Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39266 | |
Entity Registrant Name | HARBOR CUSTOM DEVELOPMENT, INC. | |
Entity Incorporation, State or Country Code | WA | |
Entity Tax Identification Number | 46-4827436 | |
Entity Address, Address Line One | 1201 Pacific Avenue, Suite 1200 | |
Entity Address, City or Town | Tacoma | |
Entity Address, State or Province | WA | |
Entity Address, Postal Zip Code | 98402 | |
City Area Code | 253 | |
Local Phone Number | 649-0636 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,376,372 | |
Entity Central Index Key | 0001784567 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock | |
Trading Symbol | HCDI | |
Security Exchange Name | NASDAQ | |
Series A Cumulative Convertible Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Series A Cumulative Convertible Preferred Stock | |
Trading Symbol | HCDIP | |
Security Exchange Name | NASDAQ | |
Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants | |
Trading Symbol | HCDIW | |
Security Exchange Name | NASDAQ | |
Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants | |
Trading Symbol | HCDIZ | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash | $ 13,707,900 | $ 25,629,200 |
Restricted Cash | 597,600 | 597,600 |
Accounts Receivable, net | 5,503,900 | 1,113,500 |
Contract Assets, net | 0 | 2,167,200 |
Notes Receivable, net | 9,754,200 | 2,000,000 |
Prepaid Expense and Other Assets | 2,911,900 | 2,778,100 |
Real Estate | 179,932,800 | 122,136,100 |
Property, Plant and Equipment, net | 10,069,200 | 9,199,700 |
Right of Use Assets | 2,323,400 | 3,429,700 |
Deferred Tax Asset | 2,586,800 | 649,000 |
TOTAL ASSETS | 227,387,700 | 169,700,100 |
LIABILITIES | ||
Accounts Payable and Accrued Expenses | 13,340,300 | 10,662,800 |
Dividends Payable | 634,700 | 670,900 |
Contract Liabilities | 896,700 | 0 |
Deferred Revenue | 63,900 | 44,800 |
Note Payable - D&O Insurance | 537,500 | 903,800 |
Revolving Line of Credit Loan, net of Unamortized Debt Discount of $0.8 million and $0, respectively | 24,011,400 | 0 |
Equipment Loans | 4,296,100 | 5,268,500 |
Finance Leases | 188,000 | 543,400 |
Construction Loans, net of Unamortized Debt Discount of $2.4 million and $4.4 million, respectively | 83,263,500 | 34,957,100 |
Construction Loans - Related Party, net of Unamortized Debt Discount of $0.01 million and $1.1 million, respectively | 8,926,100 | 13,426,600 |
Right of Use Liabilities | 3,168,000 | 3,484,400 |
TOTAL LIABILITIES | 139,326,200 | 69,962,300 |
COMMITMENTS AND CONTINGENCIES - SEE NOTE 12 | ||
STOCKHOLDERS’ EQUITY | ||
Preferred Stock, no par value per share, 10,000,000 shares authorized and 3,799,799 issued and outstanding at September 30, 2022 and 4,016,955 issued and outstanding at December 31, 2021 | 62,912,100 | 66,507,500 |
Common Stock, no par value per share, 50,000,000 shares authorized and 14,352,365 issued and outstanding at September 30, 2022 and 13,155,342 issued and outstanding at December 31, 2021 | 35,704,700 | 32,122,700 |
Additional Paid In Capital | 1,224,600 | 752,700 |
Retained Earnings (Accumulated Deficit) | (11,779,900) | 1,646,500 |
Stockholders’ Equity | 88,061,500 | 101,029,400 |
Non-Controlling Interest | 0 | (1,291,600) |
TOTAL STOCKHOLDERS’ EQUITY | 88,061,500 | 99,737,800 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 227,387,700 | $ 169,700,100 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Revolving line of credit loan, net of debt discount | $ 800 | $ 0 |
Debt discount | 2,400 | 4,400 |
Debt discount | $ 10 | $ 1,100 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 3,799,799 | 4,016,955 |
Preferred stock, shares outstanding (in shares) | 3,799,799 | 4,016,955 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares, issued (in shares) | 14,352,365 | 13,155,342 |
Common stock outstanding (in shares) | 14,352,365 | 13,155,342 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Sales | $ 11,748,500 | $ 18,010,600 | $ 50,616,000 | $ 46,017,200 |
Cost of Sales | 11,310,800 | 10,866,200 | 46,055,400 | 34,938,300 |
Gross Profit | 437,700 | 7,144,400 | 4,560,600 | 11,078,900 |
Operating Expenses | 4,523,800 | 3,322,100 | 12,017,200 | 7,639,700 |
Operating Income (Loss) | (4,086,100) | 3,822,300 | (7,456,600) | 3,439,200 |
Other Income (Expense) | ||||
Interest Expense | (565,800) | (115,100) | (1,046,800) | (298,500) |
Interest Income | 163,900 | 0 | 378,900 | 0 |
Loss on Sale of Equipment | (12,600) | 0 | (118,100) | (35,900) |
Other Income | 18,000 | 1,200 | 26,200 | 123,800 |
Total Other (Expense) | (396,500) | (113,900) | (759,800) | (210,600) |
Income (Loss) Before Income Tax | (4,482,600) | 3,708,400 | (8,216,400) | 3,228,600 |
Income Tax (Benefit) | (1,067,800) | 0 | (1,937,800) | 0 |
Net Income (Loss) | (3,414,800) | 3,708,400 | (6,278,600) | 3,228,600 |
Net Loss Attributable to Non-controlling interests | 0 | 0 | (600) | (1,700) |
Preferred Dividends | (1,903,700) | (631,400) | (5,856,200) | (771,500) |
Net Income (Loss) Attributable to Common Stockholders, basic | $ (5,318,500) | $ 3,077,000 | $ (12,134,200) | $ 2,458,800 |
Earnings (Loss) Per Share - Basic (in dollars per share) | $ (0.37) | $ 0.21 | $ (0.88) | $ 0.17 |
Earnings (Loss) Per Share - Diluted (in dollars per share) | $ (0.37) | $ 0.17 | $ (0.88) | $ 0.17 |
Weighted Average Common Shares Outstanding - Basic (in shares) | 14,350,899 | 14,898,594 | 13,862,865 | 14,350,143 |
Weighted Average Common Shares Outstanding - Diluted (in shares) | 14,350,899 | 22,063,584 | 13,862,865 | 14,522,663 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income (Loss) | $ (6,278,600) | $ 3,228,600 |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||
Depreciation | 1,022,200 | 783,500 |
Amortization of right of use assets | 440,300 | 252,200 |
Loss on sale of equipment | 119,800 | 35,900 |
Provision for loss on contract | 421,400 | 0 |
Impairment loss on notes and related interest receivable | 898,400 | 0 |
Stock compensation | 473,800 | 416,100 |
Forgiveness on PPP loan | 0 | (10,000) |
Amortization of revolver issuance costs | 320,100 | 0 |
Net change in assets and liabilities: | ||
Accounts receivable | (4,390,400) | (26,600) |
Contract assets | 2,167,200 | (4,762,400) |
Notes receivable | (8,524,600) | 0 |
Prepaid expenses and other assets | (261,700) | 820,300 |
Real estate | (56,179,400) | (82,755,400) |
Deferred tax asset | (1,937,800) | 0 |
Accounts payable and accrued expenses | 2,677,600 | 3,175,800 |
Contract liabilities | 475,300 | 390,900 |
Deferred revenue | 19,100 | (874,600) |
Payments on right of use liability, net of incentives | 349,600 | (241,600) |
NET CASH USED IN OPERATING ACTIVITIES | (68,187,700) | (79,567,300) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (1,808,000) | (378,100) |
Proceeds on the sale of equipment | 194,400 | 69,500 |
NET CASH USED IN INVESTING ACTIVITIES | (1,613,600) | (308,600) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Construction loans | 65,240,900 | 39,560,800 |
Payments on construction loans | (16,080,500) | (10,092,500) |
Financing fees construction loans | (2,304,000) | (1,476,900) |
Related party construction loans | 8,576,500 | 15,500,000 |
Payments on related party construction loans | (13,220,500) | (9,197,200) |
Financing fees related party construction loans | (23,600) | (1,983,900) |
Revolving line of credit loan, net of payments | 24,788,900 | 0 |
Financing fees revolving line of credit loan | (1,097,700) | 0 |
Note payable D&O insurance | 590,100 | 0 |
Payments on note payable D&O insurance | (956,400) | (867,600) |
Payments on equipment loans | (1,655,300) | (1,430,500) |
Payments on financing leases | (70,700) | (289,000) |
Payments on PPP loan | 0 | (9,300) |
Net proceeds from issuance of common stock | 0 | 25,101,000 |
Net proceeds from issuance of preferred stock | 0 | 28,661,000 |
Preferred dividends | (5,892,400) | (560,900) |
Repurchase of common stock | (437,700) | 0 |
Proceeds from exercise of stock options | 8,600 | 18,000 |
Proceeds from exercise of warrants | 413,800 | 0 |
Deferred offering cost | 0 | (68,300) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 57,880,000 | 82,864,700 |
NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH | (11,921,300) | 2,988,800 |
CASH AND RESTRICTED CASH AT BEGINNING OF YEAR | 26,226,800 | 2,396,500 |
CASH AND RESTRICTED CASH AT END OF PERIOD | 14,305,500 | 5,385,300 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Interest paid | 5,350,400 | 2,165,300 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Termination of leases | 52,100 | 0 |
Amortization of debt discount capitalized | 1,617,300 | 2,338,000 |
Financing of fixed assets additions | 110,000 | 1,566,800 |
Conversion of finance lease to equipment loan | 394,800 | 0 |
Cancellation of finance leases | 0 | 99,100 |
New right of use obligations | 0 | 166,800 |
Conversion of preferred to common stock | 3,595,400 | 0 |
Dividends declared but not paid | $ 634,600 | $ 210,600 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited) - USD ($) | Total | Stockholders' Equity (Deficit) | Common Stock | Preferred Stock | Additional Paid in Capital | Retained Earnings (Accumulated Deficit) | Non-Controlling Interest |
Beginning balance, shares (in shares) at Dec. 31, 2020 | 5,636,548 | 0 | |||||
Beginning balance, value at Dec. 31, 2020 | $ 6,414,700 | $ 7,704,600 | $ 11,956,900 | $ 0 | $ 234,800 | $ (4,487,100) | $ (1,289,900) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net proceeds from issuance of stock (in shares) | 9,200,000 | ||||||
Net proceeds from issuance of stock | 25,101,000 | 25,101,000 | $ 25,101,000 | ||||
Exercise of Stock Options(in shares) | 45,046 | ||||||
Exercise of Stock Options | 18,000 | 18,000 | 18,000 | ||||
Stock Compensation Expense (in shares) | 8,500 | ||||||
Stock Compensation Expense | 115,100 | 115,100 | 115,100 | ||||
Net Income (Loss) | (1,549,200) | (1,549,800) | (1,549,800) | 600 | |||
Ending balance, shares (in shares) at Mar. 31, 2021 | 14,890,094 | 0 | |||||
Ending balance, value at Mar. 31, 2021 | 30,099,600 | 31,388,900 | $ 37,057,900 | $ 0 | 367,900 | (6,036,900) | (1,289,300) |
Beginning balance, shares (in shares) at Dec. 31, 2020 | 5,636,548 | 0 | |||||
Beginning balance, value at Dec. 31, 2020 | 6,414,700 | 7,704,600 | $ 11,956,900 | $ 0 | 234,800 | (4,487,100) | (1,289,900) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income (Loss) | 3,228,600 | ||||||
Ending balance, shares (in shares) at Sep. 30, 2021 | 14,922,094 | 1,260,555 | |||||
Ending balance, value at Sep. 30, 2021 | 63,067,900 | 64,359,500 | $ 37,057,900 | $ 28,661,000 | 668,900 | (2,028,300) | (1,291,600) |
Beginning balance, shares (in shares) at Mar. 31, 2021 | 14,890,094 | 0 | |||||
Beginning balance, value at Mar. 31, 2021 | 30,099,600 | 31,388,900 | $ 37,057,900 | $ 0 | 367,900 | (6,036,900) | (1,289,300) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net proceeds from issuance of stock (in shares) | 1,260,555 | ||||||
Net proceeds from issuance of stock | 28,661,000 | 28,661,000 | $ 28,661,000 | ||||
Preferred Dividends | (140,100) | (140,100) | (140,100) | ||||
Stock Compensation Expense (in shares) | 8,500 | ||||||
Stock Compensation Expense | 115,800 | 115,800 | 115,800 | ||||
Net Income (Loss) | 1,069,400 | 1,071,700 | 1,071,700 | (2,300) | |||
Ending balance, shares (in shares) at Jun. 30, 2021 | 14,898,594 | 1,260,555 | |||||
Ending balance, value at Jun. 30, 2021 | 59,805,700 | 61,097,300 | $ 37,057,900 | $ 28,661,000 | 483,700 | (5,105,300) | (1,291,600) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Dividends | (631,400) | (631,400) | (631,400) | ||||
Stock Compensation Expense (in shares) | 23,500 | ||||||
Stock Compensation Expense | 185,200 | 185,200 | 185,200 | ||||
Net Income (Loss) | 3,708,400 | 3,708,400 | 3,708,400 | ||||
Ending balance, shares (in shares) at Sep. 30, 2021 | 14,922,094 | 1,260,555 | |||||
Ending balance, value at Sep. 30, 2021 | 63,067,900 | 64,359,500 | $ 37,057,900 | $ 28,661,000 | 668,900 | (2,028,300) | (1,291,600) |
Beginning balance, shares (in shares) at Dec. 31, 2021 | 13,155,342 | 4,016,955 | |||||
Beginning balance, value at Dec. 31, 2021 | 99,737,800 | 101,029,400 | $ 32,122,700 | $ 66,507,500 | 752,700 | 1,646,500 | (1,291,600) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Dividends | (2,012,500) | (2,012,500) | (2,012,500) | ||||
Exercise of Stock Options(in shares) | 21,623 | ||||||
Exercise of Stock Options | 8,600 | 8,600 | $ 10,500 | (1,900) | |||
Stock Compensation Expense (in shares) | 60,214 | ||||||
Stock Compensation Expense | 242,400 | 242,400 | 242,400 | ||||
Dissolution of Non-Controlling Interest | 0 | (1,292,100) | (1,292,100) | 1,292,100 | |||
Net Income (Loss) | 1,645,300 | 1,645,800 | 1,645,800 | (500) | |||
Ending balance, shares (in shares) at Mar. 31, 2022 | 13,237,179 | 4,016,955 | |||||
Ending balance, value at Mar. 31, 2022 | 99,621,600 | 99,621,600 | $ 32,133,200 | $ 66,507,500 | 993,200 | (12,300) | 0 |
Beginning balance, shares (in shares) at Dec. 31, 2021 | 13,155,342 | 4,016,955 | |||||
Beginning balance, value at Dec. 31, 2021 | $ 99,737,800 | 101,029,400 | $ 32,122,700 | $ 66,507,500 | 752,700 | 1,646,500 | (1,291,600) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of Stock Options(in shares) | 21,623 | ||||||
Exercise of Stock Options | $ 10,000 | ||||||
Net Income (Loss) | (6,278,600) | ||||||
Ending balance, shares (in shares) at Sep. 30, 2022 | 14,352,365 | 3,799,799 | |||||
Ending balance, value at Sep. 30, 2022 | 88,061,500 | 88,061,500 | $ 35,704,700 | $ 62,912,100 | 1,224,600 | (11,779,900) | 0 |
Beginning balance, shares (in shares) at Mar. 31, 2022 | 13,237,179 | 4,016,955 | |||||
Beginning balance, value at Mar. 31, 2022 | 99,621,600 | 99,621,600 | $ 32,133,200 | $ 66,507,500 | 993,200 | (12,300) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Dividends | (1,940,000) | (1,940,000) | (1,940,000) | ||||
Stock Compensation Expense (in shares) | 17,500 | ||||||
Stock Compensation Expense | 112,300 | 112,300 | 112,300 | ||||
Conversion of Preferred stock (in shares) | 1,206,515 | (217,156) | |||||
Conversion of Preferred stock | 0 | 0 | $ 3,595,400 | $ (3,595,400) | |||
Exercise of Warrants (in shares) | 139,295 | ||||||
Exercise of Warrants | 413,800 | 413,800 | $ 413,800 | ||||
Share Repurchase (in shares) | (251,934) | ||||||
Share Repurchase | (437,700) | (437,700) | $ (437,700) | ||||
Net Income (Loss) | (4,509,100) | (4,509,100) | (4,509,100) | ||||
Ending balance, shares (in shares) at Jun. 30, 2022 | 14,348,555 | 3,799,799 | |||||
Ending balance, value at Jun. 30, 2022 | 93,260,900 | 93,260,900 | $ 35,704,700 | $ 62,912,100 | 1,105,500 | (6,461,400) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Preferred Dividends | (1,903,700) | (1,903,700) | (1,903,700) | ||||
Stock Compensation Expense (in shares) | 3,810 | ||||||
Stock Compensation Expense | 119,100 | 119,100 | 119,100 | ||||
Net Income (Loss) | (3,414,800) | (3,414,800) | (3,414,800) | ||||
Ending balance, shares (in shares) at Sep. 30, 2022 | 14,352,365 | 3,799,799 | |||||
