Form 10-K
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO | ||||
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1886
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Class A common stock, par value $0.01 per share
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
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As of April 1, 2016, there were outstanding 3,016,474 shares of the registrant’s Class A common stock, par value $0.01 per share, and 390,500 sharesRegistrant’s Common Stock outstanding as of the registrant’s Class B common stock, par value $0.01 per share.
March 26, 2021 was 8,296,212.
COMSTOCK HOLDING COMPANIES, INC.
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our ability to service our debt;changes in the real estate markets; inherent risks in investment in real estate; our ability to attract and retain clients; our ability to compete in the markets in which we operate; the market conditions in the markets in which we operate; regulatory actions; fluctuations in operating results; our anticipated growth strategies; shortages and increased costs of labor or building materials; the availability and cost of land in desirable areas; adverse weather conditions and natural disasters; public health emergencies, including potential risks and uncertainties relating to the coronavirus (COVID-19) pandemic; our ability to raise debt and equity capital and grow our operations on a profitable basisbasis; and our continuing relationships with affiliates.Many of these factors are beyond our control. For a discussion of factors that could causediffer, please see the discussionupdate publicly or revise any forward-looking statements in this Annual Report on Form 10-K under the heading “Risk Factors” in Item 1A.light of new information or future events, except as required by law.
Project City Homes at the Hampshires Townes at the Hampshires (3) Estates at Falls Grove Townes at Falls Grove Townes at Shady Grove Metro Townes at Shady Grove Metro (4) Momentum | Shady Grove Metro (5) Estates at Emerald Farms Townes at Maxwell Square Townes at Hallcrest Estates at Leeland Villas | Preserve at Two Rivers 28’ Villas | Preserve at Two Rivers 32’ Estates at Popkins Lane Townes at Richmond Station Richmond Station Multi-family Townes at Totten Mews (6) Marrwood East (7) Total talented employees. lease transactions. consolidated financial statementsConsolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form 10-K.OverviewComstock Holding Companies, Inc., incorporated in 2004 as a Delaware corporation, is a multi-faceted real estate development and services company primarily focused in the Washington, D.C. metropolitan area. We have substantial experience with building a diverse range of products including multi-family, single-family homes, townhouses, mid-rise condominiums, high-rise multi-family condominiums and mixed-use (residential and commercial) developments. References in this Annual Report on Form 10-K to “Comstock,” “Company”, “we,” “our” and “us” refer to Comstock Holding Companies, Inc. together in each case with our subsidiaries and any predecessor entities unless the context suggests otherwise.Available InformationWe make available, as soon as reasonably practicable, on our website,www.comstockhomes.com, all of our reports required to be filed with the Securities and Exchange Commission (SEC). These reports can be found on the “Investor Relations” page of our website under “SEC Filings” and include our annual and quarterly reports on Form 10-K and Form 10-Q (including related filings in XBRL format), current reports on Form 8-K, proxy statements and amendments to such reports. In addition to our SEC filings, our corporate governance documents, including our Code of Ethics for the Chief Executive Officer and senior financial officers and Code of Conduct applicable to all employees and directors are available on the “Investor Relations” page of our website under “Corporate Governance.”Our principal executive offices are located at 1886 Metro Center Drive, 4th Floor, Reston, Virginia 20190 and our telephone number is (703) 883-1700. Information on or linked to our website is not incorporated by reference into this Annual Report on Form 10-K unless expressly noted.Our Operating MarketWe are primarily focused on the Washington, D.C. market (Washington D.C. and the Northern Virginia and Maryland suburbs of Washington D.C.), which is the seventh largest metropolitan statistical area in the United States. Our expertise in developing traditional and non-traditional housing products enables us to focus on a wide range of opportunities within our core market. We build homes and multi-family buildings in suburban communities, where we focus on low density products such as single-family detached homes, townhomes and mid-rise multi-family buildings, and in urban areas, where we focus on high density multi-family and mixed use products. For our homebuilding operations, we develop properties with the intent to sell either as fee-simple properties or condominiums to individual unit buyers or as investment properties to investors. Our homebuilding products are designed to attract first-time, early move-up and secondary move-up buyers. We focus on products that we are able to offer for sale in the middle price points within the markets where we operate, avoiding the very low-end and high-end products. We believe our middle market strategy positions our products such that they are affordable to a significant segment of potential home buyers in our market.Our multi-family buildings are developed as rental properties to be held and operated for our own purposes, converted at some point to for-sale condominium units or sold on a merchant build basis. When developing rental communities, we design our products to be readily convertible to condominiums. Our multi-family communities primarily target two groups: (i) young first time tenants and (ii) renters by choice.We believe that our significant experience over the past 30 years in the Washington, D.C. market provides us with the experience necessary to identify attractive opportunities in our core market. We believe that our focus in the Washington, D.C. market, which has historically been characterized by economic conditions less volatile than many other major homebuilding markets, should provide us with an opportunity to generate attractive returns on investment and for growth.business segments is included in Note 220 to our consolidated financial statements.Our Business StrategyOur business strategyConsolidated Financial Statements.designed to leverage our extensive capabilitiesa developer, operator, and market knowledge to maximize returnsasset manager of mixed-use and transit-oriented development properties in the greater Washington, D.C. metropolitan area, where we focus primarily on invested capital on our variousselect high-growth urban and transitioning “sub-urban” markets. We provide a broad range of real estate asset management services, including development and construction management services, leasing and property management services, debt and equity financing origination, and other real estate related activities.services. Our customers primarily include private and institutional owners and investors in the real estate properties that we manage and various governmental bodies that have a vested interest in public-private partnerships responsible for the development of certain properties that we develop and manage. We execute our strategy through three related business segments:•Homebuilding – We target new homebuilding opportunities where our building experience and ability to manage highly complex entitlement, development and related issues provides us with a competitive advantage.•Multi-family – We seek opportunities in the multi-family rental market where our experience and core capabilities can be leveraged. We will either position the assets for sale to institutional buyers when completed or operate the asset within our own portfolio. Operating the asset for our own account affords us the flexibility of converting the units to condominiums in the future.•Real Estate Services – Our management team has significant experience in all aspects of real estate management, including strategic planning, land development, entitlement, property management, sales and marketing, workout and turnaround strategies, financing and general construction. We are able to provide a wide range of construction management, general contracting and real estate related services to other property owners. This business line not only allows us to generate positive fee income from our highly qualified personnel but also serves as a potential catalyst for joint venture and acquisition opportunities.These business units work in concert to leverage the collective skill setsalso invest capital on behalf of our organization.asset management clients and institutional real estate investors in office, retail, residential and mixed-use properties, generally retaining an economic interest for the Company and providing management services to those properties, thereby enabling the Company to increase its assets under management (“AUM”) in order to realize competitive advantages of scale and enhance our overall returns. The talentCompany also provides additional fee-based real estate services, including corporate planning, capital markets, brokerage, title insurance, design, and experience environmental consulting and engineering services, to properties in the Company’s managed portfolio and to other clients in the U.S. Mid-Atlantic Region.personnel allows workflow flexibilityasset management clients, and fees from additional real estate related services, including environmental consulting and engineering services provided to our managed properties and unrelated third-party clients in the Mid-Atlantic Region.multitasking approachlong-term full service asset management agreement (the “2019 AMA”) with an affiliated company owned by the Company’s Chief Executive Officer, Christopher Clemente, that encompasses the majority of the properties we currently manage, including two of the largest transit-oriented, mixed-use developments in the Washington, DC area: Reston Station, a 5 million square foot transit-oriented, mixed-use development located in Reston, VA, and Loudoun Station, a nearly 2.5 million square foot transit-oriented, mixed-use development in Ashburn, VA, as well as other additional development assets, which together constitute our anchor portfolio (the “Anchor Portfolio”). The 2019 AMA for our Anchor Portfolio is a long-term agreement with an original term of 10 years that provides for significant financial payments to managingComstock in the case of early termination by the asset owner.projects. In a capital constrained environment,recurring asset management fee-based revenue received by the Company, we use creative problem solvingalso generate additional revenue from co-investments with our investment partners in certain property acquisitions and financing approaches by working closely with land owners, banks, borrowersexpect to receive performance-based incentive compensation from assets in our Anchor Portfolio and other partiesassets in an effortour managed portfolio. The Company can earn these incentive-based fees upon the occurrence of certain transaction-related events, including asset acquisitions or dispositions, asset related capital market transactions, leasing, marketing and property management, development and construction management, real title services, and environmental services, and when the performance of a subject property meets defined performance metrics. The co-investment business plans are property specific and therefore vary in expected duration but are generally expected to be between four and seven years; but may be accelerated or extended depending upon market conditions or the strategic objectives of the subject joint venture.value for all constituents.base fees, incentive fees, transaction fees, and profit participation by providing a broad range of real estate asset management services, including development, construction management, leasing and property management services, as well as acquisition and disposition services, employing our substantial experience in entitling, designing, developing, and managing a significant and diverse range of properties included in our Anchor Portfolio, while also co-investing with institutional partners to acquire existing, stabilized properties, which we manage as well. The Company and its management team have been active in the metropolitan Washington, D.C. region since 1985 and in other key U.S. markets, having developed, acquired, and managed large-scale portfolios of real estate assets, including thousands of rental apartments, and millions of square feet of mixed-use properties including office buildings, hotels, commercial garages, transit-oriented developments, and millions of square feet of regional shopping malls, as well as numerous public-private partnership developments that include large-scale public infrastructure improvements. We believe that our management team’s extensive experience in managing such a diverse and extensive portfolio of developments and stabilized assets provides the knowledge base necessary to distinguish our business networkfocus and strategy, which is focused on:provides usin the greater Washington, DC area remains uncertain, we believe that our Anchor Portfolio is well positioned to withstand potential negative impact of the COVID-19 pandemic. We also believe that our management team is properly aligned with a competitive advantage in sourcingthe interests of the Company and executing investment opportunities.Our land acquisition strategyits shareholders and is designedcommitted to maximize potential overall returns generated by homebuilding operations. We pursue land acquisition opportunities that generally fit into three categories:•Finished building lots – Whenever practical, we purchase fully developed building lots from sellers that have secured necessary entitlements and permits and have completed the land development process. This enables us to minimize the amount of land we hold in inventory and to time our acquisition of such lots with the sales of homes to be built on such lots, thereby reducing the hold time and carrying costs associated with holding the lots.•Entitled building lots – We purchase certain development sites after the land seller has secured substantially all entitlements, allowing for prompt development of the land into building lots. This affords us the opportunity to secure building lots in locations where finished building lots are not readily available, or where the price of obtaining finished lots is determined to be unaffordable.•Land options – We contract to purchase certain development sites in advance of entitlements being secured. This affords us the opportunity to design the layout of the building lots to fit our home products, while the land continues to be held by the land seller and minimizes our costs associated with carrying such land in our inventory while development permits are secured.With respect to our homebuilding operations, we seek to minimize risk associated with fluctuating market conditions by primarily building pre-sold units and limiting the numberCompany’s objectives of speculative units or “spec units” (units that are under construction without an executed sales contract) held in inventory. In each new communityproviding exceptional experiences for those that we develop,do business with while enhancing shareholder value. Further, we build model homes to demonstrate our products and to house our on-site sales operations. When practical, we execute sale-leaseback transactions on model homes. We limit building spec units in locations where there is a demand for immediate delivery of homes or where a significant number of the units in a multi-family building (such as townhouses or condominiums) have been pre-sold. We believe that by limiting the number of model homes and spec units held in inventory, we reduce our exposure to cyclical fluctuations in market values and minimize costs associated with holding inventory, such as debt service.Our OperationsWe believe that we are properly staffed for current market conditions and the foreseeable future and that we haveour Company has the ability to manage risk and pursue opportunities for additional growth as market conditions warrant. Our real estate development and management operations are primarily focused mainly inon the greater Washington, D.C. market,region, where we believe our 3030-plus years of market experience provides us the best opportunity to enhance stockholder value.Our CommunitiesWe are currently operating, orcontinue leveraging our significant experience acquiring, developing, projects in multiple countiesand managing high quality real estate assets and capitalizing on positive growth trends, while our environmental consulting and remediation management services business is well positioned to capitalize on opportunities to continue its recent growth throughout the Washington, D.C. market. entire U.S. Mid-Atlantic region.following table summarizes certain information forreal estate asset management and services industry is highly competitive. Our growth will depend upon our owned or controlled communities as of December 31, 2015: Pipeline Report as of December 31, 2015 State Product
Type (1) Estimated
Units at
Completion Units
Settled Backlog (8) Units
Owned
Unsold Units
Under
Control (2) Total Units
Owned,
Unsettled and
Under Control Average
New
Order
Revenue
Per Unit
to Date DC SF 38 37 — 1 — 1 746 DC TH 73 70 2 1 — 3 552 VA SF 19 8 3 8 — 11 537 VA TH 110 57 4 49 — 53 301 MD TH 36 26 — 10 — 10 581 MD SF 3 3 — — — — — MD Condo 110 — — 110 — 110 — MD SF 84 78 — 6 — 6 — MD TH 45 32 9 4 — 13 421 VA TH 42 7 2 33 — 35 467 VA SF 24 — 1 23 — 24 438 MD TH 10 2 — 8 — 8 445 MD TH 10 3 4 3 — 7 509 VA SF 12 — — — 12 12 — VA TH 54 — — — 54 54 — VA MF 104 — — — 104 104 — DC TH 40 — — — 40 40 — VA SF 35 — — — 35 35 — 849 323 25 256 245 526 (1)“SF” means single family home, “TH” means townhouse, “Condo” means condominium and “MF” means multi-family.(2)Under land option purchase contract, not owned.(3)3 of these units areability to attract and maintain the appropriate personnel and to professionally manage the assets subject to statutory affordable dwelling unit program.(4)Units are subject to statutory moderately priced dwelling unit program.(5)16 of these units are subject to statutory moderately priced dwelling unit program.(6)5 of these units are subject to statutory affordable dwelling unit program.(7)1 of these units is subject to statutory affordable dwelling unit program.(8)“Backlog” means we have an executed order with a buyer but the settlement did not occur prior to report date.Northern Virginia MarketTheEstates at Falls Grove and The Townes at Falls Grove projects are located in northern Prince William County near Centreville, Virginia. The properties are being developed as 19 single family homes and 110 condominium townhouses. We are actively selling both the single family homes and the townhomes in this community. As of December 31, 2015, we closed on 8 single family units and 57 townhomes units. At December 31, 2015, there were 3 single family homes and 4 townhomes in backlog.TheTownes at Hallcrest is a community located in Sterling, Virginia. The property is being developed as 42 townhomes. We are actively selling in this community and as of December 31, 2015, we have closed on 7 units and have 2 units in backlog.TheEstates at Leeland is a community located in Fredericksburg, Virginia. The property is being developed as 24 single-family units. We are actively selling in this community and as of December 31, 2015, we have 1 unit in backlog.The Estates at Popkins Laneis a community located in Alexandria, Virginia. The property is under a land option contract and we plan to construct 12 single-family homes on the site starting from the low $800’s. Development is expected to commence in late 2016, and sales activities are anticipated to begin in winter of 2017.The Townes at Richmond Station and Richmond Station Multi-familyare projects located in Prince William County, Virginia. The properties are under land option contract. We plan to construct 54 townhomes and 104 multi-family units on this site. Development is expected to commence in mid-2017.Marrwood Eastis a residential project in Loudoun County, Virginia. We plan to construct 35 single-family homes on the site starting from the $600’s. Construction activity began in the fall of 2015 and sales activities are expected to commence in spring 2016.MarylandThe Estates at Emerald Farms consists of 6 finished single-family lots that we own in a large development of single-family homes in Frederick, Maryland. We anticipate beginning marketing and sales activities on this property in spring 2016.The Townes at Shady Grove Metro and Momentum | Shady Grove are residential projects in Rockville, Maryland, adjacent to the Shady Grove metro rail station. The projects will be developed as 36 upscale townhomes, 3 single-family homes,2019 AMA and 110 luxury condominium units. As of December 31, 2015, we have closed on 26 townhomesother management agreements and 3 single-family units. We are currently developing the land for the condos.TheTownes at Maxwell Square project is located in downtown Frederick, Maryland. The property is being developed as 45 condominium townhomes. We are actively selling in this community. As of December 31, 2015, we have closed on 32 units and have 9 units in backlog.TheVillas | Preserve at Two Rivers 28’ and Villas | Preserve at Two Rivers 32’projects are active adult communities in Anne Arundel County, Maryland. We are constructing a total of 20 villas in these communities. As of December 31, 2015, we have closedto expand our services to new clients on a total of 5 units and have 4 units in backlog.District of ColumbiaTheCity Homes at the Hampshires and The Townes at the Hampshires projects are located in the Northeast quadrant of Washington, D.C. The property has been developed as 111, consisting of 38 single-family homes and 73 townhomes. We are actively selling in this community. As of December 31, 2015, we have closed on 70 townhomes and 37 single-family homes and we had 2 townhome units in backlog at December 21, 2015.TheTownes at Totten Mewsare located in the Northeast quadrant of Washington, D.C. This property is under a land contract option and is being developed as 40 townhomes, located within proximity to a metro rail station just inside the Washington, D.C.-Maryland border. The townhomes will be priced from the high $500’s. Development is expected to commence in spring of 2016 and with construction commencing in late 2016.Land/Lot Acquisition and Inventory ManagementAs discussed in ‘Our Business Strategy’ section above, we acquire land after we have completed due diligence and generally after we have obtained the rights (entitlements) to begin development or construction work resulting in an acceptable number of residential lots. Before we acquire lots or tracts of land, we complete a feasibility study, which includes soil tests, independent environmental studies, other engineering work and financial analysis. We also evaluate the status of necessary zoning and other governmental entitlements required to develop and use the property for home construction.We also enter into land/lot option contracts, in which we obtain the right, but generally not the obligation, to buy land or lots at predetermined prices on a defined schedule commensurate with anticipated home closings or planned development. Our option contracts generally are non-recourse, which limits our financial exposure to our earnest money deposited with land and lot sellers and any pre-acquisition due diligence costs we incur. This enables us to control land and lot positions with limited capital investment in order to substantially reduce the risks associated with land ownership and development.We directly acquire almost all of our land and lot positions. We are a party to a number of joint ventures, all of which are consolidated in our financial statements.We attempt to mitigate our exposure to real estate inventory risks by:Managing our supply of land/lots controlled (owned and optioned) based on anticipated future home closing levels;Monitoring market and demographic trends, housing preferences and related economic developments, based on the quality of schools, new job opportunities and local growth initiatives;Utilizing land/lot option contracts, where possible;Seeking to acquire developed lots which are substantially ready for home construction, where possible;Limiting the size of acquired land parcels to smaller tracts, where possible, and controlling our investments in land acquisition, land development and housing inventory to match the anticipated housing demand;Generally commencing construction of custom features or optional upgrades on homes under contract only after the buyer’s receipt of mortgage approval and receipt of satisfactory deposits from the buyer; andMonitoring and managing the number of speculative units built in each community.Land Development and Home ConstructionSubstantially all of our land development and home construction work is performed by subcontractors. Subcontractors typically are selected after a competitive bidding process and retained for a specific community pursuant to a contract that obligates the subcontractor to complete the scope of work at an agreed-upon price. Agreements with the subcontractors and suppliers generally are negotiated for each community.cost-efficient basis. We compete with other homebuilders for qualified subcontractors, raw materials and lotsbusinesses in the markets where we operate. We employ land development supervisors and construction superintendents to monitor land development and home construction activities, participate in major design and building decisions, coordinate the activities of subcontractors and suppliers, review the work of subcontractors for quality and cost control and monitor compliance with zoning and building codes. In addition, our construction superintendents play a significant role in working with our homebuyers by assisting with option selection and home modification decisions, educating buyers on the construction process and instructing buyers on post-closing home maintenance.Our home designs are selected or prepared in each of our communities to appeal to the tastes and preferences of local homebuyers. We also offer optional interior and exterior features to allow homebuyers the opportunity to enhance the basic home design and to allow us to generate additional revenue from each home sold. Construction time for our homes depends on the weather, availability of labor, materials and supplies, size of the home, and other factors. We typically complete construction of a home within three to six months.We typically do not maintain significant inventories of land development or home construction materials, except for work in progress materials for homes under construction. Generally, the construction materials used in our operations are readily available from numerous sources.Marketing and SalesWe market and sell our homes primarily through commissioned employees. A significant number of our home closings also involve an independent real estate broker representing the buyer. We typically conduct home sales from sales offices and/or furnished model homes in each community. Our sales personnel assist prospective homebuyers by providing floor plans and price information, demonstrating the features and layouts of model homes and assisting with the selection of options and other custom features. We train and inform our sales personnel on the availability of financing, construction schedules, and marketing and advertising plans. As market conditions warrant, to be competitive, we may provide potential homebuyers with one or more of a variety of incentives, including closing cost assistance, discounts and free upgrades.We market our homes and communities to prospective homebuyersasset management and real estate brokers through electronic media, including email, social networking sites and our company website, as well as brochures, flyers, newsletters and promotional events. We also use billboards, radio, magazine and newspaper advertising as necessary. We attempt to position our communities in locations that are desirable to potential homebuyers and convenient to or visible from local traffic patterns, which helps to reduce advertising costs. Model homes play a substantial role in our marketing efforts, and we expend significant effort and resources to create an attractive atmosphere in our model homes.We manage inventory to build a limited number of speculative homes in our communities. Speculative homes enhance our marketing and sales efforts to prospective homebuyers who are relocating to these markets, as well as to independent brokers, who often represent homebuyers requiring a home within a short time frame. We determine our speculative homes strategy based on local market factors, such as new job growth, the number of job relocations, housing demand and supply (including new homes), seasonality, current sales contract cancellation trends and our past experience in the local markets. We maintain a low level of speculative home inventory in each community based on our current and planned sales pace, and we monitor and adjust speculative home inventory on an ongoing basis as conditions warrant. Speculative homes help to provide us with opportunities to compete effectively with existing homes available in the market and improve our profits and returns on our inventory of owned lots.Quality ControlWe provide our single-family and townhouse home buyers with a one-year limited warranty covering workmanship and materials. The limited warranty is transferable to subsequent buyers not under direct contract with us and requires that all home buyers agree to the definitions and procedures set forth in the warranty. Typically, we provide our condominium home buyers with a two-year limited warranty, or as required by statute. In addition, we periodically provide structural warranty of longer durations pursuant to applicable statutory requirements. From time to time, we assess the appropriateness of our warranty reserves and adjust accruals as necessary. Based on historical experience and when deemed appropriate by us, we will accrue additional warranty reserves. We require our general contractors and sub-contractors to warrant the work they perform and they are contractually obligated to correct defects in their work that arise during the applicable warranty period. We seek to minimize our risk associated with warranty repairs through our quality assurance program and by selecting contractors with good reputations, sufficient resources and adequate insurance. It is typical that there is a gap in the warranty coverage provided by contractors and by home builders, which we have self-insured in the past. It is our experience that the warranty claims which we have self-insured have not been significant in nature, but we periodically obtain additional insurance to protect against this unquantifiable risk.CompetitionThe real estate development industry is highly competitive. We compete primarilyestate-related services businesses on the basis of price, location, design, quality,experience, service and reputation. Many of these competitors are larger than us and operate on a national or global scale and they and their clients may have greater technical, marketing and financial resources. Such competitors may also enjoy competitive advantages that result from, among other things, lower costs of capital, greater business scale and enhanced operating efficiencies.small private builders and large regional or national builders. In addition to competing for home buyers and renters, builders compete for construction financing, raw materials and skilled labor. Additionally, under normal market conditions, competition exists within the industry for prime development sites, especially those where developed building lots are available under option lot contracts. We compete with other local, regional and national builders in all of these areas. Many of our competitors have significantly greater financial, salesto attract and marketingretain experienced and other resources than we have. Some of the national builders that we compete against include Pulte Homes, DR Horton, Toll Brothers, CalAtlantic Homes, NVR, K. Hovnanian and Lennar.Competition among home builders and multi-family developers is often specific to product types being offered in a particular area. Often we do not find ourselves competing with the large national developers in the urban communities where we develop high-rise and mixed use products. This is primarily because most national builders tend to focus on a narrower range of products than what we offer. We believe this provides us with a distinct advantage in terms of attracting potential home buyers and renters in certain areas. We believe the factors that home buyers consider in deciding whether to purchase or rent from us include the product type, location, value quality, and reputation of the developer. We believe that our projects and product offerings compare favorably on these factors, and we continually strive to maintain our reputation of building quality products. and our competitors may also be subject to periodic delays or may be precluded entirely from developing in certain communities due to building moratoriums or “slow-growth” or “no-growth” initiatives that could be implemented in the future in the states where we operate. Local and state governments also have broad discretion regarding the imposition of development fees for projects in their jurisdiction. and our competitors are also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning protection of the environment. Some of the laws to which we and our properties are subject to may impose requirements concerning development in waters of the United States, including wetlands, the closure of water supply wells, management of asbestos-containing materials, exposure to radon and similar issues. The particular environmental laws that apply to any given communityreal estate asset vary based on several factors, including but not limited to the environmental conditions related to a particular property and the present and former uses of the property. These environmental laws may result in delays, may cause us and our competitors to incur substantial compliance related costs, and may prohibit or severely restrict development in certain environmentally sensitive areas. To date, environmental laws have not had a material adverse impact on our operations.projects. Through our web site,www.comstockhomes.com, our customers and prospective customers receive automatic electronic communications from us on a regular basis. Our corporate marketing directors work with in-house marketing and technology specialists to develop advertising and public relations programs for each project that leverage our technology capabilities. During 2015, we continued utilization ofservices. We use media and internet basedinternet-based marketing platforms primarily in lieu of print advertisements. We believe that the home buyingresidential renting population will continue to increase its reliance on information available on the internet to help guide its home buyingrental decision. Accordingly, through our marketing efforts, we will continue to seek to leverage this trend to lower per salelease marketing costs while maximizing potential sales.perpetuityperpetuity. We have registered our trademarks and free of charge. We routinely take steps, and occasionally take legal action, to protect itthe Company against brand infringement from third parties. Mr. Clemente has retained the right to continue to use the “Comstock” brand and trademark including for real estate development projects in our current or future markets that are unrelated to the Company but, excluding products developed as for sale homes.Althoughcurrently, substantially all of Mr. Clemente’s real estate development business is conducted with the Company pursuant to the 2019 AMA.changes in market conditions have impacted our seasonal patterns in the pastperiods of rain and could do so again in the future, we generally have more homes under construction, close more homessnow. Construction and have greater revenuesremediation cycles and operating income in the third and fourth quarters of our fiscal year. The seasonal activity increases our working capital requirements for our homebuilding operations during the third and fourth quarters of our fiscal year.efforts are often adversely affected by severe weather. As a result of seasonal activity across our Real Estate Services business segment, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.2015, we2020, the Company had 51136 full-time and 3 part time11 part-time employees. Our employees are not represented by any collective bargaining agreements, and we have never experienced a work stoppage. We believe we have good relations with our employees.Executive Officers of the RegistrantOur executive officers and other management employees and their respective ages and positions as of December 31, 2015 are as follows:NameAgeCurrent PositionChristopher Clemente56Chairman and Chief Executive OfficerChristopher Conover34Interim Chief Financial OfficerJubal R. Thompson46General Counsel and SecretaryChristopher Clemente founded Comstock in 1985 and has beenprovide a director since May 2004. Since 1992, Mr. Clemente has served as our Chairman and Chief Executive Officer. Mr. Clemente has over 30 years of experience in all aspects of real estate development and homebuilding, and more than 30 years of experience as an entrepreneur.Christopher Conoverwas named our Interim Chief Financial Officer effective November 2015. Prior to that, Mr. Conover served in various positions in the Company, most recently as Senior Vice President, Accounting and Finance. Mr. Conover joined the Company in January 2012. Prior to joining the Company in 2012, Mr. Conover served seven years in public accounting in assurance services at PricewaterhouseCoopers (“PwC”) LLP from 2007 to 2011, and Dannible & McKee, LLP from 2004 to 2007. While at PwC, Mr. Conover served as a Manager in their Financial Services Assurance practice, developing extensive experience providing audit and highly technical consulting services for real estate companies of various sizes and asset classes.Jubal R. Thompson has served as our General Counsel since October 1998 and our Secretary since December 2004. Mr. Thompson has significant experience in the areas