##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K/A
  (Amendment
    No. 1)
  ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  For the fiscal year ended December 31, 2006
  Commission file number 1-32375
      Comstock Homebuilding
    Companies, Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

20-1164345(State or Other Jurisdiction of
    Incorporation or Organization)

(I.R.S. Employer Identification
    No.)   11465
    Sunset Hills Road
 5th Floor
 Reston, Virginia 20190
 (703) 883-1700
 (Address, including zip code,
    and telephone number, including area code, of principal
    executive offices)
  Securities
    registered pursuant to Section 12(b) of the Act:
 None
  Securities
    registered pursuant to Section 12(g) of the Act:
  Class A
    common stock, par value $.01 per share
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2 o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




---



##### 



COMSTOCK
    HOMEBUILDING COMPANIES, INC.
  ANNUAL REPORT ON FORM
    10-K
 For the Fiscal Year Ended December 31, 2006
  TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


2PART IIItem 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


19PART IIIItem 10.

Directors, Executive Officers and
    Corporate Governance


32Item 11.

Executive Compensation


36Item 12.

Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder Matters


45Item 13.

Certain Relationships and Related
    Transactions, and Director Independence


47Item 14.

Principal Accountant Fees and
    Services


49Index to
    Consolidated Financial Statements


F-1  1




---



##### 



EXPLANATORY
    NOTE
  Form 10-K/A Form 10-K Form 10-K). Rule 12b-15 Form 10-K/A
  Form 10-K/A, Rule 12b-15 Form 10-K/A Form 10-K.
 PART I Item 1.
    Business  Overview
      www.comstockhomebuilding.com.
 2




---



##### 



Our
    Markets
    Our
    Business Strategy
    Attract and retain experienced personnel at all
    levels.
  Build in and expand with the strong growth markets of the
    Mid-Atlantic and Southeast region of the United States.
  Manage our land inventory to provide the most attractive
    margins or returns possible.
 3




---



##### 



Create opportunities in areas overlooked by our competitors.
  Focus on a broad segment of the home buying market, the
    middle of the market.
  Position our inventory for the growing active adult market.
  Maximize our economies of scale.
    Protect liquidity and maximize capital
    availability.
 4




---



##### 



Invest in creating a highly qualified sales force capable of
    closing sales in difficult times.
  Maximize the realized value of our real estate
    owned.
  Concentrate on finished lot option takedown opportunities.
  Identify and capitalize on undervalued and/or distressed real
    estate assets.
  Capitalize on our public status to attract capital and build
    a sustainable pipeline for future growth.
  Invest in technology to streamline operations, increase our
    ability to communicate with customers and facilitate growth.
  Our
    Operations
    Land
    Identification and Acquisition
     5




---



##### 




    supply and absorption rates of similar new home projects;
    supply and absorption rates of existing homes in the area;
    projected equity requirements;
    projected return on invested capital;
    status of land development entitlements;
    projected net margins of homes to be sold by us;
    projected absorption rates;
    demographics, school districts, transportation facilities and
    other locational factors; and
    competitive market positioning.   6




---



##### 



Land
    Entitlement and Development
          Sales,
    Marketing and Production
         7




---



##### 



tm
  
    DownRighttm 
    a program designed to help identify ways to meet the down
    payment requirements of a new home purchase;
    Tailor
    Madetm 
    a program with unique financing products and agreements with
    major lenders that tailor a monthly payment in order to make
    home ownership affordable in any interest rate climate;
    Get It
    Soldtm 
    a program designed to help our customers sell their current home
    quickly and efficiently in order to facilitate their purchase of
    a new Comstock home;
    All@Hometm 
    a program enabling our customers to design technology solutions
    for their new Comstock home to meet their individual
    specifications;
    Built
    Righttm 
    a quality assurance program incorporating quality assurance
    inspections with high-quality materials; and
    Home
    Styletm 
    an optional upgrade program providing hundreds of options to
    choose from to customize a new Comstock home to suit the
    specific desires of our customers.  project-by-project
 8




---



##### 



on-site time-to-market
  Our
    Communities
    State

CountyGeorgia

Forsyth, Gwynett, Fulton,
    Paulding, Jackson, CherokeeMaryland

FrederickNorth Carolina

Wake, Raleigh, Johnston, DurhamDistrict of Columbia

Washington, DCVirginia

Arlington, Fairfax Loudoun, Prince
    William, Culpeper     As of December 31, 2006Lots


Averageunder


NewEstimated








Lots


Option


OrderProduct


Units at


Units





Owned


Agreement


RevenueProject

State


Type(2)


Completion


Settled


Backlog(3)


Unsold


Unsold


to DateStatus: Active(1)Allen Creek


GA



SF



26



18







8






$
210,272Arcanum


GA



SF



34



11



1



22






$
403,450Brentwood Estates


GA



SF



31



19







12






$
139,139Falling Water


GA



SF



22



7



4



11






$
424,164Gates of Luberon


GA



SF



31







1



30






$
609,000Glenn Ivey(7)


GA



SF



65



5



5



55






$
235,523Highland Station


GA



SF



105



22



4



79






$
296,611Maristone


GA



SF



40



3







37






$
264,930Senators Ridge


GA



SF



60



16







44






$
244,618Traditions


GA



SF



4











4







n/aWyngate


GA



SF



28











28







n/aSub-Total/Weighted
    Average(4)










446



101



15



330






$
270,005Emerald Farm


MD



SF



84



77







7






$
457,625Sub-Total/Weighted
    Average(4)










84



77







7






$
457,625 9




---



##### 



As of December 31, 2006Lots


Averageunder


NewEstimated








Lots


Option


OrderProduct


Units at


Units





Owned


Agreement


RevenueProject

State


Type(2)


Completion


Settled


Backlog(3)


Unsold


Unsold


to DateAllyns Landing


NC



TH



116



39



17



60






$
230,423Brookefield Station


NC



SF



130











30



100



n/aCarpenter Pointe


NC



SF



5



5














$
142,280Haddon Hall


NC



Condo



90











90







n/aHolland Road


NC



SF



81







17



64






$
417,786Kelton at Preston


NC



TH



56



39



4



13






$
310,133North Farms


NC



SF



138



29



2



11



96


$
179,262Pine Hollow


NC



SF



10



3











7


$
168,908Providence-SF


NC



SF



148











34



114



n/aRiverbrooke


NC



SF



67



29



1



37






$
167,807Strathaven


NC



SF



6



6














$
382,402Wakefield Plantation


NC



TH



77



40



1



16



20


$
493,762Wheatleigh Preserve


NC



SF



28



12



3



13






$
281,630Sub-Total/Weighted
    Average(4)










952



202



45



368



337


$
291,151Barrington Park


VA



Condo



148







12



136






$
314,774Beacon Park at Belmont Bay 8&9


VA



Condo



600











112



488



n/aBlooms Mill Carriage


VA



TH



91



91














$
453,642Carter Lake


VA



Condo



258



258














$
155,040Commons at Bellemeade


VA



Condo



316



58



3



255






$
222,147Commons on Potomac Sq


VA



Condo



192



40



2



150






$
264,144Commons on Williams Sq


VA



Condo



180



104



2



74






$
352,060Penderbrook


VA



Condo



424



239



7



178






$
257,814River Club at Belmont Bay 5


VA



Condo



84



82







2






$
449,210The Eclipse on Center Park


VA



Condo



465



134



258



73






$
414,831Woodlands at Round Hill


VA



SF



46



24







22






$
757,118Sub-Total/Weighted
    Average(4)