Ending balance, value at Sep. 30, 2022 | $ 88,061,500 | $ 88,061,500 | $ 35,704,700 | $ 62,912,100 | $ 1,224,600 | $ (11,779,900) | $ 0 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The Company’s principal business activity involves acquiring raw land and developed lots for the purpose of building and selling single family and multi-family dwellings in Washington, California, Texas, and Florida. It utilizes its heavy equipment resources to develop an inventory of developed lots and provide development infrastructure construction, on a contract basis, for other home builders. On August 1, 2019, the Company changed its name from Harbor Custom Homes, Inc. to Harbor Custom Development, Inc. The Company became an effective filer with the SEC and started trading on The Nasdaq Stock Market LLC ("Nasdaq”) on August 28, 2020. Principles of Consolidation The condensed consolidated financial statements include the following subsidiaries of Harbor Custom Development, Inc. as of the reporting period ending dates as follow: Names Dates of Formation Attributable Interest September 30, 2022 December 31, 2021 Saylor View Estates, LLC* March 30, 2014 N/A 51 % Harbor Materials, LLC** July 5, 2018 N/A N/A Belfair Apartments, LLC December 3, 2019 100 % 100 % Pacific Ridge CMS, LLC May 24, 2021 100 % 100 % Tanglewilde, LLC June 25, 2021 100 % 100 % HCDI FL CONDO LLC July 30, 2021 100 % 100 % HCDI Mira, LLC August 31, 2021 100 % 100 % HCDI Bridgeview, LLC October 28, 2021 100 % 100 % HCDI Wyndstone, LLC September 15, 2021 100 % 100 % HCDI Semiahmoo, LLC December 17, 2021 100 % 100 % Mills Crossing, LLC July 21, 2022 100 % N/A Broadmoor Ventures, LLC August 24, 2022 100 % N/A *Saylor View Estates, LLC was voluntarily dissolved with the State of Washington as of January 20, 2022. **Harbor Materials, LLC was voluntarily dissolved with the State of Washington as of January 29, 2021. As of September 30, 2022 and December 31, 2021, the aggregate non-controlling interest was $0 and $(1.3) million, respectively. Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021. The accompanying unaudited condensed consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. All numbers in the financial statements are rounded to the nearest $100, except for Earnings (Loss) per Share (“EPS”) data, and numbers in the notes to the financial statements are rounded to the nearest million. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Stock-Based Compensation Effective November 19, 2018, the Company’s Board of Directors and stockholders approved and adopted the 2018 Incentive and Non-Statutory Stock Option Plan (the “2018 Plan”). The 2018 Plan allows the Administrator (as defined in the 2018 Plan), currently the Board of Directors, to determine the issuance of incentive stock options and non-qualified stock options to eligible employees and outside directors and consultants of the Company. The Company reserved 675,676 shares of common stock for issuance under the 2018 Plan. On June 1, 2022, the stockholders of the Company voted to approve an amendment to the 2018 Plan to increase, by 2,000,000, the authorized number of shares of common stock reserved for issuance as options under the 2018 Plan. Effective December 3, 2020, the Company’s Board of Directors and stockholders approved and adopted the 2020 Restricted Stock Plan (the “2020 Plan”). The 2020 Plan allows the Administrator, currently the Compensation Committee to determine the issuance of restricted stock to eligible officers, directors, and key employees. The Company reserved 700,000 shares of common stock for issuance under the 2020 Plan. On June 1, 2022, the stockholders of the Company voted to approve an amendment to the 2020 Plan to increase, by 2,000,000, the authorized number of shares of common stock available for awards under the 2020 Plan. The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee and non-employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date. Options and warrants are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. The Company accounts for forfeitures of stock options as they occur. When forfeitures occur, the unvested portion of the previously recognized compensation cost is reversed in the period of the forfeiture. Stock-based compensation expenses are included in operating expenses in the condensed consolidated statement of operations. For the nine months ended September 30, 2022 and 2021 when computing fair value of share-based payments, the Company has considered the following range of assumptions: September 30, 2022 September 30, 2021 Risk-free interest rate 1.73% - 3.54% 0.23% - 1.11% Exercise price $1.12 - $3.00 $2.76 - $5.00 Expected life of grants in years 3.93 - 6.51 2.50 - 6.50 Expected volatility of underlying stock 42.34% - 48.13% 42.63% - 56.13% Dividends — — The expected term is computed using the “simplified” method as permitted under the provisions of FASB ASC Topic 718-10-S99. The Company uses the simplified method to calculate the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The share price is the public trading price at the time of grant. Expected volatility is based on the historical stock price volatility of comparable companies’ common stock as the stock does not have sufficient historical trading activity. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. Repurchase of Equity Securities Share repurchases are recorded to common stock at the value of the cash consideration paid, as the Company's common stock has no par value. These shares are being repurchased for the purpose of constructive retirement. See Note 15. Stockholder's Equity for additional information on the share repurchase program. Earnings (Loss) Per Share EPS is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to topic 260-10-45 of the FASB ASC. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the numerator may have to adjust for any dividends and income or loss associated with potentially dilutive securities that are assumed to have resulted in the issuance of shares of common stock and the denominator may have to adjust to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued during the period to reflect the potential dilution that could occur from shares of common stock issuable through a contingent shares issuance arrangement, stock options, warrants, RSUs, or convertible preferred stock. For purposes of determining diluted earnings per common share, the treasury stock method is used for stock options, warrants, and RSUs, and the if-converted method is used for convertible preferred stock as prescribed in FASB ASC Topic 260. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per share of common stock for the three and nine months ended September 30, 2022 and 2021. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income (loss) attributable to common stockholders $ (5,318,500) $ 3,077,000 $ (12,134,200) $ 2,458,800 Effect of dilutive securities: — 631,400 — — Diluted net income (loss) $ (5,318,500) $ 3,708,400 $ (12,134,200) $ 2,458,800 Denominator: Weighted average common shares outstanding - basic 14,350,899 14,898,594 13,862,865 14,350,143 Dilutive securities (a): Restricted Stock Awards — — — 288 Options — 141,987 — 152,565 Warrants — 19,359 — 19,667 Convertible Preferred Stock — 7,003,644 — — Weighted average common shares outstanding and assumed conversion – diluted 14,350,899 22,063,584 13,862,865 14,522,663 Basic net earnings (loss) per common share $ (0.37) $ 0.21 $ (0.88) $ 0.17 Diluted net earnings (loss) per common share $ (0.37) $ 0.17 $ (0.88) $ 0.17 (a) - Outstanding anti-dilutive securities excluded: Unvested restricted stock awards 274,583 62,500 274,583 62,500 Stock options 800,925 298,333 800,925 298,333 Warrants to purchase common stock 18,447,564 4,664,335 18,447,564 4,664,335 Convertible preferred stock* 3,799,799 — 3,799,799 1,260,555 Warrants to purchase convertible preferred stock* 12,000 12,000 12,000 12,000 *Preferred stock and warrants to purchase convertible preferred stock are convertible into common stock on a 5.556 to 1 ratio. Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. Cash and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2022 and December 31, 2021. Restricted Cash On August 10, 2021, the Company entered into a Letter of Credit (“LOC”) agreement with WaFd Bank in the amount of $0.6 million. The Company signed a lease on October 5, 2021 for a new office space. The landlord of the property, University Street Properties I, LLC, is the beneficiary of the LOC. The amount of funds that cover this LOC were moved by WaFd Bank to a controlled account on August 13, 2021. (See Note 10. Letter of Credit.) Accounts Receivable Accounts receivables are reported at the amount the Company expects to collect from outstanding balances. The Company provides for an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information, and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The allowance for doubtful accounts was $0 as of September 30, 2022 and December 31, 2021. Notes Receivable Notes receivables are recorded at amounts due to the Company according to the contractual terms of the loan agreement. The Company's notes receivables are for the sale of real estate properties or financing the development of the properties prior to acquisition and are each secured by the underlying improved real estate properties. The Company reviews notes receivable for impairment whenever events or circumstances indicate that the note may not be fully recoverable. Impairment is present when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. If management determines an amount to be uncollectible, impairment is measured based on the estimated uncollectible amount less the fair value of the underlying collateral. Impairment is recognized with a valuation allowance against the note receivable with a corresponding charge to bad debt expense under operating expenses. The valuation allowance was $0.8 million for notes receivable and $0.1 million for related interest receivables as of September 30, 2022. No impairment loss was recognized as of December 31, 2021. (See Note 3. Notes Receivable.) Property and Equipment and Depreciation Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repair charges are expensed as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years Real Estate Assets Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with FASB ASC Topic 805, “Business Combinations,” where acquired assets are recorded at fair value. Interest, property taxes, insurance, and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are expensed when the underlying asset is sold. The Company capitalized interest from related party borrowings of $0.3 million and $0.2 million for the three months ended September 30, 2022 and 2021, respectively. The Company capitalized interest from related party borrowings of $0.9 million and $0.6 million for the nine months ended September 30, 2022 and 2021, respectively. The Company capitalized interest from third-party borrowings of $1.5 million and $0.3 million for the three months ended September 30, 2022 and 2021, respectively. The Company capitalized interest from third-party borrowings of $3.4 million and $0.8 million for the nine months ended September 30, 2022 and 2021, respectively. A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met: (1) Management, having the authority to approve the action, commits to a plan to sell the property; (2) The property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (3) An active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (4) The sale of the property is probable and is expected to be completed within one year of the contract date; (5) The property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) Actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. In addition to the annual assessment of potential triggering events in accordance with FASB ASC Topic 360, the Company applies a fair value-based impairment test to the net book value of assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have occurred. As of September 30, 2022 and December 31, 2021, the Company did not identify any triggering events that would require further investigation under ASC 360. Revenue and Cost Recognition FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. In accordance with ASC 606, revenue is recognized when a customer obtains control of the promised good or service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. The provision of ASC 606 includes a five-step process by which the Company determines revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which the Company expects to be entitled in exchange for those goods or services. ASC 606 requires the Company to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, performance obligations are satisfied. A detailed breakdown of the five-step process for revenue recognitions is as follows: Homes, Developed Lots, and Entitled Land 1. Identify the contract with a customer. The Company signs an agreement with a buyer to purchase the parcel of entitled land, developed lots that have completed infrastructure, or completed homes. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering entitled land, developed lots, and completed homes to the customer, which are required to meet certain specifications outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The parcel, lots, and homes are separate performance obligations for which the specific price is in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company recognizes revenue when title is transferred. The Company does not have any further material performance obligations once title is transferred. Fee Build 1. Identify the contract with a customer. The Company signs an agreement with a customer to construct the required infrastructure so that houses can be developed on the lots. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering developed lots which are required to meet certain specifications that are outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The nature of the industry involves a number of uncertainties that can affect the current state of the contract. Variable considerations are the estimates made due to a contract modification in the contractual service. Change orders, claims, extras, or back charges are common in contractual services activity as a form of variable consideration. If there is going to be a contract modification, judgment by management will need to be made to determine if the variable consideration is enforceable. The following factors are considered in determining if the variable consideration is enforceable: 1. The customer’s written approval of the scope of the change order; 2. Current contract language that indicates clear and enforceable entitlement relating to the change order; 3. Separate documentation for the change order costs that are identifiable and reasonable; and 4. The Company’s experience in negotiating change orders, especially as it relates to the specific type of contract and change order being evaluated. Once the Company receives a contract, it generates a budget of projected costs for the contract based on the contract price. If the scope of the contract during the contractual period needs to be modified, the Company files a change order. The Company does not continue to perform services until the change modification is agreed upon with documentation by both the Company and the customer. There are few times that claims, extras, or back charges are included in the contract. If there are multiple performance obligations to the contract, the costs must be allocated appropriately and consistently to each performance obligation. In the Company’s experience, usually only one performance obligation is stated per contract. If there are multiple services provided for one customer, the Company has a policy of splitting out the services over multiple contracts. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company uses the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation. The input method involves measuring the resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used relative to the total expected inputs to the satisfaction of the performance obligation. Costs incurred prior to actual contract (i.e., design, engineering, procurement of material, etc.) should not be recognized as the Company does not have control of the good/service provided. When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such costs, the Company records the entire estimated loss in the period the loss becomes known. Project contracts typically provide for a schedule of billings or invoices to the customer based on the Company’s job to date percentage of completion of specific tasks inherent in the fulfillment of its performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statement of operations can and usually does differ from amounts that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceed cumulative billings and unbilled receivables to the customer under the contract are reflected as a current contract asset in the Company’s balance sheet. Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized on the contract would be reflected as a current contract liability in the Company’s balance sheet. (See Note 17. Uncompleted Contracts.) Revenues from contracts with customers are summarized by category as follows for the three and nine months ended September 30, 2022 and 2021: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Homes $ 4,693,900 $ 3,762,000 $ 25,758,100 $ 13,947,900 Developed Lots — 770,000 9,080,000 7,770,000 Entitled Land 3,400,000 10,440,000 7,880,000 19,750,000 Fee Build 3,623,500 2,871,300 7,825,300 4,219,500 Multifamily 27,200 — 27,200 — Construction Materials 3,900 167,300 45,400 329,800 Total Revenue $ 11,748,500 $ 18,010,600 $ 50,616,000 $ 46,017,200 Disaggregation of Revenue from Contracts with Customers: The following table disaggregates the Company’s revenue based on the type of sale or service and the timing of satisfaction of performance obligations for the three and nine months ended September 30, 2022 and 2021: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Performance obligations satisfied at a point in time $ 8,125,000 $ 15,139,300 $ 42,790,700 $ 41,797,700 Performance obligations satisfied over time 3,623,500 2,871,300 7,825,300 4,219,500 Total Revenue $ 11,748,500 $ 18,010,600 $ 50,616,000 $ 46,017,200 Cost of Sales Land acquisition costs are allocated to each lot based on the size of the lot in relation to the size of the total project. Development costs and capitalized interest are allocated to lots sold based on the same criteria. Fee build costs are charged to cost of sales as incurred. See the revenue recognition criteria above. Costs relating to the handling of recycled construction materials and converting items into usable construction materials for resale are charged to cost of sales as incurred. Income Taxes Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss, credit carryforwards, and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. Management applies the criteria established under FASB ASC Topic 740, Income Taxes, to determine whether any valuation allowances are needed each year. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. There are no uncertain tax positions as of September 30, 2022 and December 31, 2021. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA includes a 15% Corporate Alternative Minimum Tax (“Corporate AMT”) for tax years beginning after December 31, 2022. The Company does not expect the Corporate AMT to have a material impact on its consolidated financial statements. Additionally, the IRA imposes a 1% excise tax on net repurchases of stock by certain publicly traded corporations. The excise tax is imposed on the value of the net stock repurchased or treated as repurchased. The new law will apply to stock repurchases occurring after December 31, 2022. Recent Accounting Pronouncements On June 16, 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. Pursuant to ASU No. 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022 for small reporting companies, non-SEC filers, and all other companies. The Company has not yet adopted ASU 2016-13 and will continue to evaluate any impact from this accounting standard on its notes receivables. On March 12, 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this update are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has applied certain optional expedients that are retained through the end of the hedging relationship. The Company continues to evaluate the impact of the guidance and may apply elections as applicable. On May 3, 2021, the FASB released ASU No. 2021-04, Compensation – Earning Per Share (Topic 260), Debt - Modifications and Extinguishments (subtopic 470-50), Compensation - Stock Compensation (Topic 718), Contracts in Entity’s Own Equity (Subtopic 815-40), Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued this update to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example warrants) that remain equity classified after modification or exchange. The standard is effective for fiscal years beginning after December 15, 2021. The Company adopted ASU 2021-04 on January 1, 2022, however the adoption did not have an impact on the Company’s Financial Statements. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is present when the sum of estimated undiscounted future cash flow expected to result from use of the assets is less than carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value. Fair value is determined based on discounted cash flow or appraised values, depending on the nature of the assets. As of September 30, 2022 and December 31, 2021, there were no impairment losses recognized for long-lived assets. |
CONCENTRATIONS
CONCENTRATIONS | 9 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | CONCENTRATIONS Cash Concentrations The Company maintains cash balances at various financial institutions. These balances are secured by the Federal Deposit Insurance Corporation. These balances generally exceed the federal insurance limits. Uninsured cash balances were $12.7 million and $24.5 million as of September 30, 2022 and December 31, 2021, respectively. Revenue Concentrations Homes For the three months ended September 30, 2022, three customers each represented 32%, 33%, and 34% of the home revenue, respectively. For the three months ended September 30, 2021, five customers each represented 19% of the home revenue. There were no concentrations in relation to the homes revenue segment for the nine months ended September 30, 2022 and 2021. Developed Lots There were no concentrations in relation to the developed lots segment for the three months ended September 30, 2022. For the three months ended September 30, 2021, three customers each represented 38%, 38%, and 24% of the developed lots revenue, respectively. For the nine months ended September 30, 2022, two customers represented 62% and 26%, respectively, of the developed lots revenue segment. Lennar Northwest, Inc. represented 90% of the developed lots revenue for the nine months ended September 30, 2021. Entitled Land For the three months ended September 30, 2022, 1031 Services, Inc. represented 100% of the entitled land revenue. For the three months ended September 30, 2021, Lennar Northwest, Inc. represented 100% of the entitled land revenue. Two customers represented 57% and 43% of the entitled land revenue for the nine months ended September 30, 2022. Lennar Northwest, Inc., represented 100% for the nine months ended September 30, 2021. Fee Build Lennar Northwest, Inc. represented 100% of fee build revenue for the three and nine months ended September 30, 2022 and 2021. |
NOTES RECEIVABLE
NOTES RECEIVABLE | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
NOTES RECEIVABLE | NOTES RECEIVABLE As of September 30, 2022, the total principal balance of notes receivable amounted to $9.8 million. These notes arose as financing by the Company for the sale of real estate properties or financing the development of the properties prior to acquisition. These notes are secured by the underlying improved real estate properties and accrue interest at annual rates ranging from 5% to 9%. All payments of principal and interest are due in full between March 30, 2023 and December 20, 2024. The outstanding balance of the notes amounted to $9.8 million and $2.0 million at September 30, 2022 and December 31, 2021, respectively. Interest income was $0.2 million and $0 for the three months ended September 30, 2022 and 2021, respectively. Interest income was $0.4 million and $0 for the nine months ended September 30, 2022 and 2021, respectively. In March 2022, the Company entered into a promissory note with Rocklin Winding Lane 22, LLC for $4.8 million ("the note") for the sale of developed lots. In the third quarter of 2022, Rocklin Winding Lane 22, LLC defaulted on the note due to a missed interest payment on June 30, 2022. As a result, the Company issued a letter of default in August 2022 and began foreclosure proceedings on the underlying real estate asset in October 2022. Pursuant to the subordination agreement, the underlying real estate asset has a $1.0 million senior loan to a third party that is prioritized over the note. The Company has performed an impairment analysis by reviewing the difference between the carrying amount of the note and the estimated fair value of the collateralized properties and determined that the note is not fully collectible. As of September 30, 2022, the Company recorded a valuation allowance against the note and related bad debt expense within operating expenses of $0.8 million. The details of notes receivables, net of a valuation allowance are as follows: September 30, 2022 December 31, 2021 Broadmoor Commons LLC $ 942,100 $ 500,000 Modern Homestead LLC 1,500,000 1,500,000 Rocklin Winding Lane 22, LLC 4,032,100 — Noffke Horizon View, LLC 3,280,000 — Total Notes Receivable $ 9,754,200 $ 2,000,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following: September 30, 2022 December 31, 2021 Machinery and Equipment $ 10,613,100 $ 10,577,600 Vehicles 104,000 71,800 Furniture and Fixtures 695,600 420,300 Leasehold Improvements 1,471,300 81,200 Total Fixed Assets 12,884,000 11,150,900 Less Accumulated Depreciation (2,814,800) (1,951,200) Fixed Assets, Net $ 10,069,200 $ 9,199,700 Depreciation expense was $0.4 million and $0.3 million for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense was $1.0 million and $0.8 million for the nine months ended September 30, 2022 and 2021, respectively. |
REAL ESTATE
REAL ESTATE | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
REAL ESTATE | REAL ESTATE Real Estate consisted of the following components: September 30, 2022 December 31, 2021 Land Held for Development $ 47,311,900 $ 73,524,400 Construction in Progress 101,894,900 43,362,700 Held for Sale 30,726,000 5,249,000 Total Real Estate $ 179,932,800 $ 122,136,100 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued liabilities consisted of the following: September 30, 2022 December 31, 2021 Trade Accounts Payable $ 10,853,600 $ 5,558,400 Income Tax Payable — 2,415,900 Accrued Compensation, Bonuses, and Benefits 671,900 1,071,700 Accrued Quarry Reclamation Costs 154,600 500,000 Retainage Payable 1,029,200 445,800 Other Accruals 631,000 671,000 Total Accounts Payable and Accrued Expenses $ 13,340,300 $ 10,662,800 |
REVOLVING LINE OF CREDIT
REVOLVING LINE OF CREDIT | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
REVOLVING LINE OF CREDIT | REVOLVING LINE OF CREDITOn March 7, 2022, the Company entered into a senior secured revolving credit facility (“the credit facility”) with BankUnited, N.A. (the "Lender") for $25.0 million. The credit facility has a two year term, with a maturity date of March 7, 2024. The unpaid principal bears interest at a fluctuating rate of interest per annum equal to the daily simple secured overnight financing rate (SOFR) plus the applicable margin of 4.75%. The credit facility is used to fund the Company’s general working capital needs and interest is expensed as incurred. For the three and nine months ended September 30, 2022, the Company capitalized debt issuance costs of $0 and $1.1 million, respectively. These costs are recorded as debt discount and amortized ratably over the life of the loan. The credit facility is collateralized by all of the Company's assets wherein the Lender is granted a junior priority interest in all collateralized Company assets that Lender has previously identified as a permitted lien or other encumbrance that the Company regularly incurs through its ordinary course of business; in all other Company assets, Lender maintains a first priority security interest. The credit facility also contains specific financial covenants. As of September 30, 2022, the Company was in compliance with these covenants except for its minimum interest coverage ratio requirement. The Company is actively engaged with the Lender to come to terms on a restructured financing arrangement, potentially including revised financial covenants for future periods. The discussions are on-going and there has been no formal revised agreement as of the date hereof. Interest expense was $0.5 million and $0 for the three months ended September 30, 2022 and 2021, respectively. Interest expense was $0.9 million and $0 for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the revolving line of credit loan balance was $24.8 million and the unamortized debt discount balance was $0.8 million. Equipment loans consists of the following: September 30, 2022 December 31, 2021 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $11,600 through 2025: $ 4,296,100 $ 5,268,500 Book value of collateralized equipment: 6,944,800 7,229,000 Future equipment loan maturities at September 30, 2022 are as follows: Year Ending December 31, 2022 (three months) $ 502,600 2023 1,896,800 2024 1,673,200 2025 223,500 Total $ 4,296,100 Interest expense was $0.04 million and $0.05 million for the three months ended September 30, 2022 and 2021, respectively. Interest expense was $0.1 million and $0.1 million for the nine months ended September 30, 2022 and 2021, respectively. |
EQUIPMENT LOANS
EQUIPMENT LOANS | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
EQUIPMENT LOANS | REVOLVING LINE OF CREDITOn March 7, 2022, the Company entered into a senior secured revolving credit facility (“the credit facility”) with BankUnited, N.A. (the "Lender") for $25.0 million. The credit facility has a two year term, with a maturity date of March 7, 2024. The unpaid principal bears interest at a fluctuating rate of interest per annum equal to the daily simple secured overnight financing rate (SOFR) plus the applicable margin of 4.75%. The credit facility is used to fund the Company’s general working capital needs and interest is expensed as incurred. For the three and nine months ended September 30, 2022, the Company capitalized debt issuance costs of $0 and $1.1 million, respectively. These costs are recorded as debt discount and amortized ratably over the life of the loan. The credit facility is collateralized by all of the Company's assets wherein the Lender is granted a junior priority interest in all collateralized Company assets that Lender has previously identified as a permitted lien or other encumbrance that the Company regularly incurs through its ordinary course of business; in all other Company assets, Lender maintains a first priority security interest. The credit facility also contains specific financial covenants. As of September 30, 2022, the Company was in compliance with these covenants except for its minimum interest coverage ratio requirement. The Company is actively engaged with the Lender to come to terms on a restructured financing arrangement, potentially including revised financial covenants for future periods. The discussions are on-going and there has been no formal revised agreement as of the date hereof. Interest expense was $0.5 million and $0 for the three months ended September 30, 2022 and 2021, respectively. Interest expense was $0.9 million and $0 for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the revolving line of credit loan balance was $24.8 million and the unamortized debt discount balance was $0.8 million. Equipment loans consists of the following: September 30, 2022 December 31, 2021 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $11,600 through 2025: $ 4,296,100 $ 5,268,500 Book value of collateralized equipment: 6,944,800 7,229,000 Future equipment loan maturities at September 30, 2022 are as follows: Year Ending December 31, 2022 (three months) $ 502,600 2023 1,896,800 2024 1,673,200 2025 223,500 Total $ 4,296,100 Interest expense was $0.04 million and $0.05 million for the three months ended September 30, 2022 and 2021, respectively. Interest expense was $0.1 million and $0.1 million for the nine months ended September 30, 2022 and 2021, respectively. |
