
stockholders unless at such meeting our stockholders vote to approve an extension to the expiration date.

Stockholders have limited control over changes in our policies and operations, which increases the uncertainty and risks

they face as stockholders.

Our board of directors determines our major policies, including our policies regarding growth and distributions. Our board
of directors may amend or revise these and other policies without a vote of our stockholders. We may change our corporate policies
without stockholder notice or consent, which could result in investments or activities that are different than, or in different proportion
than, those described in this Annual Report on Form 10-K. Under the MGCL, our charter and our bylaws, stockholders will have
a right to vote only on limited matters. Our board of directors’ broad discretion in setting policies and stockholders’ inability to
exert control over those policies increases the uncertainty and risks stockholders face.

Our organizational documents do not limit our ability to enter into new lines of businesses, and we may expand into new
investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in
our businesses.

We may, to the extent that market conditions permit, is to grow our business and expand into new investment strategies,
geographic markets and businesses. Our organizational documents do not limit us to the management of assets or operation of
service businesses within the hospitality industry. Accordingly, we may pursue growth through acquisitions of asset management
and service contracts, assets or companies, acquisitions of critical business partners or other strategic initiatives. To the extent we
make strategic investments or acquisitions, undertake other strategic initiatives or enter into a new line of business, we will face
numerous risks and uncertainties, including risks associated with: (i) the required investment of capital and other resources; (ii) the
possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts
of risk; (iii) combining or integrating operational and management systems and controls; and (iv) the broadening of our geographic
footprint, including the risks associated with conducting operations in non-U.S. jurisdictions. Entry into certain lines of business
may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead
to increased litigation and regulatory risk. If a new business generates insufficient revenues or if we are unable to efficiently manage
our expanded operations, our results of operations will be adversely affected. Our strategic initiatives may include joint ventures,
in which case we will be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability,
losses or reputational damage relating to systems, controls and personnel that are not under our control.

Our constituent documents designate the Circuit Court for Baltimore City, Maryland, or if that Court does not have jurisdiction
because the action asserts a federal claim, the United States District Court for the District of Maryland, Baltimore Division as
the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could
limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our constituent documents provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court
for Baltimore City, Maryland, or if that Court does not have jurisdiction because the action asserts a federal claim, the United
States District Court for the District of Maryland, Baltimore Division is the sole and exclusive forum for: (i) any derivative action
or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors,
officers or other employees to us or our stockholders or any breach of a standard of conduct of directors; (iii) any action asserting
a claim against us or any of our directors, officers, employees or agents arising pursuant to any provision of the MGCL, our charter
or bylaws; or (iv) any other action asserting a claim against us or any of our directors, officers, employees or agents that is governed

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by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of our
capital stock shall be deemed to have notice of and to have consented to the provisions of our constituent documents described
above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors,
officers and employees. Alternatively, if a court were to find these provisions of our constituent documents inapplicable to, or
unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated
with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of
operations.

Our amended and restated bylaws contains a provision that prevents certain stockholders from initiating a claim on behalf
of the Company or any group of stockholders, against the Company or against any director of officer of the Company, unless
the claiming stockholder meets certain requirements.

On February 27, 2018 our board of directors approved and adopted the Second Amended and Restated Bylaws of the company,
which adds a provision that requires that stockholders meet certain ownership thresholds in order to initiate claims on behalf of
the Company and/or any class of current and/or prior stockholders against the Company and/or against and director and/or officer
of the Company. The new provision will be submitted to a binding advisory vote of the Company’s stockholders at the Company’s
2018 Annual Meeting of Stockholders with the intent that the new provision will be rescinded if not approved at such meeting.

While this provision is effective, including if the stockholders vote to approve the provision at the 2018 Annual Meeting of
Stockholders, certain stockholders may be prevented from initiating derivative actions or other claims against the Company and
its directors and officers unless the claiming stockholder meets the ownership requirements set forth in our Bylaws.

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements,
including those relating to disclosure about our executive compensation, that apply to other public companies unless we opt
to do so.

We are subject to reporting and other obligations under the Exchange Act. In April 2012, the JOBS Act was enacted into law.
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for “emerging growth companies,”
including certain requirements relating to accounting standards and compensation disclosure unless we irrevocably opt to comply
with such requirements. We are an “emerging growth company” as defined in the JOBS Act. For as long as we are an emerging
growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to:

•

provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control
over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act,

comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring
mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide
additional information about the audit and the financial statements of the issuer,

provide certain disclosure regarding executive compensation, or

hold stockholder advisory votes on executive compensation.

We have irrevocably opted into complying with any new or revised financial accounting standards applicable to public

companies and thus will be required to comply with such standards.

Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when

we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because
we will have an extended transition period for complying with accounting standards newly issued or revised after April 5, 2012,
we may be less attractive to investors, and it may be difficult for us to raise additional capital as and when we need it. Investors
may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not
as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial
condition and results of operations may be materially and adversely affected.

We are subject to financial reporting and other requirements for which our accounting, internal audit and other management

systems and resources may not be adequately prepared and we may not be able to accurately report our financial results.

Following our separation from Ashford Trust, we became subject to reporting and other obligations under the Exchange Act,
including the requirements of Section 404 of the Sarbanes-Oxley Act. Section 404(a) requires annual management assessments
of the effectiveness of our internal controls over financial reporting. These reporting and other obligations place significant demands
on our management, administrative, operational, internal audit and accounting resources and cause us to incur significant expenses.
21

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We may need to upgrade our systems or create new systems; implement additional financial and management controls, reporting
systems and procedures; expand our internal audit function; and hire additional accounting, internal audit and finance staff. If we
are unable to accomplish these objectives in a timely and effective fashion, our ability to comply with the financial reporting
requirements and other rules that apply to reporting companies could be impaired. Any failure to achieve and maintain effective
internal controls could have a material adverse effect on our business, operating results and stock price.

For as long as we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm
will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b). We
could be an emerging growth company for up to five years. An independent assessment of the effectiveness of our internal controls
could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could
lead to financial statement restatements and require us to incur the expense of remediation.

We are increasingly dependent on information technology, and potential cyber-attacks, security problems or other disruption

and expanding social media vehicles present new risks.

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic
information, and to manage or support a variety of business processes, including financial transactions and records, personal
identifying information, billing and operating data. We may purchase some of our information technology from vendors, on whom
our systems depend, and rely on commercially available systems, software, tools and monitoring to provide security for processing,
transmission and storage of confidential operator and other customer information. We depend upon the secure transmission of this
information over public networks. Our networks and storage applications are subject to unauthorized access by hackers or others
through cyber-attacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means, or may be breached
due to operator error, malfeasance or other system disruptions. In some cases, it will be difficult to anticipate or immediately detect
such incidents and the damage caused thereby. Any significant breakdown, invasion, destruction, interruption or leakage of our
systems could harm us.

In addition, the use of social media could cause us to suffer brand damage or information leakage. Negative posts or comments
about us on any social networking website could damage our reputation. In addition, employees or others might disclose non-
public sensitive information relating to our business through external media channels. The continuing evolution of social media
will present us with new challenges and risks.

Changes in laws, regulations, or policies may adversely affect our business.

The laws and regulations governing our business or the businesses of our clients, or the regulatory or enforcement environment
at the federal level or in any of the states in which we or our clients operate, may change at any time and may have an adverse
effect on our business. For example, the Patient Protection and Affordable Care Act of 2010, as it is phased in over time, will
significantly affect the administration of health care services and could significantly impact our cost of providing employees with
health care insurance. The recently enacted tax cuts and JOBS Act may limit the future deductions of interest expense we may
incur. We are unable to predict how these or any other future legislative or regulatory proposals or programs will be administered
or implemented or in what form, or whether any additional or similar changes to statutes or regulations, including the interpretation
or implementation thereof, will occur in the future. Any such action could affect us in substantial and unpredictable ways and
could have an adverse effect on our results of operations and financial condition. Our inability to remain in compliance with
regulatory requirements in a particular jurisdiction could have a material adverse effect on our operations in that market and on
our reputation generally. No assurance can be given that applicable laws or regulations will not be amended or construed differently
or that new laws and regulations will not be adopted, either of which could materially adversely affect our business, financial
condition, or results of operations.

Risks Related to Conflicts of Interest

Our separation and distribution agreement, our advisory agreements, our mutual exclusivity agreement, the tax matters
agreement and other agreements entered into in connection with our separation from Ashford Trust were not negotiated on
an arm’s-length basis, and we may be unable to enforce or may pursue less vigorous enforcement of their terms because of
conflicts of interest with certain of our executive officers and directors and key employees of Ashford Trust and Ashford Prime
and/or pending or future legal proceedings.

Because certain of our officers and one of our directors are also officers of Ashford Trust and Ashford Prime and have ownership
interests in Ashford Trust and Ashford Prime, our separation and distribution agreement, our advisory agreements, our mutual
exclusivity agreement, the tax matters agreement and other agreements entered into in connection with our separation from Ashford
Trust were not negotiated on an arm’s-length basis, and we did not have the benefit of arm’s-length negotiations of the type normally
conducted with an unaffiliated third party. As a result, the terms, including fees and other amounts payable, may not be as favorable
to us as an arm’s-length agreement. Furthermore, we may choose not to enforce, or to enforce less vigorously, our rights under

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these agreements because of our desire to maintain our ongoing relationship with Ashford Trust, Ashford Prime and Remington
Lodging. For example, we are entitled to indemnification from Ashford Trust OP in the event of breaches of certain provisions of,
or misrepresentations made in, the separation and distribution agreement. In addition, we may be unable to enforce certain provisions
of our advisory agreements with Ashford Trust or Ashford Prime, including as a result of pending or future legal proceedings. See
“Risk Factors- We are currently subject to legal proceedings related to our advisory agreement with Ashford Prime which, if
adversely determined, could have a material adverse effect on our business.”

Our deferred compensation obligations may dilute your interest in our common stock.

Our deferred compensation plan, which plan has only two participants, Mr. Monty J. Bennett and his father Mr. Archie Bennett,
Jr. Both Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. have elected to invest their deferred compensation accounts in our
common stock. As a result, we have an obligation to issue approximately 196,000 shares of our common stock to Mr. Monty J.
Bennett over five years beginning in 2020, which is the end of Mr. Monty Bennett’s deferral period. We also have an obligation
to issue approximately 12,000 remaining shares of our common stock to Mr. Archie Bennett, Jr., over five years beginning in 2018,
which is the end of Mr. Archie Bennett’s deferral period. The issuance of these shares of our common stock will dilute current
stockholder’s and, if all such shares are issued, may result in a change of control of our company.

Our relationships with Remington Lodging, Ashford Trust, Ashford Prime and AIM could create significant conflicts of

interest.

Our chief executive officer and chairman, Mr. Monty J. Bennett, serves as the chief executive officer of Remington Lodging,
chairman of the board of Ashford Trust and chairman of the board of Ashford Prime. Additionally, Mr. Monty J. Bennett and his
father, Mr. Archie Bennett, Jr., beneficially own 100% of Remington Lodging. Mr. Monty J. Bennett’s obligations to Remington
Lodging, Ashford Trust and Ashford Prime reduce the time and effort he spends managing our company, and his duties to us as a
director and officer may conflict with his duties to, and pecuniary interest in, Remington Lodging, Ashford Trust and Ashford
Prime.

We, through Ashford LLC, own approximately 100% of Management Holdco. Performance Holdco owns 99.99% of AIM
GP. We, through Ashford LLC and our 100% ownership interest in Performance Holdco's general partner, own approximately
60% of Performance Holdco, and Mr. Monty J. Bennett and Mr. J. Robison Hays own, in the aggregate, 40% of Performance
Holdco. AIM served as investment advisor to the AQUA Fund and AHT SMA, LP, a wholly-owned subsidiary of Ashford Trust.
Mr. Bennett’s and Mr. Hays’ duties to us as directors and officers may conflict with their duties to, and pecuniary interests in,
Performance Holdco.

Under the terms of our mutual exclusivity agreement with Remington Lodging, we may be obligated to utilize Remington
Lodging as a property manager for hotels, if any, we may acquire in the future as well as future platforms that we advise, to
the extent we have the discretion to do so, even if the utilization of Remington Lodging for such property management may
not be the most advantageous for our hotels or future clients.

Our mutual exclusivity agreement with Remington Lodging requires us to utilize Remington Lodging to provide property
management, project management and development services for all hotels, if any, that we may acquire as well as all hotels that
future companies we advise may acquire, to the extent that we have the right, or control the right, to direct such matters, unless
our independent directors either (i) unanimously vote not to utilize Remington Lodging for such services or (ii) based on special
circumstances or past performance, by a majority vote elect not to engage Remington Lodging because they have determined, in
their reasonable business judgment, that it would be in our best interest not to engage Remington Lodging or that another manager
or developer could perform the duties materially better. In exchange for our agreement to engage Remington Lodging for such
services for all hotels, if any, that we may acquire as well as all future companies that we advise, Remington Lodging has agreed
to grant to any such future clients a first right of refusal to purchase any investments identified by Remington Lodging and any
of its affiliates that meet the initial investment criteria of such entities, as identified in the advisory agreement between us and such
entities, subject to any prior rights granted by Remington Lodging to other entities, including Ashford Trust, Ashford Prime and
us. Mr. Monty J. Bennett will potentially benefit from the receipt of property management fees, project management fees and
development fees by Remington Lodging from us and such future companies that we advise. See “Item 1. Business—Our Mutual
Exclusivity Agreement.” Mr. Monty J. Bennett’s ownership interests in and management obligations to Remington Lodging present
him with conflicts of interest in making management decisions related to the commercial arrangements between us, the clients we
advise and Remington Lodging.

Under the terms of our mutual exclusivity agreement with Remington Lodging, Remington Lodging may be able to pursue

lodging investment opportunities that compete with the businesses that we advise.

Pursuant to the terms of our mutual exclusivity agreement with Remington Lodging, if investment opportunities that satisfy
the investment criteria of Ashford Trust, Ashford Prime or one of our future clients are identified by Remington Lodging or its

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affiliates, Remington Lodging will give such entity a written notice and description of the investment opportunity. The applicable
entity will generally have 10 business days to either accept or reject the investment opportunity. If such entity rejects the opportunity,
Remington Lodging may then pursue such investment opportunity, subject to any right of first refusal contractually granted by
Remington Lodging to any other entity. As a result, it is possible that Remington Lodging could pursue an opportunity that fits
within the investment criteria of an entity that we advise and compete with that entity or compete with us. In such a case, Mr. Monty
J. Bennett, our chief executive officer and chairman, in his capacity as chief executive officer of Remington Lodging could be in
a position of directly competing with us or an entity that we advise.

Provisions of our certificate of incorporation may result in certain corporate opportunities being assigned to Ashford Trust

and Ashford Prime.

The provisions of our certificate of incorporation provide that our directors and executive officers may also serve as directors,
officers, employees, consultants or agents of Ashford Trust, Ashford Prime and their respective subsidiaries and that we may
engage in material business transactions with such entities. To the fullest extent permitted by law, we will renounce our rights to
certain business opportunities, and no director or officer of ours who is also serving as a director, officer, employee, consultant or
agent of Ashford Trust, Ashford Prime or any of their subsidiaries will be liable to us or to our stockholders for breach of any
fiduciary duty that would otherwise exist by reason of the fact that any such individual directs a corporate opportunity (other than
certain limited types of opportunities set forth in the applicable advisory agreement) to Ashford Trust, Ashford Prime or any of
their respective subsidiaries instead of us, or does not refer or communicate information regarding such corporate opportunities
to us.

Certain of our executive officers, who are also executive officers or board members of Ashford Trust, Ashford Prime, or both,
including our chief executive officer, who is also an executive officer of Remington Lodging, face competing demands relating
to their time as well as potential conflicts of interest, and this may adversely affect our operations.

Certain of our executive officers are also executive officers or board members of Ashford Trust, Ashford Prime, or both.
Because our executive officers have duties to Ashford Trust or Ashford Prime, as applicable, as well as to our company, we do
not have their undivided attention. They face conflicts in allocating their time and resources between our company, Ashford Trust
and Ashford Prime, as applicable, and they will continue to face increasing conflicts as we advise additional companies and
platforms.

The organization and management of Ashford Trust and Ashford Prime and any companies we may advise in the future

may create conflicts of interest.

We are or will be party to advisory and other agreements with Ashford Trust and Ashford Prime. These entities, along with
any other businesses we may advise in the future will acquire assets consistent with their respective initial investment guidelines,
but in each case, we will have discretion to determine which investment opportunities satisfy each such entity’s initial investment
guidelines. If, however, either Ashford Trust or Ashford Prime materially changes its investment guidelines without our express
consent, we are required to use our best judgment to allocate investment opportunities to Ashford Trust, Ashford Prime and other
entities we advise, taking into account such factors as we deem relevant, in our discretion, subject to any then-existing obligations
we may have to such other entities. If a portfolio investment opportunity cannot be equitably divided by asset type and acquired
on the basis of such asset types in satisfaction of each such entity’s investment guidelines, we will allocate investment opportunities
between Ashford Trust, Ashford Prime and any other businesses we advise in a fair and equitable manner, consistent with such
entities’ investment objectives. When determining the entity for which such a portfolio investment opportunity would be the most
suitable, our investment professionals have substantial discretions and may consider, among other factors, the following:

•

investment strategy and guidelines;

portfolio concentrations;

tax consequences;

regulatory restrictions;

liquidity requirements; and

financing availability.

We may manage additional investment vehicles in the future and, in connection with the creation of such investment vehicles,
may revise these allocation procedures. The result of a revision to the allocation procedures may, among other things, be to increase
the number of parties who have the right to participate in investment opportunities sourced by us, increasing the risk of conflicts
of interest.

The decision of how any potential investment should be allocated among Ashford Trust, Ashford Prime and any other companies

we may advise in the future, in many cases, may be a matter of subjective judgment, which will be made by us.

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Appropriately dealing with conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or
appear to fail, to deal appropriately with one or more potential or actual conflicts of interest. Litigation in connection with conflicts
of interest could have a material adverse effect on our reputation, which could materially adversely affect our business and our
ability to attract investors for future vehicles. See “Risk Factors- We are currently subject to legal proceedings related to our
advisory agreement with Ashford Prime which, if adversely determined, could have a material adverse effect on our business.”

Our fiduciary duties as the sole manager of our operating company could create conflicts of interest with our fiduciary duties

to our stockholders.

We, as the sole manager of Ashford Hospitality Holdings, LLC, which wholly owns our operating company, have fiduciary
duties to the other members of Ashford Hospitality Holdings, LLC, the discharge of which may conflict with the interests of our
stockholders. The operating agreement of Ashford LLC provides that, in the event of a conflict in the fiduciary duties owed by us
to our stockholders and, in our capacity as manager of our operating company, to the members of Ashford Hospitality Holdings,
LLC, we may act in the best interest of our stockholders without violating our fiduciary duties to the members of Ashford Hospitality
Holdings, LLC or being liable for any resulting breach of our duties to the members, subject in all cases to the implied contractual
covenant of good faith and fair dealing which, pursuant to Maryland law, cannot be waived. In addition, those persons holding
Ashford Hospitality Holdings, LLC common units will have the right to vote on certain amendments to the operating agreement
(which require approval by a majority in interest of the members, including us) and individually to approve certain amendments
that would adversely affect their rights. These voting rights may be exercised in a manner that conflicts with the interests of our
stockholders. For example, we are unable to modify the rights of Ashford Hospitality Holdings, LLC members to receive
distributions as set forth in the operating agreement in a manner that adversely affects their rights without their consent, even
though such modification might be in the best interest of our stockholders. In addition, conflicts may arise when the interests of
our stockholders and the members of Ashford Hospitality Holdings, LLC diverge, particularly in circumstances in which there
may be an adverse tax consequence to the members.

Our conflicts of interest policy may not adequately address all of the conflicts of interest that may arise with respect to our

activities.

In order to minimize any actual or perceived conflicts of interest with our directors, officers or employees, we have adopted
a conflicts of interest policy to address specifically some of the conflicts relating to our activities. Although under this policy the
approval of a majority of our disinterested directors is required to approve any transaction, agreement or relationship in which any
of our directors, officers, or employees, Ashford Trust or Ashford Prime has an interest, there is no assurance that this policy will
be adequate to address all of the conflicts that may arise. In addition, the transactions and agreements entered into in connection
with our formation prior to the separation and distribution have not been approved by any independent or disinterested persons.

Risks Related to Debt Financing

Although we do not currently have any debt at the corporate level, we have a corporate level revolving credit facility in place
and may incur debt in the future, which may materially and adversely affect our financial condition and results of operations.

While we currently do not use leverage at the corporate level, we have a corporate level revolving credit facility in place. Also
certain of our subsidiaries that provide products and services to the lodging industry use debt that has no recourse to Ashford Inc.
or Ashford LLC. Our organizational documents do not limit our capacity to use leverage or limit the amount of debt that we may
incur. We may, at any time, decide to use leverage to meet future capital needs. We may also, from time to time, use derivative
instruments primarily to manage interest rate risk. Future indebtedness will increase our operating costs, particularly in periods
of rising interest rates, and we cannot assure you that our hedging strategy and the derivatives that we use will adequately offset
the risk of interest rate volatility or that our hedging transactions will not result in losses that may reduce the overall return on
your investment.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Offices

We lease our headquarters located at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254.

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Item 3. Legal Proceedings

On December 11, 2015, a purported stockholder class action and derivative complaint challenging the Remington acquisition
was filed in the Court of Chancery of the State of Delaware and styled as Campbell v. Bennett et al., Case No. 11796. The complaint
names as defendants each of the members of the Company's board of directors, Archie Bennett, Jr., Mark A. Sharkey, MJB
Investments GP, LLC and Remington Holdings GP, as well as the Company as a nominal defendant. The complaint alleges that
the members of the Company’s board of directors breached their fiduciary duties to the Company’s stockholders in connection
with the Remington acquisition and that Monty Bennett, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and
Remington Holdings GP aided and abetted the purported breaches of fiduciary duty. In support of these claims, the complaint
alleges, among other things, that the Company’s board of directors engaged in an unfair process with Remington Lodging and the
Bennetts and as a result the Company overpaid for the 80% limited partnership and 100% general partnership interests in Remington
Lodging. The complaint also alleges that the proxy statement filed with the SEC contains certain materially false and/or misleading
statements. The action seeks injunctive relief, including enjoining the special meeting of stockholders and any vote on the
contribution or the stock issuances or rescinding the Remington acquisition if they are consummated, or in the alternative an award
of damages, as well as unspecified attorneys' and other fees and costs, in addition to any other relief the court may deem proper.
Since the filing of the complaint, the special meeting of stockholders and related vote occurred with the stockholders approving
the acquisition. On March 24, 2017, the Remington acquisition was terminated and therefore this action is moot. On April 13,
2017, the Court of Chancery entered an order dismissing the action with prejudice as to the named plaintiff, and without prejudice
as to all other members of the class. Pursuant to the order, the Court of Chancery retained jurisdiction solely for the purpose of
determining the plaintiff’s anticipated application for an award of mootness fees and reimbursement of expenses. After negotiations,
and to eliminate any risk associated with the plaintiff’s fee petition, the Company agreed to pay fees and expenses in the amount
of $150,000 within five (5) days of the entry of an order closing the case in the second quarter of 2017. Accordingly, this amount
was recorded within general and administrative expenses on our consolidated statements of operations for the year ended December
31, 2017. The Court of Chancery has not and will not pass any judgment on the fee payment. On July 17, 2017, the Court of
Chancery entered a stipulation and order closing the case.

Jesse Small v. Monty J. Bennett, et al., Case No. 24-C-16006020 (Md. Cir. Ct.) On November 16, 2016, Jesse Small, a purported
shareholder of Ashford Prime, commenced a derivative action in Maryland Circuit Court for Baltimore City asserting causes of
action for breach of fiduciary duty, corporate waste, and declaratory relief against the members of the Ashford Prime board of
directors, David Brooks (collectively, the “Individual Defendants”), Ashford Inc. and Ashford LLC. Ashford Prime is named as
a nominal defendant. The complaint alleges that the Individual Defendants breached their fiduciary duties to Ashford Prime by
negotiating and approving the termination fee provision set forth in Ashford Prime’s advisory agreement with Ashford LLC, that
Ashford Inc. and Ashford LLC aided and abetted the Individual Defendants’ fiduciary duty breaches, and that the Ashford Prime
board of directors committed corporate waste in connection with Ashford Prime’s purchase of 175,000 shares of Ashford Inc.
common stock. The complaint seeks monetary damages and declaratory and injunctive relief, including a declaration that the
termination fee provision is unenforceable. The defendants filed motions to dismiss the complaint on March 24, 2017. On June
6, 2017, the plaintiff notified the court that the plaintiff intends to dismiss the action as moot and seek a mootness fee and costs.
On July 25, 2017, the action was dismissed with prejudice as to the plaintiff. A hearing on the plaintiff’s fee petition was held on
October 25, 2017. On February 5, 2018, the court denied the plaintiff’s fee petition.

The Company is engaged in other various legal proceedings which have arisen but have not been fully adjudicated. The
likelihood of loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote
to reasonably possible and to probable. Based on estimates of the range of potential losses associated with these matters, management
does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse
effect upon the financial position or results of operations of the Company. However, the final results of legal proceedings cannot
be predicted with certainty and if the Company failed to prevail in one or more of these legal matters, and the associated realized
losses were to exceed the Company’s current estimates of the range of potential losses, the Company’s financial position or results
of operations could be materially adversely affected in future periods.

Item 4. Mine Safety Disclosures

Not Applicable

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Price and Dividend Information

Our common stock has been listed and traded on the NYSE American under the symbol “AINC” since November 13, 2014.
Prior to that time, there was no public market for our common stock. On March 8, 2018, there were approximately 105 holders
of record.

The following table sets forth the high and low intraday sales prices of our common stock for the indicated periods:

2017
High ............................................................................................. $
Low..............................................................................................

Close ............................................................................................

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

62.66

60.20

65.70

111.00

43.00

59.00

47.50

50.98

47.03

60.60

2016

High ............................................................................................. $
Low..............................................................................................

Close ............................................................................................

54.96

64.23

52.00

36.60

45.59

39.35

50.00

43.53

47.65

59.95

93.00

48.27

38.11

43.14

Distributions and Our Distribution Policy

No dividends have been declared or paid as of and for the years ended December 31, 2017 and 2016.

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Equity Compensation Plan Information

The following table sets forth certain information with respect to securities authorized and available for issuance under our

equity compensation plans:

Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights

Weighted-Average
Exercise Price
Of Outstanding
Options, Warrants,
And Rights

Equity compensation plans approved by security holders

1,179,455

(2)

Equity compensation plans not approved by security
holders ..............................................................................

Total.....................................................................

—

1,179,455

62.17

—

62.17

Number of Securities
Remaining Available
for Future Issuance

(2)

93,539 (1)

—

93,539

____________________
(1) As of December 31, 2017, 93,539 shares of our common stock, or securities convertible into 93,539 shares of our common
stock, remained available for issuance under our 2014 Incentive Plan. As defined by the 2014 Incentive Plan, authorized shares
automatically increase on January 1 of each year in an amount equal to 15% of the sum of (i) the fully diluted share count and (ii)
the shares of common stock reserved for issuance under the Company’s deferred compensation plan less shares available under
the 2014 Incentive Plan as of December 31 of the previous year. Pursuant to the plan, we have 491,571 shares of our common
stock, or securities convertible into 491,571 shares of our common stock, available for issuance under our 2014 Incentive Plan,
as of January 1, 2018.
(2) As of December 31, 2017, we have an obligation to issue 207,083 shares of our common stock with no strike price under our
non-qualified deferred compensation plan (“DCP”) for certain executive officers. The plan allows participants to defer up to 100%
of their base salary and bonus and select an investment fund for measurement of the deferred compensation obligation. 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. See further discussion in the Risk Factors section and
note 16 to our consolidated financial statements.

