UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

    For the quarterly period ended September 30, 2024

OR

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

    For the transition period from ________________ to ________________

Commission file number: 001-36400

ASHFORD INC.

(Exact name of registrant as specified in its charter)

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

(972) 490-9600

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

Title of each class	Trading Symbol	Name of each exchange on which registered
None	None	None

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

Common Stock, $0.001 par value per share	1,738,597
(Class)	Outstanding at November 11, 2024

ASHFORD INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2024

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023	3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023	4
Condensed Consolidated Statements of Equity (Deficit) for the Three and Nine Months Ended September 30, 2024 and 2023	5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	7
Notes to Condensed Consolidated Financial Statements	9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	53
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	73
ITEM 4. CONTROLS AND PROCEDURES	74
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	75
ITEM 1A. RISK FACTORS	75
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	77
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	77
ITEM 4. MINE SAFETY DISCLOSURES	77
ITEM 5. OTHER INFORMATION	78
ITEM 6. EXHIBITS	79
SIGNATURES	81

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS (unaudited)

ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents ($9,126 and $7,574, respectively, attributable to VIEs)	$	63,636	$	52,054
Restricted cash	16,233		23,216
Restricted investment	170		128
Accounts receivable, net of allowance for credit losses of $3,684 and $2,090, respectively ($57 and $693, respectively, attributable to VIEs)	24,075		26,945
Due from affiliates	468		41
Due from Ashford Trust ($108 and $326, respectively, attributable to VIEs)	723		18,933
Due from Braemar ($13 and $24, respectively, attributable to VIEs)	3,552		714
Inventories ($145 and $386, respectively, attributable to VIEs)	2,593		2,481
Prepaid expenses and other assets ($559 and $530, respectively, attributable to VIEs)	16,852		16,418
Total current assets	128,302		140,930
Investments ($10,011 and $5,000, respectively, reported at fair value and attributable to VIEs)	14,397		9,265
Property and equipment, net ($435 and $707, respectively, attributable to VIEs)	62,100		56,852
Operating lease right-of-use assets	19,665		21,193
Deferred tax assets, net	3,231		4,358
Goodwill	61,013		61,013
Intangible assets, net	193,780		210,095
Other assets, net	1,359		1,101
Total assets	$	483,847	$	504,807
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses ($1,421 and $1,919, respectively, attributable to VIEs)	$	44,302	$	54,837
Dividends payable	47,794		28,508
Deferred income ($201 and $210, respectively, attributable to VIEs)	4,781		11,963
Deferred compensation plan	454		—
Notes payable, net ($316 and $387, respectively, attributable to VIEs)	4,575		4,387
Finance lease liabilities	285		437
Operating lease liabilities	4,348		4,160
Claims liabilities and other	34,388		31,112
Total current liabilities	140,927		135,404
Deferred income ($0 and $1,192, respectively, attributable to VIEs)	9,142		6,415
Deferred tax liability, net	30,987		29,517
Deferred compensation plan	1,185		891
Notes payable, net	135,142		132,579
Finance lease liabilities	2,786		2,832
Operating lease liabilities	17,146		19,174
Other liabilities	1,482		2,590
Total liabilities	338,797		329,402
Commitments and contingencies (note 9)
MEZZANINE EQUITY
Series D Convertible Preferred Stock, $0.001 par value, 19,120,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023	478,000		478,000
Redeemable noncontrolling interests	2,128		1,972
EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized, $0.001 par value, 2,109,799 and 3,317,786 shares issued and 2,109,799 and 3,212,312 shares outstanding at September 30, 2024 and December 31, 2023, respectively	2		3
Additional paid-in capital	291,817		299,304
Accumulated deficit	(640,506)		(609,312)
Accumulated other comprehensive income (loss)	(247)		(213)
Treasury stock, at cost, 0 and 105,474 shares at September 30, 2024 and December 31, 2023, respectively	—		(1,354)
Total equity (deficit) of the Company	(348,934)		(311,572)
Noncontrolling interests in consolidated entities	13,856		7,005
Total equity (deficit)	(335,078)		(304,567)
Total liabilities, mezzanine equity and equity (deficit)	$	483,847	$	504,807

See Notes to Condensed Consolidated Financial Statements.

2

ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUES:
Advisory services fees	$	12,010	$	11,712	$	35,467	$	36,129
Hotel management fees	12,350		12,391		39,194		39,456
Design and construction fees	6,191		7,430		21,003		21,964
Audio visual	34,360		30,641		126,855		112,347
Other	15,491		11,175		50,776		32,057
Cost reimbursement revenue	110,710		107,866		338,351		317,094
Total revenues	191,112		181,215		611,646		559,047
EXPENSES:
Salaries and benefits	23,459		22,728		70,891		68,132
Cost of revenues for design and construction	2,152		2,975		5,910		9,430
Cost of revenues for audio visual	25,946		23,876		89,389		81,697
Depreciation and amortization	6,494		7,084		19,315		21,074
General and administrative	14,139		10,702		47,391		32,759
Other	7,597		5,377		27,769		17,163
Reimbursed expenses	110,753		107,869		338,482		317,023
Total expenses	190,540		180,611		599,147		547,278
OPERATING INCOME (LOSS)	572		604		12,499		11,769
Equity in earnings (loss) of unconsolidated entities	(43)		(327)		422		(1,174)
Interest expense	(4,226)		(3,650)		(12,516)		(9,909)
Amortization of loan costs	(277)		(269)		(823)		(775)
Interest income	719		522		1,978		1,239
Realized gain (loss) on investments	—		(80)		—		(160)
Other income (expense)	1,102		(75)		1,393		259
INCOME (LOSS) BEFORE INCOME TAXES	(2,153)		(3,275)		2,953		1,249
Income tax (expense) benefit	(1,615)		205		(6,618)		(1,642)
NET INCOME (LOSS)	(3,768)		(3,070)		(3,665)		(393)
Net (income) loss from consolidated entities attributable to noncontrolling interests	(25)		190		431		692
Net (income) loss attributable to redeemable noncontrolling interests	42		(111)		(96)		(399)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(3,751)		(2,991)		(3,330)		(100)
Preferred dividends, declared and undeclared	(9,382)		(9,054)		(27,815)		(27,132)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(13,133)	$	(12,045)	$	(31,145)	$	(27,232)
INCOME (LOSS) PER SHARE - BASIC AND DILUTED
Basic:
Net income (loss) attributable to common stockholders	$	(5.71)	$	(3.87)	$	(10.84)	$	(8.88)
Weighted average common shares outstanding - basic	2,301		3,116		2,873		3,065
Diluted:
Net income (loss) attributable to common stockholders	$	(5.71)	$	(3.87)	$	(10.84)	$	(9.18)
Weighted average common shares outstanding - diluted	2,301		3,116		2,873		3,130

See Notes to Condensed Consolidated Financial Statements.

3

ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
NET INCOME (LOSS)	$	(3,768)	$	(3,070)	$	(3,665)	$	(393)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment	(131)		29		(34)		(108)
COMPREHENSIVE INCOME (LOSS)	(3,899)		(3,041)		(3,699)		(501)
Comprehensive (income) loss attributable to noncontrolling interests	(25)		190		431		692
Comprehensive (income) loss attributable to redeemable noncontrolling interests	42		(111)		(96)		(399)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$	(3,882)	$	(2,962)	$	(3,364)	$	(208)

See Notes to Condensed Consolidated Financial Statements.

4

ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(unaudited, in thousands)

	Common Stock			Additional Paid-in Capital		Accumulated  Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Noncontrolling Interests in Consolidated Entities		Total		Convertible Preferred Stock			Redeemable Noncontrolling Interests
	Shares	Amount								Shares	Amount						Shares	Amount
Balance at June 30, 2024	3,439	$	4	$	299,504	$	(627,357)	$	(116)	(133)	$	(1,433)	$	11,423	$	(317,975)	19,120	$	478,000	$	2,215
Repurchases and retirement of common stock	(1,372)	(1)		(6,850)		—		—		—	—		—		(6,851)		—	—		—
Retirement of treasury stock	—	—		(1,435)		—		—		133	1,435		—		—		—	—		—
Equity-based compensation	43	(1)		641		—		—		—	—		—		640		—	—		111
Forfeiture of restricted common stock	—	—		3		—		—		—	(3)		—		—		—	—		—
Withholding of restricted common stock upon vestings	—	—		—		—		—		—	1		—		1		—	—		—
Dividends declared and undeclared - preferred stock	—	—		—		(9,382)		—		—	—		—		(9,382)		—	—		—
Acquisition of noncontrolling interest in consolidated entities	—	—		—		—		—		—	—		44		44		—	—		—
Contributions from noncontrolling interests	—	—		(46)		—		—		—	—		2,364		2,318		—	—		—
Redemption value adjustment	—	—		—		(16)		—		—	—		—		(16)		—	—		16
Distributions to noncontrolling interests	—	—		—		—		—		—	—		—		—		—	—		(172)
Foreign currency translation adjustment	—	—		—		—		(131)		—	—		—		(131)		—	—		—
Net income (loss)	—	—		—		(3,751)		—		—	—		25		(3,726)		—	—		(42)
Balance at September 30, 2024	2,110	$	2	$	291,817	$	(640,506)	$	(247)	—	$	—	$	13,856	$	(335,078)	19,120	$	478,000	$	2,128

	Common Stock			Additional Paid-in Capital		Accumulated  Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Noncontrolling Interests in Consolidated Entities		Total		Convertible Preferred Stock			Redeemable Noncontrolling Interests
	Shares	Amount								Shares	Amount						Shares	Amount
Balance at December 31, 2023	3,212	$	3	$	299,304	$	(609,312)	$	(213)	(105)	$	(1,354)	$	7,005	$	(304,567)	19,120	$	478,000	$	1,972
Repurchases and retirement of common stock	(1,372)	(1)		(6,850)		—		—		—	—		—		(6,851)		—	—		—
Retirement of treasury stock	—	—		(1,435)		—		—		133	1,435		—		—		—	—		—
Equity-based compensation	298	—		1,515		—		—		—	—		—		1,515		—	—		293
Issuance of subsidiary stock to noncontrolling interests	—	—		(354)		—		—		—	—		354		—		—	—		—
Forfeiture of restricted common stock	(4)	—		31		—		—		(4)	(31)		—		—		—	—		—
Withholding of restricted common stock upon vestings	(24)	—		—		—		—		(24)	(50)		—		(50)		—	—		—
Dividends declared and undeclared - preferred stock	—	—		—		(27,815)		—		—	—		—		(27,815)		—	—		—
Acquisition of noncontrolling interest in consolidated entities	—	—		(342)		—		—		—	—		172		(170)		—	—		—
Contributions from noncontrolling interests, net of issuance costs	—	—		(52)		—		—		—	—		6,756		6,704		—	—		62
Redemption value adjustment	—	—		—		(49)		—		—	—		—		(49)		—	—		49
Distributions to noncontrolling interests	—	—		—		—		—		—	—		—		—		—	—		(344)
Foreign currency translation adjustment	—	—		—		—		(34)		—	—		—		(34)		—	—		—
Net income (loss)	—	—		—		(3,330)		—		—	—		(431)		(3,761)		—	—		96
Balance at September 30, 2024	2,110	$	2	$	291,817	$	(640,506)	$	(247)	—	$	—	$	13,856	$	(335,078)	19,120	$	478,000	$	2,128

5

	Common Stock			Additional Paid-in Capital		Accumulated  Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Noncontrolling Interests in Consolidated Entities		Total		Convertible Preferred Stock			Redeemable Noncontrolling Interests
	Shares	Amount								Shares	Amount						Shares	Amount
Balance at June 30, 2023	3,214	$	3	$	299,039	$	(583,673)	$	(59)	(103)	$	(1,324)	$	(336)	$	(286,350)	19,120	$	478,000	$	1,726
Equity-based compensation	—	—		365		—		—		—	—		—		365		—	—		100
Forfeiture of restricted common stock	—	—		7		—		—		—	(7)		—		—		—	—		—
Asset acquisition of TSGF L.P.	—	—		—		—		—		—	—		2,413		2,413		—	—		—
Dividends declared and undeclared - preferred stock	—	—		—		(9,054)		—		—	—		—		(9,054)		—	—		—
Employee advances	—	—		(3)		—		—		—	—		—		(3)		—	—		—
Contributions from noncontrolling interests	—	—		(43)		—		—		—	—		161		118		—	—		—
Redemption value adjustment	—	—		—		1		—		—	—		—		1		—	—		(1)
Distributions to noncontrolling interests	—	—		—		—		—		—	—		—		—		—	—		(172)
Foreign currency translation adjustment	—	—		—		—		29		—	—		—		29		—	—		—
Net income (loss)	—	—		—		(2,991)		—		—	—		(190)		(3,181)		—	—		111
Balance at September 30, 2023	3,214	$	3	$	299,365	$	(595,717)	$	(30)	(103)	$	(1,331)	$	2,048	$	(295,662)	19,120	$	478,000	$	1,764

	Common Stock			Additional Paid-in Capital		Accumulated  Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Noncontrolling Interests in Consolidated Entities		Total		Convertible Preferred Stock			Redeemable Noncontrolling Interests
	Shares	Amount								Shares	Amount						Shares	Amount
Balance at December 31, 2022	3,110	$	3	$	297,715	$	(568,482)	$	78	(71)	$	(947)	$	167	$	(271,466)	19,120	$	478,000	$	1,614
Equity-based compensation	136	—		1,686		—		—		—	—		(1)		1,685		—	—		264
Forfeiture of restricted common stock	(1)	—		25		—		—		(1)	(25)		—		—		—	—		—
Withholding of restricted common stock upon vestings	(31)	—		—		—		—		(31)	(359)		—		(359)		—	—		—
Asset acquisition of TSGF L.P.	—	—		—		—		—		—	—		2,413		2,413		—	—		—
Dividends declared and undeclared - preferred stock	—	—		—		(27,132)		—		—	—		—		(27,132)		—	—		—
Employee advances	—	—		(18)		—		—		—	—		—		(18)		—	—		—
Contributions from noncontrolling interests	—	—		(43)		—		—		—	—		161		118		—	—		—
Redemption value adjustment	—	—		—		(3)		—		—	—		—		(3)		—	—		3
Distributions to noncontrolling interests	—	—		—		—		—		—	—		—		—		—	—		(516)
Foreign currency translation adjustment	—	—		—		—		(108)		—	—		—		(108)		—	—		—
Net income (loss)	—	—		—		(100)		—		—	—		(692)		(792)		—	—		399
Balance at September 30, 2023	3,214	$	3	$	299,365	$	(595,717)	$	(30)	(103)	$	(1,331)	$	2,048	$	(295,662)	19,120	$	478,000	$	1,764

See Notes to Condensed Consolidated Financial Statements.

6

ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended September 30,
	2024		2023
Cash Flows from Operating Activities
Net income (loss)	$	(3,665)	$	(393)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	25,842		26,231
Change in fair value of deferred compensation plan	737		(1,479)
Equity-based compensation	1,908		1,944
Equity in (earnings) loss in unconsolidated entities	(422)		1,174
Deferred tax expense (benefit)	2,597		(1,826)
Change in fair value of contingent consideration	(1,038)		430
(Gain) loss on disposal of assets	263		1,032
Amortization of other assets	—		166
Amortization of loan costs	823		775
Realized loss on investment	—		160
Other (gain) loss	1,306		743
Changes in operating assets and liabilities, exclusive of the effect of acquisitions:
Accounts receivable	1,083		(13,694)
Due from affiliates	(427)		(112)
Due from Ashford Trust	17,580		(7,625)
Due from Braemar	(2,865)		11,828
Inventories	(214)		(368)
Prepaid expenses and other	(771)		(1,055)
Investment in unconsolidated entities	300		—
Operating lease right-of-use assets	2,567		2,739
Other assets	(258)		(55)
Accounts payable and accrued expenses	(9,176)		(16,336)
Due to affiliates	—		51
Due to Ashford Trust	—		(747)
Due to Braemar	—		3,533
Claims liabilities and other	3,707		4,946
Operating lease liabilities	(2,879)		(2,912)
Deferred income	(4,455)		728
Net cash provided by (used in) operating activities	32,543		9,878
Cash Flows from Investing Activities
Additions to property and equipment	(16,221)		(17,479)
Proceeds from sale of property and equipment, net	948		24
Restricted cash acquired in asset acquisition of RHC	—		849
Acquisition of Alii Nui, net of cash acquired	—		(6,704)
Asset acquisition of TSGF L.P., net of cash acquired	—		(2,226)
Investments	(4,556)		—
Asset acquisition	(268)		—
Acquisition of noncontrolling interest in consolidated subsidiaries	(214)		—
Purchase of common stock of related parties	(64)		—
Proceeds from note receivable	337		1,000
Issuance of notes receivable	—		(1,269)
Net cash provided by (used in) investing activities	(20,038)		(25,805)

7

	Nine Months Ended September 30,
	2024		2023
Cash Flows from Financing Activities
Repurchase of common stock	(6,851)		—
Payments for dividends on preferred stock	(8,700)		(26,099)
Payments on revolving credit facilities	(31,479)		(17,516)
Borrowings on revolving credit facilities	34,011		17,982
Proceeds from notes payable	2,624		28,739
Payments on notes payable	(3,595)		(2,924)
Payments on finance lease liabilities	(325)		(321)
Payments of loan costs	(35)		(409)
Repurchase of restricted common stock upon vesting	(50)		(359)
Employee advances	—		(18)
Payment of contingent consideration	(100)		—
Contributions from noncontrolling interests, net of issuance costs	6,766		118
Distributions to noncontrolling interests	(172)		(516)
Net cash provided by (used in) financing activities	(7,906)		(1,323)
Effect of foreign exchange rate changes on cash and cash equivalents	—		35
Net change in cash, cash equivalents and restricted cash	4,599		(17,215)
Cash, cash equivalents and restricted cash at beginning of period	75,270		81,448
Cash, cash equivalents and restricted cash at end of period	$	79,869	$	64,233
Supplemental Cash Flow Information
Interest paid	$	12,409	$	9,868
Income taxes paid (refunded), net	3,033		7,876
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Acquisition of Alii Nui through issuance of RED Units	$	—	$	2,000
Acquisition related contingent consideration liability	—		1,000
Capital expenditures accrued but not paid	310		776
Finance lease additions	127		277
Settlement of contingent consideration liability	401		—
Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period	$	52,054	$	44,390
Restricted cash at beginning of period	23,216		37,058
Cash, cash equivalents and restricted cash at beginning of period	$	75,270	$	81,448
Cash and cash equivalents at end of period	$	63,636	$	28,018
Restricted cash at end of period	16,233		36,215
Cash, cash equivalents and restricted cash at end of period	$	79,869	$	64,233

See Notes to Condensed Consolidated Financial Statements.

8

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Description of Business

Ashford Inc. (the “Company,” “we,” “us” or “our”), a Nevada corporation, is an alternative asset management company with a portfolio of strategic operating businesses that provides products and services primarily to clients in the real estate and hospitality industries, including Ashford Hospitality Trust, Inc. (“Ashford Trust”), Braemar Hotels & Resorts Inc. (“Braemar”), Stirling Hotels & Resorts, Inc. (“Stirling”) and our consolidated subsidiary, Texas Strategic Growth Fund, L.P. (“TSGF L.P.”). We became a public company in November 2014, and our common stock was listed on the NYSE American LLC (“NYSE American”) until the Company delisted its common stock on July 29, 2024. On August 8, the Company filed a Form 15 with the Securities and Exchange Commission (the “SEC”) to terminate the registration of the Company’s common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and suspend the Company’s reporting obligations under Section 15(d) of the Exchange Act. The Form 15 became effective on November 6, 2024. The Company expects its reporting obligations will be automatically suspended as of January 1, 2025 pursuant to Rule 15d-6 of the Exchange Act.  The Company intends to file an annual report on Form 10-K for the year ended December 31, 2024.

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

We are currently the advisor for Ashford Trust, Braemar, Stirling and TSGF L.P. In our capacity as advisor, we are responsible for implementing the investment strategies and managing the day-to-day operations of our clients and their respective hotels from an ownership perspective, in each case subject to the respective advisory agreements and the supervision and oversight of each client’s respective boards of directors. Ashford Trust is focused on investing in full-service hotels in the upscale and upper upscale segments in the United States that have revenue per available room (“RevPAR”) generally less than twice the U.S. national average. Braemar invests primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Stirling is focused on investing primarily in a diverse portfolio of stabilized income-producing hotels and resorts across all chain scales primarily located in the United States and became our client on December 6, 2023. TSGF L.P. invests in all types of real estate in the state of Texas. Each of Ashford Trust and Braemar is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The common stock of each of Ashford Trust and Braemar is traded on the New York Stock Exchange (the “NYSE”). Stirling is privately held and Stirling’s subsidiary, Stirling REIT OP, LP (“Stirling OP”), is consolidated by Ashford Trust. TSGF L.P. is a privately held consolidated subsidiary of the Company.

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

Termination of the Registration of the Company’s Common Stock

On April 1, 2024, the Board, upon the recommendation of a Special Committee of the Board consisting entirely of independent and disinterested directors, approved a transaction whereby the Company would effect a reverse/forward stock split of the Company’s shares of common stock, in conjunction with terminating the Company’s public company reporting obligations and delisting the Company’s common stock from the NYSE American, subject to obtaining the requisite approval of the reverse stock split by the Company’s stockholders at a Special Meeting of Stockholders (the “Special Meeting”).

9

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

At the Special Meeting held on July 22, 2024, the Company’s stockholders approved proposals necessary to implement the Transaction (as defined below) as part of the Company’s plan to terminate the public registration of the Company’s common stock under Section 12(g) of the Exchange Act, suspend the Company’s duty to file periodic reports and other information with the SEC under Section 13(a) of the Exchange Act, and delist the Company’s common stock from the NYSE American. At the Special Meeting, the Company’s stockholders voted to effect a 1-for-10,000 reverse stock split of the Company’s Common Stock (the “Reverse Stock Split”), which was immediately followed by a 10,000-for-1 forward stock split of the Company’s Common Stock (the “Forward Stock Split,” and together with the Reverse Stock Split, the “Transaction”).

The Reverse Stock Split and the Forward Stock Split were effected on July 29, 2024 at 5:01 p.m. Eastern Time and 5:02 p.m. Eastern Time, respectively. As a result of the Transaction, each stockholder owning fewer than 10,000 shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split received $5.00 per share, without interest, in cash for each share of the Company’s common stock held by such stockholder at the effective time of the Reverse Stock Split, and such stockholders are no longer stockholders of the Company. Stockholders owning 10,000 or more shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split were not entitled to receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any, and will instead remain stockholders in the Company holding, as a result of the Forward Stock Split, the same number of shares of common stock as such stockholders held immediately before the effective time of the Reverse Stock Split.

As a result of the Transaction, the Company paid stockholders owning fewer than 10,000 shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split a total of approximately $6.9 million to purchase approximately 1.4 million shares of the Company’s common stock. The last day of trading for the Company’s common stock was July 26, 2024 and the Company’s common stock is no longer traded on the NYSE American.

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation—The accompanying historical unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Ashford Inc., its majority-owned subsidiaries and entities which it controls. All significant intercompany accounts and transactions between these entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the condensed consolidated financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in our 2023 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27, 2024.

10

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

Noncontrolling Interests—The following tables present information about noncontrolling interests in our consolidated subsidiaries, including those related to consolidated VIEs, as of September 30, 2024 and December 31, 2023 (in thousands):

	September 30, 2024
	Ashford Holdings			OpenKey (3)		TSGF L.P. (5)
Ashford Inc. ownership interest	98.05		%	76.78	%	15.93		%
Redeemable noncontrolling interests (1) (2)	1.95		%	—	%	—		%
Noncontrolling interests in consolidated entities	—		%	23.22	%	84.07		%
	100.00		%	100.00	%	100.00		%
Carrying value of redeemable noncontrolling interests	$	2,085		n/a		$	42
Redemption value adjustment, year-to-date	49			n/a		n/a
Redemption value adjustment, cumulative	671			n/a		n/a
Carrying value of noncontrolling interests	n/a			(1,250)		15,106

	December 31, 2023
	Ashford Holdings			OpenKey (3)		Pure Wellness (4)		TSGF L.P. (5)
Ashford Inc. ownership interest	99.49		%	76.78	%	70.00	%	25.29	%
Redeemable noncontrolling interests (1) (2)	0.51		%	—	%	—	%	—	%
Noncontrolling interests in consolidated entities	—		%	23.22	%	30.00	%	74.71	%
	100.00		%	100.00	%	100.00	%	100.00	%
Carrying value of redeemable noncontrolling interests	$	1,972		n/a		n/a		n/a
Redemption value adjustment, year-to-date	9			n/a		n/a		n/a
Redemption value adjustment, cumulative	622			n/a		n/a		n/a
Carrying value of noncontrolling interests	n/a			(537)		(127)		7,669

________

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

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

(3)    Represents ownership interests in OpenKey, Inc. (“OpenKey”), a consolidated VIE for which we are considered the primary beneficiary. OpenKey is a hospitality-focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms.

