<PAGE>   1
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------


                                    FORM 10-Q


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


                For the quarterly period ended December 31, 1999


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


                         Commission file number 0-27357

                                ASHFORD.COM, INC.
             (Exact name of registrant as specified in its charter)


                  DELAWARE                                     76-0617905
        (State or other jurisdiction                        (I.R.S. Employer
                    of                                   Identification Number)
        incorporation or organization)


                        3800 BUFFALO SPEEDWAY, SUITE 400
                              HOUSTON, TEXAS 77098
                    (Address of principal executive offices)

                              --------------------

                                 (713) 369-1300
              (Registrant's telephone number, including area code)

                              --------------------

         Indicate by check |X| whether the registrant (1) has filed all reports
required to be filed by Sections 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

               (1)    Yes          [X]          No
                               ----------           -----------

               (2)    Yes                       No      [X]
                               ----------           -----------

         As of December 31, 1999 there were 44,625,596 shares of the Company's
common stock outstanding.



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<PAGE>   2

                                ASHFORD.COM, INC.

                                    FORM 10-Q

                                      INDEX


<TABLE>
<CAPTION>
PART I.        CONSOLIDATED FINANCIAL INFORMATION                                                                PAGE
                                                                                                                 ----


<S>                                                                                                              <C>
ITEM 1.       Consolidated Financial Statements................................................................  3

              Consolidated Balance Sheets at December 31, 1999 and March 31, 1999..............................  3

              Consolidated Statements of Operations for the three and nine months ended
              December 31, 1999 and 1998 ......................................................................  4

              Consolidated Statements of Cash Flows for the nine months ended December
              31, 1999 and 1998 ...............................................................................  5

              Notes to Consolidated Financial Statements.......................................................  6

ITEM 2.       Management's Discussion and Analysis of Financial Condition and Results
              of Operations....................................................................................  8

ITEM 3.       Quantitative and Qualitative Disclosures About Market Risk....................................... 14


PART II.      OTHER INFORMATION

ITEM 1.       Legal Proceedings................................................................................ 26

ITEM 6.       Exhibits and Reports on Form 8-K................................................................. 26

SIGNATURES .................................................................................................... 28
</TABLE>


                                       2
<PAGE>   3

PART I.          CONSOLIDATED FINANCIAL INFORMATION

ITEM 1.           CONSOLIDATED FINANCIAL STATEMENTS

                                ASHFORD.COM, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                December 31,   March 31,
                                                                                    1999         1999
                                                                               -------------  -----------
                                                                                (Unaudited)
<S>                                                                            <C>            <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                    $  60,296      $     893
   Certificate of deposit                                                             100            100
   Accounts receivable                                                              7,915            136
   Merchandise inventory                                                           24,789          3,273
   Prepaids and other                                                             104,985            453
                                                                                ---------      ---------
     Total current assets                                                         198,085          4,855

Property and equipment, net of accumulated depreciation of $546 and $49 at
   December 31, 1999 and March 31, 1999, respectively                               5,050            253
Other assets                                                                       10,512             --
                                                                                ---------      ---------
Total assets                                                                    $ 213,647      $   5,108
                                                                                =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                             $   3,534      $     977
   Accrued liabilities                                                              2,603            322
   Note payable                                                                        --          1,000
                                                                                ---------      ---------
     Total current liabilities                                                      6,137          2,299
                                                                                ---------      ---------

Other long-term liabilities                                                            83             --

Commitments and contingencies

Stockholders' equity:
Convertible preferred stock, $.001 par value per share, no shares authorized,
   issued or outstanding at December 31, 1999; 19,166,250 shares authorized,
   9,500,000 shares issued and outstanding at March 31, 1999                           --              9
Preferred stock, $.001 par value per share, 10,000,000 shares authorized,
   no shares issued and outstanding at December 31, 1999; no shares
   authorized, issued or outstanding at March 31, 1999                                 --             --
Common stock, $.001 par value per share, 54,150,000 shares authorized,
   44,625,596 and 10,687,500 shares issued and outstanding at
   December 31, 1999 and March 31, 1999, respectively                                  45             11
Additional paid-in capital                                                        256,718          4,467
Subscription receivable                                                              (780)            --
Deferred compensation                                                             (16,522)          (414)
Accumulated deficit                                                               (32,034)        (1,264)
                                                                                ---------      ---------
   Total stockholders' equity                                                     207,427          2,809
                                                                                ---------      ---------
Total liabilities and stockholders' equity                                      $ 213,647      $   5,108
                                                                                =========      =========
</TABLE>

       The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       3
<PAGE>   4

                                ASHFORD.COM, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                        Three months ended      Nine months ended
                                                           December 31,           December 31,
                                                      --------------------    --------------------
                                                        1999        1998        1999        1998
                                                      --------    --------    --------    --------
<S>                                                   <C>         <C>         <C>         <C>
Net sales                                             $ 20,104    $  2,370    $ 28,127    $  3,464
Cost of sales                                           16,473       1,998      23,118       2,929
                                                      --------    --------    --------    --------
Gross profit                                             3,631         372       5,009         535
Operating expenses:
   Marketing and sales                                  16,140         260      24,148         364
   General and administrative                            4,562         261       8,220         404
   Depreciation and amortization                         1,800          --       2,284          --
   Amortization of deferred compensation                 1,290          --       3,015          --
                                                      --------    --------    --------    --------
     Total operating expenses                           23,792         521      37,667         768
                                                      --------    --------    --------    --------
Loss from operations                                   (20,161)       (149)    (32,658)       (233)
Interest income (expense), net                           1,123          (4)      1,888          (4)
                                                      --------    --------    --------    --------
Net loss                                              $(19,038)   $   (153)   $(30,770)   $   (237)
                                                      ========    ========    ========    ========

Net loss per share, basic and diluted                 $  (0.51)   $  (0.01)   $  (1.45)   $  (0.02)
                                                      ========    ========    ========    ========

Pro forma net loss per share, basic and diluted (2)   $  (0.51)   $  (0.01)   $  (0.97)   $  (0.02)
                                                      ========    ========    ========    ========

Shares used to compute net loss per share:
   Basic and diluted (1)                                37,198      10,688      21,275      10,688
   Pro forma basic and diluted (2)                      37,198      13,579      31,762      11,574
</TABLE>


(1)    Includes shares associated with the conversion of preferred stock into
       common stock as of the closing of the Company's initial public offering.
       See Note 3.

(2)    Includes shares associated with the conversion of preferred stock into
       common stock as if the conversion occurred on April 1, 1998. See Note 3.


        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       4
<PAGE>   5

                                ASHFORD.COM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                     Nine months ended
                                                                       December 31,
                                                                  -----------------------
                                                                     1999         1998
                                                                  ----------   ----------
<S>                                                               <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                          $ (30,770)   $    (237)
Adjustments to reconcile net loss to net cash used in operating
   activities:
   Depreciation and amortization                                      2,284           --
   Amortization of deferred compensation                              3,015           --
   Compensation expense related to issuance of common stock              --           54
   Changes in assets and liabilities:
     Accounts receivable                                             (7,779)        (102)
     Merchandise inventory                                          (21,516)      (1,172)
     Prepaids and other                                              (9,921)         (23)
     Other assets                                                      (112)          --
     Accounts payable                                                 2,557          751
     Accrued liabilities                                              2,284          161
                                                                  ---------    ---------
       Net cash used in operating activities                        (59,958)        (568)
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                               (5,340)         (98)
   Internet domain and other intagible asset purchases               (4,351)          --
                                                                  ---------    ---------
       Net cash used in investing activities                         (9,691)         (98)
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from initial public offering                         73,648           --
   Proceeds from issuance of common stock                            10,000            2
   Issuance of Series B preferred stock                              29,100           --
   Issuance of Series C preferred stock                              16,304        3,245
   Proceeds from notes payable                                           --          755
                                                                  ---------    ---------
       Net cash provided by financing activities                    129,052        4,002
                                                                  ---------    ---------
   Net increase in cash and cash equivalents                         59,403        3,336
CASH AND CASH EQUIVALENTS:
   Beginning of period                                                  893           --
                                                                  ---------    ---------
   End of period                                                  $  60,296    $   3,336
                                                                  =========    =========

SUPPLEMENTAL DISCLOSURE OF NONCASH
   INVESTING AND FINANCING ACTIVITIES:
   Issuance of common stock in connection with
     marketing agreement                                             94,611           --
   Issuance of common stock and warrants in
     connection with Internet domain and other
     intangible asset purchases                                       7,712           --
</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       5
<PAGE>   6
                                ASHFORD.COM, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements have been
     prepared by Ashford.com, Inc. (the "Company") pursuant to the rules and
     regulations of the Securities and Exchange Commission. Certain information
     and footnote disclosures normally included in financial statements prepared
     in accordance with generally accepted accounting principles have been
     condensed or omitted pursuant to such rules and regulations. In the opinion
     of management, all adjustments, consisting only of normal recurring
     adjustments, and disclosures necessary for a fair presentation of these
     financial statements have been included. These financial statements should
     be read in conjunction with the financial statements and notes thereto
     included in the Company's Form S-1 Registration Statement declared
     effective September 22, 1999. Results for the three months and nine months
     ended December 31, 1999 are not necessarily indicative of the results that
     may be expected for the year ending March 31, 2000.