Performance Graph

The following graph compares the percentage change in the cumulative total stockholder return on our common stock with the
cumulative total return of the S&P 500 Stock Index, and the Dow Jones Asset Manager Index for the period from November 13,
2014, the date our stock began trading on the NYSE American, through December 31, 2017, assuming an initial investment of
$100 in stock on November 13, 2014, with reinvestment of dividends.

The stock price performance shown below on the graph is not necessarily indicative of future price performance.

COMPARISON CUMULATIVE TOTAL RETURNS

Among Ashford Inc., the S&P 500 and the Dow Jones Asset Manager Index

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Purchases of Equity Securities by the Issuer

None.

Common Stock Repurchases—On December 5, 2017, the board of directors of Ashford Inc. approved a stock repurchase
program (the “Repurchase Program”) pursuant to which the Board granted a repurchase authorization to acquire shares of the
Company’s common stock, par value $0.01 per share having an aggregate value of up to $20 million. The Company did not
repurchase any of its stock in 2017.

Recent Sales of Unregistered Securities

On November 1, 2017, the Company issued 70,318 shares of common stock to PT Intermediate, LLC in connection with the
purchase of 85% of the outstanding membership interests in Presentation Technologies, LLC as part of the acquisition of J&S
Audio Visual. The common stock was issued pursuant to the exemption from the registration requirements under the Securities
Act of 1933, as amended (the “Securities Act”) provided under Section 4(a)(2) thereunder.

On January 2, 2018, the Company issued 8,962 shares of common stock to the OpenKey redeemable noncontrolling interest
holder in connection with the purchase of 519,647 shares of the outstanding membership interests in OpenKey, Inc. The common
stock was issued pursuant to the exemption from the registration requirements under the Securities Act of 1933, as amended
provided under Section 4(a)(2) thereunder.

Item 6. Selected Financial Data

You should read the following selected financial information in conjunction with “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our historical financial statements and related notes included in “Item 8.
Financial Statements and Supplementary Data.”

The selected financial information for periods beginning prior to our spin-off from Ashford Trust in November 2014 is a
combination of the historical financial information for Ashford Trust’s asset management business (comprised of Ashford LLC
29

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and certain assets, liabilities and operations of Ashford Trust OP), which was separated from Ashford Trust in November 2014.
Our asset management business is reflected in the financial statements for such periods as if it were operated wholly within an
entity separate from Ashford Trust, however there was no separate legal entity during such periods.

The selected historical financial information as of December 31, 2017 and 2016, and for each of the three years in the period
ended December 31, 2017, has been derived from the audited financial statements included in “Item 8. Financial Statements and
Supplementary Data.” The selected historical financial information as of December 31, 2015, 2014 and 2013, and for the years
ended December 31, 2014 and 2013, has been derived from audited financial statements not included in this Annual Report on
Form 10-K.

The selected financial information below and the financial statements included in “Item 8. Financial Statements and
Supplementary Data” do not necessarily reflect what our results of operations, financial position and cash flows would have been
if we had operated Ashford Trust’s asset management business as a stand-alone publicly traded company during all periods
presented, and, accordingly, this historical information should not be relied upon as an indicator of our future performance. The
following table presents selected financial information (in thousands, except per share amounts):

Statements of Operations Data:

Total revenue ....................................................... $
Total expenses ..................................................... $
Net income (loss)................................................. $
Net income (loss) attributable to the Company... $
Diluted income (loss) per common share............ $
Weighted average diluted common shares ..........

Balance Sheet Data:

2017

Year Ended December 31,
2015

2014

2016

2013

81,573

67,607

58,981

17,288

960

92,095
$
(20,194) $
(18,352) $
(9.59) $
2,067

70,064
$
(12,403) $
(2,396) $
(2.56) $
2,209

$
60,332
(12,044) $
(1,190) $
(4.45) $
2,203

63,586
$
(47,081) $
(46,410) $
(23.43) $
1,981

Cash and cash equivalents ................................... $
Total assets........................................................... $
Total liabilities ..................................................... $
Total equity (deficit) ............................................ $
Total liabilities and equity/deficit........................ $

36,480

114,810

78,742

30,957
114,810

$
$

84,091

129,797

38,168

90,149
129,797

$
$

50,272

166,991

30,115

136,636
166,991

$
$

29,597

49,230

33,912

14,894
49,230

$
$

Other Data:

Cash flows provided by (used in):

48,672
(47,719)
(47,719)
(24.09)
1,981

600

2,322

8,081
(5,759)
2,322

Operating activities......................................... $
Investing activities .......................................... $
Financing activities......................................... $

19,415
$
(23,158) $
(44,534) $

84,858
$
(4,865) $
(42,106) $

24,801
$
(7,637) $
$
5,858

(25,074) $
(3,471) $
$
57,542

(22,445)
(366)
23,411

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand our results of
operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our
audited financial statements and the accompanying notes thereto included in Item 8. In addition to historical financial information,
the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our
results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a
result of many factors, including those discussed under “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form
10-K. See “Forward-Looking Statements.”

Overview

We were formed as a Delaware corporation in April 2014 and became a public company on November 12, 2014, when Ashford
Trust, a NYSE-listed REIT, completed the spin-off of our company through the distribution of our outstanding common stock to
the Ashford Trust stockholders. Effective as of October 31, 2016, Ashford Inc. changed its state of incorporation from Delaware
to Maryland. As of March 8, 2018, Ashford Trust beneficially owned approximately 598,000 shares of our common stock,
representing approximately 28.4% of our company. Ashford Prime holds approximately 195,000 shares, which represents
approximately 9.3% ownership interest in Ashford Inc.

Our principal business objective is to provide asset management, advisory and other products and services to other entities
primarily in the hospitality industry. The Company seeks to grow in three primary areas; (i) expanding its existing platforms
accretively and accelerating performance to earn incentive fees; (ii) starting new platforms for additional base and incentive fees;
and (iii) acquiring, investing in or incubating strategic businesses that can achieve accelerated growth through doing business with
our existing platforms and by leveraging our deep knowledge and extensive relationships within the hospitality sector. We operate
our business primarily through two operating subsidiaries, Ashford LLC and Ashford Services. We operate our asset management
and advisory business through Ashford LLC and we operate our hospitality products and services business primarily through
Ashford Services. Currently, we, through our operating subsidiary Ashford LLC, act as the advisor to two publicly traded REITs,
Ashford Trust and Ashford Prime. In our capacity as the advisor to Ashford Trust and Ashford Prime, we are responsible for
implementing the investment strategies and managing the day-to-day operations of Ashford Trust and Ashford Prime, in each case
subject to the supervision and oversight of the respective board of directors of such entity. We provide the personnel and services
necessary to allow each of Ashford Trust and Ashford Prime to conduct its respective business. We may also perform similar
functions for new or additional platforms. We are not responsible, but may in the future be responsible, for managing the day-to-
day operations of the individual hotel properties owned by either Ashford Trust or Ashford Prime, which duties are, and will
continue to be, the responsibility of the property management companies that operate the hotel properties owned by Ashford Trust
and Ashford Prime.

As required for disclosure under the Fourth Amended and Restated Advisory Agreement (“Fourth Amended and Restated
Ashford Prime Advisory Agreement’), for the trailing twelve months ended December 31, 2017, the total incremental expenses
incurred (including all reimbursable expenses), as reasonably determined, in connection with providing services to Ashford Prime
under the Fourth Amended and Restated Ashford Prime Advisory Agreement was $2.2 million.

Recent Developments

On January 19, 2017, AIM entered into an Investment Management Agreement (the “Agreement”) with AHT SMA, LP, a
Delaware limited partnership (“Client”) and a wholly-owned subsidiary of Ashford Trust to manage Ashford Trust’s excess cash
(the “Account”). Pursuant to the Agreement, Client retained and appointed AIM as the investment manager of Client. The Agreement
will govern the relationship between Client and AIM, as well as grant AIM certain rights, powers and duties to act on behalf of
Client. AIM will not be compensated by Client for its services under the Agreement. Client bears all costs and expenses of the
establishment and ongoing maintenance of the Account as well as all costs and expenses of AIM.

On March 3, 2017, Ashford Inc. invested $1.3 million for an additional ownership interest in OpenKey, a consolidated VIE.
On September 12, 2017, Ashford Inc. invested an additional $667,000 in OpenKey. On January 16, 2018, Ashford Inc. invested an
additional $1.3 million in OpenKey. OpenKey is a hospitality focused mobile key platform that provides a universal smartphone
app for keyless entry into hotel guestrooms. See notes 1, 2, 13, 14 and 17 to our consolidated financial statements.

On March 7, 2017, AIM GP, the general partner of the AQUA U.S. Fund, provided written notice to the AQUA U.S. Fund's
limited partners of its election to dissolve the AQUA U.S. Fund pursuant to Section 6.1(a) of the Second Amended and Restated
Limited Partnership Agreement of the AQUA U.S. Fund as of March 31, 2017 (the “Dissolution Date”). In connection with the
dissolution of the AQUA U.S. Fund, the AQUA Master Fund was liquidated in accordance with the laws of the Cayman Islands.
The balance of all limited partners' capital accounts in the AQUA U.S. Fund, was distributed to limited partners in cash, and

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thereafter limited partners ceased to be a limited partner of the AQUA U.S. Fund. As of December 31, 2017, AQUA U.S. Fund
has been fully dissolved.

On April 6, 2017, we acquired a 70% interest in Pure Rooms. Pure Rooms’ patented 7-step purification process treats a room’s
surfaces, including the air, and removes up to 99% of pollutants. To consummate the acquisition, Ashford Hospitality Services
LLC (“AHS”), a subsidiary of Ashford Inc., entered into an Amended and Restated Limited Liability Company Agreement (the
“LLC Agreement”) with PRE Opco, LLC (“Pure Rooms”), pursuant to which AHS became the sole owner of the common equity,
or Series A Units. In conjunction with the LLC Agreement, AHS contributed $97,000 cash to Pure Rooms as required by the LLC
Agreement. Pursuant to the Asset and Liability Contribution Agreement (the “Contribution Agreement”), by and among Pure
Rooms (as contributee) and PAFR, LLC, the members of PAFR, LLC and Brault Enterprises, LLC (collectively, the “Sellers”),
the Sellers contributed liabilities, net of assets, of the predecessor operating company, Pure Rooms NA, LLC, with a fair value of
$532,000 in exchange for certain equity interests in Pure Rooms, including 30% of the Series A Units, 100% of the Series B-1
Units, and 50% of the Series B-2 Units. The fair value of the remaining equity consideration included $42,000 of Series A Units,
$181,000 of Series B-1 Units, and $202,000 of Series B-2 Units, totaling $425,000. As a result of the Contribution Agreement,
our equity interest in Pure Rooms was 70%. The results of operations of Pure Rooms have been included in our consolidated
financial statements from the date of acquisition. See note 4 to our consolidated financial statements.

On April 13, 2017, OpenKey entered into a $1.5 million line of credit ("LOC") with Comerica Bank (“Comerica”) that is
secured by all of OpenKey's assets. The LOC matures on October 2018 and has an interest rate of prime plus 2.75%. In connection
with the LOC, OpenKey granted Comerica a 10-year warrant to purchase approximately 28,000 shares of OpenKey's preferred
stock at $1.61 per share. As of December 31, 2017, there were no borrowings outstanding under the LOC. See notes 2 and 6 to
our consolidated financial statements.

On June 9, 2017, Ashford Prime’s stockholders approved the Fourth Amended and Restated Ashford Prime Advisory
Agreement, which became effective on June 21, 2017. For more information, see note 17 to our consolidated financial statements.

On November 1, 2017, we acquired an 85% controlling interest in a privately held company that conducts the business of
J&S Audio Visual in the United States, Mexico, and the Dominican Republic (“J&S”) for approximately $25.5 million. J&S
provides an integrated suite of audio visual services including show and event services, hospitality services, creative services and
design & integration services to its customers in various venues including hotels and convention centers in the United States,
Mexico and the Dominican Republic. The purchase price consisted of (i) $19.2 million in cash of which $10.0 million was funded
with a term loan, (ii) 70,318 shares of Ashford Inc. common stock, which was determined based on an agreed upon value of
approximately $4.3 million using a thirty-day volume weighted average price per share of $60.44, and had an estimated fair value
of approximately $5.1 million as of the acquisition date; and (iii) contingent consideration with an estimated fair value of
approximately $1.2 million. The results of operations of J&S are included in our consolidated financial statements from the date
of acquisition beginning on November 1, 2017.

On December 5, 2017, the board of directors of the Company extended the Final Expiration Date with respect to the Company’s
Rights Agreement (each as defined under the Amended and Restated Rights Agreement, dated as of August 12, 2015, as amended
by Amendment No. 1 to the Amended and Restated Rights Agreement, dated as of October 31, 2016, between the Company and
Computershare Trust Company, N.A.) until the date of the Company’s 2018 annual meeting of stockholders, at which time the
stockholders will vote on a further extension of the Final Expiration Date. If the stockholders do not approve such further extension,
the Rights will expire on the date of the 2018 annual meeting of stockholders.

On December 5, 2017, the board of directors of the Company approved a stock repurchase program (the “Repurchase Program”)
pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, par value
$0.01 per share having an aggregate value of up to $20 million. The Company did not repurchase any stock during the year ended
December 31, 2017.

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On January 8, 2018, we entered into an equity distribution agreement with B. Riley FBR, Inc., acting as sales agent (the
“Equity Distribution Agreement”). Pursuant to the Equity Distribution Agreement, we may sell from time to time through the sales
agent shares of our common stock having an aggregate offering price of up to $20.0 million. Sales of shares of our common stock,
if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market” offerings as defined in Rule
415 of the Securities Act. We will pay the sales agent a commission, which in each case shall not be more than 2.0% of the gross
sales price of the shares of our common stock sold through the sales agent. As of December 31, 2017, no shares of our common
stock have been sold under this program.

On January 16, 2018, the Company closed on the acquisition of certain assets related to RED Hospitality & Leisure
LLC ("RED") for $970,000 cash, comprised of a $750,000 deposit paid on December 11, 2017, which is reflected on our
consolidated balance sheet as “other assets” as of December 31, 2017, and an additional $220,000 paid on January 16, 2018. The
Company owns an 80% interest in RED, a premier provider of watersports activities and other travel and transportation services
in the U.S. Virgin Islands. See note 22 to our consolidated financial statements.

On February 27, 2018, our board of directors approved and adopted the Second Amended and Restated Bylaws of the Company,
which contains a provision that requires stockholders to meet certain ownership thresholds to initiate claims on behalf of the
Company or against the Company or one of its directors of officers. The new provision will be submitted to a binding advisory
vote of the company’s stockholders at the company’s 2018 Annual Meeting of Stockholders with the intent that the new provision
will be rescinded if not approved at such meeting.

On March 1, 2018, the Company entered into a $35 million senior revolving credit facility with Bank of America, N.A. The
credit facility provides for a three-year revolving line of credit and bears interest at a range of 3.0% to 3.50% over LIBOR,
depending on the leverage level of the Company. There is a one-year extension option subject to the satisfaction of certain conditions.
The new credit facility includes the opportunity to expand the borrowing capacity by up to $40 million to an aggregate size of
$75 million.

Discussion of Presentation

The discussion below relates to the financial condition and results of continuing operations of Ashford Inc. and its majority-

owned subsidiaries and entities which it controls.

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RESULTS OF OPERATIONS

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

The following table summarizes the changes in key line items from our consolidated statements of operations for the years

ended December 31, 2017 and 2016 (in thousands):

Year Ended December 31,

Favorable (Unfavorable)

2017

2016

$ Change

% Change

65,982

67,228

REVENUE

Advisory services ............................................................ $
Audio visual.....................................................................
Other ................................................................................
Total revenue ..............................................................

EXPENSES

Salaries and benefits ........................................................
Cost of revenues for audio visual ....................................
Depreciation and amortization ........................................
General and administrative..............................................
Impairment ......................................................................
Other ................................................................................
Total expenses.............................................................
OPERATING INCOME (LOSS) ......................................
Realized gain (loss) on investment in unconsolidated
entity ................................................................................
Unrealized gain (loss) on investment in unconsolidated
entity ................................................................................
Interest expense ...............................................................
Amortization of loan costs...............................................
Interest income ................................................................
Dividend income .............................................................
Unrealized gain (loss) on investments.............................
Realized gain (loss) on investments ................................
Other income (expense)...................................................
INCOME (LOSS) BEFORE INCOME TAXES..............
Income tax (expense) benefit...........................................
NET INCOME (LOSS) ......................................................
(Income) loss from consolidated entities attributable to
noncontrolling interests ........................................................
Net (income) loss attributable to redeemable
noncontrolling interests ........................................................
NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY ......................................................................... $

9,186

6,405

81,573

61,223

7,757

2,527

17,363

1,072

2,153

92,095
(10,522)

—

—
(83)
(39)
244

203
(294)
(73)
(10,471)
(9,723)
(20,194)

358

1,484

—

379

67,607

52,436

—

1,174

16,454

—

70,064
(2,457)

(1,246)
9,186

6,026

13,966

(8,787)
(7,757)
(1,353)
(909)
(1,072)
(2,153)
(22,031)
(8,065)

(1.9)%

1,590.0 %

20.7 %

(16.8)%

(115.2)%

(5.5)%

(31.4)%

(328.2)%

(3,601)

3,601

100.0 %

2,141

—

170

2,326
(10,113)
(162)
(11,623)
(780)
(12,403)

8,860

1,147

(2,141)
(83)
(39)
171
(77)
(2,123)
9,819

1,152
(8,943)
(7,791)

(100.0)%

234.2 %

(45.3)%

(91.3)%

97.1 %

54.9 %

9.9 %

(1,146.5)%

(62.8)%

(8,502)

(96.0)%

337

29.4 %

(18,352) $

(2,396) $

(15,956)

(665.9)%

Net Income (Loss) Attributable to the Company. Net loss attributable to the Company increased $16.0 million, or 665.9%,
to $18.4 million for the year ended December 31, 2017 (“2017”) compared to the year ended December 31, 2016 (“2016”) as a
result of the factors discussed below.

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Total Revenue. Total revenue increased $14.0 million, or 20.7%, to $81.6 million for 2017 compared to 2016. The increase
was driven primarily by $9.2 million in audio visual revenues from the acquisition of J&S, an increase of $2.4 million in REIT
advisory revenue and an increase of $2.4 million in other services revenue from Pure Rooms and OpenKey. See note 17 to our
consolidated financial statements. The changes in total revenue consisted of the following (in thousands):

Year Ended December 31,

2017

2016

$ Change

Advisory services revenue:
Base advisory fee (1) ................................................................................... $
Incentive advisory fee (2) ............................................................................
Reimbursable expenses (3) ..........................................................................
Non-cash stock/unit-based compensation (4) ..............................................
Other advisory revenue (5) ..........................................................................
Total advisory services revenue (11) .......................................................

43,523

43,043

3,083

9,705

9,394

277

65,982

3,083

8,859

12,243

—

67,228

480

—

846
(2,849)
277
(1,246)

Audio visual revenue (6) ................................................................................

9,186

—

9,186

Other revenue:
Investment management reimbursements (7) (11) .........................................
Debt placement fees (8) (11) ..........................................................................
Lease revenue (9) (11) ....................................................................................
Other services (10)........................................................................................
Total other revenue ................................................................................

1,976

1,137

893

2,399

6,405

—

335

379

1,976

1,137

558

2,355

6,026

Total revenue ................................................................................................ $

81,573

67,607

13,966

REVENUE
REIT advisory (11) ....................................................................................... $
J&S (6) .........................................................................................................
Other services (10) ........................................................................................
Total revenue............................................................................................. $

69,988

67,563

9,186

2,399

—

2,425

9,186

2,355

81,573

67,607

13,966

________
(1) The increase in base advisory fee is due to higher revenue of $24,000 from Ashford Trust and higher revenue of $456,000

from Ashford Prime.

(2)

Incentive advisory fee includes the second year installment of the 2016 incentive fee in the amount of $1.8 million for 2017,
earned in connection with our advisory agreement with Ashford Trust and the third year installment of the 2015 incentive fee
in the amount of $1.3 million for 2017, earned in connection with our advisory agreement with Ashford Prime. No incentive
fee was earned from Ashford Trust or Ashford Prime for the 2017 measurement period.

(3) The increase in reimbursable expenses revenue is due to higher revenue of $1.5 million from Ashford Trust and lower revenue
of $700,000 from Ashford Prime. Reimbursable expenses include overhead, internal audit, insurance claims advisory and
asset management services.

(4) The decrease in non-cash stock/unit-based compensation revenue is due to higher revenue of $2.6 million from Ashford Trust
and lower revenue of $5.5 million from Ashford Prime. Non-cash stock/unit-based compensation revenue is associated with
equity grants of Ashford Trust’s and Ashford Prime’s common stock and LTIP units awarded to officers and employees of
Ashford Inc. for which we recorded an offsetting expense in an equal amount included in “salaries and benefits.”

(5) The increase in other advisory revenue is due to higher revenue of $277,000 from Ashford Prime as a result of the $5.0 million
cash payment received upon stockholder approval of the Fourth Amended and Restated Ashford Prime Advisory Agreement
in June 2017. The payment is included in “deferred income” on our consolidated balance sheet and is being recognized over
the initial ten-year term of the agreement.

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(6) The increase in audio visual revenue is due to higher revenue of $9.2 million from third parties, as a result of our acquisition

of J&S.

(7) The increase in investment management reimbursements is due to higher revenue of $2.0 million from Ashford Trust.
Investment management reimbursements include AIM’s management Ashford Trust’s excess cash under the Investment
Management Agreement executed in 2017. AIM is not compensated for its services but is reimbursed for all costs and expenses.
(8) The increase in debt placement fee revenue is due to higher revenue of $913,000 from Ashford Trust and $224,000 from
Ashford Prime. Debt placement fees include revenues earned through provision of mortgage placement services by Lismore
Capital, our wholly-owned subsidiary.

(9)

In connection with our key money transaction with our managed REITs, we lease furniture, fixtures and equipment to Ashford
Trust and Ashford Prime at no cost. A portion of the base advisory fee is allocated to lease revenue each period equal to the
estimated fair value of the lease payments that would have been made.

(10) The increase in other services revenue is due to higher revenue of $993,000 from Ashford Trust, higher revenue of $41,000
from Ashford Prime and higher revenue of $1.3 million from third parties. Other services revenue is associated with the
provision of other hotel services by our consolidated subsidiaries, Pure Rooms and OpenKey, to Ashford Trust, Ashford Prime
and other third parties.

(11) Indicates REIT advisory revenue.

Salaries and Benefits Expense. Salaries and benefits expense increased $8.8 million, or 16.8%, to $61.2 million for 2017

compared to 2016. The change in salaries and benefits expense consisted of the following (in thousands):

Year Ended December 31,

2017

2016

$ Change

Cash salaries and benefits:

Salary expense ......................................................................................... $
Bonus expense .........................................................................................
Benefits related expenses.........................................................................
Total cash salaries and benefits (1) .........................................................

Non-cash equity-based compensation:

Stock option grants (2) ..............................................................................
Pre spin-off Ashford Trust equity grants (3)..............................................
Ashford Trust & Ashford Prime equity grants (4).....................................
Total non-cash equity-based compensation...........................................
Non-cash (gain) loss in deferred compensation plan (5)................................
Total salaries and benefits............................................................................. $

20,140

18,812

9,662

3,398
33,200

7,535

684

9,394

17,613

10,410

61,223

8,051

4,134
30,997

5,884

5,439

12,243

23,566
(2,127)
52,436

1,328

1,611
(736)
2,203

1,651
(4,755)
(2,849)
(5,953)
12,537

8,787

________
(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. The acquisitions of J&S and
Pure Rooms in 2017 contributed $868,000 and $667,000, respectively, to the $2.2 million increase over 2016.

(2) The increase in expense is due to additional stock options granted in 2017 with a three year vesting period for which there

was no related expense in 2016. See notes 2, 15 and 17 to our consolidated financial statements.

(3) As a result of our spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford
Trust equity grants. As a result, we continued to recognize equity-based compensation expense related to these grants through
the final vesting date in April 2017. The expense decreased each year as the Ashford Trust equity grants became fully vested.
See notes 2 and 15 to our consolidated financial statements.

(4) Equity grants of Ashford Trust’s and Ashford Prime’s common stock and LTIP units are awarded to our officers and employees
as part of our advisory agreements with each company, for which we record offsetting revenue in an equal amount. The
decrease is primarily attributable to a decrease in the fair value of equity grants. See notes 2 and 15 to our consolidated financial
statements.

(5) The DCP obligation is recorded as a liability in accordance with the applicable authoritative accounting guidance. The DCP
obligation is carried at fair value with changes in fair value reflected in earnings. The 2017 loss is primarily attributable to
an increase in the fair value of the DCP obligation whereas the fair value of the DCP obligation decreased in 2016. See note
16 to our consolidated financial statements.

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Cost of Revenues for Audio Visual. Cost of revenues for audio visual expense was $7.8 million for 2017 compared to $0 for
2016 as a result of our acquisition of J&S. Cost of revenues for audio visual for 2017 includes depreciation expense related to
audio visual rental pool equipment of $411,000.

Depreciation and Amortization Expense. Depreciation and amortization expense increased $1.4 million, or 115.2%, to $2.5
million for 2017 compared to 2016, primarily as a result of furniture, fixtures and equipment additions related to software
implementation, key money assets and the 2017 J&S acquisition. The increase was also due to the amortization of intangible assets
related to the 2017 acquisitions of J&S and Pure Rooms. See note 4 to our consolidated financial statements. Depreciation and
amortization expense for the year ended December 31, 2017, excludes depreciation expense related to audio visual rental pool
equipment of $411,000, which is included in cost of revenues for audio visual.

General and Administrative Expense. General and administrative expenses increased $909,000, or 5.5%, to $17.4 million

for 2017 compared to 2016. The change in general and administrative expense consisted of the following (in thousands):

Year Ended December 31,

2017

2016

$ Change

8,485

6,558

1,927

Professional fees (1) ....................................................................................... $
Office expense ..............................................................................................
Public company costs ...................................................................................
Director costs ................................................................................................
Travel and other expense ..............................................................................
Non-capitalizable costs - software implementation (2) ..................................

3,678

1,078

970

2,987

165

3,485

1,055

1,006

3,349

1,001

Total general and administrative............................................................ $

17,363

16,454

193

23
(36)
(362)
(836)
909

________
(1) The increase in these costs is primarily due to investments in Pure Rooms, OpenKey and J&S. These increases were partially

offset by a decrease in legal expense.

(2)

The decrease in these costs is primarily due to software project timing.

Impairment. Impairment of capitalized software implementation costs was $1.1 million during 2017 compared to $0 for 2016.

See notes 2 and 17 to our consolidated financial statements.

Other. Other operating expense was $2.2 million and $0 for 2017 and 2016, respectively. Other operating expense includes
cost of goods sold and royalties associated with Pure Rooms and OpenKey as well as expense from the increase in fair value of
contingent consideration related to the J&S acquisition.

Realized Gain (Loss) on Investment in Unconsolidated Entity. We had no realized gain or loss on an investment in an
unconsolidated entity in 2017. We recorded a realized loss in an unconsolidated investment fund of $3.6 million in 2016 for which
AIM was the investment advisor.

Unrealized Gain (Loss) on Investment in Unconsolidated Entity. We recorded no unrealized gain (loss) on investment in
unconsolidated entities in 2017. We recorded an unrealized gain in an unconsolidated investment fund of $2.1 million in 2016 for
which AIM was the investment advisor.

Interest Expense. Interest expense was $83,000 and $0 for 2017 and 2016, respectively, related to the notes payable, lines of

credit and capital leases held by our consolidated subsidiaries. See notes 2 and 6 to our consolidated financial statements.