2,804



1,030



284



1,002



488


$
325,772Total Active










4,286



1,410



344



1,707



825


$
322,717Status: Development(1)East Capitol


DC



Condo



130











130







n/aSub-Total/Weighted
    Average(4)










130











130







n/aCedars Road


GA



SF



109















109



n/aHighland Avenue


GA



SF



28











28







n/aJames Road


GA



SF



47











47







n/aKelly Mill Road


GA



SF



28















28



n/aPost Road


GA



SF



59











59







n/aPost Road II


GA



TH



54











54







n/aSettingdown Circle


GA



SF



172











162



10



n/aShiloh Road I


GA



SF



61











61







n/aTribble Lakes


GA



SF



200











200







n/aSub-Total/Weighted
    Average(4)










758











611



147



n/a 10




---



##### 



As of December 31, 2006Lots


Averageunder


NewEstimated








Lots


Option


OrderProduct


Units at


Units





Owned


Agreement


RevenueProject

State


Type(2)


Completion


Settled


Backlog(3)


Unsold


Unsold


to DateBlakeney Heath


NC



SF



80















80



n/aBoyce Road


NC



SF



33















33



n/aFairhills


NC



SF



18















18



n/aLakeshore Hills


NC



SF



34















34



n/aMassey Preserve


NC



SF



297











297







n/aProvidence-TH


NC



TH



80















80



n/aStowe Road


NC



SF



110















110



n/aSub-Total/Weighted
    Average(4)










652











297



355



n/aAldie Singles


VA



SF



15















15



n/aBlake Crossing


VA



TH



130











130







n/aBrandy Station


VA



SF



350















350



n/aLoudoun Station Condominiums


VA



Condo



484















484



n/aStation View


VA



TH



47











47







n/aSub-Total/Weighted
    Average(4)










1,026











177



849



n/aTotal Development










2,566











1,215



1,351



n/aTotal Active &
    Development










6,852



1,410



344



2,922



2,176


$
322,997Status: Joint VentureNorth Shore Condominiums(5)


NC



Condo



196







7



189






$
286,361North Shore Townhomes(5)


NC



TH



163



33



7



123






$
239,107Countryside(6)


VA



Condo



102



76



1







25


$
283,300Total Joint Venture










461



109



15



312



25


$
269,103   (1)
    
    Active communities are open for sales.
    Development communities are in the development
    process and have not yet opened for sales.(2)
    
    SF means single family home, TH means
    townhouse and Condo means condominium.(3)
    
    Backlog means we have an executed order with a
    buyer, inclusive of lot sales, but the settlement has not yet
    taken place.(4)
    
    Weighted Average means the weighted average new
    order sale price(5)
    
    Not consolidated(6)
    
    Consolidated, under Fin 46  Greater
    Washington, DC Area
  Northern
    Virginia Market
  Aldie Singles
  Barrington Park .
 11




---



##### 



Beacon Park at Belmont Bay
  Blakes Crossing
  Blooms Mill
  Brandy Station
  Commons at Bellemeade
  Commons on Potomac Square
  Commons on the Park
  Commons on William Square two-over-two
  Countryside
  The Eclipse on Center Park
  Loudoun Station Condominiums
 12




---



##### 



Penderbrook Square
  River Club at Belmont Bay 5
  Woodlands at Round Hill
  Maryland
  Emerald Farm
  North
    Carolina Market
  Raleigh,
    North Carolina
  Allyns Landing
  Holland Road
  Kelton at Preston
  North Shore
  Wakefield Plantation
 13




---



##### 



Brookfield
  Haddon Hall
  Massey Preserve
  North Farm
  Pine Hollow 18-hole
  Providence single family
  Providence townhomes
  Riverbrooke II
  Wheatleigh Preserve
  Charlotte,
    North Carolina Market
    Greater
    Atlanta Market
  Atlanta,
    Georgia
  Allen Creek
  Arcanum
  Brentwood Estates
 14




---



##### 



Falling Water
  Gates of Luberon
  Glen Ivey
  Highland Ave
  Highland Station
  James Road
  Maristone
  Post Road
  Post Road II
  Senators Ridge
  Settingdown Circle
  Shiloh Road
  Traditions at Braselton
  Tribble Lakes
  Wyngate
 15




---



##### 



South
    Carolina Market
  Myrtle
    Beach, South Carolina
    Warranty
    Competition
      
    Atlanta, Georgia.In the Atlanta, Georgia
    market we compete against approximately 10 to 15 publicly-traded
    national home builders, approximately 10 to 15 privately-owned
    regional home builders, and a large number of small, local home
    builders.
    Raleigh, North Carolina.In the Raleigh, North
    Carolina market we compete against approximately 10 to 15
    publicly-traded national home builders, approximately 10 to 15
    privately-owned regional home builders, and a large number of
    small, local home builders.
    Washington, D.C.In the greater Washington, D.C.
    metropolitan market we compete against approximately 15 to 20
    publicly-traded national home builders, approximately 10 to 15
    privately-owned regional home builders, and many local home
    builders, some of whom are very small and may build as few as
    five to 25 homes per year.      Regulation
   16




---



##### 



Technology
  www.comstockhomebuilding.com,
    Intellectual
    Property and Other Proprietary Rights
    Employees
   17




---



##### 



Executive
    Officers
    Name

Age


PositionChristopher Clemente*


47



Chairman and Chief Executive OfficerGregory V. Benson*


52



Regional President, SoutheastBruce J. Labovitz*


38



Chief Financial OfficerJason Parikh*


35



Chief Accounting OfficerJubal R. Thompson


37



General Counsel and Secretary     *
    Section 16 officers.  Executive
    Officers and Key Employees
  Christopher Clemente
  Gregory V. Benson
  Bruce J. Labovitz
  Jason Parikh On-Site
  Jubal R. Thompson
  Other
    Information
  1-800-SEC-0330. http://www.sec.gov.
  www.comstockhomebuilding.com, Form 10-K, Form 10-Q, Form 8-K
 18




---



##### 



CAUTIONARY
    NOTES REGARDING FORWARD-LOOKING STATEMENTS
      Item 7.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations
    Overview
     19




---



##### 



36-month
     20




---



##### 



Twelve Months Ended December 31,2006Washington Metro


NorthArea


Carolina


Georgia


TotalNew orders


503



169



122



794New order revenues

$
119,877


$
42,257


$
32,605


$
194,739Average new order price

$
238


$
250


$
267


$
245Settlements


675



132



107



914Settlement revenue

$
180,182


$
32,255


$
27,657


$
240,094Average settlement price

$
267


$
244


$
258


$
263Backlog units


285



45



15



345Backlog

$
123,081


$
13,245


$
4,948


$
141,274Average backlog price

$
432


$
294


$
330


$
409   2005Washington Metro


NorthArea


Carolina


Georgia


TotalNew orders


598



33







631New order revenues

$
218,684


$
11,575






$
230,259Average new order price

$
366


$
351






$
365Settlements


570



33







603Settlement revenue

$
204,933


$
11,330






$
216,263Average settlement price

$
360


$
343






$
359Backlog units


466



9







475Backlog

$
186,939


$
3,443






$
190,382Average backlog price

$
401


$
383






$
401   2004Washington Metro


NorthArea


Carolina


Georgia


TotalNew orders


608











608New order revenues

$
224,292










$
224,292Average new order price

$
369










$
369Settlements


263











263Settlement revenue

$
87,003










$
87,003Average settlement price

$
331










$
331Backlog units


329











329Backlog

$
174,600










$
174,600Average backlog price

$
531










$
531   Recent
    accounting pronouncements
  Fair Value Measurements
 21




---



##### 



Accounting for Uncertainty in Income Taxes  an
    Interpretation of FASB Statement No. 109, Accounting for
    Income Taxes
  Critical
    Accounting Policies and Estimates
    
