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

FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended March 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the transition period from ________________ to ________________

Commission file number: 001-36400

ASHFORD INC.
(Exact name of registrant as specified in its charter)
Nevada 84-2331507
(State or other jurisdiction of incorporation or organization) (IRS employer identification number)
14185 Dallas Parkway
Suite 1200
Dallas
Texas 75254
(Address of principal executive offices) (Zip code)

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

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

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

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☑ Smaller reporting company ☑
Emerging growth company ☐
    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock AINC NYSE American LLC
    
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $0.001 par value per share 3,107,560
(Class) Outstanding at May 9, 2022


ASHFORD INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022

TABLE OF CONTENTS

2
3
4
5
6
8



PART I. FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS (unaudited)
ASHFORD INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
March 31, 2022 December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents $ 29,827  $ 37,571 
Restricted cash 33,724  34,878 
Restricted investment 501  576 
Accounts receivable, net 13,660  10,502 
Due from affiliates 289  165 
Due from Ashford Trust 3,592  2,575 
Due from Braemar 2,939  1,144 
Inventories 1,746  1,555 
Prepaid expenses and other 6,992  9,490 
Total current assets 93,270  98,456 
Investments in unconsolidated entities 4,171  3,581 
Property and equipment, net 81,042  83,566 
Operating lease right-of-use assets 26,049  26,975 
Goodwill 56,622  56,622 
Intangible assets, net 238,780  244,726 
Other assets 697  870 
Total assets $ 500,631  $ 514,796 
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 27,243  $ 39,897 
Dividends payable 43,947  34,574 
Due to affiliates 21  — 
Deferred income 494  2,937 
Notes payable, net 6,943  6,725 
Finance lease liabilities 1,092  1,065 
Operating lease liabilities 3,602  3,628 
Other liabilities 28,710  25,899 
Total current liabilities 112,052  114,725 
Deferred income 9,883  7,968 
Deferred tax liability, net 31,509  32,848 
Deferred compensation plan 3,437  3,326 
Notes payable, net 50,319  52,669 
Finance lease liabilities 43,243  43,479 
Operating lease liabilities 22,573  23,477 
Total liabilities 273,016  278,492 
Commitments and contingencies (note 9)
MEZZANINE EQUITY
Series D Convertible Preferred Stock, $0.001 par value, 19,120,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021
 478,000  478,000 
Redeemable noncontrolling interests 80  69 
EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized, $0.001 par value, 3,171,545 and 3,072,688 shares issued and 3,108,777 and 3,023,002 shares outstanding at March 31, 2022 and December 31, 2021, respectively
 3  3 
Additional paid-in capital 294,844  294,395 
Accumulated deficit (544,076) (534,999)
Accumulated other comprehensive income (loss) (798) (1,206)
Treasury stock, at cost, 62,768 and 49,686 shares at March 31, 2022 and December 31, 2021, respectively
 (816) (596)
Total equity (deficit) of the Company (250,843) (242,403)
Noncontrolling interests in consolidated entities 378  638 
Total equity (deficit) (250,465) (241,765)
Total liabilities and equity (deficit) $ 500,631  $ 514,796 
See Notes to Condensed Consolidated Financial Statements.
2

ASHFORD INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended March 31,
2022 2021
REVENUE
Advisory services fees $ 11,802  $ 9,927 
Hotel management fees 7,178  4,472 
Design and construction fees 4,524  1,542 
Audio visual 24,965  3,611 
Other 11,439  10,629 
Cost reimbursement revenue 74,051  32,187 
Total revenues 133,959  62,368 
EXPENSES
Salaries and benefits 16,845  15,776 
Cost of revenues for design and construction 1,910  758 
Cost of revenues for audio visual 17,879  4,386 
Depreciation and amortization 7,625  8,139 
General and administrative 7,363  5,268 
Other 5,467  3,611 
Reimbursed expenses 73,908  32,115 
Total expenses 130,997  70,053 
OPERATING INCOME (LOSS) 2,962  (7,685)
Equity in earnings (loss) of unconsolidated entities 190  (114)
Interest expense (1,279) (1,267)
Amortization of loan costs (73) (86)
Interest income 81  63 
Realized gain (loss) on investments (71) (194)
Other income (expense) 147  (113)
INCOME (LOSS) BEFORE INCOME TAXES 1,957  (9,396)
Income tax (expense) benefit (1,278) 951 
NET INCOME (LOSS) 679  (8,445)
(Income) loss from consolidated entities attributable to noncontrolling interests 260  95 
Net (income) loss attributable to redeemable noncontrolling interests 9  176 
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY 948  (8,174)
Preferred dividends, declared and undeclared (9,373) (8,606)
Amortization of preferred stock discount —  (316)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (8,425) $ (17,096)
INCOME (LOSS) PER SHARE - BASIC AND DILUTED
Basic:
Net income (loss) attributable to common stockholders $ (3.00) $ (6.36)
Weighted average common shares outstanding - basic 2,809  2,686 
Diluted:
Net income (loss) attributable to common stockholders $ (3.00) $ (6.36)
Weighted average common shares outstanding - diluted 2,809  2,686 
See Notes to Condensed Consolidated Financial Statements.
3

ASHFORD INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)
Three Months Ended March 31,
2022 2021
NET INCOME (LOSS) $ 679  $ (8,445)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation adjustment (231) — 
Unrealized gain (loss) on restricted investment —  (27)
Less reclassification for realized (gain) loss on restricted investment included in net income —  194 
COMPREHENSIVE INCOME (LOSS) 448  (8,278)
Comprehensive (income) loss attributable to noncontrolling interests 260  95 
Comprehensive (income) loss attributable to redeemable noncontrolling interests 9  176 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ 717  $ (8,007)
See Notes to Condensed Consolidated Financial Statements.

4

ASHFORD INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)
(unaudited, in thousands)

Common Stock Additional Paid-in Capital Accumulated
 Deficit		 Accumulated Other Comprehensive Income (Loss) Treasury Stock Noncontrolling Interests in Consolidated Entities Total Convertible Preferred Stock Redeemable Noncontrolling Interests
Shares Amount Shares Amount Shares Amount
Balance at December 31, 2021 3,023  $ 3  $ 294,395  $ (534,999) $ (1,206) (49) $ (596) $ 638  $ (241,765) 19,120  $ 478,000  $ 69 
Equity-based compensation 100  —  693  —  —  —  —  —  693  —  —  7 
Forfeiture of restricted common shares (1) —  2  —  —  (1) (2) —  —  —  —  — 
Purchase of treasury stock (13) —  —  —  —  (13) (218) —  (218) —  —  — 
Dividends declared and undeclared - preferred stock —  —  —  (9,373) —  —  —  —  (9,373) —  —  — 
Employee advances —  —  (246) —  —  —  —  —  (246) —  —  — 
Redemption value adjustment —  —  —  (13) —  —  —  —  (13) —  —  13 
Foreign currency translation adjustment —  —  —  —  (231) —  —  —  (231) —  —  — 
Other —  —  —  (639) 639  —  —  —  —  —  —  — 
Net income (loss) —  —  —  948  —  —  —  (260) 688  —  —  (9)
Balance at March 31, 2022 3,109  $ 3  $ 294,844  $ (544,076) $ (798) (63) $ (816) $ 378  $ (250,465) 19,120  $ 478,000  $ 80 