Amortization of Loan Costs. Amortization of loan costs was $39,000 and $0 for 2017 and 2016, respectively, related to the
notes payable and lines of credit held by our consolidated subsidiaries. See notes 2 and 6 to our consolidated financial statements.

Interest Income. Interest income was $244,000 and $73,000 for 2017 and 2016, respectively.

Dividend Income. Dividend income was $93,000 and $170,000 for 2017 and 2016, respectively, related to investments held

by the AQUA U.S. Fund.

Unrealized Gain (Loss) on Investments. Unrealized gain on investments was $203,000 for 2017 and $2.3 million for 2016,
primarily related to investments held by the AQUA U.S. Fund. The unrealized gain (loss) on investments is based on changes in
closing market prices during the period.

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Realized Gain (Loss) on Investments. Realized loss on investments was $294,000 for 2017 and $10.1 million in 2016. The

realized loss on investments is related to investments held by the AQUA U.S. Fund and options on futures contracts.

Other Income (Expense). Other expense was $73,000 and $162,000 in 2017 and 2016, respectively.

Income Tax Benefit (Expense). Income tax expense increased $8.9 million, from $780,000 in 2016 to $9.7 million in 2017.
The increase in income tax expense is primarily due to an increase in the valuation allowance of our deferred tax asset caused by
the legal restructuring of our organizational structure in the second quarter of 2017 and enactment of the Tax Cuts and Jobs Act
on December 22, 2017. As a result, our effective tax rates on income (loss) before income taxes for 2017 and 2016 were (92.9%)
and (6.7%), respectively.

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. The noncontrolling interests in
consolidated entities were allocated losses of $358,000 in 2017 and $8.9 million in 2016. See notes 2, 13 and 17 to our consolidated
financial statements for more details regarding ownership interests, carrying values and allocations.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. Net losses of $1.5 million and $1.1 million were
allocated to redeemable noncontrolling interests in 2017 and 2016, respectively. Redeemable noncontrolling interests represented
ownership interests in Ashford Holdings and certain of our consolidated subsidiaries. Prior to April 6, 2017, the noncontrolling
interests represented ownership interests in Ashford LLC. See note 1 to our consolidated financial statements. For a summary of
ownership interests, carrying values and allocations, see notes 2, 14, and 17 to our consolidated financial statements.

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Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

The following table summarizes the changes in key line items from our consolidated statements of operations for the years

ended December 31, 2016 and 2015 (in thousands):

Year Ended December 31,

2016

2015

Favorable (Unfavorable)
$ Change

% Change

67,228

58,546

REVENUE

Advisory services ............................................................ $
Other ................................................................................
Total revenue ..............................................................

EXPENSES

Salaries and benefits ........................................................
Depreciation and amortization ........................................
General and administrative..............................................
Total expenses.............................................................
OPERATING INCOME (LOSS) ......................................
Realized gain (loss) on investment in unconsolidated
entity ................................................................................
Unrealized gain (loss) on investment in unconsolidated
entity ................................................................................
Interest income ................................................................
Dividend income .............................................................
Unrealized gain (loss) on investments.............................
Realized gain (loss) on investments ................................
Other income (expense)...................................................
INCOME (LOSS) BEFORE INCOME TAXES..............
Income tax (expense) benefit...........................................
NET INCOME (LOSS) ......................................................
(Income) loss from consolidated entities attributable to
noncontrolling interests ........................................................
Net (income) loss attributable to redeemable
noncontrolling interests ........................................................
NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY ......................................................................... $

379

67,607

52,436

1,174

16,454

70,064
(2,457)

(3,601)

2,141

170

2,326
(10,113)
(162)
(11,623)
(780)
(12,403)

8,860

1,147

435

58,981

41,442

799

18,091

60,332
(1,351)

—

(2,141)
352

917
(2,490)
(5,110)
(155)
(9,978)
(2,066)
(12,044)

8,682
(56)
8,626

(10,994)
(375)
1,637
(9,732)
(1,106)

(3,601)

4,282
(279)
(747)
4,816
(5,003)
(7)
(1,645)
1,286
(359)

14.8 %

(12.9)%

14.6 %

(26.5)%

(46.9)%

9.0 %

(16.1)%

(81.9)%

200.0 %

(79.3)%

(81.5)%

193.4 %

(97.9)%

(4.5)%

(16.5)%

62.2 %

(3.0)%

10,852

(1,992)

(18.4)%

1,145

57,250.0 %

(2,396) $

(1,190) $

(1,206)

(101.3)%

Net Income (Loss) Attributable to the Company. Net loss attributable to the Company increased $1.2 million, or 101.3%, to

$2.4 million for 2016 compared to the year ended December 31, 2015 (“2015”) as a result of the factors discussed below.

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Total Revenue. Total revenue increased $8.6 million, or 14.8% to $67.6 million in 2016. The changes in total revenue consisted

of the following (in thousands) See note 17 to our consolidated financial statements.:

Year Ended December 31,

2016

2015

$ Change

Advisory services revenue:
Base advisory fee (1) ..................................................................................... $
Incentive advisory fee (2)..............................................................................
Reimbursable expenses (3) ...........................................................................
Non-cash stock/unit-based compensation (4) ...............................................
Total advisory services revenue..............................................................

Other revenue:

Non-advisory expense reimbursements.......................................................
Investment advisory revenue.......................................................................
Lease revenue (5) ..........................................................................................
Other services ..............................................................................................
Total other revenue .................................................................................
Total revenue.................................................................................................. $

43,043

42,481

3,083

8,859

12,243

67,228

—

335
44

379

1,274

8,480

6,311

58,546

195

141

99
—

435

67,607

58,981

562

1,809

379

5,932

8,682

(195)
(141)
236
44
(56)
8,626

________
(1) The increase in base advisory fee revenue is due to higher revenue of $867,000 from Ashford Trust and lower revenue of

$305,000 from Ashford Prime.

(2)

Incentive advisory fee revenue for 2016, included the second year installment of the 2015 incentive fee in the amount of $1.3
million as earned in connection with our advisory agreement with Ashford Prime and the first year installment of the 2016
incentive fee in the amount of $1.8 million earned in connection with our advisory agreement with Ashford Trust. Incentive
advisory fee revenue for 2015, included the first year installment of the 2015 incentive fee in the amount of $1.3 million as
earned in connection with our advisory agreement with Ashford Prime. No incentive fee was earned for the 2016 measurement
period from Ashford Prime. No incentive fee was earned for the 2015 measurement period from Ashford Trust.

(3) The increase in reimbursable expenses is due to lower revenue of $563,000 from Ashford Trust and higher revenue of $942,000
from Ashford Prime. Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management
services.

(4) The increase in equity-based compensation revenue is due to higher revenue of $5.7 million from Ashford Trust and higher
revenue of $223,000 from Ashford Prime. Equity-based compensation revenue is associated with equity grants of Ashford
Trust’s and Ashford Prime’s common stock and LTIP units awarded to officers and employees of Ashford Inc. for which we
recorded an offsetting expense in an equal amount included in “salaries and benefits.”

(5)

In connection with our key money transaction with Ashford Prime, we lease furniture, fixtures and equipment to Ashford
Prime at no cost. A portion of the base advisory fee is allocated to lease revenue each period equal to the estimated fair value
of the lease payments that would have been made.

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Salaries and Benefits Expense. Salaries and benefits expense increased $11.0 million, or 26.5%, to $52.4 million in 2016

compared to 2015. The change in salaries and benefits expense consisted of the following (in thousands):

Year Ended December 31,

2016

2015

$ Change

Cash salaries and benefits:

Non-cash equity-based compensation:

Pre spin-off Ashford Trust equity grants (2)..............................................
Stock option grants (3) ..............................................................................
Ashford Trust & Ashford Prime equity grants (4).....................................
Total non-cash equity-based compensation...........................................
Non-cash (gain) loss in deferred compensation plan (5)................................
Total salaries and benefits............................................................................. $

18,812

17,607

8,051

4,134

30,997

5,439

5,884

12,243

23,566
(2,127)
52,436

7,396

3,377

28,380

11,503

3,856

6,311

21,670
(8,608)
41,442

1,205

655

757

2,617

(6,064)
2,028

5,932

1,896

6,481

10,994

_______
(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.

(2) As a result of the spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford Trust
equity grants. As a result, we will continue to recognize equity-based compensation expense related to these grants through
the final vesting date in April 2017. The expense decreases each year as the Ashford Trust equity grants become fully vested.
See note 15 to our consolidated financial statements.

(3) The increase in expense is due to stock options granted in 2016 with a three year vesting period. See note 15 to our consolidated

financial statements.

(4) Equity grants of Ashford Trust’s and Ashford Prime’s common stock and LTIP units awarded to our officers and employees,
for which we record offsetting revenue in an equal amount. The increase is primarily attributable to additional equity grants.
See notes 2 and 15 to our consolidated financial statements.

Depreciation Expense. Depreciation expense increased $375,000, or (46.9)%, to $1.2 million in 2016 compared to 2015, as

a result of furniture, fixtures and equipment additions.

General and Administrative Expense. General and administrative expenses decreased $1.6 million, or 9.0%, to $16.5 million
in 2016 compared to 2015. The change in general and administrative expense consisted of the following (in thousands):

Year Ended December 31,

2016

2015

$ Change

6,558

9,307

3,485

1,055

1,006

3,349

1,001

3,792

967

1,079

2,766

180

Total general and administrative............................................................ $

16,454

18,091

(2,749)
(307)
88
(73)
583

821
(1,637)

_______
(1) Professional fees decreased due to a decrease in professional and legal fees related to the proposed Remington Acquisition
Agreement entered into on September 17, 2015. For further discussion, see note 17 to our consolidated financial statements.

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Realized Gain (Loss) on Investment in Unconsolidated Entity. We recorded a realized loss in an unconsolidated investment
fund of $3.6 million in 2016 for which AIM is the investment advisor. We had no realized gain or loss on an investment in an
unconsolidated entity in 2015.

Unrealized Gain (Loss) on Investment in Unconsolidated Entity. We recorded an unrealized gain in an unconsolidated
investment fund of $2.1 million in 2016 for which AIM is the investment advisor. We had an unrealized loss on an investment in
an unconsolidated entity of $2.1 million in 2015.

Interest Income (Expense). Interest income was $73,000 and $352,000 for 2016 and 2015, respectively, related to investments

held by the AQUA Fund.

Dividend Income. Dividend income was $170,000 and $917,000 for 2016 and 2015, respectively, related to investments held

by the AQUA U.S. Fund.

Unrealized Gain (Loss) on Investments. Unrealized gain on investments was $2.3 million for 2016 and unrealized loss on
investments was $2.5 million for 2015, primarily related to investment held by the AQUA U.S. Fund. The unrealized gain (loss)
on investments is based on changes in closing market prices during the period.

Realized Gain (Loss) on Investments. Realized loss on investments was $10.1 million for 2016 and $5.1 million in 2015.

The realized loss on investments is related to investments held by the AQUA U.S. Fund and options on futures contracts.

Other Income (Expenses). Other expenses were $162,000 and $155,000 in 2016 and 2015, respectively.

Income Tax Expense. Income tax expense decreased $1.3 million, from $2.1 million in 2015 to $780,000, in 2016. The

decrease in income tax expense is primarily due to a decrease in income subject to tax at the federal and state level.

Our effective tax rates on income (loss) before income taxes for the year ended December 31, 2016 and December 31, 2015,
were (6.7%) and (20.7%), respectively. The decrease in the negative rate in 2016 as compared to 2015 was due to decreases in
permanent differences and changes in the valuation allowance on our deferred tax assets. The portion of equity-based compensation
expense related to LTIP units granted to Ashford Trust employees prior to the spin-off is not deductible for income tax purposes
and is accounted for as a permanent difference.

Income (Loss) from Consolidated Entities Attributable to Noncontrolling Interests. The noncontrolling interests in
consolidated entities were allocated losses of $8.9 million in 2016 compared to a loss of $10.9 million in 2015. At December 31,
2016, noncontrolling interests in consolidated entities represented ownership interests of 40% in Performance Holdco, 100% in
the AQUA Fund and 13.63% in OpenKey with a total carrying value of $52.8 million. At December 31, 2015, noncontrolling
interests in consolidated entities represented ownership interests of 40% in Performance Holdco, 100% in the AQUA Fund and
100% in OpenKey with a total carrying value of $104.5 million.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. Net losses of $1.1 million and $2,000 were allocated
to redeemable noncontrolling interests in 2016 and 2015, respectively. Redeemable noncontrolling interests represented ownership
interests in Ashford LLC and ownership in the common stock of certain of our consolidated subsidiaries. For a summary of
ownership interests, carrying values and allocations, see notes 2, 14, and 17 to our consolidated financial statements.

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LIQUIDITY AND CAPITAL RESOURCES

Our short-term liquidity requirements consist primarily of funds necessary for operating expenses primarily attributable to
paying our employees. We expect to meet our short-term liquidity requirements generally through net cash provided by operations,
existing cash balances and, if necessary, short-term borrowings under our revolving credit facility.

Our long-term liquidity requirements consist primarily of funds necessary to pay for operating expenses attributable to paying
our employees, investments to grow our business, key money consideration and certain recent subsidiary financing transactions
noted below. We expect to meet our long-term liquidity requirements through various sources of capital, including net cash provided
by operations, future equity issuances and availability under our revolving credit facilities.

On April 6, 2017, Pure Rooms entered into a term loan of $375,000 and a line of credit of $100,000 for which the creditor
does not have recourse to Ashford Inc. The term loan has a fixed interest rate of 5.0% per annum with a stated maturity date of
October 1, 2018. The line of credit has a variable interest rate of the Prime Rate plus 1.0%. There is no stated maturity date related
to the line of credit as it is payable on demand; accordingly, the balance has been classified as a current liability on our consolidated
balance sheet.

On April 13, 2017, OpenKey entered into a Loan and Security Agreement ("Loan Agreement") for a line of credit in the
amount of $1.5 million. The line of credit is secured by all of OpenKey's assets and matures on October 31, 2018 with an interest
rate of Prime Rate plus 2.75%. Creditors do not have recourse to Ashford Inc. At December 31, 2017, there were no borrowings
outstanding under the Loan Agreement. In connection with the line of credit, OpenKey granted the creditors a 10-year warrant to
purchase approximately 28,000 shares of OpenKey's preferred stock at $1.61 per share. The fair value of the warrants, estimated
to be $28,000, was recorded in noncontrolling interests in consolidated entities and debt issuance costs, which will be amortized
over the term of the line of credit.

On November 1, 2017, our J&S operating subsidiary entered into a series of financing transactions for which the creditors
do not have recourse to Ashford Inc., including a $10.0 million term loan to finance the acquisition of J&S. The term loan bears
interest at LIBOR plus 3.25% and matures on November 1, 2022. The subsidiary capitalized debt issuance costs of $231,000
associated with this financing, which are included as a reduction of notes payable on the consolidated balance sheet as of December
31, 2017. In connection with the term loan, the subsidiary 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 December 31, 2017, was not material. The subsidiary
also entered into a $3.0 million revolving credit facility which bears interest at LIBOR plus 3.25% and matures on November 1,
2022. During the year ended December 31, 2017, $1.7 million was drawn and approximately $924,000 of payments were made
on the revolving credit facility. As of December 31, 2017, $2.2 million of credit was available under the revolving credit facility.
These debt agreements contain various financial covenants that, among other things, require the maintenance of certain fixed
charge coverage ratios. Our J&S operating subsidiary is currently in compliance with all financial covenants. Creditors do not
have recourse to Ashford Inc.

Also on November 1, 2017, in connection with the acquisition of J&S, our J&S operating subsidiary entered into a $2.0 million
term loan agreement and a $3.0 million equipment note. These loans each bear interest at LIBOR plus 3.25% and mature on
November 1, 2022. During the year ended December 31, 2017, no amounts were drawn on either loan.

On December 5, 2017, the board of directors of Ashford Inc. approved a stock repurchase program (the “Repurchase
Program”) pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock,
par value $0.01 per share having an aggregate value of up to $20 million. No shares were repurchased in the year ended
December 31, 2017.

Sources and Uses of Cash

As of December 31, 2017 and 2016, we had $36.5 million and $84.1 million of cash and cash equivalents, respectively, and
$9.1 million and $9.8 million of restricted cash, respectively. As of December 31, 2017 and 2016, cash and cash equivalents
included funds associated with the AQUA U.S. Fund in the amounts of $0 and $55.1 million, respectively.

Net Cash Flows Provided by (Used in) Operating Activities. Operating activities provided net cash flows of $19.4 million
and $84.9 million for the years ended December 31, 2017 and 2016, respectively. The higher cash flows provided by operating

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activities in the year ended December 31, 2016 was primarily a result of the liquidation of investments in securities held by the
AQUA U.S. Fund during the year ended December 31, 2016. Cash flows from operations is impacted by the timing of receipt of
advisory fees from Ashford Trust and Ashford Prime, timing of paying vendors and timing of operating subsidiaries’ receipt of
revenues.

Net Cash Flows Provided by (Used in) Investing Activities. For the year ended December 31, 2017, investing activities used
net cash flows of $23.2 million, which is attributable to the acquisition of a controlling interest in J&S for $19.0 million (net of
cash acquired of approximately $200,000), purchases of computer software, furniture, fixtures and equipment of $3.6 million and
a $750,000 deposit for certain assets related to RED Hospitality and Leisure LLC, partially offset by $129,000 of cash acquired
in the acquisition of Pure Rooms. For the year ended December 31, 2016, investing activities used net cash flows of $4.9 million,
which was attributable to purchases of computer software, furniture, fixtures and equipment of $6.2 million partially offset by a
distribution from an investment in an unconsolidated investment entity of $1.4 million.

Net Cash Flows Provided by (Used in) Financing Activities. For the year ended December 31, 2017, net cash flows used in
financing activities was $44.5 million. These cash outflows consisted of $55.3 million of distributions to noncontrolling interests
in consolidated entities, net advances to employees of $433,000 associated with tax withholdings for restricted stock vestings,
$305,000 of payments on notes payable, $28,000 of loan cost payments, and $24,000 for the repurchase of common stock, partially
offset by $10.0 million of proceeds from the term loan to finance the acquisition of J&S, $983,000 of contributions from
noncontrolling interests in a consolidated entity and net borrowings on the J&S revolving credit facility of $629,000. For the year
ended December 31, 2016, net cash flows used in financing activities was $42.1 million, which consisted of $44.1 million of
distributions to noncontrolling interests in consolidated entities, utilization of excess tax benefit associated with stock-based
compensation of $284,000, net repayments in advances to employees of $41,000 associated with tax withholdings for restricted
stock vestings, $20,000 for the purchase of treasury shares associated with tax withholdings for restricted stock vestings, and
$18,000 for cash redemptions of units, partially offset by $2.4 million of contributions from noncontrolling interests in a
consolidated entity.

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 notes 1 and 2 to our consolidated financial statements.

Contractual Obligations and Commitments

The table below summarizes future obligations as of December 31, 2017 (in thousands):

Contractual obligations:

Long-term debt obligations...........................................
Estimated interest obligations (1)...................................
Capital lease obligations ...............................................
Operating lease obligations...........................................
Deferred compensation plan (2) .....................................
AIM Incentive Plan (3) ...................................................
Total contractual obligations ..................................

< 1 Year

1-3 Years

Payments Due by Period
3-5 Years

>5 Years

1,320
516

467

1,118

311

409

2,000
852

475

1,720

4,087

7,731
639

1,007

7,586

—

— $
—

—

1,607

7,275

—

Total

11,051
2,007

958

5,452

19,259

487

4,141

9,212

16,979

8,882

39,214

__________
(1) For variable-rate indebtedness, interest obligations are estimated based on the LIBOR and Prime interest rates as of December
31, 2017. We have assumed that the J&S credit facility balance remains outstanding at $814,000 until the maturity date of
November 1, 2022 using the interest rate as of December 31, 2017.

(2) Distributions under the deferred compensation plan are made in cash, unless the participant has elected Ashford Inc. common
stock as the investment option, in which any such distributions would be made in Ashford Inc. common stock. The deferred
compensation plan obligation is carried at fair value based on the underlying investment(s) (see note 16 to our consolidated
financial statements).

(3) Distributions under the AIM incentive plan will be made in cash within 45 days of March 31, 2018 and March 31, 2019. The
AIM incentive plan obligation is carried at amortized fair value (see note 16 to our consolidated financial statements).

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Some of our loan agreements contain financial and other covenants. If we violate these covenants, we could be required to
repay 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. We were in compliance with all covenants at December 31, 2017.

Critical Accounting Policies

Our accounting policies are fully described in note 2 to our consolidated financial statements included in “Item 8. Financial
Statements and Supplementary Data.” We believe that the following discussion addresses our most critical accounting policies,
representing those policies considered most vital to the portrayal of our consolidated financial condition and results of operations
and requiring management’s most difficult, subjective, and complex judgments.

Revenue Recognition. Advisory services revenue primarily consists of advisory and investment management fees and expense
reimbursements that are recognized when services have been rendered. Advisory fees consist of base fees and incentive fees. For
Ashford Trust, the quarterly base fee ranges from 0.70% to 0.50% per annum of the total market capitalization ranges from less
than $6.0 billion to greater than $10.0 billion total market capitalization plus the Key Money Asset Management Fee, as defined
in the respective advisory agreement, subject to certain minimums. Similarly, the Ashford Prime base fee is fixed at 0.70% of
Ashford Prime’s total market capitalization plus the Key Money Asset Management Fee, as defined in the respective advisory
agreement, subject to certain minimums. Reimbursements for overhead, travel expenses, risk management and internal audit
services are recognized when services have been rendered. We also record advisory revenue for equity grants of Ashford Trust
and Ashford Prime common stock and Long-Term Incentive Plan (“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, as well an offsetting expense in an equal amount included in “salaries and benefits.” Incentive advisory
fees are measured annually in each year that Ashford Trust’s and/or Ashford Prime’s annual total stockholder return exceeds the
average annual total stockholder return for each company’s respective peer group, subject to the FCCR Condition, as defined in
the advisory agreements. Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR
Condition. Accordingly, incentive advisory fee revenue is recognized only when the amount earned is fixed and determinable and
the FCCR Condition has been met. As incentive advisory fees are measured annually, we recognize revenue quarterly based on
the amount that would be due pursuant to the applicable advisory agreement as of the interim balance sheet date in accordance
with the authoritative accounting guidance. Debt placement fees include revenues earned through provision of mortgage placement
services by Lismore Capital, our wholly-owned subsidiary, and are recognized based on a stated percentage of the loan amount
when services have been rendered.

Audio visual revenue primarily consists of revenue generated 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. We recognize revenue when
persuasive evidence of an arrangement exists, services have been rendered, the fee is fixed or determinable and collectability is
reasonably assured. 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 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.

Certain of our consolidated entities enter into multiple element arrangements with customers. For such arrangements, we

determine whether each of the individual deliverables in the arrangement qualify as a separate unit of accounting, which
requires that the deliverable have standalone value upon delivery. We allocate arrangement consideration to the separate units
of accounting using the relative selling price method, in which allocation of consideration is based on vendor-specific objective
evidence (“VSOE”) if available, third-party evidence (“TPE”), or if VSOE and TPE are not available, management’s best
estimate of a standalone selling price for the units of accounting. We limit the amount of arrangement consideration to amounts
that are fixed or determinable. The arrangement consideration is recognized as revenue as the deliverables are provided to the
customer, which is either up front for deliverables that have standalone value upon delivery, or ratably over the period of
delivery.

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 and beginning in 2017 Mexico and Dominican Republic income taxes. In accordance with
authoritative accounting guidance, we account for income taxes using the asset and liability method under which deferred tax

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assets and liabilities are recognized for future tax consequences attributable to differences between the 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. At December 31, 2017, we recorded
a valuation allowance of $25.1 million to fully reserve our net deferred tax assets. At December 31, 2016, we recorded a valuation
allowance of $6.1 million to partially reserve our net deferred tax assets. We have provided these allowances primarily because
of operating losses incurred for each of the years for the three year period ending December 31, 2017. The losses represent
significant negative evidence regarding the realizability of our deferred tax assets. Further, our legal entity restructuring on April
6, 2017 and the Tax Cuts and Jobs Act enacted on December 22, 2017 eliminated our ability to carry back future net operating
losses against taxable income from prior periods, which is additional negative evidence regarding the reliability of our deferred
tax assets.

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 subsidiaries file income tax
returns in the U.S. federal jurisdiction and various states and cities, and beginning in 2017 in Mexico and the Dominican Republic.
Tax years 2013 through 2017 remain subject to potential examination by certain federal and state taxing authorities.

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (“TCJA”) into legislation. Under ASC 740, the
effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of U.S.
federal income taxes, the enactment date is the date the bill becomes law (i.e., upon presidential signature). With respect to this
legislation, we recorded a one-time income tax expense of approximately $303,000 due to a revaluation of our net deferred tax
assets resulting from the decrease in the corporate federal income tax rate from 35% to 21% and elimination of the ability to
carryback net operating losses generated after December 31, 2017. We are in the process of analyzing certain other provisions of
this legislation which may impact our effective tax rate. Additionally on December 22, 2017, the SEC staff issued Staff Accounting
Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary
information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain
income tax effects of the TCJA. The Company has recognized the provisional tax impacts related to the revaluation of deferred
tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017.
The ultimate impact may differ from these provisional amounts, due to, among other things, additional analysis, changes in
interpretations and assumptions the Company has made, additional regulatory guidance that may be issued and actions the Company
may take as a result of the TCJA. The accounting is expected to be complete on or before the date the 2017 U.S. income tax returns
are filed in 2018.

Equity-Based Compensation. We adopted an equity incentive plan that provides for the grant of restricted or unrestricted
shares of our common stock, options to purchase our common stock and other share awards, share appreciation rights, performance
shares, performance units and other equity-based awards or any combination of the foregoing. Equity-based compensation included
in “salaries and benefits” is accounted for at fair value based on the market price of the shares/options on the date of grant in
accordance with applicable authoritative accounting guidance. The fair value is charged to compensation expense on a straight-
line basis over the vesting period of the shares/options. Grants of restricted stock to independent directors are recorded at fair
value based on the market price of our shares at grant date, and this amount is fully expensed in “general and administrative”
expense as the grants of stock are fully vested on the date of grant. The amount of the expense may be subject to adjustment in
future periods depending on the specific characteristics of the equity-based award and the application of the accounting guidance.
Our officers and employees can be granted common stock and LTIP units from Ashford Trust and Ashford Prime in connection
with providing advisory services that result in expense, included in “salaries and benefits,” equal to the fair value of the award in
proportion to the requisite service period satisfied during the period, as well as offsetting revenue in an equal amount included in
“advisory services” revenue.

Acquisitions. We account for acquisitions and investments in businesses as business combinations if the target meets the
definition of a business and (a) the target is a VIE and we are the target's primary beneficiary, and therefore we must consolidate
its financial statements, or (b) we acquire more than 50% of the voting interest of the target and it was not previously consolidated.
We record business combinations using the acquisition method of accounting, which requires all of the assets acquired and liabilities
assumed to be recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of
the net tangible and intangible assets acquired is recorded as goodwill. The application of the acquisition method of accounting
for business combinations requires management to make significant estimates and assumptions in the determination of the fair
value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are
depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed
46

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are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations
that utilize customary valuation procedures and techniques. Significant assumptions and estimates include, but are not limited to,
the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost
savings expected to be derived from acquiring an asset, if applicable. If the actual results differ from the estimates and judgments
used in these estimates, the amounts recorded in the consolidated financial statements may be exposed to potential impairment of
the intangible assets and goodwill.

If our investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the

transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalizing
transaction costs, and does not result in the recognition of goodwill.

