UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended June 30, 2020

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File No. 000-55445

 

DREAM HOMES & DEVELOPMENT CORPORATION

(Exact Name of Registrant As Specified In Its Charter)

 

Nevada   20-2208821

(State Or Other Jurisdiction

Of Incorporation Or Organization)

 

(I.R.S. Employer

Identification No.)

 

314 South Main Street Forked River, New Jersey 08731

(Address of Principal Executive Offices and Zip Code)

 

609 693 8881

Registrant’s Telephone Number, Including Area Code:

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [  ] No [X]

 

Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer [  ] Accelerated Filer [  ] Non-Accelerated Filer [  ] Smaller Reporting Company [X]

Emerging Growth Company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [  ] No [X]

 

The number of shares outstanding of the registrant’s common stock, as of August 14, 2020, was 28,876,493

 

 

 

 

 

 

DREAM HOMES & DEVELOPMENT CORPORATION

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION    
ITEM 1. FINANCIAL STATEMENTS    
Consolidated Balance Sheets   F-1
Consolidated Statements of Operations and Comprehensive Income (Loss)   F-2
Consolidated Statements of Changes in Stockholders’ Equity   F-4
Consolidated Statements of Cash Flow   F-5
Notes to Consolidated Financial Statements   F-6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   3
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS   8
ITEM 4. CONTROLS AND PROCEDURES   8
     
PART II. OTHER INFORMATION   8
ITEM 1. LEGAL PROCEEDINGS   8
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   8
ITEM 3. DEFAULTS UPON SENIOR SECURITIES AND CONVERTIBLE NOTES   8
ITEM 4. MINE SAFETY DISCLOSURES   8
ITEM 5. OTHER INFORMATION   8
ITEM 6. EXHIBITS   9
SIGNATURES   10

 

2
 

 

DREAM HOMES & DEVELOPMENT CORPORATION

 

CONSOLIDATED BALANCE SHEETS

 

   June 30, 2020   December 31, 2019 
    UNAUDITED      
ASSETS          
CURRENT ASSETS          
Cash  $270,066   $233,402 
Accounts receivable, net of allowance for doubtful accounts ($29,838)   301,348    410,550 
Loan receivable, related party   70,956    44,991 
Employee advances   2,500    2,500 
Contract assets   226,406    328,244 
Total current assets   871,276    1,019,687 
           
PROPERTY AND EQUIPMENT, net   29,194    33,501 
           
OTHER ASSETS          
Accounts receivable, net of allowance for doubtful accounts ($43,000)   32,000    32,000 
Security deposit   2,200    2,200 
Right of use asset   20,603    - 
Deposits and costs coincident to acquisition of land for development   586,429    606,241 
           
Total assets  $1,541,702   $1,693,629 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
CURRENT LIABILITIES          
Accounts payable and accrued expenses  $644,723   $738,322 
Accrued interest   17,504    6,831 
Contract liabilities   165,652    228,661 
Lease liability   10,301    - 
Income taxes payable   -    53,174 
Note payable-line of credit   146,660    161,962 
Loans payable to related parties   4,190    6,790 
Total current liabilities   989,030    1,195,740 
           
Lease liability- noncurrent portion   10,302    - 
           
Total liabilities   999,332    1,195,740 
           
STOCKHOLDERS’ EQUITY          
Preferred stock; 5,000,000 shares authorized, $.001 par value, as of June 30, 2020 and December 31, 2019, there are no shares outstanding   -    - 
Common stock; 70,000,000 shares authorized, $.001 par value, as of June 30, 2020 and December 31, 2019, there are 28,876,493 and 25,878,993 shares outstanding, respectively   28,876    25,879 
Additional paid-in capital   1,985,407    1,868,504 
Accumulated deficit   (1,471,913)   (1,396,494)
           
Total stockholders’ equity   542,370    497,889 
           
Total liabilities and stockholders’ equity  $1,541,702   $1,693,629 

 

The accompanying notes are an integral part of these financial statements.