Common Stock Additional Paid-in Capital Accumulated
 Deficit		 Accumulated Other Comprehensive Income (Loss) Treasury Stock Noncontrolling Interests in Consolidated Entities Total Convertible Preferred Stock Redeemable Noncontrolling Interests
Shares Amount Shares Amount Shares Amount
Balance at December 31, 2020 2,868  $ 3  $ 293,597  $ (491,483) $ (1,156) (32) $ (438) $ (121) $ (199,598) 19,120  $ 476,947  $ 1,834 
Equity-based compensation 154  —  1,312  —  —  —  —  2  1,314  —  —  — 
Forfeiture of restricted common shares (1) —  8  —  —  (1) (8) —  —  —  —  — 
Purchase of treasury stock (12) —  —  —  —  (12) (102) —  (102) —  —  — 
Amortization of preferred stock discount —  —  —  (316) —  —  —  —  (316) —  316  — 
Dividends declared and undeclared - preferred stock —  —  —  (8,606) —  —  —  —  (8,606) —  —  — 
Deferred compensation plan distribution 1  —  7  —  —  —  —  —  7  —  —  — 
Employee advances —  —  245  —  —  —  —  —  245  —  —  — 
Acquisition of noncontrolling interest in consolidated entities —  —  (2,840) 2,562  —  —  —  —  (278) —  —  (1,648)
Reallocation of carrying value —  —  (189) —  —  —  —  189  —  —  —  — 
Redemption value adjustment —  —  —  (27) —  —  —  —  (27) —  —  27 
Unrealized gain (loss) on available for sale securities —  —  —  —  (27) —  —  —  (27) —  —  — 
Reclassification for realized loss (gain) on available for sale securities —  —  —  —  194  —  —  —  194  —  —  — 
Net income (loss) —  —  —  (8,174) —  —  —  (95) (8,269) —  —  (176)
Balance at March 31, 2021 3,010  $ 3  $ 292,140  $ (506,044) $ (989) (45) $ (548) $ (25) $ (215,463) 19,120  $ 477,263  $ 37 
See Notes to Condensed Consolidated Financial Statements.
5

ASHFORD INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Three Months Ended March 31,
2022 2021
Cash Flows from Operating Activities
Net income (loss) $ 679  $ (8,445)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization 9,127  9,615 
Change in fair value of deferred compensation plan 111  58 
Equity-based compensation 749  1,363 
Equity in (earnings) loss in unconsolidated entities (190) 114 
Deferred tax expense (benefit) (1,339) (607)
Change in fair value of contingent consideration —  23 
(Gain) loss on disposal of assets 769  849 
Amortization of other assets 166  306 
Amortization of loan costs 73  86 
Realized loss on restricted investments 71  194 
Other (gain) loss (155) 9 
Changes in operating assets and liabilities, exclusive of the effect of acquisitions:
Accounts receivable (4,592) (509)
Due from affiliates (124) 180 
Due from Ashford Trust (1,017) 11,452 
Due from Braemar (1,795) (1,442)
Inventories (257) (652)
Prepaid expenses and other 2,484  830 
Investment in unconsolidated entities —  54 
Operating lease right-of-use assets 926  909 
Other assets 7  (7)
Accounts payable and accrued expenses (12,773) (13,741)
Due to affiliates 21  (1,389)
Other liabilities 2,811  (2,889)
Operating lease liabilities (930) (903)
Deferred income (524) (865)
Net cash provided by (used in) operating activities (5,702) (5,407)
Cash Flows from Investing Activities
Additions to property and equipment (1,282) (491)
Proceeds from sale of property and equipment, net 406  1,853 
Investment in unconsolidated entity (400) — 
Purchase of common stock of related parties —  (873)
Acquisition of assets related to RED (455) (637)
Proceeds from note receivable 1,380  — 
Issuance of note receivable —  (2,881)
Net cash provided by (used in) investing activities (351) (3,029)
(Continued)
6

Three Months Ended March 31,
2022 2021
Cash Flows from Financing Activities
Payments on revolving credit facilities (746) (332)
Borrowings on revolving credit facilities 131  — 
Proceeds from notes payable 61  325 
Payments on notes payable (1,555) (5,126)
Payments on finance lease liabilities (208) (61)
Payments of loan costs (61) — 
Purchase of treasury stock (218) (102)
Employee advances (246) 245 
Net cash provided by (used in) financing activities (2,842) (5,051)
Effect of foreign exchange rate changes on cash and cash equivalents (3) (171)
Net change in cash, cash equivalents and restricted cash (8,898) (13,658)
Cash, cash equivalents and restricted cash at beginning of period 72,449  82,666 
Cash, cash equivalents and restricted cash at end of period $ 63,551  $ 69,008 
Supplemental Cash Flow Information
Interest paid $ 989  $ 1,092 
Income taxes paid (refunded), net (10) (1,061)
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Distribution from deferred compensation plan —  7 
Capital expenditures accrued but not paid 237  299 
Acquisition of noncontrolling interest in consolidated entities with notes payable and common stock —  1,927 
Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period $ 37,571  $ 45,270 
Restricted cash at beginning of period 34,878  37,396 
Cash, cash equivalents and restricted cash at beginning of period $ 72,449  $ 82,666 
Cash and cash equivalents at end of period $ 29,827  $ 34,020 
Restricted cash at end of period 33,724  34,988 
Cash, cash equivalents and restricted cash at end of period $ 63,551  $ 69,008 
See Notes to Condensed Consolidated Financial Statements.
7
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