Recently Adopted Accounting Standards—In March 2016, the FASB issued ASU 2016-07, Simplifying the Transition to the
Equity Method of Accounting (“ASU 2016-07”). The new standard requires an investor to apply the equity method of accounting
only from the date it qualifies for that method, i.e., the date the investor obtains significant influence over the operating and
financial policies of an investee. ASU 2016-07 eliminates the previous requirement to retroactively adjust the investment and
record a cumulative catch up for the periods that the investment had been held, but did not qualify for the equity method of
accounting. ASU 2016-07 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15,
2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or
degree of influence that result in the adoption of the equity method. Early adoption is permitted. The adoption of ASU 2016-07
did not have a material impact on our consolidated financial statements or related disclosures.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU
2016-09”) as part of the FASB simplification initiative. The new standard requires all excess tax benefits and tax deficiencies
(including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit on the
income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which
they occur. An entity also should recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether
the benefit reduces taxes payable in the current period. ASU 2016-09 also requires excess tax benefits to be classified along with
other income tax cash flows as an operating activity in the statement of cash flows. In addition, ASU 2016-09 increases the tax
withholding requirements threshold to qualify for equity classification. ASU 2016-09 also clarifies that cash paid by an employer
when directly withholding shares for tax withholding purposes should be classified as a financing activity. ASU 2016-09 provides
an optional accounting policy election to be applied on an entity-wide basis to either estimate the number of awards that are
expected to vest or account for forfeitures when they occur. ASU 2016-09 is effective for annual periods beginning after December
15, 2016, and interim periods within those annual periods. We have adopted this standard effective January 1, 2017, and the
adoption of this standard did not have a material impact on our financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”),
which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU
2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-
of-period and end-of-period total amounts shown on the statements of cash flows. ASU 2016-18 is effective for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We adopted this
standard effective January 1, 2017 on a retrospective basis. The adoption of this standard resulted in the inclusion of restricted
cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the
consolidated statements of cash flows for all periods presented. As a result, net cash provided by operating activities increased
$4.1 million in the year ended December 31, 2016 and $2.3 for the year ended December 31, 2015. Our beginning-of-period cash,
cash equivalents and restricted cash increased $9.8 million and $5.7 million in 2017 and 2016, respectively.

Recently Issued Accounting Standards—In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with
Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model, which requires a company to
recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration
the company expects to receive in exchange for those goods or services. An entity is required to (a) identify the contract(s) with
a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction
price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance
obligation. In determining the transaction price, an entity may 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. ASU 2014-09 also specifies the accounting for certain costs to obtain or fulfill a contract
with a customer. In addition, the new guidance requires improved disclosures to help users of financial statements better understand
the nature, amount, timing, and uncertainty of revenue that is recognized. The update will replace most existing revenue recognition
guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts
With Customers (Topic 606): Deferral of the Effective Date, which defers the effective date to fiscal periods beginning after
December 15, 2017, including interim periods within that reporting period. The FASB has also issued additional updates that

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further clarify the requirements of Topic 606 and provide implementation guidance. The standard permits the use of either the full
retrospective or cumulative effect (modified retrospective) transition method.

The Company intends to adopt the above standards using the modified retrospective approach for the quarter ending March
31, 2018. Upon adoption of ASU 2014-09, the Company does not expect to record any adjustment to the consolidated financial
statements on January 1, 2018. However, the Company expects the recognition of incentive advisory fees, which are a form of
variable consideration, to 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 will no longer record incentive advisory fee revenue in interim periods prior
to the fourth quarter of the year in which the incentive fee is measured. There is no impact to our incentive advisory fee revenue
recognition on an annual basis. The Company expects that this could impact its revenues in future interim periods, but we are
unable to estimate the impact because future incentive advisory fees are calculated based on future changes in total stockholder
return of our REIT clients compared to the total stockholder return of their respective peer group. We do not expect any material
changes in revenue recognition for audio visual, investment management reimbursements, debt placement fees, lease revenue or
other services revenue. The Company is in the process of evaluating the disclosure requirements under these standards and
implementing controls to support these new disclosure requirements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial
Liabilities (“ASU 2016-01”), which requires an entity to: (i) measure equity investments at fair value through net income, with
certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the
fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv)
calculate the fair value of financial instruments for disclosure purposes based on an exit price; and (v) assess a valuation allowance
on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. ASU
2016-01 provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and
adjusted for certain observable price changes. It also requires a qualitative impairment assessment of such equity investments and
amends certain fair value disclosure requirements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017,
including interim periods within those fiscal years. Certain provisions of ASU 2016-01 are eligible for early adoption. In February
2018, the FASB issued ASU 2018-03, as technical corrections and improvements to amend and clarify certain aspects of the
guidance issued in ASU 2016-01. The amendments are effective for fiscal years beginning after December 15, 2017, and interim
periods within those fiscal years beginning after June 15, 2018.We do not expect that the above standards will have a material
impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use
(“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms
longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense
recognition in the income statement. The new standard requires a lessor to classify leases as either sales-type, finance or operating.
A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee.
If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey
risks and rewards or control, an operating lease results. ASU 2016-02 is effective for fiscal years beginning after December 15,
2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach
is required for lessees for capital and operating leases as well as for lessors for sales-type, direct financing, and operating leases
existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements,
with certain practical expedients available. The accounting for leases where we are the lessor remains largely unchanged. While
we are currently in the initial stages of assessing the impact ASU 2016-02 will have on our consolidated financial statements, we
expect the primary impact to our consolidated financial statements upon adoption will be the recognition, on a discounted basis,
of any future minimum rentals due under noncancelable leases on our consolidated balance sheets resulting in the recording of
right of use assets and lease obligations.

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. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including
interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. We are
currently evaluating the impact that ASU 2016-13 will have on the consolidated financial statements and related disclosures.

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beneficial interests in securitization transactions. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017
and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact that ASU 2016-15 will
have on our consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business
(“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating
whether a transaction should be accounted for as an acquisition (or disposal) of an asset or a business. ASU 2017-01 is effective
for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted.
We are evaluating the impact that ASU 2017-01 will have on our consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for
Goodwill Impairment (“ASU 2017-04”), which removes the requirement to compare the implied fair value of goodwill with its
carrying amount as part of step 2 of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its
annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should
recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. However,
the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, ASU 2017-04
clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting
unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for fiscal years beginning after December
15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1,
2017. We are evaluating the impact that ASU 2017-04 will have on our consolidated financial statements and related disclosures.

Item 7A. Quantitative and Qualitative Disclosures 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 December 31, 2017, our total indebtedness of $11.9 million included $10.8 million of variable-rate
debt. The impact on our results of operations of 100 basis point change in interest rate on the outstanding balance of variable-rate
debt at December 31, 2017 would be approximately $100,000 annually. Interest rate changes have no impact on the remaining
$1.1 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 December 31,
2017, 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. On
November 1, 2017, we acquired a controlling interest in J&S Audiovisual, which 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. As of December 31, 2017, the impact to our net income of a 10% change (up or down) in the Mexican Peso
exchange rate is estimated to be an increase or decrease of approximately $42,000 for the two months ended December 31, 2017.
Operations in the Dominican Republic are not material.

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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm ...........................................................................................................

Consolidated Balance Sheets — December 31, 2017 and 2016 ....................................................................................................

Consolidated Statements of Operations — Years Ended December 31, 2017, 2016 and 2015 ......................................................

Consolidated Statements of Comprehensive Income (Loss) — Years Ended December 31, 2017, 2016 and 2015 ......................

Consolidated Statements of Equity (Deficit) — Years Ended December 31, 2017, 2016 and 2015 ..............................................

Consolidated Statements of Cash Flows — Years Ended December 31, 2017, 2016 and 2015 .....................................................

Notes to Consolidated Financial Statements ..................................................................................................................................

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
Ashford Inc.
14185 Dallas Parkway
Suite 1100
Dallas Texas 75254

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Ashford Inc. (the “Company”) and subsidiaries as of December
31, 2017 and 2016, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit),
and cash flows for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to
as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company and subsidiaries at December 31, 2017 and 2016, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles
generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ BDO USA, LLP
We have served as the Company’s auditor since 2015
Dallas, Texas
March 12, 2018

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ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

December 31, 2017

December 31, 2016

ASSETS

Current assets:

Cash and cash equivalents .............................................................................................................................. $
Restricted cash ................................................................................................................................................

Investments in securities .................................................................................................................................

Accounts receivable, net .................................................................................................................................

Due from Ashford Trust OP............................................................................................................................

Due from Ashford Prime OP...........................................................................................................................

Inventories.......................................................................................................................................................

Prepaid expenses and other.............................................................................................................................

Total current assets....................................................................................................................................

Investments in unconsolidated entities ..............................................................................................................

Furniture, fixtures and equipment, net...............................................................................................................

Deferred tax assets .............................................................................................................................................

Goodwill ............................................................................................................................................................

Intangible assets, net ..........................................................................................................................................

Other assets ........................................................................................................................................................

36,480

9,076

—

5,127

13,346

1,738

1,066

2,913

69,746

500

21,154

—

12,947

9,713

750

84,091

9,752

12,179

3,817

—

1,305

111,251

500

12,044

6,002

—

Total assets.......................................................................................................................................... $

114,810

129,797

LIABILITIES

Current liabilities:

Accounts payable and accrued expenses ........................................................................................................ $
Due to affiliates...............................................................................................................................................

Due to Ashford Prime OP from AQUA U.S. Fund .........................................................................................

Deferred income..............................................................................................................................................

Deferred compensation plan ...........................................................................................................................

Notes payable, net...........................................................................................................................................

Other liabilities................................................................................................................................................

Total current liabilities ..............................................................................................................................

Accrued expenses...............................................................................................................................................

Deferred income.................................................................................................................................................

Deferred compensation plan ..............................................................................................................................

Notes payable, net..............................................................................................................................................

Total liabilities ..........................................................................................................................................

Commitments and contingencies (note 11)

MEZZANINE EQUITY

20,451

4,272

—

459

311

1,751

9,076

36,320

13,440

18,948

9,956

78,742

11,314

933

2,289

—

144

—

9,752

24,432

287

4,515

8,934

—

38,168

Redeemable noncontrolling interests.................................................................................................................

5,111

1,480

EQUITY

Preferred stock, $0.01 par value, 50,000,000 shares authorized:

Series A cumulative preferred stock, no shares issued and outstanding at December 31, 2017 and

December 31, 2016..................................................................................................................................

Common stock, $0.01 par value, 100,000,000 shares authorized, 2,093,556 and 2,015,589 shares issued

and outstanding at December 31, 2017 and December 31, 2016, respectively..........................................

Additional paid-in capital ...............................................................................................................................

Accumulated deficit ........................................................................................................................................

Accumulated other comprehensive income (loss) ..........................................................................................

Total stockholders’ equity of the Company ..............................................................................................

Noncontrolling interests in consolidated entities...............................................................................................

Total equity ...............................................................................................................................................

—

249,695

(219,396)

(135)

30,185

772

30,957

Total liabilities and equity................................................................................................................... $

114,810

See Notes to Consolidated Financial Statements.

—

237,796

(200,439)

—

37,377

52,772

90,149

129,797

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ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

REVENUE

Advisory services .................................................................................................... $
Audio visual ............................................................................................................

Other........................................................................................................................

Total revenue......................................................................................................

EXPENSES

Salaries and benefits................................................................................................

Cost of revenues for audio visual............................................................................

Depreciation and amortization ................................................................................

General and administrative......................................................................................

Impairment ..............................................................................................................

Other........................................................................................................................

Total expenses....................................................................................................

OPERATING INCOME (LOSS)............................................................................

Realized gain (loss) on investment in unconsolidated entity ..................................

Unrealized gain (loss) on investment in unconsolidated entity...............................

Interest expense .......................................................................................................

Amortization of loan costs ......................................................................................

Interest income ........................................................................................................

Dividend income .....................................................................................................

Unrealized gain (loss) on investments ....................................................................

Realized gain (loss) on investments ........................................................................

Other income (expense) ..........................................................................................

INCOME (LOSS) BEFORE INCOME TAXES ...................................................

Income tax (expense) benefit ..................................................................................

NET INCOME (LOSS)............................................................................................

(Income) loss from consolidated entities attributable to noncontrolling interests ..

Net (income) loss attributable to redeemable noncontrolling interests...................
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY...................... $

INCOME (LOSS) PER SHARE - BASIC AND DILUTED

Basic:

Net income (loss) attributable to common stockholders ...................................... $

Weighted average common shares outstanding - basic ........................................

Diluted:

Net income (loss) attributable to common stockholders ...................................... $
Weighted average common shares outstanding - diluted .....................................

Year Ended December 31,

2017

2016

2015

65,982

67,228

58,546

9,186

6,405

81,573

61,223

7,757

2,527

17,363

1,072

2,153

92,095

(10,522)

—

(83)

(39)

244

203

(294)

(73)

(10,471)

(9,723)

(20,194)

358

1,484

—

379

67,607

52,436

—

1,174

16,454

—

70,064

(2,457)

(3,601)

2,141

—

170

2,326

(10,113)

(162)

(11,623)

(780)

(12,403)

8,860

1,147

—

435

58,981

41,442

—

799

18,091

—

60,332

(1,351)

—

(2,141)

—

352

917

(2,490)

(5,110)

(155)

(9,978)

(2,066)

(12,044)

10,852

(18,352) $

(2,396) $

(1,190)

(9.04) $

2,031

(9.59) $

2,067

(1.19) $

2,012

(2.56) $

2,209

(0.60)

1,991

(4.45)

2,203

See Notes to Consolidated Financial Statements.

2802727-2_Guts.indd 53

4/25/18 1:44 PM

ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)

Year Ended December 31,

2017

2016

2015

NET INCOME (LOSS)............................................................................................ $
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

Foreign currency translation adjustment .................................................................

COMPREHENSIVE INCOME (LOSS) ................................................................

Comprehensive (income) loss attributable to noncontrolling interests...................

Comprehensive (income) loss attributable to redeemable noncontrolling
interests....................................................................................................................

(20,194) $

(12,403) $

(12,044)

(135)

(20,329)

358

—

(12,403)

8,860

—

(12,044)

10,852

1,484

1,147

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY ............................................................................................................... $

(18,487) $

(2,396) $

(1,190)

See Notes to Consolidated Financial Statements.

2802727-2_Guts.indd 54

4/25/18 1:44 PM

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2802727-2_Guts.indd 56

4/25/18 1:44 PM

ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Cash Flows from Operating Activities

Net income (loss) .................................................................................................................................................... $

(20,194)

(12,403)

(12,044)

Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:

Year Ended December 31,

2017

2016

2015

Depreciation and amortization .........................................................................................................................

Change in fair value of deferred compensation plan ........................................................................................

Realized and unrealized (gain) loss on investment in unconsolidated entity, net .............................................

Equity-based compensation .............................................................................................................................

Excess tax (benefit) deficiency on equity-based compensation .......................................................................

Deferred tax expense (benefit) .........................................................................................................................

Contingent consideration .................................................................................................................................

Impairment

......................................................................................................................................................

(Gain) loss on sale of furniture, fixtures and equipment ..................................................................................

Amortization of loan costs ...............................................................................................................................

Realized and unrealized (gain) loss on investments, net ..................................................................................

Purchases of investments in securities .............................................................................................................

Sales of investments in securities ....................................................................................................................

Distributions from investment in unconsolidated entity ..................................................................................

Changes in operating assets and liabilities, exclusive of the effect of acquisitions: .........................................

Prepaid expenses and other ......................................................................................................................

Accounts receivable .................................................................................................................................

Due from Ashford Trust OP .....................................................................................................................

Due from Ashford Prime OP ....................................................................................................................

Inventories ................................................................................................................................................

Other assets ..............................................................................................................................................

Accounts payable and accrued expenses ..................................................................................................

Due to affiliates ........................................................................................................................................

Other liabilities .........................................................................................................................................

Deferred income .......................................................................................................................................

Net cash provided by (used in) operating activities .........................................................................................

Cash Flows from Investing Activities

Additions to furniture, fixtures and equipment

.......................................................................................................

Proceeds from disposal of furniture, fixtures and equipment, net ...........................................................................

Cash acquired in acquisition of Pure Rooms ..........................................................................................................

Acquisition of J&S, net of cash acquired ................................................................................................................

Asset purchase deposit related to RED Hospitality and Leisure LLC .....................................................................

Investments in unconsolidated entities ....................................................................................................................

Redemption of investment in unconsolidated entity ...............................................................................................

2,938

10,410

—

8,469

—

6,002

1,066

1,072

279

—

(128)

(725)

(1,302)

2,079

(205)

190

1,575

689

(676)

7,746

19,415

(3,580)

129

(18,972)

(750)

—

Net cash provided by (used in) investing activities .........................................................................................

(23,158)

Cash Flows from Financing Activities

Payments on revolving credit facilities ...................................................................................................................

Borrowings on revolving credit facilities ................................................................................................................

Proceeds from note payable ....................................................................................................................................

Payments on notes payable and capital leases .........................................................................................................

Payments of loan costs ............................................................................................................................................

Excess tax benefit (deficiency) on equity-based compensation ..............................................................................

Purchases of common stock ....................................................................................................................................

Forfeitures of restricted shares ................................................................................................................................

Employee advances

................................................................................................................................................

Redemption of units ................................................................................................................................................

Contributions from noncontrolling interest .............................................................................................................

Distributions to and redemptions by noncontrolling interests in consolidated entities ............................................

Net cash provided by (used in) financing activities .........................................................................................

Effect of foreign exchange rate changes on cash and cash equivalents ................................................................

Net change in cash, cash equivalents and restricted cash ...........................................................................................

Cash, cash equivalents and restricted cash at beginning of period ..............................................................................

(924)

1,507

10,000

(305)

(28)

—

(24)

—

(433)

—

983

(55,310)

(44,534)

(10)

(48,287)

93,843

1,174

(2,127)

1,460

11,573

284

(2,075)

—

7,787

(153,259)

225,470

—

604

234

(6,323)

—

4,791

(290)

4,068

3,886

84,858

(6,240)

—

1,375

(4,865)

—

(284)

(20)

—

(41)

(18)

2,373

(44,116)

(42,106)

—

37,887

55,956

Cash, cash equivalents and restricted cash at end of period ........................................................................................ $

45,556

93,843

799

(8,608)

2,141

15,609

(1,096)

(4,242)

—

(7,600)

(174,812)

212,953

(1,196)

(250)

(1,007)

(1,275)

—

2,725

(296)

2,347

629

24,801

(2,137)

—

(5,500)

—

(7,637)

—

1,096

(77)

(10)

—

4,780

—

5,858

—

23,022

32,934

55,956

2802727-2_Guts.indd 57

4/25/18 1:44 PM

Supplemental Cash Flow Information

Interest paid.................................................................................................................................................. $

Income taxes paid.........................................................................................................................................

4,948

134

2,333

5,966

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Contributions of securities from noncontrolling interests in consolidated entities...................................... $

— $

110,630

Year Ended December 31,

2017

2016

2015

Distribution from deferred compensation plan ............................................................................................

Capital expenditures accrued but not paid ...................................................................................................

Capital additions associated with common stock issuance ..........................................................................

Accrued but unpaid redemption of AQUA U.S. Fund .................................................................................

Subsidiary equity consideration for Pure Rooms acquisition ......................................................................

Assumption of debt associated with Pure Rooms acquisition .....................................................................

Issuance of OpenKey warrant ......................................................................................................................

Assumption of debt associated with J&S acquisition ..................................................................................

J&S loan costs paid from revolving credit facility.......................................................................................

Ashford Inc. common stock consideration for J&S acquisition ..................................................................

Contingent consideration for J&S acquisition .............................................................................................

Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents at beginning of period ....................................................................................... $

Restricted cash at beginning of period .........................................................................................................

Cash, cash equivalents and restricted cash at beginning of period .............................................................. $

Cash and cash equivalents at end of period ................................................................................................. $

Restricted cash at end of period ...................................................................................................................

Cash, cash equivalents and restricted cash at end of period ........................................................................ $

229

1,397

—

425

475

978

231

5,063

1,196

84,091

9,752

93,843

36,480

9,076

45,556

—

620

—

2,311

—

50,272

5,684

55,956

84,091

9,752

93,843

142

192

1,363

—

29,597

3,337

32,934

50,272

5,684

55,956

See Notes to Consolidated Financial Statements.

2802727-2_Guts.indd 58

4/25/18 1:44 PM

Table of Contents

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Ashford Inc. was formed through a spin-off of Ashford Trust’s asset management business in November 2014. The spin-off
was completed by means of a distribution of common stock of Ashford Inc. and common units of Ashford Hospitality Advisors
LLC (“Ashford LLC”), a Delaware limited liability company formed on April 5, 2013. Ashford LLC had no operations until
November 19, 2013, the date of the Ashford Prime spin-off. As part of the Ashford Inc. spin-off from Ashford Trust, Ashford LLC
became a subsidiary of Ashford Inc. on November 12, 2014. We conduct our advisory business through an operating entity, Ashford
LLC. We conduct our hospitality services business through an operating entity, Ashford Hospitality Services, LLC. We own most
of our assets through Ashford LLC and Ashford Hospitality Services, LLC.

On April 6, 2017, Ashford Inc. entered into the Amended and Restated Limited Liability Company Agreement (the “Amended
and Restated LLC Agreement”) of Ashford Hospitality Holdings LLC, a Delaware limited liability company and a subsidiary of
the Company (“Ashford Holdings”), in connection with the merger (the “Merger”) of Ashford Merger Sub LLC, a Delaware limited
liability company, with and into Ashford LLC, with Ashford LLC surviving the Merger as a wholly-owned subsidiary of Ashford
Holdings. Ashford Holdings is owned 99.8% by Ashford Inc. and 0.2% by noncontrolling interest holders. The terms of the
Amended and Restated LLC Agreement are consistent with the terms of the Amended and Restated Limited Liability Company
Agreement of Advisors. The Merger was effectuated in order to facilitate our investments in businesses that provide products and
services to the hospitality industry.

Ashford Investment Management, LLC (“AIM”) is an indirect subsidiary of the Company, established to serve as an investment
advisor to any private securities funds sponsored by us or our affiliates (the “Funds”) and is a registered investment advisor with
the Securities and Exchange Commission (the “SEC”). AIM REHE Funds GP, LP (“AIM GP”), or an affiliate of AIM GP, serves
as the general partner of any Funds. AIM Management Holdco, LLC (“Management Holdco”) owns 100% of AIM. We, through
Ashford LLC, own 100% of Management Holdco. AIM Performance Holdco, LP (“Performance Holdco”) owns 99.99% of AIM
GP with the remaining 0.01% general partner interest owned by our wholly-owned subsidiary, AIM General Partner, LLC. We,
through Ashford LLC and our 100% ownership interest in AIM General Partner, LLC, own approximately 60% of Performance
Holdco, and Mr. Monty J. Bennett, our chief executive officer and chairman of our board of directors, and Mr. J. Robison Hays,
III, our chief strategy officer and a member of our board of directors, own, in the aggregate, 40% of Performance Holdco. AIM,
AIM GP, Management Holdco, Performance Holdco and AIM General Partner, LLC are all consolidated by Ashford Inc. as it has
control.

During the first quarter of 2017, AIM served as investment advisor to Ashford Quantitative Alternative Master Fund, L.P. (the
“AQUA Master Fund”), an investment partnership formed under the laws of the Cayman Islands and commenced operations on
January 15, 2015. The Master Fund was organized for the purpose of purchasing, selling (including short sales), investing and
trading in investments and engaging in financial transactions, including borrowing, financing, pledging, hedging and other
derivative transactions. The Master Fund had one limited partner: Ashford Quantitative Alternatives (U.S.), LP (the “AQUA U.S.
Fund”), a U.S. investment limited partnership. The AQUA U.S. Fund invested substantially all of its assets in the Master Fund.
The Master Fund was managed by AIM GP and AIM. The AQUA Master Fund and the AQUA U.S. Fund are collectively known
as the “AQUA Fund.”

AIM was entitled to receive an investment management fee equal to 1.5% to 2.0% of the beginning quarterly capital account
balance of certain limited partners. AIM GP served as the general partner to the AQUA U.S. Fund and the AQUA Master Fund.
As such, it was entitled to receive a performance allocation, which was earned annually and equaled 15% to 20% of positive

2802727-2_Guts.indd 59

4/25/18 1:44 PM

Table of Contents

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

changes in the capital account balance of certain of its limited partners. Ashford Trust and other limited partners were not obligated
to pay any portion of the management fee or the performance allocation to AIM or AIM GP, as applicable, but do share pro rata
in all other applicable expenses.

On April 6, 2017, we acquired a 70% interest in Pure Rooms. Pure Rooms’ patented 7-step purification process treats a room’s
surfaces, including the air, and removes up to 99% of pollutants. To consummate the acquisition, Ashford Hospitality Services
LLC (“AHS”), a subsidiary of Ashford Inc., entered into an Amended and Restated Limited Liability Company Agreement (the
“LLC Agreement”) with PRE Opco, LLC (“Pure Rooms”), pursuant to which AHS became the sole owner of the common equity,
or Series A Units. In conjunction with the LLC Agreement, AHS contributed $97,000 cash to Pure Rooms as required by the LLC
Agreement. Pursuant to the Asset and Liability Contribution Agreement (the “Contribution Agreement”), by and among Pure
Rooms (as contributee) and PAFR, LLC, the members of PAFR, LLC and Brault Enterprises, LLC (collectively, the “Sellers”),
the Sellers contributed liabilities, net of assets, of the predecessor operating company, Pure Rooms NA, LLC, with a fair value of
$532,000 in exchange for certain equity interests in Pure Rooms, including 30% of the Series A Units, 100% of the Series B-1
Units, and 50% of the Series B-2 Units. The fair value of the remaining equity consideration included $42,000 of Series A Units,
$181,000 of Series B-1 Units, and $202,000 of Series B-2 Units, totaling $425,000. As a result of the Contribution Agreement,
our equity interest in Pure Rooms was 70%. See note 4 to our consolidated financial statements.

The accompanying consolidated financial statements reflect the operations of our asset and investment management business
including the AQUA Fund (through March 31, 2017, the date of its dissolution) and entities that we consolidate. Our asset and
investment management business provides asset and investment management, accounting and legal services to Ashford Trust,
Ashford Prime and the AQUA Fund. In this report, the terms the “Company,” “we,” “us” or “our” refers to Ashford Inc. and all
entities included in its consolidated financial statements.

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation—The accompanying consolidated financial statements, include the
accounts of Ashford Inc., its majority-owned subsidiaries and entities which it controls. All significant inter-company accounts
and transactions between these entities have been eliminated in these historical consolidated financial statements. The AQUA
Funds were investment companies and followed the accounting and reporting guidance in Financial Accounting Standards Boards
(“FASB”) Accounting Standards Codification (“ASC”) Topic 946.

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, (ii) an
implicit financial responsibility to ensure that a VIE operates as designed, and (iii) 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 CONSOLIDATED FINANCIAL STATEMENTS (continued)

Noncontrolling Interests—The following tables present information about our noncontrolling interests, including those related
to consolidated VIEs, as of December 31, 2017 and 2016 (in thousands):

Ashford Inc. ownership interest.............................................................
Redeemable noncontrolling interests (1) (3) .............................................
Noncontrolling interests in consolidated entities...................................

99.80%

0.20%

—%

85.00%

15.00%

—%

100.00%

Ashford
LLC (2)

J&S (4)

Pure Rooms (5)
70.00%

—%

30.00%

100.00%

OpenKey(6)

43.90%

39.59%

16.51%

100.00%

December 31, 2017

Carrying value of redeemable noncontrolling interests ......................... $

Redemption value adjustment, year-to-date ..........................................

Redemption value adjustment, cumulative ............................................

Carrying value of noncontrolling interests ............................................
Assets, available only to settle subsidiary's obligations (7) ....................
Liabilities, no recourse to Ashford Inc. (8) ..............................................
Notes payable, no recourse to Ashford Inc. ...........................................