2.   SIGNIFICANT ACQUISITIONS

         In August 1999, the Company entered into an option agreement to
     purchase two Internet domain names and related trademarks (the "Purchased
     Assets") from a product information Internet site (the "Option Agreement").
     In connection with the Option Agreement, the Company paid $300,000 in cash
     upon execution of the Option Agreement for the exclusive right to acquire
     the Purchased Assets. In October 1999, the Company exercised its option to
     acquire the Purchased Assets. The Company paid an aggregate purchase price
     of $4.3 million representing $940,000 of cash (including the aforementioned
     payment in connection with the Option Agreement) and 332,500 shares of the
     Company's common stock.

         In January 2000, the Company entered into a merger agreement (the
     "Agreement") with an online fragrance retailer. In connection with the
     Agreement, the Company paid an aggregate purchase price of $5.0 million
     representing $739,000 of cash and 330,354 shares of the Company's common
     stock. The principal assets received include an Internet domain name and
     related trademarks, inventory and other tangible and intangible assets
     related to Internet retail operations. The Agreement further provides that
     the Company will issue up to an additional 736,514 shares of its common
     stock to the Internet retailer upon the resolution of certain authorized
     dealer relationship contingencies as set forth in the Agreement. This
     acquisition will be accounted for using the purchase method.

3.   STOCKHOLDERS' EQUITY

     Series C Convertible Preferred Stock Financing

         In July 1999, the Company increased the number of authorized shares of
     its convertible preferred stock to 19,166,250 shares with a par value of
     $.001 per share. In addition, 2,066,250 shares of the Company's convertible
     preferred stock was designated as Series C convertible preferred stock.
     Also in July 1999, the Company entered into a stock purchase agreement with
     six investors whereby the Company issued 1,425,679 shares of Series C
     convertible preferred stock in exchange for approximately $16.3 million in
     cash. Each share of convertible preferred stock converted into common stock
     upon the Company's completion of its initial public offering on September
     22, 1999.

     Stock Split

         In August 1999, the Company's Board of Directors declared a stock split
     of 4.75 shares for every 1 share of common stock or preferred stock then
     outstanding. The stock split became effective on September 21, 1999.
     Accordingly, the accompanying financial statements and footnotes have been
     restated to reflect the stock split, including an assumed increase in
     authorized shares of common stock and preferred stock.


                                       6
<PAGE>   7

     Initial Public Offering

         On September 22, 1999, the Company completed its initial public
     offering of 6,250,000 shares of its common stock. Net proceeds before
     expenses to the Company were approximately $75.6 million. As of the closing
     date of the offering, all of the convertible preferred stock was converted
     into an aggregate of 18,074,429 shares of common stock.

     Issuance of Common Stock

         In December 1999, the Company sold 707,964 shares of its common stock
     to a leading online retailer for $10.0 million in cash. The Company also
     issued an additional 6,698,664 shares of its common stock to the online
     retailer in exchange for advertising placements targeted at the online
     retailer's customer base with the intent of delivering new customers to the
     Company (the "Advertising Placements"). The fair market value of the shares
     issued in connection with the Advertising Placements, totaling $94.6
     million, has been recorded as prepaids and other current assets in the
     accompanying consolidated balance sheet at December 31, 1999 and will be
     amortized over the one-year term of the agreement.

     Net Loss Per Share

         Net loss per share is computed using the weighted average number of
     common shares outstanding. Shares associated with stock options and
     warrants are not included because they are antidilutive. The shares of
     convertible preferred stock automatically converted into common stock
     effective upon the closing of the Company's initial public offering and are
     included in the calculation of weighted average number of shares as of that
     date.

     Pro Forma Net Loss Per Share

         Pro forma net loss per share is computed using the weighted average
     number of common shares outstanding, including the pro forma effects of the
     automatic conversion of the Company's convertible preferred stock into
     shares of the Company's common stock effective upon the closing of the
     Company's initial public offering as if such conversion occurred on April
     1, 1998, or at the date of original issuance, if later.

         The following table sets forth the computation of basic and pro forma
     net loss per share for the periods indicated (in thousands, except per
     share amounts):

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED      NINE MONTHS ENDED
                                                       DECEMBER 31,           DECEMBER 31,
                                                  --------------------    --------------------
                                                    1999        1998        1999        1998
                                                  --------    --------    --------    --------
<S>                                               <C>         <C>         <C>         <C>
Numerator:
   Net loss                                       $(19,038)  $   (153)   $(30,770)   $   (237)

Denominator:
   Weighted average shares                          37,198     10,688      21,275      10,688
                                                  --------   --------    --------    --------
   Denominator for basic and diluted
     calculation                                    37,198     10,688      21,275      10,688
   Series A convertible preferred stock                 --      2,891       6,011         967
   Series B convertible preferred stock                 --         --       4,082          --
   Series C convertible preferred stock                 --         --         394          --
                                                  --------   --------    --------    --------
   Denominator for pro forma calculation            37,198     13,579      31,762      11,655

Net loss per share, basic and diluted             $  (0.51)  $  (0.01)   $  (1.45)   $  (0.02)
                                                  ========   ========    ========    ========

Pro forma net loss per share, basic and diluted   $  (0.51)  $  (0.01)   $  (0.97)   $  (0.02)
                                                  ========   ========    ========    ========
</TABLE>


                                       7
<PAGE>   8

ITEM 2.

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS

         The discussion in this Report contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in "Risk Factors
That May Affect Future Results" as well as those discussed in this section and
elsewhere in this Report, and the risks discussed in the "Risk Factors" section
included in our Registration Statement on Form S-1 as declared effective by the
Securities and Exchange Commission on September 22, 1999 (Reg. No. 333-82759).

OVERVIEW

         We were incorporated on March 6, 1998 and commenced operations and
began offering products for sale on our Web site in April 1998. Accordingly, the
results for the 1999 fiscal year are the same as those for the period from our
inception through March 31, 1999. We initially focused exclusively on the sale
of new and vintage watches, which accounted for approximately 70% of net sales
for the quarter ended December 31, 1999. Since inception, we have focused on
broadening our product offerings, establishing relationships with luxury and
premium brand owners, generating sales momentum and expanding our operational
and customer service capabilities. We have grown rapidly since launching our
site in April 1998. Our net sales totaled $5.9 million for the fiscal year ended
March 31, 1999 compared to $20.1 million for the quarter ended December 31, 1999
and $28.1 million for the nine months ended December 31, 1999. Our cost of sales
and operating expenses have increased significantly since inception. Cost of
sales totaled $16.5 million during the quarter ended December 31, 1999. Total
operating expenses, excluding non-cash items, totaled $20.7 million in the
quarter ended December 31, 1999. This trend reflects increased product costs
associated with net sales growth and additional marketing and sales costs to
attract new customers and build brand awareness. In addition, general and
administrative expenses continue to increase in connection with our expansion
into new product categories and increased headcount. The increase in general and
administrative expense is also attributable to our continued expansion of our
Web site and associated systems to manage our growth in revenue and process
customer orders and payments.

         The market for luxury and premium products is highly seasonal, with a
disproportionate amount of net sales occurring during the fourth calendar
quarter. Although less significant, seasonal sales periods occur in May and June
due to graduation gift giving, Mother's Day and Father's Day. We expect that
these trends will continue in future periods. In addition, since a
disproportionate amount of our net sales are realized during the fourth calendar
quarter, we significantly increased our purchases of inventory during and in
advance of the current quarter. Accordingly, our accounts payable and inventory
levels are at high levels at quarter end. Our gross margin was 14% for the
fiscal year ended March 31, 1999 and 18% for the three and nine months ended
December 31, 1999, respectively. Our gross margin will fluctuate in future
periods based on factors such as:

o   product sales mix;

o   the mix of direct and indirect sources of inventory;

o   pricing strategy;

o   promotional activities;

o   inventory management; and

o   inbound and outbound shipping costs.


                                       8
<PAGE>   9

         We have incurred net losses of $1.3 million for the fiscal year ended
March 31, 1999, $19.0 million for the quarter ended December 31, 1999 and $30.8
million for the nine months ended December 31, 1999. We expect our net losses to
increase and to generate negative cash flows for the foreseeable future. We
expect operating expenses and net losses will continue to rise as we pursue an
aggressive marketing and advertising campaign to attract new customers and build
our brand identity, develop new strategic partnerships, invest in new
operational and customer service infrastructure and recruit additional
employees.

         We have a limited operating history upon which to base an evaluation of
our business and prospects. As a result of our limited operating history, it is
difficult to accurately forecast our net sales and we have limited meaningful
historical financial data upon which to base projected operating expenses. We
base our current and future expense levels on our operating plans and estimates
of future net sales, and our expenses are fixed to a large extent. Sales and
operating results are difficult to forecast because they generally depend on the
volume and timing of the orders we receive. As a result, we may be unable to
adjust our spending in a timely manner to compensate for any unexpected revenue
shortfall. This inability could cause our net losses in a given quarter to be
greater than expected.

RESULTS OF OPERATIONS

         In the following table, we show certain unaudited statement of
operations data both in absolute dollars and as a percentage of net sales for
the three months and nine months ended December 31, 1999 and 1998, respectively.
In the opinion of management, the unaudited quarterly information includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation in accordance with generally accepted accounting principles.
The operating results for any period are not necessarily indicative of the
operating results for any future period.


