Comstock (NASDAQ:CHCI), the beleaguered Reston, Va. home building company, disclosed March 31 that its auditor, PricewaterhouseCoopers, indicated its "belief that declining market conditions create substantial doubt that the Company would continue operating throughout 2009 as a going concern."
Comstock also released its audited financial results for 2008 showing a net loss of $17 million on revenue of $46.6 million, which was down 82.5% from the prior year. The loss included $18 million in impairments and write-downs.
The company also issued a report on operations for the first quarter of 2009 disclosing that it expects to deliver 13 homes during the first quarter representing home building revenue of approximately $5.7 million.It sold 7 units at its Eclipse condo project in Arlington, Va. representing $4.4 million of that new-order revenue. As of March 31, Comstock had sold a total of 371 of the 465 units at its Eclipse project. Of the remaining 94 unsold units, 63 units were being rented. The rented units are generating approximately $133,000 per month of gross rental income to help cover the cost of operating the project.
Comstock also said it was projecting 23 net new orders representing approximately $7.4 million in net new- order revenue. Its unrestricted cash balance as of March 31 was projected to be approximately $3.0 million with an additional $3.0 million of restricted cash which is being held as collateral in connection with a letter of credit issued by Wachovia Bank related to a discontinued captive general liability insurance policy. The Company is working to try to secure the release of the restricted cash.
Comstock also said it "has elected not to make" an interest payment of $218,000 due on its senior unsecured debt to JP Morgan Ventures. It warned "that if unsuccessful in its efforts to generate free cash flow and restructure its debts with its lenders, the company may be forced to seek bankruptcy protection while it reorganizes."
"The challenges currently facing the home building industry and the economy are unprecedented," said Christopher Clemente, Comstock's chairman and CEO. "The absolute lack of capital available to home builders is not only contributing to the downward spiral of the real estate market, it is costing this country hundreds of thousands of jobs and is causing an untold loss of wealth...we remain committed to doing everything possible to reach amicable arrangements with our lenders, generate free cash flow from our existing assets and continue in our effort to stabilize the long term viability of this company."
Shares of Comstock, which are still being traded even though the stock is classified as "deficient" under NASDAQ listing qualifications, closed at $0.22, up a cent.