  Consolidation
    of Variable Interest Entities
    (FIN 46-R), FIN 46-R FIN 46-R FIN 46-R FIN 46-R,
 22




---



##### 



Revenue
    Recognition
    Impairment
    of Real Estate Held for Development and Sale
    
    significant negative industry or economic trends;
    a significant underperformance relative to historical or
    projected future operating results;
    a significant change in the manner in which an asset is used; and
    an accumulation of costs significantly in excess of the amount
    originally expected to construct an asset.  property-by-property
  Warranty
    Reserve
   23




---



##### 



Environmental
    Liability Exposure
    Results
    of Operations
  Year
    ended December 31, 2006 compared to year ended
    December 31, 2005
  Orders,
    backlog and cancellations
       24




---



##### 



move-up
  Revenues
        Other
    Revenues
    Cost of
    Sales and Cost of sales other
   25




---



##### 



Impairments
    and write-offs
      Selling,
    general and administrative expenses
        Operating
    income
   26




---



##### 



Other
    (income) expense, net
    Income
    before minority interest
    Minority
    interest
    Income
    taxes
    Year
    ended December 31, 2005 compared to year ended
    December 31, 2004
  Orders
    and Backlog
       27




---



##### 



Revenues
    Other
    Revenue
    Cost of
    sales and selling, general and administrative
    expenses.
         28




---



##### 



Operating
    income
    Other
    (income) expense, net
    Income
    before minority interest
    Minority
    interest
    Income
    taxes
    Liquidity
    and Capital Resources
   29




---



##### 



Credit
    Facilities
      10-year
     30




---



##### 



Year ending December 31,2007

$
205,9222008


16,9862009


39,9812010


2,5142011 and thereafter


30,000Total

$
295,403     Cash
    Flow
   31




---



##### 



Recent
    Acquisitions
      Subsequent
    Events
          32




---



##### 



Payments due by periodLess than





3-5


More thanTotal


1 Year


1-3 Years


Years


5 Years(In thousands)Notes payable(1)

$
295,403


$
205,922


$
59,481


$



$
30,000Operating leases

$
3,423


$
1,231


$
2,187


$
5


$
Capital leases

$
237


$
86


$
151


$



$
Total

$
299,063


$
207,239


$
61,819


$
5


$
30,000     (1)
    Notes payable includes estimated interest payments based on
    interest rates in effect at December 31, 2006.          Seasonality
    and Weather
    Inflation
   33




---



##### 



PART III
  ITEM 10.
    Directors,
    Executive Officers and Corporate Governance  Executive
    Officers, Key Employees and Directors
    Name

Age

PositionChristopher Clemente*


46


Chairman and Chief Executive
    OfficerGregory V. Benson*


52


President, Chief Operating Officer
    and DirectorBruce J. Labovitz*


38


Chief Financial OfficerJason Parikh*


35


Chief Accounting OfficerDavid D. Howell


56


Vice President  Market
    DevelopmentJubal R. Thompson


37


General Counsel and SecretaryA. Clayton Perfall


52


DirectorDavid M. Guernsey


52


DirectorJames A. MacCuthcheon


44


DirectorRobert P. Pincus


52


DirectorSocrates Verses


58


DirectorNorman D. Chirite


51


Director      Christopher Clemente
  Gregory V. Benson
  Bruce J. Labovitz
  Jason Parikh On-Site
  David D. Howell
  Jubal R. Thompson
 34




---



##### 



A. Clayton Perfall
  David M. Guernsey
  James A. MacCutcheon
  Robert P. Pincus
  Socrates Verses e-services
  Norman D. Chirite
  SECTION 16(a)
    BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
   35




---



##### 



Code of
    Conduct
  www.comstockhomebuilding.com.
  Audit
    Committee
    ITEM 11.
    Executive
    Compensation  Compensation Discussion and Analysis
    Overview
  Compensation Philosophy.
  
    Attract, retain, motivate and reward highly qualified executive
    officers who preserve and create value for our
    stockholders; and
    Reinforce our performance oriented, results-based culture that
    rewards individual and corporate successes.      
    base salaries that are intended to be competitive relative to
    other publicly traded companies in our industry and peer group;
    annual cash bonuses under a performance-based cash bonus
    program; and
    long-term incentive compensation that is delivered principally
    through grants of shares of restricted stock, deferred stock and
    stock option awards.  Role of Compensation Committee and CEO.
 36




---



##### 



Role of Compensation Consultant. and/or
  Objectives
    of the Comstock Executive Compensation Programs
  pay-for-performance
    Elements
    of our Executive Compensation Program
  Base Salary.
 37




---



##### 



Benefits and Perquisites.
  Incentive Compensation.
  Annual Cash Incentive Plan.
        Long-Term Incentive Compensation.
   38




---



##### 



12-month
      Executive Severance Programs.
  change-in-control
 39




---



##### 



Impact of
    Regulatory Requirements
    
    Internal Revenue Code Section 162(m) of the Internal
    Revenue Code disallows a tax deduction to public companies for
    compensation not deemed to be performance-based over $1,000,000
    paid for any fiscal year to the CEO and other executive
    officers. We intend to attempt to qualify executive compensation
    for deductibility under applicable tax laws to the fullest
    extent practicable. We believe that our bonus programs qualify
    for the performance-based exception. We also believe that we
    will not lose any compensation-related tax deductions for
    compensation decisions made in 2006 but may experience gains or
    losses on the tax we have recorded based on the variance between
    the price of our stock on the date of issuance of a restricted
    stock award and the actual price of our stock on the date of
    vesting of the stock award. The Compensation Committee will not,
    however, necessarily seek to limit executive compensation to the
    amount deductible under Section 162(m).
    We believe that employees will not be subject to any tax
    penalties under Internal Revenue Code Section 409A as a
    result of participating in any of our compensation programs or
    agreements.
    We adopted SFAS No. 123R for the 2006 fiscal year. In
    determining restricted stock and stock option awards for 2006,
    the Committee generally considered the potential expense of
    those programs under SFAS No. 123R and the impact on
    earnings per share. The Committee concluded that the award
    levels were in the best interests of stockholders given
    competitive compensation practices in the homebuilding industry
    and among our peer companies, the awards potential
    expense, the Companys performance, and the impact of the
    awards on employee motivation and retention.  Conclusions
  pay-for-performance.
  Compensation
    Committee Report
  Regulation S-K Form 10-K.
  