11

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

(4)    Represents ownership interests in PRE Opco, LLC, our wholly owned subsidiary doing business as Pure Wellness (“Pure Wellness”) which provides hypoallergenic premium rooms in the hospitality and commercial office industry. On January 1, 2024, we acquired the remaining outstanding shares in Pure Wellness from the previous noncontrolling interest holders for $214,000, increasing our ownership of Pure Wellness from 70% to 100%. Prior to our acquisition of Pure Wellness’ noncontrolling interest, Pure Wellness was a consolidated VIE for which we were considered the primary beneficiary.

(5)    Represents ownership interests in TSGF L.P., a consolidated VIE for which we are considered the primary beneficiary.

Investments—We hold “investments in unconsolidated entities” in our condensed consolidated balance sheets, which are considered to be variable interests or voting interests in the underlying entities. Certain of our investments in variable interests are not consolidated because we have determined that we are not the primary beneficiary. Certain other investments are not consolidated as the underlying entity does not meet the definition of a VIE and we do not control more than 50% of the voting interests. We review our equity method investments for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its fair value is less than the carrying amount of our investment. No such impairment was recorded during the three and nine months ended September 30, 2024 and 2023.

Our subsidiary TSGF L.P. is accounted for as an investment company in accordance with GAAP under Financial Accounting Standards Board (“FASB”) ASC 946. TSGF L.P.’s investments are reflected in “investments” in our condensed consolidated balance sheets at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of “other income (expense)” in our condensed consolidated statements of operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, at current market conditions (i.e., the exit price). On May 30, 2024, TSGF L.P. invested a total of $4.0 million in Slate TSGF Fitz II LLC, an entity which constructs and operates multi-family units. The fair value of TSGF L.P.’s investments as of September 30, 2024 and December 31, 2023 were $10.0 million and $5.0 million, respectively. See note 7.

We additionally hold an investment in an unconsolidated variable interest entity with a carrying value of $500,000 at September 30, 2024 and December 31, 2023. We account for the investment at fair value based on recent observable transactions as we do not exercise significant influence over the entity. No equity in earnings (loss) of unconsolidated entities due to a change in fair value of the investment was recognized during the three and nine months ended September 30, 2024 and 2023. In the event that the assumptions used to determine fair value change in the future, we may be required to record an impairment charge related to this investment.

Our investment in Real Estate Advisory Holdings LLC (“REA Holdings”) is accounted for under the equity method as we have significant influence over the voting interest entity. The following table summarizes our carrying value and ownership interest in REA Holdings (in thousands):

	September 30, 2024			December 31, 2023
Carrying value of the investment in REA Holdings	$	2,515		$	2,370
Ownership interest in REA Holdings	30		%	30		%

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Equity in earnings (loss) in unconsolidated entities REA Holdings	$	(37)	$	(327)	$	445	$	(1,174)

The Company additionally holds various investments which are individually immaterial that are accounted for under the equity method. As of September 30, 2024 and December 31, 2023, the combined carrying value of these equity method investments was $1.4 million and $1.4 million, respectively.

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

12

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

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

	September 30, 2024		December 31, 2023
Advisory:
Insurance claim reserves (1)	$	1,731	$	18,947
Warwick:
Insurance claim reserves (1)	11,489		—
Remington:
Managed hotel properties’ reserves (2)	1,001		2,508
Insurance claim reserves (3)	2,012		1,761
Total Remington restricted cash	3,013		4,269
Total restricted cash	$	16,233	$	23,216

________

(1)    Prior to the incorporation of our insurance subsidiary Warwick, Ashford Inc. collected funds from Ashford Trust, Braemar and third-parties. These funds were deposited into restricted cash and were used by Ashford LLC to pay insurance claims. In the third quarter of 2024, the majority of the restricted cash was transferred to Warwick, who underwrites the related casualty insurance policies, with the remaining balance to be transferred subject to certain conditions. The claim liability related to the restricted cash balance is included in “claims liabilities and other” in our condensed consolidated balance sheets.

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

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

Accounts Receivable—Accounts receivable consists primarily of receivables from customers of audio visual services and third-party owned properties managed by Remington. 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 maintained at a level adequate to absorb estimated receivable losses. The estimate is based on past receivable loss experience, known and inherent credit risks, current economic conditions and other relevant factors, including specific reserves for certain accounts. As of September 30, 2024 and December 31, 2023, the allowance for doubtful accounts was $3.7 million and $2.1 million, respectively. The increase from December 31, 2023 is primarily due to an increase of $909,000 in Premier’s allowance for doubtful accounts related to a third-party client and other immaterial increases in the period by Remington and INSPIRE related to third-party clients.

13

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Notes Receivable—Notes receivable were comprised of the following (in thousands):

	September 30, 2024		December 31, 2023
Remington note receivable (1)	$	250	$	525
Ashford LLC note receivable (2)	1,149		1,082
REA Holdings affiliate (3)	552		845
Other	248		245
Total notes receivable	$	2,199	$	2,697

________

(1)    Remington holds a note receivable from a third party. The interest rate on the note receivable is 10% per annum with payments of interest payable quarterly. As of September 30, 2024 and December 31, 2023, the outstanding principal balance is included in “prepaid expenses and other” in our condensed consolidated balance sheets.

(2)    Ashford LLC holds a note receivable from a third party. The note bears interest at 8% per annum, compounding annually. Interest is paid in-kind and added to the outstanding principal balance until the note maturity date of November 11, 2026. The note receivable is recorded in “other assets, net” in our condensed consolidated balance sheet.

(3)    On April 3, 2023, the Company entered into a note receivable with an affiliate of REA Holdings. Principal plus any accrued interest is due to the Company on demand or, in the absence of any demand, 24 months. Interest is paid in-kind and added to the outstanding principal balance until the note maturity date. The interest rate on the note receivable is 7.5% per annum. The note receivable is recorded in “prepaid expenses and other” in our condensed consolidated balance sheet.

Property and Equipment, Net—Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. As of September 30, 2024 and December 31, 2023, property and equipment, net of accumulated depreciation, included ERFP assets, as defined in note 14, of $1.9 million and $1.7 million, audio visual equipment at Inspire Event Technologies Holdings, LLC, our subsidiary doing business as INSPIRE (“INSPIRE”), of $17.4 million and $15.6 million and marine vessels at our subsidiary, RED Hospitality & Leisure LLC (“RED”) of $27.7 million and $25.0 million, respectively.

Claims Liabilities and Other—As of September 30, 2024 and December 31, 2023, claims liabilities and other included reserves in the amount of $28.0 million and $26.8 million, respectively, for Warwick’s liabilities for case-basis estimates of reported losses and incurred but not reported (“IBNR”) losses primarily from general liability and workers’ compensation which are calculated based upon loss projections utilizing industry data. In establishing its liability for losses and loss adjustment expenses, the Company utilizes the findings of an independent consulting actuary. An estimate of ultimate losses and loss expenses is projected at each reporting date. IBNR reserves are derived from the difference between projected ultimate losses and loss expenses incurred. Actuarial methodologies used by the consulting actuary include the Bornhuetter Ferguson, loss development, case reserve development, and pure premium methods. As adjustments to these estimates become necessary, such adjustments are reflected in “other” operating expenses in our condensed consolidated statements of operations.

As of September 30, 2024 and December 31, 2023, claims liabilities and other additionally included $3.3 million and $1.7 million, respectively, relating to reserves for Remington health insurance claims. As of September 30, 2024, claims liabilities and other also included the liabilities for contingent consideration of $499,000 and $1.4 million which were earned by the sellers of Alii Nui and Maui Dive Shop (“Alii Nui”) and Chesapeake Hospitality (“Chesapeake”), respectively. As of December 31, 2023, claims liabilities and other also included the current portion of the contingent consideration liabilities of $1.0 million and $1.3 million from the Company’s acquisitions of Alii Nui and Chesapeake, respectively. See note 7.

Other Liabilities—As of September 30, 2024 and December 31, 2023, other liabilities included the noncurrent portion of the contingent consideration liability of $449,000 and $1.6 million from the Company’s acquisition of Chesapeake, respectively. See note 7. As of September 30, 2024 and December 31, 2023, other liabilities also included an uncertain tax position of $1.0 million and $978,000, respectively.

Revenue Recognition—See note 3.

Income Taxes—We are a taxable corporation for federal and state income tax purposes. Income tax expense includes U.S. federal and state income taxes, Mexico and Dominican Republic income taxes and U.S. Virgin Islands taxes. In accordance with authoritative accounting guidance, we account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between our condensed

14

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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.

ASC 740 “Income Taxes” addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance requires us to determine whether tax positions we have taken or expect to take in a tax return are more likely than not to be sustained upon examination by the appropriate taxing authority based on the technical merits of the positions. Tax positions that do not meet the more likely than not threshold would be recorded as additional tax expense in the current period. We analyze all open tax years, as defined by the statute of limitations for each jurisdiction, which includes the federal jurisdiction and various states. We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our portfolio companies file income tax returns in the U.S. federal jurisdiction and various states and cities in Mexico, the Dominican Republic, the U.S. Virgin Islands and various other countries. Tax years 2019 through 2023 remain subject to potential examination by federal and certain state taxing authorities.

15

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Recently Adopted Accounting Standards—In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt - Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. We adopted ASU 2020-06 effective January 1, 2024 and the adoption did not have a material impact on the Company’s financial statements and related disclosures.

Recently Issued Accounting Standards—In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which, among other requirements, improves disclosures about a public entity’s reportable segments by requiring a public entity to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Accounting Standards Codification Topic 280 in interim periods. The amendments in this ASU apply to all public entities that are required to report segment information in accordance with Topic 280. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company’s adoption of this ASU will be effective as of December 31, 2024. The adoption of this ASU is expected to only impact disclosures with respect to the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The ASU requires consistent categories with greater disaggregation of information in the rate reconciliation and disclosure of income taxes paid be disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this ASU apply to all entities that are subject to Topic 740. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this ASU should be applied on a prospective basis. Retrospective application is permitted. The adoption of this ASU is expected to only impact disclosures with respect to the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures.

16

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

3. Revenues

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

We determine revenue recognition through the following steps:

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

•Identification of the performance obligations in the contract

•Determination of the transaction price

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

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

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

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

Advisory Services Fees Revenue

Advisory services fees revenue is reported within our Advisory segment and primarily consists of advisory fees that are recognized when services have been rendered. Advisory fees consist of base fees and incentive fees.

For Ashford Trust, the base fee is paid monthly in an amount equal to 1/12th of 0.70% of Ashford Trust’s total market capitalization plus the Net Asset Fee Adjustment, as defined in our Third Amended and Restated Advisory Agreement with Ashford Trust, as amended, subject to certain minimums.

For Braemar, the base fee is paid monthly in an amount equal to 1/12th of 0.70% of Braemar’s total market capitalization plus the Net Asset Fee Adjustment, as defined in our Fifth Amended and Restated Advisory Agreement with Braemar, as amended, subject to certain minimums.

Incentive advisory fees are measured annually in each year that Ashford Trust’s and/or Braemar’s annual total stockholder return exceeds the average annual total stockholder return for each company’s respective peer group, subject to the Fixed Charge Coverage Ratio Condition (the “FCCR Condition”), as defined in the respective advisory agreements. Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition, which relates to the ratio of adjusted EBITDA to fixed charges for Ashford Trust or Braemar, as applicable. Incentive advisory fees are a form of variable consideration and therefore must be (i) deferred until such fees are probable of not being subject to significant reversal, and (ii) tied to a performance obligation in the contract with the customer so that revenue recognition depicts the transfer of the related advisory services to the customer. Accordingly, the Company does not record incentive advisory fee revenue in interim periods prior to the fourth quarter of the year in which the incentive fee is measured. The first-year installment of incentive advisory fees will generally be recognized only upon measurement in the fourth quarter of the first year of the three-year period. The second- and third-year installments of incentive advisory fees are recognized as revenue on a pro rata basis each quarter subject to meeting the FCCR Condition.

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Hotel Management Fees Revenue

Hotel management fees revenue is reported within our Remington segment and primarily consists of base management fees, incentive management fees and other management fees. Base management fees, incentive management fees and other management fees are recognized when services have been rendered. For hotels owned by Ashford Trust and Braemar, Remington receives base management fees of 3% of gross hotel revenue for managing the hotel employees and daily operations of the hotels, pursuant to Remington’s hotel management agreements, subject to a specified floor (which is subject to increase annually based on increases in the consumer price index). The base management fee for each hotel is due monthly. Remington additionally receives an incentive management fee for hotels owned by Ashford Trust and Braemar whenever a hotel’s gross operating profit (“GOP”) exceeds the hotel’s budgeted GOP. The incentive fee is equal to the lesser of 1% of each hotel’s annual gross revenue or the amount by which the respective hotel’s GOP exceeds the hotel’s budgeted GOP. The incentive management fee, if any, for each hotel is due annually in arrears within 90 days of the end of the fiscal year. However, if based on actual operations and revised forecasts the incentive fee is reasonably expected to be earned, payment is due monthly in arrears within 20 days following the end of each calendar month, subject to final adjustment within 90 days of the end of the fiscal year. The base management fees and incentive management fees that Remington receives for third-party owned properties vary by property. Other management fees primarily includes fees for health insurance programs administered on behalf of certain third-party properties. Health insurance program fees are recognized monthly at rates which approximate market rates for similar plans provided by independent insurance companies. Other management fees additionally includes fees for fixed monthly accounting services, revenue management services and other services at certain third-party properties.

Design and Construction Fees Revenue

Design and construction fees revenue primarily consists of revenue generated by our subsidiary, Premier Project Management LLC (“Premier”). Premier provides design and construction management services, capital improvements, refurbishment, project management, and other services such as purchasing, interior design, architectural services and freight management at properties. Premier receives fees for these services and recognizes revenue over time as services are provided to the customer. On February 12, 2024, Braemar entered into Amendment No. 2 to the Master Project Management Agreement with Premier and, on March 12, 2024, Ashford Trust entered into an Amended and Restated Master Project Management Agreement with Premier (collectively, the “Premier Agreements”). The Premier Agreements modified the existing arrangements and provide that fees from Ashford Trust and Braemar will be payable monthly as the service is delivered based on the percentage of completion, as reasonably determined by Premier. The Premier Agreements resulted in contract modifications, as defined under ASC 606, which resulted in cumulative catch-up adjustments that increased design and construction fees in the first quarter of 2024, by a total of $3.6 million.

Audio Visual Revenue

Audio visual revenue primarily consists of revenue generated within our INSPIRE segment by providing event technology services, such as audio visual services, audio visual equipment rental, staging and meeting services and event-related communication systems as well as related technical support, to our customers in various venues including hotels and convention centers. Revenue is recognized in the period in which services are provided pursuant to the terms of the contractual arrangements with our customers. Payment is typically due from customers within 30 days. We also evaluate whether it is appropriate to present: (i) the gross amount that our customers pay for our services as revenue, and the related commissions paid to the venue as cost of revenue; or (ii) the net amount (gross revenue less the related commissions paid to the venue) as revenue. We are responsible for the delivery of the services, including providing the necessary labor and equipment to perform the services. We are generally subject to inventory risk, have latitude in establishing prices and selecting suppliers and, while in many cases the venue bills the end customer on our behalf, we bear the risk of collection from the customer. The venues’ commissions are not dependent on collections. As a result, our revenue is primarily reported on a gross basis. Cost of revenues for audio visual principally includes commissions paid to venues, direct labor costs, the cost of equipment sub-rentals, depreciation of equipment, amortization of signing bonuses, as well as other costs such as supplies, freight, travel and other overhead from our venue and customer facing operations and any losses on equipment disposal.

Other Revenue

Other revenue includes revenue provided by certain of our products and service businesses, including RED. RED’s revenue is primarily generated through the provision of watersports activities and ferry and excursion services. The revenue is recognized as services are provided based on contractual customer rates. Payment is ordinarily due 15 days after the end of the month in which services were rendered. Debt placement and related fees include revenue earned from providing placement, modifications, forbearances or refinancing of certain mortgage debt by our subsidiary, Lismore Capital II LLC (“Lismore”). For

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(unaudited)

certain agreements, the fees are recognized based on a stated percentage of the loan amount when services have been rendered and the subject loan, modification or other transaction is closed. For other agreements, deferred income related to the various Lismore fees will be recognized over the term of the agreement on a straight-line basis as the service is rendered, only to the extent it is probable that a significant reversal of revenue will not occur. Constraints relating to variable consideration are resolved generally upon the closing of a transaction or financing event and the resulting change in the transaction price will be adjusted on a cumulative catch-up basis in the period a transaction or financing event closes. Other revenue also includes general liability and workers’ compensation insurance premiums paid to our insurance subsidiary, Warwick. Insurance premiums received are initially recorded in the current portion of deferred income in our condensed consolidated balance sheets and recognized as revenue ratably over the contractual terms of the respective written policy, which is primarily twelve months. General liability and workers’ compensation insurance premiums are generally paid upfront to Warwick annually.

Cost Reimbursement Revenue

Cost reimbursement revenue is recognized in the period we incur the related reimbursable costs. Under our advisory agreements and our Contribution Agreement with Ashford Trust and Braemar (as defined below), we are entitled to be reimbursed for certain costs we incur on behalf of Ashford Trust and Braemar, with no added mark-up. These costs primarily consist of expenses related to Ashford Securities (as defined below), overhead, internal audit, risk management advisory services and asset management services, including compensation, benefits and travel expense reimbursements. We record cost reimbursement revenue for cash incentive compensation awards and equity grants of Ashford Trust and Braemar common stock and LTIP units awarded to our officers and employees in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Payments for cost reimbursement revenue are primarily due within 30 days after the services were rendered.

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

The recognition of cost reimbursement revenue and reimbursed expenses for centralized software programs reimbursed by Ashford Trust and Braemar may result in temporary timing differences in our operating and net income. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively.

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

Practical Expedients and Exemptions

We do not disclose the amount of variable consideration that we expect to recognize in future periods in the following circumstances:

(1) if we recognize the revenue based on the amount invoiced or services performed;

(2) if the consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation, and the terms of the consideration relate specifically to our efforts to transfer, or to a specific outcome from transferring the service.

Deferred Income and Contract Balances

Deferred income primarily consists of customer billings in advance of revenue being recognized from our advisory agreements and other products and services contracts. Current deferred income additionally includes customer deposits which could result in cash payments within the next 12 months. The change in the deferred income balance is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred income balance at the beginning of the period.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

	Deferred Income
	2024		2023
Balance as of June 30	$	14,907	$	9,019
Increases to deferred income	6,924		2,687
Recognition of revenue (1)	(7,908)		(3,062)
Balance as of September 30	$	13,923	$	8,644

________

(1)    Revenue recognized in the three months ended September 30, 2024, includes (a) $2.1 million of revenue primarily related to our advisory agreements and our Amended and Restated Contribution Agreement with Ashford Trust and Braemar, as defined in note 14, (b) $1.1 million of audio and visual revenue, (c) $1.1 million of watersports, ferry and excursion services revenue, (d) $2.7 million of premiums earned by Warwick and (e) $908,000 of revenues earned by our other products and services companies. Revenue recognized in the three months ended September 30, 2024 includes $3.2 million which was recorded in deferred income in our condensed consolidated balance sheet as of December 31, 2023.

Revenue recognized in the three months ended September 30, 2023 includes (a) $809,000 of advisory revenue primarily related to our advisory agreements and our Amended and Restated Contribution Agreement with Ashford Trust and Braemar, (b) $34,000 of audio visual revenue, (c) $1.2 million of watersports, ferry and excursion services revenue and (d) $1.0 million of revenues earned by our other products and services companies. Revenue recognized in the three months ended September 30, 2023 includes $100,000 which was recorded in deferred income in our condensed consolidated balance sheet as of December 31, 2022.

	Deferred Income
	2024		2023
Balance as of January 1	$	18,378	$	7,800
Increases to deferred income	18,950		9,512
Recognition of revenue (1)	(23,405)		(8,668)
Balance as of September 30	$	13,923	$	8,644

________

(1)    Revenue recognized in the nine months ended September 30, 2024, includes (a) $5.5 million of revenue primarily related to our advisory agreements and our Amended and Restated Contribution Agreement with Ashford Trust and Braemar, (b) $3.0 million of audio and visual revenue, (c) $4.0 million of watersports, ferry and excursion services revenue, (d) $7.7 million of premiums earned by Warwick and (e) $3.2 million of revenues earned by our other products and services companies. Revenue recognized in the nine months ended September 30, 2024 includes $12.1 million which was recorded in deferred income in our condensed consolidated balance sheet as of December 31, 2023.

Revenue recognized in the nine months ended September 30, 2023 includes (a) $629,000 of advisory revenue primarily related to our advisory agreements and our Amended and Restated Contribution Agreement with Ashford Trust and Braemar, (b) $1.5 million of audio visual revenue, (c) $3.1 million of watersports, ferry and excursion services revenue and (d) $3.4 million of revenues earned by our other products and services companies. Revenue recognized in the nine months ended September 30, 2023 includes $5.0 million which was recorded in deferred income in our condensed consolidated balance sheet as of December 31, 2022.

We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was primarily related to (i) reimbursed software costs that will be recognized evenly over the period the software is used to provide advisory services to Ashford Trust and Braemar, (ii) a $5.0 million cash payment received in June 2017 from Braemar in connection with our Fourth Amended and Restated Advisory Agreement with Braemar, which is recognized evenly over the 10-year initial contract period that we are providing Braemar advisory services, and (iii) debt placement and related fees that will be recognized over the term of the agreement on a straight-line basis as the service was rendered, only to the extent it was probable that a significant reversal of revenue would not occur. See note 14. Incentive advisory fees that are contingent upon future market performance are excluded as the fees are considered variable and not included in the transaction price at September 30, 2024 and September 30, 2023.

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(unaudited)

The timing of revenue recognition may differ from the timing of payment by customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred income until the performance obligations are satisfied. We had receivables related to revenues from contracts with customers of $24.1 million, $26.1 million and $17.6 million included in “accounts receivable, net” primarily related to our products and services segment, $723,000, $18.9 million and $0 in “due from Ashford Trust,” and $3.6 million, $714,000 and $11.8 million included in “due from Braemar” related to advisory services at September 30, 2024, December 31, 2023 and December 31, 2022, respectively. See notes 2 and 14.

Disaggregated Revenue

Our revenues were comprised of the following for the three and nine months ended September 30, 2024 and 2023 respectively (in thousands):

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Advisory services fees:
Base advisory fees	$	11,812	$	11,514	$	34,876	$	35,539
Incentive advisory fees	67		67		201		201
Other advisory revenue	131		131		390		389
Total advisory services fees revenue	12,010		11,712		35,467		36,129
Hotel management fees:
Base fees	9,383		9,159		28,930		28,557
Incentive fees	189		925		2,464		3,966
Other management fees	2,778		2,307		7,800		6,933
Total hotel management fees revenue	12,350		12,391		39,194		39,456
Design and construction fees revenue	6,191		7,430		21,003		21,964
Audio visual revenue	34,360		30,641		126,855		112,347
Other revenue:
Watersports, ferry and excursion services (1)	9,126		8,375		32,758		25,797
Debt placement and related fees (2)	1,802		1,714		5,030		3,125
Premiums earned	3,480		—		9,549		—
Cash management fees (3)	55		34		106		213
Other services (4)	1,028		1,052		3,333		2,922
Total other revenue	15,491		11,175		50,776		32,057
Cost reimbursement revenue	110,710		107,866		338,351		317,094
Total revenues	$	191,112	$	181,215	$	611,646	$	559,047
REVENUES BY SEGMENT (5)
Advisory	$	18,287	$	19,138	$	57,625	$	60,316
Remington	110,370		106,812		340,355		314,454
Premier	9,859		10,605		31,147		30,780
INSPIRE	34,405		30,694		127,029		112,506
RED	9,157		8,398		32,882		25,866
OpenKey	330		373		1,050		1,184
Corporate and other	8,704		5,195		21,558		13,941
Total revenues	$	191,112	$	181,215	$	611,646	$	559,047

________

(1)    Watersports, ferry and excursion services revenue is earned by RED, which includes RED’s legacy operations in the U.S. Virgin Islands and the Turks and Caicos Islands, Alii Nui, which provides luxury sailing and watersports experiences in Maui, Hawaii and Sebago, a provider of watersports activities and excursion services based in Key West, Florida.

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

(3)     Cash management fees include revenue earned by providing active management and investment of Ashford Trust and Braemar’s excess cash in short-term U.S. Treasury securities.

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(unaudited)

(4)     Other services revenue relates primarily to other hotel services provided by our consolidated subsidiaries OpenKey and Pure Wellness, to Ashford Trust, Braemar and third parties.

(5)    We have six reportable segments: Advisory, Remington, Premier, INSPIRE, RED and OpenKey. We combine the operating results of Warwick and Pure Wellness into an “all other” category, which we refer to as “Corporate and Other.” See note 16 for discussion of segment reporting.

