Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 09, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39266 | |
Entity Registrant Name | HARBOR CUSTOM DEVELOPMENT, INC. | |
Entity Incorporation, State or Country Code | WA | |
Entity Tax Identification Number | 46-4827436 | |
Entity Address, Address Line One | 1201 Pacific Avenue, Suite 1200 | |
Entity Address, City or Town | Tacoma | |
Entity Address, State or Province | WA | |
Entity Address, Postal Zip Code | 98402 | |
City Area Code | 253 | |
Local Phone Number | 649-0636 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 2,329,322 | |
Entity Central Index Key | 0001784567 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock | |
Trading Symbol | HCDI | |
Security Exchange Name | NASDAQ | |
Series A Cumulative Convertible Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Series A Cumulative Convertible Preferred Stock | |
Trading Symbol | HCDIP | |
Security Exchange Name | NASDAQ | |
Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants | |
Trading Symbol | HCDIW | |
Security Exchange Name | NASDAQ | |
Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants | |
Trading Symbol | HCDIZ | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash | $ 8,330,000 | $ 9,665,300 |
Restricted Cash | 597,600 | 597,600 |
Accounts Receivable, net | 815,200 | 1,707,000 |
Notes Receivable, net | 2,115,300 | 4,525,300 |
Prepaid Expense and Other Assets | 2,064,600 | 5,318,100 |
Real Estate | 212,072,600 | 205,478,200 |
Property and Equipment, net | 1,764,600 | 2,289,500 |
Right of Use Assets | 1,827,400 | 1,926,100 |
Deferred Tax Asset | 7,311,700 | 4,659,300 |
TOTAL ASSETS | 236,899,000 | 236,166,400 |
LIABILITIES | ||
Accounts Payable and Accrued Expenses | 8,139,900 | 14,090,700 |
Dividends Payable | 3,807,400 | 634,700 |
Contract Liabilities | 378,300 | 497,400 |
Deferred Revenue | 51,200 | 52,000 |
Note Payable - Insurance | 73,200 | 378,500 |
Revolving Line of Credit Loan, net of Unamortized Debt Discount of $0 and $0.6 million, respectively | 18,359,700 | 24,359,700 |
Equipment Loans | 0 | 2,057,100 |
Finance Leases | 0 | 154,500 |
Right of Use Liabilities | 2,656,400 | 2,779,400 |
TOTAL LIABILITIES | 165,291,700 | 160,610,500 |
COMMITMENTS AND CONTINGENCIES - SEE NOTE 12 | ||
STOCKHOLDERS’ EQUITY | ||
Preferred Stock, no par value per share, 10,000,000 shares authorized and 3,799,799 issued and outstanding at June 30, 2023 and December 31, 2022 | 62,912,100 | 62,912,100 |
Common Stock, no par value per share, 50,000,000 shares authorized and 1,802,295 issued and outstanding at June 30, 2023 and 718,835 issued and outstanding at December 31, 2022 | 39,711,000 | 35,704,700 |
Additional Paid In Capital | 6,356,600 | 1,266,300 |
Retained Earnings (Accumulated Deficit) | (37,372,400) | (24,327,200) |
TOTAL STOCKHOLDERS’ EQUITY | 71,607,300 | 75,555,900 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 236,899,000 | 236,166,400 |
Nonrelated Party | ||
LIABILITIES | ||
Construction Loans | 131,825,600 | 107,483,700 |
Related Party | ||
LIABILITIES | ||
Construction Loans | $ 0 | $ 8,122,800 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revolving line of credit loan, net of debt discount | $ 0 | $ 0.6 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 3,799,799 | 3,799,799 |
Preferred stock, shares outstanding (in shares) | 3,799,799 | 3,799,799 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares, issued (in shares) | 1,802,295 | 718,835 |
Common stock outstanding (in shares) | 1,802,295 | 718,835 |
Nonrelated Party | ||
Debt discount | $ 1.3 | $ 1.9 |
Related Party | ||
Debt discount | $ 0 | $ 0.1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Sales | $ 19,844,500 | $ 10,286,400 | $ 29,025,600 | $ 38,867,400 |
Cost of Sales | 22,764,200 | 12,218,300 | 33,989,600 | 34,744,700 |
Gross Profit (Loss) | (2,919,700) | (1,931,900) | (4,964,000) | 4,122,700 |
Operating Expenses | 2,378,500 | 3,654,100 | 5,313,900 | 7,493,400 |
Operating Loss | (5,298,200) | (5,586,000) | (10,277,900) | (3,370,700) |
Other Income (Expense) | ||||
Interest Expense | (530,600) | (356,500) | (1,737,700) | (481,000) |
Interest Income | 29,300 | 159,900 | 102,100 | 214,900 |
Gain (Loss) on Sale of Equipment | 25,800 | (105,500) | (10,400) | (105,500) |
Other Income | 22,900 | 400 | 33,800 | 8,500 |
Total Other Expense | (452,600) | (301,700) | (1,612,200) | (363,100) |
Loss Before Income Tax | (5,750,800) | (5,887,700) | (11,890,100) | (3,733,800) |
Income Tax Benefit | (1,374,800) | (1,378,600) | (2,652,300) | (870,000) |
Net Loss | (4,376,000) | (4,509,100) | (9,237,800) | (2,863,800) |
Net Loss Attributable to Non-controlling interests | 0 | 0 | 0 | (500) |
Preferred Dividends | (1,903,700) | (1,940,000) | (3,807,400) | (3,952,500) |
Net Loss Attributable to Common Stockholders | $ (6,279,700) | $ (6,449,100) | $ (13,045,200) | $ (6,815,800) |
Loss Per Share - Basic (in dollars per share) | $ (3.79) | $ (9.20) | $ (10.95) | $ (10.01) |
Loss Per Share - Diluted (in dollars per share) | $ (3.79) | $ (9.20) | $ (10.95) | $ (10.01) |
Weighted Average Common Shares Outstanding - Basic (in shares) | 1,657,709 | 701,215 | 1,191,752 | 680,740 |
Weighted Average Common Shares Outstanding - Diluted (in shares) | 1,657,709 | 701,215 | 1,191,752 | 680,740 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net Loss | $ (4,376,000) | $ (4,861,800) | $ (4,509,100) | $ 1,645,300 | $ (9,237,800) | $ (2,863,800) | $ (16,900,000) |
Adjustments to reconcile net loss to net cash from operating activities: | |||||||
Depreciation | 100,000 | 300,000 | 180,500 | 639,600 | |||
Amortization of right of use assets | 98,700 | 371,400 | |||||
Loss on sale of equipment | 10,400 | 105,500 | |||||
Provision for loss on contract | 74,200 | 1,034,900 | |||||
Impairment loss on real estate | 0 | 6,289,000 | 0 | ||||
Stock compensation | 158,700 | 354,700 | |||||
Amortization of revolver issuance costs | 640,300 | 182,900 | |||||
Net change in assets and liabilities: | |||||||
Accounts receivable | 891,800 | (849,100) | |||||
Contract assets | 0 | 799,800 | |||||
Notes receivable | 2,410,000 | (8,874,400) | |||||
Prepaid expenses and other assets | 3,382,000 | 598,100 | |||||
Real estate | (11,271,800) | (31,424,100) | |||||
Deferred tax asset | (2,652,300) | (870,000) | |||||
Accounts payable and accrued expenses | (5,950,800) | 5,047,300 | |||||
Contract liabilities | (193,200) | 0 | |||||
Deferred revenue | (800) | 17,400 | |||||
Payments on right of use liability, net of incentives | (123,000) | 191,400 | |||||
NET CASH USED IN OPERATING ACTIVITIES | (15,294,100) | (35,538,400) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Purchase of property and equipment | 0 | (1,741,500) | |||||
Proceeds on the sale of equipment | 254,300 | 195,800 | |||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 254,300 | (1,545,700) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Construction loans | 49,563,200 | 30,608,500 | |||||
Payments on construction loans | (25,879,700) | (8,817,000) | |||||
Financing fees construction loans | (923,800) | (1,176,000) | |||||
Related party construction loans | 0 | 7,458,400 | |||||
Payments on related party construction loans | (8,177,300) | (7,836,800) | |||||
Financing fees related party construction loans | (75,000) | (10,100) | |||||
Revolving line of credit loan | 0 | 20,288,900 | |||||
Payments on revolving line of credit loan | (6,640,300) | 0 | |||||
Financing fees revolving line of credit loan | 0 | (1,097,700) | |||||
Payments on note payable - insurance | (333,900) | (773,300) | |||||
Payments on equipment loans | (2,057,100) | (1,133,000) | |||||
Payments on financing leases | (74,800) | (38,000) | |||||
Preferred dividends | (634,700) | (3,988,700) | |||||
Repurchase of common stock | 0 | (437,700) | |||||
Proceeds from common stock offering | 602,600 | 0 | |||||
Proceeds from pre-funded and common warrants offering | 8,335,300 | 0 | |||||
Proceeds from exercise of stock options | 0 | 8,600 | |||||
Proceeds from exercise of warrants | 0 | 413,800 | |||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 13,704,500 | 33,469,900 | |||||
NET DECREASE IN CASH AND RESTRICTED CASH | (1,335,300) | (3,614,200) | |||||
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD | $ 10,262,900 | $ 26,226,800 | 10,262,900 | 26,226,800 | 26,226,800 | ||
CASH AND RESTRICTED CASH AT END OF PERIOD | $ 8,927,600 | $ 22,612,600 | 8,927,600 | 22,612,600 | $ 10,262,900 | ||
SUPPLEMENTAL CASH FLOW INFORMATION | |||||||
Interest paid | 8,350,000 | 2,959,500 | |||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
Amortization of debt discount capitalized | 1,611,700 | 1,050,200 | |||||
Promissory note issued for earnest money | 300,000 | 150,000 | |||||
Cancellation of promissory note for earnest money | 200,000 | 0 | |||||
Financing of insurance | 28,600 | 0 | |||||
Financing of fixed assets additions | 0 | 351,300 | |||||
Conversion of finance lease to equipment loan | 0 | 394,800 | |||||
Termination of finance leases | 79,700 | 0 | |||||
New right of use obligations | 0 | 110,000 | |||||
Dividends declared but not paid | 3,807,400 | 634,600 | |||||
Conversion of preferred to common stock | 0 | 3,595,400 | |||||
Exercise of pre-funded warrants | $ 3,403,700 | $ 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) - USD ($) | Total | Stockholders' Equity (Deficit) | Common Stock | Preferred Stock | Additional Paid in Capital | Retained Earnings (Accumulated Deficit) | Non-Controlling Interest |
Beginning balance, shares (in shares) at Dec. 31, 2021 | 657,767 | ||||||
Beginning balance, shares (in shares) at Dec. 31, 2021 | 4,016,955 | ||||||
Beginning balance, value at Dec. 31, 2021 | $ 99,737,800 | $ 101,029,400 | $ 32,122,700 | $ 66,507,500 | $ 752,700 | $ 1,646,500 | $ (1,291,600) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Stock Dividends | (2,012,500) | (2,012,500) | (2,012,500) | ||||
Exercise of Stock Options (in shares) | 1,081 | ||||||
Exercise of Stock Options | 8,600 | 8,600 | $ 10,500 | (1,900) | |||
Stock Compensation Expense (in shares) | 3,011 | ||||||
Stock Compensation Expense | 242,400 | 242,400 | 242,400 | ||||
Dissolution of Non-Controlling Interest | 0 | (1,292,100) | (1,292,100) | 1,292,100 | |||
Net Income (Loss) | 1,645,300 | 1,645,800 | 1,645,800 | (500) | |||
Ending balance, shares (in shares) at Mar. 31, 2022 | 661,859 | ||||||
Ending balance, shares (in shares) at Mar. 31, 2022 | 4,016,955 | ||||||
Ending balance, value at Mar. 31, 2022 | 99,621,600 | 99,621,600 | $ 32,133,200 | $ 66,507,500 | 993,200 | (12,300) | 0 |
Beginning balance, shares (in shares) at Dec. 31, 2021 | 657,767 | ||||||
Beginning balance, shares (in shares) at Dec. 31, 2021 | 4,016,955 | ||||||
Beginning balance, value at Dec. 31, 2021 | 99,737,800 | 101,029,400 | $ 32,122,700 | $ 66,507,500 | 752,700 | 1,646,500 | (1,291,600) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income (Loss) | (2,863,800) | ||||||
Ending balance, shares (in shares) at Jun. 30, 2022 | 717,428 | ||||||
Ending balance, shares (in shares) at Jun. 30, 2022 | 3,799,799 | ||||||
Ending balance, value at Jun. 30, 2022 | 93,260,900 | 93,260,900 | $ 35,704,700 | $ 62,912,100 | 1,105,500 | (6,461,400) | 0 |
Beginning balance, shares (in shares) at Dec. 31, 2021 | 657,767 | ||||||
Beginning balance, shares (in shares) at Dec. 31, 2021 | 4,016,955 | ||||||
Beginning balance, value at Dec. 31, 2021 | 99,737,800 | 101,029,400 | $ 32,122,700 | $ 66,507,500 | 752,700 | 1,646,500 | (1,291,600) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income (Loss) | $ (16,900,000) | ||||||
Ending balance, shares (in shares) at Dec. 31, 2022 | 718,835 | 718,835 | |||||
Ending balance, shares (in shares) at Dec. 31, 2022 | 3,799,799 | 3,799,799 | |||||
Ending balance, value at Dec. 31, 2022 | $ 75,555,900 | 75,555,900 | $ 35,704,700 | $ 62,912,100 | 1,266,300 | (24,327,200) | 0 |
Beginning balance, shares (in shares) at Mar. 31, 2022 | 661,859 | ||||||
Beginning balance, shares (in shares) at Mar. 31, 2022 | 4,016,955 | ||||||
Beginning balance, value at Mar. 31, 2022 | 99,621,600 | 99,621,600 | $ 32,133,200 | $ 66,507,500 | 993,200 | (12,300) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Stock Dividends | (1,940,000) | (1,940,000) | (1,940,000) | ||||
Stock Compensation Expense (in shares) | 875 | ||||||
Stock Compensation Expense | 112,300 | 112,300 | 112,300 | ||||
Conversion of Preferred stock (in shares) | 60,326 | (217,156) | |||||
Conversion of Preferred stock | 0 | $ 3,595,400 | $ (3,595,400) | ||||
Exercise of Warrants (in shares) | 6,965 | ||||||
Exercise of Warrants | 413,800 | 413,800 | $ 413,800 | ||||
Share Repurchase (in shares) | (12,597) | ||||||
Share Repurchase | (437,700) | (437,700) | $ (437,700) | ||||
Net Income (Loss) | (4,509,100) | (4,509,100) | (4,509,100) | ||||
Ending balance, shares (in shares) at Jun. 30, 2022 | 717,428 | ||||||
Ending balance, shares (in shares) at Jun. 30, 2022 | 3,799,799 | ||||||
Ending balance, value at Jun. 30, 2022 | $ 93,260,900 | 93,260,900 | $ 35,704,700 | $ 62,912,100 | 1,105,500 | (6,461,400) | 0 |
Beginning balance, shares (in shares) at Dec. 31, 2022 | 718,835 | 718,835 | |||||
Beginning balance, shares (in shares) at Dec. 31, 2022 | 3,799,799 | 3,799,799 | |||||
Beginning balance, value at Dec. 31, 2022 | $ 75,555,900 | 75,555,900 | $ 35,704,700 | $ 62,912,100 | 1,266,300 | (24,327,200) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Stock Dividends | (1,903,700) | (1,903,700) | (1,903,700) | ||||
Stock Compensation Expense (in shares) | 317 | ||||||
Stock Compensation Expense | 83,400 | 83,400 | 83,400 | ||||
Round Up of Shares from Reverse Stock Split (in shares) | 13,093 | ||||||
Net Income (Loss) | (4,861,800) | (4,861,800) | (4,861,800) | ||||
Ending balance, shares (in shares) at Mar. 31, 2023 | 732,245 | ||||||
Ending balance, shares (in shares) at Mar. 31, 2023 | 3,799,799 | ||||||
Ending balance, value at Mar. 31, 2023 | $ 68,873,800 | 68,873,800 | $ 35,704,700 | $ 62,912,100 | 1,349,700 | (31,092,700) | 0 |
Beginning balance, shares (in shares) at Dec. 31, 2022 | 718,835 | 718,835 | |||||
Beginning balance, shares (in shares) at Dec. 31, 2022 | 3,799,799 | 3,799,799 | |||||
Beginning balance, value at Dec. 31, 2022 | $ 75,555,900 | 75,555,900 | $ 35,704,700 | $ 62,912,100 | 1,266,300 | (24,327,200) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of Stock Options (in shares) | 0 | ||||||
Net Income (Loss) | $ (9,237,800) | ||||||
Ending balance, shares (in shares) at Jun. 30, 2023 | 1,802,295 | 1,802,295 | |||||
Ending balance, shares (in shares) at Jun. 30, 2023 | 3,799,799 | 3,799,799 | |||||
Ending balance, value at Jun. 30, 2023 | $ 71,607,300 | 71,607,300 | $ 39,711,000 | $ 62,912,100 | 6,356,600 | (37,372,400) | 0 |
Beginning balance, shares (in shares) at Mar. 31, 2023 | 732,245 | ||||||
Beginning balance, shares (in shares) at Mar. 31, 2023 | 3,799,799 | ||||||
Beginning balance, value at Mar. 31, 2023 | 68,873,800 | 68,873,800 | $ 35,704,700 | $ 62,912,100 | 1,349,700 | (31,092,700) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Stock Dividends | (1,903,700) | (1,903,700) | (1,903,700) | ||||
Stock Compensation Expense (in shares) | 2,941 | ||||||
Stock Compensation Expense | 75,300 | 75,300 | 75,300 | ||||
Public Offering - Common Stock (in shares) | 160,500 | ||||||
Public Offering - Common Stock | 602,600 | 602,600 | $ 602,600 | ||||
Public Offering - Pre-funded Warrants and Common Warrants | 8,335,300 | 8,335,300 | 8,335,300 | ||||
Exercise of Pre-funded Warrants (in shares) | 906,609 | ||||||
Exercise of Pre-funded Warrants | 0 | $ 3,403,700 | (3,403,700) | ||||
Net Income (Loss) | $ (4,376,000) | (4,376,000) | (4,376,000) | ||||
Ending balance, shares (in shares) at Jun. 30, 2023 | 1,802,295 | 1,802,295 | |||||
Ending balance, shares (in shares) at Jun. 30, 2023 | 3,799,799 | 3,799,799 | |||||
Ending balance, value at Jun. 30, 2023 | $ 71,607,300 | $ 71,607,300 | $ 39,711,000 | $ 62,912,100 | $ 6,356,600 | $ (37,372,400) | $ 0 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The Company’s principal business activity involves acquiring raw land and developed lots for the purpose of building and selling single family and multi-family dwellings in Washington, California, Texas, and Florida. On August 1, 2019, the Company changed its name from Harbor Custom Homes, Inc. to Harbor Custom Development, Inc. The Company became an effective filer with the SEC and started trading on The Nasdaq Stock Market LLC (“Nasdaq”) on August 28, 2020. Principles of Consolidation The condensed consolidated financial statements include the following subsidiaries of Harbor Custom Development, Inc. as of the reporting period ending date, as follows: Names Dates of Formation Attributable Interest June 30, 2023 December 31, 2022 Saylor View Estates, LLC* March 30, 2014 N/A N/A Belfair Apartments, LLC December 3, 2019 100 % 100 % Pacific Ridge CMS, LLC May 24, 2021 100 % 100 % Tanglewilde, LLC June 25, 2021 100 % 100 % HCDI FL CONDO LLC July 30, 2021 100 % 100 % HCDI Mira, LLC** August 31, 2021 N/A N/A HCDI, Bridgeview LLC October 28, 2021 100 % 100 % HCDI Wyndstone, LLC September 15, 2021 100 % 100 % HCDI Semiahmoo, LLC December 17, 2021 100 % 100 % Mills Crossing, LLC July 21, 2022 100 % 100 % Broadmoor Ventures, LLC August 24, 2022 100 % 100 % GPB Holdings LLC October 29, 2022 100 % 100 % Winding Lane Estate LLC November 30, 2022 100 % 100 % Beacon Studio Farms LLC March 20, 2023 100 % — % *Saylor View Estates, LLC was voluntarily dissolved with the State of Washington as of January 20, 2022. **HCDI Mira, LLC was voluntarily dissolved with the State of Washington as of April 26, 2023. As of June 30, 2023 and December 31, 2022, the aggregate non-controlling interest was $0 and $0, respectively. Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The accompanying unaudited condensed consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. All numbers in the financial statements are rounded to the nearest $100, except for numbers related to Shares Issued and Earnings (Loss) per Share (“EPS”) data, and numbers in the notes to the financial statements are rounded to the nearest million, where appropriate. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Going Concern Uncertainty The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 205-40, the Company’s management has the responsibility to evaluate whether conditions and/or events raise substantial doubt about the Company’s ability to meet its financial obligations as they become due within one year after the date that the financial statements are issued. As required by this standard, the evaluation shall initially not take into consideration the potential mitigating effects of the Company’s plans that have not been fully implemented as of the date the financial statements are issued. Regarding the first step of this assessment, the Company concluded that under the standards of ASC 205-40, the following conditions raised substantial doubt about the Company’s ability to continue as a going concern: during the year ended December 31, 2022, the Company failed to maintain compliance with certain financial covenants within its loan agreements requiring loan amendment or covenant waivers; it has no borrowing availability under its revolving credit facility; it has significant construction related debt maturing over the next 12 months; it has had significant uses of cash flows from operations over the past two years; it had a $16.9 million net loss during the year ended December 31, 2022, a $4.4 million net loss for the second quarter of 2023, and a net loss of $9.2 million for the six months ended June 30, 2023; and the real estate and construction industries are experiencing declining market conditions which have negatively impacted property valuations as well as financing capabilities and terms. In performing the second step of this assessment, management is required to evaluate whether the Company’s plans to mitigate the conditions above alleviate the substantial doubt about the Company's ability to meet its obligations as they become due within one year after the date that the financial statements are issued. The Company has undertaken and completed the following plans and actions to improve its available cash balances, liquidity, and cash generated from operations: • executed an Amendment to the Revolver Loan Agreement with BankUnited to alleviate the breach of financial covenants and the bank’s ability to call the loan; • has $7.7 million o f sales closed after June 30, 2023 or under contract as of August 9, 2023 and significant additional assets that are held for sale; • has construction loans in place; • met its equity requirement for its Pacific Ridge, Wyndstone, Meadowscape, and Belfair Phase 1 projects; • substantially completed its fee build contracts; • shut down its quarry operations, eliminated most of its full time employees in its horizontal infrastructure division, and sold a significant majority of its heavy construction equipment, all of which were directly or indirectly associated with significant net loss generating activities during the year ended December 31, 2022 and the three months ended March 31, 2023; and • raised net proceeds of $8.9 million from a public offering in May 2023. Additionally, the Company’s future plans include: raising additional funds through the sales of real estate assets; obtaining new debt financing and/or refinancing existing debt; pulling cash out of one or more of its multi-family properties by obtaining a project level equity partner; and/or raising capital in the private or public equity or debt markets. Based on the properties under contract for sale, interest in the Company’s properties available for sale, its prior track record of raising capital through issuance of debt or sale of equity, and management’s ongoing discussions and negotiations with potential financing partners, management believes it is probable that the Company’s plans will be effectively implemented and probable that those plans will mitigate the previously mentioned conditions and events that raised substantial doubt. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the Company’s failure to continue as a going concern . Stock-Based Compensation Effective November 19, 2018, the Company’s Board of Directors and stockholders approved and adopted the 2018 Incentive and Nonstatutory Stock Option Plan (the “2018 Plan”). The 2018 Plan allows the Administrator (as defined in the 2018 Plan), currently the Compensation Committee, to determine the issuance of incentive stock options and non-qualified stock options to eligible employees and outside directors and consultants of the Company. The Company has 133,784 shares of common stock reserved for issuance under the 2018 Plan. Effective December 3, 2020, the Company’s Board of Directors and stockholders approved and adopted the 2020 Restricted Stock Plan (the “2020 Plan”). The 2020 Plan allows the Administrator, currently the Compensation Committee, to determine the issuance of restricted stock to eligible officers, directors, and key employees. The Company has 135,000 shares of common stock reserved for issuance under the 2020 Plan. The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee and non-employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company recognizes all forms of share-based payments, including stock option grants, warrants, and restricted stock grants, at their fair value on the grant date. Options and warrants are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment. The grants are amortized on a straight-line basis over the requisite service periods, which are generally the vesting periods. The Company accounts for forfeitures of stock options as they occur. When forfeitures occur, the unvested portion of the previously recognized compensation cost is reversed in the period of the forfeiture. Stock-based compensation expenses are included in operating expenses in the condensed consolidated statement of operations. For the six months ended June 30, 2023 and 2022 when computing fair value of share-based awards, the Company has considered the following range of assumptions: June 30, 2023 June 30, 2022 Risk-free interest rate 4.30% 1.73% - 2.14% Exercise price $3.73 $40.00 - $60.00 Expected life of grants in years 6.38 3.93 - 6.50 Expected volatility of underlying stock 43.50% 42.39% - 48.13% Dividends — — The expected term is computed using the “simplified method” as permitted under the provisions of FASB ASC Topic 718-10-S99. The Company uses the simplified method to calculate the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The share price is the closing price on the date of grant. Expected volatility is based on the historical stock price volatility of comparable companies’ common stock as the stock does not have sufficient historical trading activity. Risk free interest rates were obtained from U.S. Treasury rates for the applicable expected terms. Repurchase of Equity Securities Share repurchases are recorded to common stock at the value of the cash consideration paid, as the Company's common stock has no par value. These shares were being repurchased for the purpose of constructive retirement. (See Note 15. Stockholders’ Equity.) Reverse Stock Split On March 6, 2023, the Company effected a 1-for-20 reverse stock split of its issued and outstanding shares of common stock (the “Reverse Stock Split”) on the Nasdaq Capital Market. Accordingly, all share and per share data included in these condensed consolidated financial statements and notes thereto have been adjusted retroactively to reflect the impact of the Reverse Stock Split. 2023 Public Offering On May 18, 2023, the Company closed on a public offering of 160,500 shares of common stock, 1,790,718 pre-funded warrants, and 1,951,218 common warrants for net proceeds of $8.9 million. In addition, upon closing of this public offering, the Company issued to the placement agent 117,073 warrants to purchase shares of common stock. The pre-funded warrants and common warrants were evaluated in accordance with FASB ASC Topics 480, Distinguishing Liabilities from Equity and 815, Derivatives and Hedging. The Company assessed whether the pre-funded warrants and common warrants are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are mandatorily redeemable, embody obligations to repurchase shares or issue a variable number of shares, are exercisable without any contingent provisions, permit the holders to receive a fixed number of shares of common stock upon exercise, are indexed to the Company's common stock, and are settled in shares. Based on this assessment, the pre-funded warrants and common warrants were classified as a component of permanent stockholders' equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The Company values these equity instruments at issuance and allocated net proceeds from the sale proportionately to the common stock, the pre-funded warrants, and the common warrants. Of the net proceeds, $0.6 million was allocated to common stock, $6.7 million was allocated to pre-funded warrants, $1.6 million was allocated to common warrants, and $0.1 million was allocated to the placement agent warrants. The common warrants and placement agent warrants were valued using a Black-Scholes pricing model. When computing the fair value of these warrants, the Company used 3.94% as the risk free interest rate, an exercise price of $5.00 or $6.41, an expected life of 2.5 years, and expected volatility of 37.83% as assumptions in the model. (See Note 15. Stockholders’ Equity.) Earnings (Loss) Per Share (“EPS”) EPS is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to topic 260-10-45 of the FASB ASC. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the numerator may have to adjust for any dividends and income or loss associated with potentially dilutive securities that are assumed to have resulted in the issuance of shares of common stock and the denominator may have to adjust to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued during the period to reflect the potential dilution that could occur from shares of common stock issuable through a contingent shares issuance arrangement, stock options, warrants, RSUs, or convertible preferred stock. For purposes of determining diluted earnings per common share, the treasury stock method is used for stock options, warrants, and RSUs, and the if-converted method is used for convertible preferred stock as prescribed in FASB ASC Topic 260. In accordance with FASB ASC topic 260-10-45, pre-funded warrants have been included in the weighted average common shares outstanding number for the purpose of calculating EPS. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to common stockholders per share of common stock for the three and six months ended June 30, 2023 and 2022. For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss attributable to common stockholders $ (6,279,700) $ (6,449,100) $ (13,045,200) $ (6,815,800) Effect of dilutive securities: — — — — Diluted net loss $ (6,279,700) $ (6,449,100) $ (13,045,200) $ (6,815,800) Denominator: Weighted average common shares outstanding - basic (b) 1,657,709 701,215 1,191,752 680,740 Dilutive securities (a): Restricted Stock Awards — — — — Options — — — — Warrants — — — — Convertible Preferred Stock — — — — Weighted average common shares outstanding and assumed conversion – diluted 1,657,709 701,215 1,191,752 680,740 Basic net earnings (loss) per common share $ (3.79) $ (9.20) $ (10.95) $ (10.01) Diluted net earnings (loss) per common share $ (3.79) $ (9.20) $ (10.95) $ (10.01) (a) - Outstanding anti-dilutive securities excluded: Unvested restricted stock awards 8,207 14,000 8,207 14,000 Stock options 175,060 22,946 175,060 22,946 Warrants to purchase common stock (20:1) (1) 18,447,564 18,447,564 18,447,564 18,447,564 Warrants to purchase common stock (1:1) (2) 2,068,291 — 2,068,291 — Convertible preferred stock (3) 3,799,799 3,799,799 3,799,799 3,799,799 Warrants to purchase convertible preferred stock (3) 12,000 12,000 12,000 12,000 (b) - Outstanding shares of Pre-funded warrants included in the weighted average outstanding shares Pre-funded warrants 884,109 — 884,109 — (1) The number of outstanding warrants, issued prior to the reverse stock split on March 6, 2023, did not change or split pursuant to the reverse stock split, but the number of shares of common stock issuable upon exercise of these warrants was adjusted based on a 1 to 0.05 ratio. (2) The number of outstanding warrants issued after the reverse stock split on March 6, 2023 are exercisable for shares of common stock on a 1 to 1 ratio. (3) Preferred stock and warrants to purchase convertible preferred stock are convertible into common stock on a 0.2778 to 1 ratio. Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. Cash and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of June 30, 2023 and December 31, 2022. Restricted Cash On August 10, 2021, the Company entered into a Letter of Credit (“LOC”) agreement with WaFd Bank in the amount of $0.6 million. The Company signed a lease on October 5, 2021 for a new office space. The landlord of the property, University Street Properties I, LLC, is the beneficiary of the LOC. The amount of funds that cover this LOC were moved by WaFd Bank to a controlled account on August 13, 2021. (See Note 10. Letter of Credit.) Accounts Receivable Accounts receivables are reported at the amount the Company expects to collect from outstanding balances. The Company provides for an allowance for credit losses based upon a review of the outstanding accounts receivable, historical collection information, and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The allowance for credit losses was $0 as of June 30, 2023 and December 31, 2022. Notes Receivable Notes receivables are recorded at amounts due to the Company according to the contractual terms of the loan agreement. The Company's notes receivables are for the sale of real estate properties or financing the development of the properties prior to acquisition and are each secured by the underlying improved real estate properties. The Company reviews notes receivable for impairment whenever events or circumstances indicate that the note may not be fully recoverable. Impairment is present when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. If management determines an amount to be uncollectible, impairment is measured based on the estimated uncollectible amount less the fair value of the underlying collateral. Impairment is recognized with a valuation allowance against the note receivable with a corresponding charge to bad debt expense under operating expenses. The valuation allowance is written down when the remaining note amount is collected in full. There was no valuation allowance as of June 30, 2023. The valuation allowance was $1.2 million for notes receivable as of December 31, 2022. (See Note 3. Notes Receivable.) In March 2022, the Company entered into a promissory note with Rocklin Winding Lane 22, LLC for $4.8 million (“the note”) for the sale of developed lots. In the third quarter of 2022, Rocklin Winding Lane 22, LLC defaulted on the note due to a missed interest payment on June 30, 2022. As a result, the Company issued a letter of default in August 2022 and began foreclosure proceedings on the underlying real estate asset in October 2022. In the third quarter of 2022, the Company recorded a valuation allowance against the note and related bad debt expense within operating expenses of $0.8 million. In the fourth quarter of 2022, the Company was successful in the foreclosure of the underlying property and took ownership of the property, which was recorded for a fair value of $5.1 million at the time of repossession. Pursuant to the subordination agreement, the underlying real estate asset had a $1.0 million senior loan to a third party that was taken over by the Company upon the foreclosure of the property. Property and Equipment and Depreciation Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repair charges are expensed as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years Real Estate Assets Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with FASB ASC Topic 805, “Business Combinations,” where acquired assets are recorded at fair value. Interest, property taxes, insurance, and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset construction is completed or the asset is sold. The capitalized costs are recorded as part of the asset to which they relate and are expensed when the underlying asset is sold. The Company capitalized interest from related party borrowings of $0.3 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively. The Company capitalized interest from related party borrowings of $0.5 million and $0.6 million for the six months ended June 30, 2023 and 2022, respectively. The Company capitalized interest from third-party borrowings of $3.3 million and $1.1 million for the three months ended June 30, 2023 and 2022, respectively. The Company capitalized interest from third-party borrowings of $6.1 million and $1.9 million for the six months ended June 30, 2023 and 2022, respectively. A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met: (1) Management, having the authority to approve the action, commits to a plan to sell the property; (2) The property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (3) An active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (4) The sale of the property is probable and is expected to be completed within one year of the contract date; (5) The property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) Actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The real estate assets classified as held for sale were $47.2 million and $34.4 million as of June 30, 2023 and December 31, 2022, respectively. In addition to the annual assessment of potential triggering events in accordance with FASB ASC Topic 360, the Company applies a fair value-based impairment test to the net book value of assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have occurred. The Company recorded impairment charges of $2.4 million relating to the Pacific Ridge apartments and $2.3 million relating to the Darkhorse lots for the three months ended June 30, 2023. For the six months ended June 30, 2023, the Company recorded impairment charges of $3.2 million, $2.9 million, and $0.2 million relating to the Pacific Ridge apartments, Darkhorse lots, and Bunker Ranch home, respectively. No impairment charges were recorded for the comparable periods in 2022. For the year ended December 31, 2022, the Company recorded impairment charges of $1.2 million and $2.4 million relating to the Winding Lane lots and Pacific Ridge apartments, respectively. These charges are recorded in cost of sales and real estate as presented in Note 5. The Company did not identify any other real estate that qualified for an impairment charge. Revenue and Cost Recognition FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. In accordance with ASC 606, revenue is recognized when a customer obtains control of the promised good or service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. The provision of ASC 606 includes a five-step process by which the Company determines revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which the Company expects to be entitled in exchange for those goods or services. ASC 606 requires the Company to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, performance obligations are satisfied. A detailed breakdown of the five-step process for revenue recognitions is as follows: Homes, Developed Lots, and Entitled Land 1. Identify the contract with a customer. The Company signs an agreement with a buyer to purchase the parcel of entitled land, developed lots that have completed infrastructure, or completed homes. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering entitled land, developed lots, and completed homes to the customer, which are required to meet certain specifications outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The parcel, lots, and homes are separate performance obligations for which the specific price is in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company recognizes revenue when title is transferred. The Company does not have any further material performance obligations once title is transferred. Fee Build 1. Identify the contract with a customer. The Company signs an agreement with a customer to construct the required infrastructure so that houses can be developed on the lots. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering developed lots which are required to meet certain specifications that are outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The nature of the industry involves a number of uncertainties that can affect the current state of the contract. Variable considerations are the estimates made due to a contract modification in the contractual service. Change orders, claims, extras, or back charges are common in contractual services activity as a form of variable consideration. If there is going to be a contract modification, judgment by management will need to be made to determine if the variable consideration is enforceable. The following factors are considered in determining if the variable consideration is enforceable: 1. The customer’s written approval of the scope of the change order; 2. Current contract language that indicates clear and enforceable entitlement relating to the change order; 3. Separate documentation for the change order costs that are identifiable and reasonable; and 4. The Company’s experience in negotiating change orders, especially as it relates to the specific type of contract and change order being evaluated. Once the Company receives a contract, it generates a budget of projected costs for the contract based on the contract price. If the scope of the contract during the contractual period needs to be modified, the Company files a change order. The Company does not continue to perform services until the change modification is agreed upon with documentation by both the Company and the customer. There are few times that claims, extras, or back charges are included in the contract. If there are multiple performance obligations to the contract, the costs must be allocated appropriately and consistently to each performance obligation. In the Company’s experience, usually only one performance obligation is stated per contract. If there are multiple services provided for one customer, the Company has a policy of splitting out the services over multiple contracts. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company uses the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation. The input method involves measuring the resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used relative to the total expected inputs to the satisfaction of the performance obligation. Costs incurred prior to actual contract (i.e., design, engineering, procurement of material, etc.) should not be recognized as the Company does not have control of the good/service provided. When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such costs, the Company records the entire estimated loss in the period the loss becomes known. Project contracts typically provide for a schedule of billings or invoices to the customer based on the Company’s job to date percentage of completion of specific tasks inherent in the fulfillment of its performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statement of operations can and usually does dif |