  
 40




---



##### 



Summary Compensation Table(1), (4)Non-equityStock


Option


Incentive Plan


TotalName and Principal Position

Year


Salary


Bonus


Awards(2)


Awards(2)


Compensation(3)


Compensation$


$


$


$


$


$Christopher Clemente


2006



637,500



76,100



400,894



144,209



665,000



1,923,703Chairman of the Board and Chief
    Executive Officer (PEO) (5)Bruce J. Labovitz


2006



358,333







603,760



330,978



285,000



1,578,071Chief Financial Officer (PFO)Gregory V. Benson


2006



550,000







300,314



48,071



475,000



1,373,385Regional PresidentJason Parikh


2006



186,667







83,515



24,033



106,875



401,090Chief Accounting OfficerJubal Thompson


2006



197,917







90,127



24,033



106,875



418,952General Counsel and Secretary     (1)
    
    No named executive officer was a participant in a defined
    benefit or deferred compensation plan.(2)
    
    Actual GAAP expenses incurred during 2006 with respect of awards
    issued under the 2004 Equity Incentive Plan. A discussion of the
    assumptions used in calculating these values may be found in our
    annual report at Note 14 to our 2006 audited financial
    statements.(3)
    
    These amounts were accrued at December 31, 2006 as
    incentive plan compensation awards payable in 2007 for 2006
    performance. However, prior to their payment, the named officers
    agreed to receive all or a portion of the awards in shares of
    restricted or deferred stock.(4)
    
    On December 27, 2006, William Bensten, who was previously a
    named executive officer of the Company, resigned as a Senior
    Vice President. In connection with his resignation he purchased
    30 unsold condominium units in one of the Companys
    condominium projects for a purchase price of $4.2 million
    and he forfeited $1.3 million of previously expensed but
    yet unvested restricted stock awards. As a result,
    $1.3 million of the difference between the purchase price
    and the carrying value of the units has been recorded as
    compensation expense and is included in selling, general and
    administrative expense in the Companys audited 2006
    financial statements. This expense was offset by the reversal of
    the $1.3 million expense of forfeited stock awards.(5)
    
    Bonus payment relates to the reclassification, for tax purposes,
    of certain business related travel expenses paid to Mr. Clemente
    during the first half of 2006. 41




---



##### 



Grants of Plan Based Awards During 2006All OtherEstimated


StockPossible Payouts


Awards:Under Non-Equity


Number of


Grant DateCompensation


Incentive Plan Awards(1)


Shares of


Fair ValueGrant


Committee


Threshold


Target


Maximum


Stock or


of EquityName

Date


Action Date


$


$


$


Units


AwardsChristopher Clemente(2)


03/31/06



2/24/2006







825,000



1,100,000



77,078


$
848,636Gregory V. Benson


03/31/06



2/24/2006







825,000



1,100,000



54,705



602,298Bruce J. Labovitz(3)


03/31/06



2/24/2006







300,000



400,000



30,297



333,56706/15/06



4/14/2006















84,805



1,289,20506/15/06



4/14/2006















165,195



1,403,295Jason Parikh


03/31/06



2/24/2006







112,500



150,000



9,300



102,39108/28/06



06/01/06















60,000



292,800Jubal Thompson


03/31/06



2/24/2006







112,500



150,000



7,385



81,31008/29/06



06/01/06















14,184



71,48712/29/06



06/01/06















5,657



32,019     (1)
    
    These columns show the range of payouts targeted for 2006
    performance under the Comstock Net Income and Performance Bonus
    plans as described in the Compensation Discussion and Analysis.
    The 2007 bonus payment for 2006 performance has been made based
    on the metrics described and is shown in the Summary
    Compensation Table in the column titled Non-equity
    Incentive Plan Compensation.(2)
    
    Stock awards for Mr. Clemente include 492 shares of
    restricted stock granted to Tracy Schar, his wife, who serves as
    the Companys VP, Corporate Marketing. Excluded from the
    grants for Mr. Clemente are 21,882 shares of
    restricted stock granted to Mr. Clemente in March 2006 in
    lieu of cash related to a portion of his 2005 bonus.(3)
    
    The 165,195 shares of restricted stock granted to
    Mr. Labovitz in June 2006 are contingent on approval of an
    amendment to our equity incentive plan that would increase the
    per-person award limit to be considered by our stockholders in
    connection with our 2007 annual meeting.  Outstanding Equity Awards at December 31, 2006(1)Option Awards


Stock AwardsMarketNumber of


Number of








Number of


ValueSecurities


Securities








Shares or


of SharesUnderlying


Underlying








Units of


or Units ofUnexercised


Unexercised


Option





Stock That


Stock ThatOptions


Options


Exercise


Option


Have Not


Have Not(#)(2)


(#)(2)


Price


Expiration


Vested


VestedName

Exercisable


Unexercisable


($)


Date


(#)


($)(4)Christopher Clemente(3)


10,274



30,822



23.90



07/06/15



78,020


$
448,615Gregory V. Benson


3,425



10,274



23.90



07/06/15



54,705


$
314,554Bruce J. Labovitz(5)


7,877



23,630



23.90



07/06/15



289,672


$
1,665,612107,144



16.00



12/14/14Jason Parikh


1,712



5,137



23.90



07/06/15



69,300


$
398,475Jubal Thompson


1,712



5,137



23.90



7/6/2015



27,226


$
156,550     (1)
    
    No executive officer had any unearned equity awards outstanding
    as of December 31, 2006.(2)
    
    The vesting date of each option is listed in the table below by
    expiration date:  Expiration Date


Vesting Date12/14/2014


06/30/200712/14/2014



12/31/200712/14/2014



06/30/200812/14/2014



12/31/200807/06/2015



06/30/200707/06/2015



12/31/200707/06/2015



06/30/2008   (3)
    
    Includes 1,437 shares of restricted stock issued to Tracy Schar,
    Mr. Clementes wife. 42




---



##### 



(4)
    
    Based on closing price of $5.75 per share of our Class A
    common stock on December 31, 2006.(5)
    
    Includes 165,165 shares of restricted stock granted to
    Mr. Labovitz in June 2006 which are contingent on an
    amendment to our equity incentive plan in connection with our
    2007 annual meeting.  Stock Vested in 2006Stock AwardsNumber of


Value(1)Shares


RealizedAcquired on


onVesting


VestingName

(#)


($)Christopher Clemente(2)


9,689


$
52,587Gregory V. Benson


6,250


$
35,938Bruce J. Labovitz


15,625


$
89,844Jason Parikh


3,125


$
17,969Jubal Thompson


6,250


$
29,688     (1)
    
    Amounts reflect the market value of the stock at the closing of
    the market on the trading day immediately preceding the date on
    which the stock vested.(2)
    
    Includes 3,439 shares to Tracy Schar, his wife, with a
    value of $16,469.  EMPLOYMENT
    ARRANGEMENTS WITH EXECUTIVE OFFICERS
       43




---



##### 



POTENTIAL
    PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
        Change of Control


Change in ResponsibilitiesAcceleration of





Acceleration ofCash


Stock Awards


Cash


Stock AwardsChristopher Clemente

$
4,066,000


$
443,201


$
4,066,000


$
Bruce Labovitz

$
948,000


$
1,665,612


$
948,000


$
Gregory Benson

$
2,731,000


$
314,554


$
2,731,000


$
Jason Parikh

$



$
398,475


$



$
Jubal Thompson

$
606,000


$
156,550


$
606,000


$
   Directors
    Compensation
   44




---



##### 



Fees Earnedor Paid in


StockCash in 2006


Awards


TotalName

($)(1)


($)(2)


($)Norman Chirite


80,999



11,727



92,726Socrates Verses


36,978



24,003



60,981Clayton Perfall


69,973



46,447



116,420David Guernsey


32,588



23,581



56,169James MacCutcheon


35,426



24,414



59,840Robert Pincus


35,426



23,993



59,419     (1)
    
    Includes annual retainer fees, advisory fees, committee
    participation fees and meeting attendance stipends paid in cash
    or earned in 2006.(2)
    
    No stock options were granted in 2006. Prior to 2006, directors
    have received no stock option awards. The aggregate number of
    stock awards outstanding at
    12/31/06 and
    their fair value at grant date are shown below:  Grant DateStock Awards





Fair ValueOutstanding





of Equityat
    12/31/06


Grant Price


AwardsGrant Date


(#)


($)


