What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-14 compared with 2020-11-16 · 159 added, 413 removed, 339 unchanged (63% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

2021 December 31,

1 unchanged sentence

Cash and cash equivalents $ 6,657 $ 7,032

Trade receivables 1,635 1,886

Trade receivables, net 1,437 1,482

Trade receivables - related parties 4,922 3,598

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Goodwill 1,702 1,702

Intangible assets, net 53 103

Operating lease right-of-use assets 7,749 7,914

Intangible assets, net 19 36

TOTAL ASSETS $ 27,720 $ 28,579

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Accrued liabilities 1,221 964

Short term notes payable - due to affiliates, net of discount — 5,706

Short term operating lease liabilities 581 569

Short term notes payable 96 5

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Long term notes payable - due to affiliates 5,500 5,500

Long term notes payable - net of deferred financing charges — 1,212

Long term operating lease liabilities, net of current portion 7,211 7,361

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STOCKHOLDERS’ EQUITY

Series C preferred stock $ 0.01 par value, 20,000,000 shares authorized, 3,440,690 issued and outstanding and liquidation preference of $ 17,203 at September 30, 2020 and December 31, 2019

Series C preferred stock $ 0.01 par value, 20,000,000 shares authorized, 3,440,690 issued and outstanding and liquidation preference of $ 17,203 at March 31, 2021 and December 31, 2020

$ 6,765 $ 6,765

Class A common stock, $ 0.01 par value, 59,779,750 shares authorized, 7,949,152 and 7,849,756 issued, and 7,863,582 and 7,764,186 outstanding at September 30, 2020 and December 31, 2019, respectively

Class B common stock, $ 0.01 par value, 220,250 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019

Class A common stock, $ 0.01 par value, 59,779,750 shares authorized, 8,057,989 and 7,953,729 issued, and 7,972,419 and 7,868,159 outstanding at March 31, 2021 and December 31, 2020, respectively

Class B common stock, $ 0.01 par value, 220,250 shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020

Additional paid-in capital 200,141 200,147

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(in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Revenue—asset management $ 5,891 $ 4,733 $ 15,466 $ 13,326

Revenue—real estate services 1,439 947 5,294 2,573

Three Months Ended March 31,

Asset management $ 6,840 $ 5,435

Real estate services 1,477 1,531

Total revenue 8,317 6,966

Operating expenses

Direct costs - asset management 6,078 4,632

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General and administrative 694 727

Selling and Marketing 127 100 507 266

Sales and marketing 158 200

Operating income 300 191

Other income, net 55 47 92 131

Interest expense ( 58 ) ( 164 )

Other (loss) income, net ( 11 ) 9

Income before income tax expense 231 36

Income tax expense ( 2 ) ( 1 )

Loss on equity method investments carried at fair value ( 46 ) ( 606 ) ( 134 ) ( 606 )

Net income (loss) from continuing operations 423 ( 561 ) 1,591 ( 183 )

Net loss from discontinued operations, net of tax — ( 66 ) — ( 596 )

Gain (loss) on equity method investments carried at fair value 18 ( 47 )

Net income (loss) $ 247 $ ( 12 )

Income (loss) per share from continuing operations

Income (loss) per share

Basic net income (loss) per share $ 0.03 $ —

Diluted net income (loss) per share $ 0.03 $ —

Loss per share from discontinued operations

Basic net loss per share $ — $ ( 0.01 ) $ — $ ( 0.10 )

Diluted net loss per share $ — $ ( 0.01 ) $ — $ ( 0.10 )

Basic weighted average shares outstanding 8,166 8,003

Diluted weighted average shares outstanding (continuing operations) 8,579 7,954 8,415 6,159

Diluted weighted average shares outstanding (discontinued operations) — 7,954 — 6,159

Diluted weighted average shares outstanding 8,977 8,003

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

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Preferred Stock

capital Treasury

stock Accumulated

deficit Total

Shares Amount Shares Amount Shares Amount

Balance at December 31, 2020 3,441 $ 6,765 7,953 $ 79 220 $ 2 $ 200,147 $ ( 2,662 ) $ ( 193,116 ) $ 11,215

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Balance at March 31, 2021 3,441 $ 6,765 8,058 $ 81 220 $ 2 $ 200,141 $ ( 2,662 ) $ ( 192,869 ) $ 11,458

Stock compensation and issuances — — 52 — — — 204 — — 204

Accrued liability settled through issuance of stock — — 9 — — — 20 — — 20

Shares withheld related to net share settlement of restricted stock awards — — ( 16 ) — — — ( 30 ) — — ( 30 )

Net income — — — — — — — — 1,180 1,180

Balance at Balance at June 30, 2020 3,441 $ 6,765 7,942 $ 79 220 $ 2 $ 199,767 $ ( 2,662 ) $ ( 194,030 ) $ 9,921

Stock compensation and issuances — — 3 — — — 179 — — 179

Accrued liability settled through issuance of stock — — 5 — — — 14 — — 14

Shares withheld related to net share settlement of restricted stock awards — — ( 1 ) — — — ( 7 ) — — ( 7 )

Net income — — — — — — — — 423 423

Balance at September 30, 2020 3,441 $ 6,765 7,949 $ 79 220 $ 2 $ 199,953 $ ( 2,662 ) $ ( 193,607 ) $ 10,530

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

COMSTOCK HOLDING COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

Preferred Stock

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Shares withheld related to net share settlement of restricted stock awards — — ( 16 ) — — — ( 31 ) — — ( 31 )

Net income — — — — — — — — 85 300 385

Net loss — — — — — — — — ( 12 ) ( 12 )

Balance at March 31, 2020 3,441 $ 6,765 7,897 $ 79 220 $ 2 $ 199,573 $ ( 2,662 ) $ ( 195,210 ) $ 8,547

Stock compensation and issuances — — 30 1 — — 186 — — — 187

Accrued liability settled through issuance of stock — — 14 — — — 36 — — — 36

Shares withheld related to net share settlement of restricted stock awards — — ( 2 ) — — — — — — — —

Warrant exercises — — 200 2 — — 358 — — — 360

Class A stock conversion of non-controlling interest — — 3,824 38 — — 16,050 — — ( 16,019 ) 69

Series C conversion of non-controlling interest 641 ( 428 ) — — — — — — — — ( 428 )

Net (loss) income — — — — — — — — ( 237 ) 13 ( 224 )

Balance at June 30, 2019 3,441 $ 6,765 7,815 $ 78 220 $ 2 $ 198,358 $ ( 2,662 ) $ ( 196,243 ) $ — $ 6,298

Stock compensation and issuances — — — — — — 134 — — — 134

Accrued liability settled through issuance of stock — — 17 — — — 35 — — — 35

Gain on deconsolidation of discontinued operations — — — — — — 682 — — — 682

Net (loss) income — — — — — — — — ( 627 ) — ( 627 )

Balance at September 30, 2019 3,441 $ 6,765 7,832 $ 78 220 $ 2 $ 199,209 $ ( 2,662 ) $ ( 196,870 ) $ — $ 6,522

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income (loss) $ 247 $ ( 12 )

Adjustment to reconcile net income (loss) from continuing operations to net cash provided by operating activities

Adjustment to reconcile net income (loss) to net cash used in operating activities

Amortization of loan discount, loan commitment and deferred financing fees — 24

Amortization and depreciation expense 49 65

Amortization of right-of-use asset 165 —

Earnings from unconsolidated joint venture, net of distributions 12 105

1 unchanged sentence

Change in fair value of equity method investment ( 18 ) 47

Distributions from equity method investments carried at fair value 1,322 100

Changes in operating assets and liabilities:

Trade receivables - related party 628 463

Trade receivables - related parties ( 1,324 ) 308

Trade receivables 45 398

1 unchanged sentence

Prepaid and other assets ( 97 ) ( 239 )

