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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 JUNE 30, 2000

                                       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 of          (I.R.S. Employer
           incorporation or organization)       Identification Number)



                        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    [X]        No    [ ]

      As of June 30, 2000, there were 45,253,335 shares of the Company's common
stock outstanding.


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<PAGE>
                                ASHFORD.COM, INC.

                                    FORM 10-Q

                                      INDEX



PART I.    CONSOLIDATED FINANCIAL INFORMATION                               PAGE
                                                                            ----

ITEM 1.    Consolidated Financial Statements................................  3

           Consolidated Balance Sheets at June 30, 2000 and
              March 31, 2000................................................  3

           Consolidated Statements of Operations for the three
              months ended June 30, 2000 and 1999 ..........................  4

           Consolidated Statements of Cash Flows for the three
              months ended June 30, 2000 and 1999 ..........................  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....... 11


PART II.   OTHER INFORMATION

ITEM 1.    Legal Proceedings...............................................  22

ITEM 4.    Submission of Matters to a Vote of Security Holders.............  22

ITEM 6.    Exhibits and Reports on Form 8-K................................  22

SIGNATURES ................................................................  23

                                        2
<PAGE>
PART I.     CONSOLIDATED FINANCIAL INFORMATION

ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS

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

                                                        JUNE 30,      MARCH 31,
                                                          2000           2000
                                                       ---------      ---------
                                                      (Unaudited)
ASSETS
Current assets:
  Cash and cash equivalents ........................   $  38,141      $  46,474
  Certificates of deposit ..........................         120            120
  Accounts receivable, net of allowance
    for doubtful accounts of $170 and
    $25, respectively ..............................       3,012          4,527
  Merchandise inventory ............................      21,931         24,205
  Prepaids and other ...............................      56,092         79,793
                                                       ---------      ---------
    Total current assets ...........................     119,296        155,119

Property and equipment, net of
  accumulated depreciation of
  $2,111 and $1,159, respectively ..................       9,032          7,837
Purchased intangibles, net of
  accumulated amortization of
  $3,841 and $2,141, respectively ..................       9,740         11,365
Other assets .......................................       2,572          3,287
                                                       ---------      ---------
Total assets .......................................   $ 140,640      $ 177,608
                                                       =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued
    liabilities ....................................   $   6,620      $   6,221

Other long-term liabilities ........................         118            117

Commitments and contingencies

Stockholders' equity:
Preferred stock, $.001 par value,
  10,000,000 shares authorized, no
  shares issued and outstanding at June 30,
  2000 and March 31, 2000, respectively ............        --             --
Common stock, $.001 par value, 54,150,000
  shares authorized, 45,253,335 and
  44,956,224 shares issued and outstanding at
  June 30, 2000 and March 31, 2000, respectively ...          45             45
Additional paid-in capital .........................     261,384        260,563
Subscriptions receivable ...........................      (1,156)          (780)
Deferred compensation ..............................     (13,943)       (15,232)
Accumulated deficit ................................    (112,428)       (73,326)
                                                       ---------      ---------
  Total stockholders' equity .......................     133,902        171,270
                                                       ---------      ---------
Total liabilities and stockholders' equity .........   $ 140,640      $ 177,608
                                                       =========      =========

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

                                        3
<PAGE>
                                ASHFORD.COM, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (Unaudited)

                                                           THREE MONTHS ENDED
                                                                 JUNE 30,
                                                         ----------------------
                                                           2000          1999
                                                         --------      --------

Net sales ..........................................     $ 13,105      $  3,623
Cost of sales ......................................       10,666         3,003
                                                         --------      --------
Gross profit (1) ...................................        2,439           620
Operating expenses:
  Marketing and sales ..............................        7,817         2,394
  General and administrative .......................        5,901         1,053
  Depreciation and amortization ....................       28,508           653
                                                         --------      --------
    Total operating expenses .......................       42,226         4,100
                                                         --------      --------
Loss from operations ...............................      (39,787)       (3,480)
Interest income, net ...............................          685           302
                                                         --------      --------
Net loss ...........................................     $(39,102)     $ (3,178)
                                                         ========      ========

Net loss per share, basic and diluted ..............     $  (0.87)     $  (0.27)
                                                         ========      ========
Pro forma net loss per share, basic and
 diluted (3) .......................................     $  (0.87)     $  (0.12)
                                                         ========      ========
Shares used to compute net loss per share:
  Basic and diluted (2) ............................       45,099        11,604
  Pro forma basic and diluted (3) ..................       45,099        26,995


(1) Includes the reclassification of certain promotional costs from marketing
    and sales to cost of sales related to the adoption of the Emerging Issues
    Task Force Issue No. 00-14, "Accounting for Certain Sales Incentives." All
    periods presented have been reclassified for consistent presentation.

