Comstock Inc. 10-K

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Comstock Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Comstock Inc. (“the Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Assure CPA, LLC We have served as the Company’s auditor since 2020. Spokane, Washington February 27, 2024 73 COMSTOCK INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2023 AND 2022 December 31, 2023 December 31, 2022 ASSETS Current Assets: Cash and cash equivalents $ 3,785,577 $ 2,521,772 Investments 18,912,985 — Notes receivable and advances, net - current portion — 4,990,000 Assets held for sale — 21,684,865 Deposits - current portion 14,000 809,583 Prepaid expenses and other current assets 470,577 761,393 Total current assets 23,183,139 30,767,613 Non-current Assets: Investments 31,260,928 18,784,327 Mineral rights and properties 13,302,013 12,571,418 Properties, plant and equipment, net 15,204,030 13,474,094 Deposits 411,268 — Reclamation bond deposit 2,850,518 2,727,815 Notes receivable and advances, net 980,291 959,318 Intangible assets, net 15,866,032 17,663,681 Finance lease - right of use asset, net 2,923,766 2,911,458 Other assets 484,359 194,035 Total noncurrent assets 83,283,205 69,286,146 TOTAL ASSETS $ 106,466,344 $ 100,053,759 The accompanying notes to the Consolidated Financial Statements are an integral part of these statements . 74 COMSTOCK INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) AS OF DECEMBER 31, 2023 AND 2022 December 31, 2023 December 31, 2022 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 1,333,980 $ 714,077 Accrued expenses and other liabilities 2,362,481 1,719,597 Deposits 410,100 422,603 Derivative liabilities 5,400,128 14,545,800 Lease liability, held for sale — 12,021,566 Finance lease - right of use lease liability 838,676 409,143 Debt, net - current portion 4,495,660 1,795,890 Total current liabilities 14,841,025 31,628,676 Long-term Liabilities: Reclamation liability 5,606,681 5,226,505 Finance lease - right of use lease liability, non-current portion — 406,968 Deferred revenue 1,156,250 — Debt, net - non-current portion 5,355,062 6,121,443 Other liabilities 1,230,154 306,708 Total long-term liabilities 13,348,147 12,061,624 TOTAL LIABILITIES 28,189,172 43,690,300 COMMITMENTS AND CONTINGENCIES (Notes 12 and 20) Stockholders' Equity Preferred Stock $ .000666 par value, 50,000,000 shares authorized, no shares outstanding — — Common stock $ .000666 par value, 245,000,000 shares authorized, 117,862,081 and 91,442,018 shares issued and outstanding at December 31, 2023 and 2022, respectively 78,405 60,660 Treasury stock 2,605,322 and 2,605,322 shares, at cost, at December 31, 2023 and 2022, respectively ( 3,360,867 ) ( 3,360,867 ) Additional paid-in capital 363,889,245 348,390,556 Accumulated deficit ( 282,329,611 ) ( 291,491,432 ) Total equity - Comstock Inc. 78,277,172 53,598,917 Non-controlling interest — 2,764,542 Total stockholders' equity 78,277,172 56,363,459 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 106,466,344 $ 100,053,759 The accompanying notes to the Consolidated Financial Statements are an integral part of these statements . 75 COMSTOCK INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 December 31, 2023 December 31, 2022 Revenue $ 1,274,449 $ 178,150 Operating expenses: Selling, general and administrative expenses 12,588,626 10,243,353 Research and development 6,117,305 7,023,132 Depreciation and amortization 2,477,525 3,328,570 Gain on sale of Daney Ranch — ( 1,055,623 ) Gain on sale of Facility (Note 9) ( 7,304,570 ) — Total operating expenses 13,878,886 19,539,432 Loss from operations ( 12,604,437 ) ( 19,361,282 ) Other Income (Expense): Gain (loss) on investments 25,034,875 7,310 Interest expense ( 1,646,724 ) ( 1,651,435 ) Interest income 251,969 387,608 Change in fair value of derivative instruments 961,085 ( 7,727,638 ) Gain on conversion of debt 129,705 — Impairment of intangibles — ( 338,035 ) Impairment of investment and note receivable, net recovery — ( 3,243,650 ) Impairment of goodwill — ( 12,788,671 ) Other income (expense) ( 1,600,221 ) ( 2,022,466 ) Total other income (expense), net 23,130,689 ( 27,376,977 ) Net income (loss) 10,526,252 ( 46,738,259 ) Net income (loss) attributable to noncontrolling interest 1,364,431 ( 789,515 ) Net income (loss) attributable to Comstock Inc. $ 9,161,821 $ ( 45,948,744 ) Earnings per Share - Basic: Net income (loss) per share - basic $ 0.09 $ ( 0.62 ) Earnings per Share - Diluted: Net income (loss) per share - diluted $ 0.09 $ ( 0.62 ) Weighted average common shares outstanding, basic 105,126,754 74,458,028 Weighted average common shares outstanding, diluted 105,169,364 74,458,028 The accompanying notes to the Consolidated Financial Statements are an integral part of these statements . 76 COMSTOCK INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Common Stock Additional Paid in Capital Accumulated Deficit Treasury Stock Amount Non-Controlling Interest Total Shares Amount BALANCE - December 31, 2021 71,207,832 $ 47,065 $ 338,936,145 $ ( 245,542,688 ) $ ( 3,870,000 ) $ 3,400,000 $ 92,970,522 Issuance of common stock 20,666,674 13,765 10,772,415 — — — 10,786,180 Issuance of common stock for stock issuance costs 829,597 553 839,447 — — — 840,000 Common stock issuance costs — — ( 1,138,000 ) — — — ( 1,138,000 ) Common stock issued with note payable 605,620 403 249,597 — — — 250,000 Common stock received and cancelled in connection with employee termination ( 720,000 ) ( 480 ) 480 — — — — Capital contribution to LINICO by Aqua Metals — — 176,695 — — 323,305 500,000 Common stock received and cancelled in the rescission of the LPB transaction ( 3,500,000 ) ( 2,331 ) ( 5,107,669 ) — — — ( 5,110,000 ) Employee and director share-based compensation — 120 481,877 — — — 481,997 Repurchase of employee stock options — — ( 12,195 ) — — — ( 12,195 ) Exercise of employee stock options 50,000 33 27,967 — — — 28,000 Issuance of common stock for Haywood lease 1,500,000 999 2,294,001 — — — 2,295,000 Warrants issued with note amendment — — 18,975 — — — 18,975 Payment to Northern Comstock LLC for mineral rights 802,295 533 481,967 — — — 482,500 Sales of treasury stock ( 394,677 common shares) — — ( 269,056 ) — 509,133 — 240,077 GHF warrant valuation — — 637,910 — — — 637,910 LINICO dividends earned by AQMS not distributed — — — — — ( 169,248 ) ( 169,248 ) Net loss — — — ( 45,948,744 ) — ( 789,515 ) ( 46,738,259 ) BALANCE - December 31, 2022 91,442,018 $ 60,660 $ 348,390,556 $ ( 291,491,432 ) $ ( 3,360,867 ) $ 2,764,542 $ 56,363,459 Issuance of common stock 15,356,808 10,226 6,889,774 — — — 6,900,000 Issuance of common stock for stock issuance costs 963,445 642 349,358 — — — 350,000 Common stock issuance costs — — ( 599,620 ) — — — ( 599,620 ) Ionic Note equity conversion issuance 8,705,806 5,799 4,252,373 — — — 4,258,172 Issuance of common stock in lieu of payment of interest 475,930 317 211,245 — — — 211,562 Warrants issued with note agreement — — 157,269 — — — 157,269 Payment to Northern Comstock LLC for mineral rights 963,074 641 481,859 — — — 482,500 Employee and director share-based compensation ( 45,000 ) 120 ( 2,376 ) — — — ( 2,256 ) LINICO dividends earned by AQMS not distributed — — — — — ( 180,485 ) ( 180,485 ) Dividend payable extinguished with acquisition of AQMS' interest in LINICO — — — — — 447,001 447,001 Acquisition of AQMS interest in LINICO — — 3,758,807 — — ( 4,325,134 ) ( 566,327 ) LINICO distribution to AQMS — — — — — ( 70,355 ) ( 70,355 ) Net income — — — 9,161,821 — 1,364,431 10,526,252 BALANCE - December 31, 2023 117,862,081 $ 78,405 $ 363,889,245 $ ( 282,329,611 ) $ ( 3,360,867 ) $ — $ 78,277,172 The accompanying notes to the Consolidated Financial Statements are an integral part of these statements . 77 COMSTOCK INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 December 31, 2023 December 31, 2022 CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 10,526,252 $ ( 46,738,259 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 435,683 617,809 Amortization of finance leases 44,193 539,115 Amortization of discount associated with finance leases 246,038 829,924 Amortization of debt discount and other debt-related items 816,429 492,962 Amortization of intangibles 1,997,649 2,171,646 Accretion (reduction) of reclamation liability 380,176 ( 219,167 ) Gain on sale of Facility (Note 9) ( 7,304,570 ) — Gain on investments ( 25,034,875 ) ( 7,310 ) Gain on conversion of debt ( 129,705 ) — Gain on sale of Daney Ranch — ( 1,055,623 ) Change in fair value of Tonogold Resources, Inc. note receivable — 605,000 Employee and director share based compensation (recapture) ( 2,256 ) 481,997 Change in fair value of derivative instruments ( 961,085 ) 7,727,638 Loss on write-off of investments in MCU and MCU-P note receivable — 2,455,332 Loss on Pelen option 150,000 150,000 Share of net loss of equity-method investments 1,715,689 1,133,633 Impairment of goodwill — 12,788,671 Write-off of construction in process and deposits — 1,586,481 Impairment of MCU-P note receivable — 1,628,935 Impairment of Flux Photon intangibles — 338,035 Write-off of Tonogold reimbursement receivables — 1,283,302 Write-off of expense related to Fenix prepaid 240,000 — Interest expense paid with common stock 211,562 — Other ( 19,085 ) ( 25,605 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets 50,816 37,063 Deposits - assets 234,315 133,454 Other assets 387,730 81,582 Accounts payable 31,371 80,854 Accrued expenses and other liabilities 714,705 620,504 Deferred revenue 1,156,250 — Deposits - liability ( 12,503 ) 2,420 Other liabilities 500,000 154,438 Net cash used in operating activities ( 13,625,221 ) ( 12,105,169 ) CASH FLOW FROM INVESTING ACTIVITIES: Purchase of mineral rights and property, plant and equipment ( 1,819,065 ) ( 1,014,070 ) Proceeds received from the sale of the Manufacturing Facility (Note 9) 21,000,000 — Proceeds from sale of ABTC common shares 6,000,000 — 78 December 31, 2023 December 31, 2022 Proceeds from sale of Green Li-ion preferred shares 779,600 — Purchase of Facility (Note 9) ( 12,000,000 ) — Payments on contractual commitments associated with derivatives ( 8,025,000 ) ( 2,825,000 ) Advances to Sierra Springs Opportunity Fund, Inc. ( 1,995,000 ) ( 55,000 ) Payment of commitment for investment in Quantum Generative Materials LLC — ( 750,000 ) Proceeds from Tonogold option agreement — 750,000 Proceeds from sale of Tonogold Resources, Inc. common shares — 933,129 Proceeds from sale of Daney Ranch — 1,500,000 Additions to construction in progress — ( 1,625,972 ) Acquisition of intangible asset ( 200,000 ) ( 500,000 ) Payments on Haywood land lease and acquisition — ( 50,000 ) Payment for option to purchase additional membership interests in Pelen LLC — ( 100,000 ) Other ( 109,994 ) 4,964 Net cash provided by (used in) investing activities 3,630,541 ( 3,731,949 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt principal and financing leases ( 301,540 ) ( 3,772,360 ) LINICO distribution to AQMS ( 70,355 ) — Proceeds from the issuance of common stock 6,900,000 10,786,180 Proceeds from sale of treasury stock — 240,077 Issuances of debt 4,980,000 4,975,000 Capital contributed to LINICO from AQMS — 500,000 Common stock issuance costs ( 249,620 ) ( 298,000 ) Other — 15,805 Net cash provided by financing activities 11,258,485 12,446,702 Net increase (decrease) in cash and cash equivalents 1,263,805 ( 3,390,416 ) Cash and cash equivalents at beginning of year 2,521,772 5,912,188 Cash and cash equivalents at end of year $ 3,785,577 $ 2,521,772 79 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 503,438 $ 1,115,075 Cash paid for income taxes $ — $ — NON-CASH INVESTING AND FINANCING ACTIVITIES: Haywood land lease and acquisition $ — $ 2,050,000 Issuance of common shares for Haywood land lease and acquisition $ — $ 245,000 Common stock received in the rescission of the LPB transaction $ — $ 5,110,000 Issuance of common shares for Northern Comstock LLC mineral rights payments $ 482,500 $ 482,500 Issuance of common shares for debt conversion and accrued interest $ 4,258,172 $ — Shares of ABTC common stock received on sale of Facility $ 9,365,000 $ — Return of shares of ABTC common stock in lieu of escrowed funds $ ( 1,500,000 ) $ — Equipment acquired with payable $ 699,630 $ — SSOF advances converted to equity investment $ 6,985,000 $ — Shares payable for commitment fees $ 150,000 $ — Note payable to AQMS for acquisition of AQMS' interest in LINICO $ 566,327 $ — Issuance of common shares issued with note payable $ — $ 250,000 Issuance of common stock for stock issuance costs $ 350,000 $ 840,000 Warrants issued in connection with note agreement $ 157,269 $ 656,885 Tonogold note receivable exchanged for option $ — $ 6,650,000 Note receivable issued in sale of Daney Ranch property $ — $ 941,091 Additions of finance leases obligations $ — $ 839,439 Recognition of operating lease liability and right-of-use asset $ 213,925 $ — Increase in finance lease asset and liability due to modification of lease terms $ — $ 1,187,174 AQMS lease and other assets and liability reclassed to held for sale $ — $ 21,684,865 The accompanying notes to the Consolidated Financial Statements are an integral part of these statements . 80 COMSTOCK INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REFERENCES TO THE COMPANY Unless context otherwise indicates, the terms we , us , our , Comstock , or the Company mean Comstock Inc., and its subsidiaries on a consolidated basis. DESCRIPTION OF THE BUSINESS Comstock innovates and commercializes technologies that enable systemic decarbonization and circularity by efficiently converting under-utilized waste and renewable natural resources into fuels, metals and supporting products that contribute to balancing global uses and emissions of carbon and accelerate more efficient and effective mineral and material discoveries. Our strategic plan is based on innovating and enabling material science solutions and using our technologies to reduce reliance on long cycle fossil fuels, to shift to and maximize throughput of short cycle fuels, and to lead and support the adoption and growth of profitable, balanced, short cycle ecosystems that continuously offset, recycle, and/or neutralize carbon emissions. During 2021, 2022 and 2023, we completed a series of transactions that were designed to build on our competencies and position us and our technologies to address and capitalize on the global transition to clean energy and to enhances our exploration and mineral discovery capabilities. Those transactions primarily included our acquisitions of intellectual property and resources through the 100 % acquisition of Comstock Innovations Corporation, Comstock Engineering Corporation, FLUX Photon Corporation, and LINICO Corporation and our minority investment interest in Quantum Generative Materials LLC (“GenMat”). Collectively, these transactions added the management, employees, facilities, intellectual properties, and other assets we needed to restructure our Company and business into an emerging leader in the innovation and sustainable production of renewable energy, including lignocellulosic fuels, electrification metals and sustainable mineral discovery and mining. Comstock historically focused on natural resource exploration, development, and production, with an emphasis on developing and mining gold and silver resources from its extensive contiguous property holdings in the historic Comstock District in Nevada. We are currently focused, in conjunction with our investee GenMat, on developing technologies that enhance the efficacy and efficiency of mineral exploration and development activities, including advanced data collection capabilities, sensing and artificially intelligent interpretive and predictive technologies, while leveraging our extensive database of historical and current geologic data, for breakthrough mineral discovery. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements herein are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of Comstock Inc. and its wholly owned subsidiaries which include the following: • Comstock Fuels Corporation (“Comstock Fuels”); • Comstock Metals Corporation (“Comstock Metals”); • Comstock Mining LLC (“Comstock Mining”); • Comstock Innovations Corporation (“Comstock Innovations”); • Comstock Engineering Corporation (“Comstock Engineering”); • Comstock IP Holdings LLC (“Comstock IP”); • Comstock Exploration and Development LLC (“CED”); • Comstock Northern Exploration LLC (“CNE”); • Comstock Processing LLC (“CP”); • Comstock Royalty Holding LLC (“CRH”); • Comstock Real Estate, Inc. (“CRE”); • Comstock Industrial LLC (“CI”); • Downtown Silver Springs LLC (“DTSS”); • LINICO Corporation Inc. (“LINICO”); • MCU Philippines, Inc. (“MCU-P”) since June 18, 2022; and • MANA Corporation (“MANA”). 81 All significant intercompany balances and transactions have been eliminated on a consolidated basis for reporting purposes. SEGMENT INFORMATION We evaluate each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, we evaluate those components to determine if they must be aggregated into one or more operating segments. If applicable, when determining if it is appropriate to aggregate different operating segments, we determine if the segments are economically similar and, if so, the operating segments are aggregated. The chief operating decision maker ("CODM") over the segments is the Executive Management Committee. We have the following five reporting segments: Fuels, Metals, Mining, Strategic Investments and Corporate. We organize and operate each segment as a distinct line of business. Fuels Segment Our Fuels Segment develops and commercializes technologies that extract and convert wasted and unused lignocellulosic biomass into intermediates for refining into advanced renewable fuels. Most renewable fuels draw from the same pool of conventional fat, oil, and grease (“FOG”) feedstocks, but the total existing FOG supply can only meet a small fraction of the global mobility demand. We are currently evaluating several joint development solutions and systems based on our technologies, as well as feedstock and offtake agreements, licenses, engineering services, and direct investments. Our Fuels Segment is administered by our wholly owned subsidiary, Comstock Fuels Corporation, which will define and design solutions and license selected technologies to strategic partners, including long-term feedstock and offtake clients. Metals Segment Our Metals Segment recently secured sufficient supplier commitments and all of the necessary permits to begin commissioning our first photovoltaic recycling facility, and is expected to receive revenue in the form of tipping fees and to a lesser extent recycled metal sales from the processing of end-of-life photovoltaic materials. Our Metals Segment is administered by our wholly owned subsidiary, Comstock Metals Corporation, which has ordered and received all necessary components for its first commercial demonstration facility in Silver Springs, NV, and has applied for and received all required permits with production anticipated in early 2024. Mining Segment Our Mining Segment generated over $ 1 million in revenue during 2023 and is expected to generate income in the form of leases, licenses, and related fees throughout 2024. Our Mining Segment is administered by our wholly owned subsidiary, Comstock Mining LLC, and various other subsidiaries that collectively own or control twelve square miles of properties of patented mining claims, unpatented mining claims and surface parcels in northern Nevada, including six and a half miles of continuous mineralized strike length (the “Comstock Mineral Estate”). We have two completed third-party S-K 1300 technical reports focused on just two relatively smaller subsets of our mineral estate. We plan on further enhancing that data with hyperspectral orbital imaging and physics-based AI solutions to provide advanced prospecting analytics and more efficient, effective and expedient mineral discovery. Strategic Investments Segment We own and manage several investments and projects that are strategic to our plans and ability to produce and maximize throughput in our Fuels, Metals and Mining Segments, that are held for the purpose of complimenting or enhancing our mission of enabling systemic decarbonization and creating value but that are not a component of such other segments or otherwise have distinct operating activities. Our Strategic Investments Segment includes minority equity investments in Quantum Generative Materials LLC (physics-based artificial intelligence), Green Li-ion Pte Limited (lithium ion battery recycling and cathode production), Sierra Springs Opportunity Fund (strategic direct investment in northern Nevada real estate), and other equity or equity-linked investments. Corporate Segment Our Corporate Segment includes our corporate functions and services, including research and development activities that are ongoing outside of the business activities related to our Fuels, Metals, Mining and Strategic Investments Segments. 