Forward-Looking Statements
Management's Discussion and Analysis or Plan of Operation contains
"forward-looking" statements, as well as historical information. Although we
believe that the expectations reflected in these forward-looking statements are
reasonable, we can give no assurance that the expectations reflected in these
forward-looking statements will prove to be correct. Forward-looking statements
include those that use forward-looking terminology, such as the words
"anticipate," "believe," "estimate," "expect," "intend," "may," "project,"
"plan," "will," "shall," "should," and similar expressions, including when used
in the negative. Although we believe the expectations reflected in these
forward-looking statements are reasonable and achievable, these statements
involve risks and uncertainties, and no assurance can be given that actual
results will be consistent with these forward-looking statements. Current
shareholders and prospective investors are cautioned that any forward-looking
statements are not guarantees of future performance. Such forward-looking
statements by their nature involve substantial risks and uncertainties, certain
of which are beyond our control, and actual results for future periods could
differ materially from those discussed in this report, depending on a variety of
important factors, among which are our ability to implement our business
strategy, our ability to compete with major established companies, the
acceptance of our products in our target markets, our ability to attract and
retain qualified personnel, our ability to obtain financing, our ability to
continue as a going concern, and other risks described from time to time in our
filings with the Securities and Exchange Commission. Forward-looking statements
contained in this report speak only as of the date of this report. Future events
and actual results could differ materially from the forward-looking statements.
You should read this report completely and with the understanding that actual
future results may be materially different from what management expects. We will
not update forward-looking statements even though its situation may change in
the future.
We undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. Important
factors on which such statements are based are assumptions concerning
uncertainties, including but not limited to uncertainties associated with the
following:
(a) potential fluctuation in quarterly results;
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(b) our failure to earn revenues or profits;
(c) inadequate capital and barriers to raising the additional capital or to
obtaining the financing needed to implement our business plans;
(d) inadequate capital to continue business;
(e) changes in demand for our products and services;
(f) rapid and significant changes in markets;
(g) litigation with or legal claims and allegations by outside parties;
(h) insufficient revenues to cover operating costs.
You should read the following discussion and analysis in conjunction with our
financial statements and notes thereto, included herewith. This discussion
should not be construed to imply that the results discussed herein will
necessarily continue into the future, or that any conclusion reached herein will
necessarily be indicative of actual operating results in the future. Such
discussion represents only the best present assessment of management.
PLAN OF OPERATION
Building on a history of over 1,500 new homes built and over 400
elevation/renovation/addition projects since 1993, the management of Dream Homes
& Development Corporation has positioned the company to emerge as a rapidly
growing regional developer of new single-family subdivisions as well as a leader
in coastal new home and modular construction, elevation and mitigation. Since
Superstorm Sandy flooded 40,000 owner-occupied homes, Dream Homes has helped
hundreds of homeowners to build new homes or raise their homes to comply with
new FEMA requirements. While other involved with coastal construction in Flood
Hazard Areas, Dream Homes has excelled. As many of our competitors have failed,
Dream Homes has developed a reputation as the region's most trusted builder and
has even become known as the "rescue builders have struggled to adapt to the
changing market and complex Federal, State and local regulations" builder for
homeowners whose projects have been abandoned by others. Due to the damage
caused by the storm, as well as the material changes in the FEMA flood maps
which now require over 30,000 homeowners along the New Jersey coastline to
elevate their homes, Dream Homes is positioned to capitalize on this opportunity
for substantial revenue growth.
Management recognized that the effects of Super Storm Sandy, which occurred on
10/29/12, would be far reaching and cause an almost unlimited demand for
construction services, as well as specific construction information. Due to the
damage caused by the storm, as well as the material changes in the FEMA flood
maps which now require over 30,000 homeowners along the New Jersey coastline to
elevate their homes, management feels that focusing on the construction field
will continue to provide a stable revenue stream for the company.
Dream Homes and Development Corporation continues to pursue opportunities in the
real estate field, specifically in new home construction, home elevations and
renovations. The amount of these projects currently under contract as of
December 31, 2020 is $6,024,890.