(2) Includes shares associated with the conversion of preferred stock into
    common stock as of the closing of the Company's initial public offering on
    September 22, 1999.

(3) Includes shares associated with the conversion of preferred stock into
    common stock as if the conversion occurred on April 1, 1998, or at the date
    of original issuance, if later.

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

                                        4
<PAGE>
                                ASHFORD.COM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                                                           THREE MONTHS ENDED
                                                                 JUNE 30,
                                                         ----------------------
                                                           2000          1999
                                                         --------      --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ...........................................     $(39,102)     $ (3,178)
Adjustments to reconcile net loss to net
  cash used in operating activities:
  Depreciation and amortization ....................       28,508           653
  Changes in assets and liabilities:
    Accounts receivable ............................        1,666           (42)
    Merchandise inventory ..........................        2,274        (2,973)
    Prepaids and other .............................           31            38
    Other assets ...................................          (63)          (38)
    Accounts payable and accrued liabilities .......        1,154           385
                                                         --------      --------
      Net cash used in operating activities ........       (5,532)       (5,155)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment ..............       (2,741)         (337)
  Internet domain and other intangible
    asset purchases ................................          (60)         --
                                                         --------      --------
      Net cash used in investing activities ........       (2,801)         (337)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of Series B preferred stock .............         --          29,100
                                                         --------      --------
      Net cash provided by financing activities ....         --          29,100
                                                         --------      --------
  Net (decrease) increase in cash and
    cash equivalents ...............................       (8,333)       23,608
CASH AND CASH EQUIVALENTS:
  Beginning of period ..............................       46,474           893
                                                         --------      --------
  End of period ....................................     $ 38,141      $ 24,501
                                                         ========      ========

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

                                        5
<PAGE>
                                ASHFORD.COM, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    UNAUDITED INTERIM FINANCIAL INFORMATION

        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 Annual Report on Form 10-K for the year ended
    March 31, 2000. Results for the three months ended June 30, 2000 are not
    necessarily indicative of the results that may be expected for any future
    quarter or for the year ending March 31, 2001.

    USE OF ESTIMATES

        The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities at
    the date of the financial statements and the reported amounts of revenues
    and expenses during the reporting period. Actual results could differ from
    those estimates.

    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 Company's convertible
    preferred stock automatically converted into common stock effective upon the
    closing of the Company's initial public offering on September 22, 1999 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.

                                        6
<PAGE>
        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):

                                                          THREE MONTHS ENDED
                                                                JUNE 30,
                                                       ------------------------
                                                         2000            1999
                                                       --------        --------
Numerator:
  Net loss ......................................      $(39,102)       $ (3,178)
                                                       ========        ========
Denominator:
  Weighted average shares .......................        45,099          11,604
                                                       --------        --------
  Denominator for basic and diluted
   calculation ..................................        45,099          11,604
  Series A convertible preferred stock ..........          --             9,500
  Series B convertible preferred stock ..........          --             5,891
  Denominator for pro forma
   calculation ..................................        45,099          26,995
                                                       ========        ========

Net loss per share, basic and diluted ...........      $  (0.87)       $  (0.27)
                                                       ========        ========
Pro forma net loss per share, basic
 and diluted ....................................      $  (0.87)       $  (0.12)
                                                       ========        ========

    RECENT ACCOUNTING PRONOUNCEMENTS

        In May 2000, the Emerging Issues Task Force released Issue No. 00-14
    (EITF 00-14) "Accounting for Certain Sales Incentives," which provides
    guidance on the accounting for certain sales incentives offered by companies
    to their customers such as discounts, coupons, rebates and free products or
    services. EITF 00-14 addresses the recognition, measurement and income
    statement classification for sales incentives offered voluntarily by a
    vendor without charge to customers that can be used in, or that are
    exercisable by a customer as a result of a single exchange transaction. The
    accompanying financial statements include the reclassification of free
    product and service incentives delivered to customers at the time of sale,
    from marketing and sales to cost of sales, related to the adoption of EITF
    00-14. All periods presented have been reclassified for consistent
    presentation.