of real estate acquisitions and dispositions, real estate and corporate finance, corporate governance, mergers and acquisition and risk management.Risks Relating to Our BusinessWe engage in construction and real estate activities, which involve a high degree of risk. Our business, financial condition, operating results and cash flows may be impacted by a number of factors. A discussion of the risks associated with these factors is included below.Our operations require significant capital and our continuing operations and future growth depends on the availability of construction, acquisition, and development loans and project level capital raises which may not to be available at the time it is needed or at favorable terms.The real estate development industry is capital intensive and requires significant expenditures for operations, land purchases, land development and construction as well as potential acquisitions of other homebuilders or developers. In order to maintain our operations, we will need to obtain additional financing. These funds can be generated through public or private debt or equity financings, operating cash flow, additional bank borrowings or from strategic alliances or joint ventures. In light of our current financial condition, we may not be successful in obtaining additional funds in a timely manner, on favorable terms or at all. Moreover, certain of our bank financing agreements contain provisions that limit the type and amount of debt we may incur in the future without our lenders’ consent. We have historically utilized construction, acquisition and development loans to finance our projects. These credit facilities tend to be project-oriented and generally have variable rates and require significant management time to administer. Further, these types of financings are typically characterized by short-term loans, which are subject to call. The availability of borrowed funds, especially for land acquisition and construction financing, has been greatly reduced, and lenders may require us to invest increased amounts of equity in a project in connection with both new loans and the extension of existing loans. In addition, we may need to further refinance all or a portion of our debt on or before maturity, which we may not be able to do on favorable terms or at all. Furthermore, if financial institutions discontinue providing these facilities to us, we would lose our primary source of financing for our operations or the cost of retaining or replacing these credit facilities could increase dramatically. If we do not have access to additional capital or funds to continue our operations or grow our business, we may be required to delay, scale back or abandon some or all of our operating strategies or reduce capital expenditures and the size of our operations. As a result, such an inability to access additional capital would likely cause us to experience a material adverse effect on our business, results of operations and financial condition.Our ability to sell homes and, accordingly, our results of operations, will be affected by the availability of mortgage financing to potential home buyers.Most home buyers finance their purchase of new homes through third-party mortgage financing. As a result, residential real estate demand is adversely affected by increases in interest rates and decreases in the availability of consumer mortgage financing. Increased monthly mortgage costs and the continued constraints on obtaining financing for potential home buyers have depressed the market for new homes. For instance, recent regulations which tighten underwriting standards have made mortgage financing more difficult to obtain for some of our entry-level home buyers, which has led to decreased demand from these buyers. Even if potential home buyers do not experience difficulty securing mortgage financing for their purchases of new homes, increases in interest rates and decreased mortgage availability or significant alterations to mortgage product types could make it harder for them to sell their existing homes. This could continue to adversely affect our operating results and financial condition.Fluctuations in market conditions may affect our ability to sell our land and home inventories at expected prices, or at all, which could adversely affect our revenues, earnings and cash flows.We could be subject to significant fluctuations in the market value of our land and home inventories. We must continually locate and acquire new tracts of land if we are to support growth in our homebuilding operations. There is a lag between the time we acquire the land and the time that we can bring communities built on that land to market. This lag time varies from site to site as it is impossible to predict with any certainty the length of time it will take to obtain governmental approvals and building permits. The risk of owning undeveloped land, developed land and homes can be substantial. The market value of undeveloped land, buildable lots and housing inventories can fluctuate significantly as a result of changing economic and market conditions. Inventory carrying costs can be significant and can result in losses in a poorly performing development or market. Material write-downs of the estimated value of our land and home inventories could occur if market conditions deteriorate or if we purchase land or build home inventories at higher prices during stronger economic periods and the value of those land or home inventories subsequently declines during weaker economic periods. We could also be forced to sell homes, land or lots for prices that generate lower profit than we anticipated, or at a loss, and may not be able to dispose of an investment in a timely manner when we find dispositions advantageous or necessary. Furthermore, a continued decline in the market value of our land or home inventories may give rise to additional impairments of our inventory and write-offs of contract deposits and feasibility cost, which may result in a breach of financial covenants contained in one or more of our credit facilities, and possibly cause a default under those credit facilities. Defaults in these credit facilities are often times the responsibility of Comstock, as Comstock is the guarantor of most of its subsidiaries debts.During 2015 and 2014, we evaluated all of our projects, to the extent of the existence of any impairment indicators requiring evaluation to determine if carrying amounts were recoverable by evaluating discount rates, sales prices, absorption and our analysis of the best approach to marketing our projects for sale. During 2015, as a result of our impairment analysis, the Company wrote off $2.8 million in feasibility, site securing, predevelopment, design, carry costs and related costs for three communities in the Washington, D.C. metropolitan area due to inventory delivery delays and inefficiencies which led to the Company re-evaluating the lot takedown strategy. The inventory was deemed impaired in December 2015 and was written down due to changes made to the scheduled lot take down strategy, offers received for the properties or changes in zoning requirement.In 2014, we wrote-off $2.7 million in land, land development, and design costs for one community in the Washington, D.C. metropolitan area. The write-off occurred in December 2014 due to a revision in our previous disposition strategy. The impairment charges were recorded in the “Impairment charges and write-off” line within the accompanying consolidated statement of operations.Our ability to use our Net Operating Losses (“NOLs”) and, in certain circumstances, future built-in losses and depreciation deductions can be negatively affected if there is an “ownership change” as defined under Section 382 of the Internal Revenue Code.We currently have approximately $123 million in federal and state NOLs with a potential value of up to approximately $48 million in tax savings. These deferred tax assets are currently fully reserved. If unused, these NOLs will begin expiring in 2028. Under Internal Revenue Code Section 382 rules, if a change of ownership is triggered, our NOL asset and possibly certain other deferred tax assets may be impaired. We estimate that as of December 31, 2015, the cumulative shift in the Company’s stock would not cause an inability to utilize any of our NOLs.The Company’s ability to use its NOLs (and in certain circumstances, future built-in losses and depreciation deductions) can be negatively affected if there is an “ownership change” as defined under Internal Revenue Code Section 382. In general, an ownership change occurs whenever there is a shift in ownership by more than 50 percentage points by one or more 5% stockholders over a specified time period (generally three years). Given Internal Revenue Code Section 382’s broad definition, an ownership change could be the unintended consequence of otherwise normal market trading in the Company’s stock that is outside of the Company’s control. In an effort to preserve the availability of these NOLs, in 2011, Comstock adopted an Internal Revenue Code Section 382 rights agreement, which expired in May 2014. In June 2015, at the 2015 Annual Meeting of Stockholders, the Company’s stockholder’s approved a new Section 382 rights agreement (the “Rights Agreement”) to protect stockholder value. The Rights Agreement expires on March 27, 2025. The Rights Agreement was adopted to reduce the likelihood of such an unintended “ownership change”, thus preserving the value of these tax benefits. Similar plans have been adopted by a number of companies holding similar significant tax assets over the past several years.Home prices and sales activities in the Washington, D.C. market have a large impact on our results of operations because we primarily conduct our business in this market.We currently develop and sell homes primarily in the Washington, D.C. market; consequently, home prices and sales activities in the Washington, D.C. geographic market have a large impact on our results of operations. Although demand in this area historically has been strong, the historical slowdowns in residential real estate demand and continued constraints on obtaining consumer mortgage financing continue to reduce the likelihood of consumers seeking to purchase new homes. As a result of the specific market and general economic conditions, potential customers may be less willing or able to buy our homes, or we may take longer or incur more costs to build them. We may not be able to recapture increased costs by raising prices in many cases because of market conditions or because we fix our prices in advance of delivery by signing home sales contracts. We may be unable to change the mix of our homes or our offerings or the affordability of our homes to maintain our margins or satisfactorily address changing market conditions in other ways. Our limited geographic diversity means that adverse general economic, weather or other conditions in this geographic market could adversely affect our results of operations and cash flows or our ability to grow our business.Because our business depends on the acquisition of new land, the potential limitations on the supply of land in our geographic market could reduce our revenues or negatively impact our results of operations and financial condition.We experience competition for available land and developed home sites in the Washington, D.C. market. We have experienced competition for home sites from other, better capitalized, home builders. Our ability to continue our homebuilding activities over the long term depends upon our ability to locate and acquire suitable parcels of land or developed home sites to support our homebuilding operations. If competition for land increases, the cost of acquiring it may rise, and the availability of suitable parcels at acceptable prices may decline. Any need for increased pricing could increase the rate at which consumer demand for our homes declines and, consequently, reduce the number of homes we sell and lead to a decrease in our revenues, earnings and cash flows.Our business is subject to governmental regulations that may delay, increase the cost of, prohibit or severely restrict our development and homebuilding projects and reduce our revenues and cash flows.We are subject to extensive and complex laws and regulations that affect the land development and homebuilding processes, including laws and regulations related to zoning, permitted land uses, levels of density (number of dwelling units per acre), building design, access to water and other utilities, water and waste disposal and use of open spaces. In addition, we and our subcontractors are subject to laws and regulations relating to worker health and safety. We are also subject to a variety of local, state and federal laws and regulations concerning the protection of health and the environment. In some of our markets, we are required to pay environmental impact fees, use energy saving construction materials and give commitments to provide certain infrastructure such as roads and sewage systems. We are also subject to real estate taxes and other local government fees on real estate purchases. We must also obtain permits and approvals from local authorities to complete residential development or home construction. The laws and regulations under which we and our subcontractors operate, and our and their obligations to comply with them, may result in delays in construction and development, cause us to incur substantial compliance and other increased costs, and prohibit or severely restrict development and homebuilding activity in certain areas in which we operate. If we are unable to continue to develop communities and build and deliver homes as a result of these restrictions or if our compliance costs increase substantially, our revenues, earnings and cash flows may be reduced.Cities and counties in which we operate have adopted, or may adopt, slow or no-growth initiatives that would reduce our ability to build and sell homes in these areas and could adversely affect our revenues, earnings and cash flows.From time to time, certain cities and counties in which we operate have approved, and others in which we operate may approve, various “slow-growth” or “no-growth” initiatives and other similar ballot measures. Such initiatives restrict development within localities by, for example, limiting the number of building permits available in a given year. Approval of slow- or no-growth measures could reduce our ability to acquire land, obtain building permits and build and sell homes in the affected markets and could create additional costs and administration requirements, which in turn could have an adverse effect on our revenues, earnings and cash flows.Increased regulation in the housing industry increases the time required to obtain the necessary approvals to begin construction and has prolonged the time between the initial acquisition of land or land options and the commencement and completion of construction. These delays increase our costs, decrease our profitability and increase the risks associated with the land inventories we maintain.Municipalities may restrict or place moratoriums on the availability of utilities, such as water and sewer taps. If municipalities in which we operate take actions like these, it could have an adverse effect on our business by causing delays, increasing our costs or limiting our ability to build in those municipalities. This, in turn, could reduce the number of homes we sell and decrease our revenues, earnings and cash flows.Limitations on, or reduction or elimination of, taxcomprehensive benefits associated with owning a home could have an adverse effect on the demand for our home products.Existing tax laws generally permit significant expenses associated with owning a home, to be deducted for the purpose of calculating an individual’s federal, and in many cases, state, taxable income, primarily including mortgage interest expenses and real estate taxes. Proposals have been publicly discussed to limit mortgage interest deductions and to limit the exclusion of gain from the sale of a principal residence. If such proposals were enacted without offsetting provisions, the after-tax cost of owning a home would increase for many of our potential customers and may have an adverse effect on the homebuilding industry in general, as the loss or reduction of homeowner tax deductions could decrease the demand for new homes.The competitive conditions in the homebuilding industry could increase our costs, reduce our revenues and earnings and otherwise adversely affect our results of operations and cash flows.The homebuilding industry is highly competitive and fragmented. We compete with a number of national, regional and local builders for customers, undeveloped land and home sites, raw materials and labor. For example, in the Washington, D.C. market, we compete against multiple publicly-traded national home builders, and many privately-owned regional and local home builders. We do not compete against all of the builders in all of our product types or submarkets, as some builders focus on particular types of projects within those markets, such as large estate homes, that are not in competition with our projects.We compete primarily on the basis of price, location, design, quality, service and reputation. Some of our competitors have greater financial resources, more established market positions and better opportunities for land and home site acquisitions, greater amounts of unrestricted cash resources on hand, and lower costs of capital, labor and material than us. The competitive conditions in the homebuilding industry could, among other things:make it difficult for us to acquire suitable land or home sites in desirable locations at acceptable prices and terms, which could adversely affect our ability to build homes;require us to increase selling commissions and other incentives, which could reduce our profit margins;result in delays in construction if we experience delays in procuring materials or hiring trades people or laborers;result in lower sales volume and revenues; andincrease our costs and reduce our earnings.Our homes also compete with sales of existing homes and condominiums, foreclosure sales of existing homes and condominiums and available rental housing. A continued oversupply of competitively priced resale, foreclosure or rental homes in our markets could adversely affect our ability to sell homes profitably.Increases in our cancellation rate could have a negative impact on our home sales revenue and homebuilding margins.The cancellation rate of buyers who contracted to buy a home from us but did not close escrow (as a percentage of overall orders) was approximately 15% and 16% during the years ended December 31, 2015 and 2014, respectively. Home order cancellations negatively impact the number of closed homes, net new home orders, home sales revenue and results of operations, as well as the number of homes in backlog. Home order cancellations can result from a number of factors, including declines or slow appreciation in the market value of homes, increases in the supply of homes available to be purchased, increased competition, higher mortgage interest rates, homebuyers’ inability to sell their existing homes, homebuyers’ inability to obtain suitable financing, including providing sufficient down payments, and adverse changes in economic conditions including unemployment. Upon a home order cancellation, the homebuyer’s escrow deposit is returned to the homebuyer (other than certain miscellaneous deposits, which we retain). An increase in the level of our home order cancellations could have a negative impact on our business, prospects, liquidity, financial condition and results of operations.We are dependent on the services of certain key employees, and the loss of their services could harm our business.Our success largely depends on the continuing services of certain key employees, including Christopher Clemente, our Chairman and Chief Executive Officer; Christopher Conover, our Interim Chief Financial Officer; and Jubal Thompson, our General Counsel and Secretary. Our continued success also depends on our abilityprogram to attract and retain qualified personnel. top talent, including, without limitation, paid vacation, sick leave and volunteer hours, 401K contributions, professional development funds that reset each year, community service initiatives, and online and in-person trainings and e-learning opportunities. We further encourage our employees to provide feedback on our benefits program and periodically make enhancements to our benefits program in response thereto.Messrs. Clemente, Conover and Thompson each possess valuable industry and Company knowledge, experience and leadership abilities that would be difficult in the short term to replicate. The loss of these or other key employees could harm our operations, business plans and cash flows.Our sources of liquidity are limited and may not be sufficient to meet our needs.We are largely dependent on private placements of debt and equity (which rely heavily on insider participation) to cover our operating expenses and/or fund our liquidity needs. If we are unable to secure capital from private placements, we may be forced to reduce our capital expenditures, delay investments, seek other formsproperly staffed for current market conditions, although the continued impacts of financing or restructure our indebtedness. These alternative measures may not be successful or may not be on desirable terms that couldCOVID-19 remain uncertain, and have an adverse impact on our operations.A portion of our business plan involves and may continue to involve mixed-use developments and high-rise projects with which we have less experience.We have been involved in and continue to pursue the construction and development of mixed-use and high-rise residential projects. Our experience is largely based on smaller wood-framed structures that are less complex than high-rise construction or the development of mixed-use projects. A mixed-use project is one that integrates residential and non-residential uses in the same structure or in close proximity to each other, on the same land. As we continue to expand into these new product types, we expect to encounter operating, marketing, customer service, warranty and management challenges with which we have less familiarity. If we are unable to successfully manage the challenges of this portion of our business, we may incur additional costs and our results of operations and cash flows could be adversely affected.If we experience shortages of labor or supplies or other circumstances beyond our control, there could be delays or increased costs associated with developing our projects, which would adversely affect our operating results and cash flows.We, from time to time, may be affected by circumstances beyond our control, including:work stoppages, labor disputes and shortages of qualified trades people, such as carpenters, roofers, electricians and plumbers;lack of availability of adequate utility infrastructure and services;increases in transportation costs for delivery of materials;our need to rely on local subcontractors who may not be adequately capitalized or insured; andshortages or fluctuations in prices of building materials.These difficulties have caused and likely will cause unexpected construction delays and short-term increases in construction costs. In an attempt to protect the margins on our projects, we often purchase certain building materials with commitments that lock in the prices of these materials for 90 to 120 days or more. However, once the supply of building materials subject to these commitments is exhausted, we are again subject to market fluctuations and shortages. We may not be able to recover unexpected increases in construction or materials costs by raising our home prices because, typically, the price of each home is established at the time a customer executes a home sale contract. Furthermore, sustained increases in construction and material costs may, over time, erode our profit margins and may adversely affect our results of operations and cash flows.We depend on the availability and skill of subcontractors and their willingness to work with us.Substantially all of our land development and construction work is done by subcontractors with us acting as the general contractor or by subcontractors working for a general contractor we select for a particular project. Accordingly, the timing and quality of our land development and construction depends on the availability and skill of those subcontractors. We do not have long-term contractual commitments with subcontractors or suppliers. Although we believe that our relationships with our suppliers and subcontractors are good, we cannot assure that skilled subcontractors will continue to be available at reasonable rates and in the areas in which we conduct our operations. The inability to contract with skilled subcontractors or general contractors at reasonable costs on a timely basis could limit our ability to build and deliver homes and could erode our profit margins and adversely affect our results of operations and cash flows.Construction defect and product liability litigation and claims that arise in the ordinary course of business may be costly or negatively impact sales, which could adversely affect our results of operations and cash flows.Our homebuilding business is subject to construction defect and product liability claims arising in the ordinary course of business. These claims are common in the homebuilding industry and can be costly. Among the claims for which developers and builders have financial exposure are property damage, environmental claims and bodily injury claims and latent defects that may not materialize for an extended period of time. Damages awarded under these suits may include the costs of remediation, loss of property and health-related bodily injury. In response to increased litigation, insurance underwriters have attempted to limit their risk by excluding coverage for certain claims associated with environmentalmanage growth as market conditions pollution and product and workmanship defects. As a developer and a home builder, we may be at risk of loss for mold-related property, bodily injury and other claims in amounts that exceed available limits on our comprehensive general liability policies and those of our subcontractors. In addition, the costs of insuring against construction defect and product liability claims are high and the amount of coverage offered by insurance companies is limited. Uninsured construction defect, product liability and similar claims, claims in excess of the limits under our insurance policies, defense costs and the costs of obtaining insurance to cover such claims could have a material adverse effect on our revenues, earnings and cash flows.Increased insurance risk could negatively affect our business, results of operations and cash flows.Insurance and surety companies frequently reassess many aspects of their business and, as a result, may take actions that could negatively affect our business. These actions could include increasing insurance premiums, requiring higher self-insured retentions and deductibles, requiring additional collateral on surety bonds, reducing limits, restricting coverage’s, imposing exclusions, and refusing to underwrite certain risks and classes of business. Any of these actions may adversely affect our ability to obtain appropriate insurance coverage at reasonable costs, which could have a material adverse effect on our business. Additionally, coverage for certain types of claims, such as claims relating to mold, is generally unavailable. Further, we rely on surety bonds, typically provided by insurance companies, as a means of limiting the amount of capital utilized in connection with the public improvement sureties that we are required to post with governmental authorities in connection with land development and construction activities. The cost of obtaining these surety bonds is, from time to time, unpredictable and these surety bonds may be unavailable to us for new projects. These factors can delay or prohibit commencement of development projects and adversely affect revenue, earnings and cash flows.We are subject to warranty claims arising in the ordinary course of business that could be costly.We provide service warranties on our homes for a period of one year or more post closing and provide warranties on occasion as required by applicable statutes for extended periods. We self-insure our warranties from time to time and reserve an amount we believe will be sufficient to satisfy any warranty claims on homes we sell and periodically purchase insurance related coverage to cover the costs associated with potential claims. Additionally, we attempt to pass much of the risk associated with potential defects in materials and workmanship on to the subcontractors performing the work and the suppliers and manufacturers of the materials and their insurance carriers. In such cases, we still may incur unanticipated costs if a subcontractor, supplier, manufacturer or its insurance carrier fails to honor its obligations regarding the work or materials it supplies to our projects. If the amount of actual claims materially exceeds our aggregate warranty reserves, any available insurance coverage and/or the amounts we can recover from our subcontractors and suppliers, our results of operations, cash flows, and financial condition may be adversely affected.Our business, results of operations and financial condition may be affected by adverse weather conditions or natural disasters.Adverse weather conditions, such as extended periods of rain, snow or cold temperatures, and natural disasters, such as hurricanes, tornadoes, floods and fires, can delay completion and sale of homes, damage partially complete or other unsold homes in our inventory and/or decrease the demand for homes or increase the cost of building homes. To the extent that natural disasters or adverse weather events occur, our business and results may be adversely affected. To the extent our insurance is not adequate to cover business interruption losses or repair costs resulting from these events, our results of operations and financial conditions may be adversely affected.We are subject to certain environmental laws and the cost of compliance could adversely affect our business, results of operations and cash flows.As a current or previous owner or operator of real property, we may be liable under federal, state, and local environmental laws, ordinances and regulations for the costs of removal or remediation of hazardous or toxic substances on, under or in the properties or in the proximity of the properties we develop. These laws often impose liability whether or not we knew of, or were responsible for, the presence of such hazardous or toxic substances. The cost of investigating, remediating or removing such hazardous or toxic substances may be substantial. The presence of any such substance, or the failure to promptly remediate any such substance, may adversely affect our ability to sell the property, to use the property for our intended purpose, or to borrow funds using the property as collateral. In addition, the construction process involves the use of hazardous and toxic materials. We could be held liable under environmental laws for the costs of removal or remediation of such materials. In addition, our existing credit facilities also restrict our access to the loan proceeds if the properties that are used to collateralize the loans are contaminated by hazardous substances and require us to indemnify the bank against losses resulting from such occurrence for significant periods of time, even after the loan is fully repaid.If we are not able to develop our communities successfully, our results of operations, cash flows, and financial condition could be adversely impacted.Before a community generates any revenues, material expenditures are required to acquire land, to obtain development approvals and to construct significant portions of project infrastructure, amenities, model homes and sales facilities. It can take a year or more for a community development to achieve cumulative positive cash flow. Our inability to develop and market our communities successfully and to generate positive cash flows from these operations in a timely manner could have a material adverse effect on our ability to service our debt and to meet our working capital requirements.Our operating results, including revenue, earnings, and losses, have varied over time due to a number of conditions. If we are unable to successfully manage these conditions or factors, our operating results may continue to vary and may also suffer.The homebuilding industry is cyclical and we expect to experience variability in our revenues and net income. The volume of sales contracts and closings typically varies from month to month and from quarter to quarter depending on several factors, including the stages of development of our projects, the uncertain timing and cost of real estate closings, weather and other factors beyond our control. In the early stages of a project’s development, we incur significant start-up costs associated with, among other things, project design, land acquisition and development, construction and marketing expenses. Since revenues from sales of properties are generally recognized only upon the transfer of title at the closing of a sale, no revenue is recognized during the early stages of a project unless land parcels or residential home sites are sold to other developers. Periodic sales of properties may be insufficient to fund operating expenses. Further, if sales and other revenues are not adequate to cover operating expenses, we will be required to seek sources of additional operating funds. Accordingly, our financial results will vary from community to community and from time to time.Acts of war or terrorism may seriously harm our business.Acts of war, any outbreak or escalation of hostilities between the United States and any foreign power or acts of terrorism may cause disruption to the entire U.S. economy, or the Washington, D.C. metro area, cause shortages of building materials, increase costs associated with obtaining building materials, result in building code changes that could increase costs of construction, affect job growth and consumer confidence, or cause economic changes that we cannot anticipate, all of which could reduce demand for our homes and adversely impact our revenues, earnings and cash flows.We do not own the Comstock brand or trademark, but use the brand and trademark pursuant to the terms of a perpetual license granted by Christopher Clemente, our Chief Executive Officer and Chairman of the Board.Our Chief Executive Officer and Chairman of the Board, Christopher Clemente, has licensed his ownership interest in the “Comstock” brand and trademark to us in perpetuity and free of charge. We routinely take steps, and occasionally take legal action, to protect it against infringement from third parties. Mr. Clemente has retained the right to continue to use the “Comstock” brand and trademark individually and through his affiliates, with respect to real estate development projects in our current or future markets that are unrelated to the Company but excluding products developed as new homes for sale. We will be unable to control the quality of projects undertaken by Mr. Clemente or others using the “Comstock” brand and trademark and therefore will be unable to prevent any damage to its goodwill that may occur. Consequently, our brand’s reputation could be damaged which could have a material adverse effect on our business, operations and cash flows.Information technology failures or data security breaches could harm our business.We use information technology and other computer resources to perform important operational and marketing activities and to maintain our business records. Certain of these resources are provided to us and/or maintained by data hosting facilities and third party service providers to assist in conducting our day to day operations. Our computer systems and those of our third-party providers are subject to damage or interruption from power outages, computer and telecommunication failures, computer viruses, hackers, unauthorized accesses, IT security breaches, natural disasters, usage errors by our employees or contractors, etc. Although we have implemented administrative and technical controls to address, mitigate and minimize these IT security issues, a significant and extended disruption of or breach of security related to our computer systems and third party service providers may damage our reputation and cause us to lose customers, sales and revenue, result in the unintended misappropriation of proprietary, personal and confidential information and require us to incur significant expense to remediate or otherwise resolve these issues.Risks Related to our Common Stock and Level of IndebtednessOur level of indebtedness may harm our financial condition and results of operations.Our consolidated indebtedness as of December 31, 2015 is approximately $45.4 million. Of this amount, approximately $20.8 million represents debt under our credit facilities and project related loans that mature during 2016. We are in active discussions with our lenders with respect to these maturities and are seeking extensions and modifications to the credit facilities and loans as necessary. If, for any reason, we are unable to refinance, extend or modify the existing indebtedness, these projects may be in default of their existing obligations, which may result in a foreclosure on the project collateral and loss of the project. Any such events could have a material adverse effect on our business, financial condition and results of operations.Our level of indebtedness could impact our future operations in many important ways, including, without limitation, by:Requiring a portion of our cash flows from operations to be dedicated to the payment of any interest or amortization required with respect to outstanding indebtedness;
At the scheduled maturity of our credit facilities or in the event of an acceleration of a debt facility following an event of default, the entire outstanding principal amount of the indebtedness under such facility, together with all other amounts payable thereunder from time to time, will become due and payable. It is possible that we may not have sufficient funds to pay such obligations in full at maturity or upon such acceleration. If we default and are not able to pay any such obligations due, our lenders have liens on substantially all of our assets and could foreclose on our assets in order to satisfy our obligations.