82 Each segment has a distinct cost structure with dedicated management personnel with reporting responsibility to the Company’s senior management team. The Company accumulates discrete financial information for each segment, for review as distinct operating segments, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed on a segment specific basis. Discrete financial information is available for each operating segment (See Note 19, Segment Reporting ). BUSINESS COMBINATIONS The Company applies the acquisition method of accounting for business combinations to all acquisitions where the Company gains a controlling interest, regardless of whether consideration was exchanged. With respect to business combinations, the Company (a) recognizes and measures the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and, (c) discloses the nature and financial effects of the business combination. Accounting for acquisitions requires us to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition date is measured as the excess of the fair value of consideration transferred and the net acquisition-date fair values of the assets acquired and liabilities assumed. While the Company uses our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, the estimates inherently are uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets, including intangible assets acquired and liabilities assumed with corresponding offsets to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. Deferred tax losses created in business combinations for the difference between the historical carryover basis of assets for tax purposes and the stepped-up fair value basis for book purposes are recognized as an increase to goodwill. ASSET ACQUISITIONS The cost of a group of assets acquired in an asset acquisition includes the carrying amount of any previously held equity interest, the fair value of any noncontrolling interests, and the fair value of any consideration transferred at the date of acquisition. The cost is allocated to the individual assets acquired or liabilities assumed based on their relative fair values and goodwill is not recognized. If it is determined that the cost of the acquisition exceeds the fair value of the assets acquired, the difference is allocated pro rata on the basis of relative fair values to increase certain of the assets acquired. All identifiable assets, including intangible assets, are identified and recognized. Deferred tax losses created in asset acquisitions for the difference between the historical carryover basis for tax purposes and the stepped-up fair value basis for book purposes are calculated using a simultaneous equation under the gross up approach and recognized as an increase to the assets to which they relate. VARIABLE INTEREST ENTITIES A variable interest entity (“VIE”) refers to a legal business structure in which an investor may have an influential or controlling interest despite not having a majority of voting rights, including when the entity invested in is thinly capitalized and its equity is not sufficient to fund its activities without additional subordinated financial support. An investor in a VIE has a controlling interest if the investor is determined to be the primary beneficiary of the VIE, defined as having the (i) power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, or (ii) obligation to absorb losses of the VIE that could potentially be significant to the VIE, or (iii) right to receive benefits from the VIE that could be significant to the VIE. The Company has investments in GenMat and Sierra Springs Opportunity Fund, Inc. (“SSOF”), that the Company has determined to be VIEs. The Company has also determined that the Company does not have a controlling interest in either of these companies, as the Company does not meet the definition of primary beneficiary cited above. Accordingly, the accounts of these companies are not included in our Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES The Consolidated Financial Statements are prepared on the going concern basis of accounting that assumes the realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has had recurring net losses from operations and had an accumulated deficit of $ 282.3 million at December 31, 2023. For the year ended December 31, 2023, the Company recognized net income of $ 10.5 million while cash and cash equivalents increased by $ 1.3 million from $ 2.5 million at December 31, 2022 to $ 3.8 million at December 31, 2023. The Company intends to fund our operations over the next twelve months from (i) existing cash and cash equivalents, (ii) lease revenues (iii) sales of engineering services and technology 83 licenses, and (iv) planned investment and other non-strategic asset sales. Based on these expected funding sources, management believes the Company will have sufficient funds to sustain our operations and meet our contractual and investment commitments during the 12 months following the date of issuance of the Consolidated Financial Statements included herein. While the Company has been successful in the past in obtaining the necessary capital to support our operations, including registered equity financings from our existing shelf registration statement, borrowings, asset sales and other means, there is no assurance the Company will be able to sell additional assets timely and/or obtain additional equity capital or other financing, if needed. Risks to our liquidity include future operating expenditures above management’s expectations, including but not limited to exploration, pre-development, research and development, selling, general and administrative, investment related expenditures, the sale of the Silver Springs Properties, and amounts to be raised from the issuance of equity under our existing shelf registration statement. Declines in the share price of our common stock would also adversely affect our results of operations, financial condition and cash flows and available liquidity. If the Company is unable to obtain any necessary additional funds, this could have an immediate material adverse effect on liquidity and raise substantial doubt about our ability to continue as a going concern. In such case, the Company could be required to limit or discontinue certain business plans, activities or operations, reduce or delay certain capital expenditures or investments, or sell certain assets or businesses. There can be no assurance that the Company would be able to take any such actions on favorable terms, in a timely manner, or at all. USE OF ESTIMATES In preparation of our consolidated financial statements and related disclosures in accordance with GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and related income, costs, expenses, receipts and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may pertain to: • impairment of equity investments; • discount rates on non-interest bearing notes receivable and lease liabilities; • derivative assets and liabilities; • the useful lives and valuation of properties, plant and equipment and mineral properties; • carrying values of assets held for sale; • realization of net deferred tax assets; • useful lives of intangible assets; • impairment of intangibles, notes receivable and advances; • reclamation liabilities; • contingent liabilities; • revenue contract progress toward completion; • stock-based compensation; • estimates for executive bonuses; and • restricted stock. CASH AND CASH EQUIVALENTS Cash and cash equivalents include bank deposits and highly liquid investments purchased with maturities of three months or less. Cash deposits with banks may exceed Federal Deposit Insurance Corporation insured limits. RECEIVABLES Accounts receivables are uncollateralized, non-interest-bearing customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Accounts receivables are stated at the amount billed to the customer. Accounts receivable in excess of 90 days old are evaluated for delinquency. In addition, we consider historical bad debts and current economic trends in evaluating the allowance for doubtful accounts. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the oldest unpaid invoices. Management reviews valuation allowances on a quarterly basis. NOTES RECEIVABLE At issuance, notes receivable are recorded at an amount that reasonably approximates their fair value, which is based on the present value of future cash flows discounted at the prevailing interest rate. Any difference between the face amount and fair value is recognized as a discount or premium and accounted for as an element of interest over the life of the note. When interest accrued under the interest method exceeds interest at the stated rate, the amount of periodic amortization recognized is limited 84 to the amount at which the borrower could settle the obligation. Notes receivable are subsequently measured on an amortized cost basis. INVESTMENTS Investments in Debt and Equity Securities From time to time, the Company holds investments in the form of debt securities and other instruments, and equity securities. Investments in debt are classified as trading, available for sale or held to maturity. In certain cases, we elect to record the investment under the fair value option. Upon sale of a debt security, the realized gain or loss is recognized in current earnings. At the end of each reporting period, the Company considers whether impairment indicators exist to evaluate if a debt investment security or loan is impaired and, if so, record an impairment loss. Investments in equity securities are generally measured at fair value. Gains and losses for equity securities resulting from changes in fair value are recognized in current earnings. If an equity security does not have a readily determinable fair value, the Company may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. At the end of each reporting period, the Company reassesses whether an equity investment security without a readily determinable fair value qualifies to be measured at cost less impairment, consider whether impairment indicators exist to evaluate if an equity investment security is impaired and, if so, record an impairment loss. The Company evaluates and assesses if an orderly transaction occurs as defined under GAAP at each reporting period for our equity security investments. If an orderly transaction occurs with observable price changes, the Company adjusts the carrying value of the investment to the fair value with the change in fair value recorded in current earnings. (see Note 2, Investments , and Note 14, Fair Value Measurements ). Investments in Joint Ventures and Other Companies Investments in companies and joint ventures for which the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method. Under the equity method of accounting, our share of the net earnings or losses of the investee are included in other income (expense) in the consolidated statements of operations. Upon investment, the Company assesses whether a step up in the basis of the investee's net assets has occurred and, if so, adjusts our share of net earnings or losses by related depreciation and amortization expense. Investments are accounted for on a one-quarter lag. As changes in ownership percentage of our investments occur, the Company assesses whether we can exercise significant influence and account for the investment under the equity method. If our ownership percentage of the company or venture changes, we recognize a gain or loss on the investment in the period of change. The Company assesses its equity method investments for impairment when events or circumstances suggest that the carrying amount of the investment may be impaired. The Company records an impairment charge in earnings when the decline in value below the carrying amount is determined to be other than temporary. INTANGIBLE ASSET S Purchased intangible assets represent the estimated acquisition date fair value of acquired intangible assets used in our business. Intangible assets with definite lives are amortized over their estimated useful lives. We amortize definite-lived intangible assets on a straight-line basis, generally over periods ranging from one to ten years . Costs incurred to renew or extend the life of our intangible assets are capitalized. We review purchased intangible assets for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. We review indefinite-lived intangibles for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. We measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows that the assets or asset group are expected to generate. If the carrying value of the assets or asset group are not recoverable, impairment is measured and recorded as the amount by which the carrying value exceeds its fair value. GOODWILL Goodwill represents the cost in excess of the consideration paid over the fair value of net assets acquired in a business combination. The Company allocates goodwill to reporting units based on the expected benefit from the business combination. The Company evaluates our reporting units periodically, as well as when changes in our operating segments occur. For changes in reporting units, the Company reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis, and on an interim basis if an event occurs or circumstances change 85 that would more likely than not reduce the fair value of a reporting unit below its carrying value. We assess our goodwill for impairment at least annually as of October 1, unless events or a change in circumstances indicate an earlier impairment. FAIR VALUE MEASUREMENTS The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active exchange-traded securities and exchange-based derivatives. Level 2 inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges. Level 3 unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded, non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models. DERIVATIVE INSTRUMENTS Derivative instruments are recognized as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivative instruments depends on their intended use. Changes in the fair value of derivative instruments are recorded in current earnings. The Company evaluates and accounts for embedded derivatives in its financial instruments based on three criteria that, if met, require bifurcation of embedded derivatives from their host instruments and accounting for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not required to be re-measured at fair value and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is shown at its fair value at each balance sheet date and recorded as an asset or liability with the change in fair value recorded in current earnings. The Company has derivatives that contain make whole provisions for our investments and asset acquisitions. All transactions in which goods or services are received for the issuance of shares of our common stock or options to purchase shares of our common stock are accounted for based on the fair value of the equity interest issued. The fair value of shares of common stock is determined based upon the closing price per share of our common stock on the date of issuance and other applicable inputs. The derivatives with make whole provisions are classified as a derivative financial instrument and is shown at its fair value at each balance sheet date and recorded as an asset or liability with the change in fair value recorded in current earnings. PROPERTY, PLANT AND EQUIPMENT The Company records properties, plant and equipment at historical cost. The Company provides depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. The Company capitalizes expenditures for improvements that significantly extend the useful life of an asset. We capitalize interest costs during the construction or upgrade of qualifying assets. The Company recognizes a gain (loss) on sale of the asset in the consolidated statements of operations based upon the proceeds received on the sale less the net carrying value of the 86 asset. The Company charges expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows: Building 7 to 15 years Vehicles and equipment 3 to 7 years Processing and laboratory 5 to 15 years Furniture and fixtures 2 to 3 years The Company reviews the carrying amount of our property, plant and equipment for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future undiscounted cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows. RECLAMATION LIABILITIES AND ASSET RETIREMENT OBLIGATIONS Minimum standards for site reclamation and closure have been established for us by various government agencies and contractual obligations with lessors. Asset retirement obligations are recognized when an obligation is incurred, either through regulatory requirements in the jurisdictions in which we operate or by contractual obligation with one of our lessors, and recorded as liabilities when a reasonable estimate of fair value can be determined. An expected present value technique is used to estimate the fair value of the liability. This includes inflating the estimated costs in today’s dollars using a reasonable inflation rate up to the date of expected retirement, and discounting the inflated costs using a credit-adjusted risk-free rate. Upon initial recognition of the liability, the carrying amount of the related long-lived asset is increased by the same amount. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is amortized over the life of the related asset. Changes resulting from revisions to the timing or amount of the original estimate of undiscounted cash flows are recognized as either an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. Upward revisions of the amount of undiscounted estimated cash flows are discounted using the current credit-adjusted risk-free rate. Downward revisions in the amount of undiscounted estimated cash flows are discounted using the credit-adjusted risk-free rate that existed when the original liability was recognized. The Company reviews, on an annual basis, unless otherwise deemed necessary, the asset retirement obligations. Separately, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. MINERAL RIGHTS AND PROPERTIES The Company capitalizes acquisition costs until the Company determines the economic viability of the property. Since the Company does not have proven and probable reserves as defined by the SEC regulation S-K 1300, exploration expenditures are expensed as incurred. The Company expenses mineral lease costs and repair and maintenance costs as incurred. Upon commencement of production, the capitalized expenditures are depleted over proven and probable reserves using the units-of-production method. Where proven and probable reserves have not been established, such capitalized expenditures are depleted over the estimated production life using the straight-line method. The Company has not established proven or probable reserves for any of its projects. The Company reviews the carrying value of our mineral rights and properties for impairment, including mineral rights upon the occurrence of events or changes in circumstances that indicate the related carrying amounts may not be recoverable. Our estimate of precious metal prices, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in all of our properties. Although the Company has made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our properties and mineral claims, and possibly require future asset impairment write-downs. Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, the Company assesses recoverability of carrying value from other means, including net cash flows generated by the sale of the asset. The Company uses the units-of-production method to deplete the mineral rights and mining properties when in operation. TREASURY STOCK When the Company acquires its own stock, it is initially valued at cost and presented as treasury stock. Other than formal or constructive retirement or when ultimate disposition has not yet been decided, the cost of the acquired stock is presented as treasury stock separately as a deduction from the total of stockholders' equity. Gains on sales of treasury stock not previously 87 accounted for as constructively retired are credited to additional paid-in capital, and losses are charged to additional paid-in capital to the extent that previous net gains from sales or retirements of the same class of stock are included therein, with the remainder charged to accumulated deficit. When the Company's stock is retired or purchased for constructive retirement, any excess purchase price over par value is allocated between additional paid-in capital to the extent that previous net gains from sales or retirements are included therein, and the remainder to accumulated deficit. REVENUE RECOGNITION Fuels and Metals Segments For the majority of our operations, services revenues are recognized when services are performed and are contractually billable. For service contracts, principally engineering and construction management service, we recognize revenue over a period of time based on estimated progress toward completion. Service contracts that include multiple performance obligations are segmented between types of services. For contracts with multiple performance obligations, we allocate the transaction price to each performance obligation using an estimate of the stand-alone selling price of each distinct service in the contract. Revenue recognized on service contracts that have not been billed to clients is recorded as contract assets. Amounts billed to clients in excess of revenue recognized on service contracts to date are recorded as contract liabilities. Customer payments are typically due within 30 to 45 days of billing, depending on the contract. Mining Segment The Company has no contracts with customers as it does not have active mining operations. Consideration received by the Company pursuant to joint ventures or mineral lease agreements is applied against the carrying value of the related mineral interest. When and if payments received exceed the carrying value, the excess amount is recognized as revenue ratably over the term of the related agreement. Strategic Investments Segment We generate rental revenues from tenants via long-term lease contracts in various forms, including lease and sublease agreements. Providing access to the leased land and facilities and performing specified repair and maintenance services over the length of the tenant contract term represent our performance obligations under our tenant contracts. Tenant rental payments are typically due monthly or quarterly, depending on the contract. RESEARCH AND DEVELOPMENT Costs associated with the research and development of our demonstration scale electrification product recycling facility plant and equipment for our renewable energy products are generally recognized as expenses. Research and development expenses are capitalized only for those expenditures on materials, equipment and facilities that are acquired or constructed for research and development activities and have an alternative future use. Once such expenditures are placed in service, these costs are capitalized and depreciated to depreciation expense over the estimated lives of the products. STOCK-BASED COMPENSATION All transactions in which goods or services are received for the issuance of shares of our common stock or options to purchase shares of our common stock are accounted for based on the fair value of the equity interest issued. The fair value of shares of common stock is determined based upon the closing price per share of our common stock on the date of issuance and other applicable inputs. The Company recognizes stock-based compensation for common stock grants evenly over the related vesting period. The fair value of market condition performance share awards is determined based on path-dependent valuation techniques and inputs including the closing price per share of our common stock at date of grant, volatility and the risk-free interest rate. The Company recognizes stock-based compensation for market condition performance share awards evenly over the derived service period resulting from the path-dependent valuation. The fair value of performance condition share awards is determined based on the closing price per share of our common stock at date of grant and the probability of achieving the performance condition during the term of the award agreement. The probability of achievement is re-assessed each period end and stock-based compensation is adjusted accordingly. The Company recognizes stock-based compensation for performance condition share awards evenly over the term of the award agreement. The Company recognizes forfeitures of unvested common stock, performance shares and stock option grants as they occur. 88 RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the 2023 financial statement presentation. Reclassifications had no effect on net income (loss), cash flows, or stockholders’ equity, as previously reported. INCOME TAXES The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid or refunded. Significant judgments and estimates are required in determining the consolidated income tax expense. Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and the assumptions are consistent with the plans and estimates that the Company is using to manage its underlying businesses. The Company provides a valuation allowance for deferred tax assets that the Company does not consider more likely (than not) to be realized. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company evaluates its tax positions taken or expected to be taken in the course of preparing its tax returns to determine whether the tax positions will more likely than not be sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are not recorded as a tax benefit or expense in the current year. No reserve for uncertain tax positions has been recorded. INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Dilutive income (loss) per share includes any additional dilution from common stock equivalents, such as stock options, warrants, and convertible instruments, if the impact is not antidilutive. RELATED PARTIES AND TRANSACTIONS The Company identifies related parties and discloses related party transactions. Parties, which can be entities or individuals, are considered to be related if either party has the ability, directly or indirectly, to control or exercise significant influence over the Company in making financial and operational decisions. Entities and individuals are also considered to be related if they are subject to common control or significant influence of the Company. LEASES The Company determines if a contract is or contains a lease at its inception and evaluates if a contract gives the right to obtain substantially all of the economic benefits from use of an identified asset and the right to direct the use of the asset, in order to determine if a contract contained a lease. The Company recognized a right-of-use asset and a corresponding lease liability on its consolidated balance sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent obligations by the Company to make lease payments which arise from a lease. Lease right-of-use assets and lease liabilities are recognized at the inception date based on the present value of lease payments over the lease term. As the Company’s lease contracts do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the inception date in order to determine the present value of lease payments. For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For finance leases, the initial right-of-use asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments. For sales-type or direct financing leases in which the Company is the lessor, the Company recognizes lease payments as rental income and the property is classified on the consolidated balance sheet as assets held for use in property, plant and equipment during the term of the lease. If the lessee exercises the option to purchase the asset, the Company terminates the lease and the underlying assets are derecognized. For leases with a term of 12 months or less, lease payments are recognized on a straight-line basis over the lease term and are not recognized on the consolidated balance sheets. 89 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03 ( Topic 820) Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . The new guidance clarifies a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value, and an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments require certain disclosures for equity securities subject to contractual sale restrictions, including the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, the nature and remaining duration of the restriction, and the circumstances that could cause a lapse in the restriction. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. We adopted this new guidance on January 1, 2024 and do not expect a material impact to our financial position or results of operations. In August 2023, the FASB issued ASU 2023-05 Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement . The new guidance addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture's separate financial statements. The objectives of the amendments are to (1) provide decision useful information to investors and other allocators of capital in a joint venture's financial statements and (2) reduce diversity in practice. The guidance is applied prospectively and effective for all newly formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of this guidance on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07 ( Topic 280) Improvements to Reportable Segment Disclosures . The new guidance requires disclosure of significant segment expenses that are (1) regularly provided to or easily computed from information regularly provided to the chief operating decision maker and (2) included in the reported measure of segment profit or loss. The new standard also allows companies to disclose multiple measures of segment profit or loss if those measures are used to assess performance and allocate resources. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted and retrospective adoption is required unless impracticable. The Company is currently evaluating the impact of this disclosure guidance on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09 ( Topic 740) Improvements to Income Tax Disclosures . The new guidance requires additional disclosures of disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of this disclosure guidance on our consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. 90 NOTE 2 INVESTMENTS Summary of Investments At December 31, 2023 and 2022, our investments include: December 31, 2023 December 31, 2022 Equity Method Investments Investment Ownership % Investment Ownership % Quantum Generative Materials LLC $ 11,606,763 48.19 % $ 13,312,433 48.19 % Pelen Limited Liability Company 609,165 25.00 % 619,184 25.00 % Total equity method investments 12,215,928 13,931,617 Measurement Alternative Investments Green Li-ion Pte. Ltd. 18,912,985 13.34 % 4,517,710 16.45 % Sierra Springs Opportunity Fund, Inc. 19,045,000 17.11 % 335,000 11.64 % Total measurement alternative investments 37,957,985 4,852,710 Total investments 50,173,913 18,784,327 Less: current investments 18,912,985 — Long-term investments $ 31,260,928 $ 18,784,327 As of December 31, 2023 and 2022, the gain (loss) on investments is as follows: December 31, 2023 December 31, 2022 Realized gain on sale of 1,500 Green Li-ion shares $ 597,248 $ — Unrealized gain on remaining 35,662 Green Li-ion preferred shares 14,577,627 — Realized loss on sale of 9,076,923 ABTC common stock ( 1,865,000 ) — Unrealized gain on Sierra Springs Opportunity Fund, Inc. 11,725,000 — Other — 7,310 Total gain on investments $ 25,034,875 $ 7,310 Summary financial information for affiliated companies ( 20 % to 50 %-owned) accounted for by the equity method for the periods presented, compiled from the equity investee's financial statements and reported on a one quarter lag is as follows: December 31, 2023 December 31, 2022 Current assets $ 665,765 $ 1,023,023 Non-current assets 6,260,818 12,034,506 Current liabilities — 89,584 Non-current liabilities — — Twelve-Months Ended December 31, 2023 December 31, 2022 Revenues 70,271 73,697 Gross Profit 70,271 73,697 Net loss $ ( 4,588,529 ) $ ( 2,956,597 ) Net loss attributable to Comstock Inc. $ ( 1,715,689 ) $ ( 1,133,633 ) 91 Upon acquisition, management determined that the excess of our investment values over the net assets of the individual equity method investees was comprised of goodwill. At December 31, 2023 and 2022, non-current assets in the summarized financial information in the table above include the equity investees’ investment in, and derivative asset associated with, the Company's common stock of $ 3.7 million and $ 8.0 million, respectively. Investment in GenMat On June 24, 2021, we invested in the equity of GenMat, and received 465,000 membership units and committed $ 5,000,000 in cash and $ 10,000,000 in shares in the Company's common stock for a total of $ 15,000,000 for the initial seed investment and committed an additional $ 35,000,000 based upon GenMat’s realization of key development milestones, for up to 50 % ownership of GenMat. At closing, we issued 3,000,000 restricted shares of our common stock with a fair value of $ 10,530,000 toward the $ 10,000,000 required stock purchase price and recorded a $ 530,000 related derivative asset for the make-whole provisions associated with the Company's common stock issued. Through December 31, 2023, we paid a total of $ 12,550,000 consisting of the full $ 5,000,000 cash commitments and $ 7,550,000 against the make-whole provision associated with the Company's common stock. In 2023, we paid $ 5,100,000 against the make-whole for the deficiency in common stock value. In 2022, we paid $ 3,200,000 consisting of $ 750,000 towards the initial cash commitments and $ 2,450,000 against the make-whole for the deficiency in common stock value. For the years ended December 31, 2023 and 2022, the Company recorded $ 1,705,670 and $ 1,083,513 , respectively, in equity loss from affiliates for the investment in GenMat at 37.5 % of voting rights since 165,000 membership units were not vested as of December 31, 2023 and 2022. Through December 31, 2023, the Company has not made additional investments against the additional $ 35 million investment commitment because the Company and GenMat are finalizing the commitments associated with the first investment tranche and the related development milestones. The Company’s executive chairman and chief executive officer serves as the chairman of GenMat and the Company’s chief technology officer and another employee of the Company serve on the board of directors of GenMat. The GenMat board of directors is composed of the three employees of the Company having one vote each along with the chief executive officer and founder of GenMat who receives four votes. Investment in Pelen LLC In April 2020, the Company invested $ 602,500 in Pelen LLC in exchange for 25 % ownership. In each year from 2020 to 2022, we paid $ 100,000 for the option to purchase 75 % of the remaining membership interest of Pelen LLC. The option expired in 2023. At December 31, 2023 and 2022, the balance of option payments of $ 0 and $ 150,000 , respectively, are included in deposits in current assets on the consolidated balance sheets. The Company recorded $ 10,019 in equity loss from affiliates and $ 28,133 in equity income from affiliates for the investment in Pelen for the years ended December 31, 2023 and 2022. Investment in Green Li-ion Pte. LTD (“Green Li-ion”) As part of our acquisition of a majority ownership of LINICO on December 30, 2021, we acquired 37,162 preferred shares or 20.22 % of Green Li-ion, a Singaporean company. The investment had a relative fair value of $ 4,577,000 at acquisition and was accounted for under the equity method through March 31, 2022, and under the measurement alternative method after March 31, 2022. In 2022, Green Li-ion issued additional equity and decreased our ownership to 16.45 %, resulting in the loss of our ability to exercise significant influence. Accordingly, we elected the measurement alternative for equity investments that do not have a readily determinable fair value. On February 28, 2023 and September 5, 2023, Green Li-ion issued additional equity and further decreased our ownership down to 14.01 % and 13.34 %, respectively. On September 12, 2023, LINICO received gross proceeds of $ 795,510 , net of commission fees of $ 15,910 , from the sale of 1,500 Green Li-ion preferred shares for $ 530.34 per share and recorded a realized gain of $ 597,248 included in gain (loss) from investments in the consolidated statements of operations. In connection with this sale, the Company valued the remaining 35,662 Green Li-ion preferred shares it holds using the sales price of $ 530.34 per share which resulted in recognition of an unrealized gain on investment of $ 14,577,627 . The Company intends to sell the remaining Green Li-ion preferred shares over the next twelve months. 