1. Organization and Description of Business
Ashford Inc. (the “Company,” “we,” “us” or “our”) is a Nevada corporation that provides products and services primarily to clients in the hospitality industry, including Ashford Hospitality Trust, Inc. (“Ashford Trust”) and Braemar Hotels & Resorts Inc. (“Braemar”). We became a public company in November 2014, and our common stock is listed on the NYSE American LLC (“NYSE American”).
We provide: (i) advisory services; (ii) asset management services; (iii) hotel management services; (iv) design and construction and architectural services; (v) event technology and creative communications solutions; (vi) mobile room keys and keyless entry solutions; (vii) watersports activities and other travel, concierge and transportation services; (viii) hypoallergenic premium room products and services; (ix) debt placement and related services; (x) real estate advisory and brokerage services; and (xi) wholesaler, dealer manager and other broker-dealer services. We conduct these activities and own substantially all of our assets primarily through Ashford Hospitality Advisors LLC (“Ashford LLC”), Ashford Hospitality Services LLC (“Ashford Services”) and their respective subsidiaries.
We are currently the advisor for Ashford Trust and Braemar. In our capacity as the advisor to Ashford Trust and Braemar, we are responsible for implementing the investment strategies and managing the day-to-day operations of Ashford Trust and Braemar and their respective hotels from an ownership perspective, in each case subject to the respective advisory agreements and the supervision and oversight of the respective boards of directors of Ashford Trust and Braemar. Ashford Trust is focused on investing in full-service hotels in the upscale and upper upscale segments in the United States that have revenue per available room (“RevPAR”) generally less than twice the U.S. national average. Braemar invests primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Each of Ashford Trust and Braemar is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and the common stock of each of Ashford Trust and Braemar is traded on the New York Stock Exchange (the “NYSE”).
We provide the personnel and services that we believe are necessary for each of Ashford Trust and Braemar to conduct their respective businesses. We may also perform similar functions for new or additional platforms. In our capacity as an advisor, we are not responsible for managing the day-to-day operations of the individual hotel properties owned by either Ashford Trust or Braemar, which duties are, and will continue to be, the responsibility of the hotel management companies that operate the hotel properties owned by Ashford Trust and Braemar. Additionally, Remington Lodging & Hospitality, LLC (“Remington”), a subsidiary of the Company, operates certain hotel properties owned by Ashford Trust and Braemar.
Other Developments
On March 10, 2022, the Company entered into a Limited Waiver Under Advisory Agreement (“Braemar Limited Waiver”) with Braemar, Braemar Hospitality Limited Partnership (“Braemar OP”), Braemar TRS Corporation and Ashford LLC. On March 15, 2022, the Company entered into a Limited Waiver Under Advisory Agreement (the “Ashford Trust Limited Waiver” and together with the Braemar Limited Waiver, the “Limited Waivers”) with Ashford Trust, Ashford Hospitality Limited Partnership (“Ashford Trust OP”), Ashford TRS Corporation (“Ashford Trust TRS”) and Ashford LLC. Pursuant to the 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 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 “Waiver Period”), cash incentive compensation to employees and other representatives of the Company; provided that, pursuant to the Ashford Trust Limited Waiver, such awarded cash incentive compensation does not exceed $8,476,000, in the aggregate, during the Waiver Period.
8
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation—The accompanying historical unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Ashford Inc., its majority-owned subsidiaries and entities which it controls. All significant intercompany accounts and transactions between these entities have been eliminated in these historical condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the condensed consolidated financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in our 2021 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 25, 2022.
Cost reimbursement revenue and reimbursed expenses for the three months ended March 31, 2021 were restated as previously disclosed in the restated condensed consolidated statement of operations for the three months ended March 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The restatement related to Remington’s recognition of cost reimbursement revenue and reimbursed expenses for certain insurance costs and the timing of recognition of cost reimbursement revenue and reimbursed expenses for hotel management related salaries and benefits costs that are reimbursed from hotel owners, resulting in a $1.6 million decrease in cost reimbursement revenue and reimbursed expenses for the three months ended March 31, 2021. These costs are reported gross in the Company’s condensed consolidated statements of operations in cost reimbursement revenue with an offsetting amount reported in reimbursed expenses.
The condensed consolidated balance sheet and statement of equity (deficit) as of March 31, 2022, include a correction of an immaterial error which resulted in $639,000 of cumulative unrealized losses on available-for-sale common shares of Ashford Trust and Braemar held by Remington being reclassified from accumulated other comprehensive income to accumulated deficit. Beginning January 1, 2022, unrealized gains and losses on available-for-sale common shares are recorded in other income (expense) in the Company’s condensed consolidated statements of operations.
A variable interest entity (“VIE”) must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and we reassess whether we are the primary beneficiary of a VIE on an ongoing basis. Our determination of whether we are the primary beneficiary of a VIE is based upon the facts and circumstances for each VIE and requires significant judgment.
9
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Noncontrolling Interests—The following tables present information about noncontrolling interests in our consolidated subsidiaries, including those related to consolidated VIEs, as of March 31, 2022 and December 31, 2021 (in thousands):
March 31, 2022
Ashford
Holdings
OpenKey(3)
Pure
Wellness (4)
Ashford Inc. ownership interest 99.87  % 75.38  % 70.00  %
Redeemable noncontrolling interests(1) (2)
 0.13  % —  % —  %
Noncontrolling interests in consolidated entities —  % 24.62  % 30.00  %
100.00  % 100.00  % 100.00  %
Carrying value of redeemable noncontrolling interests $ 80  n/a n/a
Redemption value adjustment, year-to-date 13  n/a n/a
Redemption value adjustment, cumulative 594  n/a n/a
Carrying value of noncontrolling interests n/a 253  125 
Assets, available only to settle subsidiary’s obligations (5)
 n/a 1,571  1,324 
Liabilities (6)
 n/a 383  1,300 
Revolving credit facility (6)
 n/a —  50 

December 31, 2021
Ashford
Holdings
OpenKey(3)
Pure
Wellness (4)
Ashford Inc. ownership interest 99.87  % 75.38  % 70.00  %
Redeemable noncontrolling interests(1) (2)
 0.13  % —  % —  %
Noncontrolling interests in consolidated entities —  % 24.62  % 30.00  %
100.00  % 100.00  % 100.00  %
Carrying value of redeemable noncontrolling interests $ 69  n/a n/a
Redemption value adjustment, year-to-date 96  n/a n/a
Redemption value adjustment, cumulative 581  n/a n/a
Carrying value of noncontrolling interests n/a 479  159 
Assets, available only to settle subsidiary’s obligations (5)
 n/a 2,533  1,779 
Liabilities (6)
 n/a 424  1,643 
Revolving credit facility (6)
 n/a —  100 
________
(1)    Redeemable noncontrolling interests are included in the “mezzanine” section of our condensed consolidated balance sheets as they may be redeemed by the holder for cash or registered shares in certain circumstances outside of the Company’s control. The carrying value of the noncontrolling interests is based on the greater of the accumulated historical cost or the redemption value, which is generally fair value.
(2)    Redeemable noncontrolling interests in Ashford Hospitality Holdings LLC (“Ashford Holdings”) represent the members’ proportionate share of equity in earnings/losses of Ashford Holdings. Net income/loss attributable to the common unit holders is allocated based on the weighted average ownership percentage of the members’ interest.
(3)    Represents ownership interests in OpenKey, Inc. (“OpenKey”), a VIE for which we are considered the primary beneficiary and therefore we consolidate it. OpenKey is a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms. On March 9, 2021, we acquired all of the redeemable noncontrolling interests in OpenKey for a purchase price of approximately $1.9 million. See note 5.
(4)    Represents ownership interests in PRE Opco, LLC (“Pure Wellness”), a VIE for which we are considered the primary beneficiary and therefore we consolidate it. Pure Wellness provides hypoallergenic premium rooms in the hospitality and commercial office industry. See note 10.
10
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

