Published: 2021-08-09 00:00:00 ET

HTTP/1.1 200 OK HTTP/1.1 200 OK X-Crawlera-Slave: 198.20.188.195:8800 X-Crawlera-Version: 1.60.1 accept-ranges: bytes content-type: text/html last-modified: Mon, 09 Aug 2021 20:44:45 GMT server: AmazonS3 x-amz-id-2: KrUJn1WtDqaxxNLpgUnzQGAGE+D2x9+eyyXDxromAPSWHbbLkn6gwEXR/YnlO/QXLRXra5bZ9EU= x-amz-meta-mode: 33188 x-amz-meta-s3cmd-attrs: uid:504/gname:fitrprnt/uname:fitrprnt/gid:504/mode:33184/mtime:1628541866/atime:1628541866/md5:9bc823887f260b5d4a8002c6604574ef/ctime:1628541874 x-amz-replication-status: COMPLETED x-amz-request-id: EAW59JRF49A961F5 x-amz-version-id: WlCex9A9yrz44lwVXkiVTU0EoN57YISN x-content-type-options: nosniff x-frame-options: SAMEORIGIN x-xss-protection: 1; mode=block akamai-x-true-ttl: 604800, -1 x-akamai-transformed: 9 205018 0 pmb=mTOE,2 expires: Fri, 07 Apr 2023 06:37:38 GMT cache-control: max-age=0, no-cache, no-store pragma: no-cache date: Fri, 07 Apr 2023 06:37:38 GMT vary: Accept-Encoding strict-transport-security: max-age=31536000 ; includeSubDomains ; preload set-cookie: ak_bmsc=3243E376D3C610A2F088EE3D8B49D639~000000000000000000000000000000~YAAQhvNUuLsdYUyHAQAAPFRvWhPh3YHKBt10mP8Kekru3Kxv7PaEA3a0Gn4xrscpku776KXahoGKNf6dgr//Prg/+M6nDEmee61ASzSohApZdVCro046SzLP2eKCnm3BEbVf5qcAmHtMPvR5OmfEzcn3GGT9NQ9sKOAkie1sqVw4JFWVhPyTWb74nc241fBm2B9pq9ZQQDqhNwpBmtjbgzBoQW1yPAe+bbaNHAIztPwsiicL8HLVboNDMDPOEImNPx8mhlAwGEp6CM8xGsQAszbnseaShIICmaDIoBqK/jCj5pHL5OXXQEV9vlPR8TY/Upebkiqith2s3Wv/ndaFI0g0OnokLIjo4VdNlwepCUaEF08j+lwGoy/MgTLLfdXdvfM7btDjLSk=; Domain=.sec.gov; Path=/; Expires=Fri, 07 Apr 2023 08:37:38 GMT; Max-Age=7200; HttpOnly set-cookie: bm_mi=E2526FAB1F715341D4A48B77E111380F~YAAQhvNUuLwdYUyHAQAAPFRvWhPcrwONoeQTi9GqYF9vFJ6jPiqWeHYlm8X7gcmElkhcS9rqjci6qo4Bm4ZT0Dquoh+N37pldmVSLQ7zUpej3bd+/vHEysuhHxLxzrB4KrUWaNnOpgESG9dqwigCunnpOoaJjXf9pF5CTyrGL+yJ4YjOUXTi0qtbCv18chzraN8W5oG+MqDxgXarANL40pE+2NnG9AF6crsMXLLMgvVPrkIl+qDBiX6+ec9CFeIwIE5jeEvQ9pUbptNbO9whGvsvp3/cGtjl+Oywe5zD7JghnrChvBuBldsQhUtXudwsrhYSvoQ/KY5TbW5toafvdQWX5do6VehARUYWtM2LMihFPN6SgtCZXvZ/JAN7R4M9akcTRpUF91KYKA==~1; Domain=.sec.gov; Path=/; Expires=Fri, 07 Apr 2023 06:37:38 GMT; Max-Age=0; Secure Transfer-Encoding: chunked Proxy-Connection: close Connection: close

---

---

---

---

---

---

---

---

---

 

Basis of Presentation and Principles of Consolidation

Comstock Mining Inc. is an emerging leader in the sustainable extraction, valorization, and production of innovation-based, clean, renewable natural resources, with a focus on high-value, cash-generating, strategic minerals and materials that are essential to meeting the rapidly increasing global demand for clean energy, carbon-neutrality, and natural products. The Company has extensive, contiguous property in the historic Comstock and Silver City mining districts, is an emerging leader in sustainable, responsible mining and processing, and is currently commercializing environment-enhancing, material science-based technologies, products, and processes for precious and strategic minerals and materials recovery, including mercury remediation, lithium-ion battery materials recycling, and other natural resource renewal initiatives.

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of Comstock Mining Inc. and its wholly-owned subsidiaries, Comstock Processing LLC, Comstock Northern Exploration LLC, Comstock Exploration and Development LLC, Comstock Real Estate Inc., Comstock Industrial LLC, Downtown Silver Springs LLC ("DTSS"), Renewable Process Solutions, Inc. (“RPS”) since its acquisition in June 2021, and, prior to its sale in September 2020, Comstock Mining LLC. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements do not include all disclosures required of annual consolidated financial statements and, accordingly, should be read in conjunction with our consolidated financial statements for the years ended December 31, 2020 and 2019. As used in the notes to the condensed consolidated financial statements, we refer to Comstock Mining Inc., and its wholly-owned subsidiaries as "Comstock," "Company," "we," “us,” or "our."

Operating results for the three and six months ended June 30, 2021 may not be indicative of the results expected for the full year ending December 31, 2021. For further information, refer to the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of our financial position as of June 30, 2021, and our results of operations, cash flows, and changes in equity for the three and six months ended June 30, 2021 and 2020. We currently estimate our annual effective income tax rate to be 0%. Our effective tax rate differs from the federal rate of 21% primarily due to recording a full valuation allowance.

Variable Interest Entities

A variable interest entity (“VIE”) refers to a legal business structure in which an investor has a controlling interest despite not having a majority of voting rights, including when the entity invested in is thinly capitalized and its equity is not sufficient to fund its activities without additional subordinated financial support. An investor in a VIE has a controlling interest if the investor is determined to be the primary beneficiary of the VIE, defined as having the (i) power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, or (ii) obligation to absorb losses of the VIE that could potentially be significant to the VIE, or (iii) right to receive benefits from the VIE that could potentially be significant to the VIE.

We have investments in Quantum Generative Materials LLC (“GenMat”), LINICO Corporation (“LINICO”), and Sierra Springs Opportunity Fund, Inc. (“SSOF”), which we have determined to be VIEs. We also have determined that we do not have a controlling interest in any of these companies, as we do not meet the definition of primary beneficiary cited above. Accordingly, the accounts of these companies are not included in our condensed consolidated financial statements.

Liquidity and Capital Resources

 

The condensed consolidated financial statements are prepared on the going concern basis of accounting which assumes the realization of assets and the satisfaction of liabilities in the ordinary course of business. We have had recurring losses from operations and have an accumulated deficit of $219.1 million as of June 30, 2021. As of June 30, 2021, we have cash and cash equivalents and restricted cash of $5.3 million, including restricted cash of $0.5 million and $27.0 million of other net working

---

capital. During the next 12 months, management expects cash on hand, proceeds from planned sales of Tonogold Resources, Inc. ("Tonogold") common shares, collection of a convertible note receivable (the "Note") from Tonogold due on March 31, 2022, and the planned sale of our Silver Springs properties ("Silver Springs Properties") to Sierra Springs Enterprises, Inc. ("SSE") to be sufficient to pay our obligations that are due over the next 12 months from the issuance date of these condensed consolidated financial statements. However, the timing of expected receipts and disbursements may require the Company to raise financing. If we were unable to obtain any necessary additional funds, this could have an immediate material adverse effect on liquidity and raise substantial doubt about our ability to continue as a going concern. In such case, we could be required to limit or discontinue certain business plans, activities or operations, reduce or delay certain capital expenditures or investments, or sell certain assets or businesses. There can be no assurance that we would be able to take any such actions on favorable terms, in a timely manner, or at all.

Use of Estimates

In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and related income, costs, expenses, receipts and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to the useful lives and valuation of properties, plant and equipment, carrying values of assets held for sale and, mineral rights, deferred tax assets, derivative assets and liabilities, the Tonogold Series D Convertible Junior Participating Non-Cumulative Perpetual Preferred Stock ("CPS") redeemed in 2020, notes receivable accounted for at fair value or amortized cost, discount rates on non-interest bearing notes receivable, reclamation liabilities, stock-based compensation, and contingent liabilities.

Business Combinations

We apply the acquisition method of accounting for business combinations to all acquisitions where we gain a controlling interest, regardless of whether consideration was exchanged. With respect to business combinations, we a) recognize and measure in our financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognize and measure the goodwill acquired in the business combination or a gain from a bargain purchase; and c) disclose the nature and financial effects of the business combination. Accounting for acquisitions requires us to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition-date fair values of the assets acquired and the liabilities assumed.

While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets, including intangible assets, acquired and liabilities assumed with corresponding offsets to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include bank deposits and highly liquid investments purchased with maturities of three months or less. Cash deposits with banks may exceed Federal Deposit Insurance Corporation ("FDIC") insured limits.

