April 15, 2020
Sterling Griffin
President
Harbor Custom Development, Inc.
11505 Burnham Dr., Suite 301
Gig Harbor, Washington 98332
Re: Harbor Custom Development, Inc.
Registration Statement on Form S-1
Filed March 31, 2020
File No. 333-237507
Dear Mr. Griffin:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration statement
and providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments. Unless
we note
otherwise, our references to prior comments are to comments in our February 21,
2020 letter.
Registration Statement on Form S-1 filed March 31, 2020
Cover page
1. We note the revisions made to the prospectus cover page. Please reinsert
the cross
reference to the page of the risk factors section. See Item 501(b)(5) of
Regulation S-K.
Summary Financial Data
Other Financial Data, page 6
2. We note your response to prior comment 1 and your revised disclosure. We
also note that
your presentation of EBITDA margin is calculated from gross margin,
which appears to
be the most directly comparable financial measure calculated and
presented in accordance
with GAAP, rather than net income. Please revise your presentation or
re-label the
Sterling Griffin
FirstName LastNameSterling Griffin
Harbor Custom Development, Inc.
Comapany NameHarbor Custom Development, Inc.
April 15, 2020
April 2 2020 Page 2
Page 15,
FirstName LastName
measure to more appropriately characterize the non-GAAP measure. Refer
to Questions
103.01 and 103.02 of the Non-GAAP Financial Measures Compliance and
Disclosure
Interpretations ("C&DI").
Capitalization, page 42
3. We note that the pro forma as adjusted debt amount is reduced by
$3,879 compared to the
actual amount as of December 31, 2019. Please revise your
capitalization disclosure
to describe all transactions for which you are adjusting.
Dilution, page 43
4. We note from your response to prior comment 3 and from your revised
disclosure that net
tangible book value equals total assets less intangible assets. Please
revise your net
tangible book value calculation to equal total tangible assets less
your total liabilities.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
46
5. We note your disclosures of potential adverse impacts from COVID-19.
Please tell us
what consideration you gave to providing expanded information
regarding specific
impacts that your business has experienced from the COVID-19 pandemic
(e.g. number of
cancelled sales contracts, supplies that you or your subcontractors
cannot obtain; any
extended restrictions on residential construction by Washington
State). Refer to CF
Disclosure Guidance: Topic No. 9 for guidance.
6. Refer to prior comment 5. It remains unclear which of your current
financing
arrangements contain covenants (financial and otherwise) affecting
your ability to incur
additional debt, make certain investments, reduce liquidity below
certain levels, make
distributions to your shareholders, and otherwise affect your
operating policies, as you
state on page 30. Please revise to clarify and file material financing
agreements as
exhibits, or advise.
Notes to Consolidated Financial Statements for the Years Ended December, 31
2019 and 2018
12. Leases, page F-22
7. We note your response to prior comment 17 and your revised disclosure
in Note 12 to
your consolidated financial statement where it appears that lease cost
for operating leases
is still being allocated between the amortization of the asset and
interest on lease liabilities
for the year ended December 31, 2019. We reissue our prior comment 17.
Please tell us
how this allocation is consistent with the guidance in ASC
842-20-25-6(a), which states
that a lessee recognizes a single lease cost for an operating lease on
a straight-line basis. In
your response clarify which financial statement line items in your
consolidated statement
of operations reflect these operating lease costs. Please also refer
to ASC 842-20-50-4.
Sterling Griffin
Harbor Custom Development, Inc.
April 15, 2020
Page 3
12. Income Tax, page F-24
8. Please revise your disclosure to provide the significant components and
amount of income
tax expense (benefit) attributable to continuing operations for each
period presented as
required by ASC 740-10-50-9.
You may contact Isaac Esquivel at 202-551-3395 or Wilson Lee at
202-551-3468 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Ruairi Regan at 202-551-3269 or David Link at 202-551-3356 with any
other questions.
Sincerely,
FirstName LastNameSterling Griffin
Division of
Corporation Finance
Comapany NameHarbor Custom Development, Inc.
Office of Real Estate
& Construction
April 15, 2020 Page 3
cc: Lynne Bolduc, Esq.
FirstName LastName