(5)    Total assets consist primarily of cash and cash equivalents, property and equipment, intangibles and other assets that can only be used to settle the subsidiaries’ obligations.
(6)    Liabilities consist primarily of accounts payable, accrued expenses and notes payable for which creditors do not have recourse to Ashford Inc. See note 5.
Investments in Unconsolidated Entities—We hold “investments in unconsolidated entities” in our condensed consolidated balance sheets, which are considered to be variable interests and voting interests in the underlying entities. Certain of our investments in variable interests are not consolidated because we have determined that we are not the primary beneficiary. Certain other investments are not consolidated as the underlying entity does not meet the definition of a VIE and we do not control more than 50% of the voting interests. We review our “investments in unconsolidated entities” for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. No such impairment was recorded during the three months ended March 31, 2022 and 2021.
We held an investment in an unconsolidated variable interest entity with a carrying value of $500,000 at March 31, 2022 and December 31, 2021. We account for the investment at estimated fair value based on recent observable transactions as we do not exercise significant influence over the entity. No equity in earnings (loss) of unconsolidated entities due to a change in fair value of the investment was recognized during the three months ended March 31, 2022 and 2021. In the event that the assumptions used to estimate fair value change in the future, we may be required to record an impairment charge related to this investment.
Our investment in Real Estate Advisory Holdings LLC (“REA Holdings”) is accounted for under the equity method as we have significant influence over the voting interest entity. We have an option to acquire an additional 50% of the ownership interests in REA Holdings for $12.5 million beginning on January 1, 2022, which expires on the later of (i) February 28, 2024 and (ii) 30 business days following the completion date of the Company’s preliminary audit for calendar year 2023.
The following table summarizes our carrying value and ownership interest in REA Holdings (in thousands):
March 31, 2022 December 31, 2021
Carrying value of the investment in REA Holdings $ 3,021  2,831 
Ownership interest in REA Holdings 30  % 30  %
The following table summarizes our equity in earnings (loss) in REA Holdings (in thousands):
Three Months Ended March 31,
2022 2021
Equity in earnings (loss) in unconsolidated entities REA Holdings $ 190  $ (114)
Use of Estimates—The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents—Cash and cash equivalents include cash on hand or held in banks and short-term investments with an initial maturity of three months or less at the date of purchase.
11
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Restricted Cash—Restricted cash was comprised of the following (in thousands):
March 31, 2022 December 31, 2021
REIT Advisory:
Insurance claim reserves (1)
 $ 27,378  $ 24,588 
Remington:
Managed hotel properties’ reserves (2)
 3,680  6,923 
Insurance claim reserves (3)
 611  1,312 
Total Remington restricted cash 4,291  8,235 
INSPIRE:
Debt service related operating reserves (4)
 1,000  1,000 
Marietta:
Capital improvement reserves (5)
 255  255 
Restricted cash held in escrow (6)
 800  800 
Total Marietta restricted cash 1,055  1,055 
Total restricted cash $ 33,724  $ 34,878 
________
(1)    Ashford Inc.’s Risk Management department collects funds from the Ashford Trust and Braemar properties and their respective management companies in an amount equal to the actuarial forecast of that year’s expected casualty claims and associated fees. These funds are deposited into restricted cash and used to pay casualty claims throughout the year as they are incurred. The claim liability related to the restricted cash balance is included in current “other liabilities” in our condensed consolidated balance sheets.
(2)    Cash received from hotel properties managed by Remington is used to pay certain centralized operating expenses as well as hotel employee bonuses. The liability related to the restricted cash balance for centralized billing is primarily included as a payable which is presented net within “due from Ashford Trust” and “due from Braemar” in our condensed consolidated balance sheets. The liability related to the restricted cash balance for hotel employee bonuses is included in “accounts payable and accrued expenses.”
(3)    Cash reserves for health insurance claims are collected primarily from Remington’s managed properties as well as certain of Ashford Inc.’s other subsidiaries to cover employee health insurance claims. The liability related to this restricted cash balance is included in current “other liabilities.”
(4)    Our subsidiary, Inspire Event Technologies Holdings, LLC (“INSPIRE”), provides event technology and creative communications solutions services. Cash is restricted due to operating reserves required under INSPIRE’s amended credit agreement to service interest expense and projected operating costs. See note 5.
(5)    Includes cash reserves for capital improvements associated with renovations at the hotel leased by our consolidated subsidiary, Marietta Leasehold LP, (“Marietta”), which holds the leasehold rights to a single hotel and convention center property in Marietta, Georgia. The liability related to the restricted cash balance for the hotel’s renovations are included in “accounts payable and accrued expenses.”
(6)    Restricted cash is held in escrow in accordance with the Marietta lease agreement. The cash held in escrow is funded from hotel cash flows and can only be used for repairs and maintenance or capital improvements at the property.
Accounts Receivable—Accounts receivable consists primarily of receivables from customers of audio visual services. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments for services. The allowance is recorded based on management’s judgment regarding our ability to collect as well as the age of the receivables. Accounts receivable are written off when they are deemed uncollectible. As of March 31, 2022 and December 31, 2021, accounts receivable also includes a note receivable due to Remington of approximately $1.5 million and $2.9 million, respectively.
12
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Property and Equipment, net—Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. We record property and equipment at cost. As of March 31, 2022 and December 31, 2021, property and equipment, net of accumulated depreciation, included assets related to Marietta’s finance lease of $41.3 million and $41.6 million, enhanced return funding program (“ERFP”) furniture fixture & equipment (“FF&E”) of $11.6 million and $12.4 million, audio visual equipment at INSPIRE of $6.5 million and $7.0 million and marine vessels at RED Hospitality & Leisure, LLC (“RED”) of $12.8 million and $12.8 million, respectively.
Other Liabilities—As of March 31, 2022 and December 31, 2021, other liabilities included reserves in the amount of $27.4 million and $24.6 million, respectively, related primarily to Ashford Trust and Braemar properties’ insurance claims and related fees. The liability for casualty insurance claims and related fees is established based upon an analysis of historical data and actuarial estimates. We record the related funds received from Ashford Trust and Braemar in “restricted cash” in our condensed consolidated balance sheets. As of March 31, 2022 and December 31, 2021, other liabilities also included $1.3 million relating to reserves for Remington health insurance claims.
Revenue Recognition—See note 3.
Income Taxes—We are a taxable corporation for federal and state income tax purposes. Income tax expense includes U.S. federal and state income taxes, Mexico and Dominican Republic income taxes and U.S. Virgin Islands taxes. In accordance with authoritative accounting guidance, we account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between our consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.
The “Income Taxes” topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance requires us to determine whether tax positions we have taken or expect to take in a tax return are more likely than not to be sustained upon examination by the appropriate taxing authority based on the technical merits of the positions. Tax positions that do not meet the more likely than not threshold would be recorded as additional tax expense in the current period. We analyze all open tax years, as defined by the statute of limitations for each jurisdiction, which includes the federal jurisdiction and various states. We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our portfolio companies file income tax returns in the U.S. federal jurisdiction and various states and cities, beginning in 2017, in Mexico and the Dominican Republic and, beginning in 2018, in the U.S. Virgin Islands. Tax years 2017 through 2021 remain subject to potential examination by certain federal and state taxing authorities.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and includes certain income tax provisions relevant to our business. The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which is the period ended March 31, 2020. The CARES Act did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020. The Company filed a claim to carryback the 2018 tax net operating loss to a prior year as provided for by the CARES Act. The Company received the carryback amount of $1.0 million in March of 2021.
On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law and extends several COVID-19 tax related measures passed as part of the CARES Act. Among these is the extension of the deferral period of the remittance of Social Security taxes. The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which is the period ended December 31, 2020. The Company has deferred $1.3 million of Social Security taxes within “accounts payable and accrued expenses” in our consolidated balance sheets as of March 31, 2022 and December 31, 2021 related to the Consolidated Appropriations Act, 2021.
13
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Recently Issued Accounting Standards—In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”). ASU 2019-10 revised the mandatory adoption date for public business entities that meet the definition of a smaller reporting company to be effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. We are currently evaluating the impact ASU 2016-13 and ASU 2019-10 may have on our condensed consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. We are currently evaluating the impact that ASU 2020-06 may have on our condensed consolidated financial statements and related disclosures.
3. Revenues
Revenue Recognition—Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
•Identification of the contract, or contracts, with a customer
•Identification of the performance obligations in the contract
•Determination of the transaction price
•Allocation of the transaction price to the performance obligations in the contract
•Recognition of revenue when, or as, we satisfy a performance obligation
In determining the transaction price, we include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.
The following provides detailed information on the recognition of our revenues from contracts with customers:
Advisory Services Fees Revenue
Advisory services fees revenue is reported within our REIT Advisory segment and primarily consists of advisory fees that are recognized when services have been rendered. Advisory fees consist of base fees and incentive fees. For Ashford Trust, from January 1, 2021 through January 14, 2021, the base fee ranged from 0.50% to 0.70% per annum of the total market capitalization ranging from greater than $10.0 billion to less than $6.0 billion plus the Net Asset Fee Adjustment (as defined in the Amended and Restated Advisory Agreement with Ashford Trust, dated June 10, 2015, as amended), subject to certain minimums. On January 14, 2021, the Company entered into the Second Amended and Restated Advisory Agreement with Ashford Trust. The Second Amended and Restated Advisory Agreement amends and restates the terms of the Amended and Restated Advisory Agreement to, among other things, fix the percentage used to calculate the base fee thereunder at 0.70% per annum.
14
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