Geographic Information

Our Advisory, Premier, OpenKey, and Corporate and Other reporting segments conduct their business primarily within the United States. Remington, INSPIRE and RED conduct business both in the United States and internationally. The following table presents revenue from Remington, INSPIRE and RED geographically for the three and nine months ended September 30, 2024 and 2023, respectively (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Remington:
Continental United States	$	109,814	$	106,812	$	338,752	$	314,454
Costa Rica	367		—		1,284		—
Puerto Rico	144		—		239		—
Mexico	15		—		50		—
Dominican Republic	30		—		30		—
Total Remington revenues	$	110,370	$	106,812	$	340,355	$	314,454
INSPIRE:
Continental United States	$	28,496	$	25,464	$	93,088	$	81,803
Mexico	4,598		3,465		25,886		23,530
Dominican Republic	1,311		1,765		8,055		7,173
Total INSPIRE revenues	$	34,405	$	30,694	$	127,029	$	112,506
RED:
Continental United States	$	2,160	$	2,668	$	6,944	$	8,138
Hawaii	1,510		1,460		5,197		3,729
U.S. Virgin Islands	4,320		3,102		16,436		10,026
United Kingdom (Turks and Caicos Islands)	1,167		1,168		4,305		3,973
Total RED revenues	$	9,157	$	8,398	$	32,882	$	25,866
Total international revenues (1)	$	7,488	$	6,398	$	39,610	$	34,676

_______

(1)    International revenues include revenues earned outside of the United States and U.S. territories.

4. Goodwill and Intangible Assets, net

Goodwill

The carrying amount of goodwill is as follows (in thousands):

	Remington		RED		Corporate and Other (1)		Consolidated
Balance as of September 30, 2024 and December 31, 2023	$	56,658	$	3,573	$	782	$	61,013

________

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Intangible Assets

Intangible assets, net as of September 30, 2024 and December 31, 2023, are as follows (in thousands):

	September 30, 2024						December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Definite-lived intangible assets:
Remington management contracts	$	114,731	$	(59,215)	$	55,516	$	114,731	$	(51,891)	$	62,840
Premier management contracts	194,000		(72,872)		121,128		194,000		(64,808)		129,192
INSPIRE customer relationships	9,319		(7,484)		1,835		9,319		(6,645)		2,674
RED boat slip rights	9,618		(1,307)		8,311		9,350		(951)		8,399
	$	327,668	$	(140,878)	$	186,790	$	327,400	$	(124,295)	$	203,105
	Gross Carrying Amount						Gross Carrying Amount
Indefinite-lived intangible assets:
Remington trademarks	$	4,900					$	4,900
RED trademarks	2,090						2,090
	$	6,990					$	6,990

________

Amortization expense for definite-lived intangible assets was $5.5 million and $16.6 million for the three and nine months ended September 30, 2024, respectively. Amortization expense for definite-lived intangible assets was $6.1 million and $18.2 million for the three and nine months ended September 30, 2023, respectively. The useful lives of our customer relationships range from seven to 15 years and the useful lives of our Remington management contracts range from eight to 22 years. Our Premier management contracts and RED’s boat slip rights intangible assets were assigned useful lives of 30 years and 20 years, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5. Notes Payable, net

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

Indebtedness	Borrower	Maturity	Interest Rate	September 30, 2024		December 31, 2023
Credit facility (6) (9)	Ashford Inc.	April 1, 2027	Base Rate (1) + 6.35% or Adjusted Term SOFR (3) + 7.35%	$	100,000	$	100,000
Note payable (6) (11)	Ashford Inc.	February 29, 2028	4.00%	1,031		1,234
Note payable (5) (17)	OpenKey	On demand	15.00%	316		237
Term loan (5) (7) (10)	INSPIRE	March 24, 2028	Daily Adjusted Term SOFR (2) + 2.75%	16,440		18,500
Revolving credit facility (5) (7) (10)	INSPIRE	March 24, 2028	Daily Adjusted Term SOFR (2) + 2.75%	2,532		—
Equipment note (5) (7) (10)	INSPIRE	March 24, 2028	Daily Adjusted Term SOFR (2) + 2.75%	2,875		3,400
Revolving credit facility (5) (12)	Pure Wellness	On demand	Prime Rate (4) + 1.00%	150		150
Term loan (5) (8) (13)	RED	July 18, 2029	Prime Rate (4) + 0.50%	1,468		1,537
Term loan (5) (8)	RED	April 16, 2024	9.00%	—		60
Term loan (5) (8) (14)	RED	August 5, 2029	Prime Rate (4) + 2.00%	754		800
Term loan (5) (8)	RED	August 5, 2029	Prime Rate (4) + 2.00%	1,710		1,830
Term loan (6) (8)	RED	August 5, 2029	Prime Rate (4) + 1.75%	2,403		2,672
Term loan (5) (8) (18)	RED	March 17, 2033	Prime Rate (4) + 1.50%	1,624		1,645
Term loan (5) (8) (18)	RED	March 17, 2033	Prime Rate (4) + 1.50%	2,279		2,336
Term loan (5) (8) (20)	RED	May 19, 2033	Prime Rate (4) + 1.00%	591		622
Term loan (5) (8) (23)	RED	June 25, 2029	Prime Rate (4) + 1.00%	314		—
Draw term loan (5) (8) (15)	RED	March 17, 2032	5.00%	1,412		1,448
Draw term loan (5) (8) (15)	RED	March 17, 2032	5.00%	1,449		1,043
Draw term loan (5) (8) (16)	RED	Various (16)	Prime Rate (4) + 1.00%	1,316		1,386
Draw term loan (5) (8) (21)	RED	February 5, 2029	Prime Rate (4) + 1.25%	503		168
Draw term loan (5) (8) (22)	RED	February 9, 2034	Prime Rate (4) + 0.50%	1,455		—
RED Units (5) (19)	RED	See footnote (19)	6.50%	2,401		2,000
Total notes payable				143,023		141,068
Deferred loan costs, net				(2,216)		(2,723)
Original issue discount, net (9)				(1,090)		(1,379)
Notes payable, net of deferred loan costs				139,717		136,966
Less current portion				(4,575)		(4,387)
Total notes payable, net - non-current				$	135,142	$	132,579

__________________

(1)     Base Rate, as defined in the amended credit facility agreement with Mustang Lodging Funding LLC, is the greater of (i) the Wall Street Journal prime rate, (ii) the federal funds rate plus 0.50%, (iii) Adjusted Term SOFR plus 1.00%, or (iv) 1.25%.

(2)     The Daily Adjusting Term SOFR Rate is the one-month forward-looking SOFR rate plus 0.10%. The Daily Adjusting Term SOFR Rate was 4.95% at September 30, 2024.

(3)     Adjusted Term SOFR is the one-month forward-looking SOFR rate plus 0.03%. Adjusted Term SOFR was 4.88% and 5.38% at September 30, 2024 and December 31, 2023, respectively.

(4)     The Prime Rate was 8.00% and 8.50% at September 30, 2024 and December 31, 2023, respectively.

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

(6)    Creditors have recourse to Ashford Inc.

(7)    INSPIRE’s revolving credit facility and equipment note are collateralized primarily by INSPIRE’s eligible receivables, including accounts receivable, due from Ashford Trust and due from Braemar, with a total carrying value of $10.8 million and $8.3 million as of September 30, 2024 and December 31, 2023, respectively. INSPIRE’s Term Note is collateralized by substantially all of the assets of INSPIRE.

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(unaudited)

(8)    RED’s loans are collateralized primarily by RED’s marine vessels and associated leases with a carrying value of $22.9 million and $20.6 million as of September 30, 2024 and December 31, 2023, respectively.

(9)    On March 31, 2023, the Company amended its Credit Agreement (the “Credit Agreement”), previously entered into on April 1, 2022, with Mustang Lodging Funding LLC, as administrative agent, and the lenders from time to time party thereto. The amendment replaced the one-month LIBOR rate with Adjusted Term SOFR. The Credit Agreement evidences a senior secured term loan facility (the “Credit Facility”) in the amount of $100.0 million, including a $50.0 million term loan funded on the closing date of the Credit Facility (the “Closing Date”) and commitments to fund up to an additional $50.0 million of term loans in up to five separate borrowings within 24 months after the Closing Date, subject to certain conditions. The Credit Facility is a five-year interest-only facility with all outstanding principal due at maturity, with three successive one-year extension options subject to an increase in the interest rate during each extension period. Borrowings under the Credit Agreement will bear interest, at the Company’s option, at either Adjusted Term SOFR plus an applicable margin, or the Base Rate plus an applicable margin. The applicable margin for borrowings under the Credit Agreement for Adjusted Term SOFR loans will be 7.35% per annum and the applicable margin for Base Rate loans will be 6.35% per annum, with increases to both applicable margins of 0.50%, 0.75% and 1.00% per annum during each of the three extension periods, respectively. Undrawn balances of the Credit Facility were subject to an unused fee of 1.0% during the first 24 months of the term, payable on the last business day of each month. The Credit Facility included an original issue discount of $2.0 million on the Closing Date. As of September 30, 2024, no unused amounts remained under the Credit Facility.

(10)    On March 24, 2023, INSPIRE amended its credit agreement (the “INSPIRE Amendment”). The INSPIRE Amendment increased the maximum borrowing capacity under INSPIRE’s revolving credit facility from $3.0 million to $6.0 million, provides for a $20.0 million term note and an equipment note pursuant to which, until September 24, 2027, INSPIRE may request advances up to $4.0 million in the aggregate to purchase new machinery or equipment to be used in the ordinary course of business. The INSPIRE Amendment extended the maturity date of INSPIRE’s notes from January 1, 2024 to March 24, 2028. Monthly principal payments commenced on April 1, 2023 for the term note in the amount of approximately $167,000. Borrowings under the revolving note require monthly payments of interest only until the maturity date and borrowings under the equipment note require monthly principal payments at 1/60th of the original principal amount of each advance. The notes bear interest at the Daily Adjusting SOFR Rate plus a margin of 2.75% and the undrawn balance of the revolving note and the equipment note are subject to an unused fee of 0.25% per annum. On July 11, 2024, the INSPIRE Amendment was amended to increase the maximum amount available under the equipment note from $4.0 million to $7.0 million. As of September 30, 2024, the amounts unused under INSPIRE’s revolving credit facility and equipment note were $3.5 million and $4.1 million, respectively.

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

(12)    As of September 30, 2024, the amount unused under Pure Wellness’s revolving credit facility was $100,000.

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

(14)    On July 23, 2021, RED entered into a term loan agreement with a maximum principal amount of $900,000.

(15)    On March 17, 2022, in connection with the purchase and construction of marine vessels, RED entered into two closed-end non-revolving line of credit loans of $1.5 million each which converted to term loans once fully drawn. Each loan bears an interest rate of 5.0% for the first three years. After three years, the interest rate is equal to the Prime Rate plus 0.5% with a floor of 5.0%.

(16)    On September 15, 2022, RED entered into a closed-end non-revolving line of credit for $1.5 million that converted into an individual term loan each time RED draws upon the facility. As of September 30, 2024, RED had drawn the full amount allowed under the line of credit. Maturity dates for amounts drawn under the facility are November 30, 2027, December 28, 2027 and January 20, 2028.

(17)    On February 2, 2023, OpenKey entered into a loan funding agreement with Braemar with a maximum loan amount of $395,000. As of September 30, 2024, the remaining unused loan balance was $79,000.

(18)    On March 17, 2023, in connection with the acquisition of Alii Nui, RED entered into two term loans of $1.7 million and $2.4 million. RED was required to make monthly payments on the term loans starting April 17, 2023.

26

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

(19)    On March 17, 2023, in connection with the Alii Nui acquisition, RED issued 80,000 RED Units at $25 per unit with a liquidation value of $2.0 million. On January 31, 2024, RED issued 16,000 additional RED Units at $25 per unit with a liquidation value of $401,000. See note 7. The RED Units accrue interest at 6.5% per annum with required quarterly payments. The RED Units are considered a form of financing the acquisition of Alii Nui under current accounting guidance and is recorded as a non-current note payable in our condensed consolidated balance sheets.

(20)    On May 19, 2023, RED entered into a term loan for two vessels. RED was required to make monthly principal payments on the term loan starting in June 2023.

(21)    On August 4, 2023, RED entered into a draw term loan with Merchants Commercial Bank with a maximum draw of $900,000 through August 5, 2024.

(22)    On February 9, 2024, RED entered into a draw term loan with Centennial Bank with a maximum draw of $1.6 million. As of September 30, 2024, the amount unused under RED’s draw term loan was $155,000.

(23)    On June 25, 2024, RED entered into a term loan with Centennial Bank for a new vessel. RED was required to make monthly principal payments on the term loan starting in June 2024.

We are required to maintain certain financial ratios under various debt and related agreements. If we violate covenants in any debt or related agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in the inability of our portfolio companies to borrow unused amounts under their respective lines of credit. As of September 30, 2024, the Company was in compliance with all covenants or other requirements related to the Credit Agreement and was in compliance with all covenants or other requirements related to debt held by our subsidiaries.

6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses were comprised of the following (in thousands):

	September 30, 2024		December 31, 2023
Accounts payable	$	19,194	$	18,482
Accrued payroll expense	21,383		31,153
Accrued vacation expense	43		2,408
Accrued interest	550		444
Other accrued expenses	3,132		2,350
Total accounts payable and accrued expenses	$	44,302	$	54,837

7. Fair Value Measurements

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

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

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

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

27

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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

	Quoted Market Prices (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)			Total
September 30, 2024
Assets:
Investments	$	—		$	—	$	10,011	(1)	$	10,011
Restricted Investment:
Ashford Trust common stock	8		(2)	—		—			8
Braemar common stock	162		(2)	—		—			162
Total	$	170		$	—	$	10,011		$	10,181
Liabilities:
Contingent consideration	$	—		$	—	$	(449)	(3)	$	(449)
Deferred compensation plan	(1,639)			—		—			(1,639)
Total	$	(1,639)		$	—	$	(449)		$	(2,088)
Net	$	(1,469)		$	—	$	9,562		$	8,093

__________________

(1) Represents the fair value of TSGF L.P.’s investments which are reported within “investments” in our condensed consolidated balance sheets. See discussion below.

(2) The restricted investment includes shares of common stock of Ashford Trust and Braemar purchased by Remington and RED on the open market and held for the purpose of providing compensation to certain employees.

(3) Represents the fair value of the contingent consideration liability related to the achievement of certain performance targets associated with the acquisition of Chesapeake, which is reported within “other liabilities” in our condensed consolidated balance sheets.

	Quoted Market Prices (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
December 31, 2023
Assets:
Investments	$	—		$	—	$	5,000	(1)	$	5,000
Restricted Investment:
Ashford Trust common stock	19		(2)	—		—			19
Braemar common stock	109		(2)	—		—			109
Total	$	128		$	—	$	5,000		$	5,128
Liabilities:
Contingent consideration	$	(1,000)	(3)	$	—	$	(2,920)	(4)	$	(3,920)
Deferred compensation plan	(891)			—		—			(891)
Total	$	(1,891)		$	—	$	(2,920)		$	(4,811)
Net	$	(1,763)		$	—	$	2,080		$	317

__________________

(1) Represents the fair value of TSGF L.P.’s investment which is reported within “investments” in our condensed consolidated balance sheets.

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

(2) The restricted investment includes shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees.

(3) Represents the fair value of the contingent consideration liability related to Alii Nui obtaining the Permit which is reported within “claims liabilities and other” in our condensed consolidated balance sheets.

(4) Represents the fair value of the contingent consideration liability related to the achievement of certain performance targets associated with the acquisition of Chesapeake, of which the current and noncurrent portions are reported within “claims liabilities and other” and “other liabilities”, respectively, in our condensed consolidated balance sheets.

The following table presents our roll forward of our Level 3 investments (in thousands):

	Investments (1)
Balance at December 31, 2023	$	5,000
Transfers into Level 3 (2)	3,966
Balance at June 30, 2024	8,966
Transfers into Level 3 (2)	590
Unrealized gains (losses) from fair value adjustments included in earnings	455
Balance at September 30, 2024	$	10,011

__________________

(1) TSGF L.P.’s investments are measured at fair value at each reporting period. The Company utilizes the market value approach when determining the fair value of its investments made within one year of the investment date. The Company measures its remaining investments at fair value using a discounted cash flows model which includes significant unobservable inputs classified within Level 3 of the fair value hierarchy. The key assumptions in applying the discounted cash flows model are (a) a discount rate/weighted average cost of capital of 10.38% and (b) a terminal capital rate of 5.25%.

(2) On May 30, 2024, TSGF L.P. invested a total of $4.0 million in Slate TSGF Fitz II LLC, an entity which constructs and operates multi-family units. During the third quarter of 2024, TSGF L.P. invested an additional $590,000 into Slate TSGF Fitz II LLC. As of September 30, 2024, TSGF L.P. held $15.9 million of total assets, which includes TSGF L.P.’s investments valued at $10.0 million, cash and cash equivalents of $5.6 million and other assets of $255,000.

The following table presents our roll forward of our Level 3 contingent consideration liability (in thousands):

	Contingent Consideration Liability (1)
Balance at December 31, 2023	$	(2,920)
Unrealized gains (losses) from fair value adjustments included in earnings	50
Balance at June 30, 2024	(2,870)
Unrealized gains (losses) from fair value adjustments included in earnings	988
Transfers out of Level 3 (2)	1,433
Balance at September 30, 2024	$	(449)

__________________

(1) The Company measures contingent consideration liabilities related to our acquisition of Chesapeake at fair value at each reporting period using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The fair value of the contingent consideration liability is based on the present value of the expected future payments to be made to the sellers of Chesapeake in accordance with the provisions outlined in the respective purchase agreements, which is a Level 3 fair value measurement. In determining fair value, the Company estimates Chesapeake’s future performance using a Monte Carlo simulation model. The key assumptions in applying the Monte Carlo simulation model are (a) a discount rate of 35.87%; (b) a forward-looking risk-free rate of 4.64%; and (c) a volatility rate of 39.50%.

(2) Represents the contingent consideration earned by the sellers of Chesapeake as September 30, 2024 from the first-year measurement period, which was paid on October 15th, 2024.

29

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

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

	Gain (Loss) Recognized
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Assets:
Unrealized gain (loss) on investments:
Ashford Trust common stock (1)	$	(2)	$	5	$	(12)	$	68
Braemar common stock (1)	30		8		49		15
TSGF L.P. investment (2)	455		—		455		—
Realized gain (loss) on investments: (3)
Ashford Trust common stock	—		(73)		—		(146)
Braemar common stock	—		(7)		—		(14)
Total	$	483	$	(67)	$	492	$	(77)
Liabilities:
Contingent consideration (4)	$	988	$	(130)	$	1,038	$	(430)
Subsidiary compensation plans (5)	—		—		—		(6)
Deferred compensation plans (5)	(25)		689		(737)		1,479
Total	$	963	$	559	$	301	$	1,043
Net	$	1,446	$	492	$	793	$	966

__________________

(1)     Represents the unrealized gain (loss) on shares of common stock of Ashford Trust and Braemar purchased by Remington and RED on the open market and held for the purpose of providing compensation to certain employees. The unrealized gain (loss) on shares is reported within “other income (expense)” in our condensed consolidated statements of operations.

(2)     Represents the unrealized gain (loss) on TSGF L.P.’s Level 3 investments.

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

(4)    Represents the changes in fair value of our contingent consideration liabilities. The change in the fair value in the three months ended September 30, 2024 and 2023 is related to the level of achievement of certain performance targets associated with the acquisition of Chesapeake. Changes in the fair value of contingent consideration are reported within “other” operating expense in our condensed consolidated statements of operations.

(5)    Reported within “salaries and benefits” in our condensed consolidated statements of operations.

30

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Restricted Investment

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

	Historical Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale securities:
September 30, 2024
Equity securities (1)	$	668	$	—	$	(498)	$	170

__________________

(1)     Distributions of $59,000 of available-for-sale securities occurred in the nine months ended September 30, 2024.

	Historical Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale securities:
December 31, 2023
Equity securities (1)	$	662	$	—	$	(534)	$	128

__________________

(1)     Distributions of $195,000 of available-for-sale securities occurred in the year ended December 31, 2023.

8. Summary of Fair Value of Financial Instruments

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

	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets measured at fair value:
Restricted investment	$	170	$	170	$	128	$	128
Investments	10,011		10,011		5,000		$	5,000
Financial liabilities measured at fair value:
Deferred compensation plan	$	1,639	$	1,639	$	891	$	891
Contingent consideration	449		449		3,920		3,920
Financial assets not measured at fair value:
Cash and cash equivalents	$	63,636	$	63,636	$	52,054	$	52,054
Restricted cash	16,233		16,233		23,216		23,216
Accounts receivable, net	24,075		24,075		26,945		26,945
Notes receivable	2,199		2,199		2,697		2,697
Due from affiliates	468		468		41		41
Due from Ashford Trust	723		723		18,933		18,933
Due from Braemar	3,552		3,552		714		714
Financial liabilities not measured at fair value:
Accounts payable and accrued expenses	$	44,302	$	44,302	$	54,837	$	54,837
Dividends payable	47,794		47,794		28,508		28,508
Claims liabilities and other	35,421		35,421		29,782		29,782
Notes payable	143,023		143,023		141,068		141,068

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

31

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 liabilities associated with the Company’s acquisition of Chesapeake and Alii Nui are carried at fair value based on the terms of the acquisition agreements and any changes to fair value are recorded in “other” operating expenses in our condensed consolidated statements of operations. The Chesapeake liability is considered a Level 3 valuation technique and the Alii Nui liability is considered a Level 1 valuation technique. See note 7.

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 to/from affiliates, due to/from Ashford Trust, due to/from Braemar, notes receivable, accounts payable and accrued expenses and dividends payable. 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. The Company measures TSGF L.P.’s investments at fair value at each reporting period using the market value approach or discounted cash flow models. These are considered Level 3 valuation techniques. See notes 2 and 7.

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

Claims liabilities and other. The Company utilizes the findings of an independent actuary in establishing its liability for losses and loss adjustment expenses related to general liability and workers’ compensation reserves. This is considered a Level 3 valuation technique.

9. Commitments and Contingencies

MTA Audit—On November 28, 2023, the Tax Administration Service’s Administration of Quintana Roo (the “MTA”) provided preliminary findings verbally from their routine federal income tax and value added tax (“VAT”) audit for INSPIRE’s Mexico subsidiary, INSPIRE Global Event Solutions S DE R.L. DE C.V. (“INSPIRE Mexico”) 2020 tax year. The MTA asserted INSPIRE Mexico omitted certain qualifying revenues and deducted certain non-qualifying expenses from the INSPIRE Mexico 2020 VAT liability and in the INSPIRE Mexico federal income tax return. On January 25, 2024, the MTA issued INSPIRE Mexico a detailed listing of their findings and asserted a tax contingency, including penalties and interest, of $3.9 million. On February 22, 2024, INSPIRE Mexico filed a written response to the MTA contesting the alleged findings. The MTA has up to one year from the Company’s written response to issue their final tax assessment. As of September 30, 2024, the Company has recorded $525,000 as its best estimate of the liability related to the tax contingency.

Claims Liabilities—Management believes that its aggregate liabilities for unpaid losses and loss adjustment expenses at period-end for our insurance subsidiary Warwick represents its best estimate, based upon the available data, of the amount necessary to cover the ultimate cost of losses. However, because of the uncertain nature of reserve estimates, it is not presently possible to determine whether actual loss experience will conform to the assumptions used in estimating the liability. As a result, loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Accordingly, the ultimate liability could be significantly different than the amount indicated in the financial statements.

Litigation—On December 20, 2016, a class action lawsuit was filed against one of the Company’s subsidiaries in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws. The Court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees who were allegedly deprived of rest breaks as a result of the subsidiary’s previous written policy requiring employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class, however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt out period has been extended until such time that discovery has concluded. In May of 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class decertified. After submission of the briefs, the Court requested that the parties submit stipulations for the Court to rule upon. On February 13, 2024, the judge

32

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

ordered the parties to submit additional briefing related to on-site breaks. The Court has ordered the parties to complete a second mediation no later than January 31, 2025. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of September 30, 2024, no amounts have been accrued.

We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters, matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws), and other general matters. The likelihood of loss for these legal proceedings is based on definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Legal costs associated with loss contingencies are expensed as incurred. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flow.

During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain personal information. We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines. All systems have been restored. We believe that we maintain a sufficient level of insurance coverage related to such events, and the related incremental costs incurred to date are immaterial. In February of 2024, two class action lawsuits were filed; one in the U.S. District Court for the Northern District of Texas and a second in the 68th District Court for Dallas County related to the cyber incident. The lawsuit filed in the 68th District Court was subsequently dismissed and refiled in the U.S. District Court for the Northern District of Texas. On March 12, 2024, the Court ordered the two cases to be consolidated. On May 17, 2024, we filed a Motion to Dismiss the Consolidated Class Action Complaint which is currently pending before the Court.

Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

10. Equity (Deficit)

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
(Income) loss attributable to noncontrolling interests:
OpenKey	$	267	$	187	$	713	$	647
Pure Wellness	—		(10)		—		32
TSGF L.P.	(292)		13		(282)		13
Total net (income) loss attributable to noncontrolling interests	$	(25)	$	190	$	431	$	692

33

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

11. Mezzanine Equity

Redeemable Noncontrolling Interests—Redeemable noncontrolling interests are included in the mezzanine section of our condensed consolidated balance sheets as the ownership interests are redeemable for cash or registered shares outside of the Company’s control. Redeemable noncontrolling interests in Ashford Holdings includes the Series CHP Unit preferred membership interests and the membership interests of common units and LTIP units. See also note 2 for tables summarizing the redeemable noncontrolling ownership interests and carrying values.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net (income) loss attributable to redeemable noncontrolling interests:
Ashford Holdings	$	42	$	(111)	$	(96)	$	(399)

Series CHP Units—In connection with the acquisition of Chesapeake, Ashford Holdings issued 378,000 Series CHP Units to the sellers of Chesapeake. The Series CHP Units represent a preferred membership interest in Ashford Holdings having a priority in payment of cash dividends equal to the priority of the Series D Convertible Preferred Stock holders but senior to the common unit holders of Ashford Holdings. Each Series CHP Unit: (i) has a liquidation value of $25 plus all unpaid accrued and accumulated distributions thereon; (ii) is entitled to cumulative dividends at the rate of 7.28% per annum, payable quarterly in arrears; (iii) participates in any dividend or distribution paid on all outstanding common units of Ashford Holdings in addition to the preferred dividends; (iv) is convertible, along with the aggregate accrued or accumulated and unpaid distributions thereon, into common units of Ashford Holdings at the option of the holder or the issuer, which common units of Ashford Holdings will then be redeemable by the holder thereof into common stock of the Company on a 1:1 ratio or cash, at the Company’s discretion; and (v) provides for customary anti-dilution protections. The number of common units of Ashford Holdings to be received upon conversion of Series of CHP Units, along with the aggregate accrued or accumulated and unpaid distributions thereon, is determined by: (i) multiplying the number of Series CHP Units to be converted by the liquidation value thereof; and then (ii) dividing the result by the preferred conversion price, which is $117.50 per unit. In the event the Company fails to pay the required dividends on the Series CHP Units for two consecutive quarterly periods (a “Preferred Unit Breach”), then until such arrearage is paid in cash in full, the dividend rate on the Series CHP Units will increase to 10.00% per annum until no Preferred Unit Breach exists. Except with respect to certain protective provisions, no holder of Series CHP Units will have voting rights in its capacity as such. As long as any Series CHP Units are outstanding, the Company is prohibited from taking specified actions without the consent of at least 50% of the holders of Series CHP Units, including (i) modifying the terms, rights, preferences, privileges or voting powers of the Series CHP Units or (ii) altering the rights, preferences or privileges of any Units of Ashford Holdings so as to adversely affect the Series CHP Units.

For the three and nine months ended September 30, 2024, the Company recorded net income attributable to redeemable noncontrolling interests of $178,000 and $528,000, respectively, to the Series CHP Unit holders which is included in Ashford Holdings in the table above. For the three and nine months ended September 30, 2023, the Company recorded net income attributable to redeemable noncontrolling interests of $172,000 and $516,000, respectively, to the Series CHP Unit holders.

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

34

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

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

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

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

The Series D Convertible Preferred Stock is only redeemable upon a change in control of the Company by a party other than the Bennetts. The Series D Convertible Preferred Stock is not recorded at its maximum redemption amount as the Series D Convertible Preferred Stock is not currently redeemable and it is not probable the Series D Convertible Preferred Stock will become redeemable in the future.

As of September 30, 2024, the Company had aggregate undeclared preferred stock dividends of approximately $38.9 million, which relates to the second quarter of 2024, the fourth quarter of 2023 and the second and fourth quarters of 2021. On April 14, 2024, the Company paid $8.7 million of dividends previously declared by the Board with respect to the Company’s Series D Convertible Preferred Stock for the first quarter of 2024. On September 25, 2024, the Board declared a cash dividend on the Company’s Series D Convertible Preferred Stock for the quarter ended September 30, 2024. The Company paid the dividend of $8.7 million, or $0.455 per share of Series D Convertible Preferred Stock, on October 9, 2024.

All dividends, declared and undeclared, are recorded as a reduction in net income (loss) attributable to common stockholders in the period incurred in our condensed consolidated statements of operations. All accrued dividends accumulate and compound until paid in cash or converted into common stock of the Company pursuant to the Certificate of Designation for the Series D Convertible Preferred Stock. Unpaid Series D Convertible Preferred Stock dividends, declared and undeclared, totaling $47.6 million and $28.5 million at September 30, 2024 and December 31, 2023, respectively, are recorded as a liability in our condensed consolidated balance sheets as “dividends payable.”

Convertible preferred stock cumulative dividends declared during the three and nine months ended September 30, 2024 and 2023 for all issued and outstanding shares were as follows (in thousands, except per share amounts):

35

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Preferred dividends - declared	$	8,700	$	8,700	$	17,399	$	26,099
Preferred dividends per share - declared	$	0.4550	$	0.4550	$	0.9100	$	1.3650

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

	September 30, 2024		December 31, 2023
Aggregate preferred dividends - undeclared	$	38,923	$	28,508
Aggregate preferred dividends - undeclared per share	$	2.0357	$	1.4910

12. Equity-Based Compensation

Equity-based compensation expense is primarily recorded in “salaries and benefits expense” and REIT equity-based compensation expense is primarily recorded in “reimbursed expenses” in our condensed consolidated statements of operations. The components of equity-based compensation expense for the three and nine months ended September 30, 2024 and 2023 are presented below by award type (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Equity-based compensation:
Class 2 LTIP Units and stock option amortization (1)	$	33	$	32	$	98	$	97
Employee LTIP Units and equity grant expense (2)	682		428		1,591		1,308
Director and other non-employee equity grants expense (3)	47		4		219		539
Total equity-based compensation	$	762	$	464	$	1,908	$	1,944
Other equity-based compensation:
REIT equity-based compensation (4)	$	644	$	3,029	$	3,701	$	10,167
	$	1,406	$	3,493	$	5,609	$	12,111

________

(1)    As of September 30, 2024, the Company had approximately $59,000 of total unrecognized compensation expense related to the Class 2 LTIP Units that will be recognized over a weighted average period of 0.5 years.

(2)    As of September 30, 2024, the Company had approximately $1.6 million of total unrecognized compensation expense related to restricted shares and LTIP Units that will be recognized over a weighted average period of 2.0 years.

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

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

13. Deferred Compensation Plan

We administer a non-qualified deferred compensation plan (“DCP”) for certain executive officers and other employees which 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 for our executive officers are made in cash, unless the participant has elected Ashford Inc. common stock as the investment option, in which case any such distributions would be made in Ashford Inc. common stock. Additionally, the DCP obligation is carried at fair value with changes in fair value reflected in “salaries and benefits” in our condensed consolidated statements of operations.

36

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Change in fair value:
Unrealized gain (loss)	$	(25)	$	689	$	(737)	$	1,479

________

As of September 30, 2024 and December 31, 2023, the carrying value of the DCP liability was $1.6 million and $891,000, respectively. No distributions were made to any participant during the three and nine months ended September 30, 2024 and 2023.

14. Related Party Transactions

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

Ashford Trust—We are a party to an amended and restated advisory agreement with Ashford Trust and its operating subsidiary, Ashford Hospitality Limited Partnership (“Ashford Trust OP”). On March 12, 2024, we entered into the Third Amended and Restated Advisory Agreement with Ashford Trust (the “Third Amended and Restated Advisory Agreement”). The Third Amended and Restated Advisory Agreement amends and restates the terms of the Second Amended and Restated Advisory Agreement, dated January 14, 2021, to, among other items: (i) require Ashford Trust pay the advisor the Portfolio Company Fee (as defined in the Third Amended and Restated Advisory Agreement) upon certain specified defaults under Ashford Trust’s loan agreements resulting in the foreclosure of Ashford Trust’s hotel properties, (ii) provide that there shall be no additional payments to the advisor from the amendments to the master hotel management agreement between Ashford Trust and Remington Hospitality and the master project management agreement between Ashford Trust and Premier until Ashford Trust’s senior secured credit facility with Oaktree Capital Management, L.P. is paid in full, and limits, for a period of two years thereafter, the incremental financial impact to no more than $2 million per year in additional payments to the advisor from such amendments, (iii) reduces the Consolidated Tangible Net Worth covenant (as defined in the Third Amended and Restated Advisory Agreement) to $750 million (plus 75% of net equity proceeds received) from $1 billion (plus 75% of net equity proceeds received), (iv) revise the criteria that would constitute a Company Change of Control (as defined in the Third Amended and Restated Advisory Agreement), (v) revise the definition of termination fee to provide for a minimum amount of such termination fee and (vi) revise the criteria that would constitute a voting control event.

On August 8, 2024, the Company, Ashford LLC, Ashford Trust and Ashford Trust OP entered into Amendment No. 1 to the Third Amended and Restated Advisory Agreement (the “Amendment”). The Amendment extends the outside date for which any sale or disposition of any of Ashford Trust’s eight hotel properties associated with JPM8 following a JPM8 Event of Default (as such terms are defined in the advisory agreement) would be excluded from the numerator of the calculation of the percentage of gross book value of Ashford Trust’s assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the advisory agreement) has occurred, from May 31, 2025 to August 31, 2025.

We are also a party to an advisory agreement with Stirling and Stirling’s subsidiary, Stirling OP. The base fee is paid monthly calculated as 1.25% of the aggregate net asset value (“NAV”) of Stirling’s common shares and Stirling OP’s units, excluding Stirling’s Class E Common Shares (the “Class E Common Shares”) and Stirling OP’s Class E Units (the “Class E Units”), before giving effect to any accruals for any fees or distributions. The base fee may be paid, at the Company’s election, in cash or cash equivalent aggregate NAV amounts of Class E Common Shares or Class E Units. If the Company elects to receive any portion of its base fee in Class E Common Shares or Class E Units, the Company may elect to have Stirling repurchase such Class E Common Shares or Class E Units from the Company at a later date at a repurchase price per Class E Common Share or Class E Unit, as applicable, equal to the NAV per Class E Common Share. As long as the advisory agreement is not terminated, the Company holds a performance participation interest in Stirling OP that entitles it to receive an allocation from Stirling OP equal to 12.5% of the total return on certain classes of Stirling OP’s units, subject to certain terms. The Company may allocate up to 50% of the performance participation interest to its employees.

37

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Premier is party to master project management agreements with Ashford Trust OP and certain of its affiliates and, as of December 2023, Stirling OP and certain of its affiliates, to provide comprehensive and cost-effective design, development, architectural, and project management services and a related mutual exclusivity agreement with Ashford Trust and Stirling. On March 12, 2024, Premier entered into an Amended and Restated Master Project Management Agreement with Ashford Trust OP (the “A&R PMA”). The provisions of the A&R PMA are substantially the same as the Master Project Management Agreement, dated as of August 8, 2018. The A&R PMA provides for an initial term of ten years as to each hotel governed by the A&R PMA. The term may be renewed by Premier, at its option, for three successive periods of seven years each, and, thereafter, a final term of four years, provided that at the time the option to renew is exercised, Premier is not then in default under the A&R PMA. The A&R PMA also (i) provides that fees will be payable monthly as the service is delivered based on percentage completion; (ii) allows a project management fee to be paid on a development, together with (and not in lieu of) the development fee; and (iii) fixes the fees for FF&E purchasing, expediting, freight management and warehousing at 8%.

Remington is party to a master hotel management agreement with Ashford Trust and certain of its affiliates to provide hotel management services. Remington additionally manages three of Stirling OP’s properties. On March 12, 2024, Remington entered into a Second Consolidated, Amended and Restated Hotel Master Management Agreement with Ashford TRS Corporation, a wholly owned subsidiary of Ashford Trust OP (the “Second A&R HMA”). The provisions of the Second A&R HMA are substantially the same as in the Consolidated, Amended and Restated Hotel Master Management Agreement, dated as of August 8, 2018. The Second A&R HMA provides for an initial term of ten years as to each hotel governed by the Second A&R HMA. The term may be renewed by Remington, at its option, for three successive periods of seven years each, and, thereafter, a final term of four years, provided that at the time the option to renew is exercised, Remington is not then in default under the Second A&R HMA. The Second A&R HMA also provides that Remington may charge market premiums for its self-insured health plans to its hotel employees, the cost of which is an operating expense of the hotel properties. On September 11, 2024, Remington entered into the First Amendment to the Second Consolidated, Amended and Restated Hotel Master Management Agreement with Ashford TRS Corporation. The amendment modified the existing hotel management agreement so that the amount of group services charged per room per month at each hotel is capped at $38.32.

Lismore has certain agreements with Ashford Trust to provide debt placement, modifications and refinancings of certain mortgage debt. Lismore’s fees are recognized based on a stated percentage of the loan amount when services have been rendered and the subject loan, modification or other transaction is closed. Lismore has entered into various 12-month agreements with Ashford Trust to seek modifications or refinancings of certain mortgage loans held by Ashford Trust. For the three and nine months ended September 30, 2024, Lismore recognized approximately $89,000 and $2.3 million, respectively, in revenue under the agreements. For the three and nine months ended September 30, 2023, Ashford Trust paid approximately $0 and $525,000 to Lismore under the agreements. As of September 30, 2024 and December 31, 2023, the Company had $142,000 and $183,000, respectively, of deferred income recorded related to these agreements.

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

38

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUES BY TYPE
Advisory services fees:
Base advisory fees	$	8,306	$	8,121	$	24,708	$	24,839
Hotel management fees:
Base management fees	5,320		6,020		16,951		19,428
Incentive management fees	347		731		2,155		3,464
Total hotel management fees revenue (1)	5,667		6,751		19,106		22,892
Design and construction fees revenue (2)	3,098		4,532		9,651		12,771
Other revenue:
Watersports, ferry and excursion services (4)	13		21		46		58
Debt placement and related fees (5)	89		377		2,317		1,677
Premiums earned (6)	1,196		—		3,431		—
Cash management fees (7)	19		19		54		106
Other services (8)	326		422		1,114		1,156
Total other revenue	1,643		839		6,962		2,997
Cost reimbursement revenue	63,447		70,196		205,348		206,857
Total revenues	$	82,161	$	90,439	$	265,775	$	270,356
REVENUES BY SEGMENT (9)
Advisory	$	11,222	$	12,096	$	36,929	$	36,799
Remington	61,649		69,490		196,067		208,728
Premier	4,961		6,125		15,514		17,927
INSPIRE	21		28		96		84
RED	14		33		77		95
OpenKey	20		30		72		89
Corporate and other (10)	4,274		2,637		17,020		6,634
Total revenues	$	82,161	$	90,439	$	265,775	$	270,356
COST OF REVENUES
Cost of revenues for audio visual (3)	$	2,155	$	2,012	$	6,918	$	7,205
SUPPLEMENTAL REVENUE INFORMATION
Audio visual revenue from guests at REIT properties (3)	$	4,930	$	4,502	$	16,542	$	16,785

________

39

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

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

(3)    INSPIRE and RED primarily contract directly with customers to whom they provide services. INSPIRE and RED recognize the gross revenue collected from their customers by the hosting hotel or venue. Commissions retained by the hotel or venue, including Ashford Trust, for INSPIRE and RED are recognized in “cost of revenues for audio visual” and “other” operating expense, respectively, in our condensed consolidated statements of operations. See note 3 for discussion of the revenue recognition policy.

(4)    Watersports, ferry and excursion services revenue includes revenue that is earned by RED for providing services directly to Ashford Trust rather than contracting with third-party customers.

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

(6)    Premiums earned is recognized by our insurance subsidiary, Warwick, from general liability and workers’ compensation insurance premiums. Revenue from insurance premiums is recognized ratably over the contractual terms of the respective written policy.

(7)    Cash management fees include revenue earned by providing active management and investment of Ashford Trust’s excess cash in short-term U.S. Treasury securities.

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

(9)    See note 16 for discussion of segment reporting.

(10)    The Corporate and Other segment’s revenue includes cost reimbursement revenue from Ashford Trust’s capital contributions to Ashford Securities under a Fourth Amended and Restated Contribution Agreement among the Company, Ashford Trust and Braemar. Capital contributions are divided between the Company, Ashford Trust and Braemar based upon the actual amount of capital raised through Ashford Securities for each company which may result in increases or decreases to cost reimbursement revenue in any given reporting period. See discussion regarding Ashford Securities below.

Braemar—We are also a party to an amended and restated advisory agreement with Braemar and its operating subsidiary, Braemar Hospitality Limited Partnership (“Braemar OP”). On August 8, 2024, the Company, Ashford LLC, Braemar and Braemar OP entered into a Limited Waiver Under Advisory Agreement (the “Waiver Agreement”) that provides, among other things, as follows:

(i) From August 8, 2024 until the earlier of (i) November 15, 2025 and (ii) the refinancing of Braemar’s mortgage loan (the “Loan”) that is secured by four hotel properties – The Notary Hotel, The Clancy, Sofitel Chicago Magnificent Mile and Marriott Seattle Waterfront (the “Hotel Properties”) – (such date, the “Loan Outside Date”), Ashford LLC waives the operation of Section 12.4(a) of the advisory agreement that would permit Ashford LLC to terminate the advisory agreement occurring solely as a result from the sale or disposition of one or more of the Hotel Properties as a result of a mortgage foreclosure, deed-in-lieu of mortgage foreclosure, mezzanine loan foreclosure or an assignment in-lieu of a mezzanine loan foreclosure following the failure of Braemar to pay, upon the maturity of the Loan, all amounts due and payable thereunder (the “Limited Waiver”);

(ii) Upon the satisfaction of certain conditions, Braemar may request Ashford LLC agree to amend the Waiver Agreement to extend the Loan Outside Date for a period not to exceed ninety (90) days from November 15, 2025 and if Ashford LLC agrees to such amendment, Ashford LLC shall not be entitled to any further consideration in respect thereof;

(iii) If the members of the Board of Directors of Braemar (the “Braemar Board”) change such that members who constitute the Braemar Board as of August 8, 2024 (the “Braemar Incumbent Board”) no longer constitute at least a majority of the Braemar Board (other than those whose election to the Braemar Board is approved or recommended to stockholders of Braemar

40

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

by a vote of at least a majority of the Braemar Incumbent Board), the Limited Waiver shall be null and void ab initio (but the consideration provided by Braemar to Ashford LLC as described in item (iv) below shall remain in force); and

(iv) In exchange for the Limited Waiver and the other agreements provided by Ashford LLC in the Waiver Agreement, Braemar agrees to pay Ashford LLC an amount equal to Ashford LLC’s obligation under Ashford LLC’s current employment agreement with Richard J. Stockton, Braemar’s President and Chief Executive Officer (the “Stockton Employment Agreement”), to pay Mr. Stockton a multiple of his Base Salary (as defined in the Stockton Employment Agreement) that becomes payable by Ashford LLC to Mr. Stockton as the result of the occurrence of certain events as more fully described in the Waiver Agreement.

Premier is party to a master project management agreement with Braemar OP and Braemar TRS Corporation, a wholly owned subsidiary of Braemar OP, and certain of their affiliates to provide comprehensive and cost-effective design, development, architectural, and project management services and a related mutual exclusivity agreement with Braemar and Braemar OP. On February 12, 2024, Premier entered into Amendment No. 2 to the Master Project Management Agreement (the “MPMA”) with Braemar. The provisions of the MPMA are substantially the same as the Master Project Management Agreement, dated as of August 8, 2018. The MPMA provides that fees from Braemar will be payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements.

Remington is party to a master hotel management agreement with Braemar TRS Corporation and certain of its affiliates to provide hotel management services.

Lismore has certain agreements with Braemar to provide debt placement, modifications and refinancings of certain mortgage debt. Lismore’s fees are recognized based on a stated percentage of the loan amount when services have been rendered and the subject loan, modification or other transaction is closed. Lismore has entered into various 12-month agreements with Braemar to seek modifications or refinancings of certain mortgage debt held by Braemar. For the three and nine months ended September 30, 2024, Lismore recognized approximately $1.7 million and $2.7 million, respectively, in revenue under the agreements. For the three and nine months ended September 30, 2023, Braemar paid approximately $0 and $150,000 to Lismore under the agreements. As of September 30, 2024 and December 31, 2023, the Company had $69,000 and $52,000 of deferred income recorded related to the agreement.

41

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUES BY TYPE
Advisory services fees:
Base advisory fees	$	3,506	$	3,393	$	10,168	$	10,700
Incentive advisory fees (1)	67		67		201		201
Other advisory revenue (2)	131		131		390		389
Total advisory services fees revenue	3,704		3,591		10,759		11,290
Hotel management fees:
Base management fees	567		670		1,740		1,883
Incentive management fees	43		—		111		—
Total hotel management fees revenue (3)	610		670		1,851		1,883
Design and construction fees revenue (4)	2,278		1,690		8,729		5,973
Other revenue:
Watersports, ferry and excursion services (6)	597		559		2,472		1,866
Debt placement and related fees (7)	1,713		1,337		2,713		1,448
Premiums earned (8)	205		—		520		—
Cash management fees (9)	36		15		52		107
Other services (10)	79		51		198		212
Total other revenue	2,630		1,962		5,955		3,633
Cost reimbursement revenue	11,245		12,747		27,636		39,409
Total revenues	$	20,467	$	20,660	$	54,930	$	62,188
REVENUES BY SEGMENT (11)
Advisory	$	7,066	$	7,042	$	20,696	$	23,517
Remington	7,094		7,480		21,391		20,465
Premier	3,631		3,222		12,316		9,397
INSPIRE	23		26		77		75
RED	626		570		2,565		1,898
OpenKey	11		8		30		28
Corporate and other (12)	2,016		2,312		(2,145)		6,808
Total revenues	$	20,467	$	20,660	$	54,930	$	62,188
COST OF REVENUES (5)
Cost of revenues for audio visual	$	871	$	915	$	3,312	$	3,330
Other	382		364		1,990		1,415
SUPPLEMENTAL REVENUE INFORMATION
Audio visual revenues from guests at REIT properties (5)	$	2,066	$	2,276	$	8,475	$	8,291
Watersports, ferry and excursion services revenue from guests at REIT properties (5)	697		684		2,550		2,198

________

42

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

(1)    The incentive advisory fees for the three and nine months ended September 30, 2024 and 2023 includes the pro rata portion of the third year and second year installment, respectively, of the 2022 incentive advisory fee. Incentive fee payments are subject to meeting the December 31st FCCR Condition each year, as defined in our advisory agreements. The annual total stockholder return did not meet the relevant incentive fee thresholds during the 2023 measurement period.

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

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

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

(5)    INSPIRE and RED primarily contract directly with third-party customers to whom they provide services. INSPIRE and RED recognize the gross revenue collected from their customers by the hosting hotel or venue. Commissions retained by the hotel or venue, including Braemar, for INSPIRE and RED are recognized in “cost of revenues for audio visual” and “other” operating expense, respectively, in our condensed consolidated statements of operations. See note 3 for discussion of the revenue recognition policy.

(6)    Watersports, ferry and excursion services revenue includes revenue that is earned by RED for providing services directly to Braemar rather than contracting with third-party customers.

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

(8)    Premiums earned is recognized by our insurance subsidiary, Warwick, from general liability and workers’ compensation insurance premiums. Revenue from insurance premiums is recognized ratably over the contractual terms of the respective written policy.

(9)    Cash management fees include revenue earned by providing active management and investment of Braemar’s excess cash in short-term U.S. Treasury securities.

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

(11)    See note 16 for discussion of segment reporting.

(12)    The Corporate and Other segment’s revenue includes cost reimbursement revenue from Braemar’s capital contributions to Ashford Securities under a Fourth Amended and Restated Contribution Agreement among the Company, Ashford Trust and Braemar. Capital contributions are divided between the Company, Ashford Trust and Braemar based upon the actual amount of capital raised through Ashford Securities for each company which may result in increases or decreases to cost reimbursement revenue in any given reporting period. See discussion regarding Ashford Securities below.

Ashford Securities—On December 31, 2020, an Amended and Restated Contribution Agreement (the “Amended and Restated Contribution Agreement”, and as further amended from time to time, the “Contribution Agreement”) was entered into by the Company, Ashford Trust and Braemar (collectively, the “Parties” and each individually a “Party”) with respect to funding certain expenses of Ashford Securities. Beginning on the effective date of the Amended and Restated Contribution Agreement, costs to fund the operations of Ashford Securities were allocated 50% to the Company, 50% to Braemar and 0% to Ashford Trust. Upon reaching the earlier of $400 million in aggregate non-listed preferred equity offerings or other debt or equity offerings through Ashford Securities or June 10, 2023, there was a true up (the “Amended and Restated True-Up Date”) among the Parties whereby the actual amount contributed by each Party was based on the actual amount of capital raised by such Party through Ashford Securities (the resulting ratio of contributions among the Parties, the “Initial True-Up Ratio”). On January 27, 2022, the Parties entered into a Second Amended and Restated Contribution Agreement which provided for an additional $18 million in aggregate contributions to Ashford Securities allocated 10% to the Company, 45% to Ashford Trust and 45% to Braemar.