Our stock price has been volatile and we expect that it will continue to be volatile.
Our stock price has been volatile, and we expect it will continue to be volatile. During the year ended December 31, 2015, the closing price of our common stock ranged from a high of $7.70 to a low of $1.46. During this period, we completed the Reverse Stock Split, which also impacted the closing price of our Class A common stock. The volatility of our stock price may also be due to many factors including:
Investors in our Class A common stock may not be able to resell their shares of Class A common stock following periods of volatility because of the market’s adverse reaction to the volatility of the stock price. Our Class A common stock may not trade at the same levels as the stock of other homebuilders, and the market in general may not sustain its current prices.
We may not be able to maintain compliance with The NASDAQ Capital Market’s continued listing requirements.
Our Class A common stock is listed on The NASDAQ Capital Market. In order to maintain the listing of our Class A common stock on The NASDAQ Capital Market, we must meet minimum financial, operating and other requirements, including requirements for a minimum amount of capital, a minimum price per share and active operations. We may fail to satisfy certain of these listing requirements. In the past, we have at times not met the minimum trading price and stockholders’ equity amount required for continued listing on the NASDAQ Capital Market. We have taken steps to remedy these deficiencies, including by completing the Reverse Stock Split to increase our trading price. However, if we fail to satisfy these or other continued listing requirements, we would be required to take steps to satisfy the applicable continued listing requirement or suffer delisting from The NASDAQ Capital Market. A delisting of our Class A common stock could adversely affect the market liquidity of our common stock, our ability to obtain financing and our ability to fund our operations.
Investors in our Class A common stock may experience dilution with the future issuance of stock, exercise of stock options and warrants, the grant of restricted stock and issuance of stock in connection with our capital raising transactions and acquisitions of other companies.
From time to time, we have issued and we will continue to issue stock options or restricted stock grants to employees and non-employee directors pursuant to our equity incentive plan. We expect that these options or restricted stock grants will generally vest commencing one year from the date of grant and continue vesting over a four-year period. Investors may experience dilution as the options vest and are exercised by their holders and the restrictions lapse on the restricted stock grants. In addition, we may issue stock to raise capital to fund our growth initiatives, in connection with acquisitions of other companies, or warrants in connection with the settlement of obligations and or indebtedness with vendors and suppliers, which may result in investors experiencing dilution.
Substantial sales of our Class A common stock, or the perception that such sales might occur, could depress the market price of our Class A common stock.
A substantial amount of the shares of our Class A common stock are eligible for immediate resale in the public market. Any sales of substantial amounts of our Class A common stock in the public market, or the perception that such sales might occur, could depress the market price of our Class A common stock.
The holders of our Class B common stock exert control over us and thus limit the ability of other stockholders to influence corporate matters.
Mr. Christopher Clemente and Mr. Greg Benson, a former member of our board of directors, own 100% of our outstanding Class B common stock, which, together with their shares of Class A common stock, represent approximately 75% of the combined voting power of all classes of our voting stock as of December 31, 2015. As a result, Messrs. Clemente and Benson, acting together, have control over us, the election of our board of directors and our management and policies. Messrs. Clemente and Benson, acting together, also have control over all matters requiring stockholder approval, including the amendment of certain provisions of our amended and restated certificate of incorporation and bylaws, the approval of any equity-based employee compensation plans and the approval of fundamental corporate transactions, including mergers. In light of this control, other companies could be discouraged from initiating a potential merger, takeover or any other transaction resulting in a change of control. Such a transaction potentially could be beneficial to our business or to our stockholders. This may in turn reduce the price that investors are willing to pay in the future for shares of our Class A common stock.
The limited voting rights of our Class A common stock could limit its attractiveness to investors and its liquidity and, as a result, its market value.
The holders of our Class A common stock and Class B common stock generally have identical rights, except that holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to 15 votes per share on all matters to be voted on by stockholders. The difference in the voting rights of the Class A common stock and Class B common stock could diminish the value of the Class A common stock to the extent that investors or any potential future purchasers of our Class A common stock ascribe value to the superior voting rights of the Class B common stock.
It may be difficult for a third party to acquire us, which could inhibit stockholders from realizing a premium on their stock price.
We are subject to the Delaware anti-takeover laws regulating corporate takeovers. These anti-takeover laws prevent Delaware corporations from engaging in business combinations with any stockholder, including all affiliates and employees of a stockholder, who owns 15% or more of the corporation’s outstanding voting stock, for three years following the date that the stockholder acquired 15% or more of the corporation’s voting stock unless specified conditions are met.
Our amended and restated certificate of incorporation and bylaws contain provisions that have the effect of delaying, deferring or preventing a change in control that stockholders could consider favorable or beneficial. These provisions could discourage proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions include:
Our issuance of shares of preferred stock could delay or prevent a change of control of us.
Our board of directors has the authority to cause us to issue, without any further vote or action by the stockholders, up to 20,000,000 shares of Series A Junior Participating Preferred Stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in control of us without further action by the stockholders, even where stockholders are offered a premium for their shares. The issuance of shares of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of Class A common stock, including the loss of voting control. Any issuance of this type of preferred stock could impact the perception of potential future purchasers of our Class A common stock and could depress its market price.
During the period ended December 31, 2015, the Company authorized 3,000,000 shares of a new series of preferred stock designated as Series B Non-Convertible Preferred Stock (the “Series B Preferred Stock”). The shares of Series B Preferred Stock have a par value of $0.01 per share and a stated value of $5.00 per share. The Series B Preferred Stock has no conversion rights or voting rights other than required by applicable law. The Series B Preferred Stock earn dividends at a rate of 8.75% per annum. The dividends will accrue whether or not declared. The dividends are also cumulative and payable quarterly in arrears at the last day of each quarterly reporting period in the form of additional Series B Preferred Stock or in the sole discretion of the board of directors, in cash. On December 29, 2015, the Company issued 772,210 shares of Series B Preferred Stock in exchange for the conversion of an outstanding promissory note. See Item 7 – “Stonehenge Note Conversion” for additional information.
Onthrough its affiliate, Comstock Property Management, L.C., entered into a three-year lease for approximately 7,620 square feet ofhas been leasing office space for its corporate headquarterslocated at 1886 Metro Center Drive, Reston, Virginia for its corporate headquarters from Comstock Asset Management, L.C., an affiliate wholly-ownedwholly owned by our Chief Executive Officer. The amount of the leased space was 16,447 square feet. On September 19, 2012,October 31, 2020, the Company amended theCompany’s then-current lease to add an additional 2,436 square feet of office space, or a total of 10,056 square feet, for its corporate headquarters with an effective date of July 1, 2012. Concurrent with the amendment, the Company agreed to extend the termin Reston, Virginia expired following a one-month extension of the lease term. On November 1, 2020, the Company executed a new lease to relocate its corporate headquarters to new office space located at 1900 Reston Metro Plaza, Reston, Virginia for five-yearsa tenthe effective date of the amendment. This property is suitable and adequate to meetan affiliate wholly owned by our current needs.Chief Executive Officer. See related party transactions in Note 1014 in the accompanying consolidated financial statementsConsolidated Financial Statements for additional information.the properties at our communities,projects, see Item 1 ‘Business – Our Developed Communities.’
Safety Disclosures Fiscal Year Ended 2015 First quarter Second quarter Third quarter Fourth quarter Fiscal Year Ended 2014 First quarter Second quarter Third quarter Fourth quarter follows: future but intend to retain any earnings for future growth of our business. SafetyDisclosures the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common StockOn September 25, 2015, the Company effected a 1-for-7 reverse stock split of its issued and outstanding shares of Class A common stock and Class B common stock (the “Reverse Stock Split”). The Company’s Class A common stock continued trading on The Nasdaq Capital Market on a post-split basis on September 28, 2015. Pursuant to the reverse split, common stockholders received 1 share of common stock for every 7 shares of common stock owned with substantially the same terms and conditions prior to the split.All shares related and per share information has been adjusted to give the effect to the Reverse Stock Split from the beginning of the earliest period presented. The following table sets forth the high and low saleper share closing sales prices of our Class A commonthe Company’s stock for each quarter during the past two years were as reported on NASDAQ, for the periods indicated: High Low $ 7.70 $ 6.44 $ 6.51 $ 3.64 $ 5.81 $ 2.94 $ 3.61 $ 1.46 High Low $ 14.21 $ 11.27 $ 11.13 $ 8.05 $ 9.80 $ 7.70 $ 8.47 $ 5.95 High Low March 31, 2020 $ 2.48 $ 1.27 June 30, 2020 $ 2.99 $ 1.30 September 30, 2020 $ 3.46 $ 2.16 December 31, 2020 $ 3.40 $ 2.30 March 31, 2019 $ 2.86 $ 1.75 June 30, 2019 $ 2.81 $ 2.23 September 30, 2019 $ 2.80 $ 1.85 December 31, 2019 $ 2.38 $ 1.86 2015,2020, there were approximately 3637 record holders of our Class A common stock. As of December 31, 2015,2020, there were two holderswas 1 holder of our Class B common stock. As of December 31, 2015, there were three holders of our newly issued Series B Preferred Stock.Dividendscashdividends on our common stock. We do not anticipate paying any dividends on our common stock and do not anticipate doing so induring the foreseeable future.In November 2014, our board of directors approved a new shareprogram authorizing the Company to repurchase up to 0.4 million shares of our Class A common stock in one or more open market or privately negotiated transactions. In connection with its approval of the share repurchase program, the board of directors terminated the Company’s former share repurchase program that was adopted in February 2006. As of December 31, 2015, we repurchased 25 shares of our Class A common stock pursuant toany securities under our share repurchase program and 404 shares remained available for purchase. The authorization limits set forth induring the Plan (as amended) have been proportionately reduced, as set forth above, as a resultyear ended December 31, 2020.“Reverse Stock Split.”year ended December 31, 2020.
SelectedFinancialSelected Financial Data
U.S. Mid-Atlantic Region. Consolidated Financial Statements. cost-plus contracts recognized over time. Company’s historical experience. Operations. Gross new orders Cancellations Net new orders Gross new order revenue Cancellation revenue Net new order revenue Average gross new order price Settlements Settlement revenue - homebuilding Average settlement price Backlog units Backlog revenue Average backlog price 2019 was $21.9 million and $19.6 million, respectively. The 11.8% year over year growth of $2.3 million in revenue was primarily due to increased headcount and other costs that are reimbursable from Comstock Development Services ("CDS") under the 2019 AMA and the other asset management agreements. The reimbursable costs are recognized as revenue in the period in which the related costs are incurred. The increased headcount and associated personnel costs are primarily attributable to the additional real estate assets being managed along with the additional management agreements year over year. Please see Note 2 - Summary real estate services consolidated financial statementsConsolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion and analysis containscontain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those discussed below and elsewhere in this Annual Report on Form 10-K, particularly under the headings “Risk Factors” andheading “Cautionary Notes Regarding Forward-looking Statements.”We are a multi-faceted real estate development and services company. We have substantial experience with building a diverse range of products including multi-family, single-family homes, townhouses, mid-rise condominiums, high-rise multi-family condominiums and mixed-use (residential and commercial) developments. We operate our business through three segments: Homebuilding, Multi-family and Real Estate Services as further discussed in Note 2 of our consolidated financial statements. We aremarket, which is the seventh largest metropolitan statistical arearegion. We are a developer, operator, and asset manager of mixed-use and transit-oriented development properties in the United States.HomebuildingOur expertise in developing various housing products enables us togreater Washington, D.C. metropolitan area where we primarily focus on a wide range of opportunities within our core market. For our homebuilding operations, we developselect high-growth urban and transitioning “sub-urban” markets. We also provide additional fee-based real estate services, including corporate planning, capital markets, brokerage, title insurance, design, and environmental consulting and remediation services, to properties with the intent that they be sold either as fee-simple properties or condominiums to individual unit buyers or as investment properties sold to private or institutional investors. Our for-sale products are designed to attract first-time, early move-up, and secondary move-up buyers. We focus on products that we are able to offer for sale in the middle price points within the markets where we operate, avoiding the very low-endCompany’s managed portfolio and high-end products. We believe our middle market strategy positions our products such that they are affordable to a significant segment of potential home buyers in our market.Multi-familyFor Comstock’s multi-family sector, we develop projects ranging from approximately 75 to 200 units in locations that are supply constrained with demonstrated demand for stabilized assets. We seek opportunitiesother clients in the multi-family rental market where our experience and core capabilities can be leveraged. We will either position the assets for sale when completed or operate the assets within our own portfolio. Operating the assets for our own account affords us the flexibility of converting the units to condominiums in the future. When developing rental communities, we design our products to be affordable for tenants that fit one of two groups: (i) young first-time renters or (ii) renters by choice.Real Estate ServicesOur management team has significant experience in all aspects of real estate management including strategic planning, land development, entitlement, property management, sales and marketing, workout and turnaround strategies, financing and general construction. We are able to provide a wide range of construction management, general contracting and other real estate related services to other property owners. This business line not only allows us to generate fee income from our highly qualified personnel but also serves as a potential catalyst for joint venture and acquisition opportunities.We believe that our significant experience, combined with our ability to navigate through two major housing downturns (early 1990s and late 2000s), have provided us the experience necessary to capitalize on attractive opportunities in our core market of Washington, D.C. and to rebuild stockholder value. We believe that our focus on the Washington, D.C. market, which has historically been characterized by economic conditions less volatile than many other major homebuilding markets, should provide an opportunity to generate attractive returns on investment and for growth.Recent DevelopmentsReverse Stock SplitOn September 25, 2015, the Company effected the Reverse Stock Split. The Company’s Class A common stock continued trading on The Nasdaq Capital Market on a post-split basis on September 28, 2015. Throughout this annual report on Form 10-K, a reference to a number of shares of the Company’s common stock, refers to the number of shares of common stock after giving effect to the Reverse Stock Split, unless otherwise indicated.Comstock Growth Fund II, L.C.On December 29, 2015, Comstock Growth Fund II, L.C. (“CGF II”), an administrative entity managed by the Company, was created for the purposes of extending loans to the Company. CGF II entered into a subscription agreement with Comstock Development Services, LC (“CDS”), an entity wholly-owned by our Chief Executive Officer, pursuant to which CDS purchased membership interests in CGF II for an initial aggregate principal amount of $5.0 million (the “CGF II Private Placement”).Simultaneously on December 29, 2015, the Company entered into a revolving line of credit promissory note with CGF II whereby CGF II made a loan to the Company in the initial principal amount of $5.0 million and a maximum amount available for borrowing of up to $10.0 million with a two year term, which may be extended an additional year upon payment of a $10 extension fee. The interest rate is 10% per annum, and interest payments will be accrued and paid in kind monthly for the first year, and then paid current monthly in arrears beginning December 31, 2016. The Company pays an origination fee of 1% on the amount of the advance, up to an aggregate amount of $100, and a maintenance fee of 0.25% of the average outstanding balance of the loan on a quarterly basis. The loan will be used by the Company (i) to capitalize the Company’s current and future development pipeline, (ii) to repay all or a portion of the Company’s prior private placements and (iii) for general corporate purposes. We had approximately $5.0 million of outstanding borrowings at December 31, 2015. Subsequent to year-end, on January 8, 2016, the Company paid off the $5.0 million line of credit outstanding to CGF II at December 31, 2015. Concurrently, CDS redeemed all of its equity interest in CGF II.Stonehenge Note ConversionOn December 29, 2015, the Company and Stonehenge entered into a Note Exchange and Subscription Agreement (the “Note Exchange Agreement”) pursuant to which the promissory note in the original principal amount of $4,500 issued by the Company to Stonehenge was exchanged for 772,210 shares of Series B Preferred Stock. The number of shares of Series B Preferred Stock received by Stonehenge in exchange for the Note represented the principal amount outstanding plus all accrued but unpaid interest under the promissory note as of December 29, 2015, which was $3,861. The Note was cancelled in its entirety on December 29, 2015. The Series B Preferred Stock will earn dividends at a rate of 8.75% per annum accruing from the effective date of the Note Exchange Agreement. The dividends will accrue whether or not declared. The dividends are also cumulative and payable in-kind quarterly in arrears at the last day of each quarterly reporting period in the form of additional Series B Preferred Stock or in the sole discretion of the board of directors, in cash. As a result of the Stonehenge Note conversion, the Company realized a taxable gain of $1.0 million. See Note 18 for further discussion on the taxable gain.Liquidity and Capital ResourcesWe require capital to operate, to post deposits on new potential acquisitions, to purchase and develop land, to construct homes, to fund related carrying costs and overhead and to fund various advertising and marketing programs to generate sales. These expenditures include payroll, community engineering, entitlement, architecture, advertising, utilities and interest as well as the construction costs of our homes. Our sources of capital include, and we believe will continue to include, private equity and debt placements (which has included significant participation from Company insiders), funds derived from various secured and unsecured borrowings to finance acquisition, development and construction on acquired land, cash flow from operations, which includes the sale and delivery of constructed homes, finished and raw building lots and the potential sale of public debt and equity securities. The Company is involved in ongoing discussions with lenders and equity sources in an effort to provide additional growth capital to fund various new business opportunities. See Note 8 in the accompanying consolidated financial statements for more details on our credit facilities and Note 3 in the accompanying consolidated financial statements for details on private placement offerings in 2015 and 2014.As of December 31, 2015, $20.8 million of the Company’s credit facilities and project related loans were set to mature during 2016. As of April 1, 2016, the Company has successfully extended all obligations with Lenders through June 30, 2016, as more fully described in Note 8 and Note 20, and we are actively engaging our lenders seeking long term extensions and modifications to the loans where necessary. These debt instruments impose certain restrictions on our operations, including speculative unit construction limitations, curtailment obligations and financial covenant compliance. If we fail to comply with any of these restrictions, an event of default could occur. Additionally, events of default could occur if we fail to make required debt service payments or if we fail to come to agreement on an extension on a certain facility prior to a given loan’s maturity date. Any event of default would likely render the obligations under these instruments due and payable as of that event. Any such event of default would allow certain of our lenders to exercise cross default provisions in our loan agreements with them, such that all debt with that institution could be called into default.The current performance of our projects has met all required servicing obligations and we have maintained compliance with the financial covenants required by the facilities. We are anticipating that with successful resolution of the debt extension discussions with our lenders, the recently completed capital raises from our private placements, current available cash on hand, and additional cash from settlement proceeds at existing and under development communities, the Company will have sufficient financial resources to sustain its operations through the next 12 months, though no assurances can be made that the Company will be successful in its efforts. Refer to Note 20 for further discussion regarding extensions and other subsequent events impacting our credit facilities.Cash FlowNet cash provided by operating activities was $2.6 million for the year ended December 31, 2015. The $2.6 million net cash from operations in 2015 was primarily due to $1.6 million of releases of inventories associated with the increased number of units settled and $0.6 million of net reductions in other assets mainly due to deposit refunds related to land purchase options. The $5.2 million used in operating activities in 2014 was primarily due to $3.7 million for acquisition of inventories, $2.1 million in additional deposits made to secure land purchase contracts, partially offset by $0.6 million in higher accrued interest and $0.2 million collected from trade receivables.Net cash used in investing activities was $0.7 million for the year ended December 31, 2015. This was primarily attributable to the increase in deposits to escrow accounts held as collateral for certain letters of credit of $0.6 million and $0.2 million in purchase of capital assets. Net cash provided by investing activities was $0.3 million for the year ended December 31, 2014. This was primarily attributable to the release of insurance deposits of $1.0 million offset by $0.3 million of deposits to escrow accounts held as collateral for certain letters of credit, $0.3 million in purchases of capital assets and $0.2 million in net notes receivable originated to a third party in the third quarter of 2014.Net cash provided by financing activities was $3.1 million for the year ended December 31, 2015. This was primarily attributable to an increase in borrowings, net of payments, on notes payable of $3.2 million and an increase in contributions from non-controlling interests, net of distributions paid, of $0.1 million; offset by stock repurchases of $0.1 million and $0.1 million in additional loan financing costs. Net cash provided by financing activities was $0.6 million for the year ended December 31, 2014. This was primarily attributable to an increase in borrowings, net of payments, on notes payable of $15.6 million, offset by distributions to non-controlling interest of $14.6 million, increases in deferred financing charges of $0.2 million, and stock repurchases of $0.1 million.Share Repurchase ProgramIn November 2014, our board of directors approved a new share repurchase program authorizing the Company to repurchase up to 0.4 million shares of our Class A common stock in one or more open market or privately negotiated transactions. In connection with its approval of the share repurchase program, the board of directors terminated the Company’s former share repurchase program that was adopted in February 2006.During the years ended December 31, 2015 and 2014, we repurchased 11 and 14 shares, respectively, of our Class A common stock under the repurchase program. As of December 31, 2015 404 shares of our Class A common stock remain available for repurchase pursuant to our share repurchase program.consolidated financial statements.impairmentand the fair value of real estate inventories, warranty reserve and our environmental liability exposure.equity method investments. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates.consolidated financial statements.Consolidated Financial Statements. The following section is a summary of certain aspects of those accounting policies that require the most difficult, subjective or complex judgments and estimates.Real estate inventoriesReal estate inventories include land, land development costs, constructionother costs. Real estate held for development and use is stated at cost,more frequently when an event occurs, or when circumstances or events indicate that the real estate is impaired, at estimated fair value. Real estate held for sale is carried at the lower of cost or fair value less estimated costs to sell. Land, land development and indirect land development costs are accumulated by specific project and allocated to various units within that project using specific identification and allocation based upon the relative estimated sales value method. Direct construction costs are assigned to units based on specific identification, when practical, or based upon the relative sales value method. Construction costs primarily include direct construction costs and capitalized field overhead. Other costs are comprised of fees, capitalized interest and real estate taxes. We also use our best estimate at the end of a reporting period to capitalize estimated construction and development costs. Costs incurred to sell real estate are capitalized to the extent they are reasonably expected to be recovered from the sale of the project and are tangible assets or services performed to obtain regulatory approval of sales. Other selling costs are expensed as incurred.For assets held for development and use, a write-down to estimated fair value is recorded when the net carrying value of the property exceeds its estimated undiscounted future cash flows. Estimated fair value is based on comparable sales of real estate in the normal course of business under existing and anticipated market conditions. These evaluations are made on a property-by-property basis whenever events or changes in circumstances indicate that the net book valueasset may not be recoverable.If We believe the project is considered held for sale, it is valued at the lower of cost or fair value less estimated selling costs. The evaluation takes into consideration the current status of the property, carrying costs, costs of disposition, various restrictions, and any other circumstancesmethodology that may affect fair valuewe use, including management’s plans for the property. As of December 31, 2015 and 2014, the Company did not have any development projects considered to be held for sale.Revenue recognitionWe recognize revenues and related profits or losses from the sale of residential properties and units, finished lots and land sales when closing has occurred, full payment has been received, title and possession of the property has transferred to the buyer and we have no significant continuing involvement in the property. Other revenues include revenue from land sales, rental revenue from leased multi-family units, which is recognized ratably over the terms of the respective leases, and revenue earned from management and administrative support services provided, which is recognized as the services are provided.We consider revenue to be from homebuilding when there isboth a structure built or being built on the lot at closing when we have receiveddiscounted cash and the title is transferred along with the risks and rewards of ownership. Sales of lots occur, and are included in other revenues, when we sell raw land or finished home sites in advance of any home construction.Warranty reserveWarranty reserves for units settled are established to cover potential costs for materials and labor with regard to warranty-type claims expected to arise during the typical one-year warranty period provided by the Company or within the two-year statutorily mandated structural warranty period for condominiums. Because the Company typically subcontracts its homebuilding work, subcontractors are required to provide the Company with an indemnity and a certificate of insurance prior to receiving payments for their work. Claims relating to workmanship and materials are generally the primary responsibility of the subcontractors and product manufacturers. The warranty reserve is established at the time of closing, and is calculated based upon historical warranty cost experience and current business factors. Variables used in the calculation of the reserve,flow model as well as a market multiple model, to review impairment of goodwill, which includes a significant amount of judgment and estimates, provides us with a reasonable basis to determine whether impairment has occurred.adequacydifference between the fair value of the reserveinvestment and the carrying value as of the balance sheet date. These fair value adjustments are reflected as gains or losses on the Consolidated Statements of Operations. The fair value of these investments as of the balance sheet date is generally determined using a Discounted Cash Flow (“DCF”) analysis, income approach, or sales comparable approach, depending on the unique characteristics of the real estate venture.numberform of homes still under warranty, are reviewed on a periodic basis. Warranty claims are directly charged to the reserve as they arise. This reserve is an estimate and actual warranty costs could vary from these estimates.andwhich includes certain subjective assumptions. Expected volatilities are calculated based on our historical trading activities. We estimaterecognize forfeitures using a weighted average historical forfeiture rate. Our estimates of forfeitures will be adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from their estimate.as they occur. The risk-free rate for the periods is based on the U.S. Treasury rates in effect at the time of grant. The expected term of options is based on the simplified method which assumes that the option will be exercised midway between the vesting date and the contractual term of the option. The Company is able to use the simplified method as the options qualify as “plain vanilla” options as defined by Accounting Standards Codification (“ASC”) 718,Stock Compensation.Use of estimatesThe preparation We provide a valuation allowance when we consider it “more likely than not” (greater than a 50% probability) that a deferred income tax asset will not be fully recovered. Adjustments to the valuation allowance are a component of the financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amountsdeferred income tax expense or benefit in the financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates are utilized in the valuationConsolidated Statement of real estate inventories, including estimated construction and development costs, valuation of deferred tax assets, valuation of equity-based compensation, capitalization of costs, consolidation of variable interest entities and warranty reserves.20152020 compared to year ended December 31, 2014Orders, backlog and cancellationsThe following table summarizes certain information related to new orders, settlements and backlog2019twelve monthsyears ended December 31, 20152020 and 2014. Twelve Months Ended December 31, 2015 2014 146 116 22 18 124 98 $ 69,070 $ 54,989 $ 10,971 $ 7,518 $ 58,099 $ 47,471 $ 473 $ 474 123 102 $ 60,132 $ 47,378 $ 489 $ 464 25 24 $ 10,785 $ 12,430 $ 431 $ 518 homebuildingnumber19.1% increase of units delivered$1.1 million is primarily attributable to continued organic revenue growth within our Comstock Environmental business, partially offset by a decrease in closing financing transactions which generated incremental revenue of $0.6 million and $1.1 million during the years ended December 31, 2020 and 2019, respectively.20152020 increased by 21$1.5 million to 123$3.0 million, as compared to 102 units for the year ended December 31, 2014. Average revenue per unit delivered increased by $25 to $489 for the year ended December 31, 2015 as compared to $464 for the year ended December 31, 2014. Revenue from homebuilding increased by $12.7 million to $60.1$1.5 million for the year ended December 31, 20152019. The year-over-year increase is attributable to increases in employee headcount and general overhead increases associated with the increased headcount. General overhead costs include such items as comparedsoftware expense and non-capitalized computer expenses.$47.4increased sales development programs launched by our Environmental business unit to grow the business. The increase in sale development costs has helped drive our 19.1%$1.1 million increase in real estate services revenue year over year.Year Ended December 31, 2019 Revenues Revenue—homebuilding $ 14,919 Total revenue 14,919 Expenses Cost of sales—homebuilding 14,901 Sales and marketing 270 General and administrative 21 Operating loss (273) Income tax benefit (15) Net loss from discontinued operations (258) Net income attributable to non-controlling interests 313 Net loss attributable to Comstock Holding Companies, Inc. $ (571) 2014. For the year ended December 31, 2015, the Company settled 123 units (37 units at2020. The Hampshires, 30 units at Falls Grove, 24 units at Maxwell Square, 20 units at Shady Grove, 7 units at Hall Road, and 5 units at Two Rivers), as compared$3.4 million net cash provided by operations in 2020 was primarily due to 102 units (37 units at The Hampshires, 13 units at Eastgate, 35 units at Falls Grove, 8 units at Maxwell Square, and 9 units at Shady Grove) for the year ended December 31, 2014. Gross new order revenue, consisting$2.1 million of revenue from all units sold, for the year ended December 31, 2015 was $69.1 million on 146 units as compared to $55.0 million on 116 for the year ended December 31, 2014. Net new order revenue, representing revenue for all units sold less revenue from cancellations, for the year ended December 31, 2015 was $58.1 million on 124 units as compared to $47.5 million on 98 units for the year ended December 31, 2014. The increases noted in sales, revenue and average sales price were a result of the increase in the number of homes settled and mix of units settled. Our homebuilding gross margin percentage for the year ended December 31, 2015 decreased by 5.3% to 14.2%, as compared to 19.5% for the year ended December 31, 2014. The decrease noted in margins was mainly a result of the number and mix of units settled and higher land and overhead costs as a percentage of homebuilding revenue in certain of our new communities that started settlingnet income generated during the year.Revenue – otherRevenue – other increased approximately $0.6 million to $1.2 million during the year ended December 31, 2015, as compared to $0.6 Net cash provided by operating activities was $8.4 million for the year ended December 31, 2014.2019. The increase$8.4 million net cash provided by operations in 2019 was primarily relatesdue to revenue from real estate services.Cost of sales – homebuildingCost of sales – homebuilding for the year ended December 31, 2015 increased$7.8 million in cash provided by $13.5 million to $51.6 million as compared to $38.1discontinued operations.2014. The number2020. This was primarily attributable to the purchase of units settled and mix of homes settled duringfixed assets for the yearnew headquarters lease. Net cash used in investing activities attributable to continuing operations was immaterial for the years ended December 31, 2015 accounted for the increase2019.cost of sales.Cost of sales – otherCost of sales – other increased approximately $0.2financing activities was $1.6 million to $0.6 million during the year ended December 31, 2015 as compared to $0.4 million2014. The increase2020. This was primarily relates to our real estate services activities and is consistent with the increase in Revenue – other.Impairment charges and write-offsWe evaluate all of our projectsextentretirement of debt partially offset by proceeds under the existenceRevolver of any impairment indicators requiring evaluation to determine if recorded carrying amounts were recoverable by evaluating discount rates, sales prices, absorption and our analysis of$5.5 million. Net cash used in financing activities was immaterial for the best approach to marketing our projects for sale.During 2015,year ended impairment analysis,board of directors approved a new share repurchase program authorizing the Company wrote off $2.8 millionto repurchase up to 429,000 shares of our Class A common stock in feasibility, site securing, predevelopment, design, carry costsone or more open market or privately negotiated transactions. We made no share repurchases under our share repurchase program in 2020 or 2019.related costs for three communitiesUncertaintiesWashington, D.C. metropolitan area due to inventory delivery delaystravel, leisure and inefficiencies which led to the Company re-evaluating the lot takedown strategy. The inventory was deemed impaired in December 2015hospitality industries and was written down due to changes made to the scheduled lot take down strategy, offers received for the properties or changes in zoning requirement.In 2014, we wrote-off $2.7 million in land, land development, and design costs for one community in the Washington, D.C. metropolitan area. The write-off occurred in December 2014 due to a revision in our previous disposition strategy. The impairment charges were recorded in the “Impairment charges and write-off” line within the accompanying consolidated statement of operations.Interest and real estate tax expenseInterest and real estate tax expense for the year ended December 31, 2015 increased to $547 from $26 for the year ended December 31, 2014. The primary reason for the increase is due to the amount of interest charges that did not qualify for interest capitalization because the interest charges were in excess of the weighted average of the rates applicable to entity level borrowings.Income taxesDuring the year ended December 31, 2015, the Company recorded an out of period adjustment to reverse the valuation allowance, resulting in the recognition of a deferred tax benefit of $121, offset by income tax expense of $436, both related to the New Hampshire Avenue project in Washington, D.C. Additionally, as a result of the conversion of the Stonehenge Note to Series B Preferred Stock, the Company realized a taxable gain on conversion, releasing $1.0 million of the deferred valuation allowance. The effective tax rate for the years ended December 31, 2015 and 2014 was 5.6% and 4.5%, respectively.Seasonality and WeatherOur business is affected by seasonality with respect to orderscompanies that have significant operations or supply chains in China. The spread of COVID-19 has also caused significant volatility in U.S. and deliveries. Ininternational debt and equity markets, which can negatively impact consumer confidence. There is significant uncertainty around the market in which we operate, the primary selling season is from January through Maybreadth and duration of business disruptions related to COVID-19, as well as Septemberits impact on the U.S. economy and October. Orders in other months typicallyconsumer confidence. The extent to which COVID-19 impacts our results will depend on future developments, which are lower. In addition,highly uncertain and cannot be predicted, including new information which may emerge concerning the markets in whichseverity of COVID-19 and the actions taken to contain it or treat its impact. While we operate are four-season markets that experience significant periods of rain and snow. Construction cycles and efforts are often adversely affected by severe weather.InflationInflation can have not seen a significant impact on our business performanceresulting from COVID-19 to date, if the virus continues to cause significant negative impacts to economic conditions or consumer confidence, our results of operations and the homebuilding industry in general. Rising costs of land, transportation costs, utility costs, materials, labor, overhead, administrative costs and interest rates on floating credit facilities canfinancial condition could be adversely affect our business performance. In addition, rising costs of certain items, such as lumber, can adversely affect the expected profitability of our backlog. Generally, we have been able to recover any increases in costs through increased selling prices. However, there is no assurance we will be able to increase selling prices in the future to cover the effects of inflation and other cost increases.