 

F-1
 

 

DREAM HOMES & DEVELOPMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

 

   Six months ended
June 30, 2020
   Six months ended
June 30, 2019
 
         
Revenue:          
Construction contracts  $2,134,271   $1,543,647 
           
Cost of construction contracts   1,677,470    1,016,978 
           
Gross profit   456,801    526,669 
           
Operating Expenses:          
Selling, general and administrative, including stock based compensation of $119,900 and $110,194, respectively   518,196    559,052 
Depreciation expense   3,307    2,923 
           
Total operating expenses   521,503    561,975 
           
Loss from operations   (64,702)   (35,306)
           
Other income (expenses):          
Cancellation of debt   -    12,000 
Interest expense   (10,717)   (1,470)
Total other income (expenses)   (10,717)   10,530 
           
Net loss before income taxes   (75,419)   (24,776)
Provision for income taxes   -    (25,,626)
           
Net loss  $(75,419)  $(50,402)
           
Basic and diluted loss per common share  $(.00)  $(.00)
           
Weighted average common shares outstanding-basic and diluted   27,645,601    24,433,523 

 

The accompanying notes are an integral part of these financial statement.

 

F-2
 

 

DREAM HOMES & DEVELOPMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

 

    Three months ended
June 30, 2020
    Three months ended
June 30, 2019
 
             
Revenue:                
Construction contracts   $ 1,006,687     $ 754,227  
                 
Cost of construction contracts     745,276       411,300  
                 
Gross profit     261,411       342,927  
                 
Operating Expenses:                
Selling, general and administrative, including stock based compensation of $0 and $115,971, respectively     207,944       302,532  
Depreciation expense     1,654       1,461  
                 
Total operating expenses     209,598       303,993  
                 
Income (loss) from operations     51,813       38,934  
                 
Other income (expenses):                
Cancellation of debt     -       12,000  
Interest expense     (4,445 )     -  
Total other income (expenses)     (4,445 )     12,000  
                 
Net income before income taxes     47,368       50,934  
Provision for income taxes     -       (25,626 )
                 
Net income   $ 47,368     $ 25,308  
                 
Basic and diluted earnings per common share   $ .00     $ .00  
                 
Weighted average common shares outstanding-basic and diluted     28,876,493       24,666,053  

 

The accompanying notes are an integral part of these financial statement.

 

F-3
 

 

DREAM HOMES & DEVELOPMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the six months ended June 30, 2020 and 2019

UNAUDITED

 

   Common stock issued
and to be issued
   Additional
Paid in
   Accumulated     
   Shares   Amount   Capital   Deficit   Total 
For the six months ended June 30, 2020:                         
Balance at December 31, 2019   25,878,993   $25,879   $1,868,504   $(1,396,494)  $497,889 
Issuance of 2,997,500 restricted common shares for stock-based compensation at $.04 per share   2,997,500    2,997    116,903         119,900 
Net loss for the three months ended March 31, 2020                  (122,787)   (122,787)
Balance at March 31, 2020   28,876,493    28,876    1,985,407    (1,591,281)   495,002 
Net income for the three months ended June 30, 2020                  47,368    47,368 
                          
Balance at June 30, 2020   28,876,493   $28,876   $1,985,407   $(1,471,913)  $542,370 
                          
For the six months ended June 30, 2019:                         
Balance at December 31, 2018   24,200,993    24,201    1,671,988    (1,382,149)   314,040 
Warrant expense             30,394         30,394 
Net loss for the three months ended March 31, 2019                  (75,710)   (75,710)
Balance at March 31, 2019   24,200,993    24,201    1,702,382    (1,457,859)   268,724 
Shares issued for services   1,678,000    1,678    166,122         167,800 
Net income for the three months ended June 30, 2019                  25,308    25,308 
Balance at June 30, 2019   24,200,993   $25,879   $1,868,504   $(1,432,551)  $461,832 

 

The accompanying notes are an integral part of these financial statements.