CONCENTRATIONS
CONCENTRATIONS | 6 Months Ended |
Jun. 30, 2023 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | CONCENTRATIONS Cash Concentrations The Company maintains cash balances at various financial institutions. These balances are secured by the Federal Deposit Insurance Corporation. These balances generally exceed the federal insurance limits. Uninsured cash balances were $6.9 million and $8.1 million as of June 30, 2023 and December 31, 2022, respectively. Revenue Concentrations Homes For the three months ended June 30, 2023, two customers each represented 60% and 37% of the home revenue. There were no concentrations in relation to the homes revenue segment for the three months ended June 30, 2022. For the six months ended June 30, 2023, six customers each represented 19%, 18%, 18%, 17%, 16%, and 11% of the home revenue. There were no concentrations in relation to the homes revenue segment for the six months ended June 30, 2022. Developed Lots For the three months ended June 30, 2023, three customers each represented 33%, 21%, and 10% of the developed lots revenue. There were no concentrations in relation to the developed lots revenue segment for the three months ended June 30, 2022. For the six months ended June 30, 2023, three customers each represented 19%, 15%, and 14% of the developed lots revenue. For the six months ended June 30, 2022, two customers each represented 62% and 26% of the developed lots revenue segment. Entitled Land For the three months ended June 30, 2023 and 2022, there were no concentrations in relation to entitled land revenue For the six months ended June 30, 2023, there were no concentrations in relation to entitled land revenue. For the six months ended June 30, 2022, one customer represented 100% of the entitled land revenue. Fee Build One customer represented 100% of fee build revenue for the three and six months ended June 30, 2023 and 2022. Multi-Family For the three months ended June 30, 2023, one customer represented 95% of the multi-family revenue. For the six months ended June 30, 2023, one customer represented 92% of the multi-family revenue. There were no concentrations in relation to the multi-family revenue segment for the three and six months ended June 30, 2022. |
NOTES RECEIVABLE
NOTES RECEIVABLE | 6 Months Ended |
Jun. 30, 2023 | |
Receivables [Abstract] | |
NOTES RECEIVABLE | NOTES RECEIVABLE The outstanding balance of notes receivable amounted to $2.1 million and $4.5 million at June 30, 2023 and December 31, 2022, respectively . These notes arose as financing by the Company for the sale of real estate properties or financing the development of the properties prior to acquisition. These notes are secured by the underlying improved real estate properties and accrue interest at annual rates ranging from 8% to 9%. All payments of principal and interest are due in full between December 1, 2024 and December 20, 2024. Interest income was $0.03 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively. Interest income was $0.1 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively. In March 2022, the Company and Noffke Horizon View, LLC entered into a promissory note with a payment in full due on March 31, 2023 of $3.3 million (“the note”) for the sale of land. In March 2023, Noffke Horizon View, LLC notified the Company that they were unable to pay this amount in full by the due date and the Company agreed to settle the note for a reduced amount totaling $2.1 million. The Company recorded a valuation allowance against the note receivable as of December 31, 2022 and the reduced note amount was fully collected during the quarter ended March 31, 2023. The details of notes receivables, net of a valuation allowance are as follows: June 30, 2023 December 31, 2022 Broadmoor Commons LLC $ 1,000,300 $ 1,000,300 Modern Homestead LLC 1,115,000 1,445,000 Noffke Horizon View, LLC — 2,080,000 Total Notes Receivable, Net $ 2,115,300 $ 4,525,300 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment stated at cost, less accumulated depreciation, and amortization, consisted of the following: June 30, 2023 December 31, 2022 Machinery and Equipment $ 44,000 $ 505,300 Vehicles — 26,200 Furniture and Fixtures 694,000 695,600 Leasehold Improvements 1,467,000 1,524,000 Total Fixed Assets 2,205,000 2,751,100 Less Accumulated Depreciation (440,400) (461,600) Fixed Assets, Net $ 1,764,600 $ 2,289,500 Depreciation expense was $0.1 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively. |
REAL ESTATE
REAL ESTATE | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate [Abstract] | |
REAL ESTATE | REAL ESTATE Real Estate consisted of the following components: June 30, 2023 December 31, 2022 Land Held for Development $ 39,998,800 $ 47,166,700 Construction in Progress 124,873,300 123,927,300 Held for Sale 47,200,500 34,384,200 Total Real Estate $ 212,072,600 $ 205,478,200 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued liabilities consisted of the following: June 30, 2023 December 31, 2022 Trade Accounts Payable $ 6,250,200 $ 11,472,100 Accrued Compensation, Bonuses, and Benefits 393,300 384,700 Accrued Quarry Reclamation Costs 39,400 76,200 Retainage Payable 381,400 1,130,300 Other Accrued Expenses 1,075,600 1,027,400 Total Accounts Payable and Accrued Expenses $ 8,139,900 $ 14,090,700 |
REVOLVING LINE OF CREDIT
REVOLVING LINE OF CREDIT | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
REVOLVING LINE OF CREDIT | REVOLVING LINE OF CREDITOn March 7, 2022, the Company entered into a senior secured revolving credit facility (“the credit facility”) with BankUnited, N.A. (the “Lender”) for $25.0 million. The credit facility had an initial two year term, with a maturity date of March 7, 2024. The unpaid principal bore interest at a fluctuating rate of interest per annum equal to the daily simple secured overnight financing rate (SOFR) plus the applicable margin of 4.75%. The credit facility was used to fund the Company’s general working capital needs and interest is expensed as incurred. The credit facility is collateralized by all of the Company’s assets wherein the Lender is granted a junior priority interest in all collateralized Company assets that Lender has previously identified as a permitted lien or other encumbrance that the Company regularly incurs through its ordinary course of business; in all other Company assets, Lender maintains a first priority security interest. The credit facility also contained specific financial covenants. As of December 31, 2022, the Company was not in compliance with the minimum interest coverage ratio requirement and consolidated liquidity covenant. On February 23, 2023, the Company entered into an amended loan agreement (the “Amendment”) with the Lender, whereby the Lender agreed to waive its right to accelerate and declare all of the debt immediately due and owing, based upon the previously disclosed non-compliance with financial covenants resulting in technical default under the loan agreement. Further, the Lender waived the requirement that the Company comply with certain financial covenants through maturity of the debt. These concessions were made as a result of the Company granting the Lender second mortgage positions for certain properties owned by the Company, as well as transferring to the Lender membership certificates pledging certain properties as collateral and perfecting the Lender’s security interest in the pledged LLCs. Additionally, the Company agreed to make principal reduction payments including paying the Lender $0.6 million on the 20th of every month which otherwise would have been paid to preferred shareholders as a dividend on the preferred stock, and pay to the Lender 25% of all net cash proceeds from asset sales, public offerings of any class of stock or debt, private equity recaptures, or any capital raise. The Company also agreed that it will not close on the purchase of any new projects without the Lender's express written consent and will not repurchase any of its outstanding securities. The aforementioned payments will continue to be made until the earlier of March 7, 2024 or until the loan has been paid in full. The Company evaluated the Amendment in accordance with ASC 470-50, Debt - Modifications and Extinguishments and applied the borrowing capacity model as it relates to a revolving debt arrangement. Under the Amendment, the Lender is no longer committed and has no further lending obligations to the Company, which reduced the borrowing capacity of available credit to $0. The Company determined that this modification is considered a partial extinguishment and expensed the remaining unamortized debt discount of $0.5 million within interest expense for the six months ended June 30, 2023. Interest expense was $0.5 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively. Interest expense was $1.7 million and $0.4 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023 and December 31, 2022, the revolving line of credit loan balance was $18.4 million and $25.0 million and the unamortized debt discount balance was $0 and $0.6 million, respectively. Equipment loans consists of the following: June 30, 2023 December 31, 2022 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $10,500: $ — $ 2,057,100 Book value of collateralized equipment: — 11,800 Future equipment loan maturities at June 30, 2023 are as follows: Year Ending December 31, 2023 (six months) $ — 2024 — 2025 — 2026 — Total $ — Interest expense was $0 and $0.04 million for the three months ended June 30, 2023 and 2022, respectively. Interest expense was $0.001 million and $0.1 million for the six months ended June 30, 2023 and 2022, respectively. |
EQUIPMENT LOANS
EQUIPMENT LOANS | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
EQUIPMENT LOANS | REVOLVING LINE OF CREDITOn March 7, 2022, the Company entered into a senior secured revolving credit facility (“the credit facility”) with BankUnited, N.A. (the “Lender”) for $25.0 million. The credit facility had an initial two year term, with a maturity date of March 7, 2024. The unpaid principal bore interest at a fluctuating rate of interest per annum equal to the daily simple secured overnight financing rate (SOFR) plus the applicable margin of 4.75%. The credit facility was used to fund the Company’s general working capital needs and interest is expensed as incurred. The credit facility is collateralized by all of the Company’s assets wherein the Lender is granted a junior priority interest in all collateralized Company assets that Lender has previously identified as a permitted lien or other encumbrance that the Company regularly incurs through its ordinary course of business; in all other Company assets, Lender maintains a first priority security interest. The credit facility also contained specific financial covenants. As of December 31, 2022, the Company was not in compliance with the minimum interest coverage ratio requirement and consolidated liquidity covenant. On February 23, 2023, the Company entered into an amended loan agreement (the “Amendment”) with the Lender, whereby the Lender agreed to waive its right to accelerate and declare all of the debt immediately due and owing, based upon the previously disclosed non-compliance with financial covenants resulting in technical default under the loan agreement. Further, the Lender waived the requirement that the Company comply with certain financial covenants through maturity of the debt. These concessions were made as a result of the Company granting the Lender second mortgage positions for certain properties owned by the Company, as well as transferring to the Lender membership certificates pledging certain properties as collateral and perfecting the Lender’s security interest in the pledged LLCs. Additionally, the Company agreed to make principal reduction payments including paying the Lender $0.6 million on the 20th of every month which otherwise would have been paid to preferred shareholders as a dividend on the preferred stock, and pay to the Lender 25% of all net cash proceeds from asset sales, public offerings of any class of stock or debt, private equity recaptures, or any capital raise. The Company also agreed that it will not close on the purchase of any new projects without the Lender's express written consent and will not repurchase any of its outstanding securities. The aforementioned payments will continue to be made until the earlier of March 7, 2024 or until the loan has been paid in full. The Company evaluated the Amendment in accordance with ASC 470-50, Debt - Modifications and Extinguishments and applied the borrowing capacity model as it relates to a revolving debt arrangement. Under the Amendment, the Lender is no longer committed and has no further lending obligations to the Company, which reduced the borrowing capacity of available credit to $0. The Company determined that this modification is considered a partial extinguishment and expensed the remaining unamortized debt discount of $0.5 million within interest expense for the six months ended June 30, 2023. Interest expense was $0.5 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively. Interest expense was $1.7 million and $0.4 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023 and December 31, 2022, the revolving line of credit loan balance was $18.4 million and $25.0 million and the unamortized debt discount balance was $0 and $0.6 million, respectively. Equipment loans consists of the following: June 30, 2023 December 31, 2022 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $10,500: $ — $ 2,057,100 Book value of collateralized equipment: — 11,800 Future equipment loan maturities at June 30, 2023 are as follows: Year Ending December 31, 2023 (six months) $ — 2024 — 2025 — 2026 — Total $ — Interest expense was $0 and $0.04 million for the three months ended June 30, 2023 and 2022, respectively. Interest expense was $0.001 million and $0.1 million for the six months ended June 30, 2023 and 2022, respectively. |
CONSTRUCTION LOANS
CONSTRUCTION LOANS | 6 Months Ended |
Jun. 30, 2023 | |
Short-Term Debt [Abstract] | |
CONSTRUCTION LOANS | CONSTRUCTION LOANSThe Company has various construction loans with private individuals and finance companies. The loans are collateralized by specific construction projects. Most loans are generally on one one |
LETTER OF CREDIT
LETTER OF CREDIT | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
LETTER OF CREDIT | REVOLVING LINE OF CREDITOn March 7, 2022, the Company entered into a senior secured revolving credit facility (“the credit facility”) with BankUnited, N.A. (the “Lender”) for $25.0 million. The credit facility had an initial two year term, with a maturity date of March 7, 2024. The unpaid principal bore interest at a fluctuating rate of interest per annum equal to the daily simple secured overnight financing rate (SOFR) plus the applicable margin of 4.75%. The credit facility was used to fund the Company’s general working capital needs and interest is expensed as incurred. The credit facility is collateralized by all of the Company’s assets wherein the Lender is granted a junior priority interest in all collateralized Company assets that Lender has previously identified as a permitted lien or other encumbrance that the Company regularly incurs through its ordinary course of business; in all other Company assets, Lender maintains a first priority security interest. The credit facility also contained specific financial covenants. As of December 31, 2022, the Company was not in compliance with the minimum interest coverage ratio requirement and consolidated liquidity covenant. On February 23, 2023, the Company entered into an amended loan agreement (the “Amendment”) with the Lender, whereby the Lender agreed to waive its right to accelerate and declare all of the debt immediately due and owing, based upon the previously disclosed non-compliance with financial covenants resulting in technical default under the loan agreement. Further, the Lender waived the requirement that the Company comply with certain financial covenants through maturity of the debt. These concessions were made as a result of the Company granting the Lender second mortgage positions for certain properties owned by the Company, as well as transferring to the Lender membership certificates pledging certain properties as collateral and perfecting the Lender’s security interest in the pledged LLCs. Additionally, the Company agreed to make principal reduction payments including paying the Lender $0.6 million on the 20th of every month which otherwise would have been paid to preferred shareholders as a dividend on the preferred stock, and pay to the Lender 25% of all net cash proceeds from asset sales, public offerings of any class of stock or debt, private equity recaptures, or any capital raise. The Company also agreed that it will not close on the purchase of any new projects without the Lender's express written consent and will not repurchase any of its outstanding securities. The aforementioned payments will continue to be made until the earlier of March 7, 2024 or until the loan has been paid in full. The Company evaluated the Amendment in accordance with ASC 470-50, Debt - Modifications and Extinguishments and applied the borrowing capacity model as it relates to a revolving debt arrangement. Under the Amendment, the Lender is no longer committed and has no further lending obligations to the Company, which reduced the borrowing capacity of available credit to $0. The Company determined that this modification is considered a partial extinguishment and expensed the remaining unamortized debt discount of $0.5 million within interest expense for the six months ended June 30, 2023. Interest expense was $0.5 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively. Interest expense was $1.7 million and $0.4 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023 and December 31, 2022, the revolving line of credit loan balance was $18.4 million and $25.0 million and the unamortized debt discount balance was $0 and $0.6 million, respectively. Equipment loans consists of the following: June 30, 2023 December 31, 2022 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $10,500: $ — $ 2,057,100 Book value of collateralized equipment: — 11,800 Future equipment loan maturities at June 30, 2023 are as follows: Year Ending December 31, 2023 (six months) $ — 2024 — 2025 — 2026 — Total $ — Interest expense was $0 and $0.04 million for the three months ended June 30, 2023 and 2022, respectively. Interest expense was $0.001 million and $0.1 million for the six months ended June 30, 2023 and 2022, respectively. |
NOTE PAYABLE INSURANCE