43

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

On February 1, 2023, the Company entered into a Third Amended and Restated Contribution Agreement, which provided that after the Amended and Restated True-Up Date, capital contributions for the remainder of fiscal year 2023 would be divided between each Party based on the Initial True-Up Ratio, there would be a true up reflecting amounts raised by Ashford Securities since June 10, 2019, and thereafter, the capital contributions would be divided among each Party in accordance the cumulative ratio of capital raised by the Parties. On January 25, 2024, Ashford Trust paid the Company $3.2 million for Ashford Trust’s portion of their contributions to fund Ashford Securities as calculated under the 2023 year-end true-up pursuant to the Third Amended and Restated Contribution Agreement. On the same day, the Company paid Braemar $3.5 million which consisted of $293,000 and $3.2 million for the Company’s and Ashford Trust’s portion of their contributions to fund Ashford Securities, respectively, which were owed to Braemar as calculated under the 2023 year-end true-up pursuant to the Third Amended and Restated Contribution Agreement.

Effective January 1, 2024, the Company entered into a Fourth Amended and Restated Contribution Agreement with Ashford Trust and Braemar which states that, notwithstanding anything in the prior contribution agreements: (1) the Parties equally split responsibility for all aggregate contributions made by them to Ashford Securities through September 30, 2021 and (2) thereafter, their contributions for each quarter will be based on the ratio of the amounts raised by each Party through Ashford Securities the prior quarter compared to the total aggregate amount raised by the Parties through Ashford Securities the prior quarter. To the extent contributions made by any of the Parties through December 31, 2023 differed from the amounts owed pursuant to the foregoing, the Parties shall make true up payments to each other to settle the difference. On March 29, 2024, Ashford Trust paid the Company $3.4 million for Ashford Trust’s portion of their contributions to fund Ashford Securities as calculated pursuant to the Fourth Amended and Restated Contribution Agreement. On the same day, the Company paid Braemar $5.9 million which consisted of $2.5 million and $3.4 million for the Company’s and Ashford Trust’s portion of their contributions to fund Ashford Securities, respectively, which were owed to Braemar pursuant to the Fourth Amended and Restated Contribution Agreement.

As of September 30, 2024, Ashford Trust and Braemar had funded approximately $12.1 million and $12.9 million, respectively. The Company recognized cost reimbursement revenue from Ashford Trust in our condensed consolidated statements of operations of $2.7 million and $10.2 million for the three and nine months ended September 30, 2024, respectively, and $1.9 million and $3.9 million for the three and nine months ended September 30, 2023, respectively. The Company recognized a reduction to cost reimbursement revenue from Braemar in our condensed consolidated statements of operations of $13,000 and $5.6 million for the three and nine months ended September 30, 2024, respectively. The Company recognized cost reimbursement revenue from Braemar in our condensed consolidated statements of operations of $938,000 and $5.2 million for the three and nine months ended September 30, 2023, respectively. Cost reimbursement revenue for the three and nine months ended September 30, 2024 includes $613,000 and $1.6 million, respectively, of dealer manager fees earned by Ashford Securities for the placement of non-listed preferred equity offerings of Ashford Trust.

Expiration of ERFP Agreement Related Leases with Ashford Trust—On June 26, 2018, the Company entered into an Enhanced Return Funding Program Agreement with Ashford Trust (the “Ashford Trust ERFP Agreement”). Although the Ashford Trust ERFP Agreement expired in accordance with its terms on June 26, 2021, certain obligations of the parties survived.

In the first quarter of 2023, Ashford Trust purchased FF&E with a net book value of $1.5 million from the Company at the fair market value of $450,000 upon expiration of the underlying leases of the FF&E under the Ashford Trust ERFP Agreement. The Company recorded a loss on the sale of the FF&E of $1.0 million which is included within “other” operating expense in our condensed consolidated statement of operations for the six months ended June 30, 2023.

In the fourth quarter of 2023, Ashford Trust purchased FF&E with a net book value of $2.4 million from the Company at the fair market value of $630,000 upon expiration of the underlying leases of the FF&E under the Ashford Trust ERFP Agreement. The Company recognized a $630,000 outstanding receivable which is recorded in “due from Ashford Trust” in our condensed consolidated balance sheet as of December 31, 2023. In the second quarter of 2024, the Company entered into a new lease agreement with Ashford Trust wherein the Company purchased FF&E of $630,000 from Ashford Trust equal to the fair market value of the FF&E sold to Ashford Trust under the ERFP Agreement. The FF&E was leased back to Ashford Trust rent-free.

44

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Other Related Party Transactions—On January 3, 2023, the Company acquired Remington Hotel Corporation (“RHC”), an affiliate owned by Mr. Monty J. Bennett, our Chairman and Chief Executive Officer and the Chairman of Ashford Trust and Braemar, and his father, Mr. Archie Bennett, Jr., Chairman Emeritus of Ashford Trust, from which the Company leases the offices for our corporate headquarters in Dallas, Texas. The purchase price paid was de minimis. We accounted for this transaction as an asset acquisition because substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets. Upon the acquisition date, the operating lease asset and corresponding operating lease liability of $17.2 million associated with the Company’s lease with RHC was eliminated upon consolidation.

The following table summarizes the assets and liabilities acquired by the Company on the asset acquisition date (in thousands):

	January 3, 2023
Restricted cash	$	849
Property and equipment, net	2,183
Operating lease right-of-use assets	15,017
Total assets acquired	18,049
Operating lease liabilities	17,200
Other liabilities	849
Total assumed liabilities	18,049
Net assets acquired	$	—

On March 2, 2023, the Company entered into (i) a Limited Waiver Under Advisory Agreement with Braemar, Braemar OP, and Braemar TRS Corporation (the “2023 Braemar Limited Waiver”) and (ii) a Limited Waiver Under Advisory Agreement with Ashford Trust, Ashford Trust OP, and Ashford TRS Corporation (the “2023 Ashford Trust Limited Waiver” and, together with the 2023 Braemar Limited Waiver, the “2023 Limited Waivers”). Pursuant to the 2023 Limited Waivers, the parties to the respective advisory agreements waive the operation of any provision of the advisory agreements that would otherwise limit the ability of Ashford Trust or Braemar, as applicable, in its discretion, at its cost and expense, to award during the first and second fiscal quarters of calendar year 2023 (the “2023 Waiver Period”), cash incentive compensation to employees and other representatives of the Company; provided that, pursuant to the 2023 Ashford Trust Limited Waiver, such awarded cash incentive compensation does not exceed $13.1 million, in the aggregate, during the 2023 Waiver Period.

On December 7, 2023, the Company contributed $200,000 to Stirling OP in exchange for 8,000 Class E Units resulting in an interest of less than one percent in Stirling OP. The contribution is recorded as an equity method investment within “investments” in our condensed consolidated balance sheet. The Company will also advance on Stirling’s behalf certain of its organizational and offering expenses and general and administrative expenses through December 31, 2024, at which point Stirling will reimburse the Company for all such advanced expenses ratably over 60 months following such date.

On March 11, 2024, the Company entered into (i) a Limited Waiver Under Advisory Agreement with Ashford Trust, Ashford Trust Op, and Ashford TRS Corporation (the “2024 Ashford Trust Limited Waiver”) and (ii) a Limited Waiver Under Advisory Agreement with Braemar, Braemar OP and Braemar TRS Corporation (together with the 2024 Ashford Trust Limited Waiver, the “2024 Limited Waivers”). Pursuant to the 2024 Limited Waivers, the parties to the respective advisory agreements waive the operation of any provision in the advisory agreements that would otherwise limit the ability of Ashford Trust or Braemar, as applicable, in its discretion, at its cost and expense, to award during calendar year 2024, cash incentive compensation to employees and other representatives of the Company and its affiliates.

Ashford Trust held a 15.06% noncontrolling interest in OpenKey and Braemar held a 7.92% noncontrolling interest in OpenKey as of September 30, 2024 and December 31, 2023, respectively. During the three and nine months ended September 30, 2024, the Company loaned our consolidated subsidiary OpenKey $921,000 and $1.8 million, respectively, to fund OpenKey’s operations. The loan balance was eliminated upon consolidation in our condensed consolidated financial statements. See also notes 2 and 10.

45

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The Company or its affiliates provide to the Bennetts or their permitted designees certain services, including, but not limited to, accounting, tax and administrative services pursuant to the Transition Cost Sharing Agreement entered into in connection with the Company’s acquisition of Remington Lodging from the Bennetts in November 2019. The gross amount of expenses and reimbursements for these transition services for the three and nine months ended September 30, 2024 was $26,000 and $249,000, respectively. The gross amount of expenses and reimbursements for these transition services for the three and nine months ended September 30, 2023 was $115,000 and $316,000, respectively. The expenses and reimbursements for transition services are recorded on a net basis and, therefore, the reimbursed activity does not impact our condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023.

15. Income (Loss) Per Share

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income (loss) attributable to common stockholders – basic and diluted:
Net income (loss) attributable to the Company	$	(3,751)	$	(2,991)	$	(3,330)	$	(100)
Less: Dividends on preferred stock, declared and undeclared (1)	(9,382)		(9,054)		(27,815)		(27,132)
Undistributed net income (loss) allocated to common stockholders	(13,133)		(12,045)		(31,145)		(27,232)
Distributed and undistributed net income (loss) - basic	$	(13,133)	$	(12,045)	$	(31,145)	$	(27,232)
Effect of deferred compensation plan	—		—		—		(1,509)
Distributed and undistributed net income (loss) - diluted	$	(13,133)	$	(12,045)	$	(31,145)	$	(28,741)
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic	2,301		3,116		2,873		3,065
Effect of deferred compensation plan shares	—		—		—		65
Weighted average common shares outstanding – diluted	2,301		3,116		2,873		3,130
Income (loss) per share – basic:
Net income (loss) allocated to common stockholders per share	$	(5.71)	$	(3.87)	$	(10.84)	$	(8.88)
Income (loss) per share – diluted:
Net income (loss) allocated to common stockholders per share	$	(5.71)	$	(3.87)	$	(10.84)	$	(9.18)

________

(1)    Undeclared dividends were deducted to arrive at net income (loss) attributable to common stockholders. See note 11.

46

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income (loss) allocated to common stockholders is not adjusted for:
Net income (loss) attributable to redeemable noncontrolling interests in Ashford Holdings	$	(42)	$	111	$	96	$	399
Net income (loss) attributable to subsidiary convertible interests	50		46		149		542
Dividends on preferred stock, declared and undeclared	9,382		9,054		27,815		27,132
Total	$	9,390	$	9,211	$	28,060	$	28,073
Weighted average diluted shares are not adjusted for:
Effect of unvested restricted shares	131		13		99		18
Effect of assumed conversion of Ashford Holdings units	147		97		133		96
Effect of conversion of subsidiary interests	714		463		918		336
Effect of assumed conversion of preferred stock	4,396		4,234		4,355		4,230
Total	5,388		4,807		5,505		4,680

16. Segment Reporting

The Company identifies its segments based on the products and services each segment provides. Our operating segments include: (a) Advisory, which provides asset management and advisory services to other entities; (b) Remington, which provides hotel management services; (c) Premier, which provides comprehensive and cost-effective design, development, architectural, and project management services; (d) INSPIRE, which provides event technology and creative communications solutions services; (e) OpenKey, a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms; (f) RED, a provider of watersports activities and other travel and transportation services; (g) Pure Wellness, which provides hypoallergenic premium rooms in the hospitality and commercial office industry; and (h) Warwick, which provides insurance policy coverages primarily for general liability and workers’ compensation claims. For 2024, Premier, RED, OpenKey, Pure Wellness and Warwick do not meet the aggregation criteria or the quantitative thresholds to individually qualify as reportable segments. However, we have elected to disclose Premier, RED and OpenKey as reportable segments. Accordingly, we have six reportable segments: Advisory, Remington, Premier, INSPIRE, RED and OpenKey. We combine the operating results of Pure Wellness and Warwick into an “all other” seventh reportable segment, which we refer to as “Corporate and Other.” See note 3 for details of our segments’ material revenue generating activities.

The Company considers its chief executive officer to be its chief operating decision maker (“CODM”). The CODM regularly reviews operating results for the purpose of assessing performance and making decisions about resource allocation. Our CODM’s primary measure of segment profitability is net income. Our CODM currently reviews assets at the consolidated level and does not currently review segment assets to make key decisions on resource allocations.

Certain information concerning our segments for the three and nine months ended September 30, 2024 and 2023 are presented in the following tables (in thousands). Consolidated subsidiaries are reflected as of their respective acquisition dates or as of the date we were determined to be the primary beneficiary of variable interest entities.

47

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Three Months Ended September 30, 2024
	Advisory		Remington		Premier		INSPIRE		RED		OpenKey		Corporate and Other		Ashford Inc. Consolidated
REVENUE
Advisory services	$	12,010	$	—	$	—	$	—	$	—	$	—	$	—	$	12,010
Hotel management	—		12,350		—		—		—		—		—		12,350
Design and construction fees	—		—		6,191		—		—		—		—		6,191
Audio visual	—		—		—		34,360		—		—		—		34,360
Other	57		—		—		—		9,127		330		5,977		15,491
Cost reimbursement revenue (1)	6,220		98,020		3,668		45		30		—		2,727		110,710
Total revenues	18,287		110,370		9,859		34,405		9,157		330		8,704		191,112
EXPENSES
Depreciation and amortization	161		2,648		2,720		611		321		2		31		6,494
Other operating expenses (2)	60		6,861		4,005		34,689		9,628		1,292		16,758		73,293
Reimbursed expenses (1)	6,220		98,020		3,667		45		30		—		2,771		110,753
Total operating expenses	6,441		107,529		10,392		35,345		9,979		1,294		19,560		190,540
OPERATING INCOME (LOSS)	11,846		2,841		(533)		(940)		(822)		(964)		(10,856)		572
Equity in earnings (loss) of unconsolidated entities	—		—		—		—		—		—		(43)		(43)
Interest expense	—		—		—		(464)		(491)		(12)		(3,259)		(4,226)
Amortization of loan costs	—		—		—		(5)		(9)		—		(263)		(277)
Interest income	—		59		—		—		—		—		660		719
Other income (expense)	—		23		—		212		6		—		861		1,102
INCOME (LOSS) BEFORE INCOME TAXES	11,846		2,923		(533)		(1,197)		(1,316)		(976)		(12,900)		(2,153)
Income tax (expense) benefit	(2,809)		(1,199)		(204)		419		338		—		1,840		(1,615)
NET INCOME (LOSS)	$	9,037	$	1,724	$	(737)	$	(778)	$	(978)	$	(976)	$	(11,060)	$	(3,768)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $9.5 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.

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

48

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Nine Months Ended September 30, 2024
	Advisory		Remington		Premier		INSPIRE		RED		OpenKey		Corporate and Other		Ashford Inc. Consolidated
REVENUES:
Advisory services fees	$	35,467	$	—	$	—	$	—	$	—	$	—	$	—	$	35,467
Hotel management fees	—		39,194		—		—		—		—		—		39,194
Design and construction fees	—		—		21,003		—		—		—		—		21,003
Audio visual	—		—		—		126,855		—		—		—		126,855
Other	118		—		—		—		32,758		1,050		16,850		50,776
Cost reimbursement revenue (1)	22,040		301,161		10,144		174		124		—		4,708		338,351
Total revenues	57,625		340,355		31,147		127,029		32,882		1,050		21,558		611,646
EXPENSES:
Depreciation and amortization	449		7,923		8,160		1,668		1,023		8		84		19,315
Other operating expenses (2)	60		23,883		12,080		117,131		30,096		3,767		54,333		241,350
Reimbursed expenses (1)	22,047		301,161		10,151		174		124		—		4,825		338,482
Total operating expenses	22,556		332,967		30,391		118,973		31,243		3,775		59,242		599,147
OPERATING INCOME (LOSS)	35,069		7,388		756		8,056		1,639		(2,725)		(37,684)		12,499
Equity in earnings (loss) of unconsolidated entities	—		—		—		—		—		—		422		422
Interest expense	—		—		—		(1,409)		(1,360)		(29)		(9,718)		(12,516)
Amortization of loan costs	—		—		—		(15)		(27)		—		(781)		(823)
Interest income	—		116		—		—		—		—		1,862		1,978
Other income (expense)	—		24		—		(167)		17		(1)		1,520		1,393
INCOME (LOSS) BEFORE INCOME TAXES	35,069		7,528		756		6,465		269		(2,755)		(44,379)		2,953
Income tax (expense) benefit	(8,325)		(2,098)		(1,215)		(3,748)		(316)		—		9,084		(6,618)
NET INCOME (LOSS)	$	26,744	$	5,430	$	(459)	$	2,717	$	(47)	$	(2,755)	$	(35,295)	$	(3,665)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $23.8 million of cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel, accounting and insurance.

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

49

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Three Months Ended September 30, 2023
	Advisory		Remington		Premier		INSPIRE		RED		OpenKey		Corporate and Other		Ashford Inc. Consolidated
REVENUES:
Advisory services fees	$	11,712	$	—	$	—	$	—	$	—	$	—	$	—	$	11,712
Hotel management fees	—		12,391		—		—		—		—		—		12,391
Design and construction fees	—		—		7,430		—		—		—		—		7,430
Audio visual	—		—		—		30,641		—		—		—		30,641
Other	40		—		—		—		8,375		373		2,387		11,175
Cost reimbursement revenue (1)	7,386		94,421		3,175		53		23		—		2,808		107,866
Total revenues	19,138		106,812		10,605		30,694		8,398		373		5,195		181,215
EXPENSES:
Depreciation and amortization	368		3,006		2,882		490		308		3		27		7,084
Other operating expenses (2)	—		7,936		4,700		31,615		8,130		1,163		12,114		65,658
Reimbursed expenses (1)	7,389		94,421		3,175		53		23		—		2,808		107,869
Total operating expenses	7,757		105,363		10,757		32,158		8,461		1,166		14,949		180,611
OPERATING INCOME (LOSS)	11,381		1,449		(152)		(1,464)		(63)		(793)		(9,754)		604
Equity in earnings (loss) of unconsolidated entities	—		—		—		—		—		—		(327)		(327)
Interest expense	—		—		—		(438)		(445)		(7)		(2,760)		(3,650)
Amortization of loan costs	—		—		—		(42)		(10)		—		(217)		(269)
Interest income	—		44		—		—		—		—		478		522
Realized gain (loss) on investments	—		(80)		—		—		—		—		—		(80)
Other income (expense)	—		13		—		(85)		—		(3)		—		(75)
INCOME (LOSS) BEFORE INCOME TAXES	11,381		1,426		(152)		(2,029)		(518)		(803)		(12,580)		(3,275)
Income tax (expense) benefit	(2,780)		(314)		8		907		263		—		2,121		205
NET INCOME (LOSS)	$	8,601	$	1,112	$	(144)	$	(1,122)	$	(255)	$	(803)	$	(10,459)	$	(3,070)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $2.8 million of cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.

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

50

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Nine Months Ended September 30, 2023
	Advisory		Remington		Premier		INSPIRE		RED		OpenKey		Corporate and Other		Ashford Inc. Consolidated
REVENUES:
Advisory services fees	$	36,129	$	—	$	—	$	—	$	—	$	—	$	—	$	36,129
Hotel management fees	—		39,456		—		—		—		—		—		39,456
Design and construction fees	—		—		21,964		—		—		—		—		21,964
Audio visual	—		—		—		112,347		—		—		—		112,347
Other	220		3		—		—		25,797		1,184		4,853		32,057
Cost reimbursement revenue (1)	23,967		274,995		8,816		159		69		—		9,088		317,094
Total revenues	60,316		314,454		30,780		112,506		25,866		1,184		13,941		559,047
EXPENSES:
Depreciation and amortization	1,253		8,836		8,648		1,420		775		9		133		21,074
Other operating expenses (2)	1,032		24,324		14,227		104,425		23,412		3,891		37,870		209,181
Reimbursed expenses (1)	23,896		274,995		8,816		159		69		—		9,088		317,023
Total operating expenses	26,181		308,155		31,691		106,004		24,256		3,900		47,091		547,278
OPERATING INCOME (LOSS)	34,135		6,299		(911)		6,502		1,610		(2,716)		(33,150)		11,769
Equity in earnings (loss) of unconsolidated entities	—		—		—		—		—		—		(1,174)		(1,174)
Interest expense	—		—		—		(1,109)		(1,138)		(12)		(7,650)		(9,909)
Amortization of loan costs	—		—		—		(121)		(30)		—		(624)		(775)
Interest income	—		99		—		—		—		—		1,140		1,239
Realized gain (loss) on investments	—		(160)		—		—		—		—		—		(160)
Other income (expense)	—		84		—		(155)		422		(64)		(28)		259
INCOME (LOSS) BEFORE INCOME TAXES	34,135		6,322		(911)		5,117		864		(2,792)		(41,486)		1,249
Income tax (expense) benefit	(8,244)		(1,531)		182		(3,000)		(16)		—		10,967		(1,642)
NET INCOME (LOSS)	$	25,891	$	4,791	$	(729)	$	2,117	$	848	$	(2,792)	$	(30,519)	$	(393)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $8.8 million of cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.

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

Total assets by segment are presented below (in thousands):

	September 30, 2024		December 31, 2023
Remington	$	152,454	$	166,719
Premier	131,297		138,967
INSPIRE	64,558		57,193
RED	52,461		50,012
OpenKey	836		1,303
Other (1)	82,241		90,613
Total assets	$	483,847	$	504,807

________

(1)    Other includes the total assets of our Advisory and Corporate and Other segments. Total assets for our Advisory segment are not available for disclosure as assets are not allocated between our Advisory and Corporate and Other segments.

51

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

17. Subsequent Events

On November 7, 2024, the Company’s wholly-owned subsidiary Stirling REIT Advisors, LLC (“Advisor”) entered into Amendment No. 1 (the “Amendment”) to the Advisory Agreement (the “Original Advisory Agreement”) with Stirling, Stirling REIT OP, LP and Stirling TRS Corporation. Pursuant to the Amendment, (i) the date prior to which Advisor will pay for all Organization and Offering Expenses (as defined in the Original Advisory Agreement) is changed from December 31, 2024 to December 31, 2025, and (ii) the repayment period for the Organization and Offering Expenses, as well as for certain other costs and expenses of Stirling, is changed from 60 equal monthly installments starting January 2025 to 120 equal monthly installments starting January 2026.

On November 8, 2024, the Company, Ashford Trust. Ashford Trust OP and Ashford TRS Corporation entered into Amendment No. 2 to the Third Amended and Restated Advisory Agreement (the “Second Amendment”). The Second Amendment extends the outside date for which any sale or disposition of any of Ashford Trust’s Highland portfolio and JPM8 hotel properties securing the associated mortgage loans following certain defaults (as described in the Ashford Trust Advisory Agreement), including a maturity default, would be excluded from the numerator of the calculation of the percentage of gross book value of Ashford Trust’s assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the Ashford Trust Advisory Agreement) has occurred, from August 31, 2025 to November 30, 2025. In addition, the Second Amendment places certain limitations on the operations of Ashford Trust and Ashford Trust OP should a Potential Company Change of Control (as defined in the Second Amendment) occur.

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

As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the references to “we,” “us,” “our,” and the “Company” refer to Ashford Inc., a Nevada corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Advisors LLC, a Delaware limited liability company, which we refer to as “Ashford LLC” or “our operating company”; Ashford Hospitality Holdings LLC, a Delaware limited liability company, which we refer to as “Ashford Holdings” or “AHH”; Ashford Hospitality Services LLC, a Delaware limited liability company, which we refer to as “Ashford Services”; Premier Project Management LLC, a Maryland limited liability company, which we refer to as “Premier Project Management” or “Premier”; Remington Lodging & Hospitality, LLC, a Delaware limited liability company, which we refer to as “Remington”; and Warwick Insurance Company, LLC, an insurance company licensed by the Texas State Department of Insurance, which we refer to as “Warwick.” “Braemar” refers to Braemar Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Braemar Hospitality Limited Partnership, a Delaware limited partnership, which we refer to as “Braemar OP.” “Ashford Trust” or “AHT” refers to Ashford Hospitality Trust, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Limited Partnership, a Delaware limited partnership and Ashford Trust’s operating partnership, which we refer to as “Ashford Trust OP.” “Stirling” refers to Stirling Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries. Stirling REIT OP, LP, a Delaware limited partnership, which we refer to as “Stirling OP”, is Stirling’s operating partnership, however, Stirling OP is consolidated by Ashford Trust as of September 30, 2024.