                                       9
<PAGE>   10

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED         NINE MONTHS ENDED
                                                  DECEMBER 31,              DECEMBER 31,
                                             --------     --------     --------     --------
                                               1999         1998         1999         1998
                                             --------     --------     --------     --------
                                                               (IN THOUSANDS)
<S>                                          <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
Net sales                                    $ 20,104     $  2,370     $ 28,127     $  3,464
Cost of sales                                  16,473        1,998       23,118        2,929
                                             --------     --------     --------     --------
Gross profit                                    3,631          372        5,009          535
Operating expenses:
   Marketing and sales                         16,140          260       24,148          364
   General and administrative                   4,562          261        8,220          404
   Depreciation and amortization                1,800           --        2,284           --
   Amortization of deferred compensation        1,290           --        3,015           --
                                             --------     --------     --------     --------
Total operating expenses                       23,792          521       37,667          768
                                             --------     --------     --------     --------
Loss from operations                          (20,161)        (149)     (32,658)        (233)
Interest income (expense), net                  1,123           (4)       1,888           (4)
                                             --------     --------     --------     --------
Net loss                                     $(19,038)    $   (153)    $(30,770)    $   (237)
                                             ========     ========     ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED         NINE MONTHS ENDED
                                                  DECEMBER 31,              DECEMBER 31,
                                             --------     --------     --------     --------
                                               1999         1998         1999         1998
                                             --------     --------     --------     --------
<S>                                          <C>          <C>          <C>          <C>
AS PERCENTAGE OF NET SALES:
Net sales                                         100%         100%         100%         100%
Cost of sales                                      82%          84%          82%          85%
                                             --------     --------     --------     --------
Gross profit                                       18%          16%          18%          15%
Operating expenses:
   Marketing and sales                             80%          11%          86%          11%
   General and administrative                      23%          11%          29%          12%
   Depreciation and amortization                    9%           0%           8%           0%
   Amortization of deferred compensation            6%           0%          11%           0%
                                             --------     --------     --------     --------
Total operating expenses                          118%          22%         134%          22%
                                             --------     --------     --------     --------
Loss from operations                             (100)%         (6)%       (116)%         (7)%
Interest income (expense), net                      6%           0%           7%           0%
                                             --------     --------     --------     --------
Net loss                                          (95)%         (6)%       (109)%         (7)%
                                             ========     ========     ========     ========
</TABLE>

NET SALES

         Net sales consist of product sales and are net of product returns and
promotional discounts. Net sales increased from $2.4 million during the quarter
ended December 31, 1998 to $20.1 million during the quarter ended December 31,
1999 and from $3.5 million during the nine months ended December 31, 1998 to
$28.1 million during the nine months ended December 31, 1999. The growth in net
sales is principally due to the general increase in holiday season spending,
increased site traffic and awareness resulting from advertising expenditures and
additional product offerings and availability that we financed through
its convertible preferred and common stock offerings.


                                       10
<PAGE>   11

COST OF SALES

         Cost of sales consists primarily of the cost of products sold, inbound
and outbound shipping costs and warranty and inventory obsolescence costs. Cost
of sales increased as net sales increased. Gross profit increased from $372,000
to $3.6 million during the quarter ended December 31, 1999 compared to the
quarter ended December 31, 1998. Gross profit increased from $535,000 to $5.0
million during the nine months ended December 31, 1999 compared to the nine
months ended December 31, 1998. Gross margin increased from 16% during the
quarter ended December 31, 1998 to 18% during the quarter ended December 31,
1999 and from 15% during the nine months ended December 31, 1998 to 18% during
the nine months ended December 31, 1999. The increase in gross margin is
principally due to the addition of new product categories, the mix of products
sold and abnormally low margins during the prior year resulting from start-up
activities.

OPERATING EXPENSES

         Marketing and Sales. Marketing and sales expenses consist primarily of
advertising costs, credit card fees, product distribution expenses and related
employee salaries and benefits expenses. Our advertising is intended to build
brand awareness, generate site traffic and increase overall sales. Marketing and
sales expenses increased from approximately $260,000 during the quarter ended
December 31, 1998 compared to $16.1 million for the quarter ended December 31,
1999. Marketing and sales expenses increased from $364,000 during the nine
months ended December 31, 1998 to $24.1 million during the nine months ended
December 31, 1999. The increase during the three and nine months ended December
31, 1999 is primarily due to incremental holiday season advertising expenditures
of $9.2 and $12.2 million, respectively, related to television, magazine,
newspaper and radio campaigns and incremental online advertising expenditures of
$3.2 and $6.3 million, respectively, related to promotion agreements with
Yahoo!, America Online and other providers.

         General and Administrative. General and administrative expenses include
administrative employee salaries and benefits, professional fees, Web site
maintenance, office lease expenses and other costs. General and administrative
expenses increased to $4.6 million during the quarter ended December 31, 1999
compared to $261,000 during the quarter ended December 31, 1998 and to $8.2
million during the nine months ended December 31, 1999 compared to $404,000
during the nine months ended December 31, 1998. The increase during the quarter
ended December 31, 1999 is primarily due to salary and benefits costs of $2.7
million related to increased staffing levels in operations, finance and
development, incremental professional fees of $202,000 associated with
technology and employment consultants and incremental operating expenses of
$237,000 associated with office lease expenses. The increase during the nine
months ended December 31, 1999 is primarily due to salary and benefits costs of
$5.0 million related to increased staffing levels in operations, finance and
development, incremental professional fees of $555,000 associated with
technology and employment consultants and incremental operating expenses of
$385,000 associated with office lease expenses.

         Depreciation and Amortization. Depreciation and amortization expense
includes depreciation related to property and equipment as well amortization
related to distribution and marketing agreements and certain other intangible
assets. Depreciation and amortization expense was $1.8 million during the
quarter ended December 31, 1999 and $2.3 million during the nine months ended
December 31, 1999. The increase in expense is partially due to the amortization
of Internet domain and other intangible asset purchases during the current year
coupled with costs associated with the purchases of technology equipment
beginning in the latter half of fiscal 1999 and continuing through the quarter
ended December 31, 1999.

The increase also includes $849,000 and $1.1 million of amortization related to
a number of distribution and marketing agreements with luxury brand owners and
representatives entered into during the three and nine months ended December 31,
1999, respectively. The agreements are for periods up to twenty-four months and
provide us with certain exclusive online distributor rights, allow us to utilize
certain trademarks and images in connection its marketing and advertising
activities and require us to fund certain marketing and advertising activities.
In connection with the agreements, we have issued the brand owners and
representatives warrants to purchase an aggregate of 474,930 shares of our
common stock for a weighted average purchase price of $8.78 per share which are
exercisable through November 2004. We have recorded approximately $4.1 million
in deferred marketing expense during the nine months ended December 31, 1999
relating to these fully vested warrants representing the excess of the estimated
fair value of the warrants on the date of grant over the purchase price.





                                       11
<PAGE>   12
Deferred marketing cost of $1.7 million, $1.9 million and $0.5 million will be
amortized in fiscal 2000, 2001 and 2002, respectively, related to these
warrants.

         During the quarter ended March 31, 1999, we recorded deferred stock
compensation of $431,000 in connection with stock options granted during the
period. Additional deferred compensation charges of $16.1 million and $3.0
million were recorded during the quarters ended June 30, 1999 and September 30,
1999, respectively, in connection with stock options granted during those
periods. These amounts will be amortized to expense over the vesting periods of
the applicable options, generally four years, which resulted in expense of $3.0
million for the nine months ended December 31, 1999. Amortization of the
deferred compensation expense for each of the next five fiscal years is expected
to be as follows:

<TABLE>
<CAPTION>

        Year Ended                         Amount
----------------------------          ----------------
                                       (in thousands)

<S>                                   <C>
      March 31, 2000                  $        4,304
      March 31, 2001                           4,978
      March 31, 2002                           4,798
      March 31, 2003                           4,781
      March 31, 2004                             675
</TABLE>

         Interest Income (Expense), Net. Interest income (expense), net consists
of earnings on cash and cash equivalents net of interest expense on borrowings.
The increase during the quarter and nine months ended December 31, 1999 is due
to interest earned on cash balances resulting from our Series B and Series C
convertible preferred stock offerings in April 1999 and July 1999, respectively,
and interest earned on cash balances resulting from our initial public offering
in late September 1999.

LIQUIDITY AND CAPITAL RESOURCES

         General. We have financed its operations primarily through the private
sales of convertible preferred stock, an initial public offering and a recent
private sale of common stock. In April 1999, we sold $30.1 million of Series B
convertible preferred stock, including the conversion of a $1.0 million note
payable that was made in March 1999. In July 1999, we sold $16.3 million of
Series C convertible preferred stock. In September 1999, we sold 6.25 million
shares of common stock in connection with an initial public offering. Net of
underwriting and other expenses, we realized proceeds of $73.6 million in
connection with this offering. In December 1999, we sold 707,964 shares of our
common stock to a leading online retailer for $10.0 million in cash. The
proceeds from these offerings have generally been used to fund inventory
purchases, marketing and advertising campaigns, employee salaries and equipment
purchases.

         During the nine months ended December 31, 1999, net cash used in
operating activities was $60.0 million. Net cash used in operating activities
primarily consisted of increases in merchandise inventories, net losses, prepaid
expenses and accounts receivable. These uses were partially offset by increases
in accounts payable and accrued liabilities and non-cash charges for deferred
compensation and depreciation and amortization.