Accrued interest — ( 1 )

Accrued liabilities 264 478

Accounts payable 169 ( 845 )

Net cash provided by operating activities of discontinued operations — 7,429

Net cash provided by operating activities $ 2,662 $ 6,913

Lease liabilities ( 138 ) 8

Net cash used in operating activities ( 1,923 ) $ ( 1,908 )

Cash flows from investing activities:

Purchase of fixed assets ( 8 ) ( 9 )

Principal received on note receivable — 27

Net cash used in investing activities $ ( 114 ) $ ( 99 )

Distributions from equity method investments carried at fair value 1,660 144

Net cash provided by investing activities 1,652 135

Cash flows from financing activities:

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Taxes paid related to net share settlement of equity awards ( 195 ) ( 31 )

Net cash used in financing activities $ ( 1,568 ) $ ( 166 )

Net increase in cash and cash equivalents 980 6,648

Net cash (used in) provided by financing activities ( 104 ) 5,442

Net (decrease) increase in cash and cash equivalents ( 375 ) 3,669

Cash and cash equivalents, beginning of period 7,032 3,511

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Accrued liability settled through issuance of stock $ 7 $ 20

Gain on early extinguishment of debt $ 50 $ —

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Comstock Holding Companies, Inc.

The accompanying unaudited condensed consolidated financial statements of Comstock Holding Companies, Inc.

and subsidiaries (“Comstock”, “CHCI” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and other applicable rules and regulations of the Securities and Exchange Commission (“SEC”).

Such financial statements do not include all of the disclosures required by GAAP for complete financial statements.

In our opinion, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included in the accompanying consolidated financial statements.

In our opinion, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements.

The Company has evaluated subsequent events through the date these consolidated financial statements were issued and has included all necessary adjustments and disclosures.

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Metropolitan Statistical Area.

In 2018, the Company made a strategic decision to transform its operating platform from being primarily focused on developing on-balance sheet, for-sale, homebuilding projects to being focused on commercial and residential asset management and real estate related services.

On April 30, 2019, the Company announced the exit from the homebuilding business.

The Company now operates through five subsidiaries – CDS Asset Management, LC (“CAM”), Comstock Residential Management, LC, Comstock Commercial Management, LC, Park X Management, LC and Comstock Environmental Services, LLC (“CES”).

The Company’s homebuilding operations are presented in Discontinued Operations (see Note 19 – Discontinued Operations).

In February 2021, the Company amended the entity names for several subsidiaries as part of operational efficiency enhancements initiated in the first quarter of 2021.

The entity names were changed for the following Company subsidiaries:

(a) CDS Asset Management, LC is now CHCI Asset Management, LC, (b) Comstock Commercial Management, LC is now CHCI Commercial Management, LC, (c) Comstock Residential Management, LC is now CHCI Residential Management, LC, (d) CDS Capital Management, L.C.

is now CHCI Capital Management, LC and (e) Comstock Real Estate Services, LC is now CHCI Real Estate Services, L.C.

The Company operates through five primarily real estate focused subsidiaries – CHCI Asset Management, LC (“CAM”), CHCI Residential Management, LC, CHCI Commercial Management, LC, Park X Management, LC and Comstock Environmental Services, LLC (“CES”).

References in these Consolidated Financial Statements to “Comstock,” “Company”, “we,” “our” and “us” refer to Comstock Holding Companies, Inc.

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The Consolidated Balance Sheet as of December 31, 2020 was derived from the audited financial statements contained in the 2020 Form 10-K.

For the three and nine months ended September 30, 2020 and 2019, comprehensive income (loss) equaled net income (loss);

For the three months ended March 31, 2021 and 2020, comprehensive income (loss) equaled net income (loss);

therefore, a separate statement of comprehensive income (loss) is not included in the accompanying consolidated financial statements.

Certain amounts in the prior period have been reclassified to conform to the current year presentation in connection with the classification of 'General and administrative' expenses on the consolidated statement of operations and the accompanying notes to the consolidated financial statements.

The reclassification had no effect on the previously reported totals (e.g.

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Recent Developments

In March 2020, the Coronoavirus Aid Relief and Economic Security Act ("CARES Act") was signed into law in response to the COVID-19 pandemic, and we opted into the CARES Act payroll tax deferral program in the third quarter of 2020.

See Note 9 - Coronavirus Aid Relief and Economic Security Act' for further discussion.

On October 31, 2020, the Company’s then-current lease for its corporate headquarters in Reston, Virginia expired following a one-month extension of the lease term.

On November 1, 2020, the Company agreed to a new lease to relocate its corporate headquarters to new office space in Reston, Virginia for a ten year term.

See Note 20 - Subsequent Events for further discussion.

In April 2021, the Company was notified by the Lender that the Lender had received payment in full of the PPP Loan from the United States government, and the Company's PPP Loan had been forgiven (See Note 7 – Coronavirus Aid and Relief and Economic Security Act).

Use of Estimates

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The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts for the reporting periods.

We base these estimates and judgments on historical experience and on various other factors that we believe to

be reasonable under the circumstances.

We base these estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances.

We evaluate these estimates and judgments on an ongoing basis.

Actual results may differ from those estimates under different assumptions or conditions.

Material estimates are utilized in the valuation of deferred tax assets, analysis of goodwill impairment, valuation of equity-based compensation, valuation of preferred stock issuances, capitalization of costs, consolidation of variable interest entities and fair value of financial instruments (including the fair value of our equity method investments).

Material estimates are utilized in the valuation of deferred tax

assets, analysis of goodwill impairment, valuation of equity-based compensation, capitalization of costs, and fair value of financial instruments (including the fair value of our equity method investments).

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-13, “Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which removes, adds and modifies certain disclosure requirements for fair value measurements in Topic 820.

ASU 2018-13 removes the following disclosure requirements:

(i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and (ii) the entity’s valuation processes for Level 3 fair value measurements.

ASU 2018-13 adds the following disclosure requirements:

(i) provide information about the measurement uncertainty of Level 3 fair value measurements as of the reporting date rather than a point in the future, (ii) disclose changes in unrealized gains and losses related to Level 3 measurements for the period included in other comprehensive income, and (iii) disclose for Level 3 measurements the range and weighted average of the significant unobservable inputs and the way it is calculated.

ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Early adoption is permitted.

The Company adopted ASU 2018-13 prospectively as of January 1, 2020.

The adoption did not have a material impact on our Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in ASC 740, Income Tax and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 will be effective for public business entities for annual reporting periods beginning after December 15, 2020, and interim periods within those periods.

The Company adopted ASU 2019-12 as of January 1, 2021.

The adoption did not have a material impact on our condensed consolidated financial statements.

Recently Issued Accounting Standards

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The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes", which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 will be effective for public business entities for annual reporting periods beginning after December 15, 2020, and interim periods within those periods.

Early adoption is permitted.

We do not expect the adoption of this pronouncement to have a material impact on our consolidated financial statements.

We assessed other accounting pronouncements issued or effective during the three and nine months ended September 30, 2020 and deemed they were either not applicable to us or are not anticipated to have a material effect on our consolidated financial statements.

We assessed other accounting pronouncements issued or effective during the three months ended March 31, 2021 and deemed they were either not applicable to us or are not anticipated to have a material effect on our consolidated financial statements.

Other standards previously issued and adopted by the Company have been disclosed in previous filings.

REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

In connection with the preparation of the Company’s 2019 consolidated financial statements, the Company identified errors in its historical financial statements relating to how the Company accounted for debt discounts and how the Company accounted for reimbursement of salaries and other salary related costs for its property management revenue arrangements.