Restricted cash as of June 30, 2021 consists of a $500,000 escrow account with MANA Corporation (“MANA”) related to an expected transaction and related loan (Notes 2 and 22).

Investments

Investments in Debt and Equity

From time to time, we hold investments in the form of debt securities and other instruments, and equity securities.

Investments in debt are classified as trading, available for sale or held to maturity, in certain cases electing the fair value option. Upon sale of a debt security, the realized gain or loss is recognized in current earnings. At June 30, 2021, we are the holder of one debt security, the Note. In addition, we hold other debt instruments due from third parties, including a secured note receivable from MCU Philippines, Inc. ("MCU-P") and a secured note receivable from Plain Sight Innovations LLC ("PSI"). We have elected the fair value option for the Note with unrealized gains and losses resulting from changes in fair value recognized in current earnings at the end of each reporting period. The MCU-P note receivable, which is secured by all MCU-P

---

equipment, and the PSI note receivable, which is secured by substantially all PSI assets, are classified as held to maturity and accounted for at amortized cost less impairment. At the end of each reporting period, we consider whether impairment indicators exist to evaluate if a debt investment security or loan is impaired and, if so, record an impairment loss (Note 2).

Investments in equity securities are generally measured at fair value. Unrealized gains and losses for equity securities resulting from changes in fair value are recognized in current earnings. If an equity security does not have a readily determinable fair value, we may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. At the end of each reporting period, we reassess whether an equity investment security without a readily determinable fair value qualifies to be measured at cost less impairment. At the end of each reporting period, we also consider whether impairment indicators exist to evaluate if an equity investment security is impaired and, if so, record an impairment loss. At the end of each reporting period, unrealized gains and losses resulting from changes in fair value are recognized in current earnings. Upon sale of an equity security, the realized gain or loss is recognized in current earnings. At June 30, 2021, we hold three investments in equity securities, which include both Tonogold and Northern Vertex Mining Corp. ("Northern Vertex") common stock, that have readily determinable fair values for which unrealized gains or losses resulting from changes in fair value are recognized in current earnings, and SSOF common stock that does not have a readily determinable fair values and, accordingly, is accounted for at cost less impairment (Note 2).

Investments - Equity Method and Joint Ventures:

Investments in companies and joint ventures for which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method. Under the equity method of accounting, our share of the net earnings or losses of the investee are included in other income (expense) in the condensed consolidated statements of operations. At the end of each reporting period, we consider whether impairment indicators exist to evaluate whether an equity method investment is impaired and, if so, record an impairment loss.

Intangible Assets and Goodwill

Purchased Intangible Assets

Purchased intangible assets represent the estimated acquisition date fair value of acquired intangible assets used in our business. We expense the cost of modifying and updating purchased intangible assets in the period such costs are incurred. We amortize our purchased intangible assets on a straight-line basis, generally over lives of 3-10 years.

Goodwill

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. Goodwill is tested for impairment at the reporting unit level on an annual basis, and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment tests as of December 31.

Reclamation Liabilities and Asset Retirement Obligations

Minimum standards for site reclamation and closure have been established for us by various government agencies and contractual obligations with lessors. Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time, and revisions to the estimates of either the timing or amount of reclamation and abandonment costs. We review, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site and processing facility. Separately, we accrue costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable.

Stock-Based Compensation

All transactions in which goods or services are received for the issuance of shares of our common stock or options to purchase shares of our common stock are accounted for based on the fair value of the equity interest issued. The fair value of shares of common stock is determined based upon the closing price per share of our common stock on the date of issuance. We estimate the fair value of certain stock-based compensation (e.g., options) using the Black-Scholes model, which requires the input of various subjective assumptions. These assumptions include estimating the length of time recipients will retain their vested stock options before exercising them (“expected life”), the estimated volatility of our common stock price over the expected term

---

(“volatility”), the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of the fair value of stock-based compensation. We recognize forfeitures of unvested common stock, performance shares and stock option grants as they occur.

The fair value of common stock grants is based on the closing price per share of our common stock at date of grant. We recognize stock-based compensation for common stock grants evenly over the related vesting period.

The fair value of market condition performance share awards is determined based on path-dependent valuation techniques and inputs including the closing price per share of our common stock at date of grant, volatility and the risk-free interest rate. We recognize stock-based compensation for market condition performance share awards evenly over the derived service period resulting from the path-dependent valuation.

The fair value of performance condition share awards is determined based on the closing price per share of our common stock at date of grant and the probability of achieving the performance condition during the term of the award agreement. We recognize stock-based compensation for performance condition share awards evenly over the term of the award agreement.

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2020-06–Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update is to address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The update is effective for fiscal years beginning after December 15, 2021, including condensed periods within those fiscal years and with early adoption permitted. We are currently evaluating the impact of adopting this standard on our consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01–Investments–Equity Securities (Topic 321), Investments–Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)–Clarifying the Interactions Between Topic 321, Topic 323 and Topic 815 (A Consensus of the Emerging Issues Task Force) which makes improvements related to accounting for certain equity securities when the equity method of accounting is applied or discontinued, and scope considerations related to forward contracts and purchased options on certain securities. ASU 2020-01 is effective for fiscal years beginning after December 15, 2020. Our adoption of this standard on January 1 2021 did not have a material impact on our condensed consolidated financial statements.

COVID-19

For more than a year in Nevada, local governments, state health officials, emergency managers, local health authorities and community partners have come together in a statewide response to COVID-19. Processes continue to be in place to support testing, contact tracing, disease investigation and vaccine rollout in communities throughout the state.

On July 27, 2021, Nevada Governor Steve Sisolak signed Emergency Directive 047. This directive requires people in areas with substantial or high COVID-19 transmission to wear a face covering while in public indoor locations. Currently, 12 of Nevada’s 17 counties meet this threshold: Carson, Churchill, Clark, Douglas, Elko, Esmeralda, Lincoln, Lyon, Mineral, Nye, Washoe and White Pine. This mandate went into effect on Friday, July 30, 2021.

We are operating in alignment with these guidelines for limiting the spread of COVID-19 and continue prioritizing the health of our employees, partners and suppliers. This includes the continuation of remote working for certain at-risk professionals and heightened monitoring of illness indicators.

Acquisition of Renewable Process Solutions Inc.

On June 18, 2021, Comstock acquired 100% of the capital stock and voting shares of RPS, an advanced process engineering and renewable technology development company, in exchange for 1,000,000 restricted shares of our common stock, which are subject to lockup provisions with limitations on sale over a four-year and six-month period with a fair value of $2.4 million including the assumption of $0.1 million in liabilities.

---

We identified RPS in discussions with our current and prospective investment companies, and acquired RPS to build our critical core competencies in advanced process engineering and renewable technology development necessary to facilitate our participation in the development and growth of these companies. For the six months ended June 30, 2021, RPS revenue and net income were $111,285 and $98,184, respectively, compared to no revenue and a loss of $22,699 for the same period of the prior year.

Based upon our initial assessment, the excess purchase price over the fair value of the net assets acquired is $2.3 million which has been allocated to intangible assets and goodwill on the condensed consolidated balance sheet as of June 30, 2021. However, the overall allocation of purchase price is preliminary and subject to change.

Investments

Our investments include equity method investments in the companies shown below, one cost less impairment investment shown below, and financial instruments associated with these and other transactions.

At June 30, 2021 and December 31, 2020, non-current investments included:

			June 30, 2021												December 31, 2020
			Investment						Ownership %						Investment						Ownership %
Quantum Generative Materials LLC			$	12,000,000					37.50%						$	—					—%
LINICO Corporation			6,103,990						48.78%						—						—%
Mercury Clean Up, LLC			2,000,616						25.0%						2,010,113						15.0%
MCU Philippines, Inc.			507,788						50.0%						323,770						50.0%
Pelen Limited Liability Company			574,773						25.0%						603,714						25.0%
Total equity method investments			$	21,187,167											$	2,937,597
Sierra Springs Opportunity Fund, Inc.			335,000												335,000
Total Investments			$	21,522,167											$	3,272,597

Quantum Generative Materials LLC

On June 24, 2021, Comstock invested in the equity of GenMat, a developer of quantum computing technologies with the goal of accelerating material science discovery and development and partnering in the commercialization of new quantum generated materials. GenMat is developing a proprietary quantum operating system to harnesses emerging quantum computing technologies and develop breakthrough new materials for use in our strategically aligned, high-impact fields of interest, including global mining, battery recycling, and carbon capture.

At closing, we received 465,000 membership units and committed $15.0 million in cash and stock for the initial seed investment and an additional $35.0 million based upon GenMat’s realization of key development milestones, for up to 50% ownership of GenMat membership units. As of June 30, 2021, we have paid $2.0 million in cash toward the $5.0 million in scheduled cash purchase payments, and issued 3.0 million restricted shares of our common stock toward the $10.0 million required stock purchase price, for the $15.0 million initial funding. As of and for the three months ended June 30, 2021, we recognized the $360,000 excess of the fair value of the 3.0 million shares over the $10.0 million required stock purchase price as other income in the condensed consolidated statements of operations, and as an increase in the GenMat derivative asset on the condensed consolidated balance sheets (Note 15).