Revolving credit facility, no recourse to Ashford Inc. ...........................

385

224

358

—

n/a

2,522

— $

—

439

36,951

21,821

9,917

814

—

205

1,865

1,652

220

100

December 31, 2016

Carrying value of redeemable noncontrolling interests ......................... $

Redemption value adjustment, year-to-date ..........................................

Redemption value adjustment, cumulative ............................................

99.80%

0.20%

100%

179

(54)

134

—

n/a

Ashford
LLC (2)

J&S (4)

Pure Rooms (5)
—%

—%

— $

—

2,204

1,046

2,021

128

1,403

889

—

OpenKey(6)

40.06%

46.31%

13.63%

100%

1,301

1,000

975

960

256

________
(1) Redeemable noncontrolling interests are included in the “mezzanine” section of our 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.
(2) Represents the 0.2% interest in Ashford LLC prior to the legal restructuring of our organizational structure on April 6, 2017 and
0.2% interest in Ashford Holdings thereafter.
(3) Redeemable noncontrolling interests in Ashford Holdings represent the members’ proportionate share of equity in earnings/
losses of Ashford Holdings or Ashford LLC as applicable and net income/loss attributable to the common unit holders is allocated
based on the weighted average ownership percentage of these members’ interest.
(4) Represents ownership interests in J&S, which we consolidate under the voting interest model. J&S provides audio visual products
and services in the hospitality industry. See also notes 1, 13, 14, and 22.
(5) Represents ownership interests in Pure Rooms, a VIE for which we are considered the primary beneficiary and therefore we
consolidate it. Pure Rooms provides “allergy friendly” premium rooms in the hospitality industry. See also notes 1, 13, 14, and
22.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(6) 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. See also notes 1, 13, 14, and 22.
(7) Total assets primarily consisted of cash and cash equivalents and other assets that can only be used to settle the subsidiaries
obligations.
(8) Liabilities consist primarily of accounts payable and accrued expenses for which creditors do not have recourse to Ashford Inc.

In addition to the consolidated entity information above, noncontrolling interests in consolidated entities included
noncontrolling ownership interests in Performance Holdco and AQUA of 40% and 0% as of December 31, 2017, respectively, and
40% and 100% as of December 31, 2016, respectively. As of December 31, 2017 and December 31, 2016, the AQUA Fund held
approximately $0 and $52.8 million, respectively, of total assets consisting primarily of investments in securities, cash and cash
equivalents and receivables that can only be used to settle the obligations of the AQUA Fund. Additionally, as of December 31,
2017 and December 31, 2016, the AQUA Fund had liabilities of $0 and $93,000, respectively, consisting primarily of liabilities
associated with investments in securities for which creditors do not have recourse to Ashford Inc. The AQUA Fund was considered
to be a VIE, as defined by authoritative accounting guidance. All major decisions related to the AQUA Fund that most significantly
impacted its economic performance, including but not limited to admittance of limited partners and purchasing, selling (including
short sales), investing and trading in investments and engaging in financial transactions, including borrowing, financing, pledging,
hedging and other derivative transactions were subject to the approval of our wholly-owned subsidiary, AIM GP. As such, we
consolidated the AQUA Fund. On March 7, 2017, AIM GP, the general partner of the AQUA U.S. Fund, provided written notice
to the AQUA U.S. Fund's limited partners of its election to dissolve the AQUA U.S. Fund pursuant to Section 6.1(a) of the Second
Amended and Restated Limited Partnership Agreement of the AQUA U.S. Fund as of March 31, 2017 (the “Dissolution Date”).
In connection with the dissolution of the AQUA U.S. Fund, the AQUA Master Fund was liquidated in accordance with the laws
of the Cayman Islands. The balance of all limited partners' capital accounts in the AQUA U.S. Fund was distributed to limited
partners in cash, and thereafter limited partners ceased to be a limited partner of the AQUA U.S. Fund. As of December 31, 2017,
the AQUA U.S. Fund was fully dissolved.

Unconsolidated VIEs—Our investments in certain unconsolidated entities are considered to be variable interests in the
underlying entities. Because we do not have the power and financial responsibility to direct the unconsolidated entities’ activities
and operations, we are not considered to be the primary beneficiary of these entities on an ongoing basis and therefore such entities
should not be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions. We
review the 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.
Any impairment is recorded in equity in earnings/loss in unconsolidated entities.

We held an investment in an unconsolidated entity with a carrying value of $500,000 at both December 31, 2017 and 2016,
which we account for under the cost method of accounting as we do not exercise significant influence over the entity. No impairment
of the investment was recorded during the years ended December 31, 2017, 2016 and 2015.

Additionally, as of December 31, 2015, we held a first loss limited liability company interest (the "Interest") in an
unconsolidated limited liability company (the "Fund"). The Fund was a private investment fund which generally invested its assets
in one or more securities trading accounts that were managed by external investment advisors, including our subsidiary, Ashford
Investment Management, LLC. Our initial investment in the Fund was made in May 2015 in the amount of $5.0 million, which
represented an approximate 2% ownership interest in the Fund. In accordance with the Fund's limited liability company agreement,
a manager not affiliated with us possessed and exercised the full, complete and exclusive right, power and authority to manage
and conduct the business and affairs of the Fund, subject only to certain withdrawal and voting rights we had and the requirements
of applicable law. Due to our limited rights, we did not exercise significant influence over the Fund and therefore did not account
for the Interest under the equity method of accounting. The Fund was in an investment company (as defined by GAAP) for which
the Interests do not have a readily determinable value. Instead, the manager of the Fund calculated a net asset value (“NAV”) for
the Interests monthly in accordance with applicable authoritative accounting guidance. Changes in the NAV were recorded in
unrealized gain/loss in investment in unconsolidated entity. We requested redemption of the Interest effective March 29, 2016.
The redeemed amount of $1.4 million was received during the second quarter of 2016, which reduced our carrying value to $0.

Acquisitions—We account for acquisitions and investments in businesses as business combinations if the target meets the
definition of a business and (a) the target is a VIE and we are the target's primary beneficiary, and therefore we must consolidate
its financial statements, or (b) we acquire more than 50% of the voting interest of the target and it was not previously consolidated.
We record business combinations using the acquisition method of accounting, which requires all of the assets acquired and liabilities
assumed to be recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

the net tangible and intangible assets acquired is recorded as goodwill. The application of the acquisition method of accounting
for business combinations requires management to make significant estimates and assumptions in the determination of the fair
value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are
depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed
are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations
that utilize customary valuation procedures and techniques. Significant assumptions and estimates include, but are not limited to,
the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost
savings expected to be derived from acquiring an asset, if applicable. If the actual results differ from the estimates and judgments
used in these estimates, the amounts recorded in the consolidated financial statements may be exposed to potential impairment of
the intangible assets and goodwill.

If our investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the

transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalizing
transaction costs, and does not result in the recognition of goodwill.

Use of Estimates—The preparation of these 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 consolidated financial statements and
the reported amounts of revenue 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 represents reserves for casualty insurance claims and the associated ancillary costs. At the
beginning of each year, Ashford Inc.’s Risk Management department collects funds, from the Ashford Trust/Prime properties and
their respective management companies, of 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 offset to restricted cash amounts is included in other liabilities. We early adopted Accounting Standards Update
(“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash effective January 1, 2017. See discussion in “Recently
Adopted Accounting Standards” below.

Accounts Receivable—Accounts receivable consists primarily of receivables from customers of audio visual services. We
maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required
payments for services. The allowance is recorded based on management’s judgment regarding our ability to collect as well as the
age of the receivables. Accounts receivable are written off when they are deemed uncollectible.

Inventories—Inventories consist primarily of audio visual equipment and related accessories and are carried at the lower of

cost or market value using the first-in, first-out ("FIFO") valuation method.

Furniture, Fixtures and Equipment, net—We record furniture, fixtures and equipment at cost. We also capitalize certain
costs incurred related to the development of internal use software. We capitalize costs incurred during the application development
stage related to the development of internal use software. We expense costs incurred related to the planning and post-implementation
phases of development as incurred. Assets are depreciated using the straight-line method over the estimated useful lives of the
assets.

Impairment of Furniture, Fixtures and Equipment—Furniture, fixtures and equipment are reviewed for impairment
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the
asset is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows, which take
into account current market conditions and our intent with respect to holding or disposing of the asset. If our analysis indicates
that the carrying value of the asset is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for
the amount by which the asset net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating impairment
of assets, we make many assumptions and estimates, including projected cash flows, expected holding period, and expected useful
life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models,
comparable market transactions and third-party appraisals, where considered necessary. Assets not yet placed into service are also
reviewed for impairment whenever events or changes in circumstances indicate that all or a portion of the assets will not be placed
into service. We recorded impairment charges of $1.1 million for the year ended December 31, 2017 offset by recognition of
deferred income from reimbursable expenses related to capitalized software implementation costs. The impairment was recognized

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

upon determination that a portion of the software will not be placed into service. See note 17 to our consolidated financial
statements. No impairment charges were recorded for furniture, fixtures and equipment for the year ended December 31, 2016.

Goodwill and Indefinite-Lived Intangible Assets—Goodwill is assigned to reporting units that are expected to benefit from
the synergies of the business combination as of the acquisition date. Indefinite-lived intangible assets primarily include trademark
rights resulting from our acquisition of J&S. We assess goodwill and indefinite-lived intangible assets, neither of which is amortized,
for impairment annually as of October 1, or more frequently, if events and circumstances indicate impairment may have occurred.
In the evaluation of goodwill for impairment, we perform a quantitative assessment and compare the fair value of the reporting
unit to the carrying value. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is
potentially impaired and we proceed to step two of the impairment analysis. In step two of the analysis, we will record an impairment
loss equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value should such a circumstance
arise. We determine fair value based on discounted projected future operating cash flows using a discount rate that is commensurate
with the risk inherent in our current business model. We determined that there was no goodwill impairment during our annual test
as the fair value of our reporting units was in excess of the carrying values primarily due to the recency of the Pure Rooms and
J&S acquisitions. We base our measurement of fair value of trademarks using the relief-from-royalty method. This method assumes
that the trade name and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the
benefits received from them. No indicators of impairment were identified during our annual test or as of December 31, 2017.

Definite-Lived Intangible Assets—Definite-lived intangible assets primarily include customer relationships resulting from
our acquisition of J&S and Pure Rooms. These assets are amortized using the straight-line method over the estimated useful lives
of the assets. We review the carrying amount of the assets whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. If the carrying amount is not recoverable, we record an impairment charge for the excess of the
carrying amount over the fair value. No indicators of impairment were identified as of December 31, 2017.

Revenue Recognition—Revenues primarily consist of advisory and investment management fees and expense reimbursements
that are recognized when services have been rendered. Advisory fees consist of base fees and incentive fees. For Ashford Trust,
the quarterly base fee ranges from 0.70% to 0.50% per annum of the total market capitalization ranges from less than $6.0 billion
to greater than $10.0 billion total market capitalization plus the Key Money Asset Management Fee, as defined in the respective
advisory agreement, subject to certain minimums. Similarly, the Ashford Prime base fee is fixed at 0.70% of Ashford Prime’s total
market capitalization plus the Key Money Asset Management Fee, as defined in the respective advisory agreement, subject to
certain minimums. Reimbursements for overhead, travel expenses, risk management and internal audit services are recognized
when services have been rendered. We also record advisory revenue for equity grants of Ashford Trust and Ashford Prime common
stock and Long-Term Incentive Plan (“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, as well an
offsetting expense in an equal amount included in “salaries and benefits.” Incentive advisory fees are measured annually in each
year that Ashford Trust’s and/or Ashford Prime’s annual total stockholder return exceeds the average annual total stockholder
return for each company’s respective peer group, subject to the FCCR Condition, as defined in the advisory agreements. Incentive
advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition. Accordingly, incentive advisory
fee revenue is recognized only when the amount earned is fixed and determinable and the FCCR Condition has been met. As
incentive advisory fees are measured annually, we recognize revenue quarterly based on the amount that would be due pursuant
to the applicable advisory agreement as of the interim balance sheet date in accordance with the authoritative accounting guidance.
Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our wholly-
owned subsidiary, and are recognized based on a stated percentage of the loan amount when services have been rendered.

Audio visual revenue primarily consists of revenue generated 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. We recognize revenue when
persuasive evidence of an arrangement exists, services have been rendered, the fee is fixed or determinable and collectability is
reasonably assured. 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 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 rental pool equipment, amortization of signing bonuses, as well as other costs such as

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

supplies, freight, travel and other overhead from our venue and customer facing operations and any losses on equipment disposal.
Rental pool equipment for our audio visual services is depreciated over an estimated useful life of 5 years.

Certain of our consolidated entities enter into multiple element arrangements with customers. For such arrangements, we
determine whether each of the individual deliverables in the arrangement qualify as a separate unit of accounting, which requires
that the deliverable have standalone value upon delivery. We allocate arrangement consideration to the separate units of accounting
using the relative selling price method, in which allocation of consideration is based on vendor-specific objective evidence
(“VSOE”) if available, third-party evidence (“TPE”), or if VSOE and TPE are not available, management’s best estimate of a
standalone selling price for the units of accounting. We limit the amount of arrangement consideration to amounts that are fixed
or determinable. The arrangement consideration is recognized as revenue as the deliverables are provided to the customer, which
is either up front for deliverables that have standalone value upon delivery, or ratably over the period of delivery.

Salaries and Benefits—Salaries and benefits are expensed as incurred. Salaries and benefits includes expense for equity grants
of Ashford Trust and Ashford Prime 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. There is an offsetting amount, included in “advisory services” revenue. Salaries and benefits also includes changes in fair
value in the deferred compensation plan liability. See further discussion in notes 2 and 16 to our consolidated financial statements.

General and Administrative—General and administrative costs are expensed as incurred, and include advertising costs of

$126,000, $0 and $0 for the years ended December 31, 2017, 2016 and 2015, respectively.

Depreciation and Amortization—Our furniture, fixtures and equipment are depreciated on a straight-line basis over the
estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of the lease term or the estimated
useful life of the related assets. Furniture and equipment are depreciated using the straight-line method over lives ranging from 3
to 7.5 years and computer software placed into service is amortized on a straight-line basis over estimated useful lives ranging
from 3 to 5 years. While we believe our estimates are reasonable, a change in estimated useful lives could affect depreciation
expense and net income/loss as well as resulting gains or losses on potential sales. Definite-lived intangible assets, which include
customer relationships resulting from our acquisitions of J&S and Pure Rooms, are amortized using the straight-line method over
the estimated useful lives of the assets. See note 4 to our consolidated financial statements.

Equity-Based Compensation—Equity-based compensation included in “salaries and benefits” is accounted for at fair value
based on the market price of the shares/options on the date of grant in accordance with applicable accounting guidance. The fair
value is charged to compensation expense on a straight-line basis over the vesting period of the shares/options. Grants of restricted
stock to independent directors are recorded at fair value based on the market price of our shares at grant date, and this amount is
fully expensed in general and administrative expense as the grants of stock are fully vested on the date of grant. In connection
with providing advisory services, our officers and employees are granted common stock and LTIP units from Ashford Trust and
Ashford Prime, which result in expense equal to the fair value of the award, included in “salaries and benefits” in proportion to
the requisite service period satisfied during the period, as well as offsetting revenue in an equal amount included in “advisory
services” revenue.

Other Comprehensive Income (Loss)—Comprehensive income for the year ended December 31, 2017 consists of net income
and foreign currency translation adjustments. The foreign currency translation adjustment represents the unrealized impact of
translating the financial statements of the J&S operations in Mexico and the Dominican Republic from their respective functional
currencies to U.S. dollars. This amount is not included in net income and would only be realized upon the sale or upon complete
or substantially complete liquidation of the foreign businesses. The accumulated other comprehensive loss is presented on the
consolidated balance sheet as of December 31, 2017. There were no sources of other comprehensive income (loss) in the years
ended December 31, 2016 and 2015.

Due to Affiliates—Due to affiliates represents current payables resulting from general and administrative expense, furniture,
fixtures and equipment reimbursements, and contingent consideration. Due to affiliates is generally settled within a period not
exceeding one year.

Due from Ashford Trust OP—Due from Ashford Trust OP represents current receivables related to advisory services fees,
incentive fees, reimbursable expenses and service business expenses. Due from Ashford Trust OP is generally settled within a
period not exceeding one year.

Due from Ashford Prime OP—Due from Ashford Prime OP represents current receivables related to advisory services fees,
incentive fees, reimbursable expenses and service business expenses. Due from Ashford Prime OP is generally settled within a
period not exceeding one year.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Income (Loss) Per Share—Basic income (loss) per common share is calculated by dividing net income (loss) attributable to
the Company by the weighted average common shares outstanding during the period using the two-class method prescribed by
applicable authoritative accounting guidance. Diluted income (loss) per common share is calculated using the two-class method,
or the treasury stock method, if more dilutive. Diluted income (loss) per common share reflects the potential dilution that could
occur if securities or other contracts to issue common shares were exercised or converted into common shares, whereby such
exercise or conversion would result in lower income per share. See note 18.

Deferred Compensation Plan—Effective January 1, 2008, Ashford Trust established a nonqualified deferred compensation
plan (“DCP”) for certain executive officers, which was assumed by the Company in connection with the separation from Ashford
Trust. The plan allows participants to defer up to 100% of their base salary and bonus and select an investment fund for measurement
of the deferred compensation obligation. 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 consolidated statements of operations. See note 16.

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 and beginning in 2017 Mexico and Dominican Republic income 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 the 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. At December 31, 2017, we recorded a valuation
allowance of $25.1 million to fully reserve our net deferred tax assets. At December 31, 2016, we recorded a valuation allowance
of $6.1 million to partially reserve our net deferred tax assets. We have provided these allowances primarily because of operating
losses incurred for each of the years for the three year period ending December 31, 2017. The losses represent significant negative
evidence regarding the realizability of our deferred tax assets. Further, our legal entity restructuring on April 6, 2017 and the Tax
Cuts and Jobs Act enacted on December 22, 2017 eliminated our ability to carry back future net operating losses against taxable
income from prior periods, which is additional negative evidence regarding the reliability of our deferred tax assets.

The “Income Taxes” topic of the FASB’s 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 subsidiaries file income tax returns in the U.S. federal jurisdiction
and various states and cities, and beginning in 2017 in Mexico and the Dominican Republic. Tax years 2013 through 2017 remain
subject to potential examination by certain federal and state taxing authorities.

Recently Adopted Accounting Standards—In March 2016, the FASB issued ASU 2016-07, Simplifying the Transition to the
Equity Method of Accounting (“ASU 2016-07”). The new standard requires an investor to apply the equity method of accounting
only from the date it qualifies for that method, i.e., the date the investor obtains significant influence over the operating and financial
policies of an investee. ASU 2016-07 eliminates the previous requirement to retroactively adjust the investment and record a
cumulative catch up for the periods that the investment had been held, but did not qualify for the equity method of accounting.
ASU 2016-07 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. The
amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of
influence that result in the adoption of the equity method. Early adoption is permitted. The adoption of ASU 2016-07 did not have
a material impact on our consolidated financial statements or related disclosures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

other income tax cash flows as an operating activity in the statement of cash flows. In addition, ASU 2016-09 increases the tax
withholding requirements threshold to qualify for equity classification. ASU 2016-09 also clarifies that cash paid by an employer
when directly withholding shares for tax withholding purposes should be classified as a financing activity. ASU 2016-09 provides
an optional accounting policy election to be applied on an entity-wide basis to either estimate the number of awards that are
expected to vest or account for forfeitures when they occur. ASU 2016-09 is effective for annual periods beginning after December
15, 2016, and interim periods within those annual periods. We have adopted this standard effective January 1, 2017, and the
adoption of this standard did not have a material impact on our financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”),
which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU
2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-
of-period and end-of-period total amounts shown on the statements of cash flows. ASU 2016-18 is effective for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We adopted this
standard effective January 1, 2017 on a retrospective basis. The adoption of this standard resulted in the inclusion of restricted
cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the
consolidated statements of cash flows for all periods presented. As a result, net cash provided by operating activities increased
$4.1 million in the year ended December 31, 2016 and $2.3 million for the year ended December 31, 2015. Our beginning-of-
period cash, cash equivalents and restricted cash increased $9.8 million and $5.7 million in 2017 and 2016, respectively.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

for certain observable price changes. It also requires a qualitative impairment assessment of such equity investments and amends
certain fair value disclosure requirements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including
interim periods within those fiscal years. Certain provisions of ASU 2016-01 are eligible for early adoption. In February 2018, the
FASB issued ASU 2018-03, as technical corrections and improvements to amend and clarify certain aspects of the guidance issued
in ASU 2016-01. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within
those fiscal years beginning after June 15, 2018.We do not expect that the above standards will have a material impact on our
consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments - a consensus of the Emerging Issues Task Force (“ASU 2016-15”). The new guidance is intended to reduce
diversity in practice in how certain transactions are classified in the statement of cash flows. Certain issues addressed in this
guidance include - Debt payments or debt extinguishment costs, contingent consideration payments made after a business
combination, proceeds from the settlement of insurance claims, distributions received from equity method investments and
beneficial interests in securitization transactions. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017
and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact that ASU 2016-15 will
have on our consolidated financial statements and related disclosures.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Furniture, Fixtures and Equipment, net

Furniture, fixtures and equipment, net, consisted of the following (in thousands):

December 31,

2017

2016

Rental pool equipment ...............................................................................................................
Furniture, fixtures and equipment ..............................................................................................
Leasehold improvements............................................................................................................
Computer software .....................................................................................................................
Total cost..................................................................................................................................
Accumulated depreciation..........................................................................................................
Furniture, fixtures and equipment, net.....................................................................................

7,711
7,862
804
8,626
25,003
(3,849)
21,154

—
6,549
537
7,125
14,211
(2,167)
12,044

For the years ended December 31, 2017, 2016 and 2015, depreciation expense was $2.3 million, $1.2 million and $799,000,
respectively. As of December 31, 2017 and 2016, computer software of $4.7 million and $5.5 million, respectively, has not been
placed into service and no amortization was recorded related to those assets. Depreciation and amortization expense for the year
ended December 31, 2017, excludes depreciation expense related to audio visual rental pool equipment of $411,000, which is
included in cost of revenues for audio visual.

4. Acquisitions

J&S

On November 1, 2017, we completed the acquisition of an 85% controlling interest in J&S Audio Visual Communications,
Inc., J&S Audiovisual Mexico, S. de R.L. de C.V. and J&S Audio Visual Dominican Republic, L.P., collectively referred to as
"J&S." J&S provides an integrated suite of audio visual services including show and event services, hospitality services, creative
services and design & integration services to its customers in various venues including hotels and convention centers in the United
States, Mexico and the Dominican Republic.

The purchase price of approximately $25.5 million consisted of (i) $19.2 million in cash of which $10.0 million was funded
with a term loan; (ii) 70,318 shares of Ashford Inc. common stock, which was determined based on an agreed upon value of
approximately $4.3 million using a thirty-day volume weighted average price per share of $60.44 and had an estimated fair value
of approximately $5.1 million as of the acquisition date; and (iii) contingent consideration with an estimated fair value of
approximately $1.2 million. The results of operations of J&S were included in our consolidated financial statements from the date
of acquisition.

The acquisition of J&S has been recorded using the acquisition method of accounting in accordance with the authoritative
guidance for business combinations, and the purchase price allocation is based on our valuation of the fair value of the tangible
and intangible assets acquired and liabilities assumed at the date of acquisition. We have completed our preliminary valuation to
determine the fair value of the identifiable assets acquired and liabilities assumed. The fair values of the assets acquired were
determined using various valuation techniques, including an income approach. The fair value measurements were primarily based
on significant inputs that are not directly observable in the market and are considered Level 3 under the fair value measurements
and disclosure framework. Key assumptions include cash flow projections of J&S and the discount rate applied to those cash flows.
The excess of the purchase price over the estimated fair values of the identifiable net assets acquired was recorded as goodwill.

We have allocated the purchase price to the assets acquired and liabilities assumed on a preliminary basis using estimated fair
value information currently available. We are in the process of evaluating the values assigned to working capital balances, furniture,
fixtures and equipment, intangible assets, notes payable, capital leases, deferred taxes, noncontrolling interests and contingent
consideration. Thus, the balances reflected below are subject to change, and any such changes could result in adjustments to the
allocation. Any change to the amounts recorded within furniture, fixtures and equipment could also impact depreciation expense.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The fair value of the purchase price and preliminary allocation of the purchase price is as follows (in thousands):

Cash..................................................................................................................................................................
Term loan .........................................................................................................................................................
Fair value of Ashford Inc. common stock........................................................................................................
Fair value of contingent consideration.............................................................................................................
Purchase price consideration .........................................................................................................................
Fair value of redeemable noncontrolling interest ............................................................................................
Fair value of noncontrolling interest................................................................................................................

Total fair value of purchase price

9,176

10,000

5,063

1,196

25,435

2,724

324

28,483

Fair Value

Estimated
Useful Life

Current assets including cash ..................................................................................................
Furniture, fixtures and equipment ...........................................................................................
Goodwill ..................................................................................................................................
Trademarks ..............................................................................................................................
Customer relationships ............................................................................................................
Other assets..............................................................................................................................
Total assets acquired .............................................................................................................
Current liabilities .....................................................................................................................
Notes payable, current .............................................................................................................
Deferred income ......................................................................................................................
Note payable, non-current .......................................................................................................
Total assumed liabilities........................................................................................................
Net assets acquired ..................................................................................................................

6,664

9,020

12,165

3,201

6,519

129

37,698

7,024

445

1,213

533

9,215

28,483

5 years

7 years

We expect approximately $9.9 million of the goodwill balance to be deductible for tax purposes. The qualitative factors that
make up the recorded goodwill include value associated with an assembled workforce and value attributable to expanding J&S’
operations through our relationships with Ashford Trust and Ashford Prime.

Results of J&S

The results of operations of J&S have been included in our results of operations since the acquisition date. Our consolidated
statement of operations for the year ended December 31, 2017, included total revenue of $9.2 million and a net loss of $657,000
from J&S. The unaudited pro forma results of operations as if the acquisition had occurred on January 1, 2016, are included below
under “Pro Forma Financial Results.”

Pure Rooms

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$181,000 of Series B-1 Units, and $202,000 of Series B-2 Units, totaling $425,000. As a result of the Contribution Agreement,
our equity interest in Pure Rooms was 70%.

Per the LLC Agreement, the Series A Units are voting units and have the voting rights set forth in the Contribution Agreement
but do not have management participation rights. The Series B-1 Units and Series B-2 Units are non-voting units and do not have
voting or management participation rights. The distribution waterfall provides seniority as follows: Series B-1, Series B-2, then
Series A. There is no coupon or other preference associated with the Series B-1 and B-2 unit classes. During the year ended
December 31, 2017, the Series B-1 unit holders redeemed their Series B-1 units for $200,000.

The acquisition of Pure Rooms has been recorded using the acquisition method of accounting in accordance with the
authoritative guidance for business combinations, and the purchase price allocation is based on our valuation of the fair value of
the tangible and intangible assets acquired and liabilities assumed at the date of acquisition. During the fourth quarter of 2017, we
finalized the valuation of the acquired assets and liabilities associated with the Pure Rooms acquisition. The final fair value analysis
did not result in a material change on the consolidated balance sheet, and we do not expect any further adjustments to the purchase
price allocation. The fair values of the assets acquired were determined using various valuation techniques, including an income
approach. The fair value measurements were primarily based on significant inputs that are not directly observable in the market
and are considered Level 3 under the fair value measurements and disclosure framework. Key assumptions include cash flow
projections of Pure Rooms and the discount rate applied to those cash flows. The excess of the purchase price over the estimated
fair values of the identifiable net assets acquired was recorded as goodwill.

