Comstock Earnings 2019-09-30

CHCI 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
WLH	759	2,946	1,920	2,116	123	105	226	2,135	6%	9.4	4%
XIN	492	8,034	7,288	0	0	0	0	-694			0%
BZH	437	2,120	1,586	1,306	176	-21	-13	353	13%	-28.0	-1%
GRBK	418	833	322	687	143	57	79	380	21%	4.8	7%
LEGH	304	252	43	84	34	16	21	302	41%	14.0	6%
SIC	267	429	277	556	154	0	47	421	28%	8.9	0%
STRS	221	543	402	90	16	-0	2	188	18%	89.7	-0%
HOV	91	1,795	2,288	1,918	0	6	12	-33	0%	-2.9	0%
NWHM	73	673	434	670	66	-14	-12	399	10%	-33.1	-2%
CHCI	17	28	21	50	1	-2	-2	22	2%	-8.9	-8%

10-Q 1 chci-10q_20190930.htm 10-Q chci-10q_20190930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2019

☐	Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-32375

Comstock Holding Companies, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-1164345

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1886 Metro Center Drive, 4^th Floor

Reston, Virginia 20190

(703) 230-1985

(Address, including zip code, and telephone number, including area code, of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class B Common Stock
Class A Common Stock	CHCI	NASDAQ Capital Market
Preferred Stock Purchase Rights		NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of November 11, 2019, 7,747,075 shares of Class A common stock, par value $0.01 per share, and 220,250 shares of Class B common stock, par value $0.01 per share, of the registrant were outstanding.

COMSTOCK HOLDING COMPANIES, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION		1

ITEM 1.	FINANCIAL STATEMENTS (unaudited):	1

	Consolidated Balance Sheets	1

	Consolidated Statements of Operations	3

	Consolidated Statements of Changes in Stockholders’ Equity	4

	Consolidated Statements of Cash Flows	5

	Notes to Consolidated Financial Statements	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26

ITEM 4.	CONTROLS AND PROCEDURES	26

PART II – OTHER INFORMATION		28

ITEM 1.	LEGAL PROCEEDINGS	28

ITEM 1A.	RISK FACTORS	28

ITEM 6.	EXHIBITS	28

SIGNATURES		29

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

COMSTOCK HOLDING COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	September 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	1,598		$	854
Trade receivables		954			973
Trade receivables - related parties		2,487			2,950
Other assets		235			362
Current assets of discontinued operations		-			7,786
Total current assets		5,274			12,925

Equity method investments carried at fair value		8,603			—
Fixed assets, net		244			221
Goodwill		1,702			1,702
Intangible assets, net		120			170
Lease right-of-use assets		128			—
Long term assets of discontinued operations		—			20,082
TOTAL ASSETS	$	16,071		$	35,100

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,396		$	2,776
Deferred revenue		—			1,875
Notes payable - due to affiliates, unsecured, net of discount		4,981			4,903
Current liabilities of discontinued operations		—			4,889
Total current liabilities		7,377			14,443

Notes payable - secured, net of deferred financing charges		750			922
Notes payable - unsecured, net of deferred financing charges		595			595
Lease liabilities		128			—
Long term liabilities of discontinued operations		—			12,510
TOTAL LIABILITIES		8,850			28,470

Commitments and contingencies

STOCKHOLDERS’ EQUITY
Series C preferred stock $0.01 par value, 20,000,000 and 3,000,000 shares authorized, 3,440,690 and 2,799,848 issued and outstanding and liquidation preference of $17,203 and $13,999 at September 30, 2019 and December 31, 2018, respectively	$	6,765		$	7,193
Class A common stock, $0.01 par value, 59,779,750 and 11,038,071 shares authorized, 7,832,645 and 3,703,513 issued, and 7,747,075 and 3,617,943 outstanding at September 30, 2019 and December 31, 2018, respectively		78			37
Class B common stock, $0.01 par value, 220,250 shares authorized, issued and outstanding at September 30, 2019 and December 31, 2018		2			2
Additional paid-in capital		198,184			180,673
Treasury stock, at cost (85,570 shares Class A common stock)		(2,662	)		(2,662	)
Accumulated deficit		(195,146	)		(194,319	)
TOTAL COMSTOCK HOLDING COMPANIES, INC. EQUITY (DEFICIT)		7,221			(9,076	)
Non-controlling interests		—			15,706
TOTAL EQUITY		7,221			6,630
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	16,071		$	35,100