Specifically, the Company incorrectly accounted for debt discount of certain notes payable due to affiliates that should have been fully amortized at the end of the initial three-year term in October 2017.

In addition, in the interim periods in 2019, the Company previously reported the reimbursement of salary costs from its property management agreements on a net basis, although the Company was required to account for these payroll related reimbursements on a gross basis.

The correction of these non-cash errors had no effect on the previously reported operating income (loss) or total cash flows from operations, investing, or financing of the Company.

The Company evaluated the errors and, based on an analysis of quantitative and qualitative factors, determined that the related impact was not material to the Company’s consolidated financial statements for any prior period.

All financial statements and footnotes presented herein have been adjusted to reflect the revisions below.

For the three months ended September 30, 2019 For the nine months ended September 30, 2019

As previously

reported Adjustment As adjusted As previously

reported Adjustment As adjusted

Revenue—asset management

$ 4,293 $ 440 $ 4,733 $ 12,178 $ 1,148 $ 13,326

Direct costs—asset management

3,710 487 4,197 10,541 1,263 11,804

Interest (expense)

( 186 ) 16 ( 170 ) ( 352 ) 48 ( 304 )

Other income, net

— 47 47 16 115 131

Net income (loss)

( 643 ) 16 ( 627 ) ( 827 ) 48 ( 779 )

Additional paid-in capital

198,184 1,025 199,209 198,184 1,025 199,209

Accumulated deficit

( 195,146 ) ( 1,724 ) ( 196,870 ) ( 195,146 ) ( 1,724 ) ( 196,870 )

7,221 ( 699 ) 6,522 7,221 ( 699 ) 6,522

TRADE RECEIVABLES & TRADE RECEIVABLES – RELATED PARTIES

Trade receivables include amounts due from real estate services, asset management and commercial development.

The Company records an allowance for doubtful accounts based on historical collection experience and the aging of receivables.

As of September 30, 2020, the allowance for doubtful accounts was de minimis based on the Company’s historical collection experience for receivables older than 90 days along with an analysis of collections received as of the filing date.

As of September 30, 2020 and December 31, 2019, the Company had $ 3.0 million and $ 3.6 million, respectively, of receivables from related parties, primarily related to the 2019 AMA, as defined in Note 15.

The Company does not record an allowance for doubtful accounts related to receivables from related parties.

This is due to the related party nature of the receivables along with the collection history.

EQUITY METHOD INVESTMENTS IN REAL ESTATE VENTURES AT FAIR VALUE

INVESTMENTS IN UNCONSOLIDATED ENTITIES

Investments carried at fair value

Based upon elections made at the date of investment, the Company reports the equity method investments in real estate ventures at fair value.

For such investments, the Company increases or decreases the investment each reporting period by the change in the fair value and the Company reports the fair value adjustments in the Consolidated Statement of Operations in the ‘loss on equity method investments carried at fair value’ line item.

For such investments, the Company increases or decreases the investment each reporting period by the change in the fair value and the Company reports the fair value adjustments in the Consolidated Statement of Operations in the ‘Gain (loss) on equity method investments carried at fair value’ line item.

Changes in fair value of the Company's investment in Investors X (defined below) are impacted by distributions as the fair value is based on finite cash flows from the wind-down of that entity.

Fair value of equity method investments are classified as Level 3 of the fair value hierarchy.

As of September 30, 2020 and December 31, 2019, the Company had equity method investments in real estate ventures at fair value of $ 7.0 million and $ 8.4 million, respectively.

The table below shows the change in the Company’s investments in real estate ventures reported at fair value.

Nine Months Ended

September 30, 2020

Fair value of investments as of December 31, 2019 $ 8,421

Distributions ( 1,322 )

Change in fair value ( 134 )

Fair value of investments as of September 30, 2020 $ 6,965

See Note 15 – Related Party Transactions for additional discussion of our investments in real estate ventures at fair value.

The Company has elected to account for the equity method investment in Comstock Investors X, L.C.

(“Investors X”), a Variable Interest Entity (“VIE”) that owns the Company’s residual homebuilding operations at fair value.

Fair value is determined using a discounted cash flow model based on expected future cash flows for income and realization events of the

underlying asset.

Fair value is determined using a discounted cash flow model based on expected future cash flows for income and realization events of the underlying asset.

Expected future cash flows includes contractually fixed revenues and expenses as well as estimates for future revenues and expenses where contracts do not currently exist.

These estimates are based on prior experience as well as comparable, third party data.

As of September 30, 2020 and December 31, 2019, the fair value of the Company’s investment in Investors X is $ 5.8 million and $ 7.2 million, respectively.

The Company received distributions of $ 581 thousand and $ 1,239 thousand during the three and nine months ended September 30, 2020, respectively, and recognized a loss in fair value of $ 47 thousand and $ 161 thousand, respectively.

Summarized Financial Information for Investors X (unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Statement of Operations:

Total revenue $ 5,078 $ 3,072 $ 12,276 $ 3,072

Direct costs 4,653 3,750 10,915 3,750

Net income (loss) $ 425 $ ( 678 ) $ 1,361 $ ( 678 )

Comstock Holding Companies, Inc.

share of net income (loss) $ 425 $ ( 678 ) $ 1,361 $ ( 678 )

As of March 31, 2021 and December 31, 2020, the fair value of the Company’s investment in Investors X is $ 3.5 million and $ 5.1 million, respectively.

The Company received distributions of $ 1.7 million during the three months ended March 31, 2021 and recognized no gain or loss in fair value.

On December 30, 2019, the Company made an investment related to the purchase of a stabilized commercial office building located at 3101 Wilson Boulevard in the Clarendon area of Arlington County, Virginia (the “Hartford”).

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Fair value is determined using an income approach and sales comparable approach models.

As of September 30, 2020 and December 31, 2019, the fair value of the Company’s investment in the Hartford was $ 1.1 million.

The fair value of the Hartford remained at approximately $ 1.2 million during the three and nine months ended September 30, 2020.

The Company received distributions of $ 24 thousand and $ 83 thousand during the three and nine months ended September 30, 2020, respectively.

Summarized Financial Information for the Hartford (unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

Statement of Operations:

Total revenue $ 2,486 $ 6,544

Direct costs 814 1,966

Other costs 2,366 6,257

Net loss $ ( 694 ) $ ( 1,679 )

Comstock Holding Companies, Inc.

share of net loss $ ( 17 ) $ ( 42 )

As of March 31, 2021 and December 31, 2020, the fair value of the Company’s investment in the Hartford was

$ 1.2 million.

The fair value of the Company's investment in the Hartford remained at approximately $ 1.2 million during the three months ended March 31, 2021.

The Company received no distributions during the three months ended March 31, 2021.

Fair value of equity method investments are classified as Level 3 of the fair value hierarchy.

As of March 31, 2021 and December 31, 2020, the Company had equity method investments in real estate ventures at fair value of $ 4.7 million and $ 6.3 million, respectively.

The table below shows the change in the Company’s investments in real estate ventures reported at fair value:

Fair value of investments as of December 31, 2020 $ 6,307

Distributions ( 1,660 )

Change in fair value 18

Fair value of investments as of March 31, 2021 $ 4,665

See Note 12 – Related Party Transactions for additional discussion of our investments in real estate ventures at fair value.

Investments using equity method

The Company accounts for its interest in its title insurance joint venture using the equity method of accounting and adjusts the carrying value for its proportionate share of earnings, losses and distributions.

The investment in the unconsolidated joint venture was $ 17 thousand and $ 29 thousand as of March 31, 2021 and December 31, 2020, respectively, and is included within ‘Prepaid and other assets, net’ in the accompanying Consolidated Balance Sheets.