The fair value of the equity consideration of $425,000 is allocated as follows (in thousands):

Fair Value

Estimated
Useful Life

Cash .......................................................................................................................................
Furniture, fixtures and equipment .........................................................................................
Customer relationships ..........................................................................................................
Goodwill ................................................................................................................................
Total assets acquired ...........................................................................................................
Line of credit .........................................................................................................................
Note payable..........................................................................................................................
Other assumed liabilities, net ................................................................................................
Total assumed liabilities......................................................................................................
Net assets acquired ................................................................................................................

129

170

175

782

1,256

100

375

356

831

425

3 years

5 years

We expect approximately $547,000 of the goodwill balance to be deductible for income tax purposes. The qualitative factors
that make up the recorded goodwill include value associated with an assembled workforce and value attributable to expanding
Pure Rooms’ operations through our relationships with Ashford Trust and Ashford Prime.

Results of Pure Rooms

The results of operations of Pure Rooms have been included in our results of operations since the acquisition date. Our
consolidated statement of operations for the year ended December 31, 2017, included total revenue of $2.1 million and a net loss
of $78,000 from Pure Rooms. The unaudited pro forma results of operations as if the acquisition had occurred on January 1, 2016,
are included below under “Pro Forma Financial Results.”

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Pro Forma Financial Results

The following table reflects the unaudited pro forma results of operations as if the J&S and Pure Rooms acquisitions had
occurred and the applicable indebtedness was incurred on January 1, 2016, and the removal of $1.0 million and $170,000 of
transaction costs directly attributable to the acquisitions for the years ended December 31, 2017 and December 31, 2016, respectively
(in thousands):

Year Ended December 31,

2017

2016

Total revenue .................................................................................................................................. $
Net income (loss) ...........................................................................................................................
Net income (loss) attributable to common stockholders ................................................................
Pro forma income (loss) per share:

138,638
(19,213)
(17,489)

131,547
(12,120)
(2,089)

Basic............................................................................................................................................. $
Diluted.......................................................................................................................................... $

(8.37) $
(8.88) $

Weighted average common shares outstanding (in thousands):

Basic.............................................................................................................................................
Diluted..........................................................................................................................................

2,090

2,120

(1.00)
(2.35)

2,082

2,279

5. Goodwill and Intangible Assets, net

The changes in the carrying amount of goodwill for the year ended December 31, 2017, are as follows (in thousands):

Balance at the beginning of year...................................................................
Changes in goodwill:
Additions (1) ................................................................................................
Balance at the end of year .............................................................................

J&S

Corporate
and Other

Consolidated

— $

—

12,165
12,165 $

782
782 $

12,947
12,947

________
(1) Corporate and Other additions reflect the goodwill acquired as a result of the acquisition of Pure Rooms.

Intangible assets, net as of December 31, 2017, are as follows (in thousands):

Definite-lived intangible assets:

Pure Rooms customer relationships............................................................
J&S customer relationships ........................................................................

Indefinite-lived intangible assets:

J&S trademarks...........................................................................................

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

(26) $
(156)
(182) $

149
6,363
6,512

$
$

175 $

6,519
6,694 $

3,201
3,201

Amortization expense for definite-lived intangible assets was $182,000 for the year ended December 31, 2017. Annual
amortization expense for these definite-lived assets will approximate $1.0 million over the next five years. Customer relationships
for Pure Rooms and J&S were assigned a useful life of 5 years and 7 years, respectively.

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6. Notes Payable, net

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Subsidiary

Maturity

Interest Rate

December 31,
2017

December 31,
2016

November 2022 One-Month LIBOR(2) + 3.25%
November 2022 One-Month LIBOR(2) + 3.25%

Various

Various - fixed
Prime Rate (1) + 1.00%
5.00%

Indebtedness
Term loan...........................................................

Revolving credit facility....................................

Capital lease obligations (see note 7) ................

J&S

Revolving credit facility....................................

Pure Rooms

On demand

Term loan...........................................................

Pure Rooms October 1, 2018

Total notes payable............................................

Less deferred loan costs, net..............................

Total notes payable less net deferred loan costs

Less current portion...........................................

__________________
(1) Prime Rate was 4.50% at December 31, 2017.
(2) One-month LIBOR rate was 1.56% at December 31, 2017.

9,917

814

896

100

220

11,947

(240)

11,707

(1,751)

9,956

—

On November 1, 2017, our J&S operating subsidiary entered into a series of financing transactions for which the creditors do
not have recourse to Ashford Inc., including a $10.0 million term loan to finance the acquisition of J&S. The term loan bears
interest at LIBOR plus 3.25% and matures on November 1, 2022. The subsidiary capitalized debt issuance costs of $231,000
associated with this financing, which are included as a reduction of notes payable on the consolidated balance sheet as of December
31, 2017. In connection with the term loan, the subsidiary 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 December 31, 2017, was not material. The subsidiary
also entered into a $3.0 million revolving credit facility which bears interest at LIBOR plus 3.25% and matures on November 1,
2022. During the year ended December 31, 2017, $1.7 million was drawn and approximately $924,000 of payments were made
on the revolving credit facility. As of December 31, 2017, $2.2 million of credit was available under the revolving credit facility.
These debt agreements contain various financial covenants that, among other things, require the maintenance of certain fixed
charge coverage ratios. Our J&S operating subsidiary is currently in compliance with all financial covenants.

On April 13, 2017, OpenKey entered into a Loan and Security Agreement ("Loan Agreement") for a line of credit in the amount
of $1.5 million. The line of credit is secured by all of OpenKey's assets and matures on October 31, 2018 with an interest rate of
Prime Rate plus 2.75%. Creditors do not have recourse to Ashford Inc. At December 31, 2017, there were no borrowings outstanding
under the Loan Agreement. In connection with the line of credit, OpenKey granted the creditors a 10-year warrant to purchase
approximately 28,000 shares of OpenKey's preferred stock at $1.61 per share. The fair value of the warrants, estimated to be
$28,000, was recorded in noncontrolling interests in consolidated entities and debt issuance costs, which will be amortized over
the term of the line of credit.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Excluding capital lease obligations (see note 7) and interest, maturities of our long-term debt for each of the next five years

and thereafter are as follows (in thousands):

2018......................................................................................................................................................................
2019......................................................................................................................................................................
2020......................................................................................................................................................................
2021......................................................................................................................................................................
2022......................................................................................................................................................................
Thereafter.............................................................................................................................................................

1,320
1,000
1,000
1,000
6,731
—
11,051

7. Lease Commitments

Capital Leases

We lease certain equipment under capital leases. The net book value of these assets was approximately $835,000 at December
31, 2017, and is included in furniture, fixtures and equipment in our consolidated balance sheet. Amortization of assets under
capital leases is included in depreciation and amortization expense in our consolidated statement of operations.

Operating Leases

We have contractual obligations in the form of operating leases for office space and equipment. Operating lease obligations
expire at various dates with the latest maturity in 2027. For the year ended December 31, 2017, we recorded rental expense of
$307,000. We did not incur rental expense for the years ended December 31, 2016 and 2015.

As of December 31, 2017, future minimum lease payments on capital and operating leases were as follows (in thousands):

2018 ..............................................................................................................................................
2019 ..............................................................................................................................................
2020 ..............................................................................................................................................
2021 ..............................................................................................................................................
2022 ..............................................................................................................................................
Thereafter......................................................................................................................................
Total minimum lease payments ....................................................................................................
Imputed interest ............................................................................................................................
Present value of minimum lease payments...................................................................................

8. Derivative Contracts

Capital
Leases

Operating
Leases

467
387
88
16
—
—
958
(62)
896

1,118
991
729
571
436
1,607
5,452
—
5,452

As of December 31, 2016, the volume of the AQUA U.S. Fund’s option derivative activities based on their notional amounts,
which are the fair values of the underlying shares as if the options were exercised at December 31, 2016, was 8,000 long exposure
contracts with a notional amount of $0 and no short exposure contracts. As of December 31, 2017, the AQUA U.S. Fund has been
dissolved.

Options on Futures Contracts—During the year ended December 31, 2017, we purchased no options on Eurodollar futures.
During the year ended December 31, 2016, we purchased options on Eurodollar futures for total costs of $94,000 and a maturity
date of June 2017. These options were not designated as cash flow hedges. The carrying value of these options on futures contract
is included in investments in securities in the consolidated balance sheet as of December 31, 2016.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. Fair Value Measurements

Fair Value Hierarchy—Our financial instruments 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.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

December 31, 2017

Liabilities

Non-derivative liabilities:

Contingent consideration..................... $
Deferred compensation plan................

Total ................................................

Net............................................................... $

(19,259)

— $

(19,259)

—

— $

(2,262)
—
(2,262)
(2,262)

(2,262) (1)
(19,259)
(21,521)
(21,521)

Quoted
Market Prices
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

December 31, 2016

Assets

Derivative assets:

Options on futures contracts................ $
Total ................................................

Liabilities

Non-derivative liabilities:

Deferred compensation plan................

Total ................................................

(9,078)

— $

—

Net............................................................... $

(8,987)

— $

91
91 (2)

(9,078)
(9,078)
(8,987)

__________________
(1) Reported as “due to affiliates” in the consolidated balance sheets.
(2) Reported as “investments in securities” in the consolidated balance sheets.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents our rollforward of our Level 3 contingent consideration liability (in thousands):

Contingent
Consideration
Liability (1)

Balance December 31, 2016 ................................................................................................................... $
Acquisition ..............................................................................................................................................

Gains (losses) included in earnings.........................................................................................................

Dispositions and settlements ...................................................................................................................

Transfers into/out of Level 3...................................................................................................................
Balance December 31, 2017 ................................................................................................................... $

—
(1,196)
(1,066) (2)
—

—
(2,262) (3)

__________________
(1) Ashford Inc.’s contingent consideration associated with the acquisition of J&S is carried at fair value in the consolidated balance
sheets. The fair value of our contingent consideration liability was estimated using significant inputs that are not observable in the
market and thus represents a Level 3 fair value measurement. The significant inputs in the Level 3 measurement included the
timing and amount of the ultimate payout based on our estimate of J&S operating performance during the earn-out period, calculated
in accordance with the agreement, and the risk adjusted discount rate used to discount the future payment.
(2) Calculated as the change in fair value of the contingent consideration associated with the acquisition of J&S and reported as
“other” operating expense in the consolidated statements of operations.
(3) Reported as “due to affiliates” in the consolidated balance sheets.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

The following table summarizes the effect of fair value measured assets and liabilities on the consolidated statements of

operations (in thousands):

Gain (Loss) Recognized

Year Ended December 31,

2017

2016

2015

Assets

Derivative assets:

Equity put options ................................................................... $
Equity call options ..................................................................

Options on futures contracts ...................................................

Non-derivative assets:

Equity - American Depositary Receipt.................................

Equity securities....................................................................

U.S. treasury securities .........................................................

Total .................................................................................

Liabilities

Derivative liabilities:

Short equity put options.............................................................

Short equity call options............................................................

Non-derivative liabilities:

Equity - American Depositary Receipt ...................................

Equity securities ......................................................................

Contingent consideration ........................................................

Deferred compensation plan ...................................................

Total .................................................................................
Net ........................................................................................... $

Total combined

Unrealized gain (loss) on investments ......................................... $
Realized gain (loss) on investments.............................................

Contingent consideration .............................................................

Deferred compensation plan ........................................................

—

(91)

—

(91)

—

(1,066)

(10,410)

(11,476)

(11,567)

203

(294)
(1,066) (2)
(10,410) (1)

(2,829)

(7,218)

1,961

(228)

—

(7,213)

479

(7,830)

2,147

(1,944)

—

(160)

—

2,127

2,170

(5,660)

2,326

(10,113)

—
2,127 (1)

(680)

(275)

(10,564)

(331)

(18,979)

7,139

4,144

(300)

396

—

8,608

19,987

1,008

(2,490)

(5,110)

—
8,608 (1)

1,008

Net ........................................................................................... $

(11,567)

(5,660)

________
(1) Reported as a component of salaries and benefits in the consolidated statements of operations.
(2) Represents contingent consideration associated with the acquisition of J&S. Reported as a component of other operating

expense in the consolidated statements of operations.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. 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):

Financial assets measured at fair value:
Investments in securities ......................................................
Financial liabilities measured at fair value:
Deferred compensation plan ................................................
Contingent consideration
Financial assets not measured at fair value:

Cash and cash equivalents .................................................
Restricted cash...................................................................
Accounts receivable, net....................................................
Due from Ashford Trust OP...............................................
Due from Ashford Prime OP .............................................

Financial liabilities not measured at fair value:

December 31, 2017

December 31, 2016

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value

— $

19,259
2,262

36,480
9,076
5,127
13,346
1,738

19,259
2,262

36,480
9,076
5,127
13,346
1,738

9,078
—

84,091
9,752
16
12,179
3,817

9,078
—

84,091
9,752
16
12,179
3,817

Accounts payable and accrued expenses...........................

20,529

11,601

Due to affiliates .................................................................

Due to Ashford Prime OP from AQUA U.S. Fund............
Other liabilities ..................................................................
Notes payable ....................................................................

4,272
—
9,076
11,947

4,272
—
9,076
12,040

933
2,289
9,752
—

Investments in securities. Investment securities consist of U.S. treasury securities, publicly traded equity securities, equity put
and call options on certain publicly traded equity securities and futures contracts. Liabilities associated with investments in securities
consist of a margin account balance and short equity put and call options. The fair value of these investments is based on quoted
market closing prices at the balance sheet dates in active and inactive markets. This is considered either a Level 1 or Level 2
valuation technique. See notes 8 and 9 for a complete description of the methodology and assumptions utilized in determining fair
values.

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 the acquisition of J&S is carried at fair value based on the terms of
the acquisition agreement and any changes to fair value are recorded in “other” operating expenses in the consolidated statements
of operations.

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 Ashford Trust OP, due from Ashford Prime OP, accounts payable and accrued expenses,
due to affiliates, due to Ashford Prime OP from AQUA U.S. Fund 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 entity. The asset resulting from investment in unconsolidated entities.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Notes payable. The carrying value of notes payable was $11.9 million at December 31, 2017. The estimated fair value
at December 31, 2017 was approximately $12.0 million. The fair value is based on credit spreads on observable transactions of a
similar nature and is considered a Level 2 valuation technique.

11. Commitments and Contingencies

Litigation—On December 11, 2015, a purported stockholder class action and derivative complaint challenging the Remington
acquisition was filed in the Court of Chancery of the State of Delaware and styled as Campbell v. Bennett et al., Case No. 11796.
The complaint names as defendants each of the members of the Company's board of directors, Archie Bennett, Jr., Mark A. Sharkey,
MJB Investments GP, LLC and Remington Holdings GP, as well as the Company as a nominal defendant. The complaint alleges
that the members of the Company’s board of directors breached their fiduciary duties to the Company’s stockholders in connection
with the Remington acquisition and that Monty Bennett, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and
Remington Holdings GP aided and abetted the purported breaches of fiduciary duty. In support of these claims, the complaint
alleges, among other things, that the Company’s board of directors engaged in an unfair process with Remington Lodging and the
Bennetts and as a result the Company overpaid for the 80% limited partnership and 100% general partnership interests in Remington
Lodging. The complaint also alleges that the proxy statement filed with the SEC contains certain materially false and/or misleading
statements. The action seeks injunctive relief, including enjoining the special meeting of stockholders and any vote on the
contribution or the stock issuances or rescinding the Remington acquisition if they are consummated, or in the alternative an award
of damages, as well as unspecified attorneys' and other fees and costs, in addition to any other relief the court may deem proper.
Since the filing of the complaint, the special meeting of stockholders and related vote occurred with the stockholders approving
the acquisition. On March 24, 2017, the Remington acquisition was terminated and therefore this action is moot. On April 13,
2017, the Court of Chancery entered an order dismissing the action with prejudice as to the named plaintiff, and without prejudice
as to all other members of the class. Pursuant to the order, the Court of Chancery retained jurisdiction solely for the purpose of
determining the plaintiff’s anticipated application for an award of mootness fees and reimbursement of expenses. After negotiations,
and to eliminate any risk associated with the plaintiff’s fee petition, the Company agreed to pay fees and expenses in the amount
of $150,000 within five (5) days of the entry of an order closing the case in the second quarter of 2017. Accordingly, this amount
was recorded within general and administrative expenses on our consolidated statements of operations for the year ended December
31, 2017. The Court of Chancery has not and will not pass any judgment on the fee payment. On July 17, 2017, the Court of
Chancery entered a stipulation and order closing the case.

Jesse Small v. Monty J. Bennett, et al., Case No. 24-C-16006020 (Md. Cir. Ct.) On November 16, 2016, Jesse Small, a purported
shareholder of Ashford Prime, commenced a derivative action in Maryland Circuit Court for Baltimore City asserting causes of
action for breach of fiduciary duty, corporate waste, and declaratory relief against the members of the Ashford Prime board of
directors, David Brooks (collectively, the “Individual Defendants”), Ashford Inc. and Ashford LLC. Ashford Prime is named as a
nominal defendant. The complaint alleges that the Individual Defendants breached their fiduciary duties to Ashford Prime by
negotiating and approving the termination fee provision set forth in Ashford Prime’s advisory agreement with Ashford LLC, that
Ashford Inc. and Ashford LLC aided and abetted the Individual Defendants’ fiduciary duty breaches, and that the Ashford Prime
board of directors committed corporate waste in connection with Ashford Prime’s purchase of 175,000 shares of Ashford Inc.
common stock. The complaint seeks monetary damages and declaratory and injunctive relief, including a declaration that the
termination fee provision is unenforceable. The defendants filed motions to dismiss the complaint on March 24, 2017. On June 6,
2017, the plaintiff notified the court that the plaintiff intends to dismiss the action as moot and seek a mootness fee and costs. On
July 25, 2017, the action was dismissed with prejudice as to the plaintiff. A hearing on the plaintiff’s fee petition was held on
October 25, 2017. On February 5, 2018, the court denied the plaintiff’s fee petition.

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12. Income Taxes

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table reconciles the income tax benefit at statutory rates to the actual income tax expense recorded (in thousands):

Year Ended December 31,
2016

2015

2017

Income tax benefit at federal statutory income tax rate of 35% ................... $
State income tax expense, net of federal income tax benefit ........................
Income passed through to common unit holders and noncontrolling
interests .........................................................................................................

Permanent differences...................................................................................

Valuation allowance ......................................................................................

Effect of the Tax Cuts and Jobs Act ..............................................................

Other..............................................................................................................

Total income tax (expense) benefit .......................................................... $

3,665
(388)

4,068
(180)

(2)
(201)
(12,725)
(303)
231
(9,723) $

(2,985)
(1,410)
(407)
—

134
(780) $

3,492
(54)

(3,799)
(3,293)
1,563

—

25
(2,066)

The components of income tax (expense) benefit are as follows (in thousands):

Current:

Federal ........................................................................................................ $
Foreign........................................................................................................

State ............................................................................................................

Total current...........................................................................................

Deferred:

Federal ........................................................................................................

Foreign........................................................................................................

State ............................................................................................................

Total deferred .........................................................................................
Total income tax (expense) benefit ............................................................... $

Year Ended December 31,
2016

2015

2017

(3,305) $
(47)
(369)
(3,721)

(5,854)
—
(148)
(6,002)
(9,723) $

(2,578) $
—
(277)
(2,855)

2,023

—

2,075
(780) $

(5,958)
—
(350)
(6,308)

4,140

—

102

4,242
(2,066)

Interest and penalties of $1,000, $2,000 and $1,000 were paid or were due to taxing authorities for the years ended December 31,

2017, 2016 and 2015, respectively.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, 2017 and 2016, our net deferred tax asset (liability) and related valuation allowance on the consolidated

balance sheets, consisted of the following (in thousands):

December 31,

2017

2016

Prepaid expenses ....................................................................................................................... $
Investments in unconsolidated entities and joint ventures ........................................................
Capitalized acquisition costs .....................................................................................................
Deferred compensation..............................................................................................................
Accrued expenses ......................................................................................................................
Equity-based compensation.......................................................................................................
Furniture fixtures and equipment ..............................................................................................

Intangibles .................................................................................................................................

Deferred revenue .......................................................................................................................
Net operating loss ......................................................................................................................
Deferred tax asset ......................................................................................................................
Valuation allowance...................................................................................................................
Net deferred tax asset ................................................................................................................ $

(218) $

12,529
1,652
4,285
851
3,877
(643)
860
629
1,265
25,087
(25,087)

— $

(383)
119
2,116
3,258
3,065
3,940
(788)
182
214
363
12,086
(6,084)
6,002

As of December 31, 2017, the Company has net operating loss carryforwards of approximately $5.9 million for tax purposes,

which will be available to offset future taxable income. If not used, these carryforwards will expire between 2036 and 2037.

We evaluate the recoverability of our deferred tax assets quarterly to determine if valuation allowances are required or should
be adjusted. We assess whether valuation allowances should be established against deferred tax assets based on consideration of
all available evidence, both positive and negative, using a “more likely than not” standard. The analysis utilized in determining
the valuation allowance involves considerable judgment and assumptions. At December 31, 2016, we recorded a partial valuation
allowance of $6.1 million for our deferred tax assets as we concluded that it is more likely than not that we will utilize a portion
of our deferred tax assets due to the carryback potential of certain deferred tax assets. In the second quarter of 2017 we completed
a legal restructuring of our organizational structure to facilitate our investment in businesses that provide products and services to
the hospitality industry. The restructuring limited our ability to carryback losses, and as a result, we recorded a tax expense to
reduce our net deferred tax asset to zero. We expected to recover a portion of our deferred tax asset as we produced taxable income
in the post restructure period of 2017 and thereafter. We recovered a portion of the restructuring charge during the third and fourth
quarters of 2017. However, due to the Tax Cuts and Jobs Act enactment on December 22, 2017, which prohibits corporations from
carrying losses back to prior years, we do not expect to recover our net deferred tax assets until it is more likely than not that we
will be able to realize the net deferred tax assets with sources of income other than taxes paid in the carryback period.

If our operating performance improves on a sustained basis, our conclusion regarding the need for a valuation allowance could

change, resulting in the reversal of some or all of the valuation allowance in the future.

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13. Equity

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Capital Stock—In accordance with Ashford Inc.’s charter, we are authorized to issue 200 million shares of capital stock,
consisting of 100 million shares common stock, par value $0.01 per share, 50 million shares blank check common stock, par value
$0.01 per share, and 50 million shares preferred stock, par value $0.01 per share. Our Board of Directors has designated 2 million
shares of our preferred stock as Series A Preferred Stock. The holders of Series A cumulative preferred stock are entitled to receive
dividends in preference to holders of shares of any class or series of stock ranking junior to it, equal to 1,000 multiplied by the
aggregate per share amount of all dividends of common stock. Each share of Series A cumulative preferred stock shall entitle the
holder to 1,000 votes on all matters submitted to a vote of the stockholders of Ashford Inc. No shares of Series A cumulative
preferred stock are currently outstanding.

Shareholder Rights Plan—On November 16, 2014, our board of directors adopted a shareholder rights plan (the “2014 Rights
Plan”). The 2014 Rights Plan is intended to improve the bargaining position of our board of directors in the event of an unsolicited
offer to acquire our outstanding shares of common stock. Pursuant to the 2014 Rights Plan, our board of directors declared a
dividend of one preferred share purchase right (a “Right”) payable on November 27, 2014, for each outstanding share of common
stock, par value $0.01 per share (the “Common Shares”), outstanding on November 27, 2014 (the “Record Date”) to the stockholders
of record on that date. Each Right initially entitles the registered holder to purchase from the Company one one thousandth of a
share of Series A Preferred Stock, par value $0.01 per share (the “Preferred Shares”), of the Company, at a price of $275 per one
one thousandth of a Preferred Share represented by a Right (the “Purchase Price”), subject to adjustment. The Rights become
exercisable upon certain conditions, as defined in the rights agreement. At any time prior to the time any person or group becomes
an Acquiring Person, as defined in the rights agreement, the board of directors of the Company may redeem the Rights in whole,
but not in part, at a price of $0.001 per Right. The value of the rights is de minimis. The rights are set to expire on the date of the
2018 annual meeting of stockholders unless at such meeting our stockholders vote to approve an extension of the expiration date.

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.

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

(in thousands):

Year Ended December 31,
2016

2015

2017

(Income) loss allocated to noncontrolling interests:

J&S ............................................................................................................. $
Pure Rooms.................................................................................................
OpenKey (1) .................................................................................................
Other (2) .......................................................................................................
Total net (income) loss allocated to noncontrolling interests........................ $

(49) $
38

515
(146)
358

— $

—

849

8,011

8,860

—

10,852

________
(1) The 2016 loss allocated to the noncontrolling interest in OpenKey represents the period from the March 8, 2016 conversion

of our notes receivable through December 31, 2016.

(2) Represents noncontrolling interests primarily in the AQUA Fund, which was fully dissolved as of December 31, 2017.

14. Mezzanine Equity

Redeemable noncontrolling interests are included in the mezzanine section of our consolidated balance sheets as the ownership
interests are redeemable for cash or registered shares outside of the Company’s control. As described below, our mezzanine equity
includes redeemable noncontrolling interests in Ashford Holdings as well as subsidiary common stock. See note 2 for tables
summarizing the redeemable noncontrolling ownership interests and carrying values. See note 17 for a summary of related party
transactions, including income (loss) attributable to our redeemable noncontrolling interests.

Redeemable Noncontrolling Interests—Redeemable noncontrolling interests in Ashford Holdings represents certain
members’ proportionate share of equity and their allocable share of equity in earnings/loss of Ashford Holdings, which is an
allocation of net income/loss attributable to the members based on the weighted average ownership percentage of these members’
interest. Beginning one year after issuance, each common unit of membership interest may be redeemed by the holder, for cash

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

or registered shares in certain cases outside the Company’s control. Prior to April 6, 2017, the noncontrolling interests represented
certain members’ proportionate share of equity and their allocable share of equity in earnings/loss of Ashford LLC. See note 1.

In connection with our spin-off, Ashford Trust OP unit holders received one common unit in Ashford LLC for every 55 common
units held in Ashford Trust OP. Each holder of common units of Ashford LLC could then exchange up to 99% of the Ashford LLC
common units for shares of Ashford Inc. common stock. During the year ended December 31, 2014, approximately 356,000
common units were exchanged for shares of Ashford Inc. common stock at the rate of one share of Ashford Inc. common stock
for every 55 Ashford LLC common units. Following the completion of the exchange offer, Ashford LLC effected a reverse stock
split of its common units such that each common unit was automatically converted into 1/55 of a common unit.

A summary of the activity of the member interest units is as follow (in thousands):

Year Ended December 31,

2017

2016

2015

Units outstanding at beginning of year ..................................................
Units redeemed for cash (1) ....................................................................
Units outstanding at end of year ............................................................

Units convertible/redeemable at end of year .........................................

—

5
(1)
4

—

__________________
(1) During the years ended December 31, 2017, 2016, and 2015, membership interest units with aggregate fair values at redemption
of $0, $18,000 and $0, respectively, were redeemed by the holder and, at our election, we paid cash to satisfy the redemption
price.

Redeemable noncontrolling interest in other subsidiary common stock represented redeemable ownership interests in our
consolidated VIEs, J&S and OpenKey, for the year ended December 31, 2017 and in OpenKey for the year ended December 31,
2016. See note 2 to our consolidated financial statements for tables summarizing the redeemable noncontrolling ownership interests
and carrying values. See note 17 to our consolidated financial statements for a summary of related party transactions, including
income (loss) attributable to our redeemable noncontrolling interests.

Redeemable noncontrolling interests in other subsidiary common stock originated as a result of the following transactions:

On March 8, 2016, a 100% noncontrolling interest in OpenKey was initially reduced to a 49.28% redeemable noncontrolling
interest, which resulted in the conversion of our note receivable into our initial 38.49% ownership interest. See also notes 1, 2, 13
and 17 to our consolidated financial statements.