        In July 2000, the EITF reached a consensus on EITF 00-10, "Accounting
    for Shipping and Handling Fees and Costs." This consensus requires that all
    amounts billed to a customer in a sale transaction related to shipping and
    handling, if any, represent revenue and should be classified as revenue. The
    Company already classifies shipping charges to customers as revenue. The
    EITF did not reach a consensus with respect to the classification of costs
    related to shipping and handling incurred by the seller. The Company
    classifies inbound and outbound shipping costs as costs of sales. The
    Company does not impose separate handling charges on customers and
    classifies costs attributable to receiving, inspecting and warehousing
    inventories and picking, packaging and preparing customers' orders for
    shipment as marketing and sales expense.

                                        7
<PAGE>
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 THAT MAY
AFFECT FUTURE RESULTS" SECTION INCLUDED IN OUR ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED MARCH 31, 2000.

OVERVIEW

     We were incorporated on March 6, 1998 and commenced operations and began
offering products for sale on our Web site in April 1998. We initially focused
exclusively on the sale of new and vintage watches. 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.

     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 February,
May and June due to Valentine's Day, graduation gift giving, Mother's Day and
Father's Day. We expect that these trends will continue in future periods.

     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.

     We have incurred net losses since inception. We expect to generate negative
cash flows during future periods as we pursue marketing and advertising
campaigns to attract new customers and build our brand identity, develop new
strategic partnerships and invest in new operational and customer service
infrastructure. Our ability to become profitable depends on our ability to
generate and sustain substantially higher net sales while maintaining reasonable
expense levels, both of which are uncertain. 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.

     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 and could limit or delay our ability to generate net
profits in any future period.

                                        8
<PAGE>
RESULTS OF OPERATIONS

NET SALES

     Net sales consist primarily of product sales and are net of product returns
and promotional discounts. Net sales increased from $3.6 million during the
quarter ended June 30, 1999 to $13.1 million during the quarter ended June 30,
2000. The growth in net sales is primarily related to an increase in units sold
due to the growth of the our customer base, repeat purchases from existing
customers and the introduction of new product lines during the latter part of
fiscal 2000.

COST OF SALES

     Cost of sales consists primarily of the cost of products sold, free product
and service incentives delivered to customers at the time of sale, inbound and
outbound shipping costs and warranty and inventory obsolescence costs. Cost of
sales increased as net sales increased. Gross profit increased from $620,000 to
$2.4 million during the quarter ended June 30, 2000 compared to the quarter
ended June 30, 1999. Gross margin increased from 17.1% during the quarter ended
June 30, 1999 to 18.6% during the quarter ended June 30, 2000. The increase in
gross margin is principally due to the addition of new product categories during
the latter part of fiscal 2000 and the shift in the mix of products sold. See
Recent Accounting Pronouncements.

OPERATING EXPENSES

     MARKETING AND SALES. Marketing and sales expenses consist primarily of
advertising costs, credit card fees, fulfillment activities and related employee
salary and benefit expenses. Fulfillment activities include receiving of goods,
picking of goods for shipment and packaging of goods for shipment. Marketing and
sales expenses increased from approximately $2.4 million during the quarter
ended June 30, 1999 to $7.8 million for the quarter ended June 30, 2000. The
increase in marketing and sales is primarily attributable to advertising and
promotional expenditures and increased payroll and related costs associated with
fulfilling customer demand. Our advertising and promotional expenditures are
intended to build brand awareness, generate site traffic and increase overall
sales. See Recent Accounting Pronouncements.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses include
executive, finance and administrative employee salaries and benefits,
professional fees, Web site maintenance, office lease expenses and other general
corporate expenses. General and administrative expenses increased to $5.9
million during the quarter ended June 30, 2000 compared to $1.1 million during
the quarter ended June 30, 1999. The increase in general and administrative
expenses is primarily a result of expenses associated with increased headcount,
new office space and professional fees related to our overall growth and
expanded activities.

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
includes depreciation related to property and equipment and amortization related
to deferred compensation, distribution and marketing agreements and certain
other intangible assets. Depreciation and amortization expense was $28.5 million
during the quarter ended June 30, 2000 compared to $653,000 during the quarter
ended June 30, 1999. The increase is partially due to the amortization of
Internet domain and other intangible asset purchases and distribution and
marketing agreements entered into during the latter part of fiscal 2000, coupled
with costs associated with technology equipment purchases beginning in the
latter half of fiscal 1999 and continuing through the current quarter.

