This Quarterly Report on Form 10-Q/A and other written reports and oral
statements made from time to time by the Company may contain so-called
"forward-looking statements," all of which are subject to risks and
uncertainties. One can identify these forward-looking statements by their use of
words such as "expect," "plan," "will," "may," "anticipate," "believe,"
"estimate," "should," "intend," "forecast," "project" the negative or plural of
these words, and other comparable terminology. One can identify them by the fact
that they do not relate strictly to historical or current facts. These
statements are likely to address the Company's growth strategy, financial
results and product and development programs. One must carefully consider any
such statement and should understand that many factors could cause actual
results to differ from the Company's forward-looking statements. These factors
include inaccurate assumptions and a broad variety of other risks and
uncertainties, including some that are known and some that are not. No
forward-looking statement can be guaranteed and actual future results may vary
materially. The Company does not assume the obligation to update any
forward-looking statement. One should carefully evaluate such statements in
light of factors described in the Company's filings with the SEC, especially the
Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form
10-Q. In various filings the Company has identified important factors that could
cause actual results to differ from expected or historic results. One should
understand that it is not possible to predict or identify all such factors.
Consequently, the reader should not consider any such list to be a complete list
of all potential risks or uncertainties.
Use of Terms
The following discussion analyzes our financial condition and results of
operations for the six months ended June 30, 2019 and 2018. Unless the context
indicates or suggests otherwise, reference to "we", "our", "us" and the
"Company" in this section refers to the operations of Dream Homes & Development
Corporation (DHDC),
PLAN OF OPERATION
Overview
Building on a history of over 1,500 new homes built, the management of Dream
Homes & Development Corporation has positioned the company to emerge as a
rapidly growing regional developer of new single-family homes & subdivisions as
well as a leader in coastal construction, elevation and mitigation. In the seven
years that have passed since Superstorm Sandy flooded over 30,000 owner-occupied
homes, Dream Homes has helped hundreds of homeowners to rebuild or raise their
homes to comply with new FEMA requirements. While other builders have struggled
to adapt to the changing market and complex Federal, State and local regulations
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" 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.
3
In addition to the New Jersey market, the Company, through its Dream Building
LLC subsidiary, has become licensed in Florida to pursue recent opportunities
for elevation, restoration, renovation and new construction brought about by the
damage caused by recent hurricanes. Initial markets to be targeted are located
primarily in the southwest portion of the state, between Naples and Cape Coral.
Dream Building LLC. operates as a wholly owned subsidiary of Dream Homes and
Development Corporation and 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 June 30, 2019 is
$3,631,330.
In addition to the above projects, which are in process, Dream Building LLC has
also estimated an additional $5,300,000 worth of residential construction
projects and added over 200 active prospects to its data base. All these
prospects are prime candidates for educational videos and short books on
specific construction and rebuilding topics, as well as candidates for
rebuilding projects to be built under the Dream Building LLC division.
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.
Properties currently under contract to purchase and in the development stage
Dream Homes is in contract and under development for a parcel which will yield
58 new townhomes in the Ocean County NJ area. This acquisition 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 2020
and is projected to add approximately $13,000,000 to the Company's gross sales,
through its Dream Building LLC division.
The Company has received preliminary CAFRA approval for the 58-unit townhouse
development. A planning board hearing for preliminary and final site plan and
subdivision approval occurred on December 11, 2017, which produced input and
comments from the Planning Board as well as surrounding homeowners. Currently,
the property is subject to an application with the state planning commission to
be designated as a CAFRA Town Center property, which will enable greater
density. As such the planning board has agreed to reschedule the hearing pending
passage of this planning zone by New Jersey.
The Company has signed a contract for 48 waterfront townhomes with boat slips in
Lacey, NJ. The project is currently in the approval process and significant
engineering, environmental, traffic and architectural work has been completed.
The property is partially improved with all boat slips built. This development
is currently in a holding pattern, pending the receipt of a CAFRA Town Center
designation from the New Jersey Department of Environmental Protection.
On April 24, 2018, the Company signed a contract to purchase a single-family
waterview home in Ocean Township, NJ for $68,000, which later closed on July 11,
2018. The property was submitted for a variance and approved in January of 2019.
The home is in need of elevation and renovation, which is expected to cost an
additional $125,000.
The Company has renovated and is in the process of selling the property. The
property is expected to sell to a 3rd party purchasers for approximately
$400,000. The Company sold 49% of the equity interest to a private investor.
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
120-unit apartment complex. The Company has a signed contract and has been
proceeding with development approvals.
On May 11, 2018, the Company received back a signed letter of intent to purchase
2.3 acres of property in Berkeley Township, NJ. The Company is currently in
contract to purchase the property. The property was previously approved for 12
duplex residential units. A contract has been signed on this property and the
Company is currently in the development and approval stages. The proposed
development will yield 17 townhomes.
4
On December 7, 2018, the Company signed a contract to purchase a property in
Gloucester County, NJ, which will be approved for +/- 70 units of age-restricted
housing. The property is currently in the approval stage. An application was
made to the DEP for a wetlands letter of interpretation, which is currently
pending.
A revised 3rd letter of intent (LOI) has just been offered to acquire 70
townhouse lots in Ocean County, NJ and it is Management's opinion that this
property is moving forward to contract. This property is approved and
unimproved. The project is slated to begin in the early part of 2020 and has a
retail value of $17 million. A contract to acquire this property was signed in
October or 2019. It is anticipated that this property will close in spring of
2020 and construction will begin immediately.
Properties in discussion with signed letters of intent, not in contract
A letter of intent (LOI) has just been offered to acquire property to develop 15
single family homes in central Ocean County, NJ and it is Management's opinion
that this property is moving forward to contract. This property is unapproved
and unimproved.
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.
Development and approval work for the project is slated to begin in late 2019 /
early 2020. The project has a retail value of $23 million.
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 are under contract and in development represent over $108
million in new home construction projects on the books in the next few years.
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 Home Showroom 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.
The Company was awarded the Ocean County Best of the Best Awards for 2017, 2018
& 2019 in two categories (Best Custom Modular Builder and Best Home Improvement
Contractor), which has caused significant new awareness and interest from the
public. This has led to more 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
and is becoming increasingly well known to homeowners in need of new 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.
5
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.
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 at several times throughout the
year, 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 as well as Dream Building LLC, which operates as a
wholly owned subsidiary of Dream, will continue to pursue opportunities in the
construction and real estate field, specifically in new home construction, home
elevations and renovations.
RESULTS OF OPERATIONS - DREAM HOMES & DEVELOPMENT CORPORATION
The summary below should be referenced in connection with a review of the
following discussion of our results of operations for the six months ended June
30, 2019 and 2018.
© Edgar Online, source Glimpses