The Company’s share of loss for the three months ended March 31, 2021 and 2020 from this unconsolidated joint venture of $ 12 thousand and $ 3 thousand, respectively, is included in ‘Other income (loss), net’ in the accompanying Consolidated Statement of Operations.

During the three months ended March 31, 2021 and 2020 the Company collected and recorded no distributions and $ 108 thousand, respectively, from this joint venture as a return on investment.

GOODWILL & INTANGIBLES

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We assess the recoverability of the unamortized balance of our intangible assets when indicators of impairment are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall operations.

Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as

an impairment loss.

Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as an impairment loss.

As of the acquisition date, goodwill consisted primarily of synergies resulting from the combination, expected expanded opportunities for growth and production, and savings in corporate overhead costs.

We perform our annual goodwill impairment review during our fourth quarter as of October 1.

In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill.

We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased competitive environment, a change in management, key personnel, strategy or customers, significant or unusual changes in market capitalization, negative or declining cash flows, or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods.

During the three months ended March 31, 2020 we considered the impact of the coronavirus ("COVID-19") pandemic and the resulting economic impact a triggering event and performed a goodwill impairment review.

There were no events indicating a potential change in recoverability of goodwill during the three months ended September 30, 2020.

When assessing goodwill for impairment, the Company may first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than it's carrying amount or elect to bypass such assessment.

If it is determined that it is more likely than not that the fair value of a reporting unit is less than it’s carrying value, or the Company elects to bypass such assessment, the Company then determines the fair value of each reporting unit.

The estimate of the fair value of each reporting unit is based on a projected discounted cash flow model that includes significant assumptions and estimates, including the Company's discount rate, growth rate and future financial performance as well as a market multiple model based upon similar transactions in the market.

Assumptions about the discount rate are based on a weighted average cost of capital built up from various interest rate components applicable to the Company.

Assumptions about the growth rate and future financial performance of a reporting unit are based on the Company's forecasts, business plans, economic projections and anticipated future cash flows.

Market multiples are derived from recent transactions among businesses of a similar size and industry.

The fair value of each reporting unit is compared to the carrying amount of the reporting unit.

If the carrying value of the reporting unit exceeds the fair value, then an impairment loss is recognized for the difference.

For the three months ended March 31, 2020 the Company determined that there was no impairment to goodwill.

As of September 30, 2020 and December 31, 2019, the balance of goodwill was $ 1.7 million.

As of March 31, 2021 and December 31, 2020, the balance of goodwill was $ 1.7 million.

This goodwill is reflected within our Real Estate Services segment.

There were no events indicating a potential change in recoverability of goodwill during the three months ended March 31, 2021.

Intangible assets include customer relationships which have an amortization period of four years .

During the three and nine months ended September 30, 2020, $ 17 thousand and $ 50 thousand of intangible asset amortization was recorded in ‘ General and administrative’ expense on the Consolidated Statements of Operations, respectively.

September 30,

2020 December 31,

accumulated amortization

( 215 ) ( 165 )

As of September 30, 2020, the future estimated amortization expense related to these intangible assets was:

2020 (3 months ended December 31, 2020) $ 13

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-2, Leases, later codified as Accounting Standards Codification ("ASC") 842 ("ASC 842"), using the modified retrospective method.

During the three months ended March 31, 2021 and 2020, $ 17 thousand of intangible asset amortization was recorded in ‘ General and administrative’ expense on the Consolidated Statements of Operations, respectively.

The determination of whether an arrangement contains a lease and the classification of a lease, if applicable, is made at lease commencement, at which time the Company also measures and recognizes an ROU asset, representing the Company’s right to use the underlying asset, and a lease liability, representing the Company’s obligation to make lease payments under the terms of the arrangement.

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The rates implicit within the Company's leases are generally not determinable;

therefore, the Company's incremental borrowing rate of 6.5 %, at the time of adoption, was used to determine the present value of lease payments.

therefore, the Company's incremental borrowing rate is used to determine the present value of lease payments.

The determination of the Company’s incremental borrowing rate requires judgment.

The incremental borrowing rate is determined at lease commencement, or as of January 1, 2019 for operating leases in existence upon adoption of ASC 842.

The Company looks to similar corporate credit ratings and bond yields when determining the incremental borrowing rate.

As of November 1, 2020, at the lease commencement of the new corporate office in Reston, VA, the Company's incremental borrowing rate was determined to be 4.25 %.

The Company has operating leases for its office facilities as well as for office equipment.

The Company's leases have remaining terms of less than one year to 10 years.

The leases can contain various renewal and termination options.

The period which is subject to an option to extend the lease is included in the lease term if it is reasonably certain that the option will be exercised.

The period which is subject to an option to terminate the lease is included if it is reasonably certain that the option will not be exercised.

The period which is subject to an option to terminate the lease is excluded if it is reasonably certain that the option will not be exercised.

Lease costs related to the Company's operating leases are generally recognized as a single ratable lease cost over the lease term.

On August 1, 2020 the Company terminated an office lease which it had previously determined would be reasonably certain to continue until 2022.

See Note 12 - Related Party Transactions for rent expense paid and recognized for the corporate office to related parties.

On August 1, 2020 the Company terminated an office lease in Conshohocken, PA which it had previously determined would be reasonably certain to continue until 2022.

The Company subsequently executed a month-to-month lease agreement for the office space.

The Company does not expect the new month-to-month lease to continue for more than twelve months.

As such, the Company has elected the practical expedient to not follow the recognition requirements of Topic 842 for this agreement and instead to recognize the lease payments as lease cost on a straight-line basis over the lease term.

The Company does no t have any lease liabilities which have not yet commenced as of September 30, 2020.

On October 31, 2020, the Company’s then-current lease for its corporate headquarters in Reston, Virginia expired following a one-month extension of the lease term.

On November 1, 2020, the Company executed a new lease to relocate its corporate headquarters to new office space in Reston, Virginia for a ten year term.

See Note 20 - Subsequent Events for further discussion.

Since the lease is less than twelve months, the Company has elected to recognize the lease payments as lease cost on a straight-line basis over the lease term.

The Company does no t have any leases which have not yet commenced as of March 31, 2021.

The Company’s revenues consist primarily of

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• Project & Development Services;

• Environmental Consulting and Engineering Services.

• Environmental Remediation

Asset Management

Asset Management primarily provides comprehensive real estate asset management services to the CDS Portfolio (defined below), representing a series of daily performance obligations delivered over time.

Pricing includes a cost-plus management fee or a market-rate fee form of variable consideration.

Asset Management primarily provides comprehensive real estate asset management services to the CDS Portfolio, representing a series of daily performance obligations delivered over time.

Pricing includes a cost-plus management fee or a market-rate fee or a market-rate fee form of variable consideration.

The Company earns whichever is higher.

See Note 12 – Related Party Transactions.

The amount of revenue recognized is presented on a gross basis for any services provided by our employees, as we control the services provided by the employees.

This is evidenced by our obligation for their performance and our ability to direct and redirect their work and negotiate the value of such services.

The amount of revenue recognized is presented on a gross basis for any services provided by our employees, as we control them.

This is evidenced by our obligation for their performance and our ability to direct and redirect their work, as well as negotiate the value of such services.

In the instances where we do not control third-party services delivered to the client, we report revenues net of the third-party reimbursements.

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Property Management

We provide on-site day-to-day management services for owners of office, industrial, retail, multifamily residential and various other types of properties, representing a series of daily performance obligations delivered over time.

Property Management provides on-site day-to-day management services for owners of office, industrial, retail, multifamily residential and various other types of properties, representing a series of daily performance obligations delivered over time.

Pricing is generally in the form of a monthly management fee based upon property-level cash receipts, square footage under management or some other variable metric.

Revenues from project management may also include reimbursement of payroll and related costs for personnel providing the services and subcontracted vendor costs.