CONSTRUCTION LOANS
CONSTRUCTION LOANS | 9 Months Ended |
Sep. 30, 2022 | |
Short-term Debt [Abstract] | |
CONSTRUCTION LOANS | CONSTRUCTION LOANSThe Company has various construction loans with private individuals and finance companies. The loans are collateralized by specific construction projects. Most loans are generally on one one |
LETTER OF CREDIT
LETTER OF CREDIT | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
LETTER OF CREDIT | REVOLVING LINE OF CREDITOn March 7, 2022, the Company entered into a senior secured revolving credit facility (“the credit facility”) with BankUnited, N.A. (the "Lender") for $25.0 million. The credit facility has a two year term, with a maturity date of March 7, 2024. The unpaid principal bears interest at a fluctuating rate of interest per annum equal to the daily simple secured overnight financing rate (SOFR) plus the applicable margin of 4.75%. The credit facility is used to fund the Company’s general working capital needs and interest is expensed as incurred. For the three and nine months ended September 30, 2022, the Company capitalized debt issuance costs of $0 and $1.1 million, respectively. These costs are recorded as debt discount and amortized ratably over the life of the loan. The credit facility is collateralized by all of the Company's assets wherein the Lender is granted a junior priority interest in all collateralized Company assets that Lender has previously identified as a permitted lien or other encumbrance that the Company regularly incurs through its ordinary course of business; in all other Company assets, Lender maintains a first priority security interest. The credit facility also contains specific financial covenants. As of September 30, 2022, the Company was in compliance with these covenants except for its minimum interest coverage ratio requirement. The Company is actively engaged with the Lender to come to terms on a restructured financing arrangement, potentially including revised financial covenants for future periods. The discussions are on-going and there has been no formal revised agreement as of the date hereof. Interest expense was $0.5 million and $0 for the three months ended September 30, 2022 and 2021, respectively. Interest expense was $0.9 million and $0 for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the revolving line of credit loan balance was $24.8 million and the unamortized debt discount balance was $0.8 million. Equipment loans consists of the following: September 30, 2022 December 31, 2021 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $11,600 through 2025: $ 4,296,100 $ 5,268,500 Book value of collateralized equipment: 6,944,800 7,229,000 Future equipment loan maturities at September 30, 2022 are as follows: Year Ending December 31, 2022 (three months) $ 502,600 2023 1,896,800 2024 1,673,200 2025 223,500 Total $ 4,296,100 Interest expense was $0.04 million and $0.05 million for the three months ended September 30, 2022 and 2021, respectively. Interest expense was $0.1 million and $0.1 million for the nine months ended September 30, 2022 and 2021, respectively. |
NOTE PAYABLE DIRECTORS & OFFICE
NOTE PAYABLE DIRECTORS & OFFICERS INSURANCE | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLE DIRECTORS & OFFICERS INSURANCE | CONSTRUCTION LOANSThe Company has various construction loans with private individuals and finance companies. The loans are collateralized by specific construction projects. Most loans are generally on one one |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES From time to time, the Company is subject to compliance audits by federal, state, and local authorities relating to a variety of regulations including wage and hour laws, taxes, and workers’ compensation. There are no significant or pending litigation or regulatory proceedings known at this time. On June 15, 2020, the Company entered into a purchase and sale agreement to acquire property for the construction of 33 townhomes located in East Bremerton, Washington for $2.0 million. Closing is expected to take place in Q4 2022. On December 2, 2021, the Company entered into a purchase and sale agreement for the acquisition of 438 acres in Blaine, Washington for $13.5 million. Closing is expected to take place in Q4 2023. On April 21, 2022, the Company entered into a purchase and sale agreement for the purchase of 4.81 acres in Port Orchard, Washington for $2.6 million. Closing is expected to take place in Q4 2022. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Notes Payable The Company entered into construction loans with Sound Equity, LLC of which Robb Kenyon, a former director and minority shareholder, is a partner. These loans were originated between April 2019 and June 2021; the loans generally have a 12 to 18 month maturity, including those that have been extended. The interest rates range between 7.99% and 9.99%. As of September 30, 2022, and December 31, 2021, the outstanding loan balances were $8.9 million and $14.5 million, respectively. For the three months ended September 30, 2022 and 2021, the Company capitalized loan fees of $0.01 million and $0, respectively. For the nine months ended September 30, 2022 and 2021, the Company capitalized loan fees of $0.02 million and $0.6 million, respectively. These fees are recorded as debt discount and amortized over the life of the loan. The amortization is capitalized to real estate. As of September 30, 2022 and December 31, 2021, there were $0.01 million and $0.2 million of remaining debt discounts, respectively. The interest is capitalized to real estate as incurred. During the three months ended September 30, 2022 and 2021, the Company incurred interest of $0.3 million and $0.2 million, respectively. During the nine months ended September 30, 2022 and 2021, the Company incurred interest of $0.9 million and $0.6 million, respectively. Robb Kenyon resigned as a director of the Company on July 8, 2021. Due to Related Party The Company utilizes a quarry to process waste materials from the completion of raw land into sellable/buildable lots. The materials produced by the quarry and sold by the Company to others are subject to a 25% commission payable to SGRE, LLC, which is 100% owned by the Company’s Chief Executive Officer and President. The commission expense is recorded in operating expenses. On September 30, 2022 and December 31, 2021, the commission payable was $0 and $0.01 million, respectively. The commission expense for the three months ended September 30, 2022 and 2021, was $0.01 million and $0.02 million, respectively. The commission expense for the nine months ended September 30, 2022 and 2021, was $0.04 million and $0.1 million, respectively. |
INCOME TAX
INCOME TAX | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | INCOME TAX The Company’s effective tax rate for the nine months ended September 30, 2022 was a benefit of 23.6%, compared to 0% for the nine months ended September 30, 2021. The Company calculated the effective tax rate for the nine months ended September 30, 2022 based on the actual effective tax rate for the year-to-date period compared to the estimate of the annual effective tax rate for the nine months ended September 30, 2021. The increase in the effective tax rate for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 is driven by the release of the valuation allowance at December 31, 2021 and nondeductible incentive stock options . |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Common Stock The Company is authorized to issue 50,000,000 shares of common stock, at no par value per share. At September 30, 2022, the Company has 14,352,365 shares of common stock issued and outstanding. Each share of common stock has one vote per share for all purposes. Common stock does not provide any preemptive, subscription, or conversion rights and there are no redemption or sinking fund provisions or rights. Common stockholders are not entitled to cumulative voting for purposes of electing members to the Board of Directors. Preferred Stock At September 30, 2022, the Company is authorized to issue 10,000,000 shares of preferred stock, no par value per share. As of September 30, 2022, the Company has 3,799,799 shares of Series A Cumulative Convertible Preferred Stock (“Series A Preferred Shares”) issued and outstanding. The holders of the Series A Preferred Shares are entitled to receive dividends at $2.00 per share per annum which are paid monthly in arrears starting June 30, 2021. Beginning on June 9, 2024, the Company may, at its option, redeem the Series A Preferred Shares, in whole or in part, by paying $25.00 per share, plus any accrued and unpaid dividends to but not including the date of redemption. To the extent declared by the Board of Directors, dividends will be payable not later than 20 days after the end of each calendar month. Dividends on the Series A Preferred Shares will accumulate whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, and whether or not such dividends are declared by the Board of Directors. Conversion at Option of Holder . Each Series A Preferred Share, together with accrued but unpaid dividends, is convertible into 5.556 shares of common stock (subject to adjustment) at any time at the option of the holder. Dividends Preferred Stock . The holders of the Series A Preferred Shares are entitled to receive dividends in the amount of $2.00 per share per annum, which is equivalent to 8% of the $25.00 liquidation preference per share. The Company has accrued dividends of $0.6 million as of September 30, 2022 which were paid on October 17, 2022. Common Stock. The declaration of any future cash dividends is at the discretion of the board of directors and depends upon the Company’s earnings, if any, capital requirements and financial position, general economic conditions, and other pertinent conditions. It is the Company’s present intention not to pay any cash dividends on the Company’s common stock in the foreseeable future, but rather to reinvest earnings, if any, in business operations. Repurchase of Equity Securities On May 10, 2022, the Board of Directors approved a stock repurchase program authorizing the repurchase of up to $5.0 million worth of shares of common stock. The amount of the repurchase program represented approximately 15% of the outstanding shares of the Company’s common stock valued at the closing price on May 10, 2022. During the nine months ended September 30, 2022, the Company repurchased 251,934 shares of common stock under this repurchase program at an average price of $1.76 per share for a total of $0.4 million. (A) Options The following is a summary of the Company’s option activity: Options Weighted Average Exercise Price Outstanding – January 1, 2022 463,251 $ 2.82 Exercisable – January 1, 2022 343,724 $ 2.77 Granted 392,000 $ 1.19 Exercised (21,623) $ 0.40 Forfeited/Cancelled (32,703) $ 1.90 Outstanding – September 30, 2022 800,925 $ 2.05 Exercisable – September 30, 2022 383,049 $ 2.76 Options Outstanding Options Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.40 - $6.50 800,925 8.28 $ 2.05 383,049 $ 2.76 During the nine months ended September 30, 2022, the Company issued 392,000 options to employees. The options have an exercise price between $1.12 and $2.09 per share, a term of ten years, and vest over one Stock-Based Compensation. During the nine months ended September 30, 2022, the Company had 21,623 options exercised by former employees. These options were exercised at $0.40 per share for a total of $0.01 million. The Company recognized share-based compensation net of forfeitures related to options of $0.02 million and $0.1 million for the three months ended September 30, 2022 and 2021, respectively. The Company recognized share-based compensation net of forfeitures related to options of $0.1 million and $0.2 million for the nine months ended September 30, 2022 and 2021, respectively. On September 30, 2022, unrecognized share-based compensation was $0.3 million. The intrinsic value for outstanding and exercisable options as of September 30, 2022 was $0.1 million and $0.1 million. (B) Warrants The following is a summary of the Company’s common stock warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 1, 2022 18,486,859 $ 3.46 Exercisable – January 1, 2022 18,486,859 $ 3.46 Granted 100,000 $ 3.00 Exercised (139,295) $ 2.97 Forfeited/Cancelled — $ — Outstanding – September 30, 2022 18,447,564 $ 3.47 Exercisable – September 30, 2022 18,372,564 $ 3.47 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.40 - $7.50 18,447,564 3.93 $ 3.47 18,372,564 $ 3.47 During the nine months ended September 30, 2022, the Company issued 100,000 warrants in connection with investor relation services being performed. The warrants have an exercise price of $3.00 per share, a term of five years, and vest over three years. The fair value of these warrants is $0.1 million as of September 30, 2022. The intrinsic value for outstanding and exercisable warrants as of September 30, 2022 was $0.01 million and $0.01 million, respectively. The following is a summary of the Company’s preferred stock warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 1, 2022 12,000 $ 24.97 Exercisable – January 1, 2022 12,000 $ 24.97 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding – September 30, 2022 12,000 $ 24.97 Exercisable – September 30, 2022 12,000 $ 24.97 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 24.97 12,000 3.69 $ 24.97 12,000 $ 24.97 The intrinsic value for outstanding and exercisable preferred warrants as of September 30, 2022 was $0. (C) Restricted Stock Plan The following is a summary of the Company’s restricted stock activity: Restricted Stock Weighted Average Fair Value Non Vested Balance - January 1, 2022 145,000 $ 2.45 Granted 231,100 $ 1.96 Vested 101,517 $ 2.66 Forfeited/Cancelled — $ — Non Vested Balance - September 30, 2022 274,583 $ 1.96 The Company periodically grants restricted stock awards to the Board of Directors and certain employees pursuant to the 2020 Plan. These typically are awarded by the Compensation Committee at one time and from time to time, to vest over one The Company recognized $0.05 million and $0.1 million of share-based compensation during the three months ended September 30, 2022 and 2021, respectively. The Company recognized $0.4 million and $0.2 million of share-based compensation during the nine months ended September 30, 2022 and 2021, respectively. On September 30, 2022, there was $0.4 million of unrecognized compensation related to non-vested restricted stock. |
SEGMENTS
SEGMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS In accordance with FASB ASC Topic 280, Segment Reporting, an operating segment is defined as a component of an enterprise for which discrete financial information is available and reviewed regularly by the chief operating decision maker (“CODM”), or decision making group, to evaluate performance and make operating decisions. The Company identified its CODM group as its three executive officers, the Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer. In determining the reportable segments, the CODM group considers similar economics and characteristics including product types, construction processes, customer type, regulatory environments, and underlying demand and supply. The Company’s business is organized into five material reportable segments which aggregate 99.9% of revenue for the nine months ended September 30, 2022: 1) Homes 2) Developed lots 3) Entitled land 4) Multi-family 5) Fee Build The reporting segments follow the same accounting policies used in the preparation of the Company’s condensed consolidated financial statements. The following represents revenue, cost of goods sold, and gross profit (loss) information for the Company’s reportable segments for the three and nine months ended September 30, 2022 and 2021: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Revenue by segment Homes $ 4,693,900 $ 3,929,300 $ 25,758,100 $ 14,277,700 Developed lots — 770,000 9,080,000 7,770,000 Entitled land 3,400,000 10,440,000 7,880,000 19,750,000 Multi-family 27,200 — 27,200 — Fee Build 3,623,500 2,871,300 7,825,300 4,219,500 Other 3,900 — 45,400 — $ 11,748,500 $ 18,010,600 $ 50,616,000 $ 46,017,200 Cost of goods sold by segment Homes $ 3,805,000 $ 3,498,000 $ 21,461,100 $ 12,378,200 Developed lots 87,300 495,400 8,144,300 7,541,700 Entitled land 3,347,900 4,492,600 4,060,800 11,449,400 Multi-family 25,100 — 27,300 — Fee Build 3,791,200 2,380,200 11,010,600 3,569,000 Other 254,300 — 1,351,300 — $ 11,310,800 $ 10,866,200 $ 46,055,400 $ 34,938,300 Gross profit (loss) by segment Homes $ 888,900 $ 431,300 $ 4,297,000 $ 1,899,500 Developed lots (87,300) 274,600 935,700 228,300 Entitled land 52,100 5,947,400 3,819,200 8,300,600 Multi-family 2,100 — (100) — Fee Build (167,700) 491,100 (3,185,300) 650,500 Other (250,400) — (1,305,900) — $ 437,700 $ 7,144,400 $ 4,560,600 $ 11,078,900 The following represents total assets for the Company’s reportable segments at September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Homes $ 27,009,200 $ 36,615,600 Developed lots 42,983,800 8,219,500 Entitled land 9,911,500 28,157,800 Multi-family 111,291,300 47,679,400 Fee Build 5,768,500 3,325,300 Unallocated (Shared) 30,423,400 45,702,500 Total Assets $ 227,387,700 $ 169,700,100 |
UNCOMPLETED CONTRACTS
UNCOMPLETED CONTRACTS | 9 Months Ended |
Sep. 30, 2022 | |
Contractors [Abstract] | |
UNCOMPLETED CONTRACTS | UNCOMPLETED CONTRACTS Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows at September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Costs incurred on uncompleted contracts $ 16,580,500 $ 5,991,300 Estimated earnings (loss) (1,944,600) 811,600 Costs and estimated earnings on uncompleted contracts 14,635,900 6,802,900 Billings to date 15,111,200 4,635,700 Costs and estimated earnings in excess of billings on uncompleted contracts — 2,167,200 Billings in excess of costs and estimated earnings on uncompleted contracts (475,300) — Provision for loss on contract (421,400) — Contract Assets (Liabilities), net $ (896,700) $ 2,167,200 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On October 10, 2022, the board of directors of the Company declared a monthly cash dividend on the Company’s Series A Preferred Shares of $0.167 per share. The cash dividend is payable on November 20, 2022 to stockholders of record on October 31, 2022. On October 20, 2022, the Company entered into a purchase and sale agreement for the sale of 56.63 acres in Punta Gorda, Florida for $7.3 million. Closing is expected to take place in Q4 2022. On November 10, 2022, the board of directors of the Company declared a monthly cash dividend on the Company’s Series A Preferred Shares of $0.167 per share. The cash dividend is payable on December 20, 2022 to stockholders of record on November 30, 2022. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021. The accompanying unaudited condensed consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. |
Reclassification | Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. |
Use of Estimates | Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. |
Stock-Based Compensation | Stock-Based Compensation Effective November 19, 2018, the Company’s Board of Directors and stockholders approved and adopted the 2018 Incentive and Non-Statutory Stock Option Plan (the “2018 Plan”). The 2018 Plan allows the Administrator (as defined in the 2018 Plan), currently the Board of Directors, to determine the issuance of incentive stock options and non-qualified stock options to eligible employees and outside directors and consultants of the Company. The Company reserved 675,676 shares of common stock for issuance under the 2018 Plan. On June 1, 2022, the stockholders of the Company voted to approve an amendment to the 2018 Plan to increase, by 2,000,000, the authorized number of shares of common stock reserved for issuance as options under the 2018 Plan. Effective December 3, 2020, the Company’s Board of Directors and stockholders approved and adopted the 2020 Restricted Stock Plan (the “2020 Plan”). The 2020 Plan allows the Administrator, currently the Compensation Committee to determine the issuance of restricted stock to eligible officers, directors, and key employees. The Company reserved 700,000 shares of common stock for issuance under the 2020 Plan. On June 1, 2022, the stockholders of the Company voted to approve an amendment to the 2020 Plan to increase, by 2,000,000, the authorized number of shares of common stock available for awards under the 2020 Plan. The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee and non-employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date. Options and warrants are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. The Company accounts for forfeitures of stock options as they occur. When forfeitures occur, the unvested portion of the previously recognized compensation cost is reversed in the period of the forfeiture. Stock-based compensation expenses are included in operating expenses in the condensed consolidated statement of operations. For the nine months ended September 30, 2022 and 2021 when computing fair value of share-based payments, the Company has considered the following range of assumptions: September 30, 2022 September 30, 2021 Risk-free interest rate 1.73% - 3.54% 0.23% - 1.11% Exercise price $1.12 - $3.00 $2.76 - $5.00 Expected life of grants in years 3.93 - 6.51 2.50 - 6.50 Expected volatility of underlying stock 42.34% - 48.13% 42.63% - 56.13% Dividends — — The expected term is computed using the “simplified” method as permitted under the provisions of FASB ASC Topic 718-10-S99. The Company uses the simplified method to calculate the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The share price is the public trading price at the time of grant. Expected volatility is based on the historical stock price volatility of comparable companies’ common stock as the stock does not have sufficient historical trading activity. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. Repurchase of Equity Securities |
Earnings (Loss) Per Share | Earnings (Loss) Per Share EPS is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to topic 260-10-45 of the FASB ASC. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the numerator may have to adjust for any dividends and income or loss associated with potentially dilutive securities that are assumed to have resulted in the issuance of shares of common stock and the denominator may have to adjust to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued during the period to reflect the potential dilution that could occur from shares of common stock issuable through a contingent shares issuance arrangement, stock options, warrants, RSUs, or convertible preferred stock. For purposes of determining diluted earnings per common share, the treasury stock method is used for stock options, warrants, and RSUs, and the if-converted method is used for convertible preferred stock as prescribed in FASB ASC Topic 260. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per share of common stock for the three and nine months ended September 30, 2022 and 2021. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income (loss) attributable to common stockholders $ (5,318,500) $ 3,077,000 $ (12,134,200) $ 2,458,800 Effect of dilutive securities: — 631,400 — — Diluted net income (loss) $ (5,318,500) $ 3,708,400 $ (12,134,200) $ 2,458,800 Denominator: Weighted average common shares outstanding - basic 14,350,899 14,898,594 13,862,865 14,350,143 Dilutive securities (a): Restricted Stock Awards — — — 288 Options — 141,987 — 152,565 Warrants — 19,359 — 19,667 Convertible Preferred Stock — 7,003,644 — — Weighted average common shares outstanding and assumed conversion – diluted 14,350,899 22,063,584 13,862,865 14,522,663 Basic net earnings (loss) per common share $ (0.37) $ 0.21 $ (0.88) $ 0.17 Diluted net earnings (loss) per common share $ (0.37) $ 0.17 $ (0.88) $ 0.17 (a) - Outstanding anti-dilutive securities excluded: Unvested restricted stock awards 274,583 62,500 274,583 62,500 Stock options 800,925 298,333 800,925 298,333 Warrants to purchase common stock 18,447,564 4,664,335 18,447,564 4,664,335 Convertible preferred stock* 3,799,799 — 3,799,799 1,260,555 Warrants to purchase convertible preferred stock* 12,000 12,000 12,000 12,000 *Preferred stock and warrants to purchase convertible preferred stock are convertible into common stock on a 5.556 to 1 ratio. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2022 and December 31, 2021. |
Restricted Cash | Restricted CashOn August 10, 2021, the Company entered into a Letter of Credit (“LOC”) agreement with WaFd Bank in the amount of $0.6 million. The Company signed a lease on October 5, 2021 for a new office space. The landlord of the property, University Street Properties I, LLC, is the beneficiary of the LOC. The amount of funds that cover this LOC were moved by WaFd Bank to a controlled account on August 13, 2021. |
Accounts Receivable | Accounts ReceivableAccounts receivables are reported at the amount the Company expects to collect from outstanding balances. The Company provides for an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information, and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. |
Notes Receivable | Notes Receivable Notes receivables are recorded at amounts due to the Company according to the contractual terms of the loan agreement. The Company's notes receivables are for the sale of real estate properties or financing the development of the properties prior to acquisition and are each secured by the underlying improved real estate properties. |
Property and Equipment and Depreciation | Property and Equipment and Depreciation Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repair charges are expensed as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years |
Real Estate Assets | Real Estate Assets Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with FASB ASC Topic 805, “Business Combinations,” where acquired assets are recorded at fair value. Interest, property taxes, insurance, and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are expensed when the underlying asset is sold. The Company capitalized interest from related party borrowings of $0.3 million and $0.2 million for the three months ended September 30, 2022 and 2021, respectively. The Company capitalized interest from related party borrowings of $0.9 million and $0.6 million for the nine months ended September 30, 2022 and 2021, respectively. The Company capitalized interest from third-party borrowings of $1.5 million and $0.3 million for the three months ended September 30, 2022 and 2021, respectively. The Company capitalized interest from third-party borrowings of $3.4 million and $0.8 million for the nine months ended September 30, 2022 and 2021, respectively. A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met: (1) Management, having the authority to approve the action, commits to a plan to sell the property; (2) The property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (3) An active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (4) The sale of the property is probable and is expected to be completed within one year of the contract date; (5) The property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) Actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. In addition to the annual assessment of potential triggering events in accordance with FASB ASC Topic 360, the Company applies a fair value-based impairment test to the net book value of assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have occurred. |
Revenue and Cost Recognition | Revenue and Cost Recognition FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. In accordance with ASC 606, revenue is recognized when a customer obtains control of the promised good or service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. The provision of ASC 606 includes a five-step process by which the Company determines revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which the Company expects to be entitled in exchange for those goods or services. ASC 606 requires the Company to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, performance obligations are satisfied. A detailed breakdown of the five-step process for revenue recognitions is as follows: Homes, Developed Lots, and Entitled Land 1. Identify the contract with a customer. The Company signs an agreement with a buyer to purchase the parcel of entitled land, developed lots that have completed infrastructure, or completed homes. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering entitled land, developed lots, and completed homes to the customer, which are required to meet certain specifications outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The parcel, lots, and homes are separate performance obligations for which the specific price is in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company recognizes revenue when title is transferred. The Company does not have any further material performance obligations once title is transferred. Fee Build 1. Identify the contract with a customer. The Company signs an agreement with a customer to construct the required infrastructure so that houses can be developed on the lots. 2. Identify the performance obligations in the contract. Performance obligations of the Company include delivering developed lots which are required to meet certain specifications that are outlined in the contract. 3. Determine the transaction price. The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. 