FORWARD-LOOKING STATEMENTS

This Form 10-Q 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;

•our ability to obtain future financing arrangements;

•our understanding of our competition;

•the future success of recent acquisitions;

•the future demand for our services;

•projected capital expenditures; and

•the impact of technology on our operations and business.

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

•the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 27, 2024, including under the sections captioned “Item 1. Business,” “Item 1A. Risk Factors,” “Item 3. Legal Proceedings,” and “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations,” as updated in our subsequent Quarterly Reports on Form 10-Q and other filings under the Exchange Act;

•changes in interest rates;

•macroeconomic conditions, such as a prolonged period of weak economic growth, inflation and volatility in capital markets;

•uncertainty in the banking sector and market volatility due to the 2023 failures of Silicon Valley Bank, New York Signature Bank and First Republic Bank;

•catastrophic events or geopolitical conditions, such as the conflicts between Russia and Ukraine and Israel, Hamas and Iran;

•extreme weather conditions, which may cause property damage or interrupt business;

53

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

•our dependence on Ashford Trust and Braemar as our primary asset management clients for a substantial portion of our operating revenues;

•uncertainty associated with the ability of the Company to remain in compliance with all covenants in our credit agreements and our subsidiaries to remain in compliance with the covenants of their debt and related agreements;

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

•availability, terms and deployment of capital;

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

•the degree and nature of our competition;

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

•the ability of certain affiliated individuals to control significant corporate activities of the Company and their interests may differ from the interests of our other stockholders;

•availability of qualified personnel;

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

•our ability to implement effective internal controls to address the material weakness identified in this report;

•legislative and regulatory changes;

•the possibility that we may not realize any or all of the anticipated benefits from transactions to acquire businesses;

•the possibility that we may not realize any or all of the anticipated benefits from our business initiatives;

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

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

•unexpected costs of further goodwill impairments relating to the acquisition or integration of businesses we invest in or acquire.

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

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Overview

Ashford Inc., a Nevada corporation, is an alternative asset management company with a portfolio of strategic operating businesses that provides products and services primarily to clients in the real estate and hospitality industries, including Ashford Trust, Braemar, Stirling and our consolidated subsidiary, TSGF L.P. We became a public company in November 2014, and our common stock was listed on the NYSE American until the Company delisted its common stock on July 29, 2024. On August 8, the Company filed a Form 15 with the Securities and Exchange Commission (the “SEC”) to terminate the registration of the Company’s common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and suspend the Company’s reporting obligations under Section 15(d) of the Exchange Act. The Form 15 became effective on November 6, 2024. The Company expects its reporting obligations will be automatically suspended as of January 1, 2025 pursuant to Rule 15d-6 of the Exchange Act.  The Company intends to file an annual report on Form 10-K for the year ended December 31, 2024. As of November 11, 2024, Mr. Monty J. Bennett, Ashford Inc.’s Chairman and Chief Executive Officer and the Chairman of Ashford Trust, Braemar and Stirling, and his father, Mr. Archie Bennett, Jr., Chairman Emeritus of Ashford Trust, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 809,937 shares of our common stock, which represented an approximately 46.6% ownership interest in Ashford Inc., and owned 18,758,600 shares of our Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, is convertible at a price of $117.50 per share into an additional approximate 4,319,362 shares of Ashford Inc. common stock, which if converted as of November 11, 2024 would have increased Mr. Monty J. Bennett and Mr. Archie Bennett, Jr.’s ownership interest in Ashford Inc. to approximately 84.7%.

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

We seek to grow through the implementation of three primary strategies: (i) increasing our assets under management; (ii) pursuing third-party business to grow our products and services businesses; and (iii) acquiring additional businesses which align with our strategic initiatives.

We are currently the advisor for Ashford Trust, Braemar, Stirling and TSGF L.P. In our capacity as advisor, we are responsible for implementing the investment strategies and managing the day-to-day operations of our clients and their respective hotels from an ownership perspective, in each case subject to the respective advisory agreements and the supervision and oversight of each client’s respective boards of directors. Ashford Trust is focused on investing in full-service hotels in the upscale and upper upscale segments in the United States that have RevPAR generally less than twice the U.S. national average. Braemar invests primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Stirling is focused on investing primarily in a diverse portfolio of stabilized income-producing hotels and resorts across all chain scales primarily located in the United States and became our client on December 6, 2023. TSGF L.P. invests in all types of real estate in the state of Texas. Each of Ashford Trust and Braemar is a REIT as defined in the Internal Revenue Code. The common stock of each of Ashford Trust and Braemar is traded on the NYSE. Stirling is privately held and Stirling’s subsidiary Stirling OP is consolidated by Ashford Trust. TSGF L.P. is a privately held, consolidated subsidiary of the Company.

We provide the personnel and services that we believe are necessary for each of our clients to conduct their respective businesses. We may also perform similar functions for new or additional platforms. In our capacity as an advisor, we are not responsible for managing the day-to-day operations of our client’s individual hotel properties, which duties are, and will continue to be, the responsibility of the hotel management companies that operate such hotel properties. Additionally, Remington, a subsidiary of the Company, operates certain hotel properties for Ashford Trust, Braemar, Stirling and third parties. As of September 30, 2024, Remington provided hotel management services to 112 properties that were open and operating, 55 of which were owned by third parties.

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Recent Developments

Termination of the Registration of the Company’s Common Stock

On April 1, 2024, the Board, upon the recommendation of a Special Committee of the Board consisting entirely of independent and disinterested directors, approved a transaction whereby the Company would effect a reverse/forward stock split of the Company’s shares of common stock, in conjunction with terminating the Company’s public company reporting obligations and delisting the Company’s common stock from the NYSE American, subject to obtaining the requisite approval of the reverse stock split by the Company’s stockholders at the Special Meeting.

At the Special Meeting held on July 22, 2024, the Company’s stockholders approved proposals necessary to implement the Transaction as part of the Company’s plan to terminate the public registration of the Company’s common stock under Section 12(g) of the Exchange Act, suspend the Company’s duty to file periodic reports and other information with the SEC under Section 13(a) of the Exchange Act, and delist the Company’s common stock from the NYSE American. At the Special Meeting, the Company’s stockholders voted to effect the Reverse Stock Split, which was immediately followed by the Forward Stock Split.

The Reverse Stock Split and the Forward Stock Split were effected on July 29, 2024 at 5:01 p.m. Eastern Time and 5:02 p.m. Eastern Time, respectively. As a result of the Transaction, each stockholder owning fewer than 10,000 shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split received $5.00 per share, without interest, in cash for each share of the Company’s common stock held by such stockholder at the effective time of the Reverse Stock Split, and such stockholders are no longer stockholders of the Company. Stockholders owning 10,000 or more shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split were not entitled to receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any, and will instead remain stockholders in the Company holding, as a result of the Forward Stock Split, the same number of shares of common stock as such stockholders held immediately before the effective time of the Reverse Stock Split.

The intended effect of the Transaction is to reduce the number of record holders of the Company’s common stock to fewer than 300 so that the Company will be eligible to terminate the public registration of the Company’s common stock under Section 12(g) of the Exchange Act, suspend the Company’s duty to file periodic reports and other information with the SEC under Section 13(a) of the Exchange Act, and delist the Company’s common stock from the NYSE American.

Following the Transaction, we currently intend to continue to have our financial statements audited by a public accounting firm, but we do not intend to make such financial statements available to our stockholders, unless required by law or otherwise agreed to by the Company. The Company expects that the deregistration of its common stock under the Exchange Act would eliminate the significant expense required to comply with its Exchange Act reporting obligations and the SEC’s proxy rules. The Company estimates the annual savings will be approximately $2.5 million per year, including ongoing expenses for compliance with the Sarbanes-Oxley Act, and other accounting, legal, printing and other miscellaneous costs associated with being a publicly traded company.

As a result of the Transaction, the Company paid stockholders owning fewer than 10,000 shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split a total of approximately $6.9 million to purchase approximately 1.4 million shares of the Company’s common stock. The last day of trading for the Company’s common stock was July 26, 2024 and the Company’s common stock is no longer traded on the NYSE American.

Limited Waiver Under Advisory Agreement

The Company, Ashford LLC (together with the Company, the “Advisor”), Braemar, Braemar OP and Braemar TRS Corporation are parties to that certain Fifth Amended and Restated Advisory Agreement, dated as of April 23, 2018 (as amended, the “Braemar Advisory Agreement”).

On August 8, 2024, the parties to the Braemar Advisory Agreement entered into a Limited Waiver Under Advisory Agreement (the “Waiver Agreement”) that provides, among other things, as follows:

(i) From August 8, 2024 until the earlier of (i) November 15, 2025 and (ii) the refinancing of Braemar’s mortgage loan (the “Loan”) that is secured by four hotel properties – The Notary Hotel, The Clancy, Sofitel Chicago Magnificent Mile and Marriott Seattle Waterfront (the “Hotel Properties”) – (such date, the “Loan Outside Date”), the Advisor waives the operation of Section 12.4(a) of the Braemar Advisory Agreement that would permit the Advisor to terminate the Braemar Advisory Agreement occurring solely as a result from the sale or disposition of one or more of the Hotel Properties as a result of a mortgage foreclosure, deed-in-lieu of mortgage foreclosure, mezzanine loan foreclosure or an assignment in-lieu of a

56

mezzanine loan foreclosure following the failure of Braemar to pay, upon the maturity of the Loan, all amounts due and payable thereunder (the “Limited Waiver”);

(ii) Upon the satisfaction of certain conditions, Braemar may request the Advisor agree to amend the Waiver Agreement to extend the Loan Outside Date for a period not to exceed ninety (90) days from November 15, 2025 and if the Advisor agrees to such amendment, the Advisor shall not be entitled to any further consideration in respect thereof;

(iii) If the members of the Board of Directors of Braemar (the “Braemar Board”) change such that members who constitute the Braemar Board as of August 8, 2024 (the “Braemar Incumbent Board”) no longer constitute at least a majority of the Braemar Board (other than those whose election to the Braemar Board is approved or recommended to stockholders of Braemar by a vote of at least a majority of the Braemar Incumbent Board), the Limited Waiver shall be null and void ab initio (but the consideration provided by Braemar to the Advisor as described in item (iv) below shall remain in force); and

(iv) In exchange for the Limited Waiver and the other agreements provided by the Advisor in the Waiver Agreement, Braemar agrees to pay the Advisor an amount equal to the Advisor’s obligation under the Advisor’s current employment agreement with Richard J. Stockton, Braemar’s President and Chief Executive Officer (the “Stockton Employment Agreement”), to pay Mr. Stockton a multiple of his Base Salary (as defined in the Stockton Employment Agreement) that becomes payable by the Advisor to Mr. Stockton as the result of the occurrence of certain events as more fully described in the Waiver Agreement.

Amendments No. 1 and No. 2 to Third Amended and Restated Advisory Agreement

The Company, Ashford Trust, Ashford Trust OP and Ashford TRS Corporation are parties to that certain Third Amended and Restated Advisory Agreement, dated as of March 12, 2024 (as amended, the “Ashford Trust Advisory Agreement”).

On August 8, 2024, the parties to the Ashford Trust Advisory Agreement entered into Amendment No. 1 to the Third Amended and Restated Advisory Agreement (the “Amendment”). The Amendment extends the outside date for which any sale or disposition of any of Ashford Trust’s eight hotel properties associated with JPM8 following a JPM8 Event of Default (as such terms are defined in the Ashford Trust Advisory Agreement) would be excluded from the numerator of the calculation of the percentage of gross book value of Ashford Trust’s assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the Ashford Trust Advisory Agreement) has occurred, from May 31, 2025 to August 31, 2025.

On November 8, 2024, the parties to the Ashford Trust Advisory Agreement entered into Amendment No. 2 to the Third Amended and Restated Advisory Agreement (the “Second Amendment”). The Second Amendment extends the outside date for which any sale or disposition of any of Ashford Trust’s Highland portfolio and JPM8 hotel properties securing the associated mortgage loans following certain defaults (as described in the Ashford Trust Advisory Agreement), including a maturity default, would be excluded from the numerator of the calculation of the percentage of gross book value of Ashford Trust’s assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the Ashford Trust Advisory Agreement) has occurred, from August 31, 2025 to November 30, 2025. In addition, the Second Amendment places certain limitations on the operations of Ashford Trust and Ashford Trust OP should a Potential Company Change of Control (as defined in the Second Amendment) occur.

Amendment No. 1 to the Advisory Agreement

On November 7, 2024, the Company’s wholly-owned subsidiary Stirling REIT Advisors, LLC (“Advisor”) entered into Amendment No. 1 (the “Amendment”) to the Advisory Agreement (the “Original Advisory Agreement”) with Stirling, Stirling REIT OP, LP and Stirling TRS Corporation. Pursuant to the Amendment, (i) the date prior to which Advisor will pay for all Organization and Offering Expenses (as defined in the Original Advisory Agreement) is changed from December 31, 2024 to December 31, 2025, and (ii) the repayment period for the Organization and Offering Expenses, as well as for certain other costs and expenses of Stirling, is changed from 60 equal monthly installments starting January 2025 to 120 equal monthly installments starting January 2026.

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Other Developments

On April 17, 2024, J. Robison Hays, III, Senior Managing Director of the Company, gave notice of his intention to voluntarily resign from his employment and all other employment-related positions he holds with the Company and entities that it advises (including in his role as President and Chief Executive Officer of Ashford Trust). Mr. Hays’ resignation became effective June 30, 2024. The board of directors of Ashford Trust appointed Stephen Zsigray to fill the role of President and Chief Executive Officer of Ashford Trust, effective June 30, 2024. There are no current plans to fill Mr. Hays’ role as Senior Managing Director at the Company. In connection with Mr. Hays’ resignation, the Company entered into a Separation/Consulting Agreement with Mr. Hays, dated as of June 30, 2024. From and following Mr. Hays’ resignation date, any period during which Mr. Hays continues to comply with his obligations to provide consulting services on an uninterrupted basis shall be treated as continuous employment for purposes of determining the extent to which Mr. Hays is vested under any and all grants or awards made to Mr. Hays under any equity or other incentive plan of the Company or Ashford Trust.

On July 25, 2024, the Company announced that Mr. W. Michael Murphy, a member of its Board of Directors (the “Board”), passed away on July 24, 2024. Prior to serving on the Board, Mr. Murphy served on the board of directors of Braemar from 2013 to 2015 and he served on the board of directors of Ashford Trust from 2003 to 2013. Upon the recommendation of the Nominating and Corporate Governance Committee of the Board, the Board appointed Mark A. Sharkey, PhD, as a director of the Company on October 15, 2024 to fill the vacancy on the Board and to serve until the Company’s next annual meeting of stockholders and until his successor is duly elected and qualified. Mr. Sharkey has not been appointed to any committee of the Board.

Discussion of Presentation

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

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

The following table summarizes the changes in key line items from our condensed consolidated statements of operations for the three months ended September 30, 2024 and 2023 (in thousands):

	Three Months Ended September 30,				Favorable (Unfavorable)
	2024		2023		$ Change		% Change
REVENUES:
Advisory services fees	$	12,010	$	11,712	$	298	2.5	%
Hotel management fees	12,350		12,391		(41)		(0.3)	%
Design and construction fees	6,191		7,430		(1,239)		(16.7)	%
Audio visual	34,360		30,641		3,719		12.1	%
Other	15,491		11,175		4,316		38.6	%
Cost reimbursement revenue	110,710		107,866		2,844		2.6	%
Total revenues	191,112		181,215		9,897		5.5	%
EXPENSES:
Salaries and benefits	23,459		22,728		(731)		(3.2)	%
Cost of revenues for design and construction	2,152		2,975		823		27.7	%
Cost of revenues for audio visual	25,946		23,876		(2,070)		(8.7)	%
Depreciation and amortization	6,494		7,084		590		8.3	%
General and administrative	14,139		10,702		(3,437)		(32.1)	%
Other	7,597		5,377		(2,220)		(41.3)	%
Reimbursed expenses	110,753		107,869		(2,884)		(2.7)	%
Total expenses	190,540		180,611		(9,929)		(5.5)	%
OPERATING INCOME (LOSS)	572		604		(32)		(5.3)	%
Equity in earnings (loss) of unconsolidated entities	(43)		(327)		284		86.9	%
Interest expense	(4,226)		(3,650)		(576)		(15.8)	%
Amortization of loan costs	(277)		(269)		(8)		(3.0)	%
Interest income	719		522		197		37.7	%
Realized gain (loss) on investments	—		(80)		80		100.0	%
Other income (expense)	1,102		(75)		1,177		1,569.3	%
INCOME (LOSS) BEFORE INCOME TAXES	(2,153)		(3,275)		1,122		34.3	%
Income tax (expense) benefit	(1,615)		205		(1,820)		(887.8)	%
NET INCOME (LOSS)	(3,768)		(3,070)		(698)		(22.7)	%
Net (income) loss from consolidated entities attributable to noncontrolling interests	(25)		190		(215)		(113.2)	%
Net (income) loss attributable to redeemable noncontrolling interests	42		(111)		153		137.8	%
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(3,751)		(2,991)		(760)		(25.4)	%
Preferred dividends, declared and undeclared	(9,382)		(9,054)		(328)		(3.6)	%
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(13,133)	$	(12,045)	$	(1,088)	(9.0)	%

Net Income (Loss) Attributable to Common Stockholders. Net income (loss) attributable to common stockholders changed $1.1 million, or 9.0%, to a $13.1 million loss for the three months ended September 30, 2024 (the “2024 quarter”) compared to a $12.0 million loss for the three months ended September 30, 2023 (the “2023 quarter”) as a result of the factors discussed below.

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Total Revenues. Total revenues increased $9.9 million, or 5.5%, to $191.1 million for the 2024 quarter compared to the 2023 quarter due to the following (in thousands):

	Three Months Ended September 30,				Favorable (Unfavorable)
	2024		2023		$ Change		% Change
Advisory services fees:
Base advisory fees (1)	$	11,812	$	11,514	$	298	2.6	%
Incentive advisory fees (2)	67		67		—		—	%
Other advisory revenue (3)	131		131		—		—	%
Total advisory services fees revenue	12,010		11,712		298		2.5	%
Hotel management fees:
Base management fees	9,383		9,159		224		2.4	%
Incentive management fees	189		925		(736)		(79.6)	%
Other management fees	2,778		2,307		471		20.4	%
Total hotel management fees revenue (4)	12,350		12,391		(41)		(0.3)	%
Design and construction fees revenue (5)	6,191		7,430		(1,239)		(16.7)	%
Audio visual revenue (6)	34,360		30,641		3,719		12.1	%
Other revenue:
Watersports, ferry and excursion services (7)	9,126		8,375		751		9.0	%
Debt placement and related fees (8)	1,802		1,714		88		5.1	%
Premiums earned (9)	3,480		—		3,480
Cash management fees (10)	55		34		21		61.8	%
Other services (11)	1,028		1,052		(24)		(2.3)	%
Total other revenue	15,491		11,175		4,316		38.6	%
Cost reimbursement revenue (12)	110,710		107,866		2,844		2.6	%
Total revenues	$	191,112	$	181,215	$	9,897	5.5	%
REVENUES BY SEGMENT (13)
Advisory	$	18,287	$	19,138	$	(851)	(4.4)	%
Remington	110,370		106,812		3,558		3.3	%
Premier	9,859		10,605		(746)		(7.0)	%
INSPIRE	34,405		30,694		3,711		12.1	%
RED	9,157		8,398		759		9.0	%
OpenKey	330		373		(43)		(11.5)	%
Corporate and other	8,704		5,195		3,509		67.5	%
Total revenues	$	191,112	$	181,215	$	9,897	5.5	%

________

(1)The increase in base advisory fees is primarily due to higher revenue of $185,000 and $113,000 from Ashford Trust and Braemar, respectively. See note 3 in our condensed consolidated financial statements for discussion of the advisory services revenue recognition policy.

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(2)     Incentive advisory fees for the 2024 quarter and the 2023 quarter includes the pro rata portion of the third year and second year installment, respectively, of the 2022 Braemar incentive advisory fee. Incentive fee payments are subject to meeting the December 31st FCCR Condition each year, as defined in our advisory agreements. The annual total stockholder return for Ashford Trust and Braemar did not meet the relevant incentive fee thresholds during the 2023 measurement period.

(3)     Other advisory revenue from Braemar is a result of the $5.0 million cash payment received upon stockholder approval of the Fourth Amended and Restated Braemar Advisory Agreement in June 2017. The payment is included in “deferred income” on our condensed consolidated balance sheet and is being recognized evenly over the initial 10-year term of the agreement.

(4)     The decrease in hotel management fees revenue is primarily due to lower incentive management fees of $736,000 partially offset by an increase in other management fees from third parties of $471,000. Other management fees primarily includes fees for health insurance programs administered on behalf of certain third-party properties. Other management fees additionally includes fees for fixed monthly accounting services, revenue management services and other services at certain third-party properties.

(5)     The decrease in design and construction fees revenue is due to lower revenue from Ashford Trust and third parties of $1.4 million and $393,000, respectively, partially offset by higher revenue from Braemar of $588,000.

(6)     The $3.7 million increase in audio visual revenue is due to an increase in the number of hotels which INSPIRE provides services and an increase in demand for group events.

(7)    The $751,000 increase in watersports, ferry and excursion services revenue is primarily due to an increase of $1.2 million in revenue in the 2024 quarter in RED’s operations in the U.S. Virgin Islands partially offset by a decrease of $508,000 in RED’s operations in Key West, Florida.

(8)     The increase in debt placement and related fee revenue is due to higher revenue of $376,000 from Braemar partially offset by lower revenue of $288,000 from Ashford Trust. Debt placement and related fees are earned by Lismore for providing debt placement, modification, forbearance and refinancing services.

(9)    Premiums earned is recognized by our insurance subsidiary, Warwick, from insurance premiums related primarily to general liability, workers’ compensation and business automobile contracts incurred on behalf of our clients Ashford Trust, Braemar and third-party clients and their respective management companies. Warwick was incorporated in December 2023.

(10)    Cash management fees include revenue earned by providing active management and investment of Ashford Trust and Braemar’s excess cash in short-term U.S. Treasury securities.

(11)     Other services revenue relates to other hotel services provided by our consolidated subsidiaries, OpenKey and Pure Wellness, to Ashford Trust, Braemar and third parties.

(12)     The increase in cost reimbursement revenue in the 2024 quarter is primarily due to an increase in Remington’s cost reimbursement revenue of $3.6 million.

(13)     See note 16 in our condensed consolidated financial statements for discussion of segment reporting.

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Salaries and Benefits Expense. Salaries and benefits expense increased $731,000, or 3.2%, to $23.5 million for the 2024 quarter compared to the 2023 quarter. The change in salaries and benefits expense consisted of the following (in thousands):

	Three Months Ended September 30,
	2024		2023		$ Change
Salaries and benefits:
Salary expense	$	14,131	$	14,240	$	(109)
Bonus expense	4,016		4,705		(689)
Benefits related expenses	4,572		4,011		561
Total salary, bonus, and benefits related expenses	22,719		22,956		(237)
Non-cash equity-based compensation:
Class 2 LTIP units and stock option grants	33		33		—
Employee equity grant expense	682		428		254
Total equity-based compensation	715		461		254
Non-cash (gain) loss in deferred compensation plan (1)	25		(689)		714
Total salaries and benefits	$	23,459	$	22,728	$	731

________

(1)    The DCP obligation is recorded as a liability at fair value with changes in fair value reflected in earnings. The loss in the 2024 quarter and the gain the 2023 quarter are primarily attributable to increases and decreases, respectively, in the fair value of the DCP obligation. See note 13 in our condensed consolidated financial statements.

Cost of Revenues for Design and Construction. Cost of revenues for design and construction decreased $823,000, or 27.7%, to $2.2 million during the 2024 quarter compared to $3.0 million for the 2023 quarter due to decreases in capital expenditures from Ashford Trust and Braemar in the 2024 quarter.

Cost of Revenues for Audio Visual. Cost of revenues for audio visual increased $2.1 million, or 8.7%, to $25.9 million during the 2024 quarter compared to $23.9 million for the 2023 quarter, primarily due to an increase in the number of hotels which INSPIRE provides services and an increase in demand for group events.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased $590,000, or 8.3%, to $6.5 million for the 2024 quarter compared to the 2023 quarter. The decrease is primarily due to the sale of FF&E which was previously leased to Ashford Trust under the Ashford Trust ERFP Agreement. Depreciation and amortization expense for the 2024 quarter and the 2023 quarter excludes depreciation expense related to audio visual equipment of $1.4 million and $1.4 million, respectively, which is included in “cost of revenues for audio visual” and also excludes depreciation expense for the 2024 quarter and the 2023 quarter related to marine vessels in the amount of $814,000 and $536,000, respectively, which are included in “other” operating expense.

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General and Administrative Expense. General and administrative expenses increased $3.4 million, or 32.1%, to $14.1 million for the 2024 quarter compared to the 2023 quarter. The change in general and administrative expense consisted of the following (in thousands):

	Three Months Ended September 30,
	2024		2023		$ Change
Professional fees (1)	$	5,738	$	3,070	$	2,668
Office expense	3,546		3,178		368
Public company costs	214		140		74
Director costs	432		290		142
Travel and other expense	3,950		3,733		217
Non-capitalizable - software costs	259		291		(32)
Total general and administrative	$	14,139	$	10,702	$	3,437

________

(1)    The increase in professional fees is primarily due to $1.4 million in fees incurred in the 2024 quarter related to the Company’s initiative to terminate the registration of our common stock as discussed above and an increase in fees of $881,000 related to the Company’s ongoing strategic initiatives with Stirling and TSGF L.P.

Other. Other operating expense increased $2.2 million, or 41.3%, to $7.6 million for the 2024 quarter compared to the 2023 quarter. Other operating expense primarily includes the operating expenses of our insurance subsidiary Warwick and cost of goods sold, royalties and operating expenses associated with RED, OpenKey and Pure Wellness. The increase in the 2024 quarter was primarily due to an increase of $2.0 million of expenses related to Warwick, which was incorporated in December 2023.

Reimbursed Expenses. Reimbursed expenses increased $2.9 million to $110.8 million during the 2024 quarter compared to $107.9 million for the 2023 quarter primarily due to increased expenses incurred by Remington.

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

	Three Months Ended September 30,
	2024		2023		$ Change
Cost reimbursement revenue	$	110,710	$	107,866	$	2,844
Reimbursed expenses	110,753		107,869		2,884
Net total	$	(43)	$	(3)	$	(40)

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in earnings (loss) of unconsolidated entities were losses of $43,000 and $327,000 for the 2024 quarter and the 2023 quarter, respectively. Equity in earnings (loss) of unconsolidated entities primarily represents earnings (loss) in our equity method investment in REA Holdings. See note 2 in our condensed consolidated financial statements.

Interest Expense. Interest expense increased $576,000 to $4.2 million during the 2024 quarter compared to $3.7 million for the 2023 quarter. The increase is primarily due to an increase in the balance of the Company’s notes payable under our Credit Facility in the 2024 quarter compared to the 2023 quarter. Interest expense in the 2024 quarter and the 2023 quarter included expense of $3.3 million and $2.7 million, respectively, related to the Company’s Credit Facility. Interest expense relates to our Credit Facility and notes payable, lines of credit and finance leases held by our consolidated subsidiaries. See note 5 in our condensed consolidated financial statements.

Amortization of Loan Costs. Amortization of loan costs was $277,000 and $269,000 for the 2024 quarter and the 2023 quarter, respectively.

63

Interest Income. Interest income was $719,000 and $522,000 for the 2024 quarter and the 2023 quarter, respectively. The increase is primarily due to higher interest rates earned on the Company’s cash and cash equivalents in the 2024 quarter.

Other Income (Expense). Other income (expense) was income of $1.1 million and expense of $75,000 in the 2024 quarter and the 2023 quarter, respectively.

Income Tax (Expense) Benefit. Income tax (expense) benefit changed by $1.8 million from a benefit of $205,000 in the 2023 quarter to $1.6 million of expense in the 2024 quarter. Current income tax expense increased by $1.7 million from $311,000 in the 2023 quarter to $2.0 million in the 2024 quarter. Deferred income tax benefit decreased by $97,000 from a benefit of $516,000 in the 2023 quarter to a benefit of $419,000 in the 2024 quarter. The increase in our total income tax expense for the 2024 quarter is primarily due to an increase in tax liabilities associated with foreign tax expense from our investment in foreign affiliates. Our current income tax expense increased significantly in comparison to the 2023 quarter as a result of our ability to utilize certain loss carryforwards in the 2023 quarter along with other deferred tax expense adjustments resulting from equity in earnings and state tax law legislative changes.

Net (Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. The noncontrolling interests in consolidated entities were allocated income of $25,000 and a loss of $190,000 in the 2024 quarter and the 2023 quarter, respectively. See notes 2 and 10 in our condensed consolidated financial statements for more details regarding ownership interests, carrying values and allocations.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. Redeemable noncontrolling interests were allocated a loss of $42,000 and income of $111,000 in the 2024 quarter and the 2023 quarter, respectively. Redeemable noncontrolling interests represents ownership interests in Ashford Holdings which include the Series CHP Units which are recorded as a redeemable noncontrolling interest in the mezzanine section of our condensed consolidated balance sheets. For a summary of ownership interests, carrying values and allocations, see notes 2 and 11 in our condensed consolidated financial statements.

Preferred Dividends, Declared and Undeclared. Preferred dividends increased $328,000, or 3.6%, to $9.4 million during the 2024 quarter compared to $9.1 million for the 2023 quarter due to accumulating and compounding dividends incurred in the 2024 quarter related to undeclared Series D Convertible Preferred Stock dividends from the second quarter of 2024 and the fourth quarter of 2023. See note 11 in our condensed consolidated financial statements.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

The following table summarizes the changes in key line items from our condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 (in thousands):

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	Nine Months Ended September 30,				Favorable (Unfavorable)
	2024		2023		$ Change		% Change
REVENUES:
Advisory services fees	$	35,467	$	36,129	$	(662)	(1.8)	%
Hotel management fees	39,194		39,456		(262)		(0.7)	%
Design and construction fees	21,003		21,964		(961)		(4.4)	%
Audio visual	126,855		112,347		14,508		12.9	%
Other	50,776		32,057		18,719		58.4	%
Cost reimbursement revenue	338,351		317,094		21,257		6.7	%
Total revenues	611,646		559,047		52,599		9.4	%
EXPENSES:
Salaries and benefits	70,891		68,132		(2,759)		(4.0)	%
Cost of revenues for design and construction	5,910		9,430		3,520		37.3	%
Cost of revenues for audio visual	89,389		81,697		(7,692)		(9.4)	%
Depreciation and amortization	19,315		21,074		1,759		8.3	%
General and administrative	47,391		32,759		(14,632)		(44.7)	%
Other	27,769		17,163		(10,606)		(61.8)	%
Reimbursed expenses	338,482		317,023		(21,459)		(6.8)	%
Total expenses	599,147		547,278		(51,869)		(9.5)	%
OPERATING INCOME (LOSS)	12,499		11,769		730		6.2	%
Equity in earnings (loss) of unconsolidated entities	422		(1,174)		1,596		135.9	%
Interest expense	(12,516)		(9,909)		(2,607)		(26.3)	%
Amortization of loan costs	(823)		(775)		(48)		(6.2)	%
Interest income	1,978		1,239		739		59.6	%
Realized gain (loss) on investments	—		(160)		160		100.0	%
Other income (expense)	1,393		259		1,134		437.8	%
INCOME (LOSS) BEFORE INCOME TAXES	2,953		1,249		1,704		136.4	%
Income tax (expense) benefit	(6,618)		(1,642)		(4,976)		(303.0)	%
NET INCOME (LOSS)	(3,665)		(393)		(3,272)		(832.6)	%
Net (income) loss from consolidated entities attributable to noncontrolling interests	431		692		(261)		(37.7)	%
Net (income) loss attributable to redeemable noncontrolling interests	(96)		(399)		303		75.9	%
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(3,330)		(100)		(3,230)		(3,230.0)	%
Preferred dividends, declared and undeclared	(27,815)		(27,132)		(683)		(2.5)	%
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(31,145)	$	(27,232)	$	(3,913)	(14.4)	%

Net Income (Loss) Attributable to Common Stockholders. Net loss attributable to common stockholders changed $3.9 million to a $31.1 million loss for the nine months ended September 30, 2024 (the “2024 period”) compared to a $27.2 million loss for the nine months ended September 30, 2023 (the “2023 period”) as a result of the factors discussed below.

Total Revenues. Total revenues increased by $52.6 million, or 9.4%, to $611.6 million for the 2024 period compared to the 2023 period due to the following (in thousands):

65

	Nine Months Ended September 30,				Favorable (Unfavorable)
	2024		2023		$ Change		% Change
Advisory services fees:
Base advisory fees (1)	$	34,876	$	35,539	$	(663)	(1.9)	%
Incentive advisory fees (2)	201		201		—		—	%
Other advisory revenue (3)	390		389		1		0.3	%
Total advisory services fees revenue	35,467		36,129		(662)		(1.8)	%
Hotel management fees:
Base management fees	28,930		28,557		373		1.3	%
Incentive management fees	2,464		3,966		(1,502)		(37.9)	%
Other management fees	7,800		6,933		867		12.5	%
Total hotel management fees revenue (4)	39,194		39,456		(262)		(0.7)	%
Design and construction fees revenue (5)	21,003		21,964		(961)		(4.4)	%
Audio visual revenue (6)	126,855		112,347		14,508		12.9	%
Other revenue:
Watersports, ferry and excursion services (7)	32,758		25,797		6,961		27.0	%
Debt placement and related fees (8)	5,030		3,125		1,905		61.0	%
Premiums earned (9)	9,549		—		9,549
Cash management fees (10)	106		213		(107)		(50.2)	%
Other services (11)	3,333		2,922		411		14.1	%
Total other revenue	50,776		32,057		18,719		58.4	%
Cost reimbursement revenue (12)	338,351		317,094		21,257		6.7	%
Total revenues	$	611,646	$	559,047	$	52,599	9.4	%
REVENUES BY SEGMENT (13)
Advisory	$	57,625	$	60,316	$	(2,691)	(4.5)	%
Remington	340,355		314,454		25,901		8.2	%
Premier	31,147		30,780		367		1.2	%
INSPIRE	127,029		112,506		14,523		12.9	%
RED	32,882		25,866		7,016		27.1	%
OpenKey	1,050		1,184		(134)		(11.3)	%
Corporate and other	21,558		13,941		7,617		54.6	%
Total revenues	$	611,646	$	559,047	$	52,599	9.4	%

________

(1)The decrease in base advisory fees is primarily due to lower revenue of $131,000 and $532,000 from Ashford Trust and Braemar, respectively. See note 3 in our condensed consolidated financial statements for discussion of the advisory services revenue recognition policy.

(2)Incentive advisory fees for the 2024 period and the 2023 period includes the pro rata portion of the third year and second year installment, respectively, of the 2022 Braemar incentive advisory fee. Incentive fee payments are subject to meeting the December 31st FCCR Condition each year, as defined in our advisory agreements. The annual total stockholder return for Ashford Trust and Braemar did not meet the relevant incentive fee thresholds during the 2023 measurement period.

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(3)    Other advisory revenue from Braemar is a result of the $5.0 million cash payment received upon stockholder approval of the Fourth Amended and Restated Braemar Advisory Agreement in June 2017. The payment is included in “deferred income” on our condensed consolidated balance sheets and is being recognized evenly over the initial 10-year term of the agreement.

(4)    The decrease in hotel management fees revenue is primarily due to a decrease of $1.3 million of incentive management fees from Ashford Trust partially offset by an increase of other management fees from third parties of $867,000. Other management fees primarily includes fees for health insurance programs administered on behalf of certain third-party properties. Other management fees additionally includes fees for fixed monthly accounting services, revenue management services and other services at certain third-party properties.

(5)    Design and construction fee revenue in the 2024 period includes $3.6 million of revenue that resulted from changes in the timing in which design and construction fees are paid by Ashford Trust and Braemar under the Premier Agreements. See note 3 in our condensed consolidated financial statements.

(6)    The $14.5 million increase in audio visual revenue is primarily due to an increase in the number of hotels which INSPIRE provides services and an increase in demand for group events.

(7)    The $7.0 million increase in watersports, ferry and excursion services revenue is due to an increase of $1.5 million as a result of the timing of RED’s acquisition of Alii Nui in March of 2023 and increases of $6.4 million and $332,000 in revenue in RED’s operations in the U.S. Virgin Islands and Turks and Caicos, respectively. These increases were partially offset by a decrease in revenue of $1.2 million from RED’s operations in Key West, Florida.

(8)    The increase in debt placement and related fee revenue is due to higher revenue of $640,000 from Ashford Trust and higher revenue of $1.3 million from Braemar. Debt placement and related fees are earned by Lismore for providing debt placement, modification, forbearance and refinancing services.

(9)    Premiums earned is recognized by our insurance subsidiary, Warwick, from insurance premiums related primarily to general liability, workers’ compensation and business automobile contracts incurred on behalf of our clients Ashford Trust, Braemar and third-party clients and their respective management companies. Warwick was incorporated in December 2023.

(10)    Cash management fees include revenue earned by providing active management and investment of Ashford Trust and Braemar’s excess cash in short-term U.S. Treasury securities.

(11)    Other services revenue relates to other hotel services provided by our consolidated subsidiaries, OpenKey and Pure Wellness, to Ashford Trust, Braemar and third parties.

(12)    The increase in cost reimbursement revenue in the 2024 period is primarily due to an increase in Remington’s cost reimbursement revenue of $26.2 million from an increase in Remington’s operations. The increase was partially offset by a $4.4 million decrease in Ashford Securities’ cost reimbursement revenue in the 2024 period as a result of the Company reimbursing Braemar for Braemar’s contributions to fund Ashford Securities as calculated pursuant to the Fourth Amended and Restated Contribution Agreement.

(13)    See note 16 in our condensed consolidated financial statements for discussion of segment reporting.

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Salaries and Benefits Expense. Salaries and benefits expense increased by $2.8 million, or 4.0%, to $70.9 million for the 2024 period compared to the 2023 period. The change in salaries and benefits expense consisted of the following (in thousands):

	Nine Months Ended September 30,
	2024		2023		$ Change
Salaries and benefits:
Salary expense (1)	$	42,479	$	41,096	$	1,383
Bonus expense (2)	11,601		14,019		(2,418)
Benefits related expenses (1)	14,385		13,091		1,294
Total salary, bonus, and benefits related expenses	68,465		68,206		259
Non-cash equity-based compensation:
Class 2 LTIP units and stock option grants	98		97		1
Employee equity grant expense	1,591		1,308		283
Total equity-based compensation	1,689		1,405		284
Non-cash (gain) loss in deferred compensation plan (3)	737		(1,479)		2,216
Total salaries and benefits	$	70,891	$	68,132	$	2,759

________

(1)    The increase in salary expense and benefits related expenses is primarily due to increased headcount at our INSPIRE and RED subsidiaries as their respective operations increased in the 2024 period compared to the 2023 period.

(2)    The decrease in bonus expense is primarily due to a reduction to the Company’s bonus accrual in the 2024 period.

(3)    The DCP obligation is recorded as a liability at fair value with changes in fair value reflected in earnings. The loss in the 2024 period and the gain in the 2023 period are primarily attributable to increases and decreases, respectively, in the fair value of the DCP obligation which is based on the Company’s common stock price. See note 13 in our condensed consolidated financial statements.

Cost of Revenues for Design and Construction. Cost of revenues for design and construction decreased $3.5 million, or 37.3% to $5.9 million during the 2024 period compared to $9.4 million for the 2023 period due to decreases in capital expenditures from Ashford Trust and Braemar in the 2024 period.

Cost of Revenues for Audio Visual. Cost of revenues for audio visual increased $7.7 million, or 9.4%, to $89.4 million during the 2024 period compared to $81.7 million for the 2023 period, primarily due to an increase in the number of hotels which INSPIRE provides services and an increase in demand for group events.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased by $1.8 million, or 8.3%, to $19.3 million for the 2024 period compared to the 2023 period. The decrease is primarily due to the sale of FF&E which was previously leased to Ashford Trust under the Ashford Trust ERFP Agreement. Depreciation and amortization expense for the 2024 period and the 2023 period excludes depreciation expense related to audio visual equipment of $4.3 million and $3.7 million, respectively, which is included in “cost of revenues for audio visual” and also excludes depreciation expense for the 2024 period and the 2023 period related to marine vessels in the amount of $2.2 million and $1.4 million, respectively, which are included in “other” operating expense.

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General and Administrative Expense. General and administrative expenses increased by $14.6 million, or 44.7%, to $47.4 million for the 2024 period compared to the 2023 period. The change in general and administrative expense consisted of the following (in thousands):

	Nine Months Ended September 30,
	2024		2023		$ Change
Professional fees (1)	$	21,949	$	8,941	$	13,008
Office expense	10,605		10,123		482
Public company costs	543		453		90
Director costs	1,292		1,371		(79)
Travel and other expense (2)	12,388		11,057		1,331
Non-capitalizable - software costs	614		814		(200)
Total general and administrative	$	47,391	$	32,759	$	14,632

________

(1)    The increase in professional fees in the 2024 period is primarily due to $4.6 million in fees incurred in the 2024 period related to the Company’s initiative to terminate the registration of our common stock as discussed above, an increase in fees of $3.1 million related to the Company’s ongoing strategic initiatives with Stirling and TSGF L.P. and $2.5 million of expense the Company paid to reimburse Braemar for Braemar’s contributions to fund Ashford Securities as calculated pursuant to the Fourth Amended and Restated Contribution Agreement.

(2)    The increase in travel and other expense is primarily due to increases in the Company’s business travel, insurance and other related expenses for our products and services companies in the 2024 period.

Other. Other operating expense increased $10.6 million, or 61.8%, to $27.8 million for the 2024 period compared to the 2023 period. Other operating expense primarily includes the operating expenses of our insurance subsidiary Warwick and the cost of goods sold, royalties and operating expenses associated with RED, OpenKey and Pure Wellness. The increase in the 2024 period was primarily due to an increase of $7.4 million of expenses related to Warwick, which was incorporated in December 2023, and an increase of approximately $4.4 million of RED’s operating expenses. Other operating expenses for the 2023 period includes a loss on the sale of FF&E previously leased to Ashford Trust of $1.0 million under the Ashford Trust ERFP agreement.

Reimbursed Expenses. Reimbursed expenses increased $21.5 million to $338.5 million during the 2024 period compared to $317.0 million for the 2023 period primarily due to increased expenses incurred by Remington.

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

	Nine Months Ended September 30,
	2024		2023		$ Change
Cost reimbursement revenue	$	338,351	$	317,094	$	21,257
Reimbursed expenses	338,482		317,023		21,459
Net total	$	(131)	$	71	$	(202)

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in earnings (loss) of unconsolidated entities were earnings of $422,000 and losses of $1.2 million for the 2024 period and the 2023 period, respectively. Equity in earnings (loss) of unconsolidated entities primarily represents earnings (loss) in our equity method investment in REA Holdings. See note 2 in our condensed consolidated financial statements.

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Interest Expense. Interest expense increased $2.6 million to $12.5 million during the 2024 period compared to $9.9 million for the 2023 period. The increase is primarily due to an increase in the balance of the Company’s notes payable under our Credit Facility in the 2024 period compared to the 2023 period. Interest expense in the 2024 period and the 2023 period included expense of $9.7 million and $7.6 million, respectively, related to the Company’s Credit Facility. The increase in interest expense is also due to higher average interest rates during the 2024 period. The average SOFR rates in the 2024 period and the 2023 period were 5.30% and 4.90%. The average Prime Rates in the 2024 period and the 2023 period were 8.48% and 8.10%, respectively. Interest expense relates to our Credit Facility and notes payable, lines of credit and finance leases held by our consolidated subsidiaries. See note 5 in our condensed consolidated financial statements.

Amortization of Loan Costs. Amortization of loan costs was $823,000 and $775,000 for the 2024 period and the 2023 period, respectively. Amortization of loan costs relates to our Credit Facility and notes payable held by our consolidated subsidiaries. See note 5 in our condensed consolidated financial statements.

Interest Income. Interest income was $2.0 million and $1.2 million for the 2024 period and the 2023 period, respectively. The increase is primarily due to higher interest rates earned on the Company’s cash and cash equivalents in the 2024 period.

Realized Gain (Loss) on Investments. Realized loss on investments was $0 and $160,000 for the 2024 period and the 2023 period, respectively. The realized loss on investments for the 2023 period primarily related to realized losses on shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees. See note 7 in our condensed consolidated financial statements.

Other Income (Expense). Other income was $1.4 million and $259,000 in the 2024 period and the 2023 period, respectively.

Income Tax (Expense) Benefit. Income tax (expense) benefit changed by $5.0 million from $1.6 million in expense in the 2023 period to $6.6 million in expense in the 2024 period. Current income tax expense increased by $552,000 from $3.5 million in the 2023 period to $4.0 million in the 2024 period. Deferred income tax expense increased by $4.4 million from a benefit of $1.8 million in the 2023 period to expense of $2.6 million in the 2024 period. The increase in our total income tax expense for the 2024 period is primarily due to an increase in current tax liabilities associated with foreign tax expense from our investment in foreign affiliates and the increase in our equity in earnings of REA Holdings. Our deferred income tax expense increased significantly in comparison to the 2023 period as a result of our ability to utilize certain loss carryforwards in the 2023 period along with other deferred tax expense adjustments resulting from equity in earnings and state tax law legislative changes.

Net (Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Noncontrolling interests in consolidated entities were allocated a loss of $431,000 in the 2024 period and $692,000 in the 2023 period. See notes 2 and 10 in our condensed consolidated financial statements for more details regarding ownership interests, carrying values and allocations.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. Redeemable noncontrolling interests were allocated income of $96,000 and $399,000 in the 2024 period and the 2023 period, respectively. Redeemable noncontrolling interests represents ownership interests in Ashford Holdings which include the Series CHP Units which are recorded as a redeemable noncontrolling interest in the mezzanine section of our condensed consolidated balance sheets. For a summary of ownership interests, carrying values and allocations, see notes 2 and 11 in our condensed consolidated financial statements.

Preferred Dividends, Declared and Undeclared. Preferred dividends, declared and undeclared, increased $683,000 to $27.8 million during the 2024 period compared to $27.1 million for the 2023 period primarily due to compounding dividends incurred in the 2024 period related to undeclared Series D Convertible Preferred Stock dividends from the second quarter of 2024 and the fourth quarter of 2023.

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LIQUIDITY AND CAPITAL RESOURCES

Our liquidity requirements consist primarily of funds necessary to pay for operating expenses primarily attributable to paying our employees, investments and other capital expenditures to grow our businesses, interest and principal payments on our Credit Facility and our subsidiaries’ borrowings and dividends on the Series D Convertible Preferred Stock. We expect to meet our liquidity requirements generally through net cash provided by operations, existing cash balances and borrowings under our Credit Facility or other loans, which we believe will provide sufficient liquidity to meet our existing non-discretionary obligations and anticipated ordinary course operating expenses. Additionally, the Company estimates that the deregistration of its common stock under the Exchange Act will result in annual savings of approximately $2.5 million per year in expenses previously associated with being a publicly traded company.

Loan Agreements—On March 31, 2023, the Company amended its Credit Agreement, previously entered into on April 1, 2022, with Mustang Lodging Funding LLC, as administrative agent, and the lenders from time to time party thereto. The amendment replaced the one-month LIBOR rate with Adjusted Term SOFR. The Credit Agreement evidences the Credit Facility in the amount of $100.0 million, including a $50.0 million term loan funded upon closing and commitments to fund up to an additional $50.0 million of term loans in up to five separate borrowings within 24 months after the Closing Date, subject to certain conditions. The Credit Facility is a five-year interest-only facility with all outstanding principal due at maturity, with three successive one-year extension options subject to an increase in the interest rate during each extension period. Borrowings under the Credit Agreement will bear interest, at the Company’s option, at either Adjusted Term SOFR plus an applicable margin, or the Base Rate plus an applicable margin. The applicable margin for borrowings under the Credit Agreement for Adjusted Term SOFR loans will be 7.35% per annum and the applicable margin for Base Rate loans will be 6.35% per annum, with increases to both applicable margins of 0.50%, 0.75% and 1.00% per annum during each of the three extension periods, respectively. Undrawn balances of the Credit Facility were subject to an unused fee of 1.0% during the first 24 months of the term, payable on the last business day of each month.

The Credit Facility does not require the maintenance of financial covenants, but if the ratio (the “Leverage Ratio”) of consolidated funded indebtedness that is recourse to the Company or any guarantor (less unrestricted cash) to consolidated EBITDA of the Company and its subsidiaries is greater than 4.00 to 1.00 as of the end of any fiscal quarter during the term of the loan, including any extension period, then the Company is required to apply 100% of the excess cash flow generated during such fiscal quarter to prepay the term loans. The Company may not pay dividends on the Company’s shares of common stock or preferred stock if the Leverage Ratio is greater than 3.00 to 1.00 after giving effect to the payment of such dividends. The Credit Agreement is guaranteed by the Company, Ashford LLC, and certain subsidiaries of the Company, and secured by, among other things, all of the assets of Ashford LLC and each guarantor and a pledge of the equity interests in Ashford LLC and each guarantor. As of September 30, 2024, the Company was in compliance with all covenants or other requirements related to the Credit Agreement and was in compliance with all covenants or other requirements related to debt held by our subsidiaries. The Company does not expect the Leverage Ratio under our Credit Agreement to exceed 3.00 to 1.00 or debt held by our subsidiaries to violate any loan covenants within one year of the issuance of the financial statements.

On March 24, 2023, INSPIRE amended its credit agreement by entering into the INSPIRE Amendment. The INSPIRE Amendment increased the maximum borrowing capacity under INSPIRE’s Revolving Note from $3.0 million to $6.0 million, provides for a $20.0 million Term Note and an Equipment Note pursuant to which, until September 24, 2027, INSPIRE may request advances up to $4.0 million in the aggregate to purchase new machinery or equipment to be used in the ordinary course of business. The INSPIRE Amendment extended the maturity date of INSPIRE’s notes from January 1, 2024 to March 24, 2028. Monthly principal payments commenced on April 1, 2023 for the term note in the amount of approximately $167,000. Borrowings under the revolving note require monthly payments of interest only until the maturity date and borrowings under the equipment note require monthly principal payments at 1/60th of the original principal amount of each advance. The notes bear interest at the Daily Adjusting SOFR Rate plus a margin of 2.75% and the undrawn balance of the revolving note and the equipment note are subject to an unused fee of 0.25% per annum. On July 11, 2024, the INSPIRE Amendment was amended to increase the maximum amount available under the equipment note from $4.0 million to $7.0 million.

Certain segments of our business are capital intensive and may require additional financing from time to time. Any additional financings, if and when pursued, may not be available on favorable terms or at all, which could have a negative impact on our liquidity and capital resources. Aggregate portfolio companies’ notes payable, net were $42.0 million and $39.8 million as of September 30, 2024 and December 31, 2023, respectively. For further discussion see note 5 in our condensed consolidated financial statements.

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Preferred Stock Dividends—As of September 30, 2024, the Company had aggregate undeclared preferred stock dividends of approximately $38.9 million, which relates to the second quarter of 2024, the fourth quarter of 2023 and the second and fourth quarters of 2021. On April 14, 2024, the Company paid $8.7 million of dividends previously declared by the Board with respect to the Company’s Series D Convertible Preferred Stock for the first quarter of 2024. On September 25, 2024, the Board declared a cash dividend on the Company’s Series D Convertible Preferred Stock for the quarter ended September 30, 2024. The Company paid the dividend of $8.7 million, or $0.455 per share of Series D Convertible Preferred Stock, on October 9, 2024.

All dividends, declared and undeclared, are recorded as a reduction in net income (loss) attributable to common stockholders in the period incurred in our condensed consolidated statements of operations. All accrued dividends accumulate and compound until paid in cash or converted into common stock of the Company pursuant to the Certificate of Designation for the Series D Convertible Preferred Stock. Unpaid Series D Convertible Preferred Stock dividends, declared and undeclared, totaling $47.6 million and $28.5 million at September 30, 2024 and December 31, 2023, respectively, are recorded as a liability in our condensed consolidated balance sheets as “dividends payable.”

The independent members of the Board plan to revisit the dividend payment policy with respect to the Series D Convertible Preferred Stock on an ongoing basis and will make decisions on such preferred dividend payments based on the ongoing liquidity and capital needs of the Company.

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

To the extent not paid on April 15, July 15, October 15 and January 15 of each calendar year in respect of the quarterly periods ending on March 31, June 30, September 30 and December 31, respectively (each such date, a “Dividend Payment Date”), all accrued dividends on any share shall accumulate and compound on the applicable Dividend Payment Date whether or not declared by the Board and whether or not funds are legally available for the payment thereof. All accrued dividends shall remain accumulated, compounding dividends until paid in cash or converted to common shares. See note 11 in our condensed consolidated financial statements.

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

Sources and Uses of Cash

As of September 30, 2024 and December 31, 2023, we had $63.6 million and $52.1 million of cash and cash equivalents, respectively, and $16.2 million and $23.2 million of restricted cash, respectively. The majority of the Company’s cash and cash equivalents are owned by Ashford LLC, Ashford Services and Warwick and are either invested in short-term U.S. Treasury securities with maturity dates of less than 90 days or held at commercial banks in insured cash sweep accounts, which are fully insured by the FDIC. Our principal sources of funds to meet our cash requirements include: net cash provided by operations and existing cash balances, which include borrowings from our existing lending agreements. Additionally, our principal uses of funds are expected to include possible operating shortfalls, capital expenditures, preferred dividends, debt interest and principal payments and strategic acquisitions to grow our products and services companies. Items that impacted our cash flow and liquidity during the periods indicated are summarized as follows:

Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows provided by operating activities were $32.5 million for the nine months ended September 30, 2024 compared to net cash flows provided by operating activities of $9.9 million for the nine months ended September 30, 2023. The increase in cash flows from operating activities were primarily due to the timing of working capital cash flows such as collecting receivables, settling with vendors and settling with related parties, primarily our clients Ashford Trust and Braemar.

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Net Cash Flows Provided by (Used in) Investing Activities. For the nine months ended September 30, 2024, net cash flows used in investing activities were $20.0 million. These cash flows consisted of capital expenditures primarily for FF&E, audio visual equipment and marine vessels totaling $16.2 million, cash paid for TSGF L.P.’s investment of $4.6 million, cash paid for asset acquisitions of $268,000 and payments totaling $214,000 to acquire the remaining noncontrolling interest in Pure Wellness. These were offset by cash inflows of $948,000 in proceeds received from the sale of FF&E and $337,000 in proceeds from the repayment of a note receivable.

For the nine months ended September 30, 2023, net cash flows used in investing activities were $25.8 million. These cash flows consisted of capital expenditures primarily for FF&E, audio visual equipment and marine vessels totaling $17.5 million, net cash paid to acquire Alii Nui of $6.7 million, net cash paid in the asset acquisition of TSGF L.P. of $2.2 million and issuance of notes receivable of $1.3 million. These were offset by cash inflows of $1.0 million from proceeds from a note receivable and $849,000 from the asset acquisition of RHC.

Net Cash Flows Provided by (Used in) Financing Activities. For the nine months ended September 30, 2024, net cash flows used in financing activities were $7.9 million. These cash flows consisted of $31.5 million of payments on revolving credit facilities, $8.7 million of dividend payments on the Series D Convertible Preferred Stock, $6.9 million of payments for the repurchase of common stock, $3.6 million of payments on notes payable, $325,000 of payments on finance leases, $172,000 of distributions to noncontrolling interests and $100,000 of payments of contingent consideration from our acquisition of Alii Nui in the first quarter of 2023. These were offset by $34.0 million of proceeds from borrowings on revolving credit facilities, $6.8 million of cash contributions from investors purchasing equity in our consolidated subsidiary TSGF L.P. and $2.6 million of proceeds from borrowings on notes payable.

For the nine months ended September 30, 2023, net cash flows used in financing activities were $1.3 million. These cash flows consisted of $26.1 million of dividend payments on the Series D Convertible Preferred Stock, $2.9 million of payments on notes payable, purchases of $359,000 of treasury stock, $516,000 of distributions to consolidating noncontrolling interests, $409,000 of loan cost payments and $321,000 of payments on finance leases. These were offset by $28.7 million of proceeds from borrowings on notes payable, $17.0 million of which related to the Company’s Credit Agreement, and $466,000 of net borrowings on revolving credit facilities.

Seasonality

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

Contractual Obligations and Commitments

There have been no material changes since December 31, 2023, outside the ordinary course of business, to contractual obligations and commitments included in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Form 10-K, other than items as described in Liquidity and Capital Resources.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in our 2023 Form 10-K. There have been no material changes in these critical accounting policies.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

Interest Rate Risk—At September 30, 2024, our total indebtedness of $143.0 million included $134.9 million of variable-rate debt. The impact on our results of operations of a 100 basis point change in interest rates on the outstanding balance of variable-rate debt at September 30, 2024 would be approximately $1.3 million annually. Interest rate changes have no impact on the remaining $8.1 million of fixed rate debt.

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The amount above was determined based on the impact of a hypothetical interest rate on our borrowings and assumes no changes in our capital structure. As the information presented above includes only those exposures that existed at September 30, 2024, it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies at the time, and the related interest rates.

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

ITEM 4.CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2024 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s 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.

As disclosed in our Annual Form 10-K for the year ended December 31, 2023, a material weakness was identified during the Company’s financial statement close process for the fourth quarter of 2023 and preparation of the 2023 Form 10-K solely as it pertains to the Company’s new insurance subsidiary, Warwick, that was formed in December 2023, and more specifically solely related to management’s review control over evaluating whether the revenue and expense from the one-time transfer of the casualty insurance loss portfolio to Warwick should eliminate in consolidation. To remediate this material weakness, during the nine months ended September 30, 2024, we modified our existing control related to the accounting for the elimination in consolidation of Warwick’s revenue and expense to ensure that our consolidated financial statements as of and for the three and nine months ended September 30, 2024 are prepared in accordance with U.S. GAAP. The Company concluded that the control was operating effectively as of September 30, 2024. As a result, management concluded that the material weakness was remediated as of September 30, 2024.

Our management has evaluated, with the participation of our principal executive and principal financial officers, whether any changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2024 have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Based on the evaluation we conducted, other than the remediation of the material weakness identified and discussed above, our management has concluded that no such changes have occurred.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On December 20, 2016, a class action lawsuit was filed against one of the Company’s subsidiaries in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws. The Court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees who were allegedly deprived of rest breaks as a result of the subsidiary’s previous written policy requiring employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class, however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt out period has been extended until such time that discovery has concluded. In May of 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class decertified. After submission of the briefs, the Court requested that the parties submit stipulations for the Court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. The Court has ordered the parties to complete a second mediation no later than January 31, 2025. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of September 30, 2024, no amounts have been accrued.

We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters, matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws), and other general matters. The likelihood of loss for these legal proceedings is based on definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Legal costs associated with loss contingencies are expensed as incurred. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flow.

During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain personal information. We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines. All systems have been restored. We believe that we maintain a sufficient level of insurance coverage related to such events, and the related incremental costs incurred to date are immaterial. In February of 2024, two class action lawsuits were filed; one in the U.S. District Court for the Northern District of Texas and a second in the 68th District Court for Dallas County related to the cyber incident. The lawsuit filed in the 68th District Court was subsequently dismissed and refiled in the U.S. District Court for the Northern District of Texas. On March 12, 2024, the Court ordered the two cases to be consolidated. On May 17, 2024, we filed a Motion to Dismiss the Consolidated Class Action Complaint which is currently pending before the Court.

Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

ITEM 1A.RISK FACTORS

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. Other than as set forth below, as of September 30, 2024, there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023.

The Company has voluntarily delisted its common stock from the NYSE American and intends to deregister the Company’s common stock under the Exchange Act, which will result in less disclosure about the Company and will result in the Company’s stockholders not having the protections provided by the liability provisions of the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).

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On April 1, 2024, the Board, upon the recommendation of a Special Committee of the Board consisting entirely of independent and disinterested directors, approved a transaction whereby the Company would effect a reverse/forward stock split of the Company’s shares of common stock, in conjunction with terminating the Company’s public company reporting obligations and delisting the Company’s common stock from the NYSE American, subject to obtaining the requisite approval of the reverse stock split by the Company’s stockholders at the Special Meeting.

At the Special Meeting held on July 22, 2024, the Company’s stockholders approved proposals necessary to implement the Transaction as part of the Company’s plan to terminate the public registration of the Company’s common stock under Section 12(g) of the Exchange Act, suspend the Company’s duty to file periodic reports and other information with the SEC under Section 13(a) of the Exchange Act, and delist the Company’s common stock from the NYSE American. At the Special Meeting, the Company’s stockholders voted to effect the Reverse Stock Split, which was immediately followed by the Forward Stock Split.

The Reverse Stock Split and the Forward Stock Split were effected on July 29, 2024 at 5:01 p.m. Eastern Time and 5:02 p.m. Eastern Time, respectively. As a result of the Transaction, each stockholder owning fewer than 10,000 shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split received $5.00 per share, without interest, in cash for each share of the Company’s common stock held by such stockholder at the effective time of the Reverse Stock Split, and such stockholders are no longer stockholders of the Company. Stockholders owning 10,000 or more shares of the Company’s common stock in any one account immediately prior to the effective time of the Reverse Stock Split were not entitled to receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any, and will instead remain stockholders in the Company holding, as a result of the Forward Stock Split, the same number of shares of common stock as such stockholders held immediately before the effective time of the Reverse Stock Split. The intended effect of the Transaction was to reduce the number of record holders of the Company’s common stock to fewer than 300 so that the Company would be eligible to terminate the public registration of the Company’s common stock under Section 12(g) of the Exchange Act, suspend the Company’s duty to file periodic reports and other information with the SEC under Section 13(a) of the Exchange Act, and delist the Company’s common stock from the NYSE American.

The Company delisted its common stock on July 29, 2024. On August 8, the Company filed a Form 15 with the SEC to terminate the registration of the Company’s common stock under Section 12(g) of the Exchange Act, and suspend the Company’s reporting obligations under Section 15(d) of the Exchange Act. The Form 15 became effective on November 6, 2024. The Company expects its reporting obligations will be automatically suspended as of January 1, 2025 pursuant to Rule 15d-6 of the Exchange Act.

Following the Transaction, we currently intend to continue to have our financial statements audited by a public accounting firm, but we do not intend to make such financial statements available to our stockholders, unless required by law or otherwise agreed to by the Company. The Company expects that the deregistration of its common stock under the Exchange Act would eliminate the significant expense required to comply with its Exchange Act reporting obligations and the SEC’s proxy rules. The Company estimates the annual savings will be approximately $2.5 million per year, including ongoing expenses for compliance with the Sarbanes-Oxley Act, and other accounting, legal, printing and other miscellaneous costs associated with being a publicly traded company.

Stockholders holding the Company’s common stock following the Transaction and subsequent filing to become a non-reporting entity may no longer have the information that is currently provided in the Company’s filings with the SEC pursuant to the Exchange Act regarding such matters as the Company’s business operations and developments, legal proceedings involving the Company, the Company’s financial results, the compensation of the Company’s directors and named executive officers, and Company securities held by the Company’s directors, officers and major stockholders. In addition, it is likely that there will be limited liquidity for the Company’s common stock and that trading of shares may only continue in privately negotiated sales. As a result, stockholders may not be able to purchase or sell the common stock at all or at prices they desire.

Further, the Company’s stockholders will no longer have the protections provided by the liability provisions of the Exchange Act and the Sarbanes-Oxley Act applicable to the Company and the Company’s directors, officers and major stockholders, including the short-swing profit provisions of Section 16, the proxy solicitation rules under Section 14, the stock ownership reporting rules under Section 13, provisions relating to personal attestation by officers about accounting controls and procedures potential criminal liability regarding the disclosure by the Company.

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

Purchases of Equity Securities by the Issuer

The following table provides information with respect to purchases and forfeitures of shares of our common stock during each of the months in the third quarter of 2024:

Period	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased as Part of a Publicly Announced Plan (2)	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan (1)
Common stock:
July 1 to July 31	1,372,792	(3)	$	5.00	(4)	1,372,400	$	20,000,000
August 1 to August 31	—		$	—		—	$	20,000,000
September 1 to September 30	—		$	—		—	$	20,000,000
Total	1,372,792		$	5.00		1,372,400

________

(1) On December 5, 2017, the Board approved a stock repurchase program pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, having an aggregate value of up to $20 million. No shares were repurchased under the stock repurchase program during the three months ended September 30, 2024.

(2) Represents the common shares repurchased by the Company in the Transaction as discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments.”

(3) There is no cost associated with the forfeiture of 14 restricted shares of our common stock in July.

(4) Includes 378 restricted shares that were withheld to cover tax-withholding requirements in July related to the vesting of restricted shares of our common stock issued to employees pursuant to the Company’s stock incentive plan.

ITEM 3.DEFAULT UPON SENIOR SECURITIES

As of September 30, 2024, the Company had aggregate undeclared preferred stock dividends of approximately $38.9 million, which relates to the second quarter of 2024, the fourth quarter of 2023 and the second and fourth quarters of 2021. All dividends, declared and undeclared, are recorded as a reduction in net income (loss) attributable to common stockholders in the period incurred in our condensed consolidated statements of operations. All accrued dividends accumulate and compound until paid in cash or converted into common stock of the Company pursuant to the Certificate of Designation for the Series D Convertible Preferred Stock. Unpaid Series D Convertible Preferred Stock dividends, declared and undeclared, totaling $47.6 million and $28.5 million at September 30, 2024 and December 31, 2023, respectively, are recorded as a liability in our condensed consolidated balance sheets as “dividends payable.” As previously disclosed, each share of Series D Convertible Preferred Stock accrues cumulative preferred dividends at the rate of 7.28% per annum and will participate in any dividend or distribution on the common stock in addition to the preferred dividends. 

On April 14, 2024, the Company paid $8.7 million of dividends previously declared by the Board with respect to the Company’s Series D Convertible Preferred Stock for the first quarter of 2024. On September 25, 2024, the Board declared a cash dividend on the Company’s Series D Convertible Preferred Stock for the quarter ended September 30, 2024. The Company paid the dividend of $8.7 million, or $0.455 per share of Series D Convertible Preferred Stock, on October 9, 2024.

See note 11 in our condensed consolidated financial statements for a full description of all material terms of the Series D Cumulative Convertible Preferred Stock. The Series D Convertible Preferred Stock is beneficially held primarily by Mr. Monty J. Bennett, the Chairman of our Board and our Chief Executive Officer, and Mr. Archie Bennett, Jr., who is Mr. Monty J. Bennett’s father.

ITEM 4.MINE SAFETY DISCLOSURES

None.

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ITEM 5.OTHER INFORMATION

Rule 10b5-1 Trading Agreements

During the fiscal quarter ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

Amendment No. 2 to Third Amended and Restated Advisory Agreement

The Company, Ashford Trust, Ashford Trust OP and Ashford TRS Corporation are parties to that certain Third Amended and Restated Advisory Agreement, dated as of March 12, 2024 (as amended, the “Ashford Trust Advisory Agreement”).

On November 8, 2024, the parties to the Ashford Trust Advisory Agreement entered into Amendment No. 2 to the Third Amended and Restated Advisory Agreement (the “Second Amendment”). The Second Amendment extends the outside date for which any sale or disposition of any of Ashford Trust’s Highland portfolio and JPM8 hotel properties securing the associated mortgage loans following certain defaults (as described in the Ashford Trust Advisory Agreement), including a maturity default, would be excluded from the numerator of the calculation of the percentage of gross book value of Ashford Trust’s assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the Ashford Trust Advisory Agreement) has occurred, from August 31, 2025 to November 30, 2025. In addition, the Second Amendment places certain limitations on the operations of Ashford Trust and Ashford Trust OP should a Potential Company Change of Control (as defined in the Second Amendment) occur.

The foregoing description of the Second Amendment contained in this Item 5 does not purport to be complete and is subject to and qualified in its entirety by the full text of the Second Amendment, a copy of which is attached hereto as Exhibit 10.1.2 and incorporated herein by reference.

Amendment No. 1 to the Advisory Agreement

On November 7, 2024, the Company’s wholly-owned subsidiary Stirling REIT Advisors, LLC (“Advisor”) entered into Amendment No. 1 (the “Amendment”) to the Advisory Agreement (the “Original Advisory Agreement”) with Stirling, Stirling REIT OP, LP and Stirling TRS Corporation. Pursuant to the Amendment, (i) the date prior to which Advisor will pay for all Organization and Offering Expenses (as defined in the Original Advisory Agreement) is changed from December 31, 2024 to December 31, 2025, and (ii) the repayment period for the Organization and Offering Expenses, as well as for certain other costs and expenses of Stirling, is changed from 60 equal monthly installments starting January 2025 to 120 equal monthly installments starting January 2026.

The foregoing description of the Amendment does not purport to be complete and is subject to, and qualified in its entirety, by the full text of the Amendment and the Original Advisory Agreement, which are attached hereto as Exhibit 10.2.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.

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ITEM 6.EXHIBITS

Exhibit	Description
3.1	Amended and Restated Certificate of Incorporation of Ashford Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K, filed on November 6, 2019) (File No. 001-36400)
3.2	Articles of Amendment to the Certificate of Incorporation of Ashford Inc. (incorporated by reference to Exhibit 3.3 of Form 8-K, filed on November 6, 2019) (File No. 001-36400)
3.3	Articles Supplementary establishing the Series B Convertible Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.3 of Form 8-K, filed on August 8, 2018) (File No. 001-36400)
3.4	Certificate of Correction, filed on November 4, 2019, to Articles Supplementary establishing the Series B Convertible Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.4 of Form 10-Q, filed on November 7, 2019) (File No. 001-36400)
3.5	Articles Supplementary establishing the Series C Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.4 of Form 8-K, filed on August 8, 2018) (File No. 001-36400)
3.6	Amended and Restated Bylaws of Ashford Inc., as amended August 24, 2023 (incorporated by reference to Exhibit 3.14 of Form 8-K, filed on August 25, 2023) (File No. 001-36400)
3.7	Certificate of Designation of the Series D Convertible Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.2 of Form 8-K, filed on November 6, 2019) (File No. 001-36400)
3.8	Certificate of Designation of Series E Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K, filed on March 16, 2020) (File No. 001-36400)
3.9	Certificate of Designation of Series F Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K, filed on August 31, 2022) (File No. 001-36400)
3.10	Certificate of Withdrawal of Certificate of Designation of Series E Preferred Stock of Ashford Inc., as filed with the Secretary of State of the State of Nevada on August 30, 2022 (incorporated by reference to Exhibit 3.2 of Form 8-K, filed on August 31, 2022) (File No. 001-36400)
10.1	Third Amended and Restated Advisory Agreement, dated as of March 12, 2024, 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 of Form 8-K filed on March 15, 2024) (File No. 001-36400)
10.1.1	Amendment No. 1 to Third Amended and Restated Advisory Agreement, dated as of August 8, 2024, 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 10.1.1 of Form 10-Q filed on August 13, 2024) (File No. 001-36400)
10.1.2*	Amendment No. 2 to Third Amended and Restated Advisory Agreement, dated as of November 8, 2024, by and between Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC
10.2	Advisory Agreement by and among Stirling Hotels & Resorts, Inc., Stirling REIT OP, LP, Stirling TRS Corporation and Stirling REIT Advisors, LLC (incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 6, 2023) (File No. 001-36400)
10.2.1*	Amendment No. 1 to Advisory Agreement, dated as of November 7, 2024, by and among Stirling Hotels & Resorts, Inc., Stirling REIT OP, LP, Stirling TRS Corporation and Stirling REIT Advisors, LLC
10.3	Second Consolidated, Amended and Restated Hotel Master Management Agreement, dated as of March 12, 2024, by and between Ashford TRS Corporation and Remington Lodging & Hospitality, LLC (incorporated by reference to Exhibit 10.73 of Form 10-K filed on March 27, 2024) (File No. 001-36400)
10.4	Amended and Restated Master Project Management Agreement, dated March 12, 2024, by and among Ashford Hospitality Limited Partnership, Ashford TRS Corporation and Premier Project Management LLC (incorporated by reference to Exhibit 10.74 of Form 10-K filed on March 27, 2024) (File No. 001-36400)
10.5	Limited Waiver Under Advisory Agreement, dated as of March 11, 2024, by and among Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.75 of Form 10-K filed on March 27, 2024) (File No. 001-36400)
10.6	Limited Waiver Under Advisory Agreement, dated as of March 11, 2024, by and among Braemar Hotels & Resorts Inc., Braemar Hospitality Limited Partnership, Braemar TRS Corporation, Ashford Inc., and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.76 of Form 10-K filed on March 27, 2024) (File No. 001-36400)
10.7†	Separation/Consulting Agreement, dated as of June 30, 2024, by and among J. Robison Hays, III, Ashford Hospitality Advisors LLC and Ashford Inc. (incorporated by reference to Exhibit 10.1 of Form 8-K filed on July 3, 2024) (File No. 001-36400)

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10.8	Limited Waiver Under Advisory Agreement, dated August 8, 2024, by and among Braemar Hotels & Resorts Inc., Braemar Hospitality Limited Partnership, Braemar TRS Corporation, Ashford Inc., and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.7 of Form 10-Q filed on August 13, 2024) (File No. 001-36400)
10.9	First Amendment to Second Consolidated, Amended and Restated Hotel Master Management Agreement by and between Ashford TRS Corporation and Remington Lodging & Hospitality, LLC, dated September 11, 2024 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on September 12, 2024) (File No. 001-36400)
31.1*	Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
31.2*	Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The following materials from the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2024, are formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) Condensed Consolidated Statements of Equity (Deficit); (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Submitted electronically with this report.
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document	Submitted electronically with this report.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Submitted electronically with this report.
101.LAB	Inline XBRL Taxonomy Label Linkbase Document.	Submitted electronically with this report.
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document.	Submitted electronically with this report.
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

___________________________________

* Filed herewith.

**Furnished herewith.

† Management contract or compensatory plan or arrangement.

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SIGNATURES

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

ASHFORD INC.

Date:	November 13, 2024	By:	/s/ MONTY J. BENNETT
			Monty J. Bennett
			Chief Executive Officer
Date:	November 13, 2024	By:	/s/ DERIC S. EUBANKS
			Deric S. Eubanks
			Chief Financial Officer

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