On November 1, 2017, we acquired an 85% controlling interest in J&S with 15% ownership held by the company’s founders
as a redeemable noncontrolling interest in the J&S subsidiary common stock. See note 4 for details of the acquisition. See also
notes 1, 2, 13 and 17 to our consolidated financial statements.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the net (income) loss allocated to our redeemable noncontrolling interests (in thousands).
See note 2 to our consolidated financial statements for tables summarizing the redeemable noncontrolling ownership interests and
carrying values:

Net (income) loss allocated to redeemable noncontrolling
interests:
Ashford Holdings (1) ........................................................................... $
J&S .....................................................................................................
OpenKey .............................................................................................

Total net (income) loss allocated to redeemable noncontrolling
interests ................................................................................................. $

Year Ended December 31,
2016

2015

2017

19
136 (2)

1,329

—
1,143 (3)

1,484

1,147

—

________
(1) Represents the 0.2% interest in Ashford LLC prior to the legal restructuring of our organizational structure on April 6, 2017

and 0.2% interest in Ashford Holdings thereafter.

(2) For the period from the November 1, 2017 acquisition of J&S through December 31, 2017, net loss of $136,000 was allocated
to the redeemable noncontrolling interest in the J&S subsidiary common stock. See note 2 for tables summarizing the
redeemable noncontrolling ownership interests and carrying values.

(3) For the period from the March 8, 2016 conversion of our notes receivable from OpenKey through December 31, 2016, net
loss of $1.1 million was allocated to the redeemable noncontrolling interest in the OpenKey subsidiary common stock.

15. Equity-Based Compensation

Under our 2014 Incentive Plan, we are authorized to grant 1,082,261 incentive stock awards in the form of shares of our
common stock or securities convertible into shares of our common stock. As of December 31, 2017, 93,539 incentive stock award
shares were available for future issuance under the 2014 Incentive Plan. As defined by the 2014 Incentive Plan, authorized shares
automatically increase on January 1 of each year in an amount equal to 15% of the sum of (i) the fully diluted share count and
(ii) the shares of common stock reserved for issuance under the Company’s deferred compensation plan less shares available
under the 2014 Incentive Plan as of December 31 of the previous year. Pursuant to the plan, we have 491,571 shares of our
common stock, or securities convertible into 491,571 shares of our common stock, available for issuance under our 2014 Incentive
Plan, as of January 1, 2018.

Equity-based compensation expense is primarily recorded in salaries and benefits expense in our consolidated statements of
operations. The components of equity-based compensation expense for the years ended December 31, 2017, 2016 and 2015, are
presented below by award type (in thousands):

Year Ended December 31,
2016

2015

2017

Equity-based compensation
Stock option amortization (1)..................................................................... $
Director equity grants expense (2) .............................................................
Pre-spin equity grants expense (3) .............................................................

7,535

5,884

250

684

250

5,439

Total equity-based compensation (4)..................................................... $

8,469

11,573

3,856

250

11,503

15,609

Other equity-based compensation
REIT equity-based compensation (5)......................................................... $
$

9,394

17,863

12,243

23,816

6,311

21,920

________

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(1) See Stock Options discussion below. As of December 31, 2017, the Company had approximately $10.4 million of total
unrecognized compensation expense related to stock options that will be recognized over a weighted average period of 1.3 years.
During the years ended December 31, 2017, 2016 and 2015, stock option amortization included $39,000, $61,000 and $0 of
amortization related to OpenKey stock options issued under OpenKey’s stock plan.
(2) Grants of restricted stock to independent directors are recorded at fair value based on the market price of our shares at grant
date, and this amount is fully expensed in general and administrative expense as the grants of stock are fully vested on the date
of grant. See Restricted Stock discussion below.
(3) As a result of the spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford Trust
equity grants of common stock and LTIP units. We recognized the equity-based compensation expense related to these assumed
Ashford Trust equity grants through the April 2017 final vesting date. As of December 31, 2017, these equity grants were fully
vested. See Restricted Stock discussion below.
(4) Additionally, $2,000, $10,000 and $10,000 of equity-based compensation associated with employees of an affiliate was included
in “general and administrative” expense for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31,
2017, these equity grants were fully vested. See note 17.
(5) REIT equity-based compensation expense is associated with equity grants of Ashford Trust’s and Ashford Prime’s common
stock and LTIP units awarded to officers and employees of Ashford Inc. See notes 2 and 17.

As of December 31, 2017, we had outstanding stock option awards and restricted stock awards, as follows:

Stock Options—During the years ended December 31, 2017 and 2016, we granted 334,000 and 340,000 stock options to
employees with grant date fair values of $8.5 million and $7.8 million, respectively. No stock options were granted during 2015.
The grant price of the options was the market value of our stock on the date of grant. The options vest three years from the grant
date with a maximum option term of ten years. The fair value of each option granted is estimated on the date of grant using the
Black-Scholes option pricing model. Due to our lack of history, we do not have adequate historical exercise/cancellation behavior
on which to base the expected life assumption. We were not able to use the “simplified” method as described in SAB 107 and
110 because the options remain exercisable for the full contractual term upon termination. Therefore, we used an adjusted simplified
method, where any options expected to be forfeited over the term of the option were assumed to be exercised at full term and all
other options were assumed to be exercised at the midpoint of the average time-to-vest and the full contractual term. We will
continue to evaluate the expected life as we accumulate more data. Additionally, we do not have adequate historical stock price
information on which to base the expected volatility assumption. In order to estimate volatility, we utilized the weighted average
of our own stock price volatility based on daily data points over our full trading history and the average of the most recent historical
volatilities of our peer group commensurate with the option’s expected life (or full history if the peer had insufficient trading
history).

The weighted average assumptions used to value grant options are detailed below:

Weighted-average grant date fair value ...................................................... $
Weighted average assumptions used:
Expected volatility ......................................................................................
Expected term (in years).............................................................................
Risk-free interest rate..................................................................................
Expected dividend yield .............................................................................

Year Ended December 31,
2016

2017

25.29

22.91

34.9%
6.5
2.01%
—%

50.0%
6.5
1.5%
—%

2015
n/a

n/a
n/a
n/a
n/a

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of stock option activity is as follows:

Outstanding, January 1, 2015.....................................
Granted.......................................................................
Exercised....................................................................
Forfeited, canceled or expired....................................
Outstanding, December 31, 2015...............................
Granted.......................................................................
Exercised....................................................................
Forfeited, canceled or expired....................................
Outstanding, December 31, 2016...............................
Granted.......................................................................
Exercised....................................................................
Forfeited, canceled or expired....................................
Outstanding, December 31, 2017...............................
Options exercisable at December 31, 2017................

Number of
Shares

(In thousands)
300
—

—

—
300
340
—
(1)
639
334
—
(1)
972
300

Weighted
Average
Exercise Price

Weighted
Average
Contractual
Term

Aggregate
Intrinsic Value of
In-the
Money Options

(per share)

(In years)

(In thousands)

$
$

85.97
—

—

—
85.97
45.59
—
45.59
64.53
57.61
—
50.15
62.17
85.97

7.95 $
—

—

—
6.95 $
10.00
—
9.38
7.70
10.00
—
9.22
$
7.67
4.95 $

2,409
—

—

—
—
—
—
—
—
11,837
—
(80)
29,974
2,109

The aggregate intrinsic value represents the difference between the exercise price of the stock options and the quoted closing
common stock price as of the end of the period. At December 31, 2017, the Company had approximately $10.4 million of total
unrecognized compensation expense, related to stock options that will be recognized over the weighted average period of 1.3
years.

Restricted Stock—A summary of our restricted stock activity is as follows (shares in thousands):

Year Ended December 31,

2017

2016

2015

Weighted
Average
Price Per
Share at
Grant

Restricted
Shares

Weighted
Average
Price Per
Share at
Grant

Restricted
Shares

Weighted
Average
Price Per
Share at
Grant

Restricted
Shares

Outstanding at beginning of year.....................
Restricted shares granted (1) .............................

Restricted shares vested...................................

Restricted shares forfeited ...............................

(6)

—

Outstanding at end of year...............................

— $

56.20

52.89

53.64

—

(7)

—

56.20

45.09

47.48

—

56.20

(5)

—

56.20

93.92

75.42

—

56.20

________
(1) Equity-based compensation expense of $250,000, $250,000 and $250,000 (see equity-based compensation table above) was
recognized in connection with stock grants of 5,000, 5,000 and 3,000 immediately vested restricted shares to our independent
directors for the years ended December 31, 2017, 2016 and 2015, respectively.

As a result of the spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford
Trust equity grants. We recognized the equity-based compensation expense related to these assumed Ashford Trust equity grants
through the April 2017 final vesting date. As of December 31, 2017, these equity grants were fully vested. The restricted stock/
units that vested during 2017 had a fair value of $2.9 million at the date of vesting.

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ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Employee Benefit Plans

Deferred Compensation Plan—We administer a non-qualified DCP for certain executive officers. The plan allows 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 consolidated statements of operations.

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

Year Ended December 31,
2016

2015

2017

Change in fair value

Unrealized gain (loss) ................................................................................. $

(10,410) $

2,127

8,608

Distributions
Fair value (1) ................................................................................................ $
Shares (1)......................................................................................................

229
3

— $
—

142
2

________
(1) Distributions made to one participant.

As of December 31, 2017 and December 31, 2016 the carrying value of the DCP liability was $19.3 million and $9.1 million,

respectively.

AIM Incentive Awards—Effective January 15, 2015, Ashford Inc. established an incentive awards program (“AIM Incentive
Awards”) for certain employees involved in the success of AIM. The awards are intended to be a cash bonus program. The awards
are deemed to be invested as of the investment date for the applicable annual award period and adjusted for deemed returns on the
applicable fund (“Deemed Return”), based on a return multiplier between 100% and 300% (“Return Multiplier”), as elected
quarterly by the recipient. The awards are subject to vesting and may be forfeited upon termination of employment prior to the
record date for the award period. Award amounts will be measured as of the month end prior to payment and paid out within 45
days of the applicable award vesting date. The AIM Incentive Awards obligation is carried in long-term “accrued expenses” at the
amortized fair value as of the end of the period with the related expense reflected as salaries and benefits in our consolidated
statements of operations. As of December 31, 2017 and 2016, the carrying value of the AIM Incentive Awards liability was $487,000
and $287,000, respectively. For the years ended December 31, 2017, 2016 and 2015, we recorded salaries and benefits expense
of $200,000, $(25,000), and $385,000 respectively, related to the AIM Incentive Awards. During the years ended December 31,
2017, 2016 and 2015 participants were paid distributions of $0, $73,000 and $0, respectively. Effective as of January 1, 2017, the
value of AIM Incentive Awards are no longer adjusted based on the Deemed Return and are no longer based on a variable Return
Multiplier. Instead, the value of the AIM Incentive Awards is fixed for each participant at the value of such participant's award as
of the close of business on December 31, 2016.

401(k) Plan—Ashford LLC sponsors a 401(k) Plan. It is a qualified defined contribution retirement plan that covers employees
21 years of age or older who have completed one year of service and work a minimum of 1,000 hours annually. The 401(k) Plan
allows eligible employees to contribute, subject to Internal Revenue Service imposed limitations, to various investment funds.
The Company makes matching cash contributions equal to 50% of up to the first 6% of an employee’s eligible compensation
contributed to the 401(k) Plan. Participant contributions vest immediately, whereas company matches vest 25% annually. Our
consolidated subsidiaries also sponsor qualified defined contributions. These 401(k) Plans cover employees 18 to 21 years of age
or older with 0 to 3 months service and offer company matches in discretionary amounts of 0% to 25% of up to the first 5% of an
employee’s eligible compensation contributed to the 401(k) Plan and vesting periods varying up to 6 years. Participant contributions
vest immediately. For the years ended December 31, 2017, 2016 and 2015, “salaries and benefits” expense on our consolidated
statements of operations included matching expense of $304,000, $341,000, and $222,000, respectively.

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17. Related Party Transactions

As an asset manager providing advisory services to Ashford Trust and Ashford Prime, as well as holding an ownership interest
in other businesses providing products and services to the hospitality industry, including Ashford Trust and Ashford Prime, related
party transactions are inherent in our business activities. Details of our related party transactions are presented below. See note 20
for details regarding concentration of risk and percentage of our consolidated subsidiaries’ total revenues earned from Ashford
Trust and Ashford Prime.

We are a party to an amended and restated advisory agreement with Ashford Trust OP. The quarterly base fee is based on a
declining sliding scale percentage of Ashford Trust’s total market capitalization plus the Key Money Asset Management Fee
(defined in our advisory agreement as the aggregate gross asset value of all key money assets multiplied by 0.70%), subject to a
minimum quarterly base fee, as payment for managing its day-to-day operations in accordance with its investment guidelines.
Total market capitalization includes the aggregate principal amount of its consolidated indebtedness (including its proportionate
share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate share of consolidated
debt). The range of base fees on the scale are between 0.70% and 0.50% per annum for total market capitalization that ranges from
less than $6.0 billion to greater than $10.0 billion. At December 31, 2017, the quarterly base fee was 0.70% per annum.
Reimbursement for overhead, internal audit, insurance claims advisory and asset management services, including compensation,
benefits and travel expense reimbursements, are billed quarterly to Ashford Trust based on a pro rata allocation as determined by
the ratio of Ashford Trust’s net investment in hotel properties in relation to the total net investment in hotel properties for both
Ashford Trust and Ashford Prime. We also record advisory revenue for equity grants of Ashford Trust 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, as well as an offsetting expense in an equal amount included
in “salaries and benefits.” We are also entitled to an incentive advisory fee that is measured annually in each year that Ashford
Trust’s annual total stockholder return exceeds the average annual total stockholder return for Ashford Trust’s peer group, subject
to the FCCR Condition, as defined in the advisory agreement.

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

REVENUE BY TYPE

Advisory services revenue

Base advisory fee ..................................................................................... $
Reimbursable expenses (1) ........................................................................
Equity-based compensation (2)..................................................................
Incentive advisory fee (3) ..........................................................................
Total advisory services revenue...........................................................

Other revenue
Investment management reimbursements (4) ............................................
Debt placement fees (5) .............................................................................
Non-advisory expense reimbursements ...................................................
Lease revenue (6).......................................................................................
Other services (7).......................................................................................
Total other revenue ..............................................................................

Year Ended December 31,
2016

2015

2017

34,724

34,700

33,833

7,600

11,077

1,809

55,210

1,976
913

—
558

997

4,444

6,054

8,429

1,809

50,992

—
—

6,617

2,720

—

43,170

—
—

195
—

—

195

Total revenue ............................................................................................. $

59,654

50,996

43,365

REVENUE BY SEGMENT (8)
REIT advisory............................................................................................. $
J&S (9) .........................................................................................................
Corporate and other (7) ................................................................................
Total revenue ............................................................................................. $

58,657
—

997

50,992
—

59,654

50,996

43,365
—
—

43,365

COST OF REVENUES
Cost of audio visual revenues (9) ................................................................. $

— $

—

________
(1) Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services. During
the years ended December 31, 2017, 2016, and 2015, we recognized $1.7 million, $0, and $0, respectively, of deferred income
from reimbursable expenses related to software implementation costs, which was partially offset by the impairment of the
related capitalized software, as discussed in note 2 to our consolidated financial statements, in the amount of $1.1 million for
the year ended December 31, 2017.

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(3)

(4)

(6)

(2) Equity-based compensation revenue is associated with equity grants of Ashford Trust’s common stock and LTIP units awarded

to officers and employees of Ashford Inc.
Incentive advisory fee includes the second and first year installments of the 2016 incentive advisory fee in the amount of $1.8
million for each of the years ended December 31, 2017 and 2016, respectively, for which the payment was due January of the
subsequent year subject to meeting the FCCR Condition at December 31 of each year, as defined in our advisory agreement
with Ashford Trust. No incentive fee was earned for the 2017 and 2015 measurement periods.

Investment management reimbursements include AIM’s management of Ashford Trust’s excess cash under the Investment
Management Agreement. AIM is not compensated for its services but is reimbursed for all costs and expenses.

(5) Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our

wholly-owned subsidiary.
In connection with our key money transaction with Ashford Trust, we lease furniture, fixtures and equipment to Ashford Trust
at no cost. A portion of the base advisory fee is allocated to lease revenue each period equal to the estimated fair value of the
lease payments that would have been made.

(7) Other services revenue is associated with other hotel services, such as “allergy friendly” premium rooms and mobile key

applications, provided to Ashford Trust by our consolidated subsidiaries, Pure Rooms and OpenKey, respectively.

(8) See note 19 for discussion of segment reporting.
(9)

J&S contracts directly with customers to whom it provides audio visual services. J&S 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 audio visual revenues in our consolidated statements of operations. See note 2 for discussion of the audio
visual revenue recognition policy.

At December 31, 2017 and 2016, we had a net receivable of $13.3 million and $12.2 million, respectively, from Ashford Trust

OP associated primarily with the advisory services fee and other fees, as discussed above.

The following table summarizes amounts due from Ashford Trust OP to each of our consolidated entities (in thousands):

J&S .................................................................................................................................................. $

Pure Rooms .....................................................................................................................................

OpenKey..........................................................................................................................................

302

—

December 31, 2017 December 31, 2016

We are also a party to an amended and restated advisory agreement with Ashford Prime OP. Through June 20, 2017, the
quarterly base fee was based on a declining sliding scale percentage of Ashford Prime's total market capitalization plus the Key
Money Asset Management Fee (defined in our advisory agreement as the aggregate gross asset value of all key money assets
multiplied by 0.70%), subject to a minimum quarterly base fee, as payment for managing its day-to-day operations in accordance
with its investment guidelines. Total market capitalization includes the aggregate principal amount of its consolidated indebtedness
(including its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate
share of consolidated debt). Prior to the effectiveness of the amended and restated advisory agreement discussed below, the range
of base fees on the scale was between 0.70% to 0.50% per annum for total market capitalization that ranges from less than $6.0
billion to greater than $10.0 billion. Upon effectiveness of the amended and restated advisory agreement discussed below, the base
fee was fixed at 0.70% per annum. Reimbursement for overhead, internal audit, insurance claims advisory and asset management
services, including compensation, benefits and travel expense reimbursements, are billed quarterly to Ashford Prime based on a
pro rata allocation as determined by the ratio of Ashford Prime’s net investment in hotel properties in relation to the total net
investment in hotel properties for both Ashford Trust and Ashford Prime. We also record advisory revenue for equity grants of
Ashford Prime 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, as well as an offsetting
expense in an equal amount included in “salaries and benefits.” We are also entitled to an incentive advisory fee that is measured
annually in each year that Ashford Prime’s annual total stockholder return exceeds the average annual total stockholder return for
Ashford Prime’s peer group, subject to the FCCR Condition, as defined in the advisory agreement.

On January 24, 2017, we entered into an amended and restated advisory agreement with Ashford Prime (the “Fourth Amended
and Restated Ashford Prime Advisory Agreement”). On June 9, 2017, Ashford Prime’s stockholders approved the Fourth Amended
and Restated Ashford Prime Advisory Agreement, which became effective on June 21, 2017. The material terms of the Fourth
Amended and Restated Ashford Prime Advisory agreement include:

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• Ashford Prime made a cash payment to us of $5.0 million on June 21, 2017, which is included in “deferred income” on
our consolidated balance sheet, and is being recognized over the initial ten-year term of the Fourth Amended and Restated
Ashford Prime Advisory Agreement. The revenue recognized is included in other advisory revenue on our consolidated
statements of operations;

•

the termination fee payable to us under the advisory agreement has been amended by eliminating the 1.1x multiplier and
tax gross up components of the fee;

• we will disclose publicly the revenues and expenses used to calculate “Net Earnings” on a quarterly basis, which is used
to calculate the termination fee; we will retain an accounting firm to provide a quarterly report to Ashford Prime on the
reasonableness of our determination of expenses, which will be binding on the parties;

•

our right under the advisory agreement to appoint a “Designated CEO” has been eliminated;

our right to terminate the advisory agreement due to a change in a majority of the “Company Incumbent Board” (as
defined in the advisory agreement) has been eliminated;

• Ashford Prime will be incentivized to grow its assets under a “growth covenant” in the Fourth Amended and Restated
Ashford Prime Advisory Agreement under which Ashford Prime will receive a deemed credit against a base amount of
$45.0 million for 3.75% of the total purchase price of each hotel acquired after the date of the Fourth Amended and
Restated Ashford Prime Advisory Agreement that was recommended by us, netted against 3.75% of the total sale price
of each hotel sold after the date of the Fourth Amended and Restated Ashford Prime Advisory Agreement. The difference
between $45.0 million and this net credit, if any, is referred to as the “Uninvested Amount.” If the Fourth Amended and
Restated Ashford Prime Advisory Agreement is terminated, other than due to certain acts by us, Ashford Prime must pay
us the Uninvested Amount, in addition to any other fees payable under the Amended Agreement;

•

the Fourth Amended and Restated Ashford Prime Advisory Agreement requires Ashford Prime to maintain a net worth
of not less than $390 million plus 75% of the equity proceeds from the sale of securities by Ashford Prime after December
31, 2016 and a covenant prohibiting Ashford Prime from paying dividends except as required to maintain its REIT status
if paying the dividend would reduce Ashford Prime’s net worth below the required minimum net worth;

the initial term of the Fourth Amended and Restated Ashford Prime Advisory Agreement ends on the 10th anniversary
of its effective date, subject to renewal by us for up to seven additional successive 10-year terms;

the base management fee payable to us will be fixed at 0.70%, and the fee will be payable on a monthly basis;

reimbursements of expenses to us will be made monthly in advance, based on an annual expense budget, with a quarterly
true-up for actual expenses;

the right of Ashford Prime to terminate the advisory agreement due to a change of control experienced by us has been
eliminated;

the rights of Ashford Prime to terminate the advisory agreement at the end of each term upon payment of the termination
fee based on the parties being unable to agree on new market-based fees or our performance have been eliminated;
however, the Fourth Amended and Restated Ashford Prime Advisory Agreement provides a mechanism for the parties to
renegotiate the fees payable to us at the end of each term based on then prevailing market conditions, subject to floors
and caps on the changes;

if a Change of Control (as defined in the Fourth Amended and Restated Ashford Prime Advisory Agreement) is pending,
Ashford Prime has agreed to deposit not less than 50%, and in certain cases 100%, of the applicable termination fee in
escrow, with the payment of any remaining amounts owed to us secured by a letter of credit or first priority lien on certain
assets;

• Ashford Prime’s ability to terminate the Fourth Amended and Restated Ashford Prime Advisory Agreement due to a
material default by us is limited to instances where a court finally determines that the default had a material adverse effect
on Ashford Prime and we fail to pay monetary damages in accordance with the Fourth Amended and Restated Ashford
Prime Advisory Agreement; and

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•

if Ashford Prime repudiates the Fourth Amended and Restated Ashford Prime Advisory Agreement, through actions or
omissions that constitute a repudiation as determined by a final non-appealable order from a court of competent jurisdiction,
Ashford Prime will be liable to us for a liquidated damages amount.

The following table summarizes the revenues related to Ashford Prime OP (in thousands):

Year Ended December 31,
2016

2015

2017

REVENUE BY TYPE

Advisory services revenue

Base advisory fee ..................................................................................... $
Reimbursable expenses (1) ........................................................................
Equity-based compensation (2)..................................................................
Incentive advisory fee (3) ..........................................................................
Other advisory revenue (4) ........................................................................
Total advisory services revenue...........................................................

Other revenue
Debt placement fees (5) .............................................................................
Lease revenue (6).......................................................................................
Other services (7).......................................................................................
Total other revenue ..............................................................................

8,799

8,343

2,105
(1,683)
1,274

277
10,772

224

335

600

2,805

3,814

1,274

—
16,236

—

335

—

335

8,648

1,863

3,591

1,274

—
15,376

—

Total revenue ............................................................................................... $

11,372

16,571

15,475

REVENUE BY SEGMENT (8)

REIT advisory .......................................................................................... $
J&S (9) .......................................................................................................
Corporate and other (8)..............................................................................
Total revenue ............................................................................................... $

11,331
—

16,571
—

—

15,475
—

—

11,372

16,571

15,475

________
(1) Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services. During
the years ended December 31, 2017, 2016, and 2015, we recognized $126,000, $0, and $0, respectively, of deferred income
from reimbursable expenses related to software implementation costs, which was partially offset by the impairment of the
related capitalized software in the amount of $1.1 million for the year ended December 31, 2017, as discussed in note 2.
(2) Equity-based compensation revenue is associated with equity grants of Ashford Prime’s common stock and LTIP units awarded

to officers and employees of Ashford Inc.
Incentive advisory fee includes the third, second and first year installments of the 2015 incentive advisory fee in the amount
of $1.3 million for each of the years ended December 31, 2017, 2016, and 2015, respectively, for which the payment was due
January of the subsequent year subject to meeting the FCCR Condition at December 31 of each year, as defined in our advisory
agreement with Ashford Prime. No incentive fee was earned for the 2017 and 2015 measurement periods.

In connection with our Fourth Amended and Restated Ashford Prime Advisory Agreement, a $5.0 million cash payment was
made by Ashford Prime upon approval by Ashford Prime’s stockholders, which will be recognized over the 10-year initial
term.

(3)

(4)

(5) Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our

wholly-owned subsidiary.

(6)

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(7) Other services revenue is associated with other hotel services, such as “Allergy friendly” premium rooms and mobile key

applications, provided to Ashford Prime by our consolidated subsidiaries, Pure Rooms and OpenKey, respectively.

(8) See note 19 for discussion of segment reporting.
(9)

At December 31, 2017 and 2016, we had receivables of $1.7 million and $3.8 million, respectively, from Ashford Prime OP
associated with the advisory service fee and other fees, as discussed above. See note 2 for details regarding receivables held by
our consolidated subsidiaries, due from our affiliates. As of December 31, 2016, we also had a payable due to Ashford Prime OP
in the amount of $2.3 million related to the hold back from Ashford Prime’s liquidation of its investment in the AQUA Fund.

The following table summarizes amounts due from Ashford Prime OP to each of our consolidated entities (in thousands):

Pure Rooms ..................................................................................................................................... $

OpenKey..........................................................................................................................................

—

December 31, 2017 December 31, 2016

Ashford Trust and Ashford Prime have management agreements with Remington Holdings L.P. and its subsidiaries
(“Remington Lodging”), which is beneficially owned by our Chairman and Chief Executive Officer and Ashford Trust’s Chairman
Emeritus. Transactions related to these agreements are included in the accompanying consolidated financial statements. Under the
agreements, we pay Remington Lodging general and administrative expense reimbursements, approved by the independent directors
of Ashford Trust and Ashford Prime, including rent, payroll, office supplies, travel and accounting. These charges are allocated
based on various methodologies, including headcount and actual amounts incurred, which are then rebilled to Ashford Trust and
Ashford Prime. These reimbursements are included in general and administrative expenses on the consolidated statements of
operations. For the years ended December 31, 2017, 2016 and 2015 these reimbursements totaled $4.9 million, $5.7 million and
$4.5 million, respectively. The amounts due under these arrangements as of December 31, 2017 and 2016, are included in “due to
affiliates” on our balance sheets.

The balance of all limited partners' capital accounts in the AQUA U.S. Fund was distributed to limited partners in cash, and
thereafter limited partners ceased to be a limited partner of the AQUA U.S. Fund. As of December 31, 2017, the AQUA U.S. Fund
was fully dissolved. The aggregate value of the affiliated limited partners’ share of partners’ capital in the AQUA Fund at
December 31, 2016, was approximately $52.5 million.