In addition to the above projects, which are in process, the Company has also
estimated an additional $5,800,000 worth of residential construction projects
and added over 200 active prospects to its data base. All of these prospects are
prime candidates for educational videos and short books on specific construction
and rebuilding topics, as well as candidates for rebuilding and new home
projects.
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In addition to the projects which the Company currently has under contract for
elevation, renovation, new construction and development, there are a number of
parcels of land which the Company has the ability to secure, whether through
land contract or other types of options. These parcels represent additional
opportunities for development and construction potential on the order of an
additional 400 - 800 lots and/or residential units to be developed and built
within an approximate time horizon of 5 years. Conceivably, this volume of
production could yield $120,000,000 - $240,000,000 in gross revenue and
$25,000,000 - $50,000,000 in earnings to the Company.
On October 20, 2018, the Company acquired a significant portion of the assets of
Premier Modular Homes, located in Little Egg Harbor, NJ. This company has a
23-year track record serving southern Ocean County, with a concentration on Long
Beach Island. These acquired assets include physical as well as intellectual
property, such as phone numbers, web site, use of the Premier Modular Home name,
equipment, vehicles and trailers.
The Company also leased the physical premises, including office, showroom,
garage and yard space.
The Company opened an office in Brielle in April of 2020, and it has enabled the
Company to more effectively serve the northern Ocean, Monmouth and Middlesex
County markets, as well as to increase market share in the beach communities in
the modular and stick built home markets.
With this latest acquisition of Premier Modular and the Company's main office
location in Forked River, the Company has positioned itself to well serve a
significant portion of the entire coastal region, from southern Ocean County
north to Middlesex County.
Properties currently under contract to purchase and in the development stage
Berkeley Terrace - Bayville, NJ - 70 approved townhome units
A contract was signed to acquire 70 approved townhome units in October 2019,
after 31 months of discussion. This property is scheduled to close in mid to
late June 2021, at which time site improvements will commence. Sales will
accrete to 2022 & 2023 income. The Company has secured a bridge loan and is
awaiting a commitment with a permanent lender for an acquisition, development
and construction finance facility. Funding for land only has been secured at
this time.
Subsequent events: The closing to acquire this property occurred on June 29,
2021.
The Company is preparing to begin infrastructure work on the property, and start
a presales program.
The first closings are scheduled to occur in late spring of 2022.
Lacey Township, New Jersey, "Dream Homes at the Pines"
Dream Homes is in contract and under development for a parcel which will yield
68 new townhomes in the Ocean County NJ area, of which 54 are market rate and 14
are affordable housing. The acquisition of the contract was made for common
stock and occurred in the 4th quarter of 2016. This property is currently in the
approval process. This development project is scheduled to begin in late 2021
and will accrete to 2022 sales.
All costs associated with this property necessary to obtain all approvals,
acquire the land, install the infrastructure and prepare the property to
commence construction are the Company's responsibility.
In order to obtain all developmental approvals and be prepared to begin
installing infrastructure, various permits and engineering work are required.
These permits include but are not limited to township subdivision, county,
municipal utility authority, CAFRA (NJ Department of Environmental Protection)
and NJ Department of Transportation. To date, design engineering has been
completed and a CAFRA application has been prepared and submitted to the
environmental scientist, along with a check for $36,750 payable to the NJ DEP.
Application for this permit was made in April 2017. As of this date, the CAFRA
application has been put on hold pending a determination if the township will be
approved by the State of New Jersey for a CAFRA Town Center designation. A Lacey
Township Planning Board meeting was held on December 11, 2017. Additional
information was requested from the board and the next meeting was heard for
preliminary and final approval on April 19th of 2021. Preliminary approval was
granted.
It is anticipated that complete development approvals will cost approximately
$20,000 more to complete. In addition to these approval costs and acquisition
costs, infrastructure costs are anticipated to cost approximately $1,000,000.
The total amount of funding required to acquire and make this property ready for
home construction is approximately $1,900,000.