         Advertising and Promotion Agreements. During the nine months ended
December 31, 1999, we entered into a number of advertising and promotion
agreements with several online service providers and retailers that provide for
services such as the display of banner advertisements, an anchor spot on a
prominent Internet retail Web page and the delivery of new customers to us. In
connection with these agreements, we are obligated to make aggregate payments of
$19.0 million, $11.4 million of which has been paid through December 31, 1999.
Of the remaining amount, $2.0 million will be paid during the fourth fiscal
quarter ending March 31, 2000 and $5.6 million will be paid during fiscal year
2001.




                                       12
<PAGE>   13

         Asset Purchases. During the nine months ended December 31, 1999, we
made capital expenditures of approximately $5.3 million related to the purchase
of computer and office equipment as well as leasehold improvements associated
with new leased office and warehouse facilities.

         In August 1999, we entered into an option agreement to purchase two
Internet domain names and related trademarks (the "Purchased Assets") from a
product information Internet site (the "Option Agreement"). In connection with
the Option Agreement, we paid $300,000 in cash upon execution of the Option
Agreement for the exclusive right to acquire the Purchased Assets. In October
1999, we exercised its option to acquire the Purchased Assets. We paid an
aggregate purchase price of $4.3 million representing $940,000 of cash
(including the aforementioned payment in connection with the Option Agreement)
and 332,500 shares of our common stock.

         In September 1999, we entered into an asset purchase agreement to
purchase an Internet domain name and related trademarks from a luxury goods
retailer. In connection with this agreement, we paid $1.6 million in cash upon
execution for the domain name and related trademarks. The asset purchase
agreement further provides that we will pay an additional $20,000 of cash
consideration for each authorized dealer relationship successfully transitioned
to us by the luxury goods retailer. The aggregate total of such cash
consideration shall not exceed $160,000.

         In January 2000, we entered into a merger agreement (the "Agreement")
with an online fragrance retailer. In connection with the Agreement, we paid
an aggregate purchase price of $5.0 million representing $739,000 of cash and
330,354 shares of our common stock. The principal assets received include an
Internet domain name and related trademarks, inventory and other tangible and
intangible assets related to Internet retail operations. The Agreement further
provides that we will issue up to an additional 736,514 shares of our stock to
the Internet retailer upon the resolution of certain authorized dealer
relationship contingencies as set forth in the Agreement.

         Credit Facility. In August 1999, we entered into a revolving credit
agreement with a financial institution. The Revolving Credit Facility provides
for borrowings of up to $5.0 million for working capital needs under a revolving
line of credit, the availability of which equals 50% of available merchandise
inventory, as defined in the agreement. The Revolving Credit Facility expires in
August 2000 and bears interest at the prime rate. Commitment fees equal to 0.33%
per annum are payable on the unused portion of the facility. At December 31,
1999, there are no amounts outstanding under the Revolving Credit Facility.

YEAR 2000 UPDATE

The "Year 2000" issue results from an industry-wide practice of representing
years with only two digits instead of four. Beginning in the year 2000, date
code fields need to accept four digit entries to distinguish twenty-first
century dates from twentieth century dates (2000 or 1900). As a result, computer
systems and/or software used by many companies needed to be upgraded to comply
with such Year 2000 requirements.

Through the first month of the calendar year 2000, we have not experienced any
significant problems associated with the Year 2000 issue. Although it appears
that the Year 2000 issue will not have a significant adverse affect on us, we
continue to monitor the Year 2000 compliance of our internal systems. Undetected
errors in our internal systems that may be discovered in the future could have a
material adverse affect on our business, operating results or financial
condition.




                                       13
<PAGE>   14

ITEM 3.

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We operate in a rapidly changing environment that involves a number of
risks, some of which are beyond the our control. The following discussion
highlights some of these risks. These risks should be read in conjunction with
the "Risk Factors" section included in our Registration Statement on Form S-1 as
declared effective by the Securities and Exchange Commission on September 22,
1999 (Reg. No. 333-82759).

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

You should carefully consider the following risks before making an investment
decision. The risks described below are not the only ones that we face. Our
business, operating results or financial condition could be materially adversely
affected by any of the following risks. The trading price of our common stock
could decline due to any of these risks, and you as an investor may lose all or
part of your investment. You should also refer to the other information set
forth in this report, including our financial statements and the related notes.

RISKS RELATED TO OUR BUSINESS

Our Limited Operating History Makes Future Forecasting Difficult. Because Most
of our Expenses Are Fixed Based on Planned Operating Results, Failure to
Accurately Forecast Revenue Could Cause Net Losses in a Given Quarter to be
Greater than Expected.

We were incorporated in March 1998. We began selling products on our Web site in
April 1998 and the results for the 1999 fiscal year are the same as those for
the period from inception, March 6, 1998, through March 31, 1999. Accordingly,
we have an extremely limited operating history upon which to base an evaluation
of our business and prospects. Our business and prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development, particularly companies in new and
rapidly evolving markets such as online commerce. As a result of our limited
operating history, it is difficult to accurately forecast our net sales and we
have limited meaningful historical financial data upon which to base planned
operating expenses. We base our current and future expense levels on our
operating plans and estimates of future net sales, and our expenses are to a
large extent fixed. Sales and operating results are difficult to forecast
because they generally depend on the volume and timing of the orders we receive,
which is uncertain. As a result, we may be unable to adjust our spending in a
timely manner to compensate for any unexpected revenue shortfall. This inability
could cause our net losses in a given quarter to be greater than expected.

We Anticipate Future Losses and Negative Cash Flow, which May Limit or Delay Our
Ability to Become Profitable.

Since our formation, we have made significant expenditures on our technology,
Web site development, advertising, hiring of personnel and startup costs. As a
result, we have incurred losses since our inception and expect to experience
operating losses and negative cash flow for the foreseeable future. We
anticipate our losses will continue to increase from current levels because we
expect to incur additional costs and expenses related to:

o        brand development, marketing and other promotional activities;

o        the expansion of our fulfillment operations, which includes supply
         procurement, warehousing, order receipt, packaging and shipment;

o        the addition of customer service personnel;

o        the continued development of our Web site, the systems and staff that
         process customer orders and payments, and our computer network;



                                       14
<PAGE>   15

o        the expansion of our product offerings and Web site content; and

o        development of relationships with strategic business partners.

Our ability to become profitable depends on our ability to generate and sustain
substantially higher net sales while maintaining reasonable expense levels. If
we do achieve profitability, we cannot be certain that we would be able to
sustain or increase profitability on a quarterly or annual basis in the future.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Our Operating Results are Volatile and Difficult to Predict. If We Fail to Meet
the Expectations of Public Market Analysts and Investors, the Market Price of
Our Common Stock May Decline Significantly.

Our quarterly operating results have fluctuated in the past, and we expect both
our quarterly and annual operating results to fluctuate significantly in the
future. Because our operating results are volatile and difficult to predict, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance. In some future quarter our operating
results may fall below the expectations of securities analysts and investors. In
this event, the trading price of our common stock may decline significantly. The
following are material factors that may harm our business or cause our operating
results to fluctuate:

o        our inability to obtain new customers at reasonable cost, retain
         existing customers or encourage repeat purchases;

o        seasonality;

o        our inability to manage inventory levels or control inventory theft;

o        our inability to manage our fulfillment operations;

o        our inability to adequately maintain, upgrade and develop our Web site,
         the systems that we use to process customer orders and payments or our
         computer network;

o        the ability of our competitors to offer new or enhanced Web sites,
         services or products;

o        our inability to obtain product lines from our suppliers;

o        the availability and pricing of merchandise from vendors; and

o        increases in the cost of online or offline advertising.

A number of factors will cause our gross margins to fluctuate in future periods,
including the mix of watches and other products sold by us, inventory
management, marketing and supply decisions, inbound and outbound shipping and
handling costs, the level of product returns and the level of discount pricing
and promotional coupon usage. Any change in one or more of these factors could
reduce our gross margins in future periods. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

We Expect to Experience Seasonal Fluctuations in Our Net Sales, which Will Cause
Our Quarterly Results to Fluctuate and Could Cause Our Annual Results to Be
Below Expectations.

We expect to experience significant seasonal fluctuations in our net sales that
will cause quarterly fluctuations in our operating results. In particular, we
realized approximately 40% of our net sales for fiscal year 1999 during the
fourth calendar quarter primarily due to gift purchases made during the holiday
season and this trend may continue in the future.

In anticipation of increased sales activity during the fourth calendar quarter,
we expect to hire a significant number of temporary employees to bolster our
permanent staff and significantly increase our inventory levels. For this



                                       15
<PAGE>   16


reason, if our net sales are below seasonal expectations during this quarter,
our annual operating results could be below the expectations of securities
analysts and investors.

Due to our limited operating history, it is difficult to predict the seasonal
pattern of our sales and the impact of seasonality on our business and financial
results. In the future, our seasonal sales patterns may become more pronounced,
may strain our personnel and warehousing and order shipment activities and may
cause a shortfall in net sales as compared to expenses in a given period. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

If We Are Unable to Purchase or Continue to Purchase Products, Particularly
Watches, Directly from the Brand Owners, Our Net Sales Could Decrease.

Approximately 66% of all units sold during the quarter ended December 31, 1999
were purchased directly from the brand owners. We are negotiating with some of
the remaining brand owners to purchase those brands directly, in all product
categories. We believe that purchasing directly from the brand owners will
provide us with a more predictable supply of products, as well as a lower cost
of goods. As a result, we believe that part of our success is contingent on
attaining or maintaining our ability to buy directly from the brand owners. If
we lose our ability to buy directly from the brand owners, our net sales or
margins may decrease.