Project management services represent a series of distinct daily services rendered over time.

Project management services represent a series

of distinct daily services rendered over time.

Consistent with the transfer of control for distinct, daily services to the customer, revenue is typically recognized at the end of each period for the fees associated with the services performed.

The amount of revenue recognized is

presented on a gross basis for any services provided by our employees, as we control the services provided by the employees.

This is evidenced by our obligation for their performance and our ability to direct and redirect their work and negotiate the value of such services.

The amount of revenue recognized is presented gross for any services provided by our employees, as we control them.

This is evidenced by our obligation for their performance and our ability to direct and redirect their work, as well as negotiate the value of such services.

In the instances where we do not control third-party services delivered to the client, we report revenues net of the third-party reimbursements.

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Therefore, we typically satisfy our performance obligation at the point in time of the funding of the loan, when there is a present right to payment.

We provide strategic advice and execution services for owners, investors, and occupiers of real estate in connection with the leasing of office, industrial and retail space.

We provide strategic advice and execution for owners, investors, and occupiers of real estate in connection with the leasing of office, industrial and retail space.

We are compensated for our services in the form of a commission.

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generally, at the time of the contractual event where there is a present right to payment.

Project and Construction Management

Project & Development Services

We provide project and construction management services for owners and occupiers of real estate in connection with the management and leasing of office, industrial and retail space.

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Project and construction management services represent a series of performance obligations delivered over time and revenue is recognized over time.

Environmental Consulting and Engineering

We provide environmental consulting and engineering services for owners of real estate.

Environmental Remediation

We provide environmental remediation services for owners of real estate.

Remediation services are generally contracted and performed by Comstock Environmental.

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Fees earned are generally based upon employee time spent as well as a cost-plus arrangement for subcontractors used.

Generally, environmental consulting and engineering services represent a series of performance obligations delivered over time and revenue is recognized over time.

Generally, environmental remediation services represent a series of performance obligations delivered over time and revenue is recognized over time.

Contract Costs

Expenses, primarily employee commissions, incurred on leasing and capital markets transactions represent substantially all of our incremental costs to obtain revenue contracts.

We apply the applicable practical expedient offered by ASC Topic 606 "Revenue", when the amortization period is one year or less and, therefore, recognize these costs as an operating expense as they are incurred.

Since the amortization period is one year or less we recognize these costs as an operating expense as they are incurred.

The following table presents the Company’s sales from contracts with customers disaggregated by categories which best represents how the nature, amount and timing and uncertainty of sales are affected by economic factors.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Revenue by customer

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$ 6,939 $ 5,484

1,373 1,007 4,730 2,430

Total Revenue by customer

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$ 1,732 $ 1,888

3,779 2,800 10,867 10,686

Time and Material

1,780 1,777 6,096 3,136

Total Revenue by contract type

$ 8,317 $ 6,966

For the three and nine months ended September 30, 2020, $ 7.3 million and $ 20.2 million, respectively, of our revenues were earned for contracts where revenue is recognized over time.

For the three and nine months ended September 30, 2019, $ 5.6 million and $ 15.6 million, respectively, of our revenues were earned for contracts where revenue is recognized over time.

For the nine months ended September 30, 2020, $ 0.6 million of our revenues were earned for contracts where revenue is recognized at a point in time.

For the three and nine months ended September 30, 2019, $ 0.1 million and $ 0.3 million, respectively, in revenues were earned for contracts where revenue is recognized at a point in time.

As of September 30, 2020, notes payable consisted of the following:

September 30,

For the three months ended March 31, 2021 and 2020, $ 8.3 million and $ 6.8 million, respectively, of our revenues were earned for contracts where revenue is recognized over time.

For the three months ended March 31, 2021 and 2020, $ 9 thousand and $ 187 thousand, respectively, of our revenues were earned for contracts where revenue is recognized at a point in time.

As of March 31, 2021, notes payable consisted of the following:

2021 December 31,

Secured financing

Notes payable - due to affiliates, unsecured, net of $ 27 thousand discount and unamortized deferred financing charges as of December 31, 2019

Notes payable - due to affiliates, unsecured 5,500 5,500

Unsecured financing

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$ 5,596 $ 5,505

As of September 30, 2020, net maturities and/or curtailment obligations of all borrowings are as follows:

Secured financing

As of December 31, 2019, the Company had two secured loans related to Comstock Environmental.

The first loan was used to finance the acquisition of Comstock Environmental and carried a fixed interest rate of 6.5 % with a maturity date of October 17, 2022.

At December 31, 2019, this financing had an outstanding balance of $ 667 thousand.

This loan was retired during the three months ended June 30, 2020.

Comstock Environmental had an additional secured loan with an outstanding balance of $ 27 thousand as of December 31, 2019 that was used to fund the purchase of an asset used in the business.

This loan was retired during the three months ended March 31, 2020.

These financings were secured by the assets of Comstock Environmental and guaranteed by our Chief Executive Officer.

As of March 31, 2021, net maturities and/or curtailment obligations of all borrowings are as follows:

Unsecured financing

As of December 31, 2019, the Company had one unsecured seller-financed promissory note with an outstanding balance of $ 595 thousand.

This financing carried an annual interest rate of LIBOR plus 3 % and had a maturity date of July 17, 2022.

This loan had $ 50 thousand due on the third and fourth loan anniversary dates with the remainder due at maturity.

At December 31, 2019, the interest rate was 5.0 %.

During the three months ended September 30, 2020 the Company retired this promissory note.

In addition, during the nine months ended September 30, 2020, the Company financed the Director’s and Officer’s insurance policy with a one year term loan.

As of September 30, 2020, the balance on this loan was $ 22 thousand.

The Company finances its professional liability insurance policies that renew on March 1 of each year under a premium finance agreement payable within a one year term.

At December 31, 2020, the balance on this loan was $ 5 thousand and the interest rate was 3.3 %.

As of March 31, 2021, the balance on this loan was $ 96 thousand and the interest rate was 2.4 %.

Notes payable, due to affiliates – unsecured

Comstock Growth Fund

On October 17, 2014, the Company entered into an unsecured promissory note with Comstock Growth Fund ("CGF") whereby CGF made a loan to the Company in the initial principal amount of $ 10.0 million and a maximum amount available for borrowing of up to $ 20.0 million with a three-year term.

On December 18, 2014, the loan agreement was amended and restated to provide for a maximum capacity of $ 25 million.

On May 23, 2018, the Company entered into a Membership Interest Exchange and Subscription Agreement (the “Membership Exchange Agreement”), together with a revised promissory note agreement, in which a note (“CGF Note”) with an outstanding principal and accrued interest balance of $ 7.7 million was exchanged for 1,482,300 shares of the Company’s Series C Non-Convertible Preferred Stock, par value $ 0.01 per share and a stated liquidation

value of $ 5.00 per share (the “Series C Preferred Stock”), issued by the Company to Comstock Development Services, LC ("CDS").

The Company exchanged the preferred equity for 91.5 % of CDS membership interest in the CGF promissory note.

Concurrently, the face amount of the CGF promissory note was reduced to $ 5.7 million as of the Effective Date.

The CGF Note bore interest at a fixed rate of 10 % per annum.

Interest payments were made monthly in arrears.

The Company is the administrative manager of CGF but does not own any membership interests.

The Company had approximately $ 5.7 million of outstanding borrowings and accrued interest under the CGF Note, net of discounts, as of December 31, 2019.

The maturity date for the CGF Note was April 16, 2020.

The CGF Note was repaid prior to maturity during the nine months ended September 30, 2020.

Revolving Capital Line of Credit

On March 19, 2020, the Company entered into a Revolving Capital Line of Credit Agreement (the “Loan Documents”) with CDS, pursuant to which the Company secured a $ 10.0 million capital line of credit (the “Revolver”).