The Company may need to seek loans from banks to finance this project. As part
of their financing agreements, the banks typically require Vincent Simonelli to
personally guarantee these loans. If Mr. Simonelli cannot qualify as a guarantor
and there is no one other than him in the Corporation to provide those
guarantees, the financing of the deal may be adversely affected. The exact
amount of funding required for this particular property is not clear at the
present time but will be determined when full approvals have been obtained and
the Company is prepared to take title to the property.
As of February 26, 2021, financing has been secured to purchase the land upon
municipal approvals being granted.
Subsequent event: The closing to acquire this property occurred on June 29, 2021
and the Company is currently in title.
Clayton NJ - 112 Apartments
On May 3, 2018, the Company submitted a signed letter of intent to purchase 5.5
acres of property in Gloucester County, which is currently being approved for a
112-unit apartment complex, with 8000 square feet of retail space. The Company
has a signed contract and has been proceeding with development approvals. The
property is designated as a redevelopment property, and a redevelopment
agreement is currently being negotiated with the township. Progress has been
delayed due to township closures due to the Covid-19 pandemic.
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Subsequent event: On February 26, 2021, the Company took title to the property
via an assemblage of 3 parcels.
Louis Avenue - Bayville, NJ - In title
In October of 2018, the company entered into a contract to develop and acquire
17 townhouse lots in Bayville NJ. Engineering and approvals are currently in
process. Application was made to the Planning Board on March 20, 2020. The
project was deemed complete by the township engineer. Municipal scheduling has
been delayed due to the Covid-19 virus.
The Company was heard before the Berkeley Township Planning Board on October 3,
2020 and the planning board awarded preliminary approvals for 17 townhome units.
Application is currently being made for final approvals, and the Company should
be heard at the October planning board meeting.
Subsequent event: The Company acquired this property on August 4, 2021.
Properties Under Contract to Purchase and in the Approval Stage
Autumn Run - Gloucester County
On December 7, 2018, the Company signed a contract to purchase a property in
Gloucester County, NJ, which will be approved for +/- 63 units of age-restricted
manufactured housing. The property is currently in the approval stage. An
application was made to the DEP for a wetlands letter of interpretation, which
was approved as proposed. Further action before the planning board is pending
due to delays caused by township closures due to Covid-19. The Company had a
virtual workshop meeting on September 15, 2020 and an additional virtual meeting
was conducted on November 17, 2020.
Subsequent events: The application for a use variance was heard on May 24, 2021
and the variance was approved.
The Company is in the process of applying for preliminary and final site plan
approval and should be heard at the October 2021 meeting.
Properties on hold due to delay in approvals, environmental concerns or other
reasons
Berkeley Township, New Jersey, "Dream Homes at Tallwoods", Contract
On March 1, 2017, the Company acquired from DHL rights to a contract to purchase
over 7 acres of land in Berkeley Township, NJ (the "Tallwoods Contract or Dream
Homes at Tallwoods") for 71,429 restricted shares of Company common stock
(issued in April 2017).
Since the transaction had not occurred for at least a portion of the Property
within 12 months of the completion of the Due Diligence Period, as well as two
6-month extensions, the seller chose to terminate the contract. Though the
Company retained the right to waive any remaining development contingencies and
proceed to close on the property, it was determined by senior management that
the risk of acquiring an unapproved property was not acceptable.
Properties in discussion with signed letters of intent, not in contract
Discussions have been occurring since December of 2017 and a signed letter of
intent has been offered to acquire property to develop 102 townhome units in
southern Ocean County, NJ. This property was originally in contract and under
development by the Company's management team during the 2006-2009 period, at
which time the project was not finalized due to the financial crisis of 2009. As
such, a large amount of engineering, environmental, traffic and architectural
work has been completed. It is Management's opinion that this property is moving
forward to contract. This property is not fully approved and is unimproved. The
project is slated to begin in late summer of 2021 and has a retail value of $23
million.
Glassboro Township, New Jersey - Robin's Nest Solar Farm
On May 17, 2018, the Company submitted a signed contract to purchase a 700 KW
property to be developed as a solar farm in Glassboro, NJ. The purchase price is
$700,000 and the contract is subject to obtaining funding for the solar array as
well as a portion of the purchase price. There is also a PPA (power production
agreement) in place with a nursing home adjacent to the property, to purchase
the entire electrical output for the next 20 years. This property is still
available and is on hold pending funding availability.