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

COMSTOCK HOLDING COMPANIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues
Revenue—asset management	$	4,293		$	2,730		$	12,178		$	8,481
Revenue—real estate services		947			711			2,573			1,652
Total revenue		5,240			3,441			14,751			10,133
Expenses
operating expenses - asset management		3,710			2,458			10,541			7,605
operating expenses - real estate services		862			922			2,265			1,775
Sales and marketing		—			1			—			6
General and administrative		453			242			1,234			970
Operating income (loss)		215			(182	)		711			(223	)
Other income, net		—			36			16			117
Interest (expense)		(186	)		(25	)		(352	)		(73	)
(Loss) on equity method investments carried at fair value		(606	)					(606	)
(Loss) before income tax benefit		(577	)		(171	)		(231	)		(179	)
Income tax (benefit)		—			(445	)		—			(940	)
Net (loss) income from continuing operations		(577	)		274			(231	)		761
Net (loss) from discontinued operations, net of tax		(66	)		(2,201	)		(596	)		(4,413	)
Net (loss)		(643	)		(1,927	)		(827	)		(3,652	)

Income per share from continuing operations
Basic net income per share	$	(0.07	)	$	0.07		$	(0.04	)	$	0.21
Diluted net income per share	$	(0.07	)	$	0.07		$	(0.04	)	$	0.20
Loss per share from discontinued operations
Basic net loss per share	$	(0.01	)	$	(0.59	)	$	(0.10	)	$	(1.20	)
Diluted net loss per share	$	(0.01	)	$	(0.55	)	$	(0.10	)	$	(1.15	)

Basic weighted average shares outstanding		7,954			3,759			6,159			3,684
Diluted weighted average shares outstanding (continuing operations)		7,954			3,975			6,159			3,826
Diluted weighted average shares outstanding (discontinued operations)		7,954			3,975			6,159			3,826

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

COMSTOCK HOLDING COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Series C														Additional									Non-
	Preferred Stock					Class A					Class B				paid-in			Treasury			Accumulated			controlling
	Shares		Amount			Shares			Amount		Shares		Amount		capital			stock			deficit			interest			Total
Balance at December 31, 2017		579		442			3,295		$	33		220	$	2	$	177,612		$	(2,662	)	$	(189,803	)	$	16,987		$	2,611
Stock compensation and issuances		—		—			104			1		—		—		135			—			—			—			136
Net (loss) income		—		—			—			—		—		—		—			—			(723	)		95			(628	)
Balance at March 31, 2018		579		442			3,399			34		220		2		177,747			(2,662	)		(190,526	)		17,082			2,119
Stock compensation and issuances		—		—			291			3		—		—		108			—			—			—			111
Series C preferred conversion of CGF I & II		—		—			—			—		—		—		3,156			—			—			—			3,156
Net (loss) income		—		—			—			—		—		—		—			—			(1,003	)		184			(819	)
Balance at June 30, 2018		579		442			3,690			37		220		2		181,011			(2,662	)		(191,529	)		17,266			4,567
Stock compensation and issuances		—		—			(7	)		—		—		—		117			—			—			—			117
Non-controlling interest distributions		—		—			—			—		—		—		—			—			—			(1,750	)		(1,750	)
Series C preferred conversion of CGF I & II		2,221		6,751			—			—		—		—		(445	)		—			—			—			6,306
Net (loss) income		—		—			—			—		—		—		—			—			(1,927	)		314			(1,613	)
Balance at September 30, 2018		2,800	$	7,193			3,683		$	37		220	$	2	$	180,683		$	(2,662	)	$	(193,456	)	$	15,830		$	7,627