($)Norman Chirite


7/24/2006



3,992



5.71



22,794Socrates Verses


7/24/2006



3,992



5.71



22,794Clayton Perfall


7/21/2006



280



5.59



1,5657/24/2006



7,738



5.71



44,184David Guernsey


7/24/2006



3,992



5.71



22,794James MacCutcheon


7/24/2006



4,132



5.71



23,594Robert Pincus


7/24/2006



4,132



5.71



23,594   COMPENSATION
    COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
    ITEM 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  EQUITY
    COMPENSATION PLAN INFORMATION
    Number of Securities


Weighted Averageto be Issued Upon


Exercise Price of


Number ofExercise of Outstanding


Outstanding


SecuritiesOptions, Warrants


Options, Warrants


Remaining AvailablePlan Category

and Rights


and Rights


for Future IssuanceEquity compensation plans approved
    by security holders


207,144


$
19.81



927,005  45




---



##### 



SECURITY
    OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND
    OFFICERS
      Beneficial Ownership ofClass A


Class B


Class A and Class BCommon Stock(1)


Common Stock


Common Stock CombinedPercent of





Percent of


Economic


VotingName of Beneficial Owner

Number


Class


Number


Class


(%)


(%)(1)Executive Officers and
    DirectorsChristopher Clemente(2)


1,483,715



10.8
%


1,366,750



50.0
%


17.3
%


40.1
%Gregory V. Benson(3)


1,142,247



8.3
%


1,366,750



50.0
%


15.2
%


39.5
%Bruce J. Labovitz(4)


157,817



1.1
%






*



1.0
%


*Jason Parikh(5)


99,444



*







*



*



*A. Clayton Perfall


11,774



*







*



*



*David M. Guernsey


12,956



*







*



*



*James A. MacCuthcheon


16,266



*







*



*



*Robert P. Pincus


5,312



*







*



*



*Socrates Verses(7)


7,214



*







*



*



*Norman D. Chirite


15,542



*







*



*



*All directors and officers as a
    group (11 persons)


2,952,291



21.4
%


2,733,500



100
%


34.4
%


80.2
%Other 5% StockholdersHayground Cove Asset Management(7)


867,300



6.3
%






*



5.3
%


1.6
%Springhouse Asset Management,
    LLC(7)


1,338,762



9.7
%






*



8.1
%


2.4
%Bonanza Capital, Ltd.(7)


1,075,000



7.8
%






*



6.5
%


2.0
%Boston Partners Asset Management,
    L.L.C.(7)


701,030



5.1
%






*



4.3
%


1.3
%Hotchkis and Wiley Capital
    Management, LLC(7)


746,400



5.4
%






*



4.5
%


1.4
%Royce & Associates, LLC(7)


904,630



6.6
%






*



5.5
%


1.7
%     *
    
    Less than 1% of the outstanding shares of common stock(1)
    
    Does not include shares of Class A common stock issuable
    upon conversion of Class B common stock. Percentage total
    voting power represents voting power with respect to all shares
    of our Class A and Class B common stock, as a single
    class. Each holder of Class B common stock shall be
    entitled to fifteen votes per share of Class B common stock
    and each holder of Class A common stock shall be entitled
    to one vote per share of Class A common stock on all
    matters submitted to our stockholders for a vote. The
    Class A common stock and the Class B common stock vote
    together as a single class on all matters submitted to a vote of
    our stockholders, except as may otherwise be provided in our
    certificate of incorporation or as required by law. The 46




---



##### 



Class B common stock is convertible at any time by the
    holder into shares of Class A common stock on a
    share-for-share
    basis.(2)
    
    Includes 10,274 shares issuable upon the exercise of
    options that are exercisable within 60 days of
    April 16, 2007. 96,243 shares of Class A common
    stock are held by Mr. Clementes wife, Tracy Schar.
    69,333 shares of Class A common stock and
    1,366,750 shares of Class B common stock are held by
    FR54, LLC, an entity that is owned by Mr. Clemente and his
    wife. 5,000 shares are held in various trusts for the
    benefit Mr. Clementes children. Mr. Clemente is
    the custodian for each trust.(3)
    
    Includes 3,425 shares issuable upon the exercise of options
    that are exercisable within 60 days of April 16, 2007.
    350,083 shares of Class A common stock and
    1,366,750 shares of Class B common stock are held by
    Clareth LLC, an entity that is wholly owned by Mr. Benson.(4)
    
    Includes 7,877 shares issuable upon the exercise of options
    that are exercisable within 60 days of April 16, 2007.
    1,722 shares are held in various trusts for the benefit of
    Mr. Labovitzs children. Mr. Labovitz is the
    custodian for each trust.(5)
    
    Includes 1,712 shares issuable upon the exercise of options
    that are exercisable within 60 days of April 17, 2007.(6)
    
    Includes 2,000 shares of Class A common stock, with
    respect to which Mr. Verses disclaims beneficial ownership.
    The shares are held in trust for the benefit of
    Mr. Verses children. Mr. Verses wife is
    the custodian of these trusts(7)
    
    This information is based on Schedule 13G, as amended,
    filed with the Securities and Exchange Commission by the
    stockholder.  ITEM 13.
    Certain
    Relationships and Related Party Transactions, and Director
    Independence  CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS
      18-month
   47




---



##### 



mother-in-law,
            not-for-profit
 48




---



##### 



Procedures
    for Approval of Related Person Transactions
  change-in-control
  Director
    Independence
    ITEM 14.
    Principal
    Accountant Fees and Services    2006


2005Audit-Related Fees(1)

$
1,105,000


$
948,800Tax Fees(2)

$
110,000


$
145,979Other Fees-Compensation and Peer
    Comparison Study(3)

$
66,051


$
5,560     (1)
    
    Includes fees related to the annual independent audit of the
    Companys financial statements and various fees related to
    services provided in connection with the Companys filing
    of Registration Statements with the Securities and Exchange
    Commission and related comfort letters.(2)
    
    Tax Fees represent amounts billed for tax compliance and
    advisory services.(3)
    
    Represents fees related to advisory services rendered in
    connection with the Companys study of compensation
    practices of peer companies.  12-month
 49




---



##### 



50




---



##### 



INDEX TO
    FINANCIAL STATEMENTS  PageCOMSTOCK
    HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIESReport of
    Independent Registered Public Accounting Firm


F-2Consolidated
    Balance Sheets at December 31, 2006 and 2005


F-4Consolidated
    Statements of Operations for the Years Ended December 31,
    2006, 2005 and 2004


F-5Consolidated
    Statements of Changes in Shareholders Equity for the Years
    Ended December 31, 2006, 2005 and 2004


F-6Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2006, 2005 and 2004


F-7Notes to
    Consolidated Financial Statements


F-8  F-1




---



##### 



Report of
    Independent Registered Public Accounting Firm  Report of
    Independent Registered Public Accounting Firm
      Consolidated
    financial statements
    Internal
    control over financial reporting
  Internal Control  Integrated Framework Internal Control 
    Integrated Framework
   F-2




---



##### 



F-3




---



##### 



COMSTOCK
    HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (Amounts in thousands, except per share data) December 31,


December 31,2006


2005ASSETSCash and cash equivalents

$
21,263


$
42,167Restricted cash


12,326



10,800Receivables


4,555



6,365Note receivables






1,250Due from related parties


4,053



2,899Real estate held for development
    and sale


405,144



263,802Inventory not owned 
    variable interest entities


43,234



89,890Property, plant and equipment, net


2,723



605Investment in real estate
    partnership


(171
)