92 For the years ended December 31, 2023 and 2022, we recognized $ 0 and $ 59,290 , respectively, in equity loss from affiliates for the investment in Green Li-ion. Investment in Sierra Springs Opportunity Fund, Inc. (“SSOF ”) During 2019, the Company invested $ 335,000 for 6,700,000 shares of SSOF common stock. These shares represented approximately 11.64 % of SSOF as of December 31, 2022. From 2020 through November of 2023, the Company also advanced $ 6,985,000 to SSOF and its subsidiary, for the purpose of purchasing land, payments for deposits on land and payments for an option on land and water rights purchases. On December 29, 2023, the Company and SSOF agreed to convert total advances into 3,880,556 shares of SSOF common stock. The conversion rate of $ 1.80 per share was determined to be the fair value of a share of SSOF common stock based on cash sales of SSOF common shares. The Company’s initial investment of SSOF common shares in 2019 were revalued at $ 1.80 per common shares resulting in recognition of an unrealized gain on investment of $ 11,725,000 . At December 31, 2023, the Company’s total investment in SSOF consists of 10,580,556 common shares, or 17.11 % of the total SSOF outstanding common shares on a fully diluted, if converted basis. The Company's CEO is an executive of SSOF. Management concluded that SSOF is a VIE of the Company because the Company has both operational and equity risk related to SSOF, and SSOF currently has insufficient equity at risk. Management also concluded that the Company is not the primary beneficiary of SSOF because no one individual or entity has unilateral control over significant decisions. As the Company is not the primary beneficiary, SSOF is not consolidated. At December 31, 2023, the Company’s maximum exposure to loss as a result of its involvement with SSOF is limited to its investment of $ 19,045,000 . Investment in American Battery Technology Company In connection with the sale of the Manufacturing Facility (see Note 9, Sale of Manufacturing Facility ), the Company received 11 million shares of restricted common stock from the purchaser of the Manufacturing Facility, American Battery Technology Company ("ABTC"), with an initial fair value of $ 9,365,000 (see Note 14, Fair Value Measurements ). On June 30, 2023, the Company and ABTC amended the agreement whereby the Company returned 1,923,077 of the ABTC restricted shares, based on the trading price of ABTC's stock on the date of the amended agreement, in exchange for the $ 1.5 million of the purchase price set aside in escrow to settle indemnification claims. On August 8, 2023, the remaining 9,076,923 shares owned by the Company became unrestricted. In 2023, the Company sold all 9,076,923 ABTC shares for gross proceeds of $ 5,456,920 , net of commission fees of $ 90,939 . On December 8, 2023, ABTC paid $ 634,019 to the Company as part of the make-whole payment associated with the stock difference and ABTC guaranteed that the Company will receive additional cash if and to the extent that the net proceeds from such shares are less than $ 6.0 million. For the year ended December 31, 2023, the Company recognized a loss of $ 1,865,000 on sale of the ABTC shares which is included in gain (loss) from investments. Investment in LP Biosciences LLC On February 28, 2022, the LP Biosciences transactions that were entered in 2021 were terminated and each of the parties were relieved of their respective rights, liabilities, expenses, and obligations under the transactions except termination obligations. In connection with the termination, 3,500,000 restricted shares of the Company’s common stock were transferred back to the Company for cancellation upon receipt. The combined value of $ 5,110,000 , representing the carrying value of our investment of $ 4,173,000 and the derivative asset of $ 937,000 , was recorded directly to additional paid-in capital in the statement of equity as of December 31, 2022. The Company incurred additional expenses of approximately $ 250,000 in connection with the termination of the transaction, which was recorded as other income (expense) in the statement of operations for the year ended December 31, 2022. There was no such expense in 2023. 93 Investment in Mercury Clean Up LLC and MCU Philippines, Inc. In March 2022, based on the lack of known, cash-generating operating sites for MCU-P operations, we determined that the investment was not recoverable. For the year ended December 31, 2022, investment of $ 1,960,448 in MCU and the investment of $ 494,884 and notes receivable of $ 1,628,913 to MCU-P were deemed unrecoverable, and all amounts were fully impaired. On June 18, 2022, the members of MCU agreed to distribute 100 % of MCU's assets to the Company, including the cash held by MCU and MCU-P of $ 895,204 and the remaining 50 % of MCU-P common stock, in exchange for forgiveness of the debt owed by MCU-P to the Company which was fully impaired for the year ended December 31, 2022. The cash and proceeds of assets liquidated of $ 895,204 were recognized as a recovery of impairment of assets in other income (expense) of the Company with $ 590,000 from MCU and $ 305,204 from MCU-P in 2022. The carrying value of the investment on the acquisition date of both MCU and MCU-P was $ 0 and the net assets remaining after distributing the cash in repayment of the note receivable were insignificant. MCU and MCU-P hold equipment that was fully impaired prior to the acquisitions, and the remaining net assets include insignificant amounts of cash and accounts payable. For the years ended December 31, 2023 and 2022, the Company recorded equity losses from affiliates for the investment in MCU and MCU-P of $ 0 and $ 14,578 , respectively. For the years ended December 31, 2023 and 2022, the Company recorded equity losses from affiliates for the investment in MCU-P of $ 0 and $ 4,385 , respectively. NOTE 3 NOTES RECEIVABLE AND ADVANCES, NET Notes receivable and advances, net at December 31, 2023 and 2022 include: December 31, 2023 December 31, 2022 Current portion Sierra Springs advances receivable $ — $ 4,990,000 Total notes receivable and advances, current portion — 4,990,000 Non-current portion Daney Ranch note receivable 980,291 993,000 Unamortized discount for implied interest — ( 33,682 ) Daney Ranch note receivable, net of discount 980,291 959,318 Total notes receivable and advances, non-current portion, net $ 980,291 $ 959,318 Daney Ranch Sale On August 19, 2022, the Company sold the Daney Ranch and issued a 10-year $ 993,000 note receivable maturing in August 2032 to the former lessee and purchaser. The note bears interest at 2 % for the first twelve months and currently bears interest at 7 % and will so for the remaining term. The note may be prepaid, in full or in part, at any time without penalty. The note is secured by a second priority security interest in the property. The present value of the future interest and principal payments using a prevailing rate for similar loans of 7 % was less than the face amount of the loan at issuance and we recognized a discount of $ 51,909 . The discount was amortized into interest income over the first year of the note and the note is measured on an amortized cost basis. During the years ended December 31, 2023 and 2022, we recognized interest income of $ 71,595 and $ 25,519 , respectively, on the Daney Ranch note receivable. Tonogold Note Receivable In September 2020, the Company sold its 100 % ownership interest in Comstock Mining LLC whose sole assets were the Lucerne properties and related permits (“Comstock Lucerne”), to Tonogold Resources, Inc. (“Tonogold”) for cash and notes receivable. On March 26, 2022, the Company entered into an option agreement (the "Lucerne Option Agreement") with Tonogold where we agreed to extinguish their $ 6,650,000 note receivable ("the Tonogold Note") in exchange for 100 % of the membership 94 interests of Comstock Mining LLC and a payment of $ 750,000 . The agreement provided Tonogold the right to repurchase the Comstock Mining LLC membership interests, which expired at December 31, 2022, when all agreements were terminated due to the failure to pay the Company. The acquisition of the membership interest was accounted for as an asset acquisition. Consideration of $ 5,902,306 was allocated as $ 6,844,474 to the mineral interest acquired and $ 942,168 to the asset retirement obligation assumed. During 2022, the Company wrote off receivables from Tonogold totaling $ 1,283,302 consisting of expense reimbursements. Prior to the Lucerne Option Agreement, we accounted for the Tonogold Note using the fair value option. For the years ended December 31, 2023 and 2022, we recognized a loss in other income and expense on the consolidated statement of operations for the change in fair value of the Tonogold Note of $ 0 and $ 605,000 , respectively. Advances to SSOF. From 2020 through November of 2023, the Company advanced $ 6,985,000 to SSOF and its subsidiary, including $ 1,995,000 and $ 55,000 , in 2023 and 2022, respectively, for the purpose of purchasing land, payments for deposits on land and payments for an option on land and water rights purchases. Advances receivable at December 31, 2023 and 2022 were $ 0 and $ 4,990,000 , respectively, classified in Note receivable and advances, net – current portion on the consolidated balance sheets. On December 29, 2023, the Company and SSOF agreed to convert total advances into 3,880,556 shares of SSOF common stock. The conversion rate of $ 1.80 per share was determined to be the fair value of a share of SSOF common stock based on cash sales of SSOF common shares. The Company’s initial investment of SSOF common shares in 2019 were revalued at $ 1.80 per common shares resulting in recognition of an unrealized gain on investment of $ 11,725,000 (see Note 2, Investments ). NOTE 4 PROPERTY, PLANT AND EQUIPMENT, NET AND MINERAL RIGHTS Properties, plant and equipment at December 31, 2023 and 2022, include the following: December 31, 2023 December 31, 2022 Land $ 6,328,338 $ 6,328,338 Real property leased to third parties 1,037,049 1,037,049 Property, plant and equipment for mineral processing 27,644,745 27,644,745 Other property and equipment 7,394,191 5,212,891 Accumulated depreciation ( 27,200,293 ) ( 26,748,929 ) Total property, plant and equipment, net $ 15,204,030 $ 13,474,094 The Company recognized depreciation expense of $ 435,683 and $ 617,809 for the years ended December 31, 2023 and 2022, respectively. At December 31, 2023, the Company has $ 402,931 of property, plant and equipment that were not yet placed in service and have not yet been depreciated. Mineral Rights and Properties The Company owns, controls, or retains an interest in 9,358 acres located in Storey and Lyon Counties, Nevada, just south of Virginia City, Nevada (referred to collectively herein as the “Comstock Mineral Estate”), including 2,396 acres of patented claims and surface parcels, approximately 6,962 acres of unpatented claims administered by the BLM, five mineral leases, one joint venture (providing exclusive rights to exploration, development, mining and production), royalty interests, and fee ownership of real property, including 126 patented and 392 unpatented mineral lode claims, as well as 39 unpatented placer claims. Our properties at December 31, 2023 and 2022 consisted of the following: December 31, 2023 December 31, 2022 Comstock Mineral Estate $ 12,164,013 $ 12,164,013 Other mineral properties 317,405 317,405 Water rights 820,595 90,000 Total mineral rights and properties $ 13,302,013 $ 12,571,418 95 The Comstock Mineral Estate includes all of the Company's resource areas and exploration targets. During the years ended December 31, 2023 and 2022, we did not record any depletion expense, as none of the properties are currently in production. All of our mineral exploration and mining lease payments are classified as selling, general and administrative expenses in the consolidated statements of operations. On June 30, 2023, the Company signed a Mineral Exploration and Mining Lease Agreement (the “Mining Lease”) with Mackay Precious Metals Inc. (“Mackay”). The Mining Lease provides a twenty-year term granting Mackay the rights to conduct exploration on certain of the Company’s mineral properties in Storey County, Nevada. Mackay paid a lease initiation fee of $ 1,250,000 and made their first two quarterly lease payments totaling $ 875,000 , with quarterly lease payments of $ 375,000 for the next three and a half years, and then quarterly lease payments of $ 250,000 thereafter. In addition, Mackay will reimburse carrying costs for the mineral properties, and will pay a 1.5 % NSR royalty from eventual mine production from the mineral properties. Mackay also committed to exploration expenditures of $ 1,000,000 per year on a cumulative basis, and increasingly detailed technical reports after the first five, ten, and fifteen years. We determined that the lease initiation fee of $ 1,250,000 should be recognized as revenue ratably over the term of the lease and quarterly lease payments will be recognized as revenue in the period received. For the year ended December 31, 2023, we recorded revenue of $ 906,250 which includes the quarterly lease payments of $ 875,000 and amortization of the lease initiation fee of $ 31,250 . As of December 31, 2023, $ 1,218,750 of deferred revenue for the initiation fee remains, which the Company classified the short and long term deferred revenue of $ 62,500 and $ 1,156,250 , respectively, in accrued expenses and other liabilities and deferred revenue in our consolidated balance sheet. In 2023, the Company acquired senior water rights ( 50 -acre feet) associated with one of its existing properties and junior water rights ( 16 -acre feet) for a total of $ 730,595 . NOTE 5 RECLAMATION BOND DEPOSIT The Nevada Revised Statutes and Regulations require a surety bond to be posted for mining projects so that after the completion of such mining projects the sites are left safe, stable and capable of productive post-mining uses. The bond is intended to cover the estimated costs required to safely reclaim the natural environment to the regulatory standards established by the State of Nevada’s Division of Environmental Protection. Accordingly, the Company has a $ 6,751,950 reclamation surety bond through the Lexon Surety Group (“Lexon”) with the State of Nevada’s Bureau of Mining Regulation and Reclamation at December 31, 2023. The Company also has a $ 500,000 surety bond with Storey County for mine reclamation at December 31, 2023. As part of the surety agreement, the Company agreed to pay a 2.0 % annual bonding fee. The total cash collateral, per the surety agreement, was $ 2,743,582 and $ 2,620,879 at December 31, 2023, and 2022. The reclamation bond deposit at December 31, 2023 and 2022 consisted of the following: December 31, 2023 December 31, 2022 Lexon surety bond cash collateral $ 2,743,582 $ 2,620,879 Other cash reclamation bond deposits 106,936 106,936 Total reclamation bond deposit $ 2,850,518 $ 2,727,815 The Lexon collateral at December 31, 2023 and 2022, includes interest income of $ 122,703 and $ 120,879 , respectively, which has been left on deposit at BNY Mellon. The total cash collateral is a component of the reclamation bond deposit on the consolidated balance sheets for the years ended December 31, 2023 and 2022. 96 NOTE 6 INTANGIBLE ASSETS AND GOODWILL The Company’s intangible assets at December 31, 2023 and 2022 include the following: Description Estimated Economic Life December 31, 2023 December 31, 2022 Developed technologies 10 years $ 19,582,402 $ 19,382,402 License agreements 10 years 510,752 510,752 Customer agreements 1 year 122,885 122,885 Distribution agreements 8 years 19,733 19,733 Trademarks 10 years 7,000 7,000 Accumulated amortization ( 4,376,740 ) ( 2,379,091 ) Intangible assets, net $ 15,866,032 $ 17,663,681 The estimated economic lives shown above were at the closing dates of the respective acquisitions. The estimated economic lives of license agreements and developed technologies are based on the midpoint of the indicated lives derived from the related valuation analyses. The estimated economic lives of customer and distribution agreements are based on the specified terms of the respective agreements. Accumulated amortization as of December 31, 2023 and 2022 consisted of the following: December 31, 2023 December 31, 2022 Developed technologies $ 4,113,045 $ 2,172,594 License agreements 131,917 78,415 Customer agreements 122,885 122,884 Distribution agreements 7,493 4,497 Trademarks 1,400 701 Accumulated amortization $ 4,376,740 $ 2,379,091 Amortization expense related to intangible assets of $ 1,997,649 and $ 2,171,646 was recorded for the years ended December 31, 2023 and 2022, respectively. Future minimum amortization expense is as follows at December 31, 2023: 2024 $ 2,013,499 2025 2,013,499 2026 2,013,499 2027 2,013,499 2028 2,010,753 Thereafter 5,801,283 $ 15,866,032 Changes in the intangible assets balances for the year ended December 31, 2023 are presented below: As of December 31, 2022 Additions Assets Held for Sale Impairment Amortization As of December 31, 2023 Intangible assets $ 20,042,772 $ 200,000 $ — $ — $ — $ 20,242,772 Accumulated amortization ( 2,379,091 ) — — — ( 1,997,649 ) ( 4,376,740 ) Total intangible assets $ 17,663,681 $ 200,000 $ — $ — $ ( 1,997,649 ) $ 15,866,032 97 Changes in the intangible assets and goodwill balances for the year ended December 31, 2022 are presented below: As of December 31, 2021 Additions Assets Held for Sale Impairment Amortization As of December 31, 2022 Intangible assets $ 23,514,259 $ 500,000 $ ( 3,621,487 ) $ ( 350,000 ) $ — $ 20,042,772 Accumulated amortization ( 338,958 ) — 119,548 11,965 ( 2,171,646 ) ( 2,379,091 ) Goodwill 12,788,671 — — ( 12,788,671 ) — — Total intangible assets and goodwill $ 35,963,972 $ 500,000 $ ( 3,501,939 ) $ ( 13,126,706 ) $ ( 2,171,646 ) $ 17,663,681 All intangibles and goodwill are associated with the Fuels and Metals Segments. In 2022, the Company fully impaired the goodwill associated with acquisitions in 2021 of $ 12,788,671 in the Fuels and Corporate Segments. Our assessment reviewed both qualitative and quantitative factors to derive the estimated fair value of our goodwill associated with our acquisitions in 2021. The Company fully impaired the goodwill associated with acquisitions in 2021 due to a decrease in the Company's stock price and market capitalization since the acquisition date. Our valuation method incorporated the present value of projected cash flows to calculate the discounted cash flows compared to the guideline for public companies. We compared the fair value as indicated by the discounted cash flows of the reporting unit to the carrying value of the goodwill and recognized a full impairment of goodwill associated with our 2021 acquisitions. The Company is party to three license agreements with American Science and Technology Corporation (“AST”), pursuant to which the Company agreed to license certain intellectual property of AST for use at three facilities in exchange for three facility-specific license fees of $ 500,000 each, and a royalty fee equal to 1.0 % of the gross revenue of each of the first three licensed facilities. During 2022, the Company paid $ 500,000 toward the license fees which are recognized as an addition to intangible assets - developed technologies. As of December 31, 2023, we have obtained the three license agreements and no additional payments are anticipated. On December 28, 2023, the Company amended the asset purchase agreement with Flux Photon Corporation (“FPC”) dated on September 7, 2021, and amended on December 10, 2021 (as amended, the “FPC Asset Purchase Agreement”). Pursuant to the 2021 FPC Asset Purchase Agreement, the Company acquired certain intellectual property and related photocatalysis laboratory equipment (the “FPC Assets”). The original purchase price included a payable for the FPC assets of $ 17,650,000 , payable only from 20 % of future cash flows defined as the future monthly consolidated sales, less total variable costs, less operating expenses, maintenance, tax payments, and debt service payments of Comstock Inc. and its now and hereafter-existing subsidiaries until the purchase prices has been fully paid. The 2023 amended FPC Asset Purchase Agreement reduced the purchase price payable to $ 16,850,000 . On the date of the amendment, the Company paid $ 200,000 with the remaining balance of $ 16,650,000 payable to Flux from future cash flows and accounted for as an acquisition of intellectual property. Mr. Kreisler, a member of the Company's board of directors and the Company's chief technology officer, is also the owner of 100 % of the outstanding common stock of Flux and as such was the indirect beneficiary of all payments made to Flux pursuant to the FPC Asset Purchase Agreement (see Note 20, Related Party Transactions ). As of December 31, 2022, assets held for sale included a lease intangible with a balance of $ 3,501,939 which was net of related amortization of $ 119,548 . The underlying lease and lease intangible were classified as Held for Sale at December 31, 2022 and were sold in April 2023 with the Company's acquisition of the associated leased assets (see Note 9, Sale of Manufacturing Facility ). 