consolidated financial statements,Consolidated Financial Statements, the notes thereto, and the report thereon, commencing on page F-1 of this Annual Report on Form 10-K.
and Procedures disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2020.andProceduresWe have evaluated,our Interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined inpursuant to Rules 13a-15(e) and 15d-15(e) ofunder the Securities Exchange Act of 1934, as amended (the “Exchange(“Exchange Act”)), as of December 31, 2015. Based on this evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded, as of December 31, 2015, that our disclosure2020. Disclosure controls and procedures were effective, andare designed to ensure that (a) information required to be disclosed in ourthe reports filedwe file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions,forms of the SEC and (b)that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, asdisclosures.Management’s Report onManagement is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act.Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015, based on criteria set forth in the framework inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Our management determined that, as of December 31, 2015, our internal control over financial reporting is effective.Changes in Internal Control2015,2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
20162021 Annual Meeting of Stockholders or the Annual Report on Form 10-K/A, except that the information relatingan amendment to our executive officers is included in Item 1, “Business – Executive Officers” of this Annual Report on Form 10-K.
Executive CompensationExecutiveCompensation20162021 Annual Meeting of Stockholders or thean amendment to this Annual Report on Form 10-K/A.10-K.
SecurityOwnershipSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters20162021 Annual Meeting of Stockholders or thean amendment to this Annual Report on Form 10-K/A.10-K.
20162021 Annual Meeting of Stockholders or thean amendment to this Annual Report on Form 10-K/A.10-K.
Stockholders or an amendment to this Annual Report on Form 10-K.AccountantFeesAccountant Fees and Services20162021 Annual Meeting of Stockholders.
/ David M. Guernsey (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2020, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes 14, 2020 ASSETS Cash and cash equivalents Restricted cash Trade receivables Real estate inventories Fixed assets, net Other assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued liabilities Notes payable - secured by real estate inventories Notes payable - due to affiliates, unsecured, net of discount Notes payable - unsecured Income taxes payable TOTAL LIABILITIES Commitments and contingencies (Note 15) STOCKHOLDERS’ EQUITY (DEFICIT) Preferred stock, $0.01 par value, 772,210 issued and outstanding shares with a liquidation preference of $3,861 at December 31, 2015 and 0 shares authorized, issued and outstanding at December 31, 2014 Class A common stock, $0.01 par value, 11,038,071 shares authorized, 2,997,437 and 2,726,455 issued and outstanding, respectively Class B common stock, $0.01 par value, 390,500 shares authorized, issued and outstanding Additional paid-in capital Treasury stock, at cost (85,570 and 74,576 shares Class A common stock, respectively) Accumulated deficit TOTAL COMSTOCK HOLDING COMPANIES, INC. (DEFICIT) Non-controlling interests TOTAL EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY Consolidated Financial Statements. Revenues Revenue—homebuilding Revenue—other Total revenue Expenses Cost of sales—homebuilding Cost of sales—other Impairment charges and write-offs Sales and marketing General and administrative Interest and real estate tax expense Operating loss Other income, net Loss before income tax benefit (expense) Income tax benefit (expense) Net loss Less: Net income attributable to non-controlling interests Net loss attributable to Comstock Holding Companies, Inc. Basic loss per share Diluted loss per share Basic weighted average shares outstanding Diluted weighted average shares outstanding Consolidated Financial Statements. STOCKHOLDERS’ EQUITY Balance at December 31, 2013 Stock compensation and issuances Warrants Shares withheld related to net share settlement of restricted stock awards Stock repurchases Non-controlling interest distributions Net (loss) income Balance at December 31, 2014 Stock compensation and issuances Warrants Shares withheld related to net share settlement of restricted stock awards Stonehenge note conversion (net of tax expense of $1,045) Stock repurchases Non-controlling interest contributions Non-controlling interest distributions Loan commitment on related party line of credit Net (loss) income Balance at December 31, 2015 Consolidated Financial Statements. Cash flows from operating activities: Net loss Adjustment to reconcile net loss to net cash provided by (used in) operating activities Amortization of loan discount and deferred financing fees Deferred income tax benefit Depreciation expense Provision for bad debt Gain on derivative Earnings from unconsolidated joint venture, net of distributions Impairment charges and write-offs, net Amortization of stock compensation Changes in operating assets and liabilities: Restricted cash Trade receivables Real estate inventories Other assets Accrued interest Accounts payable and accrued liabilities Income taxes payable Net cash provided by (used in) operating activities Cash flows from investing activities: Purchase of fixed assets Note receivable Restricted cash Net cash (used in) provided by investing activities Cash flows from financing activities: Proceeds from notes payable Payments on notes payable Loan financing costs Distributions to non-controlling interests Contributions from non-controlling interests Proceeds from exercise of stock options Taxes paid related to net share settlement of equity awards Repurchase of stock Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental cash flow information: Interest paid, net of interest capitalized Income taxes paid Supplemental disclosure for non-cash activity: Increase in class A common stock par value in connection with issuance of stock compensation Increase in class A common stock par value in connection with CGF Private Placement Increase in additional paid-in capital in connection with issuance of class A common stock under the CGF Private Placement $ 903 $ — Increase in Series B preferred stock at par value in connection with Stonehenge Note conversion Increase in additional paid-in capital in connection with issuance of preferred stock related to the Stonehenge Note conversion $ 2,687 $ — Accrued liability settled through issuance of stock Receivables arising from notes payable due - proceeds due to the Company from CGF Discount on notes payable Loan commitment on related party line of credit - CGF II Consolidated Financial Statements. Cash Flows. See Note 19 – Discontinued Operations. Total interest incurred and capitalized Total real estate taxes incurred and capitalized Total interest and real estate taxes incurred and capitalized Interest expensed as a component of cost of sales Real estate taxes expensed as a component of cost of sales Interest and real estate taxes expensed as a component of cost of sales Interest incurred and expensed from entity level borrowings Real estate taxes incurred and expensed for inactive projects ventures. net Leasehold improvements Office equipment Balance at beginning of period Additions Releases and/or charges incurred Balance at end of period incurred. Operations. Restricted stock awards Stock options Warrants Twelve Months Ended December 31, 2015 Gross revenue Gross profit Net (loss) income Total assets Depreciation and amortization Interest expense Twelve Months Ended December 31, 2014 Gross revenue Gross profit Net (loss) income Total assets Depreciation and amortization Interest expense Consolidated Financial Statements. statements and related disclosures. Land and land development costs Cost of construction (including capitalized interest and real estate taxes) Hartford Computer equipment and capitalized software Furniture and fixtures Office equipment Less : accumulated depreciation The company did not record impairments during the years ended December 31, 2020 and 2019. Restricted Escrow Deposits Deferred financing cost Prepaid project costs Deposits on land purchase options Loan commitment Other Less : accumulated amortization Trade and accrued payables Warranty Customer deposits Other Construction revolvers Development and acquisition notes Mezzanine notes Line of credit Total secured notes Unsecured financing Notes payable to affiliates, unsecured, net of $2.3 and $1.4 million discount Total notes payable Company’s incremental borrowing rate requires judgment. The Company looks to similar corporate credit ratings and bond yields when determining the incremental borrowing rate. The incremental borrowing rate is determined at lease commencement, or as of January 1, 2019 for operating leases in existence upon adoption of ASC 842. As of November 1, 2020, at the lease commencement of the new corporate office, the Company's incremental borrowing rate was determined to be 4.25% 2016 2017 2018 Total in arrears. The April 30, 2023. Payable Fully Repaid 2020. 2016 2017 Total Weighted average fair value of options granted Dividend yields Expected volatility Weighted average expected volatility Risk free interest rates Weighted average expected term (in years) Outstanding at January 1, 2014 Granted Exercised Forfeited or Expired Outstanding at December 31, 2014 Granted Exercised Forfeited or Expired Outstanding at December 31, 2015 Exercisable at December 31, 2015 Restricted outstanding at January 1, 2014 Granted Vested Forfeited or Expired Outstanding at December 31, 2014 Granted Vested Forfeited or Expired Outstanding at December 31, 2015 consolidated financial statementsConsolidated Financial Statements or notes thereto.Exhibit ExhibitNumberExhibit 3.1Amended and Restated Certificate of Incorporation (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 16, 2015). 3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of Comstock Holding Companies, Inc. (incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on February 19, 2019). 3.3 Amended and Restated Bylaws (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2005). 3.33.4Certificate of EliminationDesignation of the Series A Junior ParticipatingC Non-Convertible Preferred Stock of the CompanyComstock Holding Companies, Inc., filed with the Secretary of State of the State of Delaware on March 26, 201522, 2017 (incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on March 27, 2015)28, 2017). 3.43.5Certificate of Amendment of Certificate of Designation of Series A Junior ParticipatingC Non-Convertible Preferred Stock of the CompanyComstock Holding Companies, Inc. filed with the Secretary of State of the State of Delaware on March 26, 2015February 15, 2019 (incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on March 27, 2015)February 19, 2019). 3.5Certificate of Designation of Series B Non-Convertible Preferred Stock of the Company filed with the Secretary of State of the State of Delaware on December 29, 2015 (incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed on January 4, 2016).4.1 Specimen Stock Certificate (incorporated by reference to an exhibit to the Registrant’s Registration Statement onForm S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). 10.1Lease Agreement, dated as of January 31, 2004, with Comstock Partners, L.C. (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). 10.2Agreement of Sublease, dated as of October 1, 2004, with Comstock Asset Management, L.C. (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). 10.310.1Form of Indemnification Agreement (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). 10.4Form of Promissory Note to be issued to each of Christopher Clemente, Gregory Benson, James Keena and Lawrence Golub by each of Comstock Holding Company, Inc., Comstock Homes, Inc., Sunset Investment Corp., Inc. and Comstock Service Corp., Inc. (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). 10.510.2Form of Tax Indemnification Agreement to be entered into by each of Christopher Clemente, Gregory Benson, James Keena and Lawrence Golub with each of Comstock Holding Company, Inc., Comstock Homes, Inc., Sunset Investment Corp., Inc. and Comstock Service Corp., Inc. (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). 10.62004 Long-Term Incentive Compensation Plan (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). + 10.7Form Of Stock Option Agreement under the 2004 Long-Term Incentive Compensation Plan (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). + 10.810.3Form Of Restricted Stock Grant Agreement under the 2004 Long-Term Incentive Compensation Plan(incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2005). + 10.9Employee Stock Purchase Plan (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). + 10.10Purchase and Sale Agreement, dated as of November 9, 2004, as amended, with Fair Oaks Penderbrook Apartments L.L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2005). 10.1110.4Services Agreement, dated March 4, 2005, with Comstock Asset Management, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2005). ExhibitNumberExhibit 10.12Employment Agreement with Christopher Clemente (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). + 10.13Employment Agreement with Gregory Benson (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). + 10.1410.6Confidentiality and Non-Competition Agreement with Christopher Clemente (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). + 10.15Confidentiality and Non-Competition Agreement with Gregory Benson (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). + 10.1610.7Trademark License Agreement (incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form S-1, as amended, initially filed with the Commission on August 13, 2004 (No. 333-118193)). 10.17Purchase Agreement, dated as of November 12, 2004 with Comstock Asset Management, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2005). 10.1810.8Description of Reimbursement and Indemnification Arrangement with Christopher Clemente and Gregory Benson (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 9, 2005). 10.19Stock Purchase Agreement with Parker-Chandler Homes, Inc. and the Selling Stockholders identified therein, dated as of January 19, 2006 (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 16, 2006). 10.20Form of purchase agreement, dated as of May 5, 2006, as amended as of May 9, 2006, by and between the Company and the purchasers identified therein (incorporated by reference to an exhibit to the Current Report on Form 8-K of the Registrant filed with the Commission on May 10, 2006). 10.21Form of warrant (incorporated by reference to an exhibit to the Current Report on Form 8-K of the Registrant filed with the Commission on May 10, 2006). 10.22Note Purchase Agreement with Kodiak Warehouse LLC, dated as of May 4, 2006 (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 9, 2006). 10.23Junior Subordinated Indenture with Wells Fargo Bank, N.A., dated as of May 4, 2006 (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 9, 2006). 10.24Credit Agreement with Wachovia Bank, N.A., dated as of May 26, 2006 (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 9, 2006). 10.25Stock Purchase Agreement with Capitol Homes, Inc. and the Selling Shareholders identified therein, dated as of May 1, 2006 (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 9, 2006). 10.26Loan and Security Agreement, dated as of February 2008, by and between the Registrant and Stonehenge Funding, LC. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 24, 2008). 10.27Guaranty Agreement, dated as of February 2008, by Comstock Potomac Yard, L.C. in favor of Stonehenge Funding, LC (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 24, 2008). 10.28Supplement to Indenture, dated as of January 7, 2008, by and between the Registrant and Wells Fargo Bank, N.A. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 24, 2008). 10.29Amended and Restated Indenture, dated as of March 14, 2008, by and between the Registrant and Wells Fargo Bank, N.A. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 24, 2008).ExhibitNumberExhibit 10.30Forbearance and Conditional Release Agreement, dated as of November 25, 2008, by and among Highland Avenue Properties, LLC, Comstock Homes of Atlanta, LLC, the Registrant and Bank of American, N.A. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009). 10.31Sixth Loan Modification Agreement, dated as of November 26, 2008, by and among the Registrant and Bank of America, N.A. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009). 10.32Amended and Restated Promissory Note (Tribble Road Loan), dated as of December 10, 2008, by the Registrant in favor of Wachovia Bank, National Association (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009). 10.33Loan Modification and Forbearance Agreement, dated as of December 10, 2008, by and among the Registrant, various wholly owned subsidiaries as guarantors and Wachovia Bank, National Association (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009). 10.34Amended and Restated Promissory Note (Revolving Line of Credit), dated as of December 10, 2008, by the Registrant in favor of Wachovia Bank, National Association (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009). 10.35Amended and Restated Promissory Note (Term Loan), dated as of December 10, 2008, by the Registrant in favor of Wachovia Bank, National Association (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009). 10.36Consensual Foreclosure and Settlement Agreement, dated August 17, 2009, by and among the Registrant, et.al. and Wachovia Bank, National Association (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2009). 10.37Third Amendment of Loan Agreement, dated September 16, 2009, by and among Comstock Penderbrook, L.C., the Registrant and Guggenheim Corporate Funding, LLC (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2009). 10.38Settlement Agreement and Mutual Release, dated September 21, 2009, by and among Registrant, Mathis Partners, LLC and Cornerstone Bank (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2009). 10.39Forbearance Agreement, dated September 28, 2009, by and among Comstock Cascades, L.C., the Registrant and Manufacturers and Traders Trust Company (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2009). 10.40Forbearance and Conditional Release Agreement, dated September 28, 2009, by and among Comstock Belmont Bay 89, L.C., the Registrant and Manufacturers and Traders Trust Company (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2009). 10.41First Amendment to Loan Agreement, dated October 30, 2009, by and among Comstock Station View, L.C., Comstock Potomac Yard, L.C., the Registrant and Key Bank National Association (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2009). 10.42Forbearance and Conditional Release Agreement, dated November 10, 2009, by and among Comstock Homes of Raleigh, L.L.C., the Registrant and Fifth Third Bank, N.A. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2009). 10.43Forbearance Agreement and Second Amendment to Loan Agreement, dated January 27, 2009, by and among Comstock Penderbrook, L.C., the Registrant and Guggenheim Corporate Funding, LLC (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.44Fourth Amendment to Sublease Agreement and Services Agreement, dated February 26, 2009, with Comstock Asset Management (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.45Subordinated Deficiency Note, dated as of September 21, 2009, by the Registrant in favor of Cornerstone Bank., successor-in-interest to Haventrust Bank (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010).ExhibitNumberExhibit 10.46Amended and Restated Subordinated Deficiency Note, dated as of November 5, 2009, by the Registrant in favor of Wachovia Bank, National Association (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.47Bankruptcy filing for Buckhead Overlook, LLC, filed November 2009 in the U.S. Bankruptcy Court, Northern District of Georgia, Atlanta Division (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.48Bankruptcy filing for Post Preserve, LLC filed November 2009 in the U.S. Bankruptcy Court, Northern District of Georgia, Atlanta Division (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.49Bankruptcy filing for Parker Chandler Homes, LLC f/k/a Comstock Homes of Atlanta, LLC filed November 2009 in the U.S. Bankruptcy Court, Northern District of Georgia, Atlanta Division (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.50Lease Agreement, dated on or about December 31, 2009, with Comstock Asset Management, L.C. by Comstock Property Management, L.C., a subsidiary of Registrant (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.51License Agreement, effective January 1, 2010, with I-Connect (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.5210.9Letter of Intent, effective February 12, 2010, by and between Registrant and Stonehenge Funding, L.C. and Subordination and Standstill Agreements between Registrant and Guggenheim Corporate Funding, LLC and between Registrant and Key Bank, National Association (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.53Seventh Loan Modification Agreement dated as of February 25, 2010, by and among the Registrant and Bank of America, N.A. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.54Memorandum Opinion, filed February 23, 2010, by the US District Court in favor of Comstock Potomac Yard, L.C., a subsidiary of Registrant, against Balfour Beatty Construction, LLC (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.55Purchase Agreement, dated October 30, 2009, by and between Comstock Station View, L.C. and M/I Homes of DC, LLC (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010). 10.56Second Amended and Restated Indenture, dated as of February 12, 2010, by and among the Registrant and Comstock Asset Management, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2010). 10.57Amended and Restated Senior Note, effective February 12, 2010, by and among, Stonehenge Funding, LC, the Registrant and Comstock Asset Management, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2010). 10.58Employment Agreement with Joseph M. Squeri (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2010). + 10.59Confidentiality and Non-Competition Agreement with Joseph M. Squeri (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2010). + 10.60Loan Agreement, dated as of January 27, 2011, by and among Comstock Potomac Yard, L.C. and Eagle Bank (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2011).ExhibitNumberExhibit 10.61Loan Agreement, dated as of February 11, 2011, by and among Comstock Cascades II, L.C. and Cardinal Bank (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2011). 10.62Credit Enhancement and Indemnification Agreement, dated February 17, 2011, by and between Registrant and Christopher D. Clemente and Gregory V. Benson (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 13, 2011). 10.63Loan Agreement, dated as of July 12, 2011, by and among Comstock Potomac Eclipse, L.C. and BCL Eclipse, LLC (incorporated by reference to an exhibit to the Current Report on Form 8-K filed with the Commission on July 15, 2011). 10.6410.10Guaranty, Pledge and Security Agreement, dated as of July 12, 2011, by Comstock Homebuilding Companies, Inc. and Comstock Emerald Farm, L.C. to and for the benefit of BCL Eclipse, LLC (incorporated by reference to an exhibit to the Current Report on Form 8-K filed with the Commission on July 15, 2011). 10.65Warrant, dated as of July 12, 2011, in the name of BridgeCom Development I, LLC (incorporated by reference to an exhibit to the Current Report on Form 8-K filed with the Commission on July 15, 2011). 10.66Registration Rights Agreement, dated as of July 12, 2011, between Comstock Homebuilding Companies, Inc. and BridgeCom Development I, LLC (incorporated by reference to an exhibit to the Current Report on Form 8-K filed with the Commission on July 15, 2011). 10.67Right of First Refusal and First Offer Agreement, dated as of July 12, 2011, between Comstock Homebuilding Companies, Inc. and BridgeCom Development I, LLC (incorporated by reference to an exhibit to the Current Report on Form 8-K filed with the Commission on July 15, 2011). 10.68Loan Agreement, dated as of October 5, 2011, by and among Comstock Penderbrook, L.C. and BCL Penderbrook, LLC (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2012). 10.69Contract of Sale Agreement, dated as of October 31, 2011, by and among Comstock Cascades II, L.C. and CAPREIT Acquisition Corporation (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2012). 10.70Loan Agreement, dated as of May 29, 2012, by and among Eagle Bank and Comstock Potomac Yard, L.C and Comstock Penderbrook, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2012). 10.71Loan agreement, dated as of August 23, 2012, by and between Eagle Bank and New Hampshire Ave. Ventures, LLC (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2012). 10.72Loan agreement, dated as of September 27, 2012, by and between Cardinal Bank and Comstock Eastgate, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2012). 10.73Loan agreement, dated as of March 25, 2013, by and between Eagle Commercial Ventures, LLC and Comstock Redland Road, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 27, 2013). 10.74Loan agreement, dated as of March 25, 2013, by and between Eagle Commercial Ventures, LLC and Comstock Redland Road, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 27, 2013). 10.75Loan agreement, dated as of March 25, 2013, by and between Eagle Bank and Comstock Redland Road, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 27, 2013). 10.76Loan agreement, dated as of March 25, 2013, by and between Eagle Bank and Comstock Redland Road, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 27, 2013).ExhibitNumberExhibit 10.77Form of Subscription Agreement, dated March 14, 2013, between Comstock Investors VII, L.C. and Subscriber, with accompanying Schedule A identifying the other Subscription Agreements (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2013). 10.78Loan agreement, dated as of May 8, 2013, by and between Cardinal Bank and Comstock Yorkshire, L.C. (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 13, 2013). 10.79Loan agreement, dated as of September 30, 2013, by and between Eagle Bank and Comstock Maxwell Square, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2013). 10.80Deferred Purchase Money Promissory Note and a Secured First Deed of Trust dated September 13, 2013 between Comstock Hall Road L.C. and certain of the sellers named therein (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2013). 10.84Form of Subscription Agreement, dated December 12, 2013, between Comstock Investors VIII L.C., and [-], with accompanying Schedule A identifying other Subscription (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2014). 10.85Loan agreement, dated December 30, 2013, between Comstock Hall Road, L.C. and Cardinal Bank (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2014). 10.86Separation Agreement, dated June 24, 2014, between Comstock Holding Companies, Inc. and Gregory V. Benson (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 13, 2014). 10.87Guidance Line of Credit and Security Agreement, dated July 15, 2014 between the Registrant and Eagle Bank (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2014). 10.88Revolving Line of Credit Note, dated July 15, 2014, between the Registrant and Eagle Bank (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2014). 10.89Revolving Line of Credit Note, dated July 23, 2014, between Comstock Yorkshire, L.C. and Cardinal Bank (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 13, 2014). 10.90Amended and Restated Promissory Note, dated December 18, 2014, between Comstock Holding Companies, Inc. and Comstock Growth Fund, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 14, 2015). 10.91Form of warrant issued in connection with private placement by Comstock Growth Fund, L.C. (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 14, 2015). 10.92Loan agreement, dated December 19, 2014, between Comstock Two Rivers II, L.C. and Cardinal Bank (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 14, 2015). 10.9310.11Section 382 Rights Agreement between Comstock Holding Companies, Inc. and American Stock Transfer & Trust Company, LLC dated March 27, 2015 (incorporated by reference to an Exhibit to the current report on Form 8-K filed with the Commission on March 27, 2015). 10.9410.12Loan agreement,Form of Subscription Agreement and Operating Agreement dated February 20, 2015,August 15, 2016, between Comstock Stone Ridge,Investors X, L.C. and Cardinal Bank[-], with accompanying Schedule A identifying subscribers (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2015)November 14, 2016). 10.9510.13Loan agreement, dated March 17, 2015, betweenForm of Warrant issued in connection with private placement by Comstock Two Rivers I,Investors X, L.C. and Eagle Bank (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2015)November 14, 2016). 10.9610.14Subscription Agreement and Operating Agreement, dated June 26, 2015,October 24, 2016, between Comstock Redland Road III, L.C. and SCG Development Partners, LLC to form Momentum General Partners, LLC (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 17, 2017).10.15 Share Exchange Agreement between Comstock Holding Companies, Inc. and Investor Management, L.C., Christopher Clemente and Teresa A. Schar dated March 22, 2017 (incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on March 28, 2017). 10.16 Asset Purchase Agreement, dated July 14, 2017, between CDS Capital Management, L.C., and Monridge Environmental, LLC (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 16, 2017). 10.17 Amendment to the Operating Agreement, dated October 13, 2017, between Comstock Investors IX,X, L.C. and Comstock Development Services, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 16, 2017).10.18 Form of Warrant, dated October 13, 2017, between Comstock Investors X, L.C. and Comstock Development Services, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed on November 16, 2017). 10.19 Third Amended and Restated Promissory Note, dated May 22, 2018, between Comstock Holding Companies, Inc. and Comstock Growth Fund, L.C. (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2018). 10.20 Second Amended and Restated Operating Agreement of Comstock Growth Fund, L.C., dated May 22, 2018 (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2018). 10.21 Membership Interest Exchange and [-] Subscription Agreement, dated May 23, 2018, between Comstock Holding Companies, Inc., Comstock Growth Fund, L.C., and certain members of Comstock Growth Fund (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2018).10.22 Comstock Holding Companies, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Annex B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on January 22, 2019).+ 10.23 2019 Master Asset Management Agreement, dated January 2, 2019, between CDS Asset Management, L.C. and Comstock Development Services, LC (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with accompanying Schedule A identifying other Subscriptionthe Commission on April 15, 2020).10.24 Form of Time-Based Restricted Stock Unit Agreement under the 2019 Omnibus Incentive Plan (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 15, 2020). 10.25 Form of Performance Based Restricted Stock Unit Agreement under the 2019 Omnibus Incentive Plan (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 15, 2020). 10.26 Amended and Restated Limited Liability Company Agreement of Comstock 3101 Wilson, LC dated February 7, 2020 (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 14, 2015)2020). 10.97*Note Exchange and Subscription Agreement, dated December 29, 2015, between Comstock Holding Companies, Inc. and Stonehenge Funding, LC.ExhibitNumberExhibit10.98*10.28Revolving Line of Credit Promissory Note dated December 29, 2015,March 27, 2020, between Comstock Holding Companies, Inc. and Comstock Growth Fund II, L.C.Development Services, LC (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 28, 2020).14.1(2)10.29Note dated April 16, 2020 between Comstock Holding Companies, Inc. and MainStreet Bank pursuant to the Paycheck Protection Program authorized under the Coronavirus Aid, Relief and Economic Security Act (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 28, 2020). 10.30 Amended and Restated Employment Agreement dated April 27, 2020, between Comstock Holding Companies, Inc. and Christopher Clemente (incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 14, 2020).+ 10.31 Letter of BDO USA, LLP dated June 24, 2020 (incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on June 24, 2020). 10.32* 10.33* 10.34* 14.1 Code of Ethics (incorporated by reference to an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2005). 21.1* 23.1* 23.2* 31.1* 31.2* 32.1* 101* The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2015,2020, formatted in eXtensible Business Language (XBRL): (i) the Consolidated Balance Sheet, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Changes in Stockholder’s Equity, (iv) the Consolidated Statement of Cash Flows and (v) the Notes to the Consolidated Financial Statements.* Filed herewith. + Management contracts or compensatory plans, contracts or arrangements COMSTOCK HOLDING COMPANIES, INC. Date: April 1, 2016March 31, 2021 By: S/ CHRISTOPHER CLEMENTEs/ Christopher Clemente Signature Capacity Date /s/ Christopher Clemente Chairman of the Board of Directors and March 31, 2021 Christopher Clemente Chief Executive Officer (Principal Executive Officer) SignatureCapacityDate/s/ Christopher Guthrie /s/ CHRISTOPHER CLEMENTE Chairman of the Board of Directors and Chief ExecutiveApril 1, 2016Christopher ClementeOfficer (Principal Executive Officer)/s/ CHRISTOPHER L. CONOVER Interim Chief Financial OfficerApril 1, 2016March 31, 2021Christopher L. ConoverGuthrie(Principal Financial Officer and Principal Accounting Officer) /s/ A. CLAYTON PERFALL DirectorApril 1, 2016A. Clayton Perfall/s/ DAVID M. GUERNSEY DirectorApril 1, 2016David M. Guernsey/s/ JAMES A. MACCUTCHEON DirectorApril 1, 2016James A. MacCutcheon/s/ NORMAN D. CHIRITE DirectorApril 1, 2016Norman D. Chirite/s/ ROBERT P. PINCUS DirectorApril 1, 2016Robert P. Pincus/s/ SOCRATES VERSES DirectorApril 1, 2016Socrates Verses/s/ JOSEPH M. SQUERI DirectorApril 1, 2016Joseph M. SqueriINDEX TO CONSOLIDATED FINANCIAL STATEMENTS/s/ David Guernsey PageDirectorMarch 31, 2021 /s/ James MacCutcheon Director March 31, 2021 James A. MacCutcheon /s/ Robert Pincus Director March 31, 2021 Robert P. Pincus /s/ Socrates Verses Director March 31, 2021 Socrates Verses /s/ Joseph Squeri Director March 31, 2021 Joseph M. Squeri To the :accompanying consolidated financial statements listed on page F-1 present fairly, in all material respects, the financial position of Comstock Holding Companies, Inc. and subsidiaries (the “Company”) atthe Companyas of December 31, 2015 and 2014,2020, and the results of their itsoperations and their itscash flows for each of the two years in the periodyear ended December 31, 20152020, in conformity with accounting principles generally accepted in the United States of America.thesethe Company’s financial statements based on our audits. audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.audits of these statementsaudit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Anmisstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit includesof its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audit also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.PricewaterhouseCoopersGRANT THORNTON LLPMcLean,1, 2016 December 31,
2015 December 31,
2014 $ 12,448 $ 7,498 2,566 1,779 332 110 38,223 40,889 394 395 4,515 5,696 $ 58,478 $ 56,367 $ 7,638 $ 8,538 24,823 28,379 19,028 15,488 1,548 2,064 — 43 53,037 54,512 — — $ 1,174 $ — 30 27 4 4 175,963 171,639 (2,662 ) (2,583 ) (175,785 ) (171,218 ) (1,276 ) (2,131 ) 6,717 3,986 5,441 1,855 $ 58,478 $ 56,367 December 31, 2020 December 31, 2019 ASSETS Current assets: Cash and cash equivalents $ 7,032 $ 3,511 Trade receivables, net 1,482 1,886 Trade receivables - related parties 3,598 3,644 Prepaid and other assets, net 242 274 Total current assets 12,354 9,315 Equity method investments at fair value 6,307 8,421 Fixed assets, net 266 278 Operating lease right-of-use assets 7,914 114 Goodwill 1,702 1,702 Intangible assets, net 36 103 TOTAL ASSETS $ 28,579 $ 19,933 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accrued personnel costs $ 2,442 $ 2,916 Accounts payable 523 1,438 Accrued liabilities 964 166 Short term operating lease liabilities 569 0 Short term notes payable - due to affiliates, net of discount 0 5,706 Short term notes payable 5 77 Total current liabilities 4,503 10,303 Long term notes payable - due to affiliates 5,500 0 Long term notes payable, net of deferred financing charges 0 1,212 Long term operating lease liabilities, net of current portion 7,361 61 TOTAL LIABILITIES $ 17,364 $ 11,576 Commitments and contingencies (Note 10) 0 0 STOCKHOLDERS’ EQUITY Series C preferred stock, $0.01 par value, 20,000,000 shares authorized, 3,440,690 shares issued and outstanding with a liquidation preference of $17,203 at December 31, 2020 and 2019 $ 6,765 $ 6,765 Class A common stock, $0.01 par value, 59,779,750 shares authorized, 7,953,729 and 7,849,756 issued and 7,868,159 and 7,764,186 outstanding at December 31, 2020 and 2019, respectively 79 78 Class B common stock, $0.01 par value, 220,250 shares authorized, issued and outstanding at December 31, 2020 and 2019 2 2 Additional paid-in capital $ 200,147 $ 199,372 Treasury stock, at cost (85,570 shares Class A common stock) (2,662) (2,662) Accumulated deficit (193,116) (195,198) TOTAL EQUITY $ 11,215 $ 8,357 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 28,579 $ 19,933 consolidated financial statements. For the years ended December 31, 2015 2014 $ 60,132 $ 47,378 1,244 587 61,376 47,965 51,583 38,133 551 372 2,765 2,695 2,076 2,130 7,410 7,585 547 26 (3,556 ) (2,976 ) 861 230 (2,695 ) (2,746 ) 732 (368 ) (1,963 ) (3,114 ) 2,604 3,725 $ (4,567 ) $ (6,839 ) $ (1.43 ) $ (2.27 ) $ (1.43 ) $ (2.27 ) 3,198 3,012 3,198 3,012 For the years ended December 31, 2020 2019 Revenue Asset management $ 21,923 $ 19,605 Real estate services 6,803 5,712 Total revenue 28,726 25,317 Operating expenses Direct costs - asset management 18,445 16,561 Direct costs - real estate services 4,097 4,611 General and administrative 2,956 1,487 Sales and marketing 661 383 Operating income 2,567 2,275 Interest expense (379) (474) Other income, net 112 225 Income before income tax expense 2,300 2,026 Income tax expense (25) (2) Loss on equity method investments carried at fair value (193) (560) Net income from continuing operations 2,082 1,464 Net loss from discontinued operations, net of tax 0 (571) Net income $ 2,082 $ 893 Income per share from continuing operations Basic net income per share $ 0.26 $ 0.22 Diluted net income per share $ 0.24 $ 0.22 Loss per share from discontinued operations Basic net loss per share $ 0 $ (0.09) Diluted net loss per share $ 0 $ (0.09) Income per share Basic net income per share $ 0.26 $ 0.13 Diluted net income per share $ 0.24 $ 0.13 Basic weighted average shares outstanding 8,056 6,617 Diluted weighted average shares outstanding 8,539 6,799 consolidated financial statements. Series B Additional Retained Non- Total Preferred Stock Class A Class B paid-in Treasury earnings controlling Shares Amount Shares Amount Shares Amount capital stock (deficit) interest — $ — 2,661 $ 27 390 $ 4 $ 170,993 $ (2,480 ) $ (164,379 ) $ 14,894 $ 19,059 — — 67 — 571 571 — — 23 — — — 163 — — — 163 — — (25 ) — — — (88 ) — — — (88 ) — — — — — — — (103 ) — — (103 ) — — — — — — — — — (14,633 ) (14,633 ) — — — — — — — — (6,839 ) 3,725 (3,114 ) — $ — 2,726 $ 27 390 $ 4 $ 171,639 $ (2,583 ) $ (171,218 ) $ 3,986 $ 1,855 — — 271 3 — — 1,125 — — — 1,128 — — 12 — — — 304 — — — 304 — — (12 ) — — — (32 ) — — — (32 ) 772 1,174 — — — — 1,642 — — — 2,816 — — — — — — — (79 ) — — (79 ) — — — — — — — — — 2,450 2,450 — — — — — — — — — (2,323 ) (2,323 ) — — — — — — 1,285 — — — 1,285 — — — — — — — — (4,567 ) 2,604 (1,963 ) 772 $ 1,174 2,997 $ 30 390 $ 4 $ 175,963 $ (2,662 ) $ (175,785 ) $ 6,717 $ 5,441 Class A Class B Total Shares Amount Shares Amount Shares Amount Balance at January 1, 2019 2,800 $ 7,193 3,703 $ 37 220 $ 2 $ 181,632 $ (2,662) $ (196,091) $ 15,706 $ 5,817 Stock compensation and issuances — — 71 1 — — 509 — — — 510 Accrued Liability settled through issuance of stock — — 63 — — — 141 — — — 141 Shares withheld related to net share settlement of restricted stock awards — — (12) — — — 0 — — — 0 Warrant exercises — — 200 2 — — 358 — — — 360 Class A stock conversion of non-controlling interest — — 3,824 38 — — 16,050 — — (16,019) 69 Series C conversion of non-controlling interest 641 (428) — — — — — — — (428) Gain on deconsolidation of discontinued operations — — — — — — 682 — — — 682 Net income — — — — — — — — 893 313 1,206 Balance at December 31, 2019 3,441 $ 6,765 7,849 $ 78 220 $ 2 $ 199,372 $ (2,662) $ (195,198) $ 0 $ 8,357 Stock compensation and issuances — — 107 1 — — 776 — — — 777 Accrued Liability settled through issuance of stock — — 30 — — — 68 — — — 68 Shares withheld related to net share settlement of restricted stock awards — — (33) — — — (69) — — — (69) Net income — — — — — — — — 2,082 0 2,082 Balance at December 31, 2020 3,441 $ 6,765 7,953 $ 79 220 $ 2 $ 200,147 $ (2,662) $ (193,116) $ 0 $ 11,215 consolidated financial statements. For the years ended December 31, 2015 2014 $ (1,963 ) $ (3,114 ) 283 304 (1,057 ) — 164 100 — 10 (696 ) (32 ) (36 ) 32 2,765 2,695 94 295 (177 ) (6 ) (222 ) 226 1,562 (3,717 ) 649 (2,727 ) 980 815 257 198 (43 ) (303 ) 2,560 (5,224 ) (163 ) (252 ) 32 (173 ) (610 ) 685 (741 ) 260 43,301 43,463 (40,078 ) (27,857 ) (108 ) (243 ) (2,323 ) (14,633 ) 2,450 — — 26 (32 ) (86 ) (79 ) (103 ) 3,131 567 4,950 (4,397 ) 7,498 11,895 $ 12,448 $ 7,498 $ (412 ) $ (806 ) $ (519 ) $ (669 ) $ 1 $ 5 $ 2 $ — $ 1,174 $ — $ 99 $ 225 $ — $ 823 $ (605 ) $ (1,279 ) $ 1,285 $ — For the years ended December 31, 2020 2019 Cash flows from operating activities: Net income $ 2,082 $ 893 Adjustment to reconcile net income to net cash provided by operating activities Amortization of loan discount, loan commitment and deferred financing fees 27 84 Depreciation expense 159 150 Amortization expense 67 67 Earnings from unconsolidated joint venture, net of distributions 96 50 Stock-based compensation 777 479 Loss on equity method investments carried at fair value 193 560 Distributions from equity method investments carried at fair value 103 0 Changes in operating assets and liabilities: Trade receivables 404 (956) Trade receivables - related party 46 (694) Deferred revenue 0 (1,875) Prepaid and other assets (64) 11 Lease liabilities 69 0 Accrued personnel costs (474) 1,520 Accounts payable (915) 240 Accrued liabilities 866 72 Net cash provided by operating activities of discontinued operations 0 7,793 Net cash provided by operating activities 3,436 8,394 Cash flows from investing activities: Contributions to equity method investments carried at fair value 0 (1,200) Distributions from equity method investments carried at fair value 1,818 1,525 Purchase of fixed assets (147) (207) Principal received on note receivable 0 27 Net cash provided by investing activities 1,671 145 Cash flows from financing activities: Proceeds from notes payable 5,554 0 Payments on notes payable (7,071) (228) Loan financing costs 0 (28) Proceeds from exercise of warrants 0 360 Taxes paid related to net share settlement of equity awards (69) (35) Net cash used in financing activities from discontinued operations 0 (5,951) Net cash used in financing activities (1,586) (5,882) Net increase in cash and cash equivalents 3,521 2,657 Cash and cash equivalents, beginning of period 3,511 854 Cash and cash equivalents, end of period $ 7,032 $ 3,511 Supplemental cash flow information: Interest paid, net of interest capitalized $ 397 $ 420 Income taxes paid $ 0 $ 0 Supplemental disclosure for non-cash activity: Accrued liability settled through issuance of stock $ 68 $ 141 Conversion of noncontrolling interest to CHCI equity $ 0 $ 16,019 Gain on deconsolidation of Investors X recorded in APIC $ 0 $ 682 Increase in operating lease right-of-use assets $ 8,023 $ 170 Issuance of stock in lieu of interest due $ 0 $ 66 Gain on early extinguishment of debt $ 50 $ 0 PPP Loan proceeds received $ 1,954 $ 0 consolidated financial statements.real estate developmentasset management and construction services company primarily focused onin the Washington, D.C. metropolitan area (Washington D.C., Northern VirginiaMetropolitan Statistical Area. In 2018, the Company made a strategic decision to transform its operating platform from being primarily focused on developing on-balance sheet, for-sale, homebuilding projects to being focused on commercial and Maryland suburbs of Washington D.C.).residential asset management and real estate related services. On April 30, 2019 the Company announced the exit from the homebuilding business. The Company has substantial experience with building a diverse range of products including multi-family units, single-family homes, townhouses, mid-rise condominiums, high-rise multi-family condominiumsnow operates through five primarily real estate focused subsidiaries – CDS Asset Management, LC (“CAM”), Comstock Residential Management, LC, Comstock Commercial Management, LC, Park X Management, LC and mixed-use (residential and commercial) developments.Comstock Environmental Services, LC (“CES”). See Note 21 - Subsequent Events for entity name changes that occurred on February 18, 2021. The Company’s homebuilding operations are presented in Discontinued Operations (see Note 19 – Discontinued Operations). References in this Annual Report on Form 10-Kthese Consolidated Financial Statements to “Comstock,” “Company,”“Company”, “we,” “our” and “us” refer to Comstock Holding Companies, Inc. together in each case with our subsidiaries and any predecessor entities unless the context suggests otherwise. Our business was founded in 1985 as a residential land developer and home builder focused on the Washington, D.C metro market.Comstock Companies, Inc. was incorporated on May 24, 2004 as a Delaware corporation. On June 30, 2004, the Company changed its name to Comstock Homebuilding Companies, Inc. On December 17, 2004, the Company completed an initial public offering of its Class A common stock. On June 22, 2012, the Company changed its name to Comstock Holding Companies, Inc. which better reflects the Company’s multi-faceted strategy and capabilities.The Company’s Class A common stock is traded on the Nasdaq Capital Market (“NASDAQ”) under the symbol “CHCI” and has no public trading history prior to December 17, 2004.Liquidity DevelopmentsWe require capital to operate, to post deposits on new potential acquisitions, to purchase and develop land, to construct homes, to fund related carrying costs and overhead and to fund various advertising and marketing programs to generate sales. These expenditures include payroll, community engineering, entitlement, architecture, advertising, utilities and interest as well as the construction costs of our homes. Our sources of capital include, and should continue to include, private equity and debt placements (which has included significant participation from Company insiders), funds derived from various secured and unsecured borrowings to finance acquisition, development and construction on acquired land, cash flow from operations, which includes the sale and delivery of constructed homes, finished and raw building lots and the potential sale of public debt and equity securities. The Company is involved in ongoing discussions with lenders and equity sources in order to obtain additional growth capital to fund various new business opportunities. See Note 8 for more details on our credit facilities and Note 3 for details on private placement offerings in 2015 and 2014.As of December 31, 2015, $20.8 million of the Company’s credit facilities and project related loans were set to mature during 2016. As of April 1, 2016, the Company has successfully extended all obligations with Lenders through June 30, 2016, as more fully described in Note 8 and Note 20, and we are actively engaging our lenders seeking long term extensions and modifications to the loans where necessary. These debt instruments impose certain restrictions on our operations, including speculative unit construction limitations, curtailment obligations and financial covenant compliance. If we fail to comply with any of these restrictions, an event of default could occur. Additionally, events of default could occur if we fail to make required debt service payments or if we fail to come to agreement on an extension on a certain facility prior to a given loan’s maturity date. Any event of default would likely render the obligations under these instruments due and payable as of that event. Any such event of default would allow certain of our lenders to exercise cross default provisions in our loan agreements with them, such that all debt with that institution could be called into default.The current performance of our projects has met all required servicing obligations and we have maintained compliance with the financial covenants required by the facilities. We are anticipating that with successful resolution of the debt extension discussions with our lenders, the recently completed capital raises from our private placements, current available cash on hand, and additional cash from settlement proceeds at existing and under development communities, the Company will have sufficient financial resources to sustain its operations through the next 12 months, though no assurances can be made that the Company will be successful in its efforts. Refer to Note 20 for further discussion regarding extensions and other subsequent events impacting our credit facilities.consolidated financial statementsConsolidated Financial Statements is as follows:consolidated financial statementsConsolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of the Company and all of its majority-owned and controlledconsolidated subsidiaries. All significant intercompany accountsIntercompany balances and transactions have been eliminated. Investments in 50% or less owned partnerships and affiliatesreal estate ventures over which we exercise significant influence, but do not control, are accounted for usingeither at fair value or under the equity method.unless itbased upon an election made at the time of investment.determinedbased on the level of influence we have in the underlying entity. When we have an asset management or property management contract with a real estate limited partnership in which we also hold an ownership interest, the combination of our limited partner interest and the management agreement generally provides us with significant influence over such real estate limited partnership. Accordingly, we account for such investments either at fair value or under the equity method. We eliminate transactions with such subsidiaries to the extent of our ownership in such subsidiaries.has controlcompleted the transfer of Investors X subject to the entity, in which caseMaster Transfer Agreement (“MTA”). For the entity would be consolidated. The Company had one joint venture investment accounted for using the equity method as ofyear ended December 31, 20152019, we classified revenues and 2014.Reverse Stock SplitOn September 25, 2015,expenses related to Investors X into discontinued operations on the Company effected a 1-for-7 reverse stock splitConsolidated Statement of its issued and outstanding shares of Class A common stock and Class B common stock (the “Reverse Stock Split”). Additionally, the number of authorized shares of Class A common stock was reduced from 77,266,500 shares to 11,038,071 sharesOperations and the numberConsolidated Statements of authorized shares of Class B common stock was reduced from 2,733,500 shares to 390,500 shares with no change to the par value per share. Pursuant to the Reverse Stock Split, common stockholders received 1 share of common stock for every 7 shares of common stock owned with substantially the same terms and conditions prior to the split.Throughout this annual report on Form 10-K, a reference to a number of shares of the Company’s common stock, refers to the number of shares of common stock after giving effect to the Reverse Stock Split, unless otherwise indicated. and restricted cashAt times,The carrying amount of cash equivalents approximates fair value due to the short-term maturity of these investments. The Company may have deposits with institutions in excess of federally insured limits. We monitor the cash balances in our bank accounts and adjust the balance as appropriate. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurance that access to ourmaintains cash and cash equivalents will not be impactedin financial institutions that at times exceeds federally insured limits. Management believes that the Company’s credit risk exposure is mitigated by adverse conditions in the financial market. Atstrength of the banking institution in which the deposits are held. As of December 31, 2015 and 2014,2020, the Company had restricted cash and cash equivalents of $2.6 million and $1.8 million, respectively, which include $1.0$5.3 million in deposits,U.S. bank accounts which were not fully insured by the Federal Deposit Insurance Corporationan insurance provider asrelated party entities. Financial instruments that subject the Company to concentrations of credit risk consist primarily of related party receivables. The Company generally does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of related party entities. The Company derives a substantial portion of its revenues from various related party entities; with related party entities accounting for future claims.Real estate inventoriesReal estate inventories include land, land development costs, construction and other costs. Real estate held79% of the Company’s total consolidated revenues in 2020.development and use is stated at cost, or when circumstances or events indicate that themore information.is impaired, at estimated fair value. Realventuresheld for sale is carried at the lower of cost or fair value less estimated costs to sell. Land,ventures that primarily own and operate real estate in 2 sectors, land development and indirect land development costs are accumulated by specific projectcommercial office. These investments take the form of equity ownership interests and, allocated to various units within that project using specific identification and allocation based upon the relative sales value, unit or area methods. Direct construction costs are assignedinvestment-specific objectives, have included three to units based on specific identification. Construction costs primarily include direct construction costs and capitalized field overhead. Other costs are comprised of fees, capitalized interest andseven year planned investment periods. Our investments in real estate taxes.ventures are not redeemable until the disposition of the underlying real estate investment. We also use our best estimatehave elected to account for these equity method investments using the fair value option.the end of afair value, we maintain an investment account that is increased or decreased each reporting period to capitalize estimated construction and development costs. Costs incurred to sell real estate are capitalized toby the extent they are reasonably expected to be recovered fromdifference between the sale of the project and are tangible assets or services performed to obtain regulatory approval of sales. Other selling costs are expensed as incurred.If the project is considered held for sale, it is valued at the lower of cost or fair value less estimated selling costs. The evaluation takes into consideration the current status of the property, carrying costs, costs of disposition, various restrictions and any other circumstances that may affect fair value including management’s plans for the property. For assets held for development and use, a write-down to estimated fair value is recorded when the net carrying value of the property exceeds its estimated undiscounted future cash flows. Estimatedinvestment and the carrying value as of the balance sheet date. These fair value adjustments are reflected as gains or losses on the Consolidated Statements of Operations. The fair value of these investments as of the balance sheet date is generally determined using a Discounted Cash Flow (“DCF”) analysis, based upon unobservable inputs in the fair value hierarchy.comparable sales ofInvestments in real estate in the normal course of business under existing and anticipated market conditions. These evaluations are made on a property-by-property basis whenever events or changes in circumstances indicate that the net book value may not be recoverable.Capitalized interest and real estate taxesInterest and real estate taxes incurred relating to the development of lots and parcels are capitalized to real estate inventories during the active development period, which generally commences when borrowings are used to acquire real estate assets and ends when the properties are substantially complete or the property becomes inactive. A project becomes inactive when development and construction activities have been suspended indefinitely. Interest is capitalized based on the interest rate applicable to specific borrowings or the weighted average of the rates applicable to other borrowings during the period. Interest and real estate taxes capitalized to real estate inventories are expensed as a component of cost of sales as related units are settled.The following table is a summary of interest and real estate taxes incurred, capitalized and expensed for units settled: Twelve Months Ended December 31 2015 2014 $ 3,295 $ 2,557 400 234 $ 3,695 $ 2,791 $ 2,346 $ 557 258 175 $ 2,604 $ 732 The amount of interest from entity level borrowings that we are able to capitalize in accordance with the accounting standards is dependent upon the average accumulated expenditures that exceed project specific borrowings. Additionally, when a project becomes inactive, its interest, real estate taxes and indirect production overhead costs are no longer capitalized but are rather expensed in the period in which they are incurred. The following is a breakdown of the interest and real estate taxes expensed in the consolidated statement of operations for the periods presented: Twelve Months Ended December 2015 2014 $ 534 $ — 13 26 $ 547 $ 26 Shorter of asset life or related lease term Furniture and fixtures 7 years 5 years Computer equipment and capitalized software3 years Leasehold improvements3 years Capitalized software Life of related lease3 years Whenretired or otherwise disposedadjusted for lease incentives, deferred rent, and initial direct costs, if incurred. Our leases generally do not include an implicit rate; therefore, we use an incremental borrowing rate based on information available at the lease commencement date in determining the present value of future minimum lease payments. The related lease expense is recognized on a straight-line basis over the lease term.accumulated depreciationfuture financial performance of a reporting unit are removedbased on the Company's forecasts, business plans, economic projections and anticipated future cash flows. Market multiples are derived from their separate accountsrecent transactions among businesses of a similar size and any gain orindustry. The fair value of each reporting unit is compared to the carrying amount of the reporting unit. If the carrying value of the reporting unit exceeds the fair value, then an impairment loss is recognized for the differencesalea straight-line basis for revolving debt. To the extent that debt is outstanding, these amounts are reflected in operations. Expendituresthe Consolidated Balance Sheets as direct deductions of debt and as assets for maintenancecosts related to revolving debt. See Note 8 for additional information on the Company's long-term debt and repairs are chargedrelated debt issuance costs.expensethe CDS portfolio, representing a series of daily performance obligations delivered over time. Pricing includes a cost-plus management fee or a market-rate fee form of variable consideration. The Company earns whichever is higher. See Note 14 – Related Party Transactions.incurred.Warranty reserveWarranty reserveswe control them. This is evidenced by our obligation for units settled are establishedtheir performance and our ability to cover potentialdirect and redirect their work, as well as negotiate the value of such services. In the instances where we do not control third-party services delivered to the client, we report revenues net of the third-party reimbursements. Consistent with the transfer of control for distinct, daily services to the customer, revenue is typically recognized at the end of each period for the fees associated with the services performed.materialspersonnel providing the services and laborsubcontracted vendor costs. Project management services represent a series of distinct daily services rendered over time. Consistent with regardthe transfer of control for distinct, daily services to warranty-type claims expected to arise during the typical one-year warrantycustomer, revenue is typically recognized at the end of each period for the fees associated with the services performed.the Company or within the two-year statutorily mandated structural warranty period for condominiums. Because the Company typically subcontracts its homebuilding work, subcontractors are required to provide the Company with an indemnity and a certificate of insurance prior to receiving paymentsour employees, as we control them. This is evidenced by our obligation for their work. Claims relatingperformance and our ability to workmanshipdirect and materials are generallyredirect their work, as well as negotiate the primary responsibilityvalue of such services. In the instances where we do not control third-party services delivered to the client, we report revenues net of the subcontractorsthird-party reimbursements.product manufacturers.structured financing services. We are compensated for our services via a fee paid upon successful commercial financing from third party lenders. The warranty reservefee earned is establishedcontingent upon the funding of the loan, which represents the transfer of control for services to the customer. Therefore, we typically satisfy our performance obligation at the point in time of the funding of the loan, when there is a present right to payment.closing,the contractual event where there is a present right to payment.is calculatedconstruction management services for owners and occupiers of real estate in connection with the management and leasing of office, industrial and retail space. The fees that we earn are typically variable based upon historical warranty cost experience and current business factors. This reserve is an estimate and actual warranty costs could vary from these estimates. Variables useda percentage of project cost. We are compensated for our services in the calculationform management fees. Project and construction management services represent a series of the reserve,performance obligations delivered over time and revenue is recognized over time.adequacyservices of subcontractors used to perform remediation services. Fees earned are generally based upon employee time spent as well as a cost-plus arrangement for subcontractors used. Generally, environmental remediation services represent a series of performance obligations delivered over time and revenue is recognized over time.reserve based onapplicable practical expedient offered by ASC Topic 606 when the number of homes still under warranty, are reviewed on a periodic basis. Warranty claims are directly charged to the reserveamortization period is one year or less and, therefore, recognize these costs as an operating expense as they arise.During 2008, the Company recorded an additional $241 in warranty reserves to cover costs and claims related to a project in North Carolina. In August 2014, the Company settled the claim for $59, including legal costs, releasing the Company from future claims and costs related to this project and accordingly reduced the warranty reserve by $182. The warranty reserve was recorded as a reduction to homebuilding cost of sales in the third quarter of 2014.The following table is a summary of warranty reserve activity, which is included in accounts payable and accrued liabilities: Years ended