Our Ability to Meet Consumer Demand is in Part Dependent upon the Availability
of Products Purchased Indirectly from Sources Other than the Brand Owners. If We
Are Unable to Obtain Popular Products Through Indirect Sources, Our Net Sales
Will Decline.

We purchase brands indirectly from distributors and other third parties that we
do not purchase directly from the brand owners. The availability of products
purchased indirectly depends on many factors, including consumer demand,
manufacturer production and fashion trends. Since there are no guarantees that
we will be able to obtain a sufficient supply of products indirectly from
third-party distributors and other suppliers, customer demand may, at times,
exceed our supply of those products. If this occurs we could lose customers and
our net sales would decline. In addition, the luxury goods brand owners could
establish procedures to limit or control our ability to purchase products
indirectly and several brand owners in the U.S. have distinctive legal rights
rendering them the only legal importer of their respective brands into the U.S.
In the event we acquire such products indirectly from distributors and other
third parties who may not have complied with applicable Customs laws and
regulations, such goods can be subject to seizure from our inventory by U.S.
Customs, and the importer may have a civil action for damages against us. As it
is often difficult to ascertain the original circumstances of importation of
certain goods offered to us by our distributors and other third parties, this
could impact our ability to obtain sufficient quantities of popular luxury
goods, such as watches, and cause customer dissatisfaction.

If We Are Unable to Obtain Sufficient Quantities of Popular Luxury and Premium
Products, Our Net Sales Could Decrease.

If we are not able to offer our customers a sufficient supply and selection of
products in a timely manner, we could lose customers and our net sales could be
below expectations. Our success depends on our ability to purchase products in
sufficient quantities at competitive prices, particularly for the holiday
shopping season. As is common in the industry, we generally do not have
long-term or exclusive arrangements with brand owners, distributors or brokers
that guarantee the availability of products for resale.

In the luxury goods market, a product or fashion style periodically becomes
intensely popular. From time to time, we may have trouble obtaining sufficient
product allocations of particularly popular brands. In addition, we believe that
some of our suppliers may establish their own online retailing efforts, which
may impact our ability to get sufficient product allocations from suppliers. In
several cases, the brands that we wish to carry have delayed establishing a
relationship with us until they have their own Web site up and running. In other
cases, the brand owners distribute only a small amount of product and rely
partially on the scarcity of that product to provide a merchandising mystique.
It is unlikely that we will obtain products for our Web site from brands who
follow the scarcity mystique, and there is no assurance that we will actually
obtain relationships within all sectors that we have planned to offer.
Therefore, we do not have a predictable or guaranteed supply of products.




                                       16
<PAGE>   17

Because We Carry Almost All of the Products We Sell in Inventory, if We Are
Unable to Accurately Predict and Plan for Changes in Consumer Demand Our Net
Sales and Gross Margins May Decrease.

At December 31, 1999, we held approximately $24.8 million of products in
inventory and we expect this number will increase in the future in order to
support possible higher sales levels. As a result, the rapidly changing trends
in consumer tastes in the market for luxury and premium products subject us to
significant inventory risks. It is critical to our success that we accurately
predict these trends and do not overstock unpopular products. The demand for
specific products can change between the time the products are ordered and the
date of receipt. We are particularly exposed to this risk because we derive a
majority of our net sales in the fourth calendar quarter of each year. Our
failure to sufficiently stock popular products in advance of the fourth calendar
quarter would harm our operating results for the entire fiscal year. In the
event that one or more products do not achieve widespread consumer acceptance,
we may be required to take significant inventory markdowns, which could reduce
our net sales and gross margins. This risk may be greatest in the first calendar
quarter of each year, after we have significantly increased inventory levels for
the holiday season. We believe that this risk will increase as we begin to offer
additional luxury items due to our lack of experience in purchasing these items.
In addition, to the extent that demand for our products increases over time, we
may be forced to increase inventory levels. Any increase would subject us to
additional inventory risks. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

If We Experience Significant Inventory Theft, Our Gross Profit Margin Would
Decrease.

Although immaterial to date, in the past we have experienced theft of
merchandise shipments in route from our facility to our customers. In the
future, we expect that we may also experience theft of merchandise while it is
being held in our fulfillment facility. We have worked with our shipping
carriers and have taken steps aimed at preventing theft. If these steps are
inadequate or if security measures fail at our fulfillment facility, we could
incur significant inventory theft, which could cause gross profit margins and
results of operations to decrease significantly.

Sales of Luxury Goods Are Particularly Susceptible to General Economic
Downturns. If General Economic Conditions Deteriorate, Our Sales Could Suffer.

Purchases of luxury products are typically discretionary for consumers and may
be particularly affected by negative trends in the general economy. The success
of our operations depends to a significant extent on a number of factors
relating to discretionary consumer spending and affecting disposable consumer
income, such as employment, wages and salaries, business conditions, interest
rates, exchange rates, availability of credit and taxation. In addition, because
the purchase of luxury products is relatively discretionary, any reduction in
disposable income in general may affect us more significantly than companies in
other industries.

To Manage Our Growth and Expansion, We Need to Improve and Implement Financial
and Managerial Controls and Improve Our Reporting Systems and Procedures. If We
Are Unable to Do So Successfully, We May Not Be Able to Manage Growth
Effectively and Our Operating Results Would Be Harmed.

Our rapid growth in personnel and operations has placed, and will continue to
place, a significant strain on our management, information systems and
resources. In order to manage this growth effectively, we need to continue to
improve our financial and managerial controls and reporting systems and
procedures. Our management team has been assembled recently and has not worked
together extensively in the past. There can be no assurance that the management
team can work together effectively and can implement our internal growth and
acquisition strategies. Any inability of our management to integrate additional
companies, customer databases, merchandise lines, categories of merchandise,
technology advances, fulfillment systems, and customer service into operations
and to eliminate unnecessary duplication may have a materially adverse effect on
our business, financial condition and results of operations.

If We Are Unable to Successfully Implement Our New Accounting and Financial
Reporting Systems, Our Stock Price Could Decline.

We anticipate expanding our financial and management information systems to
accommodate new data. If we fail to successfully implement and integrate our new
financial reporting and management information systems with our





                                       17
<PAGE>   18


existing systems or if we are not able to expand these systems to accommodate
our growth, we may not have adequate, accurate or timely financial information.
Our failure to have adequate, accurate or timely financial information would
hinder our ability to manage our business and operating results. If we grow
rapidly, we will face additional challenges in upgrading and maintaining our
financial and reporting systems.

We May Not Be Able to Compete Successfully Against Current and Future
Competitors.

We expect competition in the online sale of luxury and premium products to
intensify in the future. Increased competition is likely to result in price
pressure, reduced gross margins and loss of market share, any of which could
seriously harm our net sales and operating results. In addition, the retail
watch industry is intensely competitive. We currently or potentially compete
with a variety of other companies, including:

o        traditional retailers of luxury and premium products;

o        brand owners of the products we sell;

o        other online retailers of luxury and premium products; and

o        catalog retailers.

Many of our competitors have advantages over us including longer operating
histories, greater brand recognition and significantly greater financial, sales
and marketing and other resources. In addition, traditional store-based
retailers offer customers benefits that are not obtainable over the Internet,
such as enabling customers to physically inspect a product before purchase and
not incurring costs associated with maintaining a Web site.

If We Are Unable to Build Awareness of the Ashford.Com Brand, We May Not Be Able
to Compete Effectively Against Competitors with Greater Name Recognition and Our
Sales Could Be Adversely Affected.

If we are unable to economically achieve or maintain a leading position in
online commerce or to promote and maintain our brand, our business, results of
operations and financial condition could suffer. We believe that the importance
of brand recognition will increase as more companies engage in commerce over the
Internet. Development and awareness of our brand will depend largely on our
success in increasing our customer base. If the leading brand owners do not
perceive us as an effective marketing and sales channel for their merchandise,
or consumers do not perceive us as offering a desirable way to purchase
merchandise, we may be unsuccessful in promoting and maintaining our brand.
Furthermore, in order to attract and retain customers and to promote and
maintain our brand in response to competitive pressures, we plan to increase our
marketing and advertising budgets and otherwise to increase substantially our
financial commitment to creating and maintaining brand loyalty among vendors and
consumers.

If We Enter New Business Categories That Do Not Achieve Market Acceptance, Our
Brand and Reputation Could Be Damaged and We Could Fail to Attract New
Customers.

If we launch or acquire a new department or product category that is not
favorably received by consumers, our brand or reputation could be damaged. This
damage could impair our ability to attract new customers, which could cause our
net sales to fall below expectations. An expansion of our business to include
other luxury goods will require significant additional expenses, and strain our
management, financial and operational resources. This type of expansion would
also subject us to increased inventory risk. We may choose to expand our
operations by developing other new departments or product categories, promoting
new or complementary products, expanding the breadth and depth of products and
services offered or expanding our market presence through relationships with
third parties. In addition, we may pursue the acquisition of other new or
complementary businesses, products or technologies.


                                       18
<PAGE>   19


If Our Strategy to Sell Products Outside of the United States is Not Successful,
Our Increases in Operating Expenses May Not Be Offset by Increased Sales.