On March 19, 2020, the Company entered into a Revolving Capital Line of Credit Agreement (the “Loan Documents”) with CP Real Estate Services, LC (formerly known as Comstock Development Services, LC) (“CDS”), pursuant to which the Company secured a $ 10.0 million capital line of credit (the “Revolver”).

Under the terms of the Loan Documents, the Revolver provides for an initial variable interest rate of the Wall Street Journal Prime Rate plus 1.00 % per annum on advances made under the Revolver, payable monthly in arrears.

The five-year term facility allows for interim draws that carry a maturity date of 12 months from the initial date of the disbursement unless a longer initial term is agreed to by CDS.

The five-year term facility allows for interim draws that carry a maturity date of 12

months from the initial date of the disbursement unless a longer initial term is agreed to by CDS.

On March 27, 2020, the Company borrowed $ 5.5 million under the Revolver.

The $ 5.5 million borrowed has a maturity date of April 30, 2023.

For the three and nine months ended September 30, 2020, the Company made interest payments for all debt facilities of $ 0.1 million and $ 0.3 million, respectively.

For the three and nine months ended September 30, 2019, the Company made interest payments for all debt facilities of $ 0.2 million and $ 0.4 million, respectively.

During the nine months ended September 30, 2020, the Company retired the $ 5.7 million of outstanding borrowings for the CGF Note and did no t make principal payments for the Revolver.

During the three and nine months ended September 30, 2019, the Company did no t make principal payments for the CGF Note.

Comstock Growth Fund

On October 17, 2014, the Company entered into an unsecured promissory note with Comstock Growth Fund (“CGF”) whereby CGF made a loan to the Company in the initial principal amount of $ 10.0 million and a maximum amount available for borrowing of up to $ 20.0 million with a three year term.

On December 18, 2014, the loan agreement was amended and restated to provide for a maximum capacity of $ 25 million.

The Company exchanged the preferred equity for 91.5 % of CDS membership interest in the CGF promissory note.

Concurrently, the face amount of the CGF promissory note was reduced to $ 5.7 million.

The CGF Note was repaid prior to maturity during the year ended December 31, 2020.

For the three months ended March 31, 2021 and 2020, the Company made interest payments for all debt facilities of $ 58 thousand and $ 143 thousand, respectively.

During the three months ended March 31, 2021, the Company did no t make principal payments for the Revolver.

During the three months ended March 31, 2020, the Company retired $ 5.7 million of outstanding borrowings for the CGF Note.

CORONAVIRUS AID RELIEF AND ECONOMIC SECURITY ACT

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Based on the term and conditions of the loan agreement, the term of the PPP loan is two years with an annual interest rate of 1% and principal and interest payments will be deferred for the first six-months of the loan term, which has been updated according to the Paycheck Protection Program Flexibility Act of 2020 (“Flexibility Act”).

In June 2020, the Flexibility Act was signed into law, which amended the CARES Act.

The Flexibility Act changed key provisions of the PPP, including, but not limited to, (i) provisions relating to the maturity of PPP loans, (ii) the deferral period covering of PPP loan payments and (iii) the process for measurement of loan forgiveness.

More specifically, the Flexibility Act provides a minimum maturity of five years for all PPP loans made on or after the date of the enactment of the Flexibility Act (“June 5, 2020”) and permits lenders and borrowers to extend the maturity date of earlier PPP loans by mutual agreement.

As of the date of this filing, the Company has not approached the Lender to request an extension of the current maturity date from two years to five years.

The Flexibility Act also provides that if a borrower does not apply for forgiveness of a loan within 10 months after the last day of the measurement period (“covered period”), the PPP loan is no longer deferred and the borrower must begin paying principal and interest.

Therefore, the Company’s deferral period for principal and interest payments was updated from six-months according to the terms and conditions of the loan agreement to ten months.

In addition, the Flexibility Act extended the length of the covered period from eight weeks to 24 weeks from receipt of proceeds, while allowing borrowers that received PPP loans before June 5, 2020 to determine, at their sole discretion, a covered period of either eight weeks or 24-weeks.

After reviewing the applicable terms and conditions of the Flexibility Act, the Company has elected to extend the length of the covered period from the lesser of (i) period whereby qualified expenses equal loan proceeds or (ii) 24 weeks.

The Company has performed initial calculations for the PPP loan forgiveness according to the terms and conditions of the SBA’s Loan

Forgiveness Application (Revised June 16, 2020) and, based on such calculations, expects that the PPP loan will be forgiven in full over a period less than 24 weeks.

In addition, the Company has determined that it is probable the Company will meet all the conditions of the PPP loan forgiveness.

As such, the Company has determined that the PPP loan should be accounted for as a government grant which analogizes with International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance.

Under the provisions of IAS 20, “a forgivable loan from government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.” IAS 20 does not define “reasonable assurance”;

however, based on certain interpretations, it is analogous to “probable” under GAAP under FASB ASC 450-20-20, which is the definition the Company has applied to its expectations of the PPP loan forgiveness.

In addition, in accordance with the provisions of IAS 20, government grants shall be recognized in profit or loss on a systematic basis over the periods in which the Company recognizes costs for which the grant is intended to compensate (i.e.

qualified expenses).

Therefore, the Company recognized PPP funding as a contra-expense during the periods when qualified expenses were incurred.

The balance and activity related to the PPP loan is as follows as of September 30, 2020.

September 30, 2020

PPP loan proceeds $ 1,954

Qualified expenses eligible for forgiveness ( 1,954 )

PPP loan balance $ —

The Company plans to submit the PPP loan forgiveness application in the near term.

In accordance with the terms and conditions under the Flexibility Act, the lender has 60 days from receipt of the completed application to issue a decision to the SBA.

If the lender determines that the borrower is entitled to forgiveness of some or all of the amount applied for under the statute and applicable regulations, the lender must request payment from the SBA at the time the lender issues its decision to the SBA.

The SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, not later than 90 days after the lender issues its decision to the SBA.

Although the Company believes it is probable that the PPP loan will be forgiven, the Company cannot currently provide any objective assurance that it will obtain forgiveness in whole or in part.

The amount the Company borrowed is within the "safe-harbor" limitations of the SBA.

The SBA has published Frequently Asked Question 46 stating that if the principal amount of the loan is less than $2 million, the borrower "will be deemed to have made the required certification concerning the necessity of the loan request in good faith".

Pursuant to the Flexibility Act, the Company’s PPP loan agreement will be amended in the event that no amount or less than all of the PPP loan is forgiven.

In addition, starting in August 2021, the Company will be required to make principal and interest payments totaling $ 82,671 per month or an adjustment amount based on the loan amendment over the remaining term of the PPP loan until such time the loan is fully settled.

The Company may prepay the PPP loan at any time without penalty and the loan agreement evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults, or breaches of representations and warranties, or other provisions of the loan agreement.

The occurrence of an event of default may trigger the immediate repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or the Lender filing suit and obtaining a judgment against the Company.

The Company recognized PPP funding as a contra-expense during the three months ended June 30, 2020, when qualified expenses were incurred.

The Lender received notice that the PPP Loan was fully forgiven by the SBA in April 2021.

Deferral of Social Security Tax Payments

Pursuant to sections 2302(a)(1) and (a)(2) of the CARES Act, the Company has elected to defer payments of its share of Social Security tax due during the "payroll tax deferral period".

The payroll tax deferral period began on August 1, 2020 and ends December 31, 2020.

At September 30, 2020 the total amount of such deferral was $ 66 thousand and is reflected within 'Accrued personnel costs' on our consolidated balance sheet.

The payroll tax deferral period began on August 1, 2020 and ended December 31, 2020.