4. Allocation of the transaction price to performance obligations in the contract. The nature of the industry involves a number of uncertainties that can affect the current state of the contract. Variable considerations are the estimates made due to a contract modification in the contractual service. Change orders, claims, extras, or back charges are common in contractual services activity as a form of variable consideration. If there is going to be a contract modification, judgment by management will need to be made to determine if the variable consideration is enforceable. The following factors are considered in determining if the variable consideration is enforceable: 1. The customer’s written approval of the scope of the change order; 2. Current contract language that indicates clear and enforceable entitlement relating to the change order; 3. Separate documentation for the change order costs that are identifiable and reasonable; and 4. The Company’s experience in negotiating change orders, especially as it relates to the specific type of contract and change order being evaluated. Once the Company receives a contract, it generates a budget of projected costs for the contract based on the contract price. If the scope of the contract during the contractual period needs to be modified, the Company files a change order. The Company does not continue to perform services until the change modification is agreed upon with documentation by both the Company and the customer. There are few times that claims, extras, or back charges are included in the contract. If there are multiple performance obligations to the contract, the costs must be allocated appropriately and consistently to each performance obligation. In the Company’s experience, usually only one performance obligation is stated per contract. If there are multiple services provided for one customer, the Company has a policy of splitting out the services over multiple contracts. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The Company uses the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation. The input method involves measuring the resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used relative to the total expected inputs to the satisfaction of the performance obligation. Costs incurred prior to actual contract (i.e., design, engineering, procurement of material, etc.) should not be recognized as the Company does not have control of the good/service provided. When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such costs, the Company records the entire estimated loss in the period the loss becomes known. Project contracts typically provide for a schedule of billings or invoices to the customer based on the Company’s job to date percentage of completion of specific tasks inherent in the fulfillment of its performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statement of operations can and usually does differ from amounts that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceed cumulative billings and unbilled receivables to the customer under the contract are reflected as a current contract asset in the Company’s balance sheet. Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized on the contract would be reflected as a current contract liability in the Company’s balance sheet. (See Note 17. Uncompleted Contracts.) |
Cost of Sales | Cost of Sales Land acquisition costs are allocated to each lot based on the size of the lot in relation to the size of the total project. Development costs and capitalized interest are allocated to lots sold based on the same criteria. Fee build costs are charged to cost of sales as incurred. See the revenue recognition criteria above. Costs relating to the handling of recycled construction materials and converting items into usable construction materials for resale are charged to cost of sales as incurred. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss, credit carryforwards, and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. Management applies the criteria established under FASB ASC Topic 740, Income Taxes, to determine whether any valuation allowances are needed each year. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. There are no uncertain tax positions as of September 30, 2022 and December 31, 2021. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On June 16, 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. Pursuant to ASU No. 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022 for small reporting companies, non-SEC filers, and all other companies. The Company has not yet adopted ASU 2016-13 and will continue to evaluate any impact from this accounting standard on its notes receivables. On March 12, 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this update are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has applied certain optional expedients that are retained through the end of the hedging relationship. The Company continues to evaluate the impact of the guidance and may apply elections as applicable. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is present when the sum of estimated undiscounted future cash flow expected to result from use of the assets is less than carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value. Fair value is determined based on discounted cash flow or appraised values, depending on the nature of the assets. As of September 30, 2022 and December 31, 2021, there were no impairment losses recognized for long-lived assets. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Statement of Subsidiaries | The condensed consolidated financial statements include the following subsidiaries of Harbor Custom Development, Inc. as of the reporting period ending dates as follow: Names Dates of Formation Attributable Interest September 30, 2022 December 31, 2021 Saylor View Estates, LLC* March 30, 2014 N/A 51 % Harbor Materials, LLC** July 5, 2018 N/A N/A Belfair Apartments, LLC December 3, 2019 100 % 100 % Pacific Ridge CMS, LLC May 24, 2021 100 % 100 % Tanglewilde, LLC June 25, 2021 100 % 100 % HCDI FL CONDO LLC July 30, 2021 100 % 100 % HCDI Mira, LLC August 31, 2021 100 % 100 % HCDI Bridgeview, LLC October 28, 2021 100 % 100 % HCDI Wyndstone, LLC September 15, 2021 100 % 100 % HCDI Semiahmoo, LLC December 17, 2021 100 % 100 % Mills Crossing, LLC July 21, 2022 100 % N/A Broadmoor Ventures, LLC August 24, 2022 100 % N/A *Saylor View Estates, LLC was voluntarily dissolved with the State of Washington as of January 20, 2022. **Harbor Materials, LLC was voluntarily dissolved with the State of Washington as of January 29, 2021. |
Schedule of Share-based Compensation Arrangements by Share-based Payment Award | For the nine months ended September 30, 2022 and 2021 when computing fair value of share-based payments, the Company has considered the following range of assumptions: September 30, 2022 September 30, 2021 Risk-free interest rate 1.73% - 3.54% 0.23% - 1.11% Exercise price $1.12 - $3.00 $2.76 - $5.00 Expected life of grants in years 3.93 - 6.51 2.50 - 6.50 Expected volatility of underlying stock 42.34% - 48.13% 42.63% - 56.13% Dividends — — |
Schedule of Net Income (Loss) Per Share | The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per share of common stock for the three and nine months ended September 30, 2022 and 2021. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income (loss) attributable to common stockholders $ (5,318,500) $ 3,077,000 $ (12,134,200) $ 2,458,800 Effect of dilutive securities: — 631,400 — — Diluted net income (loss) $ (5,318,500) $ 3,708,400 $ (12,134,200) $ 2,458,800 Denominator: Weighted average common shares outstanding - basic 14,350,899 14,898,594 13,862,865 14,350,143 Dilutive securities (a): Restricted Stock Awards — — — 288 Options — 141,987 — 152,565 Warrants — 19,359 — 19,667 Convertible Preferred Stock — 7,003,644 — — Weighted average common shares outstanding and assumed conversion – diluted 14,350,899 22,063,584 13,862,865 14,522,663 Basic net earnings (loss) per common share $ (0.37) $ 0.21 $ (0.88) $ 0.17 Diluted net earnings (loss) per common share $ (0.37) $ 0.17 $ (0.88) $ 0.17 (a) - Outstanding anti-dilutive securities excluded: Unvested restricted stock awards 274,583 62,500 274,583 62,500 Stock options 800,925 298,333 800,925 298,333 Warrants to purchase common stock 18,447,564 4,664,335 18,447,564 4,664,335 Convertible preferred stock* 3,799,799 — 3,799,799 1,260,555 Warrants to purchase convertible preferred stock* 12,000 12,000 12,000 12,000 *Preferred stock and warrants to purchase convertible preferred stock are convertible into common stock on a 5.556 to 1 ratio. |
Schedule of Property and Equipment Estimated Useful Lives | Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following: September 30, 2022 December 31, 2021 Machinery and Equipment $ 10,613,100 $ 10,577,600 Vehicles 104,000 71,800 Furniture and Fixtures 695,600 420,300 Leasehold Improvements 1,471,300 81,200 Total Fixed Assets 12,884,000 11,150,900 Less Accumulated Depreciation (2,814,800) (1,951,200) Fixed Assets, Net $ 10,069,200 $ 9,199,700 |
Schedule of Revenue From Contracts With Customers | Revenues from contracts with customers are summarized by category as follows for the three and nine months ended September 30, 2022 and 2021: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Homes $ 4,693,900 $ 3,762,000 $ 25,758,100 $ 13,947,900 Developed Lots — 770,000 9,080,000 7,770,000 Entitled Land 3,400,000 10,440,000 7,880,000 19,750,000 Fee Build 3,623,500 2,871,300 7,825,300 4,219,500 Multifamily 27,200 — 27,200 — Construction Materials 3,900 167,300 45,400 329,800 Total Revenue $ 11,748,500 $ 18,010,600 $ 50,616,000 $ 46,017,200 The following table disaggregates the Company’s revenue based on the type of sale or service and the timing of satisfaction of performance obligations for the three and nine months ended September 30, 2022 and 2021: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Performance obligations satisfied at a point in time $ 8,125,000 $ 15,139,300 $ 42,790,700 $ 41,797,700 Performance obligations satisfied over time 3,623,500 2,871,300 7,825,300 4,219,500 Total Revenue $ 11,748,500 $ 18,010,600 $ 50,616,000 $ 46,017,200 |
NOTES RECEIVABLE (Tables)
NOTES RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Financing Receivable Face Amount and Interest Rate | The details of notes receivables, net of a valuation allowance are as follows: September 30, 2022 December 31, 2021 Broadmoor Commons LLC $ 942,100 $ 500,000 Modern Homestead LLC 1,500,000 1,500,000 Rocklin Winding Lane 22, LLC 4,032,100 — Noffke Horizon View, LLC 3,280,000 — Total Notes Receivable $ 9,754,200 $ 2,000,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives: Construction Equipment 5-10 years Leasehold Improvements The lesser of 10 years or the remaining life of the lease Furniture and Fixtures 5 years Computers 3 years Vehicles 10 years Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following: September 30, 2022 December 31, 2021 Machinery and Equipment $ 10,613,100 $ 10,577,600 Vehicles 104,000 71,800 Furniture and Fixtures 695,600 420,300 Leasehold Improvements 1,471,300 81,200 Total Fixed Assets 12,884,000 11,150,900 Less Accumulated Depreciation (2,814,800) (1,951,200) Fixed Assets, Net $ 10,069,200 $ 9,199,700 |
REAL ESTATE (Tables)
REAL ESTATE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
Schedule Of Real Estate Assets | Real Estate consisted of the following components: September 30, 2022 December 31, 2021 Land Held for Development $ 47,311,900 $ 73,524,400 Construction in Progress 101,894,900 43,362,700 Held for Sale 30,726,000 5,249,000 Total Real Estate $ 179,932,800 $ 122,136,100 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following: September 30, 2022 December 31, 2021 Trade Accounts Payable $ 10,853,600 $ 5,558,400 Income Tax Payable — 2,415,900 Accrued Compensation, Bonuses, and Benefits 671,900 1,071,700 Accrued Quarry Reclamation Costs 154,600 500,000 Retainage Payable 1,029,200 445,800 Other Accruals 631,000 671,000 Total Accounts Payable and Accrued Expenses $ 13,340,300 $ 10,662,800 |
EQUIPMENT LOANS (Tables)
EQUIPMENT LOANS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Equipment Loans | Equipment loans consists of the following: September 30, 2022 December 31, 2021 Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $11,600 through 2025: $ 4,296,100 $ 5,268,500 Book value of collateralized equipment: 6,944,800 7,229,000 |
Schedule of Future Equipment Loan Maturities | Future equipment loan maturities at September 30, 2022 are as follows: Year Ending December 31, 2022 (three months) $ 502,600 2023 1,896,800 2024 1,673,200 2025 223,500 Total $ 4,296,100 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Share-based Payment Arrangement, Option, Activity | The following is a summary of the Company’s option activity: Options Weighted Average Exercise Price Outstanding – January 1, 2022 463,251 $ 2.82 Exercisable – January 1, 2022 343,724 $ 2.77 Granted 392,000 $ 1.19 Exercised (21,623) $ 0.40 Forfeited/Cancelled (32,703) $ 1.90 Outstanding – September 30, 2022 800,925 $ 2.05 Exercisable – September 30, 2022 383,049 $ 2.76 |
Schedule of Share-based Payment Arrangement, Option, Exercise Price Range | Options Outstanding Options Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.40 - $6.50 800,925 8.28 $ 2.05 383,049 $ 2.76 |
Schedule of Share-based Payment Arrangement, Activity | The following is a summary of the Company’s common stock warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 1, 2022 18,486,859 $ 3.46 Exercisable – January 1, 2022 18,486,859 $ 3.46 Granted 100,000 $ 3.00 Exercised (139,295) $ 2.97 Forfeited/Cancelled — $ — Outstanding – September 30, 2022 18,447,564 $ 3.47 Exercisable – September 30, 2022 18,372,564 $ 3.47 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.40 - $7.50 18,447,564 3.93 $ 3.47 18,372,564 $ 3.47 The following is a summary of the Company’s preferred stock warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 1, 2022 12,000 $ 24.97 Exercisable – January 1, 2022 12,000 $ 24.97 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding – September 30, 2022 12,000 $ 24.97 Exercisable – September 30, 2022 12,000 $ 24.97 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 24.97 12,000 3.69 $ 24.97 12,000 $ 24.97 |
Schedule of Restricted Stock Shares Activity | The following is a summary of the Company’s restricted stock activity: Restricted Stock Weighted Average Fair Value Non Vested Balance - January 1, 2022 145,000 $ 2.45 Granted 231,100 $ 1.96 Vested 101,517 $ 2.66 Forfeited/Cancelled — $ — Non Vested Balance - September 30, 2022 274,583 $ 1.96 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following represents revenue, cost of goods sold, and gross profit (loss) information for the Company’s reportable segments for the three and nine months ended September 30, 2022 and 2021: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Revenue by segment Homes $ 4,693,900 $ 3,929,300 $ 25,758,100 $ 14,277,700 Developed lots — 770,000 9,080,000 7,770,000 Entitled land 3,400,000 10,440,000 7,880,000 19,750,000 Multi-family 27,200 — 27,200 — Fee Build 3,623,500 2,871,300 7,825,300 4,219,500 Other 3,900 — 45,400 — $ 11,748,500 $ 18,010,600 $ 50,616,000 $ 46,017,200 Cost of goods sold by segment Homes $ 3,805,000 $ 3,498,000 $ 21,461,100 $ 12,378,200 Developed lots 87,300 495,400 8,144,300 7,541,700 Entitled land 3,347,900 4,492,600 4,060,800 11,449,400 Multi-family 25,100 — 27,300 — Fee Build 3,791,200 2,380,200 11,010,600 3,569,000 Other 254,300 — 1,351,300 — $ 11,310,800 $ 10,866,200 $ 46,055,400 $ 34,938,300 Gross profit (loss) by segment Homes $ 888,900 $ 431,300 $ 4,297,000 $ 1,899,500 Developed lots (87,300) 274,600 935,700 228,300 Entitled land 52,100 5,947,400 3,819,200 8,300,600 Multi-family 2,100 — (100) — Fee Build (167,700) 491,100 (3,185,300) 650,500 Other (250,400) — (1,305,900) — $ 437,700 $ 7,144,400 $ 4,560,600 $ 11,078,900 The following represents total assets for the Company’s reportable segments at September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Homes $ 27,009,200 $ 36,615,600 Developed lots 42,983,800 8,219,500 Entitled land 9,911,500 28,157,800 Multi-family 111,291,300 47,679,400 Fee Build 5,768,500 3,325,300 Unallocated (Shared) 30,423,400 45,702,500 Total Assets $ 227,387,700 $ 169,700,100 |
UNCOMPLETED CONTRACTS (Tables)
UNCOMPLETED CONTRACTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Contractors [Abstract] | |