On January 15, 2021, Ashford Trust and Ashford Trust OP entered into a Credit Agreement (as amended, the “Credit Agreement”) with certain funds and accounts managed by Oaktree Capital Management L.P. (“Oaktree”). In connection with the transactions contemplated by the Credit Agreement, on January 15, 2021, the Company and certain of its affiliates entered into a Subordination and Non-Disturbance Agreement (the “SNDA”) with Ashford Trust, Ashford Trust OP, Ashford Trust TRS and Oaktree pursuant to which the Company agreed to subordinate to the prior repayment in full of all obligations under the Credit Agreement, (1) prior to the later of (i) the second anniversary of the Credit Agreement and (ii) the date accrued interest “in kind” is paid in full, advisory fees (other than reimbursable expenses) in excess of 80% of such fees paid during the fiscal year ended December 31, 2019 (the “Advisory Fee Cap”); (2) any termination fee or liquidated damages amounts under the Second Amended and Restated Advisory Agreement, or any amount owed under any enhanced return funding program in connection with the termination of the Second Amended and Restated Advisory Agreement or sale or foreclosure of assets financed thereunder; and (3) any payments to Lismore Capital II LLC, an indirect consolidated subsidiary of the Company (“Lismore”), in connection with the transactions contemplated by the Credit Agreement.
Prior to the fourth quarter of 2021, advisory fees under the Second Amended and Restated Advisory Agreement earned from Ashford Trust in 2021 in excess of the Advisory Fee Cap were a form of variable consideration that were constrained and deferred until such fees were probable of not being subject to significant reversal. The Advisory Fee Cap is approximately $29.0 million each year as stated in the Credit Agreement. As a result, base advisory fee revenue was recognized each month equal to the lesser of (1) base fees calculated as described above based on Ashford Trust’s market capitalization or (2) 1/12th of $29.0 million.
On October 12, 2021, Ashford Trust and Ashford Trust OP entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1”) with Oaktree. Amendment No. 1, subject to the conditions set forth therein, among other things, suspended Ashford Trust’s obligation to subordinate fees due under the Second Amended and Restated Advisory Agreement if at any point there is no accrued interest outstanding or any accrued dividends on any of Ashford Trust’s preferred stock and Ashford Trust has sufficient unrestricted cash to repay in full all outstanding loans under the Credit Agreement. In the fourth quarter of 2021, Ashford Trust met the requirements to suspend its obligation to subordinate fees due under the Second Amended and Restated Advisory Agreement and paid the Company $7.2 million for advisory fees that had been deferred in 2021 as a result of the Advisory Fee Cap. The $7.2 million payment was recorded as revenue in “advisory services fees” in the fourth quarter of 2021 in our consolidated statements of operations for the year ended December 31, 2021. Based upon Ashford Trust’s ability to meet the requirements stated in Amendment No. 1, the Company has concluded that base fees from our Second Amended and Restated Advisory Agreement with Ashford Trust which exceed the Advisory Fee Cap are no longer probable of being subject to significant reversal and will be recorded within “advisory services fees” in our condensed consolidated statements of operations based upon the fees calculated from Ashford Trust’s market capitalization as described above.
For Braemar, the base fee is paid monthly and is fixed at 0.70% of Braemar’s total market capitalization plus the Net Asset Fee Adjustment, as defined in our Fifth Amended and Restated Advisory Agreement with Braemar, as amended, subject to certain minimums.
Incentive advisory fees are measured annually in each year that Ashford Trust’s and/or Braemar’s annual total stockholder return exceeds the average annual total stockholder return for each company’s respective peer group, subject to the Fixed Charge Coverage Ratio Condition (the “FCCR Condition”), as defined in the respective advisory agreements. Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition, which relates to the ratio of adjusted EBITDA to fixed charges for Ashford Trust or Braemar, as applicable. Incentive advisory fees are a form of variable consideration and therefore must be (i) deferred until such fees are probable of not being subject to significant reversal, and (ii) tied to a performance obligation in the contract with the customer so that revenue recognition depicts the transfer of the related advisory services to the customer. Accordingly, the Company does not record incentive advisory fee revenue in interim periods prior to the fourth quarter of the year in which the incentive fee is measured. The first year installment of incentive advisory fees will generally be recognized only upon measurement in the fourth quarter of the first year of the three year period. The second and third year installments of incentive advisory fees are recognized as revenue on a pro-rata basis each quarter subject to meeting the FCCR Condition. Ashford Trust and Braemar’s annual total stockholder return did not meet the relevant incentive fee thresholds during the 2021, 2020 and 2019 measurement periods.
15
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Hotel Management Fees Revenue
Hotel management fees revenue is reported within our Remington segment and primarily consists of base management fees and incentive management fees. Base management fees and incentive management fees are recognized when services have been rendered. For hotels owned by Ashford Trust and Braemar, Remington receives base management fees of 3% of gross hotel revenue for managing the hotel employees and daily operations of the hotels, pursuant to Remington’s hotel management agreements, subject to a specified floor (which is subject to increase annually based on increases in the consumer price index). Remington additionally receives an incentive management fee for hotels owned by Ashford Trust and Braemar equal to the lesser of 1% of each hotel’s annual gross revenue or the amount by which the respective hotel’s gross operating profit exceeds the hotel’s budgeted gross operating profit. The base management fees and incentive management fees that Remington receives for third-party owned hotels vary by property.
Design and Construction Fees Revenue
Design and construction fees revenue (formerly called project management revenue) primarily consists of revenue generated by our subsidiary, Premier Project Management LLC (“Premier”). Premier provides design and construction management services, capital improvements, refurbishment, project management, and other services such as purchasing, interior design, architectural services and freight management at properties. Premier receives fees for these services and recognizes revenue over time as services are provided to the customer.
Audio Visual Revenue
Audio visual revenue primarily consists of revenue generated within our INSPIRE segment by providing event technology services such as audio visual services, audio visual equipment rental, staging and meeting services and event-related communication systems as well as related technical support, to our customers in various venues including hotels and convention centers. Revenue is recognized in the period in which services are provided pursuant to the terms of the contractual arrangements with our customers. We also evaluate whether it is appropriate to present: (i) the gross amount that our customers pay for our services as revenue, and the related commissions paid to the venue as cost of revenue; or (ii) the net amount (gross revenue less the related commissions paid to the venue) as revenue. We are responsible for the delivery of the services, including providing the necessary labor and equipment to perform the services. We are generally subject to inventory risk, have latitude in establishing prices and selecting suppliers and, while in many cases the venue bills the end customer on our behalf, we bear the risk of collection from the customer. The venues’ commissions are not dependent on collections. As a result, our revenue is primarily reported on a gross basis. Cost of revenues for audio visual principally includes commissions paid to venues, direct labor costs, the cost of equipment sub-rentals, depreciation of equipment, amortization of signing bonuses, as well as other costs such as supplies, freight, travel and other overhead from our venue and customer facing operations and any losses on equipment disposal.
Other Revenue
Other revenue includes revenue provided by certain of our products and service businesses, including RED. RED’s revenue is primarily generated through the provision of watersports activities and ferry and excursion services. The revenue is recognized as services are provided based on contractual customer rates. Debt placement and related fees include revenue earned from providing placement, modifications, forbearances or refinancing of certain mortgage debt by Lismore. For certain agreements, the fees are recognized based on a stated percentage of the loan amount when services have been rendered and the subject loan is closed. For other agreements, deferred income related to the various Lismore fees will be recognized over the term of the agreement on a straight line basis as the service is rendered, only to the extent it is probable that a significant reversal of revenue will not occur. Constraints relating to variable consideration are resolved generally upon the closing of a transaction or financing event and the resulting change in the transaction price will be adjusted on a cumulative catch-up basis in the period a transaction or financing event closes.
Cost Reimbursement Revenue
Cost reimbursement revenue is recognized in the period we incur the related reimbursable costs. Under our advisory agreements, we are entitled to be reimbursed for certain costs we incur on behalf of Ashford Trust and Braemar, with no added mark-up. These costs primarily consist of expenses related to Ashford Securities (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
16
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