	Series C														Additional									Non-
	Preferred Stock					Class A					Class B				paid-in			Treasury			Accumulated			controlling
	Shares		Amount			Shares			Amount		Shares		Amount		capital			stock			deficit			interest			Total
Balance at December 31, 2018		2,800	$	7,193			3,703		$	37		220	$	2	$	180,673		$	(2,662	)	$	(194,319	)	$	15,706		$	6,630
Stock compensation and issuances		—		—			56			—		—		—		96			—			—			—			96
Shares withheld related to net share settlement of restricted stock awards		—		—			(10	)		—		—		—		—			—			—			—			—
Net (loss) income		—		—			—			—		—		—		—			—			69			300			369
Balance at March 31, 2019		2,800		7,193			3,749			37		220		2		180,769			(2,662	)		(194,250	)		16,006			7,095
Stock compensation and issuances		—		—			44			1		—		—		156			—			—			—			157
Shares withheld related to net share settlement of restricted stock awards		—		—			(2	)		—		—		—		—			—			—			—			—
Warrant exercises		—		—			200			2		—		—		358			—			—			—			360
Class A stock conversion of non-controlling interest		—		—			3,824			38		—		—		16,050			—			—			(16,019	)		69
Series C conversion of non-controlling interest		641		(428	)		—			—		—		—		—			—			—			—			(428	)
Net (loss) income		—		—			—			—		—		—		—			—			(253	)		13			(240	)
Balance at June 30, 2019		3,441		6,765			7,815			78		220		2		197,333			(2,662	)		(194,503	)		—			7,013
Stock compensation and issuances		—		—			17			—		—		—		169			—			—			—			169
Gain on deconsolidation of discontinued operations		—		—

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	7	$17

10-Q	2019-11-14	Quarter: 2019-09-30
10-Q	2019-08-20	Quarter: 2019-06-30
10-Q	2019-05-15	Quarter: 2019-03-31
10-K	2019-03-29	Annual: 2018-12-31
10-Q	2018-11-08	Quarter: 2018-09-30
10-Q	2018-08-14	Quarter: 2018-06-30
10-Q	2018-05-16	Quarter: 2018-03-31
10-K	2018-04-20	Annual: 2017-12-31
10-Q	2017-11-16	Quarter: 2017-09-30
10-Q	2017-08-14	Quarter: 2017-06-30
10-Q	2017-05-15	Quarter: 2017-03-31
10-K	2017-04-17	Annual: 2016-12-31
10-Q	2016-11-14	Quarter: 2016-09-30
10-Q	2016-08-15	Quarter: 2016-06-30
10-Q	2016-05-16	Quarter: 2016-03-31
10-K	2016-04-04	Annual: 2015-12-31
10-Q	2015-11-16	Quarter: 2015-09-30
10-Q	2015-08-14	Quarter: 2015-06-30
10-Q	2015-05-15	Quarter: 2015-03-31
10-K	2015-04-15	Annual: 2014-12-31
10-Q	2014-11-13	Quarter: 2014-09-30
10-Q	2014-08-13	Quarter: 2014-06-30
10-Q	2014-05-15	Quarter: 2014-03-31
10-K	2014-03-31	Annual: 2013-12-31
10-Q	2013-11-12	Quarter: 2013-09-30
10-Q	2013-08-13	Quarter: 2013-06-30
10-Q	2013-05-15	Quarter: 2013-03-31
10-K	2013-03-27	Annual: 2012-12-31
10-Q	2012-11-14	Quarter: 2012-09-30
10-Q	2012-07-27	Quarter: 2012-06-30
10-Q	2012-05-11	Quarter: 2012-03-31
10-K	2012-03-30	Annual: 2011-12-31
10-Q	2011-11-14	Quarter: 2011-09-30
10-Q	2011-08-12	Quarter: 2011-06-30
10-Q	2011-05-13	Quarter: 2011-03-31
10-K	2011-03-31	Annual: 2010-12-31
10-Q	2010-11-12	Quarter: 2010-09-30
10-Q	2010-08-13	Quarter: 2010-06-30
10-Q	2010-05-14	Quarter: 2010-03-31
10-K	2010-03-31	Annual: 2009-12-31

8-K	2019-12-30	Enter Agreement, Exhibits
8-K	2019-06-19	Shareholder Vote, Exhibits
8-K	2019-04-30	Enter Agreement, M&A, Sale of Shares, Exhibits
8-K	2019-02-12	Officers, Amend Bylaw, Shareholder Vote, Exhibits
8-K	2018-06-12	Shareholder Vote
8-K	2018-06-12	Officers, Exhibits
8-K	2018-05-22	Enter Agreement, Leave Agreement, Off-BS Arrangement, Sale of Shares
8-K	2018-03-30	Enter Agreement, Exhibits

EX-31.1	chci-ex311_7.htm
EX-31.2	chci-ex312_6.htm
EX-32.1	chci-ex321_8.htm