December 31, 2015 2014 $ 492 $ 510 246 454 (426 ) (472 ) $ 312 $ 492 Revenue recognitionThe Company recognizes revenues and related profits or losses from the sale of residential properties and units, finished lots and land sales when closing has occurred, full payment has been received, title and possession of the property has transferred to the buyer and the Company has no significant continuing involvement in the property. Other revenues include revenue from land sales, rental revenue from leased multi-family units – which is recognized ratably over the terms of the respective leases, revenue from construction services – which is recognized under the percentage-of-completion method, and revenue earned from management and administrative support services provided to related parties – which is recognized as the services are provided.Advertising costsThe total amount of advertising costs charged for the year ended December 31, 2015 was $725, of which $714 was charged to sales and marketing and $11 was charged to general and administrative expenses. The total amount of advertising costs charged for the year ended December 31, 2014 was $743, of which $730 was charged to sales and marketing and $13 was charged to general and administrative expenses.vestingservice period based on their fair values at the date of grant. For the year ended December 31, 2015 and 2014,2020, total stock-basedstock based compensation cost was $124 and $319, respectively. Of this amount, $74 and $271$0.8 million which was charged to expenses within ‘general and administrative’ expenses forin the yearsConsolidated Statement of Operations. For the year ended December 31, 2015 and 2014, respectively, and $19 and $242019, total stock based compensation cost was $0.5 million which was charged to ‘costexpenses within ‘general and administrative’ and ‘Direct costs-real estate services’ in the Consolidated Statement of sales-other’ for the years ended December 31, 2015 and 2014, respectively. For the years ended December 31, 2015 and 2014, $31 and $24 was capitalized to ‘Real estate inventories’, respectively.Loss per shareThe weighted average shares and share equivalents used We provide a valuation allowance when we consider it “more likely than not” (greater than a 50% probability) that a deferred income tax asset will not be fully recovered. Adjustments to calculate basic and diluted loss per share for the years ended December 31, 2015 and 2014valuation allowance are presented ona component of the consolidated statement of operations. Restricted stock awards, stock options and warrants for the years ended December 31, 2015 and 2014 are includeddeferred income tax expense or benefit in the diluted loss per share calculation using the treasury stock method and average market prices during the periods, unless the restricted stock award, stock options and warrants would be anti-dilutive.As a resultConsolidated Statement of net losses for the years ended December 31, 2015 and 2014, the following shares have been excluded from the diluted share computation as their inclusion would be anti-dilutive: Twelve Months Ended December 2015 2014 10 22 — 28 — 54 10 104 Comprehensive incomeFor the years ended December 31, 2015 and 2014, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the consolidated financial statements.Segment reportingWe operate our business through three segments: Homebuilding, Multi-family and Real Estate Services. We are currently focused on the Washington, D.C. market.In our Homebuilding segment, we develop properties with the intent to sell as fee-simple properties or condominiums to individual buyers or to private or institutional investors. Our for-sale products are designed to attract first-time, early move-up, and secondary move-up buyers. We focus on products that we are able to offer for sale in the middle price points within the markets where we operate, avoiding the very low-end and high-end products.In our Multi-family segment we focus on projects ranging from approximately 75 to 200 units in locations that are supply constrained with demonstrated demand for stabilized assets. We seek opportunities in the multi-family rental market where our experience and core capabilities can be leveraged. We will either position the assets for sale when completed or operate the asset within our own portfolio. Operating the asset for our own account affords us the flexibility of converting the units to condominiums in the future.In our Real Estate Services segment we pursue projects in all aspects of real estate management including strategic planning, land development, entitlement, property management, sales and marketing, workout and turnaround strategies, financing and general construction. We are able to provide a wide range of construction management and general contracting services to other property owners.The following disclosure includes the Company’s three reportable segments of Homebuilding, Multi-family and Real Estate Services. Each of these segments operates within the Company’s single Washington, D.C. reportable geographic segment. Homebuilding Multi-Family Real
Estate
Services Total $ 60,132 $ — $ 1,244 $ 61,376 8,549 — 693 9,242 (2,656 ) — 693 (1,963 ) 58,387 — 91 58,478 288 — — 288 534 — — 534 $ 47,378 $ — $ 587 $ 47,965 9,245 — 215 9,460 (3,320 ) — 206 (3,114 ) 56,028 — 339 56,367 419 — — 419 — — — — The Company allocates sales, marketing and general and administrative expenses to the individual segments based upon specifically allocable costs.Use of estimatesThe preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates are utilized in the valuation of real estate inventories, valuation of deferred tax assets, capitalization of costs, consolidation of variable interest entities and warranty reserves.ReclassificationsCertain amounts in the prior year financial statements have been reclassified to the current-year presentation. The impact of the reclassifications made to prior year amounts is not material and did not affect net loss.RecentOperations.February 2015,August 2018, the Financial Accounting Standards Board (“FASB”("FASB") issued Accounting Standards Update (“ASU”) 2015-02, AmendmentsASU 2018-13, “Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Consolidation Analysis. The new guidance provides an additional requirementDisclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which removes, adds and modifies certain disclosure requirements for fair value measurements in Topic 820. ASU 2018-13 removes the following disclosure requirements: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and (ii) the entity’s valuation processes for Level 3 fair value measurements. ASU 2018-13 adds the following disclosure requirements: (i) provide information about the measurement uncertainty of Level 3 fair value measurements as of the reporting date rather than a limited partnership or similar entitypoint in the future, (ii) disclose changes in unrealized gains and losses related to qualify as a voting interest entity, amendingLevel 3 measurements for the criteriaperiod included in other comprehensive income, and (iii) disclose for consolidating such an entityLevel 3 measurements the range and eliminatingweighted average of the deferral provided under previous guidance for investment companies. In addition,significant unobservable inputs and the new guidance amends the criteria for evaluating fees paid to a decision maker or service provider as a variable interest and amends the criteria for evaluating the effect of fee arrangements and related parties on a Variable Interest Entity (“VIE”) primary beneficiary determination. This guidanceway it is calculated. ASU 2018-13 is effective for fiscal years, and interim and annual reporting periods within those fiscal years, beginning after December 15, 2015. This guidance2019. Early adoption is permitted. The Company adopted ASU 2018-13 prospectively as of January 1, 2020. The adoption did not expected to have a material impact on our financial statements.April 2015,June 2016, the FASB issued ASU 2015-03, InterestNo. 2016-13, Financial Instruments – ImputationCredit Losses (Topic 326), which modifies how companies recognize expected credit losses on financial instruments and other commitments to extend credit held by an entity at each reporting date. Existing GAAP requires an “incurred loss” methodology whereby companies are prohibited from recording an expected loss until it is probable that the loss has been incurred. ASU 2016-13 requires companies to use a methodology that reflects current expected credit losses (“CECL”) and requires consideration of Interest: Simplifyinga broad range of reasonable andPresentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires debt issuance costsCECL is remote. Companies will be required to be presented onrecord the balance sheet as a direct deductionallowance for credit losses and deduct that amount from the related debt liability, similar tobasis of the presentation of debt discounts or premiums. The costs will continue to be amortized to interest expense using the effective interest method. ASU 2015-03 requires retrospective application to all prior periods presented in the financial statements. Upon transition, an entity is required to comply with the applicable disclosures for a change in accounting principle.asset. The guidance within ASU 2015-03 will beis effective for the Company’s first fiscal year beginning after December 15, 2015, but early adoption is permitted. This guidance is not expected to have a material impact on ourCompany for financial statements.In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU No. 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 for one year, which would make the guidance effective for the Company’s first fiscal year beginning after December 15, 2017. Additionally, the FASB has also decided to permit entities to early adopt the standard, which allows for either full retrospective or modified retrospective methods of adoption, for reportingstatement periods beginning after December 15, 2016. We are2022, although early adoption is permitted. The Company is currently evaluating the impact of ASU 2014-09this guidance will have on our consolidatedits financial statements.November 2015,December 2019, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred2019-12, Simplifying the Accounting for Income Taxes, (“which is intended to simplify various aspects related to accounting for income taxes. ASU 2015-07”).2019-12 removes certain exceptions to the general principles in ASC 740, Income Tax and also clarifies and amends existing guidance to improve consistent application. ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities2019-12 will be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public companiesbusiness entities for annual reporting periods beginning after December 15, 2016,2020, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and earlyperiods. Early adoption is permitted. This guidance isWe do not expectedexpect the adoption of this pronouncement to have a material impact on our financial statements.In February 2016,Consolidated Financial Statements.FASB issued ASU No. 2016-02, Leasesadoption of these standards will not have a material impact on our consolidated statements of operations, comprehensive income, balance sheets, or cash flows.2020 2019 Fair value of investments as of January 1 $ 8,421 $ 0 Investments 0 10,506 Distributions (1,921) (1,525) Change in fair value (193) (560) Fair value of investments as of December 31 $ 6,307 $ 8,421 ASU 2016-02”Investors X”), a Variable Interest Entity (“VIE”) that owns the Company’s residual homebuilding operations at fair value. Fair value is determined using a discounted cash flow model based on expected future cash flows for income and realization events of the underlying asset. Expected future cash flows includes contractually fixed revenues and expenses as well as estimates for future revenues and expenses where contracts do not currently exist. These estimates are based on prior experience as well as comparable, third party data.For the Year Ended December 31, 2020 2019 Statement of Operations: Total revenue $ 14,515 $ 6,832 Direct costs 12,982 8,196 Net income (loss) $ 1,533 $ (1,364) Comstock Holding Companies, Inc. share of net income (loss) $ 0 $ 0 core principleCompany owns a 2.5% equity interest in the asset at a cost of approximately $1.2 million. The Company has elected to account for the equity method investment in the Hartford at fair value. Fair value is determined using an income approach and sales comparable approach models. As of December 31, 2020 and 2019, the fair value of the standard is that a lessee should recognizeCompany’s investment in the assets and liabilities that arise from leases. A lessee should recognize in its statementHartford was $1.2 million. The Company received distributions of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this new standard will have on our financial statements.Other accounting pronouncements issued or effective$0.1 million during the year ended December 31, 2015 are not applicable to us and are not anticipated to have an effect on our consolidated financial statements.3. CONSOLIDATION OF VARIABLE INTEREST ENTITIESGAAP requires a VIE to be consolidated by the company that is the primary beneficiary. The primary beneficiary of a VIE is the entity that has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Entities determined to be VIEs, for which we are not the primary beneficiary, are accounted for under the equity method. Comstock’s variable interests in VIEs may be in the form of (1) equity ownership, (2) contracts to purchase assets and/or (3) loans provided and or guaranteed to a VIE. We examine specific criteria and use judgment when determining if Comstock is the primary beneficiary of a VIE. Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions and contracts to purchase assets from VIEs.Consolidated Real Estate InventoriesIncluded within the Company’s real estate inventories at December 31, 2015 and 2014 are several projects that are determined to be VIEs. These entities have been established to own and operate real estate property and were deemed VIEs primarily based on the fact that the equity investment at risk is not sufficient to permit the entities to finance their activities without additional financial support. The Company determined that it was the primary beneficiary of these VIEs as a result of its majority voting and complete operational control of the entities.On August 23, 2012, the Company formed New Hampshire Ave. Ventures, LLC, a joint venture of its subsidiary, Comstock Ventures XVI, L.C, and 6000 New Hampshire Avenue, LLC,2020.purpose of acquiring, developing and constructing a 111-unit project (the “NHA Project”) in Washington, D.C. The Company evaluated the joint venture and determined that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support. The Company determined that it was the primary beneficiary of the VIE as a result of its complete operational control of the activities that most significantly impact the economic performance and obligation to absorb losses, or receive benefits. The Company contributed its ownership interest in Comstock Ventures XVI, L.C. to Comstock Investors VII, L.C. (“Comstock VII”) on March 13, 2013. During 2015 and 2014, New Hampshire Ave. Ventures, LLC distributed $2.0 million and $3.2 million to its non-controlling interest member, 6000 New Hampshire Avenue, LLC, respectively.On September 27, 2012, the Company formed Comstock Eastgate, L.C., a joint venture of the Company and BridgeCom Development II, LLC, for the purpose of acquiring, developing and constructing 66 condominium units in Loudoun County, Virginia (the “Eastgate Project”). The Company evaluated the joint venture and determined that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support. The Company determined that it was the primary beneficiary as a result of its complete operational control of the activities that most significantly impact the economic performance and obligation to absorb losses, or receive benefits. During 2015 and 2014, Comstock Eastgate, L.C. distributed $73 and $1.9 million, respectively, to its non-controlling interest member. The Company exited the Eastgate Project in the second quarter of 2014 after closing on all 66 units.On March 14, 2013, Comstock VII entered into subscription agreements with certain accredited investors (“Comstock VII Class B Members”), pursuant to which the Comstock VII Class B Members purchased membership interests in Comstock VII for an aggregate amount of $7.3 million (the “Comstock VII Private Placement”). The Comstock VII Private Placement was exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. In connection with the Comstock VII Private Placement, the Company issued 17 warrants for the purchase of shares of the Company’s Class A common stock to the non-affiliated accredited investors, having an aggregate fair value of $146. Comstock VII Class B Members included unrelated third-party accredited investors along with members of the Company’s board of directors and the former Chief Financial Officer, the General Counsel and the former Chief Operating Officer, of the Company. The Subscription Agreement provides that the Comstock VII Class B Members are entitled to a cumulative, preferred return of 20% per annum, compounded annually on their capital account balances. After six months, the Company has the right to repurchase the interests of the Comstock VII Class B Members, provided that (i) all of the Comstock VII Class B Members’ interests are acquired, (ii) the purchase is made in cash and (iii) the purchase price equals the Comstock VII Class B Members’ capital account plus an amount necessary to cause the preferred return to equal a cumulative cash on cash return equal to 20% per annum. The Comstock VII Private Placement provides capital related to the current and planned construction of the Company’s following projects: Townes at Shady Grove Metro in Rockville, Maryland consisting of 36 townhomes, Momentum | Shady Grove consisting of 110 condominium units, City Homes at the Hampshires in Washington D.C. consisting of 38 single family residences, Townes at the Hampshires in Washington, D.C. consisting of 73 townhomes, single family homes at the Falls Grove project in Prince William County, Virginia consisting of 19 single family homes and Townes at the Falls Grove project in Prince William County, Virginia consisting of 110 townhomes (collectively, the “Projects”). Proceeds of the Comstock VII Private Placement are to be utilized (A) to provide capital needed to complete the Projects in conjunction with project financing for the Projects, (B) to reimburse the Company for prior expenditures incurred on behalf of the Projects, and (C) for general corporate purposes of the Company. The Company evaluated Comstock VII and determined that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support and the Company was the primary beneficiary as a result of its complete operational control of the activities that most significantly impact the economic performance and its obligation to absorb losses, or receive benefits. Accordingly, the Company consolidates this entity. In 2014, the Company paid total distributions of $8.6 million of which $5.4 million was used to fully redeem the remaining equity interest of the Comstock VII Class B Members.In December 2013, Comstock Investors VIII, L.C. (“Comstock VIII”) entered into subscription agreements with certain accredited investors (“Comstock VIII Class B Members”), pursuant to which Comstock VIII Class B Members purchased membership interests in Comstock VIII for an aggregate amount of $4.0 million (the “Comstock VIII Private Placement”). The Comstock VIII Private Placement was exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. In connection with the Comstock VIII Private Placement, the Company issued 15 warrants for the purchase of shares of the Company’s Class A common stock to the non-affiliated accredited investors, having an aggregate fair value of $131. Comstock VIII Class B Members included unrelated third-party accredited investors along with members of the Company’s board of directors and the Company’s former Chief Operating Officer and the former Chief Financial Officer. The Comstock VIII Class B Members are entitled to a cumulative, preferred return of 20% per annum, compounded annually on their capital account balances. The Company has the right to repurchase the interests of the Comstock VIII Class B Members at any time, provided that (i) all of the Comstock VIII Class B Members’ interests are acquired, (ii) the purchase is made in cash and (iii) the purchase price equals the Comstock VIII Class B Members’ capital accounts plus an amount necessary to cause the preferred return to equal a cumulative cash on cash return equal to 20% per annum. The proceeds from the Comstock VIII Private Placement will be used for the current and planned construction of the following projects: The Townes at HallCrest in Sterling, Virginia consisting of 42 townhome units, and Townes at Maxwell Square Condominium in Frederick, Maryland consisting of 45 townhome condominium units (collectively, the “Investor VIII Projects”). Proceeds of the Comstock VIII Private Placement are to be utilized (A) to provide capital needed to complete the Investor VIII Projects in conjunction with project financing for the Investor VIII Projects, (B) to reimburse the Company for prior expenditures incurred on behalf of the Investor VIII Projects, and (C) for general corporate purposes of the Company. The Company evaluated Comstock VIII and determined that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support and the Company was the primary beneficiary as a result of its complete operational control of the activities that most significantly impact the economic performance and its obligation to absorb losses, or receive benefits accordingly, the Company consolidates this entity. During 2015 and 2014, the Company paid distributions in the amount of $0.3 million and $0.9 million, respectively, to the Comstock VIII Class B Members.In June 2015, Comstock Investors IX, L.C. (“Comstock IX”) entered into subscription agreements with third-party accredited investors (“Comstock IX Class B Members”), pursuant to which Comstock IX Class B Members purchased membership interests in Comstock IX for an aggregate amount of $2.5 million (the “Comstock IX Private Placement”). The Comstock IX Private Placement was exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. The Comstock IX Class B Members are entitled to a cumulative, preferred return of 20% per annum, compounded annually on their capital account balances. The Company has the right to repurchase the interests of the Comstock IX Class B Members at any time, provided that (i) all of the Comstock IX Class B Members’ interests are acquired, (ii) the purchase is made in cash and (iii) the purchase price equals the Comstock IX Class B Members’ capital accounts plus any amount necessary to cause the preferred return to equal a cumulative cash on cash return equal to 20% per annum. The proceeds from the Comstock IX Private Placement are being utilized (A) for the current and planned construction of the Marrwood East project of 35 single family homes in Loudoun County Virginia, (B) to reimburse the Company for prior expenditures incurred on behalf of the Marrwood East project and (C) for general corporate purposes of the Company. The Company evaluated Comstock IX and determined that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support and the Company was the primary beneficiary as a result of its complete operational control of the activities that most significantly impact the economic performance and its obligation to absorb losses or receive benefits. Accordingly, the Company consolidates this entity. No distributions have been paid to the Comstock IX Class B Members through December 31, 2015.At December 31, 2015 and December 31, 2014, the distributions and contributions for the VIEs discussed above are included within the ‘non-controlling interest’ classification in the consolidated statement of changes in stockholder’s equity.At December 31, 2015 and December 31, 2014, total assets of these VIEs were approximately $22.7 million and $19.5 million, respectively, and total liabilities were approximately $13.0 million and $13.5 million, respectively. The classification of these assets is primarily within ‘real estate inventories’ and the classification of liabilities are primarily within ‘notes payable – secured by real estate inventories’ and ‘accounts payable and accrued liabilities’ in the consolidated balance sheets.Land purchase optionsThe Company typically acquires land for development at market prices under fixed price purchase agreements. The purchase agreements require deposits that may be forfeited if the Company fails to perform under the agreements. The deposits required under the purchase agreements are in the form of cash or letters of credit in varying amounts. The Company may, at its option, choose for any reason and at any time not to perform under these purchase agreements by delivering notice of its intent not to acquire the land under contract. The Company’s sole legal obligation and economic loss for failure to perform under these purchase agreements is typically limited to the amount of the deposit pursuant to the liquidated damages provision contained within the purchase agreement. As a result, none of the creditors of any of the entities with which the Company enters into forward fixed price purchase agreements have recourse to the general credit of the Company.The Company does not share in an allocation of either the profit earned or loss incurred by any of these entities with which the Company has fixed price purchase agreements. The Company has concluded that whenever it options land or lots from an entity and pays a significant non-refundable deposit as described above, a variable interest entity is created under the provisions of ASC 810-10,Consolidation. This is because the Company has been deemed to have provided subordinated financial support, which creates a variable interest which limits the equity holder’s returns and may absorb some or all of an entity’s expected theoretical losses if they occur. The Company, therefore, examines the entities with which it has fixed price purchase agreements for possible consolidation by the Company under the provision of ASC 810-10. The Company does not have any contractual or ownership interests in the entities with which it contracts to buy the land. The Company concluded that it does not have the power to direct the activities that most significantly impact the economic performance of the VIEs, including the power to site plan and engineer the developments, finance the parcels under option contract, and develop the raw parcels under option contract into finished lots. The third party retains these rights under the fixed purchase price agreements until title is transferred to the Company upon settlement of the transaction, or a portion of the transactions as defined. Therefore, the Company has not consolidated these VIEs in the consolidated balance sheets.4. REAL ESTATE INVENTORIESReal estate inventories include land, land development costs, construction and other costs. Real estate held for development and use is stated at cost, or when circumstances or events indicate that the real estate is impaired, at estimated fair value. Real estate held for sale is carried at the lower of cost or fair value less estimated costs to sell. Land, land development and indirect land development costs are accumulated by specific project and allocated to various units within that project using specific identification and allocation based upon the relative sales value, unit or area methods. Direct construction costs are assigned to units based on specific identification. Construction costs primarily include direct construction costs and capitalized field overhead. Other costs are comprised of fees, capitalized interest and real estate taxes. We also use our best estimate at the end of a reporting period to capitalize estimated construction and development costs. Costs incurred to sell real estate are capitalized to the extent they are reasonably expected to be recovered from the sale of the project and are tangible assets or services performed to obtain regulatory approval of sales. Other selling costs are expensed as incurred.For assets held for development and use, a write-down to estimated fair value is recorded when the net carrying value of the property exceeds its estimated undiscounted future cash flows. Estimated fair value is based on comparable sales of real estate in the normal course of business under existing and anticipated market conditions. These evaluations are made on a property-by-property basis whenever events or changes in circumstances indicate that the net book value may not be recoverable.If the project is considered held for sale, it is valued at the lower of cost or fair value less estimated selling costs. The evaluation takes into consideration the current status of the property, carrying costs, costs of disposition, various restrictions and any other circumstances that may affect fair value including management’s plans for the property. At December 31, 2014 and 2015, the Company had no projects classified as held for sale.During 2015, as a result of our impairment analysis, the Company wrote off $2.8 million in feasibility, site securing, predevelopment, design, carry costs and related costs for three communities in the Washington, D.C. metropolitan area due to inventory delivery delays and inefficiencies which led to the Company re-evaluating the lot takedown strategy. The inventory was deemed impaired in December 2015 and was written down due to changes made to the scheduled lot take down strategy, offers received for the properties or changes in zoning requirement.In 2014, we wrote-off $2.7 million in land, land development, and design costs for one community in the Washington, D.C. metropolitan area. The write-off occurred in December 2014 due to a revision in our previous disposition strategy. The impairment charges were recorded in the “Impairment charges and write-off” line within the accompanying consolidated statement of operations. The impairment charges were calculated using a discounted cash flow analysis model, which is dependent upon several subjective factors, including the selection of an appropriate discount rate, estimated average sales price and estimated sales rates.After impairments and write-offs, real estate held for development and sale consists of the following: December 31,
2015 December 31,
2014 $ 22,896 $ 22,487 15,327 18,402 $ 38,223 $ 40,889 Year Ended December 31, 2020 Statement of Operations: Total revenue $ 9,308 Direct costs 2,785 Other costs 8,860 Net loss $ (2,337) Comstock Holding Companies, Inc. share of net loss $ (58) December 31,
2015 December 31,
2014 $ 669 $ 519 52 119 45 68 766 706 (372 ) (311 ) $ 394 $ 395 December 31,
2020December 31,
2019Computer equipment and capitalized software $ 957 $ 893 Furniture and fixtures 66 63 Office equipment 224 224 Vehicles 139 141 Leasehold improvements 56 6 1,442 1,327 Less: accumulated depreciation (1,176) (1,049) $ 266 $ 278 and amortization expense, included in ‘general and administrative’ in the accompanying consolidated statementsConsolidated Statements of operations,Operations, amounted to $164$0.2 million and $100$0.2 million for the years ended December 31, 20152020 and 2014,2019, respectively.OTHER ASSETSOther assets consistLEASESfollowing: December 31,
2015 December 31,
2014 $ 37 $ 179 1,259 1,324 1,630 885 760 2,796 1,286 — 1,065 1,365 6,037 6,549 (1,522 ) (853 ) $ 4,515 $ 5,696 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIESAccounts payablearrangement. For the purposes of recognizing ROU assets and accruedlease liabilities consistassociated with the Company’s leases, the Company has elected the practical expedient to not recognize a ROU asset or lease liability for short-term leases, which are leases with a term of twelve months or less. The lease term is defined as the non-cancelable portion of the following: December 31,
2015 December 31,
2014 $ 6,720 $ 7,547 312 492 591 484 15 15 $ 7,638 $ 8,538 8. CREDIT FACILITIESNotes payable consistedlease term plus any periods covered by an option to extend the lease if it is reasonably certain that the option will be exercised.following: December 31,
2015 December 31,
2014 $ 5,832 $ 6,505 13,833 13,748 1,367 5,770 3,791 2,356 24,823 28,379 1,548 2,064 19,028 15,488 $ 45,399 $ 45,931 Operating
Leases2021 $ 895 2022 917 2023 939 2024 961 2025 and future years 6,083 Total lease payments 9,795 Less: imputed interest 1,865 Present value of operating lease liabilities $ 7,930 2015, maturities and/or curtailment obligations2020 and 2019 the balance of allGoodwill was $1.7 million. This Goodwill is reflected within our Real Estate Services segment.our borrowings are as follows: $ 20,779 21,569 3,051 $ 45,399 We arefour years. During the years ended December 31, 2020 and 2019, $0.1 million of intangible asset amortization was recorded in active discussions with our lenders with respect toGeneral and Administrative expense on the 2016 maturities and are seeking extensions and modifications to the credit facilities and loans as necessary. The current performanceConsolidated Statement of the projects and our early discussions with our lenders indicates that we will likely be successful in extending or modifying these loans, though no assurances can be made that we will be successful in these efforts.Construction, development and mezzanine debt - securedThe Company enters into secured acquisition and development loan agreements to purchase and develop land parcels. In addition, the Company enters into secured construction loan agreements for the constructionOperations.December 31,
2020December 31,
2019Intangibles $ 268 $ 268 Less: accumulated amortization (232) (165) $ 36 $ 103 20152020, the future estimated amortization expense related to these intangible assets was:2021 $ 36 Total $ 36 2014,other intangible assets were recognized during the years ended December 31, 2020 and 2019.had secured construction revolving credit facilitiesentered into a Revolving Capital Line of Credit Agreement (the “Loan Documents”) with a maximum loan commitment of $40.5 million and $33.4 million, respectively. The Company may borrow under these facilitiesCDS, pursuant to fund its homebuilding activities. The amount the Company may borrow is subject to applicable borrowing base provisions and the number of units under construction, which may also limit the amount available or outstanding under the facilities. The facilities are secured by deeds of trust on the real property and improvements thereon, and the borrowings are repaid with the net proceeds from the closings of homes sold, subject to a minimum release price. As of December 31, 2015 and 2014, the Company had approximately $34.7 million and $26.9 million, respectively, of unused loan commitments. The Company had $5.8 million and $6.5 million of outstanding construction borrowings as of December 31, 2015 and 2014, respectively, of which $2.4 million of the outstanding construction revolving credit facilities related to the Townes at Shady Grove Metro, the Townes at Maxwell Square, and The Hampshires projects with Eagle Bank matured in January 2016. Additionally, the Company had $1.4 million in outstanding construction borrowings related to the Two Rivers II project with Cardinal bank that matured in March 2016. All other credit facilities have maturity dates ranging from May 2016 to December 2016, including extensions subject to certain conditions. Interest rates charged under these facilities include the London Interbank Offered Rate (“LIBOR”) and prime rate pricing options, subject to minimum interest rate floors. At December 31, 2015 and 2014, the weighted average interest rate on the Company’s outstanding construction revolving facility was 4.8% and 5.1%, respectively. Subsequent to year end, the Company secured extensions on $3.8a $10.0 million which was scheduled to mature incapital line of credit (the “Revolver”). Under the first quarter of 2016. See Note 20 for further discussions on the extensions.As of December 31, 2015 and 2014, the Company had approximately $37.8 million and $28.0 million, respectively, of aggregate acquisition and development maximum loan commitments of which $13.8 million and $13.7 million, respectively, was outstanding, of which $2.2 millionterms of the outstanding acquisition and development loans related toLoan Documents, the Townes at Shady Grove Metro, Momentum | Shady Grove, and The Townes at Maxwell Square projects with Eagle Bank that matured in January 2016. All other loans have maturity dates ranging from March 2016 to March 2018, including auto extension subject to certain conditions and bear interest at a rate based on LIBOR and Prime Rate pricing options, with interest rate floors ranging from 4.5% to 5.5%. As of December 31, 2015 and 2014, the weighted average interest rates were 4.7% per annum and 4.8% per annum, respectively. Subsequent to year end, the Company secured extensions on $2.2 million which was scheduled to mature in the first quarter of 2016. See Note 20Revolver provides for further discussions on the extensions.During 2015, the Company had three secured mezzanine loans. The first mezzanine loan was paid in full during the fourth quarter of 2015, and had a balance outstanding of $3.0 million at December 31, 2014. This mezzanine financing was utilized to acquire land for the development of The City Homes at The Hampshires and The Townes at The Hampshires projects and was secured by the second deed of trust. This first mezzanine loan bore an initial variable interest rate of 13.5%the Wall Street Journal Prime Rate plus 1.00% per annum and was paid on aadvances made under the Revolver, payable monthly basis.second and third mezzanine loans are being used to finance the development of the Townes at Shady Grove Metro and Momentum | Shady Grove projects. The maximum principal commitment amount of these loans is $3.2 million, of which $1.4 million and $2.8 million of principal and accrued interest was outstanding as of December 31, 2015 and 2014, respectively. These financingsfive-year term facility allows for interim draws that carry an interest rate of 12% of which 6% is paid on a monthly basis with the remaining 6% being accrued and paid at maturity. These financings are guaranteed by the Company and our Chief Executive Officer. Subsequent to year end, the Company secured an extension on $1.1 million which was scheduled to mature in the first quarter of 2016. See Note 20 for further discussions on the extension.Line of credit – securedAt December 31, 2015 and 2014, the Company had a secured revolving line of credit amounting to $4.0 million and $5.0 million, respectively, of which $3.8 million and $2.4 million was outstanding at December 31, 2015 and 2014, respectively. This line of credit is secured by the first priority security interest in the Company’s wholly owned subsidiaries in the Washington D.C., metropolitan area and is used to finance the predevelopment related expenses and deposits for current and future projects. This line of credit bears a variable interest rate tied to one-month LIBOR plus 3.25% per annum, with an interest rate floor of 5.0%. This line of credit also calls for the Company to adhere to financial covenants such as, minimum net worth and minimum liquidity, measured quarterly and minimum EBITDA measured on a twelve month basis. As of December 31, 2015, the Company was in compliance with all financial covenants dictated by the line of credit agreement. This line of credit is guaranteed by our Christopher Clemente, Chief Executive Officer. This line of credit was to mature on January 31, 2016 but subsequent to year end, the Company secured an extension on this line of credit, which calls for a maturity date of 12 months from the initial date of the disbursement unless a longer initial term is agreed to June 30, 2016. See Note 20 for further discussions on the extension.Unsecured noteAt December 31, 2015 and December 31, 2014,by CDS. This loan carries no covenants or collateral requirements. On March 27, 2020, the Company had $1.5borrowed $5.5 million and $2.1under the Revolver. The $5.5 million respectively, outstanding toborrowed has a bank under a 10-year unsecured note. Interest is charged on this financing at LIBOR plus 2.2%. At December 31, 2015 and 2014, the interest rate was 2.5% and 2.4%, respectively. The maturity date of this financing is December 28, 2018. The Company is required to make monthly principal and interest payments through maturity.payable to affiliate—unsecuredStonehengeOn March 14, 2013, Stonehenge Funding, LC (“Stonehenge”), an entity wholly-owned by our Chief Executive Officer, entered into an Extension Agreement of the Amended and Restated Senior Note with the Company to extend the maturity date of the financing arrangement to January 1, 2016. Beginning on April 1, 2013, the Company is required to pay $50 monthly to Stonehenge, to be allocated first to accrued interest and then to the outstanding principal. On December 29, 2015, the Company and Stonehenge entered into a Note Exchange Agreement, which converted the outstanding principal and unpaid interest balance of the note to shares of Series B preferred stock. Refer to Note 10 for further discussion. Interest was charged to the loan based on LIBOR plus 3% per annum. The Company had approximately $4.2 million of outstanding borrowings as of December 31, 2014, and the interest rate was 3.6% per annum. October 17, 2014, Comstock Growth Fund, L.C. (“CGF”), an administrative entity managed by the Company, was created for purposes of raising capital through a private placement offering. CGF entered into a subscription agreement with Comstock Development Services, LC (“CDS”), an entity wholly-owned by our Chief Executive Officer, pursuant to which CDS purchased membership interests in CGF for a principal amount of $10.0 million (the “CGF Private Placement”). Other investors who subsequently purchased interest in the CGF Private Placement included members of the Company’s management, board of directors and third party accredited investors for an additional principal amount of $6.2 million. Purchasers other than CDS who purchased a certain amount of membership interests received warrants that represent the right to purchase an aggregate amount of shares of the Company’s Class A common stock, depending upon the investment amount. As of December 31, 2015 and 2014, we had issued 76 and 34 warrants, respectively, representing the right to purchase shares of our Class A common stock to CGF having an aggregate fair value of $433 and $162, respectively, which was considered as a debt discount. In calculating the fair value of the warrants, the Company used the Black-Scholes pricing model based upon the date the funds were contributed to CGF. The Company amortizes the debt discount over the three year term of the loan to interest expense. Simultaneously, on October 17, 2014, the Company entered into an unsecured promissory note with CGFComstock Growth Fund (“CGF”) whereby CGF made a loan to the Company in the initial principal amount of $10.0 million and a maximum amount available for borrowing of up to $20.0 million with a three year termterm. On December 18, 2014, the loan agreement was amended and restated to provide for a maximum capacity of $25 million. On May 23, 2018, the Company entered into a Membership Interest Exchange and Subscription Agreement (the “Original Promissory“Membership Exchange Agreement”), together with a revised promissory note agreement, in which a note (“CGF Note”). with an outstanding principal and accrued interest balance of $7.7 million was exchanged for 1,482,300 shares of the Company’s Series C Non-Convertible Preferred Stock, par value $0.01 per share and a stated liquidation value of $5.00 per share (the “Series C Preferred Stock”), issued by the Company to CDS. The loan bearsCompany exchanged the preferred equity for 91.5% of CDS membership interest in the CGF promissory note. Concurrently, the face amount of the CGF promissory note was reduced to $5.7 million as of the Effective Date. The CGF Note bore interest at a floatingfixed rate based on the 30 day LIBOR plus 9.75% per annum with aof 10% floor per annum. Interest payments will bewere made monthly in arrears. There is a principal curtailment requirement of 10% annually based on the average outstanding balance for the prior year. The loan will be used by the Company (i) to finance the Company’s current and future development pipeline, (ii) to repay all or a portion of the Company’s prior private placements; (iii) to repay all or a portion of the Company’s project mezzanine loans, and (iv) for general corporate purposes. The Company is the administrative manager of CGF but does not own any membership interests. The Company had approximately $14.1 million and $11.3$5.7 million of outstanding borrowings and accrued interest under the CGF loan, net of discounts, as of December 31, 2015 and 2014, respectively. 2019. The maturity date for the CGF Note was April 16, 2020. The CGF Note was repaid prior to maturity during the year ended December 31, 2020.20152019 the Company had retired 2 secured loans related to Comstock Environmental. One loan was used to finance the acquisition of Comstock Environmental, and 2014,carried a fixed interest rate of 6.5%, and had a maturity date of October 17, 2022. At December 31, 2019, this financing had an outstanding balance of $0.7 million. This loan was retired during 2020. Comstock Environmental had an additional secured loan with an outstanding balance of $27 thousand as of December 31, 2019 to fund the purchase of an asset used in the business. This loan was retired during 2020. These financings were secured by the assets of Comstock Environmental and were guaranteed by our Chief Executive Officer.10.0% per annum. For5.0%. During 2020, the Company retired this promissory note.20152020 and 2014,2019, the Company made interest payments of $1.5$0.4 million and $0.2$0.6 million, respectively.On18, 2014,31, 2020 the Company retired the $5.7 million of outstanding borrowings for the CGF entered into amendedNote and restated subscription agreements with CDS, management and membersdid not make principal payments for the Revolver. During the year ended December 31, 2019, the Company did 0t make principal payments for the CGF loan.Company’s board of directors who participated in the CGF Private Placement (the “Amended Private Placement”). Under the Amended CGF Private Placement, in addition to the warrants described above, the Company entered into a commitment to issue 226,857 shares of our Class A common stock to purchasers of membership interests of CGF. following:December 31,
2020December 31,
2019Secured financing $ 0 $ 694 Notes payable - due to affiliates, unsecured, net of $27 thousand discount and unamortized deferred financing charges as of December 31, 2019 5,500 5,706 Unsecured financing charges 5 595 Total notes payable, net $ 5,505 $ 6,995 2014,2020, maturities of our borrowings are as follows:2021 $ 5 2022 — 2023 5,500 Total $ 5,505 fair valueCOVID-19 pandemic, the Paycheck Protection Program (the “PPP”) was established under the CARES Act and administered by the U.S. Small Business Administration (“SBA”). Companies who met the eligibility requirements set forth by the PPP could qualify for PPP loans provided by local lenders, which supports payroll, rent and utility expenses (“qualified expenses”). If the loan proceeds are fully utilized to pay qualified expenses over the covered period, as further defined by the PPP, the full principal amount of the stock, $1,091, was included within ‘Accounts payable and accrued liabilities’ with a corresponding offsetPPP loan may qualify for loan forgiveness, subject to ‘Notes payable - due to affiliates’ in the form of debt discountpotential reduction based on the consolidated balance sheets. Thelevel of full-time employees maintained by the organization during the covered period as compared to a baseline period.amortizesreceived proceeds of $1.95 million under the debt discount overPPP (the "PPP Loan") provided by Mainstreet Bank (the “Lender”). Based on the three yearterm and conditions of the loan agreement, the term of the PPP loan to interest expense. For theis two years ended December 31, 2015 and 2014, the resulting change in fair value of $696 and $32, respectively was recorded as a gain on derivative and was included within ‘Other income’ on the consolidated statement of operations.On May 12, 2015, the Company issuedwith an aggregate 226,857 shares of our Class A common stock to the purchasers in the Amended CGF Private Placement. Upon issuance of these shares, the derivative liability was satisfied and was no longer an obligation, and therefore the value of the shares were recorded within ‘Stockholders’ equity’ as an increase to Class A common stock and ‘Additional paid-in capital’ within the consolidated balance sheets based on the fair value the stock on the date of issuance. The shares of our Class A common stock were issued pursuant to exemptions from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and Rule 506 promulgated thereunderComstock Growth Fund IIAdditionally, on December 29, 2015, Comstock Growth Fund II, L.C. (“CGF II”), an administrative entity managed by the Company was created for the purpose of extending loans to the Company. CGF II entered into a subscription agreement with CDS pursuant to which CDS purchased membership interests in CGF II for an initial aggregate principal amount of $5.0 million (the “CGF II Private Placement”).Simultaneously on December 29, 2015, the Company entered into a revolving line of credit promissory note (the “Promissory Note”) with CGF II whereby CGF II made a loan to the Company in the initial principal amount of $5.0 million and a maximum amount available for borrowing of up to $10.0 million with a two year term, which may be extended an additional year upon payment of a $10 extension fee. Theannual interest rate is 10% per annum,of 1% and principal and interest payments will be accrued and paid in kind monthlydeferred for the first year, and then paid current monthly in arrears beginning December 31, 2016. The Company pays an origination fee of 1% on the amount of the advance, up to an aggregate amount of $100, and a maintenance fee of 0.25% of the average outstanding balancesix-months of the loan on a quarterly basis. The capital providedterm, which has been updated according to the Company byPaycheck Protection Program Flexibility Act of 2020 (“Flexibility Act”).loan will be used byFlexibility Act was signed into law, which amended the Company (i) to capitalize the Company’s current and future development pipeline, (ii) to repay all or a portionCARES Act. The Flexibility Act changed key provisions of the Company’s prior private placements;PPP, including, but not limited to, (i) provisions relating to the maturity of PPP loans, (ii) the deferral period covering of PPP loan payments and (iii) the process for general corporate purposes. Asmeasurement of December 31, 2015, $5.0 million was outstanding in principal and accrued interest. Subsequent to year-end,loan forgiveness. More specifically, the Flexibility Act provides a minimum maturity of five years for all PPP loans made on January 8, 2016, the Company paid off the $5.0 million line of credit outstanding to CGF II at December 31, 2015. Concurrently, CDS redeemed all of its equity interest in CGF II. Refer to Note 20 for further discussion on transactions entered into with CGF II.9. WARRANTSAs part of the Comstock VII Private Placement discussed in Note 3, the Company issued warrants to purchase shares of the Company’s Class A common stock to the Comstock VII Class B Members who are not officers, directors or affiliates of the Company and who purchased membership interests in the offering that equaled or exceeded an initial investment amount of $250. The warrants represent the right to purchase an aggregate amount of up to 16 shares of the Company’s Class A common stock. The warrants have an initial exercise price which is equal to the average of the closing price of the Company’s Class A common stock of the 20 trading days preceding the issuance of the warrant. The warrants contain a cashless exercise provision. In the event the purchasers exercise the warrants on a cashless basis, the Company will not receive any proceeds. The warrants may be exercised at any time prior to March 14, 2023.In addition, as part of the Comstock VIII Private Placement discussed in Note 3, the Company issued warrants to purchase shares of the Company’s Class A common stock to the Comstock VIII Class B Members who are not officers, directors or affiliates of the Company and who purchased membership interests that equaled or exceeded an initial investment amount of $250. The warrants represent the right to purchase an aggregate amount of up to 15 shares of the Company’s Class A common stock. The warrants have an initial exercise price which is equal to the average of the closing price of the Company’s Class A common stock of the 20 trading days preceding the issuance of the warrant. The warrants contain a cashless exercise provision. In the event the purchasers exercise the warrants on a cashless basis, the Company will not receive any proceeds. The warrants may be exercised at any time prior to December 12, 2023.As discussed in Note 8, as part of the CGF Private Placement, depending upon the investment amount, purchasers of interests in CGF other than CDS received warrants that represent the right to purchase a certain number of shares of the Company’s Class A common stock. For purchasers who are not affiliates or insiders, the warrants have an initial exercise price (subject to certain restrictions as indicated on each warrant) equal to the average of the closing price of the Company’s Class A common stock over the 20 trading days preceding the issuance of the warrant. The exercise price of the warrants to affiliates and insiders was determined based on the previous day closing price of the Class A common stock fromafter the date of the issuanceenactment of the warrants.Flexibility Act (“June 5, 2020”) and permits lenders and borrowers to extend the maturity date of earlier PPP loans by mutual agreement. As of the date of this filing, the Company has not approached the Lender to request an extension of the current maturity date from two years to five years. The warrants containFlexibility Act also provides that if a cashless exercise provision.borrower does not apply for forgiveness of a loan within 10 months after the last day of the measurement period (“covered period”), the PPP loan is no longer deferred and the borrower must begin paying principal and interest. Therefore, the Company’s deferral period for principal and interest payments was updated from six-months according to the terms and conditions of the loan agreement to ten months. In addition, theeventlength of the covered period from eight weeks to 24 weeks from receipt of proceeds, while allowing borrowers that received PPP loans before June 5, 2020 to determine, at their sole discretion, a purchaser exercisescovered period of either eight weeks or 24-weeks.warrantapplicable terms and conditions of the Flexibility Act, the Company has elected to extend the length of the covered period from the lesser of (i) period whereby qualified expenses equal loan proceeds or (ii) 24 weeks. The Company has performed initial calculations for the PPP loan forgiveness according to the terms and conditions of the SBA’s Loan Forgiveness Application (Revised June 16, 2020) and, based on a cashless basis,such calculations, expects that the PPP loan will be forgiven in full. In addition, the Company has determined that it is probable the Company will not receive any proceeds. The warrants may be exercised at any time within ten years frommeet all the dateconditions of issuance. As of December 31, 2015, the warrants represent the right to purchase an aggregate amount of up to 76 shares of our Class A common stock.In connection with entering into the SunBridge (“BridgeCom”)PPP loan agreement in 2011,forgiveness. Therefore, the Company issued warrantsrecognized PPP funding as a contra-expense during the periods when qualified expenses were incurred. The contra-expense recognized lowered the reimbursable costs, billed as revenue, to purchase shares ofclients under certain contracts where the Company’s Class A common stock to BridgeCom Development I, LLC, an affiliate of SunBridge.Company earns revenue from expenses incurred. The warrants represent the right to purchase an aggregate amount of up to 143 shares of the Company’s Class A common stock. The warrants have an initial exercise price which is equalbalance and activity related to the average of the closing price of our Class A common stock of the 20 trading days preceding the issuance of the warrant. The warrants contain a cashless exercise provision. In the event the purchasers exercise the warrants on a cashless basis, the Company will not receive any proceeds. The warrants may be exercised at any time prior to July 12, 2021. On May 29, 2012, the Company repaid the SunBridge loans in full and the SunBridge warrants remain unexercisedPPP loan is as follows as of December 31, 2015.10. RELATED PARTY TRANSACTIONSDecember 31,
2020PPP loan proceeds $ 1,954 Qualified expenses eligible for forgiveness $ (1,954) PPP loan balance $ 0 leasedecision to the SBA. If the lender determines that the borrower is entitled to forgiveness of some or all of the amount applied for under the statute and applicable regulations, the lender must request payment from the SBA at the time the lender issues its corporate headquartersdecision to the SBA. The Lender completed its review and submitted the Company's forgiveness application to the SBA in February 2021. The SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, not later than 90 days after the lender issues its decision to the SBA.an affiliate wholly-owned by our CEO. Future minimum leasethe Company, and/or the Lender filing suit and obtaining a judgment against the Company.under this lease are as follows: $ 329 167 $ 496 Forof its share of Social Security tax due during the years"payroll tax deferral period". The payroll tax deferral period began on August 1, 2020 and ended December 31, 2015 and 2014, total payments made were $0.3 million. As of2020. At December 31, 2015,2020 the Company recorded a straight–line rent payabletotal amount of $24, whichsuch deferral was $0.2 million and is included in ‘Accounts payable and accrued liabilities’.On February 23, 2009, Comstock Homes of Washington, L.C., a wholly-owned subsidiary of the Company, entered into a Services Agreement with Comstock Asset Management, L.C., an entity wholly-owned by the Chief Executive Officer, to provide services related to real estate development and improvements, legal, accounting, marketing, information technology and additional support services. For the years ended December 31, 2015 and 2014, the Company billed Comstock Asset Management, L.C. $0.9 and $0.5 million, respectively, for services and out-of-pocket expenses incurred. Revenues from this arrangement are includedreflected within ‘Revenue – other’ within the accompanying consolidated statement of operations. As of December 31, 2015 and 2014, the Company was owed $81 and $38, respectively, under this contract, which is included in ‘Trade receivables’ in the accompanying'Accrued personnel costs' on our consolidated balance sheets.On December 29, 2015,sheet. Per the Company and Stonehenge entered into a Note Exchange and Subscription Agreement pursuant to which the Note in the original principal amount of $4,500 issued by the Company to Stonehenge was exchanged for 772,210 shares of the Company’s newly created Series B Non-Convertible Preferred Stock, par value $0.01 per share and a stated value of $5.00 per share (the “Series B Preferred Stock”). The number of shares of Series B Preferred Stock received by Stonehenge in exchange for the note represented the principal amount outstanding plus all accrued but unpaid interest under the note as of December 29, 2015, which was $3,861. The note was cancelled in its entirety on December 29, 2015. The holders of Series B Preferred Stock will earn dividends at a rate of 8.75% per annum accruing from the effective date of the Note Exchange and Subscription Agreement. The dividends will accrue whether or not declared. The dividends are also cumulative and payable quarterly in arrears at the last day of each quarterly reporting period in the form of additional Series B Preferred Stock (PIK) or in the sole discretion of the board of directors, in cash. As a result of the Stonehenge note conversion, the Company realized a taxable gain of $1.0 million. See Note 18 for further discussion on the taxable gain.On October 17, 2014, CGF entered into a subscription agreement with CDS pursuant to which CDS purchased membership interests in CGF for a principal amount of $10.0 million (the “CGF Private Placement”). Other Purchasers who purchased interest in the CGF Private Placement included members of the Company’s management, board of directors and third party accredited investors for an additional principal amount of $6.2 million.Simultaneously, on October 17, 2014, the Company entered into an unsecured promissory note with CGF whereby CGF made a loan to the Company in the initial principal amount of $10.0 million and a maximum capacity of up to $20.0 million. On December 18, 2014, the loan agreement was amended and restated to provide for a maximum capacity of $25.0 million. All of the other terms of the unsecured promissory note remaineddeferral program, 50% of the same. deferred amount is due on December 31, 2021, and the remaining 50% is due on December 31, 2022 at 0% interest.borrowed additional principal loan amount of $6.2 millionleases its headquarters under the Amended and Restated CGF promissory note bringing the total aggregate principal amount borrowed to $16.2 million.a non-cancelable operating lease. The CGF loan has a three year term carrying a floating interest rate of LIBOR plus 9.75% with a 10% floor. The loan requires an annual principal repayment in the amount of 10% of the average outstanding balance and a monthly interest payment that will be made in arrears.lease contains various renewal options. See Note 86 for further discussion of transactions entered with CGF.Additionally, on December 18, 2014, CGF entered into amendedthe Company's operating lease commitments.restated subscription agreements with CDS, members offrom time to time, the Company’s management, board of directors and third party accredited investors who participatedCompany is involved in the CGF Private Placement (the “Amended CGF Private Placement”). Under the Amended CGF Private Placement, in additionlitigation incidental to the warrants described under Note 13 to the accompanying consolidated financial statements,conduct of its business. In accordance with GAAP, the Company entered intorecords a commitment to grant 226,857 shares of our Class A common stock to purchasers of membership interest of CGF in the Amended CGF Private Placement. On May 12, 2015, the Company issued the 226,857 shares of our Class A common stock to the purchasers in the Amended CGF Private Placement. The Amended CGF Private Placement was closedprovision for additional investments on May 15, 2015.On December 29, 2015, the Companya liability when it is both probable that a liability has been incurred and CGF II entered into an unsecured revolving line of credit promissory note in the initial principal amount of $5.0 million and a maximum amount available for borrowing of up to $10.0 million with a two year term, which may be extended an additional year upon payment of a $10 extension fee. The interest rate is 10% per annum, and interest payments will be accrued and paid in kind monthly for the first year, and then paid current monthly in arrears beginning December 31, 2016. The Company pays an origination fee of 1% on the amount of the advance, up tocan be reasonably estimated. While it is possible that an aggregate amount of $100, and a maintenance fee of 0.25% of the average outstanding balance of the loan on a quarterly basis. As of December 31, 2015, $5.0 million was outstanding in principal and accrued interest. See Note 8 for further discussion of transactions entered with CGF II.In connection with the departure of Gregory V. Benson, the Company’s former Chief Operating, in the second quarter of 2014, the Company entered into a Separation Agreement. See Note 14 for a summary of the Separation Agreement.See Note 3 for a summary of the Comstock VII Private Placement and the Comstock VIII Private Placement which involved certain of our officers and directors and Note 8 to the consolidated financial statements for further description of the CGF Private Placement and the CGF II Private Placement.11. EMPLOYEE BENEFIT PLANSThe Company maintains a defined contribution retirement savings plan pursuant to Section 401(k) of the Internal Revenue Code (the “Code”). Eligible participantsunfavorable outcome may contribute a portion of their compensation to their respective retirement accounts in an amount not to exceed the maximum allowed under the Code. The Company matches 100% of the employee’s contribution, up to 3% of each participant’s gross salary and 50% of the employee’s contribution above 3% not exceeding 5% of the participant’s gross salary, per pay period. Contributions made by the Company become fully vested after six years of service. The total amount matched for the 12 months ended December 31, 2015 and 2014 was $70 and $48, respectively.12. RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANSOn December 14, 2004, the Company adopted the 2004 Long-Term Compensation Plan (the “Plan”). The Plan provides for the issuance of stock options, stock appreciation rights, or SARs, restricted stock, deferred stock, dividend equivalents, bonus stock and awards in lieu of cash compensation, other stock-based awards and performance awards. Any shares issued under the Plan typically vest over service periods that range from one to five years. Stock options issued under the plan expire 10 years from the date they are granted.The Plan provided an initial authorization of 0.4 million shares of Class A common stock for issuance and allows an automatic annual increase equal to the lesser of (i) 3% of the Class A common stock outstanding (ii) 107 shares or (iii) such lesser amount as may be determined by the Company’s board of directors. On April 27, 2012, the Company authorized an increase in the number of shares of our Class A common stock reserve to 1.0 million. On June 22, 2012, the Company’s stockholders approved the Amended and Restated 2004 Long-Term Incentive Compensation Plan, including an increase in the reserve, with an automatic annual increase on January 1 of each successive year of the lesser of (i) 3% of the Class A common stock outstanding or (ii) 107 shares. As of December 31, 2015 and 2014, there were 0.3 million shares available for issuance under the Plan (as amended). The authorization limits set forth in the Plan (as amended) have been proportionately reduced, as set forth above,occur as a result of the “Reverse Stock Split.”The fair value of each option award is calculated on the date of grant using the Black-Scholes option pricing model and certain subjective assumptions. Expected volatilities are calculated based on our historical trading activities. We estimate forfeitures using a weighted average historical forfeiture rate. Our estimates of forfeitures will be adjusted over the requisite service period based on the extent to which actual forfeitures differ,one or are expected to differ, from their estimate. The risk-free rate for the periods is based on the U.S. Treasury rates in effect at the time of grant. The expected term of options is based on the simplified method which assumes that the option will be exercised midway between the vesting date and the contractual term of the option. The Company is able to use the simplified method as the options qualify as “plain vanilla” options as defined by ASC 718,Stock Compensation.The following table summarizes the assumptions used to calculate the fair value of options during 2015 and 2014: 2015 2014 $ — $ 6.12 — — N/A 79.4%-142.60 % N/A 107.19 % N/A 1.79 % N/A 6.25 The following table summarizes information about stock option activity: Shares Weighted
Average
Exercise Price 169 $ 8.82 30 7.63 (5) 5.26 (3) 12.40 191 $ 8.68 — — — — (17) 11.55 174 $ 8.39 140 $ 8.03 As of December 31, 2015 and 2014, the weighted-average remaining contractual term of unexercised stock options was 5.6 years and 6.7 years, respectively.A summarymore of the Company’s restricted share activity is presented below: Shares Weighted
Average
Exercise Price 93 $ 11.20 — — (44) 10.64 (18) 10.57 31 $ 12.46 — — (15) 12.48 (4) 12.67 12 $ 12.42 Ascurrent litigation matters, at this time management has concluded that the resolutions of December 31, 2015 and 2014, there was $0.1 million and $0.5 million, respectively, of unrecognized compensation cost related to stock options and restricted stock issuances granted under the Plan. The Company intends to issue new shares of its common stock upon vesting of restricted stock grants or the exercise of stock options.In November 2014, our board of directors approved a new share repurchase program authorizing the Company to repurchase up to three million shares of our Class A common stock in one or more open market or privately negotiated transactions depending on market price and other factors. We expect to use available cash on hand and cash generated from operating activities to fund the common share repurchase program.For the years ended December 31, 2015 and 2014, we purchased 10,988 and 13,624 shares, respectively, of our Class A common stock under the repurchase program for approximately $79 and $103, respectively (including commissions of $2). At December 31, 2015 0.4 million shares of our Class A common stock remain available for repurchase pursuant to our share repurchase agreement.13. NOTE RECEIVABLEThe Company originated a note receivable to a third party in the amount of $180 during 2014. This note has a maturity date of September 2, 2019 and is payable in monthly installments of principal and interest. The note bears a fixed interest rate of 6% per annum. As of December 31, 2015 and 2014, the outstanding balance of the note was $141 and $173, respectively, and was included within ‘Other assets’ in the accompanying consolidated balance sheets, the interest income of $9 and $4 for the years ended December 31, 2015 and 2014, respectively, was included in ‘Other income, net’ in the consolidated statements of operations.14. SEVERANCE AND RESTRUCTURINGIn connection with the departure of Gregory V. Benson, our former Chief Operating Officer in May 2014, the Company entered into a Separation Agreement with Mr. Benson on June 24, 2014. Mr. Benson served on our board until his term expired at our 2015 annual meeting of stockholders. The Separation Agreement provides for cash severance payment and incremental healthcare insurance through COBRA. In the second quarter of 2014, the Company recorded severance cost of $597, to be paid in 36 semi-monthly installments and healthcare cost of $14 to be paid over 12 months effective May 1, 2014 offset by $131 in forfeitures of stock options and restricted stock awards. The severance charge in 2014 was included in ‘General and administrative’ expenses in the consolidated statements of operations. The accrual was fully satisfied and paid through October 2015.In addition, per the Separation Agreement, the Company had a call option, but not an obligation, to purchase all or a portion of Mr. Benson’s shares of Class A and Class B common stock of the Company by June 30, 2015. The Agreement expired on June 30, 2015 and neither the Company nor any of its designees exercised any portion of the option under the Separation Agreement.15. COMMITMENTS AND CONTINGENCIESLitigationCurrently, wethese matters are not subjectexpected to any material legal proceedings. From time to time, we are named as a defendant in legal actions arising from our normal business activities. Although we cannot accurately predict the amount of our liability, if any, that could arise with respect to legal actions pending against us, we do not expect that any such liability will have a material adverse effect on ourthe Company's consolidated financial position, operatingfuture results of operations or cash flows. We believe that we have obtained adequate insurance coverage, rights to indemnification, or where appropriate, have established reserves in connection with these legal proceedings.Lettersliquidity. Legal defense costs are expensed as incurred.Measurement, establishes a framework for measuring fair value, expands disclosures regarding fair value measurementsMeasurements and Disclosures, which defines fair value as the price that would be received to sellfor an asset, or paid to transfer a liability, in an orderly transaction between market participants aton the measurement date. ASC 820 specifiesIn addition, it establishes a hierarchy of valuation techniques based on whether the inputs to aframework for measuring fair value measurement are consideredaccording to be observable or unobservable in a marketplace. The three measurement input levels for determiningthe following three-tier fair value are as followshierarchy:Fair values determined by •Level 1 inputs utilize- Quoted prices for identical assets or liabilities in active markets accessible as of the measurement date;for identical assets or liabilities that the Company has the ability to access.
The fair value of fixed and floating rate debt is based on unobservable inputs (Level 3 inputs). The fair value of the fixed and floating rate debt was estimated using a discounted cash flow analysis on the blended borrower rates currently available to the Company for loans with similar terms.
| December 31, 2015 | December 31, 2014 | |||||||
Carrying amount | $ | 45,399 | $ | 45,931 | ||||
Fair value | $ | 45,166 | $ | 44,854 | ||||
| December 31, 2020 | December 31, 2019 | ||||||||||
| Carrying amount | $ | 5,505 | $ | 6,995 | |||||||
| Fair value | $ | 5,485 | $ | 6,820 | |||||||
In connection with
was approximately $6.3 million and $8.4 million, respectively.
During 2015,generally convert into shares of our Class A common stock upon transfer. Class A common stock and Class B common stock are referred to as common stock throughout the notes to these financial statements, unless otherwise noted.
| 2019 | |||||
| Weighted average fair value of options granted | $ | 1.65 | |||
| Dividend yields | 0 | ||||
| Expected volatility | 82.03%-82.32% | ||||
| Weighted average expected volatility | 82.27 | % | |||
| Weighted average risk-free interest rates | 2.15 | % | |||
| Weighted average expected term (in years) | 8 | ||||
| Shares | Weighted Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding at January 1, 2019 | 418 | $ | 3.42 | 7.67 | $ | 9 | |||||||||||||||||
| Granted | 104 | 1.89 | |||||||||||||||||||||
| Exercised | 0 | 0 | |||||||||||||||||||||
| Forfeited or Expired | (7) | 12.01 | |||||||||||||||||||||
| Outstanding at December 31, 2019 | 515 | $ | 2.96 | 7.24 | $ | 60 | |||||||||||||||||
| Granted | 0 | 0 | |||||||||||||||||||||
| Exercised | 0 | 0 | |||||||||||||||||||||
| Forfeited or Expired | (79) | 3.75 | |||||||||||||||||||||
| Outstanding at December 31, 2020 | 436 | $ | 2.81 | 6.74 | $ | 424 | |||||||||||||||||
| Exercisable at December 31, 2020 | 274 | $ | 3.23 | 5.12 | $ | 256 | |||||||||||||||||
| Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Restricted unvested at January 1, 2019 | 138 | $ | 2.18 | ||||||||
| Granted | 254 | 2.33 | |||||||||
| Vested | (46) | 2.18 | |||||||||
| Forfeited or Expired | 0 | 0 | |||||||||
| Outstanding at December 31, 2019 | 346 | $ | 2.29 | ||||||||
| Granted | 636 | 1.96 | |||||||||
| Vested | (112) | 2.27 | |||||||||
| Forfeited or Expired | 0 | 0 | |||||||||
| Unvested at December 31, 2020 | 870 | $ | 2.06 | ||||||||
In 2014, we wrote-off $2.7 million in land, land development, and design costs for one community in the Washington, D.C. metropolitan area. The write-off occurred in December 2014 due to a revision in our previous disposition strategy. The impairment charges were recorded in the “Impairment charges and write-off” line within the accompanying consolidated statement of operations. The impairment charges were calculated using a discounted cash flow analysis model, which is dependent upon several subjective factors, including the selection of an appropriate discount rate, estimated average sales price and estimated sales rates. In performing our impairment modeling, we must select what we believe is an appropriate discount rate based on current market cost of capital and return expectations.
17.revenue earned from related parties.
| Years ended | |||||||||||
| 2020 | 2019 | ||||||||||
| Related party revenue | |||||||||||
| Asset management | $ | 21,818 | $ | 19,370 | |||||||
| Real estate services | 945 | 1,192 | |||||||||
| Total Related Party Revenue | $ | 22,763 | $ | 20,562 | |||||||
| Twelve Months Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
Statement of Operations: | ||||||||
Total net revenue | $ | 385 | $ | 399 | ||||
Total expenses | 127 | 116 | ||||||
|
|
|
| |||||
Net income | $ | 258 | $ | 283 | ||||
|
|
|
| |||||
Comstock Holding Companies, Inc. share of net income | $ | 129 | $ | 142 | ||||
|
|
|
| |||||
| Years ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Statement of Operations: | |||||||||||
| Total net revenue | $ | 185 | $ | 558 | |||||||
| Total expenses | 119 | 115 | |||||||||
| Net income | $ | 66 | $ | 443 | |||||||
| Comstock Holding Companies, Inc. share of net income | $ | 33 | $ | 222 | |||||||
| Years ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Revenue by customer | |||||||||||
| Related party | $ | 22,763 | $ | 20,562 | |||||||
| Commercial | 5,963 | 4,755 | |||||||||
| Total Revenue by Customer | $ | 28,726 | $ | 25,317 | |||||||
| Years ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Revenue by contract type | |||||||||||
| Fixed-price | $ | 5,229 | $ | 4,137 | |||||||
| Cost-plus | 13,702 | 14,546 | |||||||||
| Time and Material | 9,795 | 6,634 | |||||||||
| Total Revenue by contract type | $ | 28,726 | $ | 25,317 | |||||||
| Years Ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Restricted stock awards | 1 | 0 | |||||||||
| Stock options | 134 | 237 | |||||||||
| Warrants | 548 | 604 | |||||||||
| 683 | 841 | ||||||||||
| Years Ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Restricted stock awards | 0 | 207 | |||||||||
| Stock options | 0 | 263 | |||||||||
| Warrants | 0 | 604 | |||||||||
| 0 | 1,074 | ||||||||||
effective tax rate was 0.29%.
As a result of the conversion of the Stonehenge Note to Series B Preferred Stock, the Company realized a taxable gain on conversion, and accordingly released $1.0 million of the Company’s federal deferred tax asset valuation allowance. Pursuant to the requirements of ASC 740-20-45, the tax on the conversion gain credited directly to equity is reported net in equity; whereas, the tax benefit realized from the reversal of the valuation allowance was recorded in the The income tax line in the Company’s statement of operations. The effective tax rateprovision for the years ended December 31, 2015 and 2014 was 5.6% and 4.5%, respectively.
Income tax provisioncontinuing operations consists of the following as of December 31:
| 2015 | 2014 | |||||||
Current: | ||||||||
Federal | $ | — | $ | — | ||||
State | (327 | ) | (368 | ) | ||||
|
|
|
| |||||
| (327 | ) | (368 | ) | |||||
Deferred: | ||||||||
Federal | 918 | 4,063 | ||||||
State | 180 | 741 | ||||||
|
|
|
| |||||
| 1,098 | 4,804 | |||||||
Valuation allowance | (1,086 | ) | (4,804 | ) | ||||
|
|
|
| |||||
Total income tax expense | $ | (315 | ) | $ | (368 | ) | ||
|
|
|
| |||||
| 2020 | 2019 | ||||||||||
| Deferred: | |||||||||||
| Federal | $ | (143) | $ | 178 | |||||||
| State | (26) | 32 | |||||||||
| (169) | 210 | ||||||||||
| Valuation allowance | 194 | (208) | |||||||||
| Total income tax expense | $ | 25 | $ | 2 | |||||||
| 2015 | 2014 | |||||||
Deferred tax assets: | ||||||||
Inventory | $ | 2,094 | $ | 1,092 | ||||
Warranty | 122 | 323 | ||||||
Net operating loss and tax credit carryforwards | 47,974 | 47,967 | ||||||
Accrued expenses | 4 | 92 | ||||||
Stock based compensation | 411 | 457 | ||||||
Investments in affiliates | 480 | 2,233 | ||||||
|
|
|
| |||||
| 51,085 | 52,164 | |||||||
Less - valuation allowance | (51,048 | ) | (52,135 | ) | ||||
|
|
|
| |||||
Net deferred tax assets | 37 | 29 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation and amortization | (35 | ) | (29 | ) | ||||
|
|
|
| |||||
Net deferred tax liabilities | (35 | ) | (29 | ) | ||||
|
|
|
| |||||
Net deferred tax assets (liabilities) | $ | 2 | $ | — | ||||
|
|
|
| |||||
| 2020 | 2019 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss and tax credit carryforwards | $ | 37,899 | $ | 37,440 | |||||||
| Stock based compensation | 648 | 502 | |||||||||
| Investment in affiliates | 264 | 482 | |||||||||
| Deferred Revenue - Advance payment | 0 | 64 | |||||||||
| Other | 14 | 213 | |||||||||
| Depreciation and amortization | 37 | 0 | |||||||||
| 38,862 | 38,701 | ||||||||||
| Less - valuation allowance | (38,780) | (38,601) | |||||||||
| Net deferred tax assets | 82 | 100 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation and amortization | 0 | (55) | |||||||||
| Goodwill amortization | (103) | (56) | |||||||||
| Net deferred tax liabilities | (103) | (111) | |||||||||
| Net deferred tax assets (liabilities) | $ | (21) | $ | (11) | |||||||
| 2015 | 2014 | |||||||
Federal statutory rate | (35.00 | )% | (35.00 | )% | ||||
State income taxes - net of federal benefit | (3.90 | )% | (3.90 | )% | ||||
Permanent differences | 18.80 | % | 0.07 | % | ||||
Tax reserve and other | 38.54 | % | (18.35 | )% | ||||
Change in valuation allowance | (19.46 | )% | 58.04 | % | ||||
Current state income tax | 7.81 | % | 4.45 | % | ||||
Other, net | (1.15 | )% | (0.86 | )% | ||||
|
|
|
| |||||
Effective tax rate | 5.64 | % | 4.45 | % | ||||
|
|
|
| |||||
| 2020 | 2019 | ||||||||||
| Federal statutory rate | (21.00 | %) | (21.00 | %) | |||||||
| State income taxes - net of federal benefit | (4.93 | %) | (4.74 | %) | |||||||
| Permanent differences | 22.77 | % | (0.44 | %) | |||||||
| Return to provision adjustments | (0.81) | % | 0.42 | % | |||||||
| Change in valuation allowance | (8.48) | % | 25.47 | % | |||||||
| Current state income tax | 0 | % | 0 | % | |||||||
| Change in enacted state rates | 13.53 | % | 0 | % | |||||||
| Other, net | (1.53) | % | 0 | % | |||||||
| Effective tax rate | (0.45 | %) | (0.29 | %) | |||||||
QuarterlyDISCONTINUED OPERATIONS
| Year Ended December 31, 2019 | |||||
| Revenues | |||||
| Revenue—homebuilding | $ | 14,919 | |||
| Total revenue | 14,919 | ||||
| Expenses | |||||
| Cost of sales—homebuilding | 14,901 | ||||
| Sales and marketing | 270 | ||||
| General and administrative | 21 | ||||
| Loss from discontinued operations before income taxes | (273) | ||||
| Income tax benefit | (15) | ||||
| Net loss from discontinued operations | (258) | ||||
| Net income attributable to non-controlling interests | 313 | ||||
| Net loss attributable to Comstock Holding Companies, Inc. | $ | (571) | |||
| Three months ended | ||||||||||||||||
| March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | |||||||||||||
Revenues | $ | 10,317 | $ | 12,564 | $ | 12,288 | $ | 26,207 | ||||||||
Operating loss | (930 | ) | (799 | ) | (1,015 | ) | (812 | ) | ||||||||
Pretax loss | (738 | ) | (217 | ) | (987 | ) | (753 | ) | ||||||||
Net (loss) income | (668 | ) | (274 | ) | (1,023 | ) | 2 | |||||||||
Net loss attributable to Comstock Holding Companies, Inc. | (943 | ) | (808 | ) | (1,091 | ) | (1,725 | ) | ||||||||
Basic loss per share | (0.31 | ) | (0.25 | ) | (0.33 | ) | (0.54 | ) | ||||||||
Diluted loss per share | (0.31 | ) | (0.25 | ) | (0.33 | ) | (0.54 | ) | ||||||||
| Three months ended | ||||||||||||||||
| March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | |||||||||||||
Revenues | $ | 7,954 | $ | 11,800 | $ | 18,367 | $ | 9,844 | ||||||||
Operating (loss) income | (824 | ) | (624 | ) | 1,022 | (2,550 | ) | |||||||||
Pretax (loss) income | (769 | ) | (612 | ) | 1,128 | (2,493 | ) | |||||||||
Net (loss) income | (843 | ) | (669 | ) | 991 | (2,593 | ) | |||||||||
Net loss attributable to Comstock Holding Companies, Inc. | (1,579 | ) | (1,664 | ) | (159 | ) | (3,437 | ) | ||||||||
Basic loss per share | (0.53 | ) | (0.55 | ) | (0.05 | ) | (1.14 | ) | ||||||||
Diluted loss per share | (0.53 | ) | (0.55 | ) | (0.05 | ) | (1.14 | ) | ||||||||
20.2019.
Asset Management | Real Estate Services | Total (from continuing operations) | |||||||||||||||
| Twelve Months Ended December 31, 2020 | |||||||||||||||||
| Gross revenue | $ | 21,923 | $ | 6,803 | $ | 28,726 | |||||||||||
| Gross profit | 3,478 | 2,706 | 6,184 | ||||||||||||||
| Net income | 1,542 | 540 | 2,082 | ||||||||||||||
| Total assets | 24,886 | 3,693 | 28,579 | ||||||||||||||
| Depreciation, amortization, and stock based compensation | 774 | 227 | 1,001 | ||||||||||||||
| Interest expense | $ | 344 | $ | 35 | $ | 379 | |||||||||||
Asset Management | Real Estate Services | Total (from continuing operations) | |||||||||||||||
| Twelve Months Ended December 31, 2019 | |||||||||||||||||
| Gross revenue | $ | 19,605 | $ | 5,712 | $ | 25,317 | |||||||||||
| Gross profit | 3,044 | 1,101 | 4,145 | ||||||||||||||
| Net income (loss) | 1,737 | (273) | 1,464 | ||||||||||||||
| Total assets | 15,270 | 4,663 | 19,933 | ||||||||||||||
| Depreciation, amortization, and stock based compensation | 430 | 266 | 696 | ||||||||||||||
| Interest expense | $ | 390 | $ | 84 | $ | 474 | |||||||||||
On January 28, 2016, the Company extended its revolving construction, acquisition, and development loans related to the New Hampshire Avenue project with Eagle Bank. This loan had an initial maturity date of January 31, 2016 and the extension provides for a maturity date of April 30, 2016. All other terms of the original agreements remain in full force and effect. As of December 31, 2015, we had $1.0 million in outstanding borrowings under this revolving credit facility.
On March 14, 2016, the Company extended its revolving construction, acquisition, and development loans related to the Maxwell Square and Shady Grove projectsMetro final payment
On March 21, 2016, the Company extended its revolving line of credit with Eagle Bank. The loan had an initial maturity date of January 31, 2016 and the extension provides for a maturity date of June 30, 2016. All other terms of the original agreement remain in full force and effect. As of December 31, 2015, we had $3.8 million in outstanding borrowings under this revolving credit facility.
On March 23, 2016, the Company extended its revolving acquisition and construction loans related to the Two Rivers II project with Cardinal Bank. These loans had an initial maturity date of March 19, 2016 and the extension provides for a maturity date of September 19, 2016. All other terms of the original agreement remain in full force and effect. As of December 31, 2015, we had $1.4 million in outstanding borrowings under these revolving credit facilities.
On March 24, 2016, the Company extended its mezzanine loan related to the Momentum |at Shady GroveGrover Metro Station project, with Eagle Commercial Ventures. The loan had an initial maturity datea subsidiary of March 31, 2016 and the extension provides for a maturity date of June 30, 2016. All other terms of the original agreement remain in full force and effect. As of December 31, 2015, we had $1.1 million in outstanding borrowings under this credit facility.
On March 30, 2016, CDS repurchased a membership interest in CGF II for a principal amount of $3.0 million. Simultaneously, the Company received an advance of $3.0 millionthe final payment for real estate development management services from the Comstock Stratford JV on its line of credit promissory note from CGF II.
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