What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-21 compared with 2023-03-29 · 150 added, 119 removed, 655 unchanged (29% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets at December 31, 2022 and 2021 ...........................................................................................

Consolidated Statements of Operations for the Years Ended December 31, 2022 an d 2021 ..............................................

Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 ..............................................

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2022 and 2021 ...........

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As described further in Note 12 to the consolidated financial statements, the Company assesses available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing deferred tax assets.

The Company has historically recorded valuation allowances for certain tax attributes and other deferred tax assets.

During 2022, after weighing all available positive and negative evidence, the Company released $1.4 million of the valuation allowance as management deemed estimated future taxable income to be sufficient to realize additional deferred tax assets related to tax credit carryforwards and net operating losses.

The Company continues to record valuation allowances against deferred tax assets when it is considered more likely than not that the deferred tax asset will not be realized prior to expiration.

During 2023, after weighing all available positive and negative evidence, the Company released $1.5 million of the valuation allowance as management deemed estimated future taxable income to be sufficient to realize additional deferred tax assets related to net operating loss and tax credit carryforwards.

The principal consideration for our determination that the realizability of deferred tax assets is a critical audit matter is that the estimate of future taxable income is an accounting estimate subject to a high level of estimation uncertainty.

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• We obtained an understanding of the design and tested implementation of controls relating to the evaluation of the realizability of deferred tax assets and the estimation of future taxable income;

• We evaluated management’s assumptions regarding the Company’s estimated future taxable income, including tracing to underlying supporting documents and future development plans

• We evaluated management’s assumptions regarding the Company’s estimated future taxable income, including comparison of previous forecasts to actual results and obtained support for incremental changes applied to the prior forecast;

• With the assistance of our income tax specialists, we evaluated the nature of each of the deferred tax assets, including their expiration dates and their projected utilization when compared to projections of future taxable income.

11 unchanged sentences

Prepaid expenses and other current assets 353 264

Current assets held for sale — 2,313

Total current assets 24,386 15,781

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Deferred income taxes, net 10,885 11,355

Deferred compensation plan assets 53 —

Other assets 37 15

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Current operating lease liabilities 854 791

Current liabilities held for sale — 1,194

Total current liabilities 6,373 6,492

Credit facility - due to affiliates — 5,500

Deferred compensation plan liabilities 77 —

Operating lease liabilities 6,273 7,127

5 unchanged sentences

20,000 shares authorized;

none issued or outstanding as of December 31, 2022;

3,441 issued and outstanding as of December 31, 2021

none issued or outstanding as of December 31, 2023 and 2022

Class A common stock;

25 unchanged sentences

Other income (expense):

Interest expense ( 222 ) ( 235 )

Interest income (expense), net 96 ( 222 )

Gain (loss) on real estate ventures ( 1,187 ) 121

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Issuance of common stock, net of shares withheld for taxes — — 235 2 — — ( 570 ) — — ( 568 )

Redemption of Series C preferred stock ( 3,441 ) ( 6,765 ) 1,000 10 — — 709 — 2,046 ( 4,000 )

Stock-based compensation — — — — — — 779 — — 779

2 unchanged sentences

Issuance of common stock, net of shares withheld for taxes — — 188 1 — — ( 391 ) — — ( 390 )

Redemption of Series C preferred stock ( 3,441 ) ( 6,765 ) 1,000 10 — — 709 — 2,046 ( 4,000 )

Stock-based compensation — — — — — — 968 — — 968

14 unchanged sentences

Deferred income taxes 470 ( 55 )

Accrued interest income ( 48 ) —

(Gain) loss on disposal of fixed assets 9 —

(Gain) loss on deferred compensation plan 1 —

Changes in operating assets and liabilities:

3 unchanged sentences

Accounts payable and accrued liabilities 26 ( 41 )

Deferred compensation plan liabilities 75 —

Other assets and liabilities 44 192

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Distributions from real estate ventures 335 220

Purchase of deferred compensation plan securities ( 52 ) —

Purchase of fixed assets/leasehold improvements/intangibles ( 247 ) ( 626 )

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Payments under credit facility - due to affiliates — $ ( 5,500 )

Loan proceeds — 121

Loan payments — ( 126 )

Redemption of Series C Preferred Stock — ( 4,000 )

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Supplemental Cash Flow Information

Cash paid for interest $ 222 $ 234

Cash paid for income tax, net 92 $ 8

Net cash paid (received) for:

Interest $ ( 48 ) $ 222

Income taxes 26 $ 92

Supplemental Disclosure of Non-Cash Investing and Financing Activities

1 unchanged sentence

Right of use assets and lease liabilities at commencement — 1,224

Accrued liability settled through issuance of common stock — 28

See accompanying Notes to Consolidated Financial Statements.