As of closing and June 30, 2021, we hold 48.19% of GenMat membership units and 37.5% of voting membership units, and our chief executive officer is a member and chairman of the GenMat management committee.

LINICO Corporation

On February 15, 2021, the Company, Aqua Metals, Inc. (“AQMS”) and LINICO entered into a Series A Preferred Stock Purchase Agreement (“LINICO Stock Purchase Agreement”).

---

Pursuant to the LINICO Stock Purchase Agreement, we purchased 6,250 shares of LINICO Series A 8% Convertible Preferred Stock (“Series A Preferred”) and issued 3.0 million shares of our restricted common stock (“CMI Stock”) in payment of the purchase price. The CMI stock had a fair value of $6,750,000, of which $6,250,000 was allocated to the investment in shares of LINICO and $500,000 was allocated to the derivative asset related to LINICO on the condensed consolidated balance sheets (Note 15). The Series A Preferred has a conversion price of $1.25 per share of LINICO common stock. Following the purchase of the Series A Preferred, we own 45.45% of LINICO fully diluted shares and 47.78% of voting shares. Our chief executive officer is a member and the Chairman of the LINICO board of directors. Judd Merrill, one of our directors, is chief financial officer of AQMS.

Under the LINICO Stock Purchase Agreement, we also agreed to make $4.5 million in cash payments to LINICO (“Cash Commitment”), payable in a series of installments between February 26, 2021 and September 30, 2021. At June 30, 2021, $2.0 million was paid and recognized as an adjustment to the derivative asset related to LINICO on the condensed consolidated balance sheets (Note 15).

Pursuant to the LINICO Stock Purchase Agreement, the Company and LINICO entered into a warrant agreement (“Warrant”) wherein we have the right to purchase 2,500 additional shares of Series A Preferred for a total exercise amount of $2.5 million. The Series A Preferred received by us pursuant to exercise of the Warrant may be converted into shares of LINICO common stock at a conversion price of (i) $1.25, if exercised on or before February 15, 2022, or (ii) $2.00, if exercised after February 15, 2022.

Pursuant to the terms of an industrial lease between LINICO and AQMS entered into on February 15, 2021 (“LINICO Lease Agreement”), if LINICO elects not to exercise its option to purchase from AQMS land, buildings and related improvements, initially leased by AQMS to LINICO, for (i) $14,250,000, if the purchase is made on or before October 1, 2022 or (ii) $15,250,000, if the purchase is made after October 1, 2022, we can assume the purchase option.

The LINICO Lease Agreement requires LINICO to make an initial deposit by October 15, 2021 in an amount equal to $1,250,000, and an additional deposit (“Additional Deposit”) by November 1, 2022, in an amount equal to $2,000,000, to be credited towards the purchase price of the facility. The LINICO Stock Purchase Agreement grants us the option to fund the Additional Deposit with shares of our common stock (in no event will we issue shares to LINICO pursuant to the LINICO Stock Purchase Agreement that exceed 19.9% of our total issued and outstanding common shares as of February 15, 2021).

Mercury Clean Up, LLC

The Mercury Remediation Pilot, Investment and Joint Venture Agreement ("MCU Agreement") contains a provision whereby we are required to issue additional shares of our common stock for a make whole difference between the value of the 900,000 previously issued shares of our common stock received by MCU and our required stock-based investment of $850,000. In May 2020, we issued to MCU 650,000 additional shares of our common stock to reduce the make whole difference. During January and February 2021, MCU sold the 625,000 common shares for net proceeds of $1,147,185, resulting in a $762,377 excess contribution, which was paid to us in February 2021 (Note 15).

MCU Philippines, Inc.

On December 4, 2020, we formalized a non-interest-bearing note receivable from MCU-P that had a fair value based on the discounted present value of future payments of $855,866, which was comprised of the $1,180,000 face amount less implied interest of $324,134, which was recognized as consideration for our December 4, 2020 investment in MCU-P. As of December 31, 2020, the net balance of the note receivable was $860,940. On March 5, 2021, we loaned an additional $820,000 to MCU-P, increasing the face value of the non-interest-bearing note receivable to $2,000,000. Implied interest of $189,337 for the additional loan increased the value of our investment in MCU-P to $513,107. The discounted present value was calculated using a rate of 7.1%, which is based on the alternative borrowing cost of MCU-P, considering market data for companies with comparable credit ratings. The additional loan amount resulted in our ownership interest in MCU increasing from 15% to 25%. As of June 30, 2021, the net balance of the note receivable is $1,540,319 which is recorded on the condensed consolidated balance sheets in notes receivable and advances, net. The note receivable matures on December 31, 2024.

---

Sierra Springs Opportunity Fund, Inc.

During 2019, Comstock invested $335,000 into a qualified opportunity zone fund, SSOF, which owns SSE, a qualified opportunity zone business. We expect to own approximately 9% of SSOF upon issuance by SSOF of all 75.0 million authorized shares to investors. As of June 30, 2021, our $335,000 investment in SSOF and 6.7 million voting shares represent 12.0% of the total as converted SSOF common shares and the $0.5 million investment and 9.2 million voting shares of our chief executive officer and two of our directors represent 16.4% of the total as converted SSOF common shares. Our chief executive officer is president and a director of SSOF and an executive and a director of SSE.

At June 30, 2021, Comstock’s $335,000 investment in SSOF is recorded on the condensed consolidated balance sheets as a non-current investment asset. The investment is accounted for at cost less impairment. Management has identified no events or changes in circumstances that have a significant adverse effect on the carrying value of the investment.

For the three and six months ended June 30, 2021, we advanced SSOF an additional $0.6 million and $2.7 million respectively, increasing total advances to $4.4 million, to be used by SSOF for deposits and payments on land and other facilities related to investments in qualified businesses in the opportunity zone. The advances are non-interest-bearing and are expected to be repaid during 2021, upon the sale of our Silver Springs Properties to SSE (Note 4). The $4.4 million of advances are recorded on the condensed consolidated balance sheets at June 30, 2021 in notes receivable and advances, net.

Plain Sight Innovations LLC Loan

On April 1, 2021, we made a loan to PSI pursuant to a secured promissory note with a face value of $750,000 ("PSI Note"). The PSI Note principal, together with interest at the rate of 12% per annum, is due and payable on September 30, 2021, and is secured by substantially all of the assets of PSI. We are currently collaborating with PSI on a number of material science advancements associated with lithium-ion battery storing, crushing, and black mass processing, and other areas of interest. On May 17, 2021, we increased the loan by $85,000 to $835,000 to fund an additional PSI intellectual property development.

MANA Corporation and LP Biosciences LLC

In June 2021, we placed $500,000 in an escrow account with MANA, and made a $326,258 non-refundable advance to LP Biosciences LLC ("LPB") to fund certain costs associated with a prospective transaction and related financing. The escrow balance and advance are included in restricted cash and prepaid expenses and other current assets, respectively, on our condensed consolidated balance sheets as of June 30, 2021.

Divestiture

Sale of Comstock Mining LLC

In connection with the September 2020 sale of the membership interests of Comstock Mining LLC, there are three agreements between the Company and Tonogold: the Membership Interest Purchase Agreement, the Mineral Exploration and Mining Lease, and a Lease Option Agreement for our American Flat processing facility.

Tonogold Reimbursements

Under the three Tonogold agreements, Tonogold is required to reimburse payments made by Comstock including but not limited to all costs associated with owning the properties, lease and option payments, and interest expense. For the three and six months ended June 30, 2021, total reimbursements and lease income were $0.5 million and $1.8 million, respectively. For the three and six months ended June 30, 2020, total reimbursements and lease income were $0.5 million and $1.2 million, respectively. Reimbursements for the six months ended June 30, 2021 include the $812,500 reimbursement of the Northern Comstock accelerated payment, added to the Note principal balance in March 2021, and $0.4 million of additional reimbursements associated with the $1.0 million added to the Note principal balance in June 2021. As of June 30, 2021, the remaining $0.6 million to be applied to future Tonogold reimbursements is recorded to deposits liabilities on the condensed consolidated balance sheets.

Tonogold Note Receivable

The consideration received for Tonogold's acquisition of Comstock Mining LLC in 2020 included the Note. The Note had an initial principal balance of $5,475,000 when the Note was issued on March 20, 2020. The outstanding principal balance was

---

$4,475,000 when the purchase agreement closed on September 8, 2020. The Note included the following features: 1) conversion feature allowing us, at our sole option, to elect payment in Tonogold common shares upon an event of default or upon a partial or whole prepayment by Tonogold; 2) change of control redemption right allowing us to redeem the Note in cash at a 125% premium; 3) event of default redemption right allowing us the right to elect redemption of the Note in cash at a 118% premium; and 4) an option for us to extend the maturity date if an event of default has occurred or is expected to occur or a fundamental transaction (as defined in the Note) has been announced but not yet closed.

On March 3, 2021, we made a $812,500 accelerated payment to Northern Comstock LLC (“Northern Comstock”) pursuant to the Northern Comstock operating agreement (Note 21). Primarily as a result of the Northern Comstock accelerated payment, the Note was amended in March 2021, which included: 1) adding $812,500 for Tonogold’s Northern Comstock accelerated payment reimbursement obligation and an amendment fee of $262,500 to the principal amount of the Note, increasing the principal amount to $5,550,000 (Note 15).