NOTE PAYABLE INSURANCE | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLE INSURANCE | CONSTRUCTION LOANSThe Company has various construction loans with private individuals and finance companies. The loans are collateralized by specific construction projects. Most loans are generally on one one |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES From time to time, the Company is subject to compliance audits by federal, state, and local authorities relating to a variety of regulations including wage and hour laws, taxes, and workers’ compensation. There are no significant or pending litigation or regulatory proceedings known at this time. On December 2, 2021, the Company entered into a purchase and sale agreement for the acquisition of 438 acres in Blaine, Washington for $13.5 million. Closing is expected to take place in Q4 2023. On April 21, 2022, the Company entered into a purchase and sale agreement for the purchase of 4.81 acres in Port Orchard, Washington for $2.7 million. Closing is expected to take place in Q4 2023. On November 15, 2022, the Company entered into a purchase and sale agreement for the purchase of 15.30 acres in Stanwood, Washington for $4.6 million. Closing is expected to take place in Q2 2024. On April 21, 2023, the Company entered into a purchase and sale agreement for the purchase of 5.15 acres in Arlington, Washington. The purchase price, which is to be determined, will be $12 per usable land square foot but not less than a total of $1.8 million. Closing is expected to take place in Q4 2024. On May 4, 2023, the Company entered into a purchase and sale agreement for the purchase of 5.24 acres in Arlington, Washington. The purchase price, which is to be determined, will be $12 per usable land square foot but not less than a total of $1.9 million. Closing is expected to take place in Q4 2024. On May 4, 2023, the Company entered into a purchase and sale agreement for the purchase of 6.38 acres in Arlington, Washington. The purchase price, which is to be determined, will be $12 per usable land square foot but not less than a total of $1.9 million. Closing is expected to take place in Q4 2024. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Notes Payable The Company entered into construction loans with Sound Equity, LLC of which Robb Kenyon, a former director and minority shareholder, is a partner. These loans were originated between April 2019 and June 2021; the loans generally have a 12 to 24 month maturity, including those that have been extended. The interest rates range between 7.99% and 11.00%. As of June 30, 2023, and December 31, 2022, the outstanding loan balances were $0 and $8.2 million, respectively. For the three months ended June 30, 2023 and 2022, the Company capitalized loan fees of $0 and $0, respectively. For the six months ended June 30, 2023 and 2022, the Company capitalized loan fees of $0.1 million and $0, respectively. These fees are recorded as debt discount and amortized over the life of the loan. The amortization is capitalized to real estate. As of June 30, 2023 and December 31, 2022, there were $0 and $0.1 million of remaining unamortized debt discounts, respectively. The interest is capitalized to real estate as incurred and will be expensed to cost of goods sold when the property is sold. During the three months ended June 30, 2023 and 2022, the Company incurred interest of $0.3 million and $0.3 million, respectively. During the six months ended June 30, 2023 and 2022, the Company incurred interest of $0.5 million and $0.6 million, respectively. Robb Kenyon resigned as a director of the Company on July 8, 2021. Due to Related Party The Company previously utilized a quarry to process waste materials from the completion of raw land into sellable/buildable lots. The materials produced by the quarry and sold by the Company to others were subject to a 25% commission payable to SGRE, LLC, which is 100% owned by the Company’s former Chief Executive Officer and President. The commission expense was recorded in operating expenses. On June 30, 2023 and December 31, 2022, the commission payable was $0 and $0, respectively. The commission expense for the three months ended June 30, 2023 and 2022, was $0 and $0, respectively. For the six months ended June 30, 2023 and 2022, the commission expense was $0 and $0.03 million, respectively. The Company has nearly completed its quarry operations and will no longer incur any commission expenses. Rental Expense |
INCOME TAX
INCOME TAX | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | INCOME TAX The Company’s effective tax rate for the six months ended June 30, 2023 was a benefit of 22.3%, compared to 23.3% for the six months ended June 30, 2022. The Company calculated the effective tax rate for the six months ended June 30, 2023 and 2022 based on the actual effective tax rate for the year-to-date period. The decrease in the effective tax rate for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 is driven by the decrease in blended state tax rates and incentive stock compensation. The Company is required to establish a valuation allowance for any portion of the deferred tax asset that the Company concludes is more likely than not to be unrealizable. The Company’s assessment considered all evidence, both positive and negative, including the nature, frequency, and severity of any current and cumulative losses, taxable income in carry back years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. As of June 30, 2023, and December 31, 2022, the Company had no valuation allowance recorded. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Common Stock The Company is authorized to issue 50,000,000 shares of common stock, no par value per share. At June 30, 2023, the Company has 1,802,295 shares of common stock issued and outstanding. Each share of common stock has one vote per share for all purposes. Common stock does not provide any preemptive, subscription, or conversion rights and there are no redemption or sinking fund provisions or rights. Common stockholders are not entitled to cumulative voting for purposes of electing members to the Board of Directors. Preferred Stock The Company is authorized to issue 10,000,000 shares of preferred stock, no par value per share. As of June 30, 2023, the Company has 3,799,799 shares of Series A Cumulative Convertible Preferred Stock (“Series A Preferred Shares”) issued and outstanding. The holders of the Series A Preferred Shares are entitled to receive dividends at $2.00 per share per annum which are paid monthly in arrears starting June 30, 2021. Beginning on June 9, 2024, the Company may, at its option, redeem the Series A Preferred Shares, in whole or in part, by paying $25.00 per share, plus any accrued and unpaid dividends to but not including the date of redemption. To the extent declared by the Board of Directors, dividends will be payable not later than 20 days after the end of each calendar month. Dividends on the Series A Preferred Shares will accumulate whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, and whether or not such dividends are declared by the Board of Directors. Conversion at Option of Holder . Each Series A Preferred Share, together with accrued but unpaid dividends, is convertible into 0.2778 shares of common stock (subject to adjustment) at any time at the option of the holder. Dividends Preferred Stock . The holders of the Series A Preferred Shares are entitled to receive dividends in the amount of $2.00 per share per annum, which is equivalent to 8% of the $25.00 liquidation preference per share. The Company has accrued dividends of $3.8 million as of June 30, 2023. The Company had accrued dividends of $0.6 million as of December 31, 2022 which were paid to the shareholders on January 20, 2023. On January 20, 2023, the Board of Directors voted to suspend the cash dividend on the Series A Preferred Stock as announced on a Current Report on Form 8-K on January 25, 2023. On February 23, 2023, as part of the Amendment to the Loan Agreement with BankUnited, the Company agreed to pay $0.6 million to BankUnited each month, which otherwise would have been paid as a dividend to the holders of the Series A Preferred Stock. Common Stock. The declaration of any future cash dividends is at the discretion of the board of directors and depends upon the Company’s earnings, if any, capital requirements and financial position, general economic conditions, and other pertinent conditions. It is the Company’s present intention not to pay any cash dividends on the Company’s common stock in the foreseeable future, but rather to reinvest earnings, if any, in business operations. 2023 Public Offering On May 16, 2023, the Company entered into securities purchase agreements (the “Purchase Agreements”) with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a public offering (the “Offering”) (i) 160,500 shares (the “Shares”) of common stock of the Company, no par value (the “Common Stock”), (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 1,790,718 shares of Common Stock and (iii) warrants to purchase up to 1,951,218 shares of Common Stock (the “Warrants” and collectively with the Shares and the Pre-Funded Warrants, the “Securities”) at a combined public offering price of $5.125 per share of Common Stock and accompanying Warrant or $5.1249 per Pre-Funded Warrant and accompanying Warrant. On May 18, 2023, the Company closed on the Offering. The net proceeds after deducting Offering costs were $8.9 million. In addition, upon the closing the Offering, the Company issued to the placement agent warrants to purchase 117,073 shares of common stock with an exercise price of $6.41 per share of common stock for a term of five years beginning on May 18, 2023, all of which vested immediately upon closing. The net proceeds allocated to each of these instruments were $0.6 million for common stock, $6.7 million for Pre-Funded Warrants, $1.6 million for Warrants, and $0.1 million for placement agent warrants. Reverse Stock Split On February 17, 2023, the Company held a special meeting of stockholders at which the stockholders approved a proposal to effect a reverse split of its issued and outstanding shares of common stock at a ratio of between 1-for-3 and 1-for-25 (the “Reverse Stock Split”), such ratio to be selected at the sole discretion of the Company's Board without further stockholder action. On February 27, 2023, the Board of Directors approved the implementation of the Reverse Stock Split at a ratio of 1-for-20 shares of the common stock. The Company filed Articles of Amendment to Articles of Incorporation for the Reverse Stock Split with the Washington Secretary of State on March 1, 2023 and the Reverse Stock Split was effected on the Nasdaq Capital Market on March 6, 2023. As a result of the Reverse Stock Split, every 20 shares of common stock either issued or outstanding immediately prior to the effective time was, automatically and without any action on the part of the respective holders thereof, combined and converted into one share of common stock. The Reverse Stock Split also applied to common stock issuable upon the exercise of the Company’s outstanding warrants, outstanding stock options, unvested restricted stock awards, stock and stock option plans, and upon the conversion of the Series A Preferred Stock. The Reverse Stock Split did not affect the par value of common stock or the shares of common stock authorized to issue under the Articles of Incorporation, as amended. No fractional shares were issued in connection with the Reverse Stock Split. Fractional shares which would otherwise result from the Reverse Stock Split were rounded up to the nearest whole share. Repurchase of Equity Securities On May 10, 2022, the Board of Directors approved a stock repurchase program authorizing the repurchase of up to $5.0 million worth of shares of common stock. The amount of the repurchase program represented approximately 15% of the outstanding shares of the Company’s common stock valued at the closing price on May 10, 2022. During the six months ended June 30, 2023, the Company did not repurchase any shares of common stock. As a part of the amended loan agreement reached with BankUnited, N.A. on February 23, 2023, the Company agreed that it will not repurchase any of its currently outstanding securities. (A) Options The following is a summary of the Company’s option activity: Options Weighted Average Exercise Price Outstanding – January 1, 2023 37,546 $ 41.51 Exercisable – January 1, 2023 19,696 $ 55.55 Granted 140,000 $ 3.73 Exercised — $ — Forfeited/Cancelled (2,486) $ 19.15 Outstanding – June 30, 2023 175,060 $ 11.61 Exercisable – June 30, 2023 20,635 $ 57.57 Options Outstanding Options Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $3.73 - $130.00 175,060 9.44 $ 11.61 20,635 $ 57.57 During the six months ended June 30, 2023, 140,000 options were issued to officers of the Company. These options have an exercise price of $3.73 per share and a term of ten years. One half of these options will vest upon the filing of the Company's next Form 10-K with the U.S. Securities and Exchange Commission, with the remainder to vest in equal proportions upon the first and second anniversary of said filing. The options have an aggregated fair value of approximately $0.3 million that was calculated using the Black-Scholes option-pricing model based on the assumptions discussed above in Note 1 under Stock-Based Compensation . During the six months ended June 30, 2022, the Company issued 1,500 options to employees. These options have an exercise price between $40.00 and $41.80 per share, a term of ten years, and vest over one Stock-Based Compensation . The Company recognized share-based compensation net of forfeitures related to options of $0.02 million and $0.02 million for the three months ended June 30, 2023 and 2022, respectively. The Company recognized share-based compensation net of forfeitures related to options of $0.05 million and $0.04 million for the six months ended June 30, 2023 and 2022, respectively. On June 30, 2023, unrecognized share-based compensation was $0.4 million. The intrinsic value for outstanding and exercisable options as of June 30, 2023 was $0. The intrinsic value for outstanding and exercisable options as of June 30, 2022 was $0.1 million and $0.1 million. (B) Warrants The following is a summary of the Company’s common stock warrant activity, for warrants that are exercisable at a 20-1 ratio to common stock: Warrants* Weighted Average Exercise Price Outstanding – January 1, 2023 18,447,564 $ 3.47 Exercisable – January 1, 2023 18,380,897 $ 3.47 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding – June 30, 2023 18,447,564 $ 3.47 Exercisable – June 30, 2023 18,397,564 $ 3.47 *As a result of the Reverse Stock Split, each warrant now entitles the holder to purchase one-twentieth (0.05) of one share of common stock. Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.40 - $7.50 18,447,564 3.19 $ 3.47 18,397,564 $ 3.47 During the six months ended June 30, 2023, the Company did not issue any warrants with a 20 to 1 ratio. During the six months ended June 30, 2022, the Company issued 100,000 warrants in connection with investor relation services being performed. The warrants have an exercise price of $3.00 per warrant, a term of five years, and vest over three years. The fair value of these warrants is $0.1 million as of June 30, 2022. The intrinsic value for outstanding and exercisable warrants as of June 30, 2023 was $0. The intrinsic value for outstanding and exercisable warrants as of June 30, 2022 was $0.02 million. The following is a summary of the Company’s common stock warrant activity, for warrants that are exercisable at a 1 to 1 ratio to common stock: Warrants Weighted Average Exercise Price Outstanding – January 1, 2023 — $ — Exercisable – January 1, 2023 — $ — Granted 2,068,291 $ 5.08 Exercised — $ — Forfeited/Cancelled — $ — Outstanding – June 30, 2023 2,068,291 $ 5.08 Exercisable – June 30, 2023 2,068,291 $ 5.08 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $5.00 - $6.41 2,068,291 4.89 $ 5.08 2,068,291 $ 5.08 During the six months ended June 30, 2023, the Company issued 2,068,291 warrants in connection with the Offering. The warrants have an exercise price between $5.00 and $6.41 per warrant, a term of five years, and vested immediately. The fair value of these warrants was $1.8 million before the net proceed allocations. The intrinsic value for outstanding and exercisable warrants as of June 30, 2023 was $0. The following is a summary of the Company’s preferred stock warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 1, 2023 12,000 $ 24.97 Exercisable – January 1, 2023 12,000 $ 24.97 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding – June 30, 2023 12,000 $ 24.97 Exercisable – June 30, 2023 12,000 $ 24.97 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 24.97 12,000 2.95 $ 24.97 12,000 $ 24.97 During the six months ended June 30, 2023 and June 30, 2022, the Company did not issue any preferred warrants. The intrinsic value for outstanding and exercisable preferred warrants as of June 30, 2023 was $0. The intrinsic value for outstanding and exercisable preferred warrants as of June 30, 2022 was $0. (C) Pre-Funded Warrants The following is a summary of the Pre-Funded Warrant activity: Pre-Funded Warrants Weighted Average Exercise Price Outstanding – January 1, 2023 — $ — Exercisable – January 1, 2023 — $ — Granted 1,790,718 $ 0.0001 Exercised (906,609) $ 0.0001 Forfeited/Cancelled — $ — Outstanding – June 30, 2023 884,109 $ 0.0001 Exercisable – June 30, 2023 884,109 $ 0.0001 During the six months ended June 30, 2023, the Company issued Pre-Funded Warrants to purchase 1,790,718 shares of common stock in connection with the Offering. The Pre-Funded Warrants have an exercise price of $0.0001 per Pre-Funded Warrant, and are exercisable at any time after their original issuance at the option of the holder, subject to certain restrictions. The fair value of these Pre-Funded Warrants was $7.6 million before the net proceed allocations. During the six months ended June 30, 2023, Pre-Funded Warrants were exercised for 906,609 shares of common stock. The carrying value of the outstanding Pre-Funded Warrants was $3.3 million as of June 30, 2023. (D) Restricted Stock Plan The following is a summary of the Company’s restricted stock activity: Restricted Stock Weighted Average Fair Value Non Vested Balance - January 1, 2023 12,000 $ 38.48 Granted — $ — Vested 3,793 $ 38.54 Forfeited/Cancelled — $ — Non Vested Balance - June 30, 2023 8,207 $ 38.45 The Company periodically grants restricted stock awards to the Board of Directors and certain employees pursuant to the 2020 Plan. These typically are awarded by the Compensation Committee at one time and from time to time, to vest over one The Company recognized $0.05 million and $0.1 million of share-based compensation during the three months ended June 30, 2023 and 2022, respectively. The Company recognized $0.1 million and $0.3 million of share-based compensation during the six months ended June 30, 2023 and 2022, respectively. On June 30, 2023, there was $0.3 million of unrecognized compensation related to non-vested restricted stock. |
SEGMENTS
SEGMENTS | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS In accordance with FASB ASC Topic 280, Segment Reporting, an operating segment is defined as a component of an enterprise for which discrete financial information is available and reviewed regularly by the chief operating decision maker (“CODM”), or decision making group, to evaluate performance and make operating decisions. The Company identified its CODM group as its two executive officers, the interim Chief Executive Officer and Chief Accounting Officer. In determining the reportable segments, the CODM group considers similar economics and characteristics including product types, construction processes, customer type, regulatory environments, and underlying demand and supply. The Company’s business is organized into five material reportable segments which aggregate 100% of sales for the six months ended June 30, 2023: 1) Homes; 2) Developed Lots; 3) Entitled Land; 4) Multi-family; and 5) Fee Build. The reporting segments follow the same accounting policies used in the preparation of the Company’s condensed consolidated financial statements. The following represents sales, cost of sales, and gross profit (loss) information for the Company’s reportable segments for the three and six months ended June 30, 2023 and 2022: For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Revenue by segment Homes $ 2,649,000 $ 8,789,700 $ 8,698,700 $ 21,064,200 Developed Lots 1,900,000 — 4,340,400 9,080,000 Entitled land — — — 4,480,000 Multi-family 15,032,200 — 15,456,400 — Fee Build 263,300 1,487,800 530,100 4,201,700 Other — 8,900 — 41,500 Total Sales $ 19,844,500 $ 10,286,400 $ 29,025,600 $ 38,867,400 Cost of goods sold by segment Homes $ 2,522,600 $ 7,104,600 $ 8,484,200 $ 17,656,100 Developed Lots 4,104,900 (6,400) 7,239,600 8,057,000 Entitled land 246,800 — 337,400 712,900 Multi-family 15,619,400 2,100 16,774,600 2,100 Fee Build 262,600 4,654,600 969,300 7,219,500 Other 7,900 463,400 184,500 1,097,100 Total Cost of Sales $ 22,764,200 $ 12,218,300 $ 33,989,600 $ 34,744,700 Gross profit (loss) by segment Homes $ 126,400 $ 1,685,100 $ 214,500 $ 3,408,100 Developed Lots (2,204,900) 6,400 (2,899,200) 1,023,000 Entitled land (246,800) — (337,400) 3,767,100 Multi-family (587,200) (2,100) (1,318,200) (2,100) Fee Build 700 (3,166,800) (439,200) (3,017,800) Other (7,900) (454,500) (184,500) (1,055,600) Total Gross Profit (Loss) $ (2,919,700) $ (1,931,900) $ (4,964,000) $ 4,122,700 The following represents total assets for the Company’s reportable segments at June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Homes $ 26,420,700 $ 29,880,500 Developed lots 43,201,200 43,469,900 Entitled land 7,638,500 9,499,600 Multi-family 138,040,000 131,485,900 Fee Build 762,700 1,703,200 Unallocated (Shared) 20,835,900 20,127,300 Total Assets $ 236,899,000 $ 236,166,400 |
UNCOMPLETED CONTRACTS
UNCOMPLETED CONTRACTS | 6 Months Ended |
Jun. 30, 2023 | |
Contractors [Abstract] | |