98 NOTE 7 ACCRUED EXPENSES AND OTHER LIABILITIES - CURRENT Accrued expenses and other liabilities - current at December 31, 2023, and 2022, consisted of the following: December 31, 2023 December 31, 2022 Accrued interest expense $ 52,500 $ 43,398 Accrued payroll costs 798,827 627,210 Accrued incentive compensation 1,332,169 928,125 Accrued vendor liabilities 53,088 115,653 Deferred revenue 78,495 — Other accrued expenses 47,402 5,211 Total accrued expenses $ 2,362,481 $ 1,719,597 On July 1, 2022, the Board of Directors approved a performance objective based, cash incentive compensation plan for executives of the Company, with the potential to earn a performance bonus of up to 100 % of base salary. The incentive compensation is discretionary and based on the progress and achievement of performance objectives as depicted in the strategic plan approved by the Board of Directors. The final assessment of progress and achievement requires the compensation committee’s approval. On April 28, 2023, the compensation committee of the Board of Directors approved payment of executive incentive compensation of $ 970,000 for named executive officers other than the chief executive officer earned through December 31, 2022 which was paid in 2023. On September 29, 2023, the compensation committee of the Board of Directors approved a special, performance-based cash award to the chief executive officer of $ 30,000 , paid as of December 31, 2023. For the years ended December 31, 2023 and 2022, the Company recognized $ 1,332,169 and $ 928,125 , respectively, of expense associated with the plan based on estimates of progress towards meeting incentives. As of December 31, 2023, accrued incentive compensation of $ 1,332,169 consists of the estimated 2023 incentive pay expected to be paid in 2024. NOTE 8 LEASES The Company has the following lease balances recorded on the consolidated balance sheets as follows: Lease Assets and Liabilities Classification December 31, 2023 December 31, 2022 Finance lease right-of-use asset Asset, held for sale $ — $ 15,709,039 Finance lease right-of-use asset Finance lease - right to use asset, net 2,923,766 2,911,458 Operating lease right-of-use asset Other assets - noncurrent 237,617 42,061 Total right of use assets $ 3,161,383 $ 18,662,558 Operating lease liability - current Accrued expenses and other liabilities $ 37,401 $ 5,211 Operating lease liability - long-term Other liabilities 205,154 40,193 Finance lease liability Lease liability - held for sale — 12,021,566 Finance lease liability, current portion Finance lease - Right of use lease liability 838,676 409,143 Finance lease liability Finance lease - Right of use lease liability, long term portion — 406,968 Total lease liabilities $ 1,081,231 $ 12,883,081 99 The Company has the following lease costs recorded in the consolidated statements of operations as follows: Year Ended December 31, 2023 2022 Finance lease cost: Amortization of right-of-use assets $ 44,193 $ 539,115 Interest on lease liabilities 246,038 829,924 Operating lease cost 34,945 10,099 Total lease cost $ 325,176 $ 1,379,138 Other information Operating cash flows from operating leases $ 33,350 $ 9,650 Financing cash flows from finance leases $ 301,540 $ 3,062,360 Non-cash finance lease modification $ 56,501 $ 1,147,669 Right-of-use asset and lease acquired $ 213,925 $ 839,439 Right-of-use acquired with shares of common stock (Haywood) $ — $ 2,100,000 The Company has the following weighted average remaining lease terms and discount rates for our finance and operating leases: 2023 2022 Weighted-average remaining lease term in years - finance leases 0.33 1.33 Weighted-average remaining lease term in years - operating leases 4.62 5.75 Weighted-average discount rate - finance leases 8 % 8 % Weighted-average discount rate - operating leases 13 % 11 % Finance Lease AQMS Lease Since 2021, LINICO, a majority-owned subsidiary of the Company, had a finance lease (the “AQMS Lease”), as lessee, with Aqua Metals Reno Inc., a subsidiary of Aqua Metals Inc. (“AQMS”), for land, buildings and related improvements (the “Manufacturing Facility”). AQMS was the non-controlling interest holder for LINICO. The lease agreement provided for the Company to purchase the Manufacturing Facility for a total purchase price of $ 15.25 million ($ 3.25 million of which was previously paid by LINICO) if LINICO elected not to or was unable to purchase the Manufacturing Facility. LINICO did not exercise the purchase option on October 1, 2022, and paid an additional $ 2,000,000 on October 25, 2022, effectively extending the option until March 31, 2023, increasing the lease term from 16 to 19 months and a $ 1,147,669 increase to the lease liability and right of use asset. On March 30, 2023, the Company delivered AQMS a notice of its irrevocable intent to exercise the option and purchase the membership interest of the entity that owned the Manufacturing Facility for $ 12,000,000 , as provided by the agreement. On April 26, 2023, the Company closed on the purchase of the membership interest of Aqua Metals Transfer LLC (“AQMT”) from AQMS and paid the remaining $ 12.0 million due, taking full ownership of the membership interest of AQMT and terminating the AQMS Lease (see Note 9, Sale of Manufacturing Facility ). AST Asset Purchase Agreement On April 16, 2021, the Company entered into an asset purchase agreement (the “AST Asset Purchase Agreement”) with AST. The license agreements provided for full use of the facility and all machinery and equipment located therein until April 30, 2022. Under the AST Asset Purchase Agreement, the Company agreed to acquire substantially all of AST’s assets in exchange for $ 3,500,000 due on April 30, 2024 in addition to $ 35,000 per month from May 1, 2022 to April 30, 2024. Beginning May 1, 2022, the AST Asset Purchase Agreement provides for full access and use of the AST assets until all payments are made and title transfers to the Company. The Company also entered into three license agreements with AST in connection with the AST Asset Purchase Agreement (see Note 6, Intangible Assets and Goodwill ). 100 All of the assets purchased under the agreement are being used for research and development activities. The machinery and equipment acquired was built for a specific purpose and is being used in testing for development of the technology required to process woody biomass into intermediate materials that can be converted into paper products and fuels. These assets have no alternative future use. The facility purchased is an industrial property located in Wausau, Wisconsin with an alternative use. The AST Asset Purchase Agreement was accounted for as a finance lease with a purchase option which we are reasonably certain will be exercised. The consideration in the contract was allocated to the separate lease and non-lease components of the contract based on their relative standalone estimated fair values. The total of the lease payments was first allocated to the building, which has an observable price, and the remainder was allocated to the machinery and equipment. The initial measurement of the right-of-use asset and lease liability was $ 839,439 using the allocated consideration in the contract of $ 935,759 for the building discounted using the Company’s incremental borrowing rate at lease commencement of 7.87 % because there is no rate implicit in the lease contract. The incremental borrowing rate was determined based on debt acquired by the Company at the end of 2021, adjusted for increases in the risk-free rate. The building is being depreciated over a 20 -year useful life and the lease liability has a remaining life at December 31, 2023 of 0.33 years. Of the amounts paid under this agreement, a portion is associated with the acquired machinery and equipment and recognized as research and development expense in the consolidated statements of operation. For the years ended December 31, 2023 and 2022, the Company recognized $ 319,740 and $ 213,160 , respectively, of research and development expense. Haywood Quarry Acquisition and Lease Agreement On April 7, 2022 and amended on November 7, 2022, the Company contracted to purchase Haywood quarry and industrial property (the “Haywood Property”) from Decommissioning Services LLC (“Decommissioning Services”) for $ 2.1 million, payable in $ 50,000 of cash and 1,500,000 common shares of Comstock with a total value of $ 2,295,000 . The Haywood Property represents approximately 190 industrial acres in Lyon County, Nevada, and is part of one of the larger industrial parks in Lyon County. The property has power, water and direct highway access. The Company plans to employ a portion of the property for the storage of end-of-life electrification products. The closing and purchase of the asset is contingent on liquidation of the shares and receipt of the full purchase price by the seller. The Company agreed to make up any shortfall if the proceeds from the sale of the shares plus the deposit are less than $ 2.1 million, and the seller agreed to refund any excess proceeds. This contractual stock consideration has been recorded as a derivative on the consolidated balance sheets. The first amendment to the lease agreement signed by the parties on November 7, 2022 extended the closing date to April 7, 2024. For the years ended December 31, 2023 and 2022, the Company paid Decommissioning Services $ 200,000 and $ 150,000 , respectively, which resulted in a decrease in contractual stock consideration (see Note 14, Fair Value Measurements). During the period between execution of the agreement and closing, the property is leased to us for no additional consideration, providing exclusive rights to access, use or sublease portions of the property, to obtain permits and prepare the property for its intended purpose, including improvements. If the conditions for closing are not satisfied by April 7, 2024, the agreement will terminate, and Decommissioning Services will retain a total of $ 400,000 in rental fees for use of the property. We agreed to pay Decommissioning Services a 2 % royalty of the sales price of any gravel, aggregate, or rock products produced and sold from the Haywood Property, excluding the removal of materials that have been pledged to a third-party for improvements made. Daney Ranch In September 2020, the Company, as lessor, leased real property and improvements located at 25 Daney Canyon Road, Dayton, Nevada (“Daney Ranch”) under a 36-month lease agreement commencing September 1, 2020, subject to early termination upon exercise of a purchase option. The option allowed the lessee to purchase the property for $ 2,700,000 less all rental payments made in the first 24 months if exercised within the first two years of the agreement. At lease inception, it was not reasonably certain the lessee would exercise the purchase option and the lease was classified as an operating lease. All lease payments were recognized as rental income and the property was classified as assets held for use in property, plant and equipment during the term of the lease. In August 2022, the lessee exercised the option and completed the purchase of the Daney Ranch property, which resulted in lease termination and derecognition of the underlying assets (see Note 3, Notes Receivable and Advances, net ). 101 Operating Leases On August 15, 2023, the Company, as lessee, signed a Real Estate and Building Lease Agreement (the “Building Lease”) with Sierra Clean Processing LLC to lease real property and improvements located at 600 Lake Avenue, Silver Springs, Nevada. The Building Lease is under a five year term commencing on August 1, 2023, subject to automatically renew for an additional five year terms. Under the agreement, rental expense is $ 4,680 per month with an annual rent increase of 3 % and all lease payments were recognized as rental expense. At lease inception, the lease was classified as an operating lease and the Company determined the lease term to be five years . At August 15, 2023, we recorded a right-of-use asset and lease liability of $ 213,925 and $ 213,925 , respectively, at a discount rate of 13.57 %. For the year ended December 31, 2023, the fixed operating lease expense was $ 24,847 . The Company's chief executive officer is an executive and director of Sierra Clean Processing LLC. The Company has an operating lease, as lessee, with Sutro as lessor, for a property located adjacent to the Gold Hill Hotel, which is primarily used as a room rental. The lease runs from 2018 until 2028. The monthly rent is $ 5,850 with automatic annual increases of $ 25 per month every November, beginning in 2020. The operating lease is sub-leased to Crown Point Management LLC, the operators of the Gold Hill Hotel, and not separately valued within the Gold Hill Hotel lease. For the years ended December 31, 2023 and 2022, the fixed operating lease expense was $ 10,099 and $ 10,099 , respectively. For the years ended December 31, 2023 and 2022, short-term operating lease expense was $ 100,030 and $ 52,115 , respectively. Minimum lease payments to be paid by the Company by fiscal year for the Company's operating and finance leases are as follows: Operating Leases Finance Leases 2024 $ 67,112 $ 860,564 2025 69,118 — 2026 71,175 — 2027 73,285 — 2028 46,372 — Thereafter — — Total lease payments 327,062 860,564 Less: imputed interest ( 84,507 ) ( 21,888 ) Present value of lease liabilities $ 242,555 $ 838,676 Operating Lease Income Revenues from operating leases on our land and building leased to others totaled $ 368,198 and $ 169,100 for the years ended December 31, 2023 and 2022, respectively. Minimum lease payments for operating leases to be received from others are as follows: 2024 $ 94,725 2025 96,000 2026 96,000 2027 96,000 2028 96,000 Thereafter 96,000 Total Minimum Lease Income $ 574,725 NOTE 9 SALE OF MANUFACTURING FACILITY Since 2021, LINICO Corporation (“LINICO”), a majority-owned subsidiary of the Company, had a finance lease, as lessee, with AQMS, for land, buildings and related assets and improvements (the “Manufacturing Facility”). As of December 31, 2022, the Manufacturing Facility had a net carrying value of $ 21,684,865 and liabilities of $ 12,021,566 , that met the criteria to be 102 classified as held for sale. From March 1, 2023 to August 11, 2023, the Company consummated the sale and transferred the title of the Manufacturing Facility to ABTC. The previously existing lease between LINICO and AQMS was terminated (see Note 8, Leases ). Consideration received for the Manufacturing Facility as of December 31, 2023 are as follows: Date Consideration Fair Value of Consideration March 1, 2023 Cash $ 6,000,000 March 31, 2023 Cash 5,000,000 April 6, 2023 (modified April 21, 2023) Restricted shares of ABTC common stock ( 10,000,000 shares) 9,000,000 April 21, 2023 Cash 7,000,000 May 12, 2023 Cash 1,000,000 May 12, 2023 Restricted shares of ABTC common stock ( 1,000,000 shares) 365,000 May 22, 2023 Cash 2,000,000 June 30, 2023 ABTC common shares returned in lieu of escrowed funds ( 1,923,077 shares) ( 1,500,000 ) Total Consideration $ 28,865,000 Total consideration $ 28,865,000 Carrying value of manufacturing facility and equipment sold ( 21,397,165 ) Costs associated with the transaction ( 163,265 ) Gain on sale of manufacturing facility $ 7,304,570 On March 1, 2023, LINICO and ABTC entered into a Membership Interest Purchase Agreement (“Manufacturing Facility Purchase Agreement”) whereby ABTC would acquire the Manufacturing Facility and certain equipment. On March 31, 2023 and April 21, 2023, the Company received non-refundable consideration of $ 5 million and $ 7 million in cash, respectively, from ABTC. On April 6, 2023, LINICO and ABTC amended and restated the Manufacturing Facility Purchase Agreement (“A&R Manufacturing Facility Purchase Agreement”), and the Company received 10 million shares of ABTC restricted common stock. The A&R Manufacturing Facility Purchase Agreement contained a guarantee that the Company will receive additional cash and/or shares if and to the extent that the proceeds from such shares were less than $ 6.6 million. The Company was required to set aside $ 1.5 million of the purchase price in escrow to settle potential indemnification claims. On May 12, 2023, the Company and ABTC amended and restated the A&R Manufacturing Facility Purchase Agreement (“Second A&R Manufacturing Facility Purchase Agreement”). The Company received an additional $ 1.0 million in cash and 1 million shares of restricted shares of ABTC common stock. On May 22, 2023, the Company received an additional $ 2.0 million in cash associated with the purchase and an additional $ 250,000 in cash to extend the closing period of the agreement. On June 30, 2023, the parties amended and restated the Second A&R Manufacturing Facility Purchase Agreement (“Third A&R Manufacturing Facility Purchase Agreement”), whereby the Company returned 1,923,077 of restricted shares of ABTC stock in exchange for $ 1.5 million of the purchase price previously agreed to be set aside in escrow to settle potential indemnification claims. The number of shares returned was based on the trading price of ABTC stock on the agreement date. The Third A&R Manufacturing Facility Purchase Agreement also decreased the guarantee of amount to be received on sale of ABTC stock from $ 6.6 million to $ 6.0 million. On August 11, 2023, the Company consummated the sale and transferred the title of the Manufacturing Facility to ABTC pursuant to the Third A&R Manufacturing Facility Purchase Agreement. On April 21, 2023, the Company and ABTC entered into a pre-closing lease agreement for the Facility whereby ABTC could use the Facility until the time the sale is finalized. Under the lease terms, ABTC was responsible for payment of all taxes and operating costs associated with the Manufacturing Facility. During 2023, the Company received $ 237,473 in rental income from ABTC for renting the Manufacturing Facility prior to the closing date of August 11, 2023, at which time the lease was terminated. 103 The Company sold all of its shares of ABTC common stock in 2023 for net proceeds of $ 5,365,981 . In December 2023, ABTC paid the Company $ 634,019 in accordance with the guarantee of $ 6.0 million to be received on sale of ABTC stock. Assets held for sale at December 31, 2022 include: December 31, 2022 Right of use lease asset, net of amortization $ 15,709,039 Lease intangible, net of amortization 3,501,939 Deposits 1,250,000 Property, plant and equipment 710,563 Construction in progress 513,324 Total assets held for sale $ 21,684,865 Liabilities held for sale at December 31, 2022 include: December 31, 2022 Right of use lease liability $ 12,021,566 Total liabilities held for sale $ 12,021,566 NOTE 10 DEBT OBLIGATIONS Debt at December 31, 2023 and 2022 consisted of the following: December 31, 2023 December 31, 2022 GHF Secured Promissory Note – 6 % interest, due December 15, 2024 $ 4,290,000 $ 4,290,000 Alvin Fund LLC Promissory Note - 16 % interest, due January 31, 2026 2,000,000 2,000,000 Alvin Fund LLC Promissory Note - 8 % interest, due February 12, 2025 2,100,000 — Kips Bay Unsecured Convertible Promissory Note - 8 % interest, due March 27, 2025 3,157,894 — AQMS Notes Payable, net - 9.76 % implied interest, due December 31, 2024 600,000 — Ionic Unsecured Convertible Promissory Note - 8 % interest, due March 16, 2024 — 3,150,000 Total debt 12,147,894 9,440,000 Less: debt discounts and issuance costs ( 2,297,172 ) ( 1,522,667 ) Total debt, net of discounts 9,850,722 7,917,333 Less: current maturities ( 4,495,660 ) ( 1,795,890 ) Long-term debt, net of discounts and issuance costs $ 5,355,062 $ 6,121,443 GHF, Inc. Secured Promissory Note The Company entered into a long-term promissory note (“GHF 2021 Note”) with GHF, Inc. on December 15, 2021, with a principal amount of $ 5,000,000 , of which $ 4,550,000 was funded and $ 450,000 was an original issue discount ("OID"). The full principal is due on December 15, 2024. Interest is payable monthly at a rate of 6 % annually. Prepayment is allowed in full or in part at any time without premium or penalty. The loan is secured by all non-mining related assets of the Company, Silver Springs land and water rights, excluding the Lucerne and Dayton properties. The Company is required to prepay the promissory note with any net cash proceeds received in the sale of any collateral. If the promissory note has not been paid in full on or prior to December 15, 2022, the Company was required to issue warrants to GHF allowing them to purchase 1,000,000 shares of the Company’s common stock, half of which are exercisable at a price per share of 150 % of the 20 -day volume weighted average closing price (“VWAP”) of the Company’s common stock on its primary trading market for the 20 consecutive trading days preceding December 15, 2021, and the remainder at a price per share of 135 % of the 20 -day VWAP as determined on December 15, 2022. 