The Note was further amended in June 2021, to add $1.0 million for certain Tonogold, Northern Comstock and other reimbursement obligations and an amendment fee of $100,000 to the principal amount of the Note, increasing the principal amount to $6,650,000. As of and for the three months ended June 30, 2021, due and payable reimbursement obligations were credited to mining claims costs and expenses, the amendment fees were credited to other income in the condensed consolidated statements of operations, and reimbursement obligations not yet due and payable were credited to deposits liability on the condensed consolidated balance sheets.

The Note has an interest rate of 12% per annum, with interest payable monthly. The outstanding principal balance is due on March 31, 2022, unless extended by us. The fair value of the Note on June 30, 2021 and December 31, 2020 was $7.2 million and $5.5 million, respectively. For the three and six months ended June 30, 2021, we recognized other expense of $1.2 million and $0.4 million respectively, for the change in fair value of the Note in the condensed consolidated statements of operations (Notes 3, 15 and 17).

Tonogold Common Shares

At June 30, 2021 and December 31, 2020, we held 9.5 million and 13.1 million Tonogold common shares with fair values of $1.4 million and $3.9 million, respectively. During the three and six months ended June 30, 2021, we sold 1,944,658 shares and 3,663,447 shares, respectively, for proceeds of $0.2 million and $0.9 million, respectively, and recognized a loss and gain on sale of common shares of $0.1 million and $0.1 million, respectively. For the three and six months ended June 30, 2021, we recognized unrealized losses on the change in fair value of the common shares of $1.0 million and $1.9 million, respectively (Note 15).

Notes receivable and advances, net at June 30, 2021 and December 31, 2020 include:

			June 30, 2021						December 31, 2020
Tonogold note receivable, face value			$	6,650,000					$	4,475,000
Unrealized gain			596,000						1,023,500
Tonogold note receivable, fair value (Notes 2 and 15)			7,246,000						5,498,500
Plain Sight Innovations LLC note receivable face value (Note 2)			835,000						—
SSOF advances receivable (Note 2)			4,385,000						1,650,000
Other note receivable			38,459						—
Total notes receivable and advances, net - current portion			12,504,459						7,148,500
MCU-P note receivable, face value			2,000,000						1,180,000
Unamortized discount for implied interest			(459,681)						(319,060)
MCU-P note receivable - non-current (Note 2)			1,540,319						860,940
Total notes receivable and advances, net			$	14,044,778					$	8,009,440

---

We previously committed to a plan to sell certain land, buildings, and water rights. As of June 30, 2021 and December 31, 2020, we had assets, with a value of $6.3 million, that met the criteria to be classified as assets held for sale.

Assets held for sale at June 30, 2021 and December 31, 2020 include:

			June 30, 2021						December 31, 2020
Silver Springs Properties:
DTSS (Land)			$	3,589,876					$	3,589,876
Industrial Park (Land and water rights)			2,738,462						2,738,462
Total assets held for sale			$	6,328,338					$	6,328,338

Prepaid expenses and other current assets at June 30, 2021 and December 31, 2020 consisted of the following:

			June 30, 2021						December 31, 2020
Land and property deposits			$	—					$	12,600
Surety bond and insurance			182,548						139,527
Stock sales proceeds receivable			—						200,000
Pelen option			100,000						100,000
LPB non-refundable advance			326,258						—
Other			336,877						228,951
Total prepaid expenses and other current assets			$	945,683					$	681,078

On December 16, 2020, we entered into a securities purchase agreement with Wingfield Tono, LP (“Wingfield”), and agreed to sell 15,666,667 Tonogold common shares at $0.33 per share in three closings. On December 23, 2020, we transferred 3,333,333 Tonogold common shares to Wingfield for total proceeds of $1.1 million. As of June 30, 2021 and December 31, 2020, we had received $0.9 million in connection with the securities purchase agreement. On April 13, 2021, Wingfield returned 606,601 of the Tonogold common shares previously transferred under the Wingfield securities purchase agreement. The return of the shares eliminated a $200,000 receivable from Wingfield and terminated the securities purchase agreement.

On September 1, 2020, we paid $100,000 for a one-year option to purchase the remaining 75% of the membership interests of Pelen not owned by the Company for a purchase price of $3,750,000.

---

 

Mineral Rights and Properties

Mineral rights and properties at June 30, 2021 and December 31, 2020 consisted of the following:

			June 30, 2021						December 31, 2020
Dayton resource area			$	2,971,838					$	2,971,838
Spring Valley area			1,630,332						1,630,332
Oest area			307,522						307,522
Occidental area			1,002,172						1,002,172
Northern extension			157,205						157,205
Northern targets			161,920						121,170
Other mineral properties			317,405						317,405
Water rights			90,000						90,000
			$	6,638,394					$	6,597,644

 

These mineral rights and properties are segmented based on our identified resource areas and exploration targets. During the three and six months ended June 30, 2021 and 2020, we did not recognize related depletion expense as none of the properties are in production.

On January 17, 2021, we acquired two patented lode mining claims. The two patents, totaling approximately 34 acres, are located at the north end of the Occidental trend in Storey County, Nevada. The claims were purchased for a total of $40,750, with no royalty.

On February 25, 2020 and September 17, 2020, we sold two patented mining claims and five unpatented mining

claims (the "Wild Horse" properties) and eight unpatented mining claims (the "Como Comet" properties), respectively, to

Hercules Gold USA LLC ("Hercules") for a total purchase price of $100,000 and 100,000 shares of common stock of Eclipse

Gold Mining Corporation (the parent company of Hercules, "Eclipse"), with a fair value of $52,000. In February 2021, Eclipse merged with Northern Vertex and the 100,000 Eclipse common shares were converted to 109,000 Northern Vertex common shares, classified as investments in equity securities on the condensed consolidated balance sheets.

All of our mineral exploration and mining lease payments are classified as mining costs and expenses in the condensed consolidated statements of operations.

Properties, Plant and Equipment, Net

Properties, plant and equipment at June 30, 2021 and December 31, 2020 consisted of the following:

---

			June 30, 2021						December 31, 2020
Land and buildings leased to others
Daney Ranch			$	2,261,263					$	2,261,263
Gold Hill Hotel			753,272						753,272
Other real estate			314,526						314,526
Less accumulated depreciation			(1,277,724)						(1,196,426)
Total, net			2,051,337						2,132,635
Property, plant, and equipment for mineral processing
American Flat land and buildings			6,500,817						6,500,817
Crushing, processing, and refining plant and equipment			21,113,178						21,113,178
Less accumulated depreciation			(22,050,015)						(21,943,657)
Total, net			5,563,980						5,670,338
Other property and equipment
Comstock corporate campus			1,549,453						1,549,453
Vehicle and equipment			2,267,916						2,267,916
Furniture and fixtures			556,860						549,860
Less accumulated depreciation			(3,587,383)						(3,545,502)
Total, net			786,846						821,727
Total properties, plant and equipment, net			$	8,402,163					$	8,624,700

During the three and six months ended June 30, 2021, we recognized depreciation expense of $0.1 million and $0.2 million, respectively. During the three and six months ended June 30, 2020, we recognized depreciation expense of $0.1 million and $0.3 million, respectively.

The Nevada Revised Statutes and Regulations require a surety bond to be posted for mining projects so that, after the completion of such mining projects, the sites are left safe, stable and capable of productive post-mining uses. The bond is intended to cover the estimated costs required to safely reclaim the natural environment to the regulatory standards established by the State of Nevada’s Division of Environmental Protection. Accordingly, we have a $6.8 million reclamation surety bond through the Lexon Surety Group (“Lexon”) with the State of Nevada’s Bureau of Mining Regulation and Reclamation as of June 30, 2021. In addition, we have a $0.5 million surety bond with Storey County, Nevada related to mine reclamation as of June 30, 2021. As part of the surety agreement, we agreed to pay a 2% annual bonding fee. The total cash collateral, per the surety agreement, was $2.6 million at June 30, 2021 and December 31, 2020.

The reclamation bond deposit at June 30, 2021 and December 31, 2020 consisted of the following:

			June 30, 2021						December 31, 2020
Lexon surety bond cash collateral			$	2,588,875					$	2,588,768
Other cash reclamation bond deposits			106,936						106,936
Total reclamation bond deposit			$	2,695,811					$	2,695,704

The total cash collateral is a component of the reclamation bond deposit on the condensed consolidated balance sheets and, at June 30, 2021 and December 31, 2020 includes earned income of $88,876 and $88,768, respectively, which has been left on deposit at BNY Mellon.

---

Other assets at June 30, 2021 and December 31, 2020 consisted of the following:

			June 30, 2021						December 31, 2020
Other long-term receivables and prepaid expenses			$	102,259					$	154,950
Long-term deposits			24,354						24,354
			$	126,613					$	179,304

Accrued expenses and other liabilities at June 30, 2021 and December 31, 2020 consisted of the following:

			June 30, 2021						December 31, 2020
Accrued Northern Comstock LLC contributions, net			—						180,833
Accrued payroll costs			187,343						153,615
Accrued board of directors' fees			—						60,000
Accrued vendor liabilities			96,613						136,499
Other accrued expenses			69,716						4,000
Total accrued expenses and other liabilities			$	353,672					$	534,947

Lease Expense

We have an operating lease, as lessee, with the Sutro Tunnel Company, as lessor, for a property located adjacent to the Gold Hill Hotel, which is primarily used as a room rental. The lease runs from 2018 until 2028. The monthly rent is $750 with automatic annual increases each November of $25 per month, which began in 2020. The operating lease is sub-leased to Gold Hill Management LLC, the operators of the Gold Hill Hotel, and not separately valued within the Gold Hill Hotel lease.

