Exhibit 99.1

MB Hospitality (AUSAP), LP

Financial Statements

December 31, 2016 and 2015

MB Hospitality (AUSAP), LP

December 31, 2016 and 2015

Table of Contents

	Page(s)
Independent Auditors’ Report	1
Balance Sheets	2
Statements of Operations	3
Statements of Partners’ Capital	4
Statements of Cash Flows	5
Notes to Financial Statements	6-10

INDEPENDENT AUDITORS’ REPORT

To the Partners of

    MB Hospitality (AUSAP), LP

We have audited the accompanying financial statements of MB Hospitality (AUSAP), LP (a Texas limited partnership), which comprise the balance sheets as of December 31, 2016 and 2015, and the related statements of operations, partners’ capital, and cash flows for the year ended December 31, 2016 and for the period from inception (January 22, 2015) through December 31, 2015, and the related notes to financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MB Hospitality (AUSAP), LP as of December 31, 2016 and 2015, and the results of its operations and its cash flows for year ended December 31, 2016 and for the period from inception (January 22, 2015) through December 31, 2015, in accordance with U.S. generally accepted accounting principles.

/s/ Pannell Kerr Forster of Texas, P.C.

August 25, 2017

MB Hospitality (AUSAP), LP

Balance Sheets

	December 31,
	2016			2015
Assets
Current assets
Cash and cash equivalents	$	1,059,059		$	—
Accounts receivable		43,782			—
Prepaid expenses and other current assets		24,538			—
Total current assets		1,127,379			—
Property and equipment
Land and land improvements		1,756,813			—
Buildings and improvements		10,861,808			—
Furniture, fixtures and equipment		2,099,589			—
Computer, software and equipment		1,987			—
Construction in process		—			6,452,296
		14,720,197			6,452,296
Less accumulated depreciation		(249,039	)		—
Property and equipment, net		14,471,158			6,452,296
Other assets, net of accumulated amortization		73,437			—
Total assets	$	15,671,974		$	6,452,296
Liabilities and Partners’ Capital
Current liabilities
Accounts payable	$	174,513		$	953,547
Due to affiliate		15,681			31,928
Accrued expenses and other liabilities		219,621			—
Total current liabilities		409,815			985,475
Note payable		10,539,688			449,840
Total liabilities		10,949,503			1,435,315
Commitment and contingencies
Partners’ capital
Limited partners’ capital		4,721,999			5,016,479
General partners’ capital		472			502
Total partners’ capital		4,722,471			5,016,981
Total liabilities and partners’ equity	$	15,671,974		$	6,452,296

See accompanying notes to financial statements.    

2

MB Hospitality (AUSAP), LP

Statements of Operations

				Period from
				Inception
				(January 22,
	Year Ended			2015) to
	December 31,			December 31,
	2016			2015
Revenues
Rooms	$	1,432,484		$	—
Other		25,512			—
Total revenues		1,457,996			—
Costs and expenses
Rooms		339,621			—
General and administrative		663,452			—
Advertising and marketing		44,467			—
Repairs and maintenance		15,289			—
Utilities		67,449			—
Property taxes and insurance		120,835			—
Management fee and owners’ expense		58,442			—
Information and telecommunication systems		20,233			—
Other expenses		4,355			—
Total costs and expenses		1,334,143			—
Operating income		123,853			—
Interest expense		167,761			18,269
Depreciation and amortization		250,602			—
Net loss	$	(294,510	)	$	(18,269	)

See accompanying notes to financial statements.

3

MB Hospitality (AUSAP), LP

Statements of Partners’ Capital

For the Year Ended December 31, 2016 and Period from

Inception (January 22, 2015) to December 31, 2015

	General Partner			Limited Partners			Total
Balance, January 22, 2015	$	—		$	—		$	—
Contributions		504			5,034,746			5,035,250
Net loss		(2	)		(18,267	)		(18,269	)
Balance, December 31, 2015		502			5,016,479			5,016,981
Net loss		(30	)		(294,480	)		(294,510	)
Balance, December 31, 2016	$	472		$	4,721,999		$	4,722,471

See accompanying notes to financial statements.