If we are not able to successfully market, sell and distribute our products in
foreign markets or if certain risks and uncertainties of doing business in
foreign markets prove insurmountable then these factors could have a material
adverse effect on our future global operations, and consequently, on our
operating margins. Although we currently may not sell merchandise to customers
outside the United States, we intend to do so in the future. We do not currently
have any overseas fulfillment or distribution facility or arrangement or any Web
site content localized for foreign markets, and we cannot be certain that we
will be able to establish a global presence. In addition, there are certain
risks inherent in doing business on a global level, including:

o        regulatory requirements;

o        export restrictions;

o        tariffs and other trade barriers;

o        difficulties in staffing and managing foreign operations;

o        difficulties in protecting intellectual property rights;

o        longer payment cycles;

o        problems in collecting accounts receivable;

o        political instability;

o        fluctuations in currency exchange rates; and

o        potentially adverse tax consequences.

If We Do Not Successfully Expand Our Fulfillment Operations, Our Net Sales May
Fall Below Expectations.

We must be able to quickly and efficiently fill customer orders. If we do not
successfully expand our fulfillment operations to accommodate increases in
demand, particularly during the fourth calendar quarter of each year, we will
not be able to increase our net sales in accordance with the expectations of
securities analysts and investors. In the retail industry, fourth quarter sales
are often as much as 50% of total annual sales. Our success depends on our
ability to rapidly expand our fulfillment operations and information systems in
order to accommodate increases in customer orders, whether due to seasonal
factors or growth of our business. Our planned expansion may cause disruptions
in our business.

If We Experience Problems with Our Third-Party Shipping Services, We Could Lose
Customers.

We rely upon third-party carriers, primarily Federal Express and UPS, for
product shipments, including shipments to and from our warehouse. We are
therefore subject to the risks, including employee strikes and inclement
weather, associated with these carriers' ability to provide delivery services to
meet our shipping needs. In addition, failure to deliver products to our
customers in a timely manner would damage our reputation and brand.

Our Operating Results Depend on Our Internally Developed Web Site, Network
Infrastructure and Transaction-Processing Systems. If We Do Not Successfully
Expand Our Web Site and the Systems That Process Customer Orders, We Could Lose
Customers and Net Sales Could be Reduced.

The satisfactory performance, reliability and availability of our Web site,
transaction-processing systems and network infrastructure are critical to our
operating results, as well as to our ability to attract and retain customers and
maintain adequate customer service levels. Any system interruptions that result
in the unavailability of our Web site or reduced performance of the transaction
systems would reduce the volume of sales and the attractiveness of our service
offerings. This would seriously harm our business, operating results and
financial condition.



                                       19
<PAGE>   20

We use internally developed systems for our Web site and substantially all
aspects of transaction processing, including customer profiling and order
verifications. We have experienced periodic systems interruptions due to server
failure, which we believe will continue to occur from time to time. If the
volume of traffic on our Web site or the number of purchases made by customers
increases by more than 20 times our current sales levels, we will need to
further expand and upgrade our technology, transaction processing systems and
network infrastructure. We have experienced and expect to continue to experience
temporary capacity constraints due to sharply increased traffic during sales or
other promotions, which cause unanticipated system disruptions, slower response
times, degradation in levels of customer service, impaired quality and delays in
reporting accurate financial information.

If we fail to rapidly upgrade our Web site or toll-free call center in order to
accommodate increased traffic, we may lose customers, which would reduce our net
sales. Furthermore, if we fail to rapidly expand the computer systems that we
use to process and ship customer orders and process payments, we may not be able
to successfully fulfill customer orders. As a result, we could lose customers
and our net sales could be reduced. In addition, our failure to rapidly upgrade
our Web site or expand these computer systems without system downtime,
particularly during the fourth calendar quarter, would further reduce our net
sales. We may experience difficulty in improving and maintaining our systems if
our employees or contractors that develop or maintain our computer systems
become unavailable to us. We have experienced periodic systems interruptions,
which we believe will continue to occur, while enhancing and expanding these
computer systems.

Our Facilities and Systems are Vulnerable to Natural Disasters and Other
Unexpected Problems. The Occurrence of a Natural Disaster or Other Unexpected
Problem Could Damage Our Reputation and Brand and Reduce Our Net Sales.

The occurrence of a natural disaster or unanticipated problems at our leased or
offsite hosting facilities that house substantially all of our computer and
communications hardware systems could cause interruptions or delays in our
business, destroy data or render us unable to accept and fulfill customer
orders. Any of these interruptions or delays at these facilities would reduce
our net sales. In addition, our systems and operations are vulnerable to damage
or interruption from fire, flood, power loss, telecommunications failure,
break-ins, earthquake and similar events. We have not established specific
procedures for handling damage or interruptions caused by these events and our
business interruption insurance may not adequately compensate us for losses that
may occur. In addition, the failure by the third-party facility to provide the
data communications capacity required by us, as a result of human error, natural
disaster or other operational disruptions, could interrupt our service. The
occurrence of any or all of these events could damage our reputation and brand
and impair our business.

Our Net Sales Could Decrease if Our Online Security Measures Fail.

Our relationships with our customers may be adversely affected if the security
measures that we use to protect their personal information, such as credit card
numbers, are ineffective. If, as a result, we lose many customers, our net sales
could decrease. We rely on security and authentication technology that we
license from third parties. With this technology, we perform real-time credit
card authorization and verification with our bank. We cannot predict whether
events or developments will result in a compromise or breach of the technology
we use to protect a customer's personal information. Furthermore, our servers
may be vulnerable to computer viruses, physical or electronic break-ins and
similar disruptions. We may need to expend significant additional capital and
other resources to protect against a security breach or to alleviate problems
caused by any breaches. We cannot assure that we can prevent all security
breaches.

Our Net Sales and Gross Margins Would Decrease If We Experience Significant
Credit Card Fraud.

A failure to adequately control fraudulent credit card transactions would reduce
our net sales and our gross margins because we do not carry insurance against
this risk. We have developed procedures to help us to detect the fraudulent use
of credit card information. Under current credit card practices, we are liable
for fraudulent credit card transactions because we do not obtain a cardholder's
signature.



                                       20
<PAGE>   21

If We Do Not Respond to Rapid Technological Changes, Our Services Could Become
Obsolete and We Could Lose Customers.

If we face material delays in introducing new services, products and
enhancements, our customers may forego the use of our services and use those of
our competitors. To remain competitive, we must continue to enhance and improve
the functionality and features of our online store. The Internet and the online
commerce industry are rapidly changing. If competitors introduce new products
and services, or if new industry standards and practices emerge, our existing
Web site and proprietary technology and systems may become obsolete. To develop
our Web site and technology entails significant technical and business risks. We
may use new technologies ineffectively or we may fail to adapt our technology to
meet customer requirements or emerging industry standards.

Intellectual Property Claims Against Us Can Be Costly and Could Impair Our
Business.

Other parties may assert infringement or unfair competition claims against us.
We cannot predict whether they will do so, or whether any future assertions or
prosecutions will harm our business. If we are forced to defend against any
infringement claims, whether they are with or without merit or are determined in
our favor, then we may face costly litigation, diversion of technical and
management personnel, or product shipment delays. Further, the outcome of a
dispute may be that we would need to develop non-infringing technology or enter
into royalty or licensing agreements. Royalty or licensing agreements, if
required, may be unavailable on terms acceptable to us, or at all.

If the Protection of Our Trademarks and Proprietary Rights is Inadequate, Our
Brand and Reputation Could Be Impaired and We Could Lose Customers.

The steps we take to protect our proprietary rights may be inadequate. We regard
our copyrights, service marks, trademarks, trade dress, trade secrets and
similar intellectual property as critical to our success. We rely on trademark
and copyright law, trade secret protection and confidentiality or license
agreements with our employees, customers, partners and others to protect our
proprietary rights. In April and in May 1999, we filed applications with the
United States Patent and Trademark Office for registration of the trademarks
"ASHFORD" and "Ashford.com" for multiple classes of goods. In September 1999, we
filed applications with the United States Patent and Trademark Office for
registration of the Ashford.com design mark and the stylized "A" design mark for
multiple classes of goods. Effective trademark, service mark, copyright and
trade secret protection may not be available in every country in which we will
sell our products and services online. Furthermore, the relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear. Therefore, we may be unable to prevent third
parties from acquiring domain names that are similar to, infringe upon or
otherwise decrease the value of our trademarks and other proprietary rights.

The Loss of the Services of One or More of Our Key Personnel, or Our Failure to
Attract, Assimilate and Retain Other Highly Qualified Personnel in the Future,
Could Disrupt Our Operations and Result in Loss of Net Sales.

Our future performance will depend on the continued services of our management
and key personnel and the ability to attract additional management and key
personnel. The loss of the services of one or more of our key personnel could
seriously interrupt our business. We depend on the continued services and
performance of our senior management and other key personnel. Our future success
also depends upon the continued service of our executive officers and other key
sales, marketing and support personnel. Several of our senior management joined
us in the last twelve months, including our Chief Executive Officer, Chief
Financial Officer, Vice President of Marketing, Vice President of Business
Development, Vice President of Merchandising and Vice President, General Counsel
and Secretary. Our future success depends on these officers effectively working
together with our original management team. Our relationships with these
officers and key employees are at will and none of our officers or key employees
is bound by an employment agreement for any specific term. We currently have key
person life insurance policies covering Kenneth E. Kurtzman and James H.
Whitcomb, Jr. While the proceeds of these policies might assist us in recruiting
executive officers, the proceeds would not address the potential disruption to
our business of recruiting and integrating new senior management.

We May Not Achieve Expected Benefits of Any Investments or Acquisitions That We
Complete.

As we identify appropriate opportunities, we intend to make acquisitions of or
investments in complementary companies, products or technologies. We may not
correctly identify or realize the anticipated benefits of any acquisition or
investment. For example, we may not be able to successfully assimilate the
additional personnel,






                                       21
<PAGE>   22


operations, acquired technology and products into our business. Acquisitions may
further strain our existing financial and managerial controls and reporting
systems and procedures. In addition, key personnel of acquired companies may
decide not to work for us. These difficulties could disrupt our ongoing
business, distract our management and employees or increase our expenses.
Further, any physical expansion in facilities due to an acquisition may result
in disruptions that seriously impair our business. We are not experienced in
managing facilities or operations in geographically distant areas. Finally, in
connection with any future acquisitions, we may incur debt or issue equity
securities as part or all of the consideration for the acquired company's assets
or capital stock. We may be unable to obtain sufficient additional financing on
favorable terms, or at all. Equity issuances could be dilutive to our existing
stockholders or us.

Executive Officers, Directors and Entities Affiliated with Them Have Substantial
Control over Ashford.com which Could Delay or Prevent a Change in Our Corporate
Control Favored by Our Other Stockholders.

Executive officers, directors and entities affiliated with them, if acting
together, would be able to significantly influence all matters requiring
approval by our stockholders, including the election of directors and the
approval of mergers or other business combination transactions.

It May Be Difficult for a Third Party to Acquire Us Even if Doing So Would Be
Beneficial to Our Stockholders.

Provisions of our certificate of incorporation, our by-laws and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our stockholders. In particular, our certificate of
incorporation provides for a board of directors that is divided into three
classes which may issue preferred stock without any stockholder action. Our
certificate of incorporation also does not allow stockholders to act by written
consent or for cumulative voting in the election of directors. In addition,
Section 203 of the Delaware General Corporation Law places restrictions on
business combinations with interested stockholders.

RISKS RELATED TO OUR INDUSTRY

We Depend on Increasing Use of the Internet and on the Growth of Online
Commerce.

Our future revenues substantially depend upon the increased acceptance and use
of the Internet and other online services as a medium of commerce. Rapid growth
in the use of the Internet, the Web and online services is a recent phenomenon.
As a result, acceptance and use may not continue to develop at historical rates
and a sufficiently broad base of customers may not adopt, and/or continue to
use, the Internet and other online services as a medium of commerce. Demand and
market acceptance for recently introduced services and products over the
Internet are subject to a high level of uncertainty and there exist few proven
services and products.

In addition, the Internet may not be accepted as a viable long-term commercial
marketplace for a number of reasons, including potentially inadequate
development of the necessary network infrastructure or delayed development of
enabling technologies and performance improvements. If the Internet continues to
experience significant expansion in the number of users, frequency of use or
bandwidth requirements, the infrastructure for the Internet may be unable to
support the demands placed upon it. In addition, the Internet could lose its
viability as a commercial medium due to delays in the development or adoption of
new standards and protocols required to handle increased levels of Internet
activity, or due to increased governmental regulation. Changes in, or
insufficient availability of, telecommunications services to support the
Internet also could result in slower response times and adversely affect usage
of the Internet generally.

Our business, financial condition and results of operations would be seriously
harmed if:

o        use of the Internet, the Web and other online services does not
         continue to increase or increases more slowly than expected;

o        the infrastructure for the Internet, the Web and other online services
         does not effectively support expansion that may occur;

o        the Internet, the Web and other online services do not become a viable
         commercial marketplace; or



                                       22
<PAGE>   23

o        traffic to our Web site decreases or fails to increase as expected or
         if we spend more than we expect to attract visitors to our Web site.

If We Are Unable to Acquire the Necessary Web Domain Names, Our Brand and
Reputation Could Be Damaged and We Could Lose Customers.

We may be unable to acquire or maintain Web domain names relating to our brand
in the United States and other countries in which we may conduct business. As a
result, we may be unable to prevent third parties from acquiring and using
domain names relating to our brand, which could damage our brand and reputation
and take customers away from our Web site. We currently hold, among others, the
"Ashford.com," "newwatch.com," "sunglasses.com", "TimeZone.com", "Paris1925.com"
and "Jasmin.com" domain names and may seek to acquire additional domain names.
Governmental agencies and their designees generally regulate the acquisition and
maintenance of domain names. The regulation of domain names in the United States
and in foreign countries is subject to change in the near future. The changes in
the United States are expected to include a transition from the current system
to a system that is controlled by a non-profit corporation and the creation of
additional top-level domains. Governing bodies may establish additional
top-level domains, appoint additional domain name registrars or modify the
requirements for holding domain names.

We May Need to Change the Manner in Which We Conduct Our Business if Government
Regulation Increases.

The adoption or modification of laws or regulations relating to the Internet
could adversely affect the manner in which we currently conduct our business. In
addition, the growth and development of the market for online commerce may lead
to more stringent consumer protection laws, both in the United States and
abroad, that may impose additional burdens on us. Laws and regulations directly
applicable to communications or commerce over the Internet are becoming more
prevalent. The United States Congress recently enacted Internet laws regarding
children's privacy, copyrights, taxation and the transmission of sexually
explicit material. The European Union recently enacted its own privacy
regulations. Laws regulating the Internet, however, remain largely unsettled,
even in areas where there has been some legislative action. It may take years to
determine whether and how existing laws such as those governing intellectual
property, privacy, libel, and taxation apply to the Internet. In order to comply
with new or existing laws regulating online commerce, we may need to modify the
manner in which we do business, which may result in additional expenses. For
instance, we may need to spend time and money revising the process by which we
fulfill customer orders to ensure that each shipment complies with applicable
laws. We may need to hire additional personnel to monitor our compliance with
applicable laws. We may also need to modify our software to further protect our
customers' personal information.

We May Be Subject to Liability for the Internet Content That We Publish.

As a publisher of online content, we face potential liability for defamation,
negligence, copyright, patent or trademark infringement, or other claims based
on the nature and content of materials that we publish or distribute. If we face
liability, then our reputation and our business may suffer. In the past,
plaintiffs have brought these types of claims and sometimes successfully
litigated them against online companies. In addition, we could be exposed to
liability with respect to the unauthorized duplication of content or
unauthorized use of other parties' proprietary technology. Although we carry
general liability insurance, our insurance currently does not cover claims of
these types. We cannot be certain that we will be able to obtain insurance to
cover the claims on reasonable terms or that it will be adequate to indemnify us
for all liability that may be imposed on us. Any imposition of liability that is
not covered by our insurance or is in excess of insurance coverage could
decrease our gross profit.

Our Net Sales Could Decrease if We Become Subject to Sales or Other Taxes.

If one or more states or any foreign country successfully asserts that we should
collect sales or other taxes on the sale of our products, our net sales and
results of operations could be harmed. We do not currently collect sales or
other similar taxes for physical shipments of goods into states other than
Texas. However, one or more local, state or foreign jurisdictions may seek to
impose sales tax collection obligations on us. In addition, any new operation
could subject our shipments in other states to state sales taxes under current
or future laws. If we become obligated to collect sales taxes, we will need to
update our system that processes customer orders to calculate the appropriate
sales tax for each customer order and to remit the collected sales taxes to the
appropriate authorities. These upgrades






                                       23
<PAGE>   24


will increase our operating expenses. In addition, our customers may be
discouraged from purchasing products from us because they have to pay sales tax,
causing our net sales to decrease. As a result, we may need to lower prices to
retain these customers.

RISKS RELATED TO SECURITIES MARKETS

We May Be Unable to Meet Our Future Capital Requirements.

We cannot be certain that financing will be available to us on favorable terms
when required, or at all. If we raise funds through the issuance of equity,
equity-related or debt securities, the securities may have rights, preferences
or privileges senior to those of the rights of our common stock and our
stockholders may experience dilution. We require substantial working capital to
fund our business. Since our inception, we have experienced negative cash flow
from operations and expect to experience significant negative cash flow from
operations for the foreseeable future. We have sufficient funds for our
anticipated needs for working capital and capital expenditures through at least
the next 12 months. After that, we may need to raise additional funds.

Our Common Stock Price May Be Volatile, which Could Result In Substantial Losses
for Individual Stockholders.

The market price for our common stock may become highly volatile and subject to
wide fluctuations in response to factors including the following, some of which
are beyond our control:

o        actual or anticipated variations in our quarterly operating results;

o        announcements of technological innovations or new products or services
         by us or our competitors;

o        changes in financial estimates by securities analysts;

o        conditions or trends in the Internet and/or online commerce industries;

o        changes in the economic performance and/or market valuations of other
         Internet, online commerce or retail companies;

o        announcements by us or our competitors of significant acquisitions,
         strategic partnerships, joint ventures or capital commitments;

o        additions or departures of key personnel;

o        release of lock-up or other transfer restrictions on our outstanding
         shares of common stock or sales of additional shares of common stock;
         and

o        potential litigation.

In addition, the stock market has from time to time experienced extreme price
and volume fluctuations. These broad market fluctuations may adversely affect
the market price of our common stock.

If Our Stock Price Becomes Volatile, We Could Face a Securities Class Action
Lawsuit.

In the past, following periods of volatility in the market price of their stock,
many companies have been the subject of securities class action litigation. If
we were sued in a securities class action, it could result in substantial costs
and a diversion of management's attention and resources and would cause our
stock price to fall.