     INTEREST INCOME, NET. Interest income, net consists of earnings on cash and
cash equivalents net of interest expense on borrowings. The increase during the
quarter ended June 30, 2000 compared to the corresponding period in the prior
year is due to interest earned on cash balances resulting from our sales of
preferred stock in April 1999 and July 1999, and interest earned on cash
balances resulting from our initial public offering in late September 1999.

LIQUIDITY AND CAPITAL RESOURCES

     GENERAL. We have financed our operations primarily through private sales of
convertible preferred stock, an initial public offering and the private sale of
our common stock. The proceeds from these offerings have

                                        9
<PAGE>
generally been used to fund our operations, including inventory purchases,
marketing and advertising campaigns, employee salaries and equipment purchases.

     OPERATING ACTIVITIES. Net cash used in operating activities totaled $5.5
million during the quarter ended June 30, 2000 compared to $5.2 million during
the quarter ended June 30, 1999. Our net operating cash outflow for both periods
was primarily a result of operating losses, exclusive of depreciation and
amortization.

     INVESTING ACTIVITIES. Net cash used in investing activities totaled $2.8
million during the quarter ended June 30, 2000 compared to $337,000 during the
quarter ended June 30, 1999. Net cash used in investing activities for both
periods consisted of property and equipment purchases primarily associated with
technology and Web site enhancements.

     FINANCING ACTIVITIES. There was no cash flow from financing activities
during the quarter ended June 30, 2000. Net cash provided by financing
activities of $29.1 million during the quarter ended June 30, 1999 related to
the issuance of preferred stock in April 1999.

     COMMITMENTS. As of June 30, 2000, our principal commitments consisted of
obligations outstanding under operating leases and certain marketing and
distribution agreements. Although we have no material commitments for capital
expenditures, we anticipate increases in capital expenditures consistent with
anticipated growth in our operations and infrastructure.

     CREDIT FACILITY. We have a revolving credit agreement with a financial
institution which provides for borrowings of up to $5.0 million. The revolving
credit facility matures in August 2000. During July 2000, we secured a
three-year non-binding commitment from a bank for $25 million in debt financing.
Final closing of the debt financing is expected within thirty days and is
subject to customary closing conditions. While we believe this financing will be
finalized, there is no guarantee that the closing will occur within thirty days,
or at all.

     We believe that current cash balances will be sufficient to meet
anticipated cash needs for at least the next 12 months. However, any projections
of future cash needs and cash flows are subject to substantial uncertainty. If
current cash and cash that may be generated from future operations are
insufficient to satisfy our liquidity requirements, we may seek to sell
additional equity or debt securities or to obtain additional credit facilities
from lenders. There can be no assurance that financing will be available in
amounts or on terms acceptable to us, if at all. Our ability to raise cash
through the sale of additional equity or convertible debt securities may be
difficult depending on market conditions and other factors, and if available
could result in additional dilution to our stockholders. In addition, we will,
from time to time, consider the acquisition of or investment in complementary
businesses, products, services and technologies which might impact our liquidity
requirements or cause us to issue additional equity or debt securities.

RECENT ACCOUNTING PRONOUNCEMENTS

     In May 2000, the Emerging Issues Task Force released Issue No. 00-14 (EITF
00-14) "Accounting for Certain Sales Incentives," which provides guidance on the
accounting for certain sales incentives offered by companies to their customers
such as discounts, coupons, rebates and free products or services. EITF 00-14
addresses the recognition, measurement and income statement classification for
sales incentives offered voluntarily by a vendor without charge to customers
that can be used in, or that are exercisable by a customer as a result of a
single exchange transaction. The accompanying financial statements include the
reclassification of free product and service incentives delivered to customers
at the time of sale, from marketing and sales to cost of sales, related to the
adoption of EITF 00-14. All periods presented have been reclassified for
consistent presentation.

     In July 2000, the EITF reached a consensus on EITF 00-10, "Accounting for
Shipping and Handling Fees and Costs." This consensus requires that all amounts
billed to a customer in a sale transaction related to shipping and handling, if
any, represent revenue and should be classified as revenue. We already classify
shipping charges to customers as revenue. The EITF did not reach a consensus
with respect to the classification of costs related to shipping and handling
incurred by the seller. We classify inbound and outbound shipping costs as costs
of sales. We do not impose separate handling charges on customers and classifies
costs attributable to receiving, inspecting

                                       10
<PAGE>
and warehousing inventories and picking, packaging and preparing customers'
orders for shipment as marketing and sales expense.