These new developments with signed letters of intent, as well as the four
developments that we have under contract and in development represent over $108
million in new home construction projects in the near future. This work will
occur over the next 3-4 years and is in addition to the elevation/renovation
division of the business. Management is very positive about these new
developments, as well as the cutting-edge construction technologies being
employed to create healthier, safer, more energy efficient homes.
Dream Homes has experienced solid growth in both the new home and elevation
divisions, as well as strong additions to our personnel infrastructure, which
are just now beginning to bear fruit. Our new Modular Design Center in Little
Egg Harbor has also led to an increase in modular traffic and sales, as well as
facilitated and increased client selections throughout our entire region.
For the 4th year in a row, the Company was again awarded the Ocean County
Reader's Choice Best of the Best for 2020 in two categories (Best Custom Modular
Builder and Best Home Improvement Contractor), which caused significant new
awareness and interest from the public. This has led to increased showroom
traffic, completed estimates and signed contracts. Referrals about Dream Homes
are also being generated from many industry professionals, such as architects,
engineers and attorneys, who've either had clients with abandoned projects or
simply want to retain Dream due to superior performance and reliability.
The phrase 'The Region's Most Trusted Builder' accurately describes the Company,
which is becoming increasingly well known to homeowners in need of new custom
modular and site-built homes, elevation & renovation work. The management team
has never failed to complete a project in over 24 years in the industry.
The Company's business model over the last year has been focused on increasing
the new home and new development portion of our business, until it represents
50% - 70% of our entire revenue stream, from the current level of 20%. New home
development has a much greater scalability and growth potential than
elevation/renovation work. The Company has enjoyed steady growth in the
renovation/elevation portion of the company and anticipates that by year end
2018 each part of the company (new homes and elevation work) will represent 50%
of total revenue. By mid-year 2019, new home construction and development should
represent over 70% of revenue.
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Management hopes for steady growth in all segments of the company, since the
rebuilding process will occur over the next 15-20 years. The combined total
number of homes affected by Storm Sandy that will need to be raised or
demolished and rebuilt is in excess of 30,000 homes, of which less than 10,000
have been rebuilt. This remaining combined market for new construction and
elevation projects in the Company's market area is estimated to be in the range
of $3.4 billion dollars. The company anticipates being able to efficiently
address 5% - 10% of this market. Dream Homes' potential operations include the
development and sale of a variety of residential communities, including
construction of semi-custom homes, entry-level and first time move-up
single-family and multi-family homes.
Additionally, the Company has developed referral networks with 3 major modular
manufacturing companies, from which a dependable and steady stream of leads and
prospects has been received over the last 6-month period. Based on these
associations, as well as the recent acquisition of the Premier Modular Homes
assets and location, it is anticipated that the Custom Modular segment of the
business will enjoy significant growth for the foreseeable future.
Since modular home manufacturers will not sell directly to the public, and will
only sell to a licensed builder, manufacturers need dependable new home builders
to refer their leads. The Company has proven itself to be a valuable trade
partner for these 3 manufacturers and has received numerous prospects and leads,
some of which have already turned into contracts.
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The Company has also recently developed and offered to the market, a modular
Add-A-Level in A Day product, which offers a very rapid alternative to
traditional renovation and elevation projects. It is anticipated that this
product can be scaled easily and offered in a much more diverse market area, due
to the limited duration of this type of project.
Among the Company's other assets that are currently held, are the rights to
operate the educational construction seminar known as "Dream Homes Nearly Famous
Rebuilding Seminar", as well as the informational blog known as the "Dream Homes
Rebuilding Blog."
The Nearly Famous Rebuilding Seminar is held bi-monthly, and is a powerful
educational tool for homeowners who need of rebuilding or renovations. This
seminar has been presented steadily since early 2013, and is designed to educate
and assist homeowners in deciphering the confusion about planning and executing
complex residential construction projects.