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.
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.
We recognize revenue within “cost reimbursement revenue” in our condensed consolidated statements of operations when the amounts may be billed to Ashford Trust, Braemar and other hotel owners, and we recognize expenses within “reimbursed expenses” in our condensed consolidated statements of operations as they are incurred. This pattern of recognition results in temporary timing differences between the costs incurred for centralized software programs and the related reimbursements we receive from Ashford Trust and Braemar in our operating and net income. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively.
Certain of our consolidated entities enter into contracts with customers that contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our consolidated entities’ overall pricing objectives taking into consideration market conditions and other factors, including the customer and the nature and value of the performance obligations within the applicable contracts.
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 twelve months is recorded as current deferred income and the remaining portion is recorded as noncurrent. The change in the deferred income balance is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred income balance at the beginning of the period.
17
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following tables summarize our consolidated deferred income activity (in thousands):
Deferred Income
2022 2021
Balance as of January 1 $ 10,905  $ 21,359 
Increases to deferred income 3,846  5,912 
Recognition of revenue (1)
 (4,374) (6,752)
Balance as of March 31 $ 10,377  $ 20,519 
________
(1)    Deferred income recognized in the three months ended March 31, 2022, includes (a) $437,000 of advisory revenue primarily related to our advisory agreements with Ashford Trust and Braemar, (b) $218,000 of audio visual revenue, (c) $2.3 million of other revenue primarily related to Ashford Trust’s agreement with Lismore (see note 14), and (d) $1.4 million of “other services” revenue earned by our products and services companies, excluding Lismore. Deferred income recognized in the three months ended March 31, 2021, includes (a) $535,000 of advisory revenue primarily related to our advisory agreements with Ashford Trust and Braemar, (b) $524,000 of audio visual revenue, (c) $4.3 million of other revenue related to Ashford Trust’s and Braemar’s agreements with Lismore (see note 14) and (d) $1.4 million of “other services” revenue earned by our products and services companies, excluding Lismore.
We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was primarily related to (i) reimbursed software costs that will be recognized evenly over the period the software is used to provide advisory services to Ashford Trust and Braemar, (ii) a $5.0 million cash payment received in June 2017 from Braemar in connection with our Fourth Amended and Restated 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. Constraints relating to variable consideration were resolved generally upon the closing of a transaction or financing event and the resulting change in the transaction price was adjusted on a cumulative catch-up basis in the period a transaction or financing event closed. See note 14. Incentive advisory fees that are contingent upon future market performance are excluded as the fees are considered variable and not included in the transaction price at March 31, 2022.
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 $12.2 million and $7.6 million included in “accounts receivable, net” primarily related to our products and services segment, $3.6 million and $2.6 million in “due from Ashford Trust”, and $2.9 million and $1.1 million included in “due from Braemar” related to REIT advisory services at March 31, 2022 and December 31, 2021, respectively. We had no significant impairments related to these receivables during the three months ended March 31, 2022 and 2021. See note 14.
Disaggregated Revenue
Our revenues were comprised of the following for the three months ended March 31, 2022 and 2021, respectively (in thousands):
18
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Three Months Ended March 31,
2022 2021
Advisory services fees:
Base advisory fees
 $ 11,674  $ 9,799 
Other advisory revenue 128  128 
Total advisory services fees revenue 11,802  9,927 
Hotel management fees:
Base fees 6,174  3,857 
Incentive fees 1,004  615 
Total hotel management fees revenue 7,178  4,472 
Design and construction fees revenue 4,524  1,542 
Audio visual revenue 24,965  3,611 
Other revenue:
Watersports, ferry and excursion services (1)
 6,045  4,561 
Debt placement and related fees (2)
 2,483  4,288 
Claims management services 15  17 
Other services (3)
 2,896  1,763 
Total other revenue 11,439  10,629 
Cost reimbursement revenue 74,051  32,187 
Total revenues $ 133,959  $ 62,368 
REVENUES BY SEGMENT (4)
REIT advisory $ 19,393  $ 15,068 
Remington 70,507  30,809 
Premier 6,226  1,944 
INSPIRE 25,022  3,611 
RED 6,045  4,561 
OpenKey 382  454 
Corporate and other 6,384  5,921 
Total revenues $ 133,959  $ 62,368 
________
(1)    Watersports, ferry and excursion services revenue is earned by RED, which includes the entity that conducts RED’s legacy U.S. Virgin Islands operations, the Turks and Caicos Islands operations and Sebago, a provider of watersports activities and excursion services based in Key West, Florida.
(2)    Debt placement and related fees are earned by Lismore for providing placement, modification, forbearance or refinancing services to Ashford Trust and Braemar.
(3)     Other services revenue relates primarily to other hotel services provided by our consolidated subsidiaries OpenKey and Pure Wellness, to Ashford Trust, Braemar and third parties, and the revenue of Marietta, which holds the leasehold rights to a single hotel and convention center property in Marietta, Georgia.
19
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