104 On December 15, 2022 the Company issued warrants to GHF allowing them to purchase 1,000,000 shares of the Company’s common stock, 500,000 of which are exercisable at a price per share of $ 0.4555 and the remaining 500,000 at a price per share of $ 2.5217 . The warrants are exercisable for a period of two years commencing on December 15, 2022, and ending on December 15, 2024. Fair value of warrants were calculated using a Black-Scholes model with the following inputs: stock price on the grant date of $ 0.54 and exercise price of $ 1.00 per share; expected term of 2 years; annualized discount rate of 3.32 %; and annualized volatility of 61.82 %. The warrants had a fair value of $ 708,789 on issuance date at which time the Company estimated a 10 % probability that the warrants would be issued resulting in an initial discount on debt of $ 70,897 . In December 2022, the contingency was resolved upon issuing the warrants, the discount on the note was increased by $ 637,910 and related amortization was adjusted to reflect the increase in 2022. On August 22, 2022, the Company amended the prepayment provision of the GHF 2021 Note to reduce the amount required to be paid from the Daney Ranch sale to $ 710,000 of the net cash proceeds. As consideration for the amendment, the Company issued GHF, Inc. warrants to purchase 200,000 common shares exercisable at a price of $ 1.00 per share for a two-year term. The warrants had a fair value of $ 18,975 on the date of issuance and was recorded as an additional debt discount with a corresponding increase in additional paid-in capital. During the years ended December 31, 2023 and 2022, we recognized interest expense of $ 635,529 and $ 715,089 , respectively, which includes OID amortization of $ 378,129 and $ 429,912 , respectively, in connection with the GHF 2021 Note. Alvin Note Fund Notes The Company entered into a short-term promissory note (the “Alvin Fund 2022 Note”) with Alvin Fund LLC (“Alvin Fund”) on October 25, 2022 with a principal amount of $ 2,000,000 . In consideration of the lender providing the financing, the Company issued $ 250,000 in shares to the lender which was recognized as a discount on the loan. The full principal was due on October 25, 2023. Interest was payable monthly at a rate of 9 % annually. Prepayment is allowed in full or in part at any time without premium or penalty. The loan is secured by all the property commonly referred to as the Dayton properties. On September 30, 2023, the Company entered into an amendment to extend the maturity of the Alvin Fund 2022 Note to January 31, 2026, at an interest rate of 16 %. During the years ended December 31, 2023 and 2022, we recognized interest expense of $ 422,140 and $ 78,931 , respectively, which includes OID amortization of $ 204,110 and $ 45,890 , respectively, in connection with the Alvin Fund 2022 Note. In 2023, the Company issued an aggregate of 475,930 shares of unregistered restricted common shares with a fair value of $ 211,562 to Alvin Fund in lieu of cash payments for interest under the Alvin Fund 2022 Note. On November 12, 2023, the Company entered into a short-term promissory note (the "Alvin Fund 2023 Note") with Alvin Fund with a principal amount of $ 2,100,000 which includes $ 100,000 original issue discount. The full principal is due on February 12, 2025. Interest is payable monthly at a rate of 8 % annually. Prepayment is allowed in full or in part at any time without premium or penalty. The loan is secured by the Company's non-mining assets. During the year ended December 31, 2023, we recognized interest expense of $ 50,077 which includes OID amortization of $ 27,524 in connection with the Alvin Fund 2023 Note. In consideration of the lender providing the financing, the Company issued warrants that would allow the lender to purchase 1,000,000 shares at $ 0.70 per share which was recognized as a discount on the loan. The warrants are exercisable for a period of two years commencing on November 12, 2023, and ending on November 12, 2025. Fair value of warrants were calculated using a Monte Carlo valuation model with the following inputs: stock price on the grant date of $ 0.47 and exercise price of $ 0.70 per share; expected term of 2 years; risk free rate of 4.92 %; and annualized volatility of 85.0 %. The warrants had a relative fair value of $ 157,269 on the date of issuance and was recorded as an additional debt discount with a corresponding increase in additional paid-in-capital. Kips Bay Select LP Unsecured Convertible Note On December 27, 2023, the Company entered into a securities purchase agreement for an unsecured convertible promissory note (the "Kips Bay Note") with Kips Bay Select LP ("Kips Bay") with a principal amount of $ 5,263,157 , of which $ 263,157 was an original issue discount. The full principal is due on March 27, 2025. Interest is payable monthly at a rate of 8 % annually. On December 27, 2023, the Company received $ 3.0 million and received the remaining $ 2.0 million on January 27, 2024. The note requires the Company to pay a loan commitment fee of $ 150,000 in the form of shares of its common stock. As of December 31, 2023, the Company recorded a stock payable of $ 150,000 as a non-current other liability on the consolidated balance sheet. The amount was recognized as additional discount on the note. On January 11, 2024, the Company issued 105 308,931 restricted shares of its common stock equal to 3 % of the principal amount of the Kips Bay Note, or $ 157,895 at $ 0.511 per share. On January 16, 2024, the Company issued an additional 180,210 registered shares of its common stock equal in value to 1.75 % of the principal amount of the Kips Bay Note, or $ 92,105 , also at $ 0.511 per share. The Kips Bay Note contains conversion terms that are based on percentages of trading price and volumes over defined measurement periods. The terms require the conversion option to be bifurcated as a derivative. As of December 31, 2023, the Company bifurcated the conversion feature was recorded as a derivative liability with a corresponding addition to debt discount of $ 1,360,000 reflected in our consolidated balance sheet. The derivative was valued using a Monte Carlo valuation model with a conversion price equal to 90 % of the average price capped at $ 1.00 , discount rate of 35 %, risk free rate of 4.54 %, and volatility of 96.0 %. During the year ended December 31, 2023, we recognized interest expense of $ 16,822 which includes OID amortization of $ 14,806 in connection with the Kips Bay Note. AQMS Note On December 19, 2023, Comstock Inc., LINICO and AQMS entered into a stock redemption agreement in which the Company agreed to purchase and AQMS agreed to sell their shares in LINICO for $ 600,000 (see Note 13, Equity ). The consideration is payable in twelve installments of $ 50,000 with the first installment due on January 31, 2024, and the next eleven installments due on the last day of the next succeeding eleven months. Because the payments are not interest bearing, the Company calculated the implied interest of $ 33,673 on the future cash payments using an interest rate of 9.76 % which was recorded as a discount on the agreement and will be recognized over the payment term. The Company recognized interest expense of $ 1,922 in connection with the AQMS note payable. Ionic Ventures LLC Unsecured Convertible Note On December 16, 2022, the Company entered into a securities purchase agreement for an unsecured convertible promissory note (“Ionic Note”) with Ionic Ventures, LLC (“Ionic”). with a principal amount of $ 3,150,000 , of which $ 2,975,000 was funded and $ 175,000 was an original issue discount. The full principal was due on March 16, 2024. Interest was payable monthly at a rate of 8 % annually. The Ionic Note contains conversion terms that are based on percentages of trading price and volumes over defined measurement periods. The terms required the conversion option to be bifurcated as a derivative. As of December 31, 2023 and 2022, the Company bifurcated the conversion feature and recorded a derivative liability of $ 0 and $ 420,000 , respectively, reflected in our consolidated balance sheet. The derivative was valued using a Monte Carlo valuation model with a conversion price equal to 90 % of the average price capped at $ 0.50 , discount rate of 35 %, risk free rate of 4.40 %, and volatility of 60.0 %. During the years ended December 31, 2023 and 2022, we recognized interest expense of $ 285,772 and $ 27,517 , respectively, which includes OID amortization of $ 189,939 and $ 17,161 , respectively, in connection with the Ionic Note. The Ionic Note was fully converted in 2023. In 2023, the Company delivered 9,636,924 shares of common stock with a fair value of $ 4,622,502 at an average conversion price per share of $ 0.48 upon the conversion. The conversion terms required a measurement period of five days within which the number of shares initially converted are adjusted for changes in trading volume during the period. Under this provision, on April 6, 2023 and October 27, 2023, Ionic returned excess shares of 327,549 and 603,569 , respectively, of the Company's common stock issued upon earlier conversions with a fair value of $ 364,330 . The gain on debt conversion recognized during the year ended December 31, 2023 was calculated as follows: Principal converted $ 3,150,000 Debt discount associated with principal converted ( 387,900 ) Accrued interest payable converted 106,190 Derivative liability converted 1,519,587 Total 4,387,877 Fair value of stock issued 4,258,172 Gain on conversion of debt $ 129,705 NOTE 11 LONG-TERM RECLAMATION LIABILITY At December 31, 2023 and 2022, we have asset retirement obligations of $ 5,606,681 , and $ 5,226,505 , respectively, for our obligation to reclaim our mine facilities based on our most recent reclamation plan, as revised, submitted and approved by the 106 Nevada State Environmental Commission and Division of Environmental Protection. Our total reclamation liability includes cost estimates for our American Flat processing facility, Dayton project and enhanced reclamation obligations in Storey County. During the fourth quarter of 2022, we updated our future plans for developing the mining assets as a result of Tonogold defaulting on its option to repurchase the assets (See Note 3, Notes Receivable and Advances, net). The estimated commencement date of reclamation activities changed from December 31, 2025 to December 31, 2032. This resulted in a net reduction in the liability of $ 1,599,559 at December 31, 2022, which $ 942,167 was recorded as a reduction to our mineral assets retirement cost on the consolidated balance sheets which resulted in the related mineral asset retirement cost being reduced to zero. The remaining balance of the net reduction of $ 617,391 was recorded as a gain in selling, general and administrative expenses on the consolidated statements of operations in 2022. On March 31, 2022, the Company reacquired the membership interests of Comstock Mining LLC and recognized an asset retirement obligation associated with the Lucerne mine assets of $ 942,168 . To calculate the estimated obligation, we used estimated reclamation costs of $ 1,159,236 , an inflation rate of 2.94 %, a credit-adjusted risk-free rate of 8.45 % and an estimated reclamation date of December 31, 2025. Following is a reconciliation of the mining retirement obligation associated with our reclamation plan for the mining projects for the years ended December 31, 2023, and 2022: December 31, 2023 December 31, 2022 Long-term reclamation liability — beginning of year $ 5,226,505 $ 5,445,672 Addition associated with the Lucerne mine — 942,168 Change in estimate of reclamation costs — 246,644 Reduction of obligation due to extension of time — ( 1,806,203 ) Accretion of reclamation liability 380,176 398,224 Long-term reclamation liability — end of year $ 5,606,681 $ 5,226,505 NOTE 12 COMMITMENTS AND CONTINGENCIES COMSTOCK MINERAL ESTATE LEASE PAYMENTS We lease certain mineral rights and properties under leases expiring at various dates through 2040. Future minimum annual lease payments, including royalty and rental payments, under these existing lease agreements are as follows at December 31, 2023: Year Leases 2024 $ 109,000 2025 111,000 2026 151,000 2027 151,000 2028 151,000 Thereafter 1,361,250 Total minimum annual lease payments $ 2,034,250 We have minimum royalty obligations with certain of its mineral properties and leases. For most of the mineral properties and leases, we are subject to a range of royalty obligations to the extent that production commences. These royalties range from 0.5 %` to 5 % of NSR from minerals produced on the properties, with the majority being under 3 %. Some of the factors that will influence the amount of the royalties include ounces extracted and the price of extracted metals. Our mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally become more restrictive. The Company believes its operations are in compliance with applicable laws and regulations in all material respects. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. 107 OTHER On August 12, 2022, the Company entered into a termination agreement with a former employee. The Company and the former employee agreed to a $ 102,000 settlement and the Company paid $ 102,000 during 2023. The Company pays each of the independent directors cash retainers of $ 60,000 per year. The Chair of each Committee is paid an additional cash retainer of $ 20,000 per year. As of December 31, 2023, the Company accrued an additional $ 500,000 in director fee compensation associated with the stock-based portion of their compensation earned in 2023 that is expected to be issued in 2024 and paid annually. For the years ended December 31, 2023 and 2022, the Company recognized director fees expenses of $ 1,117,600 and $ 418,800 , respectively. As of December 31, 2023 and 2022, director fee compensation included in accounts payable on the consolidated balance sheet was $ 87,500 and $ 0 , respectively. From time to time, we are involved in claims and proceedings that arise in the ordinary course of business. There are no matters pending that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows. NOTE 13 EQUITY ISSUANCE OF REGISTERED SHARES OF COMMON STOCK On February 13, 2023, the Company entered into an equity purchase agreement (the “2023 Leviston Sales Agreement”) with Leviston Resources LLC (“Leviston”) to offer and sell registered shares of common stock at an aggregate offering price of up to $ 5,000,000 from time to time, at our option, on terms we deem favorable. For the year ended December 31, 2023, the Company issued 10,892,604 registered shares of common stock to Leviston pursuant to the Company’s Form S-3 filed with the U.S. Securities and Exchange Commission, for an aggregate sales price of $ 5,000,000 at an average price per share of $ 0.46 , and additional 552,486 common shares at a fair value of $ 200,000 in commitment fees. As of December 31, 2023, the 2023 Leviston Sales Agreement has no remaining capacity. On December 16, 2022, the Company entered into a securities purchase agreement for the Ionic Note with Ionic. The Ionic Note contains conversion terms that are based on percentages of trading price and volumes over defined measurement periods. As of December 31, 2023, the Company delivered 9,636,924 shares of common stock with a fair value of $ 4,622,502 at an average conversion price per share of $ 0.48 upon the conversion. The conversion terms required a measurement period of five days within which the number of shares initially converted are adjusted for changes in trading volume during the period. Under this provision, on April 6, 2023 and October 27, 2023, Ionic returned excess shares of 327,549 and 603,569 , respectively, of the Company's common stock issued upon earlier conversions with a fair value of $ 364,330 (see Note 10, Debt Obligations ). On June 21, 2022, the Company entered into an agreement with Tysadco Partners, LLC (“Tysadco”) for the purchase of up to $ 10,000,000 worth of shares of the Company’s common stock from time to time, at the Company’s option. Any shares offered and sold to Tysadco were registered for resale pursuant to a registration statement on Form S-1 filed with U.S. Securities and Exchange Commission pursuant to the Securities Act of 1933. The Company paid commissions equal to 5 % of the offering proceeds to the placement agent in connection with such sales. In consideration to enter the Purchase Agreement, the Company delivered 428,571 additional shares of common stock with a fair value of $ 300,000 to Tysadco. For the year ended December 31, 2022, the Company issued 3,433,634 shares of common stock to Tysadco, for an aggregate sales price of $ 1,100,000 at an average price per share of $ 0.32 . For the year ended December 31, 2023, the Company issued 4,464,204 shares of common stock to Tysadco, for an aggregate sales price of $ 1,900,000 at an average price per share of $ 0.43 . Sales of common stock, if any, under the Purchase Agreement are made at a 10 % discount to the volume weighted average sales price of the common stock on the date that Tysadco receives a capital call from the Company. As of December 31, 2023, the Purchase Agreement has $ 7,000,000 remaining capacity. On April 12, 2022, the Company entered into an equity purchase agreement ("2022 Leviston Sales Agreement") with Leviston to offer and sell registered shares of common stock at an aggregate offering price of up to $ 10 million from time to time, at our option, on terms we deem favorable. In consideration of Leviston’s agreement to enter the Purchase Agreement, the Company agreed to deliver additional shares of common stock to Leviston, for no additional consideration, on the first settlement date with respect to a put notice delivered by us. For the year ended December 31, 2022, we issued to Leviston 13,156,117 common shares with an aggregate sales price of $ 7,311,180 , at an average price per share of $ 0.64 , and an additional 206,897 common shares at a fair value of $ 300,000 in commitment fees. As of December 31, 2023, the 2022 Leviston Sales Agreement has no remaining capacity. 