(35
)Deferred income tax


10,188



2,545Other assets


14,114



11,031TOTAL ASSETS

$
517,429


$
431,319LIABILITIES AND
    SHAREHOLDERS EQUITYAccounts payable and accrued
    liabilities


55,680



59,131Due to related parties


1,140



40Obligations related to inventory
    not owned


40,950



83,015Notes payable


265,403



142,994Junior subordinated debt


30,000



Notes payable  related
    parties






663TOTAL LIABILITIES


393,173



285,843Commitments and contingencies
    (Note 15)Minority interest


371



400SHAREHOLDERS
    EQUITYClass A common stock,
    $0.01 par value, 77,266,500 shares authorized, 14,129,081
    and 11,532,442 issued and outstanding, respectively


141



115Class B common stock,
    $0.01 par value, 2,733,500 shares authorized, 2,733,500
    issued and outstanding


27



27Additional paid-in capital


147,528



126,461Treasury stock, at cost (391,400
    Class A common stock)


(2,439
)


(Accumulated deficit) retained
    earnings


(21,372
)


18,473TOTAL SHAREHOLDERS EQUITY


123,885



145,076TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
517,429


$
431,319    F-4




---



##### 



COMSTOCK
    HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Amounts in thousands, except per share data) Twelve Months Ended December 31,2006


2005


2004RevenuesSale of real estate 
    Homes

$
240,093


$
216,265


$
87,003Other revenue


5,788



8,040



9,042Total revenue


245,881



224,305



96,045ExpensesCost of sales of real estate


211,408



152,886



57,339Cost of sales of other


5,249



3,604



6,654Impairments and write-offs


57,426



1,216



Selling, general and administrative


37,500



24,190



11,940Operating (loss) income


(65,702
)


42,409



20,112Other (income) expense, net


(1,487
)


(1,450
)


908(Loss) income before minority
    interest and equity in (loss) earnings of real estate partnership


(64,215
)


43,859



19,204Minority interest


15



30



5,260(Loss) income before equity in
    (loss) earnings of real estate partnership


(64,230
)


43,829



13,944Equity in (loss) earnings of real
    estate partnership


(135
)


99



118Total pre tax (loss) income


(64,365
)


43,928



14,062Income taxes (benefit) provision


(24,520
)


16,366



(241
)Net (loss) income

$
(39,845
)

$
27,562


$
14,303Basic (loss) earnings per share

$
(2.63
)

$
2.14


$
1.95Basic weighted average shares
    outstanding


15,148



12,870



7,347Diluted (loss) earnings per share

$
(2.63
)

$
2.12


$
1.95Diluted weighted average shares
    outstanding


15,148



13,022



7,351    F-5




---



##### 



COMSTOCK
    HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CHANGES IN
    SHAREHOLDERS EQUITY
    (Amounts in thousands, except per share data) Additional





RetainedThe Comstock Companies


Class A


Class B


paid-in


Treasury


earningsShares


Amount


Shares


Amount


Shares


Amount


capital


stock


(deficit)


TotalBalance at December 31,
    2003


3,558


$
3






$







$



$
1,493


$



$
5,529


$
7,025Distributions


































(5,668
)


(5,668
)Issuance of common stock in
    Homebuilding on June 7, 2004






































Recapitalization by virtue of merger


(3,558
)


(3
)


4,333



43



2,733



27



4











71Acquisition of Comstock Service on
    December 17, 2004


























4,756











4,756Issuance of common stock of
    Homebuilding on December 17, 2004 (less transaction costs)










3,960



40











56,012











56,052Issuance of common
    stock  overallotment










594



6











8,833











8,839Distribution following IPO


































(23,253
)


(23,253
)Issuance of restricted common stock










275



3











(3
)










Stock compensation and issuances


























101











101Net income


































14,303



14,303Balance at December 31,
    2004










9,162



92



2,733



27



71,196







(9,089
)


62,226Stock compensation and issuances










3



0











2,346











2,346Issuance of common stock under
    employee stock purchase plans










8



0











133











133Issuances of common stock in follow
    on offering on June 22, 2005 (less transaction costs)










2,360



23











52,786











52,809Net income


































27,562



27,562Balance at December 31,
    2005










11,533



115



2,733



27



126,461







18,473



145,076Stock compensation and issuances










457



5











2,386











2,391Issuance of common stock under
    employee stock purchase plans










18















142











142Treasury stock purchases






























(2,439
)






(2,439
)Share issuance  private
    placement of equity (less transaction costs)










2,121



21











18,539











18,560Net loss


































(39,845
)


(39,845
)Balance at December 31,
    2006





$




14,129


$
141



2,733


$
27


$
147,528


$
(2,439
)

$
(21,372
)

$
123,885    F-6




---



##### 



COMSTOCK
    HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Amounts in thousands, except per share data) Twelve Months Ended December 31,2006


2005


2004Cash flows from operating
    activities:Net (loss) income

$
(39,845
)

$
27,562


$
14,303Adjustment to reconcile net (loss)
    income to net cash (used in) provided by operating activitiesAmortization and depreciation


1,080



172



106Write-down of land, deposits and
    pre-acquisition costs


57,426







Loss on disposal of assets


24



9



1Minority interest


15



30



5,260Equity in (loss) earnings of real
    estate partnership


136



(99
)


(118
)Distributions from investment in
    real estate partnership






163



Amortization of stock compensation


2,390



2,346



101Deferred income tax


(21,816
)


(1,724
)


(531
)Changes in operating assets and
    liabilities:Restricted cash


(1,526
)


(3,300
)


(7,500
)Receivables


3,593



(7,376
)


2,107Due from related parties


(1,154
)


(1,452
)


1,693Real estate held for development
    and sale


(71,444
)


(159,476
)


(23,081
)Other assets


1,338



(11,141
)


(5,428
)Accounts payable and accrued
    liabilities


(14,247
)


23,599



24,025Income tax payable






(290
)


290Due to related parties


(2,333
)


(108
)


(82
)Net cash (used in) provided by
    operating activities


(86,363
)


(131,085
)


11,146Cash flows from investing
    activities:Purchase of property, plant and
    equipment


(2,392
)


(298
)


(372
)Distributions of capital from
    investment in real estate partnership






1,000



120Business acquisitions, net of cash
    acquired


(15,490
)






1,215Net cash (used in) provided by
    investing activities


(17,882
)


702



963Cash flows from financing
    activities:Proceeds from notes payable


216,551



212,408



81,747Proceeds from junior subordinated
    debt


30,000







Proceeds from related party notes
    payable


4,200



444



4,646Payments on notes payable


(182,199
)


(135,098
)


(78,716
)Payments on related party notes
    payable


(1,430
)


(10,725
)


(6,000
)Contribution from minority
    shareholders






87



Payment of distribution payable






(12,655
)


Distributions paid to minority
    shareholders


(44
)


(2,412
)


(14,181
)Distributions paid to shareholders










(14,168
)Proceeds from shares issued under
    employee stock purchase plan


141



133



Purchase of treasury stock


(2,438
)






Net proceeds from equity offerings


18,561



52,809



64,962Net cash provided by financing
    activities


83,342



104,991



38,290Net (decrease) increase in cash and
    cash equivalents


(20,904
)


(25,392
)


50,399Cash and cash equivalents,
    beginning of period


42,167



67,559



17,160Cash and cash equivalents, end of
    period

$
21,263


$
42,167


$
67,559Supplemental cash flow information:Interest paid (net of interest
    capitalized)

$



$



$
Income taxes paid

$
45


$
22,274



Supplemental disclosure for
    non-cash activity:Interest incurred but not paid in
    cash

$
13,689


$
8,036


$
2,760    F-7




---



##### 



COMSTOCK
    HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
    NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
    (Amounts in thousands, except per share data) 1.
    ORGANIZATION            2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES    Basis
    of presentation
  85-5, Issues Related to Accounting for Business
    Combinations. Business Combinations
 F-8




---



##### 



Principles
    of consolidation
  No. 46-R: Consolidation of Variable Interest Entities, an
    interpretation of ARB No. 51 (FIN 46-R).
  Reclassification
    Cash
    and cash equivalents and restricted cash
      Receivables
    Real
    estate held for development and sale
        F-9




---



##### 



property-by-property
  Capitalized
    interest and real estate taxes
      Years Ended December 31,2006


2005


2004Total interest incurred

$
27,758


$
12,272


$
4,686Beginning interest capitalized

$
11,590


$
4,524


$
1,428Plus: Interest incurred on notes
    payable and junior subordinated debt


27,718



11,752



2,847Plus: Interest incurred on related
    party notes payable


40



310



1,461Less: Interest expensed as a
    component of cost of sales


(12,094
)


(4,996
)


(1,212
)Ending interest capitalized

$
27,254


$
11,590


$
4,524   Property,
    plant and equipment
    Furniture and fixtures






7 yearsOffice equipment






5 yearsComputer equipment and capitalized
    software






3 yearsLeasehold improvements






Life of related lease     Investment
    in real estate partnerships
  FIN 46-R,
  Warranty
    reserve
   F-10




---



##### 



Years Ended December 31,2006


2005


2004Balance at beginning of period

$
1,206


$
916


$
541Additions(a)


1,524



888



823Releases
    and/or
    charges incurred


(1,061
)


(598
)


(448
)Balance at end of period

$
1,669


$
1,206


$
916     (a)
    
    As discussed in Note 4, 2006 includes additions of $360,
    assumed in connection with the acquisition of Parker Chandler
    Homes. Inc. and Capitol Homes Inc.  Revenue
    recognition
      Advertising
    costs
    Stock
    compensation
  Share-Based Payment Accounting for Stock Issued to Employees
  Income
    taxes
  Accounting for Income
    Taxes
 F-11




---



##### 



Earnings
    per share
    Year Ended December 31,Basic earnings per share

2006


2005


2004Net (loss) income

$
(39,845
)

$
27,562


$
14,303Basic weighted-average shares
    outstanding


15,148



12,870



7,347Per share amounts

$
(2.63
)

$
2.14


$
1.95Dilutive Earnings Per ShareNet (loss) income

$
(39,845
)

$
27,562


$
14,303Basic weighted-average shares
    outstanding


15,148



12,870



7,347Stock options and restricted stock
    grants






152



4Dilutive weighted-average shares
    outstanding


15,148



13,022



7,351Per share amounts

$
(2.63
)

$
2.12


$
1.95     Comprehensive
    income
    Segment
    reporting
  Disclosures about Segments of an Enterprise and Related
    Information As such,
 F-12




---



##### 



Year ended December 31,2006


2005


2004Revenues:Washington DC Metropolitan Area

$
181,058


$
212,973


$
96,045North and South Carolina(a)


32,297



11,332



Georgia(b)


32,526







Total

$
245,881


$
224,305


$
96,045Operating (loss) incomeWashington DC Metropolitan Area


(10,729
)


57,738



22,940North and South Carolina


(7,811
)


(1,022
)


Georgia


(29,121
)






Segment operating (loss) income


(47,661
)


56,716



22,940Corporate expenses unallocated


(18,041
)


(14,307
)


(2,828
)Total operating (loss) income


(65,702
)


42,409



20,112Other income (loss)


1,487



1,450



(908
)Equity in (losses) earnings of
    real estate partnership


(135
)


99



118Minority interest expense


(15
)


(30
)


(5,260
)(Loss) income before income taxes

$
(64,365
)

$
43,928


$
14,062     (a)
    
    As discussed in Note 1, the Company entered the North and
    South Carolina market on December 14, 2004 as a result of
    the merger with Comstock Service. Due to their immateriality,
    the results of the North and South Carolina region, for the
    period December 14, 2004 to December 31, 2004 have
    been included in the Washington DC Metropolitan Area. In
    May of 2006, the Company acquired Capital Homes Inc. and
    expanded its presence in the North and South Carolina region.(b)
    
    In January of 2006, the Company entered the Georgia region, by
    acquiring Parker Chandler Homes Inc.    Total Assets

2006


2005Washington DC Metropolitan Area

$
317,349


$
350,970North and South Carolina


61,617



19,930Georgia


94,133



Corporate


44,330



60,419Total Assets

$
517,429


$
431,319   Use of
    estimates
   F-13




---



##### 



Recent
    accounting pronouncements
  Fair Value Measurements
  Accounting for Uncertainty in Income Taxes  an
    Interpretation of FASB Statement No. 109, Accounting for
    Income Taxes
  3.
    CONSOLIDATION
    OF VARIABLE INTEREST ENTITIES    FIN 46-R. FIN 46-R. FIN 46-R.
   F-14




---



##### 



4.
    ACQUISITIONS        5.
    REAL
    ESTATE HELD FOR DEVELOPMENT AND SALE      Washington DC Metropolitan Area

$
19,900North and South Carolina

$
4,800Georgia

$
15,200  F-15




---



##### 



December 31,2006


2005Land and land development costs

$
232,693


$
119,530Cost of construction (including
    capitalized interest and real estate taxes)


172,451



144,272Total

$
405,144


$
263,802   6.
    PROPERTY,
    PLANT AND EQUIPMENT, NET    December 31,2006


2005Computer equipment and capitalized
    software

$
2,228


$
540Furniture and fixtures


371



296Office equipment


282



243Leasehold improvements


640



3,521



1,079Less: accumulated depreciation


(798
)


(474
)$
2,723


$
605     Position 98-1
  7.
    INVESTMENT
    IN REAL ESTATE PARTNERSHIP       F-16




---



##### 



2006


2005Investment in real estate
    partnership

$
(171
)

$
(35
)Development and construction loan
    receivable

$
3,477


$
2,835       December 31,2006


2005Real estate held for development
    and sale

$
13,081


$
11,263Other assets


22



75Total assets

$
13,103


$
11,338Mortgage notes payable

$
14,353


$
10,921Notes payable to related parties


350



1,547Other liabilities


64



143Total liabilities


14,767



12,611Partners deficit


(1,664
)


(1,273
)Total liabilities and
    partners deficit

$
13,103


$
11,338   Condensed
    Combined Statements of Operations
  Years Ended December 31,2006


2005


2004Revenues

$



$
3,920


$
22,157Operating (loss) income

$
(241
)


111



4,573Other expense


141



7



99Net (loss) income

$
(382
)

$
104


$
4,474Companys share of net (loss)
    income

$
(135
)

$
99


$
118  F-17




---



##### 



8.
    OTHER
    ASSETS    December 31,2006


2005Contract land deposits

$
2,528


$
2,825Restricted escrow deposits


2,231



1,915Prepaid income taxes(1)


4,460



4,708Miscellaneous prepaid and other


4,895



1,583$
14,114


$
11,031     (1)
    
    Prepaid income taxes includes approximately $2,705 in expected
    tax benefits as a result of a taxable loss incurred for the
    twelve months ended December 31, 2006. The company expects
    to carry back this benefit and apply it against 2005 taxable
    income.  9.
    ACCOUNTS
    PAYABLE AND ACCRUED LIABILITIES    December 31,2006


2005Trade payables

$
32,990


$
35,163Warranty


1,672



1,206Customer deposits


14,932



17,817Other


6,086



4,945$
55,680


$
59,131   10.  NOTES PAYABLE,
    JUNIOR SUBORDINATED DEBT AND COVENANTS
    December 31,Debt

Due

2006


2005Secured acquisition, development
    and construction notes(a)

Various

$
218,461


$
138,097Secured revolving credit line(b)

May 2009


39,981



2,046Junior subordinated note(c)

June 2036


30,000



Unsecured term loans(d)

Various


6,764



Subordinate secured notes(e)

Various


197



2,851Sub-total




295,403



142,994Other notes payable 
    related party








663Total



$
295,403


$
143,657   (a)  Secured
    acquisition, development and construction notes
   F-18




---



##### 



(b)  Secured
    revolving credit lines
    (c)  Junior
    subordinated note
    (d)  Unsecured
    term loans
    (e)  Subordinated
    secured notes
   F-19




---



##### 



Year ending December 31,2007

$
205,9222008


16,9862009


39,9812010


2,5142011 and thereafter


30,000Total

$
295,403     11.  COMMON
    STOCK
          00-19
   F-20




---



##### 



12.  RELATED
    PARTY TRANSACTIONS
      father-in-law,
    mother-in-law
         F-21




---



##### 



not-for-profit
    13.  EMPLOYEE
    BENEFIT PLANS
   F-22




---



##### 



14.  RESTRICTED
    STOCK, STOCK OPTIONS AND OTHER STOCK PLANS
          2006


2005Stock options


207,144



213,993Restricted stock grants


617,827



273,891Total outstanding equity awards


824,971



487,884     Shares available for issuance
    at December 31, 2005


1,050Additions to plan


338Restricted stock
    grants  Issued


(819
)Shares issued under employee stock
    purchase plan


(18
)Restricted stock grants and
    options  Forfeited


376Shares available for issuance
    at December 31, 2006


927     2006


2005Weighted average fair value of
    options granted


N/A


$
7.61Dividend yields


N/A



N/AExpected volatility


N/A



41-48
%Weighted average expected
    volatility


N/A



45
%Risk free interest rates


N/A



3.56- 3.63
%Weighted average expected lives
    (in years)


N/A



2.5  F-23




---



##### 



Weighted


WeightedAverage


AverageShares


Exercise Price


Intrinsic ValueOutstanding at December 31,
    2004


107,144


$
16.00Granted


106,849



23.90Exercised






Forfeited or expired






Outstanding at December 31,
    2005


213,993



19.94Granted






Exercised






Forfeited or expired


(6,849
)


23.00Outstanding at December 31,
    2006


207,144


$
19.81Exercisable at December 31,
    2006


25,000


$
23.00


$
     Weighted Average FairShares


Value at Date of GrantRestricted shares outstanding at
    December 14, 2004






Granted


275,317


$
16.00Restricted shares outstanding at
    December 31, 2005


275,317



16.00Granted


16,188



24.55Vested


(4,068
)


18.12Forfeited


(13,545
)


16.28Restricted shares outstanding at
    December 31, 2005


273,892



16.46Granted


597,940



9.71Vested


(129,800
)


(15.05
)Forfeited


(155,347
)


15.62Restricted shares outstanding at
    December 31, 2006


586,685


$
9.83         15.  COMMITMENTS
    AND CONTINGENCIES
  Litigation
   F-24




---



##### 



Letters
    of credit and performance bonds
    Operating
    leases
    Year Ended:

Amount2007

$
1,2312008


1,1202009


9032010


1642011


5Thereafter


Total

$
3,423    F-25




---



##### 



16.  FAIR
    VALUE OF FINANCIAL INSTRUMENTS
    December 31,2006


2005Carrying amount

$
60,097


$
31,609Fair value

$
61,924


$
36,233     17.  INCOME
    TAXES
        2006


2005Current:Federal

$
(2,281
)

$
15,160State


(424
)


2,885(2,705
)


18,045Deferred:Federal


(18,833
)


(1,417
)State


(3,552
)


(262
)(22,385
)


(1,679
)OtherTax shortfall related to the
    vesting of equity awards


570



Total income tax (benefit) expense

$
(24,520
)

$
16,366  F-26




---



##### 



2006


2005Deferred tax assets:Inventory

$
9,642


$
2,246Warranty


612



417Investment in affiliates


25



27Accrued expenses


1,213



64Stock based compensation


762



79012,254



3,544Less  valuation
    allowance


(470
)


(840
)Net deferred tax assets


11,784



2,704Deferred tax liabilities:Depreciation and amortization


(1,596
)


(159
)Net deferred tax liabilities


(1,596
)


(159
)Net deferred tax assets

$
10,188


$
2,545       2006


2005Statutory Rate


35.00
%


35.00
%State income taxes  net
    of federal benefit


4.03
%


3.95
%Permanent differences


0.02
%


(1.75
)%Change in effective tax rate


(0.04
)%


(0.03
)%Tax reserve


(0.61
)%


1.67
%Tax shortfall related to the
    vesting of certain equity awards


(0.88
)%


0.00
%Change in valuation allowance


0.58
%


(1.58
)%38.10
%


37.26
%  F-27




---



##### 



18.  QUARTERLY
    RESULTS (unaudited)
    Three months endedMarch 31,


June 30,


September 30,


December 31,2006


2006


2006


2006Revenues

$
36,595


$
50,697


$
35,280


$
123,309Operating income (loss)


1,778



(11,962
)


(9,709
)


(45,808
)Pretax income


1,991



(11,645
)


(9,404
)


(45,306
)Net income (loss)


1,240



(7,123
)


(5,754
)


(28,207
)Basic earnings per share


0.09



(0.47
)


(0.36
)


(1.79
)Diluted earnings per share


0.09



(0.47
)


(0.36
)


(1.79
)   Three months endedMarch 31,


June 30,


September 30,


December 31,2005


2005


2005


2005Revenues

$
28,729


$
39,911


$
78,437


$
77,228Operating income (loss)


6,075



4,636



17,919



13,779Pretax income


6,140



4,787



18,424



14,578Net income (loss)


3,809



3,066



11,483



9,204Basic earnings per share


0.33



0.26



0.82



0.66Diluted earnings per share


0.32



0.26



0.81



0.65   year-to-date
      19.  SUBSEQUENT
    EVENTS
         F-28




---



##### 



SIGNATURES    COMSTOCK HOMEBUILDING COMPANIES, INC.
    By:
    /s/  Christopher
    Clemente       Signature

Capacity

Date/s/  Christopher
    ClementeChristopher
    Clemente

Chairman of the Board of
    Directors
    and Chief Executive Officer (Principal
    Executive Officer)

April 30, 2007*Gregory
    V. Benson

Regional President, Southeast

April 30, 2007/s/  Bruce
    J. LabovitzBruce
    J. Labovitz

Chief Financial Officer
    (Principal Financial Officer)

April 30, 2007/s/  Jason
    ParikhJason
    Parikh

Chief Accounting Officer
    (Principal Accounting Officer)

April 30, 2007*A.
    Clayton Perfal

Director

April 30, 2007*David
    M. Guernsey

Director

April 30, 2007*James
    A. MacCutcheon

Director

April 30, 2007*Norman
    D. Chirite

Director

April 30, 2007*Robert
    P. Pincus

Director

April 30, 2007*Socrates
    Verses

Director

April 30, 2007By: /s/  Bruce
    J. LabovitzBruce
    J. LabovitzAttorney-in-Fact



April 30, 2007