(4)    We have six reportable segments: REIT Advisory, Remington, Premier, INSPIRE, RED and OpenKey. We combine the operating results of Marietta and Pure Wellness into an “all other” category, which we refer to as “Corporate and Other.” See note 16 for discussion of segment reporting.
Geographic Information
Our REIT Advisory, Remington, Premier, OpenKey, and Corporate and Other reporting segments conduct their business primarily within the United States. Our INSPIRE reporting segment conducts business in the United States, Mexico, and the Dominican Republic. RED conducts business in the United States and the Turks and Caicos Islands, a territory of the United Kingdom.
The following table presents revenue from INSPIRE and RED geographically for the three months ended March 31, 2022 and 2021, respectively (in thousands):
Three Months Ended March 31,
2022 2021
INSPIRE:
United States $ 19,070  $ 2,915 
Mexico 4,618  411 
Dominican Republic 1,334  285 
Total audio visual revenue $ 25,022  $ 3,611 
RED:
United States $ 5,265  $ 4,561 
United Kingdom (Turks and Caicos Islands) 780  — 
Total watersports, ferry and excursion services $ 6,045  $ 4,561 
4. Goodwill and Intangible Assets, net
The carrying amount of goodwill as of March 31, 2022 is as follows (in thousands):
Remington RED
Corporate and Other (1)
 Consolidated
Balance at March 31, 2022 $ 54,605  $ 1,235  $ 782  $ 56,622 
________
(1) Corporate and Other includes the goodwill from the Company’s acquisition of Pure Wellness.
20
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Intangible assets, net as of March 31, 2022 and December 31, 2021, are as follows (in thousands):
March 31, 2022 December 31, 2021
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Definite-lived intangible assets:
Remington management contracts $ 107,600  $ (30,953) $ 76,647  $ 107,600  $ (28,284) $ 79,316 
Premier management contracts 194,000  (44,568) 149,432  194,000  (41,619) 152,381 
INSPIRE customer relationships 9,319  (4,689) 4,630  9,319  (4,409) 4,910 
RED boat slip rights 3,100  (419) 2,681  3,100  (380) 2,720 
Pure Wellness customer relationships 175  (175) —  175  (166) 9 
$ 314,194  $ (80,804) $ 233,390  $ 314,194  $ (74,858) $ 239,336 
Gross Carrying Amount Gross Carrying Amount
Indefinite-lived intangible assets:
Remington trademarks $ 4,900  $ 4,900 
RED trademarks 490  490 
$ 5,390  $ 5,390 
Amortization expense for definite-lived intangible assets was $5.9 million and $6.4 million for the three months ended March 31, 2022 and 2021, respectively. The useful lives of our customer relationships range from 5 to 15 years. Our Remington management contracts, Premier management contracts and boat slip rights intangible assets were assigned useful lives of 22, 30, and 20 years, respectively.
21
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