Due to the opportunities afforded by the market conditions, Dream Homes and
Development Corporation will continue to pursue opportunities in the
construction and real estate field, specifically in new home construction, home
elevations and renovations.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations
are based on our financial statements, which have been prepared in accordance
with U.S. generally accepted accounting principles. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenue and expenses and related
disclosures. We review our estimates and judgments on an on-going basis. We base
our estimates and judgments on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances. Actual
results may differ from these estimates. We believe the following accounting
policies are critical to the judgments and estimates we use in preparing our
financial statements.
Net Income (Loss) Per Common Share
Basic net income (Basic net loss) per common share is calculated by dividing net
income (loss) by the weighted average number of common shares outstanding during
the period.
Diluted net income (loss) per common share is computed using the weighted
average number of common shares outstanding and potentially dilutive securities
outstanding during the period (none for the periods presented).
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RESULTS OF OPERATIONS - DREAM HOMES & DEVELOPMENT CORPORATION
The summary of selected financial data table below
DREAM HOMES & DEVELOPMENT CORPORATION
STATEMENTS OF OPERATIONS
Year ended Year ended
December 31, 2020 December 31, 2019
Revenue:
Construction contracts $ 3,014,027 $ 3,103,011
Cost of construction contracts 2,172,293 2,090,966
Gross profit 941,734 1,012,045
Operating Expenses:
Selling, general and administrative,
including stock based compensation of
$197,900 and $88,194, respectively 1,032,419 990,210
Depreciation expense 8,445 6,230
Total operating expenses 1,040,864 996,440
Income (loss) from operations (199,130 ) 15,605
Other income (expenses):
Cancellation of debt - 10,000
Interest expense (25,088 ) (8,301
Total other income (expenses) (25,088 ) 1,699
Net income (loss) before income taxes (224,218 ) 17,304
Provision for income taxes - 31,649
Net loss $ (224,218 ) $ (14,345 )
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Results of Operations - Comparison for the years ended December 31, 2020 and
2019
Revenues
For the years ended December 31, 2020 and December 31, 2019, net revenues were
$3,014,027 as compared to $3,103,011 for the year ended December 31, 2019,
resulting in a decrease in net revenues of $88,984. As of December 31, 2020 and
2019, all of our sales were domestic.
Cost of Construction contracts and Sales
For the years ended December 31, 2020 and December 31, 2019, cost of
construction contracts and sales were $2,172,293 as compared to $2,090,966,
resulting in an increase in cost of construction contracts of $81,327.
Operating Expenses
Operating expenses increased $50,654 from $996,440 in 2019 to $1,040,864 in
2020. The increase was primarily due to stock based compensation and commission
expenses.
Major selling, general and administrative expenses for the year ended December
31, 2020 of $1,051,235 include salary expense of $428,011, office expenses of
$6,550, professional fees of $32,342, vehicle expenses of $ 28,117, advertising
expenses of $ 9,167, stock based compensation of $197,900, sales commissions
expense of $134,733,
insurance expense of $ 67,136, and rent expense of $ 50,660.
Liquidity and Capital Resources
As of December 31, 2020 and 2019, our cash balance was $51,710 and $233,402,
respectively, total assets were $1,292,338 and $1,693,629, respectively, and
total current liabilities amounted to $807,906 and $1,195,740, respectively,
including loans payable to related parties of $3,671 and $6,790, respectively.
As of December 31, 2020 and 2019, the total stockholders' equity was $484,432
and $497,889, respectively.
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Inflation
The impact of inflation on the costs of our company, and the ability to pass on
cost increases to clients over time is dependent upon market conditions. We are
not aware of any inflationary pressures that have had any significant impact on
our operations since inception, and we do not anticipate that inflationary
factors will have a significant impact on future operations.
OFF-BALANCE SHEET ARRANGEMENTS
We do not maintain off-balance sheet arrangements nor do we participate in
non-exchange traded contracts requiring fair value accounting treatment.
Risk
Foreign Currency Exchange Rate Risk
We are not exposed to potential gains or losses from foreign currency
fluctuations.
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