NOTE 2                  INVESTMENTS

Summary of Investments

At June 30, 2024 and  December 31, 2023 our investments include:

Summary financial information for affiliated companies (20% to 50%-owned) accounted for by the equity method for the periods presented, compiled from the equity investee's financial statements and reported on a one quarter lag is as follows:

Upon acquisition, management determined that the excess of our investment values over the net assets of the individual equity method investees was comprised of goodwill and intellectual property. At June 30, 2024 and December 31, 2023, non-current assets in the summarized financial information in the table above include the GenMat investment in, and derivative asset associated with, the Company's common stock of $0.7 million and $3.7 million, respectively. 

Investment in Quantum Generative Materials LLC

On June 24, 2021, the Company invested in the equity of Quantum Generative Materials LLC (“GenMat”), and we received 465,000 membership units and committed $5,000,000 in cash and $10,000,000 in guaranteed stock value for a total of $15,000,000 for the initial seed investment and committed an additional $35,000,000 based upon GenMat’s realization of key development milestones, for up to 50% ownership of GenMat. The Company paid $5.0 million in cash in 2021 and 2022 and, upon signing the agreement, issued 3,000,000 shares of its common stock to GenMat. The agreement stipulated that proceeds from the sale of the stock would offset the $10.0 million funding commitment. 

Through May 17, 2024, Comstock invested direct cash of $9,714,364 against the $10.0 million commitment. In addition, prior to 2024, GenMat sold a total of 486,549 shares of Comstock’s common stock it held for proceeds of $285,636. The direct cash funding plus the proceeds GenMat earned on the sale of Comstock common stock total $10.0 million thus fulfilling the commitment agreed to in 2021. During the six-months ended June 30, 2024 and 2023, Comstock paid $2,164,364 and $2,100,000, respectively, to GenMat against the initial $10,000,000 funding commitment (see Note 11, Fair Value Measurements).

At May 17, 2024, GenMat held 2,513,451 in Comstock common shares with a fair value of $694,970. Pursuant to the terms of the agreement, future proceeds from the sale of these shares will be applied against the purchase price of future investment tranches in GenMat. Subsequent to achieving the $10.0 million commitment in May 2024, funds advanced by the Company to GenMat are recorded as Advances on the condensed consolidated balance sheet and the change in fair value each period is recognized in earnings (see Note 3, Notes Receivable and Advances, net). At June 30, 2024, the shares had a fair value of $412,206 based on the closing trading price of Comstock’s common stock at the end of the period. During the three-month period ended June 30, 2024, the Company recognized a loss on the change in fair value of this asset from May 17, 2024 to June 30, 2024 of $282,764 which is included in other income (expense) in the condensed consolidated statements of operations.

For the three and six-months ended June 30, 2024, the Company recorded $606,935 and $1,173,139, respectively, in equity loss from affiliates for our investment in GenMat.

For the three and six-months ended June 30, 2023, the Company recorded $345,586 and $789,208, respectively, in equity loss from affiliates for our investment in GenMat. 

The Company’s executive chairman and chief executive officer serves as the chairman of GenMat and the Company’s chief technology officer and another employee of the Company serve on the board of directors of GenMat. The GenMat board of directors is composed of the three employees of the Company having one vote each along with the chief executive officer and founder of GenMat who receives four votes.

GenMat Restructuring

On April 25, 2024, the Company and GenMat entered into a non-binding memorandum of understanding (the “MOU”) to amend the existing agreements. Under the MOU, the Company agreed to further fund GenMat up to $25.0 million (at a rate of $500,000 per month), terminable if GenMat receives $10.0 million or more of equity financing from third-party sources. The Company also agreed to the cancellation of 230,000 of its 465,000 GenMat units, thereby reducing the Company’s fully diluted equity interest to 235,000 units or 31.97%. GenMat will issue new common stock in exchange for the Company’s existing units. The Company will have the right to appoint one director to GenMat’s Board of Directors. The Company will have exclusive licensing rights for the biofuel field of use and non-exclusive licensing rights to the mining field of use. If the Company ceases funding, the exclusive license will convert to a nonexclusive right for the remainder of the license term. The Company and GenMat shall enter into amended and restated transaction documents (collectively, the “Amended Equity Agreements”) which upon execution, terminates the original transaction documents. As of  June 30, 2024, the Amended Equity Agreements were not executed and the Company expects the agreements to be executed in the second half of 2024.

Investment in Pelen LLC

On April 24, 2020, the Company completed the acquisition of 25% of Pelen LLC's (“Pelen”) membership interests for $602,500. For the three and six-months ended June 30, 2024, the Company recorded $6,054 in equity income and $3,646 in equity loss from affiliates for our investment in Pelen. For the three and six-months ended June 30, 2023, the Company recorded $4,487 in equity income and $17,056 in equity losses from affiliates for our investment in Pelen.