Schedule of Contract with Customer, Contract Asset, Contract Liability, and Receivable | Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows at September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Costs incurred on uncompleted contracts $ 16,580,500 $ 5,991,300 Estimated earnings (loss) (1,944,600) 811,600 Costs and estimated earnings on uncompleted contracts 14,635,900 6,802,900 Billings to date 15,111,200 4,635,700 Costs and estimated earnings in excess of billings on uncompleted contracts — 2,167,200 Billings in excess of costs and estimated earnings on uncompleted contracts (475,300) — Provision for loss on contract (421,400) — Contract Assets (Liabilities), net $ (896,700) $ 2,167,200 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF STATEMENT OF SUBSIDIARIES (Details) | Sep. 30, 2022 | Dec. 31, 2021 |
Saylor View Estates, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 51% | |
Belfair Apartments, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Pacific Ridge CMS, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Tanglewilde, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI FL CONDO LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI Mira, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI Bridgeview, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI Wyndstone, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
HCDI Semiahmoo, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | 100% |
Mills Crossing, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% | |
Broadmoor Ventures, LLC | ||
Noncontrolling Interest [Line Items] | ||
Attributable Interest | 100% |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - NARRATIVE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Jun. 01, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 30, 2022 | Mar. 31, 2022 | Aug. 10, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 03, 2020 | Nov. 19, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Stockholders' equity | $ 88,061,500 | $ 63,067,900 | $ 88,061,500 | $ 63,067,900 | $ 99,737,800 | $ 93,260,900 | $ 99,621,600 | $ 59,805,700 | $ 30,099,600 | $ 6,414,700 | ||||
Cash equivalents | 0 | 0 | 0 | |||||||||||
Restricted cash | $ 600,000 | |||||||||||||
Accounts receivable, allowance for credit loss | 0 | 0 | 0 | |||||||||||
Financing receivable impairment loss | 800,000 | 800,000 | 0 | |||||||||||
Interest receivable | 100,000 | 100,000 | ||||||||||||
Unrecognized tax | 0 | 0 | 0 | |||||||||||
Impairment, long-lived asset | 0 | 0 | ||||||||||||
Third Party | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Interest costs capitalized | 1,500,000 | 300,000 | 3,400,000 | 800,000 | ||||||||||
Affiliated Entity | Construction Loan | Sound Equity, LLC | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Interest costs capitalized | 300,000 | 200,000 | 900,000 | 600,000 | ||||||||||
2018 Plan | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Common stock for issuance of reserved shares (in shares) | 675,676 | |||||||||||||
Authorized number of shares of common stock (in shares) | 2,000,000 | |||||||||||||
2020 Plan | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Common stock for issuance of reserved shares (in shares) | 700,000 | |||||||||||||
Authorized number of shares of common stock (in shares) | 2,000,000 | |||||||||||||
Non-Controlling Interest | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Stockholders' equity | $ 0 | $ (1,291,600) | $ 0 | $ (1,291,600) | $ (1,291,600) | $ 0 | $ 0 | $ (1,291,600) | $ (1,289,300) | $ (1,289,900) |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF FAIR VALUE ASSUMPTIONS OF SHARE-BASED PAYMENTS (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate, minimum | 1.73% | 0.23% |
Risk-free interest rate, maximum | 3.54% | 1.11% |
Expected volatility of underlying stock, minimum | 42.34% | 42.63% |
Expected volatility of underlying stock, maximum | 48.13% | 56.13% |
Dividends | 0% | 0% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 1.12 | $ 2.76 |
Expected life of grants in years | 3 years 11 months 4 days | 2 years 6 months |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 3 | $ 5 |
Expected life of grants in years | 6 years 6 months 3 days | 6 years 6 months |
NATURE OF OPERATIONS AND SUMM_7
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF NET INCOME (LOSS) PER SHARE (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Net income (loss) attributable to common stockholders | $ | $ (5,318,500) | $ 3,077,000 | $ (12,134,200) | $ 2,458,800 |
Effect of dilutive securities: | $ | 0 | 631,400 | 0 | 0 |
Net Income (Loss) Attributable to Common Stockholders, diluted | $ | $ (5,318,500) | $ 3,708,400 | $ (12,134,200) | $ 2,458,800 |
Weighted average common shares outstanding - basic (in shares) | 14,350,899 | 14,898,594 | 13,862,865 | 14,350,143 |
Weighted average common shares outstanding and assumed conversion – diluted (in shares) | 14,350,899 | 22,063,584 | 13,862,865 | 14,522,663 |
Basic net earnings (loss) per common share (in dollars per share) | $ / shares | $ (0.37) | $ 0.21 | $ (0.88) | $ 0.17 |
Diluted net earnings (loss) per common share (in dollars per share) | $ / shares | $ (0.37) | $ 0.17 | $ (0.88) | $ 0.17 |
Preferred stock convertible into common shares | 5.556 | 5.556 | ||
Restricted Stock | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Dilutive securities (in shares) | 0 | 0 | 0 | 288 |
Options | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Dilutive securities (in shares) | 0 | 141,987 | 0 | 152,565 |
Outstanding anti-dilutive securities excluded (in shares) | 800,925 | 298,333 | 800,925 | 298,333 |
Warrants | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Dilutive securities (in shares) | 0 | 19,359 | 0 | 19,667 |
Convertible Preferred Stock | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Dilutive securities (in shares) | 0 | 7,003,644 | 0 | 0 |
Outstanding anti-dilutive securities excluded (in shares) | 3,799,799 | 0 | 3,799,799 | 1,260,555 |
Unvested restricted stock awards | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Outstanding anti-dilutive securities excluded (in shares) | 274,583 | 62,500 | 274,583 | 62,500 |
Warrants to purchase common stock | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Outstanding anti-dilutive securities excluded (in shares) | 18,447,564 | 4,664,335 | 18,447,564 | 4,664,335 |
Warrants to purchase convertible preferred stock | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Outstanding anti-dilutive securities excluded (in shares) | 12,000 | 12,000 | 12,000 | 12,000 |
NATURE OF OPERATIONS AND SUMM_8
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Construction Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Construction Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Furniture and Fixtures | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Computers | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
NATURE OF OPERATIONS AND SUMM_9
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 11,748,500 | $ 18,010,600 | $ 50,616,000 | $ 46,017,200 |
Performance obligations satisfied at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 8,125,000 | 15,139,300 | 42,790,700 | 41,797,700 |
Performance obligations satisfied over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 3,623,500 | 2,871,300 | 7,825,300 | 4,219,500 |
Homes | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 4,693,900 | 3,762,000 | 25,758,100 | 13,947,900 |
Developed Lots | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 0 | 770,000 | 9,080,000 | 7,770,000 |
Entitled land | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 3,400,000 | 10,440,000 | 7,880,000 | 19,750,000 |
Fee Build | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 3,623,500 | 2,871,300 | 7,825,300 | 4,219,500 |
Multifamily | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 27,200 | 0 | 27,200 | 0 |
Construction Materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 3,900 | $ 167,300 | $ 45,400 | $ 329,800 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |||||
Cash, uninsured amount | $ 12.7 | $ 12.7 | $ 24.5 | ||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 32% | 19% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Developed Lots | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 38% | 62% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer One | Entitled land | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 57% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Two | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 33% | 19% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Two | Developed Lots | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 38% | 26% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Two | Entitled land | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 43% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Three | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 34% | 19% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Three | Developed Lots | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 24% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Four | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 19% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Customer Five | Homes | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 19% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Lennar Northwest Inc | Developed Lots | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 90% | ||||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Lennar Northwest Inc | Entitled land | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 100% | 100% | |||
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Lennar Northwest Inc | Fee Build | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 100% | 100% | 100% | 100% | |
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Services Inc | Entitled land | |||||
Concentration Risk [Line Items] | |||||
Concentration risk (in percent) | 100% |
NOTES RECEIVABLE - NARRATIVE (D
NOTES RECEIVABLE - NARRATIVE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | |
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Financing receivable, face amount | $ 9,800,000 | $ 9,800,000 | ||||
Financing receivable outstanding | 9,754,200 | 9,754,200 | $ 2,000,000 | |||
Interest income | 200,000 | $ 0 | 400,000 | $ 0 | ||
Financing receivable impairment loss | 800,000 | 800,000 | $ 0 | |||
Rocklin Winding Lane | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Financing receivable, face amount | $ 4,800,000 | |||||
Financing receivable impairment loss | 800,000 | $ 800,000 | ||||
Minimum | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Financing receivable, interest rate | 5% | |||||
Maximum | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Financing receivable, interest rate | 9% | |||||
Rocklin Winding Lane | Loans Payable | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Long-term debt | $ 1,000,000 | $ 1,000,000 |
NOTES RECEIVABLE - FACE AMOUNT
NOTES RECEIVABLE - FACE AMOUNT AND INTEREST RATE (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable | $ 9,754,200 | $ 2,000,000 |
Broadmoor Commons LLC | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable | 942,100 | 500,000 |
Modern Homestead LLC | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable | 1,500,000 | 1,500,000 |
Rocklin Winding Lane 22, LLC | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable | 4,032,100 | 0 |
Noffke Horizon View, LLC | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Notes Receivable | $ 3,280,000 | $ 0 |
PROPERTY AND EQUIPMENT - SCHEDU
PROPERTY AND EQUIPMENT - SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | $ 12,884,000 | $ 11,150,900 |
Less Accumulated Depreciation | (2,814,800) | (1,951,200) |
Fixed Assets, Net | 10,069,200 | 9,199,700 |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | 10,613,100 | 10,577,600 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | 104,000 | 71,800 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | 695,600 | 420,300 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total Fixed Assets | $ 1,471,300 | $ 81,200 |
PROPERTY AND EQUIPMENT - NARRAT
PROPERTY AND EQUIPMENT - NARRATIVE (Details ) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 400,000 | $ 300,000 | $ 1,022,200 | $ 783,500 |
REAL ESTATE (Details)
REAL ESTATE (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Real Estate [Abstract] | ||
Land Held for Development | $ 47,311,900 | $ 73,524,400 |
Construction in Progress | 101,894,900 | 43,362,700 |
Held for Sale | 30,726,000 | 5,249,000 |
Total Real Estate | $ 179,932,800 | $ 122,136,100 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Trade Accounts Payable | $ 10,853,600 | $ 5,558,400 |
Income Tax Payable | 0 | 2,415,900 |
Accrued Compensation, Bonuses, and Benefits | 671,900 | 1,071,700 |
Accrued Quarry Reclamation Costs | 154,600 | 500,000 |
Retainage Payable | 1,029,200 | 445,800 |
Other Accruals | 631,000 | 671,000 |
Total Accounts Payable and Accrued Expenses | $ 13,340,300 | $ 10,662,800 |
REVOLVING LINE OF CREDIT (Detai
REVOLVING LINE OF CREDIT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Mar. 07, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Line of Credit Facility [Line Items] | ||||||
Long-term line of credit | $ 24,011,400 | $ 24,011,400 | $ 0 | |||
Revolving line of credit loan, net of debt discount | 800,000 | 800,000 | $ 0 | |||
Revolving Credit Facility | Line of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 25,000,000 | |||||
Debt instrument, term (in years) | 2 years | |||||
Capitalized debt issuance costs | 0 | 1,100,000 | ||||
Incurred interest expense | 500,000 | $ 0 | 900,000 | $ 0 | ||
Long-term line of credit | $ 24,800,000 | $ 24,800,000 | ||||
Revolving Credit Facility | Line of Credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Basis spread on variable rate | 4.75% |
EQUIPMENT LOANS - SCHEDULE OF E
EQUIPMENT LOANS - SCHEDULE OF EQUIPMENT LOANS (Details) - Notes Payable to Banks - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
Various notes payable to banks and financial institutions with interest rates varying from 0% to 13.89%, collateralized by equipment with monthly payments ranging from $400 to $11,600 through 2025: | $ 4,296,100 | $ 5,268,500 |
Book value of collateralized equipment: | $ 6,944,800 | $ 7,229,000 |
Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (in percent) | 0% | |
Debt instrument, periodic payment | $ 400 | |
Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (in percent) | 13.89% | |
Debt instrument, periodic payment | $ 11,600 |
EQUIPMENT LOANS - SCHEDULE OF F
EQUIPMENT LOANS - SCHEDULE OF FUTURE EQUIPMENT LOAN MATURITIES (Details) - Notes Payable to Banks - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||
2022 (three months) | $ 502,600 | $ 502,600 | |||
2023 | 1,896,800 | 1,896,800 | |||
2024 | 1,673,200 | 1,673,200 | |||
2025 | 223,500 | 223,500 | |||
Total | 4,296,100 | 4,296,100 | $ 5,268,500 | ||
Incurred interest expense | $ 40,000 | $ 50,000 | $ 100,000 | $ 100,000 |
CONSTRUCTION LOANS (Details)
CONSTRUCTION LOANS (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Short-term Debt [Line Items] | ||
Debt discount | $ 2.4 | $ 4.4 |
Construction Loan Payable | ||
Short-term Debt [Line Items] | ||
Short-term debt | 85.6 | 39.4 |
Book value of collateralized equipment: | $ 165.9 | $ 122.1 |
Construction Loan Payable | Minimum | ||
Short-term Debt [Line Items] | ||
Debt instrument, term (in years) | 1 year | |
Debt instrument, interest rate (in percent) | 5% | |
Construction Loan Payable | Maximum | ||
Short-term Debt [Line Items] | ||
Debt instrument, term (in years) | 2 years | |
Debt instrument, interest rate (in percent) | 10% |
LETTER OF CREDIT (Details)
LETTER OF CREDIT (Details) - Line of Credit - Letter of Credit | Aug. 10, 2021 USD ($) |
Line of Credit Facility [Line Items] | |