4

MB Hospitality (AUSAP), LP

Statements of Cash Flows

				Period from
				Inception
				(January 22,
	Year Ended			2015) to
	December 31,			December 31,
	2016			2015
Cash flows from operating activities:
Net loss	$	(294,510	)	$	(18,269	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		249,039			—
Amortization of deferred financing costs		29,375			18,269
Amortization of deferred franchise fees		1,563			—
Changes in operating assets and liabilities:
Accounts receivable		(43,782	)		—
Prepaid expenses and other current assets		(24,538	)		—
Other assets		(75,000	)		—
Accounts payable		174,513			—
Due to affiliate		(16,247	)		31,928
Accrued expenses and other liabilities		219,621			—
Net cash provided by operating activities		220,034			31,928
Cash flows from investing activities:
Purchase of property and equipment		(9,221,448	)		(5,498,749	)
Net cash used in investing activities		(9,221,448	)		(5,498,749	)
Cash flows from financing activities:
Contributions from partners		—			5,035,250
Deferred financing costs		—			(88,125	)
Proceeds from note payable		10,060,473			519,696
Net cash provided by financing activities		10,060,473			5,466,821
Net increase in cash and cash equivalents		1,059,059			—
Cash and equivalents at beginning of period		—			—
Cash and equivalents at end of period	$	1,059,059		$	—
Supplemental disclosure of cash flow information:
Cash paid for interest	$	243,196		$	—

See accompanying notes to financial statements.    

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MB Hospitality (AUSAP), LP

Notes to Financial Statements

December 31, 2016 and 2015

Note 1 - Summary of Significant Accounting Policies

Description of business

MB Hospitality (AUSAP), LP (“the Partnership”) a Texas limited partnership, was formed on May 27, 2014. The Partnership was formed to develop, own and operate a hotel in Austin, Texas, consisting of 120 guest rooms and related amenities and facilities. The hotel opened on August 3, 2016.

Organization

The Partnership’s ownership structure is comprised of a General Partner with a 0.01% interest and two Limited Partners with 4.99% and 95.00% interests. Profit and losses are allocated proportionally to the partners based on their respective capital percentages. The partnership agreement has a term lasting until December 31, 2064, unless sooner dissolved in accordance with the agreement.

Cash equivalents

For purposes of the statements of cash flows, the Partnership considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

Reserve and escrow accounts

The Partnership’s reserve and escrow accounts consists of escrow deposits to be used for future improvements to the property and for property and insurance tax payments.

Property and equipment

Property and equipment are stated at cost. Depreciation is calculated on the straight-line method based upon the estimated useful lives of the assets as follows:

	Useful Lives
Building		39 years
Land improvements		15 years
Computer software and equipment		5 years
Furniture, fixtures and equipment		7 years

Improvements that extend the life of the asset are capitalized. Maintenance and repairs are charged to expense as incurred.

The Partnership reviews its properties whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable through operations. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value. The Partnership does not believe that any such changes have occurred and as such there were no impairment losses recorded in 2016 or 2015.

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MB Hospitality (AUSAP), LP

Notes to Financial Statements

December 31, 2016 and 2015

Note 1 - Summary of Significant Accounting Policies (Continued)

Accounts receivable

Accounts receivable consist of unbilled hotel guest charges for guests staying at the hotel at year-end and corporate account customer charges from various times throughout the year. The Partnership estimates an allowance for doubtful accounts based on historical activity, with no allowance deemed necessary as of December 31, 2016 and 2015.

Deferred franchise fees

Deferred franchise fees represent the initial fees to obtain the right to operate the hotel under the System Hotel name. Deferred franchise fees are amortized on a straight-line basis from the date the hotel opened for business through the expiration date of the franchise agreement. Unamortized deferred franchise fees are included in other assets on the accompanying balance sheets.

Deferred financing costs

Deferred financing costs are those costs incurred in connection with obtaining a note payable and is amortized to interest expense, on a straight-line basis, which approximates the interest method, over the term of the note payable. Deferred financing costs are presented as a direct deduction from the carrying value of the associated note payable.

Income taxes

The Partnership is organized as a Texas limited partnership and therefore, income and losses are reported in the tax returns of the Partners.

The Partnership is subject to Texas state margin tax, and accordingly, the financial statements for the years ended December 31, 2016 and 2015 include a tax provision for Texas state margin tax of $7,650 and $0, respectively.

The Partnership recognizes in the financial statements the impact of an uncertain tax position only if that position is more likely than not of being sustained upon examination by the taxing authority. Should the Partnership be subject to examination by the taxing authority, any adjustments required would be passed through to the Partners for their share of such adjustments.

Revenue recognition

Revenues are recognized when services have been performed, generally at the time of the hotel stay or at the point of sale.

Advertising

Advertising costs are expensed as incurred. Advertising expense was $44,467 and $0 for the years ended December 31, 2016 and 2015, respectively, which is included in advertising and marketing on the accompanying statements of operations.

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MB Hospitality (AUSAP), LP

Notes to Financial Statements

December 31, 2016 and 2015

Note 1 - Summary of Significant Accounting Policies (Continued)

Use of estimates

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

Concentrations of credit risk

The Partnership operates one hotel. Future operations could be affected by economic or other conditions in its geographical area or by changes in the travel and tourism industry.

Financial instruments which potentially subject the Partnership to concentrations of credit risk are primarily cash and cash equivalents and trade receivables. The Partnership maintains cash accounts in major U.S. financial institutions. The balances of these accounts occasionally exceed the federally insured limits, although no losses have been incurred in connection with such cash balances. Any losses incurred in connection with accounts receivable are immaterial and considered a normal cost of operations.

Recent accounting pronouncement

In April 2015, the Financial Accounting Standards Board issued new guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt. The new guidance does not affect the recognition and measurement of debt issuance costs. Therefore, the amortization of such costs will continue to be calculated using the interest method and be reported as interest expense. The new guidance is effective for financial statements issued in fiscal years beginning after December 15, 2015, and will be applied on a retrospective basis. Early adoption is permitted for financial statements that have not been previously issued. The Partnership’s adoption of this guidance did not have a material impact on the Partnership’s financial statements, other than balance sheet reclassifications.

Derivative financial instruments

On December 28, 2016, the Partnership entered into a 4.865% LIBOR interest rate swap agreement. This swap agreement has an initial notional amount of $7,950,000 with a declining balance which expires on December 1, 2019. As of December 31, 2016, there was no change in the fair value of the derivative and therefore no realized or unrealized gain or loss have been recorded on the interest rate swaps. The initial payment will commence on February 1, 2017.

The Partnership has not designated these interest rate derivative contracts as cash flow hedges, and as such, any changes in fair value of these derivatives will be recognized currently in earnings.

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MB Hospitality (AUSAP), LP

Notes to Financial Statements

December 31, 2016 and 2015

Note 2 - Note Payable to Financial Institution

Effective May 19, 2015, the Partnership entered into a promissory note with a financial institution that allows for draws up to $11,750,000 upon certain milestones. The note matures on May 19, 2018 with interest payments due monthly and principal and any accrued but unpaid interest due at maturity. Upon the maturity date of the note, the Partnership has the option to extend the note three separate times for a period of one year increments. The note is secured by the hotel and partners’ guarantees. Interest accrues at a rate of LIBOR plus 3% per annum. As of December 31, 2016, the interest rate was 3.77%.

For the year ended December 31, 2016, the Partnership capitalized $106,372 of interest from the note payable related to the construction of the hotel.

In connection with the note payable, the Partnership incurred deferred financing costs of $88,125. The Partnership recorded $29,375 and $18,269 of interest expense related to the deferred financing costs on the note payable for the years ended December 31, 2016 and 2015, respectively.

Long-term debt at December 31, 2016 and 2015 consisted of the following:

	2016			2015
Note payable to financial institution	$	10,580,169		$	519,696
Less: unamortized debt financing cost		(40,481	)		(69,856	)
Note payable, less unamortized debt financing cost	$	10,539,688		$	449,840

The following is a schedule by year of maturities of the long-term note payable at December 31, 2016:

Year Ended
December 31,
2017	$	—
2018		10,580,169
Total	$	10,580,169

Note 3 - Related Party Transactions

For the years ended December 31, 2016 and 2015, the Partnership incurred $21,916 and $0, respectively, in asset management fees, to a related party for hotel management functions. The asset management fee is calculated based on 1.5% of gross revenue. As of December 31, 2016 and 2015, the Partnership has accounts payable to a related party of $15,681 and $31,928, respectively.

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MB Hospitality (AUSAP), LP

Notes to Financial Statements

December 31, 2016 and 2015

Note 4 - Subsequent Events

Subsequent to year end, the Partnership received a letter of intent for the purchase of the hotel from a public company. There is a due diligence period of 45 days with closing set to occur 30 days after the due diligence period.

The Partnership has evaluated subsequent events through August 25, 2017, which is the date the financial statements were available to be issued and has determined that there are no other items that require disclosure.

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