Investment in Research and Development Company

On March 1, 2024, the Company entered into Securities Purchase Agreement (the “Developer Securities Purchase Agreement”) with an unaffiliated research and development company (“Developer”) under which the Company agreed to purchase 4,000,000 shares of common stock of the Developer, corresponding to 40% of Developer's fully-diluted issued and outstanding capital stock, for $1,500,000. Concurrently and in connection with the entity into the Developer Securities Purchase Agreement, the Company and Developer entered into Development Services Agreement (“DSA”) for purposes of conducting certain research and development work. The purchase price payable by the Company pursuant to the Developer Securities Purchase Agreement will be paid on the following schedule:

Phase 1

After completion of Phase 1

Since the payments are not interest bearing, the Company calculated the implied interest of $214,039 on the future cash payments using an interest rate of 9.76% which was recorded as a discount on initial investment of $1.5 million and will be recognized over the payment term. The Company recorded a corresponding payable for future cash payments to account for the 40% ownership interest in the Developer. At June 30, 2024, the future remaining payments, net implied interest, totaled $1,150,424 (see Note 6, Accrued Expenses and Other Liabilities).  For the three and six-months ended June 30, 2024, the Company recorded $48,400 in equity loss from affiliates for our investment in the Developer. During the three and six-months ended June 30, 2024, Comstock paid $60,000 and $180,000, respectively, to the Developer in accordance with the funding commitments under the Developer Securities Purchase Agreement. 

Investment in Green Li-ion

As part of our acquisition of a majority ownership of LINICO on December 30, 2021, we acquired 37,162 preferred shares of Green Li-ion Pte, Ltd. (“Green Li-ion”). On September 12, 2023, LINICO received gross proceeds of $795,510, net of commission fees of $15,910, from the sale of 1,500 Green Li-ion preferred shares for $530.34 per share and recorded a realized gain of $597,248 included in gain (loss) from investments in the consolidated statements of operations in the third quarter of 2023. In connection with this sale, the Company valued the remaining 35,662 Green Li-ion preferred shares it holds using the cash rate of $530.34 per share which resulted in recognition of an unrealized gain on investment of $14,577,627 in 2023. The Company intends to sell the remaining Green Li-ion preferred shares during late 2024, or early 2025.

Investment in Sierra Springs Opportunity Fund Inc.

During 2019, the Company invested $335,000 for 6,700,000 shares of Sierra Springs Opportunity Fund Inc (“SSOF”) common stock. From 2020 through November 2023, the Company advanced $6,985,000 to SSOF and its subsidiary for the purpose of purchasing land, payments for deposits on land and payments for an option on land and water rights purchases. On December 29, 2023, the Company and SSOF agreed to convert total advances into 3,880,556 shares of SSOF common stock. The conversion price of $1.80 per share was determined to be the fair value of a share of SSOF common stock based on cash sales of SSOF common shares and increased value of SSOF’s underlying real estate assets. The Company’s initial 2019 investment of SSOF common shares were revalued at $1.80 per common shares resulting in recognition of an unrealized gain on investment of $11,725,000 in 2023.

At December 31, 2023, the Company’s total SSOF investment consisted of 10,580,556 common shares, or 17.11% of SSOF's outstanding common shares on a fully diluted, if converted basis. For the six-months ended June 30, 2024, the Company invested an additional $530,000 in SSOF at $1.80 per share increasing our equity ownership in SSOF to 10,875,000 common shares, or 17.50% at June 30, 2024.

The Company's chief executive officer is an executive of SSOF. Management concluded that SSOF is a variable interest entity of the Company because the Company has both operational and equity risk related to SSOF, and SSOF currently has insufficient equity at risk. Management also concluded that the Company is not the primary beneficiary of SSOF because no one individual or entity has unilateral control over significant decisions and decisions require the consent of all investors. As the Company is not the primary beneficiary, SSOF is not consolidated.

Investment in American Battery Technology Company

In connection with the sale of the Facility in 2023, the Company received 11 million shares of restricted common stock from the purchaser of the Facility, American Battery Technology Company (“ABTC”) with an initial fair value of $9,365,000 (see Note 7, Leases). On June 30, 2023, the Company and ABTC amended the agreement whereby the Company returned 1,923,077 of the ABTC restricted shares and ABTC agreed to forego the right to have $1.5 million of the purchase price set aside in escrow to settle indemnification claims. As of June 30, 2023, the remaining investment of 9,076,923 shares of restricted ABTC common stock had a fair value of $7.1 million. In August 2023, the remaining 9,076,923 shares owned by the Company became unrestricted. During the third quarter of 2023, the Company sold all 9,076,923 ABTC shares with proceeds of $5,456,920, net of commission fees of $90,939. For the three and six-months ended June 30, 2023, the Company recognized a loss of $765,000 on the investment included in other income (expense) in the condensed consolidated statements of operations.