For the three and six months ended June 30, 2021, the fixed operating lease expense was $2,525 and $5,049, respectively, with 7.26 years remaining on the lease at June 30, 2021.

We have the following lease balances recorded on the condensed consolidated balance sheets as follows:

Lease Assets and Liabilities			Classification			June 30, 2021						December 31, 2020
Operating lease right-of-use asset			Other assets			$	49,145					$	51,294
Operating lease liability - current			Accrued expenses and other liabilities			$	4,008					$	3,650
Operating lease liability - long-term			Other liabilities			47,682						49,791
Total operating lease liabilities						$	51,690					$	53,441

---

Maturities of lease liabilities by fiscal year for our operating leases are as follows:

Remainder of 2021						$	4,700
2022						9,650
2023						9,950
2024						10,250
2025						10,550
Thereafter						31,500
Total operating lease payments						76,600
Less: Imputed interest						(24,910)
Present value of lease liabilities						$	51,690

Lease Income

Real estate revenue from operating leases on our land and buildings leased to others (Note 6) recorded on the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 is as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
			2021						2020						2021						2020
Daney Ranch			$	27,000					$	—					$	54,000					$	—
Gold Hill Hotel			13,575						24,000						20,150						48,000
Lab and office space			—						7,500						—						15,000
Land			4,500						4,500						9,000						9,000
All other residential			9,550						12,375						19,975						24,800
Total real estate revenue from operating leases			$	54,625					$	48,375					$	103,125					$	96,800

Maturities of lease payments for operating leases on our land and buildings leased to others are as follows:

Remainder of 2021			$	100,650
2022			180,025
2023			166,325
2024			22,725
Thereafter			—
Total Minimum Lease Income			$	469,725

On February 1, 2021, we signed a lease, as lessor, with Gold Hill Management LLC to lease the Gold Hill Hotel. The lease term began on April 1, 2021 and ends on March 31, 2024. The agreement includes the payment of $19,500 in previously deferred rent from the previous month to month tenant, Crown Point Management LLC. The rent is $4,525 per month for the first year, inclusive of real estate taxes, increasing to $6,050 per month for the second year, and $7,575 per month for the third year. At the end of the three-year term, the tenant may renew the lease for up to two additional five-year periods, at a rate of $8,000 per month. The options to extend are not included in the lease payments to be received on an annual basis in the above table.

---

 

Long-term debt at June 30, 2021 and December 31, 2020 consisted of the following:

Note Description			June 30, 2021						December 31, 2020
Georges Trust Unsecured Promissory Notes - 12% interest, due September 2021			$	—					$	1,389,014
Concorde Trust Unsecured Promissory Note - 12% interest, due 2021			—						683,263
Bean Trust Unsecured Promissory Note - 12% interest, due 2021			—						290,386
GHF Inc Unsecured Promissory Note - 12% interest, due September 2021			—						916,712
Note Payable (Caterpillar Financial Services) - 5.7% interest			—						404,373
Total debt			—						3,683,748
Less: debt discounts and issuance costs			—						(126,043)
Total debt, net of discounts and issuance costs			—						3,557,705
Less: current maturities			—						(3,557,705)
Long-term debt, net of discounts and issuance costs			$	—					$	—

Unsecured Promissory Notes

On March 4, 2021, we retired our unsecured promissory notes ("Promissory Notes") by paying the remaining principal balance of $3.1 million plus earned OID of $0.1 million. For the six months ended June 30, 2021, interest expense on the Promissory Notes was $139,213, which includes OID amortization of $71,289.

GF Comstock 2 LP Debenture

On August 11, 2020, we retired the GF Comstock 2 LP debenture ("Debenture") by paying the remaining principal balance of $4.0 million, plus the remaining make whole obligation of $0.2 million and recognized a loss on early retirement of debt of $51,000. Interest expense on the Debenture was $0.2 million and $0.3 million for the three and six months ended June 30, 2020, respectively, of which Tonogold reimbursed $0.1 million and $0.2 million, respectively.

Caterpillar Equipment Facility

On March 4, 2021, we retired the Caterpillar Financial Services loan by paying the remaining principal balance of $296,171.

We are required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping, and re-vegetating various portions of our sites after mining and mineral processing operations are completed. These reclamation actions are conducted in accordance with plans reviewed and approved by appropriate regulatory agencies.

As of June 30, 2021 and December 31, 2020, we have accrued a long-term liability of $5.3 million and $6.1 million. respectively, for our obligation to reclaim our mine facilities based on our most recent reclamation plan, as revised, submitted and approved by the Nevada State Environmental Commission and Division of Environmental Protection. Our total reclamation liability includes cost estimates for our American Flat processing facility, Dayton project and enhanced reclamation obligations in Storey County, Nevada. Under the Lease Option Agreement with Tonogold, we must preserve the property and equipment in its current state for possible resumption of processing by Tonogold through November 2022 and, if the option is exercised, Tonogold will begin processing at the American Flat facility. Tonogold has not yet announced specific plans or a definitive schedule for future processing, but has announced actions that could lead to mining operations in the vicinity of the American Flat facility. If the option is not exercised, Comstock may repurpose the plant to be used for processing another resource. Based on these facts and circumstances, management extended the timing of reclamation to five years from January 1, 2021, with an updated expected reclamation commencement date of December 31, 2025. This resulted in a reduction in the liability of $926,434. The updated liability was calculated based on a weighted average credit-adjusted risk-free rate of 6.02%, which was calculated from the discount rates used in the eight layers of asset retirement obligations recorded since 2010, and an inflation rate of 1.78% based on the average Consumer Price Index over the previous five years. The adjustment in excess of the net retirement obligation asset of $57,964 was $868,471 as of January 1, 2021 and was recorded as a credit to environmental and reclamation costs and expenses in the condensed consolidated statements of operations.

---

In conjunction with recording the original reclamation liability, we recorded a retirement obligation asset on the consolidated balance sheets that was amortized over the period of the anticipated land disturbance and operations. Such costs were based on management’s original estimate of then expected amounts for remediation work, assuming the work is performed in accordance with current laws and regulations. It is reasonably possible that, due to uncertainties associated with the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology, the ultimate cost and timing of reclamation and remediation could change in the future. The accretion of the reclamation liability for the three and six months ended June 30, 2021 totaled $78,693 and $156,214, respectively, and was a component of environmental and reclamation costs and expenses in the condensed consolidated statements of operations. The accretion of the reclamation liability for the three and six months ended June 30, 2020 totaled $5,178 and $10,355, respectively, and was a component of environmental and reclamation costs and expenses in the condensed consolidated statements of operations. The amortization of the retirement obligation asset for the three and six months ended June 30, 2021 was $0. The amortization of the retirement obligation asset for the three and six months ended June 30, 2020 was $14,491 and $28,982, respectively, and was a component of environmental and reclamation costs and expenses in the condensed consolidated statements of operations.

Following is a reconciliation of the mining retirement liability associated with our reclamation plan for the mining projects as of June 30, 2021 and December 31, 2020:

			June 30, 2021						December 31, 2020
Long-term reclamation liability — beginning of period			$	6,054,919					$	6,034,208
Reduction of obligation due to extension of time			(926,434)						—
Accretion of reclamation liability			156,214						20,711
Long-term reclamation liability — end of period			$	5,284,699					$	6,054,919

Following is a reconciliation of the mining retirement obligation asset as of June 30, 2021 and December 31, 2020:

			June 30, 2021						December 31, 2020
Retirement obligation asset — beginning of period			$	57,963					$	115,926
Reduction of obligation liability			(57,963)
Amortization of retirement obligation asset			—						(57,963)
Retirement obligation asset — end of period			$	—					$	57,963

---

 

We lease certain mineral rights and properties under operating leases expiring at various dates through 2040. Future minimum annual lease payments, including royalty and rental payments, under these existing lease agreements are as follows as of June 30, 2021:

Remainder of 2021			$	51,000
2022			114,000
2023			114,000
2024			108,000
2025			110,000
Thereafter			1,686,250
			$	2,183,250

Expense under leases for the three and six months ended June 30, 2021 was $37,435 and $62,585, respectively. Tonogold reimbursements of lease costs for the three and six months ended June 30, 2021 were $25,150 and $50,300, respectively.

Expense under leases for the three and six months ended June 30, 2020 was $26,150 and $51,073, respectively. Tonogold reimbursements of lease costs for the three months ended June 30, 2020 were $12,850 and $25,700, respectively.

Royalty Agreements

We have minimum royalty obligations for certain of our mineral properties and leases. For most of the mineral properties and leases, we are subject to a range of royalty obligations once production commences. These royalties range from 0.5% to 5% of Net Smelter Returns ("NSR") from minerals produced on the properties, with the majority being under 3%. Some of the factors that influence the amount of the royalties include ounces extracted and the price of gold.