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Comstock Holding Companies, Inc.

("Comstock" or the "Company"), founded in 1985 and incorporated in the state of Delaware in 2004, is a leading real estate asset manager and developer of mixed-use and transit-oriented properties in the Washington, D.C.

("Comstock" or the "Company"), founded in 1985 and incorporated in the state of Delaware in 2004, is a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C.

metropolitan area.

On March 31, 2022, the Company completed the sale of Comstock Environmental Services, LLC ("CES"), a wholly owned subsidiary, to August Mack Environmental, Inc.

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Operating segments are defined as components of a business that can earn revenue and incur expenses for which discrete financial information is evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to decide how to allocate resources and assess performance.

Prior to June 30, 2021, the Company operated its business through two segments:

Asset Management and Real Estate Services.

Given the classification of CES as a discontinued operation, the Company now manages its business as one reportable operating segment.

The Company's CODM, its chief executive officer, primarily reviews consolidated results of operations to assess performance and make decisions on how to allocate resources, therefore the Company views its operations and manages its business as one reportable operating segment.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash and short-term investments with maturities of three months or less when purchased.

The Company’s cash and cash equivalents include holdings in checking and overnight sweep investment accounts, all of which have daily maturities.

The carrying amount of cash equivalents approximates fair value due to the short-term maturity of these investments.

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Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable from related parties.

The Company invests a significant portion of its excess cash position into U.S.

Treasury-based funds through an automated overnight sweep investment account program administered by a brokerage firm affiliated with the bank at which the majority of our cash deposits are held.

The Company maintains cash and cash equivalents in financial institutions that management believes to be financially sound and with minimal credit risk.

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The Company does a significant amount of business with related parties, demonstrated by related parties accounting for 97.4 % of its consolidated revenue and 90.5 % of its accounts receivable in 2023.

The Company generally does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of its related party entities.

The Company generally does not obtain collateral or other security to support financial instruments subject to credit risk and monitors the credit standing of its related party entities.

Investments in Real Estate Ventures

The Company invests in certain real estate ventures that qualify for equity method accounting treatment.

The Company holds investments in certain real estate ventures that qualify for equity method accounting treatment.

Based on elections made at the investment date, the Company has elected to record certain equity method investments at fair value.

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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 a right-of-use ("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.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments (e.g.

rent) over the lease term beginning at the commencement date.

The operating lease assets are adjusted for lease incentives, deferred rent, and initial direct costs, if incurred.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments (e.g., rent) over the lease term beginning at the commencement date.

The operating lease

assets are adjusted for lease incentives, deferred rent, and initial direct costs, if incurred.

The related lease expense is recognized on a straight-line basis over the lease term.

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therefore, an incremental borrowing rate is used that is based on information available at the lease commencement date in determining the present value of future minimum lease payments.

The Company typically looks to the floating rate of interest charged under the Company's existing credit facility at the time of lease commencement when determining the incremental borrowing rate.

For the purposes of recognizing operating lease assets and liabilities, the Company has elected the practical expedient to not recognize an asset or lease liability for short-term leases, which are leases with a term of twelve months or less.

The Company typically looks to floating interest rates charged under existing arrangements or current market interest rates at the time of lease commencement when determining the incremental borrowing rate.

For the purpose of recognizing operating lease assets and liabilities, the Company has elected the practical expedient to not recognize an asset or lease liability for short-term leases, which are leases with a term of twelve months or less.

The lease term is defined as the non-cancelable portion of the lease term plus any periods covered by an option to extend the lease if it is reasonably certain that the option will be exercised.

The Company’s revenue streams, revenue recognition policies, and cost of revenue details are summarized by the following:

Asset Management/Property Management

Asset management pricing includes a cost-plus management fee or a market-rate fee form of variable consideration, and the Company earns whichever is higher.

Asset Management/Property Management/Parking

Asset management pricing associated with the 2022 AMA includes a cost-plus management fee or a market-rate fee form of variable consideration, and the Company earns whichever is higher.

Revenue for other asset management contracts is generally in the form of a monthly fee based upon property-level cash receipts or leasing agreements executed at the managed properties.

Property Management 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.

In addition, property management revenue includes reimbursable expenses such as payroll and other employee costs for those performing services at managed properties.

Asset and property management services represent a series of distinct daily services rendered over time.

The revenue for asset and property management services is presented gross for any services provided by the Company's employees and presented net of third-party reimbursements in instances where the Company does not control third-party services delivered to the client.

Parking management pricing is generally in the form of a fixed monthly management fee to include additional fixed fees for accounting, remote monitoring, ticketing, insurance, and various other site-level services.

In addition, property management and parking revenue includes reimbursable expenses such as payroll and other employee costs for those performing services at managed properties.