At March 31, 2021 the total amount of such deferral was $ 193 thousand and is reflected within 'Accrued personnel costs' on our consolidated balance sheet.

Per the terms of the deferral program, 50% of the deferred amount is due on December 31, 2021, and the remaining 50% is due on December 31, 2022 at 0% interest.

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The following table summarizes the carrying amount and the corresponding fair value of fixed and floating rate debt.

September 30,

2021 December 31,

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Critical inputs to fair value estimates include various level 3 inputs such as valuations of the underlying real estate assets and borrowings, which incorporate investment-specific assumptions such as discount rates, capitalization rates, rental and expense growth rates, and asset-specific market borrowing rates.

As of September 30, 2020 and December 31, 2019, investments in the real estate ventures at fair value were approximately $ 7.0 million and $ 8.4 million, respectively.

As of March 31, 2021 and December 31, 2020, investments in the real estate ventures at fair value were approximately $ 4.7 million and $ 6.3 million, respectively.

Non-Recurring Fair Value Measurements

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RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANS

During the three and nine months ended September 30, 2020, the Company issued no stock options.

During the three and nine months ended September 30, 2020, the Company issued 14,500 and 644,852 restricted stock awards to employees, respectively.

During the three and nine months ended September 30, 2019, the Company issued 114,431 stock options and 12,085 and 254,336 restricted stock awards to employees, respectively.

During the three months ended March 31, 2021, the Company issued no stock options and 165,809 restricted stock awards to employees.

During the three months ended March 31, 2020, the Company issued no stock options and 630,352 restricted stock awards to employees.

Stock-based compensation expense associated with restricted stock and stock options is recognized based on the grant date fair value of the award over its vesting period.

The following table reflects the statements of operations line items for stock-based compensation for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Cost of sales - Real Estate Services

$ — $ 23 $ — $ 61

Expense - General and administrative

177 111 594 279

$ 177 $ 134 $ 594 $ 340

Three Months Ended March 31,

General and administrative - real estate services $ 31 $ 22

General and administrative - asset management 153 191

Under net settlement procedures currently applicable to our outstanding restricted stock awards for employees, upon each settlement date and election by the employees, restricted stock awards are withheld to cover the required withholding tax, which is based on the value of the restricted stock award on the settlement date as determined by the closing price of our Class A common stock on the trading day immediately preceding the applicable settlement date.

The remaining amounts are delivered to the recipient as shares of our Class A common stock.

As of September 30, 2020, the weighted-average remaining contractual term of unexercised stock options was 7 years.

As of September 30, 2020 and December 31, 2019, there was $ 1.3 million and $ 0.6 million, respectively, of unrecognized compensation cost related to stock options and restricted stock awards.

As of March 31, 2021, the weighted-average remaining contractual term of unexercised stock options was 5 years.

As of March 31, 2021 and December 31, 2020, there was $ 1.4 million and $ 1.1 million, respectively, of unrecognized compensation cost related to stock options and restricted stock awards.

The Company intends to issue new shares of its Class A common stock upon vesting of restricted stock grants or the exercise of stock options.

INCOME (LOSS) PER SHARE

The weighted average shares and share equivalents used to calculate basic and diluted (loss) income from continuing operations for the three and nine months ended September 30, 2020 and 2019, and discontinued operations per share for the three and nine months ended September 30, 2019, are presented in the accompanying consolidated statements of operations.

Restricted stock awards, stock options and warrants for the three and nine months ended September 30, 2020 and 2019 are included in the diluted income (loss) per share calculation using the treasury stock method and average market prices during the periods, unless their inclusion would be anti-dilutive.

The following share equivalents have been excluded from the continuing operations dilutive share computation for the three and nine months ended September 30, 2020 and 2019 as their inclusion would be anti-dilutive.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Restricted stock awards

Stock options

118 295 159 268

449 616 589 575

567 1,059 751 991

The following share equivalents have been excluded from the discontinued operations dilutive share computation for the three and nine months ended September 30, 2019 as their inclusion would be anti-dilutive.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The weighted average shares and share equivalents used to calculate basic and diluted (loss) income from continuing operations for the three months ended March 31, 2021 and 2020 are presented in the accompanying consolidated statements of operations.

Restricted stock awards, stock options and warrants for the three months ended March 31, 2021 and 2020 are included in the diluted income (loss) per share calculation using the treasury stock method and average market prices during the periods, unless their inclusion would be anti-dilutive.

The following share equivalents have been excluded from the continuing operations dilutive share computation for the three months ended March 31, 2021 and 2020 as their inclusion would be anti-dilutive:

Three Months Ended March 31,

Restricted stock awards

Stock options

— 1,059 — 991

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

Consolidated loss in statement of operations

Included within the Company’s net loss from discontinued operations, net of tax for the three and nine months ended September 30, 2019 are the activities of real estate entities that were determined to be VIEs.

These entities have been established to own and operate real estate property and were deemed VIEs primarily based on the fact that the equity investment at risk is not sufficient to permit the entities to finance their activities without additional financial support.

The Company determined that it was the primary beneficiary of these VIEs as a result of the Company’s majority voting rights and complete operational control of these entities.

Prior to April 30, 2019, the Company evaluated Investors X and determined that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support and the Company was the primary beneficiary of the VIE as a result of its complete operational control of the activities that most significantly impact the economic performance and its obligation to absorb losses or receive benefits.

As a result of the April 30, 2019 Master Transfer Agreement (“MTA”) entered into between the Company and CDS, the Company determined that Investors X was considered held for sale effective April 30, 2019 and Investors X activities were reclassified to discontinued operations in the accompanying Consolidated Financial Statements.

See Note 15 - Related Party Transactions for more information.

RELATED PARTY TRANSACTIONS

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The Company previously leased its corporate headquarters from an affiliate controlled and owned by our CEO and family.

Future minimum lease payments under this lease, which expires on October 31, 2020, are $ 52 thousand.

For the three and nine months ended September 30, 2020, total rental payments made were $ 155 thousand and $ 459 thousand, respectively.

For the three and nine months ended September 30, 2019, total rental payments made were $ 153 thousand and $ 452 thousand, respectively.

On November 1, 2020, the Company relocated its corporate headquarters to a new office space pursuant to a lease agreement with an affiliate controlled and owned by our Chief Executive Officer and family, as landlord.

See Note 20 - Subsequent Events for further discussion.

Asset Management Agreement

On March 30, 2018, CAM, an entity wholly owned by the Company, entered into that AMA with CDS.

On November 1, 2020, the Company relocated its corporate headquarters to a new office space pursuant to a ten year lease agreement with an affiliate controlled and owned by our Chief Executive Officer and family, as landlord.

Future minimum lease payments under this lease, which expires on October 31, 2030, is $ 9.6 million.

The Company is also responsible for the pro-rata share of common area maintenance costs to the landlord.

For the three months ended March 31, 2021 and 2020, total rental payments made were $ 298 thousand and $ 142 thousand, respectively.

This is reflected within 'Direct costs - asset management' as it is a reimbursable cost under the 2019 AMA.

Asset Management Agreement ("AMA")

On March 30, 2018, CAM, an entity wholly owned by the Company, entered into the AMA with CDS.

The effective date of the AMA is January 2, 2018.

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Pursuant to the AMA, CDS will pay CAM an annual cost-plus fee (the “Annual Fee”) in an aggregate amount equal to the sum of (i) the employment expenses of personnel dedicated to providing services to the CDS Portfolio pursuant to the AMA, (ii) the costs and expenses of the Company related to maintaining the listing of its shares on a securities exchange and complying with regulatory and reporting obligations as a public company, and (iii) a fixed annual payment of $ 1,000,000 .

2019 Amended Asset Management Agreement

As of March 31, 2021 and December 31, 2020, the Company had $ 4.9 million and $ 3.6 million, respectively, of receivables from related parties, primarily related to the 2019 AMA.