Our mining and exploration activities are subject to various laws and regulations governing environmental protection. These laws and regulations are frequently changing and generally becoming more restrictive. We believe our operations are in compliance with applicable laws and regulations, in all material respects. We continuously make expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures.

Comstock Residents Association

On January 31, 2014, the Comstock Residents Association (“CRA”) and two of its members filed a civil action in the Third Judicial District Court in Lyon County, Nevada (“District Court”) against the Lyon County Board of Commissioners (the “Commissioners”) and the Company, asking the District Court to reverse the Commissioners’ decision to grant a master plan amendment and zone changes that were approved by the Commissioners in 2014 (“Application”).

Prior to the approval of the Application, the master plan designation and zoning precluded mining on certain property of the Company in the area of Silver City, Nevada.

On January 11, 2021, the Nevada Supreme Court issued a final order affirming the District Court's judgment in favor of Lyon County and Comstock Mining. On January 29, 2021, the CRA filed a Petition for Rehearing to the Nevada Supreme Court. On February 25, 2021, the Nevada Supreme Court issued an order denying a rehearing. On March 8, 2021, the CRA filed a Petition for En Banc Reconsideration to the Nevada Supreme Court. On April 9, 2021, the Nevada Supreme Court responded to the petition by issuing an order denying en banc reconsideration, once again, in favor of Lyon County and Comstock Mining.

OSHA Complaint

On or about February 27, 2020, the Company received notice that three former employees had filed a complaint with OSHA regarding alleged wrongful termination of employment in 2019, seeking backpay, front pay and other compensatory damages (for mental anguish and reputational harm) as well as interest and legal fees and costs. We believe that those terminations were lawful and intend to vigorously defend the complaint.

As of June 30, 2021 and December 31, 2020, we have accrued severance of $84,166 in connection with this complaint, which is recorded in accrued expenses and other liabilities on the condensed consolidated balance sheets.

---

Equity Issuance Agreements

On March 2, 2021, we entered into equity purchase agreements (“Equity Purchase Agreements”) with certain investors to issue and sell in a registered direct offering (“Offering”) 4.0 million shares of common stock at a price of $4.00 per share. The Equity Purchase Agreements contain customary representations, warranties and agreements of the Company, and customary conditions to closing, indemnification rights and obligations of the parties. The Offering of the shares closed on March 4, 2021. We paid Noble Capital Markets, Inc., the placement agent for the Offering, an aggregate cash fee of $960,000 (equal to 6% of the aggregate gross proceeds raised in the Offering), and $30,000 for other expenses, resulting in net proceeds of $15,010,000.

On February 8, 2021, we entered into an equity purchase agreement (“2021 Leviston Sales Agreement”) with Leviston Resources LLC (“Leviston”) to offer and sell registered shares of common stock at an aggregate offering price of up to $5.0 million from time to time, at our option, on terms we deem favorable. The term of the agreement is 24 months. We agreed to deliver to Leviston additional shares of common stock with a fair value of $250,003, for no additional consideration, on the first settlement date with respect to a put notice delivered by us. For the three months ended March 31, 2021, we issued to Leviston 423,842 common shares with an aggregate sales price of $2,020,000, at an average price per share of $4.77, and an additional 50,907 common shares in commitment and due diligence fees. As of June 30, 2021, the 2021 Leviston Sales Agreement has $2,980,000 of remaining capacity.

Gross proceeds from and fees related to the issuance of shares of our common stock pursuant to registered equity issuance agreements for the six months ended June 30, 2021 and 2020 are as follows:

			2021						2020
Number of shares sold			4,423,842						638,511
Gross proceeds			$	18,020,000					$	242,621
Common stock issuance costs			(1,313,002)						(50,070)
Net proceeds			$	16,706,998					$	192,551
Average price per share			$	4.07					$	0.38

Other Common Stock Issuances

We issued 3.0 million restricted shares of our common stock as consideration for the February 15, 2021 investment in LINICO, 1.0 million restricted common shares as part of the consideration for the June 18, 2021 acquisition of RPS, and an additional 3.0 million restricted common shares as part of the consideration for the June 24, 2021 investment in GenMat.

---

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents our assets at June 30, 2021 measured at fair value on a recurring basis:

									Fair Value Measurements at
									June 30, 2021
			Total						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Common shares of Tonogold (Note 2)			$	1,420,262					$	1,420,262					$	—					$	—
Tonogold note receivable (Note 2)			7,246,000						—						—						7,246,000
LINICO derivative asset (Note 2)			6,640,000						—						6,640,000						—
GenMat derivative asset (Note 2)			890,000						—						890,000						—
Common shares of Northern Vertex (Note 6)			28,885						28,885						—						—
Total Assets			$	16,225,147					$	1,449,147					$	7,530,000					$	7,246,000

The following table presents our assets and liabilities at December 31, 2020 measured at fair value on a recurring basis:

									Fair Value Measurements at
									December 31, 2020
			Total						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Common shares of Tonogold (Note 2)			$	3,939,558					$	3,939,558					$	—					$	—
Tonogold note receivable (Note 2)			5,498,500						—						—						5,498,500
MCU derivative asset (Note 2)			265,127												265,127						—
Common shares of Northern Vertex (Note 6)			40,165						—						40,165						—
Total Assets			$	9,743,350					$	3,939,558					$	305,292					$	5,498,500

During the six months ended June 30, 2021, the common shares of Northern Vertex (previously Eclipse) were transferred from Level 2 to Level 1 as a result of the restriction period expiring on March 1, 2021. For the six months ended June 30, 2021 and 2020, there were no other transfers of assets and liabilities between Level 1, Level 2 and Level 3.

The following tables provides reconciliation between the beginning and ending balance of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

---

			Three Months Ended June 30,												Six Months Ended June 30,
			2021						2020						2021						2020
Beginning balance			$	7,319,000					$	11,090,243					$	5,498,500					$	9,080,000
Total change in fair value recognized in earnings
Tonogold convertible preferred shares			—						240,000						—						(45,000)
Tonogold contingent forward asset			—						351,091						—						1,413,382
Tonogold note receivable (Note 2)			(1,173,000)						—						(427,500)						—
			(1,173,000)						591,091						(427,500)						1,368,382
Additions
Tonogold contingent forward asset			—						—						—						1,232,952
Conversion of Tonogold convertible preferred shares to Tonogold common			—						(1,100,000)						—						(1,100,000)
Tonogold note receivable (Note 2)			1,100,000						—						2,175,000						—
			1,100,000						(1,100,000)						2,175,000						132,952
Ending balance			$	7,246,000					$	10,581,334					$	7,246,000					$	10,581,334

Valuation Methodologies

Following is a description of the valuation methodologies used for our financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy.

Common Shares of Tonogold

The fair value of our investment in common shares of Tonogold is based on the closing price per share of the stock. At June 30, 2021 and December 31, 2020, the fair values of the common shares are based on the $0.15 and $0.30 closing share prices (OTC: TNGL), respectively. We recorded unrealized losses of $1,029,482 and $1,920,521 for the change in fair value in other income (expense) in the condensed consolidated statements of operations for the three and six months ended June 30, 2021, respectively. We recorded an unrealized gain of $1,380,929 for the change in fair value in other income (expense) in the condensed consolidated statements of operations for the three and six months ended June 30, 2020. The Tonogold common shares are classified within Level 1 of the valuation hierarchy.

Tonogold Note Receivable

In connection with Tonogold's acquisition of Comstock Mining LLC on September 8, 2020, we recorded the Note due from Tonogold on the consolidated balance sheets, with a principal amount of $4,475,000 and a 12% annual interest rate. Interest is due and payable monthly with the principal originally due and payable on September 20, 2021 and extended to March 31, 2022. Because of embedded features, the Company made the irrevocable election to report the Note Receivable on a fair value basis.

At December 31, 2020, the fair value of the Note was $5.5 million based on a Monte Carlo model with the following inputs: Tonogold common share price – $0.30; volatility – 89%; risk free rate – 0.09%; cost of debt – 7.62%; conversion premium – 30%; probability of prepayment – 5% at both March and June 2021; probability of change in control – 5% at June 2021; probability of default – 27% at September 2021.

At June 30, 2021, the fair value of the Note was $7.2 million based on a Monte Carlo model with the following inputs: Tonogold common share price – $0.15; volatility – 49%; risk free rate – 0.07%; cost of debt – 6.24%; conversion premium – 30%; probability of prepayment – 10% at August 2021; probability of default – 28% at March 2022. We recorded other expense of $1.2 million and $0.4 million in the condensed consolidated statements of operations for the three and six months

---

ended June 30, 2021, respectively, which represented changes in fair value of the Note. The Note is classified within Level 3 of the valuation hierarchy.