Asset management, property management, and parking services represent a series of distinct daily services rendered over time.

The revenue these services is presented gross for any services provided by the Company's employees and presented net of third-party reimbursements in instances where the Company does not control third-party services delivered to the client.

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.

Capital Markets

Compensation for commercial mortgage and structured financing services is received via fees paid upon successful commercial financing from third-party lenders.

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Compensation for providing strategic advice and execution for owners, investors, and occupiers is received in the form of a commission.

The commission is paid upon signing of the lease by the tenant, therefore the Company's performance obligation is satisfied at the time of the contractual event, where there is a present right to payment.

Project & Development Services

The commission is paid upon signing of the lease by the tenant, therefore the Company's performance obligation is satisfied at the time of the contractual event, when there is a present right to payment.

Construction & Development

Fees for project and development services for owners and occupiers of real estate are typically variable and based on a percentage of the total project cost.

Project and development services represent a series of performance obligations delivered over time, therefore the Company recognizes revenue over time for these services accordingly.

Project and development services represent a series of performance obligations delivered over time;

therefore, the Company recognizes revenue over time for these services accordingly.

Incentive Fees

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Due to the subjective and potentially volatile nature of this variable consideration, revenue is only recognized on Incentive Fees for each managed asset when 1) any material uncertainties associated with the valuation of real estate assets that drive Incentive Fees are substantially resolved and 2) it is probable that a significant reversal in the amount of related cumulative Incentive Fee revenue recognized will not occur.

As a result, the Company has only

recognized Incentive Fees at or near each asset's respective triggering event (as detailed in the 2022 AMA) when imputed profit can be reasonably calculated and relied upon to not materially change.

As a result, the Company only recognizes Incentive Fees at or near each asset's respective triggering event (as detailed in the 2022 AMA) when imputed profit can be reasonably calculated and relied upon to not materially change.

Cost of Revenue

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For awards with a performance-based vesting condition, the Company accrues stock-based compensation expense if it is probable that the performance condition will be achieved.

Interest Income

Interest income from our automated overnight "sweep account" program investments is recognized on an accrual basis.

Interest income is included in "interest income (expense), net" on our consolidated statements of operations.

Income taxes are accounted for under the asset and liability method in accordance with ASC 740.

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Common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock unit awards.

Diluted net income (loss) per common share is calculated by dividing net income (loss) attributable to common stockholders by the fully diluted weighted-average number of common

shares outstanding during the period.

Diluted net income (loss) per common share is calculated by dividing net income (loss) attributable to common stockholders by the fully diluted weighted-average number of common shares outstanding during the period.

The diluted weighted-average common shares outstanding amount includes the impact of common share equivalents, which are the incremental shares of common stock that would be issuable upon the hypothetical exercise of stock options and vesting of restricted stock unit awards.

The common stock equivalents are calculated using the treasury stock method and average market prices during the periods and are included in the diluted net income (loss) per share calculation unless their inclusion would be anti-dilutive.

Recent Accounting Pronouncements - Not Yet Adopted

Recent Accounting Pronouncements - Adopted

In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments—Credit Losses:

Measurement of Credit Losses on Financial Instruments .” This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on current expected credit losses ("CECL") rather than incurred losses.

The standard will become effective for the Company for financial statement periods beginning after December 15, 2022, and early adoption is permitted.

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

The Company adopted the standard effective January 1, 2023, and determined that adoption of the standard had no material impact on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements - Not Yet Adopted

In March 2023, the FASB issued ASU 2023-01, “ Leases (Topic 842) – Common Control Arrangements .” This guidance amends certain provisions of ASC 842, specifically those that apply to leasing arrangements between related parties under common control.

The standard will become effective for fiscal years beginning after December 15, 2023, and early adoption is permitted.

The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements and related disclosures.

In October 2023, the FASB issued ASU 2023-06, “ Disclosure Improvements – Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .” This guidance affects a wide variety of topics in the Codification.

The effective date for each amendment will be the date on which the removal of the respective related disclosures from Regulation S-X or Regulation S-K becomes effective.

Early adoption is prohibited.

The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280):

Improving Reportable Segment Disclosures .” This guidance is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

The standard requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

The standard also requires all annual disclosures currently required by ASC Topic 280 to be included in interim periods.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

” This guidance is a final standard on improvements to income tax disclosures and requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid.

This standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted and should be applied prospectively.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Discontinued Operations

6 unchanged sentences

Selling, general, and administrative — ( 403 )

Depreciation and amortization — ( 60 )

Other income (expense) — 87

Goodwill impairment — ( 1,702 )

Pre-tax income (loss) from discontinued operations — ( 418 )

3 unchanged sentences

These amounts reflect the finalized transaction costs and net working capital adjustments.

The cumulative goodwill impairment charge in 2021 was a result of the Company performing the quantitative two-step impairment test and determining that the carrying value of CES significantly exceeded its fair value at the time of measurement, which was estimated using Level 1 inputs.

The following table reconciles the carrying amounts of major classes of assets and liabilities of discontinued operations to total assets and liabilities of discontinued operations that were classified as held for sale in the consolidated balance sheet as of December 31, 2021 (in thousands):

Carrying amounts of major classes of assets held for sale:

Accounts receivable $ 2,075

Prepaid expenses and other current assets 129

Total current assets 2,204

Fixed assets, net 106

Intangible assets, net 3

Total assets $ 2,313

Carrying amounts of major classes of liabilities held for sale:

Accrued personnel costs $ 153

Accounts payable and accrued liabilities 1,015

Loans payable 26

Total liabilities $ 1,194

Fixed Assets & Intangible Assets

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Investments in Real Estate Ventures

The Company's unconsolidated investments in real estate ventures are recorded on the consolidated balance sheets at fair value.

The following table summarizes these investments (in thousands):

Description 2022 2021

Investors X $ 1,369 $ 1,484

The Hartford 953 1,211

BLVD Forty Four 2,135 2,007

BLVD Ansel 2,556 —

Total $ 7,013 $ 4,702

The Company’s maximum loss exposure on each of its unconsolidated investments in real estate ventures is equal to the carrying amount of the investment.

The following table summarizes the Company's investments in real estate ventures that are recorded on the consolidated balance sheets (in thousands):

Investment Ownership % 2023 2022 Accounting Method

Investors X 50.0 % $ 976 $ 1,369 Fair Value

The Hartford 2.5 % 610 953 Fair Value

BLVD Forty Four 5.0 % 1,837 2,135 Fair Value

BLVD Ansel 5.0 % 2,090 2,556 Fair Value

Total investments recorded at fair value 5,513 7,013

Comstock 41 100.0 % 1,564 — Consolidated

Total investments in real estate ventures $ 7,077 $ 7,013

The Company’s maximum loss exposure on each of its investments in real estate ventures is equal to the carrying amount of the investment.

Additional details on each investment are as follows:

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("Investors X"), an unconsolidated variable interest entity that owns the Company's residual homebuilding operations.

As of December 31, 2022, the residual cash flow primarily relates to anticipated proceeds from the sale of rezoned residential lots and returns of cash securing outstanding letters of credit and cash collateral posted for land development bonds covering work performed by subsidiaries owned by Investors X.

The cash will be released as bond release work associated with these projects is completed.

As of December 31, 2023, the residual cash flow primarily relates to anticipated proceeds from the sale of rezoned residential lots.

The cash will be released as land development work associated with these projects is completed and lots are sold.

(See Note 14 for additional information).

In December 2019, the Company entered into a joint venture with CP to acquire a Class-A office building adjacent to Clarendon Station on Metro’s Orange Line in Arlington County’s premier transit-oriented office market, the Rosslyn-Ballston Corridor.

In December 2019, the Company entered into a joint venture with CP to acquire The Hartford Building ("The Hartford"), a Class-A office building adjacent to Clarendon Station on Metro’s Orange Line in Arlington County’s premier transit-oriented office market, the Rosslyn-Ballston Corridor.

Built in 2003, the 211,000 square foot mixed-use Leadership in Energy and Environmental Design (“LEED”) GOLD building is being leased to multiple high-quality tenants.

In February 2020, the Company arranged for DivcoWest to purchase a majority ownership stake in The Hartford Building and secured a $ 87.0 million loan facility from MetLife.

As part of the transaction, the Company entered into asset management and property management agreements to manage the property.

As part of the transaction, the Company entered into asset management and property management agreements to manage the property in exchange for market-rate fees, for which it recognized $ 0.9 million of revenue for the year ended December 31, 2023.

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

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BLVD Forty Four

In October 2021, the Company entered into a joint venture with CP to acquire a stabilized 15-story, luxury high-rise apartment building in Rockville, Maryland that was built in 2015, which we rebranded as BLVD Forty Four.

Located one block from the Rockville Station on Metro's Red Line and in the heart of the I-270 Technology and Life Science Corridor, the 263 -unit mixed use property includes approximately 16,000 square feet of retail and a commercial parking garage.

In October 2021, the Company entered into a joint venture with CP to acquire a stabilized 15-story, luxury high-rise apartment building in Rockville, Maryland that was rebranded as BLVD Forty Four.

Located one block from the Rockville Station on Metro's Red Line and in the heart of the I-270 Technology and Life Science Corridor, the 263 -unit mixed use property built in 2015 includes approximately 16,000 square feet of retail and a commercial parking garage.

In connection with the transaction, the Company received an acquisition fee and is entitled to receive investment-related income and promote distributions in connection with its equity interest in the asset.

The Company also provides asset, residential, retail and parking property management services for the property in exchange for market rate fees.

The Company also provides asset, residential, retail and parking property management services for the property in exchange for market-rate fees, for which it recognized $ 1.3 million of revenue for the year ended December 31, 2023.

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

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The Company will also provide asset, residential, retail and parking property management services for the property in exchange for market rate fees.

The Company also provides asset, residential, retail and parking property management services for the property in exchange for market rate fees, for which it recognized $ 1.1 million of revenue

for the year ended December 31, 2023.

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

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Balance as of December 31, 2023 $ 5,513

In December 2023, the Company completed the acquisition of an 18,150 square foot land parcel located at 41 Maryland Avenue in Rockville, Maryland (“Comstock 41”) through a wholly owned subsidiary for $ 1.5 million.

This investment property sits adjacent to BLVD Ansel and BLVD Forty-Four and is currently a surface parking lot.

Comstock 41 has existing entitlements for at least 117 dwelling units and approximately 11,000 square feet of retail space.

(See Note 14 for additional information).

Other Investments

3 unchanged sentences

The carrying value of the STS investment is recorded in "other assets" on the Company's consolidated statement of balance sheets.

The Company's proportionate share of net income and distributions are recorded in gain (loss) on real estate ventures in the consolidated statements of operations, and were $ 0.1 million and $ 0.1 million for the years ended December 31, 2022 and 2021, respectively.

The following tables summarize the combined financial information for our unconsolidated investments in real estate ventures accounted for at fair value or under the equity method (in thousands):

The Company's proportionate share of net income and distributions are recorded in gain (loss) on real estate ventures in the consolidated statements of operations and was immaterial for the years ended December 31, 2023 and 2022, respectively.

Investment Financial Information

The following tables summarize the combined summarized statements of operations information for our unconsolidated investments in real estate ventures (in thousands):

Year Ended December 31,

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The Company has operating leases for office space leased in various buildings for its own use.

The Company's leases have remaining terms ranging from 5 to 10 years.

The Company's leases have original terms ranging from 5 to 10 years.

The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

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Credit Facility - Due to Affiliates

On March 19, 2020, the Company entered into a Revolving Capital Line of Credit Agreement with CPRES, pursuant to which the Company secured a $ 10.0 million capital line of credit (the “Credit Facility”), on which it made a $ 5.5 million initial draw with an April 30, 2023 maturity date.

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

The Credit Facility provides for an initial variable interest rate of the Wall Street Journal Prime Rate plus 1.00 % per annum on advances made under the Credit Facility, payable monthly in arrears.

The Company made a $ 5.5 million initial draw on the Credit Facility in the form of a note with an April 30, 2023, maturity date.

On September 30, 2022, the Company paid down its $ 5.5 million outstanding principal balance on the Credit Facility in full.

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however, the Company does not expect the results, if any, to have a material adverse impact on its results of operations, financial position, or liquidity.

The Company records a contingent liability when it is both probable that a liability has been incurred and the amount can be reasonably estimated;

The Company records a contingent liability when it is both probable that a liability has been incurred and the amount can be reasonably

however, the Company is not aware of any reasonably possible losses that would have a material impact on its results of operations, financial position, or liquidity.

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As of December 31, 2023, the carrying amount of cash and cash equivalents, accounts receivable, other current assets, and accounts payable approximated fair value because of the short-term nature of these instruments.

As of December 31, 2023, deferred compensation plan assets, which are Company-funded investments that are meant to correlate with participant-directed hypothetical investments in stock and bond mutual funds, are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held (Level 1).

Corresponding deferred compensation plan liabilities reflect the fair value of the aforementioned hypothetical investments and are based on inputs derived principally from observable market data (Level 2) through their direct correlation with the deferred compensation plan assets.

As of December 31, 2023, the Company had certain equity method investments in real estate ventures that it elected to record at fair value using significant unobservable inputs (Level 3).

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The Company's certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock, each with a par value of $ 0.01 per share.

Holders of Class A common stock and Class B common stock are entitled to dividends when,

as and if, declared by the Company's board of directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends.

Holders of Class A common stock and Class B common stock are entitled to dividends when, as and if, declared by the Company's board of directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends.

Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to fifteen votes per share.

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The SEPA was unanimously approved by the independent directors of the Company.

Upon completion of the transaction, all of the shares of Series C preferred stock were immediately cancelled and fully retired.

Upon completion of the transaction, all shares of Series C preferred stock were immediately cancelled and fully retired.

At the time of the transaction, the total carrying value of the Series C preferred stock (including the related additional paid-in capital) was $ 10.3 million.

The share exchange was accounted for as a redemption;

therefore, the $ 2.0 million difference between the carrying value and the $ 8.3 million fair value of the consideration paid upon redemption was added to net income to arrive at income attributable to common stockholders and calculate net income (loss) per share.

(See Note 13 for additional information).

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The 2019 Plan mandates that all lapsed, forfeited, expired, terminated, cancelled and withheld shares, including those from the predecessor plan, be returned to the 2019 Plan and made available for issuance.

The 2019 Plan originally authorized 2.5 million shares of the Company's Class A common stock for issuance.

The 2019 Plan originally authorized

2.5 million shares of the Company's Class A common stock for issuance.

As of December 31, 2023, there were 1.4 million shares of Class A common stock available for issuance under the 2019 Plan.

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Balance as of December 31, 2023 671 $ 3.42

The total intrinsic value of RSUs that vested during the years ended December 31, 2023 and 2022 was $ 1.1 million and $ 1.0 million, respectively.

Stock Options

10 unchanged sentences

Exercisable as of December 31, 2023 116 $ 3.07 3.9 $ 192

The Company granted no stock options during the years ended December 31, 2022 and 2021.

The total grant date fair value of stock options vested and total intrinsic value of stock options exercised for the years ended December 31, 2022 and 2021 were immaterial.

There were no stock option exercises during the year ended December 31, 2023.

The total intrinsic value of stock options exercised during the year ended December 31, 2022, was $ 0.6 million.

All the Company's revenue was for the years ended December 31, 2023 and 2022 was generated in the United States.

12 unchanged sentences

Year Ended December 31,

Revenue by Contract Type 1

Revenue by Contract Fee Type 1

Fixed-price $ 6,255 $ 7,048

3 unchanged sentences

1 Certain contracts contain multiple revenue streams with characteristics that lend to classification in more than one category.

For the year ended December 31, 2022, the Company recognized revenue from Incentive Fees of $ 3.9 million, stemming from an operating asset triggering event on October 1, 2022.

This operating asset triggering event was the first in series of annual operating asset triggering events that are scheduled each October 1 through 2024.

All Incentive Fees recognized in the current period are related to services performed in prior periods for which revenue recognition criteria were previously constrained.

There was no Incentive Fee revenue recognized for the year ended December 31, 2021.

For the years ended December 31, 2023, and 2022 the Company recognized revenue from incentive fees of $ 4.8 million and $ 3.9 million, respectively.

The incentive fee revenue recognized in both periods stemmed from scheduled annual triggering events for operating assets that began on October 1, 2022, and are scheduled each October 1 through 2024, pursuant to the terms of the 2022 AMA.

All Incentive Fees recognized to date have been related to services performed in prior periods for which revenue recognition criteria were previously constrained.

Subsequent to these scheduled triggering events, and in accordance with terms pursuant to the 2022 AMA, incentive fees may be recognized on assets currently under development upon the achievement of future triggering events tied to various metrics that indicate stabilization, such as occupancy and leasing rates.

(See Note 14 in the Notes to Consolidated Financial Statements for additional information).

The following table summarizes the components of the provision for (benefit from) income tax (in thousands):

18 unchanged sentences

Effective tax rate 4.51 % 1.59 %

The Company's effective tax rates for the years ended December 31, 2023 and 2022 differ from the U.S.

federal statutory tax rate of 21%, primarily due to state income taxes and the impact of valuation allowance releases of $ 1.5 million and $ 1.1 million, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Prior to 2021, the Company had recorded valuation allowances for certain tax attributes and deferred tax assets due the existence of sufficient uncertainty regarding the future realization of those deferred tax assets through future taxable income.

In June 2021, based on financial performance trends and forecasts of future operating results, the Company determined that it was more likely than not that a portion of the deferred tax assets related to its net operating loss ("NOL") carryforwards would be utilized in future periods.

As a result, the Company recorded an $ 11.3 million income tax benefit in the second quarter of 2021 that represented a partial release of its valuation allowance.

For the years ended December 31, 2022 and 2021, the Company recorded net decreases to its valuation allowance of $ 1.4 million and $ 13.0 million, respectively.

If, in the future, the Company believes that it is more likely than not that the rest of the deferred tax benefits will be realized, the full valuation allowance will be reversed.

Conversely, if future results of operations are lower than currently forecasted, the Company may need to re-establish a valuation allowance accordingly.

The Company has recorded valuation allowances for certain tax attributes and deferred tax assets due to the existence of sufficient uncertainty regarding the future realization of those deferred tax assets through future taxable income.

Based on its recent financial performance and current forecasts of future operating results, the Company conducts a quarterly analysis to determine if it is more likely than not that a portion of the deferred tax assets related to its net operating loss carryforwards will be utilized in future periods.

The Company's effective tax rate in any given period is directly impacted by the timing and magnitude of any partial valuation allowance releases.

The following table summarizes the components of the Company's deferred tax assets and liabilities (in thousands):

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On June 13, 2022, CHCI Asset Management, L.C.

(“CAM”), an entity wholly owned by the Company, entered into a new master asset management agreement with CP to manage and administer CP’s commercial real estate portfolio (the "Anchor Portfolio") and the day to-day operations of CP and its subsidiaries (the “2022 AMA”).

This agreement superseded in its entirety the previous asset management agreement between CAM and CPRES dated April 30, 2019 (the “2019 AMA”).

The 2022 AMA increased the base fees collected, expanded the services that qualify for additional supplemental fees, extended the term through 2035, and most notably introduced a mark-to-market incentive fee based on the imputed profit of Anchor Portfolio assets, generally as each is stabilized and as further specified in the agreement.

(“CAM”), an entity wholly owned by the Company, entered into a new master asset management agreement with CP (the “2022 AMA”) that superseded in its entirety the previous asset management agreement between CAM and CPRES dated April 30, 2019 (the “2019 AMA”).

Entry into the 2022 AMA was unanimously approved by the independent directors of the Company.

Consistent with the structure of the 2019 AMA, the 2022 AMA engages CAM to provide investment advisory, development, and asset management services necessary to build out, stabilize, and manage assets in the Anchor Portfolio, which currently consists

primarily of two of the larger transit-oriented, mixed-use developments in the Washington D.C.

area (Reston Station and Loudoun Station) that are owned by CP Entities and ultimately controlled by Mr.

Consistent with the structure of the 2019 AMA, the 2022 AMA engages CAM to manage and administer CP’s commercial real estate portfolio (the "Anchor Portfolio") and the day to-day operations of CP and each property-owning subsidiary of CP (collectively, the “CP Entities”).

CAM will provide investment advisory, development, and asset management services necessary to build out, stabilize and manage the Anchor Portfolio, which currently consists primarily of two of the larger transit-oriented, mixed-use developments located on Washington D.C.

Metro’s Silver Line (Reston Station and Loudoun Station) that are owned by CP Entities and ultimately controlled by Mr.

Pursuant to the fee structures set forth in both the 2022 AMA and 2019 AMA, CAM is entitled to receive an annual payment equal to the greater of the "Cost-Plus Fee" or the "Market Rate Fee".

The Cost-Plus Fee is equal to the sum of (i) the comprehensive costs incurred by or for providing services to the Anchor Portfolio, (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 of a public company, and (iii) a fixed annual payment of $ 1.0 million.

a public company, and (iii) a fixed annual payment of $ 1.0 million.

The Market Rate Fee calculation is defined in the respective asset management agreements as the sum of the fees detailed in the following table:

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1 % of any Financing Transaction or other commercially reasonable and mutually agreed upon fee

Triggering events are differentiated between operating assets (i.e.

those already in service) and assets under development.

Triggering events are differentiated between operating assets (i.e., those already in service) and assets under development.

Operating asset triggering events are scheduled for specific dates, whereas triggering events for assets under development are tied to various metrics that indicate stabilization, such as occupancy and leasing rates.

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On April 30, 2019, CAM entered into a Business Management Agreement with Investors X, whereby CAM provides 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.

The aggregate fee payable to CAM from Investors X under the Business Management Agreement is $ 0.9 million payable in 15 quarterly installments of $ 0.1 million each and ending on December 31, 2022.

The aggregate fee payable to CAM from Investors X under the Business Management Agreement, which ended on December 31, 2022, was $ 0.9 million payable in 15 quarterly installments of $ 0.1 million each.

The Company considers Investors X to be a variable interest entity over which it does not have the power to direct activities that most significantly impact economic performance, therefore it is not the primary beneficiary of Investors X and does not have to consolidate the entity into its financial results.

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On July 1, 2019, CAM entered into a Business Management Agreement (the “BC Management Agreement”) with CPRES, whereby CAM provides CPRES with professional management and consultation services, including, without limitation, consultation on land development and real estate transactions, for a residential community located in Monteverde, Florida.

On January 1, 2023, a successor contract for the BC Management Agreement was executed by DCS Real Estate Investments, LC, an entity controlled by a member of CP.

The BC Management Agreement is structured in successive renewable one-year terms.

The BC Management Agreement provides that CPRES will pay CAM an annual management fee equal to $ 0.3 million, payable in equal monthly installments during the term commencing on July 1, 2019, and will reimburse CAM for certain expenses.

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

The BC Management Agreement provides that DCS Real Estate Investments, LC will pay CAM an annual management fee equal to $ 0.4 million, payable in equal monthly installments and will reimburse CAM for certain expenses.

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

In conjunction with the investment, the Company entered into an operating agreement with CP to form Comstock 3101 Wilson, LC, to purchase The Hartford.

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In February 2020, the Company, CP and DWF VI 3101 Wilson Member, LLC (“DWF”), an unaffiliated, third party, equity investor in The Hartford, entered into a limited liability company agreement (the “DWC Operating Agreement”) to form DWC 3101 Wilson Venture, LLC (“DWC”) to, among other things, acquire, own and hold all interests in The Hartford.

In furtherance thereof, on February 7, 2020, the Original Operating Agreement was amended and restated (the “A&R Operating Agreement”) to

memorialize the Company’s and CP’s assignment of 100 % of its membership interests in the Hartford to DWC.

As a result thereof, DWC is the sole member of the Hartford Owner.

In furtherance thereof, on February 7, 2020, the original operating agreement was amended and restated (the “A&R Operating Agreement”) to memorialize the Company’s and CP’s assignment of 100 % of its membership interests in The Hartford to DWC.

As a result, DWC is the sole member of The Hartford Owner.

The Company and CP, respectively, hold minority membership interests in, and DWF holds the majority membership interest in, DWC.

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BLVD Forty Four/BLVD Ansel

In October 2021 and March 2022, the Company entered into joint ventures with CP to acquire BLVD Forty Four and BLVD Ansel, respectively, two adjacent mixed-use luxury high-rise apartment buildings located near the Rockville Metro Station in Montgomery County, Md.

The Company considers BLVD Forty Four and BLVD Ansel to be variable interest entities upon which it exercises significant influence;

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(See Note 5 for additional information).

In conjunction with the acquisition of Comstock 41, the Company entered into an amendment to the existing asset management agreement with CP to introduce an acquisition pursuit fee of $ 0.1 million and contingent entitlement success fee to pursue potential relocation of moderately-priced dwelling units ("MPDUs") from BLVD Forty Four to Comstock 41.

The acquisition pursuit fee was earned and recognized as revenue for the year ended December 31, 2023, upon the completion of the Comstock 41 acquisition.

The entitlement success fee, if earned, will equal 25 % of the economic value created by the relocation of the MPDUs (subject to reasonable agreed upon changes at the time of the calculation) and due upon approval of a finalized amendment to the existing project development plan by local government agencies.

(See Note 5 for additional information).

Corporate Leases

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 Christopher Clemente, its Chief Executive Officer, and his family as landlords.

On November 1, 2020, the Company relocated its corporate headquarters to office space located at 1900 Reston Metro Plaza in Reston, Virginia, pursuant to a ten-year lease agreement with an affiliate controlled and owned by Christopher Clemente, its Chief Executive Officer, and his family.

On November 1, 2022, the Company executed a 3,778 square foot lease expansion agreement with terms that align with the original agreement.

( See Note 6 for additional information).

On January 1, 2022, ParkX Management, LC, a subsidiary of the Company, entered into a five-year lease agreement for its parking operations monitoring center with an affiliate controlled and owned by Christopher Clemente, its Chief Executive Officer, and his family as landlords.

Clemente and his family.

( See Note 6 for additional information).

Series C Preferred Stock Redemption

On June 13, 2022, the Company entered into the SEPA with CPRES, pursuant to which the Company acquired from CPRES all outstanding shares of its non-convertible and non-redeemable Series C preferred stock.

( See Note 10 for additional information) .

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The combined total expense for this plan was $ 0.6 million and $ 0.5 million for the years ended December 31, 2023 and 2022, respectively.

In addition, the Company adopted a non-qualified deferred compensation plan ("NQDC Plan") in November 2023.

The NQDC Plan allows certain eligible employees to defer, on a pre-tax basis, a portion of their base annual salary and/or their annual bonus and earn tax-deferred earnings on these deferrals.

The NQDC Plan also provides for matching Company contributions that vest over a three-year period.

In the NQDC Plan, a participant's deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator.

The Company, through a broker partner affiliated with the NQDC Plan administrator, directly funds investments that are meant to correlate with participant-directed hypothetical investments in stock and bond mutual funds in an effort to directly provide for its future NQDC Plan liabilities.

NQDC Plan assets and liabilities are marked-to-market each quarter.

Fair value changes to NQDC Plan liabilities are recorded as a benefit plan-related operating expense and the net investment income (loss) from NQDC Plan assets is recorded as other income (expense) in our condensed consolidated statements of income.

As of December 31, 2023, total NQDC plan assets and liabilities were $ 0.1 million and 0.1 million, respectively.

For the year ended December 31, 2023, there were no distributions from the Company's NQDC Plan.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

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-K

Item 8. Financial Statements and Supplementary Data