On June 11, 2015, we announced that we planned to provide a total of $6.0 million in key money consideration to our managed
REITs for two acquisitions. In connection with our engagement to provide hotel advisory services to Ashford Trust, we planned
to provide $4.0 million of key money consideration to purchase furniture, fixtures and equipment related to Ashford Trust’s $62.5
million acquisition of the 226-room Le Pavillon Hotel in New Orleans, Louisiana by Ashford Trust, which closed in June 2015.
As of December 31, 2016, we had provided substantially all of the $4.0 million key money consideration. Separately, in connection
with our engagement to provide hotel advisory services to Ashford Prime, we have also provided $2.0 million of key money
consideration comprised of $206,000 in cash and the issuance of 19,897 shares of our common stock to purchase furniture, fixtures
and equipment related to Ashford Prime’s $85.0 million acquisition of the 62-room Bardessono Hotel and Spa in Yountville,
California, which closed in July 2015. The initial value assigned to the common stock was based on the previous 10-day closing
prices as of July 1, 2015, which was approximately $1.8 million. The key money consideration was paid on September 14, 2015.
In return for the key money consideration, Ashford Prime transferred furniture, fixtures and equipment to Ashford Inc., which was
subsequently leased back at no cost for a term of five years. The fair value of the key money consideration transferred on September
14, 2015, was approximately $1.6 million, which decreased in value from July 1, 2015 solely due to the change in the price of
Ashford Inc. common stock.

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The hotel advisory services and the lease are considered a multiple element arrangement, in accordance with the applicable
accounting guidance. As such, a portion of the base advisory fee must be allocated to lease revenue equal to the estimated fair
value of the lease payments that would have been made. As a result, advisory revenue of $893,000, $335,000 and $99,000 was
allocated to lease revenue for the years ended December 31, 2017, 2016 and 2015, respectively. Lease revenue is included in other
revenue in the consolidated statements of operations.

As of December 31, 2017 and 2016, Ashford Trust held a 16.23% and 13.34%, respectively, noncontrolling interest in OpenKey,
a VIE for which we are considered the primary beneficiary and therefore we consolidate it. On January 16, 2018, Ashford Trust
invested an additional $667,000 in OpenKey. Ashford Trust invested $983,000, $2.3 million and $0 in OpenKey during the years
ended December 31, 2017, 2016 and 2015, respectively. OpenKey is a hospitality focused mobile key platform that provides a
universal smartphone app for keyless entry into hotel guest rooms. See also notes 1, 2, 13, 14, and 22.

An officer of J&S owns the J&S headquarters property including the adjoining warehouse space. J&S leases this property for
$300,000 per year. Rental expense for the year ended December 31, 2017 was $50,000. We did not incur rental expense related
to this lease for the years ended December 31, 2016 and 2015.

18. 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):

Year Ended December 31,
2016

2015

2017

Net income (loss) attributable to common stockholders – basic and diluted:

Net income (loss) attributable to the Company ........................................................

Undistributed net income (loss) allocated to common stockholders ......................
Distributed and undistributed net income (loss) - basic....................................
Effect of deferred compensation plan .......................................................................

Effect of contingently issuable shares.......................................................................
Distributed and undistributed net loss - diluted ................................................

Weighted average common shares outstanding:

Weighted average common shares outstanding – basic ............................................

Effect of deferred compensation plan shares ............................................................

Effect of contingently issuable shares

Weighted average common shares outstanding – diluted .........................................

Income (loss) per share – basic:

Net income (loss) allocated to common stockholders per share.............................

Income (loss) per share – diluted:

Net income (loss) allocated to common stockholders per share.............................

(18,352) $
(18,352)
(18,352)
—
(1,465) $
(19,817) $

(2,396) $
(2,396)
(2,396)
(2,127)
(1,143) $
(5,666) $

2,031

—

2,067

2,012

158

2,209

(1,190)
(1,190)
(1,190)
(8,608)
—
(9,798)

1,991

212

—

2,203

(9.04) $

(1.19) $

(0.60)

(9.59) $

(2.56) $

(4.45)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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):

Year Ended December 31,
2016

2015

2017

Net income (loss) allocated to common stockholders is not adjusted for:

Net income (loss) attributable to redeemable noncontrolling interests in Ashford
Holdings..................................................................................................................

Total ...................................................................................................................

(19) $
(19) $

(4) $
(4) $

Weighted average diluted shares are not adjusted for:

Effect of unvested restricted shares ........................................................................

Effect of assumed exercise of stock options...........................................................

Effect of assumed conversion of Ashford Holdings units ......................................

Total ...................................................................................................................

—

(2)
(2)

5
9

19. Segment Reporting

We have two business segments: (i) REIT Advisory, which provides asset management and advisory services to other entities,
and (ii) Hospitality Products and Services (“HPS”), which provides products and services to clients primarily in the hospitality
industry. HPS includes (a) J&S, which provides event technology and creative communications solutions services, (b) Pure Rooms,
which provides “allergy friendly” premium rooms in the hospitality industry, and (c) OpenKey, a hospitality focused mobile key
platform that provides a universal smartphone app for keyless entry into hotel guest rooms. Our Pure Rooms and OpenKey operating
segments do not individually meet the accounting criteria for separate disclosure as reportable segments. Accordingly, we have
two reportable segments: REIT Advisory and J&S. We combine the operating results of Pure Rooms and OpenKey into an “all
other” category, which we refer to as “Corporate and Other.”

The REIT Advisory segment primarily earns revenue by providing asset management and advisory services on a fee basis by
managing the day-to-day operations of Ashford Trust and Ashford Prime and their respective subsidiaries, in conformity with each
entity's investment guidelines. The J&S segment earns revenue 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 in the United States, Mexico and the Dominican
Republic. Corporate and Other includes a portion of our revenue and operating expenses that are not directly attributable to the
REIT Advisory segment or J&S. The revenue in this category primarily consists of income generated by Pure Rooms and OpenKey
by providing services to hotels. As of December 31, 2017, there were no material revenues or expenses amongst our operating
segments.

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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Table of Contents

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Certain information concerning our segments for the years ended December 31, 2017, and 2016 is presented in the following
table (in thousands). Consolidated subsidiaries are reflected as of the acquisition date or as of the date we were determined to be
the primary beneficiary of variable interest entities.

Year Ended December 31, 2017

Year Ended December 31, 2016

REIT
Advisory

J&S

Corporate
and Other

Ashford Inc.
Consolidated

REIT
Advisory

J&S

Corporate
and Other

Ashford Inc.
Consolidated

REVENUE

Advisory services.................. $

65,982

— $

65,982

67,228

— $

67,228

Audio visual ..........................

Other .....................................

Total revenue......................

EXPENSES

Depreciation and
amortization ..........................

Impairment............................
Other operating expenses (1)..
Total expenses....................

OPERATING INCOME
(LOSS).....................................

Interest expense.....................

Amortization of loan costs ....

Interest income......................
Other income (expense) (2) ....
INCOME (LOSS) BEFORE
INCOME TAXES...................

—

4,006

69,988

1,373

1,041

19,099

21,513

48,475

—

48,475

Income tax (expense) benefit

(18,324)

9,186

—

9,186

319

—

9,655

9,974

(788)

(68)

(6)

—

(47)

(909)

252

—

2,399

835

59,742

60,608

9,186

6,405

81,573

2,527

1,072

88,496

92,095

—

335

67,563

298

—

21,102

21,400

(58,209)

(10,522)

46,163

(15)

(33)

244

(24)

(83)

(39)

244

(71)

—

(58,037)

8,349

(10,471)

(9,723)

46,163

(16,684)

—

876

—

47,788

48,664

—

379

67,607

1,174

—

68,890

70,064

(48,620)

(2,457)

—

(9,239)

(57,786)

15,904

(11,623)

(780)

NET INCOME (LOSS).......... $

30,151

(657) $

(49,688) $

(20,194)

29,479

— $

(41,882) $

(12,403)

________
(1) Other operating expenses includes salaries and benefits, cost of revenues for audio visual and general and administrative
expenses. REIT Advisory amounts represent expenses for which there is a direct offsetting amount included in revenues,
including REIT equity-based compensation expense and reimbursable expenses.

(2) Other income (expense) primarily includes the realized gain (loss) on investment in unconsolidated entity, the unrealized gain
(loss) on investment in unconsolidated entity, dividend income, the realized gain (loss) on investments and the unrealized gain
(loss) on investments.

For the year ended December 31, 2015, we operated in one business segment: asset and investment management, which
included managing the day-to-day operations of Ashford Prime and its subsidiaries, Ashford Trust and its subsidiaries and the
REHE Fund in conformity with each entity’s investment guidelines.

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Table of Contents

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Geographic Information

The following table presents revenue by geographic area for the years ended December 31, 2017, 2016 and 2015 (in thousands):

Year Ended December 31,

2017

2016

2015

United States............................................................................................... $

78,420

67,607

58,981

Mexico........................................................................................................

All other countries ......................................................................................

2,760

393

—

81,573

67,607

58,981

The following table presents furniture, fixtures and equipment, net by geographic area as of December 31, 2017 and 2016 (in

thousands):

United States ................................................................................................................................... $

18,087

12,044

Mexico.............................................................................................................................................

All other countries...........................................................................................................................

2,960

107

—

21,154

12,044

December 31, 2017 December 31, 2016

20. Concentration of Risk

During the years ended December 31, 2017, 2016 and 2015, our advisory revenue was primarily derived from our advisory
agreements with Ashford Trust and Ashford Prime. Further, OpenKey and Pure Rooms generated revenue through contracts with
Ashford Trust OP and Ashford Prime OP, as summarized in the table below, stated as a percentage of the consolidated subsidiaries’
total revenues:

Percentage of total revenues from Ashford Trust OP and Ashford Prime OP(1)
J&S (2) ......................................................................................................................
Pure Rooms..............................................................................................................

OpenKey ..................................................................................................................

Year Ended December 31,

2017

2016

2015

2.2%

45.6%

28.4%

—%

9.1%

—%

________
(1) See note 17 for details regarding our related party transactions.
(2) Represents percentage of revenues earned by J&S from customers at Ashford Trust and Ashford Prime hotels. See note 2 for

the discussion of audio visual revenue recognition policy.

As of December 31, 2017, our operations include consolidated J&S net assets of $2.3 million and $399,000 located in Mexico
and Dominican Republic, respectively. For discussion of revenues by geographic location see note 19 to our consolidated financial
statements.

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash
equivalents. We are exposed to credit risk with respect to cash held at financial institutions and U.S. government treasury bond
holdings. Our counterparties are investment grade financial institutions.

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Table of Contents

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Selected Financial Quarterly Data (Unaudited)

The following is a summary of the quarterly results of operations for the years ended December 31, 2017 and 2016 (in

thousands, except per share data):

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Full
Year

2017
Total revenue.............................................................................. $ 13,013
Total operating expenses............................................................
15,149
Operating income (loss)............................................................. $
(2,136) $
Net income (loss) ....................................................................... $
(2,723) $
Net income (loss) attributable to the Company ......................... $
(2,385) $
Basic: .........................................................................................
Net income (loss) attributable to common stockholders per
share (1) ....................................................................................... $
Weighted average common shares outstanding - basic..............
Diluted:......................................................................................
Net income (loss) attributable to common stockholders per
share (1) ....................................................................................... $
Weighted average common shares outstanding - diluted...........

(1.18) $
2,015

(1.34) $
2,046

$ 19,639

$ 19,255

$ 29,666

$ 81,573

18,221

1,418
$
(7,231) $
(6,709) $

21,595
(2,340) $
(2,258) $
(1,856) $

37,130
92,095
(7,464) $ (10,522)
(7,982) $ (20,194)
(7,402) $ (18,352)

(3.32) $
2,019

(0.92) $
2,022

(3.58) $
2,069

(9.04)
2,031

(3.85) $
2,265

(1.05) $
2,054

(3.72) $
2,118

(9.59)
2,067

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Full
Year

2016
Total revenue.............................................................................. $ 13,409
Total operating expenses............................................................
13,921
Operating income (loss)............................................................. $
Net income (loss) ....................................................................... $
Net income (loss) attributable to the Company ......................... $
Basic: .........................................................................................
Net income (loss) attributable to common stockholders per
share (1) ....................................................................................... $
Weighted average common shares outstanding - basic..............
Diluted:......................................................................................
Net income (loss) attributable to common stockholders per
share (1) ....................................................................................... $
Weighted average common shares outstanding - diluted...........

(0.86) $
2,008

(1.51) $
2,218

(512) $
(8,398) $
(1,732) $

$ 18,152

$ 16,538

$ 19,508

$ 67,607

20,344
(2,192) $
(1,279) $
(1,106) $

16,673

(135) $
(1,092) $
(285) $

382

19,126

70,064
(2,457)
$
(1,634) $ (12,403)
(2,396)
$

727

(0.55) $
2,011

(0.14) $
2,014

0.36

2,014

(1.19)
2,012

(0.71) $
2,048

(0.49) $
2,262

(0.25) $
2,267

(2.56)
2,209

_________________
(1) The sum of the basic and diluted income (loss) attributable to common stockholders per share for the four quarters in 2017 and 2016 may
differ from the full year basic and diluted income (loss) attributable to common stockholders per share due to the required method of computing
the weighted average diluted common shares in the respective periods.

22. Subsequent Events

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Table of Contents

ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

On January 16, 2018, Ashford Inc. invested an additional $1.3 million in OpenKey. OpenKey is a hospitality focused mobile
key platform that provides a universal smartphone app for keyless entry into hotel guestrooms. See notes 1, 2, 13, 14 and 17 to
our consolidated financial statements.

On March 1, 2018, the Company entered into a $35.0 million senior revolving credit facility with Bank of America, N.A. The
credit facility provides for a three-year revolving line of credit and bears interest at a range of 3.0% to 3.50% over LIBOR, depending
on the leverage level of the Company. There is a one-year extension option subject to the satisfaction of certain conditions. The
new credit facility includes the opportunity to expand the borrowing capacity by up to $40.0 million to an aggregate size of $75.0
million.

100

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure 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 December 31, 2017. 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 Securities and Exchange Commission 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.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the
assessment of the effectiveness of our internal control over financial reporting. The internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with GAAP, and that receipts and our expenditures are being made only in accordance with
authorizations of management and our directors and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial
statements.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. In making
the assessment of the effectiveness of our internal control over financial reporting, management has utilized the criteria established
in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission,
(2013 framework) (“COSO”).

Based on management’s assessment of these criteria, we concluded that, as of December 31, 2017, our internal control over

financial reporting is effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially

affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B. Other Information

None.

Item 10. Directors, Executive Officer, and Corporate Governance

PART III

The information required in response to this Item 10 is incorporated herein by reference to our definitive proxy statement to
be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of
the fiscal year covered by this Annual Report on Form 10-K.

Item 11. Executive Compensation

The information required in response to this Item 11 is incorporated herein by reference to our definitive proxy statement to
be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of
the fiscal year covered by this Annual Report on Form 10-K.

101

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required in response to this Item 12 is incorporated herein by reference to our definitive proxy statement to
be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of
the fiscal year covered by this Annual Report on Form 10-K.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required in response to this Item 13 is incorporated herein by reference to our definitive proxy statement to
be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of
the fiscal year covered by this Annual Report on Form 10-K.

Item 14. Principal Accountant Fees and Services

The information required in response to this Item 14 is incorporated herein by reference to our definitive proxy statement to
be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of
the fiscal year covered by this Annual Report on Form 10-K.

Item 15. Financial Statement Schedules and Exhibits

(a) Financial Statements and Schedules

PART IV

See “Item 8. Financial Statements and Supplementary Data,” on pages 50 through 100 hereof, for a list of our consolidated

financial statements and report of independent registered public accounting firm.

All other financial statement schedules have been omitted because such schedules are not required under the related instructions,
such schedules are not significant, or the required information has been disclosed elsewhere in the consolidated financial statements
and related notes thereto.

Exhibits

Exhibits required by Item 601 of Regulation S-K: The exhibits filed in response to this item are listed in the Exhibit Index.

Item 16. Form 10-K Summary

None.

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102

Pursuant to the requirements of Section 13 or 15(d) 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, on March 12, 2018.

SIGNATURES

ASHFORD INC.

By:

/s/ MONTY J. BENNETT

Monty J. Bennett

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, by the following

persons, on behalf of the Registrant in the capacities and on the dates indicated.

Signature

Title

Date

/s/ MONTY J. BENNETT

Monty J. Bennett

/s/ DOUGLAS A. KESSLER
Douglas A. Kessler

/s/ DERIC S. EUBANKS

Deric S. Eubanks

/s/ MARK L. NUNNELEY

Mark L. Nunneley

/s/ J. ROBISON HAYS, III

J. Robison Hays, III

/s/ DINESH P. CHANDIRAMANI

Dinesh P. Chandiramani

/s/ DARRELL T. HAIL

Darrell T. Hail

/s/ JOHN MAULDIN

John Mauldin

/s/ BRIAN WHEELER

Brian Wheeler

/s/ UNO IMMANIVONG

Uno Immanivong

Chairman of the Board of Directors and Chief
Executive Officer (Principal Executive Officer)

March 12, 2018

President

March 12, 2018

Chief Financial Officer
(Principal Financial Officer)

March 12, 2018

Chief Accounting Officer
(Principal Accounting Officer)

March 12, 2018

Chief Strategy Officer and Director

March 12, 2018

Director

March 12, 2018

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103

EXHIBIT INDEX

Exhibit
2.1

Description
Separation and Distribution Agreement, dated October 31, 2014, by and between Ashford Hospitality Trust, Inc.,
Ashford OP Limited Partner LLC, Ashford Hospitality Limited Partnership, Ashford Inc. and Ashford Hospitality
Advisors LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on November 6,
2014) (File No. 001-36400)

2.2

2.2.1

2.2.2

2.2.3

2.3

2.4**

2.4.1

3.1

3.2

4.1

4.2

4.2.1

10.1

10.2

10.2.1

10.3

10.4

10.5

Acquisition Agreement, dated September 17, 2015, by and between Archie Bennett, Jr. and Monty J. Bennett,
Remington Holdings GP, LLC, MJB Investments, LP, Mark A. Sharkey, Remington Holdings, LP, Ashford Inc.,
Ashford Advisors, Inc., Remington Hospitality Management, Inc., Ashford GP Holdings I, LLC and Remington GP
Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on September 18,
2015) (File No. 001-36400)

First Amendment to Acquisition Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K filed on June 24, 2016) (File No. 001-36400)

Second Amendment to Acquisition Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed on September 23, 2016) (File No. 001-36400)

Amendment, Waiver and Consent Agreement, dated October 28, 2016 (incorporated by reference to Exhibit 10.2 to
the Current Report on Form 8-K filed on November 1, 2016) (File No. 001-36400)

Agreement and Plan of Merger, dated October 28, 2016, by and between Ashford Inc., a Delaware corporation. and
Ashford Inc., a Maryland corporation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-
K filed on November 1, 2016) (File No. 001-36400)

Unit Purchase Agreement, dated as of July 25, 2017, by and among Presentation Technologies, Inc., Monroe Jost,
Kevin Jost, Todd Jost and PT Holdco, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form
8-K filed on July 31, 2017) (File No. 001-36400)

Amendment No. 2 to Unit Purchase Agreement, dated as of October 31, 2017, by and among PT Holdco, LLC, PT
Intermediate, LLC and Presentation Technologies, LLC (incorporated by reference to Exhibit 2.1 to the Current
Report on Form 8-K filed on November 6, 2017) (File No. 001-36400)
Amended and Restated Articles of Incorporation of Ashford Inc. (incorporated by reference to Exhibit 3.1 of Form
8-K, filed on November 1, 2016) (File No. 001-36400)
Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Current
Report on Form 8-K filed on March 2, 2018) (File No. 001-36400)

Specimen Common Stock Certificate of Ashford Inc. (incorporated by reference to Exhibit 4.1 to Amendment No.
8 to the Registration Statement on Form 10 filed on November 1, 2016)

Amended and Restated Rights Agreement, dated as of August 12, 2015, between Ashford Inc. and Computershare
Trust Company, N.A. (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on
August 14, 2015) (File No. 001-36400)

Amendment No. 1 to the Amended and Restated Rights Agreement, dated October 31, 2016, between Ashford Inc.
and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to the Current Report on Form
8-K filed on November 1, 2016) (File No. 001-36400)
Tax Matters Agreement, dated October 31, 2014, between Ashford Inc., Ashford Hospitality Advisors LLC, Ashford
Hospitality Trust, Inc. and Ashford Hospitality Limited Partnership (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed on November 6, 2014) (File No. 001-36400)

Advisory Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Trust, Inc., Ashford
Hospitality Limited Partnership and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.1
to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)

Amended and Restated Advisory Agreement, dated as of June 10, 2015, by and between Ashford Hospitality Trust,
Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality
Advisors LLC (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on June 12, 2015) (File
No. 001-36400)

Fourth Amended and Restated Advisory Agreement, dated as of January 24, 2017, between Ashford Hospitality
Prime, Inc., Ashford Hospitality Prime Limited Partnership, Ashford Prime TRS Corporation, Ashford Inc. and
Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on
January 25, 2017) (File No. 001-36400)
Mutual Exclusivity Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Advisors LLC,
Ashford Inc. and Remington Lodging & Hospitality, LLC (incorporated by reference to Exhibit 10.2 to the Current
Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)

Assignment and Assumption Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Trust,
Inc., Ashford Hospitality Limited Partnership and Ashford Hospitality Advisors LLC Re: Ashford Trademarks
(incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on November 18, 2014) (File
No. 001-36400)

104

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Exhibit
10.6

10.7

10.8†

10.8.1†

10.8.2†

10.8.3†

10.8.4†

10.8.5†

10.9

10.10†

Description
Licensing Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Advisors LLC, Ashford
Hospitality Trust, Inc. and Ashford Hospitality Limited Partnership (incorporated by reference to Exhibit 10.4 to the
Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)

Registration Rights Agreement, dated as of November 12, 2014 by Ashford Inc. for the benefit of the holders of
common units in Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.5 to the Current Report
on Form 8-K filed on November 18, 2014) (File No. 001-36400)

Amended and Restated Employment Agreement, dated as of February 20, 2017, by and among Ashford Inc., Ashford
Hospitality Advisors, LLC and Douglas A. Kessler (incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed on February 21, 2017) (File No. 001-36400)

Employment Agreement, effective November 12, 2014, with Monty J. Bennett (incorporated by reference to Exhibit
10.6.1 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)

Amendment to Employment Agreement, dated as of September 13, 2017, by and among Ashford Inc., Ashford
Hospitality Advisors, LLC and Monty J. Bennett (incorporated by reference to Exhibit 10.3 to the Current Report
on Form 8-K filed on September 14, 2017) (File No. 001-36400)

Amended and Restated Employment Agreement, dated as of September 13, 2017, by and among Ashford Inc., Ashford
Hospitality Advisors, LLC and David Brooks (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed on September 14, 2017) (File No. 001-36400)

Amended and Restated Employment Agreement, dated as of September 13, 2017, by and among Ashford Inc., Ashford
Hospitality Advisors, LLC and Deric Eubanks (incorporated by reference to Exhibit 10.2 to the Current Report on
Form 8-K filed on September 14, 2017) (File No. 001-36400)

Employment Agreement, dated as of November 2, 2016, by and among Ashford Inc., Ashford Hospitality Advisors,
LLC and Richard J. Stockton (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed on
November 3, 2016) (File No. 001-36400)
Form of Indemnification Agreement, dated as of November 6, 2014 between Ashford Inc. and each of its executive
officers and directors (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on November
18, 2014) (File No. 001-36400)
Ashford Inc. 2014 Incentive Plan (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed
on November 18, 2014) (File No. 001-36400)

10.10.1† Amendment No. 1 to the Ashford, Inc. 2014 Incentive Plan (incorporated by reference to Exhibit 99.2 to Form S-8

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

filed on November 2, 2016) (File No. 333-200183)
Amended and Restated Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.9 to the
Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)

Investment Management Agreement, dated December 10, 2014 between AHT SMA, LP and Ashford Investment
Management LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December
16, 2014) (File No. 001-36400)

Investment Management Agreement, dated as of December 10, 2014 between AHP SMA, LP and Ashford Investment
Management, LLC (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K filed on March
24, 2015) (File No. 001-36400)

Investment Management Agreement, dated January 19, 2017, between AHT SMA, LP, a Delaware limited partnership,
and Ashford Investment Management LLC, a Delaware limited liability company (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed on January 25, 2017) (File No. 001-36400)

Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Advisors LLC, dated October
8, 2014 (incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K filed on March 24, 2015)
(File No. 001-36400)

Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Holdings LLC, dated April
6, 2017) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 12, 2017 (File
No. 001-36400)

Letter Agreement, dated as of September 17, 2015 between Ashford Inc. and Ashford Hospitality Trust, Inc.
(incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on September 18, 2015) (File No.
001-36400)

Letter Agreement, dated as of September 17, 2015 between Ashford Inc. and Ashford Hospitality Prime, Inc.
(incorporated by reference to Exhibit 10.2 to the Current Report on 8-K filed on September 18, 2015) (File No.
001-36400)

Commitment Letter, dated as of June 14, 2017, by and between Ashford Inc. and Comerica Bank (incorporated by
reference to Exhibit 10.1 to the Current Report on 8-K filed July 31, 2017) (File No. 001-36400)

105

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Exhibit
10.20

10.21

10.22

10.23

10.24

10.25

21 *

23.1*

31.1*

31.2*

32.1*

32.2*

Description

Credit Agreement, dated as of November 1, 2017, by and between Presentation Technologies, LLC and Comerica
Bank (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on November 6, 2017) (File No.
001-36400)

Term Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica Bank
(incorporated by reference to Exhibit 10.2 to the Current Report on 8-K filed on November 6, 2017) (File No.
001-36400)

Revolving Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica Bank
(incorporated by reference to Exhibit 10.3 to the Current Report on 8-K filed on November 6, 2017) (File No.
001-36400)

Draw Term Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica
Bank (incorporated by reference to Exhibit 10.4 to the Current Report on 8-K filed on November 6, 2017) (File No.
001-36400)

Equipment Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica
Bank (incorporated by reference to Exhibit 10.5 to the Current Report on 8-K filed on November 6, 2017) (File No.
001-36400)

Credit Agreement, dated as of March 1, 2018, by and among Ashford Hospitality Holdings LLC, Ashford Inc., Bank
of America, N. A. and the other lender party thereto (incorporated by reference to Exhibit 10-1 to the Current Report
on 8-K filed on March 7, 2018)(File No. 001-36400)
List of subsidiaries of Ashford Inc.
Consent of BDO USA, LLP

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as amended

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as amended

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

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 Annual Report on Form 10-K for the year ended December 31, 2017 are formatted
in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations
(iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Equity; (v) Consolidated
Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-
T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K 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

Submitted electronically with this report.

101.SCH XBRL Taxonomy Extension Schema Document

Submitted electronically with this report.

101.CAL XBRL Taxonomy Calculation Linkbase Document

Submitted electronically with this report.

101.DEF XBRL Taxonomy Extension Definition Linkbase

Submitted electronically with this report.

Document

101.LAB XBRL Taxonomy Label Linkbase Document

Submitted electronically with this report.

101.PRE XBRL Taxonomy Presentation Linkbase Document

Submitted electronically with this report.

___________________________________
* Filed herewith.

** The disclosure schedules referenced in the Unit Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Ashford
hereby undertakes to furnish supplementally a copy of the omitted disclosure schedules upon request by the SEC.

† Management contract or compensatory plan or arrangement.

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2 0 1 7 A N N UA L R E P O RT

14185 Dallas Parkway I Suite 1100 I Dallas, Texas 75254 I 972.490.9600 I www.ashfordinc.com
14185 Dallas Parkway I Suite 1100 I Dallas, Texas 75254 I 972.490.9600 I www.ashfordinc.com

14185 Dallas Parkway I Suite 1100 I Dallas, Texas 75254 I 972.490.9600 I www.ashfordinc.com

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