UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported): April 13, 2009 (March 31, 2009)
Comstock Homebuilding Companies, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 1-32375 | 20-1164345 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
11465 SUNSET HILLS ROAD, FIFTH FLOOR RESTON, VIRGINIA 20910
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (703) 883-1700
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a- 12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Conditions. |
On March 31, 2009, Comstock Homebuilding Companies, Inc. (the “Company”), issued a press release announcing financial results for the three months and twelve months, respectively, ended December 31, 2008. A copy of the press release is furnished herewith as Exhibit 99.1, and this exhibit is incorporated by reference in its entirety into this Item 2.02.
The information contained in this Item 2.02 and in the accompanying exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| Item 8.01 | Other Events. |
On March 31, 2009, Comstock Homebuilding Companies, Inc. (the “Company”) received its audited financial statements for the fiscal year ended December 31, 2008, which statements were included in its Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2009. The audited financial statements contained an unqualified opinion from the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, including an explanatory paragraph raising doubt about the Company’s ability to continue as a “going concern.”
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit Number |
Description | |
| 99.1 | Press Release by Comstock Homebuilding Companies, Inc., dated March 31, 2009 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 13, 2009
| COMSTOCK HOMEBUILDING COMPANIES, INC. | ||
| By: | /s/ Jubal R. Thompson | |
| General Counsel and Secretary | ||
EXHIBIT INDEX
| Exhibit Number |
||
| 99.1 | Press Release by Comstock Homebuilding Companies, Inc., dated March 31, 2009 | |
Exhibit 99.1
NEWS RELEASE
COMSTOCK HOMEBUILDING COMPANIES, INC. PROVIDES RESULTS FOR 2008 AND UPDATE ON OPERATIONS
Reston, Virginia (March 25, 2009) – (MARKET WIRE via COMTEX) — Comstock Homebuilding Companies, Inc. (Nasdaq: CHCI) (“Comstock” or the “Company”) today released preliminary financial results for 2008, information regarding the status of its delisting and a general update on operations.
Results of Operations
On March 31, 2009 the Company filed its 2008 Form 10-K with the Securities and Exchange Commission. For the twelve months ending December 31, 2008 the company generated the following summary results of operations:
| Twelve Months Ended December 31, | ||||||||
| (dollars in 000s except per share) | 2008 | 2007 | ||||||
| Total revenue |
$ | 46,662 | $ | 266,159 | ||||
| Impairments & write-offs |
18,022 | 78,264 | ||||||
| Gross profit |
(10,634 | ) | (57,414 | ) | ||||
| Operating loss |
(32,719 | ) | (92,085 | ) | ||||
| Gain on troubled debt restructuring |
12,851 | — | ||||||
| Net loss |
(17,058 | ) | (87,510 | ) | ||||
| Diluted earnings per share |
$ | (0.98 | ) | $ | (5.42 | ) | ||
The Company reported the following summary balance sheet information for December 31, 2008:
| December 31, | December 31, | |||||
| (dollars in 000s except per share) | 2008 | 2007 | ||||
| Cash and cash equivalents |
$ | 5,977 | $ | 6,822 | ||
| Real estate held for sale |
129,542 | 203,860 | ||||
| Notes payable |
102,829 | 171,214 | ||||
| Shareholder equity |
30,525 | 46,519 | ||||
| Book value per share |
$ | 1.66 | $ | 2.61 | ||
The Company also announced that in connection with their unqualified opinion regarding the Company’s 2008 audit, the Company’s independent registered public accounting firm, PricewaterhouseCoopers, indicated their belief that declining market conditions create substantial doubt that the Company would continue operating throughout 2009 as a going concern. As such, PricewaterhouseCoopers issued a Going Concern Opinion along with its 2008 audit report.
Status of Delisting
The Company disclosed that on March 23, 2009 the Company received a notice from NASDAQ indicating that NASDAQ had determined to once again extend its suspension of the bid-price and market value of publicly held shares requirements until July 20, 2009. As such, the Company’s delisting deadline was automatically extended. The Company now has until on or about October 13, 2009 to regain compliance with the NASDAQ bid-price requirements and until on or about November 8, 2009 to regain compliance with the NASDAQ market value of publically held shares requirements.
Update on Operations and Cash Resources
The Company disclosed that sales during the first quarter remained weak as the general economic conditions in its three primary markets continued to generate low levels of consumer demand for new home sales. The Company reported that it projected 23 net new orders during the first quarter of 2009 representing approximately $7.4 million in net new order revenue. The Company projected that it will deliver 13 homes during the first quarter representing homebuilding revenue of approximately $5.7 million.
During the first quarter of 2009 the Company sold 7 units at its Eclipse project representing $4.4 million of new order revenue. As of March 31, 2009 the Company had sold a total of 371 of the 465 units at its Eclipse at Potomac Yard. Of the remaining 94 unsold units, 63 units were being rented generating approximately $133,000 per month of gross rental income to help cover the cost of operating the project.
The Company reported that its unrestricted cash balance as of March 31, 2009 was projected to be approximately $3.0 million with an additional $3.0 million of restricted cash which is being held as collateral in connection with a letter of credit issued by Wachovia Bank related to a discontinued captive general liability insurance policy. The Company is working to try to secure the release of the restricted cash. In connection with its limited liquidity the Company has elected not to make the March 31, 2009 interest payment due on its senior unsecured debt to JP Morgan Ventures. The amount of the interest payment due is approximately $218,000.
The Company also announced that it is working on multiple strategic plans aimed at generating unrestricted cash flow to shore up its balance sheet and secure its ability to continue operating. These strategies include further restructuring of the Company’s debts with its lenders as well as aggressive and non-conventional approaches to bulk selling inventory units. The Company warned that if unsuccessful in its efforts to generate free cash flow and restructure its debts with its lenders, the Company may be forced to seek bankruptcy protection while it reorganizes.