                                       24
<PAGE>   25

30,614,429, Or 69%, of Our Total Outstanding Shares is Restricted from Immediate
Resale but May Be Sold into the Market in the Near Future. This Could Cause the
Market Price of Our Common Stock to Drop Significantly, even if Our Business Is
Doing Well.

We have outstanding 44,625,596 shares of common stock. 30,614,429 shares of our
total outstanding shares are available for resale in the public market from time
to time beginning 180 days after September 23, 1999. As restrictions on resale
end, the market price could drop significantly if the holders of these
restricted shares sell them or are perceived by the market as intending to sell
them.

Some Shares in Our Initial Public Offering May Have Been Offered or Sold in
Violation of the Securities Act of 1933.

Prior to the effectiveness of the registration statement covering the shares of
our common stock, Deutsche Banc Alex. Brown provided written materials to
approximately 485 persons that we had designated as potential purchasers of up
to 437,500 shares of common stock in the offering through a directed share
program. These materials may constitute a prospectus that does not meet the
requirements of the Securities Act of 1933.

If the distribution of these materials by Deutsche Banc Alex. Brown did
constitute a violation of the Securities Act of 1933, the recipients of these
materials who purchased common stock in the offering through the directed share
program would have the right, for a period of one year from the date of their
purchase of common stock, to obtain recovery of the consideration paid in
connection with their purchase of common stock or, if they had already sold the
stock, sue us for damages resulting from their purchase of common stock. These
damages could total up to approximately $5.7 million, plus interest, based on
the initial public offering price of $13.00 per share, if these investors seek
recovery or damages after an entire loss of their investment. If this occurs,
our business, results of operations and financial condition would be harmed.



                                       25
<PAGE>   26


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         We are, and from time to time may be, involved in litigation relating
to claims arising out of our ordinary course of business. We believe that there
are no claims or actions pending or threatened against us, the ultimate
disposition of which would materially adversely affect us.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a) Exhibits under Item 601 of Regulation S-K

  Exhibit
   Number         Description

   2.1**          Option Agreement dated August 17, 1999 by and between the
                  Company and Power Reserve, Inc. and Richard E. Paige

   2.2**          Asset Acquisition Agreement dated October 26, 1999 by and
                  between the Company and Power Reserve, Inc.

   2.3**          Asset Acquisition Agreement dated October 26, 1999 by and
                  between the Company and Richard E. Paige

   2.4***         Agreement and Plan of Reorganization dated as of January 14,
                  2000 by and among the Company, Ashford-Jasmin Fragrance
                  Company and Jasmin.com Corporation

   3.1*           Amended and Restated Certificate of Incorporation of the
                  Company

   3.2*           By-laws of the Company

   4.1*           Amended and Restated Investor Rights Agreement, dated July 9,
                  1999, among the Company and the investors and founders named
                  therein

   4.2*           Specimen Certificate of the Company's common stock

   4.3            See Exhibit 3.1 for provisions of the Company's Amended and
                  Restated Certificate of Incorporation defining the rights of
                  the holders of common stock

   4.4            See Exhibit 3.3 for provisions of the Company's By-laws
                  defining the rights of holders of common stock

   10.1*          Form of Indemnification Agreement entered into between the
                  Company and its directors and officers

   10.2*          1998 Stock Incentive Plan

   10.3*          1999 Equity Incentive Plan

   10.4*          1999 Employee Stock Purchase Plan

   10.5*          Watch Merchant Program Advertising and Promotion Agreement
                  dated February 26, 1996 between the Company and Yahoo!, Inc.

   10.6*          Office Lease dated July, 1999 between the Company and Crescent
                  Real Estate Funding III, L.P.

   10.7*          Employment Agreement dated May 10, 1999 between the Company
                  and Kenneth E. Kurtzman

   10.8*          Employment Agreement dated November 28, 1998 between the
                  Company and James H. Whitcomb Jr.

   10.9*          Fashion Accessories Program Advertising and Promotion
                  Agreement dated August 11, 1999 between the Company and
                  Yahoo!, Inc.

   10.10*         Advertising Agreement dated July 30, 1999 between the Company
                  and America Online, Inc.

   10.11*         Credit Agreement dated August 9, 1999 between the Company and
                  Chase Bank of Texas, National Association

   10.12****      Stock Purchase Agreement dated as of November 29, 1999 by and
                  among the Company, Amazon.com, Inc. and Amazon.com Advertising
                  Services NV, Inc.

   23.2*          Consent of Gunderson Dettmer Stough Villeneuve Franklin &
                  Hachigian, LLP, counsel to the Company

   24.1*          Power of Attorney

   27.1*          Financial Data Schedule




                                       26
<PAGE>   27

*      Incorporated by reference to the Company's Registration Statement on Form
       S-1 (File No. 333-82759).

**     Incorporated by reference to the Company's Current Report on Form 8-K/A
       filed on November 12, 1999.

***    Incorporated by reference to the Company's Current Report on Form 8-K/A
       filed on February 1, 1999.

****   Incorporated by reference to the Company's Current Report on Form 8-K
       filed on December 15, 1999.

             (b) Reports on Form 8-K

                 Report on Form 8-K/A filed on November 12, 1999 containing (i)
the Option Agreement dated August 17, 1999 between the Company and Power
Reserve, Inc. and Richard E. Paige, (ii) the Asset Acquisition Agreement date
October 26, 1999 between the Company and Power Reserve, Inc., (iii) the Asset
Acquisition Agreement dated October 26, 1999 between the Company and Richard E.
Paige and text of press release dated October 27, 1999, announcing that the
Company acquired the TimeZone.com and paris1925.com Internet domain names as
well as the related trademarks and content in exchange for $940,000 cash and
332,500 shares of the Company 's common stock.

                 Report on Form 8-K filed on December 15, 1999 containing (i)
the Stock Purchase Agreement dated as of November 29, 1999 by and among the
Company, Amazon.com, Inc. and Amazon.com Advertising Services NV, Inc. (together
"Amazon") and (ii) the text of press release dated December 1, 1999, announcing
that the Company had entered into a marketing initiative and a strategic
alliance with Amazon and that Amazon had made a minority investment in the
Company.


                                       27
<PAGE>   28


                                   SIGNATURES


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

Date: February 14, 2000                   ASHFORD.COM, INC.



                                          By: /s/ David F. Gow
                                              ----------------------------------
                                              David F. Gow
                                              Chief Financial Officer




                                       28

<PAGE>   29



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

   EXHIBIT
   NUMBER         DESCRIPTION
   -------        -----------

<S>               <C>
   2.1**          Option Agreement dated August 17, 1999 by and between the
                  Company and Power Reserve, Inc. and Richard E. Paige

   2.2**          Asset Acquisition Agreement dated October 26, 1999 by and
                  between the Company and Power Reserve, Inc.

   2.3**          Asset Acquisition Agreement dated October 26, 1999 by and
                  between the Company and Richard E. Paige

   2.4***         Agreement and Plan of Reorganization dated as of January 14,
                  2000 by and among the Company, Ashford-Jasmin Fragrance
                  Company and Jasmin.com Corporation

   3.1*           Amended and Restated Certificate of Incorporation of the
                  Company

   3.2*           By-laws of the Company

   4.1*           Amended and Restated Investor Rights Agreement, dated July 9,
                  1999, among the Company and the investors and founders named
                  therein

   4.2*           Specimen Certificate of the Company's common stock

   4.3            See Exhibit 3.1 for provisions of the Company's Amended and
                  Restated Certificate of Incorporation defining the rights of
                  the holders of common stock

   4.4            See Exhibit 3.3 for provisions of the Company's By-laws
                  defining the rights of holders of common stock

   10.1*          Form of Indemnification Agreement entered into between the
                  Company and its directors and officers

   10.2*          1998 Stock Incentive Plan

   10.3*          1999 Equity Incentive Plan

   10.4*          1999 Employee Stock Purchase Plan

   10.5*          Watch Merchant Program Advertising and Promotion Agreement
                  dated February 26, 1996 between the Company and Yahoo!, Inc.

   10.6*          Office Lease dated July, 1999 between the Company and Crescent
                  Real Estate Funding III, L.P.

   10.7*          Employment Agreement dated May 10, 1999 between the Company
                  and Kenneth E. Kurtzman

   10.8*          Employment Agreement dated November 28, 1998 between the
                  Company and James H. Whitcomb Jr.

   10.9*          Fashion Accessories Program Advertising and Promotion
                  Agreement dated August 11, 1999 between the Company and
                  Yahoo!, Inc.

   10.10*         Advertising Agreement dated July 30, 1999 between the Company
                  and America Online, Inc.

   10.11*         Credit Agreement dated August 9, 1999 between the Company and
                  Chase Bank of Texas, National Association

   10.12****      Stock Purchase Agreement dated as of November 29, 1999 by and
                  among the Company, Amazon.com, Inc. and Amazon.com Advertising
                  Services NV, Inc.

   23.2*          Consent of Gunderson Dettmer Stough Villeneuve Franklin &
                  Hachigian, LLP, counsel to the Company

   24.1*          Power of Attorney

   27.1*          Financial Data Schedule
</TABLE>


*      Incorporated by reference to the Company's Registration Statement on Form
       S-1 (File No. 333-82759).

**     Incorporated by reference to the Company's Current Report on Form 8-K/A
       filed on November 12, 1999.

***    Incorporated by reference to the Company's Current Report on Form 8-K/A
       filed on February 1, 1999.

****   Incorporated by reference to the Company's Current Report on Form 8-K
       filed on December 15, 1999.