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 our control. The following discussion highlights
some of these risks. These risks should be read in conjunction with the "Risk
Factors That May Affect Future Results" section included in our Annual Report on
Form 10-K for the year ended March 31, 2000.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

     The following risk factors and other information included in this Report
should be carefully considered. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks actually occur, our business,
financial condition and operating results could be materially adversely
affected.

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 and began selling products on our Web
site in April 1998. 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 negative cash flow during future periods. 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 continued development of our Web site, the systems and staff that
    process customer orders and payments, and our computer network;

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

                                       11
<PAGE>
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, both of which are uncertain. 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 products we sell, 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 50% and 40% of our net sales for fiscal year 2000 and
1999, respectively, during the fourth calendar quarter primarily due to gift
purchases made during the holiday season and this trend may continue in the
future.

     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

                                       12
<PAGE>
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 DIRECTLY FROM THE
BRAND OWNERS, OUR NET SALES COULD DECREASE.

     A significant portion of our units sold are 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.

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 June 30, 2000, we held approximately $21.9 million of products in
inventory. 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

                                       13
<PAGE>
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.

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. 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 EXPAND OUR ACCOUNTING AND FINANCIAL REPORTING
SYSTEMS, OUR STOCK PRICE COULD DECLINE.

     We are currently 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 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

                                       14
<PAGE>
which could seriously harm our net sales and operating results. In addition, the
luxury goods 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 maintain 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.

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. 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;

                                       15
<PAGE>
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.

     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 four 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 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 expand the computer systems that we

                                       16
<PAGE>
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 upgrade our Web
site or expand these computer systems without system downtime 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.

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

                                       17
<PAGE>
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. We currently have applications outstanding with the United
States Patent and Trademark Office for registration of the trademarks "ASHFORD"
and "Ashford.com" for multiple classes of goods and services. We also have
applications outstanding 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 and services. 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. Our relationships with 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 continue 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, 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.

                                       18
<PAGE>
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

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," "Jasmin.com" and "Ashfordcorporategifts.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

                                       19
<PAGE>
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. 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 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 negative cash flow from operations
in the 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.


                                       20
<PAGE>
     In particular, we have entered into a non-binding agreement with a bank
that would provide us with $25 million in debt financing. The debt financing has
not been finalized and while we believe this financing will close within thirty
days, it remains subject to final negotiations and customary closing conditions.
Furthermore, there is no guarantee that the closing will occur within thirty
days, or at all.

OUR COMMON STOCK PRICE IS VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES FOR
INDIVIDUAL STOCKHOLDERS.

     The trading price of our common stock fluctuates significantly. For
example, since our initial public offering through June 30, 2000, the reported
sale price of our common stock on the Nasdaq National Market was as high as
$24.88 and as low as $2.50. Trading prices of our common stock may fluctuate in
response to a number of events and factors, such as:

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 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.

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 have constituted a prospectus that did 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.

                                       21
<PAGE>
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 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     The Company's annual meeting of stockholders was held on July 27, 2000.

     The following nominees were elected as directors, each to hold office until
the Company's annual meeting to be held in 2003 or until his respective
successor is elected and qualified, by the vote set forth below:

            NOMINEE                         FOR                      WITHHELD
-------------------------------       --------------               ------------
J. Robert Shaw                          41,225,334                    449,841
Robert Cohn                             41,232,984                    442,191

     The proposal to ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending March 31,
2001 was approved by the vote set forth below:

        FOR                          AGAINST                       ABSTAIN
-------------------           -------------------            -------------------
    34,252,425                       11,835                         4,283

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 Investors' 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            Reference is made to Exhibits 3.1 and 3.2

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

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

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

                                       22
<PAGE>
10.8*          Advertising Agreement dated July 30, 1999 between the Company and
               America Online, Inc.

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

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

27.1           Financial Data Schedule

*              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

               None.

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:  August 14, 2000                      ASHFORD.COM, INC.


                                            By: /s/ DAVID F. GOW
                                                    David F. Gow
                                                    Chief Financial Officer

                                       23
<PAGE>
                                  EXHIBIT INDEX

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 Investors' 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           Reference is made to Exhibits 3.1 and 3.2

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

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

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

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

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

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

27.1           Financial Data Schedule

*              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.

                                       24