UNCOMPLETED CONTRACTS | UNCOMPLETED CONTRACTS Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows at June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Costs incurred on uncompleted contracts $ 20,473,300 $ 19,429,800 Estimated loss (3,966,300) (3,495,100) Costs and estimated earnings on uncompleted contracts 16,507,000 15,934,700 Billings to date 16,800,400 16,273,000 Costs and estimated earnings in excess of billings on uncompleted contracts — — Billings in excess of costs and estimated earnings on uncompleted contracts (293,400) (338,300) Provision for loss on contract (84,900) (159,100) Contract Liabilities $ (378,300) $ (497,400) The contract liabilities were $0.4 million and $0.5 million as of June 30, 2023 and December 31, 2022, respectively. The uncollected billings were $0.8 million and $1.7 million as of June 30, 2023 and December 31, 2022, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Effective July 12, 2023, Jeffrey Habersetzer was appointed as Interim Chief Executive Officer and Interim President of the Company. Also effective July 12, 2023, Mr. Habersetzer stepped down from his positions of General Counsel and Corporate Secretary. Mr. Habersetzer retains his position as Chief Operating Officer. The terms of Mr. Habersetzer’s Employment Agreement will not change other than to add his new title and duties as Interim Chief Executive Officer and Interim President effective July 12, 2023. Effective July 12, 2023, Yoshi Niino was appointed as Chief Accounting Officer of the Company and assumed the duties of the Company’s principal financial officer and principal accounting officer. Effective July 12, 2023, James Burton was appointed as the Corporate Secretary of the Company. Subsequent to June 30, 2023, Pre-Funded Warrants were exercised by investors for 527,000 shares of common stock, which had a carrying value of $2.0 million. As of August 9, 2023, there are 357,109 Pre-Funded Warrants outstanding and exercisable. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The accompanying unaudited condensed consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. |
Reclassification | Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. |
Use of Estimates | Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. |
Going Concern Uncertainty | Going Concern Uncertainty The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 205-40, the Company’s management has the responsibility to evaluate whether conditions and/or events raise substantial doubt about the Company’s ability to meet its financial obligations as they become due within one year after the date that the financial statements are issued. As required by this standard, the evaluation shall initially not take into consideration the potential mitigating effects of the Company’s plans that have not been fully implemented as of the date the financial statements are issued. Regarding the first step of this assessment, the Company concluded that under the standards of ASC 205-40, the following conditions raised substantial doubt about the Company’s ability to continue as a going concern: during the year ended December 31, 2022, the Company failed to maintain compliance with certain financial covenants within its loan agreements requiring loan amendment or covenant waivers; it has no borrowing availability under its revolving credit facility; it has significant construction related debt maturing over the next 12 months; it has had significant uses of cash flows from operations over the past two years; it had a $16.9 million net loss during the year ended December 31, 2022, a $4.4 million net loss for the second quarter of 2023, and a net loss of $9.2 million for the six months ended June 30, 2023; and the real estate and construction industries are experiencing declining market conditions which have negatively impacted property valuations as well as financing capabilities and terms. In performing the second step of this assessment, management is required to evaluate whether the Company’s plans to mitigate the conditions above alleviate the substantial doubt about the Company's ability to meet its obligations as they become due within one year after the date that the financial statements are issued. The Company has undertaken and completed the following plans and actions to improve its available cash balances, liquidity, and cash generated from operations: • executed an Amendment to the Revolver Loan Agreement with BankUnited to alleviate the breach of financial covenants and the bank’s ability to call the loan; • has $7.7 million o f sales closed after June 30, 2023 or under contract as of August 9, 2023 and significant additional assets that are held for sale; • has construction loans in place; • met its equity requirement for its Pacific Ridge, Wyndstone, Meadowscape, and Belfair Phase 1 projects; • substantially completed its fee build contracts; • shut down its quarry operations, eliminated most of its full time employees in its horizontal infrastructure division, and sold a significant majority of its heavy construction equipment, all of which were directly or indirectly associated with significant net loss generating activities during the year ended December 31, 2022 and the three months ended March 31, 2023; and • raised net proceeds of $8.9 million from a public offering in May 2023. Additionally, the Company’s future plans include: raising additional funds through the sales of real estate assets; obtaining new debt financing and/or refinancing existing debt; pulling cash out of one or more of its multi-family properties by obtaining a project level equity partner; and/or raising capital in the private or public equity or debt markets. Based on the properties under contract for sale, interest in the Company’s properties available for sale, its prior track record of raising capital through issuance of debt or sale of equity, and management’s ongoing discussions and negotiations with potential |
Stock-Based Compensation | Stock-Based Compensation Effective November 19, 2018, the Company’s Board of Directors and stockholders approved and adopted the 2018 Incentive and Nonstatutory Stock Option Plan (the “2018 Plan”). The 2018 Plan allows the Administrator (as defined in the 2018 Plan), currently the Compensation Committee, to determine the issuance of incentive stock options and non-qualified stock options to eligible employees and outside directors and consultants of the Company. The Company has 133,784 shares of common stock reserved for issuance under the 2018 Plan. Effective December 3, 2020, the Company’s Board of Directors and stockholders approved and adopted the 2020 Restricted Stock Plan (the “2020 Plan”). The 2020 Plan allows the Administrator, currently the Compensation Committee, to determine the issuance of restricted stock to eligible officers, directors, and key employees. The Company has 135,000 shares of common stock reserved for issuance under the 2020 Plan. The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee and non-employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company recognizes all forms of share-based payments, including stock option grants, warrants, and restricted stock grants, at their fair value on the grant date. Options and warrants are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment. The grants are amortized on a straight-line basis over the requisite service periods, which are generally the vesting periods. The Company accounts for forfeitures of stock options as they occur. When forfeitures occur, the unvested portion of the previously recognized compensation cost is reversed in the period of the forfeiture. Stock-based compensation expenses are included in operating expenses in the condensed consolidated statement of operations. For the six months ended June 30, 2023 and 2022 when computing fair value of share-based awards, the Company has considered the following range of assumptions: June 30, 2023 June 30, 2022 Risk-free interest rate 4.30% 1.73% - 2.14% Exercise price $3.73 $40.00 - $60.00 Expected life of grants in years 6.38 3.93 - 6.50 Expected volatility of underlying stock 43.50% 42.39% - 48.13% Dividends — — The expected term is computed using the “simplified method” as permitted under the provisions of FASB ASC Topic 718-10-S99. The Company uses the simplified method to calculate the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The share price is the closing price on the date of grant. Expected volatility is based on the historical stock price volatility of comparable companies’ common stock as the stock does not have sufficient historical trading activity. Risk free interest rates were obtained from U.S. Treasury rates for the applicable expected terms. Repurchase of Equity Securities Share repurchases are recorded to common stock at the value of the cash consideration paid, as the Company's common stock has no par value. These shares were being repurchased for the purpose of constructive retirement. (See Note 15. Stockholders’ Equity.) Reverse Stock Split On March 6, 2023, the Company effected a 1-for-20 reverse stock split of its issued and outstanding shares of common stock (the “Reverse Stock Split”) on the Nasdaq Capital Market. Accordingly, all share and per share data included in these condensed consolidated financial statements and notes thereto have been adjusted retroactively to reflect the impact of the Reverse Stock Split. 2023 Public Offering On May 18, 2023, the Company closed on a public offering of 160,500 shares of common stock, 1,790,718 pre-funded warrants, and 1,951,218 common warrants for net proceeds of $8.9 million. In addition, upon closing of this public offering, the Company issued to the placement agent 117,073 warrants to purchase shares of common stock. The pre-funded warrants and common warrants were evaluated in accordance with FASB ASC Topics 480, Distinguishing Liabilities from Equity and 815, Derivatives and Hedging. The Company assessed whether the pre-funded warrants and common warrants are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are mandatorily redeemable, embody obligations to repurchase shares or issue a variable number of shares, are exercisable without any contingent provisions, permit the holders to receive a fixed number of shares of common stock upon exercise, are indexed to the Company's common stock, and are settled in shares. Based on this assessment, the pre-funded warrants and common warrants were classified as a component of permanent stockholders' equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The Company values these equity instruments at issuance and allocated net proceeds from the sale proportionately to the common stock, the pre-funded warrants, and the common warrants. Of the net proceeds, $0.6 million was allocated to common stock, $6.7 million was allocated to pre-funded warrants, $1.6 million was allocated to common warrants, and $0.1 million was allocated to the placement agent warrants. The common warrants and placement agent warrants were valued using a Black-Scholes pricing model. When computing the fair value of these warrants, the Company used 3.94% as the risk free interest rate, an exercise price of $5.00 or $6.41, an expected life of 2.5 years, and expected volatility of 37.83% as assumptions in the model. (See Note 15. Stockholders’ Equity.) |
Earnings (Loss) Per Share (“EPS”) | Earnings (Loss) Per Share (“EPS”) EPS is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to topic 260-10-45 of the FASB ASC. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the numerator may have to adjust for any dividends and income or loss associated with potentially dilutive securities that are assumed to have resulted in the issuance of shares of common stock and the denominator may have to adjust to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued during the period to reflect the potential dilution that could occur from shares of common stock issuable through a contingent shares issuance arrangement, stock options, warrants, RSUs, or convertible preferred stock. For purposes of determining diluted earnings per common share, the treasury stock method is used for stock options, warrants, and RSUs, and the if-converted method is used for convertible preferred stock as prescribed in FASB ASC Topic 260. In accordance with FASB ASC topic 260-10-45, pre-funded warrants have been included in the weighted average common shares outstanding number for the purpose of calculating EPS. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to common stockholders per share of common stock for the three and six months ended June 30, 2023 and 2022. For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss attributable to common stockholders $ (6,279,700) $ (6,449,100) $ (13,045,200) $ (6,815,800) Effect of dilutive securities: — — — — Diluted net loss $ (6,279,700) $ (6,449,100) $ (13,045,200) $ (6,815,800) Denominator: Weighted average common shares outstanding - basic (b) 1,657,709 701,215 1,191,752 680,740 Dilutive securities (a): Restricted Stock Awards — — — — Options — — — — Warrants — — — — Convertible Preferred Stock — — — — Weighted average common shares outstanding and assumed conversion – diluted 1,657,709 701,215 1,191,752 680,740 Basic net earnings (loss) per common share $ (3.79) $ (9.20) $ (10.95) $ (10.01) Diluted net earnings (loss) per common share $ (3.79) $ (9.20) $ (10.95) $ (10.01) (a) - Outstanding anti-dilutive securities excluded: Unvested restricted stock awards 8,207 14,000 8,207 14,000 Stock options 175,060 22,946 175,060 22,946 Warrants to purchase common stock (20:1) (1) 18,447,564 18,447,564 18,447,564 18,447,564 Warrants to purchase common stock (1:1) (2) 2,068,291 — 2,068,291 — Convertible preferred stock (3) 3,799,799 3,799,799 3,799,799 3,799,799 Warrants to purchase convertible preferred stock (3) 12,000 12,000 12,000 12,000 (b) - Outstanding shares of Pre-funded warrants included in the weighted average outstanding shares Pre-funded warrants 884,109 — 884,109 — (1) The number of outstanding warrants, issued prior to the reverse stock split on March 6, 2023, did not change or split pursuant to the reverse stock split, but the number of shares of common stock issuable upon exercise of these warrants was adjusted based on a 1 to 0.05 ratio. (2) The number of outstanding warrants issued after the reverse stock split on March 6, 2023 are exercisable for shares of common stock on a 1 to 1 ratio. (3) Preferred stock and warrants to purchase convertible preferred stock are convertible into common stock on a 0.2778 to 1 ratio. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of June 30, 2023 and December 31, 2022. |
Restricted Cash | Restricted CashOn August 10, 2021, the Company entered into a Letter of Credit (“LOC”) agreement with WaFd Bank in the amount of $0.6 million. The Company signed a lease on October 5, 2021 for a new office space. The landlord of the property, University Street Properties I, LLC, is the beneficiary of the LOC. The amount of funds that cover this LOC were moved by WaFd Bank to a controlled account on August 13, 2021. |
Accounts Receivable | Accounts ReceivableAccounts receivables are reported at the amount the Company expects to collect from outstanding balances. The Company provides for an allowance for credit losses based upon a review of the outstanding accounts receivable, historical collection information, and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. |
Notes Receivable | Notes Receivable Notes receivables are recorded at amounts due to the Company according to the contractual terms of the loan agreement. The Company's notes receivables are for the sale of real estate properties or financing the development of the properties prior to acquisition and are each secured by the underlying improved real estate properties. |
Property and Equipment and Depreciation | Property and Equipment and Depreciation Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repair charges are expensed as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years |
Real Estate Assets | Real Estate Assets Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with FASB ASC Topic 805, “Business Combinations,” where acquired assets are recorded at fair value. Interest, property taxes, insurance, and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset construction is completed or the asset is sold. The capitalized costs are recorded as part of the asset to which they relate and are expensed when the underlying asset is sold. The Company capitalized interest from related party borrowings of $0.3 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively. The Company capitalized interest from related party borrowings of $0.5 million and $0.6 million for the six months ended June 30, 2023 and 2022, respectively. The Company capitalized interest from third-party borrowings of $3.3 million and $1.1 million for the three months ended June 30, 2023 and 2022, respectively. The Company capitalized interest from third-party borrowings of $6.1 million and $1.9 million for the six months ended June 30, 2023 and 2022, respectively. A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met: (1) Management, having the authority to approve the action, commits to a plan to sell the property; (2) The property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (3) An active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (4) The sale of the property is probable and is expected to be completed within one year of the contract date; (5) The property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) Actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The real estate assets classified as held for sale were $47.2 million and $34.4 million as of June 30, 2023 and December 31, 2022, respectively. In addition to the annual assessment of potential triggering events in accordance with FASB ASC Topic 360, the Company applies a fair value-based impairment test to the net book value of assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have occurred. |
Revenue and Cost Recognition | Revenue and Cost Recognition FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. In accordance with ASC 606, revenue is recognized when a customer obtains control of the promised good or service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. The provision of ASC 606 includes a five-step process by which the Company determines revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which the Company expects to be entitled in exchange for those goods or services. ASC 606 requires the Company to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, performance obligations are satisfied. A detailed breakdown of the five-step process for revenue recognitions is as follows: Homes, Developed Lots, and Entitled Land 1. Identify the contract with a customer. The Company signs an agreement with a buyer to purchase the parcel of entitled land, developed lots that have completed infrastructure, or completed homes. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering entitled land, developed lots, and completed homes to the customer, which are required to meet certain specifications outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The parcel, lots, and homes are separate performance obligations for which the specific price is in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company recognizes revenue when title is transferred. The Company does not have any further material performance obligations once title is transferred. Fee Build 1. Identify the contract with a customer. The Company signs an agreement with a customer to construct the required infrastructure so that houses can be developed on the lots. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering developed lots which are required to meet certain specifications that are outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The nature of the industry involves a number of uncertainties that can affect the current state of the contract. Variable considerations are the estimates made due to a contract modification in the contractual service. Change orders, claims, extras, or back charges are common in contractual services activity as a form of variable consideration. If there is going to be a contract modification, judgment by management will need to be made to determine if the variable consideration is enforceable. The following factors are considered in determining if the variable consideration is enforceable: 1. The customer’s written approval of the scope of the change order; 2. Current contract language that indicates clear and enforceable entitlement relating to the change order; 3. Separate documentation for the change order costs that are identifiable and reasonable; and 4. The Company’s experience in negotiating change orders, especially as it relates to the specific type of contract and change order being evaluated. Once the Company receives a contract, it generates a budget of projected costs for the contract based on the contract price. If the scope of the contract during the contractual period needs to be modified, the Company files a change order. The Company does not continue to perform services until the change modification is agreed upon with documentation by both the Company and the customer. There are few times that claims, extras, or back charges are included in the contract. If there are multiple performance obligations to the contract, the costs must be allocated appropriately and consistently to each performance obligation. In the Company’s experience, usually only one performance obligation is stated per contract. If there are multiple services provided for one customer, the Company has a policy of splitting out the services over multiple contracts. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company uses the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation. The input method involves measuring the resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used relative to the total expected inputs to the satisfaction of the performance obligation. Costs incurred prior to actual contract (i.e., design, engineering, procurement of material, etc.) should not be recognized as the Company does not have control of the good/service provided. When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such costs, the Company records the entire estimated loss in the period the loss becomes known. Project contracts typically provide for a schedule of billings or invoices to the customer based on the Company’s job to date percentage of completion of specific tasks inherent in the fulfillment of its performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statement of operations can and usually does differ from amounts that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceed cumulative billings and unbilled receivables to the customer under the contract are reflected as a current contract asset in the Company’s balance sheet. Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized on the contract would be reflected as a current contract liability in the Company’s balance sheet. (See Note 17. Uncompleted Contracts.) Rental Income Rental income attributable to residential leases has been evaluated under FASB ASC Topic 842, Leases. Rental income is recorded when due from residents and recognized monthly as it was earned. Residential apartment leases may include lease income related to such items as utility recoveries, parking rent, storage rent and pet rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. Leases entered into between a resident and a property for the rental of an apartment unit are generally six months to one year, and typically renewed on a month-to-month basis after the initial term. |
Cost of Sales | Cost of Sales Land acquisition costs are typically allocated to each lot based on the size of the lot in relation to the size of the total project. Development costs and capitalized interest are allocated to lots sold based on the same criteria. Fee build costs are charged to cost of sales as incurred. See the revenue recognition criteria above. Costs relating to the handling of recycled construction materials and converting items into usable construction materials for resale are charged to cost of sales as incurred. Rental expenses, relating to our multi-family rental revenue, are charged to cost of sales as incurred. |
Advertising | AdvertisingAdvertising expenses, which are expensed as incurred and included in operating expenses |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss, credit carryforwards, and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. Management applies the criteria established under FASB ASC Topic 740, Income Taxes, to determine whether any valuation allowances are needed each year. The Company calculated the effective tax rate for the six months ended June 30, 2023 and 2022 based on the actual effective tax rate for the year-to-date period. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. There are no uncertain tax positions as of June 30, 2023 and December 31, 2022. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On June 16, 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. Pursuant to ASU No. 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022 for small reporting companies, non-SEC filers, and all other companies. The adoption of ASU 2016-13 did not have a material impact on the Company's condensed financial statements. On March 12, 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this update are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has applied certain optional expedients that are retained through the end of the hedging relationship. In December 2022, ASU 2022-06 was issued which was effective upon issuance, defers the sunset date of this prior guidance from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief guidance in Topic 848. The adoption of ASU 2020-04 and ASU 2022-06 did not have a material impact on the Company’s condensed financial statements. On May 3, 2021, the FASB released ASU No. 2021-04, Compensation – Earning Per Share (Topic 260), Debt - Modifications and Extinguishments (subtopic 470-50), Compensation - Stock Compensation (Topic 718), Contracts in Entity’s Own Equity (Subtopic 815-40), Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued this update to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example warrants) that remain equity classified after modification or exchange. The standard is effective for fiscal years beginning after December 15, 2021. The Company adopted ASU 2021-04 on January 1, 2022, however the adoption did not have an impact on the Company’s condensed financial statements. In July 2023, the FASB released ASU No. 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock (SEC Update). The FASB issued this update to describe and clarify the amendments as listed above. The Company assessed the amendments related to this update, specifically for topics 205, 505 and 718 and noted that ASU No. 2023-03 does not have an impact on the Company’s condensed financial statements. |
Impairment of Property and Equipment | Impairment of Property and Equipment The Company reviews fixed assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is present when the sum of estimated undiscounted future cash flow expected to result from use of the assets is less than carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value. Fair value is determined based on discounted cash flow or appraised values, depending on the nature of the assets. As of June 30, 2023 and December 31, 2022, there were no impairment losses recognized for fixed assets. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Statement of Subsidiaries | The condensed consolidated financial statements include the following subsidiaries of Harbor Custom Development, Inc. as of the reporting period ending date, as follows: Names Dates of Formation Attributable Interest June 30, 2023 December 31, 2022 Saylor View Estates, LLC* March 30, 2014 N/A N/A Belfair Apartments, LLC December 3, 2019 100 % 100 % Pacific Ridge CMS, LLC May 24, 2021 100 % 100 % Tanglewilde, LLC June 25, 2021 100 % 100 % HCDI FL CONDO LLC July 30, 2021 100 % 100 % HCDI Mira, LLC** August 31, 2021 N/A N/A HCDI, Bridgeview LLC October 28, 2021 100 % 100 % HCDI Wyndstone, LLC September 15, 2021 100 % 100 % HCDI Semiahmoo, LLC December 17, 2021 100 % 100 % Mills Crossing, LLC July 21, 2022 100 % 100 % Broadmoor Ventures, LLC August 24, 2022 100 % 100 % GPB Holdings LLC October 29, 2022 100 % 100 % Winding Lane Estate LLC November 30, 2022 100 % 100 % Beacon Studio Farms LLC March 20, 2023 100 % — % *Saylor View Estates, LLC was voluntarily dissolved with the State of Washington as of January 20, 2022. |
Schedule of Share-based Compensation Arrangements by Share-based Payment Award | For the six months ended June 30, 2023 and 2022 when computing fair value of share-based awards, the Company has considered the following range of assumptions: June 30, 2023 June 30, 2022 Risk-free interest rate 4.30% 1.73% - 2.14% Exercise price $3.73 $40.00 - $60.00 Expected life of grants in years 6.38 3.93 - 6.50 Expected volatility of underlying stock 43.50% 42.39% - 48.13% Dividends — — |
Schedule of Net Loss Per Share | The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to common stockholders per share of common stock for the three and six months ended June 30, 2023 and 2022. For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss attributable to common stockholders $ (6,279,700) $ (6,449,100) $ (13,045,200) $ (6,815,800) Effect of dilutive securities: — — — — Diluted net loss $ (6,279,700) $ (6,449,100) $ (13,045,200) $ (6,815,800) Denominator: Weighted average common shares outstanding - basic (b) 1,657,709 701,215 1,191,752 680,740 Dilutive securities (a): Restricted Stock Awards — — — — Options — — — — Warrants — — — — Convertible Preferred Stock — — — — Weighted average common shares outstanding and assumed conversion – diluted 1,657,709 701,215 1,191,752 680,740 Basic net earnings (loss) per common share $ (3.79) $ (9.20) $ (10.95) $ (10.01) Diluted net earnings (loss) per common share $ (3.79) $ (9.20) $ (10.95) $ (10.01) (a) - Outstanding anti-dilutive securities excluded: Unvested restricted stock awards 8,207 14,000 8,207 14,000 Stock options 175,060 22,946 175,060 22,946 Warrants to purchase common stock (20:1) (1) 18,447,564 18,447,564 18,447,564 18,447,564 Warrants to purchase common stock (1:1) (2) 2,068,291 — 2,068,291 — Convertible preferred stock (3) 3,799,799 3,799,799 3,799,799 3,799,799 Warrants to purchase convertible preferred stock (3) 12,000 12,000 12,000 12,000 (b) - Outstanding shares of Pre-funded warrants included in the weighted average outstanding shares Pre-funded warrants 884,109 — 884,109 — (1) The number of outstanding warrants, issued prior to the reverse stock split on March 6, 2023, did not change or split pursuant to the reverse stock split, but the number of shares of common stock issuable upon exercise of these warrants was adjusted based on a 1 to 0.05 ratio. (2) The number of outstanding warrants issued after the reverse stock split on March 6, 2023 are exercisable for shares of common stock on a 1 to 1 ratio. (3) Preferred stock and warrants to purchase convertible preferred stock are convertible into common stock on a 0.2778 to 1 ratio. |
Schedule of Property and Equipment Estimated Useful Lives | Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years Property and equipment stated at cost, less accumulated depreciation, and amortization, consisted of the following: June 30, 2023 December 31, 2022 Machinery and Equipment $ 44,000 $ 505,300 Vehicles — 26,200 Furniture and Fixtures 694,000 695,600 Leasehold Improvements 1,467,000 1,524,000 Total Fixed Assets 2,205,000 2,751,100 Less Accumulated Depreciation (440,400) (461,600) Fixed Assets, Net $ 1,764,600 $ 2,289,500 |
Schedule of Revenue From Contracts With Customers | Revenues from contracts with customers are summarized by category as follows for the three and six months ended June 30, 2023 and 2022: For the Three Months Ended For the Six Months Ended 2023 2022 2023 2022 Homes $ 2,649,000 $ 8,789,700 $ 8,698,700 $ 21,064,200 Developed Lots 1,900,000 — 4,340,400 9,080,000 Entitled Land — — — 4,480,000 Multi-family 15,032,200 — 15,456,400 — Fee Build 263,300 1,487,800 530,100 4,201,700 Construction Materials — 8,900 — 41,500 Total Revenue $ 19,844,500 $ 10,286,400 $ 29,025,600 $ 38,867,400 The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations for the three and six months ended June 30, 2023 and 2022: For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Performance obligations satisfied at a point in time $ 19,581,200 $ 8,798,600 $ 28,495,500 $ 34,665,700 Performance obligations satisfied over time 263,300 1,487,800 530,100 4,201,700 Total Revenue $ 19,844,500 $ 10,286,400 $ 29,025,600 $ 38,867,400 |
NOTES RECEIVABLE (Tables)
NOTES RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Financing Receivable Face Amount and Interest Rate | The details of notes receivables, net of a valuation allowance are as follows: June 30, 2023 December 31, 2022 Broadmoor Commons LLC $ 1,000,300 $ 1,000,300 Modern Homestead LLC 1,115,000 1,445,000 Noffke Horizon View, LLC — 2,080,000 Total Notes Receivable, Net $ 2,115,300 $ 4,525,300 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years Property and equipment stated at cost, less accumulated depreciation, and amortization, consisted of the following: June 30, 2023 December 31, 2022 Machinery and Equipment $ 44,000 $ 505,300 Vehicles — 26,200 Furniture and Fixtures 694,000 695,600 Leasehold Improvements 1,467,000 1,524,000 Total Fixed Assets 2,205,000 2,751,100 Less Accumulated Depreciation (440,400) (461,600) Fixed Assets, Net $ 1,764,600 $ 2,289,500 |
REAL ESTATE (Tables)
REAL ESTATE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate [Abstract] | |
Schedule Of Real Estate Assets | Real Estate consisted of the following components: June 30, 2023 December 31, 2022 Land Held for Development $ 39,998,800 $ 47,166,700 Construction in Progress 124,873,300 123,927,300 Held for Sale 47,200,500 34,384,200 Total Real Estate $ 212,072,600 $ 205,478,200 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following: June 30, 2023 December 31, 2022 Trade Accounts Payable $ 6,250,200 $ 11,472,100 Accrued Compensation, Bonuses, and Benefits 393,300 384,700 Accrued Quarry Reclamation Costs 39,400 76,200 Retainage Payable 381,400 1,130,300 Other Accrued Expenses 1,075,600 1,027,400 Total Accounts Payable and Accrued Expenses $ 8,139,900 $ 14,090,700 |
EQUIPMENT LOANS (Tables)
EQUIPMENT LOANS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Equipment Loans | Equipment loans consists of the following: June 30, 2023 December 31, 2022 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $10,500: $ — $ 2,057,100 Book value of collateralized equipment: — 11,800 |
Schedule of Future Equipment Loan Maturities | Future equipment loan maturities at June 30, 2023 are as follows: Year Ending December 31, 2023 (six months) $ — 2024 — 2025 — 2026 — Total $ — |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of Share-based Payment Arrangement, Option, Activity | The following is a summary of the Company’s option activity: Options Weighted Average Exercise Price Outstanding – January 1, 2023 37,546 $ 41.51 Exercisable – January 1, 2023 19,696 $ 55.55 Granted 140,000 $ 3.73 Exercised — $ — Forfeited/Cancelled (2,486) $ 19.15 Outstanding – June 30, 2023 175,060 $ 11.61 Exercisable – June 30, 2023 20,635 $ 57.57 |
Schedule of Share-based Payment Arrangement, Option, Exercise Price Range | Options Outstanding Options Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $3.73 - $130.00 175,060 9.44 $ 11.61 20,635 $ 57.57 |
Schedule of Share-based Payment Arrangement, Activity | The following is a summary of the Company’s common stock warrant activity, for warrants that are exercisable at a 20-1 ratio to common stock: Warrants* Weighted Average Exercise Price Outstanding – January 1, 2023 18,447,564 $ 3.47 Exercisable – January 1, 2023 18,380,897 $ 3.47 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding – June 30, 2023 18,447,564 $ 3.47 Exercisable – June 30, 2023 18,397,564 $ 3.47 *As a result of the Reverse Stock Split, each warrant now entitles the holder to purchase one-twentieth (0.05) of one share of common stock. Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.40 - $7.50 18,447,564 3.19 $ 3.47 18,397,564 $ 3.47 The following is a summary of the Company’s common stock warrant activity, for warrants that are exercisable at a 1 to 1 ratio to common stock: Warrants Weighted Average Exercise Price Outstanding – January 1, 2023 — $ — Exercisable – January 1, 2023 — $ — Granted 2,068,291 $ 5.08 Exercised — $ — Forfeited/Cancelled — $ — Outstanding – June 30, 2023 2,068,291 $ 5.08 Exercisable – June 30, 2023 2,068,291 $ 5.08 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $5.00 - $6.41 2,068,291 4.89 $ 5.08 2,068,291 $ 5.08 The following is a summary of the Company’s preferred stock warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 1, 2023 12,000 $ 24.97 Exercisable – January 1, 2023 12,000 $ 24.97 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding – June 30, 2023 12,000 $ 24.97 Exercisable – June 30, 2023 12,000 $ 24.97 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 24.97 12,000 2.95 $ 24.97 12,000 $ 24.97 The following is a summary of the Pre-Funded Warrant activity: Pre-Funded Warrants Weighted Average Exercise Price Outstanding – January 1, 2023 — $ — Exercisable – January 1, 2023 — $ — Granted 1,790,718 $ 0.0001 Exercised (906,609) $ 0.0001 Forfeited/Cancelled — $ — Outstanding – June 30, 2023 884,109 $ 0.0001 Exercisable – June 30, 2023 884,109 $ 0.0001 |
Schedule of Restricted Stock Shares Activity | The following is a summary of the Company’s restricted stock activity: Restricted Stock Weighted Average Fair Value Non Vested Balance - January 1, 2023 12,000 $ 38.48 Granted — $ — Vested 3,793 $ 38.54 Forfeited/Cancelled — $ — Non Vested Balance - June 30, 2023 8,207 $ 38.45 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following represents sales, cost of sales, and gross profit (loss) information for the Company’s reportable segments for the three and six months ended June 30, 2023 and 2022: For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Revenue by segment Homes $ 2,649,000 $ 8,789,700 $ 8,698,700 $ 21,064,200 Developed Lots 1,900,000 — 4,340,400 9,080,000 Entitled land — — — 4,480,000 Multi-family 15,032,200 — 15,456,400 — Fee Build 263,300 1,487,800 530,100 4,201,700 Other — 8,900 — 41,500 Total Sales $ 19,844,500 $ 10,286,400 $ 29,025,600 $ 38,867,400 Cost of goods sold by segment Homes $ 2,522,600 $ 7,104,600 $ 8,484,200 $ 17,656,100 Developed Lots 4,104,900 (6,400) 7,239,600 8,057,000 Entitled land 246,800 — 337,400 712,900 Multi-family 15,619,400 2,100 16,774,600 2,100 Fee Build 262,600 4,654,600 969,300 7,219,500 Other 7,900 463,400 184,500 1,097,100 Total Cost of Sales $ 22,764,200 $ 12,218,300 $ 33,989,600 $ 34,744,700 Gross profit (loss) by segment Homes $ 126,400 $ 1,685,100 $ 214,500 $ 3,408,100 Developed Lots (2,204,900) 6,400 (2,899,200) 1,023,000 Entitled land (246,800) — (337,400) 3,767,100 Multi-family (587,200) (2,100) (1,318,200) (2,100) Fee Build 700 (3,166,800) (439,200) (3,017,800) Other (7,900) (454,500) (184,500) (1,055,600) Total Gross Profit (Loss) $ (2,919,700) $ (1,931,900) $ (4,964,000) $ 4,122,700 The following represents total assets for the Company’s reportable segments at June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Homes $ 26,420,700 $ 29,880,500 Developed lots 43,201,200 43,469,900 Entitled land 7,638,500 9,499,600 Multi-family 138,040,000 131,485,900 Fee Build 762,700 1,703,200 Unallocated (Shared) 20,835,900 20,127,300 Total Assets $ 236,899,000 $ 236,166,400 |
UNCOMPLETED CONTRACTS (Tables)
UNCOMPLETED CONTRACTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Contractors [Abstract] | |
Schedule of Contract with Customer, Contract Asset, Contract Liability, and Receivable | Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows at June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Costs incurred on uncompleted contracts $ 20,473,300 $ 19,429,800 Estimated loss (3,966,300) (3,495,100) Costs and estimated earnings on uncompleted contracts 16,507,000 15,934,700 Billings to date 16,800,400 16,273,000 Costs and estimated earnings in excess of billings on uncompleted contracts — — Billings in excess of costs and estimated earnings on uncompleted contracts (293,400) (338,300) Provision for loss on contract (84,900) (159,100) Contract Liabilities $ (378,300) $ (497,400) |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF STATEMENT OF SUBSIDIARIES (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Belfair Apartments, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Pacific Ridge CMS, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Tanglewilde, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI FL CONDO LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI, Bridgeview LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI Wyndstone, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI Semiahmoo, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Mills Crossing, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Broadmoor Ventures, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
GPB Holdings LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Winding Lane Estate LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Beacon Studio Farms LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 0% |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - NARRATIVE (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||||