5. Notes Payable, net
Notes payable—Notes payable, net consisted of the following (in thousands):
Indebtedness Borrower Maturity Interest Rate March 31, 2022 December 31, 2021
Term loan (9)
 Ashford Inc. March 19, 2024
Base Rate (1) + 2.00% to 2.25% or LIBOR (2) (3) +3.00% to 3.25%
 $ 26,589  $ 27,271 
Note payable (12)
 Ashford Inc. February 29, 2028
4.00%
 1,684  1,746 
Term loan (5) (7) (10)
 INSPIRE January 1, 2024
Prime Rate (4) + 2.00%
 19,400  20,000 
Revolving credit facility (5) (7) (10)
 INSPIRE January 1, 2024
Prime Rate (4) + 2.00%
 1,304  1,869 
Revolving credit facility (5) (13)
 Pure Wellness On demand
Prime Rate (4) + 1.00%
 50  100 
Revolving credit facility (6) (8) (14)
 RED August 5, 2022
Prime Rate (4) + 1.75%
 —  — 
Term loan (5) (8) (15)
 RED July 17, 2029
6.00% (15)
 1,630  1,641 
Term loan (5) (8)
 RED July 17, 2023
6.50%
 541  607 
Term loan (5) (8) (16)
 RED August 5, 2029
Prime Rate (4) + 2.00%
 900  888 
Term loan (5) (8)
 RED August 5, 2029
Prime Rate (4) + 2.00%
 2,100  2,143 
Term loan (6) (8)
 RED August 5, 2029
Prime Rate (4) + 1.75%
 3,266  3,357 
Draw term loan (5) (8) (17)
 RED March 17, 2032
5.00% (17)
 26  — 
Draw term loan (5) (8) (17)
 RED March 17, 2032
5.00% (17)
 22  — 
Total notes payable 57,512  59,622 
Capitalized default interest, net (11)
 255  290 
Deferred loan costs, net (505) (518)
Notes payable including capitalized default interest and deferred loan costs, net 57,262  59,394 
Less current portion (6,943) (6,725)
Total notes payable, net - non-current $ 50,319  $ 52,669 
__________________
(1)     Base Rate, as defined in the term loan agreement, is the greater of (i) the Prime Rate set by Bank of America, (ii) the federal funds rate plus 0.50%, or (iii) LIBOR plus 1.00%.
(2)     Ashford Inc. may elect a 1, 2, 3 or 6 month LIBOR period for each borrowing.
(3)     The one-month LIBOR rate was 0.45% and 0.10% at March 31, 2022 and December 31, 2021, respectively.
(4)     Prime Rate was 3.50% and 3.25% at March 31, 2022 and December 31, 2021, respectively.
(5)     Creditors do not have recourse to Ashford Inc.
(6)    Creditors have recourse to Ashford Inc.
(7)    INSPIRE’s revolving credit facility is collateralized primarily by INSPIRE’s receivables, including accounts receivable, due from Ashford Trust and due from Braemar, with a total carrying value of $10.0 million and $5.0 million as of March 31, 2022 and December 31, 2021, respectively. INSPIRE’s term loan 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 $13.3 million and $12.5 million as of March 31, 2022 and December 31, 2021, respectively.
22
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

(9)    On March 29, 2021, the Company amended its Term Loan Agreement (the “Term Loan Agreement”) with Bank of America, N.A. (as so amended, the “Seventh Amendment”). The Seventh Amendment (a) increases the required amortization rate from 1.25% to 2.50% each quarter commencing July 1, 2021, (b) requires the Company to maintain a minimum liquidity of $15.0 million at all times, including pro forma for preferred dividends, and (c) restricts dividends and stock repurchases, other than preferred dividends, so long as there is no default under the Term Loan Agreement. Principal payment amounts are subject to maintaining a fixed charge coverage ratio below specified thresholds, which if not met, increase the principal payment due each quarter from 2.50% to 5.0% of the outstanding principal balance. Upon signing the Seventh Amendment, the Company made a $5.0 million prepayment to Bank of America, N.A. as consideration for their execution and delivery of the Seventh Amendment. The Company is also subject to certain financial covenants. See covenant compliance discussion below. The Term Loan Agreement was repaid April 1, 2022. See our discussion in note 17.
(10)    On December 31, 2020, INSPIRE amended its credit agreement dated as of November 1, 2017 (the “INSPIRE Amendment”). The maximum borrowing capacity under the INSPIRE Amendment for the revolving credit facility is $3.0 million. As of March 31, 2022, the amount unused under INSPIRE’s revolving credit facility was $1.7 million. The INSPIRE Amendment provides INSPIRE with an option to elect a one-year extension subject to satisfaction of certain conditions, including a payment of a one-time, permanent principal reduction of the term loan of not less than $2.5 million and other fees as of the date of INSPIRE’s election to extend. Pursuant to the INSPIRE Amendment, INSPIRE’s obligations to comply with certain financial and other covenants were waived until March 31, 2023. Amounts borrowed under the revolving credit facility and the term loan bear interest at the Prime Rate plus a margin of 1.25%, with the margin increasing by 0.25% beginning on July 1, 2021 and at the beginning of each successive quarter thereafter. The INSPIRE Amendment suspended payments of principal under the term loan through December 2021. Commencing January 1, 2022, INSPIRE is required to make monthly payments under the term loan of $200,000 through June 2022, $250,000 through December 2022 and $300,000 thereafter. The INSPIRE amendment requires INSPIRE to maintain an operating reserve account of $1.0 million. INSPIRE holds 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 March 31, 2022 and December 31, 2021 was not material.
(11)    The INSPIRE Amendment was considered a troubled debt restructuring due to terms that allowed for deferred interest and the forgiveness of default interest and late charges. As a result of the troubled debt restructuring, $427,000 of accrued default interest and late charges were capitalized into the INSPIRE term loan balance upon commencement and are amortized over the remaining term of the loan using the effective interest method.
(12)    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.
(13)    As of March 31, 2022, the amount unused under Pure Wellness’s revolving credit facility was $200,000.
(14)    As of March 31, 2022, the amount unused under RED’s revolving credit facility was $250,000.
(15)    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%.
(16)    RED is not required to make any payments of principal until May 5, 2022.
(17)    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 convert 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%. As of March 31, 2022, the amount unused under RED’s non-revolving line of credit loans were $1.5 million and $1.5 million, respectively.
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 March 31, 2022, our Term Loan Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements.
23
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

6. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses were comprised of the following (in thousands):
March 31, 2022 December 31, 2021
Accounts payable $ 12,956  $ 11,682 
Accrued payroll expense 10,000  23,648 
Accrued vacation expense 3,669  3,427 
Accrued interest 325  259 
Other accrued expenses 293  881 
Total accounts payable and accrued expenses $ 27,243  $ 39,897 
7. Fair Value Measurements
Fair Value Hierarchy—Our assets and liabilities measured at fair value, either on a recurring or a non-recurring basis, are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the market place as discussed below:
•Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.
•Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
•Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.
24
ASHFORD INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):
Quoted Market Prices (Level 1) Significant Other
Observable Inputs (Level 2)		 Significant Unobservable Inputs
 (Level 3)		 Total
March 31, 2022
Assets
Restricted Investment:
Ashford Trust common stock $ 131 
(1)
 $ —  $ —  $ 131 
Braemar common stock 370 
(1)
 —  —  370 
Total $ 501  $ —  $ —  $ 501 
Liabilities
Subsidiary compensation plan $ —  $ (6)
(1)
 $ —  $ (6)
Deferred compensation plan (3,437) —  —  (3,437)
Total $ (3,437) $ (6) $ —  $ (3,443)
Net $ (2,936) $ (6) $ —  $ (2,942)
__________________
(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 March 31, 2022, which are exercisable upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.
Quoted Market Prices (Level 1) Significant Other
Observable Inputs (Level 2)		 Significant Unobservable Inputs
(Level 3)		 Total
December 31, 2021
Assets
Restricted Investment:
Ashford Trust common stock $ 150 
(1)
 $ —  $ —  $ 150 
Braemar common stock 426 
(1)
 —  —  426 
Total $ 576  $ —  $ —  $ 576 
Liabilities