108 ISSUANCE OF UNREGISTERED SHARES OF COMMON STOCK Issuance of unregistered shares of our common stock in connection with acquisitions, investments and other endeavors for the year ended December 31, 2023 are as follows. All shares are restricted from trading for a six month period from issuance. Issuance Date Acquisition/Investment Common Shares Issued February 14, 2023 Leviston Resources LLC 410,959 June 21, 2023 Alvin Fund LLC 270,757 August 25, 2023 Northern Comstock LLC 963,074 September 1, 2023 Alvin Fund LLC 74,353 December 4, 2023 Alvin Fund LLC 64,458 December 5, 2023 Alvin Fund LLC 66,362 Total common shares issued 1,849,963 Issuance of unregistered shares of our common stock in connection with acquisitions, investments and other endeavors for the year ended December 31, 2022 are as follows. Issuance Date Acquisition/Investment Common Shares Issued Restriction Period April 7, 2022 Decommissioning Service LLC 1,500,000 A April 12, 2022 Leviston Resources LLC 136,986 A June 21, 2022 Tysadco Partners LLC 3,505,494 A June 21, 2022 Tysadco Partners LLC 57,143 B August 26, 2022 Northern Comstock LLC 802,295 A October 5, 2022 Single Investor 1,000,000 A October 25, 2022 Alvin Fund LLC 605,620 A Total common shares issued 7,607,538 (A) Six months from issuance date (B) Three months from issuance date Noncontrolling Interest On December 30, 2021, the Company entered into an agreement with LINICO to purchase additional shares resulting in approximately 90 % controlling interest. The remaining 10 % ownership was held by AQMS (see Note 20, Related Party Transactions ) and is accounted for as a noncontrolling interest in our consolidated financial statements. On December 19, 2023, the Company, LINICO and AQMS entered into a stock redemption agreement in which LINICO agreed to purchase and AQMS agreed to sell their shares in LINICO for $ 600,000 . The consideration is payable in twelve installments of $ 50,000 with the first installment due on January 31, 2024, and the next eleven installments due on the last day of the next succeeding eleven months. Upon the execution and delivery of the agreement, AQMS delivered the shares to LINICO whereupon LINICO cancelled the shares and AQMS’ sole rights with respect to LINICO. The Company agreed to make full, timely, and faithful payment to AQMS for the purchase price. AQMS resigned from all positions as officers, directors, agents or otherwise of LINICO, effective upon the execution of the agreement. The ownership percentage change did not result in a change in control and the Company retained and maintained control of LINICO. The increase in ownership percentage and decrease in non-controlling interest resulted in an increase to the Company's additional paid in capital of $ 3,758,807 during the year ended December 31, 2023. As of December 31, 2023 and 2022, we own 100.00 % and 88.21 %, respectively, of LINICO and AQMS owns — % and 11.79 %, respectively. 109 LINICO is required pay dividends to the Company and AQMS after the date it receives cash payment in full for the issuance of any shares of Series A Preferred Stock or Series A-2 Preferred Stock, and from and after the date of issuance of any shares of Series A-1 Preferred Stock or Series A-3 Preferred Stock, at the rate per annum of eight percent 8 % of the Original Issue Price of such shares, plus the amount of previously accrued and unpaid dividends. Upon execution and delivery of the stock redemption agreement, all accrued dividends to AQMS of $ 447,001 were canceled. As of December 31, 2023 and 2022, accrued dividends of $ 0 and $ 266,516 , respectively, were due to AQMS and are included in accrued liabilities on the consolidated financial statements at December 31, 2023. In September 2023, LINICO distributed $ 70,355 to AQMS for the sale of the 1,500 Green Li-ion shares. No accrued dividends were paid by LINICO during the years ended December 31, 2023 and 2022. During the year ended December 31, 2023, the Company and AQMS did not make additional capital contribution in LINICO. During the year ended December 31, 2022, the Company and AQMS made $ 1,140,000 and $ 500,000 , respectively, in cash contributions to LINICO. In March 2022, the $ 500,000 capital contribution from AQMS was invested in LINICO through the exercise of Series A preferred stock warrants which decreased the Company’s ownership in LINICO by 2.01 % from 90.34 % to 88.33 %. The ownership percentage change did not result in a change in control and the Company retained and maintained control of LINICO. The decrease in ownership percentage resulted in a reduction to the Company's additional paid in capital of $ 176,695 during the year ended December 31, 2022. Treasury Stock At December 31, 2023 and 2022, our treasury stock includes 2,605,322 shares of our common stock with carrying value of $ 3,360,867 . During 2022, we sold 394,677 shares of treasury stock with a carrying value of $ 509,113 for gross proceeds of $ 240,077 . The difference of $ 269,056 was recognized as a deduction to additional paid in capital. The shares were acquired with our acquisition of LINICO on December 30, 2021 and are carried at cost and presented as a deduction to equity. We have presented the cost of the acquired stock as a deduction from equity. No sales of treasury stock were made in 2023. On January 5, 2024, the Company elected to reacquire 2,605,322 shares of the Company’s common stock from its wholly owned subsidiary, LINICO Corporation, for cancellation upon receipt. The transaction reduced the Company’s outstanding shares from 117,862,081 to 115,256,759 (see Note 21, Subsequent Events ). Warrants On August 22, 2022, the Company issued 200,000 warrants to GHF, Inc. in exchange for amending the terms of their note, which are exercisable at a price of $ 1.00 per common share and have a two-year term (see Note 10, Debt Obligations ). On December 15, 2022, the Company issued warrants to GHF allowing them to purchase 1,000,000 shares of the Company’s common stock, 500,000 of which are exercisable at a price per share of $ 0.4555 and the remaining 500,000 at a price per share of $ 2.5217 (see Note 10, Debt Obligations ). On November 12, 2023, the Company issued warrants to Alvin Fund allowing them to purchase 1,000,000 shares of the Company’s common stock, exercisable at a price per share of $ 0.70 (see Note 10, Debt Obligations ). The warrants are exercisable for a period of two years commencing on November 12, 2023 and ending on November 12, 2025. Outstanding warrants for the year ended December 31, 2023 are as follows: Number of Warrants Exercise Price Expiration Date GHF, Inc. 200,000 $ 1.0000 August 22, 2024 GHF, Inc. 500,000 $ 0.4555 December 15, 2024 GHF, Inc. 500,000 $ 2.5217 December 15, 2024 Alvin Fund LLC 1,000,000 $ 0.7000 November 12, 2025 Total outstanding warrants 2,200,000 During the years ended December 31, 2023 and 2022, no warrants were exercised or expired. 110 NOTE 14 FAIR VALUE MEASUREMENTS The following table presents our assets and liabilities measured at fair value on a recurring basis at December 31, 2023: Fair Value Measurements at December 31, 2023 Total Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Kips Bay convertible debenture derivative $ 1,360,000 $ — $ — $ 1,360,000 LINICO related derivative 2,383,162 — 2,383,162 — Haywood Property derivative 875,000 — 875,000 — GenMat derivative 781,966 — 781,966 — Total liabilities measured at fair value $ 5,400,128 $ — $ 4,040,128 $ 1,360,000 The following table presents our assets and liabilities at December 31, 2022, which are measured at fair value on a recurring basis: Fair Value Measurements at December 31, 2022 Total Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Ionic convertible debenture derivative $ 420,000 $ — $ — $ 420,000 LINICO related derivative 6,053,162 — 6,053,162 — Haywood Property derivative 1,480,000 — 1,480,000 — GenMat derivative 6,592,638 — 6,592,638 — Total liabilities measured at fair value $ 14,545,800 $ — $ 14,125,800 $ 420,000 Changes in the assets and liabilities that include level 3 inputs are as follows: • During the year ended December 31, 2022, the Company recognized a loss of $ 605,000 in the fair value measurement of the Tonogold Note Receivable (See Note 3, Notes Receivable and Advances, net) and a $ 6,650,000 exchange of the note receivable associated with the Tonogold agreement using significant unobservable inputs (Level 3). As of December 31, 2022, the ending balance of investments measured at fair value was $ 0 . • During the year ended December 31, 2023, the Company recognized a loss of $ 1,099,587 for the change in fair value of the Ionic convertible debenture derivative. During the year ended December 31, 2023, $ 1,519,587 of the derivative liability was fully converted using significant unobservable inputs (Level 3). VALUATION METHODOLOGIES The following is a description of the valuation methodologies used for the Company's financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy. Derivatives The Company has several derivatives associated with its common stock including make-whole commitments and debt conversion options. The following tables presents changes in our derivative liabilities for the years ended December 31, 2023 111 and 2022, measured at fair value: For the Year Ended December 31, 2023 As of December 31, 2022 Additions (Deductions) Unrealized Gain (Loss) on Change in Fair Value Payments for Decrease in Contractual Stock Consideration As of December 31, 2023 Ionic convertible debenture derivative $ 420,000 $ ( 1,519,587 ) $ 1,099,587 $ — $ — Kips Bay convertible debenture derivative — 1,360,000 — — 1,360,000 LINICO related derivative 6,053,162 — ( 945,000 ) ( 2,725,000 ) 2,383,162 Haywood Property derivative 1,480,000 — ( 405,000 ) ( 200,000 ) 875,000 GenMat derivative 6,592,638 — ( 710,672 ) ( 5,100,000 ) 781,966 Total liabilities measured at fair value $ 14,545,800 $ ( 159,587 ) $ ( 961,085 ) $ ( 8,025,000 ) $ 5,400,128 For the Year Ended December 31, 2022 As of December 31, 2021 Additions (Deductions) Unrealized Gain (Loss) on Change in Fair Value Payments for Decrease in Contractual Stock Consideration As of December 31, 2022 Ionic convertible debenture derivative $ — $ 420,000 $ — $ — $ 420,000 LINICO related derivative 2,743,162 — 3,535,000 ( 225,000 ) 6,053,162 Haywood Property derivative — ( 245,000 ) 1,875,000 ( 150,000 ) 1,480,000 GenMat derivative 6,130,000 — 2,912,638 ( 2,450,000 ) 6,592,638 LPB derivative ( 342,000 ) 937,000 ( 595,000 ) — — Total liabilities measured at fair value $ 8,531,162 $ 1,112,000 $ 7,727,638 $ ( 2,825,000 ) $ 14,545,800 At December 31, 2023 and 2022, the fair value of the LINICO, the Haywood Property, and GenMat derivatives was based on a trading price of the Company’s shares of $ 0.55 and $ 0.28 , respectively. Ionic Ventures, LLC Conversion Option On December 16, 2022, we recorded a derivative liability on the consolidated balance sheets in connection with the Ionic Note. On that date, the $ 420,000 fair value of the derivative liability was determined based on bifurcation of the derivative liability from the convertible note. At December 31, 2022, the derivative was valued using a Monte Carlo valuation model with a conversion price equal to 90 % of the average price capped at $ 0.50 , discount rate of 35 %, risk-free rate of 4.40 %, and volatility of 60.0 %. At December 31, 2023, the derivative was fully converted. The derivative liability was classified within Level 3 of the valuation hierarchy. In 2023, the range of variables used to calculate the fair value of the derivative liabilities associated with the conversion of the Ionic Note using a Monte Carlo valuation model are as follows. Stock Price Discount Rate Volatility Risk Free Rate Conversion price equal to 90 % of the average price capped at $ 0.50 35.0 % 85.0 % to 99 % 4.17 % to 5.44 % Kips Bay Select LP Conversion Option On December 27, 2023, we recorded a derivative liability on the consolidated balance sheets in connection with the Kips Bay Note. On that date, the $ 1,360,000 fair value of the derivative liability was determined based on bifurcation of the derivative liability from the convertible note. At both December 27, 2023 and December 31, 2023, the fair value of the derivative liability was $ 1,360,000 and was valued using a Monte Carlo valuation model with a conversion price equal to 90 % of the average price capped at $ 1.00 , discount rate of 35 %, risk free rate of 4.54 %, and volatility of 96.0 %. The derivative liability was classified within Level 3 of the valuation hierarchy. 112 LPB Derivative Instrument On July 23, 2021, we recorded a derivative asset on the consolidated balance sheets in connection with the LPB Contribution Agreement. On that date, the $ 6,642,000 fair value of the derivative asset was determined based on the excess of the fair value of 3,500,000 shares of our common stock issued to and held by LPB over the $ 4,173,000 fair value of our contractual consideration under the LPB Partnership Interest Purchase Agreement. The value of the shares was based on the $ 3.09 closing price per share of our common stock on that date. On February 28, 2022, the Company and the other parties to the LPB transactions mutually agreed to terminate the transaction documents. Prior to settlement, the fair value of the shares was based on the closing price per share of our common stock of $ 1.46 , and we recorded a gain on the change in fair value of the derivative liability of $ 595,000 in the consolidated statements of operations for the year ended December 31, 2022. The fair value of the derivative as of the settlement date of $ 937,000 was derecognized, along with the value of the investment in LPB, and the fair value of the 3,500,000 shares was $ 5,110,000 and was recognized as a decrease first to the par value of the common stock returned, and the remainder as a reduction to additional paid in capital. American Battery Technology Investment In connection with the sale of the Manufacturing Facility (See Note 9, Sale of Manufacturing Facility) , the Company received 11 million shares of restricted common stock from the purchaser of the Manufacturing Facility, ABTC, with an initial fair value of $ 9,365,000 . The fair value of our investment in ABTC restricted common shares acquired in connection with the sale of the Manufacturing Facility was valued using a Monte Carlo valuation model as follows. Date Description Fair Value Beginning Stock Price Volatility Risk Free Rate April 6, 2023 10 million ABTC shares (make-whole provision $ 6.6 million to $ 7.6 million) $ 7,000,000 $ 0.78 94.0 % 4.80 % April 21, 2023 Change in fair value on the 10 million ABTC shares for a change in make-whole commitment $ 2,000,000 $ 0.86 95.0 % 5.00 % May 12, 2023 1 million ABTC shares $ 365,000 $ 0.74 95.0 % 5.07 % NOTE 15 STOCK-BASED COMPENSATION 2022 EQUITY INCENTIVE PLAN In 2022, the Company adopted the Comstock Inc. 2022 Equity Incentive Plan (the “2022 Plan”). The maximum number of shares of our common stock that may be delivered pursuant to awards granted under the 2022 Plan is 6,000,000 . The 2022 Plan provides for the grant of various types of awards, including but not limited to, restricted stock (including performance and cash awards), incentive and non-qualified stock options, stock appreciation rights and other equity-based awards. As of December 31, 2023, the Company has not granted any options or shares under the 2022 Plan. 2020 EQUITY INCENTIVE PLAN In 2020, the Company adopted the Comstock Mining Inc. 2020 Equity Incentive Plan (the “2020 Plan”). The maximum number of shares of our common stock that may be delivered pursuant to awards granted under the 2020 Plan is 1,800,000 . The 2020 Plan provides for the grant of various types of awards, including but not limited to, restricted stock (including performance awards), restricted stock units, stock options, and other types of stock-based compensation. During the years ended December 31, 2023 and 2022, the Company recognized $ 143,100 and $ 190,800 , respectively, for the vesting of stock awards issued in 2020. During the year ended December 31, 2023, 45,000 shares, which were issued in 2021 under the 2020 Plan, were forfeited totaling $ 11,925 in compensation recaptured. No remaining compensation on these awards will be recognized after December 31, 2023. 113 During 2021, we granted 1,170,000 share awards, net of 30,000 shares which were forfeited during the year ended December 31, 2022, to employees under the 2020 Plan. During 2022, we granted 60,000 shares, net of 40,000 shares forfeited during the year ended December 31, 2022 to additional employees. During 2023, we granted 30,000 shares to an additional employee and 30,000 shares were forfeited during the year ended December 31, 2023. The vesting of 50 % of the employee share awards is contingent on the achievement of performance goals over the next three years , and vesting of the remaining 50 % is contingent on the achievement of our common stock market price goals over the next five years , defined on a per share value basis. Vesting is dependent on the employee remaining with the Company from the grant date through the vesting date. The performance shares that vest based on the achievement of performance goals were valued using the Company's common stock price on the grant date, and stock-based compensation was determined based on the probability of achieving each goal. The market-based vesting based on the Company share price were valued using a path-dependent model with the following range of inputs: During the Year Ended December 31, 2023 December 31, 2022 Total shares granted 30,000 40,000 Performance condition valuation inputs: Performance condition shares 15,000 20,000 Stock price at grant date $ 0.28 $ 0.62 to $ 1.68 Market condition valuation inputs: Market condition shares 15,000 20,000 Stock price $ 0.28 $ 0.62 to $ 1.68 Volatility 97 % 95 % to 96 % Risk-free rate 4.13 % 2.51 % to 2.82 % Number of iterations 150,000 100,000 Fair value per share $ 0.02 $ 0.17 to $ 0.91 Term (in years) 2.5 yrs 2.2 yrs to 2.5 yrs On January 4, 2024, the Company's Compensation Committee of the Board of Directors determined that the share units granted under the 2020 Plan shall be canceled, forfeited and terminated without issuance of any shares of the Company. For the year ended December 31, 2023, the Company recognized net stock based compensation recapture of $ 289,310 and recorded the amount in selling, general and administrative expenses in the consolidated statements of operations. For the year ended December 31, 2022, stock-based compensation for all employee share grants was $ 291,197 recorded in selling, general and administrative expenses in the consolidated statements of operations. No shares have vested at December 31, 2023. During the year ended December 31, 2023, 30,000 shares awards were forfeited and $ 52,583 in compensation recaptured. COMSTOCK METALS EMPLOYEE AGREEMENT On March 1, 2023, Comstock Metals Corporation, a wholly owned subsidiary of the Company, entered into an Employment Agreement with Dr. Fortunato Villamagna, to serve as President of Comstock Metals Corporation. As part of this agreement, Dr. Villamagna shall receive 20 % of the equity in Comstock Metals Corporation, vesting evenly, over a five-year period commencing on March 1, 2023 through March 1, 2028. Management determined that the estimated fair value of the equity award was $ 863,000 and our valuation method incorporated the present value of projected cash flows to calculate the discounted cash flows compared to the guideline for public companies with a marketability discount rate of 40 %, risk free rate of 3.77 %, and volatility of 110.0 %. The determination of the fair value of the equity award was based on Level 3 inputs in the fair value hierarchy. For the year ended December 31, 2023, the Company recognized share-based compensation of $ 143,833 for the period of March 1, 2023 through December 31, 2023. At December 31, 2023, unamortized stock-based compensation for the equity award was $ 719,167 and will be amortized over the remaining vesting term of 4.25 years. 