The Company does not record an allowance for doubtful accounts due to the related party nature of the receivables.

2019 Amended Asset Management Agreement ("2019 AMA")

On April 30, 2019, CAM entered into the 2019 AMA with CDS, which amends and restates in its entirety the AMA.

Pursuant to the 2019 AMA, CDS will engage CAM to manage and administer the Anchor Portfolio and the day to-day operations of CDS and each property-owning subsidiary of CDS (collectively, the “CDS Entities”).

Pursuant to the 2019 AMA, CDS will engage CAM to manage and administer the Anchor Portfolio and the day to-day operations

of CDS and each property-owning subsidiary of CDS (collectively, the “CDS Entities”).

The “Anchor Portfolio” consists of a majority of the properties we currently manage.

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The Company receives a flat construction management fee for each engagement under a work authorization based upon the construction management or supervision fee set forth in the applicable tenant’s lease, which fee is generally 1 % to 4 % of the total costs (or total hard costs) of construction of the tenant’s improvements in its premises, or as otherwise agreed to by the parties.

Business Management Agreements

Business Management Agreement

On April 30, 2019, CAM entered into a Business Management Agreement (the “BMA”) with Investors X, whereby CAM will provide Investors X with asset and professional services related to the wind down of the Company’s divested homebuilding operations and the continuation of services related to the Company’s divested land development activities.

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On March 27, 2020 the Company borrowed $ 5.5 million under the Revolver.

On April 10, 2020, the capital provided to the Company by the Revolver was utilized to retire all of the Company’s 10 % corporate indebtedness maturing in 2020 owed to CGF.

On April 10, 2020, the capital provided to the Company by the Revolver was utilized to retire all of the Company’s 10 % corporate indebtedness owed to CGF.

See Note 6 - Debt for further description of the CGF Private Placement and the Revolver.

1 unchanged sentence

The following table details the revenue earned from related parties:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Revenue by customer

1 unchanged sentence

$ 6,939 $ 5,484

1,373 1,007 4,730 2,430

Total revenue $ 8,317 $ 6,966

UNCONSOLIDATED JOINT VENTURE

The investment in the unconsolidated joint venture was $ 11 thousand and $ 125 thousand as of September 30, 2020 and December 31, 2019, respectively, and is included within ‘Prepaid and other assets, net’ in the accompanying Consolidated Balance Sheets.

The Company’s share of earnings for the three and nine months ended September 30, 2020 from this unconsolidated joint venture of $ 1 thousand and $ 16 thousand, respectively, is included in ‘Other income, net’ in the accompanying Consolidated Statement of Operations.

During the three and nine months ended September 30, 2020, the Company collected and recorded distributions of 22 thousand and $ 130 thousand from this joint venture as a return on investment.

The Company’s share of earnings for the three and nine months ended September 30, 2019 from this unconsolidated joint venture of $ 48 thousand and $ 115 thousand, respectively, is included in ‘Other income, net’ in the accompanying Consolidated Statement of Operations.

During the three and nine months ended September 30, 2019, the Company collected and recorded distributions of 10 thousand and 124 thousand, respectively, from this joint venture as a return on investment.

Summarized financial information for the unconsolidated joint venture is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Statement of Operations:

Total net revenue

$ 30 $ 122 $ 125 $ 318

Total expenses

Net income $ 2 $ 95 $ 31 $ 230

Comstock Holding Companies, Inc.

share of net income $ 1 $ 48 $ 16 $ 115

For the three and nine months ended September 30, 2020, the Company recognized deferred income tax expense of $ 1 thousand and $ 13 thousand, respectively.

For the three and nine months ended September 30, 2019, the Company recognized no deferred income tax expense from continuing operations due to the valuation allowance.

The effective tax rate for the nine months ended September 30, 2020 and 2019 is ( 0.11 )% and 19.99 %, respectively.

For the three months ended March 31, 2021 and 2020, the Company recognized deferred income tax expense of $ 2 thousand and $ 1 thousand, respectively.

The effective tax rate for the three months ended March 31, 2021 and 2020 is 0.59 % and ( 5.12 )%, respectively.

The Company currently has approximately $ 146 million in federal and state NOLs.

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Under Internal Revenue Code Section 382 (“Section 382”), if a change in ownership is triggered, the Company’s NOL assets and possibly certain other deferred tax assets may be impaired.

The Company assesses uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Income Taxes .

The Company has no t recorded any accruals related to uncertain tax positions as of September 30, 2020 and 2019.

The Company assesses uncertain tax positions and has no t recorded any accruals related to uncertain tax positions as of March 31, 2021 and 2020.

and state income tax returns in jurisdictions with varying statutes of limitations.

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SEGMENT DISCLOSURES

Subsequent to July 23, 2019, we operate our business through two segments:

We operate our business through two segments:

Asset Management, and Real Estate Services.

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The Real Estate Services segment operates in the Mid-Atlantic Region.

The following table includes the Company’s two reportable segments of Asset Management and Real Estate Services, excluding discontinued operations, for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, 2020

The following table includes the Company’s two reportable segments of Asset Management and Real Estate Services, excluding discontinued operations, for the three months ended March 31, 2021 and 2020.

Three Months Ended March 31, 2021

Gross revenue

3 unchanged sentences

23,778 3,942 27,720

Three Months Ended September 30, 2019

Three Months Ended March 31, 2020

Gross revenue

3 unchanged sentences

19,661 3,129 22,790

Nine Months Ended September 30, 2020

Gross revenue $ 15,466 $ 5,294 $ 20,760

Gross profit 2,551 2,185 4,736

Net income 1,112 479 1,591

Total assets 14,687 3,681 18,368

Nine Months Ended September 30, 2019

Gross revenue $ 13,326 $ 2,573 $ 15,899

Gross profit 1,522 308 1,830

Net income (loss) 364 ( 547 ) ( 183 )

Total assets 12,131 3,784 15,915

DISCONTINUED OPERATIONS

On April 30, 2019, the Company entered into the MTA with CDS, an entity wholly owned by Christopher Clemente, the Chief Executive Officer of the Company, and FR54, LC (“FR54”), an entity also controlled by Mr.

Clemente, that sets forth certain transactions to complete the Company’s previously announced exit from the homebuilding and land development business in favor of a migration to an asset management model.

Refer to Note 14 – Consolidation of Variable Interest Entities for further discussion regarding the accounting related to discontinued operations.

The Company did no t carry any assets or liabilities from discontinued operations on the consolidated balance sheet as of September 30, 2020 and December 31, 2019.

The operating results of the discontinued operations that are reflected on the consolidated statement of operations within the net income (loss) from discontinued operations are as follows:

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Revenue—homebuilding

$ 1,305 $ 14,919

Total revenue

Cost of sales—homebuilding

Sales and marketing

General and administrative

Operating (loss)

( 66 ) ( 273 )

Income tax expense

Net (loss) from discontinued operations

( 66 ) ( 283 )

Net income attributable to non-controlling interests

Net (loss) attributable to Comstock Holding Companies, Inc.

$ ( 66 ) $ ( 596 )

SUBSEQUENT EVENTS

On October 31, 2020, the Company’s then-current lease for its corporate headquarters in Reston, Virginia expired following a one-month extension of the lease term.

On November 1, 2020, the Company agreed to a new lease to relocate its corporate headquarters to new office space in Reston, Virginia for a ten year term.

Commencing on November 1, 2020, the Company is responsible for the new monthly base rent payment plus the monthly payment of the Company’s proportionate share of operating expenses, real estate taxes and insurance for the office space, which are reimbursable under the 2019 AMA.

COMSTOCK HOLDING COMPANIES, INC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements