UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☑
þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172023
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)
Nevada84-2331507
Maryland46-5292553
(State or other jurisdiction of incorporation or organization)(IRS employer identification number)
14185 Dallas Parkway
Suite 1100
Dallas, Texas
1200
Dallas
Texas75254
(Address of principal executive offices)(Zip code)
(972) 490-9600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common StockAINCNYSE American LLC
Preferred Stock Purchase RightsNYSE American LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨  Yes     þ  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨  Yes     þ  No
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)    þ  Yes    ¨  No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filero☐Accelerated filerþ☐
Non-accelerated filero☑(Do not check if a smaller reporting company)Smaller reporting companyo☑
Emerging growth companyþ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) if the Exchange Act. þ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Exchange Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨☐  Yes    þ  No
As of June 30, 2017,2023, the aggregate market value of 1,600,5872,237,855 shares of the registrant’s common stock held by non-affiliates was approximately $81,597,925.$21,751,951.
As of March 8, 2018,25, 2024, the registrant had 2,102,5183,431,075 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement pertaining to the 20182024 Annual Meeting of Stockholders are incorporated herein by reference into Part III of this Form 10-K.



ASHFORD INC.
YEAR ENDED DECEMBER 31, 20172023
INDEX TO FORM 10-K
Page
PART I
Page
PART I
Item 1.
4
Item 1A.
1539
Item 1B.
2556
Item 2.1C.
2556
Item 2.
56
Item 3.
2656
Item 4.
2657
PART II
PART II
Item 5.
2758
Item 6.
2960
Item 7.
3161
Item 7A.
4977
Item 8.
5079
Item 9.
101150
Item 9A.
101150
Item 9B.
101151
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
151
PART III
Item 10.
101152
Item 11.
101152
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
102152
Item 13.
102152
Item 14.
102152
PART IV
PART IV
Item 15.
102153
Item 16.
102161
SIGNATURES




As used in this Annual Report on Form 10-K, unless the context otherwise indicates, the references to “we,” “us,” “our,” and the “Company” refer to Ashford Inc., a MarylandNevada corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Advisors LLC, a Delaware limited liability company, which we refer to as “Ashford LLC” or “our operating company” and; Ashford Hospitality Holdings LLC, a Delaware limited liability company, which we refer to as “Ashford Holdings.” “AIM” refers toHoldings” or “AHH”; Ashford Investment Management,Hospitality Services LLC, a Delaware limited liability company.company, which we refer to as “Ashford Prime”Services”; Premier Project Management LLC, a Maryland limited liability company, which we refer to as “Premier Project Management” or “AHP”“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 Ashford Hospitality Prime,Braemar Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including AshfordBraemar Hospitality Prime Limited Partnership, a Delaware limited partnership, which we refer to as “Ashford Prime“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.” “Remington Lodging”“Stirling” refers to Remington Lodging and Hospitality LLC,Stirling Hotels & Resorts Inc., a Delaware limited liability company,Maryland corporation, and, as the context may require, its consolidated subsidiaries,subsidiaries. Stirling REIT OP, LP, a property management company ownedDelaware limited partnership, which we refer to as “Stirling OP” is Stirling’s operating partnership, however, Stirling OP is consolidated by Mr. Monty J. Bennett, our chief executive officer and chairman, and his father, Mr. Archie Bennett, Jr., chairman emeritusAshford Trust as of Ashford Trust.December 31, 2023.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K and documents incorporated herein by reference contain certain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature:
•our business and investment strategy;
•our projected operating results and dividend rates;results;
•our ability to obtain future financing arrangements;
•our ability to maintain compliance with the NYSE American LLC (the “NYSE American”) continued listing standards;
•our understanding of our competition;
market trends;•the future success of recent acquisitions;
•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 factors referenced, including those set forth under the sections captioned “Item 1. Business,” “Item 1A. Risk Factors”Factors,” “Item 3. Legal Proceedings,” and “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations;”
•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 conflict between Russia and Ukraine and the more recent Israel-Hamas conflict;
•extreme weather conditions may cause property damage or interrupt business;
•actions by our clients’ lenders to accelerate loan balances and foreclose on our clients’ hotel properties that are security for our clients’ loans that are in default;
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•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 interest rates or the general economy;
•the degree and nature of our competition;
•actual and potential conflicts of interest with or between Remington Lodging, Ashford Trust, Braemar and Ashford Prime,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 Alii Nui and Chesapeake Hospitality (“Chesapeake”) or any other business we invest in or acquire, which may harm relationships with customers, employees and regulators; and
•unexpected costs of further goodwill impairments relating to the acquisition or integration of Alii Nui, Chesapeake or any other business we invest in or acquire.
When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this annual report. The matters summarized under “Item 1A. Risk Factors” and elsewhere, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Annual Report on Form 10-K. Furthermore, we do not intend to update any of our forward-looking statements after the date of this annual report to conform these statements to actual results and performance, except as may be required by applicable law.

On February 29, 2024, the Company issued a press release and furnished a Current Report on Form 8-K announcing its financial results for the fourth quarter ended December 31, 2023. Subsequent to the issuance of such financial results, the Company revised the presentation of certain revenues and operating expenses in our consolidated statement of operations related to the one-time transfer of the casualty insurance loss portfolio to the Company’s newly formed insurance subsidiary, Warwick, in the fourth quarter of 2023. The revisions resulted in the elimination upon consolidation of $19.1 million of revenue and operating expense in our consolidated statement of operations for both the three months and year ended December 31, 2023 with no net impact to net loss attributable to common stockholders or the related per share amounts.
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PART I
Item 1. Business
Our Company and Our Business Strategy
Ashford Inc., a Nevada corporation, is a Maryland corporation formed on April 2, 2014 that providesan alternative asset management advisory and othercompany with a portfolio of strategic operating businesses that provides products and services primarily to clients in the real estate and hospitality industry.industries, including Ashford Trust, Braemar, Stirling and our consolidated subsidiary the Texas Strategic Growth Fund, L.P. (“TSGF L.P.”). We became a public company in November 2014, and our common stock is listed on the NYSE American. As of December 31, 2023, Mr. Monty J. Bennett, Ashford Inc. currently provides’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 610,261 shares of our common stock, which represented an approximately 19.0% ownership interest in Ashford Inc., and owned 18,758,600 shares of our Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”), which, along with all unpaid accrued and accumulated dividends thereon, is convertible at a price of $117.50 per share into an additional approximate 4,229,668 shares of Ashford Inc. common stock, which if converted as of December 31, 2023 would have increased Mr. Monty J. Bennett and Mr. Archie Bennett, Jr.’s ownership interest in Ashford Inc. to approximately 65.0%.
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 to Ashford Hospitality Trust, Inc. (“Ashford Trust”)businesses; and Ashford Hospitality Prime, Inc. (“Ashford Prime”).(iii) acquiring additional businesses which align with our strategic initiatives.
Advisory Services. We are currently the advisor for Ashford Trust, commenced operatingBraemar, 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 August 2003each 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 servicefull-service hotels in the upscale and upper-upscaleupper upscale segments in the U.S.United States that have revenue per available room (“RevPAR”) generally less than twice the U.S. national average. Ashford PrimeBraemar invests primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Ashford PrimeStirling invests in a diverse portfolio of stabilized income-producing hotels and resorts across all chain scales primarily located in the United States and became a publicly traded companyour client on December 6, 2023. TSGF L.P. invests in November 2013 uponall types of real estate in the completionstate of its spin-off from Ashford Trust.Texas. Each of Ashford Trust and Ashford PrimeBraemar is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code and theof 1986, as amended (the “Internal Revenue Code”). The common stock of each of Ashford Trust and Ashford PrimeBraemar is traded on the NYSE. The common stock ofNew York Stock Exchange (the “NYSE”). Stirling is privately held and Stirling’s subsidiary Stirling OP is consolidated by Ashford Inc.Trust. TSGF L.P. is listed on the NYSE American Exchange. Ashford Trusta privately held, approximately 598,000 shares of Ashford Inc. common stock, which represented an approximate 28.6% ownership interest in Ashford Inc. Ashford Prime held approximately 195,000 shares, which represented an approximate 9.3% ownership interest in Ashford Inc. as of December 31, 2017.
On April 6, 2017, Ashford Inc. entered into the Amended and Restated Limited Liability Company Agreement (the “Amended and Restated LLC Agreement”) of Ashford Hospitality Holdings LLC, a Delaware limited liability company and aconsolidated subsidiary of the Company (“Ashford Holdings”), in connection with the merger (the “Merger”) of Ashford Merger Sub LLC, a Delaware limited liability company, with and into Ashford Hospitality Advisors LLC, a Delaware limited liability company and the operating company of the Company (“Ashford LLC”), with Ashford LLC surviving the Merger as a wholly-owned subsidiary of Ashford Holdings. Ashford Holdings is owned approximately 99.8% by Ashford Inc. and approximately 0.2% by noncontrolling interest holders. The terms of the Amended and Restated LLC Agreement are consistent with the terms of the Amended and Restated Limited Liability Company Agreement of Advisors LLC. The Merger was effectuated in order to facilitate our investments in businesses that provide products and services to the hospitality industry. After the Merger, Ashford Inc. serves as the sole manager of Ashford Holdings.Company.
In our capacity as the advisor to Ashford Trust and Ashford Prime, we are responsible for implementing the investment strategies and managing the day-to-day operations of Ashford Trust and Ashford Prime, in each case subject to the supervision and oversight of the respective board of directors of such entity. We provide the personnel and services that we believe are necessary to allowfor each of Ashford Trust and Ashford Primeour clients to conduct itstheir respective business.businesses. We may also perform similar functions for new or additional platforms. WeIn our capacity as an advisor, we are not responsible for managing the day-to-day operations of theour client’s individual hotel properties, owned by either Ashford Trust or Ashford Prime, which duties are, and will continue to be, the responsibility of the hotel management companies that operate thesuch hotel properties owned by Ashford Trust and Ashford Prime.properties.
We conduct our advisory business through an operating entity, Ashford LLC. We conduct our hospitality products and services business through an operating entity, Ashford Hospitality Services, LLC (“Ashford Services”). We own our assets through Ashford LLC and Ashford Services.
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Our Business Strategy

Our principal business objective is to provide asset management, advisory and other products and services to other entities primarily in the hospitality industry. The Company seeks to grow in three primary areas; (i) expanding its existing platforms accretively and accelerating performance to earn incentive fees; (ii) starting new platforms for additional base and incentive fees; and (iii) acquiring, investing in or incubating strategic businesses that can achieve accelerated growth through doing business with our existing platforms and by leveraging our deep knowledge and extensive relationships within the hospitality sector. We operate our business primarily through two operating subsidiaries, Ashford LLC and Ashford Services. We operate our asset management and advisory business through Ashford LLC and we operate our hospitality products and services business primarily through Ashford Services. Currently, we, through our operating subsidiary Ashford LLC, act as the advisor to two publicly traded REITs, Ashford Trust and Ashford Prime.
In our asset management and advisory services business, we earn advisory fees from each company that we advise. The fees for the REIT companiesearned from each company that we advise include a base fee, payable in cash, quarterly for Ashford Trust andon a monthly for Ashford Prime,basis, for managing the respective day-to-day operations of the companies that we advise and the day-to-day operations of thetheir respective subsidiaries,hotels from an ownership perspective, in each case in conformity with the respective investment guidelines of such entity.client. The base fee for Ashford Trust and Braemar is determined as a percentage of each entity’sclient’s total market capitalization, subject to a minimum fee. The base fee for Stirling is determined as a percentage of Stirling’s common shares and Stirling OP’s units net asset value (“NAV”). We may also be entitled to receive an incentive fee from each of Ashford Trust and Braemar, payable in cash or a combination of cash and stock, and a performance participation allocation from eachStirling OP based upon a percentage of the total return on certain classes of Stirling OP’s units. Ashford Trust and Ashford PrimeBraemar’s incentive fee is based on their respective out-performance of their peers, as measured by the annual total stockholder return of such company compared to its peers. For

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”), and is defined in the respective advisory agreements. Incentive advisory fees, measured with respect to a particular year, are paid over a three-year period, beginning on January 15 immediately following the year ended December 31, 2017, we earned advisory services revenues of $55.2 millionmeasurement, and $10.8 million fromeach 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. TSGF L.P. is a consolidated subsidiary of the Company and Ashford Prime, respectively. their activity under their advisory agreement eliminates upon consolidation.
For the year ended December 31, 2016,2023, we earned advisory services revenuesfees of $51.0$33.2 million and $16.2$14.3 million from Ashford Trust and Braemar, respectively, of which $0, and $268,000 were incentive fees. Advisory services fees from Ashford Prime, respectively.
Separate from our advisory agreements, Lismore Capital, our wholly-owned subsidiary, provides mortgage placement services to our REIT clients. DuringTrust for the year ended December 31, 2017, Lismore Capital earned $1.1 million in debt placement fees. No debt placement2023, includes $67,000 of advisory services fees were earned duringfrom Stirling OP. For the yearsyear ended December 31, 20162022, we earned advisory services fees of $34.8 million and 2015.$13.1 million from Ashford Trust and Braemar, respectively, of which $0 and $268,000 were incentive fees.
Asset Management Services. We provide asset management services to Ashford Trust, Braemar, Stirling and TSGF L.P. Our strategic approach of designating at least one asset manager to each property allows us to leverage our extensive portfolio of subject matter experts, including asset management, revenue optimization, capital management, legal and risk management, data analysis and property tax. Our fees for asset management services are included in advisory services fees as noted above.
Hotel Management Services. As of December 31, 2023, we provide hotel management services to 61 properties for Ashford Trust, four properties for Braemar, three properties for Stirling OP and 54 properties for third-parties through our subsidiary, Remington. Hotel management services consist of hotel operations, sales and marketing, revenue management, budget oversight, guest service, asset maintenance (not involving capital expenditures) and related services.
In our hotel management business, Remington receives a base management fee based on gross revenues for each hotel, subject to a specified floor (which is subject to increase annually based on increases in the consumer price index) and an incentive fee if a hotel meets and exceeds various thresholds based on hotel revenues and certain profitability targets. Additionally, Remington receives from certain third-party owned properties fixed monthly accounting fees, information technology fees, legal fees, and fees for revenue management services. For the year ended December 31, 2023, we earned hotel management fees of $30.4 million, $2.5 million and $19.7 million from Ashford Trust, Braemar and third-party clients, respectively. Hotel management fees from Ashford Trust for the year ended December 31, 2023, includes $46,000 of hotel management fees from Stirling OP. For the year ended December 31, 2022, we earned hotel management fees of $29.9 million, $3.7 million and $12.9 million from Ashford Trust, Braemar and third-party clients, respectively.
Design and Construction Services. We provide comprehensive solutions for renovations and construction to substantially all of the hotels owned by Ashford Trust, Braemar, Stirling OP and also to third-party clients through our subsidiary, Premier. Services provided by Premier consist of construction management, interior design, architecture, and the purchasing, expediting, warehousing, freight management, installation and supervision of property and equipment and related services.
For these services, Premier receives fees based upon the applicable rate stated in the respective project management agreement with Ashford Trust, Braemar and Stirling or the applicable agreement with third-party clients. For the year ended December 31, 2023, we earned design and construction fees of $15.9 million, $7.8 million and $4.0 million from Ashford Trust, Braemar and third-party clients, respectively. Design and construction fees from Ashford Trust for the year ended December 31, 2023, includes $263,000 of design and construction fees from Stirling OP. For the year ended December 31, 2022, we earned design and construction fees of $11.6 million, $7.4 million and $3.2 million from Ashford Trust, Braemar and third-party clients, respectively.
Event Technology and Creative Communications Solutions. We provide an integrated suite of audio visual services, including event, hospitality, products and services business, we provide products andcreative services to third-party clients primarilyand, as of December 31, 2023, have contracts in place as the hospitality industry, includingexclusive in-house provider of event technology and audio visual services at 24 hotels owned by Ashford Trust, nine hotels
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owned by Braemar and Ashford Prime. Ashford Services50 hotels and eight convention centers owned by third parties, respectively. We provide these services through Inspire Event Technologies Holdings, LLC, our subsidiary doing business as INSPIRE (“INSPIRE”).
INSPIRE generates revenue from customers in various forms depending on the particular product or service provided and the generalgenerally accepted market conditionconditions for pricing such products or services. For the years ended December 31, 2023 and 2022, INSPIRE earned audio visual revenues of $148.6 million and $121.3 million, respectively. INSPIRE primarily contracts directly with customers to whom it provides audio visual services and recognizes the gross revenue collected from their customers by the hosting hotel or venue. For the year ended December 31, 2023, we earned audio visual revenue of $22.9 million, $10.8 million and $114.9 million from guests at Ashford Trust, Braemar and third-party properties, respectively. For the year ended December 31, 2022, we earned audio visual revenue of $18.2 million, $9.4 million and $93.7 million from guests at Ashford Trust, Braemar and third-party properties, respectively.
Watersports Activities, Travel, Concierge and Transportation Services. We provide watersports, travel, concierge and transportation services to Ashford Trust and Braemar, as well as to third-party clients, through our subsidiary, RED Hospitality & Leisure LLC (“RED”).
RED generates revenue from Ashford Trust, Braemar and third-party clients in various forms depending on the particular product or service provided and the generally accepted market conditions for pricing such products or services. For the year ended December 31, 2017,2023, we earned audio visual revenue and other services revenue of $9.2$68,000, $2.3 million and $2.4$31.7 million from Ashford Trust, Braemar and third-party clients, respectively. For the year ended December 31, 2016,2022, we earned other services revenue of $44,000.$217,000, $2.3 million and $23.8 million from Ashford Trust, Braemar and third-party clients, respectively.
Business SegmentsMobile Room Keys and Keyless Entry Solutions. We provide mobile room keys and keyless entry solutions to Ashford Trust and Braemar, as well as to third-party clients, through our subsidiary, OpenKey, Inc. (“OpenKey”).
We have two business segments: (i) REIT Advisory, which provides asset managementOpenKey generates revenue from Ashford Trust, Braemar and advisory services to other entitiesthird-party clients in various forms depending on the particular product or service provided and (ii) Hospitalitythe generally accepted market conditions for pricing such products or services. For the year ended December 31, 2023, we earned revenue of $119,000, $38,000 and $1.4 million from Ashford Trust, Braemar and third-party clients, respectively. For the year ended December 31, 2022, we earned revenue of $119,000, $38,000 and $1.3 million from Ashford Trust, Braemar and third-party clients, respectively.
Hypoallergenic Premium Room Products and Services, which providesServices. We provide hypoallergenic premium room products and services to Ashford Trust, Braemar and third-party clients primarilythrough our subsidiary, PRE Opco LLC (“Pure Wellness”).
Pure Wellness generates revenue from Ashford Trust, Braemar and third-party clients in various forms depending on the hospitality industry. A discussionparticular product or service provided and the generally accepted market conditions for pricing such products or services. For the year ended December 31, 2023, we earned revenue of $1.4 million, $210,000 and $818,000 from Ashford Trust, Braemar and third-party clients, respectively. For the year ended December 31, 2022, we earned revenue of $1.3 million, $128,000 and $754,000 from Ashford Trust, Braemar and third-party clients, respectively.
Debt Placement and Related Services. We provide debt placement and related services to Ashford Trust and Braemar through our subsidiary, Lismore Capital II LLC (“Lismore”).
In our debt placement and related services business, Lismore typically earns a fee equal to a percentage of the amount of debt sourced by Lismore. For the year ended December 31, 2023, we earned revenue of $2.3 million and $2.4 million from Ashford Trust and Braemar, respectively. For the year ended December 31, 2022, we earned revenue of $3.3 million and $940,000 from Ashford Trust and Braemar, respectively.
Real Estate Advisory and Brokerage Services. We provide real estate advisory and brokerage services to Ashford Trust, Braemar and third-party clients through our subsidiary, in which we hold a noncontrolling interest, Real Estate Advisory Holdings LLC (“REA Holdings”). For the years ended December 31, 2023 and 2022, we recognized a loss of $697,000 and equity in earnings of $385,000, respectively, through REA Holdings.
REA Holdings, through its operating subsidiary, generates earnings from Ashford Trust, Braemar and third-party clients in various forms depending on the particular product or service provided and the generally accepted market conditions for pricing such products or services.
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Broker-Dealer Services. We provide wholesaler, dealer manager and other broker-dealer services to Braemar, Ashford Trust and certain subsidiaries of the Company through our subsidiary, Ashford Securities LLC (“Ashford Securities”). Ashford Securities generates revenue in various forms depending on the particular product or service provided and the generally accepted market conditions for pricing such products or services. The Company, Ashford Trust and Braemar fund certain of Ashford Securities’ expenses pursuant to the terms of the Contribution Agreement (defined below), as amended, among the Company, Ashford Trust and Braemar.
For the year ended December 31, 2023, Ashford Securities earned cost reimbursement revenue of $5.1 million and $6.4 million from Ashford Trust and Braemar, respectively, including $1.8 million and $2.0 million of dealer manager fees earned by Ashford Securities for the placement of non-listed preferred equity offerings of Ashford Trust and Braemar, respectively. For the year ended December 31, 2022, the Company earned cost reimbursement revenue of $15.5 million from Braemar.
Insurance Services. We provide insurance policies covering general liability, workers’ compensation and business automobile claims on behalf of our operating segmentsclients Ashford Trust, Braemar, Stirling and third-parties through our insurance subsidiary Warwick, which is incorporatedlicensed by referencethe Texas Department of Insurance. For the year ended December 31, 2023, Warwick recognized $375,000of revenue which primarily related to note 19 to our consolidated financial statements set forthgeneral liability and workers’ compensation insurance policies written in Part II, Item 8. Financial Statements and Supplementary Data.December of 2023.
Our Advisory Agreements
We advise Ashford Trust, Braemar, Stirling and Ashford PrimeTSGF L.P. pursuant to our advisory agreements. The termsprovisions of the twoAshford Trust and Braemar’s advisory agreements are substantially similar, except as otherwise described below. The following summary of the terms of our advisory agreements does not purport to be complete and is subject to and qualified in its entirety by reference to a copy of the actual agreements, as amended, entered into with Ashford Trust, or Ashford Prime,Braemar and Stirling, which have been included as exhibits to other documents filed with the Securities and Exchange Commission (the “SEC”)SEC and incorporated by reference in this Form 10-K. TSGF L.P. is a consolidated subsidiary of the Company and TSGF L.P.’s activity under the advisory agreement eliminates upon consolidation.
General.
Ashford Trust and Braemar. Pursuant to our advisory agreements with Ashford Trust and Ashford Prime,Braemar, we provide, or obtain on their behalf, the personnel and services necessary for each of these entities to conduct its respective business, as they have no employees of their own. All of the officers of each of Ashford Trust and Ashford PrimeBraemar are our employees. We are not obligated to dedicate any of our employees exclusively to either Ashford Trust or Ashford Prime,Braemar, nor are we or our employees obligated to dedicate any specific portion of time to the business of either Ashford Trust or Ashford Prime,Braemar, except as necessary to perform the service required of us in our capacity as the advisor to such entities. The advisory agreements require us to manage the business affairs of each of Ashford Trust and Ashford PrimeBraemar in conformity with the policies and the guidelines that are approved and monitored by the boards of such entities. Additionally, we must refrain from taking any action that would (a) adversely affect the status of Ashford Trust or Ashford PrimeBraemar as a REIT, (b) subject us to regulation under the Investment Company Act of 1940 (the “Investment Company Act”), (c) knowingly and intentionally violate any law, rule or regulation of any governmental body or agency having jurisdiction over us, (d) violate any of the rules or regulations of any exchange on which our securities are listed, or (e) violate the charter, bylaws or resolutions of the board of directors of each of Ashford Trust and Ashford Prime,Braemar, all as in effect from time to time. So long as we are the advisor to Ashford Prime, Ashford Prime’sBraemar, Braemar’s governing documents permit us to designate two persons as candidates for election as director at any stockholder meeting of Ashford PrimeBraemar at which directors are to be elected. Such nominees may be our executive officers. If the size of Braemar’s board of directors is increased at any time to more than seven directors, our right to nominate shall be increased by such number of directors as shall be necessary to maintain the ratio of directors nominated by us to the directors otherwise nominated, as nearly as possible (rounding to the next larger whole number), equal to the ratio that would have existed if Braemar’s board of directors consisted of seven members.
Stirling. Pursuant to our advisory agreement with Stirling, we have contractual responsibilities to Stirling and will be responsible for sourcing, evaluating, and monitoring Stirling’s investment opportunities and making decisions related to the acquisition, management, financing and disposition of Stirling’s assets, in accordance with Stirling’s investment objectives, guidelines, policies and limitations, subject to oversight by Stirling’s board of directors. Stirling’s board of directors will at all times have oversight and policy-making authority, including responsibility for governance, financial controls, compliance and disclosure with respect to Stirling and Stirling OP.
Our Duties as Advisor.
Ashford Trust and Braemar. Subject to the supervision of the respective boards of directors of each of Ashford Trust and Ashford Prime,Braemar, we are responsible for, among other duties: (1) performing and administering the day-to-day operations of Ashford
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Trust and Ashford Prime,Braemar, including all of the subsidiaries and joint ventures of such entities,entities; (2) all services relating to the acquisition, disposition and financing of hotels,hotels; (3) performing asset management duties,duties; (4) engaging and supervising, on behalf of such companies, third partiesthird-parties to provide various services includedincluding but not limited to overseeing development management, propertyhotel management, project management, design and construction services and other professional services,services; and (5) performing corporate governance and other management functions, including financial, capital markets, treasury, financial reporting, internal audit, accounting, tax and risk management services, SEC and regulatory compliance, and retention of legal counsel, auditors and other professional advisors, as well as other duties and services outlined in the advisory agreements.
Any increase in the scope of duties or services to be provided by us must be jointly approved by us and either Ashford Trust or Ashford Prime,Braemar, as applicable, and is subject to additional compensation as outlined in the advisory agreements.
We are generally, the exclusive asset manager for each ofUnder our advisory agreements with Ashford Trust and Braemar, we have the right to provide all services offered by us. At any time that Ashford Prime.Trust or Braemar desires to engage a third-party for the performance of services or delivery of products, we have the exclusive right to provide such service or product at market rates.
We also have the power to delegate all or any part of our rights and powers to manage and control the business and affairs of such companies to such officers, employees, affiliates, agents and representatives of ours or such company as we may deem

appropriate. Any authority delegated by us to any other person is subject to the limitations on our rights and powers specifically set forth in the advisory agreement or the charter of such company.
We have agreed, from time to time, to make mutually agreed upon “key money investments” in the subsidiaries and affiliates of each of Ashford Trust and Ashford Prime to facilitate such companies, subsidiaries or affiliates’ acquisition of one or more properties, if the independent directors of Ashford Trust or Ashford Prime, as applicable, and Ashford Inc. determine that without such an investment, the acquisition of such property would be uneconomic to Ashford Trust or Ashford Prime. Any such assets are referred to as “key money assets.” Any key money investment will be in the form of, but not limited to, cash, notes, equity of Ashford Inc., the acquisition of furniture, fixture and equipment for use at the subject hotel, or as agreed to at the time a key money investment is made. Upon any such key money investment, Ashford Trust or Ashford Prime will engage Ashford LLC as the asset manager for the related key money asset and will pay the key money asset management fees, which are included in the base fees. Ashford Trust or Ashford Prime may also agree to additional incentive fees based on the performance of any key money asset. Ashford Trust or Ashford Prime will be obligated to pay us the “key money clawback amount,” which is equal to the difference between a per annum return of 5% on a key money asset together with the initial key money investment amount and the amount actually received by us (through key money asset management fees and key money incentive fees, if applicable) related to such key money asset, if the Advisory Agreement (or the applicable asset management agreement) is terminated by Ashford Trust or Ashford Prime for any reason or such companies dispose of such key money asset (calculated on an investment by investment basis).
We have agreed to require our employees and officers who provide services to the companies we advise to comply with the codes and the policies of such companies.
Consolidated Tangible Net Worth. The requirement that Ashford Trust maintain a minimum Consolidated Tangible Net Worth (as defined in the Third Amended and Restated Advisory Agreement) was suspended until the first fiscal quarter beginning after June 30, 2023.
Company Change of Control. The sale or disposition by Ashford Trust of assets which would constitute a Company Change of Control was revised in order to provide Ashford Trust additional flexibility to dispose of underperforming assets negatively impacted by the COVID-19 pandemic. Commencing after the first anniversary of the effective date of the Second Amended and Restated Advisory Agreement, a Company Change of Control will include, the consummation of a sale or disposition by Ashford Trust of assets constituting 20% of the gross book value of Ashford Trust’s assets over any one-year period, or the consummation of a sale or disposition by Ashford Trust of assets constituting 30% of the gross book value of Ashford Trust’s assets over any three-year period, exclusive in each case of assets sold or contributed to a platform also advised by the Company and certain other exceptions set forth in the Third Amended and Restated Advisory Agreement with Ashford Trust (the “Third Amended and Restated Advisory Agreement”).
Stirling. Pursuant to the terms of the advisory agreement with Stirling, we are responsible for, among other things: (i) serving as the advisor to Stirling and Stirling OP with respect to the establishment and periodic review of Stirling’s investment guidelines and Stirling and Stirling OP’s investments, financing activities and operations; (ii) sourcing, evaluating and monitoring Stirling and Stirling OP’s investment opportunities and executing the acquisition, management, financing and disposition of Stirling and Stirling OP’s assets, in accordance with Stirling’s investment objectives, guidelines, policies and limitations, subject to oversight by Stirling’s board of directors; (iii) with respect to prospective acquisitions, purchases, sales, exchanges or other dispositions of investments, conducting negotiations on Stirling and Stirling OP’s behalf with sellers, purchasers, and other counterparties and, if applicable, their respective agents, advisors and representatives, and determining the structure and terms of such transactions; (iv) providing Stirling with portfolio management and other related services; (v) serving as Stirling’s advisor with respect to decisions regarding any of its financings, hedging activities or borrowings; and (vi) engaging and supervising, on Stirling and Stirling OP’s behalf and at their expense, various service providers.
Relationship with Ashford Trust and Ashford Prime.Braemar. We advise both Ashford Trust and Ashford Prime.Braemar. We are also permitted to have other advisory clients, which may include other REITs operating in the real estate industry or having the same or substantially similar investment guidelines as Ashford Trust or Ashford Prime.Braemar. If either Ashford Trust or Ashford PrimeBraemar materially revises its initial investment guidelines without our express written consent, we are required only to use our best judgment to allocate investment opportunities to Ashford Prime,Braemar, Ashford Trust and other entities we advise, taking into account such factors as we deem relevant, in our discretion, subject to any of our then existing obligations to such other entities. Ashford PrimeBraemar has agreed not to revise its initial investment guidelines to be directly competitive with Ashford Trust. Ashford Trust agrees, pursuant to the terms of the Ashford Trust advisory agreement, that it will revise its investment guidelines as necessary to avoid direct competition with (i) any entity or platform that Ashford Trust may create or spin-off in the future and (ii) any other entity advised by us, provided that in the case of clause (ii), we and Ashford Trust mutually agree to the terms of such revision of Ashford Trust’s investment guidelines. The advisory agreements give each of Ashford Trust and Ashford PrimeBraemar the right to equitable treatment with respect to other clients of ours, but the advisory agreements do not give any entity the right to preferential treatment, except as follows:
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•Any new individual investment opportunities that satisfy Ashford Trust’s investment guidelines will be presented to its board of directors, which has up to 10 business days to accept any such opportunity prior to it being available to Ashford PrimeBraemar or another business advised by us.
•Any new individual investment opportunities that satisfy Ashford Prime’sBraemar’s investment guidelines will be presented to its board of directors, which has up to 10 business days to accept any such opportunity prior to it being available to Ashford Trust or another business advised by us.
To minimize conflicts between Ashford Trust and Ashford Prime,Braemar, the advisory agreements require each such entity to designate an investment focus by targeted RevPAR, segments, markets and other factors or financial metrics. After consultation with us, such entity may modify or supplement its investment guidelines from time to time by giving written notice to us; however, if either Ashford Trust or Ashford PrimeBraemar materially changes its investment guidelines without our express written consent, we are required only to use our best judgment to allocate investment opportunities to Ashford Trust, Ashford PrimeBraemar and other entities we may advise, taking into account such factors as we deem relevant, in our discretion, subject to any then existing obligations we have to such other entities.
When determining whether an asset satisfies the investment guidelines of either Ashford Trust or Ashford Prime,Braemar, we must make a good faith determination of projected RevPAR, taking into account historical RevPAR as well as such additional considerations as conversions or reposition of assets, capital plans, brand changes and other factors that may reasonably be forecasted to raise RevPAR after stabilization of such initiative.
If Ashford Trust or Ashford PrimeBraemar elect to spin-off, carve-out, split-off or otherwise consummate a transfer of a division or subset of assets for the purpose of forming a joint venture, a newly created private platform or a new publicly traded company to hold such division or subset of assets constituting a distinct asset type and/or investment guidelines, Ashford Trust and Ashford

PrimeBraemar have agreed that any such new entity will be advised by us pursuant to an advisory agreement containing substantially the same material terms set forth in our advisory agreement with Ashford Trust or Ashford Prime,Braemar, as applicable.
Limitations on Liability and Indemnification.
Ashford Trust and Braemar. The advisory agreements provide that we have no responsibility other than to render the services and take the actions described in the advisory agreements in good faith and with the exercise of due care and are not responsible for any action the board of directors of either Ashford Trust or Ashford PrimeBraemar takes in following or declining to follow any advice from us. The advisory agreements provide that we, and our officers, directors, managers, employees and members, will not be liable for any act or omission by us (or our officers, directors, managers, employees or members) performed in accordance with and pursuant to the advisory agreements, except by reason of acts constituting gross negligence, bad faith, willful misconduct or reckless disregard of our duties under the applicable advisory agreement.
Each of Ashford Trust and Ashford PrimeBraemar has agreed to indemnify and hold us harmless (including our partners, directors, officers, stockholders, managers, members, agents, employees and each other person or entity, if any, controlling us) to the full extent lawful, from and against any and all losses, claims, damages or liabilities of any nature whatsoever with respect to or arising from any acts or omission by us (including ordinary negligence) in our capacity as advisor, except with respect to losses, claims, damages or liabilities with respect to or arising out of our gross negligence, bad faith or willful misconduct, or reckless disregard of our duties set forth in the applicable advisory agreement (for which we have indemnified Ashford Trust or Ashford Prime,Braemar, as applicable).
Stirling. Stirling has agreed to indemnify and hold harmless the Company and its affiliates performing services for Stirling from specific claims and liabilities arising out of the performance of their obligations under the Advisory Agreement, subject to certain limitations.
Term and Termination of our Advisory Agreement with Ashford Trust. The term of ourthe advisory agreement with Ashford Trust is 10 years, commencing from the effective date of the amended advisory agreementSecond Amended and Restated Advisory Agreement on June 10, 2015. Our advisory agreement withJanuary 14, 2021, subject to an extension by the Company for up to seven successive additional 10-year renewal terms thereafter. The board of directors of Ashford Trust provides for automatic five-year renewal terms unless previously terminated as described below. Followingwill review our performance and fees annually and, following the 10-year initial term, ourmay elect to renegotiate the amount of fees payable under the advisory agreement in certain circumstances. Additionally, if Ashford Trust undergoes a change of control transaction, Ashford Trust will have the right to terminate the advisory agreement with Ashford Trust may be terminated by Ashford Trust, as applicable, with 180 days’ written notice prior to the expirationpayment of the then current term, on the affirmative vote of at least two-thirds of the independent directors of such entity, based upon a good faith finding that either (a) there has been unsatisfactory performance by us that is materially detrimental to such company and the subsidiaries of such company taken as a whole, or (b) the basetermination fee and/or incentive fee (each as defined in the advisory agreements) is not fair based on the then-current market for such fees (and we do not offer to negotiate a lower fee that at least a majority of the independent directors determine is fair).described below. If the reason for non-renewal specified by such company in the termination notice is (b) in the preceding sentence, then we may, at our option, provide a notice of proposal to renegotiate the base fee and incentive fee not less than 150 days prior to the pending termination date. Thereupon, each party has agreed to use its commercially reasonable efforts to negotiate in good faith to find a resolution on fees within 120 days following receipt by such company of the renegotiation proposal. If a resolution is achieved between us and at least a majority of the independent directors of such entity, within the 120-day period, then the applicable advisory agreement will continue in full force and effect with modification only to the agreed upon base fee and/or incentive fee, as applicable.
If no resolution on fees is reached within the 120-day period, or if Ashford Trust terminates the advisory agreement by reason of clause (a) above,without cause or terminates the advisory agreement upon a change inof control, of such companies, the related advisory agreement will terminate and Ashford Trust will be required to pay us all fees and expense reimbursements due and owing through the date of termination as well as a termination fee equal to 1.1 times the greater of either:
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•12 multiplied by our Net Earnings for the 12-month period preceding the termination date of ourthe advisory agreement. For purposes of this calculation, “Net Earnings” is defined in the advisory agreement as (A) our reported Adjusted EBITDA (as defined in the advisory agreement) attributable to the advisory agreement for the 12-month period preceding the termination of the advisory agreement (adjusted to assume the advisory agreement was in place for the full 12-month period if it otherwise was not), as reported in our earnings releases less (B) our pro forma Adjusted EBITDA (as defined in the advisory agreement) assuming ourthe advisory agreement was not in place during such period plus (C) all EBITDA (Net Income (per Generally Accepted Accounting Principles (“GAAP”)) plus interest expenses, income taxes, depreciation and amortization) of ours and any of our affiliates and subsidiaries from providing any service or product to the applicable company,Ashford Trust, its operating partnership or any of its affiliates or subsidiaries, exclusive of EBITDA directly resulting from the advisory agreement;
•the earnings multiple (calculated as our total enterprise value divided by our adjusted EBITDA) for our common stock per the 12-month period preceding the termination date multiplied by our Net Earnings (as defined in the advisory agreement)above) for the 12 months preceding the termination; or
•the simple average of our earnings multiples for the three fiscal years preceding the termination (calculated as our total enterprise value divided by our adjusted EBITDA for such periods) multiplied by our Net Earnings (as defined in the advisory agreement)above) for the 12 months preceding the termination;
plus, in either case, a gross-up amount for federal and state tax liability, based on an assumed combined tax rate of 40%.; provided, that, notwithstanding the foregoing, the minimum amount of any termination fee calculated as of any date of determination shall be the greater of (i) the fee that would have been payable hereunder had such termination fee been calculated as of December 31, 2023 and (ii) the fee calculated hereunder as of such date of determination. Any such termination fee will be payable on or before the termination date.

The Company has agreed that its right to receive fees payable under the advisory agreement, including the termination fee and liquidated damages, shall be subordinate under certain circumstances to the payment in full of obligations under Ashford Trust’s senior secured credit facility with Oaktree Capital Management, L.P. (“Oaktree”) and has agreed to enter into documents necessary to subordinate the Company’s interest in such fees. On January 15, 2021, the Company, together with certain affiliated entities, entered into a Subordination and Non-Disturbance Agreement (“SNDA”) pursuant to which the Company agreed to subordinate to the prior repayment in full of all obligations under Ashford Trust’s senior secured credit facility with Oaktree, among other things, (1) advisory fees (other than reimbursable expenses) in excess of 80% of such fees paid during the fiscal year ended December 31, 2019, and (2) any termination fee or liquidated damages amounts under the advisory agreement, or any amount owed under any enhanced return funding program in connection with the termination of the advisory agreement or sale or foreclosure of assets financed thereunder. On October 12, 2021, Ashford Trust entered into an amendment to the senior secured credit facility with Oaktree which, among other items, suspended Ashford Trust’s obligation to subordinate fees due under the advisory agreement if at any point there is no accrued interest outstanding or any accrued dividends on any of Ashford Trust’s preferred stock and Ashford Trust has sufficient unrestricted cash to repay in full all outstanding loans due under Ashford Trust’s senior secured credit facility.
Ashford Trust may also terminate the advisory agreement with 60 days’ notice upon a change of control of such entity, if the change of control transaction is conditioned upon the termination of the advisory agreement. In such a circumstance, Ashford Trust would be required to pay the accrued costs and termination fee described above.
Ashford Trust may also terminate the applicable advisory agreement at any time, including during the 10-year initial term, without the payment of a termination fee, upon customary events of default and our failure to cure during certain cure periods, such as our default in performance of material obligations, the filing of bankruptcy or a dissolution action and other events, as outlined in the advisory agreement.
Upon any termination of the advisory agreement, we are expectedrequired to cooperate with and assist Ashford Trust in executing an orderly transition of the management of its assets to a new advisor, providing a full accounting of all accounts held in the name of or on behalf of such company,Ashford Trust, returning any funds held on behalf of such companyAshford Trust (other than the termination fee escrow account, if applicable) and returning any and all of the books and records of such company.Ashford Trust.
Upon a Liquidated Damages Event (as defined in the Third Amended and Restated Advisory Agreement) Ashford Trust will be responsible for paying all accrued feesshall pay to the Company the Liquidated Damages Amount (as defined in the Third Amended and expenses and will be subjectRestated Advisory Agreement), which amount, less any outstanding amount owed by the Company to certain non-solicitation obligations with respect to our employees upon any termination of the applicable advisory agreement other than terminationAshford Trust as a result of a judgment, plus reimbursable costs and expenses, shall be deemed liquidated damages and the parties shall have no further obligations under the Third Amended and Restated Advisory Agreement.
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The advisory agreement also provides that if: (i) Ashford Trust enters into a letter of intent or definitive agreement that upon consummation would constitute a change of controlcontrol; (ii) the Ashford Trust board recommends that Ashford Trust’s stockholders accept a third-party tender offer that would, if consummated, result in a third-party beneficially owning 35% or more of our company.
FollowingAshford Trust’s voting stock; or (iii) a third-party otherwise becomes a beneficial owner of 35% or more of Ashford Trust voting stock, then we are entitled to transfer Ashford Trust cash to an escrow account in an amount sufficient to pay the 10-year initial term, we may terminatetermination fee and other amounts set forth in the advisory agreement prior to the expiration of each successive then-current term with 180 days’ prior written notice. Additionally, we may terminate the advisory agreement if Ashford Trust defaults in the performance or observance of any material term, condition or covenant under the applicable advisory agreement; provided, however, before terminating the advisory agreement, we must give Ashford Trust written notice of the default and provide Ashford Trust with an opportunity to cure the default within 45 days, or if such default is not reasonably susceptible to cure within 45 days, such additional cure period as is reasonably necessary to cure the default (not to exceed 90 days) so long as such entity is diligently and in good faith pursuing such cure. In the event of such a termination, we will be entitled to all accrued fees and expenses.agreement.
Base Fees under our Advisory Agreement with Ashford Trust. The total base fee per annumAshford Trust is basedrequired, on a declining sliding scale percentagemonthly basis, to pay a fee (the “Base Fee”) in an amount equal to 1/12 of (i) 0.70% of the total market capitalizationTotal Market Capitalization (as defined below) of Ashford Trust for the prior month, plus (ii) the Key MoneyNet Asset Management Fee (defined in ourAdjustment (as defined below), if any, on the last day of the prior month during which the advisory agreement as the aggregate gross asset value of all key money assets multiplied by 0.7%). This amount is then divided by four to calculate the quarterly base fee;was in effect; provided, however in no event shall the base feeBase Fee for any quartermonth be less than the Trust Minimum Base Fee (as defined by the advisory agreement)below).

The “total market capitalization”“Total Market Capitalization” of Ashford Trust for purposes of determining the base feeany period is calculated as:

(a)    to the extent Ashford Trust common stock is listed for trading on a quarterly basis as follows:national securities exchange for every day during any period for which the Total Market Capitalization is to be calculated, the amount calculated as:
(i)
(i)    the average of the volume-weighted average price per share of common stock for Ashford Trust for each trading day of the preceding quarter multiplied by the average number of shares of common stock and common units outstanding during such quarter, on a fully-diluted basis (assuming all common units and long term incentive partnership units in Ashford Trust OP that have achieved economic parity with common units in the applicable operating partnership have been redeemed and Ashford Trust has elected to issue common stock in satisfaction of the redemption price), plus
(ii)the quarterly average of the aggregate principal amount of the consolidated indebtedness of Ashford Trust (including its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate share of consolidated debt), plus
(iii)the quarterly average of the liquidation value of any outstanding preferred equity of such company, and
(iv)multiplying the sum of (i), (ii), and (iii) above by the Key Money Asset Factor (defined in our advisory agreement as 1 minus the quotient resulting from dividing the aggregate gross book value of all key money assets by the aggregate gross book value of such entity’s assets (including key money assets)).
The minimum base fee for Ashford Trust for each quartertrading day of the period (“Average VWAP”) multiplied by the average number of shares of common stock and common units outstanding during such applicable period, on a fully diluted basis (assuming all common units and long term incentive partnership units in Ashford Trust OP that have achieved economic parity with common units in the applicable operating partnership have been converted into shares of common stock and including any shares of common stock issuable upon conversion of any convertible preferred stock where the conversion price is less than Average VWAP), plus
(ii)    the average for the applicable period of the aggregate principal amount of the consolidated indebtedness of Ashford Trust (including its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate share of consolidated debt), plus
(iii)    the average for the applicable period of the liquidation value of any outstanding preferred equity of Ashford Trust (excluding any convertible preferred stock where the conversion price is less than Average VWAP).
(b)    to the extent Ashford Trust common stock is not listed for trading on a national securities exchange (due to any reason, including but not limited to delisting by the New York Stock Exchange or the occurrence of a change of control) for any day during any period for which the Total Market Capitalization is to be calculated, the greater of: (i) the weighted average Gross Asset Value of all the Ashford Trust’s assets on each day during such period; or (ii) the Total Market Capitalization as calculated pursuant to paragraph (a) of this definition on the last day on which common stock was listed for trading on a national securities exchange, regardless of whether this day occurred during the applicable period.
“Gross Asset Value” shall mean, with respect to any of Ashford Trust’s assets as of any date, the undepreciated carrying value of all such assets including all cash and cash equivalents and capitalized leases and any property and equipment leased to subsidiaries of Ashford Trust to facilitate the purchase of any Ashford Trust Enhanced Return Hotel Asset (as defined below) as reflected on the most recent balance sheet and accompanying footnotes of Ashford Trust filed with the SEC or prepared by the Company in accordance with GAAP consistent with its performance of its duties under the advisory agreement without giving effect to any impairmentsplus the publicly disclosed purchase price (excluding any net working capital and transferred property and equipment reserves) of any assets acquired after the date of the most recent balance sheet and all capital expenditures made (to the extent not already reflected in the carrying value of the asset) with respect to an asset since the date of its acquisition for any improvements or for additions thereto, that have a useful life of more than one year and that are required to be capitalized under GAAP.
“Net Asset Fee Adjustment” shall be equal to (i) the product of the Sold Non-ERFP Asset Amount (as more particularly defined in the advisory agreement, but generally equal to the net sales prices of real property (other than any asset the purchase of which was funded in part by the Ashford Trust ERFP Agreement (“Ashford Trust Enhanced Return Hotel Assets”)) sold or disposed of after the date of the Ashford Trust ERFP Agreement, commencing with and including the first such sale) and 0.70% plus (ii) the product of the Sold ERFP Asset Amount (as more particularly defined in the advisory agreement, but generally equal to the net sales prices of Ashford Trust Enhanced Return Hotel Assets sold or disposed of after the date of the Ashford Trust ERFP Agreement, commencing with and including the first such sale) and 1.07%.
The “Trust Minimum Base Fee” for each month beginning January 1, 2016 is2021 or thereafter will be equal to the greater of:
(i)90% of the base fee paid for the same quarter in the prior year; and
(ii)the “G&A ratio” multiplied by the total market capitalization of Ashford Trust.
(i)    90% of the base fee paid for the same month in the prior year; and
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(ii)    1/12th of the “G&A ratio” for the most recently completed fiscal quarter multiplied by the Total Market Capitalization of Ashford Trust on the last balance sheet date included in Ashford Trust’s most recent Form 10-Q or Form 10-K filing.
The “G&A ratio” is calculated as the simple average of the ratios of total general and administrative expenses, including any dead deal costs, less any non-cash expenses, paid in the applicable quarter by each member of a select peer group, divided by the total market capitalization of such peer group member. The peer group for each companyAshford Trust may be adjusted from time-to-time by mutual agreement between us and a majority of the independent directors of Ashford Trust, negotiating in good faith. The base fee is payable quarterly in arrears in cash.Trust.
Term and Termination of our Advisory Agreement with Ashford Prime. Braemar. The initial stated term of ourthe advisory agreement with Ashford PrimeBraemar is 10 years commencing from the effective date of the amended advisory agreement June 21, 2017. Ourand will expire, unless otherwise extended or earlier terminated, on January 24, 2027. The advisory agreement with Ashford PrimeBraemar provides for seven successive additional ten-year10-year renewal terms upon written notice to Ashford Prime,Braemar, given

at least 210 days prior to the expiration of the then currentthen-current term. The advisory agreement may be terminated by the Ashford Prime,Braemar, with no termination fee due and payable, under the following circumstances: (i) upon our conviction (including a plea or nolo contendere) by a court of competent jurisdiction of a felony; (ii) if we commit an act of fraud against Ashford Prime,Braemar, convert the funds of Ashford PrimeBraemar or act in a manner constituting gross negligence in the performance of our material duties under the advisory agreement (including a failure to act); (iii) if we undergo a Bankruptcy Event (as defined byin the advisory agreement); or (iv) upon the entry by a court of a final non-appealable order awarding monetary damages to Ashford PrimeBraemar based on a finding that we committed a material breach or default of a material term, condition, obligation or covenant of the advisory agreement, which breach or default had a material adverse effect.
If Ashford Prime terminatesUpon the closing of a change of control with respect to Braemar (as defined in the advisory agreement), either party may terminate the advisory agreement, upon a change in control, the related advisory agreement will terminate and Ashford PrimeBraemar will be required to pay us all fees and expense reimbursements due and owing through the date of termination as well as a termination fee equal to the greater of:
•(i)    12 multiplied by (a)(ii) the sum of (A) our Net Earnings (as defined below) for the 12-month period ending on the last day of the fiscal quarter preceding the termination date of ourthe advisory agreement (“LTM Period”) and (b)(B) to the extent not included in Net Earnings, any incentive fees under the advisory agreement that have accrued or are accelerated buybut have not yet been paid at the time of termination of the advisory agreement;
•(a)(ii)     the quotient of (i)(A) our total market capitalization (as defined in the advisory agreement) on the trading day immediately preceding the date of payment of the termination fee, divided by (ii)(B) our Adjusted EBITDA for the 12-monthLTM Period (which for purposes of this paragraph shall include the EBITDA (adjusted on a comparable basis to our Adjusted EBITDA)) for the same LTM Period of any person that we acquired a beneficial ownership interest in during the applicable measurement period, precedingin the termination datesame proportion as our beneficial ownership of our advisory agreementthe acquired person, multiplied by (ii) Net Earnings for the LTM Period plus, to the extent not included in Net Earnings, any incentive fees under the advisory agreement that have accrued or are accelerated buybut have not yet been paid at the time of termination of the advisory agreement; and
•(iii)     the simple average, for the three years preceding the fiscal year in which the termination fee is due, of (a)(i) the quotient of (i)(A) our total market capitalization on the trading day immediately preceding the date of payment of the termination fee, divided by (ii)(B) our Adjusted EBITDA for the 12-month period precedingLTM Period multiplied by (ii) Net Earnings for the termination date of our advisory agreementLTM Period plus, to the extent not included in Net Earnings, any incentive fees under the advisory agreement that have accrued or are accelerated buybut have not yet been paid at the time of termination of the advisory agreementagreement.
For purposes of this calculation, “Net Earnings” is generally defined in the advisory agreement as (A) the total base fees and incentive fees, plus any other revenues reported on our income statement as pertaining to the advisory agreement (in each case, in accordance with GAAP) including all of EBITDA of us and our affiliates and certain of our subsidiaries from providing any additional services to Ashford PrimeBraemar and its affiliates, less (B) the total incremental expenses determined in accordance with the advisory agreement, in each case for the 12-month period precedingLTM Period (adjusted assuming (i) the termination dateagreement was in place for the full LTM Period if it otherwise was not and (ii) all contracts providing for fees owing to us by Braemar were in place for the full LTM Period if they otherwise were not and all fees payable under such contracts shall be annualized as such). In the event we acquire a beneficial ownership interest in a person that reported on its income statement revenues derived from Braemar, then the revenues received by such acquired person from Braemar for the full LTM Period shall be included within clause (A) of the definition of Net Earnings in the same proportion as our advisory agreement.beneficial ownership of the acquired person.
Any such termination fee will be payable on or before the termination date.
Upon any termination of the advisory agreement, we are expectedrequired to cooperate with and assist Ashford PrimeBraemar in executing an orderly transition of the management of its assets to a new advisor, providing a full accounting of all accounts held in the name of or on behalf of such company, returning any funds held on behalf of such company and returning any and all of the books and records of such company. Ashford PrimeBraemar will be responsible for paying all accrued fees and expenses and will be subject to
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certain non-solicitation obligations with respect to our employees upon any termination of the applicable advisory agreement other than termination as a result of change of control of our company.
The advisory agreement also provides that if: (a) Braemar enters a letter of intent or definitive agreement that upon consummation would constitute a change of control; (b) the Braemar board recommends that Braemar’s stockholders accept a third-party tender offer that would, if consummated, result in a third-party beneficially owning 35% or more of Braemar’s voting stock; or (c) a third-party otherwise becomes a beneficial owner of 35% or more of Braemar voting stock, then we are entitled to transfer Braemar cash to an escrow account in an amount sufficient to pay the termination fee and other amounts set forth in the advisory agreement.
Base Fees under our Advisory Agreement with Ashford Prime. The total baseBraemar. Braemar is required to pay, on a monthly basis, a fee per annum is(the “Base Fee”) in an amount equal to 0.70%1/12th of the sum of (i) 0.70% of the Total Market Capitalization (as defined by the advisory agreement)below) of Braemar for the prior month, andplus (ii) the Key Money GrossNet Asset ValueFee Adjustment (as defined by the advisory agreement)below), if any, on the last day of the prior month. This amount is then divided by 12 to calculatemonth during which the monthly base fee;advisory agreement was in effect; provided, however, in no event shall the base feeBase Fee for any month be less than the Braemar Minimum Base Fee (as defined by the advisory agreement)below).
The “total market capitalization”“Total Market Capitalization” of Braemar for purposes of determining the base feeany period is calculated on a monthly basis as follows:
(i)the average of the volume-weighted average price per share of common stock for Ashford Prime for each trading day of the preceding month multiplied by the average number of shares of common stock and common units outstanding during such month, on a fully-diluted basis (assuming all common units and long term incentive partnership units in the applicable operating partnership which have achieved economic parity with common units in the applicable operating partnership have been redeemed and Ashford Prime has elected to issue common stock in satisfaction of the redemption price and assuming any shares of common stock issuable upon conversion of any convertible preferred stock of Ashford Prime have converted where the conversion price is less than such volume-weighted average price), plus
(ii)the monthly average of the aggregate principal amount of the consolidated indebtedness of Ashford Prime (including its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate share of consolidated debt), plus

(a)    to the extent Braemar common stock is listed for trading on a national securities exchange for every day during any period for which the Total Market Capitalization is to be calculated, the amount calculated as:
(iii)the quarterly average of the liquidation value of any outstanding preferred equity of such company (excluding any shares of common stock issuable upon conversion of any convertible preferred stock of Ashford Prime where the conversion price is less than the volume-weighted average price per share of common stock for Ashford Prime for each trading day of the preceding month), and
(iv)multiplying the sum of (i), (ii), and (iii) above by the Key Money Asset Factor (defined in our advisory agreement as 1 minus the quotient resulting from dividing the aggregate gross book value of all key money assets by the aggregate gross book value of such entity’s assets (including key money assets)).
(i)    the average of the volume-weighted average price per share of common stock for Braemar for each trading day of the period (“Average VWAP”) multiplied by the average number of shares of common stock and common units outstanding during such applicable period, on a fully diluted basis (assuming all common units and long term incentive partnership units in the applicable operating partnership which have achieved economic parity with common units in the applicable operating partnership have been converted into shares of common stock and including any shares of common stock issuable upon conversion of any convertible preferred stock where the conversion price is less than the Average VWAP), plus
(ii)    the average for the applicable period of the aggregate principal amount of the consolidated indebtedness of Braemar (including its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate share of consolidated debt), plus
(iii)    the average for the applicable period of the liquidation value of any outstanding preferred equity of Braemar (excluding any shares of common stock issuable upon conversion of any convertible preferred stock of Braemar where the conversion price is less than the Average VWAP).
(b)     to the extent Braemar common stock is not listed for trading on a national securities exchange (due to any reason, including but not limited to delisting by the New York Stock Exchange or the occurrence of a change of control) for any day during any period for which the Total Market Capitalization is to be calculated, the greater of: (i) the weighted average Gross Asset Value of all Braemar’s assets on each day during such period; or (ii) the Total Market Capitalization as calculated pursuant to paragraph (a) of this definition on the last day on which common stock was listed for trading on a national securities exchange, regardless of whether this day occurred during the applicable period.
“Gross Asset Value” shall mean, with respect to any of Braemar’s assets as of any date, the undepreciated carrying value of all such assets including all cash and cash equivalents and capitalized leases and any property and equipment leased to subsidiaries of Braemar to facilitate the purchase of any Enhanced Return Hotel Asset as reflected on the most recent balance sheet and accompanying footnotes of Braemar filed with the SEC or prepared by the Advisor in accordance with GAAP consistent with its performance of its duties under the advisory agreement without giving effect to any impairmentsplus the publicly disclosed purchase price (excluding any net working capital and transferred property and equipment reserves) of any assets acquired after the date of the most recent balance sheet and all capital expenditures made (to the extent not already reflected in the carrying value of the asset) with respect to an asset since the date of its acquisition for any improvements or for additions thereto, that have a useful life of more than one year and that are required to be capitalized under GAAP.
“Net Asset Fee Adjustment” shall be equal to (i) the product of the Sold Non-ERFP Asset Amount (as more particularly defined in the advisory agreement, but generally equal to the net sales prices of real property (other than any Enhanced Return Hotel Assets) sold or disposed of after the date of the ERFP Agreement, commencing with and including the first such sale) and 0.70% plus (ii) the product of the Sold ERFP Asset Amount (as more particularly defined in the advisory agreement, but generally equal to the net sales prices of Enhanced Return Hotel Assets sold or disposed of after the date of the ERFP Agreement, commencing with and including the first such sale) and 1.07%.
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The minimum base fee for Ashford Prime“Braemar Minimum Base Fee” for each month will be equal to the greater of:
(i)90% of the base fee paid for the same month in the prior year; and
(ii)the “G&A ratio” multiplied by the total market capitalization of Ashford Prime.
(i)    90% of the base fee paid for the same month in the prior year; or
(ii)    1/12th of the “G&A ratio” for the most recently completed fiscal quarter multiplied by the total market capitalization of Braemar on the last balance sheet date included in Braemar’s most recent Form 10-Q or Form 10-K filing.
The “G&A ratio” is calculated as the simple average of the ratios of total general and administrative expenses, including any dead deal costs, less any non-cash expenses, paid in the applicable monthfiscal quarter by each member of a select peer group, divided by the total market capitalization of such peer group member. The peer group for each company may be adjusted from time-to-timetime to time by mutual agreement between us and a majority of the independent directors of such company, negotiating in good faith.Braemar. Each month’s base fee is determined based on prior month results and is payable in cash on the fifth business day of the month for which the fee is applies.applied.
Term and Termination of our Advisory Agreement with Stirling. The stated term of the advisory agreement with Stirling is one year from the effective date of December 6, 2023 subject to an unlimited number of successive, automatic one-year renewals unless terminated by the Company or Stirling’s board of directors. Stirling’s related party transactions committee, composed of all of Stirling’s independent directors, will evaluate the performance of the Company and the terms of the advisory agreement annually in connection with the automatic renewal of the advisory agreement. The advisory agreement may be terminated (i) immediately by Stirling upon a material breach of advisory agreement by the Company; (ii) immediately by Stirling for fraud or, criminal conduct, in the event of any gross negligence, bad faith, willful misconduct or reckless disregard on the part of the Company in the performance of its duties under the advisory agreement, or upon the bankruptcy of the Company; (iii) upon 60 days’ written notice without cause or penalty by a majority vote of Stirling’s independent members of the board of directors; or (iv) upon 60 days’ written notice by the Company.
The advisory agreement shall be binding on successors to Stirling resulting from a change in control or sale of all or substantially all the Stirling’s assets, and shall likewise be binding on any successor to the Company.
Upon termination, the Company shall be entitled to receive from Stirling within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Company prior to termination of the advisory agreement. The Company shall be required to cooperate with and assist Stirling in executing an orderly transition of the management of its assets to a new advisor, providing a full accounting of all accounts held in the name of or on behalf of such company, returning any funds held on behalf of such company and returning any and all of the books and records of such company.
Base Fees under our Advisory Agreement with Stirling. Stirling is required to pay to the Company, on a monthly basis, a fee (the “Base Fee”) in an amount equal to 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 (“Class E Common Shares”) and Stirling OP’s Class E Units (“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. Class E Common Shares and Class E Units obtained by the Company will not be subject to the repurchase limits of Stirling’s share repurchase plan or any reduction or penalty for an early repurchase.
In the event the advisory agreement is terminated or its term expires without renewal, the Company will be entitled to receive its prorated Base Fee through the date of termination. Such pro ration shall take into account the number of days of any partial calendar month or calendar year for which advisory agreement was in effect.
Incentive Fee under the Advisory Agreements with Ashford Trust and Ashford PrimeBraemar. Incentive advisory fees are measured annually in each year that Ashford Trust’s and/or Ashford Prime’sBraemar’s annual total stockholder return (“TSR”) exceeds the average annual total stockholder return for each company’s respective peer group, subject to the FCCR Condition, as defined in the advisory agreements. Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition. For purposes of this calculation, theAshford Trust’s TSR of such entity is calculated using a year-end stock price equal to the closing price of its common stock on the last trading day of the year as compared to the closing stock price of its common stock on the last trading day of the prior year, in each case assuming all dividends on the common stock during such period are reinvested into additional shares of common stock of Ashford Trust on the day such entity.dividends are paid. Braemar’s TSR is calculated as the sum, expressed as a percentage, of: (A) the change in the Braemar common stock price during the applicable period; plus (B) the dividend yield paid during the applicable period (determined by dividing dividends paid during the applicable period by
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Braemar’s common stock price at the beginning of the applicable period and including the value of any dividends or distributions with respect to Braemar common stock not paid in cash valued in the reasonable discretion of Ashford LLC). The average TSR for each member of such company’s peer group is calculated in the same manner and for the same time period, and the simple average for the entire peer group is used.
The annual incentive fee is calculated as (i) 5% of the amount (expressed as a percentage but in no event greater than 25%) by which the annual TSR of Ashford Trust or Ashford Prime,Braemar, as applicable, exceeds the average TSR for its respective peer group, multiplied by (ii) the fully diluted equity value of such company at December 31 of the applicable year. To determine the fully diluted equity value, we assume that all units in the operating partnership of Ashford Trust or Ashford Prime,Braemar, as applicable, including Long-Term Incentive Plan (“LTIP”) units that have achieved economic parity with the common units, if any, are redeemed and the applicable company has elected to issueconverted into common stock of such company in satisfaction of the redemption price and that the per share value of each share of common stock of such company is equal to the closing price of its stock on the last trading day of the year. The incentive fee, if any, that is subject to the FCCR Condition, (defined below), is payable in arrears in three equal annual installments with the first installment payable on January 15 following the applicable year for which the incentive fee relates and on January 15 of the next two successive years. Notwithstanding the foregoing, upon any termination of the advisory agreement for any reason, any unpaid incentive fee (including any incentive fee installmentas measured for the stub period ending on the termination date) will become fully earned and immediately due and payable without regard to the FCCR Condition defined below.Condition. Except in the case when the incentive fee is payable on the date of termination of this Agreement, up to 50% of the incentive fee may be paid by each Ashford Trust or Ashford Prime,Braemar, at the option of such entity, in shares of its common stock or common units of the applicable operating partnership of such entity, with the balance payable in cash, unless at the time for payment of the incentive fee:
(i)we or our affiliates own common stock or common units in an amount (determined with reference to the closing price of the common stock of each Ashford Trust or Ashford Prime, as applicable, on the last trading day of the year ) greater than or equal to three times the base fee for the preceding four quarters,
(ii)payment in such securities would cause us to be subject to the provisions of the Investment Company Act, or
(iii)payment in such securities would not be legally permissible for any reason; in which case, the entire Incentive Fee will be paid by Ashford Trust or Ashford Prime in cash.
(i)    we or our affiliates own common stock or common units in an amount (determined with reference to the closing price of the common stock of each Ashford Trust or Braemar, as applicable, on the last trading day of the year) greater than or equal to three times the base fee for the preceding four quarters,
(ii)    payment in such securities would cause us to be subject to the provisions of the Investment Company Act, or
(iii)    payment in such securities would not be legally permissible for any reason; in which case, the entire Incentive Fee will be paid by Ashford Trust or Braemar in cash.
Upon the determination of the incentive fee, except in the case of any termination of the advisory agreement in which case the incentive fee for the stub period and all unpaid installments of an incentive fee shall be deemed earned by us and fully due and payable by Ashford Trust and Ashford Prime,Braemar, as applicable, each one-third installment of the incentive fee shall not be deemed

earned by us or otherwise payable by Ashford Trust or Ashford Prime,Braemar, as applicable, unless such entity, as of the December 31 immediately preceding the due date for the payment of the incentive fee installment, has met the FCCR Condition requiring an FCCR of 0.20x or greater (the “FCCR Condition”).greater. For purposes of this calculation, “FCCR” means such entity’s fixed charge coverage ratio, whichFCCR is the ratio of adjusted EBITDA for the previous four consecutive fiscal quarters to fixed charges, which includes all (i) such entity and its subsidiaries’ interest expense, (ii) such entity and its subsidiaries’ regularly scheduled principal payments, other than balloon or similar principal payments which repay indebtedness in full and payments under cash flow mortgages applied to principal and (iii) preferred dividends paid by such entity.
Performance Participation under the Advisory Agreement with Stirling.So long as the advisory agreement with Stirling has not been terminated, Stirling REIT Special Limited Partner LLC, a Delaware limited partnership and affiliate of the Company, will hold 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 units, subject to certain terms described in Stirling’s Private Placement Memorandum. Such allocation will be measured on a calendar year basis, made quarterly and accrued monthly. The Company may allocate up to 50% of the performance participation interest to its employees.
Equity Compensation.To incentivize our employees, officers, consultants, non-employee directors, affiliates and representatives to achieve the goals and business objectives of each of Ashford Trust and Ashford Prime,Braemar, as established by the boards of directors of such entities, in addition to the base fee and the incentive fee described above, the boards of directors of each of Ashford Trust and Ashford PrimeBraemar have the authority to make annual equity awards to us orand, during the first and second fiscal quarters of calendar years 2022, 2023 and 2024, cash incentive compensation directly to our employees, officers, consultants and non-employee directors, based on achievement of certain financial and other hurdlesobjectives established by such board of directors.
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Expense Reimbursement. We are responsible for all wages, salaries, cash bonus payments and benefits related to our employees providing services to Ashford Trust or Ashford PrimeBraemar (including any of the officers of Ashford Trust or Ashford PrimeBraemar who are also officers or employees of our company), with the exception of any equity compensation and, during the first and second fiscal quarters of calendar years 2022, 2023 and 2024, cash incentive compensation that may be awarded by Ashford Trust or Ashford PrimeBraemar to our employees who provide services to Ashford Trust and Ashford Prime,employees. We are also responsible for the provision of certain internal audit, asset management and risk management services and the international office expenses described below. Ashford Trust and Ashford PrimeBraemar are each responsible to pay or reimburse us monthly for all other costs we incur on behalf of such entities or in connection with the performance of our services and duties to such companies, including, without limitation, tax, legal, accounting, advisory, investment banking and other third-party professional fees, director fees, insurance (including errors and omissions insurance and any other insurance required pursuant to the terms of the advisory agreements), debt service, taxes, underwriting, brokerage, reporting, registration, listing fees and charges, travel and entertainment expenses, conference sponsorships, transaction diligence and closing costs, dead deal costs, dividends, office space, the cost of all equity awards or compensation plans established by such companies, including the value of awards made by companies to our employees, and any other costs which are reasonably necessary for the performance by us of our duties and functions, including any expenses incurred by us to comply with new or revised laws or governmental rules or regulations that impose additional duties on Ashford Trust or Ashford PrimeBraemar or us in our capacity as advisor to such entities. In addition, each of Ashford Trust and Ashford PrimeBraemar pays a pro rata share of our office overhead and administrative expenses incurred in the performance of our duties and functions under the advisory agreements. There is no specific limitation on the amount of such reimbursements.
In addition to the expenses described above, each of Ashford Trust and Ashford PrimeBraemar are required to reimburse us monthly for its pro rata share (as reasonably agreed to between us and a majority of the independent directors of such company or its audit committee, chairman of its audit committee or lead director) of all reasonable international office expenses, overhead, personnel costs, travel and other costs directly related to our non-executive personnel who are located internationally or that oversee the operations of international assets or related to our personnel that source, investigate or provide diligence services in connection with possible acquisitions or investments internationally. Such expenses include but are not limited to, salary, wagewages, payroll taxes and the cost of employee benefit plans. We also pay or reimburse Ashford Trust for the costs associated with Ashford Trust’s current chairman emeritus, which includes a $700,000 annual stipend and the cost of all benefits currently available to him, as well as reimbursement for reasonable expenses incurred by him in connection with his service to Ashford Trust.
With respect to Stirling, the Company will 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 the 60 months following such date.
Additional Services. If, and to the extent that, either Ashford Trust or Ashford PrimeBraemar requests us to render services on behalf of such company other than those required to be rendered by us under the advisory agreement, including, but not limited to, certain services provided by Ashford Services, such additional services will be compensated separately, at market rates, as defined in the advisory agreements.
The Ashford Trademark. We have a proprietary interest in the “Ashford” trademark, and we agreed to license its use to each of Ashford Trust and Ashford Prime.Braemar. If at any time Ashford Trust or Ashford PrimeBraemar ceases to retain us to perform advisory services for them, within 60 days following receipt of written request from us, such entity must cease to conduct business under or use the “Ashford” name or logo, as well as change its name and the names of any of its subsidiaries to a name that does not contain the name “Ashford.”
Our Hotel Management Agreements, Project Management Agreements and Mutual Exclusivity Agreements with each of Ashford Trust and Braemar
Ashford Trust Hotel Management Agreement
General. Remington has a master hotel management agreement with Ashford Trust (the “Ashford Trust Master Hotel Management Agreement.”) Pursuant to the Ashford Trust Master Hotel Management Agreement, Remington manages 61 of Ashford Trust’s 90 hotel properties as of December 31, 2023. The Ashford Trust Master Hotel Management Agreement will also govern the management of hotels Ashford Trust acquires in the future that are managed by Remington, which has the right to manage and operate hotel properties Ashford Trust acquires in the future unless Ashford Trust’s independent directors either (i) unanimously elect not to engage Remington, or (ii) by a majority vote, elect not to engage Remington because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in Ashford Trust’s best interest not to engage Remington for the particular hotel, or (B) based on the prior performance of Remington, another manager could perform the management duties materially better than Remington for the particular hotel. See “Our Hotel Management Agreements, Project Management Agreements and Mutual Exclusivity Agreements with each of Ashford Trust and Braemar—Ashford Trust Hotel Management Mutual Exclusivity Agreement-—Exclusivity Rights of Remington.”
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Term. The Ashford Trust Master Hotel Management Agreement provides for an initial term of 10 years as to each hotel governed by the agreement. The term may be renewed by Remington, at its option, subject to certain performance tests, 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 Ashford Trust Master Hotel Management Agreement. If at the time of the exercise of any renewal period, Remington is in default, then the exercise of the renewal option will be conditional on timely cure of such default, and if such default is not timely cured, then Ashford Trust’s TRS lessee may terminate the Ashford Trust Master Hotel Management Agreement regardless of the exercise of such option and without the payment of any fee or liquidated damages. If Remington desires to exercise any option to renew, it must give Ashford Trust’s taxable REIT subsidiary (“TRS”) lessee written notice of its election to renew the Ashford Trust Master Hotel Management Agreement no less than 90 days before the expiration of the then-current term of the Ashford Trust Master Hotel Management Agreement.
Amounts Payable under the Ashford Trust Master Hotel Management Agreement. Remington receives a base management fee, and if the hotels meet and exceed certain thresholds, an additional incentive fee. The base management fee for each hotel will be due monthly and will be equal to the greater of:
•$17,000 (increased annually based on consumer price index adjustments); or
•3% of the gross revenues associated with that hotel for the related month.
The incentive management fee, if any, for each hotel will be due annually in arrears within 90 days of the end of the fiscal year and will be equal to the lesser of (i) 1% of gross revenues and (ii) the amount by which the actual house profit (gross operating profit of the applicable hotel before deducting management fees or franchise fees) exceeds the target house profit as set forth in the annual operating budget approved for the applicable fiscal year. If, however, based on actual operations and revised forecasts from time to time, it is reasonably anticipated that the incentive fee is reasonably expected to be earned, the TRS lessee shall pay the incentive fee pro rata on a monthly basis.
Termination. The Ashford Trust Master Hotel Management Agreement may be terminated as to one or more of the hotels earlier than the stated term if certain events occur, including:
•a sale of a hotel;
•the failure of Remington to satisfy certain performance standards;
•for the convenience of Ashford Trust’s TRS lessee;
•in the event of a casualty to, condemnation of, or force majeure involving a hotel; or
•upon a default by Remington or Ashford Trust that is not cured prior to the expiration of any applicable cure periods.
In certain cases of early termination of the Ashford Trust Master Hotel Management Agreement with respect to one or more of the hotels, Ashford Trust must pay Remington termination fees, plus any amounts otherwise due to Remington pursuant to the terms of the Ashford Trust Master Hotel Management Agreement. Ashford Trust will be obligated to pay termination fees in the circumstances described below, provided that Remington is not then in default, subject to certain cure and grace periods:
Sale. If any hotel subject to the Ashford Trust Master Hotel Management Agreement is sold during the first 12 months of the date such hotel becomes subject to the Ashford Trust Master Hotel Management Agreement, Ashford Trust’s TRS lessee may terminate the Ashford Trust Master Hotel Management Agreement with respect to such sold hotel, provided that it pays to Remington an amount equal to the management fee (both base fees and incentive fees) estimated to be payable to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget for the balance of the first year of the term. If any hotel subject to the Ashford Trust Master Hotel Management Agreement is sold at any time after the first year of the term and the TRS lessee terminates the master management agreement with respect to such hotel, Ashford Trust’s TRS lessee will have no obligation to pay any termination fees.
Casualty. If any hotel subject to the Ashford Trust Master Hotel Management Agreement is the subject of a casualty during the first year of the initial 10-year term and the TRS lessee elects not to rebuild, then Ashford Trust must pay to Remington the termination fee, if any, that would be owed if the hotel had been sold. However, after the first year of the initial 10-year term, if a hotel is the subject of a casualty and the TRS lessee elects not to rebuild the hotel even though sufficient casualty insurance proceeds are available to do so, then the TRS lessee must pay to Remington a termination fee equal to the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine.
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Condemnation or Force Majeure. In the event of a condemnation of, or the occurrence of any force majeure event with respect to, any of the hotels, the TRS lessee has no obligation to pay any termination fees if the Ashford Trust Master Hotel Management Agreement terminates as to those hotels.
Failure to Satisfy Performance Test. If any hotel subject to the Ashford Trust Master Hotel Management Agreement fails to satisfy a certain performance test, the TRS lessee may terminate the Ashford Trust Master Hotel Management Agreement after the base 10 year term of the Ashford Trust hotel management agreement applicable to and with respect to such hotel, and in such case, the TRS lessee must pay to Remington an amount equal to 60% of the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine. Remington will have failed the performance test with respect to a particular hotel if during any fiscal year during the term (i) such hotel’s gross operating profit margin for such fiscal year is less than 75% of the average gross operating profit margins of comparable hotels in similar markets and geographical locations, as reasonably determined by Remington and the TRS lessee, and (ii) such hotel’s RevPAR yield penetration is less than 80%. Upon a performance test failure, the TRS lessee must give Remington two years to cure. If, after the first year, the performance test failure has not been cured, then the TRS lessee may, in order not to waive any such failure, require Remington to engage a consultant with significant hotel lodging experience reasonably acceptable to both Remington and the TRS lessee, to make a determination as to whether or not another management company could manage the hotel in a materially more efficient manner. If the consultant’s determination is in the affirmative, then Remington must engage such consultant to assist with the cure of such performance failure for the second year of the cure period after that failure. If the consultant’s determination is in the negative, then Remington will be deemed not to be in default under the performance test. The cost of such consultant will be shared by the TRS lessee and Remington equally. If Remington fails the performance test for the second year of the cure period and, after that failure, the consultant again makes a finding that another management company could manage the hotel in a materially more efficient manner than Remington, then the TRS lessee has the right to terminate the Ashford Trust hotel management agreement after the base 10 year term of the Ashford Trust hotel management agreement applicable to and with respect to such hotel upon 45 days’ written notice to Remington and to pay to Remington the termination fee described above. Further, if any hotel subject to the Ashford Trust hotel management agreement is within a cure period due to a failure of the performance test, an exercise of a renewal option shall be conditioned upon timely cure of the performance test failure, and if the performance failure is not timely cured, the TRS lessee may elect to terminate the Ashford Trust Hotel Management Agreement after the base 10 year term of the Ashford Trust Hotel Management Agreement applicable to and with respect to such hotel without paying any termination fee.
For Convenience. With respect to any hotel managed by Remington pursuant to the Ashford Trust Master Hotel Management Agreement, if the TRS lessee elects for convenience to terminate the management of such hotel, at any time, including during any renewal term, the TRS lessee must pay a termination fee to Remington, equal to the product of (i) 65% of the aggregate management fees for such hotel (both base fees and incentive fees) estimated to be payable to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) and (ii) nine.
If the Ashford Trust Master Hotel Management Agreement terminates as to all of the hotels covered in connection with a default under the Ashford Trust Master Hotel Management Agreement, the Ashford Trust hotel management MEA (as defined below) can also be terminated at the non-defaulting party’s election. See “Our Hotel Management Agreements, Project Management Agreements and Mutual Exclusivity Agreements with each of Ashford Trust and Braemar—Ashford Trust Hotel Management Mutual Exclusivity Agreement with Remington.”
Maintenance and Modifications. Remington must maintain each hotel in good repair and condition and make such routine maintenance, repairs and minor alterations as it deems reasonably necessary. The cost of all such routine maintenance, repairs and alterations will be paid by the TRS lessee. All non-routine repairs and maintenance, either to a hotel or its property and equipment pursuant to the capital improvement budget described below, will be managed by Premier pursuant to the Ashford Trust Project Management Agreement.
Insurance. Remington must coordinate with the TRS lessee the procurement and maintenance of all workers’ compensation, employer’s liability and other appropriate and customary insurance related to its operations as a hotel manager, the cost of which is the responsibility of the TRS lessee.
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Assignment and Subleasing. Neither Remington nor the TRS lessee may assign or transfer the Ashford Trust Master Hotel Management Agreement without the other party’s prior written consent. However, Remington may assign its rights and obligations to an affiliate that satisfies the eligible independent contractor requirements and is “controlled” by Mr. Monty J. Bennett, his father Mr. Archie Bennett, Jr., or their respective family partnerships or trusts, the sole members or beneficiaries of which are at all times lineal descendants of Messrs. Monty J. Bennett or Archie Bennett, Jr. (including step children) and spouses. “Controlled” means (i) the possession of a majority of the capital stock (or ownership interest) and voting power of such affiliate, directly or indirectly, or (ii) the power to direct or cause the direction of the management and policies of such affiliate in the capacity of chief executive officer, president, chairman, or other similar capacity where they are actively engaged or involved in providing such direction or control and spend a substantial amount of time managing such affiliate. No assignment will release Remington from any of its obligations under the Ashford Trust Master Hotel Management Agreement.
Damage to Hotels. If any of our insured properties is destroyed or damaged, the TRS lessee is obligated, subject to the requirements of the underlying lease, to repair or replace the damaged or destroyed portion of the hotel to the same condition as existed prior to such damage or destruction. If the lease relating to such damaged hotel is terminated pursuant to the terms of the lease, the TRS lessee has the right to terminate the Ashford Trust Master Hotel Management Agreement with respect to such damaged hotel upon 60 days’ written notice. In the event of a termination, neither the TRS lessee nor Remington will have any further liabilities or obligations under the Ashford Trust Master Hotel Management Agreement with respect to such damaged hotel, except that Ashford Trust may be obligated to pay to Remington a termination fee, as described above. If the Ashford Trust Master Hotel Management Agreement remains in effect with respect to such damaged hotel, and the damage does not result in a reduction of gross revenues at the hotel, the TRS lessee’s obligation to pay management fees will be unabated. If, however, the Ashford Trust Master Hotel Management Agreement remains in effect with respect to such damaged hotel, but the damage does result in a reduction of gross revenues at the hotel, the TRS lessee will be entitled to partial, pro rata abatement of the management fees while the hotel is being repaired.
Condemnation of a Property or Force Majeure. If all or substantially all of a hotel is subject to a total condemnation or a partial taking that prevents use of the property as a hotel, the Ashford Trust Master Hotel Management Agreement, with respect to such hotel, will terminate, subject to the requirements of the applicable lease. In the event of termination, neither the TRS lessee nor Remington will have any further rights, remedies, liabilities or obligations under the Ashford Trust Master Hotel Management Agreement with respect to such hotel. If any partial taking of a property does not make it unreasonable to continue to operate the hotel, there is no right to terminate the Ashford Trust Master Hotel Management Agreement. If there is an event of force majeure or any other cause beyond the control of Remington that directly involves a hotel and has a significant adverse effect upon the continued operations of that hotel, then the Ashford Trust Master Hotel Management Agreement may be terminated by the TRS lessee. In the event of such a termination, neither the TRS lessee nor Remington will have any further rights, remedies, liabilities or obligations under the Ashford Trust Master Hotel Management Agreement with respect to such hotel.
Annual Operating Budget. The Ashford Trust Master Hotel Management Agreement provides that not less than 45 days prior to the beginning of each fiscal year during the term of the Ashford Trust Master Hotel Management Agreement, Remington will submit to the TRS lessee for each of the hotels, an annual operating budget setting forth in detail an estimated profit and loss statement for each of the next 12 months (or for the balance of the fiscal year in the event of a partial first fiscal year), including a schedule of hotel room rentals and other rentals and a marketing and business plan for each of the hotels. The budget is subject to the TRS lessee approval, which may not be unreasonably withheld. The budget may be revised from time to time, taking into account such circumstances as the TRS lessee deems appropriate or as business and operating conditions shall demand, subject to the reasonable approval of Remington.
Capital Improvement Budget. Remington must prepare a capital improvement budget of the expenditures necessary for replacement of property and equipment and building repairs for the hotels during the following fiscal year and provide such budget to the relevant TRS lessee and landlord for approval at the same time Remington submits the proposed annual operating budget for approval by TRS lessee. Remington may not make any other expenditures for these items without the relevant TRS lessee and landlord approval, except expenditures which are provided in the capital improvements budget or are required by reason of any (i) emergency, (ii) applicable legal requirements, (iii) the terms of any franchise agreement or (iv) are otherwise required for the continued safe and orderly operation of Ashford Trust’s hotels.
Indemnity Provisions. Remington has agreed to indemnify the TRS lessee against all damages not covered by insurance that arise from: (i) the fraud, willful misconduct or gross negligence of Remington subject to certain limitations; (ii) infringement by Remington of any third-party’s intellectual property rights; (iii) employee claims based on a substantial violation by Remington of employment laws or that are a direct result of the corporate policies of Remington; (iv) the knowing or reckless placing, discharge, leakage, use or storage of hazardous materials in violation of applicable environmental laws on or in any of our hotels by Remington; or (v) the breach by Remington of the Ashford Trust Master Hotel Management
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Agreement, including action taken by Remington beyond the scope of its authority under the Ashford Trust Master Hotel Management Agreement, which is not cured.
Except to the extent indemnified by Remington as described in the preceding paragraph, the TRS lessee will indemnify Remington against all damages not covered by insurance and that arise from: (i) the performance of Remington’s services under the Ashford Trust Master Hotel Management Agreement; (ii) the condition or use of Ashford Trust’s hotels; (iii) certain liabilities to which Remington is subjected, including pursuant to the WARN Act, in connection with the termination of the Ashford Trust Master Hotel Management Agreement; (iv) all employee cost and expenses; or (v) any claims made by an employee of Remington against Remington that are based on a violation or alleged violation of the employment laws.
Events of Default. Events of default under the Ashford Trust Master Hotel Management Agreement include:
•The TRS lessee or Remington files a voluntary bankruptcy petition, or experiences a bankruptcy-related event not discharged within 90 days.
•The TRS lessee or Remington fails to make any payment due under the Ashford Trust Master Hotel Management Agreement, subject to a 10-day notice and cure period.
•The TRS lessee or Remington fails to observe or perform any other term of the Ashford Trust Master Hotel Management Agreement, subject to a 30-day notice and cure period. There are certain instances in which the 30-day notice and cure period can be extended to up to 120 days.
•Remington does not qualify as an “eligible independent contractor” as such term is defined in Section 856(d)(9) of the Internal Revenue Code.
If an event of default occurs and continues beyond any grace period, the non-defaulting party will have the option of terminating the Ashford Trust Master Hotel Management Agreement, on 30 days’ notice to the other party.
To minimize conflicts between Ashford Trust and Remington on matters arising under the Ashford Trust Master Hotel Management Agreement, Ashford Trust’s Corporate Governance Guidelines provide that any waiver, consent, approval, modification, enforcement matters or elections which Ashford Trust may make pursuant to the terms of the Ashford Trust Master Hotel Management Agreement shall be within the exclusive discretion and control of a majority of the independent members of the board of directors (or higher vote thresholds specifically set forth in such agreements). In addition, Ashford Trust’s board of directors has established a Related Party Transaction Committee comprised solely of independent members of Ashford Trust’s board of directors to review all related party transactions that involve conflicts. The Related Party Transaction Committee can deny a new proposed related party transaction or recommend for approval by the independent members of Ashford Trust’s board of directors. All related party transactions must be approved by the independent members of Ashford Trust’s board of directors.
Ashford Trust Hotel Management Mutual Exclusivity Agreement
We and Ashford LLC, our operating company, entered intoGeneral. Remington has a mutual exclusivity agreement with Ashford Trust (the “Ashford Trust hotel management MEA”) which gives Ashford Trust a first right of refusal to purchase any lodging-related investments identified by Remington Lodging,and any of its affiliates that was consentedmeet Ashford Trust’s initial investment criteria, and agreedAshford Trust agrees to by Mr. Monty J. Bennett, regarding potential future advisory clients for us and property management clients forengage Remington Lodging. Mr. Monty J. Bennett and his father Mr. Archie Bennett, Jr. are the sole owners of Remington Lodging, and Mr. Monty J. Bennett is the chief executive officer of Remington Lodging. Pursuant to this agreement, we have

agreed to utilize Remington Lodging to provide propertyhotel management project management and development services for all hotels that future companies we may adviseAshford Trust acquired or may acquire,invested in, to the extent that we haveAshford Trust has the right or control the right to direct such matters,matters.
Term. The initial term of the Ashford Trust hotel management MEA is 10 years from November 19, 2013. This term automatically extends for three additional renewal periods of seven years each and a final renewal period of four years, for a total of up to 35 years. The agreement may be sooner terminated because of:
•an event of default (see “Events of Default”);
•a party’s early termination rights (see “Early Termination”); or
•a termination of all the Ashford Trust master hotel management agreements between TRS lessee and Remington because of an event of default under the Ashford Trust Master Hotel Management Agreement that affects all properties (see “Relationship with Ashford Trust Master Hotel Management Agreement”).
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Modification of Investment Guidelines. In the event that Ashford Trust materially modifies its initial investment guidelines without the written consent of Remington, which consent may be withheld at its sole and absolute discretion, and may further be subject to the consent of Braemar, Remington will have no obligation to present or offer Ashford Trust investment opportunities at any time thereafter. Instead, Remington, subject to the superior rights of Braemar or any other party with which Remington may have an existing agreement, shall use their reasonable discretion to determine how to allocate investment opportunities itidentifies. In the event Ashford Trust materially modifies its investment guidelines without the written consent of Remington, Braemar will have superior rights to investment opportunities identified by Remington, and Ashford Trust will no longer retain preferential treatment to investment opportunities identified by Remington. A material modification for this purpose means any modification of Ashford Trust’s initial investment guidelines to be competitive with Braemar’s investment guidelines.
Our Exclusivity Rights. Remington and Mr. Monty J. Bennett have granted Ashford Trust a first right of refusal to pursue certain exceptions.lodging investment opportunities identified by Remington or its affiliates (including Mr. Bennett), including opportunities to buy hotel properties, to buy land and build hotels, or to otherwise invest in hotel properties that satisfy Ashford Trust’s initial investment guidelines and are not considered excluded transactions pursuant to the Ashford Trust hotel management MEA. If investment opportunities are identified and are subject to the Ashford Trust hotel management MEA, and Ashford Trust has not materially modified its initial investment guidelines without the written consent of Remington, then Remington Lodging, Mr. Bennett and their affiliates, as the case may be, will not pursue those opportunities (except as described below) and will give Ashford Trust a written notice and description of the investment opportunity, and Ashford Trust will have 10 business days to either accept or reject the investment opportunity. If Ashford Trust rejects the opportunity, Remington may then pursue such investment opportunity, subject to a right of first refusal in favor of Braemar pursuant to an existing agreement between Braemar and Remington, on materially the same terms and conditions as offered to Ashford Trust. If the terms of such investment opportunity materially change, then Remington must offer the revised investment opportunity to Ashford Trust, whereupon Ashford Trust will have 10 business days to either accept or reject the opportunity on the revised terms.
RegulationReimbursement of Costs. If Ashford Trust accepts an investment opportunity from Remington, Ashford Trust will be obligated to reimburse Remington or its affiliates for the actual out-of-pocket and third-party costs and expenses paid by Remington or its affiliates in connection with such investment opportunity, including any earnest money deposits, but excluding any finder’s fee, brokerage fee, development fee or other compensation paid by Remington or its affiliates. Remington must submit to Ashford Trust an accounting of the costs in reasonable detail.
GeneralExclusivity Rights of Remington. If Ashford Trust elects to pursue an investment opportunity that consists of the management and operation of a hotel property or acquisition of debt, or making of a loan, with respect to such hotel property, Ashford Trust will hire Remington to provide such services unless Ashford Trust’s independent directors either (i) unanimously elect not to engage Remington, or (ii) by a majority vote, elect not to engage Remington because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in Ashford Trust’s best interest not to engage Remington for the particular hotel, or (B) based on the prior performance of Remington, another manager or developer could perform the management duties materially better than Remington for the particular hotel. In return, Remington has agreed that it will provide those services.
Excluded Investment Opportunities. The following are excluded from the Ashford Trust hotel management MEA and are not subject to any exclusivity rights or right of first refusal:
•With respect to Remington, an investment opportunity where Ashford Trust’s independent directors have unanimously voted not to engage Remington as the manager or developer.
•With respect to Remington, an investment opportunity where Ashford Trust’s independent directors, by a majority vote, have elected not to engage Remington as the manager or developer based on their determination, in their reasonable business judgment, that special circumstances exist such that it would be in Ashford Trust’s best interest not to engage Remington with respect to the particular hotel.
•With respect to Remington, an investment opportunity where Ashford Trust’s independent directors, by a majority vote, have elected not to engage Remington as the manager or developer because they have determined, in their reasonable business judgment, that another manager or developer could perform the management, development or other duties materially better than Remington for the particular hotel, based on Remington’s prior performance.
•Existing hotel investments of Remington or its affiliates with any of their existing joint venture partners, investors or property owners.
•Existing bona fide arm’s length third-party management arrangements (or arrangements for other services) of Remington or any of its affiliates with third parties other than Ashford Trust and its affiliates.
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•Like-kind exchanges made pursuant to existing contractual obligations by any of the existing joint venture partners, investors or property owners in which Remington or its affiliates have an ownership interest, provided that Remington provides Ashford Trust with notice 10 days prior to such transaction.
Management or Development. If Ashford Trust hires Remington to manage or operate a hotel, it will be pursuant to the terms of the Ashford Trust Master Hotel Management Agreement agreed to between Ashford Trust and Remington.
Events of Default. Each of the following is a default under the Ashford Trust hotel management MEA:
•Ashford Trust or Remington experience a bankruptcy-related event;
•Ashford Trust fails to reimburse Remington as described under “Reimbursement of Costs,” subject to a 30-day cure period; and
•Ashford Trust or Remington does not observe or perform any other term of the agreement, subject to a 30-day cure period (which may be increased to a maximum of 120 days in certain instances). We, AIM
If a default occurs, the non-defaulting party will have the option of terminating the Ashford Trust hotel management MEA subject to 30 days’ written notice and pursuing its rights and remedies under applicable law.
Early Termination. Remington has the right to terminate the exclusivity rights granted to Ashford Trust if:
•Mr. Monty J. Bennett is removed without cause as chairman of Ashford Trust’s board of directors or is not re-appointed to such position, or he resigns as chairman of its board of directors for good reason or as a result of a change of control, or the employment agreement of Mr. Monty J. Bennett with the Company is not renewed;
•Mr. Archie Bennett Jr. is removed as Chairman Emeritus or Ashford Trust breaches the Chairman Emeritus Agreement dated January 7, 2013;
•upon expiration of the non-compete restrictions contained in the employment agreement of Mr. Monty J. Bennett;
•Mr. Monty J. Bennett is no longer chairman of the board of Ashford Trust and subject to the non-compete restrictions in his employment agreement, and three times in any fiscal year during the term of the Ashford Trust hotel management MEA, in any combination of the following: (i) Ashford Trust’s independent directors elect not to pursue a Remington transaction (as specified in the Ashford Trust hotel management MEA) or elect not to engage Remington with respect to the management opportunities part of a Remington transaction which Ashford Trust has elected to pursue pursuant to the Ashford Trust hotel management MEA, or (ii) Ashford Trust fails to close on a Remington transaction presented to Ashford Trust, and the failure to close is caused by an Ashford Trust affiliate; or
•Ashford Trust terminates the Remington exclusivity rights pursuant to the terms of the Ashford Trust hotel management MEA.
Ashford Trust may terminate the exclusivity rights granted to Remington if:
•Remington fails to qualify as an “eligible independent contractor” as defined in Section 856(d)(9) of the Internal Revenue Code and for that reason, Ashford Trust terminates the Ashford Trust Master Hotel Management Agreement with Remington;
•If Mr. Monty J. Bennett resigns as chief executive officer and chairman of the board of directors of Ashford Trust without good reason or if Mr. Monty J. Bennett’s employment agreement with the Company is terminated for cause;
•Ashford Trust experiences a change in control provided that Ashford Trust first pays to Remington the termination fees payable in connection with a termination for convenience pursuant to the Ashford Trust hotel management MEA; and
•Remington terminates Ashford Trust’s exclusivity rights pursuant to the terms of the Ashford Trust hotel management MEA or the Ashford Trust Master Hotel Management Agreement for all of the properties then covered.
Assignment. The Ashford Trust hotel management MEA may not be assigned by any of the parties without the prior written consent of the other parties, provided that Remington can assign its interest in the Ashford Trust hotel management MEA, without the written consent of the other parties, to a “manager affiliate entity” as that term is defined in the agreement, so long as such affiliate qualifies as an “eligible independent contractor” at the time of such transfer.
Relationship with Ashford Trust Master Hotel Management Agreement. The rights provided to Ashford Trust and to Remington in the Ashford Trust hotel management MEA may be terminated if the Ashford Trust Master Hotel Management Agreement between Ashford Trust and Remington terminates in its entirety because of an event of default as to all of the then-managed properties. A termination of Remington’s management rights with respect to one or more hotels (but not all hotels)
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does not terminate the Ashford Trust hotel management MEA. A termination of the Ashford Trust hotel management MEA does not terminate the Ashford Trust Master Hotel Management Agreement either in part or in whole, and the Ashford Trust Master Hotel Management Agreement would continue in accordance with its terms as to the hotels covered, despite a termination of the Ashford Trust hotel management MEA.
Ashford Trust Project Management Agreement
Pursuant to our Ashford Trust Project Management Agreement, Ashford TRS Corporation, a subsidiary of Ashford Trust OP, and certain of its affiliates (collectively, “Ashford Trust TRS”) has appointed Premier as its sole, exclusive and continuing manager to manage, coordinate, plan and execute the capital improvement budget and all major repositionings of hotels owned or leased by Ashford Trust TRS (collectively, “Ashford Trust Hotels”) and to provide construction management, interior design, architectural, property and equipment purchasing, property and equipment expediting/freight management, property and equipment warehousing, and property and equipment installation and supervision services (collectively, “Project Services”).
The Ashford Trust Project Management Agreement provides that Premier shall be paid a design and construction fee equal to four percent of the total project costs associated with the implementation of the capital improvement budget (both hard and soft) payable monthly in arrears based upon the prior calendar month’s total expenditures under the capital improvement budget until such time that the capital improvement budget and/or renovation project involves the expenditure of an amount in excess of five percent of the gross revenues of the applicable Ashford Trust Hotel, whereupon the design and construction fee shall be reduced to three percent of the total project costs in excess of the five percent of gross revenue threshold. In addition, the Ashford Trust Project Management Agreement provides that Premier shall also provide to Ashford Trust Hotels the following services, and shall be paid the following fees: (i) architectural (6.5% of total construction costs); (ii) construction management for projects without a general contractor (10% of total construction costs); (iii) interior design (6% of the purchase price of the property and equipment designed or selected by Premier); and (iv) property and equipment purchasing (8% of the purchase price of the property and equipment purchased by Premier; provided that if the purchase price exceeds $2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6% of the property and equipment purchase price in excess of $2.0 million for such hotel in such calendar year).
The Ashford Trust Project Management Agreement provides for an initial term of 10 years as to each hotel governed by the agreement. 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 Ashford Trust Project Management Agreement. In certain cases of early termination of the Ashford Trust Project Management Agreement with respect to one or more of the hotels, Ashford Trust must pay Premier termination fees as described in the Ashford Trust Project Management Agreement, plus any amounts otherwise due to Premier.
Ashford Trust Project Management Mutual Exclusivity Agreement
Pursuant to our Ashford Trust Mutual Exclusivity Agreement, Premier has given Ashford Trust a first right of refusal to purchase any lodging-related investments identified by Premier and any of its affiliates that meet Ashford Trust’s initial investment criteria, and Ashford Trust has agreed to engage Premier to provide development and construction, capital improvement, refurbishment, project management and other services, such as purchasing, interior design, freight management, and construction management, for hotels Ashford Trust acquires or invests in, to the extent that Ashford Trust has the right or controls the right to direct such matters, unless Ashford Trust’s independent directors either: (i) unanimously vote not to hire Premier; or (ii) based on special circumstances or past performance, by a majority vote elect not to engage Premier because they had determined, in their reasonable business judgment, that it would not be in Ashford Trust’s bestinterest to engage Premier or that another manager or developer could perform the project management or development duties materially better.
The Ashford Trust Mutual Exclusivity Agreement provides for a term ending August 29, 2027, including extensions exercised to date. The term will be automatically extended for one seven year period and, thereafter, a final term of four years, provided that at the time of any such extension an event of default under the Ashford Trust Mutual Exclusivity Agreement does not exist.
Braemar Hotel Master Hotel Management Agreement
General. Remington has a master hotel management agreement with Braemar (the “Braemar Master Hotel Management Agreement”).Pursuant to the Braemar Master Hotel Management Agreement, Remington currently manages the Pier House Resort & Spa, the Bardessono Hotel & Spa, Hotel Yountville, and Cameo Beverly Hills. The Braemar Master Hotel Management Agreement will also govern the management of hotels Braemar acquires in the future that are managed by Remington, which has the right to manage and operate hotel properties Braemar acquires in the future unless Braemar’s independent directors either (i) unanimously elect not to engage Remington, or (ii) by a majority vote, elect not to engage
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Remington because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in Braemar’s best interest not to engage Remington for the particular hotel, or (B) based on the prior performance of Remington, another manager or developer could perform the management duties materially better than Remington for the particular hotel. See “Our Hotel Management Agreements, Project Management Agreements and Mutual Exclusivity Agreements with each of Ashford Trust and Braemar—Braemar Hotel Management Mutual Exclusivity Agreement with Remington—Exclusivity Rights of Remington.”
Term. The Braemar Master Hotel Management Agreement provides for an initial term of 10 years as to each hotel governed by the agreement. The term may be renewed by Remington, at its option, subject to certain performance tests, 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 Braemar Master Hotel Management Agreement. If at the time of the exercise of any renewal period, Remington is in default, then the exercise of the renewal option will be conditional on timely cure of such default, and if such default is not timely cured, then Braemar’s TRS lessee may terminate the Braemar Master Hotel Management Agreement regardless of the exercise of such option and without the payment of any fee or liquidated damages. If Remington desires to exercise any option to renew, it must give Braemar’s TRS lessee written notice of its election to renew the Braemar Master Hotel Management Agreement no less than 90 days before the expiration of the then-current term of the Braemar Master Hotel Management Agreement.
Amounts Payable under the Braemar Master Hotel Management Agreement. Remington receives a base management fee, and if the hotels meet and exceed certain thresholds, an additional incentive fee. The base management fee for each hotel will be due monthly and will be equal to the greater of:
•$17,000 (increased annually based on consumer price index adjustments); or
•3% of the gross revenues associated with that hotel for the related month.
The incentive management fee, if any, for each hotel will be due annually in arrears within 90 days of the end of the fiscal year and will be equal to the lesser of (i) 1% of gross revenues and (ii) the amount by which the actual house profit (gross operating profit of the applicable hotel before deducting management fees or franchise fees) exceeds the target house profit as set forth in the annual operating budget approved for the applicable fiscal year, except with respect to hotels where Remington takes over management upon acquisition by Braemar, in which case, for the first five years, the incentive management fee to be paid to Remington, if any, is the amount by which the hotel’s actual house profit exceeds the projected house profit for such calendar year as set forth in our acquisition pro forma. If, however, based on actual operations and revised forecasts from time to time, it is reasonably anticipated that the incentive fee is reasonably expected to be earned, the TRS lessee will consider payment of the incentive fee pro rata on a quarterly basis.
Termination. The Braemar Master Hotel Management Agreement may be terminated as to one or more of the hotels earlier than the stated term if certain events occur, including:
•a sale of a hotel;
•the failure of Remington to satisfy certain performance standards;
•for the convenience of Braemar’s TRS lessee;
•in the event of a casualty to, condemnation of, or force majeure involving a hotel; or
•upon a default by Remington or Braemar that is not cured prior to the expiration of any applicable cure periods.
In certain cases of early termination of the Braemar Master Hotel Management Agreement with respect to one or more of the hotels, Braemar must pay Remington termination fees, plus any amounts otherwise due to Remington pursuant to the terms of the Braemar Master Hotel Management Agreement. Braemar will be obligated to pay termination fees in the circumstances described below, provided that Remington is not then in default, subject to certain cure and grace periods:
Sale. If any hotel subject to the Braemar Master Hotel Management Agreement is sold during the first 12 months of the date such hotel becomes subject to the Braemar Master Hotel Management Agreement, Braemar’s TRS lessee may terminate the Braemar Master Hotel Management Agreement with respect to such sold hotel, provided that it pays to Remington an amount equal to the management fee (both base fees and incentive fees) estimated to be payable to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget for the balance of the first year of the term. If any hotel subject to the Braemar Master Hotel Management Agreement is sold at any time after the first year of the term and the TRS lessee terminates the master hotel management agreement with respect to such hotel, Braemar’s TRS lessee will have no obligation to pay any termination fees.
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Casualty. If any hotel subject to the Braemar Master Hotel Management Agreement is the subject of a casualty during the first year of the initial 10-year term and the TRS lessee elects not to rebuild, then Braemar must pay to Remington the termination fee, if any, that would be owed if the hotel had been sold. However, after the first year of the initial 10-year term, if a hotel is the subject of a casualty and the TRS lessee elects not to rebuild the hotel even though sufficient casualty insurance proceeds are available to do so, then the TRS lessee must pay to Remington a termination fee equal to the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine.
Condemnation or Force Majeure. In the event of a condemnation of, or the occurrence of any force majeure event with respect to, any of the hotels, the TRS lessee has no obligation to pay any termination fees if the Braemar Master Hotel Management Agreement terminates as to those hotels.
Failure to Satisfy Performance Test. If any hotel subject to the Braemar Master Hotel Management Agreement fails to satisfy a certain performance test, the TRS lessee may terminate the Braemar Master Hotel Management Agreement with respect to such hotel, and in such case, the TRS lessee must pay to Remington an amount equal to 60% of the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine. Remington will have failed the performance test with respect to a particular hotel if during any fiscal year during the term (i) such hotel’s gross operating profit margin for such fiscal year is less than 75% of the average gross operating profit margins of comparable hotels in similar markets and geographical locations, as reasonably determined by Remington and the TRS lessee, and (ii) such hotel’s RevPAR yield penetration is less than 80%. Upon a performance test failure, the TRS lessee must give Remington two years to cure. If, after the first year, the performance test failure has not been cured, then the TRS lessee may, in order not to waive any such failure, require Remington to engage a consultant with significant hotel lodging experience reasonably acceptable to both Remington and the TRS lessee, to make a determination as to whether or not another management company could manage the hotel in a materially more efficient manner. If the consultant’s determination is in the affirmative, then Remington must engage such consultant to assist with the cure of such performance failure for the second year of the cure period after that failure. If the consultant’s determination is in the negative, then Remington will be deemed not to be in default under the performance test. The cost of such consultant will be shared by the TRS lessee and Remington equally. If Remington fails the performance test for the second year of the cure period and, after that failure, the consultant again makes a finding that another management company could manage the hotel in a materially more efficient manner than Remington, then the TRS lessee has the right to terminate the Braemar hotel management agreement with respect to such hotel upon 45 days’ written notice to Remington and to pay to Remington the termination fee described above. Further, if any hotel subject to the Braemar hotel management agreement is within a cure period due to a failure of the performance test, an exercise of a renewal option shall be conditioned upon timely cure of the performance test failure, and if the performance failure is not timely cured, the TRS lessee may elect to terminate the Braemar hotel management agreement without paying any termination fee.
For Convenience. With respect to any hotel managed by Remington pursuant to the Braemar Master Hotel Management Agreement, if the TRS lessee elects for convenience to terminate the management of such hotel, at any time, including during any renewal term, the TRS lessee must pay a termination fee to Remington, equal to the product of (i) 65% of the aggregate management fees for such hotel (both base fees and incentive fees) estimated to be payable to Remington with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) and (ii) nine.
If the Braemar Master Hotel Management Agreement terminates as to all of the hotels covered in connection with a default under the Braemar Master Hotel Management Agreement, the Braemar hotel management MEA (as defined below) can also be terminated at the non-defaulting party’s election. See “Our Hotel Management Agreements, Project Management Agreements and Mutual Exclusivity Agreements with each of Ashford Prime,Trust and Braemar—Braemar Hotel Management Mutual Exclusivity Agreement with Remington.”
Maintenance and Modifications. Remington must maintain each hotel in good repair and condition and make such routine maintenance, repairs and minor alterations as it deems reasonably necessary. The cost of all such routine maintenance, repairs and alterations will be paid by the TRS lessee. All non-routine repairs and maintenance, either to a hotel or its property and equipment pursuant to the capital improvement budget described below, will be managed by Premier pursuant to the master project management agreement.
Insurance. Remington must coordinate with the TRS lessee the procurement and maintenance of all workers’ compensation, employer’s liability, and other appropriate and customary insurance related to its operations as a hotel manager, the cost of which is the responsibility of the TRS lessee.
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Assignment and Subleasing. Neither Remington nor the TRS lessee may assign or transfer the Braemar Master Hotel Management Agreement without the other party’s prior written consent. However, Remington may assign its rights and obligations to an affiliate that satisfies the eligible independent contractor requirements and is “controlled” by Mr. Monty J. Bennett, his father Mr. Archie Bennett, Jr., or their respective family partnerships or trusts, the sole members or beneficiaries of which are at all times lineal descendants of Messrs. Monty J. Bennett or Archie Bennett, Jr. (including step children) and spouses. “Controlled” means (i) the possession of a majority of the capital stock (or ownership interest) and voting power of such affiliate, directly or indirectly, or (ii) the power to direct or cause the direction of the management and policies of such affiliate in the capacity of chief executive officer, president, chairman, or other similar capacity where they are actively engaged or involved in providing such direction or control and spend a substantial amount of time managing such affiliate. No assignment will release Remington from any of its obligations under the Braemar Master Hotel Management Agreement.
Damage to Hotels. If any of our insured properties is destroyed or damaged, the TRS lessee is obligated, subject to the requirements of the underlying lease, to repair or replace the damaged or destroyed portion of the hotel to the same condition as existed prior to such damage or destruction. If the lease relating to such damaged hotel is terminated pursuant to the terms of the lease, the TRS lessee has the right to terminate the Braemar Master Hotel Management Agreement with respect to such damaged hotel upon 60 days’ written notice. In the event of a termination, neither the TRS lessee nor Remington will have any further liabilities or obligations under the Braemar Master Hotel Management Agreement with respect to such damaged hotel, except that Braemar may be obligated to pay to Remington a termination fee, as described above. If the Braemar Master Hotel Management Agreement remains in effect with respect to such damaged hotel, and the damage does not result in a reduction of gross revenues at the hotel, the TRS lessee’s obligation to pay management fees will be unabated. If, however, the Braemar Master Hotel Management Agreement remains in effect with respect to such damaged hotel, but the damage does result in a reduction of gross revenues at the hotel, the TRS lessee will be entitled to partial, pro rata abatement of the management fees while the hotel is being repaired.
Condemnation of a Property or Force Majeure. If all or substantially all of a hotel is subject to a total condemnation or a partial taking that prevents use of the property as a hotel, the Braemar Master Hotel Management Agreement, with respect to such hotel, will terminate, subject to the requirements of the applicable lease. In the event of termination, neither the TRS lessee nor Remington will have any further rights, remedies, liabilities or obligations under the Braemar Master Hotel Management Agreement with respect to such hotel. If any partial taking of a property does not make it unreasonable to continue to operate the hotel, there is no right to terminate the Braemar Master Hotel Management Agreement. If there is an event of force majeure or any other cause beyond the control of Remington that directly involves a hotel and has a significant adverse effect upon the continued operations of that hotel, then the Braemar Master Hotel Management Agreement may be terminated by the TRS lessee. In the event of such a termination, neither the TRS lessee nor Remington will have any further rights, remedies, liabilities or obligations under the Braemar Master Hotel Management Agreement with respect to such hotel.
Annual Operating Budget. The Braemar Master Hotel Management Agreement provides that not less than 45 days prior to the beginning of each fiscal year during the term of the Braemar Master Hotel Management Agreement, Remington will submit to the TRS lessee for each of the hotels, an annual operating budget setting forth in detail an estimated profit and loss statement for each of the next 12 months (or for the balance of the fiscal year in the event of a partial first fiscal year), including a schedule of hotel room rentals and other rentals and a marketing and business plan for each of the hotels. The budget is subject to the TRS lessee approval, which may not be unreasonably withheld. The budget may be revised from time to time, taking into account such circumstances as the TRS lessee deems appropriate or as business and operating conditions shall demand, subject to the reasonable approval of Remington.
Capital Improvement Budget. Remington must prepare a capital improvement budget of the expenditures necessary for replacement of property and equipment and building repairs for the hotels during the following fiscal year and provide such budget to the relevant TRS lessee and landlord for approval at the same time Remington submits the proposed annual operating budget for approval by TRS lessee. Remington may not make any other expenditures for these items without the relevant TRS lessee and landlord approval, except expenditures which are provided in the capital improvements budget or are required by reason of any (i) emergency, (ii) applicable legal requirements, (iii) the terms of any franchise agreement or (iv) are otherwise required for the continued safe and orderly operation of Braemar’s hotels.
Indemnity Provisions. Remington has agreed to indemnify the TRS lessee against all damages not covered by insurance that arise from: (i) the fraud, willful misconduct or gross negligence of Remington subject to certain limitations; (ii) infringement by Remington of any third-party’s intellectual property rights; (iii) employee claims based on a substantial violation by Remington of employment laws or that are a direct result of the corporate policies of Remington; (iv) the knowing or reckless placing, discharge, leakage, use or storage of hazardous materials in violation of applicable environmental laws on or in any of our hotels by Remington; or (v) the breach by Remington of the Braemar Master Hotel Management Agreement, including action taken by Remington beyond the scope of its authority under the Braemar Master Hotel Management Agreement, which is not cured.
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Except to the extent indemnified by Remington as described in the preceding paragraph, the TRS lessee will indemnify Remington against all damages not covered by insurance and that arise from: (i) the performance of Remington’s services under the Braemar Master Hotel Management Agreement; (ii) the condition or use of Braemar’s hotels; (iii) certain liabilities to which Remington is subjected, including pursuant to the WARN Act, in connection with the termination of the Braemar Master Hotel Management Agreement; (iv) all employee cost and expenses; or (v) any claims made by an employee of Remington against Remington that are based on a violation or alleged violation of the employment laws.
Events of Default. Events of default under the Braemar Master Hotel Management Agreement include:
•The TRS lessee or Remington files a voluntary bankruptcy petition, or experiences a bankruptcy-related event not discharged within 90 days.
•The TRS lessee or Remington fails to make any payment due under the Braemar Master Hotel Management Agreement, subject to a 10-day notice and cure period.
•The TRS lessee or Remington fails to observe or perform any other term of the Braemar Master Hotel Management Agreement, subject to a 30-day notice and cure period. There are certain instances in which the 30-day notice and cure period can be extended to up to 120 days.
•Remington does not qualify as an “eligible independent contractor” as such term is defined in Section 856(d)(9) of the Internal Revenue Code.
If an event of default occurs and continues beyond any grace period, the non-defaulting party will have the option of terminating the Braemar Master Hotel Management Agreement, on 30 days’ notice to the other party.
To minimize conflicts between Braemar and Remington on matters arising under the Braemar Master Hotel Management Agreement, Braemar’s Corporate Governance Guidelines provide that any waiver, consent, approval, modification, enforcement matters or elections which Braemar may make pursuant to the terms of the Braemar Master Hotel Management Agreement shall be within the exclusive discretion and control of a majority of the independent members of the board of directors (or higher vote thresholds specifically set forth in such agreements). In addition, Braemar’s board of directors has established a Related Party Transaction Committee comprised solely of independent members of Braemar’s board of directors to review all related party transactions that involve conflicts. The Related Party Transaction Committee may make recommendations to the independent members of Braemar’s board of directors (including rejection of any proposed transaction). All related party transactions are approved by either the Related Party Transaction Committee or the independent members of Braemar’s board of directors.
Braemar Hotel Management Mutual Exclusivity Agreement
General. Remington has a mutual exclusivity agreement with Braemar (the “Braemar hotel management MEA”) which gives Braemar a first right of refusal to purchase any lodging-related investments identified by Remington and any of its affiliates that meet Braemar’s initial investment criteria, and Braemar agrees to engage Remington to provide hotel management for hotels Braemar acquired or invested in, to the extent that Braemar has the right or control the right to direct such matters.
Term. The initial term of the Braemar hotel management MEA is 10 years from November 19, 2013. This term automatically extends for three additional renewal periods of seven years each and a final renewal period of four years, for a total of up to 35 years. The agreement may be sooner terminated because of:
•an event of default (see “Events of Default”),
•a party’s early termination rights (see “Early Termination”), or
•a termination of all the Braemar Master Hotel Management Agreements between TRS lessee and Remington because of an event of default under the Braemar Master Hotel Management Agreement that affects all properties (see “Relationship with Braemar Master Hotel Management Agreement”).
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Modification of Investment Guidelines. In the event that Braemar materially modifies its initial investment guidelines without the written consent of Remington, which consent may be withheld at its sole and absolute discretion, and may further be subject to the consent of Ashford Trust, Remington will have no obligation to present or offer Braemar investment opportunities at any time thereafter. Instead, Remington, subject to the superior rights of Ashford Trust or any other party with which Remington may have an existing agreement, shall use their reasonable discretion to determine how to allocate investment opportunities itidentifies. In the event Braemar materially modifies its investment guidelines without the written consent of Remington, Ashford Trust will have superior rights to investment opportunities identified by Remington, and Braemar will no longer retain preferential treatment to investment opportunities identified by Remington. A material modification for this purpose means any modification of Braemar’s initial investment guidelines to be competitive with Ashford Trust’s investment guidelines.
Our Exclusivity Rights. Remington and Mr. Monty J. Bennett have granted Braemar a first right of refusal to pursue certain lodging investment opportunities identified by Remington or its affiliates (including Mr. Bennett), including opportunities to buy hotel properties, to buy land and build hotels, or to otherwise invest in hotel properties that satisfy Braemar’s initial investment guidelines and are not considered excluded transactions pursuant to the Braemar hotel management MEA. If investment opportunities are identified and are subject to the Braemar hotel management MEA, and Braemar has not materially modified its initial investment guidelines without the written consent of Remington, then Remington, Mr. Bennett and their affiliates, as the case may be, will not pursue those opportunities (except as described below) and will give Braemar a written notice and description of the investment opportunity, and Braemar will have 10 business days to either accept or reject the investment opportunity. If Braemar rejects the opportunity, Remington may then pursue such investment opportunity, subject to a right of first refusal in favor of Ashford Trust pursuant to an existing agreement between Ashford Trust and Remington, on materially the same terms and conditions as offered to Braemar. If the terms of such investment opportunity materially change, then Remington must offer the revised investment opportunity to Braemar, whereupon Braemar will have 10 business days to either accept or reject the opportunity on the revised terms.
Reimbursement of Costs. If Braemar accepts an investment opportunity from Remington, Braemar will be obligated to reimburse Remington or its affiliates for the actual out-of-pocket and third-party costs and expenses paid by Remington or its affiliates in connection with such investment opportunity, including any earnest money deposits, but excluding any finder’s fee, brokerage fee, development fee or other compensation paid by Remington or its affiliates. Remington must submit to Braemar an accounting of the costs in reasonable detail.
Exclusivity Rights of Remington. If Braemar elects to pursue an investment opportunity that consists of the management and operation of a hotel property, Braemar will hire Remington to provide such services unless Braemar’s independent directors either (i) unanimously elect not to engage Remington, or (ii) by a majority vote, elect not to engage Remington because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in Braemar’s best interest not to engage Remington for the particular hotel, or (B) based on the prior performance of Remington, another manager or developer could perform the management duties materially better than Remington for the particular hotel. In return, Remington has agreed that it will provide those services.
Excluded Investment Opportunities. The following are excluded from the Braemar hotel management MEA and are not subject to any exclusivity rights or right of first refusal:
•With respect to Remington, an investment opportunity where Braemar’s independent directors have unanimously voted not to engage Remington as the manager or developer.
•With respect to Remington, an investment opportunity where Braemar’s independent directors, by a majority vote, have elected not to engage Remington as the manager or developer based on their determination, in their reasonable business judgment, that special circumstances exist such that it would be in Braemar’s best interest not to engage Remington with respect to the particular hotel.
•With respect to Remington, an investment opportunity where Braemar’s independent directors, by a majority vote, have elected not to engage Remington as the manager or developer because they have determined, in their reasonable business judgment, that another manager or developer could perform the management, development or other duties materially better than Remington for the particular hotel, based on Remington’s prior performance.
•Existing hotel investments of Remington or its affiliates with any of their existing joint venture partners, investors or property owners.
•Existing bona fide arm’s length third-party management arrangements (or arrangements for other services) of Remington or any of its affiliates with third parties other than Braemar and its affiliates.
•Like-kind exchanges made pursuant to existing contractual obligations by any of the existing joint venture partners, investors or property owners in which Remington or its affiliates have an ownership interest, provided that Remington
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provides Braemar with notice 10 days prior to such transaction.
Management or Development. If Braemar hires Remington to manage or operate a hotel, it will be pursuant to the terms of the Braemar Master Hotel Management Agreement agreed to between Braemar and Remington.
Events of Default. Each of the following is a default under the Braemar hotel management MEA:
•Braemar or Remington experience a bankruptcy-related event;
•Braemar fails to reimburse Remington as described under “Reimbursement of Costs,” subject to a 30-day cure period; and
•Braemar or Remington does not observe or perform any other term of the agreement, subject to a 30-day cure period (which may be increased to a maximum of 120 days in certain instances).
If a default occurs, the non-defaulting party will have the option of terminating the Braemar hotel management MEA subject to 30 days’ written notice and pursuing its rights and remedies under applicable law.
Early Termination. Remington has the right to terminate the exclusivity rights granted to Braemar if:
•Mr. Monty J. Bennett is removed as Braemar’s chairman of its board of directors or is not re-appointed to such position, or he resigns as chairman of its board of directors;
•Braemar terminates the Remington exclusivity rights pursuant to the terms of the Braemar hotel management MEA; or
•Braemar’s advisory agreement with Ashford LLC is terminated for any reason pursuant to its terms and Mr. Monty J. Bennett is no longer serving as Braemar’s chairman of its board of directors.
Braemar may terminate the exclusivity rights granted to Remington if:
•Remington fails to qualify as an “eligible independent contractor” as defined in Section 856(d)(9) of the Internal Revenue Code and for that reason, Braemar terminates the Braemar Master Hotel Management Agreement with Remington;
•Braemar experiences a change in control and terminates the Braemar Master Hotel Management Agreement between Braemar and Remington with respect to all hotels and have paid a termination fee equal to the product of (i) 65% of the aggregate management fees budgeted in the annual operating budget applied to the hotels for the full current fiscal year in which such termination is to occur for such hotels (both base fees and incentive fees, but in no event less than the base fees and incentive fees for the preceding full fiscal year) and (ii) nine;
•the Remington parties terminate Braemar’s exclusivity rights pursuant to the terms of the Braemar hotel management MEA; or
•Braemar’s advisory agreement with Ashford LLC is terminated for any reason pursuant to its terms and Mr. Monty J. Bennett is no longer serving as Braemar’s chairman of its board of directors.
Assignment. The Braemar hotel management MEA may not be assigned by any of the parties without the prior written consent of the other parties, provided that Remington can assign its interest in the Braemar hotel management MEA, without the written consent of the other parties, to a “manager affiliate entity” as that term is defined in the agreement, so long as such affiliate qualifies as an “eligible independent contractor” at the time of such transfer.
Relationship with Braemar Master Hotel Management Agreement. The rights provided to Braemar and to Remington in the Braemar hotel management MEA may be terminated if the Braemar Master Hotel Management Agreement between Braemar and Remington terminates in its entirety because of an event of default as to all of the then-managed properties. A termination of Remington’s management rights with respect to one or more hotels (but not all hotels) does not terminate the Braemar hotel management MEA. A termination of the Braemar hotel management MEA does not terminate the Braemar Master Hotel Management Agreement either in part or in whole, and the Braemar Master Hotel Management Agreement would continue in accordance with its terms as to the hotels covered, despite a termination of the Braemar hotel management MEA.
Braemar Project Management Agreement
Pursuant to the Braemar Project Management Agreement, Braemar TRS Corporation, a subsidiary of Braemar OP (“Braemar TRS”) has appointed Premier as its sole, exclusive and continuing manager to manage, coordinate, plan and execute the capital improvement budget and all major repositionings of hotels owned or leased by Braemar TRS (collectively, “Braemar Hotels”) and to provide Project Services.
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The Braemar Project Management Agreement provides that Premier shall be paid a design and construction fee equal to four percent (4%) of the total project costs associated with the implementation of the capital improvement budget (both hard and soft) until such time that the capital improvement budget and/or renovation project involves the expenditure of an amount in excess of five percent (5%) of the gross revenues of the applicable Braemar Hotel, whereupon the design and construction fee shall be reduced to three percent (3%) of the total project costs in excess of the five percent (5%) of gross revenue threshold. In addition, the Braemar Project Management Agreement provides that Premier shall also provide to Braemar Hotels the following services and shall be paid the following fees: (i) architectural (6.5% of total construction costs); (ii) construction management for projects without a general contractor (10% of total construction costs); (iii) interior design (6% of the purchase price of the property and equipment designed or selected by Premier); and (iv) property and equipment purchasing (8% of the purchase price of property and equipment purchased by Premier; provided that if the purchase price exceeds $2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6% of the property and equipment purchase price in excess of $2.0 million for such hotel in such calendar year). Such fees will be payable monthly as the service is delivered based on percentage completion, as reasonably determined by Premier for each service, or payable as set forth in other agreements.
The Braemar Project Management Agreement provides for an initial term of 10 years as to each hotel governed by the agreement. 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 Braemar Project Management Agreement. In certain cases of early termination of the Braemar Project Management Agreement with respect to one or more of the hotels, Braemar must pay Premier termination fees as described in the Braemar Project Management Agreement, plus any amounts otherwise due to Premier.
Braemar Project Management Mutual Exclusivity Agreement
Pursuant to the Braemar Mutual Exclusivity Agreement, Premier has given Braemar a first right of refusal to purchase any lodging-related investments identified by Premier and any of its affiliates that meet Braemar’s initial investment criteria, and Braemar has agreed to engage Premier to provide development and construction, capital improvement, refurbishment, project management and other services, such as purchasing, interior design, freight management, and construction management, for hotels Braemar acquires or invests in, to the extent that Braemar has the right or controls the right to direct such matters, unless Braemar’s independent directors either: (i) unanimously vote not to hire Premier; or (ii) based on special circumstances or past performance, by a majority vote elect not to engage Premier because they had determined, in their reasonable business judgment, that it would not be in Braemar’s bestinterest to engage Premier or that another manager or developer could perform the project management or development duties materially better.
The Braemar Mutual Exclusivity Agreement provides for an initial term until November 19, 2023. The initial term will be automatically extended for three successive periods of seven years each and, thereafter, a final term of four years, provided that at the time of any such extension an event of default under the Braemar Mutual Exclusivity Agreement does not exist.
The foregoing descriptions of the Amended and Restated Mutual Exclusivity Agreement with Remington Lodging, Mutual Exclusivity Agreements with Braemar and Ashford Trust, and Master Project Management Agreements with Braemar and Ashford Trust are qualified in their entirety by reference to the agreements, which have been included as exhibits to other documents filed with the SEC and are incorporated by reference to this Form 10-K.
Our Investor Rights Agreement, Merger and Registration Rights Agreement, Non-Competition Agreement, Transition Cost Sharing Agreement and Hotel Services Agreement with the Bennetts
Investor Rights Agreement
In connection with the acquisition of the hotel management business conducted by Remington Lodging which closed on November 6, 2019, the Company, Mr. Monty J. Bennett, Mr. Archie Bennett, Jr., MJB Investments, LP, Mr. James L. Cowen, Mr. Jeremy Welter, Mr. Mark A. Sharkey, Ms. Marissa A. Bennett and other related parties entered into an investor rights agreement (the “Investor Rights Agreement”) governing the relationship of such parties subsequent to such closing. The Investor Rights Agreement supersedes and replaces the previously existing investor rights agreement, dated August 8, 2018, in all respects.
Board Designation Rights. For so long as the holders of Series D Convertible Preferred Stock (together with each person that succeeds to their respective interests as the result of a transfer permitted under the Investor Rights Agreement, the “Covered Investors”) beneficially own no less than 20% of the issued and outstanding shares of our common stock (taking into account the Series D Convertible Preferred Stock on an as-converted basis), Mr. Monty J. Bennett, during his lifetime, and the Covered Investors holding 55% of the common stock (taking into account the Series D Convertible Preferred Stock on an as-converted basis held by all Covered Investors) thereafter, will be entitled to nominate one individual (other than Mr. Archie Bennett, Jr.), and Mr. Archie Bennett, Jr., during his lifetime, and the Covered Investors holding 55% of the common stock
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(taking into account the Series D Convertible Preferred Stock on an as-converted basis held by all Covered Investors) thereafter, will be entitled to nominate one individual (other than Mr. Archie Bennett, Jr.) for election as a member of our board of directors (each, a “Seller Nominee”). Initially, Mr. Monty J. Bennett will serve as the Seller Nominee of Mr. Monty J. Bennett, and Mr. W. Michael Murphy will serve as the Seller Nominee of Mr. Archie Bennett, Jr.
In the event we fail to pay the accrued preferred dividends on the Series D Convertible Preferred Stock for two consecutive quarterly periods, the Covered Investors agree that one of the two additional board designation rights arising under the Certificate of Designation (as defined below) shall be vested in Mr. Archie Bennett, Jr., during his lifetime, and the other such board designation right shall be vested in Mr. Monty J. Bennett, during his lifetime. In furtherance of the foregoing, each Covered Investor agrees that it will vote all of such Covered Investor’s Series D Convertible Preferred Stock, and consent to any action by the holders of the Series D Convertible Preferred Stock without a meeting as permitted under appropriate state law, as may be directed Mr. Archie Bennett, Jr., or Mr. Monty J. Bennett, respectively, in connection with their designation of the individuals to fill such board seats.
Transfer Restrictions. For five years after the closing of the acquisition of Remington Lodging, each of the Covered Investors are prohibited from transferring our common stock or Series D Convertible Preferred Stock to any person that is or would become, together with such person’s affiliates and associates, a beneficial owner of 10% or more of the then outstanding shares of our common stock, taking into account the Series D Convertible Preferred Stock on an as converted basis, except (i) to family members and in connection with estate planning, (ii) as a result of any voting agreement between Mr. Monty J. Bennett and Mr. Archie Bennett, Jr., (iii) transfers in which no transferee (or group of affiliated or associated transferees) would purchase or receive 2% or more of the outstanding voting shares of the Company, (iv) in connection with any widespread public distribution of shares of our common stock or Series D Convertible Preferred Stock registered under the Securities Act of 1933, as amended (the “Securities Act”), or (v) a transfer to any transferee that would beneficially own more than 50% of our outstanding common stock and Series D Convertible Preferred Stock without any transfer from a Covered Investor, unless such transfer restrictions have been waived by the affirmative vote of the majority of our stockholders that are not affiliates or associates of the Covered Investors.
Voting Limitations. The Holder Group Investors (as defined below) will not, subject to certain exceptions and until the aggregate voting power of the Holder Group Investors is less than 25% of the combined voting power of all of the outstanding voting securities of the Company on any given matter, until the fifth anniversary of the closing of the Transactions: (i) take any action, vote such Holder Group Investor’s securities, or enter into any transaction, including by acting in consent with another person, that would result in the Company being treated as a “controlled company” under the applicable rules of the NYSE American nor (ii) take any action, vote such Holder Group Investor’s securities, or into any transaction, including by acting in concert with another person, that results in the Company engaging in a Rule 13e-3 Transaction (as defined in the rules and regulations issued by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), provided, that the restriction set forth in this clause (ii) may be waived by the affirmative vote of a majority of the issued and outstanding shares of our voting stock (taking into account the Series D Convertible Preferred Stock on an as-converted basis) that are not beneficially owned by the Holder Group Investors (provided that, for purposes of clause (ii), our voting stock that is owned of record by Ashford Trust or Braemar shall not be deemed to be beneficially owned by the Holder Group Investors so long as the decision to vote such shares on such waiver is solely determined by a majority of the members of the board of directors of the applicable entity who are independent within the meaning of applicable rules of the NYSE American (or any exchange on which our voting stock is then listed) and do not have a material financial interest in such Rule 13e-3 Transaction (or a duly appointed board committee consisting only of such independent and disinterested board members)).
Put Option. Each Covered Investor has the option, exercisable with respect to each and every Change of Control (defined below) that may occur following the date of the Investor Rights Agreement, to sell to the Company all or any portion of the Series D Convertible Preferred Stock then owned by such Covered Investor (the “Change of Control Put Option”) at any time during the ten business day consecutive period following the consummation of a Change of Control. “Change of Control” means, with respect to any Covered Investor, any of the following, in each case that was not voted for or consented to by such Covered Investor solely in its capacity as a stockholder of the Company (but not in any other capacity): (i) any person (other than Mr. Monty J. Bennett, Mr. Archie Bennett, Jr., MJB Investments, LP their controlled affiliates, any trust or other estate in which any of them has a substantial beneficial interest or as to which any of them serves as trustee or in a similar fiduciary capacity, any immediate family member of Mr. Monty J. Bennett or Mr. Archie Bennett, Jr., or any group (as defined in Rule 13d-5(b) under the Exchange Act)) acquires beneficial ownership of securities of the Company that, together with the securities of the Company previously beneficially owned by the first such person, constitutes more than 50% of the total voting power of our outstanding securities, or (ii) the sale, lease, transfer or other disposition (other than as collateral) of all or a majority of our (taken as a whole) assets or income or revenue generating capacity, other than to any direct or indirect majority-owned and controlled affiliate of the Company.
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In the event that a Covered Investor exercises the Change of Control Put Option, the price to be paid by the Company to such exercising Covered Investor will be an amount, payable in cash or our common stock (at the election of such Covered Investor), equal to (i) $25.125, plus (ii) all accrued and unpaid dividends, plus (iii) in the event that a Change of Control Put Option is exercised prior to June 30, 2026, an additional amount equal to, initially, 24% of $25 until the first anniversary of the closing of the Transactions, with such percentage reduced by (A) 4% for each year thereafter, inclusive of the year in which the Change of Control Put Option is exercised, until the fourth anniversary of the closing of the Transactions and (B) 3% for each year thereafter until the sixth anniversary of the closing of the Transactions, at which time such percentage shall be 3% until June 30, 2026.
Preemptive Rights. The Investor Rights Agreement also provides that, except for issuances contemplated by the transaction documents entered into under the Combination Agreement, we will not issue any equity securities, rights to acquire equity securities of the Company or debt convertible into equity securities of the Company (collectively, the “New Securities”), unless we give the Bennetts and each person that succeeds to the interests of the Bennetts and certain permitted transferees (“Holder Group Investors”) notice of its respective intention to issue New Securities and the right of such Holder Group Investor to acquire such Holder Group Investor’s pro rata share of the New Securities.
Termination. The Investor Rights Agreement terminates by its terms on the earliest of (i) the written agreement of the Company and the Covered Investors holding in the aggregate 55% of the total number of shares of our common stock (taking into account the Series D Convertible Preferred Stock on an as converted basis) and (ii) the date on which the Covered Investors no longer own any of our common stock or Series D Convertible Preferred Stock; provided certain specified provisions will last for the time periods provided by their terms, and others will last indefinitely.
A Covered Investor will automatically cease to be bound by the Investor Rights Agreement solely in its capacity as a Covered Investor at such time as such Covered Investor no longer owns any of our common stock or any Series D Convertible Preferred Stock.
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Merger and Registration Rights Agreement
In connection with the acquisition of the hotel management business conducted by Remington Lodging which closed on November 6, 2019, the Company, Ashford Merger Sub Inc., the Bennetts and the Covered Investors entered into the Merger and Registration Rights Agreement (the “Merger Agreement”). Pursuant to the Merger Agreement, the Company filed a registration statement on March 5, 2020 under the Securities Act to permit the resale of the Series D Convertible Preferred Stock and our common stock into which the Series D Convertible Preferred Stock is convertible. The registration statement was declared effective on March 12, 2020. We will use commercially reasonable efforts to cause the registration statement to remain available for the resale of the securities covered by the registration statements. In certain circumstances, including at any time that we are in possession of material nonpublic information, we will have the right to suspend sales under the registration statement.
Non-Competition Agreement
In connection with the acquisition of the hotel management business conducted by Remington Lodging which closed on November 6, 2019, the Company and the Bennetts entered into a non-competition agreement (the “Non-Competition Agreement”). Subject to certain exclusions, the Non-Competition Agreement provides that for a period of the later of five years following the closing of the Transactions, or three years following the date on which Mr. Monty J. Bennett is no longer our principal executive officer, each of Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. will not, and will cause its controlled affiliates not to, directly or indirectly (i) engage in, or have an interest in a person that engages directly or indirectly in, (a) the hotel management business conducted by Remington and its subsidiaries within the lodging industry, including hotel operations, sales and marketing, revenue management, budget oversight, guest service, asset maintenance (not involving capital expenditures) and related services conducted by Remington and its subsidiaries or (b) the design and construction business conducted by Premier, within the lodging industry, including construction management, interior design, architecture, and the purchasing, expediting, warehousing, freight management, installation and supervision of property and equipment, and related services, in each case in clause (a) or (b) anywhere in the United States (excluding certain passive investments and existing relationships); or (ii) intentionally interfere in any material respect with the business relationships between Remington, Premier and their respective customers, clients or vendors. Notwithstanding the foregoing, each of the Bennetts may, among other things, (A) freely pursue any opportunity to acquire ownership, directly or indirectly, in any interests in real properties in the lodging industry if such opportunity has been presented to the board of each of the Company, Ashford Trust and Braemar and none of the foregoing elect to pursue or participate in such opportunity and (B) with respect to any hotel properties in which the Bennetts, or any of their controlled affiliates, own, directly or indirectly (other than through their ownership interests in Ashford Trust or Braemar), in the aggregate at least a 5% interest (such hotel properties, “Bennett-Owned Properties”), each Bennett, and any of his controlled affiliates, directly or indirectly: (x) may self-manage the provision of hotel management business services or design and construction business services to such Bennett-Owned Properties, but may not provide any such services to any other hotels not constituting Bennett-Owned Properties, or (y) may require that the Company provide hotel management business services and design and construction business services pursuant to the terms of the Hotel Services Agreement (as defined below).
Transition Cost Sharing Agreement
In connection with the acquisition of the hotel management business conducted by Remington Lodging which closed on November 6, 2019, the Bennetts entered into a transition cost sharing agreement (the “Transition Cost Sharing Agreement”) with us, pursuant to which the Company and Remington will provide the Bennetts with family office related services, including accounting, tax, legal and general office and administrative support services (collectively, the “Services”) generally in accordance with Remington’s past practice prior to the closing. The Bennetts will pay to the Company and Remington the actual costs incurred by the Company and Remington, including salaries, employment taxes and benefits applicable to the employees of the Company and Remington providing the Services, based on the percentage of time spent by such employees in providing the Services, relative to the time spent by such employees on matters not related to the Services, plus applicable allocated overhead and other expenses incurred, in each case without mark-up. Subject to certain exceptions, the Services are required to be provided by the Company and Remington until the last to occur of: (i) the tenth anniversary of the date of the Transition Cost Sharing Agreement; (ii) the death of Mr. Archie Bennett, Jr. and (iii) 30 days following the date on which Mr. Monty J. Bennett is no longer employed by us as our chief executive officer, or substantially similar executive position, or ceases to serve as a member of our board of directors.
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Hotel Services Agreement
In connection with the acquisition of the hotel management business conducted by Remington Lodging which closed on November 6, 2019, the Bennetts entered into a hotel services agreement (the “Hotel Services Agreement”) with us, pursuant to which we will provide specified hotel design and construction and hotel management services to any hotel in which the Bennetts, in the aggregate, directly or indirectly (other than through their ownership of interests in Ashford Trust and Braemar) own at least a 5% interest, in exchange for fees in an amount equal to the cost of such services provided plus 5%, until the last to occur of: (i) the tenth anniversary of the commencement of services or (ii) the death of Mr. Archie Bennett, Jr. and Mr. Monty J. Bennett.
Regulation
General. The Company, Ashford Trust, Braemar and Stirling, as applicable, are subject, in certain circumstances, to supervision and regulation by state and federal governmental authorities and are subject to various laws and judicial and administrative decisions imposing various requirements and restrictions, which, among other things regulate public disclosures, reporting obligations and capital raising activity. As an advisor to companies that own hotel properties, the operations and properties of such entities are subject to various federal, state and local laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements.
REIT Regulations. Each of Ashford Trust and Ashford PrimeBraemar has elected and is qualified and expects to continue to qualify to be taxed as a REIT under SectionSections 856 through 860 of the Internal Revenue Code. As REITs, such companies must currently distribute, at a minimum, an amount equal to 90% of their taxable income. In addition, such companies must distribute 100% of taxable income to avoid paying corporate federal income taxes. REITs are also subject to a number of organizational and operational requirements in order to elect and maintain REIT status. These requirements include specific share ownership tests and assets and gross income composition tests. If either Ashford Trust or Ashford PrimeBraemar fails to continue to qualify as a REIT in any taxable year, it is subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate tax rates. Even if such companies continue to qualify for taxation as REITs, they may be subject to state and local income taxes and to federal income tax and excise tax on their undistributed income. Under the Protecting Americans from Tax Hikes Act of 2015, enacted on December 18, 2015, several Internal Revenue Code provisions relating to REITs and their stockholders were revised. These new rules were enacted with varying effective dates, some of which were retroactive.
Tax Cuts and Jobs Act. The Tax Cuts and Jobs Act ("TCJA") was enacted on December 22, 2017. The TCJA reduced the US federal corporate tax rate from 35% to 21% effective January 1, 2018. As a result, we revalued our net deferred tax assets and valuation allowance using the 21% U.S. federal income tax rate. In addition, the TCJA repealed the provisions that provided for carryback of losses generated in taxable years ending after December 31, 2017, and we increased our valuation allowance because we cannot consider tax paid in prior years as a source of taxable income to support realization of a portion of our net deferred tax assets. The impact of other provisions of the TCJA are still being evaluated by the Company.
Americans with Disabilities Act. As the advisor to Ashford Trust, Braemar and Ashford Prime,Stirling, we are responsible for ensuring that the hotels owned by such entities comply with applicable provisions of the Americans with Disabilities Act or “ADA,”(the “ADA”) to the extent that such hotels are “public accommodations” as defined by the ADA. Non-compliance with the ADA could result in imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing one, and we continue to assess the hotels and to advise Ashford Trust, Braemar or Ashford Prime,Stirling, as applicable, to make alterations as appropriate in this respect.
Affordable Care Act. Changes in laws and regulations could reduce our profits or increase our costs. We could beare subject to penalties undera variety of laws, regulations and policies including the employer mandate provisions of the Affordable Care Act ("ACA"(“ACA”) if we did not, which imposes penalties on employers failing to offer affordable, minimum value health care coverage to substantially all of our full-time equivalent employees and their dependents. We do not anticipate incurring any significant penalties under the ACA. Any such penalty would be based on the number of full-time employees. We do not anticipate being subject to a penalty under the ACA; however, even in the event that we are, any such penalty would be less than approximately $652,000 based on our number of full-time employees. As of December 31, 2017,2023, we had 102105 full-time domestic corporate employees and approximately 3008,900 employees at our consolidated subsidiaries that provide products and services primarily to the lodging industry.
Environmental Matters. Under various laws relating to the protection of the environment, a current or previous owner or operator (including tenants) of real estate may be liable for contamination resulting from the presence or discharge of hazardous or toxic substances at that property and may be required to investigate and clean up such contamination at that property or emanating from that property. These costs could be substantial and liability under these laws may attach without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants, and the liability may be joint and several. The presence of contamination or the failure to remediate contamination at the hotels owned by Ashford Trust or Ashford PrimeBraemar may expose such entities, and potentially us, to third-party liability or materially and adversely affect the ability to sell, lease or develop the real estate or to incur debt using the real estate as collateral.
The hotels owned by Ashford Trust, Braemar and Ashford PrimeStirling are subject to various federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew and waste management. These hotels incur costs to comply with these laws and regulations, and we or the property owners could be subject to fines and penalties for non-compliance.

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Some of these hotels may contain or develop harmful mold or suffer from other adverse conditions, which could lead to liability for adverse health effects and costs of remediation. The presence of significant mold or other airborne contaminants at any of the hotels owned by Ashford Trust, Braemar or Ashford PrimeStirling could require a costly remediation program to contain or remove the mold or other airborne contaminants from the affected hotel or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from guests or employees at the hotels and others if property damage or health concerns arise.
In the judgment of management, while we may incur significant expense complying with the various regulation to which we are subject, existing statutes and regulations will not have a material adverse effect on our business. However, it is not possible to forecast the nature of future legislation, regulations, judicial decisions, orders or interpretations, nor their impact upon our future business, financial condition, results of operations or prospects.
Distributions and Our Distribution Policy
Evaluation of our distribution policy and the decision to make a distribution is made solely at the discretion of our board of directors and is based on factors including, but not limited to, our ability to generate income, availability of existing cash balances, the performance of our business, capital requirements, applicable law, access to cash in the capital markets and other financing sources, general economic conditions and economic conditions that more specifically impact our business or prospects and other factors our board of directors deems relevant.
Future distribution levels are subject to adjustment based upon any one or more of the factors set forth above, the matters discussed under “Item 1A. Risk Factors” in this Annual Report on Form 10-K or any other document we file with the SEC under the Exchange Act and other factors that our board of directors may, from time to time, deem relevant to consider when determining an appropriate distribution. Our board of directors may also determine not to make any distribution.
Competition
The asset management industry is highly competitive. We compete on an industry, regional and niche basis based on a number of factors, including ability to raise capital, investment opportunities and performance, transaction execution skills, access to and retention of qualified personnel, reputation, range of products, innovation and fees for our services. Our clients compete with many third parties engaged in the hotel industry, including other hotel operating companies, ownership companies (including hotel REITs) and national and international hotel brands. Some of these competitors, including other REITs and private real estate companies and funds may have substantially greater financial and operational resources than Ashford Trust, Braemar or Ashford PrimeStirling and may have greater knowledge of the markets in which we seek to invest. Such competitors may also enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Future competition from new market entrants may limit the number of suitable investment opportunities offered to Ashford Trust, Braemar and Ashford Prime.Stirling. It may also result in higher prices, lower yields and a more narrow margin over the borrowing cost for Ashford Trust, Braemar and Ashford Prime,Stirling, making it more difficult to originate or acquire new investments on attractive terms. Certain competitors may also be subject to different regulatory regimes or rules that may provide them more flexibility or better access to pursue potential investments and raise capital for their managed companies. In addition, certain competitors may have higher risk tolerance, different risk assessment or a lower return threshold, which could allow them to consider a broader range of investments and to bid more aggressively for investment opportunities that we may want to pursue.
Ashford Trust, Braemar and Ashford PrimeStirling each compete with many third parties engaged in the hotel industry. Competition in the hotel industry is based on a number of factors, most notably convenience of location, brand affiliation, price, range of services, guest amenities or accommodations offered and quality of customer service. Competition is often specific to the individual markets in which properties are located and includes competition from existing and new hotels. We believe that hotels that are affiliated with leading national brands, such as the Marriott or Hilton brands, will enjoy the competitive advantages associated with operating under such brands. Increased competition could have a material adverse effect on the occupancy rate, average daily room rate and RevPAR of the hotels owned by Ashford Trust, Braemar or Ashford PrimeStirling or may require capital improvements that otherwise would not have to be made, which may result in decreases in the profitability of Ashford Trust, Braemar, or Ashford PrimeStirling and decreased advisory fees to us. Since the fees we receive are based in part upon total equity market capitalization and total shareholder returns, such fees are impacted by relative performance of the share price of Ashford Trust, Braemar and Ashford PrimeStirling compared to competitive REITs.
Insurance
We are required under our advisory agreements to havemaintain errors and omissions insurance programscoverage and other insurance coverage in amounts which are carried by managers performing functions similar to comply with our contractual obligations and as reasonably necessary for our business.those we provide.

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Shareholder Rights Plan
On November 16, 2014,August 30, 2022, we adopted a shareholder rights plan by entering into a Rights Agreement, dated November 17, 2014,August 30, 2022, with ComputerShare Trust Company, N.A., as rights agent (“ComputerShare”) (the “Rights Agreement”). We intend forThe Rights Agreement was adopted in response to recent volatility of the shareholder rights plan to improve the bargaining positionstock market and trading of our boardcommon stock and is intended to protect the Company and its stockholders from efforts to obtain control or rapid share accumulations that are inconsistent with the best interests of directors in the event of an unsolicited offer to acquire our outstanding shares of common stock.Company and its stockholders. Our board of directors implemented the rights plan by declaring (i) a dividend to the holders of the Company’s common stock of one preferred share purchase right that was paid on November 27, 2014,(a “Right”) for each outstanding share of our common stock and (ii) a dividend to the holders of the Company’s Series D Convertible Preferred Stock of one Right in respect of each share of the Company’s common stock issuable upon conversion of the Series D Convertible Preferred Stock. The dividends were distributed on November 27, 2014,September 9, 2022, to our stockholders of record on that date. Each of those rightsRights become exercisable on the Distribution Date (defined below)date on which the Rights separate and begin trading separately from our common stock and entitles the registered holder to purchase from the Company one one-thousandth of a share of our Series AF Preferred Stock, par value $0.01$0.001 per share (“Series F Preferred Stock”), at a price of $275 per one one-thousandth of a share of our Series AF Preferred Stock represented by such a right,Right, subject to adjustment. The value of the Rights was de minimis.
On May 15, 2023, we entered into Amendment No. 1 to the Rights Agreement (“Amendment No. 1”) with ComputerShare. Pursuant to Amendment No. 1, the Rights Agreement was amended to (i) extend the Final Expiration Date (as defined under the Rights Agreement) with respect to the Company’s Rights until July 30, 2024 and (ii) decrease the beneficial ownership threshold in the definition of “Acquiring Person” from 10% to 7%. Our board of directors determined to adopt Amendment No. 1 in response to continued volatility of the stock market and trading of our common stock.Pursuant to Amendment No. 1, the Rights will expire on July 30, 2024, unless the expiration date is extended or unless the Rights are earlier redeemed by the Company.
Initially, the rightsRights will be attached to all certificates representing our common stock and Series D Preferred Share certificates and no separate certificates evidencing the rightsRights (“Right Certificates”) will be issued. The Rights Agreement provides that, until the date on whichDistribution Date (as defined below), or earlier expiration or redemption of the rights separate and begin trading separately from our common stock (which we refer to asRights: (i) the “Distribution Date”), the rightsRights will be transferred with and only with the shares of our common stock. The Distribution Date will occur,stock and the rightsSeries D Preferred Shares, (ii) new common stock and the Series D Preferred Shares certificates issued after September 9, 2022 (the “Record Date”) or upon transfer or new issuance of common stock and Series D Preferred Shares will contain a notation incorporating the Rights Agreement by reference, and (iii) the surrender for transfer of any certificates for common stock or Series D Preferred Shares outstanding as of the Record Date, even without such notation or a copy of the Summary of Rights being attached thereto, will also constitute the transfer of the Rights associated with the common stock or the Series D Preferred Shares represented by such certificate. The Rights would separate and begin trading separately from the shares of our common stock and certificates representing the rightsSeries D Preferred Shares, and Right Certificates will be issuedcaused to evidence the rights on the earlier to occur of:
(i)
i.10 business days following a public announcement, or the public disclosure of facts indicating, that a person or group of affiliated or associated persons has acquired beneficial ownership (as defined in the Rights Agreement) of 10% or more of the outstanding shares of common stock, (referred to, subject to certain exceptions as “Acquiring Persons”) (or, in the event an exchange of the rights for shares of our common stock is effected in accordance with certain provisions of the Rights Agreement and our board of directors determines that a later date is advisable, then such later date that is not more than 20 days after such public announcement); or
(ii)10 business days (or such later date as may be determined by action of our board of directors prior to such time as any person becomes an Acquiring Person) of 10% or more of the outstanding shares of our common stock following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 10% or more of the outstanding shares of our common stock.
The rights also become exercisable if a person or group that already beneficially owns 10%of affiliated or associated persons has acquired Beneficial Ownership (as defined below) of 7% or more of ourthe outstanding common stock acquires any additional shares(with certain exceptions as described below, an “Acquiring Person”) (or, in the event an exchange is effected in accordance with Section 24 of the Rights Agreement and our board of directors determines that a later date is advisable, then such later date that is not more than 20 days after such public announcement); or
ii.10 business days (or such later date as may be determined by action of our board of directors prior to such time as any person becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 7% or more of the outstanding common stock (the earlier of such dates, the “Distribution Date”).
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An Acquiring Person shall not include (i) the Company, (ii) any subsidiary of the Company, (iii) any employee benefit plan of the Company or of any subsidiary of the Company, (iv) any entity or trustee holding (or acting in a fiduciary capacity in respect of) common stock for or pursuant to the terms of any such employee benefit plan or for the purpose of funding any such plan or funding other employee benefits for employees of the Company or of any subsidiary of the Company, (v) Monty J. Bennett and his affiliates and associates and (vi) any person who or which, at the close of business on the Record Date, was a Beneficial Owner of 7% or more of the common stock of the Company then outstanding, other than a person who or which is not an affiliate or associate of the Beneficial Owner (as defined in the Rights Agreement) on the Record Date and who or which subsequently becomes an affiliate or associate of such Beneficial Owner without the prior written approval of our board of directors except(a “Grandfathered Stockholder”); provided, however, that if a Grandfathered Stockholder becomes, after the DistributionRecord Date, will not occurthe Beneficial Owner of additional common stock (other than as a result of our company, onecertain corporate actions of our subsidiaries, onethe Company), regardless of our employee benefit planswhether, thereafter or as a trustee for oneresult thereof, there is an increase, decrease or no change in the percentage of those plans, or Mr. Monty J. Bennett and certain of his affiliates and associates (so long as they own 20% or less of our outstanding common stock), acquiring additional shares of our common stock then outstanding beneficially owned by such Grandfathered Stockholder, then such Grandfathered Stockholder shall be deemed an Acquiring Person unless, upon such acquisition of beneficial ownership of additional common stock, such Grandfathered Stockholder is not the Beneficial Owner of 7% or more of the common stock then outstanding; provided further that upon the first decrease of a Grandfathered Stockholder’s beneficial ownership below 7%, such Grandfathered Stockholder shall no longer be considered a Grandfathered Stockholder and those persons will not be Acquiring Persons.this clause (vi) shall have no further force or effect with respect to such Grandfathered Stockholder.
If a person or group becomes an Acquiring Person at any time withafter the date of the Rights Agreement (with certain limited exceptions,exceptions) the rightsRights will become exercisable for shares of our common stock (or, in certain circumstances, shares of our Series A Preferred StockShares or other similar securities of our securities that are similar)the Company) having a value equal to two times the exercise price of the right.Right. From and after the announcement that any person has become an Acquiring Person, if certificated rightsthe Rights evidenced by a Right Certificate are or were at any time on or after the earlier of (i) the date of such announcement or (ii) the Distribution Date acquired or beneficially owned by an Acquiring Person or an associate or affiliate of an Acquiring Person, such rightsRights shall become void, and any holder of such rightsRights shall thereafter have no right to exercise such rights. In addition, if,Rights.
If, at any time after a person becomes an Acquiring Person,Person: (i) we consolidatethe Company consolidates with, or mergemerges with and into, any other person;person; (ii) any person consolidates with us,the Company, or merges with and into usthe Company, and we arethe Company is the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares of our common stock are or will be changed into or exchanged for stock or other securities of any other person (or of ours)the Company) or cash or any other property;property; or (iii) 50% or more of ourits consolidated assets or earning powerEarning Power (as defined in the Rights Agreement) are sold, then proper provision will be made so that each holder of a rightRight will thereafter have the right to receive, upon the exercise of a rightthereof at the then current exercise price of the right,Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the right.Right. Upon the occurrence of ana flip-in or flip-over event, of the type described in this paragraph, if our board of directors so elects, we willthe Company shall deliver upon payment of the exercise price of a rightRight an amount of cash or securities equivalent in value to the shares of common stock issuable upon exercise of a right. If we failRight; provided that, if the Company fails to meet thatsuch obligation within 30 days following of the announcement that a person has become an Acquiring Person, wethe Company must deliver, upon exercise of a rightRight but without requiring payment of the exercise price then in effect, shares of our common stock (to the extent available) and cash equal in value to the difference between the value of the shares of our common stock otherwise issuable upon the exercise of a rightRight and the exercise price then in effect.
On December 5, 2017, the Our board of directors may extend the 30-day period described above for up to an additional 60 days to permit the taking of action that may be necessary to authorize sufficient additional common stock to permit the issuance of common stock upon the exercise in full of the Company extendedRights.
Human Capital
Our key human capital management objectives are to attract, recruit, hire, develop and promote a deep and diverse bench of talent that translates into a strong and successful workforce. To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the Final Expiration Date with respectfuture; reward and support employees through competitive pay and benefit programs; enhance our culture through efforts to the Company’s Rights Agreement (each as defined under the Amendedfoster, promote, and Restated Rights Agreement, dated as of August 12, 2015, as amended by Amendment No. 1preserve a positive corporate culture; and evolve and invest in technology, tools, and resources to the Amended and Restated Rights Agreement, dated as of October 31, 2016, between the Company andenable employees at work.

Employees
Computershare Trust Company, N.A.) until the date of the Company’s 2018 annual meeting of stockholders, at which time the stockholders will vote on a further extension of the Final Expiration Date. If the stockholders do not approve such further extension, the Rights will expire on the date of the 2018 annual meeting of stockholders.
Employees
At December 31, 2017, Ashford Inc.2023, we had 102a total of 105 corporate employees thatwho directly or indirectly perform various acquisition, development, asset and investment management, capital markets, accounting, tax, risk management, legal, redevelopment, and corporate management functions for Ashford Inc., Ashford Trust, Braemar and Ashford Prime. Certain ofStirling. Employees at our consolidated subsidiaries have a total of approximately 300 employees as of December 31, 2017, that provide hospitality products and services primarily to the lodging industry, including audio visualhotel management, design and construction, event technology and other services. As of December 31, 2023, our consolidated subsidiaries had a total of approximately 8,900 employees.
Emerging Growth Company Status
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We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Although we are still evaluating the JOBS Act, we may take advantage of some or all of the reduced regulatory and reporting requirements that are available to us as long as we qualify as an emerging growth company, except that we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act.
We, in general, remain as an emerging growth company for up to five full fiscal years following our separation from Ashford Trust. We would cease to be an emerging growth company and, therefore, become ineligible to rely on the above exemptions, if we:
have more than $1 billion in annual revenue in a fiscal year;
issue more than $1 billion of non-convertible debt during the preceding three-year period; or
become a “large accelerated filer” as defined in Exchange Act Rule 12b-2, which would occur after: (i) we have filed at least one annual report pursuant to the Exchange Act; (ii) we have been an SEC-reporting company for at least 12 months; and (iii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
Access To Reports and Other Information
We maintain a website at www.ashfordinc.com. On our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act, of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with the SEC. In addition, our Code of Business Conduct and Ethics, Code of Ethics for the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, Corporate Governance Guidelines, and Board Committee Charters are also available free-of-charge on our website or can be made available in print upon request.
All reports filed with the SEC may also be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E. Washington, D.C. 20549-1090. Further information regarding the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. In addition, all of our filed reports can be obtained at the SEC’s website at www.sec.gov.www.sec.gov. We also use our website to distribute company information, and such information may be deemed material. Accordingly, investors should monitor our website, in addition to our press releases, SEC filings and public conference calls and webcasts. The contents of our website are not, however, a part of this report.
A description of any substantive amendment or waiver of our Code of Business Conduct and Ethics or our Code of Ethics for our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer will be disclosed on our website under the Corporate Governance section. Any such description will be located on our website for a period of 12 months following the amendment or waiver.
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Item 1A. Risk Factors
Summary Risk Factors
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to, risks related to:
•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 conflict between Russia and Ukraine and the more recent Israel-Hamas conflict;
•extreme weather conditions may cause property damage or interrupt business;
•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 Alii Nui and Chesapeake or any other business we invest in or acquire, which may harm relationships with customers, employees and regulators; and
•unexpected costs of further goodwill impairments relating to the acquisition or integration of Alii Nui, Chesapeake or any other business we invest in or acquire.
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Risks Related to Our Business
A financial crisis, economic slowdown, pandemic or epidemic or other economically disruptive event may significantly and adversely affect our businesses.
We provide services primarily to clients in the hospitality industry. The performance of the hospitality industry has been closely linked with the performance of the general economy and, specifically, growth in the U.S. gross domestic product. In periods of economic difficulties or concerns with respect to communicable disease, business and leisure travelers may seek to reduce travel costs and/or health risks by limiting travel or seeking to reduce costs on their trips. Any economic recession will likely have an adverse effect on our clients Ashford Trust, Braemar and Stirling. Additionally, the public perception of a risk of a pandemic, such as COVID-19, Ebola, H1N1 influenza (swine flu), MERS, SARs, avian flu, the Zika virus or similar outbreaks, or public perception of health risks linked to perceived regional food and beverage safety, may further affect our clients’ businesses, and thereby may adversely affect our business, particularly with respect to: (i) base and incentive fees paid to us by our clients under our advisory agreements (which depend in part on our clients’ market capitalization and business performance at our clients’ hotels); and (ii) revenues generated by our INSPIRE, Premier and Remington businesses, which depend in significant part on occupancy levels and operating performance at our clients’ hotels.
Economic conditions in the United States could have a material adverse impact on our earnings and financial condition.
The economic outlook in the United States is uncertain and facing recessionary concerns resulting from slowing gross domestic product growth, continuing effects of the COVID-19 pandemic, rising inflation, increasing interest rates, supply chain disruptions, the conflict between Russia and Ukraine and the more recent Israel-Hamas conflict. Because economic conditions in the United States may affect demand within the hospitality industry and our subsidiaries’ businesses, current and future economic conditions in the United States, including slower growth, stock market volatility and recession fears, could have a material adverse impact on our earnings and financial condition. Economic conditions may be affected by numerous factors, including but not limited to, the pace of economic growth and/or recessionary concerns, inflation, increases in the levels of unemployment, energy prices, changes in currency exchange rates, uncertainty about government fiscal and tax policy, geopolitical events, the regulatory environment and the availability of credit and interest rates.
Inflation and price volatility could negatively impact our businesses and results of operations.
General inflation in the United States has risen to levels not experienced in recent decades, including rising energy prices, prices for consumer goods, interest rates, wages, and currency volatility, causing interest rates and borrowing costs to rise. These increases and any fiscal, monetary or other policy interventions by the U.S. government or Federal Reserve in reaction to such events could negatively impact our businesses by increasing our operating costs and our borrowing costs and may negatively impact our ability to access the debt markets on favorable terms.
Our cash, cash equivalents and investments could be adversely affected if the financial institutions in which we hold our cash, cash equivalents and investments fail.
We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) insurance limit. The FDIC took control and was appointed receiver of Silicon Valley Bank, New York Signature Bank and First Republic Bank on March 10, 2023, March 12, 2023 and May 1, 2023, respectively. The Company did not have any direct exposure to Silicon Valley Bank, New York Signature Bank or First Republic Bank. However, if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.
We have identified a material weakness in our internal control over financial reporting which may, if not remediated, result in additional material misstatements in our financial statements.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. As disclosed in Item 9A, “Controls and Procedures,” management identified a material weakness in our internal control over financial reporting. The material weakness was identified 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 controls over evaluating whether the revenue and expense from the one-time transfer of the casualty insurance loss portfolio to Warwick should eliminate in consolidation.
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A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of the material weakness, our management concluded that our internal control over financial reporting and related disclosure controls and procedures were not effective based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission.
We are actively engaged in developing and executing a remediation plan designed to address this material weakness. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our financial statements may contain material misstatements and we could be required to restate our financial results.
The asset management, advisory and hospitality productproducts and services businesses are highly competitive.
The asset management, advisory and hospitality productproducts and services businesses are highly competitive. Competition in these businesses is driven by a variety of factors including: asset and investment performance; the quality of service provided to the companies we advise; investor perception of an asset and investment manager’s drive, focus and alignment of interest; terms of investment, including the level of fees and expenses charged for services; our actual or perceived financial condition, liquidity and stability; the duration of relationships with investors; brand recognition; and business reputation. We expect to face competition

primarily from other asset, service and investment management firms, private equity funds, hedge funds, other financial institutions, sovereign wealth funds, corporate buyers and other parties.firms. A number of factors serve to increase our competitive risks:risks including but not limited to:
•other asset managers or advisors may have greater financial, technical, marketing and other resources and more personnel than we do;
•other asset managers or advisors may offer more products and services than we do or be more adept at developing, marketing and managing new products and services than we are;
•Ashford Trust, Ashford Prime,Braemar, and other companies that we may advise may not perform as well as the clients of other asset managers;
•several other asset managers or advisors and their clients have significant amounts of capital and many of them have similar management and investment objectives to ours which may create additional competition for advisory opportunities;
•some of these other asset managers’ or advisors’ clients may also have a lower cost of capital and access to funding sources that are not available to us or the companies that we advise, which may create competitive disadvantages for us with respect to funding opportunities;
•some of these other asset managers’ or advisors’ clients may have higher risk tolerance, different risk assessment or a lower return threshold, which could allow them to facilitate the acquisition and management by their clients of a wider variety of assets and allow them to consider a broader range of investments and to advise their clients to bid more aggressively for investment opportunities on which we would advise our clients to bid;
•there are relatively few barriers to entry impeding new asset management or advisory companies and the successful efforts of new entrants into the asset management businesses are expected to continue to result in increased competition;
•some other asset managers or advisors may have better expertise or be regarded by potential clients as having better expertise with regard to specific assets or investments;
•other asset managers or advisors may have more scalable platforms and may operate more efficiently than us;
•other asset managers or advisors may have better brand recognition than us and there is no assurance that we will maintain a positive brand in the future;
•other industry participants may from time to time seek to recruit members of our management or investment teams and other employees away from us;
•an increase in the allocation of capital to our asset strategies by institutional and individual investors could lead to a reduction in the size and duration of pricing inefficiencies that we may seek to exploit;
•a decrease in the allocation of capital to our asset strategies could intensify competition for that capital and lead to difficulty in raising new capital; and
•the market for qualified professionals is intensely competitive and our ability to continue to compete effectively will also depend upon our ability to attract, retain and motivate our employees.
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Our inability to effectively compete onin these and other areas may have an adverse effect on our business, results of operations and financial condition.
The investments of the entities we currently advise and provide other products and services to are concentrated in the hotel industry. Our business wouldmay be significantly and adversely affected by anthe economic downturn in that sector and we will be significantly influenced by the economies and other conditions in the specific markets in which our asset management clients operate.
Substantially all of the investments of Ashford Trust, Braemar and Ashford PrimeStirling and the investments of other clients we also provide other products and services to are concentrated in the hotel industry. These concentrations may expose such entities,This concentration exposes our clients and therefore us, to the risk of economic downturnsdownturn in the hotel real estate sector to a greater extent than if the investments of such entitiesours and our clients were diversified across other sectors of the real estate industry or other industries.
Similarly, we are particularly susceptible to adverse market conditions in areas in which our asset management clients have high concentrations of properties. Industry downturns, relocation of businesses, any oversupply of hotel rooms, a reduction in travel and/or lodging demand or other adverse economic developments in the hotel industry generally or in areas where our asset management clients have a high concentration of properties could adversely affect us. In addition, some of our clients’ properties are located in areas where recently there have been bouts of civil unrest. Adverse conditions in these areas (including business layoffs or downsizing, industry slowdowns, property damage and other factors) may have an adverse effect on our business.
FailureThe design and construction business acquisition may not be accretive to our stockholders.
While it is intended that the acquisition of our design and construction business will be accretive to our performance metrics (including after taking into account the possible conversion of the hotel industry to exhibit sustained improvement or to improve as expected may adversely affect us.
A substantial part ofSeries D Convertible Preferred Stock into our business plan is based on management’s belief that the lodging markets will continue to experience stable or improving economic fundamentals in the future. Therecommon stock), there can be no assurance that this will be the case. While the long-term value of the design and construction business is difficult to predict, the failure of the acquisition to be accretive to the Company’s stockholders could have a material adverse effect on the Company’s business, financial condition, and results of operations.
The hotel management business acquisition may not be accretive to our stockholders.
While it is intended that the acquisition of our hotel management business will be accretive to our performance metrics (including after taking into account the possible conversion of the Series D Convertible Preferred Stock into our common stock), there can be no assurance that this will be the case. While the long-term value of the hotel management business is difficult to predict, the failure of the acquisition to be accretive to the Company’s stockholders could have a material adverse effect on the Company’s business, financial condition, and results of operations.
We have no experience in operating an insurance business, and our entry into the insurance market may not be successful.
Through Warwick, we are entering into the business of providing insurance policies covering general liability, workers’ compensation and business automobile claims to certain affiliates of the Company, their advisees and certain unrelated entities in contractual relationships with the Company’s affiliates. Warwick is licensed by the Texas Department of Insurance. Entering the insurance business will subject us to additional laws and regulations and involves additional risks, including risks relating to regulatory oversight and examinations, risks related to compliance with capital maintenance requirements, and increased risks of litigation. The Company has no experience in operating an insurance business, which would enhance these risks. Expanding our business into the realm of insurance involves a number of risks, including the required investment of capital and other resources, increasing demands on our operational and management systems and controls, the diversion of management’s attention from our core business, and our ability to implement an effective marketing strategy to promote awareness of our insurance products. The insurance industry is highly competitive and there can be no assurance that our plans to enter the insurance market will be successful. If our proposed insurance business does not generate sufficient revenue or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected.
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We may be a “controlled company” within the meaning of the rules of NYSE American and, as a result, would qualify for, and could rely on, exemptions from certain corporate governance requirements.
Following the expiration of certain time and voting restrictions in the Investor Rights Agreement on August 8, 2023, the Bennetts gained control of a majority of the voting power of our equity securities. For a period of five years after the effective date of the Investor Rights Agreement, the Bennetts have agreed not to whetherelect, or to what extent, lodging industry fundamentals will remain stable or continuecause the Company to improve. If conditions inelect, to be exempt from the industry do not remain stable or improveNYSE American’s corporate governance requirements on account of the Company’s status as expected, or deteriorate,a “controlled company.” As a result, we may be a “controlled company” within the meaning of the corporate governance standards of the NYSE American after such time. Currently, under the rules of the NYSE American, a company for which more than 50% of the outstanding voting power is held by an individual, group, or another company is a “controlled company” and may elect to be exempt from certain stock exchange corporate governance requirements, which, generally, include the following:
•the requirement that a majority of the board of directors consists of independent directors;
•the requirement that the Company’s nominating and corporate governance committee consists entirely of independent directors; and
•the requirement that the Company’s compensation committee consists entirely of independent directors.
Accordingly, in the event we are a “controlled company” and elect to be exempt from some or all of these corporate governance requirements, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE American corporate governance requirements.
We cannot assure you that our common stock will be liquid or that it will remain listed on the NYSE American exchange. A failure to regain compliance with the NYSE American stockholders’ equity listing requirements or failure to continue to meet the other listing requirements could result in a delisting of our common stock.
Our common stock is listed on the NYSE American exchange. The NYSE American’s listing standards generally mandate that we meet certain requirements relating to stockholders’ equity, stock price, market capitalization, aggregate market value of publicly held shares and distribution requirements.
On December 20, 2023, the Company received a Notice from the NYSE American that it was not in compliance with the continued listing standards set forth in Sections 1003(a)(i) and (ii) of the Company Guide. Specifically, the Notice indicated that the Company was not in compliance with Sections 1003(a)(i) and 1003(a)(ii) of the Company Guide, requiring a listed company to have stockholders’ equity of (i) at least $2.0 million if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years and (ii) at least $4.0 million if it has reported losses from continuing operations or net losses in three of its four most recent fiscal years. The Company reported a stockholders’ deficit of $304.6 million as of December 31, 2023, and had losses from continuing operations and/or net losses in three of its four most recent fiscal years ended December 31, 2023. The Company submitted a plan to the NYSE American on January 12, 2024 addressing how it intends to regain compliance with Sections 1003(a)(i) and (ii) of the Company Guide by June 20, 2025, or sooner if the NYSE American determines that the nature and circumstances of the Company’s continued listing status warrant a shorter period of time.
On February 27, 2024, the Company received notification from the NYSE American that it had accepted the Company’s plan and granted a plan period through June 20, 2025. During the plan period the Company will be subject to quarterly review to determine if it is making progress consistent with the plan. If the Company does not regain compliance with the NYSE American listing standards by June 20, 2025, or if the Company does not make sufficient progress consistent with its plan, then the NYSE American may initiate delisting proceedings.
Additionally, in the future we may not be able to maintain such minimum stockholders’ equity and/or issue additional equity securities in exchange for cash or other assets, if available, to maintain the minimum stockholders’ equity required by the NYSE American. If we are delisted from the NYSE American exchange then our common stock will trade, if at all, only on the over-the-counter market, such as the OTC Bulletin Board securities market, and then only if one or more registered broker-dealer market makers comply with quotation requirements. In addition, delisting of our common stock could depress our stock price, substantially limit liquidity of our common stock and materially adversely affected.affect our ability to raise capital on terms acceptable to us, or at all. Delisting from the NYSE American exchange could also have other negative results, including the potential loss of confidence by suppliers and employees and the loss of institutional investor interest. We cannot assure you that our common stock will be liquid or that it will remain listed on the NYSE American exchange. A failure to regain compliance with the NYSE American stockholders’ equity requirements or failure to continue to meet the other listing requirements could result in a delisting of our common stock.

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We are subject to substantial regulation, numerous contractual obligations and extensive internal policies and failure to comply with these matters could have a material adverse effect on our business, financial condition and results of operations.
We and our subsidiaries will beare subject to substantial regulation, numerous contractual obligations and extensive internal policies. Given our organizational structure, we are subject to regulation by the SEC, the Internal Revenue Service, and other federal, state and local governmental bodies and agencies. We also will beare responsible for managing the regulatory aspects of Ashford Trust and Ashford Prime,Braemar, including compliance with applicable REIT rules. These regulations are extensive, complex and require substantial management time and attention. If we fail to comply with any of the regulations that apply to our business or the businesses of Ashford Trust, Ashford PrimeBraemar or other entities that we advise, we could be subjected to extensive investigations as well as substantial penalties, and our business and operations could be materially adversely affected. We also will have numerous contractual obligations that we must adhere to on a continuous basis to operate our business, the default of which could have a material adverse effect on our business and financial condition. While we have designed policies to appropriately operate our business and the entities we advise, these internal policies may not be effective in all regards and, further, if we fail to comply with our internal policies, we could be subjected to additional risk and liability.
If certain of our subsidiaries that engage in the hotel management business do not qualify as “eligible independent contractors” under applicable REIT rules, each REIT (including Ashford Trust and Braemar) for which such subsidiaries provide services might fail to qualify as a REIT.
If our subsidiaries that engage in the hotel management business, including Ashford Services and its subsidiaries (including Remington), do not qualify as “eligible independent contractors” under applicable REIT rules, each REIT for which Ashford Services and its subsidiaries provide hotel management services (including Ashford Trust and Braemar) might fail to qualify as a REIT. Each of our hotel management companies that enters into a hotel management contract with a TRS lessee of a REIT must qualify as an “eligible independent contractor” under the applicable REIT rules in order for the rent paid to the REIT by its TRS lessees to be qualifying income for the REIT under the applicable REIT rules. Among other requirements, in order to qualify as an eligible independent contractor with respect to a REIT, a management company must not own more than 35% of the outstanding shares of the REIT (by value) and no person or group of persons can own more than 35% of the outstanding shares of the REIT and the ownership interests of the management company, taking into account only owners of more than 5% of shares of the REIT and, with respect to ownership interests in such management companies that are publicly traded, only holders of more than 5% of such ownership interests. Complex ownership attribution rules apply for purposes of these 35% thresholds. Additionally, Ashford Services and its subsidiaries, including Remington, must comply with the provisions of the private letter ruling each of Ashford Trust and Braemar obtained from the Internal Revenue Service in connection with our acquisition of Remington to ensure that Ashford Services and its subsidiaries, including Remington, continue to qualify as “eligible independent contractors” under applicable REIT rules.
We may do more business internationally, which may subject us to numerous political, economic, market, reputational, operational, legal, regulatory and other risks that could adversely impact our business and results of operations.
We have limited experience operating internationally but we may do so in the near future, in our capacity as advisor to an entity with international operations. As a result of any future international operations conducted by us, our business and financial results in the future could be adversely affected due to currency fluctuations, social or judicial instability, acts or threats of terrorism, changes in governmental policies or policies of central banks, expropriation, nationalization and/or confiscation of assets, price controls, fund transfer restrictions, capital controls, exchange rate controls, taxes, inadequate intellectual property protection, unfavorable political and diplomatic developments, changes in legislation or regulations and other additional international developments or restrictive actions. These risks are especially acute in emerging markets. Many non-U.S. jurisdictions in which we may do business have been negatively impacted by recessionary conditions. These jurisdictions may continue to experience increasing levels of stress. In addition, the risk of default on sovereign debt in some non-U.S. jurisdictions could expose us to substantial losses. Any such unfavorable conditions or developments could have an adverse impact on our businesses and results of operations.
We may also experience difficulty entering new international markets due to regulatory barriers, the necessity of adapting to new regulatory systems and problems related to entering new markets with different cultural bases and political systems. These difficulties may prevent, or significantly increase the cost of, our international expansion.
In addition, changes in policies or laws of the U.S. or foreign governments resulting in, among other things, higher taxation, currency conversion limitations, restrictions on fund transfers or the expropriation of private enterprises, could reduce the anticipated benefits of our international expansion. Any actions by countries in which we conduct business to reverse policies that encourage investment could adversely affect our business. If we fail to realize the anticipated growth of our future international operations, our business and operating results could suffer.
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Our ability to raise capital and attract investors for our existing and potential advisory clients and our performance is critical to our ability to earn fees and grow our businesses.
The majority of base advisory fees that we earn in our asset management business are based on the total market capitalization of the entities that we advise. Accordingly, our base fees are expected to increase if we are able to successfully raise capital in the debt and equity markets for our existing and potential clients. Conversely, our base fees are expected to decrease if the total market capitalization of our existing clients declines. Further, the incentive fees we earn in our asset management business will be primarily driven by the outperformance of our clients as compared with their respective peers, based on total stockholder return. Recently, the total market capitalization of our clients has declined significantly, which reduces the amount of the base asset management fees paid pursuant to our advisory agreements with our clients and reduces the likelihood that we will earn an incentive fee for this year.
Our ability to earn these fees is subject to a number of risks, many of which are beyond our control, including monetary and fiscal policies, domestic and international economic conditions, political considerations and capital markets. To the extent that general capital markets activity slows down or comes to a halt, our clients may have difficulty growing.growing or refinancing their existing debt obligations. This risk is based on micro- and macro-economic market factors including but not limited to disruptions in the debt and equity capital markets, resulting in the lack of access to capital or prohibitively high costs of obtaining or replacing capital. DespiteThe markets have experienced a high level of volatility as a result of the COVID-19 pandemic and the full economic impact is difficult to predict. If we are unable to raise capital and attract investors for our existing and potential advisory clients, this would negatively impact our advisory fees and would have a negative impact on other revenues from our services businesses.
We are no longer eligible to file a new Form S-3 registration statement or a post-effective amendment to our Form S-3, which would impair our capital raising activities.
As a result of our recent improvements,payment defaults under our Series D Convertible Preferred Stock, we are no longer eligible to file a new Form S-3 registration statement or a post-effective amendment to our current Form S-3. If we are unable to regain Form S-3 eligibility, this could impair our capital raising ability. Under these circumstances, we will be required to use a registration statement on Form S-1 to register securities with the markets could suffer another severe downturnSEC, which would hinder our ability to act quickly in raising capital to take advantage of market conditions in our capital raising activities and another liquidity crisis could emerge.

would increase our cost of raising capital.
We are predominantly dependent on Ashford Trust and Ashford PrimeBraemar as our only currentprimary asset management clients for a substantial portion of our operating revenue,revenues, the loss of either of which, or their failure or inability to pay any amounts owed to us, including under their advisory agreements, could adversely affect our business, financial condition, prospects and results of operations. Ashford Trust and Ashford PrimeBraemar are also customers of our consolidated subsidiaries that provide products and services to the hospitality industry.
Ashford Trust and Ashford PrimeBraemar are the only companiesour largest clients for which we currently provide asset management and advisory services. Ashford Trust and Ashford PrimeBraemar are also customers of our consolidated subsidiaries that provide products and services to the hospitality industry. Therefore, our business is subject to the risks of the businesses of each entity.Ashford Trust and Braemar. The loss or failure of either company,client, termination of either advisory agreement, the failure or inability of either companyclient to pay us any amounts owed under their respective advisory agreements or other contracts, and particularly their failure or inability to pay all or a portion of any applicable termination fee, would adversely affect our business, financial condition, prospects and results of operations. Additionally, these companiesclients could sell assets over time or lose hotels to lenders who have foreclosed on loans secured by our clients’ properties, decreasing their total market capitalization, and thereby cause our advisory fees and other revenues to decrease, which would adversely affect our results of operations and financial condition.
We depend on our key personnel with long-standing business relationships. The loss of such key personnel could threaten our ability to operate our business successfully.
Our future success depends, to a significant extent, upon the continued services of our management team and key employees of the businesses we have acquired and may in the future acquire. In particular, the hotel industry and/or investment experience of Messrs. Monty J. Bennett, Douglas A. Kessler, Richard J. Stockton, David A. Brooks,Alex Rose, Deric S. Eubanks Jeremy J. Welter, Mark L. Nunneley and J. Robison Hays, III,Justin Coe and the extent and nature of the relationships they have developed with hotel franchisors, operators, and owners and hotel lending and other financial institutions are critically important to the success of our business. The loss of services of one or more members of our management or investment teams could harm our business and our prospects.
The prior performance of Ashford Trust and Ashford Prime is not indicative of our future performance.
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We have presented information in this Annual Report on Form 10-K regarding the historical results of Ashford Trust and Ashford Prime. When considering this information you should consider that the historical results of Ashford Trust and Ashford Prime are not indicative of the future results that you should expect from us or our common stock. There are significant differences between Ashford Trust and Ashford Prime and us, and our financial condition and results of operations could vary significantly because our investment, financing, business and other strategies differ from those of Ashford Trust and Ashford Prime.

As described elsewhere in this document, our future results are subject to many uncertainties and other factors that could cause our financial condition and results of operations to be materially different than that of Ashford Trust and Ashford Prime.
If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.
Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will eventually be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an opinion on their audit of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our stock price may suffer.
Our platform may not be as scalable as we anticipate and we could face difficulties growing our business without significant new investment in personnel and infrastructure.
WhileOur platform may not be as scalable as we believe our platform for operatinganticipate and we could face difficulties growing our business is highly scalable and can supportwithout significant growth without substantial new investment in personnel and infrastructure on a relative basis, we may be wrong in that assessment.infrastructure. It is possible that if our business grows substantially, we will need to make significant new investment in personnel and infrastructure to support that growth. We may be unable to make significant investments on a timely basis or at reasonable costs, and our failure in this regard could disrupt our business and operations.

If our portfolio management techniques and strategies are not effective, we may be exposed to material unanticipated losses.
Our portfolio management techniques and strategies may not fully mitigate the risk exposure of our operations in all economic or market environments, or against all types of risk, including risks that we might fail to identify or anticipate. Any failures in our portfolio management techniques and strategies to accurately quantify such risk exposure could limit our ability to manage risks in our operations and could result in losses.
We may growacquire other complementary businesses, which could require significant management attention, disrupt our business, throughdilute stockholder value and harm our business, revenue and financial results.
We have in the past, and may in the future, make certain strategic acquisitions of complementary businesses, such as our recent acquisition of asset management services contracts, assets or companies, which entails substantial risk.
WeAlii Nui. Our acquisitions may determine to grownot achieve our business through the acquisition of asset management, services contracts, assets or companies. Such acquisitions entail substantial risk. During our due diligence of such acquisitions,goals, and we may not discover all relevant liabilitiesrealize benefits from acquisitions. Any integration process will require significant time and resources, and we may have limited, if any, recourse againstnot be able to manage the sellers.process successfully or fully realize all of the anticipated benefits and synergies from our acquisitions. If we fail to successfully integrate acquisitions, or the personnel or technologies associated with those acquisitions, the business, revenue and financial results of the combined company could be harmed. We also may not successfully integrateevaluate or utilize the asset contracts or companiesacquired assets and accurately forecast the financial impact of an acquisition, including accounting charges. We may also incur unanticipated liabilities that we assume as a result of acquiring companies. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could affect our financial condition or the value of our securities. We would expect to finance any future acquisitions through a combination of additional issuances of equity, corporate indebtedness or cash from operations. The sale of equity to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. Further, the companies we acquire intomay require increases in working capital and capital expenditure investments to fund their growth, and may not achieve anticipated revenue, earnings or cash flows, including as a result of the loss of any key employees or declines in hotel occupancy and/or revenue per available room due to COVID-19 or other factors.
In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Our acquisition strategy could require significant management attention, disrupt our business and operations, which could have a material adverse effect onharm our results of operationbusiness, revenue and financial condition. Additionally, to the extent such acquisitions result in us entering new lines of business, we may become subject to new laws and regulations with which we are not familiar, or from which we are currently exempt, potentially leading to increased litigation and regulatory risk. Moreover, we may grow our business through joint ventures, in which case we will be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to systems, control and personnel that are not under our control.results.
Certain provisions of MarylandNevada law could inhibit changes in control.
Certain provisions of the Maryland General Corporation LawNevada Revised Statutes (the “MGCL”“NRS”) may have the effect of inhibiting a third partythird-party from making a proposal to acquire us or impeding a change of controlthe Company under circumstances that otherwise could provide our stockholders with the opportunity to realize a premium over the then-prevailing market price of our common stock including:or a “control premium” for their shares or inhibit a transaction that might otherwise be viewed as being in the best interest of our stockholders. These provisions include:
•“business combination” provisions that, subject to limitations, prohibit certain business combinations between usthe Company and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof)and, if specified conditions exist, certain of our affiliates) for fivetwo years after the most recent date on which the stockholder first becomes an interested stockholder, and thereafter impose special stockholder voting requirements on these businesscontinues to prohibit such combinations unless certain fair price requirements set forth in the MGCLspecified conditions are satisfied; and
•“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors)directors (a “controlling interest”), together with shares acquired in a “control share acquisition” (defined as the direct or indirectwithin 90 days immediately before acquisition of ownership or control of outstanding “control shares”)the controlling interest) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirdsa majority of all the votes entitled to be cast on the matter,our voting power, excluding all interested shares.
Our bylaws opt out•“constituency” provisions that allow the directors to consider a wide range of interests, such as those of employees and the “control share”community, in their decision making. The constituency provisions for certain personsapply to takeovers and entities, but we may later amend our bylawswould allow the directors to modify or eliminate these opt-out provisions.respond based on considerations other than the stockholders; and
Our charter provides that
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•provisions which generally prohibit the removal of a director may be removed only for cause and only upon the affirmative vote of the holders of at least 80%by less than two-thirds of the voting power of the then issued and outstanding shares of capital stock entitled to be cast in the election of directors. Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, notwithstanding any contrary provision in the charter or bylaws, to any or all of the following five provisions: a classified board; a two-thirds stockholder vote requirement for removal of a director; a requirement that the number of directors be fixed only by vote of the directors; a requirement that a vacancy on the board of directors be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred; and a requirement that the holders of at least a majority of all votes entitled to be cast request a special meeting of stockholders. Through provisions in our charter and bylaws unrelated to Subtitle 8, we already require that the number of directors be fixed only by our board of directors and require, unless called by the Chairman of our board of directors, our chief executive officer or a majority of our board of directors, the written request of the holders of at least a majority of the voting power of the then issued and outstanding shares of capital stock to call a special meeting. Additionally, our charter currently provides that directors are elected annually and does not currently provide for a classified board.corporation.
Our charter bylaws and Marylandcontains a provision opting out of the business combination provisions.
Pursuant to Section 78.378(1) of the NRS, the Company has elected not to be governed by the provisions of Nevada state law contain other provisions that may delay, deter or preventapplicable to the acquisition of a transaction or a change of control that might involve a premium price for our common stock or otherwise becontrolling interest in the best interest of our stockholders.

We have adopted a shareholder rights plan which could make it more difficult for a third-party to acquire us while the plan remains in effect.
We have in effect a shareholder rights plan that is intended to protect us from efforts to obtain control of our company that our board of directors believe are inconsistent with the best interests of our company and our stockholders. The rights will be exercisable ten days following the earlierstock of the public announcement thatCompany, as set forth in NRS Sections 78.378 to 78.3793, involving the acquisition of a stockholder (other than us, onecontrolling interest in the stock of our subsidiariesthe Company by: (i) Mr. Archie Bennett, Jr.; (ii) Mr. Monty J. Bennett; (iii) MJB Investments; (iv) any present or employee benefit plansfuture affiliate of Mr. Archie Bennett, Jr. or Mr. Monty J. Bennett and certainBennett; (v) Ashford Trust; (vi) Braemar; or (vii) any other entity that is advised by the Company or its controlled affiliates through an advisory agreement. In addition, the control share provisions only apply to corporations that have 200 or more stockholders of his affiliates and associates (so long as they beneficially own 20% or lessrecord, at least 100 of whom have had Nevada addresses appearing on the stock ledger of the corporation for at least 90 days before the date on which the applicability of those provisions is determined. As of December 31, 2023, none of our common stock)) has acquired beneficial ownershiprecord stockholders had a Nevada address appearing on our stock ledger.
In addition, the NRS provides that, except where the action impedes the rights of 10%stockholders to vote for or more of our common stock without the approval of our board ofremove directors, or the announcementan act of a tender offerdirector relating to or exchange offer that would result in the ownershipaffecting an acquisition or a potential acquisition of 10% or more of our common stock by a person or group of persons (other than one or more of the excluded persons described above). The rights also become exercisable if a person or group that already beneficially owns 10% or more of our common stock (other than one or more of the excluded persons described above) acquires any additional shares of our common stock without the approval of our board of directors. If the rights become exercisable, all rights holders (other than the person/entity triggering the rights) will be entitled to acquire certain of our securities at a substantial discount. The rights may substantially dilute the stock ownershipcontrol of a personcorporation is not subject to a higher duty or group attemptinggreater scrutiny than is applied to take over our company withoutany other act of a director. Hence, directors of a Nevada corporation may not be required to act in certain takeover situations under the approval of our board of directors, and the rights plan could make it more difficult for a third-party to acquire our companysame standards or a significant percentage of our outstanding shares of common stock, without first negotiating with our board of directors. The rights are set to expire on the date of the 2018 annual meeting of stockholders unless at such meeting our stockholders vote to approve an extensionbe subject to the expiration date.same standard of judicial review as apply in Delaware and some other corporate jurisdictions.
Stockholders will have limited control over changes in our policies and operations, which increases the uncertainty and risks they face as stockholders.
Our board of directors determines ourits major policies, including ourits policies regarding growth and distributions. Under the NRS, the authority to manage the Company’s business and affairs is vested in its board of directors. Our board of directors may amend or revise these and otherits corporate policies without a vote of ourits stockholders. We may change ourits corporate policies without stockholder notice or consent, which could result in investments or activities that are different than, or in different proportion than, those described in this Annual Report on Form 10-K. Under the MGCL,NRS, and under our charter and our bylaws, stockholders will have a right to vote only on limited matters. Our board of directors’ broad discretion in setting policies and stockholders’ inability to exert control over those policies increases the uncertainty and risks stockholders face.
Our charter designates the Business Court of the Eighth Judicial District Court of the State of Nevada, or if this Court does not have jurisdiction because the action asserts a federal claim, the United States District Court for the District of Nevada, Southern Division, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
While the corporation has the option to consent to the selection of an alternative forum, our charter provides that the Business Court of the Eighth Judicial District of the State of Nevada, or if this Court does not have jurisdiction because the action asserts a federal claim, the United States District Court for the District of Nevada, Southern Division, are the sole and exclusive forums for: (i) any derivative action or proceeding brought on the corporation’s behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of the corporation’s directors, officers, employees or agents in such capacity; or (iii) any action arising pursuant to, or to interpret, apply, enforce or determine the validity of, any provision of Nevada’s business association statutes, the corporation’s articles of incorporation and bylaws or any agreement entered into pursuant to the statute governing voting trusts to which the corporation is a party or of which the corporation is a beneficiary. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers, employees, or agents, which may discourage such lawsuits against the Company and its directors, officers, employees, and agents. Alternatively, if a court were to find these provisions of our charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, the corporation may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect its business, financial condition and results of operations. Our charter cannot be amended unless its board of directors recommends an amendment and its stockholders approve the amendment.
Our board of directors may create and issue a class or series of capital stock without stockholder approval.
Our charter authorizes our board of directors to issue preferred stock, common stock, and blank check stock, and in the case of preferred stock and blank check common stock, to create one or more classes and to establish the preferences and rights of any class of stock issued. These actions can be taken without soliciting stockholder approval. Our ability to classify and issue additional shares of capital stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests.
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Our board of directors can take many actions without stockholder approval.
Our board of directors has overall authority to oversee our operations and determine our major corporate policies. This authority includes significant flexibility. For example, our board of directors can do the following:
•amend or revise at any time and from time to time our investment, financing, borrowing and dividend policies and our policies with respect to all other activities, including growth, debt, capitalization and operations, subject to the limitations and restrictions provided in our advisory agreement and mutual exclusivity agreement;
•amend our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements;
•issue additional shares without obtaining stockholder approval, which could dilute the ownership of our then-current stockholders;
•classify or reclassify any unissued shares of our blank check stock or preferred stock and set the preferences, rights and other terms of such classified or reclassified shares, without obtaining stockholder approval;
•employ and compensate affiliates; and
•direct our resources toward investments that do not ultimately appreciate over time
Any of these actions could increase our operating expenses, impact our ability to make distributions or reduce the value of our assets without giving you, as a stockholder, the right to vote.
Our organizational documents do not limit our ability to enter into new lines of businesses, and we may expand into new investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in our businesses.
We may, to the extent that market conditions permit, is to grow our business and expand into new investment strategies, geographic markets and businesses. Our organizational documents do not limit us to the management of assets or operation of service businesses within the hospitality industry. Accordingly, we may pursue growth through acquisitions of asset management and service contracts, assets or companies, acquisitions of critical business partners or other strategic initiatives. To the extent we make strategic investments or acquisitions, undertake other strategic initiatives or enter into a new line of business, we will face numerous risks and uncertainties, including risks associated with: (i) the required investment of capital and other resources; (ii) the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk; (iii) combining or integrating operational and management systems and controls; and (iv) the broadening of our geographic footprint, including the risks associated with conducting operations in non-U.S. jurisdictions. Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If a new business generates insufficient revenues or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected. Our strategic initiatives may include joint ventures, in which case we will be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to systems, controls and personnel that are not under our control.
Our constituent documents designate the Circuit Court for Baltimore City, Maryland, or if that Court does not have jurisdiction because the action asserts a federal claim, the United States District Court for the District of Maryland, Baltimore Division as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our constituent documents provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or if that Court does not have jurisdiction because the action asserts a federal claim, the United States District Court for the District of Maryland, Baltimore Division is the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders or any breach of a standard of conduct of directors; (iii) any action asserting a claim against us or any of our directors, officers, employees or agents arising pursuant to any provision of the MGCL, our charter or bylaws; or (iv) any other action asserting a claim against us or any of our directors, officers, employees or agents that is governed

by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our constituent documents described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our constituent documents inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations.
Our amended and restated bylaws contains a provision that prevents certain stockholders from initiating a claim on behalf of the Company or any group of stockholders, against the Company or against any director of officer of the Company, unless the claiming stockholder meets certain requirements.
On February 27, 2018 our board of directors approved and adopted the Second Amended and Restated Bylaws of the company, which adds a provision that requires that stockholders meet certain ownership thresholds in order to initiate claims on behalf of the Company and/or any class of current and/or prior stockholders against the Company and/or against and director and/or officer of the Company. The new provision will be submitted to a binding advisory vote of the Company’s stockholders at the Company’s 2018 Annual Meeting of Stockholders with the intent that the new provision will be rescinded if not approved at such meeting.
While this provision is effective, including if the stockholders vote to approve the provision at the 2018 Annual Meeting of Stockholders, certain stockholders may be prevented from initiating derivative actions or other claims against the Company and its directors and officers unless the claiming stockholder meets the ownership requirements set forth in our Bylaws.
For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to disclosure about our executive compensation, that apply to other public companies unless we opt to do so.
We are subject to reporting and other obligations under the Exchange Act. In April 2012, the JOBS Act was enacted into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for “emerging growth companies,” including certain requirements relating to accounting standards and compensation disclosure unless we irrevocably opt to comply with such requirements. We are an “emerging growth company” as defined in the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to:
provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act,
comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer,
provide certain disclosure regarding executive compensation, or
hold stockholder advisory votes on executive compensation.
We have irrevocably opted into complying with any new or revised financial accounting standards applicable to public companies and thus will be required to comply with such standards.
Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it.
Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with accounting standards newly issued or revised after April 5, 2012, we may be less attractive to investors, and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
We are subject to financial reporting and other requirements for which our accounting, internal audit and other management systems and resources may not be adequately prepared and we may not be able to accurately report our financial results.
Following our separation from Ashford Trust, we became subject to reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act. Section 404(a) requires annual management assessments of the effectiveness of our internal controls over financial reporting. These reporting and other obligations place significant demands on our management, administrative, operational, internal audit and accounting resources and cause us to incur significant expenses.

We may need to upgrade our systems or create new systems; implement additional financial and management controls, reporting systems and procedures; expand our internal audit function; and hire additional accounting, internal audit and finance staff. If we are unable to accomplish these objectives in a timely and effective fashion, our ability to comply with the financial reporting requirements and other rules that apply to reporting companies could be impaired. Any failure to achieve and maintain effective internal controls could have a material adverse effect on our business, operating results and stock price.
For as long as we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b). We could be an emerging growth company for up to five years. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.
We are increasingly dependent on information technology, and potential cyber-attacks, security problems or other disruption and expanding social media vehicles present new risks.
The protection of business partners, employees and company data is critically important to us. We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, billing and operating data. The collection and use of personally identifiable information is governed by federal and state laws and regulations. Privacy and information security laws continue to evolve and may be inconsistent from one jurisdiction to another. Compliance with all such laws and regulations may increase the Company’s operating costs and adversely impact the Company’s ability to market the Company’s properties and services.
We may purchase some of our information technology from vendors, on whom our systems depend, and rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential operator and other customer information. We depend upon the secure transmission of this information over public networks. Our networks and storage applications are subject to unauthorized access by hackers or others through cyber-attacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means, or may be breached due to operator error, malfeasance or other system disruptions. During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain employee personal information. We have completed an investigation and have
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identified certain employee information may have been exposed, but we have not identified that any customer information was exposed. All systems have been restored. Privacy and information security risks have generally increased in recent years because of the proliferation of new technologies, such as ransomware, and the increased sophistication and activities of perpetrators of cyber-attacks. Further, there has been a surge in widespread cyber-attacks during and since the COVID-19 pandemic, and the use of remote work environments and virtual platforms may increase our risk of cyber-attack or data security breaches. In some cases, itlight of the increased risks, we have dedicated additional resources to strengthening the security of our computer systems. In the future, we may expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. Despite these steps, there can be no assurance that we will not suffer a significant data security incident in the future, that unauthorized parties will not gain access to sensitive data stored on our systems or that any such incident will be difficult to anticipate or immediately detect such incidents and the damage caused thereby. Any significant breakdown, invasion, destruction, interruption or leakage of our systems could harm us.discovered in a timely manner.
In addition, the use of social media could cause us to suffer brand damage or information leakage. Negative posts or comments about us on any social networking website could damage our reputation. In addition, employees or others might disclose non-public sensitive information relating to our business through external media channels. The continuing evolution of social media will present us with new challenges and risks.
We may experience losses caused by severe weather conditions or natural disasters.
The properties owned by Ashford Trust, Braemar and Stirling are susceptible to extreme weather conditions which may cause property damage or interrupt business, which could harm our business and results of operations. Certain of the properties owned by Ashford Trust, Braemar and Stirling are located in areas that may be subject to extreme weather conditions, including but not limited to, hurricanes, floods, tornadoes and winter storms in the United States. Insurance may not fully cover all losses and, depending on the severity of the event and the impact on such properties, such insurance may not cover a significant portion of the losses, including, but not limited to, the costs associated with evacuation. These losses may lead to an increase of our cost of insurance, a decrease in our anticipated revenues from an affected property and a loss of all or a portion of the capital we have invested in an affected property. In addition, we may not purchase insurance under certain circumstances if the cost of insurance exceeds, in our judgment, the value of the coverage relative to the risk of loss.
Changes in laws, regulations, or policies may adversely affect our business.
The laws and regulations governing our business or the businesses of our clients, or the regulatory or enforcement environment at the federal level or in any of the states in which we or our clients operate, may change at any time and may have an adverse effect on our business. For example, the Patient ProtectionTax Cuts and Affordable CareJobs Act of 2010, as it is phased in over time, will significantly affect the administration of health care services and could significantly impact our cost of providing employees with health care insurance. The recently enacted tax cuts and JOBS Act may limit(“TCJA”) limits the future deductions of interest expense we may incur. We are unable to predict how these or any other future legislative or regulatory proposals or programs will be administered or implemented or in what form, or whether any additional or similar changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Any such action could affect us in substantial and unpredictable ways and could have an adverse effect on our results of operations and financial condition. Our inability to remain in compliance with regulatory requirements in a particular jurisdiction could have a material adverse effect on our operations in that market and on our reputation generally. No assurance can be given that applicable laws or regulations will not be amended or construed differently or that new laws and regulations will not be adopted, either of which could materially adversely affect our business, financial condition, or results of operations.
Tax increases and changes in tax rules may adversely affect our financial results.
As a company conducting business with physical operations throughout North America, we are exposed, both directly and indirectly, to the effects of changes in U.S., state and local tax rules. Taxes for financial reporting purposes and cash tax liabilities in the future may be adversely affected by changes in such tax rules. Such changes may put us at a competitive disadvantage compared to some of our major competitors, to the extent we are unable to pass the tax costs through to our customers.
The Biden administration has announced in 2021 and 2022, and in certain cases has enacted, a number of tax proposals to fund new government investments in infrastructure, healthcare, and education, among other things. Certain of these proposals involve an increase in the domestic corporate tax rate, which if implemented could have a material impact on our future results of operations and cash flows. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, with tax provisions primarily focused on implementing a 15% corporate alternative minimum tax on global adjusted financial statement income and a 1% excise tax on share repurchases. The IRA also creates a number of potentially beneficial tax credits to incentivize investments in certain technologies and industries. Certain provisions of the IRA became effective in fiscal 2023, and the Treasury Department and IRS have announced their intention to continue to release and finalize regulations and other guidance implementing the IRA in fiscal 2024. We do not believe these tax law changes will have applicability to the Company or its operating activity.
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We are subject to risk associated with the employment of hotel personnel, particularly with hotels that employ unionized labor.
Our hotel management business is responsible for, and subject to the risks associated with, hiring and maintaining a hotel labor force. From time to time, hotel operations may be disrupted as a result of strikes, lockouts, public demonstrations or other negative actions and publicity. We also may incur increased legal costs and indirect labor costs as a result of contract disputes involving our managers and their labor force or other events. The resolution of labor disputes or re-negotiated labor contracts could lead to increased labor costs, a significant component of our hotel operating costs, either by increases in wages or benefits or by changes in work rules that raise hotel operating costs. We do not have the ability to affect the outcome of these negotiations. We may also be unable to attract, retain, train, manage and engage quality personnel to adequately staff hotel departments, which could result in a sub-standard level of service to hotel guests and hotel operations.
Certain of the properties we manage are subject to collective bargaining agreements and, as a result, are more highly affected by labor force activities than others. The resolution of labor disputes or re-negotiated labor contracts could lead to increased labor costs, either by increases in wages or benefits or by changes in work rules that raise hotel operating costs. Furthermore, labor agreements may limit our ability to reduce the size of hotel workforces during an economic downturn because collective bargaining agreements are negotiated between us and labor unions. Our ability, if any, to have any material impact on the outcome of these negotiations is restricted by and dependent on the individual management agreement covering a specific property and we may have little ability to control the outcome of these negotiations.
We may also become subject to additional collective bargaining agreements in the future. Potential changes in the federal regulatory scheme could make it easier for unions to organize groups of our personnel. If such changes take effect, more of our personnel could be subject to increased organizational efforts, which could potentially lead to disruptions or require more of our management’s time to address unionization issues.
In addition, changes in labor laws may negatively impact us. For example, the implementation of new occupational health and safety regulations, minimum wage laws, and overtime, working conditions status and citizenship requirements and the Department of Labor’s proposed regulations expanding the scope of non-exempt employees under the Fair Labor Standards Act to increase the entitlement to overtime pay could significantly increase the cost of labor in the workforce, which could reduce our profits and adversely affect our business and results of operations.
We are dependent upon the profitability of our subsidiaries and their ability to make cash distributions to us.
We are a holding company and, thus, do not conduct material activities other than activities incidental to holding equity interests of our subsidiaries and being a publicly-traded corporation. We are dependent on the profitability of our legacy advisory business and the acquired hotel management business and project management business, and the ability of our subsidiaries in which these businesses operate to generate cash. As a result, we are substantially dependent on the ability of our subsidiaries to fund cash needs. If our subsidiaries are less profitable than anticipated, our cash flows will be negatively affected, which could have a material adverse effect on our stock price.
Cash distributions made by the operating companies to fund payments of dividends on the Series D Convertible Preferred Stock may subject us to taxes to the extent such distributions are treated as a taxable dividend or distribution.
Because our ownership in Ashford Advisors Inc. (which owns Ashford LLC, Premier and Ashford Services) is held indirectly through Ashford Hospitality Holdings LLC, an entity treated as a partnership for U.S. federal income tax purposes, cash distributions to us might be treated as dividends for U.S. federal income tax purposes and we might not be entitled to a 100% dividends received deduction on dividends paid by Ashford Advisors Inc., and instead might only be entitled to a partial dividends received deduction, with respect to amounts distributed by Ashford Advisors Inc. for our benefit that are treated as a taxable dividend. In general, a distribution by Ashford Advisors Inc. that is treated as a dividend is treated as a taxable dividend to the extent any such distribution is made out of Ashford Advisors Inc.’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). To the extent the amount of such distribution exceeds Ashford Advisors Inc.’s current and accumulated earnings and profits, it will be treated first as a non-taxable return of capital to the extent of Ashford Hospitality Holdings LLC’s adjusted tax basis in the shares of Ashford Advisors Inc. and, to the extent the amount of such distribution exceeds such adjusted tax basis, will be treated as capital gain from the sale or exchange of such shares. Consequently, we might be subject to U.S. federal income tax on a portion of amounts distributed by Ashford Advisors Inc. for our benefit that are treated as a taxable dividend and on the full amount of any such distribution treated as a capital gain. Accordingly, in connection with any distributions made by the operating companies to fund payments of dividends on our preferred stock, additional distributions might be required to fund such taxes and any taxes payable on such additional distributions.
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The representation of the Bennetts on our board of directors may increase as a result of our failure to make certain full dividend payments on the Series D Convertible Preferred Stock for two consecutive quarters.
For so long as the holders of Series D Convertible Preferred Stock hold at least 20% of the issued and outstanding shares of our common stock (on an as-converted basis), Mr. Archie Bennett, Jr., during his lifetime, and Mr. Monty J. Bennett, during his lifetime, are collectively entitled to nominate two individuals as members of our board of directors one of whom is currently Mr. Monty J. Bennett and the other of whom is currently Mr. W. Michael Murphy. If we fail to make two consecutive full dividend payments to the holders of the Series D Convertible Preferred Stock, then Mr. Archie Bennett, Jr., during his lifetime, and Mr. Monty J. Bennett, during his lifetime, will each be entitled to nominate one additional individual as a member of our board of directors and the size of our board of directors may be increased by up to two directors to accommodate these two additional nominees. In furtherance of the foregoing, each of the holders of Series D Convertible Preferred Stock has agreed that they will vote all of their Series D Convertible Preferred Stock, and consent to any action by the holders of the Series D Convertible Preferred Stock without a meeting as permitted under appropriate state law, as may be directed by Mr. Archie Bennett, Jr., or Mr. Monty J. Bennett, respectively, in connection with their nomination of the individuals to fill such seats on our board of directors. The Bennetts and certain of their affiliates, therefore, would likely have increased control over our operations and management.
As of December 31, 2023, the Company had aggregate undeclared preferred stock dividends of approximately $28.5 million, which relates to the second and fourth quarters of 2021 and the fourth quarter of 2023. On each of April 14, 2023, July 12, 2023 and October 11, 2023 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, second and third quarters of 2023. 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.
If the Company fails to make the full dividend payment on the Series D Convertible Preferred Stock in two consecutive quarters, Mr. Archie Bennett, Jr. and Mr. Monty J. Bennett will each be entitled to nominate one additional individual as a member of our board of directors. Additionally, the dividend rate on the Series D Convertible Preferred Stock will increase to 10% per year, until the unpaid preferred dividends have been paid in full. Although we missed dividend payments in January of 2024 and the years ended December 31, 2021, we did not fail to make the full dividend payment for two consecutive quarters and therefore such board appointment rights and increase in interest payment will not apply. There is no assurance that the Company will not fail to make the full dividend payment in two consecutive quarters in the future.
We have adopted a shareholder rights plan which could make it more difficult for a third-party to acquire us while the plan remains in effect.
We have in effect a shareholder rights plan that was adopted in response to recent volatility of the stock market and trading of our common stock and is intended to protect the Company and its stockholders from the efforts to obtain control or rapid share accumulations that are inconsistent with the best interests of the Company and its stockholders. The Rights will be exercisable ten days following the earlier of the public announcement that a stockholder (other than us, one of our subsidiaries or employee benefit plans or Mr. Monty J. Bennett and certain of his affiliates and associates) has acquired beneficial ownership of 7% or more of our common stock without the approval of our board of directors or the announcement of a tender offer or exchange offer that would result in the ownership of 7% or more of our common stock by a person or group of persons (other than one or more of the excluded persons described above). The Rights also become exercisable if a person or group that already beneficially owns 7% or more of our common stock (other than one or more of the excluded persons described above) acquires any additional shares of our common stock without the approval of our board of directors. If the Rights become exercisable, all Rights holders (other than the person/entity triggering the Rights) will be entitled to acquire certain of our securities at a substantial discount. The Rights may substantially dilute the stock ownership of a person or group attempting to take over our company without the approval of our board of directors, and the rights plan could make it more difficult for a third-party to acquire our company or a significant percentage of our outstanding shares of common stock, without first negotiating with our board of directors.
Risks Related to Conflicts of Interest
Certain affiliated stockholders have the ability to control significant corporate activities of the Company and their interests may differ from the interests of our other stockholders.
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As of December 31, 2023, the Bennetts directly or indirectly beneficially owned approximately 65.0% of our outstanding common stock (including shares and all unpaid accrued and accumulating dividends of Series D Convertible Preferred Stock on an as-converted basis.) Following the expiration of certain time and voting restrictions in the Investor Rights Agreement on August 8, 2023, the Bennetts gained control of a majority of the voting power of our equity securities As a result, the Bennetts may be able to influence or effectively control the decisions of the Company and the holders of Series D Convertible Preferred Stock may, depending on the circumstances at the time, have the voting power to elect all of the members of our board of directors and thereby control our management and affairs. In addition, at such time, the holders of our Series D Convertible Preferred Stock may be able to determine the outcome of all matters requiring stockholder approval, including mergers and other material transactions, and may be able to cause or prevent a change in the composition of our board of directors or a change in control of the Company that could deprive other stockholders of an opportunity to receive a premium for their common stock as part of a sale of the Company.
In addition to their direct or indirect beneficial ownership of the shares of our common stock, the Bennetts are party to the Investor Rights Agreement, under which, for so long as the holders of our Series D Convertible Preferred Stock and their affiliates continue to beneficially own no less than 20% of the issued and outstanding shares of our common stock, they will have the ability to cause the election of two members of our board of directors plus an additional two directors in the event of the non-payment of full dividends on the Series D Convertible Preferred Stock for two consecutive quarters. In addition, the Company could be obligated, at the Bennetts’ election, to provide management services, of the character of the design and construction business or hotel management business, to any hotels in which the Bennetts own at least a 5% interest, which is different from the pricing structure of the agreements that we currently have with our two main clients, Ashford Trust and Braemar.
As of December 31, 2023, the Company had aggregate undeclared preferred stock dividends of approximately $28.5 million, which relates to the second and fourth quarters of 2021 and the fourth quarter of 2023. On each of April 14, 2023, July 12, 2023 and October 11, 2023 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, second and third quarters of 2023. 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.
If the Company fails to make the full dividend payment on the Series D Convertible Preferred Stock in two consecutive quarters, Mr. Archie Bennett, Jr. and Mr. Monty J. Bennett will each be entitled to nominate one additional individual as a member of our board of directors. Additionally, the dividend rate on the Series D Convertible Preferred Stock will increase to 10% per year, until the unpaid preferred dividends have been paid in full. Although we missed dividend payments in January 2024 and in the year ended December 31, 2021, we did not fail to make the full dividend payment for two consecutive quarters and therefore such board appointment rights and increase in interest payment will not apply. There is no assurance that the Company will not fail to make the full dividend payment in two consecutive quarters in the future.
The Bennetts’ interests may not always coincide with your interests or the interests of our other stockholders. The concentrated holdings of our common stock directly or indirectly by the Bennetts, the various provisions of the Investor Rights Agreement, and the resulting representation and potential control of our board of directors by the Bennetts may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders. Moreover, this concentration of stock ownership may also adversely affect the trading price of our common stock if investors perceive a disadvantage in owning stock of a company with a controlling stockholder.
Our separation and distribution agreement, our advisory agreements, our amended and restated mutual exclusivity agreement,agreements, the tax matters agreement, the hotel services agreement and other agreements entered into in connection with our separation from Ashford Trust, and the agreements entered into with Ashford Trust and Braemar in connection with our acquisitions of Premier and Remington, were not negotiated on an arm’s-length basis, and we may be unable to enforce or may pursue less vigorous enforcement of their terms because of conflicts of interest with certain of our executive officers and directors and key employees of Ashford Trust, Braemar and Ashford PrimeStirling and/or pending or future legal proceedings.
Because certain of our officers and one of our directors are also officers of Ashford Trust, Braemar and Ashford PrimeStirling and have ownership interests in Ashford Trust, Braemar and Ashford Prime,Stirling, our separation and distribution agreement,agreements, our advisory agreements, our amended and restated mutual exclusivity agreement,agreements, the tax matters agreement, the hotel services agreement and other agreements entered into in connection with our separation from Ashford Trust, and the agreements entered into with Ashford Trust and Braemar in connection with our acquisitions of Premier and Remington, were not negotiated on an arm’s-length basis, and we did not have the benefit of arm’s-length negotiations of the type normally conducted with an unaffiliated third party.third-party. As a result, the terms,
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including fees and other amounts payable, may not be as favorable to us as an arm’s-length agreement. Furthermore, we may choose not to enforce, or to enforce less vigorously, our rights under

these agreements because of our desire to maintain our ongoing relationship with Ashford Trust, Ashford PrimeBraemar and Remington Lodging. For example, we are entitled to indemnification from Ashford Trust OP in the event of breaches of certain provisions of, or misrepresentations made in, the separation and distribution agreement. In addition, we may be unable to enforce certain provisions of our advisory agreements with Ashford Trust or Ashford Prime, including as a result of pending or future legal proceedings. See “Risk Factors- We are currently subject to legal proceedings related to our advisory agreement with Ashford Prime which, if adversely determined, could have a material adverse effect on our business.”Stirling.
Our deferred compensation obligations may dilute your interest in our common stock.
Our deferred compensation plan which plan has only two participants,one participant, Mr. Monty J. Bennett, our chairman and his fatherchief executive officer. Mr. Archie Bennett, Jr. Both, chairman emeritus of Ashford Trust, was issued all of his shares under the deferred compensation plan during the fiscal year ended December 31, 2022. Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. havehas elected to invest theirhis deferred compensation accountsaccount in our common stock. As a result, we have an obligation to issue approximately 196,000 shares of our common stock to Mr. Monty J. Bennett in quarterly installments over five years beginning in 2020, which is the end of2026. Mr. Monty Bennett’s deferral period. We also have an obligation to issue approximately 12,000 remaining sharesJ. Bennett may postpone all or a portion of our common stock to Mr. Archie Bennett, Jr., overthe distributions, for a minimum of five years, beginning in 2018, which isif he notifies the end of Mr. Archie Bennett’s deferral period. The issuance of these shares of our common stock will dilute current stockholder’s and, if all such shares are issued, may result in a change of control of our company.Company 12 months prior to the scheduled distributions.
Our relationships with Remington Lodging, Ashford Trust, Ashford PrimeBraemar and AIMStirling could create significant conflicts of interest.
Our chief executive officer and chairman, Mr. Monty J. Bennett, serves as the chief executive officer of Remington Lodging, chairman of the board of Ashford Trust, and chairman of the board of Ashford Prime. Additionally, Mr. Monty J. BennettBraemar and his father, Mr. Archie Bennett, Jr., beneficially own 100%chief executive officer and board member of Remington Lodging.Stirling. Mr. Monty J. Bennett’s obligations to Remington Lodging, Ashford Trust, Braemar and Ashford PrimeStirling reduce the time and effort he spends managing our company, and his duties to us as a director and officer may conflict with his duties to, and pecuniary interest in, Remington Lodging, Ashford Trust, Braemar and Ashford Prime.Stirling.
We, through Ashford LLC, ownThe holders of the Series D Convertible Preferred Stock have rights that are senior to the rights of the holders of our common stock, which may decrease the likelihood, frequency or amount of dividends (if any) to holders of our common stock.
The Series D Convertible Preferred Stock Certificate of Designation requires that dividends be paid on the Series D Convertible Preferred Stock before any distributions can be paid to holders of our common stock and that, in the event of our bankruptcy, liquidation, dissolution or winding up, whether voluntary or involuntary, the holders of Series D Convertible Preferred Stock must be satisfied before any distributions can be made to the holders of our common stock.
On each of April 14, 2023, July 12, 2023 and October 11, 2023 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, second and third quarters of 2023. 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.
As of December 31, 2023, the Company had aggregate undeclared preferred stock dividends of approximately 100%$28.5 million, which relates to the second and fourth quarters of Management Holdco. Performance Holdco owns 99.99%2021 and the fourth quarter of AIM GP. We, through Ashford LLC2023. 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. In addition, if we declare or pay a dividend on our 100% ownershipcommon stock, the holders of the Series D Convertible Preferred Stock will participate, on an as-converted basis, in such dividend with the holders of our common stock. The Series D Convertible Preferred Stock will vote together with the holders of our common stock as a single class on all matters, with the number of votes attributable to each share of Series D Convertible Preferred Stock determined on an as-converted basis, subject to the voting restrictions set forth in the Investor Rights Agreement. As a result of the Series D Convertible Preferred Stock’s superior rights relative to our common stock, including its right to participate in any dividends or other distributions to the holders of our common stock, the right of holders of our common stock to receive distributions from us may be diluted and is limited by such rights.
The holders of the Series D Convertible Preferred Stock are expected to benefit from significant cash flows that may create conflicts of interest in Performance Holdco'sour management.
The Bennetts and other sellers of the project and hotel management businesses were issued Series D Convertible Preferred Stock in consideration for the sale of such businesses. Each share of Series D Convertible Preferred Stock has a cumulative dividend rate of 7.28% per year. In addition, if the Company fails to pay dividends on the Series D Convertible Preferred Stock for two consecutive quarterly periods the dividend rate increases to 10% per year until paid in full.
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As of December 31, 2023, the Company had aggregate undeclared preferred stock dividends of approximately $28.5 million, which relates to the second and fourth quarters of 2021 and the fourth quarter of 2023. On each of April 14, 2023, July 12, 2023 and October 11, 2023 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, second and third quarters of 2023. 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.
As a result of this consideration, the holders of the Series D Convertible Preferred Stock have the right to receive significant cash flow that might otherwise have been used for general partner, own approximately 60%corporate purposes. The holders of Performance Holdco,the Series D Convertible Preferred Stock may be incentivized by this consideration to maximize our cash flow, and thus Mr. Monty J. Bennett and Mr. J. Robison Hays own, in the aggregate, 40% of Performance Holdco. AIM served as investment advisor to the AQUA Fund and AHT SMA, LP, a wholly-owned subsidiary of Ashford Trust. Mr. Bennett’s and Mr. Hays’ duties to us as directors and officers may conflict with their duties to, and pecuniary interests in, Performance Holdco.
Under the terms of our mutual exclusivity agreement with Remington Lodging, we may be obligated to utilize Remington Lodging as a property manager for hotels, if any, we may acquire in the future as well as future platforms that we advise, to the extent we have the discretion to do so, even if the utilization of Remington Lodging for such property management may not be the most advantageous for our hotels or future clients.
Our mutual exclusivity agreement with Remington Lodging requires us to utilize Remington Lodging to provide property management, project management and development services for all hotels, if any, that we may acquire as well as all hotels that future companies we advise may acquire, to the extent that we have the right, or control the right, to direct such matters, unless our independent directors either (i) unanimously vote not to utilize Remington Lodging for such services or (ii) based on special circumstances or past performance, by a majority vote elect not to engage Remington Lodging because they have determined, in their reasonable business judgment, that it would be in our best interest not to engage Remington Lodging or that another manager or developer could perform the duties materially better. In exchange for our agreement to engage Remington Lodging for such services for all hotels, if any, that we may acquire as well as all future companies that we advise, Remington Lodging has agreed to grant to any such future clients a first right of refusal to purchase any investments identified by Remington Lodging and any of its affiliates that meet the initial investment criteria of such entities, as identified in the advisory agreement between us and such entities, subject to any prior rights granted by Remington Lodging to other entities, including Ashford Trust, Ashford Prime and us. Mr. Monty J. Bennett will potentially benefit from the receipt of property management fees, project management fees and development fees by Remington Lodging from us and such future companies that we advise. See “Item 1. Business—Our Mutual Exclusivity Agreement.” Mr. Monty J. Bennett’s ownership interests in and management obligations to Remington Lodging present him with conflicts of interest in making management decisions relatedthat might be to the commercial arrangements between us, the clients we advise and Remington Lodging.
Under the termsdetriment of our mutual exclusivity agreement with Remington Lodging, Remington Lodginglong-term strategy and success. The cash flow generated by the hotel management business and design and construction business may not be ableequal to pursue lodging investment opportunities that compete withor in excess of the businesses that we advise.
Pursuantdividends payable to the terms of our mutual exclusivity agreement with Remington Lodging, if investment opportunities that satisfy the investment criteria of Ashford Trust, Ashford Prime or one of our future clients are identified by Remington Lodging or its

affiliates, Remington Lodging will give such entity a written notice and descriptionholders of the investment opportunity. The applicable entity will generally have 10 business days to either accept or reject the investment opportunity. If such entity rejects the opportunity, Remington Lodging may then pursue such investment opportunity, subject toshares of Series D Convertible Preferred Stock in any right of first refusal contractually granted by Remington Lodging to any other entity. As a result, it is possible that Remington Lodging could pursue an opportunity that fits within the investment criteria of an entity that we advise and compete with that entity or compete with us. In such a case, Mr. Monty J. Bennett, our chief executive officer and chairman, in his capacity as chief executive officer of Remington Lodging could be in a position of directly competing with us or an entity that we advise.
Provisions of our certificate of incorporation may result in certain corporate opportunities being assigned to Ashford Trust and Ashford Prime.
The provisions of our certificate of incorporation provide that our directors and executive officers may also serve as directors, officers, employees, consultants or agents of Ashford Trust, Ashford Prime and their respective subsidiaries and that we may engage in material business transactions with such entities. To the fullest extent permitted by law, we will renounce our rights to certain business opportunities, and no director or officer of ours who is also serving as a director, officer, employee, consultant or agent of Ashford Trust, Ashford Prime or any of their subsidiaries will be liable to us or to our stockholders for breach of any fiduciary duty that would otherwise exist by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in the applicable advisory agreement) to Ashford Trust, Ashford Prime or any of their respective subsidiaries instead of us, or does not refer or communicate information regarding such corporate opportunities to us.period.
Certain of our executive officers, who are also executive officers or board members of Ashford Trust, Ashford Prime,Braemar, Stirling or both,all three, including our chairman of the board and chief executive officer, who is also an executive officerchairman of Remington Lodging,the board of Ashford Trust, Braemar and Stirling, face competing demands relating to their time as well as potential conflicts of interest, and this may adversely affect our operations.
Certain of our executive officers are also executive officers or board members of Ashford Trust, Ashford Prime,Braemar, Stirling, or both.all three. Because our executive officers have duties to Ashford Trust, Braemar or Ashford Prime,Stirling, as applicable, as well as to our company, we do not have their undivided attention. They face conflicts in allocating their time and resources between our company, Ashford Trust, Braemar and Ashford Prime,Stirling, as applicable, and they will continue to face increasing conflicts as we advise additional companies and platforms.
The organization and management of Ashford Trust, Braemar and Ashford PrimeStirling and any companies we may advise in the future may create conflicts of interest.
We are or will be party to advisory and other agreements with Ashford Trust, Braemar and Ashford Prime.Stirling. These entities, along with any other businesses we may advise in the future will acquire assets consistent with their respective initial investment guidelines, but in each case, we will have discretion to determine which investment opportunities satisfy each such entity’s initial investment guidelines. If, however, either Ashford Trust, or Ashford PrimeBraemar and Stirling materially changes itstheir investment guidelines without our express consent, we are required to use our best judgment to allocate investment opportunities to Ashford Trust, Ashford PrimeBraemar and Stirling and other entities we advise, taking into account such factors as we deem relevant, in our discretion, subject to any then-existing obligations we may have to such other entities. If a portfolio investment opportunity cannot be equitably divided by asset type and acquired on the basis of such asset types in satisfaction of each such entity’s investment guidelines, we will allocate investment opportunities between Ashford Trust, Ashford PrimeBraemar and Stirling and any other businesses we advise in a fair and equitable manner, consistent with such entities’ investment objectives. When determining the entity for which such a portfolio investment opportunity would be the most suitable, our investment professionals have substantial discretionsdiscretion and may consider, among other factors, the following:
•investment strategy and guidelines;
•portfolio concentrations;
•tax consequences;
•regulatory restrictions;
•liquidity requirements; and
•financing availability.
We may manage additional investment vehicles in the future and, in connection with the creation of such investment vehicles, may revise these allocation procedures. The result of a revision to the allocation procedures may, among other things, be to increase the number of parties who have the right to participate in investment opportunities sourced by us, increasing the risk of conflicts of interest.
The decision of how any potential investment should be allocated among Ashford Trust, Ashford PrimeBraemar and any other companies we may advise in the future, in many cases, may be a matter of subjective judgment, which will be made by us.

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Appropriately dealing with conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest. Litigation in connection with conflicts of interest could have a material adverse effect on our reputation, which could materially and adversely affect our business and our ability to attract investors for future vehicles. See “Risk Factors- We are currently subject to legal proceedings related to our advisory agreement with Ashford Prime which, if adversely determined, could have a material adverse effect on our business.”
Our fiduciary duties as the sole manager of our operating company could create conflicts of interest with our fiduciary duties to our stockholders.
We, as the sole manager of Ashford Hospitality Holdings LLC, which wholly owns our operating company, have fiduciary duties to the other members of Ashford Hospitality Holdings LLC, the discharge of which may conflict with the interests of our stockholders. The operating agreement of Ashford LLC provides that, in the event of a conflict in the fiduciary duties owed by us to our stockholders and, in our capacity as manager of our operating company, to the members of Ashford Hospitality Holdings LLC, we may act in the best interest of our stockholders without violating our fiduciary duties to the members of Ashford Hospitality Holdings LLC or being liable for any resulting breach of our duties to the members, subject in all cases to the implied contractual covenant of good faith and fair dealing which, pursuant to MarylandDelaware law, cannot be waived. In addition, those persons holding Ashford Hospitality Holdings LLC common units will have the right to vote on certain amendments to the operating agreement (which require approval by a majority in interest of the members, including us) and individually to approve certain amendments that would adversely affect their rights. These voting rights may be exercised in a manner that conflicts with the interests of our stockholders. For example, we are unable to modify the rights of Ashford Hospitality Holdings LLC members to receive distributions as set forth in the operating agreement in a manner that adversely affects their rights without their consent, even though such modification might be in the best interest of our stockholders. In addition, conflicts may arise when the interests of our stockholders and the members of Ashford Hospitality Holdings LLC diverge, particularly in circumstances in which there may be an adverse tax consequence to the members.
Our conflictsconflict of interest policy may not adequately address all of the conflicts of interest that may arise with respect to our activities.
In order to minimize any actual or perceived conflicts of interest with our directors, officers or employees, we have adopted a conflictsconflict of interest policy to address specifically some of the conflicts relating to our activities. Although under this policy the approval of a majority of our disinterested directors is required to approve any transaction, agreement or relationship in which any of our directors, officers, or employees, Ashford Trust, Braemar or Ashford PrimeStirling has an interest, there is no assurance that this policy will be adequate to address all of the conflicts that may arise. In addition, the transactions and agreements entered into in connection with our formation prior to the separation and distribution have not been approved by any independent or disinterested persons.
Risks Related to Debt Financing
Although we do not currently have anyWe may incur additional debt at the corporate level we have a corporate level revolving credit facility in place and may incur debt in the future,from time to time, which may materially and adversely affect our financial condition and results of operations.
While we currently do not use leverageWe may incur additional debt at the corporate level we have a corporate level revolving credit facility in place. Alsofrom time to time. In addition, certain of our subsidiaries that provide products and services to the lodging industry use debt, thatsome of which has no recourse to Ashford Inc. or Ashford LLC. Our organizational documents do not limit our capacity to use leverage or limit the amount of debt that we may incur. We may, at any time, decide to use leverage to meet future capital needs. We may guarantee, at the corporate level, debt incurred by our subsidiaries. We may also, from time to time, use derivative instruments primarily to manage interest rate risk. Future indebtedness will increase our operating costs, particularly in periods of rising interest rates, and we cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses that may reduce the overall return on your investment.
Higher interest rates have increased our interest costs on our variable-rate debt and such costs may remain high.
As of December 31, 2023, our total indebtedness of $141.1 million included $133.5 million of variable-rate debt. Higher interest rates in the past few years have negatively impacted nearly all commercial real estate managers, including the Company. Higher interest rates have increased our interest costs on our variable-rate debt and could increase interest expense on any future fixed rate debt we may incur, and interest we pay reduces our cash available for preferred dividend payments, expansion, working capital and other uses. Moreover, periods of rising interest rates heighten the risks described above under “We may incur additional debt at the corporate level from time to time, which may materially and adversely affect our financial condition and results of operations.”
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy. The Company’s information security program consists of various processes designed to ensure that the Company and its electronic assets are shielded from cyber events that may compromise the Company’s ability to successfully execute its business on a day-to-day basis. These processes cover areas such as, but not limited to, risk management, access control, anti-virus management, sensitive data management, electronic communication, risk/security reporting, incident response planning and business continuation planning. The information technology department (“IT Department”), which includes the cybersecurity department (“IT Security Department”), is responsible for implementing such processes and coordinating with the Human Resources Department to align training and onboarding efforts with such processes. The IT Security Department carries out risk management primarily by outsourcing risks to those companies and agencies that specialize in handling such risks and that have the appropriate resources to do so. Additionally, the IT Department assesses and improves the Company’s cybersecurity risk management processes on an annual basis by: (i) engaging its cyber insurance broker, AON, plc, to complete a benchmarking evaluation to compare the Company’s cybersecurity posture against peers and (ii)engaging cyber risk readiness and response company, Netdiligence®, to conduct vulnerability and penetration testing, which produces a report that specifies any possible risk area and devices. Such report is presented to the IT Department for analysis and for the purpose of developing subsequent action plans to remediate any vulnerabilities. As of the date of this report, we are not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial conditions, except as otherwise noted.
Governance. Management is ultimately responsible for assessing and managing the Company’s cybersecurity risk. The information security program is overseen by the Chief Financial Officer, Vice President of IT, and the Information Security Manager. The Information Security Manager provides a weekly report to the Vice President of IT, which contains an overview of the activity in the department, any United States Computer Emergency Readiness Team alerts processed and all findings from the preventative maintenance tools. The Vice President of IT provides such report to the Chief Financial Officer on a quarterly basis. The Audit Committee of the Board is then briefed each quarter on the occurrence of any cybersecurity incidents. The Board will also be provided an overview of the information security program on an annual basis, including updates on the IT team, IT training, implementation of IT controls, cybersecurity testing, the incident response process and the cybersecurity assets of the Company.
Item 2. Properties
Offices
We lease our headquarters located at 14185 Dallas Parkway, Suite 1100,1200, Dallas, Texas 75254.

Our consolidated businesses lease other office and warehouse facilities. See note 9 in our consolidated financial statements.
Item 3. Legal Proceedings
On December 11, 2015,20, 2016, a purported stockholder class action and derivative complaint challenging the Remington acquisitionlawsuit was filed against one of the Company’s subsidiaries in the Superior Court of Chancery of the State of DelawareCalifornia in and styled as Campbell v. Bennett et al., Case No. 11796.for the County of Contra Costa alleging violations of certain California employment laws. The complaint names as defendants eachcourt has entered an order granting class certification with respect to: (i) a statewide class of the membersnon-exempt employees who were allegedly deprived of the Company's board of directors, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and Remington Holdings GP, as well as the Company as a nominal defendant. The complaint alleges that the members of the Company’s board of directors breached their fiduciary duties to the Company’s stockholders in connection with the Remington acquisition and that Monty Bennett, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and Remington Holdings GP aided and abetted the purported breaches of fiduciary duty. In support of these claims, the complaint alleges, among other things, that the Company’s board of directors engaged in an unfair process with Remington Lodging and the Bennetts andrest breaks as a result of the Company overpaidsubsidiary’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 80% limited partnership and 100% general partnership interests in Remington Lodging. The complaint also allegescourt to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. While we believe it is reasonably possible that the proxy statement filed with the SEC contains certain materially false and/or misleading statements. The action seeks injunctive relief, including enjoining the special meeting of stockholders and any vote on the contribution or the stock issuances or rescinding the Remington acquisition if they are consummated, or in the alternative an award of damages, as well as unspecified attorneys' and other fees and costs, in addition to any other relief the courtwe may deem proper. Since the filing of the complaint, the special meeting of stockholders and related vote occurred with the stockholders approving the acquisition. On March 24, 2017, the Remington acquisition was terminated and therefore this action is moot. On April 13, 2017, the Court of Chancery entered an order dismissing the action with prejudice as to the named plaintiff, and without prejudice as to all other members of the class. Pursuant to the order, the Court of Chancery retained jurisdiction solely for the purpose of determining the plaintiff’s anticipated application for an award of mootness fees and reimbursement of expenses. After negotiations, and to eliminate any riskincur 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 plaintiff’s fee petition, the Company agreedtrial judge retains discretion to pay fees and expenses in the amount of $150,000 within five (5) days of the entry of an order closing the case in the second quarter of 2017. Accordingly, this amount was recorded within general and administrative expenses on our consolidated statements of operations for the year ended December 31, 2017. The Court of Chancery has not and will not pass any judgment on the fee payment. On July 17, 2017, the Court of Chancery entered a stipulation and order closing the case.
Jesse Small v. Monty J. Bennett, et al., Case No. 24-C-16006020 (Md. Cir. Ct.) On November 16, 2016, Jesse Small, a purported shareholder of Ashford Prime, commenced a derivative action in Maryland Circuit Court for Baltimore City asserting causes of action for breach of fiduciary duty, corporate waste, and declaratory relief against the members of the Ashford Prime board of directors, David Brooks (collectively, the “Individual Defendants”), Ashford Inc. and Ashford LLC. Ashford Prime is named as a nominal defendant. The complaint alleges that the Individual Defendants breached their fiduciary duties to Ashford Prime by negotiating and approving the termination fee provisionaward lower penalties than set forth in Ashford Prime’s advisory agreement with Ashford LLC,the applicable California employment laws, we do not believe that Ashford Inc. and Ashford LLC aided and abetted the Individual Defendants’ fiduciary duty breaches, and that the Ashford Prime board of directors committed corporate waste in connection with Ashford Prime’s purchase of 175,000 shares of Ashford Inc. common stock. The complaint seeks monetary damages and declaratory and injunctive relief, including a declaration that the termination fee provision is unenforceable. The defendants filed motions to dismiss the complaint on March 24, 2017. On June 6, 2017, the plaintiff notified the court that the plaintiff intends to dismiss the action as moot and seek a mootness fee and costs. On July 25, 2017, the action was dismissed with prejudice asany potential loss to the plaintiff. A hearing on the plaintiff’s fee petition was held on October 25, 2017. On February 5, 2018, the court denied the plaintiff’s fee petition.
The Company is reasonably estimable at this time. As of December 31, 2023, no amounts have been accrued.
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We are also engaged in other various legal proceedings whichthat 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 Disability 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, ranges from remote toliterature. We recognize a loss when we believe the loss is both probable and reasonably possible and to probable.estimable. Legal costs associated with loss contingencies are expensed as incurred. Based on estimates of the range of potential losses associated withinformation available to us relating to these matters, management doeslegal 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 upon theon our consolidated financial position, or 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 employee personal information. We have completed an investigation and have identified certain employee information that may have been exposed, but we have not identified that any customer information was exposed. All systems have been restored. We believe that we maintain a sufficient level of insurance coverage related to such events, and the Company. However,related incremental costs incurred to date are immaterial. In February of 2024, two class action lawsuits were filed related to the cyber incident. The suits are currently pending in the U.S. District Court for the Northern District of Texas. We intend to vigorously defend these matters and do not believe that any potential loss is reasonably estimable at this time. It is reasonably possible that the Company may incur additional costs related to the matter, but we are unable to predict with certainty the ultimate amount or range of potential loss.
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 and if the Company failed tocertainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses were to exceed the Company’sour current estimates of the range of potential losses, the Company’sour consolidated financial position, or results of operations, or cash flows could be materially adversely affected in future periods.
Item 4. Mine Safety Disclosures
Not Applicable

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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Market Price and Dividend Information
Our common stock has been listed and traded on the NYSE American under the symbol “AINC” since November 13, 2014. Prior to that time, there was no public market for our common stock. On March 8, 2018,25, 2024, there were approximately 105510 holders of record.
The following table sets forth the high and low intraday sales prices of our common stock for the indicated periods:
 First Quarter Second Quarter Third Quarter Fourth Quarter
2017       
High$62.66
 $60.20
 $65.70
 $111.00
Low43.00
 47.50
 47.03
 59.95
Close59.00
 50.98
 60.60
 93.00
        
2016       
High$54.96
 $64.23
 $52.00
 $48.27
Low36.60
 39.35
 43.53
 38.11
Close45.59
 50.00
 47.65
 43.14
Distributions and Our Distribution Policy
Evaluation of our distribution policy and the decision to make a distribution is made solely at the discretion of our board of directors and is based on factors including, but not limited to, our ability to generate income, availability of existing cash balances, the performance of our business, capital requirements, applicable law, access to cash in the capital markets and other financing sources, general economic conditions and economic conditions that more specifically impact our business or prospects and other factors our board of directors deems relevant.
Future distribution levels are subject to adjustment based upon any one or more of the factors set forth above, the matters discussed under “Item 1A. Risk Factors” in this Annual Report on Form 10-K or any other document we file with the SEC under the Exchange Act and other factors that our board of directors may, from time to time, deem relevant to consider when determining an appropriate distribution. Our board of directors may also determine not to make any distribution.
No dividends on our common stock have been declared or paid as of and for the years ended December 31, 20172023, 2022 and 2016.2021.

Equity Compensation Plan Information
The following table sets forth certain information with respect to securities authorized and available for issuance under our equity compensation plans:
Number of Securities to be Issued Upon Exercise of
Outstanding Options, Warrants and Rights		 Weighted-Average
Exercise Price
Of Outstanding
Options, Warrants,
And Rights		 Number of Securities Remaining Available for Future Issuance 
Number of Securities to be Issued Upon Exercise of
Outstanding Options, Warrants and Rights
Equity compensation plans approved by security holders
Equity compensation plans approved by security holders
Equity compensation plans approved by security holders1,179,455
(2) 
62.17
(2) 
93,539
(1) 
1,709,860(2)65.48(2)593,082 (1)(1)
Equity compensation plans not approved by security holders— — —
 
Total1,179,455 62.17 93,539
 
Total
Total
____________________
(1) As of December 31, 2017, 93,5392023, 593,082 shares of our common stock, or securities convertible into 93,539593,082 shares of our common stock, remained available for issuance under our 2014 Incentive Plan. As defined by the 2014 Incentive Plan, authorized shares automatically increase on January 1 of each year in an amount equal to 15% of the sum of (i) the fully diluted share count and (ii) the shares of common stock reserved for issuance under the Company’s deferred compensation plan less shares available under the 2014 Incentive Plan as of December 31 of the previous year. Pursuant to the plan, we have 491,571750,949 shares of our common stock, or securities convertible into 491,571750,949 shares of our common stock, available for issuance under our 2014 Incentive Plan, as of January 1, 2018.2024.
(2) As of December 31, 2017,2023, we have an obligation to issue 207,083195,579 shares of our common stock with no strike price under our non-qualified deferred compensation plan (“DCP”) for certainMr. Monty J. Bennett, our chairman and chief executive officers.officer. The plan allows participantsthe participant to defer up to 100% of theirhis base salary and bonus and select an investment fund for measurement of the deferred compensation obligation. Distributions under the DCP are made in cash, unless the participant has elected Ashford Inc. common stock as the investment option, in which case any such distributions would be made in Ashford Inc. common stock. Mr. Monty J. Bennett has elected to invest his deferred compensation account in our common stock which will be issued in quarterly installments over five years beginning in 2026. Mr. Monty J. Bennett may postpone all or a portion of the distributions, for a minimum of 5 years, if he notifies the Company 12 months prior to the scheduled distributions. See further discussion in the Risk Factors section and note 16 to17 in our consolidated financial statements.

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Performance Graph
The following graph compares the percentage change in the cumulative total stockholder return on our common stock with the cumulative total return of the S&P 500 Stock Index, and the Dow Jones Asset Manager Index for the period from November 13, 2014, the date our stock began trading on the NYSE American,December 31, 2018 through December 31, 2017,2023, assuming an initial investment of $100 in stock on November 13, 2014,December 31, 2018, with reinvestment of dividends.
The stock price performance shown below on the graph is not necessarily indicative of future price performance.
COMPARISON CUMULATIVE TOTAL RETURNS
Among Ashford Inc., the S&P 500 Stock Index and the Dow Jones Asset Manager Index

4266
Purchases of Equity Securities by the Issuer
None.
Common Stock Repurchases—On December 5, 2017, the board of directors of Ashford Inc. approved a stock repurchase program (the “Repurchase Program”) pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01$0.001 per share having an aggregate value of up to $20 million. No shares were repurchased under the stock repurchase program during the year ended December 31, 2023. The Company did not repurchase anymaximum aggregate dollar value that may yet be purchased under the Repurchase Program is $20 million.
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The following table provides the information with respect to purchases of its stock in 2017.
Recent Sales of Unregistered Securities
On November 1, 2017, the Company issued 70,318 shares ofour common stock to PT Intermediate, LLC in connection with the purchase of 85% of the outstanding membership interests in Presentation Technologies, LLC as part of the acquisition of J&S Audio Visual. The common stock was issued pursuant to the exemption from the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”) provided under Section 4(a)(2) thereunder.
On January 2, 2018, the Company issued 8,962 shares of common stock to the OpenKey redeemable noncontrolling interest holder in connection with the purchase of 519,647 shares of the outstanding membership interests in OpenKey, Inc. The common stock was issued pursuant to the exemption from the registration requirements under the Securities Act of 1933, as amended provided under Section 4(a)(2) thereunder.
Item 6. Selected Financial Data
You should read the following selected financial information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial statements and related notes included in “Item 8. Financial Statements and Supplementary Data.”
The selected financial information for periods beginning prior to our spin-off from Ashford Trust in November 2014 is a combination of the historical financial information for Ashford Trust’s asset management business (comprised of Ashford LLC

and certain assets, liabilities and operations of Ashford Trust OP), which was separated from Ashford Trust in November 2014. Our asset management business is reflected in the financial statements for such periods as if it were operated wholly within an entity separate from Ashford Trust, however there was no separate legal entity during such periods.
The selected historical financial information as of December 31, 2017 and 2016, and for each of the three yearsmonths in the periodquarter ended December 31, 2017, has been derived from2023:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per Share
Total Number of Shares Purchased as Part of a Publicly Announced Plan (1)
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
Common stock:
October 1 to October 31933 $— (2)— $20,000,000 
November 1 to November 30668 $— (2)— $20,000,000 
December 1 to December 3162 $— (2)— $20,000,000 
Total1,663 $— — 
____________________
(1) No shares were repurchased under the audited financial statements included in “Item 8. Financial Statements and Supplementary Data.” The selected historical financial information as of December 31, 2015, 2014 and 2013, and forRepurchase Program during the yearsthree months ended December 31, 20142023.
(2) There is no cost associated with the forfeiture of 933, 688, and 2013, has been derived from audited financial statements not included in this Annual Report on Form 10-K.
The selected financial information below and the financial statements included in “Item 8. Financial Statements and Supplementary Data” do not necessarily reflect what our results of operations, financial position and cash flows would have been if we had operated Ashford Trust’s asset management business as a stand-alone publicly traded company during all periods presented, and, accordingly, this historical information should not be relied upon as an indicator62 restricted shares of our future performance. The following table presents selected financial information (in thousands, except per share amounts):common stock in October, November and December, respectively.
Item 6. Reserved
60
 Year Ended December 31,
 2017 2016 2015 2014 2013
          
Statements of Operations Data:         
Total revenue$81,573
 $67,607
 $58,981
 $17,288
 $960
Total expenses$92,095
 $70,064
 $60,332
 $63,586
 $48,672
Net income (loss)$(20,194) $(12,403) $(12,044) $(47,081) $(47,719)
Net income (loss) attributable to the Company$(18,352) $(2,396) $(1,190) $(46,410) $(47,719)
Diluted income (loss) per common share$(9.59) $(2.56) $(4.45) $(23.43) $(24.09)
Weighted average diluted common shares2,067
 2,209
 2,203
 1,981
 1,981
Balance Sheet Data:         
Cash and cash equivalents$36,480
 $84,091
 $50,272
 $29,597
 $600
Total assets$114,810
 $129,797
 $166,991
 $49,230
 $2,322
Total liabilities$78,742
 $38,168
 $30,115
 $33,912
 $8,081
Total equity (deficit)$30,957
 $90,149
 $136,636
 $14,894
 $(5,759)
Total liabilities and equity/deficit$114,810
 $129,797
 $166,991
 $49,230
 $2,322
Other Data:         
Cash flows provided by (used in):         
Operating activities$19,415
 $84,858
 $24,801
 $(25,074) $(22,445)
Investing activities$(23,158) $(4,865) $(7,637) $(3,471) $(366)
Financing activities$(44,534) $(42,106) $5,858
 $57,542
 $23,411



Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our audited financial statements and the accompanying notes thereto included in Item 8. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K. See “Forward-Looking Statements.”
Overview
We were formed asAshford Inc., a DelawareNevada corporation, is an alternative asset management company with a portfolio of strategic operating businesses that provides products and services primarily to clients in April 2014the real estate and hospitality industries, including Ashford Trust, Braemar, Stirling and our consolidated subsidiary TSGF L.P. We became a public company onin November 12, 2014, when Ashford Trust, a NYSE-listed REIT, completed the spin-off ofand our company through the distribution of our outstanding common stock tois listed on the Ashford Trust stockholders. Effective as of October 31, 2016, Ashford Inc. changed its state of incorporation from Delaware to Maryland.NYSE American. As of March 8, 2018,25, 2024, Mr. Monty J. Bennett, Ashford Inc.’s Chairman and Chief Executive Officer and the Chairman of Ashford Trust, beneficiallyBraemar 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 598,000610,261 shares of our common stock, representingwhich represented an approximately 28.4% of our company. Ashford Prime holds approximately 195,000 shares, which represents approximately 9.3%17.8% ownership interest in Ashford Inc., and owned 18,758,600 shares of our Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”), which, along with all unpaid accrued and accumulated dividends thereon, is convertible at a price of $117.50 per share into an additional approximate 4,233,572 shares of Ashford Inc. common stock, which if converted as of March 25, 2024 would have increased Mr. Monty J. Bennett and Mr. Archie Bennett, Jr.’s ownership interest in Ashford Inc. to approximately 63.2%.
Our principal business objective is to provideWe 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 to other entities primarily in the hospitality industry. The Company seeks to grow in three primary areas; (i) expanding its existing platforms accretively and accelerating performance to earn incentive fees; (ii) starting new platforms for additional base and incentive fees;businesses; and (iii) acquiring investing in or incubating strategicadditional businesses that can achieve accelerated growth through doing businesswhich align with our existing platforms and by leveraging our deep knowledge and extensive relationships within the hospitality sector. strategic initiatives.
We operate our business primarily through two operating subsidiaries, Ashford LLC and Ashford Services. We operate our asset management and advisory business through Ashford LLC and we operate our hospitality products and services business primarily through Ashford Services. Currently, we, through our operating subsidiary Ashford LLC, act asare currently the advisor to two publicly traded REITs,for Ashford Trust, Braemar, Stirling and Ashford Prime.TSGF L.P. In our capacity as the advisor, to Ashford Trust and Ashford Prime, we are responsible for implementing the investment strategies and managing the day-to-day operations of Ashford Trustour clients and Ashford Prime,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 respective boardupscale 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 directorsat least twice the U.S. national average. Stirling invests in a diverse portfolio of such entity. 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 to allowfor each of Ashford Trust and Ashford Primeour clients to conduct itstheir respective business.businesses. We may also perform similar functions for new or additional platforms. WeIn our capacity as an advisor, we are not responsible, but may in the future be responsible for managing the day-to-day operations of theour client’s individual hotel properties, owned by either Ashford Trust or Ashford Prime, which duties are, and will continue to be, the responsibility of the propertyhotel 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 December 31, 2023, Remington provided hotel management services to 122 properties that were open and operating, 54 of which were owned by Ashford Trust and Ashford Prime.third parties.
As required for disclosure under the Fourth Amended and Restated Advisory Agreement (“Fourth Amended and Restated Ashford Prime Advisory Agreement’), for the trailing twelve months ended December 31, 2017, the total incremental expenses incurred (including all reimbursable expenses), as reasonably determined, in connection with providing services to Ashford Prime under the Fourth Amended and Restated Ashford Prime Advisory Agreement was $2.2 million.
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Recent Developments
On January 19, 2017, AIM entered into3, 2023, the Company acquired Remington Hotel Corporation (“RHC”), an Investment Management Agreement (the “Agreement”) with AHT SMA, LP, a Delaware limited partnership (“Client”)affiliate owned by Mr. Monty J. Bennett, our Chairman and a wholly-owned subsidiaryChief Executive Officer and the Chairman of Ashford Trust to manageand Braemar, and his father, Mr. Archie Bennett, Jr., Chairman Emeritus of Ashford Trust’s excess cash (the “Account”). Pursuant toTrust, from which the Agreement, Client retained and appointed AIMCompany leases the offices for our corporate headquarters in Dallas, Texas. The purchase price paid was de minimis. The transaction was accounted for as the investment manager of Client. The Agreement will govern the relationship between Client and AIM, as well as grant AIM certain rights, powers and duties to act on behalf of Client. AIM will not be compensated by Client for its services under the Agreement. Client bears all costs and expenses of the establishment and ongoing maintenance of the Account as well as all costs and expenses of AIM.an asset acquisition. See note 19.
On March 3, 2017, Ashford Inc. invested $1.317, 2023, RED acquired certain privately held entities and assets associated with the Alii Nui and Maui Dive Shop (“Alii Nui”), which provides luxury sailing and watersports experiences in Maui, Hawaii, for a total purchase price of $11.0 million, for an additional ownership interest in OpenKey, a consolidated VIE. On September 12, 2017, Ashford Inc. invested an additional $667,000 in OpenKey. On January 16, 2018, Ashford Inc. invested an additional $1.3excluding working capital adjustments. The purchase price consisted of $8.0 million in OpenKey. OpenKey iscash, subject to certain adjustments, $1.0 million of contingent consideration and 80,000 Preferred Units issued by RED (the “RED Units”) issued at $25 per unit for a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guestrooms.total liquidation value of $2.0 million. See notes 1, 2, 13, 14 and 17 tonote 4 in our consolidated financial statements.
On March 7,24, 2023, INSPIRE amended its credit agreement dated as of November 1, 2017 AIM GP,(the “INSPIRE Amendment”). The INSPIRE Amendment increased the general partnermaximum borrowing capacity under INSPIRE’s revolving credit facility (the “Revolving Note”) from $3.0 million to $6.0 million, provides for a $20.0 million senior secured term loan (“Term Note”) and an equipment note (“Equipment Note” and together with the Revolving Note and the Term Note, the “Notes”) 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. See note 8 in our consolidated financial statements.
On May 15, 2023, the Company and Computershare Trust Company, N.A., a federally chartered trust company (the “Rights Agent”) entered into Amendment No. 1 (“Amendment No. 1”) to the Rights Agreement dated as of August 30, 2022 (the “Rights Agreement”). Our board of directors implemented the rights plan by declaring (i) a dividend to the holders of the AQUA U.S. Fund, provided written noticeCompany’s common stock of one preferred share purchase right (a “Right”) for each share of common stock and (ii) a dividend to the AQUA U.S. Fund's limited partnersholders of its electionthe Company’s Series D Convertible Preferred Stock of one Right in respect of each share of the Company’s common stock issuable upon conversion of the Series D Convertible Preferred Stock. The dividends were distributed on September 9, 2022, to dissolveour stockholders of record on that date. Each of those Rights become exercisable on the AQUA U.S. Funddate on which the Rights separate and begin trading separately from our common stock and entitles the registered holder to purchase from the Company one one-thousandth of a share of our Series F Preferred Stock, par value $0.001 per share (“Series F Preferred Stock”), at a price of $275 per one one-thousandth of a share of our Series F Preferred Stock represented by such Right, subject to adjustment. Pursuant to Amendment No. 1, the Rights Agreement was amended to (i) extend the final expiration date with respect to the Company’s Rights until July 30, 2024, and (ii) decrease the beneficial ownership threshold in the definition of an acquiring person from 10% to 7%. The value of the Rights was de minimis.
On August 21, 2023 (the “Investment Date”), the Company invested $2.5 million to acquire 51% of the equity of TSGF L.P., a fund which provides a growth-oriented investment product focused on commercial real estate in the State of Texas. The Company consolidated TSGF L.P. as of the Investment Date as management concluded TSGF L.P. is a variable interest entity (“VIE”) for which the Company is considered the primary beneficiary. Our interests in TSGF L.P. were accounted for as an asset acquisition. The approximately $5.0 million of total assets consolidated on the Investment Date included an investment of $4.5 million, $274,000 of cash and cash equivalents and other immaterial assets related to working capital. Subsequent to the Investment Date, Ashford Securities, a subsidiary of the Company, raised an additional $4.9 million in capital on behalf of TSGF L.P. through December 31, 2023, which is included in “noncontrolling interests in consolidated entities” in our consolidated balance sheet. Ashford Securities has raised $9.7 million of capital in total for TSGF L.P. through December 31, 2023, which comprises $2.5 million from the Company and $7.2 million from other investors. The $7.2 million of capital raised from other investors includes $2.3 million of capital raised by Ashford Securities prior to the Investment Date.
On December 5, 2023, Mark Nunneley, the Company’s Chief Accounting Officer (“CAO”), voluntarily resigned from his role as the CAO and all other positions he held with the Company effective December 31, 2023. Mr. Nunneley accepted the position of Senior Managing Director of the Company in which role he remains employed on a full-time basis to provide strategic advice and be responsible for special projects as requested by the Company. Effective January 1, 2024, Justin Coe, formerly the Company’s Senior Vice President of Accounting, was appointed to fill the role of CAO.
On December 6, 2023, the Company entered into an advisory agreement with Stirling and Stirling’s subsidiary Stirling OP. The term of the advisory agreement with Stirling is one year from the effective date of December 6, 2023 subject to an unlimited number of successive, automatic one-year renewals unless terminated by the Company or Stirling’s board of directors. See note 19 in our consolidated financial statements.
On December 19, 2023, the Company incorporated our insurance subsidiary Warwick, which is licensed by the Texas Department of Insurance. Effective December 19, 2023, Ashford Inc. and Warwick entered into a loss portfolio transfer agreement whereby Ashford Inc. agreed to transfer the existing cash reserves and liabilities for Ashford Trust and Braemar’s
62

general liability and workers’ compensation policies from January 1, 2014 through December 31, 2023 to Warwick pursuant to Section 6.1(a)approvals obtained from the independent members of the boards of directors of Ashford Trust and Braemar. This transaction eliminated in consolidation. On the same date, Ashford Inc. and Remington entered into general liability and workers’ compensation insurance policies, respectively, with Warwick with agreed upon annual premiums of $4.7 million and $6.0 million, respectively, for a coverage period of one year.
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 Limited PartnershipAdvisory Agreement, ofdated January 14, 2021, to, among other items: (i) require Ashford Trust pay the AQUA U.S. Fund as of March 31, 2017 (the “Dissolution Date”). In connection withadvisor the dissolution of the AQUA U.S. Fund, the AQUA Master Fund was liquidated in accordance with the laws of the Cayman Islands. The balance of all limited partners' capital accountsPortfolio Company Fee (as defined in the AQUA U.S. Fund, was distributed to limited partners in cash, and


thereafter limited partners ceased to be a limited partner of the AQUA U.S. Fund. As of December 31, 2017, AQUA U.S. Fund has been fully dissolved.
On April 6, 2017, Ashford Inc. entered into theThird Amended and Restated Limited Liability Company Agreement (the “Amended and Restated LLC Agreement”)Advisory Agreement) upon certain specified defaults under Ashford Trust’s loan agreements resulting in the foreclosure of Ashford Hospitality Holdings LLC, a Delaware limited liability companyTrust’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 a subsidiary of the Company (“Ashford Holdings”), in connection with the merger (the “Merger”) of Ashford Merger Sub LLC, a Delaware limited liability company, with and into AshfordRemington Hospitality Advisors LLC, a Delaware limited liability company and the operating companymaster project management agreement between Ashford Trust and Premier until Ashford Trust’s Oaktree Credit Agreement is paid in full, and limits, for a period of two years thereafter, the Company (“Ashford LLC”), with Ashford LLC survivingincremental financial impact to no more than $2 million per year in additional payments to the Merger as a wholly-owned subsidiary of Ashford Holdings. Ashford Holdings is owned approximately 99.8% by Ashford Inc. and approximately 0.2% by noncontrolling interest holders. The terms ofadvisor from such amendments, (iii) reduces the Consolidated Tangible Net Worth covenant (as defined in the Third Amended and Restated LLC Agreement are consistent withAdvisory Agreement) to $750 million (plus 75% of net equity proceeds received) from $1 billion (plus 75% of net equity proceeds received), (iv) revise the termscriteria that would constitute a Company Change of Control (as defined in the Third Amended and Restated Limited Liability CompanyAdvisory 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.
Other Developments
Change in Control
On August 8, 2023, the 40% voting cap under the Investor Rights Agreement, of Advisors LLC. The Merger was effectuated in order to facilitate our investments in businesses that provide productsdated November 6, 2019 and services to the hospitality industry. After the Merger, Ashford Inc. serves as the sole manager of Ashford Holdings.
On April 6, 2017, we acquired a 70% interest in Pure Rooms. Pure Rooms’ patented 7-step purification process treats a room’s surfaces, including the air, and removes up to 99% of pollutants. To consummate the acquisition, Ashford Hospitality Services LLC (“AHS”), a subsidiary of Ashford Inc., entered into an Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) with PRE Opco, LLC (“Pure Rooms”), pursuant to which AHS became the sole owner of the common equity, or Series A Units. In conjunction with the LLC Agreement, AHS contributed $97,000 cash to Pure Rooms as required by the LLC Agreement. Pursuant to the Asset and Liability Contribution Agreement (the “Contribution Agreement”), by and among Pure Rooms (as contributee)the Company, Mr. Archie Bennett Jr. and PAFR, LLC, the members of PAFR, LLCMr. Monty J. Bennett (the “Bennetts”) and Brault Enterprises, LLC (collectively, the “Sellers”), the Sellers contributed liabilities, net of assets,other holders of the predecessor operating company, Pure Rooms NA, LLC, with a fair value of $532,000 in exchange for certain equity interests in Pure Rooms, including 30% of theCompany’s Series A Units, 100% of the Series B-1 Units, and 50% of the Series B-2 Units. The fair value of the remaining equity consideration included $42,000 of Series A Units, $181,000 of Series B-1 Units, and $202,000 of Series B-2 Units, totaling $425,000. D Convertible Preferred Stock (the “Investor Rights Agreement”), expired.As a result, the Bennetts may now vote their full ownership interests in the Company as they determine at their sole discretion. Upon the expiration of the Contribution Agreement, our equity interestvoting cap, the Bennetts controlled a majority of the Company’s voting securities, resulting in Pure Rooms was 70%. The resultsa change of operationscontrol of Pure Rooms have been included in our consolidated financial statements from the dateCompany. As of acquisition. See note 4 to our consolidated financial statements.
On April 13, 2017, OpenKey entered into a $1.5 million line of credit ("LOC") with Comerica Bank (“Comerica”) that is secured by all of OpenKey's assets. The LOC matures on October 2018 and has an interest rate of prime plus 2.75%. In connection withAugust 8, 2023, the LOC, OpenKey granted Comerica a 10-year warrant to purchaseBennetts owned approximately 28,000610,261 shares of OpenKey's preferredour common stock and owned 18,758,600 shares of our Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”), which, along with all unpaid accrued and accumulated dividends thereon, is convertible at $1.61a price of $117.50 per share. As of December 31, 2017, there were no borrowings outstanding under the LOC. See notes 2 and 6 to our consolidated financial statements.
On June 9, 2017, Ashford Prime’s stockholders approved the Fourth Amended and Restated Ashford Prime Advisory Agreement, which became effective on June 21, 2017. For more information, see note 17 to our consolidated financial statements.
On November 1, 2017, we acquired an 85% controlling interest in a privately held company that conducts the business of J&S Audio Visual in the United States, Mexico, and the Dominican Republic (“J&S”) forshare into approximately $25.5 million. J&S provides an integrated suite of audio visual services including show and event services, hospitality services, creative services and design & integration services to its customers in various venues including hotels and convention centers in the United States, Mexico and the Dominican Republic. The purchase price consisted of (i) $19.2 million in cash of which $10.0 million was funded with a term loan, (ii) 70,3184,152,301 shares of Ashford Inc. common stock, which was determined based on an agreed upon valueresulting in a combined ownership interest in Ashford Inc. of approximately $4.3 million using a thirty-day volume weighted average price per share of $60.44, and had an estimated fair value of approximately $5.1 million64.6%. The Company elected the accounting policy option as of the acquisition date; and (iii) contingent consideration with an estimated fair value of approximately $1.2 million. The results of operations of J&S are included in our consolidated financial statements from the date of acquisition beginning on November 1, 2017.allowed under Accounting Standards Codification (“ASC”) 805, Business Combinations, to continue to use Ashford Inc.’s historical accounting basis rather than apply pushdown accounting.
On December 5, 2017, the board of directors of the Company extended the Final Expiration Date with respect to the Company’s Rights Agreement (each as defined under the Amended and Restated Rights Agreement, dated as of August 12, 2015, as amended by Amendment No. 1 to the Amended and Restated Rights Agreement, dated as of October 31, 2016, between the Company and Computershare Trust Company, N.A.) until the date of the Company’s 2018 annual meeting of stockholders, at which time the stockholders will vote on a further extension of the Final Expiration Date. If the stockholders do not approve such further extension, the Rights will expire on the date of the 2018 annual meeting of stockholders.Bylaws
On December 5, 2017,August 24, 2023, the boardBoard of directorsDirectors (the “Board”) of the Company approved a stock repurchase program (the “Repurchase Program”) pursuantamendments to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share having an aggregate value of up to $20 million. The Company did not repurchase any stock during the year ended December 31, 2017.


On January 2, 2018, the Company issued 8,962 shares of common stock to the OpenKey redeemable noncontrolling interest holder in connection with the purchase of 519,647 shares of the outstanding membership interests in OpenKey, Inc. The common stock was issued pursuant to the exemption from the registration requirements under the Securities Act of 1933, as amended provided under Section 4(a)(2) thereunder.
On January 8, 2018, we entered into an equity distribution agreement with B. Riley FBR, Inc., acting as sales agent (the “Equity Distribution Agreement”). Pursuant to the Equity Distribution Agreement, we may sell from time to time through the sales agent shares of our common stock having an aggregate offering price of up to $20.0 million. Sales of shares of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 of the Securities Act. We will pay the sales agent a commission, which in each case shall not be more than 2.0% of the gross sales price of the shares of our common stock sold through the sales agent. As of December 31, 2017, no shares of our common stock have been sold under this program.
On January 16, 2018, the Company closed on the acquisition of certain assets related to RED Hospitality & Leisure LLC ("RED") for $970,000 cash, comprised of a $750,000 deposit paid on December 11, 2017, which is reflected on our consolidated balance sheet as “other assets” as of December 31, 2017, and an additional $220,000 paid on January 16, 2018. The Company owns an 80% interest in RED, a premier provider of watersports activities and other travel and transportation services in the U.S. Virgin Islands. See note 22 to our consolidated financial statements.
On February 27, 2018, our board of directors approved and adopted the Second Amended and Restated Bylaws of the Company which contains(the “Bylaws”), effective immediately. The amendments to the Bylaws provide, among other things, that:
•the notice to be furnished to the Company by a stockholder seeking to bring a proposed director nomination before a meeting of the Company’s stockholders must include the information required pursuant to Rule 14a-19(b) under the “Exchange Act”, if the stockholder intends to engage in a solicitation in support of director nominees other than the Company’s nominees;
•no stockholder may solicit proxies in support of any nominees other than individuals nominated by the Board unless such stockholder has complied with Rule 14a-19 under the Exchange Act in connection with the solicitation of such proxies, including the provision that requires stockholders to meet certain ownership thresholdsthe Company of notices required thereunder in a timely manner;
•if any stockholder provides notice pursuant to initiate claims on behalfRule 14a-19(b) under the Exchange Act and subsequently fails to comply with any of the requirements of Rule 14a-19 under the Exchange Act, then the Company will disregard any proxies or votes solicited for such stockholder’s nominee; and
•at the request of the Company, or againstif any stockholder provides notice pursuant to Rule 14a-19(b) under the Exchange Act, such stockholder must deliver to the Company, no later than five business days prior to the applicable meeting of stockholders, reasonable evidence that such stockholder has met the requirements of Rule 14a-19 under the Exchange Act.
63

In addition, the amendments to the Bylaws include enhancements to certain advance notice procedures and disclosure requirements for a stockholder nomination of directors and the submission of proposals for consideration at annual meetings of the stockholders of the Company (other than proposals to be included in the Company’s proxy statement pursuant to Rule 14a-8 of the Exchange Act).
Other
On December 20, 2023, the Company received notification (the “Letter”) from the NYSE American that it was not in compliance with the continued listing standards set forth in Sections 1003(a)(i) and (ii) of the NYSE American Company Guide (the “Company Guide”). Specifically, the Letter indicated that the Company was not in compliance with Sections 1003(a)(i) and 1003(a)(ii) of the Company Guide, requiring a listed company to have stockholders’ equity of (i) at least $2.0 million if it has reported losses from continuing operations or onenet losses in two of its directorsthree most recent fiscal years and (ii) at least $4.0 million if it has reported losses from continuing operations or net losses in three of officers.its four most recent fiscal years. The new provisionCompany reported a stockholders’ deficit of $304.6 million as of December 31, 2023, and had losses from continuing operations and/or net losses in three of its four most recent fiscal years ended December 31, 2023. The Company submitted a plan to the NYSE American on January 12, 2024 addressing how it intends to regain compliance with Sections 1003(a)(i) and (ii) of the Company Guide by June 20, 2025, or sooner if the NYSE American determines that the nature and circumstances of the Company’s continued listing status warrant a shorter period of time.
The Company received notification from the NYSE American on February 27, 2024, that it had accepted the Company’s plan and granted a plan period through June 20, 2025. During the plan period, the Company will be submittedsubject to a binding advisory vote of the company’s stockholders at the company’s 2018 Annual Meeting of Stockholdersquarterly review to determine if it is making progress consistent with the intent that the new provision will be rescinded if not approved at such meeting.
On March 1, 2018,plan. If the Company entered into a $35 million senior revolving credit facilitydoes not regain compliance with Bank of America, N.A. The credit facility provides for a three-year revolving line of credit and bears interest at a range of 3.0% to 3.50% over LIBOR, depending on the leverage level ofNYSE American listing standards by June 20, 2025, or if the Company. There is a one-year extension option subject toCompany does not make sufficient progress consistent with its plan, then the satisfaction of certain conditions. The new credit facility includes the opportunity to expand the borrowing capacity by up to $40 million to an aggregate size of $75 million.NYSE American may initiate delisting proceedings.
Discussion of Presentation
The discussion below relates to the financial condition and results of continuing operations of Ashford Inc. and its majority-owned subsidiaries and entities which it controls.

The historical financial information is not necessarily indicative of our future results of operations, financial position and cash flows.

64

RESULTS OF OPERATIONS
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2022 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Year Ended December 31, 20172023 Compared to Year Ended December 31, 20162022
The following table summarizes the changes in key line items from our consolidated statements of operations for the years ended December 31, 20172023 and 20162022 (in thousands):
Year Ended December 31,Favorable (Unfavorable)
20232022$ Change% Change
REVENUE
Advisory services fees$47,948 $48,381 $(433)(0.9)%
Hotel management fees52,561 46,548 6,013 12.9 %
Design and construction fees27,740 22,167 5,573 25.1 %
Audio visual148,617 121,261 27,356 22.6 %
Other43,433 44,312 (879)(2.0)%
Cost reimbursement revenue426,496 361,763 64,733 17.9 %
Total revenues746,795 644,432 102,363 15.9 %
EXPENSES  
Salaries and benefits92,144 76,521 (15,623)(20.4)%
Cost of revenues for design and construction11,666 8,359 (3,307)(39.6)%
Cost of revenues for audio visual108,754 84,986 (23,768)(28.0)%
Depreciation and amortization28,222 31,766 3,544 11.2 %
General and administrative46,276 34,004 (12,272)(36.1)%
Other25,281 25,828 547 2.1 %
Reimbursed expenses426,507 361,375 (65,132)(18.0)%
Total expenses738,850 622,839 (116,011)(18.6)%
OPERATING INCOME (LOSS)7,945 21,593 (13,648)(63.2)%
Equity in earnings (loss) of unconsolidated entities(702)392 (1,094)(279.1)%
Interest expense(14,208)(9,996)(4,212)(42.1)%
Amortization of loan costs(1,051)(761)(290)(38.1)%
Interest income1,798 371 1,427 384.6 %
Realized gain (loss) on investments(80)(121)41 33.9 %
Other income (expense)747 (25)772 3,088.0 %
INCOME (LOSS) BEFORE INCOME TAXES(5,551)11,453 (17,004)(148.5)%
Income tax (expense) benefit544 (8,530)9,074 106.4 %
NET INCOME (LOSS)(5,007)2,923 (7,930)(271.3)%
Net (income) loss from consolidated entities attributable to noncontrolling interests880 1,171 (291)(24.9)%
Net (income) loss attributable to redeemable noncontrolling interests(501)(448)(53)(11.8)%
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY(4,628)3,646 (8,274)(226.9)%
Preferred dividends, declared and undeclared(36,193)(36,458)265 0.7 %
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS$(40,821)$(32,812)$(8,009)(24.4)%
 Year Ended December 31, Favorable (Unfavorable)
 2017 2016 $ Change % Change
REVENUE       
Advisory services$65,982
 $67,228
 $(1,246) (1.9)%
Audio visual9,186
 —
 9,186
 

Other6,405
 379
 6,026
 1,590.0 %
Total revenue81,573
 67,607
 13,966
 20.7 %
EXPENSES   
  
  
Salaries and benefits61,223
 52,436
 (8,787) (16.8)%
Cost of revenues for audio visual7,757
 —
 (7,757) 

Depreciation and amortization2,527
 1,174
 (1,353) (115.2)%
General and administrative17,363
 16,454
 (909) (5.5)%
Impairment1,072
 —
 (1,072) 

Other2,153
 —
 (2,153) 

Total expenses92,095
 70,064
 (22,031) (31.4)%
OPERATING INCOME (LOSS)(10,522) (2,457) (8,065) (328.2)%
Realized gain (loss) on investment in unconsolidated entity—
 (3,601) 3,601
 100.0 %
Unrealized gain (loss) on investment in unconsolidated entity—
 2,141
 (2,141) (100.0)%
Interest expense(83) —
 (83) 

Amortization of loan costs(39) —
 (39) 

Interest income244
 73
 171
 234.2 %
Dividend income93
 170
 (77) (45.3)%
Unrealized gain (loss) on investments203
 2,326
 (2,123) (91.3)%
Realized gain (loss) on investments(294) (10,113) 9,819
 97.1 %
Other income (expense)(73) (162) 89
 54.9 %
INCOME (LOSS) BEFORE INCOME TAXES(10,471) (11,623) 1,152
 9.9 %
Income tax (expense) benefit(9,723) (780) (8,943) (1,146.5)%
NET INCOME (LOSS)(20,194) (12,403) (7,791) (62.8)%
(Income) loss from consolidated entities attributable to noncontrolling interests358
 8,860
 (8,502) (96.0)%
Net (income) loss attributable to redeemable noncontrolling interests1,484
 1,147
 337
 29.4 %
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY$(18,352) $(2,396) $(15,956) (665.9)%
Net Income (Loss) Attributable to the Company.Common Stockholders. Net loss attributable to the Company increased $16.0common stockholders changed $8.0 million or 665.9%, to $18.4a $40.8 million loss for the year ended December 31, 2017 (“2017”2023 (the “2023 period”) compared to a $32.8 million loss for the year ended December 31, 2016 (“2016”2022 (the “2022 period”) as a result of the factors discussed below.


Total Revenue.Revenues. Total revenuerevenues increased $14.0by $102.4 million, or 20.7%15.9%, to $81.6$746.8 million for 20172023 compared to 2016. 2022 due to the following (in thousands):
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Year Ended December 31,Favorable (Unfavorable)
20232022$ Change% Change
Advisory services fees:
Base advisory fees (1)
$47,159 $47,592 $(433)(0.9)%
Incentive advisory fees (2)
268 268 — — %
Other advisory revenue (3)
521 521 — — %
Total advisory services fees revenue47,948 48,381 (433)(0.9)%
Hotel management fees:
Base management fees37,651 34,072 3,579 10.5 %
Incentive management fees5,569 8,533 (2,964)(34.7)%
Other management fees9,341 3,943 5,398 136.9 %
Total hotel management fees revenue (4)
52,561 46,548 6,013 12.9 %
Design and construction fees revenue (5)
27,740 22,167 5,573 25.1 %
Audio visual revenue (6)
148,617 121,261 27,356 22.6 %
Other revenue:
Watersports, ferry and excursion services (7)
34,057 26,309 7,748 29.4 %
Debt placement and related fees (8)
4,634 4,222 412 9.8 %
Premiums earned (9)
375 — 375 
Cash management fees (10)
256 135 121 89.6 %
Claims management services (11)
12 20 (8)(40.0)%
Other services (12)
4,099 13,626 (9,527)(69.9)%
Total other revenue43,433 44,312 (879)(2.0)%
Cost reimbursement revenue (13)
426,496 361,763 64,733 17.9 %
Total revenues$746,795 $644,432 $102,363 15.9 %
REVENUES BY SEGMENT (14)
Advisory$78,960 $77,347 $1,613 2.1 %
Remington424,322 356,435 67,887 19.0 %
Premier39,947 32,247 7,700 23.9 %
INSPIRE148,829 121,418 27,411 22.6 %
RED34,150 26,335 7,815 29.7 %
OpenKey1,586 1,484 102 6.9 %
Corporate and other19,001 29,166 (10,165)(34.9)%
Total revenues$746,795 $644,432 $102,363 15.9 %
________
(1)The decrease in base advisory fees is primarily due to lower revenue of $1.6 million from Ashford Trust offset by higher revenue of $1.2 million from Braemar. See note 3 in our consolidated financial statements for discussion of the advisory services revenue recognition policy.
(2)Incentive advisory fees for 2023 includes the pro rata portion of the second year installment of the Braemar 2022 incentive advisory fee which was paid in January 2024. Incentive fee payments are subject to meeting the December 31st FCCR Condition each year, as defined in our advisory agreements. Ashford Trust’s annual total stockholder return did not meet the relevant incentive fee thresholds during the 2023, 2022 and 2021 measurement periods. Braemar’s annual total stockholder return did not meet the relevant incentive fee thresholds during the 2023 and 2021 measurement period.
66

(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 consolidated balance sheet and is being recognized evenly over the initial 10-year term of the agreement.
(4)    The increase was drivenin hotel management fees revenue is due to higher base management fees and other management fees. Base management fees from Ashford Trust and third parties increased by $1.6 million and $2.5 million, respectively, offset by a decrease of $488,000 from Braemar. Other management fees increased $5.4 million primarily due to various management fees earned from third parties which began in the first quarter of 2023 and due to the timing of Remington’s acquisition of Chesapeake in April of 2022. 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. Incentive management fees from Ashford Trust, Braemar and third parties decreased by $9.2$1.1 million, $786,000 and $1.1 million, respectively.
(5)    The increase in design and construction fees revenue is primarily due to higher revenue from Ashford Trust, Braemar and third parties of $4.3 million, $435,000 and $828,000, respectively, due to increased capital expenditures from our clients.
(6)    The $27.4 million increase in audio visual revenues from the acquisition of J&S,revenue is primarily due to an increase in demand for group events in 2023.
(7)    The $7.7 million increase in watersports, ferry and excursion services revenue is due to an increase of $2.4$6.6 million from RED’s acquisition of Alii Nui in the first quarter of 2023 and increases of $122,000 and $1.7 million in REIT advisory 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 $747,000 from RED’s operations in the continental U.S.
(8)    The increase in debt placement and related fee revenue is due to higher revenue of $1.4 million from Braemar offset by lower revenue of $1.0 million from Ashford Trust. Debt placement and related fees are earned by Lismore for providing debt placement, modification, forbearance and refinancing services. The decrease in revenue from Ashford Trust in 2023 is primarily due to the expiration of the Ashford Trust Agreement with Lismore on April 6, 2022. Debt placement and related fees revenue related to the Ashford Trust Agreement in 2022 were $2.4 million.
(9)    Premiums earned is recognized by our insurance subsidiary, Warwick, from insurance premiums related primarily to general liability and workers’ compensation contracts incurred on behalf of our clients Ashford Trust, Braemar and third-party clients and their respective management companies.
(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)    Claims management services include revenue earned from providing insurance claim assessment and administration services to Ashford Trust and Braemar.
(12)    Other services revenue relates to other hotel services provided by our consolidated subsidiaries, OpenKey and Pure Wellness, to Ashford Trust, Braemar and third parties. Other revenue additionally includes Marietta prior to Ashford Trust’s acquisition of Marietta on December 16, 2022. The decrease in other services revenue is primarily due to the sale of Marietta, which recognized $9.8 million of revenue in 2022.
(13)    The increase in cost reimbursement revenue in 2023 is primarily due to an increase in Remington’s cost reimbursement revenue of $62.0 million from Remington’s acquisition of Chesapeake in April of 2022. The increase is additionally due to an increase of $2.1 million in Premier’s cost reimbursement revenue due to our clients’ increased capital expenditures in 2023 compared to 2022 and an increase of $2.4$1.9 million in other servicescost reimbursement revenue from Pure Roomsin 2023 related to reimbursable advisory expenses for Ashford Trust and OpenKey. Braemar.
(14)    See note 17 to21 in our consolidated financial statements. The changes in total revenue consistedstatements for discussion of the following (in thousands):segment reporting.
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 Year Ended December 31,  
 2017 2016 $ Change
Advisory services revenue:     
Base advisory fee (1)
$43,523
 $43,043
 $480
Incentive advisory fee (2)
3,083
 3,083
 —
Reimbursable expenses (3)
9,705
 8,859
 846
Non-cash stock/unit-based compensation (4)
9,394
 12,243
 (2,849)
Other advisory revenue (5)
277
 —
 277
Total advisory services revenue (11)
65,982
 67,228
 (1,246)
      
Audio visual revenue (6)
9,186
 —
 9,186
      
Other revenue:     
Investment management reimbursements (7) (11)
1,976
 —
 1,976
Debt placement fees (8) (11)
1,137
 —
 1,137
Lease revenue (9) (11)
893
 335
 558
Other services (10)
2,399
 44
 2,355
Total other revenue6,405
 379
 6,026
      
Total revenue$81,573
 $67,607
 $13,966
      
REVENUE     
REIT advisory (11)
$69,988
 $67,563
 $2,425
J&S (6)
9,186
 —
 9,186
Other services (10)
2,399
 44
 2,355
Total revenue$81,573
 $67,607
 $13,966
________
(1)
The increase in base advisory fee is due to higher revenue of $24,000 from Ashford Trust and higher revenue of $456,000 from Ashford Prime.
(2)
Incentive advisory fee includes the second year installment of the 2016 incentive fee in the amount of $1.8 million for 2017, earned in connection with our advisory agreement with Ashford Trust and the third year installment of the 2015 incentive fee in the amount of $1.3 million for 2017, earned in connection with our advisory agreement with Ashford Prime. No incentive fee was earned from Ashford Trust or Ashford Prime for the 2017 measurement period.
(3)
The increase in reimbursable expenses revenue is due to higher revenue of $1.5 million from Ashford Trust and lower revenue of $700,000 from Ashford Prime. Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services.
(4)
The decrease in non-cash stock/unit-based compensation revenue is due to higher revenue of $2.6 million from Ashford Trust and lower revenue of $5.5 million from Ashford Prime. Non-cash stock/unit-based compensation revenue is associated with equity grants of Ashford Trust’s and Ashford Prime’s common stock and LTIP units awarded to officers and employees of Ashford Inc. for which we recorded an offsetting expense in an equal amount included in “salaries and benefits.”
(5)
The increase in other advisory revenue is due to higher revenue of $277,000 from Ashford Prime as a result of the $5.0 million cash payment received upon stockholder approval of the Fourth Amended and Restated Ashford Prime Advisory Agreement in June 2017. The payment is included in “deferred income” on our consolidated balance sheet and is being recognized over the initial ten-year term of the agreement.


(6)
The increase in audio visual revenue is due to higher revenue of $9.2 million from third parties, as a result of our acquisition of J&S.
(7)
The increase in investment management reimbursements is due to higher revenue of $2.0 million from Ashford Trust. Investment management reimbursements include AIM’s management Ashford Trust’s excess cash under the Investment Management Agreement executed in 2017. AIM is not compensated for its services but is reimbursed for all costs and expenses.
(8)
The increase in debt placement fee revenue is due to higher revenue of $913,000 from Ashford Trust and $224,000 from Ashford Prime. Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our wholly-owned subsidiary.
(9)
In connection with our key money transaction with our managed REITs, we lease furniture, fixtures and equipment to Ashford Trust and Ashford Prime at no cost. A portion of the base advisory fee is allocated to lease revenue each period equal to the estimated fair value of the lease payments that would have been made.
(10)
The increase in other services revenue is due to higher revenue of $993,000 from Ashford Trust, higher revenue of $41,000 from Ashford Prime and higher revenue of $1.3 million from third parties. Other services revenue is associated with the provision of other hotel services by our consolidated subsidiaries, Pure Rooms and OpenKey, to Ashford Trust, Ashford Prime and other third parties.
(11)
Indicates REIT advisory revenue.
Salaries and Benefits Expense. Salaries and benefits expense increased $8.8by $15.6 million, or 16.8%20.4%, to $61.2$92.1 million for 20172023 compared to 2016.2022. The change in salaries and benefits expense consisted of the following (in thousands):
 Year Ended December 31,  
 2017 2016 $ Change
Cash salaries and benefits:     
Salary expense$20,140
 $18,812
 $1,328
Bonus expense9,662
 8,051
 1,611
Benefits related expenses3,398
 4,134
 (736)
Total cash salaries and benefits (1)
33,200
 30,997
 2,203
Non-cash equity-based compensation:     
Stock option grants (2)
7,535
 5,884
 1,651
Pre spin-off Ashford Trust equity grants (3)
684
 5,439
 (4,755)
Ashford Trust & Ashford Prime equity grants (4)
9,394
 12,243
 (2,849)
Total non-cash equity-based compensation17,613
 23,566
 (5,953)
Non-cash (gain) loss in deferred compensation plan (5)
10,410
 (2,127) 12,537
Total salaries and benefits$61,223
 $52,436
 $8,787
Year Ended December 31,
20232022$ Change
Salaries and benefits:
Salary expense (1)
$55,751 $45,432 $10,319 
Bonus expense (2)
18,735 16,859 1,876 
Benefits related expenses (3)
17,758 11,174 6,584 
Total salary, bonus, and benefits related expenses92,244 73,465 18,779 
Non-cash equity-based compensation:
Class 2 LTIP units and stock option grants (4)
130 1,398 (1,268)
Employee equity grant expense1,729 2,135 (406)
Total equity-based compensation1,859 3,533 (1,674)
Non-cash (gain) loss in deferred compensation plan (5)
(1,959)(477)(1,482)
Total salaries and benefits$92,144 $76,521 $15,623 
________
(1)
The change in cash salaries and benefits expense is primarily due to fluctuations in the number of employees, salary and bonus awards, group insurance costs, payroll taxes and employee participation in the benefits offered. The acquisitions of J&S and Pure Rooms in 2017 contributed $868,000 and $667,000, respectively, to the $2.2 million increase over 2016.
(2)
The increase in expense is due to additional stock options granted in 2017 with a three year vesting period for which there was no related expense in 2016. See notes 2, 15 and 17 to our consolidated financial statements.
(3)
As a result of our spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford Trust equity grants. As a result, we continued to recognize equity-based compensation expense related to these grants through the final vesting date in April 2017. The expense decreased each year as the Ashford Trust equity grants became fully vested. See notes 2 and 15 to our consolidated financial statements.
(4)
Equity grants of Ashford Trust’s and Ashford Prime’s common stock and LTIP units are awarded to our officers and employees as part of our advisory agreements with each company, for which we record offsetting revenue in an equal amount. The decrease is primarily attributable to a decrease in the fair value of equity grants. See notes 2 and 15 to our consolidated financial statements.
(5)
The DCP obligation is recorded as a liability in accordance with the applicable authoritative accounting guidance. The DCP obligation is carried at fair value with changes in fair value reflected in earnings. The 2017 loss is primarily attributable to an increase in the fair value of the DCP obligation whereas the fair value of the DCP obligation decreased in 2016. See note 16 to our consolidated financial statements.

(1)    The increase in salary expense is due to an increase in corporate employees at both the Company’s corporate office and our subsidiaries’ corporate offices compared to 2022 and $3.4 million of expense recognized in 2023 related to Mr. Welter’s termination agreement with the Company. See note 13 in our consolidated financial statements.

(2)    The increase in bonus expense is primarily due to a reduction to the Company’s bonus accrual in 2022 due to Mr. Welter’s departure from the Company and increased headcount at both the Company’s corporate office and our subsidiaries’ corporate offices compared to 2022.
(3)    The increase in benefits related expenses is primarily due to an increase in corporate employees at both the Company’s corporate office and our subsidiaries’ corporate offices compared to 2022. Increases include $1.8 million in benefits related expenses associated with a new health insurance services management fee which Remington introduced in the first quarter of 2023 and $1.3 million in employee health insurance benefit related expenses which increased due to the timing of Remington’s acquisition of Chesapeake in April of 2022.
(4)    The decrease in Class 2 LTIP units and stock grant expense in 2023 primarily relates to the vesting of previously issued stock option grants which were subject to a three-year vesting period. Beginning in 2020, the Company began to issue restricted stock in lieu of stock options under its equity incentive program.
(5)    The DCP obligation is recorded as a liability at fair value with changes in fair value reflected in earnings. The gains in 2023 and 2022 are primarily attributable to decreases in the fair value of the DCP obligation which is based on the Company’s common stock price. See note 17 in our consolidated financial statements.
Cost of Revenues for Design and Construction.Cost of revenues for design and construction increased $3.3 million, or 39.6% to $11.7 million during 2023 compared to $8.4 million for 2022 due to increased capital expenditures by our clients as well as higher salary and benefits-related expenses from an increase in employee headcount involved in Premier’s operations.
Cost of Revenues for Audio Visual.Cost of revenues for audio visual expense was $7.8increased $23.8 million, or 28.0%, to $108.8 million during 2023 compared to $85.0 million for 2017 compared2022, primarily due to $0an increase in demand for 2016 as a result of our acquisition of J&S. Cost of revenues for audio visual for 2017 includes depreciation expense related to audio visual rental pool equipment of $411,000.group events.
Depreciation and Amortization Expense.Depreciation and amortization expense increased $1.4decreased by $3.5 million, or 115.2%11.2%, to $2.5$28.2 million for 20172023 compared to 2016,2022. The decrease is primarily as a result of furniture, fixtures and equipment additions related to software implementation, key money assets and the 2017 J&S acquisition. The increase was also due to the amortizationsale of intangible assets relatedFF&E which was previously leased to Ashford Trust under the 2017 acquisitionsAshford Trust ERFP Agreement and the sale of J&S and Pure Rooms. See note 4Marietta to our consolidated financial statements.Ashford Trust in the fourth quarter of 2022. Depreciation and amortization expense for the year ended December 31, 2017,2023 and 2022 excludes depreciation expense related to audio visual rental pool equipment of $411,000,$5.2 million and $4.9 million, respectively, which is included in cost“cost of revenues for audio visual.visual” and also excludes depreciation expense for 2023 and 2022 related to marine vessels in the amount of $2.0 million and $1.4 million, respectively, which are included in “other” operating expense.
68

General and Administrative Expense. General and administrative expenses increased $909,000,by $12.3 million, or 5.5%36.1%, to $17.4$46.3 million for 20172023 compared to 2016.2022. The change in general and administrative expense consisted of the following (in thousands):
Year Ended December 31,  
2017 2016 $ Change
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2023
2023
2023
Professional fees (1)
$8,485
 $6,558
 $1,927
Office expense3,678
 3,485
 193
Professional fees (1)
Professional fees (1)
Office expense (2)
Office expense (2)
Office expense (2)
Public company costs
Public company costs
Public company costs1,078
 1,055
 23
Director costs970
 1,006
 (36)
Travel and other expense2,987
 3,349
 (362)
Non-capitalizable costs - software implementation (2)
165
 1,001
 (836)
Director costs
Director costs
Travel and other expense (3)
Travel and other expense (3)
Travel and other expense (3)
Non-capitalizable - software costs
Non-capitalizable - software costs
Non-capitalizable - software costs
Total general and administrative$17,363
 $16,454
 $909
Total general and administrative
Total general and administrative
________
(1)
The increase in these costs is primarily due to investments in Pure Rooms, OpenKey and J&S. These increases were partially offset by a decrease in legal expense.
(2)
The decrease in these costs is primarily due to software project timing.
Impairment.Impairment(1)    The increase in professional fees in 2023 is primarily due to transaction costs related to the formation of capitalized software implementationboth Stirling and Warwick in 2023.
(2)    The increase in office expense in 2023 is primarily due to an increase in INSPIRE’s operations compared to 2022 and Remington and RED’s acquisitions of Chesapeake and Alii Nui in April of 2022 and March of 2023, respectively.
(3)    The increase in travel and other expenses is primarily due to corporate business development and related costs incurred in 2023 and increases in the Company’s business travel and other related expenses for our products and services companies in 2023. The increase in travel and other expenses is also due to increased charitable donations of $2.0 million in 2023.
Other.Other operating expense decreased $547,000, or 2.1%, to $25.3 million for 2023 compared to 2022. The decrease in 2023 was $1.1primarily due to a decrease of $7.0 million of operating expenses related to Marietta, which was acquired by Ashford Trust in December 2022. The decrease was offset by an increase of approximately $5.4 million of RED’s operating expenses. Other operating expenses for the 2023 and 2022 periods include losses on the sale of FF&E previously leased to Ashford Trust of $2.8 million and $2.8 million, respectively, under the Ashford Trust ERFP agreement and cost of goods sold, royalties and operating expenses associated with OpenKey and Pure Wellness.
Reimbursed Expenses. Reimbursed expenses increased $65.1 million to $426.5 million during 20172023 compared to $0$361.4 million for 2016.2022 primarily due to an increase in hotel management reimbursed expenses due to the timing of Remington’s acquisition of Chesapeake in April of 2022.
Reimbursed expenses may vary from cost reimbursement revenue recognized in the period due to timing differences between the costs we incur for centralized software programs and the related reimbursements we receive from our clients. Over the long term, these timing differences are not designed to impact our economics, either positively or negatively. The timing differences consisted of the following shown below (in thousands):
Year Ended December 31,
20232022$ Change
Cost reimbursement revenue$426,496 $361,763 $64,733 
Reimbursed expenses426,507 361,375 65,132 
Net total$(11)$388 $(399)
Equity in Earnings (Loss) of Unconsolidated Entities. Equity in earnings (loss) of unconsolidated entities were a loss of $702,000 and earnings of $392,000 for 2023 and 2022, respectively. Equity in earnings (loss) of unconsolidated entities primarily represents earnings (loss) in our equity method investment in REA Holdings. See notesnote 2 and 17 toin our consolidated financial statements.
Other.Other operating expense was $2.2 million and $0 for 2017 and 2016, respectively. Other operating expense includes cost of goods sold and royalties associated with Pure Rooms and OpenKey as well as expense from the increase in fair value of contingent consideration related to the J&S acquisition.
69

Realized Gain (Loss) on Investment in Unconsolidated Entity.We had no realized gain or loss on an investment in an unconsolidated entity in 2017. We recorded a realized loss in an unconsolidated investment fund of $3.6 million in 2016 for which AIM was the investment advisor.
Unrealized Gain (Loss) on Investment in Unconsolidated Entity. We recorded no unrealized gain (loss) on investment in unconsolidated entities in 2017. We recorded an unrealized gain in an unconsolidated investment fund of $2.1 million in 2016 for which AIM was the investment advisor.
Interest Expense. Interest expense was $83,000 and $0 for 2017 and 2016, respectively, relatedincreased $4.2 million to the notes payable, lines of credit and capital leases held by our consolidated subsidiaries. See notes 2 and 6$14.2 million during 2023 compared to our consolidated financial statements.
Amortization of Loan Costs. Amortization of loan costs was $39,000 and $0 for 2017 and 2016, respectively, related to the notes payable and lines of credit held by our consolidated subsidiaries. See notes 2 and 6 to our consolidated financial statements.
Interest Income.Interest income was $244,000 and $73,000 for 2017 and 2016, respectively.
Dividend Income. Dividend income was $93,000 and $170,000 for 2017 and 2016, respectively, related to investments held by the AQUA U.S. Fund.
Unrealized Gain (Loss) on Investments. Unrealized gain on investments was $203,000 for 2017 and $2.3$10.0 million for 2016, primarily related to investments held by the AQUA U.S. Fund.2022. The unrealized gain (loss) on investments is based on changes in closing market prices during the period.


Realized Gain (Loss) on Investments. Realized loss on investments was $294,000 for 2017 and $10.1 million in 2016. The realized loss on investments is related to investments held by the AQUA U.S. Fund and options on futures contracts.
Other Income (Expense). Other expense was $73,000 and $162,000 in 2017 and 2016, respectively.
Income Tax Benefit (Expense). Income tax expense increased $8.9 million, from $780,000 in 2016 to $9.7 million in 2017. The increase in income tax expense is primarily due to an increase in the valuation allowanceCompany’s notes payable under our Credit Facility entered into in April of 2022, which had an outstanding balance of $100.0 million as of December 31, 2023. Interest expense in 2023 included expense of $10.7 million related to the Company’s Credit Facility. The increase in interest expense is also due to higher average interest rates during 2023. The average SOFR rate in 2023 was 5.01% and in 2022 the average LIBOR rate was 1.91%. The average Prime Rates in 2023 and 2022 were 8.20% and 4.85%, respectively. Interest expense relates to our deferred tax asset causedCredit Facility and notes payable, lines of credit and finance leases held by our consolidated subsidiaries. See note 8 in our consolidated financial statements.
Amortization of Loan Costs. Amortization of loan costs was $1.1 million and $761,000 for 2023 and 2022, respectively. The increase is primarily due to the legal restructuringCompany’s Credit Facility entered into in April of 2022. Amortization of loan costs relates to our organizational structureCredit Facility and notes payable held by our consolidated subsidiaries. See note 8 in our consolidated financial statements.
Interest Income.Interest income was $1.8 million and $371,000 for 2023 and 2022, respectively. The increase is primarily due to higher interest rates earned on the Company’s cash and cash equivalents in the second quarter2023 period.
Realized Gain (Loss) on Investments. Realized loss on investments was $80,000 and $121,000 for 2023 and 2022, respectively. The realized loss on investments for 2023 and 2022 primarily relate to realized losses on shares of 2017common stock of Ashford Trust and enactmentBraemar purchased by Remington on the open market and held for the purpose of theproviding compensation to certain employees. See note11 in our consolidated financial statements.
Other Income (Expense). Other income (expense) was income of $747,000 and expense of $25,000 in 2023 and 2022, respectively.
Income Tax Cuts(Expense) Benefit. Income tax (expense) benefit changed by $9.1 million from $8.5 million in expense in 2022 to $544,000 of benefit in 2023. Current income tax expense decreased by $9.1 million from $12.8 million in 2022 to $3.7 million in 2023. Deferred income tax benefit decreased by $23,000 from $4.3 million in 2022 to $4.3 million in 2023. The decrease in total income tax expense is primarily due to a decrease in operating income and Jobs Act on December 22, 2017. As a result, our effective tax rates on income (loss) before income taxes for 2017 and 2016 were (92.9%) and (6.7%), respectively.an increase in interest expense.
Net (Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. The noncontrolling Noncontrolling interests in consolidated entities were allocated lossesa loss of $358,000$880,000 in 20172023 and $8.9$1.2 million in 2016.2022. See notes 2 13 and 17 to14 in our consolidated financial statements for more details regarding ownership interests, carrying values and allocations.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. Net losses of $1.5 million and $1.1 million were allocated to redeemable noncontrolling interests in 2017 and 2016, respectively. Redeemable noncontrolling interests representedwere allocated income of $501,000 in 2023 and $448,000 in 2022. Redeemable noncontrolling interests represents ownership interests in Ashford Holdings and certainwhich include the Series CHP Units which are recorded as a redeemable noncontrolling interest in the mezzanine section of our consolidated subsidiaries. Prior to April 6, 2017, the noncontrolling interests represented ownership interests in Ashford LLC. See note 1 to our consolidated financial statements.balance sheets. For a summary of ownership interests, carrying values and allocations, see notes 2 14, and 17 to15 in our consolidated financial statements.


Year Ended December 31, 2016 ComparedPreferred Dividends, Declared and Undeclared. Preferred dividends, declared and undeclared, decreased $265,000 to Year Ended December 31, 2015
$36.2 million during 2023 compared to $36.5 million for 2022. The following table summarizesdecrease is due to the changesCompany’s payment in key line items from our consolidated statementsApril 2022 of operations$17.8 million of accrued and outstanding Series D Convertible Preferred Stock dividends for the yearsquarters ended December 31, 2016 and 2015 (in thousands):
 Year Ended December 31, Favorable (Unfavorable)
 2016 2015 $ Change % Change
REVENUE       
Advisory services$67,228
 $58,546
 $8,682
 14.8 %
Other379
 435
 (56) (12.9)%
Total revenue67,607
 58,981
 8,626
 14.6 %
EXPENSES 
    
  
Salaries and benefits52,436
 41,442
 (10,994) (26.5)%
Depreciation and amortization1,174
 799
 (375) (46.9)%
General and administrative16,454
 18,091
 1,637
 9.0 %
Total expenses70,064
 60,332
 (9,732) (16.1)%
OPERATING INCOME (LOSS)(2,457) (1,351) (1,106) (81.9)%
Realized gain (loss) on investment in unconsolidated entity(3,601) —
 (3,601)  
Unrealized gain (loss) on investment in unconsolidated entity2,141
 (2,141) 4,282
 200.0 %
Interest income73
 352
 (279) (79.3)%
Dividend income170
 917
 (747) (81.5)%
Unrealized gain (loss) on investments2,326
 (2,490) 4,816
 193.4 %
Realized gain (loss) on investments(10,113) (5,110) (5,003) (97.9)%
Other income (expense)(162) (155) (7) (4.5)%
INCOME (LOSS) BEFORE INCOME TAXES(11,623) (9,978) (1,645) (16.5)%
Income tax (expense) benefit(780) (2,066) 1,286
 62.2 %
NET INCOME (LOSS)(12,403) (12,044) (359) (3.0)%
(Income) loss from consolidated entities attributable to noncontrolling interests8,860
 10,852
 (1,992) (18.4)%
Net (income) loss attributable to redeemable noncontrolling interests1,147
 2
 1,145
 57,250.0 %
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY$(2,396) $(1,190) $(1,206) (101.3)%
Net Income (Loss) Attributable to the Company. Net loss attributable to the Company increased $1.2 million, or 101.3%, to $2.4 million for 2016 compared to the year ended December 31, 2015 (“2015”) as a result of the factors discussed below.


Total Revenue. Total revenue increased $8.6 million, or 14.8% to $67.6 million in 2016. The changes in total revenue consisted of the following (in thousands) See note 17 to our consolidated financial statements.:
 Year Ended December 31,  
 2016 2015 $ Change
Advisory services revenue:     
Base advisory fee (1)
$43,043
 $42,481
 $562
Incentive advisory fee (2)
3,083
 1,274
 1,809
Reimbursable expenses (3)
8,859
 8,480
 379
Non-cash stock/unit-based compensation (4)
12,243
 6,311
 5,932
Total advisory services revenue67,228
 58,546
 8,682
      
Other revenue:     
Non-advisory expense reimbursements—
 195
 (195)
Investment advisory revenue—
 141
 (141)
Lease revenue (5)
335
 99
 236
Other services44
 —
 44
Total other revenue379
 435
 (56)
Total revenue$67,607
 $58,981
 $8,626
________
(1)
The increase in base advisory fee revenue is due to higher revenue of $867,000 from Ashford Trust and lower revenue of $305,000 from Ashford Prime.
(2)
Incentive advisory fee revenue for 2016, included the second year installment of the 2015 incentive fee in the amount of $1.3 million as earned in connection with our advisory agreement with Ashford Prime and the first year installment of the 2016 incentive fee in the amount of $1.8 million earned in connection with our advisory agreement with Ashford Trust. Incentive advisory fee revenue for 2015, included the first year installment of the 2015 incentive fee in the amount of $1.3 million as earned in connection with our advisory agreement with Ashford Prime. No incentive fee was earned for the 2016 measurement period from Ashford Prime. No incentive fee was earned for the 2015 measurement period from Ashford Trust.
(3)
The increase in reimbursable expenses is due to lower revenue of $563,000 from Ashford Trust and higher revenue of $942,000 from Ashford Prime. Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services.
(4)
The increase in equity-based compensation revenue is due to higher revenue of $5.7 million from Ashford Trust and higher revenue of $223,000 from Ashford Prime. Equity-based compensation revenue is associated with equity grants of Ashford Trust’s and Ashford Prime’s common stock and LTIP units awarded to officers and employees of Ashford Inc. for which we recorded an offsetting expense in an equal amount included in “salaries and benefits.”
(5)
In connection with our key money transaction with Ashford Prime, we lease furniture, fixtures and equipment to Ashford Prime at no cost. A portion of the base advisory fee is allocated to lease revenue each period equal to the estimated fair value of the lease payments that would have been made.


Salaries and Benefits Expense. Salaries and benefits expense increased $11.0 million, or 26.5%, to $52.4 million in 2016 compared to 2015. The change in salaries and benefits expense consisted of the following (in thousands):
 Year Ended December 31,  
 2016 2015 $ Change
Cash salaries and benefits:     
Salary expense$18,812
 $17,607
 $1,205
Bonus expense8,051
 7,396
 655
Benefits related expenses4,134
 3,377
 757
Total cash salaries and benefits (1)
30,997
 28,380
 2,617
Non-cash equity-based compensation:     
Pre spin-off Ashford Trust equity grants (2)
5,439
 11,503
 (6,064)
Stock option grants (3)
5,884
 3,856
 2,028
Ashford Trust & Ashford Prime equity grants (4)
12,243
 6,311
 5,932
Total non-cash equity-based compensation23,566
 21,670
 1,896
Non-cash (gain) loss in deferred compensation plan (5)
(2,127) (8,608) 6,481
Total salaries and benefits$52,436
 $41,442
 $10,994
_______
(1)
The change in cash salaries and benefits expense is primarily due to fluctuations in the number of employees, salary and bonus awards, group insurance costs, payroll taxes and employee participation in the benefits offered.
(2)
As a result of the spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford Trust equity grants. As a result, we will continue to recognize equity-based compensation expense related to these grants through the final vesting date in April 2017. The expense decreases each year as the Ashford Trust equity grants become fully vested. See note 15 to our consolidated financial statements.
(3)
The increase in expense is due to stock options granted in 2016 with a three year vesting period. See note 15 to our consolidated financial statements.
(4)
Equity grants of Ashford Trust’s and Ashford Prime’s common stock and LTIP units awarded to our officers and employees, for which we record offsetting revenue in an equal amount. The increase is primarily attributable to additional equity grants. See notes 2 and 15 to our consolidated financial statements.
(5)
The DCP obligation is recorded as a liability in accordance with the applicable authoritative accounting guidance. The DCP obligation is carried at fair value with changes in fair value reflected in earnings. See note 16 to our consolidated financial statements.
Depreciation Expense. Depreciation expense increased $375,000, or (46.9)%, to $1.2 million in 2016 compared to 2015, as a result of furniture, fixtures and equipment additions.
General and Administrative Expense. General and administrative expenses decreased $1.6 million, or 9.0%, to $16.5 million in 2016 compared to 2015. The change in general and administrative expense consisted of the following (in thousands):
 Year Ended December 31,  
 2016 2015 $ Change
Professional fees (1)
$6,558
 $9,307
 $(2,749)
Office expense3,485
 3,792
 (307)
Public company costs1,055
 967
 88
Director costs1,006
 1,079
 (73)
Travel and other expense3,349
 2,766
 583
Non-capitalizable costs - software implementation1,001
 180
 821
Total general and administrative$16,454
 $18,091
 $(1,637)
_______
(1)
Professional fees decreased due to a decrease in professional and legal fees related to the proposed Remington Acquisition Agreement entered into on September 17, 2015. For further discussion, see note 17 to our consolidated financial statements.


Realized Gain (Loss) on Investment in Unconsolidated Entity. We recorded a realized loss in an unconsolidated investment fund of $3.6 million in 2016 for which AIM is the investment advisor. We had no realized gain or loss on an investment in an unconsolidated entity in 2015.
Unrealized Gain (Loss) on Investment in Unconsolidated Entity. We recorded an unrealized gain in an unconsolidated investment fund of $2.1 million in 2016 for which AIM is the investment advisor. We had an unrealized loss on an investment in an unconsolidated entity of $2.1 million in 2015.
Interest Income (Expense).Interest income was $73,000 and $352,000 for 2016 and 2015, respectively, related to investments held by the AQUA Fund.
Dividend Income. Dividend income was $170,000 and $917,000 for 2016 and 2015, respectively, related to investments held by the AQUA U.S. Fund.
Unrealized Gain (Loss) on Investments. Unrealized gain on investments was $2.3 million for 2016 and unrealized loss on investments was $2.5 million for 2015, primarily related to investment held by the AQUA U.S. Fund. The unrealized gain (loss) on investments is based on changes in closing market prices during the period.
Realized Gain (Loss) on Investments. Realized loss on investments was $10.1 million for 2016 and $5.1 million in 2015. The realized loss on investments is related to investments held by the AQUA U.S. Fund and options on futures contracts.
Other Income (Expenses). Other expenses were $162,000 and $155,000 in 2016 and 2015, respectively.
Income Tax Expense. Income tax expense decreased $1.3 million, from $2.1 million in 2015 to $780,000, in 2016. The decrease in income tax expense is primarily due to a decrease in income subject to tax at the federal and state level.
Our effective tax rates on income (loss) before income taxes for the year ended December 31, 2016June 30, 2020 and December 31, 2015, were (6.7%) and (20.7%), respectively. The decrease in the negative rate in 2016 as compared to 2015 was due to decreases in permanent differences and changes in the valuation allowance on our deferred tax assets. The portion of equity-based compensation expense related to LTIP units granted to Ashford Trust employees prior to the spin-off is not deductible for income tax purposes and is accounted for as a permanent difference.2020.
Income (Loss) from Consolidated Entities Attributable to Noncontrolling Interests. The noncontrolling interests in consolidated entities were allocated losses of $8.9 million in 2016 compared to a loss of $10.9 million in 2015. At December 31, 2016, noncontrolling interests in consolidated entities represented ownership interests of 40% in Performance Holdco, 100% in the AQUA Fund and 13.63% in OpenKey with a total carrying value of $52.8 million. At December 31, 2015, noncontrolling interests in consolidated entities represented ownership interests of 40% in Performance Holdco, 100% in the AQUA Fund and 100% in OpenKey with a total carrying value of $104.5 million.
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Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. Net losses of $1.1 million and $2,000 were allocated to redeemable noncontrolling interests in 2016 and 2015, respectively. Redeemable noncontrolling interests represented ownership interests in Ashford LLC and ownership in the common stock of certain of our consolidated subsidiaries. For a summary of ownership interests, carrying values and allocations, see notes 2, 14, and 17 to our consolidated financial statements.



LIQUIDITY AND CAPITAL RESOURCES
Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses primarily attributable to paying our employees.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 short-term liquidity requirements generally through net cash provided by operations, existing cash balances and, if necessary, short-term borrowings under our revolving credit facility.
Our long-termCredit Facility or other loans, which we believe will provide sufficient liquidity requirements consist primarily of funds necessary to pay for operating expenses attributable to paying our employees, investments to grow our business, key money consideration and certain recent subsidiary financing transactions noted below. We expect to meet our long-term liquidity requirements through various sources of capital, including net cash provided by operations, future equity issuancesexisting non-discretionary obligations and availability under our revolving credit facilities.anticipated ordinary course operating expenses.
Loan Agreements—On April 6, 2017, Pure RoomsMarch 31, 2023, the Company amended its Credit Agreement, previously entered into a term loan of $375,000on April 1, 2022, with Mustang Lodging Funding LLC, as administrative agent, and a line of credit of $100,000 for which the creditor does not have recourselenders from time to Ashford Inc.time party thereto. The term loan has a fixed interestamendment replaced the one-month LIBOR rate of 5.0% per annum with a stated maturity date of October 1, 2018.Adjusted Term SOFR. The line of credit has a variable interest rate ofCredit Agreement evidences the Prime Rate plus 1.0%. There is no stated maturity date related to the line of credit as it is payable on demand; accordingly, the balance has been classified as a current liability on our consolidated balance sheet.
On April 13, 2017, OpenKey entered into a Loan and Security Agreement ("Loan Agreement") for a line of creditCredit Facility in the amount of $1.5$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. On November 9, 2023, the Company drew the remaining balance available under the Credit Facility of $13.0 million. The line of creditCredit Facility is secured bya five-year interest-only facility with all of OpenKey's assets and matures on October 31, 2018outstanding principal due at maturity, with three successive one-year extension options subject to an increase in the interest rate of Primeduring 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 2.75%. Creditors doan 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 haverequire the maintenance of financial covenants, but if the ratio (the “Leverage Ratio”) of consolidated funded indebtedness that is recourse to Ashford Inc. At December 31, 2017, there were no borrowings outstanding under the Loan Agreement. In connection with the line of credit, OpenKey granted the creditors a 10-year warrantCompany or any guarantor (less unrestricted cash) to purchase approximately 28,000 shares of OpenKey's preferred stock at $1.61 per share. The fair valueconsolidated EBITDA of the warrants, estimatedCompany and its subsidiaries is greater than 4.00 to be $28,000, was recorded in noncontrolling interests in consolidated entities and debt issuance costs, which will be amortized over1.00 as of the end of any fiscal quarter during the term of the lineloan, including any extension period, then the Company is required to apply 100% of credit.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 December 31, 2023, our Credit Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements. The Company does not expect 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 NovemberMarch 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, 2017, our J&S operating subsidiary entered into a series2024 to March 24, 2028. Monthly principal payments commence on April 1, 2023 for the Term Note in the amount of financing transactions for whichapproximately $167,000. Borrowings under the creditors do not have recourse to Ashford Inc., including a $10.0 million term loan to financeRevolving Note require monthly payments of interest only until the acquisitionmaturity date and borrowings under the Equipment Note require monthly principal payments at 1/60th of J&S.the original principal amount of each advance. The term loan bearsNotes bear interest at LIBORthe BSBY Rate plus 3.25%a margin of 2.75% and matures on November 1, 2022. The subsidiary capitalized debt issuance coststhe undrawn balance of $231,000 associated with this financing, whichthe Revolving Note and the Equipment Note are included as a reductionsubject to an unused fee of 0.25% per annum. As of December 31, 2023, the amounts unused under INSPIRE’s revolving credit facility and equipment note were $6.0 million and $600,000, respectively.
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As of December 31, 2023, principal and interest payment obligations related to the Company’s notes payable onwere as follows (in thousands):
Principal Payments (1)
Interest Payments (2)
2024$4,387 $15,864 
20254,068 15,495 
20266,189 15,167 
2027104,989 5,137 
202812,711 1,055 
Thereafter8,724 2,265 
Total payments$141,068 $54,983 
__________________
(1)     Principal payments assume no extension of existing extension options for each of the consolidated balance sheetfollowing five years and thereafter as of December 31, 2017. In connection with2023.
(2)     For variable-rate indebtedness, interest obligations are estimated based on the term loan,respective Adjusted Term SOFR, BSBY Rate and Prime interest rates as of December 31, 2023. We have assumed that credit facility balances remain outstanding until maturity using the subsidiary entered into an interest rate cap with an initial notional amount totaling $5.0rates as of December 31, 2023.
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 $39.8 million and a strike rate$27.6 million as of 4.0%. The fair value of the interest rate cap at December 31, 2017, was not material. The subsidiary also entered into a $3.0 million revolving credit facility which bears interest at LIBOR plus 3.25%2023 and matures on November 1, 2022. During the year ended December 31, 2017, $1.7 million was drawn and approximately $924,000 of payments were made on the revolving credit facility. 2022, respectively. For further discussion see note 8 in our consolidated financial statements.
Preferred stock dividends—As of December 31, 2017, $2.22023, the Company had aggregate undeclared preferred stock dividends of approximately $28.5 million, which relates to the second and fourth quarters of 2021 and the fourth quarter of 2023.On each of April 14, 2023, July 12, 2023 and October 11, 2023 the Company paid $8.7 million of credit was available underdividends previously declared by the revolving credit facility. These debt agreements contain various financial covenants that, among other things, requireBoard with respect to the maintenanceCompany’s Series D Convertible Preferred Stock for the first, second and third quarters of certain fixed charge coverage ratios. Our J&S operating subsidiary2023.
All dividends, declared and undeclared, are recorded as a reduction in net income (loss) attributable to common stockholders in the period incurred in our 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 $28.5 million and $27.1 million at December 31, 2023 and 2022, respectively, are recorded as a liability in our 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 currently in complianceconvertible, along with all financial covenants. Creditors dounpaid 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 have recourse to Ashford Inc.
Alsopaid on November 1, 2017,April 15, July 15, October 15 and January 15 of each calendar year in connection withrespect of the acquisition of J&S, our J&S operating subsidiary entered into a $2.0 million term loan agreementquarterly periods ending on March 31, June 30, September 30 and a $3.0 million equipment note. These loans each bear interest at LIBOR plus 3.25% and mature on November 1, 2022. During the year ended December 31, 2017, no amounts were drawnrespectively (each such date, a “Dividend Payment Date”), all accrued dividends on either loan.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 15 in our consolidated financial statements.
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Other liquidity considerations—On December 5, 2017, the board of directors of Ashford Inc.Board approved a stock repurchase program (the “Repurchase Program”) pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share having an aggregate value of up to $20 million. No shares were repurchased inunder the stock repurchase program during the year ended December 31, 2017.2023.
On March 1, 2018,As of December 31, 2023, future minimum lease payments on operating leases and financing leases were as follows (in thousands):
Operating LeasesFinance Leases
2024$5,956 $639 
20255,323 395 
20265,091 1,370 
20274,942 234 
20284,320 161 
Thereafter6,212 1,544 
Total minimum lease payments$31,844 $4,343 
Imputed interest(8,510)(1,074)
Present value of minimum lease payments$23,334 $3,269 
Our deferred compensation plan currently has only one participant, Mr. Monty J. Bennett, our Chairman and Chief Executive Officer. Mr. Monty J. Bennett has elected to invest his deferred compensation account in our common stock. As a result, we have an obligation to issue approximately 196,000 shares of our common stock to Mr. Monty J. Bennett in quarterly installments over five years beginning in 2026. Mr. Monty J. Bennett may postpone all or a portion of the distributions, for a minimum of five years, if he notifies the Company entered into a $35 million senior revolving credit facility with Bank12 months prior to the scheduled distributions. As of America, N.A. The credit facility provides for a three-year revolving line of credit and bears interest at a range of 3.0% to 3.50% over LIBOR, depending onDecember 31, 2023, the leverage levelfair value of the Company. There isDCP liability was $720,000.
The Company has commitments related to cash compensation for the departure of Mr. Welter which included a one-year extension option subjectcash termination payment of $750,000, which was paid on August 5, 2022, and payments totaling approximately $6.4 million, which are payable in 24 substantially equal monthly installments of approximately $267,000 beginning in August 2022. As of December 31, 2023, the Company’s remaining commitment to Mr. Welter totaled approximately $1.9 million.
Additional information pertaining to other liquidity considerations of the satisfactionCompany can be found in “Item 7. Management’s Discussion and Analysis of certain conditions. The new credit facility includes the opportunity to expand the borrowing capacity by up to $40 million to an aggregate sizeFinancial Condition and Results of $75 million.Operations — Recent Developments.”
Sources and Uses of Cash
As of December 31, 20172023 and 2016,December 31, 2022, we had $36.5$52.1 million and $84.1$44.4 million of cash and cash equivalents, respectively, and $9.1$23.2 million and $9.8$37.1 million of restricted cash, respectively. AsThe majority of December 31, 2017 and 2016,the Company’s cash and cash equivalents includedare owned by Ashford LLC and Ashford Services 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 associated withto 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, principal payments, acquisitions and key money payments to grow our products and services companies. Items that impacted our cash flow and liquidity during the AQUA U.S. Fund in the amounts of $0 and $55.1 million, respectively.periods indicated are summarized as follows:
Net Cash Flows Provided by (Used in) Operating Activities. Operating activities provided net cash flows of $19.4 million and $84.9 million for the years ended December 31, 2017and2016, respectively. The higher Net cash flows provided by operating


activities inwere $18.8 million for the year ended December 31, 2016 was primarily a result2023 compared to net cash flows provided by operating activities of the liquidation of investments in securities held by the AQUA U.S. Fund during$42.1 million for the year ended December 31, 2016. Cash2022. The decrease in cash flows from operations is impacted byoperating activities were primarily due to a decrease in earnings in the 2023 period and the timing of receipt of advisory fees fromworking capital cash flows such as collecting receivables, settling with vendors and settling with related parties, primarily our clients Ashford Trust and Ashford Prime, timing of paying vendors and timing of operating subsidiaries’ receipt of revenues.Braemar.
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Net Cash Flows Provided by (Used in) Investing Activities. For the year ended December 31, 2017, investing activities used2023, net cash flows used in investing activities were $33.0 million. These cash flows consisted of $23.2capital expenditures primarily for FF&E, audio visual equipment and marine vessels totaling $24.7 million, which is attributablenet cash paid to acquire Alii Nui of $6.7 million, net cash paid in the asset acquisition of a controlling interest in J&S for $19.0 million (netTSGF L.P. of cash acquired of approximately $200,000), purchases of computer software, furniture, fixtures and equipment of $3.6$2.2 million and a $750,000 deposit for certain assets related to RED Hospitality and Leisure LLC, partiallyissuances of notes receivable of $1.5 million. These were offset by $129,000cash inflows of $1.5 million in proceeds primarily received from the sale of FF&E to Ashford Trust, $1.0 million from proceeds from a note receivable and $849,000 of cash acquired in the asset acquisition of Pure Rooms. RHC.
For the year ended December 31, 2016, investing activities used2022, net cash flows used in investing activities were $22.4 million. These cash flows consisted of $4.9capital expenditures primarily for FF&E, audio visual equipment and marine vessels totaling $14.8 million, which was attributablenet cash paid to purchasesacquire Chesapeake of computer software, furniture, fixtures$6.4 million, cash held by Marietta upon disposition of $2.1 million, issuance of a note receivable of $530,000 and equipment of $6.2 million partially offset by a distribution from an investment in an unconsolidated investment entity of $400,000. These were offset by cash inflows of $1.4 million.million in proceeds from notes receivable and $466,000 in proceeds primarily received from the sale of FF&E to Ashford Trust.
Net Cash Flows Provided by (Used in) Financing Activities. For the year ended December 31, 2017,2023, net cash flows provided by financing activities were $8.0 million. These cash flows consisted of $43.7 million of proceeds from borrowings on notes payable, $30.0 million of which related to the Company’s Credit Agreement, and $4.9 million of cash contributions from noncontrolling interests primarily related to third parties investing in the equity of our consolidated subsidiary TSGF L.P. These were offset by $34.8 million of dividend payments on the Series D Convertible Preferred Stock, $3.8 million of payments on notes payable, purchases of $359,000 of treasury stock, $688,000 of distributions to noncontrolling interests, $409,000 of loan cost payments and $419,000 of payments on finance leases.
For the year ended December 31, 2022, net cash flows used in financing activities was $44.5were $10.7 million. These cash outflowsflows consisted of $55.3$43.9 million of dividend payments on the Series D Convertible Preferred Stock and $31.1 million of payments on notes payable which were primarily related to paying off the remaining balance of the Company’s Term Loan Agreement with Bank of America, N.A. Other cash flows used in financing activities consisted of $2.7 million of loan cost payments, $1.8 million of net payments on our revolving credit facilities, $1.2 million of payments on finance leases, $413,000 of distributions to noncontrolling interests, purchases of $270,000 of treasury stock and net repayments in consolidated entities, net advances to employees of $433,000$45,000 associated with tax withholdings for restricted stock vestings, $305,000 of payments on notes payable, $28,000 of loan cost payments, and $24,000 for the repurchase of common stock, partiallyvestings. These were offset by $10.0$70.4 million of proceeds from borrowings on notes payable, primary related to the term loan to financeCompany’s Credit Agreement entered into in the acquisitionsecond quarter of J&S, $983,0002022, and $327,000 of contributions from noncontrolling interestsBraemar from investments in a consolidated entity and net borrowings on the J&S revolving credit facility of $629,000. For the year ended December 31, 2016, net cash flows used in financing activities was $42.1 million, which consisted of $44.1 million of distributions to noncontrolling interests in consolidated entities, utilization of excess tax benefit associated with stock-based compensation of $284,000, net repayments in advances to employees of $41,000 associated with tax withholdings for restricted stock vestings, $20,000 for the purchase of treasury shares associated with tax withholdings for restricted stock vestings, and $18,000 for cash redemptions of units, partially offset by $2.4 million of contributions from noncontrolling interests in a consolidated entity.
Off-Balance Sheet Arrangements
In the normal course of business, we may form or invest in partnerships or joint ventures. We evaluate each partnership and joint venture to determine whether the entity is a VIE. If the entity is determined to be a VIE, we assess whether we are the primary beneficiary and need to consolidate the entity. For further discussion see notes 1 and 2 to our consolidated financial statements.
Contractual Obligations and Commitments
The table below summarizes future obligations as of December 31, 2017 (in thousands):OpenKey.
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  Payments Due by Period
  < 1 Year 1-3 Years 3-5 Years >5 Years Total
Contractual obligations:          
Long-term debt obligations $1,320
 $2,000
 $7,731
 $—
 $11,051
Estimated interest obligations (1)
 516
 852
 639
 —
 2,007
Capital lease obligations 467
 475
 16
 —
 958
Operating lease obligations 1,118
 1,720
 1,007
 1,607
 5,452
Deferred compensation plan (2)
 311
 4,087
 7,586
 7,275
 19,259
AIM Incentive Plan (3)
 409
 78
 —
 —
 487
Total contractual obligations $4,141
 $9,212
 $16,979
 $8,882
 $39,214
__________

(1)
For variable-rate indebtedness, interest obligations are estimated based on the LIBOR and Prime interest rates as of December 31, 2017. We have assumed that the J&S credit facility balance remains outstanding at $814,000 until the maturity date of November 1, 2022 using the interest rate as of December 31, 2017.
(2)
Distributions under the deferred compensation plan are made in cash, unless the participant has elected Ashford Inc. common stock as the investment option, in which any such distributions would be made in Ashford Inc. common stock. The deferred compensation plan obligation is carried at fair value based on the underlying investment(s) (see note 16 to our consolidated financial statements).
(3)
Distributions under the AIM incentive plan will be made in cash within 45 days of March 31, 2018 and March 31, 2019. The AIM incentive plan obligation is carried at amortized fair value (see note 16 to our consolidated financial statements).


Some of our loan agreements contain financial and other covenants. If we violate these covenants, we could be required to repay a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. We were in compliance with all covenants at December 31, 2017.
Critical Accounting PoliciesEstimates
Our accounting policies are fully describedThe preparation of financial statements in note 2conformity with U.S. GAAP requires management to ourmake estimates that affect the amounts reported in the consolidated financial statements includedand the related notes. Critical accounting estimates refers to those assumptions and approximations that may have a material impact on the amounts reported in “Item 8. Financial Statementsthe consolidated financial statements and Supplementary Data.” the related notes due to the level of subjectivity involved in developing the estimate.
We believe that the following discussion addresses our most critical accounting policies,estimates, representing those policiesestimates considered most vitalimportant to the portrayal of our consolidated financial condition and results of operations and requiringrequire management’s most difficult, subjective and complex judgments.
Revenue Recognition. Advisory services revenue primarily consistsjudgments, often as a result of advisory and investment management fees and expense reimbursementsthe need to make estimates about the effect of matters that are recognized when services have been rendered. Advisory fees consist of base fees and incentive fees. For Ashford Trust, the quarterly base fee ranges from 0.70% to 0.50% per annum of the total market capitalization ranges from less than $6.0 billion to greater than $10.0 billion total market capitalization plus the Key Money Asset Management Fee, as definedinherently uncertain. Changes in the respective advisory agreement, subject to certain minimums. Similarly, the Ashford Prime base fee is fixed at 0.70% of Ashford Prime’s total market capitalization plus the Key Money Asset Management Fee, as defined in the respective advisory agreement, subject to certain minimums. Reimbursements for overhead, travel expenses, risk management and internal audit services are recognized when services have been rendered. We also record advisory revenue for equity grants of Ashford Trust and Ashford Prime common stock and Long-Term Incentive Plan (“LTIP”) units awarded to our officers and employees in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period, as well an offsetting expense in an equal amount included in “salaries and benefits.” Incentive advisory fees are measured annually in each year that Ashford Trust’s and/or Ashford Prime’s annual total stockholder return exceeds the average annual total stockholder return for each company’s respective peer group, subject to the FCCR Condition, as defined in the advisory agreements. Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition. Accordingly, incentive advisory fee revenue is recognized only when the amount earned is fixed and determinable and the FCCR Condition has been met. As incentive advisory fees are measured annually, we recognize revenue quarterlysuch estimates, based on the amount that would be due pursuant to the applicable advisory agreement as of the interim balance sheet datenewly available information, or different assumptions or conditions, may affect amounts reported in accordance with the authoritative accounting guidance. Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our wholly-owned subsidiary, and are recognized based on a stated percentage of the loan amount when services have been rendered.future periods.
Audio visual revenue primarily consists of revenue generated by providing event technology services such as audio visual services, audio visual equipment rental, staging and meeting services and event-related communication systems as well as related technical support, to our customers in various venues including hotels and convention centers. We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered, the fee is fixed or determinable and collectability is reasonably assured. Revenue is recognized in the period in which services are provided pursuant to the terms of the contractual arrangements with our customers. We also evaluate whether it is appropriate to present (i) the gross amount that our customers pay for our services as revenue, and the related commissions paid to the venue as cost of revenue, or (ii) the net amount (gross revenue less the related commissions paid to the venue) as revenue. We are responsible for the delivery of the services, including providing the necessary labor and equipment to perform the services. We are subject to inventory risk, have latitude in establishing prices and selecting suppliers and, while in many cases the venue bills the end customer on our behalf, we bear the risk of collection from the customer. The venues’ commissions are not dependent on collections. As a result, our revenue is primarily reported on a gross basis. Cost of revenues for audio visual principally includes commissions paid to venues, direct labor costs, the cost of equipment sub-rentals, depreciation of equipment, amortization of signing bonuses, as well as other costs such as supplies, freight, travel and other overhead from our venue and customer facing operations and any losses on equipment disposal.
Certain of our consolidated entities enter into multiple element arrangements with customers. For such arrangements, we determine whether each of the individual deliverables in the arrangement qualify as a separate unit of accounting, which requires that the deliverable have standalone value upon delivery. We allocate arrangement consideration to the separate units of accounting using the relative selling price method, in which allocation of consideration is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”), or if VSOE and TPE are not available, management’s best estimate of a standalone selling price for the units of accounting. We limit the amount of arrangement consideration to amounts that are fixed or determinable. The arrangement consideration is recognized as revenue as the deliverables are provided to the customer, which is either up front for deliverables that have standalone value upon delivery, or ratably over the period of delivery.
Income Taxes.—We are a taxable corporation for federal and state income tax purposes. Income tax expense includes U.S. federal and state income taxes, and beginning in 2017 Mexico and Dominican Republic income taxes 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 theour consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. At December 31, 2017, we recorded a valuation allowance of $25.1 million to fully reserve our net deferred tax assets. At December 31, 2016, we recorded a valuation allowance of $6.1 million to partially reserve our net deferred tax assets. We have provided these allowances primarily because of operating losses incurred for each of the years for the three year period ending December 31, 2017. The losses represent significant negative evidence regarding the realizability of our deferred tax assets. Further, our legal entity restructuring on April 6, 2017 and the Tax Cuts and Jobs Act enacted on December 22, 2017 eliminated our ability to carry back future net operating losses against taxable income from prior periods, which is additional negative evidence regarding the reliability of our deferred tax assets.
TheASC 740 “Income Taxes” topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance requires us to determine whether tax positions we have taken or expect to take in a tax return are more likely than not to be sustained upon examination by the appropriate taxing authority based on the technical merits of the positions. Tax positions that do not meet the more likely than not threshold would be recorded as additional tax expense in the current period. We analyze all open tax years, as defined by the statute of limitations for each jurisdiction, which includes the federal jurisdiction and various states. We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our subsidiariesportfolio 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 beginning in 2017 in Mexico2023 additionally Aruba, Puerto Rico and the Dominican Republic.Costa Rica. Tax years 20132019 through 20172023 remain subject to potential examination by certain federal and certain state taxing authorities.
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (“TCJA”) into legislation. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of U.S. federal income taxes, the enactment date is the date the bill becomes law (i.e., upon presidential signature). With respect to this legislation, we recorded a one-time income tax expense of approximately $303,000 due to a revaluation of our net deferred tax assets resulting from the decrease in the corporate federal income tax rate from 35% to 21% and elimination of the ability to carryback net operating losses generated after December 31, 2017. We are in the process of analyzing certain other provisions of this legislation which may impact our effective tax rate. Additionally on December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. Insurance Reserves—The Company has recognizedinsurance reserve 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 provisional tax impacts relatedCompany 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 consolidated statements of operations. 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 revaluation of deferred tax assets and liabilities and included these amountsassumptions used in its consolidated financial statements forestimating the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued and actions the Company may take asliability. As a result, of the TCJA. The accounting is expected to be complete on or before the date the 2017 U.S. income tax returns are filed in 2018.
Equity-Based Compensation. We adopted an equity incentive plan that provides for the grant of restricted or unrestricted shares of our common stock, options to purchase our common stock and other share awards, share appreciation rights, performance shares, performance units and other equity-based awards or any combination of the foregoing. Equity-based compensation included in “salaries and benefits” is accounted for at fair value based on the market price of the shares/options on the date of grant in accordance with applicable authoritative accounting guidance. The fair value is charged to compensation expense on a straight-line basis over the vesting period of the shares/options. Grants of restricted stock to independent directors are recorded at fair value based on the market price of our shares at grant date, and this amount is fully expensed in “general and administrative” expense as the grants of stock are fully vested on the date of grant. The amount of the expenseloss experience may be subject to adjustment in future periods depending on the specific characteristics of the equity-based award and the application of the accounting guidance. Our officers and employees can be granted common stock and LTIP units from Ashford Trust and Ashford Prime in connection with providing advisory services that result in expense, included in “salaries and benefits,” equalnot conform to the fair value ofassumptions used in determining the awardestimated amounts for such liability at the balance sheet date. Accordingly, the ultimate liability could be significantly different than the amount indicated in proportion to the requisite service period satisfied during the period, as well as offsetting revenue in an equal amount included in “advisory services” revenue.financial statements.
Acquisitions. Acquisitions—We account for acquisitions and investments in businesses as business combinations if the target meets the definition of a business and (a) the target is a VIE and we are the target'starget’s primary beneficiary, and therefore we must consolidate its financial statements, or (b) we acquire more than 50% of the voting interest of the target and it was not previously consolidated. We record business combinations using the acquisition method of accounting, which requires all of the assets acquired and liabilities assumed to be recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill. The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed


are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Significant assumptions and estimates include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset, if applicable.capital. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in theour consolidated financial statements may be exposed to potential impairment of the intangible assets and goodwill.
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If our investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalizing transaction costs, and does not result in the recognition of goodwill.
Recently Adopted Accounting StandardsImpairment of Goodwill and Indefinite-Lived Intangible Assets—In March 2016, the FASB issued ASU 2016-07, Simplifying the TransitionGoodwill is assigned to the Equity Method of Accounting (“ASU 2016-07”). The new standard requires an investor to apply the equity method of accounting only from the date it qualifies for that method, i.e., the date the investor obtains significant influence over the operating and financial policies of an investee. ASU 2016-07 eliminates the previous requirement to retroactively adjust the investment and record a cumulative catch up for the periods that the investment had been held, but did not qualify for the equity method of accounting. ASU 2016-07 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Early adoption is permitted. The adoption of ASU 2016-07 did not have a material impact on our consolidated financial statements or related disclosures.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) as part of the FASB simplification initiative. The new standard requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit on the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period. ASU 2016-09 also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows. In addition, ASU 2016-09 increases the tax withholding requirements threshold to qualify for equity classification. ASU 2016-09 also clarifies that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. ASU 2016-09 provides an optional accounting policy election to be applied on an entity-wide basis to either estimate the number of awardsunits that are expected to vestbenefit from the synergies of the business combination as of the acquisition date. Indefinite-lived intangible assets primarily include trademark rights resulting from our acquisition of Remington, INSPIRE and RED. We assess goodwill and indefinite-lived intangible assets, neither of which is amortized, for impairment annually as of October 1, or accountmore frequently, if events and circumstances indicate impairment may have occurred. In the evaluation of goodwill for forfeitures when they occur. ASU 2016-09impairment, we may elect to perform a qualitative assessment to determine whether the fair value of the goodwill is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We have adopted this standard effective January 1, 2017,more likely than not impaired. In considering the qualitative approach, we evaluate factors including, but not limited to, the operational stability and the adoptionoverall financial performance of this standard did not havethe reporting units. We may choose to bypass the qualitative assessment and perform a material impact on our financial position, resultsquantitative assessment and compare the fair value of operations or cash flows.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which clarifiesreporting unit to the presentation of restricted cashcarrying value and, restricted cash equivalents in the statements of cash flows. Under ASU 2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shownif applicable, record an impairment charge based on the statementsexcess of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted.the reporting unit’s carrying amount over its fair value. We adopted this standard effective January 1, 2017determine the fair value of a reporting unit based on a retrospective basis. The adoptionblended analysis of this standard resulted in the inclusionincome approach and the market value approach. We base our measurement of restricted cash with cash and cash equivalents when reconcilingfair value of trademarks using the beginning-of-period and end-of-period total amounts shown onrelief-from-royalty method. This method assumes that the consolidated statements of cash flows for all periods presented. As a result, net cash provided by operating activities increased $4.1 million in the year ended December 31, 2016 and $2.3 for the year ended December 31, 2015. Our beginning-of-period cash, cash equivalents and restricted cash increased $9.8 million and $5.7 million in 2017 and 2016, respectively.
Recently Issued Accounting Standards—In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model, which requires a company to recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. An entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration onlytrademarks have value to the extent that ittheir owner is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. ASU 2014-09 also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. In addition, the new guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The update will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts With Customers (Topic 606): Deferralrelieved of the Effective Date, which defers the effective dateobligation to fiscal periods beginning after December 15, 2017, including interim periods within that reporting period. The FASB has also issued additional updates that


further clarify the requirements of Topic 606 and provide implementation guidance. The standard permits the use of either the full retrospective or cumulative effect (modified retrospective) transition method.
The Company intends to adopt the above standards using the modified retrospective approachpay royalties for the quarter ending March 31, 2018. Upon adoption of ASU 2014-09,benefits received from them. Management elected to perform a quantitative assessment for the Company does not expect to record any adjustment toCompany’s current year annual impairment test. Based on the consolidated financial statements on January 1, 2018. However, the Company expects the recognition of incentive advisory fees, which are a form of variable consideration, to be (i) deferred until such fees are probable of not being subject to significant reversal, and (ii) tied to a performance obligation in the contract with the customer so that revenue recognition depicts the transfer of the related advisory services to the customer. Accordingly, the Company will no longer record incentive advisory fee revenue in interim periods prior to the fourth quarter of the year in which the incentive fee is measured. There is no impact to our incentive advisory fee revenue recognition on an annual basis. The Company expects that this could impact its revenues in future interim periods, but we are unable to estimate the impact because future incentive advisory fees are calculated based on future changes in total stockholder returnresults of our REIT clients compared to the total stockholder return of their respective peer group. We do not expect any material changes in revenue recognition for audio visual, investment management reimbursements, debt placement fees, lease revenue or other services revenue. The Company is in the process of evaluating the disclosure requirements under these standards and implementing controls to support these new disclosure requirements.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price; and (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. ASU 2016-01 provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. It also requires a qualitativeannual impairment assessment, no impairment of such equity investments and amends certain fair value disclosure requirements. ASU 2016-01 is effective for fiscal years beginning aftergoodwill or indefinite-lived intangible assets was indicated as of October 1, 2023. Additionally, no indicators of impairment were identified from the date of our impairment assessment through December 15, 2017, including interim periods within those fiscal years. Certain provisions of ASU 2016-01 are eligible for early adoption. In February 2018, the FASB issued ASU 2018-03, as technical corrections and improvements to amend and clarify certain aspects of the guidance issued in ASU 2016-01. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018.We do not expect that the above standards will have a material impact on our consolidated financial statements and related disclosures.31, 2023.
In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards or control, an operating lease results. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases as well as for lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The accounting for leases where we are the lessor remains largely unchanged. While we are currently in the initial stages of assessing the impact ASU 2016-02 will have on our consolidated financial statements, we expect the primary impact to our consolidated financial statements upon adoption will be the recognition, on a discounted basis, of any future minimum rentals due under noncancelable leases on our consolidated balance sheets resulting in the recording of right of use assets and lease obligations.
Recently Adopted Accounting Standards—In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("(“ASU 2016-13"2016-13”). ASU 2016-13 sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held.In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”). ASU 2019-10 revised the mandatory adoption date for public business entities that meet the definition of a smaller reporting company to be effective for fiscal years beginning after December 15, 2022. We adopted ASU 2016-13 and ASU 2019-10 effective January 1, 2023 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provides optional guidance through December 31, 2022 to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which further clarified the scope of the reference rate reform optional practical expedients and exceptions outlined in Topic 848. The amendments in ASU Nos. 2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848) (“ASU 2022-06”), which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The Company applied the optional expedient in evaluating debt modifications converting from London Interbank
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Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”). The Company adopted the standards upon the respective effective dates. There was no material impact as a result of this adoption.
Recently Issued 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, 2019,2023, including interim periods within those fiscal years. EarlyEntities should adopt the guidance as of the beginning of the fiscal year of adoption is permitted for periods beginning after December 15, 2018.and cannot adopt the guidance in an interim reporting period. We are currently evaluatingadopted ASU 2020-06 effective January 1, 2024 and the adoption did not have a material impact that ASU 2016-13 will have on the consolidatedCompany’s financial statements and related disclosures.
In August 2016,November 2023, the FASB issued ASU 2016-15, Statement of Cash Flows2023-07, Segment Reporting (Topic 230)280): Classification of Certain Cash Receipts and Cash Payments - a consensus of the Emerging Issues Task ForceImprovements to Reportable Segment Disclosures (“ASU 2016-15”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 new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Certain issues addressedamendments in this guidance include - Debt payments or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, distributions received from equity method investments and


beneficial interestsASU apply to all public entities that are required to report segment information in securitization transactions. ASU 2016-15 isaccordance with Topic 280. The amendments in this Update are effective for fiscal years beginning after December 15, 20172023, and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact that ASU 2016-15 will have on our consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether a transaction should be accounted for as an acquisition (or disposal) of an asset or a business. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.2024. Early adoption is permitted. We are evaluatingA public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company continues to evaluate the level of impact thatthe adoption of ASU 2017-012023-07 will have on our consolidatedthe Company’s financial statements and related disclosures.statements.
In January 2017,November 2023, the FASB issued ASU 2017-04, Intangibles—Goodwill2023-09, 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 Other (Topic 350): Simplifyingdisclosure of income taxes paid be disaggregated by jurisdiction. It also includes certain other amendments to improve the Test for Goodwill Impairment (“ASU 2017-04”), which removes the requirement to compare the implied fair valueeffectiveness of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, ASU 2017-04 clarifies that an entity should consider income tax effects from any tax deductible goodwill ondisclosures. The amendments in this ASU apply to all entities that are subject to Topic 740. For public business entities, the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.amendments in this ASU 2017-04 isare effective for fiscal yearsannual periods beginning after December 15, 2019.2024. Early adoption is permitted for interimannual financial statements that have not yet been issued or annual goodwill impairment tests performedmade available for issuance. The amendments in this ASU should be applied on testing dates after January 1, 2017. We are evaluatinga prospective basis. Retrospective application is permitted. The Company continues to evaluate the level of impact thatthe adoption of ASU 2017-042023-09 will have on our consolidatedthe Company’s financial statements and related disclosures.statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our primary market risk exposures consist of changes in interest rates on borrowings under our debt instruments that bear interest at variable rates that fluctuate with market interest rates as well as foreign currency exchange rate risk.
Interest Rate Risk—At December 31, 2017,2023, our total indebtedness of $11.9$141.1 million included $10.8$133.5 million of variable-rate debt. The impact on our results of operations of a 100 basis point change in interest rate on the outstanding balance of variable-rate debt at December 31, 20172023, would be approximately $100,000$1.3 million annually. Interest rate changes have no impact on the remaining $1.1$7.6 million of fixed-ratefixed rate debt.
The amount above was determined based on the impact of a hypothetical interest rate on our borrowings and assumes no changes in our capital structure. As the information presented above includes only those exposures that existed at December 31, 2017,2023, 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.
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Foreign Exchange Risk—The majority of our revenues, expenses and capital purchases are transacted in U.S. dollars. On November 1, 2017, we acquired a controlling interest in J&S Audiovisual, whichINSPIRE has operations in Mexico and the Dominican Republic and thereforeRemington has operations in Costa Rica for which we have exposure with respect to exchange rate fluctuations. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in our income statement as incurred. We have chosen not to hedge foreign exchange risks related to our foreign currency denominated earnings and cash flows through the use of financial instruments. As of December 31, 2017,2023, the impact to our net income of a 10% change (up or down) in the Mexican Peso exchange rate is estimated to be an increase or decrease of approximately $42,000$116,000 for the twotwelve months ended December 31, 2017.2023. Operations in the Dominican Republic and Costa Rica are not material.

RED’s operations outside of the U.S. are primarily transacted in U.S. dollars, which is the official currency of the Turks and Caicos Islands.

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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (BDO USA, P.C., Dallas, Texas, PCAOB ID#243)
5180
5282
5383
5484
5585
5787
5989

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Report of Independent Registered Public Accounting Firm


Shareholders and Board of Directors and Stockholders
Ashford Inc.
14185 Dallas Parkway
Suite 1100
Dallas, Texas 75254
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Ashford Inc. (the “Company”) and subsidiaries as of December 31, 20172023 and 2016,2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2017,2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 20172023 and 2016,2022, and the results of theirits operations and theirits cash flows for each of the three years in the period ended December 31, 2017,2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.



Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment- Remington Reporting Unit

As described in Note 7 to the Company’s consolidated financial statements, the Company’s consolidated goodwill balance was $61.0 million as of December 31, 2023, which is allocated primarily to the Company’s Remington and RED reporting units. As described in Note 2, goodwill is assessed for impairment on an annual basis, or more often if events and circumstances indicate that impairment may have occurred. The Company determines the fair value of its reporting units using a blended analysis of the income and the market value approaches.
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We identified the estimate of the fair value of the Company’s Remington reporting unit as part of the annual impairment assessment as a critical audit matter. The principal considerations for our determination included the subjectivity and judgment required under the income approach to determine forecasts of future revenues and expenses, the discount rate, and the terminal growth rate. Auditing these elements involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the involvement of individuals with specialized skill or knowledge.
The primary procedures we performed to address this critical audit matter included:

•Assessing the reasonableness of the forecasts of future revenue and expenses utilized in the projected cash flows by (i) comparing the forecasts to historical revenue and expenses of the reporting unit and (ii) assessing forecasts of future revenues and expenses against industry metrics.
•Utilizing personnel with specialized skill and knowledge in valuation to assist in (i) assessing the appropriateness of the valuation method and (ii) evaluating the reasonableness of the discount rate and terminal growth rate.


/s/ BDO USA, LLPP.C.
We have served as the Company’s auditor since 20152015.
Dallas, Texas
March 12, 201827, 2024

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ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31, 2023December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents ($7,574 and $5,523, respectively, attributable to VIEs)$52,054 $44,390 
Restricted cash23,216 37,058 
Restricted investment128 303 
Accounts receivable, net of allowance for credit losses of $2,090 and $175, respectively ($693 and $724, respectively, attributable to VIEs)26,945 17,615 
Due from affiliates41 463 
Due from Ashford Trust ($326 and $663, respectively, attributable to VIEs)18,933 — 
Due from Braemar ($24 and $52, respectively, attributable to VIEs)714 11,828 
Inventories ($386 and $394, respectively, attributable to VIEs)2,481 2,143 
Prepaid expenses and other assets ($530 and $747, respectively, attributable to VIEs)16,418 11,226 
Total current assets140,930 125,026 
Investments ($5,000 and $0, respectively, reported at fair value and attributable to VIEs)9,265 4,217 
Property and equipment, net ($707 and $666, respectively, attributable to VIEs)56,852 41,791 
Operating lease right-of-use assets21,193 23,844 
Deferred tax assets, net4,358 — 
Goodwill61,013 58,675 
Intangible assets, net210,095 226,544 
Other assets, net1,101 2,259 
Total assets$504,807 $482,356 
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses ($1,919 and $2,824, respectively, attributable to VIEs)$54,837 $56,079 
Dividends payable28,508 27,285 
Due to affiliates— 15 
Due to Ashford Trust— 1,197 
Deferred income ($210 and $444, respectively, attributable to VIEs)11,963 444 
Notes payable, net ($387 and $150, respectively, attributable to VIEs)4,387 5,195 
Finance lease liabilities437 1,456 
Operating lease liabilities4,160 3,868 
Claims liabilities and other31,112 25,630 
Total current liabilities135,404 121,169 
Deferred income ($1,192 and $1,495, respectively, attributable to VIEs)6,415 7,356 
Deferred tax liability, net29,517 27,873 
Deferred compensation plan891 2,849 
Notes payable, net132,579 89,680 
Finance lease liabilities2,832 1,962 
Operating lease liabilities19,174 20,082 
Other liabilities2,590 3,237 
Total liabilities329,402 274,208 
Commitments and contingencies (note 13)
MEZZANINE EQUITY
Series D Convertible Preferred Stock, $0.001 par value, 19,120,000 shares issued and outstanding as of December 31, 2023 and December 31, 2022478,000 478,000 
Redeemable noncontrolling interests1,972 1,614 
EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized, $0.001 par value, 3,317,786 and 3,181,585 shares issued and 3,212,312 and 3,110,044 shares outstanding at December 31, 2023 and December 31, 2022, respectively3 3 
Additional paid-in capital299,304 297,715 
Accumulated deficit(609,312)(568,482)
Accumulated other comprehensive income (loss)(213)78 
Treasury stock, at cost, 105,474 and 71,541 shares at December 31, 2023 and December 31, 2022, respectively(1,354)(947)
Total equity (deficit) of the Company(311,572)(271,633)
Noncontrolling interests in consolidated entities7,005 167 
Total equity (deficit)(304,567)(271,466)
Total liabilities, mezzanine equity and equity (deficit)$504,807 $482,356 
 December 31, 2017 December 31, 2016
ASSETS   
Current assets:   
Cash and cash equivalents$36,480
 $84,091
Restricted cash9,076
 9,752
Investments in securities—
 91
Accounts receivable, net5,127
 16
Due from Ashford Trust OP13,346
 12,179
Due from Ashford Prime OP1,738
 3,817
Inventories1,066
 —
Prepaid expenses and other2,913
 1,305
Total current assets69,746
 111,251
Investments in unconsolidated entities500
 500
Furniture, fixtures and equipment, net21,154
 12,044
Deferred tax assets—
 6,002
Goodwill12,947
 —
Intangible assets, net9,713
 —
Other assets750
 —
Total assets$114,810
 $129,797
LIABILITIES   
Current liabilities:   
Accounts payable and accrued expenses$20,451
 $11,314
Due to affiliates4,272
 933
Due to Ashford Prime OP from AQUA U.S. Fund—
 2,289
Deferred income459
 —
Deferred compensation plan311
 144
Notes payable, net1,751
 —
Other liabilities9,076
 9,752
Total current liabilities36,320
 24,432
Accrued expenses78
 287
Deferred income13,440
 4,515
Deferred compensation plan18,948
 8,934
Notes payable, net9,956
 —
Total liabilities78,742
 38,168
Commitments and contingencies (note 11)

 

MEZZANINE EQUITY   
Redeemable noncontrolling interests5,111
 1,480
EQUITY   
Preferred stock, $0.01 par value, 50,000,000 shares authorized:   
Series A cumulative preferred stock, no shares issued and outstanding at December 31, 2017 and December 31, 2016—
 —
Common stock, $0.01 par value, 100,000,000 shares authorized, 2,093,556 and 2,015,589 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively21
 20
Additional paid-in capital249,695
 237,796
Accumulated deficit(219,396) (200,439)
Accumulated other comprehensive income (loss)(135) —
Total stockholders’ equity of the Company30,185
 37,377
Noncontrolling interests in consolidated entities772
 52,772
Total equity30,957
 90,149
Total liabilities and equity$114,810
 $129,797
See Notes to Consolidated Financial Statements.

82

ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2023202320222021
REVENUE
Advisory services fees
Advisory services fees
Advisory services fees
Hotel management fees
Design and construction fees
Audio visual
Year Ended December 31,
2017 2016 2015
REVENUE     
Advisory services$65,982
 $67,228
 $58,546
Audio visual9,186
 —
 —
Other6,405
 379
 435
Total revenue81,573
 67,607
 58,981
Other
Other
Cost reimbursement revenue
Total revenues
EXPENSES     
Salaries and benefits61,223
 52,436
 41,442
Salaries and benefits
Salaries and benefits
Cost of revenues for design and construction
Cost of revenues for audio visual7,757
 —
 —
Depreciation and amortization2,527
 1,174
 799
General and administrative17,363
 16,454
 18,091
Impairment
Impairment
Impairment1,072
 —
 —
Other2,153
 —
 —
Reimbursed expenses
Total expenses92,095
 70,064
 60,332
OPERATING INCOME (LOSS)(10,522) (2,457) (1,351)
Realized gain (loss) on investment in unconsolidated entity—
 (3,601) —
Unrealized gain (loss) on investment in unconsolidated entity—
 2,141
 (2,141)
Equity in earnings (loss) of unconsolidated entities
Interest expense
Interest expense
Interest expense(83) —
 —
Amortization of loan costs(39) —
 —
Interest income244
 73
 352
Dividend income93
 170
 917
Unrealized gain (loss) on investments203
 2,326
 (2,490)
Realized gain (loss) on investments(294) (10,113) (5,110)
Realized gain (loss) on investments
Realized gain (loss) on investments
Other income (expense)
Other income (expense)
Other income (expense)(73) (162) (155)
INCOME (LOSS) BEFORE INCOME TAXES(10,471) (11,623) (9,978)
Income tax (expense) benefit(9,723) (780) (2,066)
NET INCOME (LOSS)(20,194) (12,403) (12,044)
(Income) loss from consolidated entities attributable to noncontrolling interests358
 8,860
 10,852
Net (income) loss from consolidated entities attributable to noncontrolling interests
Net (income) loss attributable to redeemable noncontrolling interests1,484
 1,147
 2
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY$(18,352) $(2,396) $(1,190)
Preferred dividends, declared and undeclared
Amortization of preferred stock discount
Amortization of preferred stock discount
Amortization of preferred stock discount
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
     
INCOME (LOSS) PER SHARE - BASIC AND DILUTED     
INCOME (LOSS) PER SHARE - BASIC AND DILUTED
INCOME (LOSS) PER SHARE - BASIC AND DILUTED
Basic:     
Basic:
Basic:
Net income (loss) attributable to common stockholders
Net income (loss) attributable to common stockholders
Net income (loss) attributable to common stockholders$(9.04) $(1.19) $(0.60)
Weighted average common shares outstanding - basic2,031
 2,012
 1,991
Diluted:     
Net income (loss) attributable to common stockholders$(9.59) $(2.56) $(4.45)
Net income (loss) attributable to common stockholders
Net income (loss) attributable to common stockholders
Weighted average common shares outstanding - diluted2,067
 2,209
 2,203
     
See Notes to Consolidated Financial Statements.

83

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

Year Ended December 31,
2017 2016 2015
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2023202320222021
     
NET INCOME (LOSS)$(20,194) $(12,403) $(12,044)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

NET INCOME (LOSS)
NET INCOME (LOSS)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment(135) —
 —
Foreign currency translation adjustment
Foreign currency translation adjustment
Unrealized gain (loss) on restricted investment
Less reclassification for realized (gain) loss on restricted investment included in net income
COMPREHENSIVE INCOME (LOSS)(20,329) (12,403) (12,044)
Comprehensive (income) loss attributable to noncontrolling interests358
 8,860
 10,852
Comprehensive (income) loss attributable to redeemable noncontrolling interests1,484
 1,147
 2
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY$(18,487) $(2,396) $(1,190)
See Notes to Consolidated Financial Statements.



84

ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)
(in thousands)
Common StockAdditional Paid-in CapitalAccumulated
 Deficit		Accumulated Other Comprehensive Income (Loss)Treasury StockNoncontrolling Interests in Consolidated EntitiesTotalConvertible Preferred StockRedeemable Noncontrolling Interests
SharesAmountSharesAmountSharesAmount
Balance at January 1, 20212,868 $3 $293,597 $(491,483)$(1,156)(32)$(438)$(121)$(199,598)19,120 $476,947 $1,834 
Equity-based compensation169 — 4,296 — — — — 3 4,299 — — — 
Purchase of treasury stock(14)— — — — (14)(121)— (121)— — — 
Forfeiture of restricted common shares(3)— 37 — — (3)(37)— — — — — 
Amortization of preferred stock discount— — — (1,053)— — — — (1,053)— 1,053 — 
Dividends declared and undeclared - preferred stock— — — (35,000)— — — — (35,000)— — — 
Deferred compensation plan distribution3 — 51 — — — — — 51 — — — 
Employee advances— — 180 — — — — — 180 — — — 
Acquisition of noncontrolling interest in consolidated entities— — (3,392)2,560 — — — 326 (506)— — (1,648)
Contributions from noncontrolling interests— — — — — — — 734 734 — — — 
Reallocation of carrying value— — (374)— — — — 374 — — — — 
Redemption value adjustment— — — (98)— — — — (98)— — 98 
Foreign currency translation adjustment— — — — (19)— — — (19)— — — 
Unrealized gain (loss) on available for sale securities— — — — (409)— — — (409)— — — 
Reclassification for realized loss (gain) on available for sale securities— — — — 378 — — — 378 — — — 
Net income (loss)— — — (9,925)— — — (678)(10,603)— — (215)
Balance at December 31, 20213,023 $3 $294,395 $(534,999)$(1,206)(49)$(596)$638 $(241,765)19,120 $478,000 $69 
Equity-based compensation109 — 3,753 — — — — — 3,753 — — 164 
Purchase of treasury stock(16)— — — — (16)(270)— (270)— — — 
Forfeiture of restricted common shares(6)— 81 — — (6)(81)— — — — — 
Acquisition of Chesapeake— — — — — — — — — — — 1,390 
Dividends declared and undeclared - preferred stock— — — (36,458)— — — — (36,458)— — — 
Employee advances— — (45)— — — — — (45)— — — 
Contributions from noncontrolling interests— — — — — — — 327 327 — — — 
Reallocation of carrying value— — (469)— — — — 469 — — — — 
Redemption value adjustment— — — (32)— — — — (32)— — 32 
Distributions to noncontrolling interests— — — — — — — (96)(96)— — (489)
Foreign currency translation adjustment— — — — 645 — — — 645 — — — 
Other— — — (639)639 — — — — — — — 
Net income (loss)— — — 3,646 — — — (1,171)2,475 — — 448 
Balance at December 31, 20223,110 $3 $297,715 $(568,482)$78 (71)$(947)$167 $(271,466)19,120 $478,000 $1,614 
85

 Common Stock Additional Paid-in Capital 
Accumulated
 Deficit
 Accumulated Other Comprehensive Income (Loss) Treasury Stock Noncontrolling Interests in Consolidated Entities Total Redeemable Noncontrolling Interests
 Shares AmountShares Amount
Balance at January 1, 20151,987
 $20
 $228,003
 $(213,042) $—
 —
 $—
 $(87) $14,894
 $424
Purchase of treasury stock—
 —
 —
 —
 —
 (1) (77) —
 (77) —
Forfeitures of restricted shares—
 —
 —
 —
 —
 —
 (10) —
 (10) —
Equity-based compensation3
 —
 4,105
 11,504
 —
 —
 —
 —
 15,609
 —
Issuance of common stock20
 —
 1,363
 —
 —
 —
 —
 —
 1,363
 —
Excess tax benefit (deficiency) on equity-based compensation—
 —
 1,096
 —
 —
 —
 —
 —
 1,096
 —
Deferred compensation plan distribution1
 —
 80
 —
 —
 1
 62
 —
 142
 —
Employee advances—
 —
 69
 —
 —
 —
 —
 —
 69
 —
Contributions from noncontrolling interests in consolidated entities—
 —
 —
 —
 —
 —
 —
 115,410
 115,410
 —
Redemption value adjustment—
 —
 —
 182
 —
 —
 —
 —
 182
 (182)
Net income (loss)—
 —
 —
 (1,190) —
 —
 —
 (10,852) (12,042) (2)
Balance at December 31, 20152,011
 $20
 $234,716
 $(202,546) $—
 —
 $(25) $104,471
 $136,636
 $240
Purchase of treasury stock—
 —
 —
 —
 —
 (1) (20) —
 (20) —
Retirement of treasury stock—
 —
 (45) —
 —
 1
 45
 —
 —
 —
Equity-based compensation5
 —
 6,073
 5,439
 —
 —
 —
 61
 11,573
 —
Excess tax benefit (deficiency) on equity-based compensation—
 —
 (284) —
 —
 —
 —
 —
 (284) —
Employee advances—
 —
 (41) —
 —
     —
 (41) —
Contributions from noncontrolling interests—
 —
 —
 —
 —
 —
 —
 2,373
 2,373
 —
Reallocation of carrying value—
 —
 (2,623) —
 —
 —
 —
 1,154
 (1,469) 1,469
Redemption of offshore fund—
 —
 —
 —
 —
 —
 —
 (179) (179) —
Redemption of noncontrolling interest holder in AQUA U.S. Fund—
 —
 —
 —
 —
 —
 —
 (46,248) (46,248) —
Redemption of units—
 —
 —
 —
 —
 —
 —
 —
 —
 (18)
Redemption value adjustment—
 —
 —
 (936) —
 —
 —
 —
 (936) 936
Net income (loss)—
 —
 —
 (2,396) —
 —
 —
 (8,860) (11,256) (1,147)
Balance at December 31, 20162,016
 $20
 $237,796
 $(200,439) $—
 —
 $—
 $52,772
 $90,149
 $1,480
                    

 Common Stock Additional Paid-in Capital 
Accumulated
 Deficit
 Accumulated Other Comprehensive Income (Loss) Treasury Stock Noncontrolling Interests in Consolidated Entities Total Redeemable Noncontrolling Interests
 Shares AmountShares Amount
Purchases of common stock—
 —
 (24) —
 —
 —
 —
 —
 (24) —
Equity-based compensation4
 —
 7,746
 684
 —
 —
 —
 39
 8,469
 —
Deferred compensation plan distribution3
 —
 229
 —
 —
 —
 —
 —
 229
 —
Employee advances—
 —
 (433) —
 —
 —
 —
 —
 (433) —
Redemption of noncontrolling interest holder in AQUA U.S. Fund—
 —
 —
 —
 —
 —
 —
 (52,782) (52,782) —
OpenKey warrant issuance—
 —
 —
 —
 —
 —
 —
 28
 28
 —
Contributions from noncontrolling interests—
 —
 —
 —
 —
 —
 —
 983
 983
 —
Reallocation of carrying value—
 —
 (681) —
 —
 —
 —
 (506) (1,187) 1,187
Redemption value adjustment—
 —
 —
 (1,270) —
 —
 —
 —
 (1,270) 1,270
Acquisition of Pure Rooms—
 —
 —
 —
 —
 —
 —
 425
 425
 —
Distributions to consolidated noncontrolling interests—
 —
 —
 (19) —
 —
 —
 (220) (239) —
Acquisition of J&S71
 1
 5,062
 —
 —
 —
 —
 391
 5,454
 2,658
Foreign currency translation adjustment—
 —
 —
 —
 (135) —
 —
 —
 (135) —
Net income (loss)—
 —
 —
 (18,352) —
 —
 —
 (358) (18,710) (1,484)
Balance at December 31, 20172,094
 $21
 $249,695
 $(219,396) $(135) —
 $—
 $772
 $30,957
 $5,111
Common StockAdditional Paid-in CapitalAccumulated
 Deficit		Accumulated Other Comprehensive Income (Loss)Treasury StockNoncontrolling Interests in Consolidated EntitiesTotalConvertible Preferred StockRedeemable Noncontrolling Interests
SharesAmountSharesAmountSharesAmount
Equity-based compensation136 — 2,054 — — — — — 2,054 — — 364 
Issuance of subsidiary common stock to noncontrolling interests— — (493)— — — — 434 (59)— — — 
Purchase of treasury stock(31)— — — — (31)(359)— (359)— — — 
Forfeiture of restricted common shares(3)— 48 — — (3)(48)— — — — — 
Asset acquisition of TSGF L.P.— — — — — — — 2,413 2,413 — — — 
Dividends declared and undeclared - preferred stock— — — (36,193)— — — — (36,193)— — — 
Employee advances— — (20)— — — — — (20)— — — 
Contributions from noncontrolling interests— — — — — — — 4,871 4,871 — — — 
Redemption value adjustment— — — (9)— — — — (9)— — 9 
Distributions to noncontrolling interests— — — — — — — — — — — (516)
Foreign currency translation adjustment— — — — (291)— — — (291)— — — 
Net income (loss)— — — (4,628)— — — (880)(5,508)— — 501 
Balance at December 31, 20233,212 $3 $299,304 $(609,312)$(213)(105)$(1,354)$7,005 $(304,567)19,120 $478,000 $1,972 
See Notes to Consolidated Financial Statements.

86

ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
202320222021
Cash Flows from Operating Activities
Net income (loss)$(5,007)$2,923 $(10,818)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization35,435 38,003 38,497 
Change in fair value of deferred compensation plan(1,959)(477)1,671 
Equity-based compensation2,412 4,045 4,553 
Equity in (earnings) loss in unconsolidated entities702 (392)126 
Deferred tax expense (benefit)(4,281)(4,258)(5,056)
Change in fair value of contingent consideration600 650 23 
Impairment— — 1,160 
(Gain) loss on disposal of assets3,141 3,115 1,593 
Amortization of other assets166 663 1,039 
Amortization of loan costs1,051 761 322 
Realized loss on investment80 86 378 
Loss on disposition of Marietta— 1,244 — 
Other (gain) loss1,317 117 (306)
Changes in operating assets and liabilities, exclusive of the effect of acquisitions:
Accounts receivable(9,812)(9,317)(4,180)
Due from affiliates422 (298)188 
Due from Ashford Trust(18,303)2,575 10,623 
Due from Braemar11,156 (10,684)(818)
Inventories(304)(697)(666)
Prepaid expenses and other(3,398)(2,017)(1,744)
Investment in unconsolidated entities— 156 69 
Operating lease right-of-use assets3,686 3,481 3,713 
Other assets(38)(22)99 
Accounts payable and accrued expenses(4,757)16,881 302 
Due to affiliates2 240 (1,698)
Due to Ashford Trust(2,229)2,229 — 
Claims liabilities and other2,086 (286)(4,029)
Operating lease liabilities(3,834)(3,505)(3,724)
Deferred income10,458 (3,108)(10,481)
Net cash provided by (used in) operating activities18,792 42,108 20,836 
Cash Flows from Investing Activities
Additions to property and equipment(24,695)(14,797)(8,074)
Proceeds from sale of property and equipment, net1,512 466 2,104 
Restricted cash acquired in asset acquisition of RHC849 — — 
Acquisition of Alii Nui, net of cash acquired(6,704)— — 
Asset acquisition of TSGF L.P., net of cash acquired(2,226)— — 
Investments(1,250)(400)(250)
Acquisition of Chesapeake, net of cash acquired— (6,363)— 
Cash held by Marietta upon disposition— (2,123)— 
Purchase of common stock of related parties— — (873)
Proceeds from sale of equity method investment— — 535 
Proceeds from note receivable1,000 1,380 — 
Issuance of notes receivable(1,519)(530)(2,880)
Net cash provided by (used in) investing activities(33,033)(22,367)(9,438)
(Continued)
87

 Year Ended December 31,
 2017 2016 2015
Cash Flows from Operating Activities     
Net income (loss)$(20,194) $(12,403) $(12,044)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:     
Depreciation and amortization2,938
 1,174
 799
Change in fair value of deferred compensation plan10,410
 (2,127) (8,608)
Realized and unrealized (gain) loss on investment in unconsolidated entity, net—
 1,460
 2,141
Equity-based compensation8,469
 11,573
 15,609
Excess tax (benefit) deficiency on equity-based compensation—
 284
 (1,096)
Deferred tax expense (benefit)6,002
 (2,075) (4,242)
Contingent consideration1,066
 —
 —
Impairment1,072
 —
 —
(Gain) loss on sale of furniture, fixtures and equipment279
 —
 —
Amortization of loan costs39
 —
 —
Realized and unrealized (gain) loss on investments, net91
 7,787
 (7,600)
Purchases of investments in securities—
 (153,259) (174,812)
Sales of investments in securities—
 225,470
 212,953
Distributions from investment in unconsolidated entity—
 —
 24
Changes in operating assets and liabilities, exclusive of the effect of acquisitions:     
Prepaid expenses and other(128) 604
 (1,196)
Accounts receivable(725) 234
 (250)
Due from Ashford Trust OP(1,302) (6,323) (1,007)
Due from Ashford Prime OP2,079
 4
 (1,275)
Inventories(205) —
 —
Other assets190
 —
 —
Accounts payable and accrued expenses1,575
 4,791
 2,725
Due to affiliates689
 (290) (296)
Other liabilities(676) 4,068
 2,347
Deferred income7,746
 3,886
 629
Net cash provided by (used in) operating activities19,415
 84,858
 24,801
Cash Flows from Investing Activities     
Additions to furniture, fixtures and equipment(3,580) (6,240) (2,137)
Proceeds from disposal of furniture, fixtures and equipment, net15
 —
 —
Cash acquired in acquisition of Pure Rooms129
 —
 —
Acquisition of J&S, net of cash acquired(18,972) —
 —
Asset purchase deposit related to RED Hospitality and Leisure LLC(750) —
 —
Investments in unconsolidated entities—
 —
 (5,500)
Redemption of investment in unconsolidated entity—
 1,375
 —
Net cash provided by (used in) investing activities(23,158) (4,865) (7,637)
Cash Flows from Financing Activities     
Payments on revolving credit facilities(924) —
 —
Borrowings on revolving credit facilities1,507
 —
 —
Proceeds from note payable10,000
 —
 —
Payments on notes payable and capital leases(305) —
 —
Payments of loan costs(28) —
 —
Excess tax benefit (deficiency) on equity-based compensation—
 (284) 1,096
Purchases of common stock(24) (20) (77)
Forfeitures of restricted shares—
 —
 (10)
Employee advances(433) (41) 69
Redemption of units—
 (18) —
Contributions from noncontrolling interest983
 2,373
 4,780
Distributions to and redemptions by noncontrolling interests in consolidated entities(55,310) (44,116) —
Net cash provided by (used in) financing activities(44,534) (42,106) 5,858
Effect of foreign exchange rate changes on cash and cash equivalents(10) —
 —
Net change in cash, cash equivalents and restricted cash(48,287) 37,887
 23,022
Cash, cash equivalents and restricted cash at beginning of period93,843
 55,956
 32,934
Cash, cash equivalents and restricted cash at end of period$45,556
 $93,843
 $55,956
      

 Year Ended December 31,
 2017 2016 2015
Supplemental Cash Flow Information     
Interest paid$53
 $134
 $42
Income taxes paid4,948
 2,333
 5,966
Supplemental Disclosure of Non-Cash Investing and Financing Activities     
Contributions of securities from noncontrolling interests in consolidated entities$—
 $—
 $110,630
Distribution from deferred compensation plan229
 —
 142
Capital expenditures accrued but not paid1,397
 620
 192
Capital additions associated with common stock issuance—
 —
 1,363
Accrued but unpaid redemption of AQUA U.S. Fund—
 2,311
 —
Subsidiary equity consideration for Pure Rooms acquisition425
 —
 —
Assumption of debt associated with Pure Rooms acquisition475
 —
 —
Issuance of OpenKey warrant28
 —
 —
Assumption of debt associated with J&S acquisition978
 —
 —
J&S loan costs paid from revolving credit facility231
 —
 —
Ashford Inc. common stock consideration for J&S acquisition5,063
 —
 —
Contingent consideration for J&S acquisition1,196
 —
 —
      
Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash     
Cash and cash equivalents at beginning of period$84,091
 $50,272
 $29,597
Restricted cash at beginning of period9,752
 5,684
 3,337
Cash, cash equivalents and restricted cash at beginning of period$93,843
 $55,956
 $32,934
      
Cash and cash equivalents at end of period$36,480
 $84,091
 $50,272
Restricted cash at end of period9,076
 9,752
 5,684
Cash, cash equivalents and restricted cash at end of period$45,556
 $93,843
 $55,956
Year Ended December 31,
202320222021
Cash Flows from Financing Activities
Payments for dividends on preferred stock(34,798)(43,919)(16,706)
Payments on revolving credit facilities(26,800)(2,910)(1,063)
Borrowings on revolving credit facilities26,800 1,092 1,826 
Proceeds from notes payable43,652 70,397 2,900 
Payments on notes payable(3,803)(31,098)(8,737)
Payments on finance lease liabilities(419)(1,160)(439)
Payments of loan costs(409)(2,714)(222)
Purchase of treasury stock(359)(270)(121)
Employee advances(20)(45)180 
Contributions from noncontrolling interests4,871 327 734 
Distributions to noncontrolling interests(688)(413)— 
Net cash provided by (used in) financing activities8,027 (10,713)(21,648)
Effect of foreign exchange rate changes on cash and cash equivalents36 (29)33 
Net change in cash, cash equivalents and restricted cash(6,178)8,999 (10,217)
Cash, cash equivalents and restricted cash at beginning of period81,448 72,449 82,666 
Cash, cash equivalents and restricted cash at end of period$75,270 $81,448 $72,449 
Supplemental Cash Flow Information
Interest paid$14,145 $9,749 $5,022 
Income taxes paid (refunded), net8,188 6,403 6,628 
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Acquisition of Chesapeake through issuance of Series CHP Units from our subsidiary Ashford Holdings$— $1,387 $— 
Acquisition of Alii Nui through issuance of RED Units2,000 — — 
Acquisition related contingent consideration liability1,000 1,670 — 
Capital expenditures accrued but not paid1,437 212 205 
Finance lease additions1,392 903 — 
Acquisition of noncontrolling interest— — 2,202 
Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period$44,390 $37,571 $45,270 
Restricted cash at beginning of period37,058 34,878 37,396 
Cash, cash equivalents and restricted cash at beginning of period$81,448 $72,449 $82,666 
Cash and cash equivalents at end of period$52,054 $44,390 $37,571 
Restricted cash at end of period23,216 37,058 34,878 
Cash, cash equivalents and restricted cash at end of period$75,270 $81,448 $72,449 
See Notes to Consolidated Financial Statements.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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 Maryland corporation formed on April 2, 2014portfolio of strategic operating businesses that provides asset management, advisory and other products and services primarily to clients in the real estate and hospitality industry. Ashford Inc. currently provides asset management and advisory services toindustries, including Ashford Hospitality Trust, Inc. (“Ashford Trust”), Braemar Hotels & Resorts Inc. (“Braemar”) Stirling Hotels & Resorts, Inc. (“Stirling”) and our consolidated subsidiary The Texas Strategic Growth Fund, L.P. (“TSGF L.P.”). We became a public company in November 2014, and our common stock is listed on the NYSE American LLC (“NYSE American”).
We provide: (i) advisory services; (ii) asset management services; (iii) hotel management services; (iv) design and construction services; (v) event technology and creative communications solutions; (vi) mobile room keys and keyless entry solutions; (vii) watersports activities and other travel, concierge and transportation services; (viii) hypoallergenic premium room products and services; (ix) 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 Prime, Inc.Advisors LLC (“Ashford Prime”LLC”)., Ashford Hospitality Services LLC (“Ashford Services”), Warwick Insurance Company, LLC (“Warwick”) and their respective subsidiaries.
We are currently the advisor for Ashford Trust, commenced operatingBraemar, 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 August 2003each 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 servicefull-service hotels in the upscale and upper-upscaleupper upscale segments in the U.S.United States that have revenue per available room (“RevPAR”) generally less than twice the U.S. national average. Ashford PrimeBraemar invests primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Ashford PrimeStirling invests in a diverse portfolio of stabilized income-producing hotels and resorts across all chain scales primarily located in the United States and became a publicly traded companyour client on December 6, 2023. TSGF L.P. invests in November 2013 uponall types of real estate in the completionstate of its spin-off from Ashford Trust.Texas. Each of Ashford Trust and Ashford PrimeBraemar is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code and theof 1986, as amended (the “Internal Revenue Code”). The common stock of each of Ashford Trust and Ashford PrimeBraemar is traded on the NYSE. The common stock ofNew York Stock Exchange (the “NYSE”). Stirling is privately held and Stirling’s subsidiary Stirling REIT OP, LP (“Stirling OP”) is consolidated by Ashford Inc.Trust. TSGF L.P. is listed on the NYSE American Exchange. Ashford Trusta privately held, approximately 598,000 shares of Ashford Inc. common stock, which represented an approximate 28.6% ownership interest in Ashford Inc. Ashford Prime held approximately 195,000 shares, which represented an approximate 9.3% ownership interest in Ashford Inc. as of December 31, 2017.
Ashford Inc. was formed through a spin-off of Ashford Trust’s asset management business in November 2014. The spin-off was completed by means of a distribution of common stock of Ashford Inc. and common units of Ashford Hospitality Advisors LLC (“Ashford LLC”), a Delaware limited liability company formed on April 5, 2013. Ashford LLC had no operations until November 19, 2013, the dateconsolidated subsidiary of the Ashford Prime spin-off. As partCompany.
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 Ashford Inc. spin-off from Ashford Trust, Ashfordhotel management companies that operate such hotel properties. Additionally, Remington Lodging & Hospitality, LLC became a subsidiary of Ashford Inc. on November 12, 2014. We conduct our advisory business through an operating entity, Ashford LLC. We conduct our hospitality services business through an operating entity, Ashford Hospitality Services, LLC. We own most of our assets through Ashford LLC and Ashford Hospitality Services, LLC.
On April 6, 2017, Ashford Inc. entered into the Amended and Restated Limited Liability Company Agreement (the “Amended and Restated LLC Agreement”(“Remington”) of Ashford Hospitality Holdings LLC, a Delaware limited liability company and, a subsidiary of the Company, (“operates certain hotel properties for Ashford Holdings”), in connection with the merger (the “Merger”) of Ashford Merger Sub LLC, a Delaware limited liability company, withTrust, Braemar, Stirling and into Ashford LLC, with Ashford LLC surviving the Merger as a wholly-owned subsidiary of Ashford Holdings. Ashford Holdings is owned 99.8% by Ashford Inc. and 0.2% by noncontrolling interest holders. The terms of the Amended and Restated LLC Agreement are consistent with the terms of the Amended and Restated Limited Liability Company Agreement of Advisors. The Merger was effectuated in order to facilitate our investments in businesses that provide products and services to the hospitality industry.third parties.
Ashford Investment Management, LLC (“AIM”) is an indirect subsidiary ofOther Developments
On January 3, 2023, the Company established to serve as an investment advisor to any private securities funds sponsored by us or our affiliates (the “Funds”) and is a registered investment advisor with the Securities and Exchange Commission (the “SEC”). AIM REHE Funds GP, LPacquired Remington Hotel Corporation (“AIM GP”RHC”), or an affiliate of AIM GP, serves as the general partner of any Funds. AIM Management Holdco, LLC (“Management Holdco”) owns 100% of AIM. We, through Ashford LLC, own 100% of Management Holdco. AIM Performance Holdco, LP (“Performance Holdco”) owns 99.99% of AIM GP with the remaining 0.01% general partner interest owned by our wholly-owned subsidiary, AIM General Partner, LLC. We, through Ashford LLC and our 100% ownership interest in AIM General Partner, LLC, own approximately 60% of Performance Holdco, and Mr. Monty J. Bennett, our chief executive officerChairman and chairman of our board of directors, and Mr. J. Robison Hays, III, our chief strategy officer and a member of our board of directors, own, in the aggregate, 40% of Performance Holdco. AIM, AIM GP, Management Holdco, Performance Holdco and AIM General Partner, LLC are all consolidated by Ashford Inc. as it has control.
During the first quarter of 2017, AIM served as investment advisor to Ashford Quantitative Alternative Master Fund, L.P. (the “AQUA Master Fund”), an investment partnership formed under the laws of the Cayman Islands and commenced operations on January 15, 2015. The Master Fund was organized for the purpose of purchasing, selling (including short sales), investing and trading in investments and engaging in financial transactions, including borrowing, financing, pledging, hedging and other derivative transactions. The Master Fund had one limited partner: Ashford Quantitative Alternatives (U.S.), LP (the “AQUA U.S. Fund”), a U.S. investment limited partnership. The AQUA U.S. Fund invested substantially all of its assets in the Master Fund. The Master Fund was managed by AIM GP and AIM. The AQUA Master FundChief Executive Officer and the AQUA U.S. Fund are collectively knownChairman 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. The transaction was accounted for as an asset acquisition. See note 19.
On March 17, 2023, RED Hospitality & Leisure LLC (“RED”) acquired certain privately held entities and assets associated with the “AQUA Fund.”
AIM was entitledAlii Nui and Maui Dive Shop (“Alii Nui”), which provides luxury sailing and watersports experiences in Maui, Hawaii, for a total purchase price of $11.0 million, excluding working capital adjustments. The purchase price consisted of $8.0 million in cash, subject to receive an investment management fee equal to 1.5% to 2.0%certain adjustments, $1.0 million of the beginning quarterly capital account balancecontingent consideration and 80,000 Preferred Units issued by RED (the “RED Units”) issued at $25 per unit for a total liquidation value of certain limited partners. AIM GP served as the general partner to the AQUA U.S. Fund and the AQUA Master Fund. As such, it was entitled to receive a performance allocation, which was earned annually and equaled 15% to 20% of positive

$2.0 million. See note 4.
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changes in the capital account balance of certain of its limited partners. Ashford Trust and other limited partners were not obligated to pay any portion of the management fee or the performance allocation to AIM or AIM GP, as applicable, but do share pro rata in all other applicable expenses.
On March 7,24, 2023, Inspire Event Technologies Holdings, LLC (“INSPIRE”) amended its credit agreement dated as of November 1, 2017 AIM GP,(the “INSPIRE Amendment”). The INSPIRE Amendment increased the general partnermaximum borrowing capacity under INSPIRE’s revolving credit facility (the “Revolving Note”) from $3.0 million to $6.0 million, provides for a $20.0 million senior secured term loan (“Term Note”) and an equipment note (“Equipment Note” and together with the Revolving Note and the Term Note, the “Notes”) 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. See note 8.
On May 15, 2023, the Company and Computershare Trust Company, N.A., a federally chartered trust company (the “Rights Agent”) entered into Amendment No. 1 (“Amendment No. 1”) to the Rights Agreement dated as of August 30, 2022 (the “Rights Agreement”). Our board of directors implemented the rights plan by declaring (i) a dividend to the holders of the AQUA U.S. Fund, provided written noticeCompany’s common stock of one preferred share purchase right (a “Right”) for each share of common stock and (ii) a dividend to the AQUA U.S. Fund's limited partners of its election to dissolve the AQUA U.S. Fund pursuant to Section 6.1(a)holders of the Second Amended and Restated Limited Partnership AgreementCompany’s Series D Convertible Preferred Stock of one Right in respect of each share of the AQUA U.S. FundCompany’s common stock issuable upon conversion of the Series D Convertible Preferred Stock. The dividends were distributed on September 9, 2022, to our stockholders of record on that date. Each of those Rights become exercisable on the date on which the Rights separate and begin trading separately from our common stock and entitles the registered holder to purchase from the Company one one-thousandth of a share of our Series F Preferred Stock, par value $0.001 per share (“Series F Preferred Stock”), at a price of $275 per one one-thousandth of a share of our Series F Preferred Stock represented by such Right, subject to adjustment. Pursuant to Amendment No. 1, the Rights Agreement was amended to (i) extend the final expiration date with respect to the Company’s Rights until July 30, 2024, and (ii) decrease the beneficial ownership threshold in the definition of an acquiring person from 10% to 7%. The value of the Rights was de minimis.
On August 21, 2023 (the “Investment Date”), the Company invested $2.5 million to acquire 51% of the equity of TSGF L.P., a fund which provides a growth-oriented investment product focused on commercial real estate in the State of Texas. The Company consolidated TSGF L.P. as of March 31, 2017 (the “Dissolution Date”). In connection with the dissolutionInvestment Date as management concluded TSGF L.P. is a variable interest entity (“VIE”) for which the Company is considered the primary beneficiary. Our interests in TSGF L.P. were accounted for as an asset acquisition. The approximately $5.0 million of total assets consolidated on the AQUA U.S. Fund, the AQUA Master Fund was liquidated in accordance with the lawsInvestment Date included an investment of the Cayman Islands. The balance$4.5 million, $274,000 of all limited partners' capital accounts in the AQUA U.S. Fund was distributed to limited partners in cash and thereafter limited partners ceasedcash equivalents and other immaterial assets related to be a limited partner ofworking capital. Subsequent to the AQUA U.S. Fund. As of December 31, 2017, the AQUA U.S. Fund was fully dissolved.
On April 6, 2017, we acquired a 70% interest in Pure Rooms. Pure Rooms’ patented 7-step purification process treats a room’s surfaces, including the air, and removes up to 99% of pollutants. To consummate the acquisition,Investment Date, Ashford Hospitality ServicesSecurities LLC (“AHS”Ashford Securities”), a subsidiary of the Company, raised an additional $4.9 million in capital on behalf of TSGF L.P. through December 31, 2023, which is included in “noncontrolling interests in consolidated entities” in our consolidated balance sheet. Ashford Inc.,Securities has raised $9.7 million of capital in total for TSGF L.P. through December 31, 2023, which comprises $2.5 million from the Company and $7.2 million from other investors. The $7.2 million of capital raised from other investors includes $2.3 million of capital raised by Ashford Securities prior to the Investment Date.
On December 6, 2023, the Company entered into an Amendedadvisory agreement with Stirling and Restated Limited LiabilityStirling’s subsidiary Stirling OP. The term of the advisory agreement with Stirling is one year from the effective date of December 6, 2023 subject to an unlimited number of successive, automatic one-year renewals unless terminated by the Company Agreement (the “LLC Agreement”) with PRE Opco, LLC (“Pure Rooms”),or Stirling’s board of directors. See note 19.
On December 19, 2023, the Company incorporated our insurance subsidiary Warwick, which is licensed by the Texas Department of Insurance. Effective December 19, 2023, Ashford Inc. and Warwick entered into a loss portfolio transfer agreement whereby Ashford Inc. agreed to transfer the existing cash reserves and liabilities for Ashford Trust and Braemar’s general liability and workers’ compensation policies from January 1, 2014 through December 31, 2023 to Warwick pursuant to which AHS becameapprovals obtained from the sole ownerindependent members of the common equity, or Series A Units. In conjunctionboards of directors of Ashford Trust and Braemar. This transaction eliminated in consolidation. On the same date, Ashford Inc. and Remington entered into general liability and workers’ compensation insurance policies, respectively, with Warwick with agreed upon annual premiums of $4.7 million and $6.0 million, respectively, for a coverage period of one year.
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Change in Control
On August 8, 2023, the LLC40% voting cap under the Investor Rights Agreement, AHS contributed $97,000 cash to Pure Rooms as required by the LLC Agreement. Pursuant to the Assetdated November 6, 2019 and Liability Contribution Agreement (the “Contribution Agreement”),entered into by and among Pure Rooms (as contributee)the Company, Mr. Archie Bennett Jr. and PAFR, LLC, the members of PAFR, LLCMr. Monty J. Bennett (the “Bennetts”) and Brault Enterprises, LLC (collectively, the “Sellers”), the Sellers contributed liabilities, net of assets,other holders of the predecessor operating company, Pure Rooms NA, LLC, with a fair value of $532,000 in exchange for certain equity interests in Pure Rooms, including 30% of theCompany’s Series A Units, 100% of the Series B-1 Units, and 50% of the Series B-2 Units. The fair value of the remaining equity consideration included $42,000 of Series A Units, $181,000 of Series B-1 Units, and $202,000 of Series B-2 Units, totaling $425,000. D Convertible Preferred Stock (the “Investor Rights Agreement”), expired.As a result, the Bennetts may now vote their full ownership interests in the Company as they determine at their sole discretion. Upon the expiration of the Contribution Agreement, our equity interest in Pure Rooms was 70%. See note 4 to our consolidated financial statements.
On November 1, 2017, we acquired an 85% controlling interestvoting cap, the Bennetts controlled a majority of the Company’s voting securities, resulting in a privately held company that conductschange of control of the business of J&S Audio Visual in the United States, Mexico, and the Dominican Republic (“J&S”) for approximately $25.5 million. J&S provides an integrated suite of audio visual services including show and event services, hospitality services, creative services and design & integration services to its customers in various venues including hotels and convention centers in the United States, Mexico and the Dominican Republic. See notes 2,4, 13, 14 and 17 to our consolidated financial statements.
On January 16, 2018, the Company closed on the acquisition of certain assets related to RED Hospitality & Leisure LLC ("RED") for $970,000 cash, comprised of a $750,000 deposit paid on December 11, 2017, which is reflected on our consolidated balance sheet as “other assets” as of December 31, 2017, and an additional $220,000 paid on January 16, 2018.Company. The Company owns an 80% interest in RED, a premier provider of watersports activities and other travel and transportation services inelected the U.S. Virgin Islands. See note 22accounting policy option as allowed under Accounting Standards Codification (“ASC”) 805, Business Combinations, to our consolidated financial statements.
The accompanying consolidated financial statements reflect the operations of our asset and investment management business including the AQUA Fund (through March 31, 2017, the date of its dissolution) and entities that we consolidate. Our asset and investment management business provides asset and investment management, accounting and legal servicescontinue to Ashford Trust, Ashford Prime and the AQUA Fund. In this report, the terms the “Company,” “we,” “us” or “our” refers touse Ashford Inc. and all entities included in its consolidated financial statements.’s historical accounting basis rather than apply pushdown accounting.
2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation—The accompanying consolidated financial statements, include the accounts of Ashford Inc., its majority-owned subsidiaries and entities which it controls. All significant inter-companyintercompany accounts and transactions between these entities have been eliminated in these historical consolidated financial statements. The AQUA Funds were investment companies and followed the accounting and reporting guidance in Financial Accounting Standards Boards (“FASB”) Accounting Standards Codification (“ASC”) Topic 946.
A variable interest entityVariable Interest Entity (“VIE”) must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, (ii) an implicit financial responsibility to ensure that a VIE operates as designed, and (iii)(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 December 31, 2023 and December 31, 2022 (in thousands):
December 31, 2023
Ashford
Holdings
OpenKey (3)
Pure
Wellness (4)
TSGF L.P. (5)
Ashford Inc. ownership interest99.49 %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/an/an/a
Redemption value adjustment, year-to-date9 n/an/an/a
Redemption value adjustment, cumulative622 n/an/an/a
Carrying value of noncontrolling interestsn/a(537)(127)7,669 

December 31, 2022
Ashford
Holdings
OpenKey (3)
Pure
Wellness (4)
Ashford Inc. ownership interest99.87 %76.79 %70.00 %
Redeemable noncontrolling interests (1) (2)
0.13 %— %— %
Noncontrolling interests in consolidated entities— %23.21 %30.00 %
100.00 %100.00 %100.00 %
Carrying value of redeemable noncontrolling interests$1,614 n/an/a
Redemption value adjustment, year-to-date32 n/an/a
Redemption value adjustment, cumulative613 n/an/a
Carrying value of noncontrolling interestsn/a273 (106)
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Noncontrolling Interests—The following tables present information about our noncontrolling interests, including those related to consolidated VIEs, as of December 31, 2017 and 2016 (in thousands):
 December 31, 2017
 
Ashford
LLC (2)
 
J&S (4)
 
Pure Rooms (5)
 
OpenKey(6)
Ashford Inc. ownership interest99.80% 85.00% 70.00% 43.90%
Redeemable noncontrolling interests (1) (3)
0.20% 15.00% —% 39.59%
Noncontrolling interests in consolidated entities—% —% 30.00% 16.51%
 100.00% 100.00% 100.00% 100.00%
        
Carrying value of redeemable noncontrolling interests$385
 $2,522
 $—
 $2,204
Redemption value adjustment, year-to-date224
 —
 —
 1,046
Redemption value adjustment, cumulative358
 —
 —
 2,021
Carrying value of noncontrolling interests—
 439
 205
 128
Assets, available only to settle subsidiary's obligations (7)
n/a
 36,951
 1,865
 1,403
Liabilities, no recourse to Ashford Inc. (8)
n/a
 21,821
 1,652
 889
Notes payable, no recourse to Ashford Inc.n/a
 9,917
 220
 —
Revolving credit facility, no recourse to Ashford Inc.n/a
 814
 100
 —
        
 December 31, 2016
 
Ashford
LLC (2)
 
J&S (4)
 
Pure Rooms (5)
 
OpenKey(6)
Ashford Inc. ownership interest99.80% —% —% 40.06%
Redeemable noncontrolling interests (1) (3)
0.20% —% —% 46.31%
Noncontrolling interests in consolidated entities0
 —% —% 13.63%
 100% —% —% 100%
        
Carrying value of redeemable noncontrolling interests$179
 $—
 $—
 $1,301
Redemption value adjustment, year-to-date(54) —
 —
 1,000
Redemption value adjustment, cumulative134
 —
 —
 975
Carrying value of noncontrolling interests—
 —
 —
 96
Assets, available only to settle subsidiary's obligations (7)
n/a
 —
 —
 960
Liabilities, no recourse to Ashford Inc. (8)
n/a
 —
 —
 256
________
(1)Redeemable noncontrolling interests are included in the “mezzanine” section of our consolidated balance sheets as they may be redeemed by the holder for cash or registered shares in certain circumstances outside of the Company’s control. The carrying value of the noncontrolling interests is based on the greater of the accumulated historical cost or the redemption value, which is generally fair value.
(2) Represents the 0.2% interest in Ashford LLC prior to the legal restructuring of our organizational structure on April 6, 2017 and 0.2% interest in Ashford Holdings thereafter.
(3)Redeemable noncontrolling interests in Ashford Hospitality Holdings LLC (“Ashford Holdings”) represent the members’ proportionate share of equity in earnings/losses of Ashford Holdings or Ashford LLC as applicable and netHoldings. Net income/loss attributable to the common unit holders is allocated based on the weighted average ownership percentage of thesethe members’ interest.
(4) Represents ownership interests in J&S, which we consolidate under the voting interest model. J&S provides audio visual products and services in the hospitality industry. See also notes 1, 13, 14, and 22.
(5) Represents ownership interests in Pure Rooms, a VIE for which we are considered the primary beneficiary and therefore we consolidate it. Pure Rooms provides “allergy friendly” premium rooms in the hospitality industry. See also notes 1, 13, 14, and 22.

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(6)(3)    Represents ownership interests in OpenKey, Inc. (“OpenKey”), a VIE for which we are considered the primary beneficiary and therefore we consolidate it. OpenKey is a hospitality focusedhospitality-focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms. See also notes 1, 13, 14, and 22.
(7) Total assets primarily consisted of cash and cash equivalents and other assets that can only be used to settle the subsidiaries obligations.
(8) Liabilities consist primarily of accounts payable and accrued expenses for which creditors do not have recourse to Ashford Inc.
In addition to the consolidated entity information above, noncontrolling interests in consolidated entities included noncontrolling(4)    Represents ownership interests in Performance Holdco and AQUA of 40% and 0% as of December 31, 2017, respectively, and 40% and 100% as of December 31, 2016, respectively. As of December 31, 2017 and December 31, 2016, the AQUA Fund held approximately $0 and $52.8 million, respectively, of total assets consisting primarily of investments in securities, cash and cash equivalents and receivables that can only be used to settle the obligations of the AQUA Fund. Additionally, as of December 31, 2017 and December 31, 2016, the AQUA Fund had liabilities of $0 and $93,000, respectively, consisting primarily of liabilities associated with investments in securitiesPRE Opco, LLC (“Pure Wellness”), a VIE for which creditors do not have recourse to Ashford Inc. The AQUA Fund waswe are considered to bethe primary beneficiary and therefore we consolidate it. Pure Wellness provides hypoallergenic premium rooms in the hospitality and commercial office industry. See note 14.
(5)    Represents ownership interests in TSGF L.P. a VIE as defined by authoritative accounting guidance. All major decisions related tofor which we are considered the AQUA Fund that most significantly impacted its economic performance, including but not limited to admittance of limited partnersprimary beneficiary and purchasing, selling (including short sales), investing and tradingtherefore we consolidate it.
Investments—We hold “investments in investments and engagingunconsolidated entities” in financial transactions, including borrowing, financing, pledging, hedging and other derivative transactions were subject to the approval of our wholly-owned subsidiary, AIM GP. As such, we consolidated the AQUA Fund. On March 7, 2017, AIM GP, the general partner of the AQUA U.S. Fund, provided written notice to the AQUA U.S. Fund's limited partners of its election to dissolve the AQUA U.S. Fund pursuant to Section 6.1(a) of the Second Amended and Restated Limited Partnership Agreement of the AQUA U.S. Fund as of March 31, 2017 (the “Dissolution Date”). In connection with the dissolution of the AQUA U.S. Fund, the AQUA Master Fund was liquidated in accordance with the laws of the Cayman Islands. The balance of all limited partners' capital accounts in the AQUA U.S. Fund was distributed to limited partners in cash, and thereafter limited partners ceased to be a limited partner of the AQUA U.S. Fund. As of December 31, 2017, the AQUA U.S. Fund was fully dissolved.
Unconsolidated VIEs—Our investments in certain unconsolidated entitiessheets, which are considered to be variable interests or voting interests in the underlying entities. BecauseCertain 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 havecontrol more than 50% of the power and financial responsibility to direct the unconsolidated entities’ activities and operations, we are not considered to be the primary beneficiary of these entities on an ongoing basis and therefore such entities should not be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions.voting interests. We review theour equity method investments in unconsolidated entities for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. AnyNo such impairment was recorded during the years ended December 31, 2023, 2022 and 2021.
Our subsidiary TSGF L.P. is recordedaccounted for as an investment company in equityaccordance with accounting principles generally accepted in earnings/lossthe United States of America (“GAAP”) under Financial Accounting Standards Board (“FASB”) ASC 946. TSGF L.P.’s investment is reflected in unconsolidated entities.“investments” in our 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 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). The fair value of TSGF L.P.’s investment as of December 31, 2023 was $5.0 million. See note 11.
We heldadditionally hold an investment in an unconsolidated variable interest entity with a carrying value of $500,000 at both December 31, 20172023 and 2016, which weDecember 31, 2022. We account for under the cost method of accountinginvestment at fair value based on recent observable transactions as we do not exercise significant influence over the entity. No impairmentequity in earnings (loss) of unconsolidated entities due to a change in fair value of the investment was recordedrecognized during the years ended December 31, 2017, 20162023, 2022 and 2015.2021. 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.
Additionally, as of December 31, 2015, we held a first loss limited liability company interest (the "Interest") in an unconsolidated limited liability company (the "Fund"). The Fund was a private investment fund which generally invested its assets in one or more securities trading accounts that were managed by external investment advisors, including our subsidiary, Ashford Investment Management, LLC. Our initial investment in Real Estate Advisory Holdings LLC (“REA Holdings”) is accounted for under the Fund was made in May 2015 in the amount of $5.0 million, which represented an approximate 2% ownership interest in the Fund. In accordance with the Fund's limited liability company agreement, a manager not affiliated with us possessed and exercised the full, complete and exclusive right, power and authority to manage and conduct the business and affairs of the Fund, subject only to certain withdrawal and voting rightsequity method as we had and the requirements of applicable law. Due to our limited rights, we did not exercisehave significant influence over the Fundvoting interest entity. We have an option to acquire an additional 50% of the ownership interests in REA Holdings for $12.5 million beginning on January 1, 2022, which expires 30 business days following the issuance of the Company’s fiscal year 2023 financial statements.
The following table summarizes our carrying value and therefore did not accountownership interest in REA Holdings (in thousands):
December 31, 2023December 31, 2022
Carrying value of the investment in REA Holdings$2,370 $3,067 
Ownership interest in REA Holdings30 %30 %
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The following table summarizes our equity in earnings (loss) in REA Holdings (in thousands):
Year Ended December 31,
202320222021
Equity in earnings (loss) in unconsolidated entities REA Holdings$(697)$385 $13 
The Company additionally holds various investments which are individually immaterial that are accounted for the Interest under the equity method. As of December 31, 2023 and 2022, the combined carrying value of these equity method of accounting. The Fundinvestments was in an investment company (as defined by GAAP) for which the Interests do not have a readily determinable value. Instead, the manager of the Fund calculated a net asset value (“NAV”) for the Interests monthly in accordance with applicable authoritative accounting guidance. Changes in the NAV were recorded in unrealized gain/loss in investment in unconsolidated entity. We requested redemption of the Interest effective March 29, 2016. The redeemed amount of $1.4 million was received during the second quarter of 2016, which reduced our carrying value to $0.and $650,000.
Acquisitions—We account for acquisitions and investments in businesses as business combinations if the target meets the definition of a business and (a) the target is a VIE and we are the target'starget’s primary beneficiary, and therefore we must consolidate its financial statements, or (b) we acquire more than 50% of the voting interest of the target and it was not previously consolidated. We record business combinations using the acquisition method of accounting, which requires all of the assets acquired and liabilities assumed to be recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of

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the net tangible and intangible assets acquired is recorded as goodwill. The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Significant assumptions and estimates include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset, if applicable.capital. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in theour consolidated financial statements may be exposed to potential impairment of the intangible assets and goodwill.
If our investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalizing transaction costs, and does not result in the recognition of goodwill.
Use of Estimates—The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United StatesGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenuerevenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents—Cash and cash equivalents include cash on hand or held in banks and short-term investments with an initial maturity of three months or less at the date of purchase.
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Restricted Cash—Restricted cash represents reserves for casualty insurance claims andwas comprised of the associated ancillary costs. At the beginning of each year, following (in thousands):
December 31, 2023December 31, 2022
Advisory:
Insurance claim reserves (1)
$18,947 $23,471 
Remington:
Managed hotel properties’ reserves (2)
2,508 11,464 
Insurance claim reserves (3)
1,761 2,123 
Total Remington restricted cash4,269 13,587 
Total restricted cash$23,216 $37,058 
________
(1)    Ashford Inc.’s Risk Management department collects funds from the Ashford Trust/PrimeTrust and Braemar properties and their respective management companies ofin an amount equal to the actuarial forecast of that year’s expected casualty claims and associated fees. These funds arewere deposited into restricted cash and used to pay casualty claims throughout the year as they arewere incurred. The offsetclaim liability related to the restricted cash amountsbalance is included in “claims liabilities and other” in our 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 from Braemar” and “due to/from affiliates” in our 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 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 liabilities. We early adopted Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash effective January 1, 2017. See discussionsubsidiaries to cover employee health insurance claims. The liability related to this restricted cash balance is included in “Recently Adopted Accounting Standards” below.“claims liabilities and other” in our consolidated balance sheets.
Accounts Receivable—Accounts receivable consists primarily of receivables from customers of audio visual services.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 recordedmaintained at a level adequate to absorb estimated receivable losses. The estimate is based on management’s judgment regardingpast receivable loss experience, known and inherent credit risks, current economic conditions and other relevant factors, including specific reserves for certain accounts. As of December 31, 2023 and 2022, the allowance for doubtful accounts was $2.1 million and $175,000, respectively. The net increase of $1.9 million in our abilityallowance for doubtful accounts is primarily related to collect as well as the agecertain third-party contracts with Remington and driven by an increase in provisions for estimated losses of $2.0 million offset by write-offs of $100,000.
Notes Receivable—Notes receivable were comprised of the receivables. Accountsfollowing (in thousands):
December 31, 2023December 31, 2022
Remington note receivable (1)
$525 $1,506 
Ashford LLC note receivable (2)
1,082 535 
REA Holdings affiliate (3)
845 — 
Other245 — 
Total notes receivable$2,697 $2,041 
________
(1)    Remington holds a note receivable are written off when they are deemed uncollectible.from a third party which matures on January 31, 2024. The interest rate on the note receivable is 10% per annum with payments of interest payable quarterly commencing March 31, 2023. As of December 31, 2023 and December 31, 2022, the outstanding principal balance is included in “prepaid expenses and other” and “other assets, net,” respectively, in our 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 consolidated balance sheet.
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(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 consolidated balance sheet.
Inventories—Inventories consist primarily of INSPIRE’s audio visual equipment and related accessories and RED’s retail merchandise, beverages and boat equipment. Inventories are carried at the lower of cost or marketnet realizable value using the first-in, first-out ("FIFO"(“FIFO”) valuation method.
Furniture, FixturesProperty and Equipment, netNet—We record furniture, fixturesProperty and equipment, at cost. We also capitalize certain costs incurred related to the development of internal use software. We capitalize costs incurred during the application development stage related to the development of internal use software. We expense costs incurred related to the planning and post-implementation phases of development as incurred. Assets areincluding assets acquired under finance leases, is depreciated using the straight-line method over the estimated useful lives of the assets.or lease terms if shorter.
Impairment of Furniture, FixturesProperty and Equipment—Furniture, fixturesProperty and equipment are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the asset is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the asset. If our analysis indicates that the carrying value of the asset is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the asset net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating impairment of assets, we make many assumptions and estimates, including projected cash flows, expected holding period, and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. Assets not yet placed into service are also reviewed for impairment whenever events or changes in circumstances indicate that all or a portion of the assets will not be placed into service. We recordedNo impairment charges of $1.1 million forrelated to property and equipment were recorded in the yearyears ended December 31, 2017 offset by recognition of deferred income from reimbursable expenses related to capitalized software implementation costs. The impairment was recognized2023, 2022 and 2021.

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upon determination that a portion of the software will not be placed into service. See note 17 to our consolidated financial statements. No impairment charges were recorded for furniture, fixtures and equipment for the year ended December 31, 2016.
Goodwill and Indefinite-Lived Intangible Assets—Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date. Indefinite-lived intangible assets primarily include trademark rights resulting from our acquisition of J&S.Remington, INSPIRE and RED. We assess goodwill and indefinite-lived intangible assets, neither of which is amortized, for impairment annually as of October 1, or more frequently, if events and circumstances indicate impairment may have occurred. In the evaluation of goodwill for impairment, we may elect to perform a qualitative assessment to determine whether the fair value of the goodwill is more likely than not impaired. In considering the qualitative approach, we evaluate factors including, but not limited to, the operational stability and the overall financial performance of the reporting units. We may choose to bypass the qualitative assessment and perform a quantitative assessment and compare the fair value of the reporting unit to the carrying value and, if applicable, record an impairment charge based on the excess of the reporting unit’s carrying amount over its fair value. IfWe determine the carryingfair value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and we proceed to step twobased on a blended analysis of the impairment analysis. In step two ofincome approach and the analysis, we will record an impairment loss equal to the excess of the carryingmarket value of the reporting unit’s goodwill over its implied fair value should such a circumstance arise. We determine fair value based on discounted projected future operating cash flows using a discount rate that is commensurate with the risk inherent in our current business model. We determined that there was no goodwill impairment during our annual test as the fair value of our reporting units was in excess of the carrying values primarily due to the recency of the Pure Rooms and J&S acquisitions.approach. We base our measurement of fair value of trademarks using the relief-from-royalty method. This method assumes that the trade name and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. NoManagement elected to perform a quantitative assessment for the Company’s current year annual impairment test. Based on the results of our annual impairment assessment, no impairment of goodwill or indefinite-lived intangible assets was indicated as of October 1, 2023. Additionally, no indicators of impairment were identified duringfrom the date of our annual test or as ofimpairment assessment through December 31, 2017.2023.
Definite-Lived Intangible Assets—Definite-lived intangible assets primarily include management contracts, customer relationships and boat slip rights resulting from our acquisitionacquisitions. The Remington and Premier management contracts are not amortized on a straight-line basis, rather the assets are amortized in a manner that approximates the pattern of J&Sthe assets’ economic benefit to the Company over an estimated useful life of eight to 30 years, respectively. The INSPIRE, RED and Pure Rooms. TheseWellness assets are amortized using the straight-line method over the estimated useful lives of the assets. We review the carrying amount of the assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount is not recoverable, we record an impairment charge for the excess of the carrying amount over the fair value. No indicators of impairment were identified as of December 31, 2017.
Revenue Recognition—Revenues primarily consist of advisory and investment management fees and expense reimbursements that are recognized when services have been rendered. Advisory fees consist of base fees and incentive fees. For Ashford Trust, the quarterly base fee ranges from 0.70% to 0.50% per annum of the total market capitalization ranges from less than $6.0 billion to greater than $10.0 billion total market capitalization plus the Key Money Asset Management Fee, as defined in the respective advisory agreement, subject to certain minimums. Similarly, the Ashford Prime base fee is fixed at 0.70% of Ashford Prime’s total market capitalization plus the Key Money Asset Management Fee, as defined in the respective advisory agreement, subject to certain minimums. Reimbursements for overhead, travel expenses, risk management and internal audit services are recognized when services have been rendered. We also record advisory revenue for equity grants of Ashford Trust and Ashford Prime common stock and Long-Term Incentive Plan (“LTIP”) units awarded to our officers and employees in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period, as well an offsetting expense in an equal amount included in “salaries and benefits.” Incentive advisory fees are measured annually in each year that Ashford Trust’s and/or Ashford Prime’s annual total stockholder return exceeds the average annual total stockholder return for each company’s respective peer group, subject to the FCCR Condition, as defined in the advisory agreements. Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition. Accordingly, incentive advisory fee revenue is recognized only when the amount earned is fixed and determinable and the FCCR Condition has been met. As incentive advisory fees are measured annually, we recognize revenue quarterly based on the amount that would be due pursuant to the applicable advisory agreement as of the interim balance sheet date in accordance with the authoritative accounting guidance. Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our wholly-owned subsidiary, and are recognized based on a stated percentage of the loan amount when services have been rendered.
Audio visual revenue primarily consists of revenue generated by providing event technology services such as audio visual services, audio visual equipment rental, staging and meeting services and event-related communication systems as well as related technical support, to our customers in various venues including hotels and convention centers. We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered, the fee is fixed or determinable and collectability is reasonably assured. Revenue is recognized in the period in which services are provided pursuant to the terms of the contractual arrangements with our customers. We also evaluate whether it is appropriate to present (i) the gross amount that our customers pay for our services as revenue, and the related commissions paid to the venue as cost of revenue, or (ii) the net amount (gross revenue less the related commissions paid to the venue) as revenue. We are responsible for the delivery of the services, including providing the necessary labor and equipment to perform the services. We are subject to inventory risk, have latitude in establishing prices and selecting suppliers and, while in many cases the venue bills the end customeradditional information on our behalf, we bear the risk of collection from the customer. The venues’ commissions are not dependent on collections. As a result, our revenue is primarily reported on a gross basis. Cost of revenues for audio visual principally includes commissions paid to venues, direct labor costs, the cost of equipment sub-rentals, depreciation of rental pool equipment, amortization of signing bonuses, as well as other costs such as

definite-lived intangible assets, see note 7.
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supplies, freight, travelClaims Liabilities and Other—As of December 31, 2023 and 2022, claims liabilities and other overhead from our venue and customer facing operations and any losses on equipment disposal. Rental pool equipment for our audio visual services is depreciated over an estimated useful life of 5 years.
Certain of our consolidated entities enter into multiple element arrangements with customers. For such arrangements, we determine whether each of the individual deliverablesincluded reserves in the arrangement qualify as a separate unit of accounting, which requires that the deliverable have standalone value upon delivery. We allocate arrangement consideration to the separate units of accounting using the relative selling price method, in which allocation of consideration is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”), or if VSOE and TPE are not available, management’s best estimate of a standalone selling price for the units of accounting. We limit the amount of arrangement$26.8 million and $23.5 million for Warwick and Ashford LLC’s liabilities, respectively, 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 consolidated statements of operations.
As of December 31, 2023 and 2022, claims liabilities and other additionally included $1.7 million and $2.2 million, respectively, relating to reserves for Remington health insurance claims. As of December 31, 2023, claims liabilities and other also included the current portion of the contingent consideration to amounts that are fixed or determinable. The arrangementliabilities of $1.3 million and $1.3 million from the Company’s acquisitions of Alii Nui and Chesapeake Hospitality (“Chesapeake”), respectively. See notes 4 and 11.
Other Liabilities—As of December 31, 2023 and 2022, other liabilities included the noncurrent portion of the contingent consideration is recognized as revenue asliability of $1.6 million and $2.3 million from the deliverables are provided to the customer, which is either up front for deliverables that have standalone value upon delivery, or ratably over the periodCompany’s acquisition of delivery.Chesapeake, respectively. See notes 4 and 11. As of December 31, 2023 and 2022 other liabilities also included an uncertain tax position liability of $978,000 and $917,000, respectively.
Salaries and Benefits—Salaries and benefits are expensed as incurred.incurred and include salaries and benefit related expenses for our officers and employees. Salaries and benefits also includes expense for equity grants of Ashford Trust and Ashford Primethe Company’s common stock and LTIP units awarded to our officers and employees in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period. There is an offsetting amount, included in “advisory services” revenue. Salaries and benefits also includes changes in fair value in the deferred compensation plan liability. See further discussion in notes 216 and 16 to our consolidated financial statements.17.
General and Administrative—General and administrative costs are expensed as incurred, and include advertising costs of $126,000, $0$2.8 million, $1.8 million and $0$1.5 million for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively.
Depreciation and Amortization—Our furniture, fixturesproperty and equipment, including assets acquired under finance leases, are depreciated on a straight-line basis over the estimated useful lives of the assets.assets with useful lives ranging from 2 to 20 years. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the related assets. FurnitureProperty and equipment, excluding our RED vessels, are depreciated using the straight-line method over lives ranging from 32 to 7.5 years and computer software placed into service is amortized on10 years. Our RED vessels are depreciated using the straight-line method over a straight-line basis over estimated useful lives ranging from 3 to 5life of 20 years. While we believe our estimates are reasonable, a change in estimated useful lives could affect depreciation expense and net income/loss as well as resulting gains or losses on potential sales. Definite-lived intangible assets, which include customer relationships resulting fromSee also the “Definite-Lived Intangible Assets” above.
Equity-Based Compensation—Our equity incentive plan provides for the grant of restricted or unrestricted shares of our acquisitions of J&Scommon stock, share appreciation rights, performance shares, performance units and Pure Rooms, are amortized using the straight-line method over the estimated useful livesother equity-based awards or any combination of the assets. See note 4 to our consolidated financial statements.
Equity-Based Compensation—foregoing. Equity-based compensation included in “salaries and benefits” is accounted for at fair value based on the market price of the shares/options on the date of grant in accordance with applicable authoritative accounting guidance. The fair value is charged to compensation expense on a straight-line basis over the vesting period of the shares/options. Grants of restricted stock to independent directors are recorded at fair value based on the market price of our shares at grant date, and this amount is fully expensed in general“general and administrativeadministrative” expense as the grants of stock are fully vested on the date of grant. In connection with providing advisory services, ourThe Company accounts for forfeitures when they occur. Our officers and employees arecan be granted common stock and LTIP units from Ashford Trust and Ashford Prime, whichBraemar in connection with providing advisory services that result in expense, included in “reimbursed expenses,” equal to the grant date fair value of the award included in “salaries and benefits” in proportion to the requisite service period satisfied during the period, as well as offsetting revenue in an equal amount included in “advisory services” revenue.“cost reimbursement revenue”.
Other Comprehensive Income (Loss)—Comprehensive income for the year ended December 31, 2017 consists of net income and(loss), foreign currency translation adjustments.adjustments and unrealized gain (loss) on restricted investments. The foreign currency translation adjustment represents the unrealized impact of translating the financial statements of the J&SINSPIRE operations in Mexico and the Dominican Republic and Remington’s operations in Costa Rica from their respective functional currencies to U.S. dollars. This amount is not included in net income and would only be realized upon the sale or upon complete or substantially complete liquidation of the foreign businesses. The accumulated other comprehensive lossincome (loss) is presented on our consolidated balance sheets as of December 31, 2023 and 2022.
Due to/from Ashford Trust—Due to/from Ashford Trust represents current receivables related to advisory services fees, incentive fees, reimbursable expenses and business expenses and payables owed by our products and services businesses to Ashford Trust which are presented net on the consolidated balance sheet as of December 31, 2017. There were no sources of other comprehensive income (loss) in the years ended December 31, 2016 and 2015.
sheet. Due to Affiliates—Due to affiliates represents current payables resulting to/from general and administrative expense, furniture, fixtures and equipment reimbursements, and contingent consideration. Due to affiliatesAshford Trust is generally settled within
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a period not exceeding one year.year and is presented as a current asset or current liability based upon the period’s ending net balance.
Due to/from Ashford Trust OPBraemar—Due to/from Ashford Trust OPBraemar represents current receivables related to advisory services fees, incentive fees, reimbursable expenses and service business expenses.expenses and payables owed by our products and services businesses to Braemar which are presented net on the consolidated balance sheet. Due to/from Ashford Trust OPBraemar is generally settled within a period not exceeding one year.year and is presented as a current asset or current liability based upon the period’s ending net balance.
Due from Ashford Prime OP—Due from Ashford Prime OP represents current receivables related to advisory services fees, incentive fees, reimbursable expenses and service business expenses. Due from Ashford Prime OP is generally settled within a period not exceeding one year.

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Income (Loss) Per Share—Basic income (loss) per common share is calculated by dividing net income (loss) attributable to the Companycommon stockholders by the weighted average common shares outstanding during the period using the two-class method prescribed by applicable authoritative accounting guidance. Diluted income (loss) per common share is calculated using the two-class method, or the treasury stock method, if more dilutive. Diluted income (loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, whereby such exercise or conversion would result in lower income per share. See note 18.20.
Deferred Compensation PlanLeases—Effective January 1, 2008, Ashford Trust establishedWe determine if an arrangement is a nonqualified deferred compensation plan (“DCP”) for certain executive officers, which was assumed bylease at the Company in connection with the separation from Ashford Trust. The plan allows participants to defer up to 100% of their base salary and bonus and select an investment fund for measurementinception of the deferred compensation obligation. In connection with our spin-offcontract. Lease right of use (“ROU”) assets and lease liabilities are recognized based on the assumptionpresent value of the DCP obligation byfuture minimum lease payments over the Company,lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the DCP was modifiedinformation available at the commencement date in determining the present value of future payments. Our lease terms may include options to giveextend or terminate the participants various investment options, including Ashford Inc. common stock,lease when it is reasonably certain that we will exercise that option. Lease expense for measurement that can be changed byminimum lease payments related to operating leases is recognized on a straight-line basis over the participant at any time. These modifications resulted inlease term. Lease expense for minimum lease payments related to financing leases is recognized using the DCP obligation beingeffective interest method over the lease term. Short-term leases (less than twelve months) are not recorded ason the balance sheet; we recognize lease expense for these leases on a liability in accordance withstraight-line basis over the applicable authoritative accounting guidance. Distributions underlease term. Additionally, we elected the DCP are made in cash, unlesspractical expedient relieving us from the participant has elected Ashford Inc. common stock asrequirement to separate the investment option, in which case any such distributions would be made in Ashford Inc. common stock. Additionally,lease and non-lease components on the DCP obligation is carried at fair value with changes in fair value reflected in salaries and benefits in our consolidated statements of operations.balance sheet across all existing asset classes. See note 16.9.
Income Taxes—We are a taxable corporation for federal and state income tax purposes. Income tax expense includes U.S. federal and state income taxes, and beginning in 2017 Mexico and Dominican Republic income taxes 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 theour consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. At December 31, 2017, we recorded a valuation allowance of $25.1 million to fully reserve our net deferred tax assets. At December 31, 2016, we recorded a valuation allowance of $6.1 million to partially reserve our net deferred tax assets. We have provided these allowances primarily because of operating losses incurred for each of the years for the three year period ending December 31, 2017. The losses represent significant negative evidence regarding the realizability of our deferred tax assets. Further, our legal entity restructuring on April 6, 2017 and the Tax Cuts and Jobs Act enacted on December 22, 2017 eliminated our ability to carry back future net operating losses against taxable income from prior periods, which is additional negative evidence regarding the reliability of our deferred tax assets.
TheASC 740 “Income Taxes” topic of the FASB’s Accounting Standards Codification addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance requires us to determine whether tax positions we have taken or expect to take in a tax return are more likely than not to be sustained upon examination by the appropriate taxing authority based on the technical merits of the positions. Tax positions that do not meet the more likely than not threshold would be recorded as additional tax expense in the current period. We analyze all open tax years, as defined by the statute of limitations for each jurisdiction, which includes the federal jurisdiction and various states. We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our subsidiariesportfolio 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 beginning in 2017 in Mexico2023 additionally Aruba, Puerto Rico and the Dominican Republic.Costa Rica. Tax years 20132019 through 20172023 remain subject to potential examination by certain federal and certain state taxing authorities.
Recently Adopted Accounting Standards—In MarchJune 2016, the FASB issued ASU 2016-07, Simplifying2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 sets forth an “expected credit loss” impairment model to replace the Transition to the Equity Methodcurrent “incurred loss” method of Accounting (“ASU 2016-07”).recognizing credit losses. The new standard requires an investormeasurement and recognition of expected credit losses for most financial assets held.In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”). ASU 2019-10 revised the mandatory adoption date for public business entities that meet the definition of a smaller reporting company to apply the equity method of accounting only from the date it qualifies for that method, i.e., the date the investor obtains significant influence over the operating and financial policies of an investee. ASU 2016-07 eliminates the previous requirement to retroactively adjust the investment and record a cumulative catch up for the periods that the investment had been held, but did not qualify for the equity method of accounting. ASU 2016-07 isbe effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. The amendments should be applied prospectively upon their2022. We adopted ASU 2016-13 and ASU 2019-10 effective date to increases inJanuary 1, 2023 and the level of ownership interest or degree of influence that result in the adoption of the equity method. Early adoption is permitted. The adoption of ASU 2016-07 did not have a material impact on our consolidated financial statements orand related disclosures.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) as part of the FASB simplification initiative. The new standard requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit on the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period. ASU 2016-09 also requires excess tax benefits to be classified along with

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other income tax cash flows as an operating activity in the statement of cash flows. In addition, ASU 2016-09 increases the tax withholding requirements threshold to qualify for equity classification. ASU 2016-09 also clarifies that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. ASU 2016-09 provides an optional accounting policy election to be applied on an entity-wide basis to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We have adopted this standard effective January 1, 2017, and the adoption of this standard did not have a material impact on our financial position, results of operations or cash flows.
In November 2016,March 2020, the FASB issued ASU 2016-18, Statement of Cash Flows2020-04, Reference Rate Reform (Topic 230): Restricted Cash848) (“ASU 2016-18”2020-04”), which clarifiesprovides optional guidance through December 31, 2022 to ease the presentationpotential burden in accounting for, or recognizing the effects of, restricted cashreference rate reform on financial reporting. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which further clarified the scope of the reference rate reform optional practical expedients and restricted cash equivalentsexceptions outlined in Topic 848. The amendments in ASU Nos. 2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the statementsmeasurement of cash flows. Underhedge effectiveness in hedging relationships that have been modified to replace a reference rate. In December 2022, the FASB issued ASU 2016-18 restricted cash2022-06, Reference Rate Reform (Topic 848) (“ASU 2022-06”), which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The Company applied the optional expedient in evaluating debt modifications converting from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”). The Company adopted the standards upon the respective effective dates. There was no material impact as a result of this adoption.
Recently Issued Accounting Standards—In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and restricted cash equivalents are includedOther 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 cashcharacteristics 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 equivalentsconversion 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 reconciling the beginning-of-period and end-of-period total amounts shown on the statements ofan instrument may be settled in cash flows.or shares. For smaller reporting companies, ASU 2016-182020-06 is effective for fiscal years beginning after December 15, 2017, and2023, 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.
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 Update 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. We adoptedA public entity should apply the amendments in this standard effective January 1, 2017 on a retrospective basis.ASU retrospectively to all prior periods presented in the financial statements. The Company continues to evaluate the level of impact the adoption of this standard resulted in the inclusion of restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shownASU 2023-07 will have on the consolidated statements of cash flows for all periods presented. As a result, net cash provided by operating activities increased $4.1 million in the year ended December 31, 2016 and $2.3 million for the year ended December 31, 2015. Our beginning-of-period cash, cash equivalents and restricted cash increased $9.8 million and $5.7 million in 2017 and 2016, respectively.Company’s financial statements.
Recently Issued Accounting Standards—In May 2014,November 2023, the FASB issued ASU 2014-09, Revenue from Contracts with Customers2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2014-09”2023-09”). The ASU 2014-09requires 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 comprehensive new revenue recognition model, which requires a companyprospective basis. Retrospective application is permitted. The Company continues to recognize revenue to depictevaluate the transferlevel of impact the adoption of ASU 2023-09 will have on the Company’s financial statements.
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3. Revenues
Revenue Recognition—Revenues are recognized when control of the promised goods or services is transferred to a customerour customers, in an amount that reflects the consideration the company expectswe expect to receivebe entitled to in exchange for those goods or services. An entity is required to (a) identify
We determine revenue recognition through the contract(s)following steps:
•Identification of the contract, or contracts, with a customer (b) identify
•Identification of the performance obligations in the contract (c) determine
•Determination of the transaction price (d) allocate
•Allocation of the transaction price to the performance obligations in the contract and (e) recognize
•Recognition of revenue when, (or as) the entity satisfiesor as, we satisfy a performance obligation. obligation
In determining the transaction price, an entity maywe include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.ASU 2014-09 also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. In addition, the new guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The update will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which defers the effective date to fiscal periods beginning after December 15, 2017, including interim periods within that reporting period. The FASB has also issued additional updates that further clarify the requirements of Topic 606 and provide implementation guidance. The standard permits the use of either the full retrospective or cumulative effect (modified retrospective) transition method.
The Company intends to adopt the above standards using the modified retrospective approach for the quarter ending March 31, 2018. Upon adoption of ASU 2014-09, the Company does not expect to record any adjustment to the consolidated financial statementsfollowing provides detailed information on January 1, 2018. However, the Company expects the recognition of incentiveour 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 toand 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 will no longerdoes not record incentive advisory fee revenue in interim periods prior to the fourth quarter of the year in which the incentive fee is measured. There is no impact to ourThe first-year installment of incentive advisory fee revenue recognition on an annual basis.fees will generally be recognized only upon measurement in the fourth quarter of the first year of the three-year period. The Company expects that this could impact its revenues in future interim periods, but we are unable to estimate the impact because futuresecond- and third-year installments of incentive advisory fees are calculated basedrecognized as revenue on future changes ina pro rata basis each quarter subject to meeting the FCCR Condition.
Braemar’s 2022 annual total stockholder return met the relevant incentive fee thresholds during the 2022 measurement period and $268,000 was recognized as incentive advisory fees in each of our REIT clients compared to the years ended 2023 and 2022. Ashford Trust’s annual total stockholder return of their respective peer group. We dodid not expect any material changes in revenue recognition for audio visual, investment management reimbursements, debt placement fees, lease revenue or other services revenue. The Company is inmeet the process of evaluatingrelevant incentive fee thresholds during the disclosure requirements under these standards2023, 2022 and implementing controls to support these new disclosure requirements.
In January 2016,2021 measurement periods. Braemar’s annual total stockholder return did not meet the FASB issued ASU 2016-01, Recognitionrelevant incentive fee thresholds during the 2023 and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by2021 measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price; and (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. ASU 2016-01 provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted

period.
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Hotel Management Fees Revenue
Hotel management fees revenue is reported within our Remington segment and primarily consists of base management fees, 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 certain observable price changes. It also requires a qualitative impairment assessment of such equity investmentsmanaging the hotel employees and amends certain fair value disclosure requirements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Certain provisions of ASU 2016-01 are eligible for early adoption. In February 2018, the FASB issued ASU 2018-03, as technical corrections and improvements to amend and clarify certain aspectsdaily operations of the guidance issuedhotels, pursuant to Remington’s hotel management agreements, subject to a specified floor (which is subject to increase annually based on increases in ASU 2016-01. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018.We do not expect that the above standards will have a material impact on our consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”)consumer price index). The new standard establishesbase 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 right-of-usehotel’s gross operating profit (“ROU”GOP”) model that requires a lessee to record an ROU asset and a lease liability onexceeds the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.hotel’s budgeted GOP. The new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset,incentive fee is equal to the lessee. If risks and rewards are conveyed without the transferlesser of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards1% of each hotel’s annual gross revenue or control, an operating lease results. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases as well as for lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The accounting for leases where we are the lessor remains largely unchanged. While we are currently in the initial stages of assessing the impact ASU 2016-02 will have on our consolidated financial statements, we expect the primary impact to our consolidated financial statements upon adoption will be the recognition, on a discounted basis, of any future minimum rentals due under noncancelable leases on our consolidated balance sheets resulting in the recording of right of use assets and lease obligations.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held.ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. We are currently evaluating the impact that ASU 2016-13 will have on the consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments - a consensus of the Emerging Issues Task Force (“ASU 2016-15”). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Certain issues addressed in this guidance include - Debt payments or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, distributions received from equity method investments and beneficial interests in securitization transactions. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact that ASU 2016-15 will have on our consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether a transaction should be accounted for as an acquisition (or disposal) of an asset or a business. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact that ASU 2017-01 will have on our consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amountrespective hotel’s GOP exceeds the reporting unit’s fair value. However,hotel’s budgeted GOP. The incentive management fee, if any, for each hotel is due annually in arrears within 90 days of the lossend 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 should not exceedmonthly 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 total amount of goodwill allocated to that reporting unit. In addition, ASU 2017-04 clarifies that an entity should consider income tax effectscustomer. Fees from any tax deductible goodwillAshford Trust are payable monthly in arrears based on the carrying amountprior calendar month’s total expenditures. Fees from Braemar are payable monthly as the service is delivered based on the percentage of completion, as reasonably determined by Premier.
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 reporting unit when measuringcontractual arrangements with our customers. Payment is typically due from customers within 30 days. We also evaluate whether it is appropriate to present: (i) the goodwill impairment loss, if applicable. ASU 2017-04 is effectivegross amount that our customers pay for fiscal years beginning after December 15, 2019. Early adoption is permitted for interimour services as revenue, and the related commissions paid to the venue as cost of revenue; or annual goodwill impairment tests performed on testing dates after January 1, 2017.(ii) the net amount (gross revenue less the related commissions paid to the venue) as revenue. We are evaluatingresponsible for the impact that ASU 2017-04 willdelivery 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 consolidated financial statementsbehalf, 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 disclosures.

fees include revenue earned from providing placement, modifications, forbearances or refinancing of certain mortgage debt by our subsidiary, Lismore Capital II LLC (“Lismore”). For certain agreements, the fees are recognized based on a stated percentage of the loan amount when services have been rendered and the subject loan, 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
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3. Furniture, Fixturesgeneral liability and Equipment, net
Furniture, fixturesworkers’ compensation insurance premiums paid to our insurance subsidiary, Warwick. Insurance premiums received are initially recorded in the current portion of deferred income in our consolidated balance sheets and equipment, net, consistedrecognized 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 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. Generally, deferred income that will be recognized within the next 12 months is recorded as current deferred income and the remaining portion is recorded as noncurrent. 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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The following table summarizes our consolidated deferred income activity (in thousands):
Deferred Income
20232022
Balance as of January 1$7,800 $10,905 
Increases to deferred income (1)
22,657 11,531 
Recognition of revenue (2)
(12,079)(14,636)
Balance as of December 31$18,378 $7,800 
________
  December 31,
  2017 2016
Rental pool equipment $7,711
 $—
Furniture, fixtures and equipment 7,862
 6,549
Leasehold improvements 804
 537
Computer software 8,626
 7,125
Total cost 25,003
 14,211
Accumulated depreciation (3,849) (2,167)
Furniture, fixtures and equipment, net $21,154
 $12,044
(1)    The year ended December 31, 2023 includes increases of $12.5 million of deferred income from our insurance subsidiary Warwick, primarily for general liability and workers’ compensation policy premiums. Revenue from insurance premiums is recognized ratably over the contractual terms of the respective written policy in “other” revenue in our consolidated statements of operations.
For(2)    Revenue recognized in the year ended December 31, 2023, includes (a) $760,000 of revenue primarily related to our advisory agreements and our Contribution Agreement with Ashford Trust and Braemar, (b) $2.6 million of audio visual revenue, (c) $4.1 million of watersports, ferry and excursion services revenue, (d) $375,000 of premiums earned by Warwick and (e) $4.2 million of revenues earned by our other products and services companies. Revenue recognized in the year ended December 31, 2023 includes $5.5 million which was recorded in deferred income in our consolidated balance sheet as of December 31, 2022.
Revenue recognized in the year ended December 31, 2022 includes (a) $2.4 million of revenue primarily related to our advisory agreements and our Contribution Agreement with Ashford Trust and Braemar, (b) $3.5 million of audio visual revenue, (c) $2.3 million of debt placement revenue related to Ashford Trust’s agreement with Lismore (see note 19), (d) $2.3 million of watersports, ferry and excursion services revenue and (e) $4.1 million of revenues earned by our other products and services companies. Revenue recognized in the year ended December 31, 2022 includes $8.1 million which was recorded in deferred income in our consolidated balance sheet as of December 31, 2021.
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 19. 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 December 31, 2023.
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 $26.1 million, $17.6 million and $7.6 million included in “accounts receivable, net” primarily related to our products and services segment, $18.9 million, $0 and $2.6 million in “due from Ashford Trust,” and $714,000, $11.8 million and $1.1 million included in “due from Braemar” related to advisory services at December 31, 2023, 2022 and 2021, respectively. We had no write-offs related to these receivables during the years ended December 31, 2017, 20162023, 2022 and 2015, depreciation expense was $2.3 million, $1.2 million2021 other than those discussed in note 2. See notes 2 and $799,000, respectively. As19.
Disaggregated Revenue
Our revenues were comprised of December 31, 2017 and 2016, computer software of $4.7 million and $5.5 million, respectively, has not been placed into service and no amortization was recorded related to those assets. Depreciation and amortization expensethe following for the yearyears ended December 31, 2017, excludes depreciation expense2023, 2022 and 2021, respectively (in thousands):
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Year Ended December 31,
202320222021
Advisory services fees:
Base advisory fees
$47,159 $47,592 $47,045 
Incentive advisory fees268 268 — 
Other advisory revenue521 521 521 
Total advisory services fees revenue47,948 48,381 47,566 
Hotel management fees:
Base fees37,651 34,072 21,291 
Incentive fees5,569 8,533 4,969 
Other management fees9,341 3,943 — 
Total hotel management fees revenue52,561 46,548 26,260 
Design and construction fees revenue27,740 22,167 9,557 
Audio visual revenue148,617 121,261 49,880 
Other revenue:
Watersports, ferry and excursion services (1)
34,057 26,309 23,867 
Debt placement and related fees (2)
4,634 4,222 12,384 
Premiums earned375 — — 
Cash management fees (3)
256 135 — 
Claims management services12 20 81 
Other services (4)
4,099 13,626 10,997 
Total other revenue43,433 44,312 47,329 
Cost reimbursement revenue426,496 361,763 203,975 
Total revenues$746,795 $644,432 $384,567 
REVENUES BY SEGMENT (5)
Advisory$78,960 $77,347 $74,616 
Remington424,322 356,435 197,802 
Premier39,947 32,247 12,413 
INSPIRE148,829 121,418 49,900 
RED34,150 26,335 23,867 
OpenKey1,586 1,484 1,965 
Corporate and other19,001 29,166 24,004 
Total revenues$746,795 $644,432 $384,567 
________
(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.
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(2)    Debt placement and related fees are earned by Lismore for providing placement, modification, forbearance or refinancing services to audio visual rental pool equipmentAshford Trust and Braemar.
(3)     Cash management fees include revenue earned by providing active management and investment of $411,000,Ashford Trust and Braemar’s excess cash in short-term U.S. Treasury securities.
(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. The years ended December 31, 2022 and 2021 included the revenue of Marietta Leasehold LP (“Marietta”), which is includedholds the leasehold rights to a single hotel and convention center property in costMarietta, Georgia, and was acquired by Ashford Trust on December 16, 2022. See note 5.
(5)    We have six reportable segments: Advisory, Remington, Premier, INSPIRE, RED and OpenKey. We combine the operating results of revenuesWarwick, Pure Wellness and, for audio visual.
4. Acquisitions
J&S
On November 1, 2017,the years ended December 31, 2022 and 2021, Marietta into an “all other” category, which we completed the acquisition of an 85% controlling interest in J&S Audio Visual Communications, Inc., J&S Audiovisual Mexico, S. de R.L. de C.V. and J&S Audio Visual Dominican Republic, L.P., collectively referredrefer to as "J&S." J&S provides an integrated suite“Corporate and Other.” See note 21 for discussion of audio visual services including showsegment reporting.
Geographic Information
Our Advisory, Premier, OpenKey, and event services, hospitality services, creative servicesCorporate and design & integration services to its customers in various venues including hotelsOther reporting segments conduct their business primarily within the United States. Remington, INSPIRE and convention centersRED conduct business both in the United States Mexico and internationally. The following table presents revenue from Remington, INSPIRE and RED geographically for the Dominican Republic.years ended December 31, 2023, 2022 and 2021, respectively (in thousands):
Year Ended December 31,
202320222021
Remington:
United States$423,999 $356,435 $197,802 
Costa Rica323 — — 
Total Remington revenues$424,322 $356,435 $197,802 
INSPIRE:
United States$109,676 $92,418 $39,164 
Mexico29,737 22,087 7,724 
Dominican Republic9,416 6,913 2,992 
Total INSPIRE revenues$148,829 $121,418 $49,880 
RED:
Continental United States$10,138 $10,885 $11,908 
Hawaii6,658 — — 
U.S. Virgin Islands11,591 11,469 10,757 
United Kingdom (Turks and Caicos Islands)5,763 3,981 1,202 
Total RED revenues$34,150 $26,335 $23,867 
Total international revenues (1)
$45,239 $32,981 $11,918 
_______
(1)    International revenues include revenues earned outside of the U.S. and U.S. territories.
4. Business Combinations
Alii Nui
On March 17, 2023, RED acquired certain privately held entities and assets associated with Alii Nui, which provides luxury sailing and watersports experiences in Maui, Hawaii, for a total purchase price of $11.0 million, excluding working capital adjustments. The purchase price of approximately $25.5 million consisted of (i) $19.2$8.0 million in cash, subject to certain adjustments, $1.0 million of contingent consideration and 80,000 RED Units issued at $25 per unit for a total liquidation value of $2.0 million. The RED Units accrue interest at 6.5% per annum with required quarterly payments.
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The $8.0 million cash consideration includes $300,000 of cash held back by the Company to be paid eighteen months after the acquisition date (the “Holdback Date”), subject to certain conditions. The $1.0 million of contingent consideration is subject to Alii Nui obtaining a permit to operate a marine vessel (the “Permit”) prior to the Holdback Date, of which $10.0 million was funded with a term loan; (ii) 70,318 shares$500,000 is to be paid upon the later of Ashford Inc. common stock, which was determined basedJanuary 15, 2024 or the date the Permit is obtained and the remaining $500,000 is to be paid on an agreedthe Holdback Date, subject to certain conditions. Subsequent to the acquisition date, Alii Nui obtained approval to be issued the Permit upon registration of the marine vessel.
Both the Company and the holders of the RED Units have the right to convert the RED Units at the liquidation value of approximately $4.3 million using$25 per unit three years after the acquisition date upon providing notice to the respective party. The Company may convert the RED Units by paying cash or a thirty-day volume weighted average price per sharecombination of $60.44 and had an estimated fair value of approximately $5.1 million ascash or the Company’s common shares at the sole discretion of the Company (the “Call Right”). The holders of the RED Units may convert their RED Units for cash (the “Put Right”). Under current accounting guidance, the Call Right and the Put Right are accounted for on a combined basis as a form of financing the acquisition date;of Alii Nui and (iii) contingent consideration with an estimated fair valuerecorded as a non-current note payable of approximately $1.2 million. The results of operations of J&S were included$2.0 million in our consolidated financial statements from the date of acquisition.balance sheet.
The acquisition of J&S has beenAlii Nui was recorded using the acquisition method of accounting in accordance with the authoritative guidance for business combinations, and the purchase price allocation iswas based on our valuation of the fair value of the tangible and intangible assets acquired and liabilities assumed at the date of acquisition. We have completed our preliminary valuation to determine the fair value of the identifiable assets acquired and liabilities assumed. The fair values of the assets acquired were determined using various valuation techniques, including an income approach. The fair value measurements were primarily based on significant inputs that are not directly observable in the market and are considered Level 3 under the fair value measurements and disclosure framework. Key assumptions include cash flow projections of J&Sfor Alii Nui and the discount rate applied to those cash flows. The excess of the purchase price over the estimated fair values of the identifiable net assets acquired was recorded as goodwill. For goodwill reporting purposes, the operations and goodwill for Alii Nui are included in our RED reporting unit as they are similar businesses. See note 7.
We have allocated the purchase price to the assets acquired and liabilities assumed on a preliminary basis using estimatedbased upon our valuation of the fair value information currently available. We are in the process of evaluating the values assigned to working capital balances, furniture, fixturesthe RED Units, contingent consideration and equipment, intangible assets. In the third quarter of 2023, we finalized the valuation of the acquired assets notes payable, capital leases,and liabilities resulting in an increase to goodwill and deferred taxes, noncontrolling intereststax liabilities of $1.6 million from finalizing the tax basis of the acquired assets and contingent consideration. Thus, the balances reflected belowacquired business corporate entity.
The fair value of the purchase price and final allocation of the purchase price are subject to change, and any such changes could result in adjustments to the allocation. Any change to the amounts recorded within furniture, fixtures and equipment could also impact depreciation expense.as follows (in thousands):

Cash$7,700 
Cash consideration payable300 
Contingent consideration1,000 
RED Units2,000 
Working capital adjustments304 
Total fair value of purchase price$11,304 

Fair ValueEstimated Useful Life
Current assets including cash of $996$1,286 
Property and equipment, net2,254 20 years
Trademarks1,600 
Boat slip rights6,250 20 years
Total assets acquired11,390 
Current liabilities857 
Deferred tax liability1,567 
Total assumed liabilities2,424 
Total identifiable net assets acquired$8,966 
Goodwill$2,338 
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The fair value of the purchase price and preliminary allocation of the purchase price is as follows (in thousands):
Cash $9,176
Term loan 10,000
Fair value of Ashford Inc. common stock 5,063
Fair value of contingent consideration 1,196
Purchase price consideration 25,435
Fair value of redeemable noncontrolling interest 2,724
Fair value of noncontrolling interest 324
Total fair value of purchase price $28,483
  Fair Value Estimated Useful Life
Current assets including cash $6,664
  
Furniture, fixtures and equipment 9,020
 5 years
Goodwill 12,165
  
Trademarks 3,201
  
Customer relationships 6,519
 7 years
Other assets 129
  
Total assets acquired 37,698
  
Current liabilities 7,024
  
Notes payable, current 445
  
Deferred income 1,213
  
Note payable, non-current 533
  
Total assumed liabilities 9,215
  
Net assets acquired $28,483
  
We do not expect approximately $9.9 millionany of the goodwill balance to be deductible for tax purposes. The qualitative factors that make up the recorded goodwill include value associated with an assembled workforce andincludes value attributable to expanding J&S’growth opportunities to expand RED’s operations through our relationships with Ashford Trust and Ashford Prime.to new markets in Hawaii.
Results of J&SAlii Nui
The results of operations of J&SAlii Nui have been included in our results of operations since the acquisition date.date of March 17, 2023. Our consolidated statement of operations for the year ended December 31, 2017, included2023 include total revenue from Alii Nui of $9.2 million and a net loss of $657,000 from J&S. The unaudited pro forma results$6.7 million. In addition, our consolidated statement of operations as if the acquisition had occurred on January 1, 2016, are included below under “Pro Forma Financial Results.”
Pure Rooms
On April 6, 2017, we acquired a 70% interest in Pure Rooms. Pure Rooms’ patented 7-step purification process treats a room’s surfaces, including the air, and removes up to 99% of pollutants. To consummate the acquisition, Ashford Hospitality Services LLC (“AHS”), a subsidiary of Ashford Inc., entered into an Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) with PRE Opco, LLC (“Pure Rooms”), pursuant to which AHS became the sole owner of the common equity, or Series A Units. In conjunction with the LLC Agreement, AHS contributed $97,000 cash to Pure Rooms as required by the LLC Agreement. Pursuant to the Asset and Liability Contribution Agreement (the “Contribution Agreement”), by and among Pure Rooms (as contributee) and PAFR, LLC, the members of PAFR, LLC and Brault Enterprises, LLC (collectively, the “Sellers”), the Sellers contributed liabilities, net of assets, of the predecessor operating company, Pure Rooms NA, LLC, with a fair value of $532,000 in exchange for certain equity interests in Pure Rooms, including 30% of the Series A Units, 100% of the Series B-1 Units, and 50% of the Series B-2 Units. The fair value of the remaining equity consideration included $42,000 of Series A Units,

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$181,000 of Series B-1 Units, and $202,000 of Series B-2 Units, totaling $425,000. As a result of the Contribution Agreement, our equity interest in Pure Rooms was 70%.
Per the LLC Agreement, the Series A Units are voting units and have the voting rights set forth in the Contribution Agreement but do not have management participation rights. The Series B-1 Units and Series B-2 Units are non-voting units and do not have voting or management participation rights. The distribution waterfall provides seniority as follows: Series B-1, Series B-2, then Series A. There is no coupon or other preference associated with the Series B-1 and B-2 unit classes. During the year ended December 31, 2017,2023 include net loss from Alii Nui of $245,000.
Chesapeake
On April 15, 2022, the Company acquired privately held Chesapeake, a third-party hotel management company. The Company paid to the sellers $6.3 million in cash, subject to certain adjustments, and issued to the sellers 378,000 Series CHP Convertible Preferred Units of Ashford Holdings (the “Series CHP Units”) at $25 per Unit, for a total liquidation value of $9.45 million. The Series CHP Units include a discount of $8.1 million resulting in a total fair value of $1.4 million. The discount is due to the Company’s ability to convert the Series B-1 unit holders redeemed theirCHP Units to common units of Ashford Holdings at the preferred conversion price of $117.50. Common units of Ashford Holdings are exchangeable into common stock of the Company on a 1:1 ratio. The sellers also have the ability to earn up to $10.25 million of additional consideration based on the base management fee contribution from the acquired business for the trailing 12 month periods ending March 2024 and March 2025, respectively, for a total potential purchase consideration of $18.1 million, subject to certain adjustments. The first $6.3 million of such additional consideration is payable in cash and any amounts payable in excess of such $6.3 million may be satisfied by the issuance of shares of common stock of the Company, common units of Ashford Holdings or additional Series B-1 units for $200,000.CHP Units, as determined by the Company in its sole discretion.
The acquisition of Pure Rooms has beenChesapeake was recorded using the acquisition method of accounting in accordance with the authoritative guidance for business combinations, and the purchase price allocation iswas based on our valuation of the fair value of the tangible and intangible assets acquired and liabilities assumed at the date of acquisition. During the fourth quarter of 2017, we finalized the valuation of the acquired assets and liabilities associated with the Pure Rooms acquisition. The final fair value analysis did not result in a material change on the consolidated balance sheet, and we do not expect any further adjustments to the purchase price allocation. The fair values of the assets acquired were determined using various valuation techniques, including an income approach. The fair value measurements were primarily based on significant inputs that are not directly observable in the market and are considered Level 3 under the fair value measurements and disclosure framework. Key assumptions include cash flow projections of Pure Roomsfor Chesapeake and the discount rate applied to those cash flows. The excess of the purchase price over the estimated fair values of the identifiable net assets acquired was recorded as goodwill. In the third quarter of 2022, we recorded an adjustment to increase the working capital paid to the sellers by $73,000. In the fourth quarter of 2022, we finalized the valuation of the acquired assets and liabilities associated with the acquisition. For goodwill reporting purposes, the operations and goodwill for Chesapeake are included in our Remington reporting unit as they are similar businesses. See note 7.
The fair value of the equity considerationpurchase price and final allocation of $425,000 is allocatedthe purchase price are as follows (in thousands):
Series CHP Units$9,450 
Discount on Series CHP Units(8,063)
Cash6,300 
Fair value of contingent consideration1,670 
Working capital adjustments193 
Total fair value of purchase price$9,550 

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  Fair Value Estimated Useful Life
Cash $129
  
Furniture, fixtures and equipment 170
 3 years
Customer relationships 175
 5 years
Goodwill 782
  
Total assets acquired 1,256
  
Line of credit 100
  
Note payable 375
 
Other assumed liabilities, net 356
  
Total assumed liabilities 831
  
Net assets acquired $425
  
Fair ValueEstimated Useful Life
Current assets including cash of $228$930 
Management contracts7,131 8 years
Total assets acquired8,061 
Current liabilities347 
Deferred tax liability217 
Total assumed liabilities564 
Total identifiable net assets acquired$7,497 
Goodwill$2,053 
We do not expect approximately $547,000any of the goodwill balance to be deductible for income tax purposes. The qualitative factors that make up the recorded goodwill include value associated with an assembled workforce andincludes value attributable to expanding Pure Rooms’ operations through our relationships with Ashford Trust and Ashford Prime.growth opportunities to expand Remington’s hotel management services to third-party owners in the hospitality industry.
Results of Pure RoomsChesapeake
The results of operations of Pure RoomsChesapeake have been included in our results of operations since the acquisition date.date of April 15, 2022. Our consolidated statementstatements of operations for the yearyears ended December 31, 2017, included2023 and 2022 include total revenue from Chesapeake of $2.1$64.7 million and a$43.1 million, respectively. In addition, our consolidated statements of operations for the years ended December 31, 2023 and 2022 include net loss from Chesapeake of $78,000 from Pure Rooms. The unaudited pro forma results$1.3 million and net income of operations as if the acquisition had occurred on January 1, 2016, are included below under “Pro Forma Financial Results.”$3.0 million, respectively.

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Pro Forma Financial Results
The following table reflects the unaudited pro forma results of operations as if the J&SAlii Nui and Pure RoomsChesapeake acquisitions had occurred and the applicable indebtedness was incurred on January 1, 2016,2022, and the removal of $1.0$375,000 and $1.9 million and $170,000 of transaction costs directly attributable to the acquisitions (net of the incremental tax expense) for the years ended December 31, 20172023 and December 31, 2016,2022, respectively, (in thousands):
Year Ended December 31,
20232022
Total revenues$748,635 $665,791 
Net income (loss)(4,778)3,867 
Net income (loss) attributable to common stockholders(40,592)(32,067)
   Year Ended December 31,
     2017 2016
Total revenue    $138,638
 $131,547
Net income (loss)    (19,213) (12,120)
Net income (loss) attributable to common stockholders    (17,489) (2,089)
Pro forma income (loss) per share:       
Basic    $(8.37) $(1.00)
Diluted    $(8.88) $(2.35)
Weighted average common shares outstanding (in thousands):       
Basic    2,090
 2,082
Diluted    2,120
 2,279
5. Goodwill and Intangible Assets, netDispositions
Marietta Disposition
On June 26, 2018, the Company entered into the Ashford Trust ERFP Agreement with Ashford Trust. On April 20, 2021, the Company received written notice from Ashford Trust of Ashford Trust’s intention not to renew the Ashford Trust ERFP Agreement. As a result, the Ashford Trust ERFP Agreement terminated in accordance with its terms on June 26, 2021. The changes inCompany remained obligated to fund the carrying amountremaining $11.4 million ERFP commitment from Ashford Trust’s acquisition of goodwill for the year endedEmbassy Suites Manhattan hotel under the Ashford Trust ERFP Agreement by December 31, 2017, are as follows (in thousands):2022. See note 19.
  J&SCorporate and OtherConsolidated
Balance at the beginning of year $—
$—
$—
Changes in goodwill:    
Additions (1)
 12,165
782
12,947
Balance at the end of year $12,165
$782
$12,947
________
(1)Corporate and Other additions reflect the goodwill acquired as a result of the acquisition of Pure Rooms.
Intangible assets, netOn December 16, 2022, the Company and Ashford Trust entered into an Agreement of Purchase and Sale (the “Purchase Agreement”) pursuant to which, effective as of December 31, 2017, are as follows (in thousands):16, 2022, Ashford Trust acquired all of the equity interests in Marietta and, in exchange, Ashford Trust forgave, cancelled and discharged in full the Company’s outstanding $11.4 million ERFP commitment to Ashford Trust. The Company incurred a loss on the disposition of Marietta related to the net assets of Marietta on the disposal date of approximately $1.2 million which is included in “other” operating expense in our consolidated statements of operations.
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  Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Definite-lived intangible assets:    
Pure Rooms customer relationships $175
$(26)$149
J&S customer relationships 6,519
(156)6,363
  $6,694
$(182)$6,512
     
Indefinite-lived intangible assets:    
J&S trademarks $3,201
  
  $3,201
  
Amortization expense for definite-lived intangible assets was $182,000 for the year ended December 31, 2017. Annual amortization expense for these definite-lived assets will approximate $1.0 million over the next five years. Customer relationships for Pure Rooms and J&S were assigned a useful life of 5 years and 7 years, respectively.

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6. Notes Payable,Since the disposition of Marietta did not represent a strategic shift that had a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in the consolidated financial statements. The results of operations of Marietta were included in net
Notes payable, net consisted income (loss) through the date of disposition as shown in the consolidated statements of operations for the years ended December 31, 2022 and 2021. The following table includes financial information from Marietta in the consolidated statements of operations for the years ended December 31, 2022 and 2021 (in thousands):
Year Ended December 31,
20222021
Other revenue$9,763 $6,336 
Depreciation and amortization(1,206)(1,260)
General and administrative(113)48 
Other expenses(7,047)(3,758)
Operating income (loss)1,397 1,366 
Interest expense(2,399)(2,539)
Loss before income taxes$(1,002)$(1,173)
Indebtedness Subsidiary Maturity Interest Rate December 31, 2017 December 31, 2016
Term loan J&S November 2022 
One-Month LIBOR(2) + 3.25%
 $9,917
 $—
Revolving credit facility J&S November 2022 
One-Month LIBOR(2) + 3.25%
 814
 —
Capital lease obligations (see note 7) J&S Various Various - fixed 896
 —
Revolving credit facility Pure Rooms On demand 
Prime Rate (1) + 1.00%
 100
 —
Term loan Pure Rooms October 1, 2018 5.00% 220
 —
Total notes payable       11,947
 —
Less deferred loan costs, net       (240) —
Total notes payable less net deferred loan costs       11,707
  
Less current portion       (1,751) —
        $9,956
 $—
On the date of disposition, the assets and liabilities related to Marietta were as follows (in thousands):
__________________
December 16, 2022
(1)
Assets		Prime Rate was 4.50% at December 31, 2017.
(2)
Current assets:		One-month LIBOR rate was 1.56% at December 31, 2017.
Cash and cash equivalents$1,067 
Restricted cash1,056 
Accounts receivable, net22 
Inventories48 
Prepaid expenses and other364 
Total current assets2,557 
Property and equipment, net40,381 
Total assets$42,938 
Liabilities
Current liabilities:
Accounts payable and accrued expenses$582 
Due to affiliates242 
Finance lease liabilities845 
Total current liabilities1,669 
Finance lease liabilities40,025 
Total liabilities41,694 
Net assets disposed$1,244 
On November 1, 2017, our J&S operating subsidiary entered into a series of financing transactions for which the creditors do not have recourse to Ashford Inc., including a $10.0 million term loan to finance the acquisition of J&S. The term loan bears interest at LIBOR plus 3.25% and matures on November 1, 2022. The subsidiary capitalized debt issuance costs of $231,000 associated with this financing, which are included as a reduction of notes payable on the consolidated balance sheet as of December 31, 2017. In connection with the term loan, the subsidiary entered into an interest rate cap with an initial notional amount totaling $5.0 million and a strike rate of 4.0%. The fair value of the interest rate cap at December 31, 2017, was not material. The subsidiary also entered into a $3.0 million revolving credit facility which bears interest at LIBOR plus 3.25% and matures on November 1, 2022. During the year ended December 31, 2017, $1.7 million was drawn and approximately $924,000 of payments were made on the revolving credit facility. As of December 31, 2017, $2.2 million of credit was available under the revolving credit facility. These debt agreements contain various financial covenants that, among other things, require the maintenance of certain fixed charge coverage ratios. Our J&S operating subsidiary is currently in compliance with all financial covenants.
Also on November 1, 2017, in connection with the acquisition of J&S, our J&S operating subsidiary entered into a $2.0 million term loan agreement and a $3.0 million equipment note. These loans each bear interest at LIBOR plus 3.25% and mature on November 1, 2022. During the year ended December 31, 2017, no amounts were drawn on either loan.
On April 6, 2017, Pure Rooms entered into a term loan of $375,000 and a line of credit of $100,000 for which the creditor does not have recourse to Ashford Inc. The term loan has a fixed interest rate of 5.0% per annum with a stated maturity date of October 1, 2018. The line of credit has a variable interest rate of the Prime Rate plus 1.0%. There is no stated maturity date related to the line of credit as it is payable on demand; accordingly, the balance has been classified as a current liability on our consolidated balance sheet.
On April 13, 2017, OpenKey entered into a Loan and Security Agreement ("Loan Agreement") for a line of credit in the amount of $1.5 million. The line of credit is secured by all of OpenKey's assets and matures on October 31, 2018 with an interest rate of Prime Rate plus 2.75%. Creditors do not have recourse to Ashford Inc. At December 31, 2017, there were no borrowings outstanding under the Loan Agreement. In connection with the line of credit, OpenKey granted the creditors a 10-year warrant to purchase approximately 28,000 shares of OpenKey's preferred stock at $1.61 per share. The fair value of the warrants, estimated to be $28,000, was recorded in noncontrolling interests in consolidated entities and debt issuance costs, which will be amortized over the term of the line of credit.

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6. Property and Equipment, net
Property and equipment, net, consisted of the following (in thousands):
December 31,
20232022
Rental pool equipment$38,755 $26,563 
FF&E leased to Ashford Trust1,610 11,283 
FF&E leased to Braemar992 1,616 
Property and equipment17,045 11,726 
Marine vessels27,307 17,789 
Leasehold improvements4,695 1,148 
Computer software417 1,266 
Total cost90,821 71,391 
Accumulated depreciation(33,969)(29,600)
Property and equipment, net$56,852 $41,791 
For the years ended December 31, 2023, 2022 and 2021, depreciation expense was $11.1 million, $12.7 million and $12.9 million, respectively. Depreciation and amortization expense on the statement of operations for the years ended December 31, 2023, 2022 and 2021 excludes depreciation expense related to audio visual equipment of $5.2 million, $4.9 million and $5.0 million, respectively, which is included in “cost of revenues for audio visual” and depreciation expense related to marine vessels of $2.0 million, $1.4 million and $929,000, respectively, which is included in “other” operating expense in our consolidated statements of operations.
7. Goodwill and Intangible Assets, net
Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 are as follows (in thousands):
RemingtonRED
Corporate and Other (1)
Consolidated
Balance at January 1 2022 (2)
$54,605 $1,235 $782 $56,622 
Additions (3)
1,980 — — 1,980 
Adjustments (3)
73 — — 73 
Balance at December 31, 202256,658 1,235 782 58,675 
Additions (4)
— 686 — 686 
Adjustments (4)
— 1,652 — 1,652 
Balance at 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.
(2) Remington goodwill includes accumulated impairments from the year ended December 31, 2020 of $121.0 million.
(3) The additions and subsequent adjustments relate to the Company’s acquisition of Chesapeake. See note 4.
(4) The additions and subsequent adjustments relate to RED’s acquisition of Alii Nui. See note 4.
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Intangible Assets
Excluding capital lease obligations (seeIntangible assets, net as of December 31, 2023 and December 31, 2022, are as follows (in thousands):
December 31, 2023December 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Definite-lived intangible assets:
Remington management contracts$114,731 $(51,891)$62,840 $114,731 $(40,519)$74,212 
Premier management contracts194,000 (64,808)129,192 194,000 (53,415)140,585 
INSPIRE customer relationships9,319 (6,645)2,674 9,319 (5,527)3,792 
RED boat slip rights (1)
9,350 (951)8,399 3,100 (535)2,565 
$327,400 $(124,295)$203,105 $321,150 $(99,996)$221,154 
Gross Carrying AmountGross Carrying Amount
Indefinite-lived intangible assets:
Remington trademarks$4,900 $4,900 
RED trademarks (2)
2,090 490 
$6,990 $5,390 
________
(1)    The weighted average renewal period for RED’s boat slip rights is approximately 12 months. RED has the ability and intent to renew their boat slip rights and the costs to renew are immaterial. RED’s boat slip rights includes $6.3 million of boat slip rights acquired in RED’s acquisition of Alii Nui on March 17, 2023. See note 7)4.
(2)    Includes $1.6 million of trademarks acquired in RED’s acquisition of Alii Nui on March 17, 2023. See note 4.
Amortization expense for definite-lived intangible assets was $24.3 million, $25.3 million and interest, maturities$25.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. The useful lives of our long-termcustomer 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.
Expected future amortization expense of definite-lived intangible assets as of December 31, 2023 are as follows (in thousands):
2024$21,877 
202518,987 
202617,255 
202715,764 
202814,488 
Thereafter114,734 
Total$203,105 
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8. Notes Payable, net
Notes payable—Notes payable, net consisted of the following (in thousands):
IndebtednessBorrowerMaturityInterest RateDecember 31, 2023December 31, 2022
Credit facility (6) (9)
Ashford Inc.April 1, 2027
Base Rate (1) + 6.35% or Adjusted Term SOFR (3) + 7.35%
$100,000 $70,000 
Note payable (6) (11)
Ashford Inc.February 29, 20284.00%1,234 1,495 
Note payable (5) (17)
OpenKeyOn demand15.00%237 — 
Term loan (5) (7) (10)
INSPIREMarch 24, 2028
BSBY Rate (2) + 2.75%
18,500 17,300 
Equipment note (5) (7) (10)
INSPIREMarch 24, 2028
BSBY Rate (2) + 2.75%
3,400 — 
Revolving credit facility (5) (12)
Pure WellnessOn demand
Prime Rate (4) + 1.00%
150 150 
Term loan (5) (8) (13)
REDJuly 18, 20296.00%1,537 1,596 
Term loan (5) (8)
REDApril 16, 20249.00%60 337 
Term loan (5) (8) (14)
REDAugust 5, 2029
Prime Rate (4) + 2.00%
800 858 
Term loan (5) (8)
REDAugust 5, 2029
Prime Rate (4) + 2.00%
1,830 1,980 
Term loan (6) (8)
REDAugust 5, 2029
Prime Rate (4) + 1.75%
2,672 3,006 
Term loan (5) (8) (18)
REDMarch 17, 2033
Prime Rate (4) + 1.50%
1,645 — 
Term loan (5) (8) (18)
REDMarch 17, 2033
Prime Rate (4) + 1.50%
2,336 — 
Term loan (5) (8) (20)
REDMay 19, 2033
Prime Rate (4) + 1.00%
622 — 
Draw term loan (5) (8) (15)
REDMarch 17, 20325.00%1,448 641 
Draw term loan (5) (8) (15)
REDMarch 17, 20325.00%1,043 640 
Draw term loan (5) (8) (16)
RED
Various (16)
Prime Rate (4) + 1.00%
1,386 1,099 
Draw term loan (5) (8) (21)
REDFebruary 5, 2029
Prime Rate (4) + 1.25%
168 — 
RED Units (5) (19)
RED
See footnote (19)
6.50%2,000 — 
Total notes payable141,068 99,102 
Capitalized default interest, net— 148 
Deferred loan costs, net(2,723)(2,643)
Original issue discount, net (9)
(1,379)(1,732)
Notes payable including capitalized default interest and deferred loan costs, net136,966 94,875 
Less current portion(4,387)(5,195)
Total notes payable, net - non-current$132,579 $89,680 
__________________
(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 Bloomberg Short-Term Bank Yield Index rate (the “BSBY Rate”) was 5.44% at December 31, 2023.
(3)     Adjusted Term SOFR is the one-month forward-looking SOFR rate plus 0.03%. Adjusted Term SOFR was 5.38% at December 31, 2023.
(4)     The Prime Rate was 8.50% and 7.50% at December 31, 2023 and December 31, 2022, respectively.
(5)     Creditors do not have recourse to Ashford Inc.
(6)    Creditors have recourse to Ashford Inc.
(7)    INSPIRE’s Revolving Note 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 $8.3 million and $7.5 million as of December 31, 2023 and December 31, 2022, respectively. INSPIRE’s Term Note is collateralized by substantially all of the assets of INSPIRE.
(8)    RED’s loans are collateralized primarily by RED’s marine vessels and associated leases with a carrying value of $20.6 million and $13.6 million as of December 31, 2023 and December 31, 2022, respectively.
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(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 December 31, 2023, no unused amounts remained under the Credit Facility.
(10)    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 commence 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 BSBY 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. As of December 31, 2023, the amounts unused under INSPIRE’s revolving credit facility and equipment note were $6.0 million and $600,000, 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 December 31, 2023, 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 is 6.0% for the first five years. After five years, the interest rate is equal to the Prime Rate plus 0.5% with a floor of 6.0%.
(14)    On July 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 December 31, 2023, 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 December 31, 2023, the remaining unused loan balance was $158,000.
(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.
(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. 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 consolidated balance sheet. See note 4.
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(20)    On May 19, 2023, RED entered into a term loan for two vessels. The interest rate is equal to the Prime Rate plus 1.00% and the note matures on May 19, 2033. 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 February 5, 2024. The interest rate is equal to the Prime Rate plus 1.25% and the maturity date is February 5, 2029. As of December 31, 2023, the amount unused under RED’s draw term loan was $732,000.
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 December 31, 2023, our Credit Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements.
Maturities and scheduled amortization of notes payable as of December 31, 2023, assuming no extension of existing extension options for each of the nextfollowing five years and thereafter are as follows (in thousands):
2024$4,387 
20254,068 
20266,189 
2027104,989 
202812,711 
Thereafter8,724 
Total$141,068 
   
2018 $1,320
2019 1,000
2020 1,000
2021 1,000
2022 6,731
Thereafter —
  $11,051
7. Lease Commitments
Capital9. Leases
We lease certain office space, warehouse facilities, vehicles and equipment under capitaloperating leases. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years. The net book valueexercise of these assets was approximately $835,000lease renewal options is at December 31, 2017, and is included in furniture, fixtures and equipment in our consolidated balance sheet. Amortization of assets under capital leases is included in depreciation and amortization expense in our consolidated statement of operations.
Operating Leases
We have contractual obligations in the form of operating leases for office space and equipment.sole discretion. Operating lease obligations expire at various dates with the latest maturity in 2027. For2030. Certain of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
On January 3, 2023, the year ended December 31, 2017, we recorded rental expense of $307,000. We did not incur rental expenseCompany acquired Remington Hotel Corporation (“RHC”), an affiliate owned by the Bennetts, from which the Company leases the offices for our corporate headquarters in Dallas, Texas. Prior to the acquisition, for the years ended December 31, 20162022 and 2015.2021, we recorded $3.3 million and $3.4 million, respectively, in rent expense related to our corporate office lease with RHC. See note 19.
As of December 31, 2017, future minimumWe additionally lease payments on capitalcertain equipment and operating leases were as follows (in thousands):
  Capital Leases Operating Leases
2018 $467
 $1,118
2019 387
 991
2020 88
 729
2021 16
 571
2022 —
 436
Thereafter —
 1,607
Total minimum lease payments 958
 5,452
Imputed interest (62) —
Present value of minimum lease payments $896
 $5,452
8. Derivative Contracts
As of December 31, 2016, the volume of the AQUA U.S. Fund’s option derivative activities based on their notional amounts,boat slips which are accounted for as finance leases. Prior to Ashford Trust’s acquisition of Marietta on December 16, 2022, finance lease assets included a lease of a single hotel and convention center property in Marietta, Georgia, from the fair valuesCity of the underlying shares as if the options were exercised at December 31, 2016, was 8,000 long exposure contracts with a notional amount of $0 and no short exposure contracts. As of December 31, 2017, the AQUA U.S. Fund has been dissolved.
Options on Futures Contracts—During the year ended December 31, 2017, we purchased no options on Eurodollar futures. During the year ended December 31, 2016, we purchased options on Eurodollar futures for total costs of $94,000 and a maturity date of June 2017. These options were not designated as cash flow hedges.Marietta. The carryingnet book value of these options on futures contractfinance lease assets is included in investments“property and equipment, net” in securities in theour consolidated balance sheet assheets. Amortization of December 31, 2016.finance lease assets is included in “depreciation and amortization” expense in our consolidated statements of operations.


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As of December 31, 2023 and 2022, our leased assets and liabilities consisted of the following (in thousands):
LeasesClassificationDecember 31, 2023December 31, 2022
Assets
Operating lease assetsOperating lease right-of-use assets$21,193 $23,844 
Finance lease assetsProperty and equipment, net3,081 3,236 
Total leased assets$24,274 $27,080 
Liabilities
Current
OperatingOperating lease liabilities$4,160 $3,868 
FinanceFinance lease liabilities437 1,456 
Noncurrent
OperatingOperating lease liabilities19,174 20,082 
FinanceFinance lease liabilities2,832 1,962 
Total leased liabilities$26,603 $27,368 
We incurred the following lease costs related to our operating and finance leases (in thousands):
Year Ended December 31,
Lease CostClassification202320222021
Operating lease cost
Rent expense (1)
General and administrative$6,846 $6,060 $5,654 
Finance lease cost
Amortization of leased assetsDepreciation and amortization460 1,624 1,455 
Interest on lease liabilitiesInterest expense212 2,616 2,727 
Total lease cost$7,518 $10,300 $9,836 
__________________
(1)    The years ended December 31, 2023, 2022 and 2021 include short term lease expense of $917,000, $619,000 and $442,000, respectively.
The years ended December 31, 2023, 2022 and 2021 include the following operating and finance lease additions (in thousands):
Year Ended December 31,
Lease Additions202320222021
Operating leases (1)
$20,438 $298 $607 
Finance leases$1,392 $903 $— 
__________________
(1)    The year ended December 31, 2023, includes $17.2 million of operating lease additions which were acquired upon our acquisition of RHC which leases the offices for our corporate headquarters in Dallas, Texas. 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 were eliminated upon consolidation. See note 19.
For the years ended December 31, 2023, 2022 and 2021, cash paid amounts included in the measurement of lease liabilities included (in thousands):
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Year Ended December 31,
Lease Payments202320222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,834 $3,505 $3,713 
Financing cash flows from finance leases$419 $1,160 $439 
9.As of December 31, 2023, future minimum lease payments on operating leases and financing leases and total future minimum lease payments to be received were as follows (in thousands):
Operating LeasesFinance LeasesSublease Payments to be Received
2024$5,956 $639 $105 
20255,323 395 83 
20265,091 1,370 83 
20274,942 234 83 
20284,320 161 76 
Thereafter6,212 1,544 — 
Total minimum lease payments (receipts)31,844 4,343 $430 
Imputed interest(8,510)(1,074)
Present value of minimum lease payments$23,334 $3,269 
Our weighted-average remaining lease terms (in years) and discount rates consisted of the following:
December 31, 2023December 31, 2022December 31, 2021
Lease term and discount rate
Weighted-average remaining lease term
Operating leases (1)
8.018.749.34
Finance leases (2)
8.408.1731.49
Weighted-average discount rate
Operating leases8.2 %5.2 %5.2 %
Finance leases6.7 %6.6 %6.2 %
__________________
(1)    The weighted-average remaining lease term includes two optional 10 year extension periods for our INSPIRE headquarters in Irving, Texas, as failure to renew the lease would result in INSPIRE incurring significant relocation costs.
(2)    The weighted-average remaining lease term as of December 31, 2021 included our lease with the City of Marietta which had a lease term through December 31, 2054. On December 16, 2022, Marietta was acquired by Ashford Trust. See note 5.
10. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses were comprised of the following (in thousands):
December 31, 2023December 31, 2022
Accounts payable$18,482 $18,841 
Accrued payroll expense31,153 30,626 
Accrued vacation expense2,408 2,418 
Accrued interest444 381 
Other accrued expenses2,350 3,813 
Total accounts payable and accrued expenses$54,837 $56,079 
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11. Fair Value Measurements
Fair Value Hierarchy—Our financial instrumentsassets 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.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):
Quoted Market Prices (Level 1)Significant Other
Observable Inputs (Level 2)		Significant Unobservable Inputs
 (Level 3)		Total
December 31, 2023
Assets
Investments$— $— $5,000 (1)$5,000 
Restricted Investment:
Ashford Trust common stock19 (2)— — 19 
Braemar common stock109 (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 
 Quoted Market Prices (Level 1) 
Significant Other
Observable Inputs (Level 2)
 
Significant Unobservable Inputs
 (Level 3)
 Total 
December 31, 2017        
Liabilities        
Non-derivative liabilities:        
Contingent consideration$—
 $—
 $(2,262) $(2,262)
(1) 
Deferred compensation plan(19,259) —
 —
 (19,259) 
Total(19,259) —
 (2,262) (21,521) 
Net$(19,259) $—
 $(2,262) $(21,521) 
__________________
 Quoted Market Prices (Level 1) 
Significant Other
Observable Inputs (Level 2)
 
Significant Unobservable Inputs
(Level 3)
 Total 
December 31, 2016        
Assets        
Derivative assets:        
Options on futures contracts$91
 $—
 $—
 $91
 
Total91
 $—
 —
 91
(2) 
Liabilities        
Non-derivative liabilities:        
Deferred compensation plan(9,078) —
 —
 (9,078) 
Total(9,078) —
 —
 (9,078) 
Net$(8,987) $—
 $—
 $(8,987) 
__________________
(1) Reported as “due to affiliates”Represents the fair value of TSGF L.P.’s investment which is reported within “investments” in theour consolidated balance sheets.
(2) Reported as “investmentsThe restricted investment includes shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees. The compensation agreement liability is based on ratably accrued vested shares through December 31, 2023, which are distributed to the plan participants upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.
(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 securities” in theour 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 consolidated balance sheets.
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Quoted Market Prices (Level 1)Significant Other
Observable Inputs (Level 2)		Significant Unobservable Inputs
(Level 3)		Total
December 31, 2022
Assets
Restricted Investment:
Ashford Trust common stock$57 (1)$— $— $57 
Braemar common stock246 (1)— — 246 
Total$303 $— $— $303 
Liabilities
Contingent consideration$— $— $(2,320)(2)$(2,320)
Subsidiary compensation plan— (74)(1)— (74)
Deferred compensation plan(2,849)— — (2,849)
Total$(2,849)$(74)$(2,320)$(5,243)
Net$(2,546)$(74)$(2,320)$(4,940)
__________________
(1) The restricted investment includes shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees. The compensation agreement liability is based on ratably accrued vested shares through December 31, 2022, which are distributed to the plan participants upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.
(2) 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 consolidated balance sheets.
The following table presents our rollforwardroll forward of our Level 3 contingent consideration liabilityinvestments (in thousands):
Investments (1)
Balance at January 1, 2023$— 
TSGF L.P. investment5,000 
Balance at December 31, 2023$5,000 
__________________
 
Contingent Consideration Liability (1)
 
Balance December 31, 2016$—
 
Acquisition(1,196) 
Gains (losses) included in earnings(1,066)
(2) 
Dispositions and settlements—
 
Transfers into/out of Level 3—
 
Balance December 31, 2017$(2,262)
(3) 
__________________
(1) Ashford Inc.TSGF L.P.’s contingent consideration associated with the acquisition of J&Sinvestment is carriedmeasured at fair value in the consolidated balance sheets.at each reporting period. The fair value of our contingent consideration liability was estimated using significant inputs that are not observable inCompany used the market and thus represents a Level 3 fair value measurement. The significant inputs inapproach method when determining the Level 3 measurement included the timing and amount of the ultimate payout based on our estimate of J&S operating performance during the earn-out period, calculated in accordance with the agreement, and the risk adjusted discount rate used to discount the future payment.
(2) Calculated as the change in fair value of the contingent consideration associated with the acquisitioninvestment acquired as of J&SDecember 31, 2023. As of December 31, 2023, TSGF L.P. held $9.3 million of total assets, which includes TSGF L.P’s investment of $5.0 million and reported as “other” operating expense in the consolidated statementscash and cash equivalents of operations.
(3) Reported as “due to affiliates” in the consolidated balance sheets.

$4.3 million.
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The following table presents our roll forward of our Level 3 contingent consideration liability (in thousands):
Contingent Consideration Liability (1)
Balance at January 1, 2022$— 
Acquisition of Chesapeake(1,670)
Gains (losses) from fair value adjustments included in earnings(650)
Balance at December 31, 2022(2,320)
Gains (losses) from fair value adjustments included in earnings(600)
Balance at December 31, 2023$(2,920)
__________________
(1) The Company measures contingent consideration liabilities related to the Chesapeake acquisition in April of 2022 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, with a range of 35.55% to 36.42%; (b) a forward-looking risk-free rate, with a range of 4.98% to 5.42%; and (c) a volatility rate of 39.98%.

Assets Measured at Fair Value on a Non-recurring Basis
Our non-financial assets, such as goodwill, indefinite-lived intangible assets and long-lived assets are adjusted to fair value when an impairment charge is recognized. Such fair value measurements are based predominately on Level 3 inputs.
Goodwill
Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date. The Company’s reporting units with goodwill balances include Remington, RED and Pure Wellness. No impairment charges related to goodwill were recorded for the years ended December 31, 2023, 2022 or 2021.
Indefinite-Lived Intangible Assets
During the third quarter of 2021, as a result of the strategic rebranding of our segment formerly known as JSAV to INSPIRE, we performed an impairment test and calculated the fair value of our indefinite-lived JSAV trademarks using the relief-from-royalty method which includes unobservable Level 3 inputs including royalty rates and projected revenues for the time period that the Company is expected to benefit from the trademark. As a result of the evaluation, we recognized intangible asset impairment charges of $1.2 million, which was the full impairment of the indefinite-lived JSAV trademarks within the INSPIRE segment for the year ended December 31, 2021. No impairment charges related to indefinite-lived assets were recorded for the years ended December 31, 2023 or December 31, 2022.
Long-Lived Assets
Long-lived assets include property and equipment, finance and operating lease assets, and definite-lived intangible assets which primarily include Remington and Premier management contracts, INSPIRE customer relationships and RED boat slip rights resulting from our acquisitions. No impairment charges related to long-lived assets were recorded for the years ended December 31, 2023, 2022 or 2021.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Effect of Fair Value Measured Assets and Liabilities on Our Consolidated Statements of Operations
The following table summarizes the effect of fair value measured assets and liabilities on theour consolidated statements of operations (in thousands):
Gain (Loss) Recognized
Year Ended December 31,
202320222021
Assets
Unrealized gain (loss) on investment:
Ashford Trust common stock (1)
$(20)$40 $— 
Braemar common stock (1)
(5)(67)— 
Realized gain (loss) on investment: (2)
Ashford Trust common stock(73)(109)(336)
Braemar common stock(7)23 (42)
Intangible assets, net (3)
— — (1,160)
Total$(105)$(113)$(1,538)
Liabilities
Contingent consideration (4)
$(600)$(650)$(23)
Subsidiary compensation plan (5)
(6)117 (295)
Deferred compensation plans (5)
1,959 477 (1,671)
Total$1,353 $(56)$(1,989)
Net$1,248 $(169)$(3,527)
 Gain (Loss) Recognized 
Year Ended December 31, 
2017 2016 2015 
Assets      
Derivative assets:      
Equity put options$—
 $(2,829) $(7,218) 
Equity call options—
 1,961
 (680) 
Options on futures contracts(91) (228) (275) 
       
Non-derivative assets:      
Equity - American Depositary Receipt—
 —
 89
 
Equity securities—
 (7,213) (10,564) 
U.S. treasury securities—
 479
 (331) 
Total(91) (7,830) (18,979) 
Liabilities      
Derivative liabilities:      
Short equity put options—
 2,147
 7,139
 
Short equity call options—
 (1,944) 4,144
 
Non-derivative liabilities:      
Equity - American Depositary Receipt—
 —
 (300) 
Equity securities—
 (160) 396
 
Contingent consideration(1,066) —
 —
 
Deferred compensation plan(10,410) 2,127
 8,608
 
Total(11,476) 2,170
 19,987
 
Net$(11,567) $(5,660) $1,008
 
Total combined      
Unrealized gain (loss) on investments$203
 $2,326
 $(2,490) 
Realized gain (loss) on investments(294) (10,113) (5,110) 
Contingent consideration(1,066)
(2) 
—
 —
 
Deferred compensation plan(10,410)
(1) 
2,127
(1) 
8,608
(1) 
Net$(11,567) $(5,660) $1,008
 
__________________
________
(1)     Represents the unrealized gain (loss) on shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees. The unrealized gain (loss) on shares is reported within “other income (expense)” in our consolidated statements of operations.
(1)
Reported as a component of salaries and benefits in the consolidated statements of operations.
(2)
Represents contingent consideration associated with the acquisition of J&S. Reported as a component of other operating expense in the consolidated statements of operations.

(2)     Represents the realized gain (loss) on shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees.
(3)    See above for discussion of impairment.
(4)    Represents the changes in fair value of our contingent consideration liabilities. The change in the fair value in the years ended December 31, 2023 and 2022 related to the level of achievement of certain performance targets associated with the acquisition of Chesapeake in April of 2022. The change in the year ended December 31, 2021 related to the level of achievement of certain performance targets and stock consideration collars associated with the Company’s previous acquisition of BAV Services, Inc. (“BAV”). Changes in the fair value of contingent consideration are reported within “other” operating expense in our consolidated statements of operations.
(5)    Reported within “salaries and benefits” in our consolidated statements of operations.
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Restricted Investment
10.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 CostGross Unrealized GainsGross Unrealized LossesFair 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.
Historical CostGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-sale securities:
December 31, 2022
Equity securities (1)
$821 $— $(518)$303 
__________________
(1)     Distributions of $365,000 of available-for-sale securities occurred in the year ended December 31, 2022.
12. 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):
December 31, 2023December 31, 2022
Carrying
Value		Estimated
Fair Value		Carrying
Value		Estimated
Fair Value
Financial assets measured at fair value:
Restricted investment$128 $128 $303 $303 
Investments5,000 5,000 — — 
Financial liabilities measured at fair value:
Deferred compensation plan$891 $891 $2,849 $2,849 
Contingent consideration3,920 3,920 2,320 2,320 
Financial assets not measured at fair value:
Cash and cash equivalents$52,054 $52,054 $44,390 $44,390 
Restricted cash23,216 23,216 37,058 37,058 
Accounts receivable, net26,945 26,945 17,615 17,615 
Notes receivable2,697 2,697 2,041 2,041 
Due from affiliates41 41 463 463 
Due from Ashford Trust18,933 18,933 — — 
Due from Braemar714 714 11,828 11,828 
Financial liabilities not measured at fair value:
Accounts payable and accrued expenses$54,837 $54,837 $56,079 $56,079 
Dividends payable28,508 28,508 27,285 27,285 
Due to affiliates— — 15 15 
Due to Ashford Trust— — 1,197 1,197 
Claims liabilities and other29,782 29,782 26,547 26,547 
Notes payable141,068 141,068 99,102 99,102 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  December 31, 2017 December 31, 2016
  
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial assets measured at fair value:        
Investments in securities $—
 $—
 $91
 $91
Financial liabilities measured at fair value:        
Deferred compensation plan $19,259
 $19,259
 $9,078
 $9,078
Contingent consideration 2,262
 2,262
 —
 —
Financial assets not measured at fair value:        
Cash and cash equivalents $36,480
 $36,480
 $84,091
 $84,091
Restricted cash 9,076
 9,076
 9,752
 9,752
Accounts receivable, net 5,127
 5,127
 16
 16
Due from Ashford Trust OP 13,346
 13,346
 12,179
 12,179
Due from Ashford Prime OP 1,738
 1,738
 3,817
 3,817
Financial liabilities not measured at fair value:        
Accounts payable and accrued expenses $20,529
 $20,529
 $11,601
 $11,601
Due to affiliates 4,272
 4,272
 933
 933
Due to Ashford Prime OP from AQUA U.S. Fund —
 —
 2,289
 2,289
Other liabilities 9,076
 9,076
 9,752
 9,752
Notes payable 11,947
 12,040
 —
 —
Investments in securities. Investment securities consist of U.S. treasury securities, publicly traded equity securities, equity put and call options on certain publicly traded equity securities and futures contracts. Liabilities associated with investments in securities consist of a margin account balance and short equity put and call options. TheRestricted investment. These financial assets are carried at fair value of these investments is based on quoted market closing prices atof the balance sheet dates in active and inactive markets.underlying investments. This is considered either a Level 1 or Level 2 valuation technique. See notes 8 and 9 for a complete description of the methodology and assumptions utilized in determining fair values.
Deferred compensation plan. The liability resulting from the deferred compensation plan is carried at fair value based on the closing prices of the underlying investments. This is considered a Level 1 valuation technique.
Contingent consideration. The liabilityliabilities associated with the Company’s acquisition of J&S isChesapeake and Alii Nui are carried at fair value based on the terms of the acquisition agreementagreements and any changes to fair value are recorded in “other” operating expenses in theour 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 11.
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, OP, due to/from Ashford Prime OP,Braemar, notes receivable, accounts payable and accrued expenses due to affiliates, due to Ashford Prime OP from AQUA U.S. Fund and other liabilitiesdividends 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 in unconsolidated entity. Investments. The asset resulting fromCompany measures TSGF L.P.’s investment in unconsolidated entities.at fair value at each reporting period using the market value approach. This is considered a Level 3 valuation technique. See notes 2 and 11.

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Notes payable. The carryingfair value of notes payable was $11.9 million at December 31, 2017. The estimated fair value at December 31, 2017 was approximately $12.0 million. The fair value is based on credit spreads on observable transactions of a similar nature and is considered a Level 2 valuation technique.
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.
11.
13. Commitments and Contingencies
Release and Waiver Agreement—On April 15, 2022, the Company and Ashford Services agreed with Jeremy Welter, the Chief Operating Officer of the Company, that, effective on July 15, 2022, Mr. Welter would terminate employment with and service to the Company, Ashford Services and their affiliates. Mr. Welter was also the Chief Operating Officer of Ashford Trust and Braemar and accordingly his service as Chief Operating Officer of each of Ashford Trust and Braemar also ended on July 15, 2022. The Company has commitments related to cash compensation for the departure of Mr. Welter which included a cash termination payment of $750,000, which was paid on August 5, 2022, and payments totaling approximately $6.4 million, which are payable in 24 substantially equal monthly installments of approximately $267,000 beginning in August 2022. As of December 31, 2023, the Company’s remaining commitment to Mr. Welter totaled approximately $1.9 million.
MTA Audit—On November 28, 2023, the Tax Administration Service’s Administration of Quintana Roo (the “Mexican Tax Authorities” or 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 have up to one year from the Company’s written response to issue their final tax assessment. As of December 31, 2023, 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Litigation—On December 11, 2015,20, 2016, a purported stockholder class action and derivative complaint challenging the Remington acquisitionlawsuit was filed against one of the Company’s subsidiaries in the Superior Court of Chancery of the State of DelawareCalifornia in and styled as Campbell v. Bennett et al., Case No. 11796.for the County of Contra Costa alleging violations of certain California employment laws. The complaint names as defendants eachcourt has entered an order granting class certification with respect to: (i) a statewide class of the membersnon-exempt employees who were allegedly deprived of the Company's board of directors, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and Remington Holdings GP, as well as the Company as a nominal defendant. The complaint alleges that the members of the Company’s board of directors breached their fiduciary duties to the Company’s stockholders in connection with the Remington acquisition and that Monty Bennett, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and Remington Holdings GP aided and abetted the purported breaches of fiduciary duty. In support of these claims, the complaint alleges, among other things, that the Company’s board of directors engaged in an unfair process with Remington Lodging and the Bennetts andrest breaks as a result of the Company overpaidsubsidiary’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 80% limited partnership and 100% general partnership interests in Remington Lodging. The complaint also allegescourt to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. While we believe it is reasonably possible that the proxy statement filed with the SEC contains certain materially false and/or misleading statements. The action seeks injunctive relief, including enjoining the special meeting of stockholders and any vote on the contribution or the stock issuances or rescinding the Remington acquisition if they are consummated, or in the alternative an award of damages, as well as unspecified attorneys' and other fees and costs, in addition to any other relief the courtwe may deem proper. Since the filing of the complaint, the special meeting of stockholders and related vote occurred with the stockholders approving the acquisition. On March 24, 2017, the Remington acquisition was terminated and therefore this action is moot. On April 13, 2017, the Court of Chancery entered an order dismissing the action with prejudice as to the named plaintiff, and without prejudice as to all other members of the class. Pursuant to the order, the Court of Chancery retained jurisdiction solely for the purpose of determining the plaintiff’s anticipated application for an award of mootness fees and reimbursement of expenses. After negotiations, and to eliminate any riskincur 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 plaintiff’s fee petition, the Company agreedtrial judge retains discretion to pay fees and expenses in the amount of $150,000 within five (5) days of the entry of an order closing the case in the second quarter of 2017. Accordingly, this amount was recorded within general and administrative expenses on our consolidated statements of operations for the year ended December 31, 2017. The Court of Chancery has not and will not pass any judgment on the fee payment. On July 17, 2017, the Court of Chancery entered a stipulation and order closing the case.
Jesse Small v. Monty J. Bennett, et al., Case No. 24-C-16006020 (Md. Cir. Ct.) On November 16, 2016, Jesse Small, a purported shareholder of Ashford Prime, commenced a derivative action in Maryland Circuit Court for Baltimore City asserting causes of action for breach of fiduciary duty, corporate waste, and declaratory relief against the members of the Ashford Prime board of directors, David Brooks (collectively, the “Individual Defendants”), Ashford Inc. and Ashford LLC. Ashford Prime is named as a nominal defendant. The complaint alleges that the Individual Defendants breached their fiduciary duties to Ashford Prime by negotiating and approving the termination fee provisionaward lower penalties than set forth in Ashford Prime’s advisory agreement with Ashford LLC,the applicable California employment laws, we do not believe that Ashford Inc. and Ashford LLC aided and abetted the Individual Defendants’ fiduciary duty breaches, and that the Ashford Prime board of directors committed corporate waste in connection with Ashford Prime’s purchase of 175,000 shares of Ashford Inc. common stock. The complaint seeks monetary damages and declaratory and injunctive relief, including a declaration that the termination fee provision is unenforceable. The defendants filed motions to dismiss the complaint on March 24, 2017. On June 6, 2017, the plaintiff notified the court that the plaintiff intends to dismiss the action as moot and seek a mootness fee and costs. On July 25, 2017, the action was dismissed with prejudice asany potential loss to the plaintiff. A hearing on the plaintiff’s fee petition was held on October 25, 2017. On February 5, 2018, the court denied the plaintiff’s fee petition.
The Company is reasonably estimable at this time. As of December 31, 2023, no amounts have been accrued.
We are also engaged in other various legal proceedings whichthat 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 Disability 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, ranges from remote toliterature. We recognize a loss when we believe the loss is both probable and reasonably possible and to probable.estimable. Legal costs associated with loss contingencies are expensed as incurred. Based on estimates of the range of potential losses associated withinformation available to us relating to these matters, management doeslegal 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 upon theon our consolidated financial position, or 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 employee personal information. We have completed an investigation and have identified certain employee information that may have been exposed, but we have not identified that any customer information was exposed. All systems have been restored. We believe that we maintain a sufficient level of insurance coverage related to such events, and the Company. However,related incremental costs incurred to date are immaterial. In February of 2024, two class action lawsuits were filed related to the cyber incident. The suits are currently pending in the U.S. District Court for the Northern District of Texas. We intend to vigorously defend these matters and do not believe that any potential loss is reasonably estimable at this time. It is reasonably possible that the Company may incur additional costs related to the matter, but we are unable to predict with certainty the ultimate amount or range of potential loss.
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 and if the Company failed tocertainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses were to exceed the Company’sour current estimates of the range of potential losses, the Company’sour consolidated financial position, or results of operations, or cash flows could be materially adversely affected in future periods.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


12. Income Taxes
The following table reconciles the income tax benefit at statutory rates to the actual income tax expense recorded (in thousands):
 Year Ended December 31,
 2017 2016 2015
Income tax benefit at federal statutory income tax rate of 35%$3,665
 $4,068
 $3,492
State income tax expense, net of federal income tax benefit(388) (180) (54)
Income passed through to common unit holders and noncontrolling interests(2) (2,985) (3,799)
Permanent differences(201) (1,410) (3,293)
Valuation allowance(12,725) (407) 1,563
Effect of the Tax Cuts and Jobs Act(303) —
 —
Other231
 134
 25
Total income tax (expense) benefit$(9,723) $(780) $(2,066)
The components of income tax (expense) benefit are as follows (in thousands):
 Year Ended December 31,
 2017 2016 2015
Current:     
Federal$(3,305) $(2,578) $(5,958)
Foreign(47) —
 —
State(369) (277) (350)
Total current(3,721) (2,855) (6,308)
Deferred: 
  
  
Federal(5,854) 2,023
 4,140
Foreign—
 —
 —
State(148) 52
 102
Total deferred(6,002) 2,075
 4,242
Total income tax (expense) benefit$(9,723) $(780) $(2,066)
Interest and penalties of $1,000, $2,000 and $1,000 were paid or were due to taxing authorities for the years ended December 31, 2017, 2016 and 2015, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


At December 31, 2017 and 2016, our net deferred tax asset (liability) and related valuation allowance on the consolidated balance sheets, consisted of the following (in thousands):
 December 31,
 2017 2016
Prepaid expenses$(218) $(383)
Investments in unconsolidated entities and joint ventures12,529
 119
Capitalized acquisition costs1,652
 2,116
Deferred compensation4,285
 3,258
Accrued expenses851
 3,065
Equity-based compensation3,877
 3,940
Furniture fixtures and equipment(643) (788)
Intangibles860
 182
Deferred revenue629
 214
Net operating loss1,265
 363
Deferred tax asset25,087
 12,086
Valuation allowance(25,087) (6,084)
Net deferred tax asset$—
 $6,002
As of December 31, 2017, the Company has net operating loss carryforwards of approximately $5.9 million for tax purposes, which will be available to offset future taxable income. If not used, these carryforwards will expire between 2036 and 2037.
We evaluate the recoverability of our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. We assess whether valuation allowances should be established against deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. The analysis utilized in determining the valuation allowance involves considerable judgment and assumptions. At December 31, 2016, we recorded a partial valuation allowance of $6.1 million for our deferred tax assets as we concluded that it is more likely than not that we will utilize a portion of our deferred tax assets due to the carryback potential of certain deferred tax assets. In the second quarter of 2017 we completed a legal restructuring of our organizational structure to facilitate our investment in businesses that provide products and services to the hospitality industry. The restructuring limited our ability to carryback losses, and as a result, we recorded a tax expense to reduce our net deferred tax asset to zero. We expected to recover a portion of our deferred tax asset as we produced taxable income in the post restructure period of 2017 and thereafter. We recovered a portion of the restructuring charge during the third and fourth quarters of 2017. However, due to the Tax Cuts and Jobs Act enactment on December 22, 2017, which prohibits corporations from carrying losses back to prior years, we do not expect to recover our net deferred tax assets until it is more likely than not that we will be able to realize the net deferred tax assets with sources of income other than taxes paid in the carryback period.
If our operating performance improves on a sustained basis, our conclusion regarding the need for a valuation allowance could change, resulting in the reversal of some or all of the valuation allowance in the future.
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (“TCJA”) into legislation. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of U.S. federal income taxes, the enactment date is the date the bill becomes law (i.e., upon presidential signature). With respect to this legislation, we recorded a one-time income tax expense of approximately $303,000 due to a revaluation of our net deferred tax assets resulting from the decrease in the corporate federal income tax rate from 35% to 21% and elimination of the ability to carryback net operating losses generated after December 31, 2017. We are in the process of analyzing certain other provisions of this legislation which may impact our effective tax rate. Additionally on December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. The Company has recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued and actions the Company may take as a result of the TCJA. The accounting is expected to be complete on or before the date the 2017 U.S. income tax returns are filed in 2018.

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13. Equity
Capital Stock—In accordance with Ashford Inc.’s charter, we are authorized to issue 200 million shares of capital stock, consisting of 100 million shares common stock, par value $0.01$0.001 per share, 50 million shares blank check common stock, par value $0.01$0.001 per share,and 50 million shares preferred stock, par value $0.01$0.001 per share. Our Boardshare, 19,120,000 of Directors haswhich is designated 2 million shares of our preferred stock as Series AD Convertible Preferred Stock. The holders of Series A cumulative preferred stock are entitled to receive dividends in preference to holders of shares of any class or series of stock ranking junior to it, equal to 1,000 multiplied by the aggregate per share amount of all dividends of common stock. Each share of Series A cumulative preferred stock shall entitle the holder to 1,000 votes on all matters submitted to a vote of the stockholders of Ashford Inc. No shares of Series A cumulative preferred stock are currently outstanding.
Shareholder Rights Plan—On November 16, 2014, our board of directors adopted a shareholder rights plan (the “2014 Rights Plan”). The 2014 Rights Plan is intended to improve the bargaining position of our board of directors in the event of an unsolicited offer to acquire our outstanding shares of common stock. Pursuant to the 2014 Rights Plan, our board of directors declared a dividend of one preferred share purchase right (a “Right”) payable on November 27, 2014, for each outstanding share of common stock, par value $0.01 per share (the “Common Shares”), outstanding on November 27, 2014 (the “Record Date”) to the stockholders of record on that date. Each Right initially entitles the registered holder to purchase from the Company one one thousandth of a share of Series A Preferred Stock, par value $0.01 per share (the “Preferred Shares”), of the Company, at a price of $275 per one one thousandth of a Preferred Share represented by a Right (the “Purchase Price”), subject to adjustment. The Rights become exercisable upon certain conditions, as defined in the rights agreement. At any time prior to the time any person or group becomes an Acquiring Person, as defined in the rights agreement, the board of directors of the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right. The value of the rights is de minimis. The rights are set to expire on the date of the 2018 annual meeting of stockholders unless at such meeting our stockholders vote to approve an extension of the expiration date.
Noncontrolling Interests in Consolidated Entities—See note 2 for details regarding ownership interests, carrying values and allocations related to noncontrolling interests in our consolidated subsidiaries.
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The following table summarizes the (income) loss allocatedattributable to noncontrolling interests for each of our consolidated entities (in thousands):
Year Ended December 31,
202320222021
(Income) loss attributable to noncontrolling interests:
OpenKey$809 $1,005 $799 
RED— — (51)
Pure Wellness21 166 (70)
TSGF L.P.50 — — 
Total net (income) loss attributable to noncontrolling interests$880 $1,171 $678 
 Year Ended December 31,
 2017 2016 2015
(Income) loss allocated to noncontrolling interests:     
J&S$(49) $—
 $—
Pure Rooms38
 —
 —
OpenKey (1)
515
 849
 —
Other (2)
(146) 8,011
 10,852
Total net (income) loss allocated to noncontrolling interests$358
 $8,860
 $10,852
________
(1)
The 2016 loss allocated to the noncontrolling interest in OpenKey represents the period from the March 8, 2016 conversion of our notes receivable through December 31, 2016.
(2)
Represents noncontrolling interests primarily in the AQUA Fund, which was fully dissolved as of December 31, 2017.
14.15. Mezzanine Equity
Redeemable Noncontrolling Interests—Redeemable noncontrolling interests are included in the mezzanine section of our consolidated balance sheets as the ownership interests are redeemable for cash or registered shares outside of the Company’s control. As described below, our mezzanine equity includes redeemableRedeemable noncontrolling interests in Ashford Holdings as well asincludes the Series CHP Unit preferred membership interest issued in our acquisition of Chesapeake in April of 2022 and the membership interests of common units and LTIP units. Redeemable noncontrolling interest additionally includes redeemable ownership interests in the common stock of our consolidated subsidiary common stock.OpenKey for the year ended December 31, 2021. See also note 2 for tables summarizing the redeemable noncontrolling ownership interests and carrying values. See note 17 for a summary of related party transactions, including income (loss)
The following table summarizes the net (income) loss attributable to our redeemable noncontrolling interests.interests (in thousands):
Redeemable Noncontrolling Interests
Year Ended December 31,
202320222021
Net (income) loss attributable to redeemable noncontrolling interests:
Ashford Holdings$(501)$(448)$63 
OpenKey— — 152 
Total net (income) loss attributable to redeemable noncontrolling interests$(501)$(448)$215 
Series CHP Units—Redeemable noncontrolling interestsIn 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 represents certain members’ proportionate sharehaving a priority in payment of equitycash 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 their allocable shareaccumulated distributions thereon; (ii) is entitled to cumulative dividends at the rate of equity7.28% per annum, payable quarterly in earnings/lossarrears; (iii) participates in any dividend or distribution paid on all outstanding common units of Ashford Holdings which is an allocation of net income/loss attributablein addition to the members based onpreferred dividends; (iv) is convertible, along with the weighted average ownership percentageaggregate accrued or accumulated and unpaid distributions thereon, into common units of these members’ interest. Beginning one year after issuance, eachAshford Holdings at the option of the holder or the issuer, which common unitunits of membership interest mayAshford Holdings will then be redeemedredeemable 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.
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or registered shares in certain cases outsideFor the Company’s control. Prior to April 6, 2017, the noncontrolling interests represented certain members’ proportionate share of equity and their allocable share of equity in earnings/loss of Ashford LLC. See note 1.
In connection with our spin-off, Ashford Trust OP unit holders received one common unit in Ashford LLC for every 55 common units held in Ashford Trust OP. Each holder of common units of Ashford LLC could then exchange up to 99% of the Ashford LLC common units for shares of Ashford Inc. common stock. During the yearyears ended December 31, 2014, approximately 356,000 common units were exchanged for shares2023 and 2022 the Company recorded net income attributable to redeemable noncontrolling interests of $688,000 and $489,000, respectively, to the Series CHP Unit holders which is included in Ashford Inc. common stockHoldings in the table above.
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 one share of Ashford Inc.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 every 55 Ashford LLCcustomary 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 units. Followingstock may be declared or paid, and no other distributions or redemptions may be made, on the completionCompany’s common stock; and (C) the Board will be increased by two seats and the holders of 55% of the exchange offer, Ashford LLC effectedoutstanding 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 reverse“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 spliton an as-converted basis, subject to applicable voting limitations.
So long as any shares of Series D Convertible Preferred Stock are outstanding, the Company is prohibited from taking specified actions without the consent of the holders of 55% of the outstanding Series D Convertible Preferred Stock, including: (i) modifying the terms, rights, preferences, privileges or voting powers of the Series D Convertible Preferred Stock; (ii) altering the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series D Convertible Preferred Stock; (iii) issuing any security senior to the Series D Convertible Preferred Stock, or any shares of Series D Convertible Preferred Stock other than pursuant to the Combination Agreement dated May 31, 2019 between us, the Bennetts, Remington Holdings, L.P. and certain other parties, as amended (the “Combination Agreement”); (iv) entering into any agreement that expressly prohibits or restricts the payment of dividends on the Series D Convertible Preferred Stock or the common stock of the Company or the exercise of the Change of Control Put Option (as defined in the Combination Agreement); or (v) other than the payment of dividends on the Series D Convertible Preferred Stock or payments to purchase any of the Series D Convertible Preferred Stock, transferring all or a substantial portion of the Company’s or its common units such that each common unit was automatically converted into 1/55subsidiaries’ cash balances or other assets to a person other than the Company or its subsidiaries, other than by means of a common unit.
A summarydividend payable by the Company pro rata to the holders of the activityCompany common stock (together with a corresponding dividend payable to the holders of the member interest units is as follow (in thousands):Series D Convertible Preferred Stock).
 Year Ended December 31,
 2017 2016 2015
Units outstanding at beginning of year4
 5
 5
Units redeemed for cash (1)
—
 (1) —
Units outstanding at end of year4
 4
 5
Units convertible/redeemable at end of year4
 4
 5
__________________
(1)
During the years ended December 31, 2017, 2016, and 2015, membership interest units with aggregate fair values at redemption of $0, $18,000 and $0, respectively, were redeemed by the holder and, at our election, we paid cash to satisfy the redemption price.
Redeemable noncontrolling interest in other subsidiaryAfter 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 representednot fewer than five business days before such purchase is scheduled to close).
The Series D Convertible Preferred Stock is only redeemable ownership interestsupon a change in our consolidated VIEs, J&Scontrol 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 OpenKey,it is not probable the Series D Convertible Preferred Stock will become redeemable in the future.
As of December 31, 2023, the Company had aggregate undeclared preferred stock dividends of approximately $28.5 million, which relates to the second and fourth quarters of 2021 and the fourth quarter of 2023. On each of April 14, 2023, July 12, 2023 and October 11, 2023 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 year ended December 31, 2017first, second and in OpenKey for the year ended December 31, 2016. See note 2 to our consolidated financial statements for tables summarizing the redeemable noncontrolling ownership interests and carrying values. See note 17 to our consolidated financial statements for a summarythird quarters of related party transactions, including income (loss) attributable to our redeemable noncontrolling interests.
Redeemable noncontrolling interests in other subsidiary common stock originated as a result of the following transactions:
On March 8, 2016, a 100% noncontrolling interest in OpenKey was initially reduced to a 49.28% redeemable noncontrolling interest, which resulted in the conversion of our note receivable into our initial 38.49% ownership interest. See also notes 1, 2, 13 and 17 to our consolidated financial statements.
On November 1, 2017, we acquired an 85% controlling interest in J&S with 15% ownership held by the company’s founders as a redeemable noncontrolling interest in the J&S subsidiary common stock. See note 4 for details of the acquisition. See also notes 1, 2, 13 and 17 to our consolidated financial statements.

2023.
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The following table summarizesAll dividends, declared and undeclared, are recorded as a reduction in net income (loss) attributable to common stockholders in the net (income) loss allocated to our redeemable noncontrolling interests (in thousands). See note 2 toperiod incurred in our consolidated financial 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 tables summarizing the redeemable noncontrolling ownership interestsSeries D Convertible Preferred Stock. Unpaid Series D Convertible Preferred Stock dividends, declared and carrying values:undeclared, totaling $28.5 million and $27.1 million at December 31, 2023 and 2022, respectively, are recorded as a liability in our consolidated balance sheets as “dividends payable.”
Convertible preferred stock cumulative dividends declared during the years ended December 31, 2023, 2022 and 2021 for all issued and outstanding shares were as follows (in thousands, except per share amounts):
Year Ended December 31,
202320222021
Preferred dividends - declared$26,099 $52,618 $16,706 
Preferred dividends per share - declared$1.3650 $2.7520 $0.8737 
Aggregate undeclared convertible preferred stock cumulative dividends (in thousands, except per share amounts):
December 31, 2023December 31, 2022
Aggregate preferred dividends - undeclared$28,508 $18,414 
Aggregate preferred dividends - undeclared per share$1.4910 $0.9631 
 Year Ended December 31,
 2017 2016 2015
Net (income) loss allocated to redeemable noncontrolling interests:     
Ashford Holdings (1)
$19
 $4
 $2
J&S136
(2) 
—
 —
OpenKey1,329
 1,143
(3) 
—
Total net (income) loss allocated to redeemable noncontrolling interests$1,484
 $1,147
 $2
________
(1)
Represents the 0.2% interest in Ashford LLC prior to the legal restructuring of our organizational structure on April 6, 2017 and 0.2% interest in Ashford Holdings thereafter.
(2)
For the period from the November 1, 2017 acquisition of J&S through December 31, 2017, net loss of $136,000 was allocated to the redeemable noncontrolling interest in the J&S subsidiary common stock. See note 2 for tables summarizing the redeemable noncontrolling ownership interests and carrying values.
(3)
For the period from the March 8, 2016 conversion of our notes receivable from OpenKey through December 31, 2016, net loss of $1.1 million was allocated to the redeemable noncontrolling interest in the OpenKey subsidiary common stock.
15.16. Equity-Based Compensation
Under our 2014 Incentive Plan, we are authorized to grant 1,082,2613,173,812 incentive stock awards in the form of shares of our common stock or securities convertible into shares of our common stock. As of December 31, 2017, 93,5392023, 593,082 incentive stock award shares were available for future issuance under the 2014 Incentive Plan. As defined by the 2014 Incentive Plan, authorized shares automatically increase on January 1 of each year in an amount equal to 15% of the sum of (i) the fully diluted share count and (ii) the shares of common stock reserved for issuance under the Company’s deferred compensation plan less shares available under the 2014 Incentive Plan as of December 31 of the previous year. Pursuant to the plan, we have 491,571750,949 shares of our common stock, or securities convertible into 491,571750,949 shares of our common stock, available for issuance under our 2014 Incentive Plan, as of January 1, 2018.2024.
Equity-based compensation expense is primarily recorded in salaries“salaries and benefits expense” and REIT equity-based compensation expense is primarily recorded in “reimbursed expenses” in our consolidated statements of operations. The components of equity-based compensation expense for the years ended December 31, 2017, 20162023, 2022 and 2015,2021 are presented below by award type (in thousands):
 Year Ended December 31,
 2017 2016 2015
Equity-based compensation     
Stock option amortization (1)
$7,535
 $5,884
 $3,856
Director equity grants expense (2)
250
 250
 250
Pre-spin equity grants expense (3)
684
 5,439
 11,503
Total equity-based compensation (4)
$8,469
 $11,573
 $15,609
      
Other equity-based compensation     
REIT equity-based compensation (5)
$9,394
 $12,243
 6,311
 $17,863
 $23,816
 $21,920
Year Ended December 31,
202320222021
Equity-based compensation
Class 2 LTIP Units and stock option amortization (1)
$130 $1,398 $2,641 
Employee LTIP Units and equity grant expense (2)
1,729 2,135 1,217 
Director and other non-employee equity grants expense (3)
553 512 695 
Total equity-based compensation$2,412 $4,045 $4,553 
Other equity-based compensation
REIT equity-based compensation (4)
$12,196 $16,107 $19,098 
$14,608 $20,152 $23,651 
________

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(1) See Stock Optionsdiscussion below. As of December 31, 2017,2023, the Company had approximately $10.4 million$156,000 of total unrecognized compensation expense related to stock optionsthe Class 2 LTIP Units that will be recognized over a weighted average period of 1.31.2 years. DuringThe Company did not grant or modify any stock option grants or Class 2 LTIP Units during the years ended December 31, 2017, 20162023 and 2015, stock option amortization included $39,000, $61,000 and $02021. The year ended December 31, 2022 includes total compensation expense of amortizationapproximately $947,000 related to OpenKeythe modification of 74,000 and 150,000 fully vested stock options issuedand Class 2 LTIP Units (defined below), respectively, awarded to employees and management which were granted in December 2014 and expiring in December 2022 under OpenKey’sthe original grant terms. The modification extended the expiration date for the stock plan.options and Class 2 LTIP Unit awards to December 2025. No other modifications were made to the original grant terms.
(2)As of December 31, 2023, the Company had approximately $2.5 million of total unrecognized compensation expense related to restricted shares and LTIP Units (defined below) that will be recognized over a weighted average period of 1.6 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 fully expensed in general and administrative expense as the grants of stock are fully vested on the date of grant. See Restricted Stockdiscussion below.
(3) As a result of the spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford Trust equity grants of common stock and LTIP units. We recognized the equity-based compensation expense related to these assumed Ashford Trust equity grants through the April 2017 final vesting date. As of December 31, 2017, these equity grants were fully vested. See Restricted Stockdiscussion below.
(4) Additionally, $2,000, $10,000 and $10,000 of equity-based compensation associated with employees of an affiliate was included in “general and administrative” expense for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, these equity grants were fully vested. See note 17.expense.
(5)(4)    REIT equity-based compensation expense is primarily recorded in “reimbursed expenses” and is associated with equity grants of Ashford Trust’s and Ashford Prime’sBraemar’s common stock and LTIP units awarded to our officers and employees of Ashford Inc. See notes 2 and 17.employees.
As of December 31, 2017,2023, we had outstanding stock option awards and restricted stockequity-based compensation awards as follows:
Stock Options—DuringThe Company did not grant or modify any stock option grants during the years ended December 31, 20172023 and 2016,2021. During the year ended December 31, 2022, we granted 334,000 and 340,000modified 74,000 fully vested stock options to employees withand management which were granted in December 2014 and expiring in December 2022 under the original grant terms. The modification extended the expiration date fair values of $8.5 million and $7.8 million, respectively. Nofor the stock options were granted during 2015. The grant priceto December 2025 which resulted in $313,000 of the options was the market value of our stockexpense recognized on the extension date of grant. The options vest three years fromdue to the grant date with a maximum option term of ten years. Theincrease in the fair value of each option granted is estimated on the date ofstock options. No other modifications were made to the original grant using the Black-Scholes option pricing model. Due to our lack of history, we do not have adequate historical exercise/cancellation behavior on which to base the expected life assumption. We were not able to use the “simplified” method as described in SAB 107 and 110 because the options remain exercisable for the full contractual term upon termination. Therefore, we used an adjusted simplified method, where any options expected to be forfeited over the term of the option were assumed to be exercised at full term and all other options were assumed to be exercised at the midpoint of the average time-to-vest and the full contractual term. We will continue to evaluate the expected life as we accumulate more data. Additionally, we do not have adequate historical stock price information on which to base the expected volatility assumption. In order to estimate volatility, we utilized the weighted average of our own stock price volatility based on daily data points over our full trading history and the average of the most recent historical volatilities of our peer group commensurate with the option’s expected life (or full history if the peer had insufficient trading history).
The weighted average assumptions used to value grant options are detailed below:
 Year Ended December 31,
 2017 2016 2015
Weighted-average grant date fair value$25.29
 $22.91
 n/a
Weighted average assumptions used:     
Expected volatility34.9% 50.0% n/a
Expected term (in years)6.5
 6.5
 n/a
Risk-free interest rate2.01% 1.5% n/a
Expected dividend yield—% —% n/a

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terms.
A summary of stock option activity is as follows:
 Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term 
Aggregate Intrinsic Value of In-the
Money Options
 (In thousands) (per share) (In years) (In thousands)
Outstanding, January 1, 2015300
 $85.97
 7.95
 $2,409
Granted—
 —
 —
 —
Exercised—
 —
 —
 —
Forfeited, canceled or expired—
 —
 —
 —
Outstanding, December 31, 2015300
 $85.97
 6.95
 $—
Granted340
 45.59
 10.00
 —
Exercised—
 —
 —
 —
Forfeited, canceled or expired(1) 45.59
 9.38
 —
Outstanding, December 31, 2016639
 $64.53
 7.70
 $—
Granted334
 57.61
 10.00
 11,837
Exercised—
 —
 —
 —
Forfeited, canceled or expired(1) 50.15
 9.22
 (80)
Outstanding, December 31, 2017972
 $62.17
 7.67
 $29,974
Options exercisable at December 31, 2017300
 $85.97
 4.95
 $2,109
Number of OptionsWeighted Average Exercise PriceWeighted Average Contractual TermAggregate Intrinsic Value of In-the
Money Options
(In thousands)(per option)(In years)(In thousands)
Outstanding, January 1, 20211,434 $67.26 5.67$— 
Forfeited, canceled or expired(3)69.51 7.67— 
Conversions to Class 2 LTIP Units(631)62.72 4.80— 
Outstanding, December 31, 2021800 70.84 4.56— 
Forfeited, canceled or expired(76)85.97 — — 
Conversions to Class 2 LTIP Units(150)71.06 4.88— 
Outstanding, December 31, 2022574 68.78 4.39— 
Outstanding, December 31, 2023574 68.78 3.39— 
Options exercisable at December 31, 2023574 $68.78 3.39$— 
The aggregate intrinsic value represents the difference between the exercise price of the stock options and the quoted closing common stock price as of the end of the period. At December 31, 2017,2023, the Company had approximately $10.4 million of totaldid not have any remaining unrecognized compensation expense related to stock options that will be recognized over the weighted average period of 1.3 years.
Restricted Stock—A summary of our restricted stock activity is as follows (shares in thousands):options.
 Year Ended December 31,
 2017 2016 2015
 Restricted Shares 
Weighted Average
Price Per Share at Grant
 Restricted Shares 
Weighted Average
Price Per Share at Grant
 Restricted Shares Weighted Average
Price Per Share at Grant
Outstanding at beginning of year1
 $56.20
 3
 $56.20
 5
 $56.20
Restricted shares granted (1)
5
 52.89
 5
 45.09
 3
 93.92
Restricted shares vested(6) 53.64
 (7) 47.48
 (5) 75.42
Restricted shares forfeited—
 —
 —
 —
 —
 —
Outstanding at end of year—

$—
 1
 $56.20
 3
 $56.20
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________
(1) Equity-based compensation expense of $250,000, $250,000 and $250,000 (see equity-based compensation table above) was recognized in connection with stock grants of 5,000, 5,000 and 3,000 immediately vested restricted shares to our independent directors for the years ended December 31, 2017, 2016 and 2015, respectively.
As a result of the spin-off, we assumed all of the unrecognized equity-based compensation associated with prior Ashford Trust equity grants. We recognized the equity-based compensation expense related to these assumed Ashford Trust equity grants through the April 2017 final vesting date. As of December 31, 2017, these equity grants were fully vested. The restricted stock/units that vested during 2017 had a fair value of $2.9 million at the date of vesting.

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Class 2 LTIP Units—On September 10, 2021, the independent members of the Board of Directors of the Company approved Amendment No. 1 (the “Amendment”) to the Third Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Holdings LLC (a subsidiary operating partnership of the Company), dated as of November 6, 2019 (the “LLC Agreement”). The purpose of the Amendment is to create a new class of Class 2 Long-Term Incentive Partnership Units (the “Class 2 LTIP Units”) in Ashford Hospitality Holdings LLC (“AHH”), which replicate the economics of a stock option granted by the Company by converting (prior to the applicable final conversion date) into a number of long-term incentive partnership units (the “LTIP Units”) in AHH based on the appreciation in a share of the Company’s common stock over the issue price of the applicable Class 2 LTIP Unit. LTIP Units are in turn convertible into common limited partnership units of AHH, which are themselves redeemable for cash or convertible into shares of the Company’s common stock on a 1-for-1 basis at the sole option of the Company. The Amendment was approved in order to provide certain executives of the Company the opportunity to substitute historical stock options granted by the Company with Class 2 LTIP Units awarded under the Company’s 2014 Incentive Plan, as amended, with such Class 2 LTIP Units having an issue price equal to the exercise price of the applicable substituted option, the same vesting conditions as the applicable substituted option and a final conversion date that is the same as the expiration date of the applicable substituted option. There is no incremental expense recognized upon conversion as the fair value of the Class 2 LTIP Units and the applicable substituted options are the same.
The Company did not grant or modify any Class 2 LTIP Units during the year ended December 31, 2023. During the year ended December 31, 2022, certain executives converted 150,000 fully vested stock options to Class 2 LTIP Units. The fully vested stock options were granted in December 2014 and expired in December 2022 under the original grant terms. Subsequent to the conversion of the stock options to Class 2 LTIP Units, the 150,000 Class 2 LTIP Units were modified to extend the expiration date from December 2022 to December 2025. The extension of the expiration date resulted in $634,000 of expense recognized on the extension date due to the increase in the fair value of the Class 2 LTIP Units. No other modifications were made to the original grant terms.
During the year ended December 31, 2022, 48,000 Class 2 LTIP Units were granted to an executive officer of the Company with a grant date fair value of $390,000. The Class 2 LTIP Units vest three years from the grant date with a maximum option term of ten years. The fair value of each Class 2 LTIP Unit granted is estimated on the date of grant using the Black-Scholes option pricing model. The assumptions used to value the Class 2 LTIP Units granted in the year ended December 31, 2022 are detailed below:
Year Ended December 31,
2022
Grant date fair value$8.10 
Assumptions used:
Expected volatility75.2 %
Expected term (in years)6.5
Risk-free interest rate2.2 %
Expected dividend yield— %
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A summary of Class 2 LTIP Unit activity is as follows:
16.
Number of SharesWeighted Average Exercise PriceWeighted Average Contractual TermAggregate Intrinsic Value of In-the
Money Options
(In thousands)(per share)(In years)(In thousands)
Outstanding, January 1, 2021— $— — $— 
Conversions from stock options631 62.72 4.80— 
Outstanding, December 31, 2021631 62.72 4.80— 
Granted48 45.00 9.21— 
Conversions from stock options150 71.06 4.88— 
Outstanding, December 31, 2022829 63.20 4.63— 
Outstanding, December 31, 2023829 63.20 3.63— 
Class 2 LTIP Units exercisable at December 31, 2023781 $60.59 3.16$— 
The aggregate intrinsic value represents the difference between the exercise price of the Class 2 LTIP Units and the quoted closing common stock price as of the end of the period. At December 31, 2023, the Company had approximately $156,000 of total unrecognized compensation expense, related to Class 2 LTIP Units that will be recognized over the weighted average period of 1.2 years.
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Restricted Stock—A summary of our restricted stock activity, as it relates to equity-based compensation, is as follows (in thousands, except per share amounts):
Year Ended December 31,
202320222021
Restricted SharesWeighted Average
Price Per Share at Grant		Weighted Average Fair ValueRestricted SharesWeighted Average
Price Per Share at Grant		Weighted Average Fair ValueRestricted SharesWeighted Average
Price Per Share at Grant		Weighted Average Fair Value
Outstanding at beginning of year228 $12.25 $2,793 303 $9.93 $3,009 241 $10.45 $2,518 
Restricted shares granted (1)
136 13.18 1,792 109 15.96 1,740 172 9.03 1,553 
Restricted shares vested(153)11.13 1,703 (177)10.54 1,866 (107)9.19 983 
Restricted shares forfeited(3)14.33 43 (7)13.44 94 (3)9.87 30 
Outstanding at end of year208 $13.64 $2,837 228 $12.25 $2,793 303 $9.93 $3,009 
________
(1) Equity-based compensation expense of $672,000, $1.0 million and $580,000 was recognized in connection with stock grants of 136,000, 109,000 and 172,000 to our employees and independent directors for the years ended December 31, 2023, 2022 and 2021, respectively.
LTIP Units—Under our 2014 Incentive Plan, we are authorized to grant LTIP awards to certain executives and employees as compensation which have a vesting period of three years. All LTIP Units are convertible into common shares of AHH at a 1:1 ratio upon vesting.
A summary of our LTIP Unit activity, as it relates to equity-based compensation, is as follows (in thousands, except per share amounts):
Year Ended December 31,
20232022
LTIPsWeighted Average
Price Per Share at Grant		Weighted Average Fair ValueLTIPsWeighted Average
Price Per Share at Grant		Weighted Average Fair Value
Outstanding at beginning of year39 $16.14 $629 — $— $— 
LTIPs granted (1)
41 13.59 557 39 16.14 629 
LTIPs vested(13)16.14 210 — — — 
Outstanding at end of year67 $14.57 $976 39 $16.14 $629 
________
(1) Equity-based compensation expense of $364,000 and $164,000 was recognized in connection with the grants of 41,000 and 39,000 LTIP Units for the years ended December 31, 2023 and 2022, respectively. At December 31, 2023, 13,000 LTIP Units were vested and the Company had approximately $656,000 of total unrecognized compensation expense related to LTIP Units.
Deferred Stock Units—Beginning in 2019 under our existing 2014 Incentive Plan, our independent directors may elect to receive Deferred Stock Units (“DSU”) which allows deferral of immediate vesting common shares granted in the period until the earlier of the end of the director’s service or a change of control in the Company. DSUs are fully vested as of the grant date and may only be settled in the Company’s common stock.
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A summary of our DSU activity, as it relates to equity-based compensation, is as follows (in thousands, except per share amounts):
Year Ended December 31,
202320222021
DSUsWeighted Average
Price Per Share at Grant		Weighted Average Fair ValueDSUsWeighted Average
Price Per Share at Grant		Weighted Average Fair ValueDSUsWeighted Average
Price Per Share at Grant		Weighted Average Fair Value
Outstanding at beginning of year82 $10.76 $882 66 $9.68 $639 43 $9.67 $416 
DSUs granted (1)
30 10.79 324 16 15.27 244 23 9.70 223 
Outstanding at end of year112 $10.63 $1,191 82 $10.76 $882 66 $9.68 $639 
________
(1) Equity-based compensation expense of $320,000, $225,000 and $225,000 was recognized in connection with grants of 30,000, 16,000 and 23,000 immediately vested DSUs to our independent directors for each of the years ended December 31, 2023, 2022 and 2021, respectively.
17. Employee Benefit Plans
Deferred Compensation Plan—We administer a non-qualified DCPdeferred compensation plan (“DCP”) for certain executive officers. The plan allows participants to defer up to 100% of their base salaryofficers and bonus and select an investment fund for measurement of the deferred compensation obligation. For the periods the DCP was administered by Ashford Trust, the participants elected Ashford Trust common stock as their investment option. In accordance with the applicable authoritative accounting guidance, the deferred amounts and any dividends earned received equity treatment and were included in additional paid-in capital. In connection with our spin-off and the assumption of the DCP obligation by the Company, the DCP was modified toother 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“salaries and benefitsbenefits” in our consolidated statements of operations.
The following table summarizes the DCP activity (in thousands):
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2023202320222021
Change in fair value
Unrealized gain (loss)
Unrealized gain (loss)
Unrealized gain (loss)
Year Ended December 31,
2017 2016 2015
Change in fair value     
Unrealized gain (loss)$(10,410) $2,127
 $8,608
Distributions
Distributions
     
Distributions     
Fair value (1)
$229
 $—
 $142
Fair value (1)
Fair value (1)
Shares (1)
3
 —
 2
________
(1)Distributions made to one participant.
As of December 31, 20172023 and December 31, 20162022, the carrying value of the DCP liability was $19.3$891,000 and $2.8 million, and $9.1 million, respectively.
AIM Incentive Awards—Effective January 15, 2015, Ashford Inc. established an incentive awards program (“AIM Incentive Awards”) for certain employees involved in the success of AIM. The awards are intended No distributions were made to be a cash bonus program. The awards are deemed to be invested as of the investment date for the applicable annual award period and adjusted for deemed returns on the applicable fund (“Deemed Return”), based on a return multiplier between 100% and 300% (“Return Multiplier”), as elected quarterly by the recipient. The awards are subject to vesting and may be forfeited upon termination of employment prior to the record date for the award period. Award amounts will be measured as of the month end prior to payment and paid out within 45 days of the applicable award vesting date. The AIM Incentive Awards obligation is carried in long-term “accrued expenses” at the amortized fair value as of the end of the period with the related expense reflected as salaries and benefits in our consolidated statements of operations. As of December 31, 2017 and 2016, the carrying value of the AIM Incentive Awards liability was $487,000 and $287,000, respectively. Forany participant during the years ended December 31, 2017, 20162023 and 2015, we recorded salaries and benefits expense of $200,000, $(25,000), and $385,000 respectively, related to the AIM Incentive Awards. During the years ended December 31, 2017, 2016 and 2015 participants were paid distributions of $0, $73,000 and $0, respectively. Effective as of January 1, 2017, the value of AIM Incentive Awards are no longer adjusted based on the Deemed Return and are no longer based on a variable Return Multiplier. Instead, the value of the AIM Incentive Awards is fixed for each participant at the value of such participant's award as of the close of business on December 31, 2016.2022.
401(k) Plan—Ashford LLC sponsors aand our consolidated subsidiaries sponsor 401(k) Plan. It is aPlans. The 401(k) Plans are qualified defined contribution retirement planplans that coverscover employees 21 years of age or older who have completed one yearthree months of service and work a minimum of 1,000 hours annually.service. The 401(k) Plan allowsPlans allow eligible employees to contribute, subject to Internal Revenue Service imposed limitations, to various investment funds. The Company makesand our consolidated subsidiaries make matching cash contributions equal to 100% of up to the first 3% of an employee’s eligible compensation contributed to the respective 401(k) Plan and cash contributions equal to 50% of up to the first 6%next 2% of an employee’s eligible compensation contributed to the respective 401(k) Plan. ParticipantBoth participant contributions vest immediately, whereasand company matches vest 25% annually. Our consolidated subsidiaries also sponsor qualified defined contributions. These 401(k) Plans cover employees 18 to 21 yearsimmediately.
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Table of age or older with 0 to 3 months service and offer company matches in discretionary amounts of 0% to 25% of up to the first 5% of an employee’s eligible compensation contributed to the 401(k) Plan and vesting periods varying up to 6 years. Participant contributions vest immediately. Contents
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2017, 20162023, 2022 and 2015,2021, “salaries and benefits” expense on our consolidated statements of operations included matching expense of $304,000, $341,000,$4.3 million, $2.8 million and $222,000,$0, respectively. For the years ended December 31, 2023, 2022 and 2021, “cost of revenues for design and construction” on our consolidated statements of operations included matching expense of $473,000, $183,000 and $0, respectively. Due to the significant negative impact on the Company’s operations and financial results from COVID-19, the Company’s 401(k) match was temporarily suspended for the year ended December 31, 2021.

18. Income Taxes
The following table reconciles the income tax (expense) benefit at statutory rates to the actual income tax (expense) benefit recorded (in thousands):
Year Ended December 31,
202320222021
Income tax (expense) benefit at federal statutory income tax rate$1,166 $(2,422)$2,261 
State income tax (expense) benefit, net of federal income tax benefit6 (1,453)437 
Foreign income tax expense(1,099)(1,470)(426)
Income (loss) passed through to common unit holders and noncontrolling interests(125)58 (32)
Permanent differences(2,177)(203)(1,086)
Valuation allowance1,969 (1,094)(860)
Uncertain tax position(61)(917)— 
Stock compensation expense361 (741)— 
Other504 (288)(132)
Total income tax (expense) benefit$544 $(8,530)$162 
The U.S. and foreign components of income (loss) before income taxes were as follows (in thousands):
Year Ended December 31,
202320222021
Domestic$(9,819)$4,664 $(11,718)
Foreign4,268 6,789 738 
Total income (loss) before income taxes$(5,551)$11,453 $(10,980)
The components of income tax (expense) benefit are as follows (in thousands):
Year Ended December 31,
202320222021
Current:
Federal$(888)$(7,928)$(4,192)
Foreign(1,475)(2,031)(223)
State(1,374)(2,829)(479)
Total current(3,737)(12,788)(4,894)
Deferred:   
Federal14 5,301 4,081 
Foreign3,181 (125)(203)
State1,086 (918)1,178 
Total deferred4,281 4,258 5,056 
Total income tax (expense) benefit$544 $(8,530)$162 
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Penalties of $6,000, $20,000 and interest of $32,000 were paid to taxing authorities for the years ended December 31, 2023, 2022 and 2021, respectively.
At December 31, 2023 and 2022, our net deferred tax asset (liability) and related valuation allowance on the consolidated balance sheets, consisted of the following (in thousands):
December 31,
20232022
Deferred tax assets
Investments in unconsolidated entities and joint ventures$161 $136 
Capitalized acquisition costs4,431 5,618 
Deferred compensation198 711 
Accrued expenses7,014 2,453 
Equity-based compensation10,748 10,881 
Deferred revenue887 930 
Net operating loss carryover8,483 6,911 
Charitable contributions carryover580 — 
Total gross deferred tax assets32,502 27,640 
Less: Valuation allowance(6,126)(7,774)
Total deferred tax assets, net of valuation allowance (1)
26,376 19,866 
Deferred tax liabilities
Prepaid expenses(872)(709)
Property and equipment(5,025)(4,297)
Intangibles(39,951)(42,733)
Investment in insurance subsidiary(5,687)— 
Total deferred tax liabilities(51,535)(47,739)
Total net deferred tax assets (liabilities)$(25,159)$(27,873)
________
(1)    Includes $4.4 million of deferred tax assets presented in our consolidated balance sheet as of December 31, 2023, of which $3.2 million and $1.2 million of deferred tax assets are assigned to our INSPIRE Mexico and Warwick subsidiaries, respectively.
At December 31, 2023, the Company had federal net operating loss carryforwards of approximately $26.2 million, primarily related to the separate company filing for OpenKey. These NOLs are only available to reduce future federal tax liabilities at each separate entity. If unused, $5.9 million of the OpenKey federal net operating loss carryforwards expire in tax year beginning in 2036, with all other federal net operating losses having an indefinite carryforward period.
At December 31, 2023, the Company also had state net operating loss carryforwards of $3.2 million with, $3.2 million of these loss carryforwards only available to OpenKey. The Company had foreign net operating loss carryforwards of $9.6 million related primarily to its operations in the U.S. Virgin Islands.
We evaluate the recoverability of our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. We assess whether valuation allowances should be established against deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. The analysis utilized in determining the valuation allowance involves considerable judgment and assumptions.
Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. At December 31, 2023, there is a full valuation allowance on the deferred tax assets related to OpenKey totaling $6.1 million. During 2023, the valuation allowance of $2.6 million related to INSPIRE Mexico was reversed due to positive evidence that the deferred tax asset balances will be realized in future years.
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A reconciliation of the unrecognized tax benefit is as follows (in thousands):
17.
Year Ended December 31,
202320222021
Balance at the beginning of the year$1,161 $— $— 
Gross increases for tax positions of prior years77 1,161 — 
Balance at the end of year$1,238 $1,161 $— 
The total amount of unrecognized tax benefits that could affect the Company’s effective tax rate if recognized was $978,000, net of federal benefit, as of December 31, 2023. The Company’s policy is to record penalty and interest as a component of income tax expense. See note 2.
19. Related Party Transactions
As an asset manager providing advisory services to Ashford Trust and Ashford Prime,Braemar, as well as holding an ownership interest in other businesses providing products and services to the hospitality industry, including Ashford Trust and Ashford Prime,Braemar, related party transactions are inherent in our business activities.business. Unless otherwise noted, the activity of Ashford Trust includes Stirling OP. Details of our related party transactions are presented below. See note 20 for details regarding concentration of risk and percentage of our consolidated subsidiaries’ total revenues earned from
Ashford Trust and Ashford Prime.
—We are a party to an amended and restated advisory agreement with Ashford Trust OP.and its operating subsidiary, Ashford Hospitality Limited Partnership (“Ashford Trust OP”). The quarterly base fee is based on a declining sliding scale percentagepaid monthly calculated as 1/12th of 0.70% of Ashford Trust’s total market capitalization plus the Key MoneyNet Asset Management Fee (definedAdjustment, as defined in our advisory agreement, as the aggregate gross asset value of all key money assets multiplied by 0.70%), subject to a minimum quarterlymonthly base fee, as payment for managing its day-to-day operations in accordance with its investment guidelines. Total market capitalization includes the aggregate principal amount of its consolidated indebtedness (including its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate share of consolidated debt). The range of base fees on the scale are between 0.70% and 0.50% per annum for total market capitalization that ranges from less than $6.0 billion to greater than $10.0 billion. At December 31, 2017, the quarterly base fee was 0.70% per annum. Reimbursement for overhead, internal audit, insurance claims advisory and asset management services, including compensation, benefits and travel expense reimbursements, are billed quarterly to Ashford Trust based on a pro rata allocation as determined by the ratio of Ashford Trust’s net investment in hotel properties in relation to the total net investment in hotel properties for both Ashford Trust and Ashford Prime. We also record advisory revenue for equity grants of Ashford Trust common stock and LTIP units awarded to our officers and employees in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period, as well as an offsetting expense in an equal amount included in “salaries and benefits.”fee. We are also entitled to an incentive advisory fee that is measured annually in each year that Ashford Trust’s annual total stockholder return exceeds the average annual total stockholder return for Ashford Trust’s peer group, subject to the FCCR Condition, as defined in the advisory agreement.

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The following table summarizes the revenues and expenses related to Ashford Trust OP (in thousands):
 Year Ended December 31,
 2017 2016 2015
REVENUE BY TYPE     
Advisory services revenue     
Base advisory fee$34,724
 $34,700
 $33,833
Reimbursable expenses (1)
7,600
 6,054
 6,617
Equity-based compensation (2)
11,077
 8,429
 2,720
Incentive advisory fee (3)
1,809
 1,809
 —
Total advisory services revenue55,210
 50,992
 43,170
      
Other revenue     
Investment management reimbursements (4)
1,976
 —
 —
Debt placement fees (5)
913
 —
 —
Non-advisory expense reimbursements—
 —
 195
Lease revenue (6)
558
 —
 —
Other services (7)
997
 4
 —
Total other revenue4,444
 4
 195
      
Total revenue$59,654
 $50,996
 $43,365
      
REVENUE BY SEGMENT (8)
     
REIT advisory$58,657
 $50,992
 $43,365
J&S (9)
—
 —
 —
Corporate and other (7)
997
 4
 —
Total revenue$59,654
 $50,996
 43,365
      
COST OF REVENUES     
Cost of audio visual revenues (9)
$90
 $—
 $—
________
(1)
Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services. During the years ended December 31, 2017, 2016, and 2015, we recognized $1.7 million, $0, and $0, respectively, of deferred income from reimbursable expenses related to software implementation costs, which was partially offset by the impairment of the related capitalized software, as discussed in note 2 to our consolidated financial statements, in the amount of $1.1 million for the year ended December 31, 2017.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(2)
Equity-based compensation revenue is associated with equity grants of Ashford Trust’s common stock and LTIP units awarded to officers and employees of Ashford Inc.
(3)
Incentive advisory fee includes the second and first year installments of the 2016 incentive advisory fee in the amount of $1.8 million for each of the years ended December 31, 2017 and 2016, respectively, for which the payment was due January of the subsequent year subject to meeting the FCCR Condition at December 31 of each year, as defined in our advisory agreement with Ashford Trust. No incentive fee was earned for the 2017 and 2015 measurement periods.
(4)
Investment management reimbursements include AIM’s management of Ashford Trust’s excess cash under the Investment Management Agreement. AIM is not compensated for its services but is reimbursed for all costs and expenses.
(5)
Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our wholly-owned subsidiary.
(6)
In connection with our key money transaction with Ashford Trust, we lease furniture, fixtures and equipment to Ashford Trust at no cost. A portion of the base advisory fee is allocated to lease revenue each period equal to the estimated fair value of the lease payments that would have been made.
(7)
Other services revenue is associated with other hotel services, such as “allergy friendly” premium rooms and mobile key applications, provided to Ashford Trust by our consolidated subsidiaries, Pure Rooms and OpenKey, respectively.
(8)
See note 19 for discussion of segment reporting.
(9)
J&S contracts directly with customers to whom it provides audio visual services. J&S recognizes the gross revenue collected from their customers by the hosting hotel or venue. Commissions retained by the hotel or venue, including Ashford Trust, are recognized in cost of audio visual revenues in our consolidated statements of operations.See note 2 for discussion of the audio visual revenue recognition policy.
At December 31, 2017 and 2016, we had a net receivable of $13.3 million and $12.2 million, respectively, from Ashford Trust OP associated primarily with the advisory services fee and other fees, as discussed above.
The following table summarizes amounts due from Ashford Trust OP to each of our consolidated entities (in thousands):
 December 31, 2017 December 31, 2016
J&S$62
 $—
Pure Rooms302
 —
OpenKey25
 4
We are also a party to an amended and restated advisory agreement with Ashford Prime OP. Through June 20, 2017, the quarterly base fee was based on a declining sliding scale percentage of Ashford Prime's total market capitalization plus the Key Money Asset Management Fee (defined in our advisory agreement as the aggregate gross asset value of all key money assets multiplied by 0.70%), subject to a minimum quarterly base fee, as payment for managing its day-to-day operations in accordance with its investment guidelines. Total market capitalization includes the aggregate principal amount of its consolidated indebtedness (including its proportionate share of debt of any entity that is not consolidated but excluding its joint venture partners’ proportionate share of consolidated debt). Prior to the effectiveness of the amended and restated advisory agreement discussed below, the range of base fees on the scale was between 0.70% to 0.50% per annum for total market capitalization that ranges from less than $6.0 billion to greater than $10.0 billion. Upon effectiveness of the amended and restated advisory agreement discussed below, the base fee was fixed at 0.70% per annum. Reimbursement for overhead, internal audit, insurance claimsrisk management advisory services and asset management services, including compensation, benefits and travel expense reimbursements, are billed quarterlymonthly to Ashford PrimeTrust based on a pro rata allocation as determined by the ratio of Ashford Prime’sTrust’s net investment in hotel properties in relation to the total net investment in hotel properties for both Ashford Trust and Ashford Prime.Braemar. We also record advisorycost reimbursement revenue for equity grants of Ashford PrimeTrust common stock and LTIP units awarded to our officers and employees in connection with providing advisory services equal to the grant date fair value of the award in proportion to the requisite service period satisfied during the period, as well as an offsetting expense in an equal amount included in “salaries“reimbursed expenses.”
On March 12, 2024, we entered into the Third Amended and benefits.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 Oaktree Credit Agreement 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.
As of December 2023, we are 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
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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.
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 Hospitality Limited Partnership (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 managed three of Stirling OP’s properties. Ashford Trust pays the Company a monthly hotel management fee equal to the greater of approximately $17,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenue (the “base fee”) as well as annual incentive hotel management fees, if certain operational criteria are met, and other general and administrative expense reimbursements. Ashford Trust pays the base fee and reimburses all expenses for Remington-managed hotels on a weekly basis for the preceding week. Remington is also party to a mutual exclusivity agreement with Ashford Trust and Ashford Trust OP.
On March 12, 2024, Remington entered into a Second Consolidated, Amended and Restated Hotel Master Management Agreement with Ashford TRS Corporation (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.
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 also previously held an agreement with Ashford Trust (the “Ashford Trust Agreement”) with an effective date of April 6, 2020 pursuant to which Lismore negotiated forbearance, modifications and refinancings of the existing mortgage debt on Ashford Trust’s hotels. The Ashford Trust Agreement additionally allowed for the Company to receive certain fees for refinancings performed within eight months after the Ashford Trust Agreement terminates. The Ashford Trust Agreement terminated effective April 6, 2022. For the years ended December 2023, 2022 and 2021, the Company recognized revenue of $0, $2.4 million and $10.3 million, respectively, under the Ashford Trust Agreement. Revenue recognized for the year ended December 31, 2021 includes a $1.2 million cumulative catch-up adjustment to revenue which was previously considered constrained. As of December 31, 2023 and 2022, the Company did not have any deferred income related to the Ashford Trust Agreement.
During the year ended December 31, 2023, Lismore entered into various 12-month agreements with Ashford Trust to seek modifications or refinancings of certain mortgage loans held by Ashford Trust. For the year ended December 31, 2023, Lismore recognized approximately $748,000 in revenue under the agreement. As of December 31, 2023, the Company had $183,000 of deferred income recorded related to these agreements.
The following table summarizes the revenues and expenses related to Ashford Trust (in thousands):
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Year Ended December 31,
202320222021
REVENUES BY TYPE
Advisory services fees:
Base advisory fees$33,176 $34,802 $36,239 
Hotel management fees:
Base management fees25,469 23,873 17,819 
Incentive management fees4,963 6,066 4,180 
Total hotel management fees revenue (1)
30,432 29,939 21,999 
Design and construction fees revenue (2)
15,911 11,601 4,032 
Other revenue:
Watersports, ferry and excursion services (4)
68 217 — 
Debt placement and related fees (5)
2,261 3,282 11,381 
Premiums earned (6)
142 — — 
Cash management fees (7)
139 97 — 
Claims management services (8)
9 17 74 
Other services (9)
1,561 1,438 1,628 
Total other revenue4,180 5,051 13,083 
Cost reimbursement revenue278,731 244,148 162,920 
Total revenues$362,430 $325,541 $238,273 
REVENUES BY SEGMENT (10)
Advisory$47,625 $48,859 $51,726 
Remington282,533 255,387 167,600 
Premier22,961 18,776 5,939 
INSPIRE111 85 — 
RED117 231 — 
OpenKey119 123 119 
Corporate and other (11)
8,964 2,080 12,889 
Total revenues$362,430 $325,541 $238,273 
COST OF REVENUES
Cost of revenues for audio visual (3)
$9,841 $7,663 $2,969 
SUPPLEMENTAL REVENUE INFORMATION
Audio visual revenue from guests at REIT properties (3)
$22,878 $18,183 $6,734 
Watersports, ferry and excursion services revenue from guests at REIT properties (4)
171 190 545 
________
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(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 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)    Claims management services include revenue earned from providing insurance claim assessment and administration services.
(9)    Other services revenue is primarily associated with other hotel products and services, such as mobile key applications and hypoallergenic premium rooms, provided to Ashford Trust by our consolidated subsidiaries, OpenKey and Pure Wellness.
(10)    See note 21 for discussion of segment reporting.
(11)    The Corporate and Other segment’s revenue includes cost reimbursement revenue from Ashford Trust’s capital contributions to Ashford Securities under the Third Amended and Restated Contribution Agreement between 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.
The following table summarizes amounts due (to) from Ashford Trust, net at December 31, 2023 and 2022 associated primarily with the advisory services fee and other fees discussed above, as it relates to each of our consolidated entities (in thousands):
December 31, 2023December 31, 2022
Ashford LLC$8,656 $(4,002)
Remington5,134 (2,015)
Premier3,391 2,475 
INSPIRE1,495 1,718 
RED12 5 
OpenKey10 (35)
Pure Wellness235 657 
Due (to) from Ashford Trust$18,933 $(1,197)
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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”). The base fee is paid monthly calculated as 1/12th of 0.70% of Braemar’s total market capitalization plus the Net Asset Fee Adjustment, as defined in our advisory agreement, subject to a minimum monthly base fee. Reimbursement for overhead, internal audit, risk management advisory services and asset management services, including compensation, benefits and travel expense reimbursements, are billed monthly to Braemar based on a pro rata allocation as determined by the ratio of Braemar’s net investment in hotel properties in relation to the total net investment in hotel properties for both Ashford Trust and Braemar. We also record cost reimbursement revenue for equity grants of Braemar common stock and LTIP units awarded to our officers and employees in connection with providing advisory services equal to the grant date fair value of the award in proportion to the requisite service period satisfied during the period, as well as an offsetting expense in an equal amount included in “reimbursed expenses.” We are also entitled to an incentive advisory fee that is measured annually in each year that Ashford Prime’sBraemar’s annual total stockholder return exceeds the average annual total stockholder return for Ashford Prime’sBraemar’s peer group, subject to the FCCR Condition, as defined in the advisory 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. Subsequent to December 31, 2023, the agreement was amended resulting in fees under the agreement being 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. Braemar pays the Company a monthly hotel management fee equal to the greater of approximately $17,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenue (the “base fee”) as well as annual incentive hotel management fees, if certain operational criteria are met, and other general and administrative expense reimbursements. Braemar pays the base fee and reimburses all expenses for Remington-managed hotels on a weekly basis for the preceding week. Remington is also party to a mutual exclusivity agreement with Braemar and Braemar OP.
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.
On January 24, 2017, weMarch 20, 2020, Lismore entered into an amended and restated advisory agreement with Ashford PrimeBraemar to negotiate the refinancing, modification or forbearance of the existing mortgage and mezzanine debt on Braemar’s hotels (the “Fourth Amended and Restated Ashford Prime Advisory“Braemar Agreement”). On June 9, 2017, Ashford Prime’s stockholders approvedThe Braemar Agreement terminated effective March 20, 2021. For the Fourth Amendedyears ended December 31, 2023, 2022 and Restated Ashford Prime Advisory Agreement, which became effective on June 21, 2017. 2021, the Company recognized revenue of $0, $0 and $853,000, respectively, related to the Braemar Agreement. As of December 31, 2023 and 2022, the Company did not have any deferred income related to the Braemar Agreement.
During the year ended December 31, 2023, Lismore entered into a 12-month agreement with Braemar to seek modifications or refinancings of certain mortgage debt held by Braemar. For the year ended December 31, 2023, Lismore recognized approximately $312,000 in revenue under the agreement. As of December 31, 2023, the Company had $52,000 of deferred income recorded related to the agreement.
The material terms offollowing table summarizes the Fourth Amendedrevenues and Restated Ashford Prime Advisory agreement include:

expenses related to Braemar (in thousands):
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Ashford Prime made a cash payment to us of $5.0 million on June 21, 2017, which is included in “deferred income” on our consolidated balance sheet, and is being recognized over the initial ten-year term of the Fourth Amended and Restated Ashford Prime Advisory Agreement. The revenue recognized is included in other advisory revenue on our consolidated statements of operations;
the termination fee payable to us under the advisory agreement has been amended by eliminating the 1.1x multiplier and tax gross up components of the fee;
we will disclose publicly the revenues and expenses used to calculate “Net Earnings” on a quarterly basis, which is used to calculate the termination fee; we will retain an accounting firm to provide a quarterly report to Ashford Prime on the reasonableness of our determination of expenses, which will be binding on the parties;
our right under the advisory agreement to appoint a “Designated CEO” has been eliminated;
our right to terminate the advisory agreement due to a change in a majority of the “Company Incumbent Board” (as defined in the advisory agreement) has been eliminated;
Ashford Prime will be incentivized to grow its assets under a “growth covenant” in the Fourth Amended and Restated Ashford Prime Advisory Agreement under which Ashford Prime will receive a deemed credit against a base amount of $45.0 million for 3.75% of the total purchase price of each hotel acquired after the date of the Fourth Amended and Restated Ashford Prime Advisory Agreement that was recommended by us, netted against 3.75% of the total sale price of each hotel sold after the date of the Fourth Amended and Restated Ashford Prime Advisory Agreement. The difference between $45.0 million and this net credit, if any, is referred to as the “Uninvested Amount.” If the Fourth Amended and Restated Ashford Prime Advisory Agreement is terminated, other than due to certain acts by us, Ashford Prime must pay us the Uninvested Amount, in addition to any other fees payable under the Amended Agreement;
the Fourth Amended and Restated Ashford Prime Advisory Agreement requires Ashford Prime to maintain a net worth of not less than $390 million plus 75% of the equity proceeds from the sale of securities by Ashford Prime after December 31, 2016 and a covenant prohibiting Ashford Prime from paying dividends except as required to maintain its REIT status if paying the dividend would reduce Ashford Prime’s net worth below the required minimum net worth;
the initial term of the Fourth Amended and Restated Ashford Prime Advisory Agreement ends on the 10th anniversary of its effective date, subject to renewal by us for up to seven additional successive 10-year terms;
the base management fee payable to us will be fixed at 0.70%, and the fee will be payable on a monthly basis;
reimbursements of expenses to us will be made monthly in advance, based on an annual expense budget, with a quarterly true-up for actual expenses;
the right of Ashford Prime to terminate the advisory agreement due to a change of control experienced by us has been eliminated;
the rights of Ashford Prime to terminate the advisory agreement at the end of each term upon payment of the termination fee based on the parties being unable to agree on new market-based fees or our performance have been eliminated; however, the Fourth Amended and Restated Ashford Prime Advisory Agreement provides a mechanism for the parties to renegotiate the fees payable to us at the end of each term based on then prevailing market conditions, subject to floors and caps on the changes;
if a Change of Control (as defined in the Fourth Amended and Restated Ashford Prime Advisory Agreement) is pending, Ashford Prime has agreed to deposit not less than 50%, and in certain cases 100%, of the applicable termination fee in escrow, with the payment of any remaining amounts owed to us secured by a letter of credit or first priority lien on certain assets;
Ashford Prime’s ability to terminate the Fourth Amended and Restated Ashford Prime Advisory Agreement due to a material default by us is limited to instances where a court finally determines that the default had a material adverse effect on Ashford Prime and we fail to pay monetary damages in accordance with the Fourth Amended and Restated Ashford Prime Advisory Agreement; and

Year Ended December 31,
202320222021
REVENUES BY TYPE
Advisory services fees:
Base advisory fees$13,983 $12,790 $10,806 
Incentive advisory fees (1)
268 268 — 
Other advisory revenue (2)
521 521 521 
Total advisory services fees revenue14,772 13,579 11,327 
Hotel management fees:
Base management fees2,471 2,959 2,304 
Incentive management fees— 786 612 
Total hotel management fees revenue (3)
2,471 3,745 2,916 
Design and construction fees revenue (4)
7,800 7,365 2,230 
Other revenue:
Watersports, ferry and excursion services (6)
2,314 2,293 2,605 
Debt placement and related fees (7)
2,373 940 1,003 
Premiums earned (8)
21 — — 
Cash management fees (9)
117 38 — 
Claims management services (10)
3 3 7 
Other services (11)
248 166 192 
Total other revenue5,076 3,440 3,807 
Cost reimbursement revenue52,929 57,396 30,394 
Total revenues$83,048 $85,525 $50,674 
REVENUES BY SEGMENT (12)
Advisory$31,334 $28,486 $22,911 
Remington27,577 28,181 18,345 
Premier12,652 9,875 3,009 
INSPIRE101 72 — 
RED2,356 2,304 2,605 
OpenKey38 38 38 
Corporate and other (13)
8,990 16,569 3,766 
Total revenues$83,048 $85,525 $50,674 
COST OF REVENUES (5)
Cost of revenues for audio visual$4,371 $3,842 $998 
Other1,950 1,153 421 

SUPPLEMENTAL REVENUE INFORMATION
Audio visual revenues from guests at REIT properties (5)
$10,829 $9,384 $2,175 
Watersports, ferry and excursion services revenue from guests at REIT properties (5)
2,894 2,132 2,117 
________
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(1)    The incentive advisory fees for the years ended December 31, 2023 and 2022 includes the pro rata portion of the second year and first 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 and 2021 measurement period.
if Ashford Prime repudiates the(2)    In connection with our Fourth Amended and Restated Ashford PrimeBraemar 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 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)    Claims management services include revenue earned from providing insurance claim assessment and administration services.
(11)    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.
(12)    See note 21 for discussion of segment reporting.
(13)    The Corporate and Other segment’s revenue includes cost reimbursement revenue from Braemar’s capital contributions to Ashford Securities under the Third Amended and Restated Contribution Agreement between 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 actionsAshford Securities for each company which may result in increases or omissions that constitute a repudiation as determined by a final non-appealable order from a court of competent jurisdiction,decreases to cost reimbursement revenue in any given reporting period. See discussion regarding Ashford Prime will be liable to us for a liquidated damages amount.Securities below.
The following table summarizes amounts due (to) from Braemar, net at December 31, 2023 and 2022 associated primarily with the revenues relatedadvisory services fee and other fees discussed above, as it relates to Ashford Prime OPeach of our consolidated entities (in thousands):
139
 Year Ended December 31,
 2017 2016 2015
REVENUE BY TYPE     
Advisory services revenue     
Base advisory fee$8,799
 $8,343
 $8,648
Reimbursable expenses (1)
2,105
 2,805
 1,863
Equity-based compensation (2)
(1,683) 3,814
 3,591
Incentive advisory fee (3)
1,274
 1,274
 1,274
Other advisory revenue (4)
277
 —
 —
Total advisory services revenue10,772
 16,236
 15,376
      
Other revenue     
Debt placement fees (5)
224
 —
 —
Lease revenue (6)
335
 335
 99
Other services (7)
41
 —
 —
Total other revenue600
 335
 99
      
Total revenue$11,372
 $16,571
 $15,475
      
REVENUE BY SEGMENT (8)
     
REIT advisory$11,331
 $16,571
 $15,475
J&S (9)
—
 —
 —
Corporate and other (8)
41
 —
 —
Total revenue$11,372
 $16,571
 $15,475
________
(1)
Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services. During the years ended December 31, 2017, 2016, and 2015, we recognized $126,000, $0, and $0, respectively, of deferred income from reimbursable expenses related to software implementation costs, which was partially offset by the impairment of the related capitalized software in the amount of $1.1 million for the year ended December 31, 2017, as discussed in note 2.
(2)
Equity-based compensation revenue is associated with equity grants of Ashford Prime’s common stock and LTIP units awarded to officers and employees of Ashford Inc.
(3)
Incentive advisory fee includes the third, second and first year installments of the 2015 incentive advisory fee in the amount of $1.3 million for each of the years ended December 31, 2017, 2016, and 2015, respectively, for which the payment was due January of the subsequent year subject to meeting the FCCR Condition at December 31 of each year, as defined in our advisory agreement with Ashford Prime. No incentive fee was earned for the 2017 and 2015 measurement periods.
(4)
In connection with our Fourth Amended and Restated Ashford Prime Advisory Agreement, a $5.0 million cash payment was made by Ashford Prime upon approval by Ashford Prime’s stockholders, which will be recognized over the 10-year initial term.
(5)
Debt placement fees include revenues earned through provision of mortgage placement services by Lismore Capital, our wholly-owned subsidiary.
(6)
In connection with our key money transaction with Ashford Prime, we lease furniture, fixtures and equipment to Ashford Prime at no cost. A portion of the base advisory fee is allocated to lease revenue each period equal to the estimated fair value of the lease payments that would have been made.

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December 31, 2023December 31, 2022
Ashford LLC$(2,433)$7,253 
Remington173 (69)
Premier2,177 3,443 
INSPIRE599 917 
RED193 193 
OpenKey5 8 
Pure Wellness— 83 
Due (to) from Braemar$714 $11,828 
(7)
Other services revenue is associated with other hotel services, such as “Allergy friendly” premium rooms and mobile key applications, provided to Ashford Prime by our consolidated subsidiaries, Pure Rooms and OpenKey, respectively.
(8)
See note 19 for discussion of segment reporting.
(9)
J&S contracts directly with customers to whom it provides audio visual services. J&S recognizes the gross revenue collected from their customers by the hosting hotel or venue. Commissions retained by the hotel or venue, including Ashford Trust, are recognized in cost of audio visual revenues in our consolidated statements of operations.See note 2 for discussion of the audio visual revenue recognition policy.
AtAshford Securities—On December 31, 20172020, an Amended and 2016, we had receivables of $1.7 millionRestated Contribution Agreement (the “Amended and $3.8 million, respectively,Restated Contribution Agreement”, and as further amended from Ashford Prime OP associated withtime to time, the advisory service fee and other fees, as discussed above. See note 2 for details regarding receivables held“Contribution Agreement”) was entered into by our consolidated subsidiaries, due from our affiliates. As of December 31, 2016, we also had a payable due to Ashford Prime OP in the amount of $2.3 million related to the hold back from Ashford Prime’s liquidation of its investment in the AQUA Fund.
The following table summarizes amounts due from Ashford Prime OP to each of our consolidated entities (in thousands):
 December 31, 2017 December 31, 2016
Pure Rooms$50
 $—
OpenKey6
 —
Company, Ashford Trust and Ashford Prime have management agreementsBraemar (collectively, the “Parties” and each individually a “Party”) with Remington Holdings L.P. and its subsidiaries (“Remington Lodging”), which is beneficially owned by our Chairman and Chief Executive Officer and Ashford Trust’s Chairman Emeritus. Transactions relatedrespect to these agreements are included in the accompanying consolidated financial statements. Under the agreements, we pay Remington Lodging general and administrative expense reimbursements, approved by the independent directorsfunding certain expenses of Ashford TrustSecurities. Beginning on the effective date of the Amended and Restated Contribution Agreement, costs to fund the operations of Ashford Prime, including rent, payroll, office supplies, travelSecurities were allocated 50% to the Company, 50% to Braemar and accounting. These charges are allocated0% 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 various methodologies, including headcountthe 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 actual amounts incurred,Restated Contribution Agreement which are then rebilledprovided for an additional $18 million in aggregate contributions to Ashford Securities allocated 10% to the Company, 45% to Ashford Trust and Ashford Prime. These reimbursements are included in general and administrative expenses on45% to Braemar. On February 3, 2023, the consolidated statements of operations. For the years ended December 31, 2017, 2016 and 2015 these reimbursements totaled $4.9 million, $5.7 million and $4.5 million, respectively. The amounts due under these arrangements as of December 31, 2017 and 2016, are included in “due to affiliates” on our balance sheets.
On March 7, 2017, AIM GP, the general partner of the AQUA U.S. Fund, provided written notice to the AQUA U.S. Fund's limited partners of its election to dissolve the AQUA U.S. Fund pursuant to Section 6.1(a) of the Second Amended and Restated Limited Partnership AgreementTrue-Up Date occurred and, on March 30, 2023, Braemar paid the Company $8.7 million for Braemar’s portion of their contributions to fund Ashford Securities as calculated under the AQUA U.S. Fund asInitial True-Up Ratio. The $8.7 million payment consisted of March 31, 2017 (the “Dissolution Date”). In connection with$2.5 million and $6.2 million for the dissolution of the AQUA U.S. Fund, the AQUA Master Fund was liquidated in accordance with the laws of the Cayman Islands.
The balance of all limited partners' capital accounts in the AQUA U.S. Fund was distributed to limited partners in cash,Company’s and thereafter limited partners ceased to be a limited partner of the AQUA U.S. Fund. As of December 31, 2017, the AQUA U.S. Fund was fully dissolved. The aggregate value of the affiliated limited partners’ share of partners’ capital in the AQUA Fund at December 31, 2016, was approximately $52.5 million.
On June 11, 2015, we announced that we planned to provide a total of $6.0 million in key money consideration to our managed REITs for two acquisitions. In connection with our engagement to provide hotel advisory servicesAshford Trust’s prior contributions made to Ashford Trust, we planned to provide $4.0 million of key money consideration to purchase furniture, fixtures and equipment related to Ashford Trust’s $62.5 million acquisition ofSecurities, respectively, which were owed by Braemar as calculated under the 226-room Le Pavillon Hotel in New Orleans, Louisiana byInitial True-Up Ratio. On March 30, 2023, the Company paid Ashford Trust $6.2 million.
On February 1, 2023, the Company entered into a Third Amended and Restated Contribution Agreement, which closed in June 2015. Asprovided that after the Amended and Restated True-Up Date, capital contributions for the remainder of December 31, 2016, we had provided substantially all of the $4.0 million key money consideration. Separately, in connection with our engagement to provide hotel advisory services to Ashford Prime, we have also provided $2.0 million of key money consideration comprised of $206,000 in cash and the issuance of 19,897 shares of our common stock to purchase furniture, fixtures and equipment related to Ashford Prime’s $85.0 million acquisition of the 62-room Bardessono Hotel and Spa in Yountville, California, which closed in July 2015. The initial value assigned to the common stock wasfiscal year 2023 would be divided between each Party based on the previous 10-day closing pricesInitial 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. However, 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 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 July 1, 2015, which was approximately $1.8 million. The key money consideration was paid on September 14, 2015. In return$293,000 and $3.2 million for the key money consideration,Company’s and Ashford Prime transferred furniture, fixtures and equipmentTrust’s portion of their contributions to fund Ashford Inc.,Securities, respectively, which was subsequently leased back at no cost for a term of five years. The fair value ofwere owed to Braemar as calculated under the key money consideration transferred on September 14, 2015, was approximately $1.6 million, which decreased in value from July 1, 2015 solely due2023 year-end true-up pursuant to the change in the price of Ashford Inc. common stock.

Third Amended and Restated Contribution Agreement.
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As of December 31, 2023, Ashford Trust and Braemar had funded approximately $179,000 and $20.9 million, respectively. The hotel advisory servicesCompany recognized cost reimbursement revenue from Ashford Trust in our consolidated statements of operations of $5.1 million and the lease are considered a multiple element arrangement, in accordance with the applicable accounting guidance. As such, a portion of the base advisory fee must be allocated to lease revenue equal to the estimated fair value of the lease payments that would have been made. As a result, advisory revenue of $893,000, $335,000 and $99,000 was allocated to lease revenue$0 for the years ended December 31, 2017, 20162023 and 2015,2021, respectively, and recognized a reduction to cost reimbursement revenue of $2.5 million for the year ended December 31, 2022. The Company recognized cost reimbursement revenue from Braemar in our consolidated statements of operations of $6.4 million, $15.5 million and $2.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. LeaseCost reimbursement revenue for the year ended December 31, 2023 includes $1.8 million and $2.0 million of dealer manager fees earned by Ashford Securities for the placement of non-listed preferred equity offerings of Ashford Trust and Braemar, respectively.
ERFP Commitments—On June 26, 2018, the Company entered into an Enhanced Return Funding Program Agreement with Ashford Trust (the “Ashford Trust ERFP Agreement”). The independent members of the board of directors of each of the Company and Ashford Trust, with the assistance of separate and independent legal counsel, engaged to negotiate the Ashford Trust ERFP Agreement on behalf of the Company and Ashford Trust, respectively. On January 15, 2019, the Company entered into the Braemar ERFP Agreement (collectively with the Ashford Trust ERFP Agreement, the “ERFP Agreements”) with Braemar. The independent members of the board of directors of each of the Company and Braemar, with the assistance of separate and independent legal counsel, engaged to negotiate the Braemar ERFP Agreement on behalf of the Company and Braemar, respectively. Under the ERFP Agreements, the Company agreed to provide $50 million (each, an “Aggregate ERFP Amount” and collectively, the “Aggregate ERFP Amounts”) to each of Ashford Trust and Braemar (collectively, the “REITs”), respectively, in connection with each such REIT’s acquisition of hotels recommended by us, with the option to increase each Aggregate ERFP Amount to up to $100 million upon mutual agreement by the parties to the respective ERFP Agreement. Under each of the ERFP Agreements, the Company paid each REIT 10% of each acquired hotel’s purchase price in exchange for furniture, fixtures and equipment (“FF&E”) at a property owned by such REIT, which were subsequently leased by us to such REIT rent-free. The ERFP Agreements required that the Company acquire the related FF&E either at the time of the property acquisition or at any time generally within two years of the respective REITs’ acquisition of the hotel property. The Company recognized the related depreciation tax deduction at the time such FF&E was purchased by the Company and placed into service at the respective REIT’s hotel properties.
On March 13, 2020, the Company entered into an Extension Agreement related to the Ashford Trust ERFP Agreement. Under the terms of the Extension Agreement, the deadline to fund the remaining ERFP commitment under the Ashford Trust ERFP Agreement of $11.4 million, was extended from January 22, 2021 to December 31, 2022. On April 20, 2021, the Company received written notice from Ashford Trust of Ashford Trust’s intention not to renew the Ashford Trust ERFP Agreement. As a result, the Ashford Trust ERFP Agreement terminated in accordance with its terms on June 26, 2021. The expiration of the Ashford Trust ERFP Agreement had no impact on the Extension Agreement which continued in full force until December 16, 2022, when Ashford Trust acquired all of the equity interests in Marietta and, in exchange, forgave, cancelled and discharged in full the outstanding $11.4 million ERFP commitment. See note 5.
On November 8, 2021, the Company delivered written notice to Braemar of the Company’s intention not to renew the Braemar ERFP Agreement. As a result, the Braemar ERFP Agreement terminated in accordance with its terms on January 15, 2022.
As of December 31, 2023 and 2022, the Company had no remaining ERFP commitments to Ashford Trust or Braemar under the Ashford Trust ERFP Agreement and the Braemar ERFP Agreement, respectively.
Expiration of ERFP Agreement Related Leases with Ashford Trust and Braemar—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 2021, Ashford Trust purchased FF&E from the Company at the fair market value of $82,000 upon expiration of the underlying leases of the FF&E under the Ashford Trust ERFP Agreement. The Company recorded a loss on sale of the FF&E of $107,000 which is included within “other” operating expense in other revenueour consolidated statements of operations. Additionally, on January 20, 2021, Ashford Trust sold the Le Meridien hotel in Minneapolis, Minnesota. The hotel contained FF&E with a net book value of $399,000 which was owned by the Company and leased to Ashford Trust rent-free pursuant to the Ashford Trust ERFP Agreement. The Company recorded a loss on disposal of FF&E of $271,000 within “other” operating expense in our consolidated statements of operations. Pursuant to the agreement, Ashford Trust provided replacement FF&E to the Company in the third quarter of 2021 equal to the fair market value of the sold FF&E with a fair market value of $128,000, which was subsequently leased back to Ashford Trust rent-free.
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During the second quarter of 2021, the Company purchased $1.6 million of FF&E from Braemar. The Company set-off the purchased FF&E against a $1.6 million outstanding receivable previously incurred by Braemar. The FF&E purchased by the Company was subsequently leased back to Braemar rent-free.
In the second quarter of 2021, Braemar purchased FF&E from the Company at the fair market value of $144,000 upon expiration of the underlying leases of the FF&E under the Braemar ERFP Agreement. The Company recorded a loss on sale of the FF&E of $267,000 which is included within “other” operating expense in our consolidated statements of operations.
As
In the first quarter of 2022, Ashford Trust purchased FF&E with a net book value of $1.1 million from the Company at the fair market value of $406,000 upon expiration of the underlying leases of the FF&E under the Ashford Trust ERFP Agreement. The Company recorded a loss on sale of the FF&E of $706,000 which is included within “other” operating expense in our consolidated statement of operations for the year ended December 31, 2022.
In the fourth quarter of 2022, Ashford Trust purchased FF&E with a net book value of $3.1 million from the Company at the fair market value of $1.0 million upon expiration of the underlying leases of the FF&E under the Ashford Trust ERFP Agreement. The Company recorded a loss on sale of the FF&E of $2.1 million which is included within “other” operating expense in our consolidated statement of operations for the year ended December 31, 2022. The Company recognized a $1.0 million outstanding receivable which is recorded in “due from Ashford Trust” in our consolidated balance sheet as of December 31, 20172022. In the fourth quarter of 2023, the Company entered into a new lease agreement with Ashford Trust wherein the Company purchased FF&E of $1.0 million 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.
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 consolidated statement of operations for the year ended December 31, 2023. In the fourth quarter of 2023, the Company entered into a new lease agreement with Ashford Trust wherein the Company purchased FF&E of $450,000 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.
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 consolidated balance sheet as of December 31, 2023. The Company recorded a loss on the sale of the FF&E of $1.8 million which is included within “other” operating expense in our consolidated statement of operations for the year ended December 31, 2023.
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 2016, 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.
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The following table summarizes the assets and liabilities acquired by the Company on the asset acquisition date (in thousands):
January 3, 2023
Restricted cash$849 
Property and equipment, net2,183 
Operating lease right-of-use assets15,017 
Total assets acquired18,049 
Operating lease liabilities17,200 
Other liabilities849 
Total assumed liabilities18,049 
Net assets acquired$— 
Prior to the acquisition, for the years ended December 31, 2022 and 2021, we recorded $3.3 million and $3.4 million, respectively, in rent expense related to our corporate office lease with RHC.
On March 10, 2022, the Company entered into a Limited Waiver Under Advisory Agreement (the“2022 Braemar Limited Waiver”) with Braemar, Braemar Hospitality Limited Partnership (“Braemar OP”), Braemar TRS Corporation (“Braemar TRS”) and Ashford LLC. On March 15, 2022, the Company entered into a Limited Waiver Under Advisory Agreement (the “2022 Ashford Trust Limited Waiver” and together with the 2022 Braemar Limited Waiver, the “2022 Limited Waivers”) with Ashford Trust, Ashford Hospitality Limited Partnership (“Ashford Trust OP”), Ashford TRS Corporation (“Ashford Trust TRS”) and Ashford LLC. Pursuant to the 2022 Limited Waivers, the parties to the Second Amended and Restated Advisory Agreement with Ashford Trust and the Fifth Amended and Restated Advisory Agreement with Braemar waive the operation of any provision of such agreement 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 2022 (the “2022 Waiver Period”), cash incentive compensation to employees and other representatives of the Company; provided that, pursuant to the 2022 Ashford Trust Limited Waiver, such awarded cash incentive compensation does not exceed $8.5 million, in the aggregate, during the 2022 Waiver Period.
On March 2, 2023, the Company entered into a second Limited Waiver Under Advisory Agreement (the “2023 Braemar Limited Waiver”) with Braemar, Braemar OP, and Braemar TRS and a second Limited Waiver Under Advisory Agreement (the “2023 Ashford Trust Limited Waiver” and, together with the 2023 Braemar Limited Waiver, the “2023 Limited Waivers”) with Ashford Trust, Ashford Trust OP, and Ashford Trust TRS. Pursuant to the 2023 Limited Waivers, the parties to the Second Amended and Restated Advisory Agreement with Ashford Trust and the Fifth Amended and Restated Advisory Agreement with Braemar waive the operation of any provision of such agreement 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 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 third Limited Waiver Under Advisory Agreement with Ashford Trust (the “2024 Ashford Trust Limited Waiver”) and (ii) a third Limited Waiver Under Advisory Agreement with Braemar (the “2024 Braemar Limited Waiver” and, 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.
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Ashford Trust held a 16.23% and 13.34%, respectively,15.06% noncontrolling interest in OpenKey a VIE for which we are considered the primary beneficiary and therefore we consolidate it. On January 16, 2018,Braemar held an 7.92% noncontrolling interest in OpenKey as of December 31, 2023 and 2022, respectively. Ashford Trust invested an additional $667,000 in OpenKey. Ashford Trust invested $983,000, $2.3 million$0, $0 and $0$500,000 in OpenKey during the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. Braemar invested $0, $327,000 and $233,000 in OpenKey is a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms.during the years ended December 31, 2023, 2022 and 2021, respectively. During the year ended December 31, 2023, the Company loaned our consolidated subsidiary OpenKey $2.9 million to fund OpenKey’s operations. The loan balance was eliminated upon consolidation in our consolidated financial statements. See also notes 1, 2, 13, 14, and 22.15.
An officerThe Company or its affiliates provide to the Bennetts or their permitted designees certain services, including, but not limited to, accounting, tax and administrative services pursuant to that certain Transition Cost Sharing Agreement entered into in connection with Company’s acquisition of J&S ownsRemington Lodging from the J&S headquarters property including the adjoining warehouse space. J&S leases this propertyBennetts in November 2019. The gross amount of expenses and reimbursements for $300,000 per year. Rental expense for the year ended December 31, 2017 was $50,000. We did not incur rental expense related to this leasethese transition services for the years ended December 31, 20162023, 2022 and 2015.2021 was $417,000, $379,000 and $405,000, respectively. The expenses and reimbursements for transition services are recorded on a net basis and, therefore, the reimbursed activity does not impact our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021.
18.20. Income (Loss) Per Share
The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):
Year Ended December 31,
202320222021
Net income (loss) attributable to common stockholders – basic and diluted:
Net income (loss) attributable to the Company$(4,628)$3,646 $(9,925)
Less: Dividends on preferred stock, declared and undeclared (1)
(36,193)(36,458)(35,000)
Less: Amortization of preferred stock discount— — (1,053)
Undistributed net income (loss) allocated to common stockholders(40,821)(32,812)(45,978)
Distributed and undistributed net income (loss) - basic$(40,821)$(32,812)$(45,978)
Effect of deferred compensation plan(1,995)— — 
Distributed and undistributed net income (loss) - diluted$(42,816)$(32,812)$(45,978)
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic3,079 2,915 2,756 
Effect of deferred compensation plan shares49 — — 
Weighted average common shares outstanding – diluted3,128 2,915 2,756 
Income (loss) per share – basic:
Net income (loss) allocated to common stockholders per share$(13.26)$(11.26)$(16.68)
Income (loss) per share – diluted:
Net income (loss) allocated to common stockholders per share$(13.69)$(11.26)$(16.68)
________
  Year Ended December 31,
  2017 2016 2015
Net income (loss) attributable to common stockholders – basic and diluted:      
Net income (loss) attributable to the Company $(18,352) $(2,396) $(1,190)
Undistributed net income (loss) allocated to common stockholders (18,352) (2,396) (1,190)
Distributed and undistributed net income (loss) - basic (18,352) (2,396) (1,190)
Effect of deferred compensation plan —
 (2,127) (8,608)
Effect of contingently issuable shares $(1,465) $(1,143) $—
Distributed and undistributed net loss - diluted $(19,817) $(5,666) $(9,798)
       
Weighted average common shares outstanding:      
Weighted average common shares outstanding – basic 2,031
 2,012
 1,991
Effect of deferred compensation plan shares —
 158
 212
Effect of contingently issuable shares 36
 39
 —
Weighted average common shares outstanding – diluted 2,067
 2,209
 2,203
       
Income (loss) per share – basic:      
Net income (loss) allocated to common stockholders per share $(9.04) $(1.19) $(0.60)
Income (loss) per share – diluted:      
Net income (loss) allocated to common stockholders per share $(9.59) $(2.56) $(4.45)

(1)    Undeclared dividends were deducted to arrive at net income (loss) attributable to common stockholders. See note 15.
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Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2023202320222021
Net income (loss) allocated to common stockholders is not adjusted for:
Net income (loss) attributable to redeemable noncontrolling interests in Ashford Holdings
Net income (loss) attributable to redeemable noncontrolling interests in Ashford Holdings
Net income (loss) attributable to redeemable noncontrolling interests in Ashford Holdings
Net income (loss) attributable to subsidiary convertible interests
Dividends on preferred stock, declared and undeclared
 Year Ended December 31,
Dividends on preferred stock, declared and undeclared
 2017 2016 2015
Net income (loss) allocated to common stockholders is not adjusted for:      
Net income (loss) attributable to redeemable noncontrolling interests in Ashford Holdings $(19) $(4) $(2)
Dividends on preferred stock, declared and undeclared
Amortization of preferred stock discount
Total $(19) $(4) $(2)
Weighted average diluted shares are not adjusted for:      
Effect of unvested restricted shares —
 1
 3
Effect of assumed exercise of stock options 34
 —
 1
Effect of unvested restricted shares
Effect of unvested restricted shares
Effect of assumed conversion of Ashford Holdings units 4
 4
 5
Effect of assumed conversion of Ashford Holdings units
Effect of assumed conversion of Ashford Holdings units
Effect of conversion of subsidiary interests
Effect of assumed conversion of preferred stock
Effect of assumed conversion of preferred stock
Effect of assumed conversion of preferred stock
Total 38
 5
 9
19.21. Segment Reporting
We have two business segments: (i) REITThe 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, and (ii) Hospitality Products and Services (“HPS”),entities; (b) Remington, which provides productshotel management services; (c) Premier, which provides comprehensive and services to clients primarily in the hospitality industry. HPS includes (a) J&S,cost-effective design, development, architectural, and project management services; (d) INSPIRE, which provides event technology and creative communications solutions services, (b) Pure Rooms, which provides “allergy friendly” premium rooms in the hospitality industry, and (c)services; (e) OpenKey, a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms. Ourrooms; (f) RED, a provider of watersports activities and other travel and transportation services; (g) Pure RoomsWellness, 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 2023, Premier, OpenKey, operating segmentsRED, Pure Wellness and Warwick do not individually meet the accountingaggregation criteria for separate disclosureor 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 twosix reportable segments: REIT Advisory, Remington, Premier, INSPIRE, RED and J&S.OpenKey. We combine the operating results of Pure RoomsWellness, Warwick and, OpenKeyfor the years ended December 31, 2022 and 2021, Marietta, into an “all other” category,seventh reportable segment, which we refer to as “Corporate and Other.” See note 3 for details of our segments’ material revenue generating activities.
The REIT Advisory segment primarily earns revenue by providing asset management and advisory services on a fee basis by managing the day-to-day operations of Ashford Trust and Ashford Prime and their respective subsidiaries, in conformity with each entity's investment guidelines. The J&S segment earns revenue by providing event technology services such as audio visual services, audio visual equipment rental, staging and meeting services and event-related communication systems as well as related technical support,Company considers its chief executive officer to our customers in various venues including hotels and convention centers in the United States, Mexico and the Dominican Republic. Corporate and Other includes a portion of our revenue and operating expenses that are not directly attributable to the REIT Advisory segment or J&S. The revenue in this category primarily consists of income generated by Pure Rooms and OpenKey by providing services to hotels. As of December 31, 2017, there were no material revenues or expenses amongst our operating segments.
Ourbe its chief operating decision maker (“CODM”) uses multiple measures. The CODM regularly reviews operating results for the purpose of segment profitability for assessing performance of our business.and making decisions about resource allocation. Our reportedCODM’s primary measure of segment profitability is net income, although the CODM also focuses on adjusted EBITDA and adjusted net income, which exclude certain gains, losses and charges, to assess performance and allocate resources.income. Our CODM currently reviews assets at the corporate (consolidated)consolidated level and does not currently review segment assets to make key decisions on resource allocations.

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Certain information concerning our segments for the years ended December 31, 2017,2023, 2022 and 2016 is2021 are presented in the following tabletables (in thousands). Consolidated subsidiaries are reflected as of thetheir respective acquisition datedates or as of the date we were determined to be the primary beneficiary of variable interest entities.
145
 Year Ended December 31, 2017 Year Ended December 31, 2016
 REIT Advisory J&S Corporate and Other Ashford Inc. Consolidated REIT Advisory J&S Corporate and Other Ashford Inc. Consolidated
REVENUE               
Advisory services$65,982
 $—
 $—
 $65,982
 $67,228
 $—
 $—
 $67,228
Audio visual—
 9,186
 —
 9,186
 —
 —
 —
 —
Other4,006
 —
 2,399
 6,405
 335
 —
 44
 379
Total revenue69,988
 9,186
 2,399
 81,573
 67,563
 —
 44
 67,607
EXPENSES               
Depreciation and amortization1,373
 319
 835
 2,527
 298
 —
 876
 1,174
Impairment1,041
 —
 31
 1,072
 —
 —
 —
 —
Other operating expenses (1)
19,099
 9,655
 59,742
 88,496
 21,102
 —
 47,788
 68,890
Total expenses21,513
 9,974
 60,608
 92,095
 21,400
 —
 48,664
 70,064
OPERATING INCOME (LOSS)48,475
 (788) (58,209) (10,522) 46,163
 —
 (48,620) (2,457)
Interest expense—
 (68) (15) (83) —
 —
 —
 —
Amortization of loan costs—
 (6) (33) (39) —
 —
 —
 —
Interest income—
 —
 244
 244
 —
 —
 73
 73
Other income (expense) (2)
—
 (47) (24) (71) —
 —
 (9,239) (9,239)
INCOME (LOSS) BEFORE INCOME TAXES48,475
 (909) (58,037) (10,471) 46,163
 —
 (57,786) (11,623)
Income tax (expense) benefit(18,324) 252
 8,349
 (9,723) (16,684) —
 15,904
 (780)
NET INCOME (LOSS)$30,151
 $(657) $(49,688) $(20,194) $29,479
 $—
 $(41,882) $(12,403)
________
(1)
Other operating expenses includes salaries and benefits, cost of revenues for audio visual and general and administrative expenses. REIT Advisory amounts represent expenses for which there is a direct offsetting amount included in revenues, including REIT equity-based compensation expense and reimbursable expenses.
(2)
Other income (expense) primarily includes the realized gain (loss) on investment in unconsolidated entity, the unrealized gain (loss) on investment in unconsolidated entity, dividend income, the realized gain (loss) on investments and the unrealized gain (loss) on investments.
For the year ended December 31, 2015, we operated in one business segment: asset and investment management, which included managing the day-to-day operations of Ashford Prime and its subsidiaries, Ashford Trust and its subsidiaries and the REHE Fund in conformity with each entity’s investment guidelines.

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Year Ended December 31, 2023
AdvisoryRemingtonPremierINSPIREREDOpenKeyCorporate and OtherAshford Inc. Consolidated
REVENUE
Advisory services fees$47,948 $— $— $— $— $— $— $47,948 
Hotel management fees— 52,561 — — — — — 52,561 
Design and construction fees— — 27,740 — — — — 27,740 
Audio visual— — — 148,617 — — — 148,617 
Other268 41 — — 34,058 1,586 7,480 43,433 
Cost reimbursement revenue (1)
30,744 371,720 12,207 212 92 — 11,521 426,496 
Total revenues78,960 424,322 39,947 148,829 34,150 1,586 19,001 746,795 
EXPENSES
Depreciation and amortization1,353 11,861 11,527 1,920 1,109 12 440 28,222 
Other operating expenses (2)
2,898 32,825 18,354 139,246 32,273 4,979 53,546 284,121 
Reimbursed expenses (1)
30,673 371,720 12,207 212 92 — 11,603 426,507 
Total operating expenses34,924 416,406 42,088 141,378 33,474 4,991 65,589 738,850 
OPERATING INCOME (LOSS)44,036 7,916 (2,141)7,451 676 (3,405)(46,588)7,945 
Equity in earnings (loss) of unconsolidated entities— — — — — — (702)(702)
Interest expense— — — (1,818)(1,625)(21)(10,744)(14,208)
Amortization of loan costs— — — (164)(41)— (846)(1,051)
Interest income— 122 — — — — 1,676 1,798 
Realized gain (loss) on investments— (80)— — — — — (80)
Other income (expense)— (24)— 479 402 (64)(46)747 
INCOME (LOSS) BEFORE INCOME TAXES44,036 7,934 (2,141)5,948 (588)(3,490)(57,250)(5,551)
Income tax (expense) benefit(10,571)(1,453)519 (487)304 — 12,232 544 
NET INCOME (LOSS)$33,465 $6,481 $(1,622)$5,461 $(284)$(3,490)$(45,018)$(5,007)
________
(1)    Our segments are reported net of eliminations upon consolidation. Approximately $12.9 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.
(2)    Other operating expenses includes salaries and benefits, costs of revenues for design and construction, cost of revenues for audio visual, general and administrative expenses and other expenses.

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Year Ended December 31, 2022
AdvisoryRemingtonPremierINSPIREREDOpenKeyCorporate and OtherAshford Inc. Consolidated
REVENUE
Advisory services fees$48,381 $— $— $— $— $— $— $48,381 
Hotel management fees— 46,548 — — — — — 46,548 
Design and construction fees— — 22,167 — — — — 22,167 
Audio visual— — — 121,261 — — — 121,261 
Other157 181 — — 26,309 1,480 16,185 44,312 
Cost reimbursement revenue (1)
28,809 309,706 10,080 157 26 4 12,981 361,763 
Total revenues77,347 356,435 32,247 121,418 26,335 1,484 29,166 644,432 
EXPENSES
Depreciation and amortization3,410 12,362 11,899 1,803 656 12 1,624 31,766 
Other operating expenses (2)
2,828 24,414 13,693 107,520 22,760 5,758 52,725 229,698 
Reimbursed expenses (1)
28,421 309,706 10,080 157 26 4 12,981 361,375 
Total operating expenses34,659 346,482 35,672 109,480 23,442 5,774 67,330 622,839 
OPERATING INCOME (LOSS)42,688 9,953 (3,425)11,938 2,893 (4,290)(38,164)21,593 
Equity in earnings (loss) of unconsolidated entities— 7 — — — — 385 392 
Interest expense— — — (1,263)(769)— (7,964)(9,996)
Amortization of loan costs— — — (130)(52)— (579)(761)
Interest income— 182 — — — — 189 371 
Realized gain (loss) on investments— (121)— — — — — (121)
Other income (expense)— (26)— 131 (47)4 (87)(25)
INCOME (LOSS) BEFORE INCOME TAXES42,688 9,995 (3,425)10,676 2,025 (4,286)(46,220)11,453 
Income tax (expense) benefit(10,406)(1,845)(528)(4,073)(557)— 8,879 (8,530)
NET INCOME (LOSS)$32,282 $8,150 $(3,953)$6,603 $1,468 $(4,286)$(37,341)$2,923 
________
(1)    Our segments are reported net of eliminations upon consolidation. Approximately $13.2 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.
(2)    Other operating expenses includes salaries and benefits, costs of revenues for design and construction, cost of revenues for audio visual, general and administrative expenses and other expenses.
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Year ended December 31, 2021
AdvisoryRemingtonPremierINSPIREREDOpenKeyCorporate and OtherAshford Inc. Consolidated
REVENUE
Advisory services fees$47,566 $— $— $— $— $— $— $47,566 
Hotel management fees— 26,260 — — — — — 26,260 
Design and construction fees— — 9,557 — — — — 9,557 
Audio visual— — — 49,880 — — — 49,880 
Other81 20 — — 23,867 1,965 21,396 47,329 
Cost reimbursement revenue (1)
26,969 171,522 2,856 20 — — 2,608 203,975 
Total revenues74,616 197,802 12,413 49,900 23,867 1,965 24,004 384,567 
EXPENSES
Depreciation and amortization4,039 12,141 12,230 1,880 400 15 1,893 32,598 
Impairment— — — 1,160 — — — 1,160 
Other operating expenses (2)
645 14,525 8,846 52,228 18,547 5,170 52,125 152,086 
Reimbursed expenses (1)
26,949 171,522 2,856 20 — — 2,609 203,956 
Total operating expenses31,633 198,188 23,932 55,288 18,947 5,185 56,627 389,800 
OPERATING INCOME (LOSS)42,983 (386)(11,519)(5,388)4,920 (3,220)(32,623)(5,233)
Equity in earnings (loss) of unconsolidated entities— (139)— — — — 13 (126)
Interest expense— — — (876)(628)— (3,640)(5,144)
Amortization of loan costs— — — (121)(81)— (120)(322)
Interest income— 277 — — — — 8 285 
Realized gain (loss) on investments— (3)— — — — — (3)
Other income (expense)— 10 — (189)(252)7 (13)(437)
INCOME (LOSS) BEFORE INCOME TAXES42,983 (241)(11,519)(6,574)3,959 (3,213)(36,375)(10,980)
Income tax (expense) benefit(10,097)(1,406)2,414 1,326 (1,025)— 8,950 162 
NET INCOME (LOSS)$32,886 $(1,647)$(9,105)$(5,248)$2,934 $(3,213)$(27,425)$(10,818)
________
(1)    Our segments are reported net of eliminations upon consolidation. Approximately $8.6 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.
(2)    Other operating expenses includes salaries and benefits, costs of revenues for design and construction, cost of revenues for audio visual, general and administrative expenses and other expenses
Total assets by segment are presented below (in thousands):
December 31,
20232022
Remington$166,719 $182,884 
Premier138,967 155,332 
INSPIRE57,193 42,168 
RED50,012 31,863 
OpenKey1,303 2,149 
Other (1)
90,613 67,960 
Total Assets$504,807 $482,356 
________
(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.
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Geographic Information
For revenues by geographical locations, see note 3. The following table presents revenue by geographic area for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 Year Ended December 31,
 2017 2016 2015
United States$78,420
 $67,607
 $58,981
Mexico2,760
 —
 —
All other countries393
 —
 —
 $81,573
 $67,607
 $58,981
The following table presents furniture, fixturesproperty and equipment, net by geographic area as of December 31, 20172023 and 20162022 (in thousands):
December 31, 2023December 31, 2022
United States$49,478 $36,548 
Mexico6,439 4,478 
Dominican Republic677 538 
United Kingdom (Turks and Caicos Islands)258 227 
$56,852 $41,791 
 December 31, 2017 December 31, 2016
United States$18,087
 $12,044
Mexico2,960
 —
All other countries107
 —
 $21,154
 $12,044
20.22. Concentration of Risk
During the years ended December 31, 2017, 20162023, 2022 and 2015,2021, our advisory revenue was primarily derived from our advisory agreements with Ashford Trust and Ashford Prime. Further,Braemar. Additionally, Remington, Premier, OpenKey, RED, Pure Wellness, Lismore and Pure RoomsWarwick generated revenuerevenues through contracts with Ashford Trust OP and Ashford Prime OP,Braemar, as summarized in the table below, stated as a percentage of the consolidated subsidiaries’ total revenues:revenues.
Year Ended December 31,
202320222021
Percentage of total revenues from Ashford Trust and Braemar (1)
Remington73.1 %79.6 %93.7 %
Premier89.1 %88.8 %72.1 %
INSPIRE (2)
22.8 %22.8 %17.9 %
RED16.2 %9.6 %10.9 %
OpenKey9.9 %10.8 %8.0 %
Pure Wellness66.9 %65.7 %62.1 %
Lismore100.0 %100.0 %100.0 %
Warwick0.8 %N/AN/A
________
 Year Ended December 31,
 2017 2016 2015
Percentage of total revenues from Ashford Trust OP and Ashford Prime OP(1)
     
J&S (2)
2.2% —% —%
Pure Rooms45.6% —% —%
OpenKey28.4% 9.1% —%
(1)See note 19 for details regarding our related party transactions.
________(2)Represents percentage of revenues earned by INSPIRE from customers at Ashford Trust and Braemar hotels. See note 3 for the discussion of audio visual revenue recognition policy.
(1)
See note 17 for details regarding our related party transactions.
(2)
Represents percentage of revenues earned by J&S from customers at Ashford Trust and Ashford Prime hotels. See note 2 for the discussion of audio visual revenue recognition policy.
AsThe carrying amounts of net assets related to our INSPIRE operations in Mexico and the Dominican Republic increased to $2.2 million and $2.1 million, respectively, as of December 31, 2017, our operations include consolidated J&S2023, from $1.4 million and $763,000 as of December 31, 2022. The carrying amounts of net assets related to our RED operations in Turks and Caicos were $944,000 and $682,000 as of $2.3 millionDecember 31, 2023 and $399,000 located in Mexico and Dominican Republic,2022, respectively. For discussion of revenues by geographic location, see note 19 to our consolidated financial statements.3.
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, cash equivalents and cash equivalents.accounts receivable. We are exposed to credit risk with respect to cash held at financial institutions that are in excess of the FDIC insurance limits of $250,000 and U.S. government treasury bond holdings. Our counterparties are investment grade financial institutions.

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21. Selected Financial Quarterly Data (Unaudited)
The following is a summary of the quarterly results of operations for the years ended December 31, 2017 and 2016 (in thousands, except per share data):

First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Full
Year
2017         
Total revenue$13,013
 $19,639
 $19,255
 $29,666
 $81,573
Total operating expenses15,149
 18,221
 21,595
 37,130
 92,095
Operating income (loss)$(2,136) $1,418
 $(2,340) $(7,464) $(10,522)
Net income (loss)$(2,723) $(7,231) $(2,258) $(7,982) $(20,194)
Net income (loss) attributable to the Company$(2,385) $(6,709) $(1,856) $(7,402) $(18,352)
Basic:         
Net income (loss) attributable to common stockholders per share (1)
$(1.18) $(3.32) $(0.92) $(3.58) $(9.04)
Weighted average common shares outstanding - basic2,015
 2,019
 2,022
 2,069
 2,031
Diluted:         
Net income (loss) attributable to common stockholders per share (1)
$(1.34) $(3.85) $(1.05) $(3.72) $(9.59)
Weighted average common shares outstanding - diluted2,046
 2,265
 2,054
 2,118
 2,067
 First
Quarter		 Second
Quarter		 Third
Quarter		 Fourth
Quarter		 Full
Year
2016         
Total revenue$13,409
 $18,152
 $16,538
 $19,508
 $67,607
Total operating expenses13,921
 20,344
 16,673
 19,126
 70,064
Operating income (loss)$(512) $(2,192) $(135) $382
 $(2,457)
Net income (loss)$(8,398) $(1,279) $(1,092) $(1,634) $(12,403)
Net income (loss) attributable to the Company$(1,732) $(1,106) $(285) $727
 $(2,396)
Basic:         
Net income (loss) attributable to common stockholders per share (1)
$(0.86) $(0.55) $(0.14) $0.36
 $(1.19)
Weighted average common shares outstanding - basic2,008
 2,011
 2,014
 2,014
 2,012
Diluted:         
Net income (loss) attributable to common stockholders per share (1)
$(1.51) $(0.71) $(0.49) $(0.25) $(2.56)
Weighted average common shares outstanding - diluted2,218
 2,048
 2,262
 2,267
 2,209
_________________
(1)
The sum of the basic and diluted income (loss) attributable to common stockholders per share for the four quarters in 2017 and 2016 may differ from the full year basic and diluted income (loss) attributable to common stockholders per share due to the required method of computing the weighted average diluted common shares in the respective periods.
22. Subsequent Events
On January 2, 2018, the Company issued 8,962 shares of common stock to the OpenKey redeemable noncontrolling interest holder in connection with the purchase of 519,647 shares of the outstanding membership interests in OpenKey, Inc. The common stock was issued pursuant to the exemption from the registration requirements under the Securities Act of 1933, as amended provided under Section 4(a)(2) thereunder.

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On January 8, 2018, we entered into an equity distribution agreement with B. Riley FBR, Inc., acting as sales agent (the “Equity Distribution Agreement”). Pursuant to the Equity Distribution Agreement, we may sell from time to time through the sales agent shares of our common stock having an aggregate offering price of up to $20.0 million. Sales of shares of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 of the Securities Act. We will pay the sales agent a commission, which in each case shall not be more than 2.0% of the gross sales price of the shares of our common stock sold through the sales agent. As of December 31, 2017, no shares of our common stock have been sold under this program.
On January 16, 2018, Ashford Inc. invested an additional $1.3 million in OpenKey. OpenKey is a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guestrooms. See notes 1, 2, 13, 14 and 17 to our consolidated financial statements.
On January 16, 2018, the Company closed on the acquisition of certain assets related to RED Hospitality & Leisure LLC ("RED") for $970,000 cash, comprised of a $750,000 deposit paid on December 11, 2017, which is reflected on our consolidated balance sheet as “other assets” as of December 31, 2017, and an additional $220,000 paid on January 16, 2018. The Company owns an 80% interest in RED, a premier provider of watersports activities and other travel and transportation services in the U.S. Virgin Islands.
On February 27, 2018, our board of directors approved and adopted the Second Amended and Restated Bylaws of the Company, which contains a provision that requires stockholders to meet certain ownership thresholds to initiate claims on behalf of the Company or against the Company or one of its directors of officers. The new provision will be submitted to a binding advisory vote of the company’s stockholders at the company’s 2018 Annual Meeting of Stockholders with the intent that the new provision will be rescinded if not approved at such meeting.
On March 1, 2018, the Company entered into a $35.0 million senior revolving credit facility with Bank of America, N.A. The credit facility provides for a three-year revolving line of credit and bears interest at a range of 3.0% to 3.50% over LIBOR, depending on the leverage level of the Company. There is a one-year extension option subject to the satisfaction of certain conditions. The new credit facility includes the opportunity to expand the borrowing capacity by up to $40.0 million to an aggregate size of $75.0 million.


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2017.2023. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the evaluation date, as a result of the material weakness in our internal control over financial reporting described below, and for which it was not possible for the Company to remediate during the fourth quarter of 2023 for reasons discussed below, our disclosure controls and procedures arewere not effective (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms;forms and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of our internal control over financial reporting. The internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and our expenditures are being made only in accordance with authorizations of management and our directors and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.2023. In making the assessment of the effectiveness of our internal control over financial reporting, management has utilized the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, (2013 framework) (“COSO”).
Based on management’s assessment of theseour evaluation under the COSO criteria, weour management concluded that as of December 31, 2017, our internal control over financial reporting was not effective as of December 31, 2023, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
During the Company’s financial statement close process for the fourth quarter of 2023 and preparation of the 2023 Form 10-K, a material weakness was identified 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 controls over evaluating whether the revenue and expense from the one-time transfer of the casualty insurance loss portfolio (the “LPT”) to Warwick should eliminate in consolidation.
As previously disclosed, the Company’s Risk Management department has historically collected funds from Ashford Trust and Braemar properties and their respective management companies in an amount equal to the actuarial forecast of that year’s expected casualty claims and associated fees. These funds have historically been deposited into restricted cash and used to pay casualty claims throughout the year as they are incurred. The claim liability related to the restricted cash balance has been included in current “other liabilities” in our consolidated balance sheets. This deposit accounting was appropriate because the Company was determined to be an agent for its clients related to these casualty claims, not a principal, under GAAP.
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In December 2023, the Company formed our insurance subsidiary, Warwick, which is effective.licensed by the Texas Department of Insurance, and obtained the approval from the independent boards of directors of Ashford Trust and Braemar to (1) transfer the loss portfolio to Warwick including the existing cash reserves and claims liability for casualty insurance policies from January 1, 2014 through December 31, 2023 and (2) enter into new casualty policies with Warwick for the next one year policy period. The Company engaged multiple third-party accounting experts to evaluate the accounting for these transactions and initially concluded that the Company had become the principal for its clients under GAAP through Warwick, which resulted in reporting the revenues and expenses related to the LPT in the Company’s consolidated statement of operations with no net impact to net loss attributable to common stockholders or the related per share amounts.
However, prior to the issuance of the Form 10-K, management determined that the incorrect judgment was applied when determining whether the Company should report the revenues and expenses related to the LPT in its consolidated statement of operations or eliminate the revenues and expenses in consolidation. This resulted in a judgmental misstatement in the Company’s consolidated financial statements prior to the issuance of the Form 10-K. The execution of the related control is complex and involves significant judgment for which there are varying interpretations, and the facts and circumstances underlying the deficiency occur infrequently. The operation of the control used in reaching the Company’s accounting conclusion, which involves judgment, resulted in a misstatement that ultimately caused the control to be ineffective. Since the deficiency was identified prior to the issuance of the Form 10-K, the consolidated financial statements in the Form 10-K have been corrected.
To prevent future material weaknesses from arising under similar circumstances, if similar facts and circumstances arise in the future we will ensure that similar transactions eliminate in consolidation. The Company is also evaluating other remediation steps. The material weakness will not be considered remediated until management is able to test and conclude that it has designed and implemented effective controls that have operated for a sufficient period of time. As such, it is not possible for management to remediate the material weakness as of December 31, 2023.
We reviewed the results of management’s assessment with the audit committee of our board of directors.
Notwithstanding the material weakness described above, management has concluded that our consolidated financial statements included in this annual report are fairly stated in all material respects in accordance with GAAP.
Changes in Internal Control over Financial Reporting
ThereOther than the remediation efforts described above, there were no changes in our internal controls over financial reporting during our most recent fiscal quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B. Other Information
None.During the fiscal quarter ended December 31, 2023, 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).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officer, and Corporate Governance
The information required in response to this Item 10 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required in response to this Item 11 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required in response to this Item 12 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required in response to this Item 13 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 14. Principal Accountant Fees and Services
The information required in response to this Item 14 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
152

PART IV
Item 15. Financial Statement Schedules and Exhibits
(a)Financial Statements and Schedules
(a)Financial Statements and Schedules
See “Item 8. Financial Statements and Supplementary Data,” on pages 5079 through 100149 hereof, for a list of our consolidated financial statements and report of independent registered public accounting firm.
All other financial statement schedules have been omitted because such schedules are not required under the related instructions, such schedules are not significant, or the required information has been disclosed elsewhere in the consolidated financial statements and related notes thereto.
(b)Exhibits
Exhibits required by Item 601 of Regulation S-K: The exhibits filed in response to this item are listed in the Exhibit Index.
Item 16. Form 10-K Summary
None.


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 12, 2018.
ExhibitDescription
2.1
ASHFORD INC.
By:/s/ MONTY J. BENNETT
Monty J. Bennett
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, by the following persons, on behalf of the Registrant in the capacities and on the dates indicated.
SignatureTitleDate
/s/ MONTY J. BENNETT
Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)March 12, 2018
Monty J. Bennett
/s/ DOUGLAS A. KESSLERPresidentMarch 12, 2018
Douglas A. Kessler
/s/ DERIC S. EUBANKS
Chief Financial Officer
(Principal Financial Officer)
March 12, 2018
Deric S. Eubanks
/s/ MARK L. NUNNELEY
Chief Accounting Officer
(Principal Accounting Officer)
March 12, 2018
Mark L. Nunneley
/s/ J. ROBISON HAYS, IIIChief Strategy Officer and DirectorMarch 12, 2018
J. Robison Hays, III
/s/ DINESH P. CHANDIRAMANIDirectorMarch 12, 2018
Dinesh P. Chandiramani
/s/ DARRELL T. HAILDirectorMarch 12, 2018
Darrell T. Hail
/s/ JOHN MAULDIN
DirectorMarch 12, 2018
John Mauldin
/s/ BRIAN WHEELERDirectorMarch 12, 2018
Brian Wheeler
/s/ UNO IMMANIVONGDirectorMarch 12, 2018
Uno Immanivong



EXHIBIT INDEX
ExhibitDescription
2.1
Separation and Distribution Agreement, dated as of October 31, 2014, by and between Ashford Hospitality Trust, Inc., Ashford OP Limited Partner LLC, Ashford Hospitality Limited Partnership, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on November 6, 2014) (File No. 001-36400)
2.2
Acquisition Agreement, dated as of September 17, 2015, by and between Archie Bennett, Jr. and Monty J. Bennett, Remington Holdings GP, LLC, MJB Investments, LP, Mark A. Sharkey, Remington Holdings, LP, Ashford Inc., Ashford Advisors, Inc., Remington Hospitality Management, Inc., Ashford GP Holdings I, LLC and Remington GP Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on September 18, 2015) (File No. 001-36400)
2.2.1
First Amendment to Acquisition Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 24, 2016) (File No. 001-36400)
2.2.2
Second Amendment to Acquisition Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 23, 2016) (File No. 001-36400)
2.2.3
Amendment, Waiver and Consent Agreement, dated as of October 28, 2016 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on November 1, 2016) (File No. 001-36400)
2.3
Agreement and Plan of Merger, dated as of October 28, 2016, by and between Ashford Inc., a Delaware corporation.corporation and Ashford Inc., a Maryland corporation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 1, 2016) (File No. 001-36400)
2.4***
Unit Purchase Agreement, dated as of July 25, 2017, by and among Presentation Technologies, Inc., Monroe Jost, Kevin Jost, Todd Jost and PT Holdco, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on July 31, 2017) (File No. 001-36400)
2.4.1
Amendment No. 2 to Unit Purchase Agreement, dated as of October 31, 2017, by and among PT Holdco, LLC, PT Intermediate, LLC and Presentation Technologies, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on November 6, 2017) (File No. 001-36400)
3.12.5
Combination Agreement, dated as of May 31, 2019, between Monty J. Bennett, Archie Bennett, Jr., Remington Holdings, L.P., Remington Holdings GP, LLC, MJB Investments, LP, Ashford Inc., James L. Cowen, Jeremy J. Welter, Ashford Nevada Holding Corp. and Ashford Merger Sub Inc. (incorporated by reference to Exhibit 2.1 of Form 8-K, filed on June 3, 2019) (File No. 001-36400)
2.5.1
First Amendment to Combination Agreement, dated as of July 17, 2019, between Monty J. Bennett, Archie Bennett, Jr., Remington Holdings, L.P., Remington Holdings GP, LLC, MJB Investments, LP, Ashford Inc., James L. Cowen, Jeremy J. Welter, Ashford Nevada Holding Corp. and Ashford Merger Sub Inc. (incorporated by reference to Exhibit 2.2 of Form 8-K, filed on July 19, 2019) (File No. 001-36400)
2.5.2
Second Amendment to Combination Agreement, dated as of August 28, 2019, between Monty J. Bennett, Archie Bennett, Jr., Remington Holdings, L.P., Remington Holdings GP, LLC, MJB Investments, LP, Ashford Inc., James L. Cowen, Jeremy J. Welter, Ashford Nevada Holding Corp. and Ashford Merger Sub Inc. (incorporated by reference to Exhibit 2.3 of Form 8-K/A, filed on August 30, 2019) (File No. 001-36400)
2.6
Membership Interest Purchase and Contribution Agreement (the “Purchase Agreement”), dated as of April 15, 2022, by and among Ashford Hospitality Holdings, LLC, Remington Holdings, L.P., MHI Hotels Services, LLC, Chesapeake Hospitality, LLC, Chesapeake Hospitality II, LLC, Chesapeake Hospitality III, LLC, Chesapeake Hospitality IV, LLC, Chesapeake Hospitality V, LLC, Chesapeake Hospitality VI, LLC, ACSB Hospitality, LLC, KES Family Partnership, R.L.L.L.P, CLS Family Partnership, R.L.L.L.P, Steven McDonnell Smith Family Partnership, LLP, W. Chris Green, Clifford G. Ferrara and Louis Schaab; and solely for purposes of Section 6.15 of the Purchase Agreement, Kim Sims, Chris Sims and Steven Smith (incorporated by reference to Exhibit 2.1 of Form 10-Q, filed May 11, 2022) (File No. 001-36400)
153

ExhibitDescription
3.1
Amended and Restated ArticlesCertificate of Incorporation of Ashford Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K, filed on November 1, 2016)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
Second Amended and Restated BylawsArticles 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
Certificate of Designation of the CompanySeries 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)
3.7
Certificate of Designation of Series E Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.1 to the Current Report onof Form 8-K, filed on March 2, 2018)16, 2020) (File No. 001-36400)
4.13.8
Certificate of Designation of Series F 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 3.1 of Form 8-K, filed on August 31, 2022) (File No. 001-36400)
3.9
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)
3.10
Amended and Restated Bylaws of Ashford Inc., as amended August 24, 2023 (incorporated by reference to Exhibit 3.1 of Form 8-K, filed on August 25, 2023) (File No. 001-36400)
4.1
4.2
Form of Senior Indenture and (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-3 of Ashford Inc. filed October 5, 2018) (File No. 333-2277729)
4.3
Amended and Restated Form of Subordinated Indenture (incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-3 of Ashford Inc. filed October 5, 2018) (File No. 333-2277729)
4.4
Form of Senior Debt Security (incorporated by reference to Exhibit 4.6 to the Registration Statement on Form S-3 of Ashford Inc. filed October 5, 2018) (File No. 333-2277729)
4.5
Rights Agreement, dated as of August 12, 2015,30, 2022, between Ashford Inc. and Computershare Trust Company, N.A., as Rights Agent, which includes the Form of Certificate of Designation of Series F Preferred Stock as Exhibit A, the Form of Rights Certificate as Exhibit B, and the Summary of Rights as Exhibit C (incorporated by reference to Exhibit 10.3 to the Quarterly Report on4.1 of Form 10-Q8-K, filed on August 14, 2015)31, 2022) (File No. 001-36400).
4.2.14.6
Amendment No. 1 to the Amended and Restated Rights Agreement, dated October 31, 2016,May 15, 2023, between Ashford Inc. and Computershare Trust Company, N.A.N.A, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Current Report on4.2 of Form 8-K filed on November 1, 2016)May 15, 2023) (File No. 001-36400)
10.14.7*
Description of Securities
10.1
Tax Matters Agreement, dated as of October 31, 2014, between Ashford Inc., Ashford Hospitality Advisors LLC, Ashford Hospitality Trust, Inc. and Ashford Hospitality Limited Partnership (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 6, 2014) (File No. 001-36400)
10.2
Advisory Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.2.1
Amended and Restated Advisory Agreement, dated as of June 10, 2015, by and between Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on June 12, 2015) (File No. 001-36400)
10.310.2.2
Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as of June 26, 2018, among Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC, dated June, 26, 2018, incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on June 26, 2018 (File No. 001-36400).
10.2.3
Second Amended and Restated Advisory Agreement, dated as of January 14, 2021, by and between Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on January 15, 2021) (File No. 001-36400)
154

ExhibitDescription
10.3
Fourth Amended and Restated Advisory Agreement, dated as of January 24, 2017, between Ashford Hospitality Prime, Inc., Ashford Hospitality Prime Limited Partnership, Ashford Prime TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on January 25, 2017) (File No. 001-36400)
10.4
Mutual Exclusivity Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Advisors LLC, Ashford Inc. and Remington Lodging & Hospitality, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.510.4.1
Ashford Inc. Amended and Restated Mutual Exclusivity Agreement, dated as of August 8, 2018, by and among Ashford Hospitality Advisors LLC, Ashford Inc. and Remington Lodging & Hospitality LLC, and consented to by Monty J. Bennett (incorporated by reference to Exhibit 10.3 of Form 8-K filed on August 8, 2018) (File No. 001-36400)
10.5
Assignment and Assumption Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership and Ashford Hospitality Advisors LLC Re: Ashford Trademarks (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)


10.6
ExhibitDescription
10.6
Licensing Agreement, dated as of November 12, 2014 by and between Ashford Hospitality Advisors LLC, Ashford Hospitality Trust, Inc. and Ashford Hospitality Limited Partnership (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.7
Registration Rights Agreement, dated as of November 12, 2014 by Ashford Inc. for the benefit of the holders of common units in Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.8†
Amended and Restated Employment Agreement, dated as of February 20, 2017, by and among Ashford Inc., Ashford Hospitality Advisors, LLC and Douglas A. Kessler (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 21, 2017) (File No. 001-36400)
10.8.1†
Employment Agreement, effective November 12, 2014, with Monty J. Bennett (incorporated by reference to Exhibit 10.6.1 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.8.2†10.8.1†
Amendment to Employment Agreement, dated as of September 13, 2017, by and among Ashford Inc., Ashford Hospitality Advisors, LLC and Monty J. Bennett (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on September 14, 2017) (File No. 001-36400)
10.8.3†10.8.2†
Amended and Restated Employment Agreement, dated as of September 13, 2017, by and among Ashford Inc., Ashford Hospitality Advisors, LLC and David Brooks (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 14, 2017) (File No. 001-36400)
10.8.4†
Amended and Restated Employment Agreement, dated as of September 13, 2017, by and among Ashford Inc., Ashford Hospitality Advisors, LLC and Deric Eubanks (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on September 14, 2017) (File No. 001-36400)
10.8.5†10.8.3†
Amended and Restated Employment Agreement, dated as of November 2, 2016,April 1, 2019, by and among Ashford Inc., Ashford Hospitality Advisors, LLC, and Richard J. Stockton (incorporated by reference to Exhibit 99.110.1 to the Current Report on Form 8-K filed on November 3, 2016)May 17, 2022) (File No. 001-36400).
10.910.8.4†
First Amendment to Amended and Restated Employment Agreement, dated as of May 12, 2022, by and among Ashford Inc., Ashford Hospitality Advisors, LLC, and Richard J. Stockton (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on May 17, 2022) (File No. 001-36400).
10.9
Form of Indemnification Agreement, dated as of November 6, 2014 between Ashford Inc. and each of its executive officers and directors (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.10†10.9.1
Form of Amended and Restated Indemnification Agreement between Ashford Inc. and each of its executive officers and directors (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 6, 2018) (File No. 001-36400)
10.10†
Ashford Inc. 2014 Incentive Plan (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.10.1†
Amendment No. 1 to the Ashford, Inc. 2014 Incentive Plan (incorporated by reference to Exhibit 99.2 to Form S-8 filed on November 2, 2016) (File No. 333-200183)
10.1110.10.2†
Form of LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.10.2 to the Annual Report on Form 10-K filed on March 17, 2023) (File No. 001-36400)
10.10.3†
Form of Class 2 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.10.3 to the Annual Report on Form 10-K filed on March 17, 2023) (File No. 001-36400)
10.10.4†
Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.10.4 to the Annual Report on Form 10-K filed on March 17, 2023) (File No. 001-36400)
10.11
Amended and Restated Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed on November 18, 2014) (File No. 001-36400)
10.12
Investment Management Agreement, dated as of December 10, 2014 between AHT SMA, LP and Ashford Investment Management LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 16, 2014) (File No. 001-36400)
10.13
Investment Management Agreement, dated as of December 10, 2014 between AHP SMA, LP and Ashford Investment Management, LLC (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K filed on March 24, 2015) (File No. 001-36400)
155

ExhibitDescription
10.14
Investment Management Agreement, dated as of January 19, 2017, between AHT SMA, LP, a Delaware limited partnership, and Ashford Investment Management LLC, a Delaware limited liability company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on January 25, 2017) (File No. 001-36400)
10.15
Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Advisors LLC, dated as of October 8, 2014 (incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K filed on March 24, 2015) (File No. 001-36400)
10.16
Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Holdings LLC, dated as of April 6, 2017) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 12, 20172017) (File No. 001-36400)
10.17
Letter Agreement, dated as of September 17, 2015 between Ashford Inc. and Ashford Hospitality Trust, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on September 18, 2015) (File No. 001-36400)
10.18
Letter Agreement, dated as of September 17, 2015 between Ashford Inc. and Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 10.2 to the Current Report on 8-K filed on September 18, 2015) (File No. 001-36400)
10.19
Commitment Letter, dated as of June 14, 2017, by and between Ashford Inc. and Comerica Bank (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed July 31, 2017) (File No. 001-36400)


10.20
ExhibitDescription
10.20
Credit Agreement, dated as of November 1, 2017, by and between Presentation Technologies, LLC and Comerica Bank (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on November 6, 2017) (File No. 001-36400)
10.21
Term Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica Bank (incorporated by reference to Exhibit 10.2 to the Current Report on 8-K filed on November 6, 2017) (File No. 001-36400)
10.2210.21.1
10.22
Revolving Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica Bank (incorporated by reference to Exhibit 10.3 to the Current Report on 8-K filed on November 6, 2017) (File No. 001-36400)
10.23
Draw Term Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica Bank (incorporated by reference to Exhibit 10.4 to the Current Report on 8-K filed on November 6, 2017) (File No. 001-36400)
10.24
Equipment Note, dated as of November 1, 2017, made by Presentation Technologies, LLC in favor of Comerica Bank (incorporated by reference to Exhibit 10.5 to the Current Report on 8-K filed on November 6, 2017) (File No. 001-36400)
10.25
Credit Agreement, dated as of March 1, 2018, by and among Ashford Hospitality Holdings LLC, Ashford Inc., Bank of America, N. A. and the other lenderlenders party thereto (incorporated by reference to Exhibit 10-1 to the Current Report on 8-K filed on March 7, 2018)(File No. 001-36400)
10.25.1
First Amendment to Credit Agreement, dated as of March 21, *2018, effective as of March 1, 2018, by and among Ashford Hospitality Holdings LLC, Ashford Inc., Bank of America, N.A. and the other lenders party thereto (incorporated by reference to Exhibit 99.1 of Form 8-K filed on March 26, 2018) (File No. 001-36400)
10.25.2
Fifth Amendment to Credit Agreement, dated as of June 23, 2020, by and among Ashford Hospitality Holdings LLC, Ashford Inc., Bank of America, N.A. and the other lenders party thereto (incorporated by reference to Exhibit 10.4 of Form 8-K/A filed on June 29, 2020) (File No. 001- 36400)
10.25.3
Second Consent, Assumption and Modification Agreement, dated as of November 6, 2019, by and among Ashford Hospitality Holdings LLC, Ashford Inc., Bank of America, N.A. and the other lenders party thereto (incorporated by reference to Exhibit 10.3 of Form 8-K/A filed on November 6, 2019 (File No. 001-36400)
10.25.4
Seventh Amendment to Credit Agreement, dated as of March 29, 2021, by and among Ashford Hospitality Holdings LLC, Ashford Inc., Bank of America, N.A. and the other lenders party thereto (incorporated by reference to Exhibit 10.5 of Form 8-K/A filed on April 1, 2021)(File No. 001-36400).
10.26
Fifth Amended and Restated Advisory Agreement, dated as of April 23, 2018, among Braemar Hotels & Resorts Inc., Braemar Hospitality Limited Partnership, Braemar TRS Corporation, Ashford Hospitality Advisors LLC and Ashford Inc. (incorporated by reference to Exhibit 10.1 of the Braemar Hotels & Resorts Inc.’s Form 8-K filed on April 23, 2018) (File No. 001-35972).
10.26.1
Enhanced Return Funding Program Agreement and Amendment No. 1 to the Fifth Amended and Restated Advisory Agreement, dated January 15, 2019, 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 10.1 of Form 8-K filed on January 18, 2019) (File No. 001-36400)
156

ExhibitDescription
10.26.2
Extension Agreement to Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated March 13, 2020, 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 10.2 of Form 8-K filed on March 16, 2020) (File No. 001-36400)
10.26.3
Amendment No. 2 to the Fifth Amended and Restated Advisory Agreement, dated as of August 16, 2021, 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 10.5 of Form 10-Q filed on August 16, 2021)(File No. 001-36400)
10.27
Investor Rights Agreement, dated as of August 8, 2018, by and among Ashford Holding Corp., Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP, Mark A. Sharkey, and any other Persons that become parties by joinder as provided herein (incorporated by reference to Exhibit 10.1 of Form 8-K filed on August 8, 2018) (File No. 001-36400)
10.28
Merger and Registration Rights Agreement, dated as of August 8, 2018, by and among Ashford Inc., Ashford Holding Corp., and Ashford Merger Sub Inc., and, solely for the purposes of Article V hereof, Archie Bennett, Jr., MJB Investments, LP and Mark A. Sharkey (incorporated by reference to Exhibit 10.2 of Form 8-K filed on August 8, 2018) (File No. 001-36400)
10.29
Braemar Mutual Exclusivity Agreement, dated as of August 8, 2018, by and among Braemar Hospitality Limited Partnership, Braemar Hotels & Resorts, Inc. and Project Management LLC (incorporated by reference to Exhibit 10.4 of Form 8-K filed on August 8, 2018) (File No. 001-36400)
10.30
Braemar Master Project Management Agreement, dated as of August 8, 2018, by and among Braemar TRS Corporation, CHH III Tenant Parent Corp., RC Hotels (Virgin Islands), Inc., Project Management LLC and Braemar Hospitality Limited Partnership (incorporated by reference to Exhibit 10.5 of Form 8-K filed on August 8, 2018) (File No. 001-36400)
10.30.1
Amendment No. 1 to the Braemar Master Project Management Agreement, dated May 28, 2021, by and among Braemar TRS Corporation, CHH III Tenant Parent Corp., RC Hotels (Virgin Islands), Inc., Braemar Hospitality Limited Partnership and Project Management LLC (incorporated by reference to Exhibit 10.4 of Form 10-Q filed on August 16, 2021)(File No. 001-36400)
10.30.2*
Amendment No. 2 to the Braemar Master Project Management Agreement, dated February 12, 2024, by and among Braemar TRS Corporation, CHH III Tenant Parent Corp., RC Hotels (Virgin Islands), Inc., Braemar Hospitality Limited Partnership and Premier Project Management LLC
10.31
Mutual Exclusivity Agreement, dated as of August 8, 2018, by and among Ashford Hospitality Limited Partnership, Ashford Hospitality Trust, Inc. and Project Management LLC (incorporated by reference to Exhibit 10.6 of Form 8-K filed on August 8, 2018) (File No. 001-36400)
10.32
Master Project Management Agreement, dated as of August 8, 2018, by and among Ashford TRS Corporation, RI Manchester Tenant Corporation, CY Manchester Tenant Corporation, Project Management LLC and Ashford Hospitality Limited Partnership (incorporated by reference to Exhibit 10.7 of Form 8-K filed on August 8, 2018) (File No. 001-36400)
10.32.1
Amendment No. 1 to the Master Project Management Agreement, dated as of May 28, 2021, by and among Ashford TRS Corporation, RI Manchester Tenant Corporation, CY Manchester Tenant Corporation, Project Management LLC and Ashford Hospitality Limited Partnership (incorporated by reference to Exhibit 10.3 of Form 10-Q filed on August 16, 2021)(File No. 001-36400)
10.33†
Amended and Restated Employment Agreement dated as of September 13,2017, by and among Ashford Inc., Ashford Hospitality Advisors, LLC, and J. Robison Hays, III (incorporated by reference to Exhibit 10.3 of Form 10-Q filed on May 9, 2019) (File No. 001-36400)
10.34†
Amended and Restated Employment Agreement between Ashford Inc., Ashford Hospitality Services, LLC and Jeremy Welter, dated as of December 20, 2019 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 23, 2019) (File No. 001-36400)
10.34.1†
Release and Waiver, by and between Ashford Hospitality Services, LLC and Jeremy Welter, dated April 15, 2022 (incorporated by reference to Exhibit 99.1 of Form 8-K filed on April 19, 2022)(File No. 001-36400).
10.35†
Form of Acknowledgment Letter by and between the Company and Certain of its Officers dated December 29, 2020 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 29, 2020)(File No. 001-36400)
10.36†
Employment Agreement, by and among Ashford Inc., Ashford Hospitality Advisors LLC and Alex Rose, dated as of June 30, 2021 (incorporated by reference to Exhibit 10.1 of Form 10-Q filed on August 16, 2021)(File No. 001-36400)
10.37†
Consulting and Cooperation Agreement, by and among Ashford Inc., Ashford Hospitality Advisors LLC, and Robert G. Haiman, dated as of June 30, 2021 (incorporated by reference to Exhibit 10.2 of Form 10-Q filed on August 16, 2021)(File No. 001-36400)
10.38†
Amended and Restated Employment Agreement, by and among Ashford Inc., Ashford Hospitality Advisors LLC, and Mark Nunneley, dated as of September 13, 2017 (incorporated by reference to Exhibit 10.39 of Form 10-K filed on March 25, 2022)(File No. 001-36400)
157

ExhibitDescription
10.39
Investor Rights Agreement, dated November 6, 2019, by and among Ashford Nevada Holding Corp., Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP and the parties thereto (incorporated by reference to Exhibit 10.1 of Form 8-K filed on November 6, 2019) (File No. 001-36400)
10.40
Merger Agreement and Registration Rights Agreement, dated November 6, 2019, by and among Ashford, Inc., Ashford Nevada Holding Corp., Ashford Merger Sub Inc., and solely for the purposes of Article V hereof, Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP and the parties thereto.1.37 (incorporated by reference to Exhibit 10.2 of Form 8-K filed on November 6, 2019) (File No. 001-36400)
10.41
Non-Competition Agreement, dated November 6, 2019, by and among Ashford Nevada Holding Corp., Archie Bennett, Jr. and Monty J. Bennett (incorporated by reference to Exhibit 10.3 of Form 8-k filed on November 6, 2019) (File No. 001-36400)
10.42
Transition Cost Sharing Agreement, dated November 6, 2019, by and among Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP, Ashford Nevada Holding Corp. and Remington Holdings, L.P. (incorporated by reference to Exhibit 10.4 of Form 8-K filed on November 6, 2019) (File No. 001-36400)
10.43
Hotel Services Agreement, dated November 6, 2019, by and among Archie Bennett, Jr., Monty J. Bennet, MJB Investments, LP, Ashford Nevada Holding Corp., Remington Holdings, L.P., Ashford Hospitality Services LLC and Premier Project Management LLC (incorporated by reference to Exhibit 10.5 of Form 8-K filed on November 6, 2019) (File No. 001-36400)
10.44
Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.41 of Form 10-K filed on March 12, 2020) (File No. 001-36400)
10.45
Letter Agreement, dated March 13, 2020, by and between Remington Lodging & Hospitality, LLC and Ashford TRS Corporation (incorporated by reference to Exhibit 10.4 of Form 8-K filed on March 16, 2020) (File No. 001-36400)
10.46
Letter Agreement, dated March 13, 2020, by and between Remington Lodging & Hospitality, LLC and Braemar TRS Corporation (incorporated by reference to Exhibit 10.6 of Form 8-K filed on March 16, 2020) (File No. 001-36400)
10.47
Form of Letter Agreement by and between the Company and Certain of its Officers, dated March 13, 2020 (incorporated by reference to Exhibit 10.7 of Form 8-K filed on March 16, 2020) (File No. 001-36400)
10.48
Term Loan Agreement, dated as of March 19, 2020, by and among Ashford Hospitality Holdings LLC, Ashford Inc., Bank of America, N.A. and the other lenders party thereto (incorporated by reference to Exhibit 10.1 of Form 8-K filed on March 20, 2020) (File No. 001-36400)
10.49
Ashford Trust Loan Modification/Forbearance Agreement, dated as of March 20, 2020, by and among Lismore Capital LLC and Ashford Hospitality Trust, Inc. (incorporated by reference to Exhibit 10.1 of Form 8-K filed on March 26, 2020) (File No. 001-36400)
10.50
Amended and Restated Ashford Trust Agreement, dated as of April 6, 2020, by and between Lismore Capital II LLC and Ashford Hospitality Trust, Inc. (incorporated by reference to Exhibit 10.1 of Form 8-K filed on July 8, 2020) (File No. 001-36400)
10.51
Braemar Loan Modification/Forbearance Agreement, dated as of March 20, 2020, by and among Lismore Capital LLC and Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 10.2 of Form 8-K filed on March 26, 2020) (File No. 001-36400)
10.52
Letter Agreement, by and between Ashford Inc. and Monty J. Bennett, dated as of May 15, 2020 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on May 19, 2020) (File No. 001-36400)
10.53
Letter Agreement, by and between Ashford Inc. and Monty J. Bennett, dated as of December 14, 2020. (incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 14, 2020) (File No. 001-36400)
10.54
Credit Agreement by and between Presentation Technologies, LLC and Comerica Bank (composite version, reflects all amendments through December 31, 2020) (incorporated by reference to Exhibit 10.1 of Form 8-K filed on January 5, 2021) (File No. 001-36400)
158

ExhibitDescription
10.55
Subordination and Non-Disturbance Agreement, dated as of January 15, 2021, by and among Oaktree Fund Administration, LLC as the Administrative Agent and collateral agent on behalf of the Lenders, Ashford Inc., Ashford Hospitality Advisors LLC, Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Remington Lodging & Hospitality, LLC, Premier Project Management, LLC and Lismore Capital II LLC (incorporated by reference to Exhibit 10.1 of Form 8-K filed on January 15, 2021) (File No. 001-36400)
10.56
Third Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Holdings LLC, dated as of November 6, 2019 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on September 14, 2021) (File No. 001-36400).
10.56.1
Amendment No. 1 to the Third Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Holdings LLC (incorporated by reference to Exhibit 10.2 of Form 8-K filed on September 14, 2021) (File No. 001-36400).
10.56.2
Amendment No. 2 to the Third Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Holdings LLC (incorporated by reference to Exhibit 10.1 of Form 8-K filed on April 18, 2022) (File No. 001-36400).
10.57
Fourth Amendment to Loan Documents by and among Presentation Technologies, Inc., J & S Audio Visual Communications, LLC, J&S Audio Visual Dominican Republic, LP, J&S DR GP, LLC, PT DR Holdings, LLC, PT Holdco, LLC and Comerica Bank, dated September 22, 2021 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on September 23, 2021) (File No. 001-36400)
10.57.1
Fifth Amendment to Loan Documents, dated as of June 27, 2022, by and among Inspire Event Technologies Holdings, LLC, Inspire Event Technologies, LLC, Inspire Event Technologies Dominican Republic, LP, Inspire Event Technologies DR, GP, LLC, PT DR Holdings, LLC, PT Holdco, LLC and Comerica Bank (incorporated by reference to Exhibit 10.3 of Form 10-Q, filed on August 12, 2022) (File No. 001-36400).
10.58
Limited Waiver Under Advisory Agreement, dated as of March 15, 2022, 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 10.1 of Form 8-K filed on March 16, 2022) (File No. 001-36400)
10.59
Limited Waiver Under Advisory Agreement, dated as of March 10, 2022, 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 10.2 of Form 8-K filed on March 16, 2022) (File No. 001-36400)
10.60
Credit Agreement, dated as of April 1, 2022, by and among Ashford Inc., Ashford Hospitality Holdings LLC, Ashford Hospitality Advisors LLC, Ashford Hospitality Services LLC, and Mustang Lodging Funding LLC, as administrative agent (incorporated by reference to Exhibit 10.1 of Form 8-K filed on April 4, 2022) (File No. 001-36400).
10.60.1
First Amendment to Credit Agreement, dated as of July 11, 2022, by and among Ashford Inc., Ashford Hospitality Holdings LLC, Ashford Hospitality Advisors LLC, Ashford Hospitality Services LLC, and Mustang Lodging Funding LLC, as administrative agent (incorporated by reference to Exhibit 10.4.1 of Form 10-Q, filed on August 12, 2022) (File No. 001-36400)
10.61
Side Letter, dated as of December 16, 2022, by and among, Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Hospitality Advisors LLC and Ashford Inc. (incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 21, 2022) (File No. 001-36400)
10.62
Agreement of Purchase and Sale, dated as of December 16, 2022, by and between Ashford Hospitality Limited Partnership and Ashford Hospitality Advisors LLC. (incorporated by reference to Exhibit 10.2 of Form 8-K filed on December 21, 2022) (File No. 001-36400)
10.63
Amended and Restated Credit Agreement by and between Inspire Event Technologies Holdings, LLC and Comerica Bank, dated March 24, 2023 (composite version, reflects all amendments through March 24, 2023) (incorporated by reference to Exhibit 10.1 of Form 8-K, filed on March 28, 2023) (File No. 001-36400)
10.64
Third Amended and Restated Master Term Note, dated March 24, 2023, made by Inspire Event Technologies Holdings, LLC in favor of Comerica Bank (incorporated by reference to Exhibit 10.2 of Form 8-K, filed on March 28, 2023) (File No. 001-36400)
10.65
Third Amended and Restated Master Revolving Note, dated March 24, 2023, made by Inspire Event Technologies Holdings, LLC in favor of Comerica Bank (incorporated by reference to Exhibit 10.3 of Form 8-K, filed on March 28, 2023) (File No. 001-36400)
10.66
Equipment Note Agreement, dated March 24, 2023, made by Inspire Event Technologies Holdings, LLC in favor of Comerica Bank (incorporated by reference to Exhibit 10.4 of Form 8-K, filed on March 28, 2023) (File No. 001-36400)
10.67
Limited Waiver Under Advisory Agreement, dated as of March 2, 2023, 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 10.1 of Form 8-K, filed on March 3, 2023) (File No. 001-36400)
159

ExhibitDescription
10.68
Limited Waiver Under Advisory Agreement, dated as of March 2, 2023, 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 10.2 of Form 8-K, filed on March 3, 2023) (File No. 001-36400)
10.69†
Amended and Restated Employment Agreement by and between Ashford Hospitality Advisors LLC and Deric S. Eubanks, dated to be effective January 1, 2023 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on August 25, 2023) (File No. 001-36400)
10.70
Advisory Agreement, by and among Stirling Hotels & Resorts, Inc., Stirling REIT OP, LP, Stirling TRS Corporation and Stirling REIT Advisors, LLC, dated December 6, 2023 (incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 6, 2023) (File No. 001-36400)
10.71†
Letter Agreement, by and between Mark Nunneley and Ashford Inc., dated December 7, 2023 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed on December 7, 2023) (File No. 001-36400)
10.72
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)
10.73*
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
10.74*
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
10.75*
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
10.76*
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
21*
List of subsidiaries of Ashford Inc.
23.1*
Consent of BDO USA, LLPP.C.
31.1*
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as amended
31.2*
Certification of Chief Financial Officer Pursuant to Rule 13a-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
97.1*
Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1
The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 20172023 are formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Equity;Equity (Deficit); (v) Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (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, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
101.INSXBRL 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.SCHInline XBRL Taxonomy Extension Schema DocumentSubmitted electronically with this report.
101.SCH101.CALInline XBRL Taxonomy Extension SchemaCalculation Linkbase DocumentSubmitted electronically with this report.
101.CAL101.DEFXBRL Taxonomy Calculation Linkbase DocumentSubmitted electronically with this report.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentSubmitted electronically with this report.
101.LABInline XBRL Taxonomy Label Linkbase DocumentSubmitted electronically with this report.
101.PREInline XBRL Taxonomy Presentation Linkbase DocumentSubmitted electronically with this report.
160

ExhibitDescription
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* Filed herewith.
** Furnished herewith.
*** The disclosure schedules referenced in the Unit Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K.Ashford hereby undertakes to furnish supplementally a copy of the omitted disclosure schedules upon request by the SEC.
† Management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary
None.
106
161

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 27, 2024.
ASHFORD INC.
By:/s/ MONTY J. BENNETT
Monty J. Bennett
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, by the following persons, on behalf of the Registrant in the capacities and on the dates indicated.
SignatureTitleDate
/s/ MONTY J. BENNETT
Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)March 27, 2024
Monty J. Bennett
/s/ DERIC S. EUBANKS
Chief Financial Officer
(Principal Financial Officer)		March 27, 2024
Deric S. Eubanks
/s/ JUSTIN R. COE
Chief Accounting Officer
(Principal Accounting Officer)		March 27, 2024
Justin R. Coe
/s/ J. ROBISON HAYS, IIISenior Managing DirectorMarch 27, 2024
J. Robison Hays, III
/s/ DINESH P. CHANDIRAMANIDirectorMarch 27, 2024
Dinesh P. Chandiramani
/s/ DARRELL T. HAILDirectorMarch 27, 2024
Darrell T. Hail
/s/ W. MICHAEL MURPHYDirectorMarch 27, 2024
W. Michael Murphy
/s/ BRIAN WHEELERDirectorMarch 27, 2024
Brian Wheeler
/s/ UNO IMMANIVONGDirectorMarch 27, 2024
Uno Immanivong

162