114 NOTE 16 OTHER INCOME AND EXPENSES Other income (expense) net consisted of the following for the years ended December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Change in fair value Tonogold note receivable — ( 605,000 ) LPB settlement and related expenses — ( 250,000 ) Amendment fee associated with Manufacturing Facility sale 250,000 — Write off of Pelen option ( 150,000 ) ( 150,000 ) Equity loss in affiliates ( 1,715,689 ) ( 1,133,633 ) All other 15,468 116,167 Total other income (expense) $ ( 1,600,221 ) $ ( 2,022,466 ) NOTE 17 INCOME TAXES The results of the Company’s operations are included in a federal income tax return. The Company provides deferred income taxes on the net differences between the carrying amounts of assets and liabilities for financial and income tax reporting. No benefit (provision) has been recognized for the years ended December 31, 2023 and 2022. The difference between the provision for income taxes reported in the consolidated financial statements and the provision for income taxes based on federal statutory rates results principally from (1) valuation allowance adjustments, (2) goodwill impairment and (3) certain other permanent differences. Reconciliation of the statutory federal income tax rates consist of the following: December 31, 2023 December 31, 2022 Federal statutory rate 21.0 % ( 21.0 ) % Goodwill impairment — % 5.8 % Change in valuation allowance ( 22.5 ) % 15.4 % Other 1.5 % ( 0.2 ) % Total — % — % 115 The Company’s total deferred income taxes at December 31, 2023 and 2022 consisted of the following: December 31, 2023 December 31, 2022 Asset retirement obligation $ 1,177,403 $ 1,097,566 Mineral rights and properties, plant, and equipment 423,328 697,805 Mining exploration, development, claims, and permit costs 729,282 404,649 Lease liability 176,122 2,695,912 Net operating loss carryforward 46,105,332 46,020,993 Capital loss carryforward 1,291,211 1,024,983 Fair value adjustments — 3,827,353 Capitalized research expenditures 2,188,570 1,327,372 Other 1,271,660 624,764 Total deferred tax asset 53,362,908 57,721,397 Valuation allowance ( 48,109,677 ) ( 50,171,780 ) Net deferred tax assets 5,253,231 7,549,617 Deferred tax liabilities: Right of use asset – leases ( 172,991 ) ( 3,469,304 ) Intangible assets ( 2,951,300 ) ( 4,080,313 ) Fair value adjustments ( 2,128,940 ) — Total deferred tax liabilities ( 5,253,231 ) ( 7,549,617 ) Net deferred tax assets and liabilities $ — $ — The Company records a valuation allowance if, based on the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. At December 31, 2023, and 2022, the Company has determined that a full valuation allowance is necessary against its net deferred tax assets based on this evidence and have valuation allowances of $ 48.1 million and $ 50.2 million, respectively, against the net deferred tax assets. At December 31, 2023, the Company has total net operating and capital loss carryforwards of approximately $ 225.6 million. Of this total, the Company has approximately $ 168.2 million in net operating loss carryforwards for federal income tax purposes which, if not utilized, will begin to expire in 2024 and could be subject to certain limitations under section 382 of the Internal Revenue Code of 1986, as amended, approximately $ 51.3 million for federal income tax purposes with no expiration, but which are subject to 80 % limitation upon utilization, and approximately $ 6.1 million of capital loss carryforwards for federal income tax purposes which, if not utilized, will begin to expire in 2027. At December 31, 2023, and 2022, the Company did no t have any unrecognized tax benefits. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception. The Company is subject to U.S. federal and state income tax examination for tax years 2020 and forward. Tax returns for years prior to 2020 may remain open with respect to net operating loss carryforwards that are utilized in a later year, as tax attributes from prior years can be adjusted during an audit of a later year. NOTE 18 NET INCOME (LOSS) PER COMMON SHARE Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share reflects the potential dilution that could occur if outstanding stock options were exercised into common stock. For the year ended December 31, 2022, we had no common stock equivalent shares that were potentially dilutive, including warrants to purchase common stocks, stock options, stock awards and conversion options on a convertible debenture. The following is a reconciliation of the numerator and denominator used in the basic and diluted computation of net income (loss) per share: 116 December 31, 2023 December 31, 2022 Numerator: Net income (loss) attributed to Comstock Inc. $ 9,161,821 $ ( 45,948,744 ) Denominator: Basic weighted average shares outstanding 105,126,754 74,458,028 Incremental shares 42,610 — Diluted weighted average shares outstanding 105,169,364 74,458,028 Net income (loss) per common shares: Basic EPS $ 0.09 $ ( 0.62 ) Diluted EPS $ 0.09 $ ( 0.62 ) For the years ended December 31, 2023 and 2022, the weighted average number of shares outstanding, for the purpose of calculating earnings per share, were reduced by treasury shares of 2,605,322 and 2,293,495 , respectively, which is the number of treasury shares through our ownership in LINICO. For the year ended December 31, 2023, the calculation of incremental shares for diluted weighted average shares outstanding did not include the following items due to their anti-dilutive impact: 580,000 performance award shares, 580,000 market condition award shares, and 1,700,000 warrant shares. For the year ended December 31, 2022, all potentially dilutive shares were anti-dilutive due to the net loss incurred in that period. NOTE 19 SEGMENT REPORTING We have the following segments and reporting units: Fuels, Metals, Mining, Strategic Investments and Corporate. The Company’s goal is to accelerate the commercialization of decarbonizing technologies. Once a technology achieves a certain technology readiness or a justifiable critical mass or market distinction, we strategically plan its commercialization and dedicate resources toward that end. Until then, it is managed with corporate resources. Summarized financial information relating to our reportable segments is provided below. In 2023, our chief operating decision maker ("CODM") reassessed the Company's performance and allocation of resources. Based on this reassessment, the Company's segments were determined to be Fuels, Metals, Mining, Strategic Investments and Corporate. Previously, our CODM assessed performance and allocation of resources to three business segments and reporting units including Renewable Energy, Mining and Strategic Investments. Certain amounts have been reclassified to conform to the current period presentation on a comparable basis. The Company's strategic plans, executes and monitors each reporting segment and has dedicated personnel responsible for each reportable segment. Our Fuels Segment represents our lignocellulosic biomass into biointermediates for refining into renewable fuels. Our Metals Segment represents our recycling of electrification products. Our Mining Segment includes our gold and silver mining assets and related real estate. Our Strategic Investments Segment includes our investments in GenMat, Green Li-ion and SSOF and our Corporate Segment includes all other assets and general corporate costs. Mining revenue is from leasing mineral claims and other real estate. 117 Twelve-Months Ended December 31, 2023 Fuels Metals Mining Strategic Investments Corporate/Other Total Revenue $ — $ — $ 1,014,776 $ 237,473 $ 22,200 $ 1,274,449 Depreciation and amortization $ 885,070 $ 1,245,448 $ 165,731 $ 61,472 $ 119,804 $ 2,477,525 (Loss) income from operations $ ( 6,836,194 ) $ ( 1,855,549 ) $ ( 1,284,753 ) $ ( 3,176,886 ) $ 548,945 $ ( 12,604,437 ) Change in fair value of derivative instruments $ — $ — $ 405,000 $ 1,655,672 $ ( 1,099,587 ) $ 961,085 Gain (loss) on investments $ — $ — $ — $ 25,034,875 $ — $ 25,034,875 Total other income (expense), net $ 3,210 $ — $ 439,241 $ 25,055,208 $ ( 2,366,970 ) $ 23,130,689 Net income (loss) $ ( 6,832,984 ) $ ( 1,855,549 ) $ ( 845,512 ) $ 21,878,323 $ ( 1,818,026 ) $ 10,526,252 Total Assets $ 7,257,580 $ 11,797,921 $ 25,003,871 $ 57,082,301 $ 5,324,671 $ 106,466,344 Capital Expenditures $ 68,582 $ 997,993 $ 736,595 $ — $ 15,895 $ 1,819,065 Twelve-Months Ended December 31, 2022 Fuels Metals Mining Strategic Investments Corporate/Other Total Revenue $ — $ — $ 146,950 $ — $ 31,200 $ 178,150 Depreciation and amortization $ 888,780 $ 1,180,300 $ 318,594 $ 684,116 $ 256,780 $ 3,328,570 Loss from operations $ ( 7,928,025 ) $ ( 1,180,300 ) $ ( 346,115 ) $ ( 1,843,510 ) $ ( 8,063,332 ) $ ( 19,361,282 ) Change in fair value of derivative instruments $ — $ — $ ( 1,875,000 ) $ ( 6,069,888 ) $ 217,250 $ ( 7,727,638 ) Impairment of intangible assets $ — $ — $ — $ — $ ( 338,035 ) $ ( 338,035 ) Impairment of investments and note receivable, net recovery $ — $ — $ ( 2,452,788 ) $ ( 54,587 ) $ ( 736,275 ) $ ( 3,243,650 ) Impairment of goodwill $ ( 2,202,275 ) $ — $ — $ — $ ( 10,586,396 ) $ ( 12,788,671 ) Total other income (expense), net $ ( 2,196,608 ) $ — $ ( 4,394,679 ) $ ( 8,276,973 ) $ ( 12,508,717 ) $ ( 27,376,977 ) Net income (loss) $ ( 10,124,633 ) $ ( 1,180,300 ) $ ( 4,740,794 ) $ ( 10,120,482 ) $ ( 20,572,050 ) $ ( 46,738,259 ) Total Assets $ 8,101,196 $ 10,618,187 $ 25,563,028 $ 60,536,258 $ ( 4,764,910 ) $ 100,053,759 Capital Expenditures $ — $ — $ — $ 998,175 $ 15,895 $ 1,014,070 118 NOTE 20 RELATED PARTY TRANSACTIONS The following related party transactions occurred during the years ended December 31, 2023 and 2022. TRANSACTIONS INVOLVING SIERRA SPRINGS OPPORTUNITY FUND On December 29, 2023, the Company and SSOF agreed to convert total advances into 3,880,556 shares of SSOF common stock (See Note 2, Investments ). At December 31, 2023, the Company’s total investment in SSOF was recorded at a fair value of $ 19,045,000 , representing 10,580,556 common shares, or 17.11 % of the total SSOF outstanding common shares on a fully diluted, if converted basis. The Company's executive chairman and chief executive officer co-founded SSOF and SSE, and serves as the chief executive officer of SSOF and as an executive of SSE along with a diverse team of qualified financial, capital markets, real estate and operational professionals that together govern, lead and manage SSOF and SSE. The $ 525,000 investment and 9,167,666 voting shares of our CEO and two of our directors represent 14.82 % of total as converted SSOF common shares. The Company's chief executive officer has not received compensation from either SSOF or SSE. SSOF is a qualified opportunity zone fund, that owns 100 % of SSE, a qualified opportunity zone business. SSE and its subsidiaries own or control approximately 2,500 acres of land, a manufacturing facility, significant senior, junior and effluent water rights, sewer rights and also owns and operates the Silver Springs Regional Airport LLC. The substantial majority of these properties are contiguous and strategically located within immediate proximity of Highway 50, State Route 492, the Northern Nevada Industrial Center and the Tahoe Reno Industrial Center where companies like Tesla, Switch, Google, Microsoft, and Redwood Materials, amongst many others that are currently located, expanding or locating in this industrializing region. TRANSACTIONS INVOLVING FLUX PHOTON CORPORATION (“FPC”) On September 7, 2021, the Company closed on an asset purchase agreement (the “FPC Asset Purchase Agreement”) with Flux Photon Corporation (“FPC”), to acquire certain intellectual property and related photocatalysis laboratory equipment (the “FPC Assets”). The purchase price payable for the FPC Assets is $ 18,000,000 payable in cash to FPC at a rate equal to 20 % of the future monthly consolidated sales, less total variable costs, less operating expenses, maintenance, tax payments, and debt service payments of the Company and its now and hereafter-existing subsidiaries, until the purchase price of $ 18,000,000 has been fully paid. The Company assigned the FPC Assets to its wholly-owned Comstock IP Holdings subsidiary immediately after closing. On December 10, 2021, the FPC Asset Purchase Agreement was amended to provide for the payment by the Company of a $ 350,000 down payment against the purchase price, with a remaining performance-based cash payment of $ 17,650,000 required under the FPC Asset Purchase Agreement. The Company’s chief technology officer and the president of the Company's Comstock Fuels subsidiary are indirect beneficiaries of all payments made to FPC under the FPC Asset Purchase Agreement. The Company additionally agreed to appoint the Company's chief technology officer to the Company’s Board of Directors in connection with the Company’s acquisition of Comstock Innovations Corporation on September 7, 2021. We recognized an impairment loss of $ 338,035 on the FPC Assets in other income (expense) in the consolidated statement of operations during the year ended December 31, 2022 in the Fuels Segment. On December 28, 2023, the Company amended the FPC Asset Purchase Agreement. The remaining purchase price payable for the Assets was $ 17,650,000 , payable only from 20 % of future cash flows defined as the future monthly consolidated sales, less total variable costs, less operating expenses, maintenance, tax payments, and debt service payments of Comstock Inc. and its now and hereafter-existing subsidiaries until the purchase prices has been fully paid. The 2023 amended FPC Asset Purchase Agreement reduced the purchase price payable to $ 16,850,000 . On the date of the amendment, the Company paid $ 200,000 with the remaining balance of $ 16,650,000 payable to Flux from future cash flows and accounted for as an acquisition of intellectual property. Mr. Kreisler, a member of the Company's board of directors and the Company's chief technology officer, is also the owner of 100 % of the outstanding common stock of Flux and as such was the indirect beneficiary of all payments made to Flux pursuant to the FPC Asset Purchase Agreement. LEASE AND PURCHASE AGREEMENT FOR BATTERY RECYCLING FACILITY Since 2021, LINICO, a majority-owned subsidiary of the Company, had a finance lease, as lessee, with AQMS, for the Manufacturing Facility. The chief financial officer of AQMS was on the Company's board of directors until he resigned effective as of April 5, 2023. On April 26, 2023, the Company closed on the purchase of AQMT, a subsidiary of AQMS, whose sole asset was the Facility, and paid $ 12.0 million due to AQMS, effectively taking full ownership of the Manufacturing Facility. The previously existing lease between LINICO and AQMS was terminated (see Note 9, Sale of Manufacturing 119 Facility ). The Company purchased $ 782,500 in equipment from AQMS for the year ended December 31, 2022. This equipment was included in the sale of the Manufacturing Facility in 2023. PURCHASE OF METAL RECYCLING FURNACE On December 15, 2023, the Company and Dr. Fortunato Villamagna, president of Comstock Metals Corporation, signed an agreement in which Dr. Villamagna agreed to contribute a metal recycling furnace to the Company. The Company agreed to make payments for the metal recycling furnace totaling $ 375,000 from an amount not exceeding 20 % of excess cash flow generated by Comstock Metals Corporation, defined as excess cash available after the satisfaction of all planned growth capital for Comstock Metals Corporation and the repayment of intercompany loans. At December 31, 2023, the metal recycling furnace is included in Properties, plant and equipment, net and the corresponding liability is included in other liabilities (long-term) on the consolidated balance sheet. On March 1, 2023, the Company entered into a separate employment agreement with Dr. Villamagna which provides that he receive 20 % of the equity of Comstock Metals Corporation vesting evenly over a five-year period (see Note 15, Stock-Based Compensation ). OTHER The Company is currently assessing an agreement with an affiliate company of Kevin Kreisler, the Company’s director and chief technology officer, pursuant to which the Company would agree to acquire the majority of the issued and outstanding equity of a publicly traded entity in connection with the Company’s ongoing evaluation of various alternatives to monetize certain non-strategic assets. Pursuant to the agreement, Mr. Kreisler agreed to contribute his beneficial ownership interest in the entity to the Company for no additional consideration, and the Company agreed to reimburse certain transaction expenses of approximately $ 100,000 incurred by Mr. Kreisler. As of the year ended December 31, 2022, the Company had paid $ 100,000 to Mr. Kreisler. As of the year ended December 31, 2023, no agreement has been determined between the Company and the affiliated company of Mr. Kreisler. In 2023, the Company recognized expense of $ 42,000 that was paid to Mr. Kreisler for rental of office space. Sierra Clean Processing LLC, a wholly owned subsidiary of SSOF, owns the building at 600 Lake Avenue, Silver Springs, Nevada which the Company entered into the Building Lease on August 15, 2023 (see Note 8, Leases ). The Company's CEO is an executive and director of Sierra Clean Processing LLC. NOTE 21 SUBSEQUENT EVENTS On January 2, 2024 and on February 2, 2024, the Company paid $ 500,000 , respectively, for a total $ 1.0 million to GenMat related to the make whole provision associated with the Company's common stock. On January 2, 2024, the Company paid $ 250,000 to RenFuel K2B AB (“RenFuel”) for a bridge term loan, bearing interest at 7 % per annum and maturing on February 15, 2024. On February 12, 2024, Comstock Fuels and RenFuel entered into an amendment to extend the deadlines to finalize the transaction documents to March 15, 2024, and the closing of the transactions to March 31, 2024 associated with the Company’s December 22, 2023 announced intention to advance the Company’s first commercial biorefinery and make a strategic $ 3,000,000 investment in RenFuel. These new transactions are in addition to the Exclusive License Agreement executed by RenFuel and Comstock Fuels on October 11, 2023, pursuant to which RenFuel granted Comstock Fuels an exclusive license to use RenFuel’s patented catalytic esterification and related technologies in North America, Central America, and South America. On January 4, 2024, the Company's Compensation Committee of the Board of Directors determined that the criteria for both the performance and market share award units granted under the 2020 Plan were not sufficiently met and that the granted share awards shall be canceled, forfeited and terminated without issuance of any shares of the Company. On January 5, 2024, the Company reacquired and retired the 2,605,322 shares of treasury stock, for cancellation upon receipt. The transaction reduced the Company’s outstanding shares from 117,862,081 to 115,256,759 . On January 11, 2024, for consideration to enter into the Kips Bay Note, the Company issued 308,931 restricted shares of its common stock equal to 3 % of the principal amount of the Kips Bay Note, or $ 157,895 at $ 0.511 per share. On January 16, 2024, the Company issued an additional 180,210 registered shares of its common stock equal in value to 1.75 % of the principal amount of the Kips Bay Note, or $ 92,105 , also at $ 0.511 per share. 120 During January 2024, the Company invested $ 350,000 in SSOF at $ 1.80 per share increasing our equity ownership to 17.37 %. On February 1, 2024, the Company issued 75,080 shares of unregistered restricted common shares with a fair value of $ 36,822 to Alvin Fund in lieu of cash payment from interest under the Alvin Fund 2023 Note. 121 ITEM 9 CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.