LINICO Derivative Asset

On February 16, 2021, we recorded a derivative asset on the consolidated balance sheets in connection with the LINICO Stock Purchase Agreement. On that date, the $500,000 fair value of the derivative asset was determined based on the excess of the value of 3.0 million shares of our common stock issued to and held by LINICO over the $6,250,000 contractual consideration required under the agreement. The value of the shares was based on the $2.25 closing price per share of our common stock on that date. At June 30, 2021, the $6.6 million fair value of the derivative asset is based on the same number of shares and the $3.63 closing price per share of our common stock plus $2.0 million of Cash Commitment payments made to LINICO. We recorded an unrealized loss of $2,849,999 and an unrealized gain $4,140,000 for the change in fair value of the LINICO derivative asset in other income (expense) in the condensed consolidated statements of operations for the three and six months ended June 30, 2021, respectively. The derivative asset is classified within Level 2 of the valuation hierarchy.

GenMat Derivative Asset

On June 24, 2021, we recorded a derivative asset on the consolidated balance sheets in connection with the GenMat Membership Interest Purchase Agreement. On that date, the $530,000 fair value of the derivative asset was determined based on the excess of the value of 3.0 million shares of our common stock issued to and held by GenMat over the $10.0 million contractual consideration required under the agreement. The value of the shares was based on the $3.51 closing price per share of our common stock on that date. At June 30, 2021, the $890,000 fair value of the derivative asset is based on the same number of shares and the $3.63 closing price per share of our common stock on that date. We recorded $360,000 for the increase in fair value of the derivative asset in other income in the condensed consolidated statements of operations for the three months ended June 30, 2021. The derivative asset is classified within Level 2 of the valuation hierarchy.

Common Shares of Northern Vertex

During 2020, we sold certain mining claims in exchange for 100,000 shares of common stock of Eclipse, which were restricted from sale through March 1, 2021. At December 31, 2020, the fair value of the Company’s investment is based on the $0.43 closing price per share of the stock with a discount of $3,010 calculated based on a required holding period of 0.17 years, risk-free rate of 0.08% and volatility of 74.0%. In February 2021, Eclipse merged with Northern Vertex and our 100,000 shares of Eclipse were converted to 109,000 Northern Vertex shares. On March 1, 2021, the restriction period expired and the fair value of the shares as of June 30, 2021 is based on the closing price per share of $0.27. We recorded an unrealized loss of $1,744 and $11,280 for the reduction in fair value of the Northern Vertex shares in other expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2021, respectively. Upon expiration of the restriction period, the Northern Vertex common shares were transferred from Level 2 to Level 1 of the valuation hierarchy.

MCU Derivative Asset

On December 4, 2020, we recorded a derivative asset on the consolidated balance sheets in connection with our $2.0 million purchase of 15% of MCU membership interests. At December 31, 2020, the $265,127 fair value of the derivative asset was based on 625,000 of our common shares issued as a portion of the purchase price, and the $1.04 closing price per share of our common stock. During the six months ended June 30, 2021, MCU sold all 625,000 shares, resulting in a final derivative asset fair value of $762,377 based on the excess of actual net proceeds and cash payments to MCU over the $2 million purchase price. We received a cash payment of $762,377 from MCU in February 2021 in full satisfaction of any excess proceeds from the sale of the stock, which was applied to the derivative asset, resulting in no remaining fair value as of June 30, 2021. We recorded $497,250 for the change in fair value of the derivative asset in other income in the condensed consolidated statements of operations for the six months ended June 30, 2021. The derivative asset was classified within Level 2 of the valuation hierarchy.

Tonogold Contingent Forward

On March 20, 2020, Tonogold issued a senior secured convertible note with a principal amount of $5,475,000 to the Company, reflecting Tonogold’s intent to purchase additional membership interests in Comstock Mining LLC in the future at a specified price. The Contingent Forward included the following features: 1) conversion feature allowing Comstock, at our sole option, to elect payment in Tonogold common shares upon certain events; 2) change of control redemption right allowing Comstock to redeem the note in cash at a 125% premium; 3) event of default redemption right allowing Comstock the right to redeem the note in cash at a 118% premium; and 4) a payment modification included in the Contingent Forward. The fair value of the

---

Contingent Forward was based on a Monte Carlo model with various inputs. These inputs included the Tonogold common share price of $0.41, volatility of 94.0%, risk-free rate of 0.16%, cost of debt of 14.44%, required conversion premium of 30.0%, probability of prepayment of 5%, probability of change in control of 5% and probability of default of 29%. For the three and six months ended June 30, 2020, we recorded $0.4 million and $1.4 million, respectively, in other income in the condensed consolidated statements of operations. The contingent forward asset was netted against the gain on sale of Comstock Mining LLC recorded for the year ended December 31, 2020.

Tonogold Convertible Preferred Shares

The consideration received for Tonogold's acquisition of Comstock Mining LLC included shares of the Tonogold CPS. Since the CPS were not listed securities, and had no readily available market, we elected the fair value option for this instrument.

The value of the CPS as of June 30, 2020 was based on a Monte Carlo model with various inputs including the Tonogold common share price of $0.41, volatility of 98%, risk-free rate of 0.18%, cost of debt of 14.44%, private placement conversion price ceiling of $0.18, redemption probability of 50%, and illiquidity discount of 5% - 15%. We recorded $0.3 million and $0.1 million in other income and other expense, respectively, for the changes in fair value of the CPS in the condensed consolidated statements of operations for the three and six months ended June 30, 2020. The Company held no shares of Tonogold CPS at June 30, 2021 and December 31, 2020.

Other Financial Instruments

At June 30, 2021, the carrying amount of cash and cash equivalents, notes receivable carried at amortized costs, and notes payable approximates fair value because of the short-term maturity of these financial instruments.

2020 Equity Incentive Plan

In 2020, the Company adopted the Comstock Mining Inc. 2020 Equity Incentive Plan (“2020 Plan”). The maximum number of shares of our common stock that may be delivered pursuant to awards granted under the 2020 Plan is 1,800,000. The plan provides for the grant of various types of awards, including but not limited to restricted stock (including performance awards), restricted stock units, stock options, and other types of stock-based awards.

In December 2020, 540,000 shares were granted to non-executive directors under the 2020 Plan, which vest in three equal increments of 180,000 shares each on January 1, 2022, January 1, 2023 and January 1, 2024. The fair value of the common shares issued was $1.06 per share, based on the closing price of our common stock on December 30, 2020. Compensation cost totaling $572,400 will be recognized on a straight line basis over the three years vesting period. Compensation cost for these grants totaling $47,700 and $95,400 was recorded as a general and administrative expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2021, respectively. Unamortized stock-based compensation of $477,000 as of June 30, 2021 will be amortized over the remaining 30-month vesting term.

In January 2021, 1,055,000 performance shares were granted to employees under the 2020 Plan. The vesting of 50% of the employee performance share awards is contingent on the achievement of performance goals over the next three years and vesting of the remaining 50% is contingent on the achievement of our common stock market price goals over the next five years, defined on a per share basis. Vesting is dependent on the employee remaining with the Company from the grant date through the vesting date. The performance shares which vest based on the achievement of performance goals were valued using the Company's common stock price on the grant date of $1.10 per share, and stock-based compensation was determined based on the probability of achieving each goal. The performance shares which vest based on the market price of the Company's shares were valued using a path-dependent model with the following inputs: beginning stock price – $1.10; annual equity volatility – 77%; risk-free rate – 0.36%; number of iterations – 100,000, which resulted in an indicated fair value of $0.41 per share, which is recognized evenly over the term derived from the model of 3.2 years. In June 2021, 60,000 performance shares were granted to employees under the 2020 Plan. The performance shares which vest based on the market price of the Company's shares were valued using a path-dependent model with the following inputs: beginning stock price – $3.51; annual equity volatility – 93%; risk-free rate – 0.79%; number of iterations – 100,000, which resulted in an indicated fair value of $2.71 per share, which is recognized evenly over the term derived from the model of 1.7 years.

Stock-based compensation for all employee performance share grants totaling $57,259 and $104,975 was recorded as costs and expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2021, respectively. As of June 30, 2021, unamortized stock-based compensation for performance goals-based grants of $638,000 will be amortized over the remaining 30-month vesting term, and $261,832 for market price-based grants will be amortized over the remaining 32-month and 20-month derived vesting terms as applicable.

---

2011 Equity Incentive Plan

In 2011, the Company adopted the Comstock Mining Inc. 2011 Equity Incentive Plan (“2011 Plan”). The maximum number of shares of our common stock that could be delivered pursuant to awards granted under the 2011 Plan was 1,200,000. The plan provided for the grant of various types of awards, including, but not limited to, restricted stock (including performance awards), restricted stock units, stock options, and other types of stock-based awards. The 2011 Plan expired June 23, 2021. As there are no further shares available for issuance, as of June 30, 2021, we will no longer disclose shares available to be issued under the plan.

In May 2020, non-executive board members were granted 135,000 common shares for past services and 180,000 common shares for current services for a total of 315,000 common shares. The fair value of the common shares issued was $0.56 per share, based on the closing price per share of our common stock on May 28, 2020.

Also in May 2020, employees were granted 138,800 fully vested stock options to acquire common shares with an exercise price equal to the $0.56 closing price per share of our common stock on the date of the grant, and expiring on the second anniversary of the grants. Compensation cost for the options issued totaled $27,849 and was recorded as additional paid in capital on the consolidated balance sheets for the year ended December 31, 2020. As of June 30, 2021, 56,150 options have been repurchased and cancelled. Cash paid for the options totaling $22,975 and $222,556 for the three and six months ended June 30, 2021 was deemed to be the incremental fair value of the options at the repurchase date, and was recorded as a reduction in additional paid-in capital on the condensed consolidated balance sheets. At June 30, 2021, the intrinsic value of the remaining 82,650 options outstanding was $253,736.