Line of credit facility, maximum borrowing capacity | $ 600,000 |
Prime Rate | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 1% |
NOTE PAYABLE DIRECTORS & OFFI_2
NOTE PAYABLE DIRECTORS & OFFICERS INSURANCE (Details) - USD ($) | Aug. 28, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Short-term Debt [Line Items] | |||
Notes payable | $ 537,500 | $ 903,800 | |
Notes Payable, Other Payables | |||
Short-term Debt [Line Items] | |||
D&O insurance, face vale | $ 600,000 | ||
D&O insurance expense | $ 100,000 | ||
Debt instrument, term (in years) | 11 months | ||
Debt interest rate | 4.75% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - Purchase and Sale Agreement - Forecast $ in Millions | 3 Months Ended | |
Dec. 31, 2022 USD ($) a home | Dec. 31, 2023 USD ($) a | |
East Bremerton, Washington | ||
Other Commitments [Line Items] | ||
Number of town homes | home | 33 | |
Other commitment | $ 2 | |
Blaine, Washington | ||
Other Commitments [Line Items] | ||
Other commitment | $ 13.5 | |
Area of land | a | 438 | |
Port Orchard, Washington | ||
Other Commitments [Line Items] | ||
Other commitment | $ 2.6 | |
Area of land | a | 4.81 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||||
Due to related parties | $ 8,926,100 | $ 8,926,100 | $ 13,426,600 | ||
Affiliated Entity | Construction Loan | Sound Equity, LLC | |||||
Related Party Transaction [Line Items] | |||||
Due to related parties | 8,900,000 | 8,900,000 | 14,500,000 | ||
Expenses from transactions with related party | 10,000 | $ 0 | 20,000 | $ 600,000 | |
Remaining debt discount | 10,000 | 10,000 | 200,000 | ||
Interest costs capitalized | 300,000 | 200,000 | $ 900,000 | 600,000 | |
Affiliated Entity | Construction Loan | Sound Equity, LLC | Minimum | |||||
Related Party Transaction [Line Items] | |||||
Payment terms | 12 months | ||||
Related party transaction, interest rate | 7.99% | ||||
Affiliated Entity | Construction Loan | Sound Equity, LLC | Maximum | |||||
Related Party Transaction [Line Items] | |||||
Payment terms | 18 months | ||||
Related party transaction, interest rate | 9.99% | ||||
Management | Due To SGRE, LLC | |||||
Related Party Transaction [Line Items] | |||||
Due to related parties | 0 | $ 0 | $ 10,000 | ||
Expenses from transactions with related party | $ 10,000 | $ 20,000 | $ 40,000 | $ 100,000 | |
Percentage of commission payable | 25% | 25% | |||
Management | Due To SGRE, LLC | SGRE, LLC | |||||
Related Party Transaction [Line Items] | |||||
Related party, ownership percentage | 100% | 100% |
INCOME TAX (Details)
INCOME TAX (Details) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 23.60% | 0% |
STOCKHOLDERS_ EQUITY - NARRATIV
STOCKHOLDERS’ EQUITY - NARRATIVE (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | May 10, 2022 USD ($) | |
Class of Stock [Line Items] | ||||
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0 | |||
Common stock, shares, issued (in shares) | 14,352,365 | 13,155,342 | ||
Common stock outstanding (in shares) | 14,352,365 | 13,155,342 | ||
Common stock, voting rights | vote | 1 | |||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | ||
Preferred stock, shares issued (in shares) | 3,799,799 | 4,016,955 | ||
Preferred stock, shares outstanding (in shares) | 3,799,799 | 4,016,955 | ||
Preferred stock accrued dividend | $ | $ 634,700 | $ 670,900 | ||
Share Repurchase | $ | $ 437,700 | |||
Maximum | ||||
Class of Stock [Line Items] | ||||
Preferred stock, dividend terms | 20 days | |||
Series A Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Preferred stock, shares issued (in shares) | 3,799,799 | |||
Preferred stock, shares outstanding (in shares) | 3,799,799 | |||
Preferred stock, dividend rate (in dollars per share) | $ / shares | $ 2 | |||
Preferred stock, dividend rate, percentage | 8% | |||
Preferred stock, liquidation preference per share (in dollars per share) | $ / shares | $ 25 | |||
Preferred Stock, convertible, shares issuable (in shares) | 5.556 | |||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Stock repurchase program, authorized amount | $ | $ 5,000,000 | |||
Stock repurchase program, amount of shares authorized to be repurchased, percentage | 15% | |||
Share Repurchase (in shares) | 251,934 | |||
Average price (in dollars per share) | $ / shares | $ 1.76 | |||
Share Repurchase | $ | $ 400,000 |
STOCKHOLDERS_ EQUITY - SCHEDULE
STOCKHOLDERS’ EQUITY - SCHEDULE OF STOCK OPTIONS ACTIVITY (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Options | ||
Outstanding, beginning balance (in shares) | 463,251 | |
Granted (in shares) | 392,000 | |
Exercised (in shares) | (21,623) | |
Forfeited/Cancelled (in shares) | (32,703) | |
Outstanding, ending balance (in shares) | 800,925 | |
Exercisable (in shares) | 383,049 | 343,724 |
Weighted Average Exercise Price | ||
Outstanding, beginning balance (in dollars per share) | $ 2.82 | |
Granted (in dollars per share) | 1.19 | |
Exercised (in dollars per share) | 0.40 | |
Forfeited/Cancelled (in dollars per share) | 1.90 | |
Outstanding, ending balance (in dollars per share) | 2.05 | |
Exercisable (in dollars per share) | $ 2.76 | $ 2.77 |
STOCKHOLDERS_ EQUITY - SCHEDU_2
STOCKHOLDERS’ EQUITY - SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Equity [Abstract] | |
Exercise price range, lower range limit (in dollars per share) | $ 0.40 |
Exercise price range, upper range limit (in dollars per share) | $ 6.50 |
Number of option outstanding (in shares) | shares | 800,925 |
Weighted average remaining contractual life (in years) | 8 years 3 months 10 days |
Weighted average exercise price (in dollars per share) | $ 2.05 |
Number of option exercisable (in shares) | shares | 383,049 |
Options exercisable, weighted average exercise price (in dollars per share) | $ 2.76 |
STOCKHOLDERS_ EQUITY - OPTIONS
STOCKHOLDERS’ EQUITY - OPTIONS NARRATIVE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 392,000 | |||||
Granted (in dollars per share) | $ 1.19 | |||||
Share-based compensation arrangement by share-based payment award, options, granted in period, fair value | $ 200,000 | |||||
Exercise of stock options (in shares) | 21,623 | |||||
Exercised (in dollars per share) | $ 0.40 | |||||
Exercise of Stock Options | $ 8,600 | $ 18,000 | $ 10,000 | |||
Option, cost not yet recognized, amount | $ 300,000 | 300,000 | ||||
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value | 100,000 | 100,000 | ||||
Share-based compensation arrangement by share-based payment award, options, exercisable, intrinsic value | 100,000 | $ 100,000 | ||||
Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in dollars per share) | $ 1.12 | |||||
Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in dollars per share) | $ 2.09 | |||||
Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 392,000 | |||||
Expiration period (in years) | 10 years | |||||
Share-based payment arrangement, expense | $ 20,000 | $ 100,000 | $ 100,000 | $ 200,000 | ||
Options | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | |||||
Options | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years |
STOCKHOLDERS_ EQUITY - SCHEDU_3
STOCKHOLDERS’ EQUITY - SCHEDULE OF WARRANTS ACTIVITY (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Common Stock Warrant | ||
Warrants | ||
Outstanding, beginning balance (in shares) | 18,486,859 | |
Granted (in shares) | 100,000 | |
Exercised (in shares) | (139,295) | |
Forfeited/Cancelled (in shares) | 0 | |
Outstanding, ending balance (in shares) | 18,447,564 | |
Exercisable (in shares) | 18,372,564 | 18,486,859 |
Weighted Average Fair Value | ||
Outstanding, beginning balance (in dollars per share) | $ 3.46 | |
Granted (in dollars per share) | 3 | |
Exercised (in dollars per share) | 2.97 | |
Forfeited/Cancelled (in dollars per share) | 0 | |
Outstanding, ending balance (in dollars per share) | 3.47 | |
Exercisable (in dollars per share) | $ 3.47 | $ 3.46 |
Preferred Stock Warrant | ||
Warrants | ||
Outstanding, beginning balance (in shares) | 12,000 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited/Cancelled (in shares) | 0 | |
Outstanding, ending balance (in shares) | 12,000 | |
Exercisable (in shares) | 12,000 | 12,000 |
Weighted Average Fair Value | ||
Outstanding, beginning balance (in dollars per share) | $ 24.97 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0 | |
Forfeited/Cancelled (in dollars per share) | 0 | |
Outstanding, ending balance (in dollars per share) | 24.97 | |
Exercisable (in dollars per share) | $ 24.97 | $ 24.97 |
STOCKHOLDERS_ EQUITY - SCHEDU_4
STOCKHOLDERS’ EQUITY - SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Common Stock Warrant | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | $ 0.40 |
Exercise price range, upper range limit (in dollars per share) | $ 7.50 |
Outstanding (in shares) | shares | 18,447,564 |
Weighted average remaining contractual term, outstanding | 3 years 11 months 4 days |
Weighted average exercise price, outstanding (in dollars per share) | $ 3.47 |
Exercisable (in shares) | shares | 18,372,564 |
Exercisable, weighted average exercise price (in dollars per share) | $ 3.47 |
Preferred Stock Warrant | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, upper range limit (in dollars per share) | $ 24.97 |
Outstanding (in shares) | shares | 12,000 |
Weighted average remaining contractual term, outstanding | 3 years 8 months 8 days |
Weighted average exercise price, outstanding (in dollars per share) | $ 24.97 |
Exercisable (in shares) | shares | 12,000 |
Exercisable, weighted average exercise price (in dollars per share) | $ 24.97 |
STOCKHOLDERS_ EQUITY - WARRANTS
STOCKHOLDERS’ EQUITY - WARRANTS NARRATIVE (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Common Stock Warrant | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Class of warrant or right, outstanding (in shares) | shares | 100,000 |
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ / shares | $ 3 |
Warrants and rights outstanding, term | 5 years |
Warrants and rights outstanding, vesting term | 3 years |
Warrants and rights outstanding | $ 100,000 |
Common Stock Warrant | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Aggregate intrinsic value, outstanding | 10,000 |
Aggregate intrinsic value, exercisable | 10,000 |
Preferred Stock Warrant | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Aggregate intrinsic value, outstanding | 0 |
Aggregate intrinsic value, exercisable | $ 0 |
STOCKHOLDERS_ EQUITY - SCHEDU_5
STOCKHOLDERS’ EQUITY - SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Restricted Stock | |
Outstanding, beginning balance (in shares) | shares | 145,000 |
Granted (in shares) | shares | 231,100 |
Vested (in shares) | shares | 101,517 |
Forfeited/Cancelled (in shares) | shares | 0 |
Outstanding, ending balance (in shares) | shares | 274,583 |
Weighted Average Fair Value | |
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 2.45 |
Granted (in dollars per share) | $ / shares | 1.96 |
Vested (in dollars per share) | $ / shares | 2.66 |
Forfeited/Cancelled (in dollars per share) | $ / shares | 0 |
Outstanding, ending balance (in dollars per share) | $ / shares | $ 1.96 |
STOCKHOLDERS_ EQUITY - RESTRICT
STOCKHOLDERS’ EQUITY - RESTRICTED STOCK PLAN NARRATIVE (Details) - Restricted Stock - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based payment arrangement, expense | $ 50 | $ 100 | $ 400 | $ 200 |
Share-based payment arrangement, nonvested award, cost not yet recognized, amount | $ 400 | $ 400 | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years |
SEGMENTS - SCHEDULE OF COMPANY_
SEGMENTS - SCHEDULE OF COMPANY’S REPORTABLE SEGMENT (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) officer segment | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Segment Reporting [Abstract] | |||||
Number of executive officers | officer | 3 | ||||
Number of reportable segments | segment | 5 | ||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | $ 11,748,500 | $ 18,010,600 | $ 50,616,000 | $ 46,017,200 | |
Cost of goods sold by segment | 11,310,800 | 10,866,200 | 46,055,400 | 34,938,300 | |
Gross profit (loss) by segment | 437,700 | 7,144,400 | 4,560,600 | 11,078,900 | |
TOTAL ASSETS | 227,387,700 | 227,387,700 | $ 169,700,100 | ||
Homes | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 4,693,900 | 3,929,300 | 25,758,100 | 14,277,700 | |
Cost of goods sold by segment | 3,805,000 | 3,498,000 | 21,461,100 | 12,378,200 | |
Gross profit (loss) by segment | 888,900 | 431,300 | 4,297,000 | 1,899,500 | |
TOTAL ASSETS | 27,009,200 | 27,009,200 | 36,615,600 | ||
Developed lots | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 0 | 770,000 | 9,080,000 | 7,770,000 | |
Cost of goods sold by segment | 87,300 | 495,400 | 8,144,300 | 7,541,700 | |
Gross profit (loss) by segment | (87,300) | 274,600 | 935,700 | 228,300 | |
TOTAL ASSETS | 42,983,800 | 42,983,800 | 8,219,500 | ||
Entitled land | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 3,400,000 | 10,440,000 | 7,880,000 | 19,750,000 | |
Cost of goods sold by segment | 3,347,900 | 4,492,600 | 4,060,800 | 11,449,400 | |
Gross profit (loss) by segment | 52,100 | 5,947,400 | 3,819,200 | 8,300,600 | |
TOTAL ASSETS | 9,911,500 | 9,911,500 | 28,157,800 | ||
Multi-family | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 27,200 | 0 | 27,200 | 0 | |
Cost of goods sold by segment | 25,100 | 0 | 27,300 | 0 | |
Gross profit (loss) by segment | 2,100 | 0 | (100) | 0 | |
TOTAL ASSETS | 111,291,300 | 111,291,300 | 47,679,400 | ||
Fee Build | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 3,623,500 | 2,871,300 | 7,825,300 | 4,219,500 | |
Cost of goods sold by segment | 3,791,200 | 2,380,200 | 11,010,600 | 3,569,000 | |
Gross profit (loss) by segment | (167,700) | 491,100 | (3,185,300) | 650,500 | |
TOTAL ASSETS | 5,768,500 | 5,768,500 | 3,325,300 | ||
Other | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 3,900 | 0 | 45,400 | 0 | |
Cost of goods sold by segment | 254,300 | 0 | 1,351,300 | 0 | |
Gross profit (loss) by segment | (250,400) | $ 0 | (1,305,900) | $ 0 | |
Unallocated (Shared) | |||||
Segment Reporting Information [Line Items] | |||||
TOTAL ASSETS | $ 30,423,400 | $ 30,423,400 | $ 45,702,500 |
UNCOMPLETED CONTRACTS - SUMMARY
UNCOMPLETED CONTRACTS - SUMMARY OF COST, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Contractors [Abstract] | ||
Costs incurred on uncompleted contracts | $ 16,580,500 | $ 5,991,300 |
Estimated earnings (loss) | (1,944,600) | 811,600 |
Costs and estimated earnings on uncompleted contracts | 14,635,900 | 6,802,900 |
Billings to date | 15,111,200 | 4,635,700 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 0 | 2,167,200 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (475,300) | 0 |
Provision for loss on contract | (421,400) | 0 |
Contract Assets, net | 0 | 2,167,200 |
Contract (Liabilities) net | $ (896,700) | $ 0 |
UNCOMPLETED CONTRACTS - NARRATI
UNCOMPLETED CONTRACTS - NARRATIVE (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Contractors [Abstract] | ||
Contract liabilities | $ 896,700 | $ 0 |
Estimated earnings (loss) | (1,944,600) | 811,600 |
Provision for loss on contract | 421,400 | 0 |
Uncollected billings | 5,500,000 | 1,000,000 |
Contract assets, net | 0 | 2,167,200 |
Costs in excess of billings | $ 1,400,000 | $ 1,400,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Millions | Nov. 10, 2022 $ / shares | Oct. 10, 2022 $ / shares | Dec. 31, 2022 USD ($) a |
Punta Gorda, Florida | Purchase and Sale Agreement | Forecast | |||
Subsequent Event [Line Items] | |||
Area of land | a | 56.63 | ||
Other commitment | $ | $ 7.3 | ||
Series A Cumulative Convertible Preferred Stock | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Dividends per share, declared (in dollars per share) | $ / shares | $ 0.167 | $ 0.167 |