“The challenges currently facing the home building industry and the economy are unprecedented,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “The absolute lack of capital available to homebuilders is contributing to the downward spiral of the real estate market and is costing this country hundreds of thousands of jobs and is causing an untold loss of wealth. While we applaud the federal government’s effort to stimulate the economy we believe that the effort is flawed, as it has to date overlooked one of the most meaningful contributors to the U.S. economic engine—the homebuilding industry. As the government uses vast resources to prop up Wall Street, ‘Main Street’ is crumbling. In spite of these overwhelming obstacles, we remain committed to doing everything possible to reach amicable arrangements with our lenders, generate free cash flow from our existing assets and continue in our effort to stabilize the long term viability of this company.”
About Comstock Homebuilding Companies, Inc.
Comstock Homebuilding Companies, Inc. is a publically traded real estate enterprise with a focus on a variety of affordably priced, for-sale residential products. The company currently operates as Comstock Homes in the Washington, D.C.; Raleigh, NC; and Atlanta, GA markets. Comstock trades on Nasdaq as CHCI. For more information please visit www.comstockhomebuilding.com.
Cautionary Statement
This release may contain “forward-looking” statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Additional information concerning these and other important risks and uncertainties can be found under the heading “Risk Factors” in the Company’s Form 10-K as filed with the Securities and Exchange Commission on March 31, 2009. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
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| INCOME STATEMENT | Twelve Months Ended December 31, | |||||||||||
| 2008 | 2007 | 2006 | ||||||||||
| Revenues |
||||||||||||
| Revenue - homebuilding |
$ | 44,097 | $ | 232,805 | $ | 240,093 | ||||||
| Revenue - other |
2,565 | 33,354 | 5,788 | |||||||||
| Total revenue |
46,662 | 266,159 | 245,881 | |||||||||
| Expenses |
||||||||||||
| Cost of sales - homebuilding |
39,246 | 211,068 | 211,408 | |||||||||
| Cost of sales - other |
28 | 34,241 | 5,249 | |||||||||
| Impairments and write-offs |
18,022 | 78,264 | 57,426 | |||||||||
| Selling, general and administrative |
16,400 | 34,671 | 37,500 | |||||||||
| Interest, real estate taxes and indirect costs related to inactive projects |
5,685 | — | — | |||||||||
| Operating loss |
(32,719 | ) | (92,085 | ) | (65,702 | ) | ||||||
| Loss (Gain) on troubled debt restructuring |
(12,851 | ) | — | — | ||||||||
| Other income, net |
(2,850 | ) | (1,886 | ) | (1,487 | ) | ||||||
| Loss before minority interest |
(17,018 | ) | (90,199 | ) | (64,215 | ) | ||||||
| Minority interest |
(8 | ) | (137 | ) | 15 | |||||||
| Loss before equity in loss earnings of real estate partnership |
(17,010 | ) | (90,062 | ) | (64,230 | ) | ||||||
| Equity in loss of real estate partnership |
— | — | (135 | ) | ||||||||
| Total pre tax loss |
(17,010 | ) | (90,062 | ) | (64,365 | ) | ||||||
| Income taxes expense (benefit) |
48 | (2,552 | ) | (24,520 | ) | |||||||
| Net loss |
$ | (17,058 | ) | $ | (87,510 | ) | $ | (39,845 | ) | |||
| Basic loss per share |
$ | (0.98 | ) | $ | (5.42 | ) | $ | (2.63 | ) | |||
| Basic weighted average shares outstanding |
17,462 | 16,140 | 15,148 | |||||||||
| Diluted loss per share |
$ | (0.98 | ) | $ | (5.42 | ) | $ | (2.63 | ) | |||
| Diluted weighted average shares outstanding |
17,462 | 16,140 | 15,148 | |||||||||
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| BALANCE SHEET | December 31, | December 31, | ||||||
| 2008 | 2007 | |||||||
| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 5,977 | $ | 6,822 | ||||
| Restricted cash |
3,859 | 4,985 | ||||||
| Receivables |
— | 370 | ||||||
| Due from related parties |
— | 92 | ||||||
| Real estate held for development and sale |
129,542 | 203,860 | ||||||
| Inventory not owned - variable interest entities |
19,250 | 19,250 | ||||||
| Property, plant and equipment, net |
829 | 1,539 | ||||||
| Other assets |
1,402 | 22,058 | ||||||
| TOTAL ASSETS |
$ | 160,859 | $ | 258,976 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Accounts payable and accrued liabilities |
$ | 8,232 | $ | 21,962 | ||||
| Obligations related to inventory not owned |
19,050 | 19,050 | ||||||
| Notes payable |
84,563 | 135,367 | ||||||
| Unsecured debt |
18,266 | 35,847 | ||||||
| TOTAL LIABILITIES |
130,111 | 212,226 | ||||||
| Commitments and contingencies |
||||||||
| Minority interest |
223 | 231 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Class A common stock, $0.01 par value, 77,266,500 shares authorized, 15,608,438 and 15,120,955 issued and outstanding, respectively |
156 | 151 | ||||||
| Class B common stock, $0.01 par value, 2,733,500 shares authorized, 2,733,500 issued and outstanding |
27 | 27 | ||||||
| Additional paid-in capital |
157,057 | 155,998 | ||||||
| Treasury stock, at cost (391,400 Class A common stock) |
(2,439 | ) | (2,439 | ) | ||||
| Accumulated deficit |
(124,277 | ) | (107,219 | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY |
30,525 | 46,519 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 160,859 | $ | 258,976 | ||||
Contact:
Bruce Labovitz
Email Contact
703.230.1131
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