Other income (expense) net consisted of the following for the three and six months ended June 30, 2021 and 2020:

			Three Months Ended June 30,												Six Months Ended June 30,
			2021						2020						2021						2020
Change in fair value of contingent forward asset			$	—					$	351,091					$	—					$	1,413,382
Change in fair value of derivative asset related to Mercury Clean Up, LLC			—						—						497,250						—
Change in fair value of derivative asset related to LINICO Corporation			(2,849,999)						—						4,140,000						—
Change in fair value of derivative asset related to GenMat			360,000						—						360,000						—
Gain on sale of mining claims			—						—						—						100,000
Tonogold reimbursement of Pelen acquisition costs			—						—						—						150,000
Change in fair value of Tonogold preferred shares			—						240,000						—						(45,000)
Change in fair value MCU make whole			—						170,722						—						138,052
Realized gain (loss) on sale of Tonogold common shares			(89,345)						23,740						104,320						23,740
Change in fair value of Tonogold note receivable			(1,173,000)						—						(427,500)						—
Tonogold note receivable amendment fee			100,000						—						362,500						—
Unrealized gain (loss) on investments in securities			(1,031,226)						1,380,929						(1,931,801)						1,380,929
Recognition of grant from CARES Act PPP loan			—						193,546						—						193,546
Other			(159,454)						38,321						(167,964)						45,815
Total other income (expense)			$	(4,843,024)					$	2,398,349					$	2,936,805					$	3,400,464

---

In 2021, our effective tax rate is not expected to be affected by increases or decreases in pre-tax income principally due to a full valuation allowance applied against net deferred tax assets, as noted below. For the six months ended June 30, 2021, we recognized no income tax benefit or expense, and paid no cash for income taxes.

Income taxes are provided for using the asset and liability method under which deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities. These temporary differences result in taxable or deductible amounts in future years and are measured using the tax rates and laws that are expected to be in effect when such differences are expected to reverse.

We are required to establish a valuation allowance against the deferred tax assets if, based on the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2021, management has determined that a full valuation allowance is necessary against our net deferred tax assets based on the weight of all available evidence. Management will continue to assess the need for a valuation allowance on a quarterly basis.

 

Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share reflects the potential dilution that could occur if stock options were exercised. The following is a reconciliation of the numerator and denominator used in the basic and diluted computation of net income (loss) per share: 

			Three months ended June 30,												Six Months Ended June 30,
			2021						2020						2021						2020
Numerator:
Net income (loss)			$	(6,320,992)					$	1,275,986					$	1,867,239					$	1,012,774
Denominator:
Basic weighted average shares outstanding			43,114,856						28,253,242						40,442,281						27,758,899
Incremental shares			—						11,231						69,646						5,615
Diluted weighted average shares outstanding			43,114,856						28,264,472						40,511,927						27,764,514
Net income (loss) per common share:
Basic EPS			$	(0.15)					$	0.05					$	0.05					$	0.04
Diluted EPS			$	(0.15)					$	0.05					$	0.05					$	0.04

For the six months ended June 30, 2021, common stock equivalent shares consisted of stock options and were included in the calculation of diluted earnings per share. For the three months ended June 30, 2021, we had no common stock equivalent shares that were dilutive.

 

We are organized into three operating segments, Mining, Real Estate, and Natural Resource Renewal. Our mining segment consists of mining claim, development and processing, and environmental and reclamation operations and related assets, including investments in and loans to Tonogold, investment in Pelen, and general and administrative expenses. Our real estate segment consists of real estate rental operations, including the Daney Ranch and Gold Hill Hotel, and related assets, as well as assets held for sale to SSOF, and investments in and advances to SSOF. Our natural resource renewal segment consists of investments in mineral remediation and recycling, including investments in MCU, MCU-P and LINICO, and loans to MCU-P, as well as other natural resource renewal operations, including RPS, our GenMat investments, and financing of PSI, MANA and LPB. We evaluate the performance of our operating segments based on income (loss) from operations. All intercompany transactions are eliminated. Financial information relating to our reportable operating segments and consolidated totals follows:

---

			Three Months Ended   June 30,												Six Months Ended   June 30,
			2021						2020						2021						2020
Revenue
Mining			$	—					$	—					$	—					$	—
Real estate			54,625						48,375						103,125						96,800
Natural resource renewal			—						—						—						—
Total revenue			54,625						48,375						103,125						96,800
Costs and Expenses
Mining			(1,714,932)						(1,243,992)						(1,316,502)						(2,500,702)
Real estate			(49,410)						(15,320)						(98,582)						(28,916)
Natural resource renewal			—						—						—						—
Total costs and expenses			(1,764,342)						(1,259,312)						(1,415,084)						(2,529,618)
Operating Income (Loss)
Mining			(1,714,932)						(1,243,992)						(1,316,502)						(2,500,702)
Real estate			5,215						33,055						4,543						67,884
Natural resource renewal			—						—						—						—
Total loss from operations			(1,709,717)						(1,210,937)						(1,311,959)						(2,432,818)
Other income (expense) (Note 17)			(4,611,275)						2,486,923						3,179,198						3,445,592
Net income (loss)			$	(6,320,992)					$	1,275,986					$	1,867,239					$	1,012,774
Capital Expenditures
Mining			$	7,000					$	11,000					$	47,750					$	11,000
Real estate			—						—						—						—
Natural resource renewal			—						—						—						—
Total capital expenditures			$	7,000					$	11,000					$	47,750					$	11,000
Depreciation, Amortization, and Depletion
Mining			$	70,487					$	110,268					$	141,250					$	303,751
Real estate			44,144						5,960						88,287						11,919
Natural resource renewal			—						—						—						—
Total depreciation, amortization, and depletion			$	114,631					$	116,228					$	229,537					$	315,670

			As of June 30,						As of December 31,
			2021						2020
Assets
Mining			$	31,627,136					$	29,754,182
Real estate			13,437,502						10,770,370
Natural resource renewal			32,289,258						2,599,010
Total assets			$	77,353,896					$	43,123,562

The addition of the natural resource renewal segment reflects our growth in our new environmental, social and corporate governance ("ESG") initiatives, which expand beyond our historical focus on mining and real estate.

---

We identify, account for and disclose related party transactions. Parties, which can be entities or individuals, are considered to be related if either party has the ability, directly or indirectly, to control or exercise significant influence over the other party in making financial and operational decisions. Entities and individuals are also considered to be related if they are subject to the common control or significant influence of another party. The following related party transactions occurred during the three and six months ended June 30, 2021 and 2020 (Notes 1 and 2).

Northern Comstock LLC

We have an operating agreement with Northern Comstock, an entity controlled by a related party. For each of the three months ended June 30, 2021 and 2020, we made cash capital contribution payments under the Northern Comstock operating agreement of $90,000 and for the six months ended June 30, 2021 and 2020, $992,500 and $180,000, respectively. Cash payments for the six months ended June 30, 2021 included a one-time accelerated capital contribution payment of $812,500 as a result of the net proceeds of $15.0 million we received on March 4, 2021 from the Equity Purchase Agreements (Notes 2 and 14).

Mercury Clean Up, LLC and MCU Philippines, Inc.

For the three and six months ended June 30, 2021 and 2020, in connection with our investments in MCU and MCU-P, we have provided certain services relating to feasibility studies and permitting that are separate from those investments and not included as obligations under the MCU Agreement.

MANA Corporation and LP Biosciences LLC

On July 23, 2021, we entered into a Securities Exchange Agreement to purchase 100% of the issued and outstanding equity of MANA in exchange for 4.2 million restricted shares of our common stock. On July 23, 2021, we also acquired 50% of the issued and outstanding equity of LPB from LP Nutrition LLC and entered into a Note Purchase Agreement to purchase a secured note with a face value of $17.0 million from LPB in exchange for a purchase price of $15.0 million, including a prior non-refundable advance of $326,258. The 50% equity of LPB was acquired in exchange for 3.5 million restricted shares of our common stock issued to LPB.

Solid Carbon Products

As of July 26, 2021, we made a loan to Solid Carbon Products (“SCP”) pursuant to a secured promissory note with a face value of $100,000 ("SCP Note"). The SCP Note principal, together with interest at the rate of 8% per annum, is due and payable on July 26, 2023. SCP is in the business of turning waste CO₂ into profitable carbon products.

Plain Sight Innovations

As of June 30, 2021,we made loans to PSI pursuant to a secured promissory note with a face value of $835,000 ("PSI Note"). The PSI Note principal, together with interest at the rate of 12% per annum, is due and payable on September 30, 2021, and is secured by substantially all of the assets of PSI. On August 3, 2021, we increased the loan by $415,000 to $1,250,000 to fund additional intellectual property development and general corporate purposes.

Comstock Residents Association

On April 9, 2021, the Nevada Supreme Court concluded the Comstock Residents Association litigation by issuing an order denying en banc reconsideration, once again, in favor of Lyon County and Comstock Mining.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---