Aug. 09, 2023 USD ($) | May 18, 2023 USD ($) $ / shares shares | May 16, 2023 shares | Mar. 06, 2023 | Feb. 17, 2023 | May 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Aug. 10, 2021 USD ($) | Dec. 03, 2020 shares | Nov. 19, 2018 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Stockholders' equity | $ 71,607,300 | $ 68,873,800 | $ 93,260,900 | $ 99,621,600 | $ 71,607,300 | $ 93,260,900 | $ 75,555,900 | $ 99,737,800 | ||||||||||
Net loss | (4,376,000) | (4,861,800) | (4,509,100) | 1,645,300 | (9,237,800) | (2,863,800) | (16,900,000) | |||||||||||
Stock split, conversion ratio | 0.0500 | |||||||||||||||||
Cash equivalents | 0 | 0 | 0 | |||||||||||||||
Restricted cash | $ 600,000 | |||||||||||||||||
Accounts receivable, allowance for credit loss | 0 | 0 | 0 | |||||||||||||||
Financing receivable impairment loss | 0 | 0 | 1,200,000 | |||||||||||||||
Real estate assets held for sale | 47,200,500 | 47,200,500 | 34,384,200 | |||||||||||||||
Impairment loss on real estate | 0 | 6,289,000 | 0 | |||||||||||||||
Rental income | 800,000 | 0 | 1,200,000 | 0 | ||||||||||||||
Advertising expense | 100,000 | 100,000 | 200,000 | 100,000 | ||||||||||||||
Unrecognized tax | 0 | 0 | 0 | |||||||||||||||
Impairment, long-lived asset | 0 | 0 | ||||||||||||||||
Pacific Ridge Apartments | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Impairment loss on real estate | 2,400,000 | 3,200,000 | 2,400,000 | |||||||||||||||
Dark Horse lots | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Impairment loss on real estate | 2,300,000 | 2,900,000 | ||||||||||||||||
Bunker Ranch home | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Impairment loss on real estate | 200,000 | |||||||||||||||||
Winding Lane Estate LLC | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Impairment loss on real estate | 1,200,000 | |||||||||||||||||
Related Party | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Interest costs capitalized | 300,000 | 300,000 | 500,000 | 600,000 | ||||||||||||||
Loans Payable | Rocklin Winding Lane 22, LLC | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Long-term debt | 1,000,000 | |||||||||||||||||
Rocklin Winding Lane 22, LLC | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Financing receivable impairment loss | $ 800,000 | |||||||||||||||||
Financing receivable, face amount | 4,800,000 | |||||||||||||||||
Real estate acquired through foreclosure | 5,100,000 | |||||||||||||||||
Third Party | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Interest costs capitalized | 3,300,000 | 1,100,000 | $ 6,100,000 | 1,900,000 | ||||||||||||||
Minimum | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Stock split, conversion ratio | 0.3333 | |||||||||||||||||
Lease term | 6 months | |||||||||||||||||
Maximum | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Stock split, conversion ratio | 0.0400 | |||||||||||||||||
Lease term | 1 year | |||||||||||||||||
Measurement Input, Risk Free Interest Rate | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Warrants and rights outstanding, measurement input | 0.0394 | |||||||||||||||||
Measurement Input, Exercise Price | Minimum | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Warrants and rights outstanding, measurement input | $ / shares | 5 | |||||||||||||||||
Measurement Input, Exercise Price | Maximum | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Warrants and rights outstanding, measurement input | $ / shares | 6.41 | |||||||||||||||||
Measurement Input, Expected Term | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Warrants and rights outstanding, term | 2 years 6 months | |||||||||||||||||
Measurement Input, Price Volatility | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Warrants and rights outstanding, measurement input | 0.3783 | |||||||||||||||||
2018 Plan | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Common stock for issuance of reserved shares (in shares) | shares | 133,784 | |||||||||||||||||
2020 Plan | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Common stock for issuance of reserved shares (in shares) | shares | 135,000 | |||||||||||||||||
Public Stock Offering | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Sale of stock, consideration received on transaction | $ 8,900,000 | $ 8,900,000 | ||||||||||||||||
Public Stock Offering | Pre-funded Offering Warrants | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Sale of stock, consideration received on transaction | $ 6,700,000 | |||||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | shares | 1,790,718 | 1,790,718 | ||||||||||||||||
Public Stock Offering | Common Stock Offering warrants | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Sale of stock, consideration received on transaction | $ 1,600,000 | |||||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | shares | 1,951,218 | 1,951,218 | ||||||||||||||||
Public Stock Offering | Placement Agent Warrants | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Sale of stock, consideration received on transaction | $ 100,000 | |||||||||||||||||
Over-Allotment Option | Placement Agent Warrants | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | shares | 117,073 | |||||||||||||||||
Warrants and rights outstanding, term | 5 years | |||||||||||||||||
Subsequent Event | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Sales under contract | $ 7,700,000 | |||||||||||||||||
Non-Controlling Interest | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Stockholders' equity | 0 | 0 | 0 | 0 | $ 0 | 0 | 0 | (1,291,600) | ||||||||||
Net loss | (500) | |||||||||||||||||
Common Stock | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Stockholders' equity | $ 39,711,000 | $ 35,704,700 | $ 35,704,700 | $ 32,133,200 | $ 39,711,000 | $ 35,704,700 | $ 35,704,700 | $ 32,122,700 | ||||||||||
Common Stock | Public Stock Offering | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||
Sale of stock, consideration received on transaction | $ 600,000 | |||||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | shares | 160,500 | 160,500 |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF FAIR VALUE ASSUMPTIONS OF SHARE-BASED AWARDS (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 4.30% | |
Risk-free interest rate, minimum | 1.73% | |
Risk-free interest rate, maximum | 2.14% | |
Exercise price | $ 3.73 | |
Expected life of grants in years | 6 years 4 months 17 days | |
Expected volatility of underlying stock | 43.50% | |
Expected volatility of underlying stock, minimum | 42.39% | |
Expected volatility of underlying stock, maximum | 48.13% | |
Dividends | 0% | 0% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 40 | |
Expected life of grants in years | 3 years 11 months 4 days | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 60 | |
Expected life of grants in years | 6 years 6 months |
NATURE OF OPERATIONS AND SUMM_7
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF NET LOSS PER SHARE (Details) | 3 Months Ended | 6 Months Ended | |||
Mar. 06, 2023 | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) $ / shares shares | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Net loss attributable to common stockholders | $ | $ (6,279,700) | $ (6,449,100) | $ (13,045,200) | $ (6,815,800) | |
Effect of dilutive securities: | $ | 0 | 0 | 0 | 0 | |
Diluted net loss | $ | $ (6,279,700) | $ (6,449,100) | $ (13,045,200) | $ (6,815,800) | |
Weighted average common shares outstanding - basic (in shares) | 1,657,709 | 701,215 | 1,191,752 | 680,740 | |
Weighted average common shares outstanding and assumed conversion – diluted (in shares) | 1,657,709 | 701,215 | 1,191,752 | 680,740 | |
Basic net earnings (loss) per common share (in dollars per share) | $ / shares | $ (3.79) | $ (9.20) | $ (10.95) | $ (10.01) | |
Diluted net earnings (loss) per common share (in dollars per share) | $ / shares | $ (3.79) | $ (9.20) | $ (10.95) | $ (10.01) | |
Stock split, conversion ratio | 0.0500 | ||||
Restricted Stock Awards | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Dilutive securities (in shares) | 0 | 0 | 0 | 0 | |
Options | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Dilutive securities (in shares) | 0 | 0 | 0 | 0 | |
Outstanding anti-dilutive securities excluded (in shares) | 175,060 | 22,946 | 175,060 | 22,946 | |
Warrants | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Dilutive securities (in shares) | 0 | 0 | 0 | 0 | |
Convertible Preferred Stock | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Dilutive securities (in shares) | 0 | 0 | 0 | 0 | |
Outstanding anti-dilutive securities excluded (in shares) | 3,799,799 | 3,799,799 | 3,799,799 | 3,799,799 | |
Preferred stock convertible into common shares | 0.2778 | 0.2778 | |||
Unvested restricted stock awards | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Outstanding anti-dilutive securities excluded (in shares) | 8,207 | 14,000 | 8,207 | 14,000 | |
Warrants to purchase common stock (20:1) | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Outstanding anti-dilutive securities excluded (in shares) | 18,447,564 | 18,447,564 | 18,447,564 | 18,447,564 | |
Stock split, conversion ratio | 0.05 | ||||
Warrants to purchase common stock (1:1) | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Outstanding anti-dilutive securities excluded (in shares) | 2,068,291 | 0 | 2,068,291 | 0 | |
Warrants to purchase convertible preferred stock | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Outstanding anti-dilutive securities excluded (in shares) | 12,000 | 12,000 | 12,000 | 12,000 | |
Preferred stock convertible into common shares | 0.2778 | 0.2778 | |||
Pre-funded warrants | |||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||
Weighted average common shares outstanding - basic (in shares) | 884,109 | 0 | 884,109 | 0 |
NATURE OF OPERATIONS AND SUMM_8
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES (Details) | Jun. 30, 2023 |
Construction Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Construction Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Furniture and Fixtures | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Computers | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
NATURE OF OPERATIONS AND SUMM_9
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 19,844,500 | $ 10,286,400 | $ 29,025,600 | $ 38,867,400 |
Performance obligations satisfied at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 19,581,200 | 8,798,600 | 28,495,500 | 34,665,700 |
Performance obligations satisfied over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 263,300 | 1,487,800 | 530,100 | 4,201,700 |
Homes | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 2,649,000 | 8,789,700 | 8,698,700 | 21,064,200 |
Developed Lots | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 1,900,000 | 0 | 4,340,400 | 9,080,000 |
Entitled land | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 0 | 0 | 0 | 4,480,000 |
Multi-family | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 15,032,200 | 0 | 15,456,400 | 0 |
Fee Build | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 263,300 | 1,487,800 | 530,100 | 4,201,700 |
Construction Materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 0 | $ 8,900 | $ 0 | $ 41,500 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Risks and Uncertainties [Abstract] | |||||
Cash, uninsured amount | $ 6.9 | $ 6.9 | $ 8.1 | ||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 60% | 19% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Developed Lots | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 33% | 19% | 62% | ||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Entitled land | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 100% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Fee Build | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 100% | 100% | 100% | 100% | |
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Multi-family | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 95% | 92% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Two | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 37% | 18% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Two | Developed Lots | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 21% | 15% | 26% | ||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Three | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 18% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Three | Developed Lots | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 10% | 14% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Four | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 17% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Five | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 16% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Six | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 11% |
NOTES RECEIVABLE - NARRATIVE (D
NOTES RECEIVABLE - NARRATIVE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | |
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Financing receivable outstanding | $ 2,115,300 | $ 2,115,300 | $ 4,525,300 | ||||
Interest income | 30,000 | $ 200,000 | 100,000 | $ 200,000 | |||
Noffke Horizon View, LLC | Loans Payable | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Long-term debt | $ 2,100,000 | ||||||
Noffke Horizon View, LLC | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Financing receivable outstanding | $ 0 | $ 0 | $ 2,080,000 | ||||
Financing receivable, face amount | $ 3,300,000 | ||||||
Minimum | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Financing receivable, interest rate | 8% | ||||||
Maximum | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Financing receivable, interest rate | 9% |
NOTES RECEIVABLE - FACE AMOUNT
NOTES RECEIVABLE - FACE AMOUNT AND INTEREST RATE (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable, Net | $ 2,115,300 | $ 4,525,300 |
Broadmoor Commons LLC | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable, Net | 1,000,300 | 1,000,300 |
Modern Homestead LLC | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable, Net | 1,115,000 | 1,445,000 |
Noffke Horizon View, LLC | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable, Net | $ 0 | $ 2,080,000 |
PROPERTY AND EQUIPMENT - SCHEDU
PROPERTY AND EQUIPMENT - SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | $ 2,205,000 | $ 2,751,100 |
Less Accumulated Depreciation | (440,400) | (461,600) |
Fixed Assets, Net | 1,764,600 | 2,289,500 |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | 44,000 | 505,300 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | 0 | 26,200 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | 694,000 | 695,600 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | $ 1,467,000 | $ 1,524,000 |
PROPERTY AND EQUIPMENT - NARRAT
PROPERTY AND EQUIPMENT - NARRATIVE (Details ) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 100,000 | $ 300,000 | $ 180,500 | $ 639,600 |
REAL ESTATE (Details)
REAL ESTATE (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Real Estate [Abstract] | ||
Land Held for Development | $ 39,998,800 | $ 47,166,700 |
Construction in Progress | 124,873,300 | 123,927,300 |
Held for Sale | 47,200,500 | 34,384,200 |
Total Real Estate | $ 212,072,600 | $ 205,478,200 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Trade Accounts Payable | $ 6,250,200 | $ 11,472,100 |
Accrued Compensation, Bonuses, and Benefits | 393,300 | 384,700 |
Accrued Quarry Reclamation Costs | 39,400 | 76,200 |
Retainage Payable | 381,400 | 1,130,300 |
Other Accrued Expenses | 1,075,600 | 1,027,400 |
Total Accounts Payable and Accrued Expenses | $ 8,139,900 | $ 14,090,700 |
REVOLVING LINE OF CREDIT (Detai
REVOLVING LINE OF CREDIT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Feb. 23, 2023 | Mar. 07, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Line of Credit Facility [Line Items] | |||||||
Amortization of debt discount capitalized | $ 1,611,700 | $ 1,050,200 | |||||
Long-term line of credit | $ 18,359,700 | 18,359,700 | $ 24,359,700 | ||||
Revolving line of credit loan, net of debt discount | 0 | 0 | 600,000 | ||||
Revolving Credit Facility | Line of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 25,000,000 | ||||||
Debt instrument, term (in years) | 2 years | ||||||
Payment of principal reduction | $ 600,000 | ||||||
Percentage of assets sales and capital raises | 25% | ||||||
Line of credit facility, remaining borrowing capacity | $ 0 | ||||||
Amortization of debt discount capitalized | 500,000 | ||||||
Incurred interest expense | 500,000 | $ 300,000 | 1,700,000 | $ 400,000 | |||
Long-term line of credit | $ 18,400,000 | $ 18,400,000 | $ 25,000,000 | ||||
Revolving Credit Facility | Line of Credit | Secured Overnight Financing Rate (SOFR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 4.75% |
EQUIPMENT LOANS - SCHEDULE OF E
EQUIPMENT LOANS - SCHEDULE OF EQUIPMENT LOANS (Details) - Notes Payable to Banks - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $10,500: | $ 0 | $ 2,057,100 |
Book value of collateralized equipment | $ 0 | $ 11,800 |
Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (in percent) | 0% | |
Debt instrument, periodic payment | $ 400 | |
Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (in percent) | 13.89% | |
Debt instrument, periodic payment | $ 10,500 |
EQUIPMENT LOANS - SCHEDULE OF F
EQUIPMENT LOANS - SCHEDULE OF FUTURE EQUIPMENT LOAN MATURITIES (Details) - Notes Payable to Banks - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||||
2023 (six months) | $ 0 | $ 0 | |||
2024 | 0 | 0 | |||
2025 | 0 | 0 | |||
2026 | 0 | 0 | |||
Total | 0 | 0 | $ 2,057,100 | ||
Incurred interest expense | $ 0 | $ 40,000 | $ 1,000 | $ 100,000 |
CONSTRUCTION LOANS (Details)
CONSTRUCTION LOANS (Details) - Construction Loan Payable - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Short-term Debt [Line Items] | ||
Short-term debt | $ 133.1 | $ 109.4 |
Debt discount | 1.3 | 1.9 |
Book value of collateralized equipment | $ 212.1 | $ 193.1 |
Minimum | ||
Short-term Debt [Line Items] | ||
Debt instrument, term (in years) | 1 year | |
Debt instrument, interest rate (in percent) | 7.99% | |
Maximum | ||
Short-term Debt [Line Items] | ||
Debt instrument, term (in years) | 2 years | |
Debt instrument, interest rate (in percent) | 13% |
LETTER OF CREDIT (Details)
LETTER OF CREDIT (Details) - Line of Credit - Letter of Credit | Aug. 10, 2021 USD ($) |
Line of Credit Facility [Line Items] | |
Line of credit facility, maximum borrowing capacity | $ 600,000 |
Prime Rate | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 1% |
NOTE PAYABLE INSURANCE (Details
NOTE PAYABLE INSURANCE (Details) - USD ($) | Aug. 28, 2022 | Jun. 30, 2023 | Dec. 31, 2022 |
Short-term Debt [Line Items] | |||
Notes payable | $ 73,200 | $ 378,500 | |
Notes Payable, Other Payables | |||
Short-term Debt [Line Items] | |||
D&O insurance, face value | $ 600,000 | ||
D&O insurance expense | $ 100,000 | ||
Debt instrument, term (in years) | 11 months | ||
Debt interest rate | 4.75% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - Forecast $ in Millions | Dec. 31, 2024 USD ($) a $ / ft² | Jun. 30, 2024 USD ($) a | Dec. 31, 2023 USD ($) a |
Purchase and Sale Agreement | Blaine, Washington | |||
Other Commitments [Line Items] | |||
Purchase price | $ | $ 13.5 | ||
Area of land | a | 438 | ||
Purchase and Sale Agreement | Port Orchard, Washington | |||
Other Commitments [Line Items] | |||
Purchase price | $ | $ 2.7 | ||
Area of land | a | 4.81 | ||
Purchase and Sale Agreement | Stanwood, Washington | |||
Other Commitments [Line Items] | |||
Purchase price | $ | $ 4.6 | ||
Area of land | a | 15.30 | ||
Purchase and Sale Agreement | Arlington, Washington | |||
Other Commitments [Line Items] | |||
Purchase price | $ | $ 1.8 | ||
Area of land | a | 5.15 | ||
Purchase price (in dollar per square foot) | $ / ft² | 12 | ||
Purchase And Sale Agreement Two | Arlington, Washington | |||
Other Commitments [Line Items] | |||
Purchase price | $ | $ 1.9 | ||
Area of land | a | 5.24 | ||
Purchase price (in dollar per square foot) | $ / ft² | 12 | ||
Purchase And Sale Agreement Three | Arlington, Washington | |||
Other Commitments [Line Items] | |||
Purchase price | $ | $ 1.9 | ||
Area of land | a | 6.38 | ||
Purchase price (in dollar per square foot) | $ / ft² | 12 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Related Party | |||||
Related Party Transaction [Line Items] | |||||
Construction loan | $ 0 | $ 0 | $ 8,122,800 | ||
Interest costs capitalized | 300,000 | $ 300,000 | 500,000 | $ 600,000 | |
Related Party | Construction Loan | Sound Equity, LLC | |||||
Related Party Transaction [Line Items] | |||||
Construction loan | 0 | 0 | 8,200,000 | ||
Capitalized loan fees | 0 | 0 | 100,000 | 0 | |
Remaining debt discount | 0 | $ 0 | 100,000 | ||
Related Party | Construction Loan | Sound Equity, LLC | Minimum | |||||
Related Party Transaction [Line Items] | |||||
Payment terms | 12 months | ||||
Related party transaction, interest rate | 7.99% | ||||
Related Party | Construction Loan | Sound Equity, LLC | Maximum | |||||
Related Party Transaction [Line Items] | |||||
Payment terms | 24 months | ||||
Related party transaction, interest rate | 11% | ||||
Related Party | Property Management Agreement | Olympic Management Company | |||||
Related Party Transaction [Line Items] | |||||
Service fee | $ 3,000 | ||||
Property management fee | 500 | ||||
Rental expense within cost of sales | $ 100,000 | 0 | $ 300,000 | 0 | |
Management | Quarry Used To Process Waste Materials Transactions | SGRE, LLC | |||||
Related Party Transaction [Line Items] | |||||
Percentage of commission payable | 25% | 25% | |||
Commission payable | $ 0 | $ 0 | $ 0 | ||
Commission expense | $ 0 | $ 0 | $ 0 | $ 30,000 | |
Management | Quarry Used To Process Waste Materials Transactions | SGRE, LLC | SGRE, LLC | |||||
Related Party Transaction [Line Items] | |||||
Related party, ownership percentage | 100% | 100% |
INCOME TAX (Details)
INCOME TAX (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 22.30% | 23.30% | |
Valuation allowance | $ 0 | $ 0 |
STOCKHOLDERS_ EQUITY - NARRATIV
STOCKHOLDERS’ EQUITY - NARRATIVE (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||
May 18, 2023 USD ($) $ / shares shares | May 16, 2023 $ / shares shares | Mar. 06, 2023 | Feb. 27, 2023 shares | Feb. 17, 2023 | May 31, 2023 USD ($) | Mar. 31, 2023 shares | Jun. 30, 2023 USD ($) vote $ / shares shares | Feb. 23, 2023 USD ($) | Dec. 31, 2022 USD ($) shares | Jun. 30, 2022 shares | May 10, 2022 USD ($) | Mar. 31, 2022 shares | Dec. 31, 2021 shares | |
Class of Stock [Line Items] | ||||||||||||||
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | ||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0 | |||||||||||||
Common stock, shares, issued (in shares) | 1,802,295 | 718,835 | ||||||||||||
Common stock outstanding (in shares) | 1,802,295 | 718,835 | ||||||||||||
Common stock, voting rights | vote | 1 | |||||||||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | ||||||||||||
Preferred stock, shares outstanding (in shares) | 3,799,799 | 3,799,799 | ||||||||||||
Preferred stock, shares issued (in shares) | 3,799,799 | 3,799,799 | ||||||||||||
Dividends Payable | $ | $ 3,807,400 | $ 634,700 | ||||||||||||
Stock split, conversion ratio | 0.0500 | |||||||||||||
Shares repurchased (in shares) | 0 | |||||||||||||
Public Stock Offering | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Sale of stock, consideration received on transaction | $ | $ 8,900,000 | $ 8,900,000 | ||||||||||||
Public Stock Offering | Pre-funded Offering Warrants | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 1,790,718 | 1,790,718 | ||||||||||||
Share price per share (in dollars per share) | $ / shares | $ 5.1249 | |||||||||||||
Sale of stock, consideration received on transaction | $ | $ 6,700,000 | |||||||||||||
Public Stock Offering | Common Stock Offering warrants | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 1,951,218 | 1,951,218 | ||||||||||||
Sale of stock, consideration received on transaction | $ | $ 1,600,000 | |||||||||||||
Public Stock Offering | Placement Agent Warrants | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Sale of stock, consideration received on transaction | $ | $ 100,000 | |||||||||||||
Over-Allotment Option | Placement Agent Warrants | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 117,073 | |||||||||||||
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ / shares | $ 6.41 | |||||||||||||
Warrants and rights outstanding, term | 5 years | |||||||||||||
Common Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Common stock outstanding (in shares) | 732,245 | 1,802,295 | 718,835 | 717,428 | 661,859 | 657,767 | ||||||||
Round Up of Shares from Reverse Stock Split (in shares) | 13,093 | |||||||||||||
Common Stock | Public Stock Offering | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 160,500 | 160,500 | ||||||||||||
Share price per share (in dollars per share) | $ / shares | $ 5.125 | |||||||||||||
Sale of stock, consideration received on transaction | $ | $ 600,000 | |||||||||||||
Maximum | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Preferred stock, dividend terms | 20 days | |||||||||||||
Stock split, conversion ratio | 0.0400 | |||||||||||||
Minimum | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Stock split, conversion ratio | 0.3333 | |||||||||||||
Series A Preferred Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Preferred stock, shares outstanding (in shares) | 3,799,799 | |||||||||||||
Preferred stock, shares issued (in shares) | 3,799,799 | |||||||||||||
Preferred stock, dividend rate (in dollars per share) | $ / shares | $ 2 | |||||||||||||
Preferred stock, liquidation preference per share (in dollars per share) | $ / shares | $ 25 | |||||||||||||
Preferred Stock, convertible, shares issuable (in shares) | 0.2778 | |||||||||||||
Preferred stock, dividend rate, percentage | 8% | |||||||||||||
Dividends Payable | $ | $ 600,000 | |||||||||||||
Common Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Round Up of Shares from Reverse Stock Split (in shares) | 20 | |||||||||||||
Stock repurchase program, authorized amount | $ | $ 5,000,000 | |||||||||||||
Stock repurchase program, amount of shares authorized to be repurchased, percentage | 15% |
STOCKHOLDERS_ EQUITY - SCHEDULE
STOCKHOLDERS’ EQUITY - SCHEDULE OF STOCK OPTIONS ACTIVITY (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Options | ||
Outstanding, beginning balance (in shares) | 37,546 | |
Granted (in shares) | 140,000 | |
Exercised (in shares) | 0 | |
Forfeited/Cancelled (in shares) | (2,486) | |
Outstanding, ending balance (in shares) | 175,060 | |
Exercisable (in shares) | 20,635 | 19,696 |
Weighted Average Exercise Price | ||
Outstanding, beginning balance (in dollars per share) | $ 41.51 | |
Granted (in dollars per share) | 3.73 | |
Exercised (in dollars per share) | 0 | |
Forfeited/Cancelled (in dollars per share) | 19.15 | |
Outstanding, ending balance (in dollars per share) | 11.61 | |
Exercisable (in dollars per share) | $ 57.57 | $ 55.55 |
STOCKHOLDERS_ EQUITY - SCHEDU_2
STOCKHOLDERS’ EQUITY - SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE (Details) | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Equity [Abstract] | |
Exercise price range, lower range limit (in dollars per share) | $ 3.73 |
Exercise price range, upper range limit (in dollars per share) | $ 130 |
Number of option outstanding (in shares) | shares | 175,060 |
Weighted average remaining contractual life (in years) | 9 years 5 months 8 days |
Weighted average exercise price (in dollars per share) | $ 11.61 |
Number of option exercisable (in shares) | shares | 20,635 |
Options exercisable, weighted average exercise price (in dollars per share) | $ 57.57 |
STOCKHOLDERS_ EQUITY - OPTIONS
STOCKHOLDERS’ EQUITY - OPTIONS NARRATIVE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 140,000 | |||
Granted (in dollars per share) | $ 3.73 | |||
Share-based compensation arrangement by share-based payment award, options, granted in period, fair value | $ 300 | $ 30 | ||
Option, cost not yet recognized, amount | $ 400 | 400 | ||
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value | 0 | $ 100 | 0 | 100 |
Share-based compensation arrangement by share-based payment award, options, exercisable, intrinsic value | 0 | 100 | $ 0 | $ 100 |
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in dollars per share) | $ 40 | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in dollars per share) | $ 41.80 | |||
Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 140,000 | 1,500 | ||
Granted (in dollars per share) | $ 3.73 | |||
Expiration period (in years) | 10 years | 10 years | ||
Share-based payment arrangement, expense | $ 20 | $ 20 | $ 50 | $ 40 |
Options | Share-Based Payment Arrangement, Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 50% | |||
Options | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | |||
Options | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years |
STOCKHOLDERS_ EQUITY - SCHEDU_3
STOCKHOLDERS’ EQUITY - SCHEDULE OF WARRANTS ACTIVITY (Details) | 6 Months Ended | ||
Mar. 06, 2023 | Jun. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | |
Weighted Average Fair Value | |||
Stock split, conversion ratio | 0.0500 | ||
Warrants to purchase common stock (20:1) | |||
Warrants | |||
Outstanding, beginning balance (in shares) | shares | 18,447,564 | ||
Granted (in shares) | shares | 0 | ||
Exercised (in shares) | shares | 0 | ||
Forfeited/Cancelled (in shares) | shares | 0 | ||
Outstanding, ending balance (in shares) | shares | 18,447,564 | ||
Exercisable (in shares) | shares | 18,397,564 | 18,380,897 | |
Weighted Average Fair Value | |||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 3.47 | ||
Granted (in dollars per share) | $ / shares | 0 | ||
Exercised (in dollars per share) | $ / shares | 0 | ||
Forfeited/Cancelled (in dollars per share) | $ / shares | 0 | ||
Outstanding, ending balance (in dollars per share) | $ / shares | 3.47 | ||
Exercisable (in dollars per share) | $ / shares | $ 3.47 | $ 3.47 | |
Stock split, conversion ratio | 0.05 | ||
Warrants to purchase common stock (1:1) | |||
Warrants | |||
Outstanding, beginning balance (in shares) | shares | 0 | ||
Granted (in shares) | shares | 2,068,291 | ||
Exercised (in shares) | shares | 0 | ||
Forfeited/Cancelled (in shares) | shares | 0 | ||
Outstanding, ending balance (in shares) | shares | 2,068,291 | ||
Exercisable (in shares) | shares | 2,068,291 | 0 | |
Weighted Average Fair Value | |||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 0 | ||
Granted (in dollars per share) | $ / shares | 5.08 | ||
Exercised (in dollars per share) | $ / shares | 0 | ||
Forfeited/Cancelled (in dollars per share) | $ / shares | 0 | ||
Outstanding, ending balance (in dollars per share) | $ / shares | 5.08 | ||
Exercisable (in dollars per share) | $ / shares | $ 5.08 | $ 0 | |
Preferred Stock Warrant | |||
Warrants | |||
Outstanding, beginning balance (in shares) | shares | 12,000 | ||
Granted (in shares) | shares | 0 | ||
Exercised (in shares) | shares | 0 | ||
Forfeited/Cancelled (in shares) | shares | 0 | ||
Outstanding, ending balance (in shares) | shares | 12,000 | ||
Exercisable (in shares) | shares | 12,000 | 12,000 | |
Weighted Average Fair Value | |||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 24.97 | ||
Granted (in dollars per share) | $ / shares | 0 | ||
Exercised (in dollars per share) | $ / shares | 0 | ||
Forfeited/Cancelled (in dollars per share) | $ / shares | 0 | ||
Outstanding, ending balance (in dollars per share) | $ / shares | 24.97 | ||
Exercisable (in dollars per share) | $ / shares | $ 24.97 | $ 24.97 | |
Pre-funded warrants | |||
Warrants | |||
Outstanding, beginning balance (in shares) | shares | 0 | ||
Granted (in shares) | shares | 1,790,718 | ||
Exercised (in shares) | shares | (906,609) | ||
Forfeited/Cancelled (in shares) | shares | 0 | ||
Outstanding, ending balance (in shares) | shares | 884,109 | ||
Exercisable (in shares) | shares | 884,109 | 0 | |
Weighted Average Fair Value | |||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 0 | ||
Granted (in dollars per share) | $ / shares | 0.0001 | ||
Exercised (in dollars per share) | $ / shares | 0.0001 | ||
Forfeited/Cancelled (in dollars per share) | $ / shares | 0 | ||
Outstanding, ending balance (in dollars per share) | $ / shares | 0.0001 | ||
Exercisable (in dollars per share) | $ / shares | $ 0.0001 | $ 0 |
STOCKHOLDERS_ EQUITY - SCHEDU_4
STOCKHOLDERS’ EQUITY - SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Warrants to purchase common stock (20:1) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price range, lower range limit (in dollars per share) | $ 0.40 | |
Exercise price range, upper range limit (in dollars per share) | $ 7.50 | |
Outstanding (in shares) | 18,447,564 | |
Weighted average remaining contractual term, outstanding | 3 years 2 months 8 days | |
Weighted average exercise price, outstanding (in dollars per share) | $ 3.47 | |
Exercisable (in shares) | 18,397,564 | |
Exercisable, weighted average exercise price (in dollars per share) | $ 3.47 | |
Number outstanding (in shares) | 18,447,564 | 18,447,564 |
Warrants to purchase common stock (1:1) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price range, lower range limit (in dollars per share) | $ 5 | |
Exercise price range, upper range limit (in dollars per share) | $ 6.41 | |
Outstanding (in shares) | 2,068,291 | |
Weighted average remaining contractual term, outstanding | 4 years 10 months 20 days | |
Weighted average exercise price, outstanding (in dollars per share) | $ 5.08 | |
Exercisable (in shares) | 2,068,291 | |
Exercisable, weighted average exercise price (in dollars per share) | $ 5.08 | |
Number outstanding (in shares) | 2,068,291 | 0 |
Preferred Stock Warrant | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price range, upper range limit (in dollars per share) | $ 24.97 | |
Outstanding (in shares) | 12,000 | |
Weighted average remaining contractual term, outstanding | 2 years 11 months 12 days | |
Weighted average exercise price, outstanding (in dollars per share) | $ 24.97 | |
Exercisable (in shares) | 12,000 | |
Exercisable, weighted average exercise price (in dollars per share) | $ 24.97 | |
Number outstanding (in shares) | 12,000 | 12,000 |
STOCKHOLDERS_ EQUITY - WARRANTS
STOCKHOLDERS’ EQUITY - WARRANTS NARRATIVE (Details) | 6 Months Ended | |
Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) $ / shares shares | |
Warrants to purchase common stock (20:1) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class of warrant or right, outstanding (in shares) | shares | 0 | 100,000 |
Class of warrant or right, exercisable ratio | 20 | |
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ / shares | $ 3 | |
Warrants and rights outstanding, term | 5 years | |
Warrants and rights outstanding, vesting term | 3 years | |
Warrants and rights outstanding | $ 100,000 | |
Aggregate intrinsic value, outstanding | $ 0 | 20,000 |
Aggregate intrinsic value, exercisable | $ 0 | 20,000 |
Warrants to purchase common stock (1:1) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class of warrant or right, outstanding (in shares) | shares | 2,068,291 | |
Warrants and rights outstanding, term | 5 years | |
Warrants and rights outstanding | $ 1,800,000 | |
Aggregate intrinsic value, outstanding | 0 | |
Aggregate intrinsic value, exercisable | $ 0 | |
Warrants to purchase common stock (1:1) | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ / shares | $ 5 | |
Warrants to purchase common stock (1:1) | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ / shares | $ 6.41 | |
Preferred Stock Warrant | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Aggregate intrinsic value, outstanding | $ 0 | 0 |
Aggregate intrinsic value, exercisable | $ 0 | $ 0 |
Pre-funded warrants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ / shares | $ 0.0001 | |
Warrants and rights outstanding | $ 7,600,000 | |
Aggregate intrinsic value, outstanding | $ 3,300,000 | |
Granted (in shares) | shares | 1,790,718 | |
Exercised (in shares) | shares | (906,609) |
STOCKHOLDERS_ EQUITY - SCHEDU_5
STOCKHOLDERS’ EQUITY - SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY (Details) - Restricted Stock Awards | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Restricted Stock | |
Outstanding, beginning balance (in shares) | shares | 12,000 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | 3,793 |
Forfeited/Cancelled (in shares) | shares | 0 |
Outstanding, ending balance (in shares) | shares | 8,207 |
Weighted Average Fair Value | |
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 38.48 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 38.54 |
Forfeited/Cancelled (in dollars per share) | $ / shares | 0 |
Outstanding, ending balance (in dollars per share) | $ / shares | $ 38.45 |
STOCKHOLDERS_ EQUITY - RESTRICT
STOCKHOLDERS’ EQUITY - RESTRICTED STOCK PLAN NARRATIVE (Details) - Restricted Stock Awards - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based payment arrangement, expense | $ 50 | $ 100 | $ 100 | $ 300 |
Share-based payment arrangement, nonvested award, cost not yet recognized, amount | $ 300 | $ 300 | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years |
SEGMENTS - SCHEDULE OF COMPANY_
SEGMENTS - SCHEDULE OF COMPANY’S REPORTABLE SEGMENT (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) officer segment | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Segment Reporting [Abstract] | |||||
Number of executive officers | officer | 2 | ||||
Number of reportable segments | segment | 5 | ||||
Segment Reporting Information [Line Items] | |||||
Total Sales | $ 19,844,500 | $ 10,286,400 | $ 29,025,600 | $ 38,867,400 | |
Total Cost of Sales | 22,764,200 | 12,218,300 | 33,989,600 | 34,744,700 | |
Total Gross Profit (Loss) | (2,919,700) | (1,931,900) | (4,964,000) | 4,122,700 | |
Total Assets | 236,899,000 | 236,899,000 | $ 236,166,400 | ||
Homes | |||||
Segment Reporting Information [Line Items] | |||||
Total Sales | 2,649,000 | 8,789,700 | 8,698,700 | 21,064,200 | |
Total Cost of Sales | 2,522,600 | 7,104,600 | 8,484,200 | 17,656,100 | |
Total Gross Profit (Loss) | 126,400 | 1,685,100 | 214,500 | 3,408,100 | |
Total Assets | 26,420,700 | 26,420,700 | 29,880,500 | ||
Developed Lots | |||||
Segment Reporting Information [Line Items] | |||||
Total Sales | 1,900,000 | 0 | 4,340,400 | 9,080,000 | |
Total Cost of Sales | 4,104,900 | (6,400) | 7,239,600 | 8,057,000 | |
Total Gross Profit (Loss) | (2,204,900) | 6,400 | (2,899,200) | 1,023,000 | |
Total Assets | 43,201,200 | 43,201,200 | 43,469,900 | ||
Entitled land | |||||
Segment Reporting Information [Line Items] | |||||
Total Sales | 0 | 0 | 0 | 4,480,000 | |
Total Cost of Sales | 246,800 | 0 | 337,400 | 712,900 | |
Total Gross Profit (Loss) | (246,800) | 0 | (337,400) | 3,767,100 | |
Total Assets | 7,638,500 | 7,638,500 | 9,499,600 | ||
Multi-family | |||||
Segment Reporting Information [Line Items] | |||||
Total Sales | 15,032,200 | 0 | 15,456,400 | 0 | |
Total Cost of Sales | 15,619,400 | 2,100 | 16,774,600 | 2,100 | |
Total Gross Profit (Loss) | (587,200) | (2,100) | (1,318,200) | (2,100) | |
Total Assets | 138,040,000 | 138,040,000 | 131,485,900 | ||
Fee Build | |||||
Segment Reporting Information [Line Items] | |||||
Total Sales | 263,300 | 1,487,800 | 530,100 | 4,201,700 | |
Total Cost of Sales | 262,600 | 4,654,600 | 969,300 | 7,219,500 | |
Total Gross Profit (Loss) | 700 | (3,166,800) | (439,200) | (3,017,800) | |
Total Assets | 762,700 | 762,700 | 1,703,200 | ||
Other | |||||
Segment Reporting Information [Line Items] | |||||
Total Sales | 0 | 8,900 | 0 | 41,500 | |
Total Cost of Sales | 7,900 | 463,400 | 184,500 | 1,097,100 | |
Total Gross Profit (Loss) | (7,900) | $ (454,500) | (184,500) | $ (1,055,600) | |
Unallocated (Shared) | |||||
Segment Reporting Information [Line Items] | |||||
Total Assets | $ 20,835,900 | $ 20,835,900 | $ 20,127,300 |
UNCOMPLETED CONTRACTS - SUMMARY
UNCOMPLETED CONTRACTS - SUMMARY OF COST, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Contractors [Abstract] | ||
Costs incurred on uncompleted contracts | $ 20,473,300 | $ 19,429,800 |
Estimated loss | (3,966,300) | (3,495,100) |
Costs and estimated earnings on uncompleted contracts | 16,507,000 | 15,934,700 |
Billings to date | 16,800,400 | 16,273,000 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 0 | 0 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (293,400) | (338,300) |
Provision for loss on contract | (84,900) | (159,100) |
Contract Liabilities | $ (378,300) | $ (497,400) |
UNCOMPLETED CONTRACTS - NARRATI
UNCOMPLETED CONTRACTS - NARRATIVE (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Contractors [Abstract] | ||
Contract liabilities | $ 378,300 | $ 497,400 |
Uncollected billings | $ 800,000 | $ 1,700,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Pre-funded warrants - Subsequent Event - USD ($) $ in Millions | Aug. 14, 2023 | Aug. 09, 2023 |
Subsequent Event [Line Items] | ||
Class of warrant or right, number of securities called by warrants or rights (in shares) | 527,000 | |
Class of warrant or right, number of securities called by warrants or rights, value | $ 2 | |
Class of warrant or right, outstanding (in shares) | 357,109 | |
Class of warrant or right, exercisable (in shares) | 357,109 |