 

F-4
 

 

DREAM HOMES & DEVELOPMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

 

   For the six months ended June 30, 2020   For the six months ended June 30, 2019 
         
OPERATING ACTIVITIES          
Net loss  $(75,419)  $(50,402)
Adjustments to reconcile net loss to net cash provided (used) in operating activities:          
Depreciation expense   3,307    2,923 
Stock-based compensation   119,900    110,194 
Write-off on deposits and acquisition of land   43,701    28,102 
Write-off of note payable   -    (12,000)
Changes in operating assets and liabilities:          
Accounts receivable   109,202    11,817 
Loan receivable, related party   (25,965)     
Contract assets   101,838    82,516 
Accounts payable and accrued liabilities   (93,599)   71,149 
Contract liabilities   (63,009)   (102,799)
Income taxes payable   (53,174)   25,626 
Net cash provided  in operating activities   66,782    167,126 
           
INVESTING ACTIVITIES          
Purchase of office equipment and vehicles   -    (19,000)
Deposits and costs coincident to acquisition of land for development   (14,816)   (30,395)
Net cash used in investing activities   (14,816)   (49,395)
           
FINANCING ACTIVITIES          
Payments on note payable-line of credit   (15,302)   - 
Payments on loans payable to related parties   -    (17,314)
Net cash used in financing activities   (15,302)   (17,314)
           
NET INCREASE IN CASH   36,664    100,417 
           
CASH BALANCE, BEGINNING OF PERIOD   233,402    118,687 
           
CASH BALANCE, END OF PERIOD  $270,066   $219,104 
           
Supplemental Disclosures of Cash Flow Information:          
Interest paid  $-   $1,470 
Income taxes paid  $-   $- 
Non-Cash Investing and Financing Activities:          
Issuance of 2,997,500 restricted common stock for compensation  $119,900   $- 
Issuance of 1,100,000 shares of common stock for debt reduction  $    $88,000

 

The accompanying notes are an integral part of these financial statements.

 

F-5
 

 

DREAM HOMES & DEVELOPMENT CORPORATION

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30, 2020 and 2019

UNAUDITED

 

Note 1 - Significant Accounting Policies

 

Nature of Operations

 

Dream Homes & Development Corporation is a regional builder and developer of new single-family homes and subdivisions, as well as a market leader in coastal construction, elevation and mitigation. In the seven years that have passed since Superstorm Sandy flooded 30,000 owner-occupied homes, Dream Homes has helped hundreds of homeowners to rebuild or raise their homes to comply with new FEMA requirements.

 

In addition to the coastal construction market, Dream Homes will continue to pursue opportunities in new single and multi-family home construction, with 3 new developments totaling 119 units under contract and in development. Dream Homes’ operations will 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.

 

In addition to the New Jersey market, the Company 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.

 

In addition to the Company’s construction operations, the Company holds a bi-monthly “Dream Homes Nearly Famous Rebuilding Seminar”, and publishes an informational blog known as the “Dream Homes Rebuilding Blog”. The Rebuilding Seminar is an educational tool for homeowners who need 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. A professional team attends each seminar and presents on a diverse variety of topics, including expert advice from architects, engineers, finance people, attorneys, project managers, elevation professionals and builder/general contractors. The “Dream Homes Rebuilding Blog” is an educational platform written by Vincent Simonelli, which offers comprehensive advice on all aspects of construction, finance, development and real estate. The Blog is located at http://blog.dreamhomesltd.com.

 

History

 

Dream Homes & Development Corporation was originally incorporated as The Virtual Learning Company, Inc. (“Virtual Learning”) on January 6, 2009 as a Nevada corporation with 75,000,000 shares of capital stock authorized, of which 70,000,000 shares are common shares ($.001 par value), and 5,000,000 shares are preferred shares ($.001 par value).

 

On March 14, 2017, Virtual Learning changed its name to Dream Homes & Development Corporation (“DHDC”). DHDC maintains a web site at www.dreamhomesltd.com as well as a blog, located at http://blog.dreamhomesltd.com.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of DHDC and its wholly owned subsidiary DBL (collectively, the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

 

F-6
 

 

Property and Equipment

 

Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided using the straight-line method over an estimated useful life of five years. Repairs and maintenance costs are expensed as incurred, and renewals and betterments are capitalized.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that we would receive to sell an asset or pay to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. In determining fair value, GAAP establishes a three-level hierarchy used in measuring fair value, as follows:

 

● Level 1 inputs are quoted prices available for identical assets and liabilities in active markets.

 

● Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data.

 

● Level 3 inputs are less observable and reflect our own assumptions.

 

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and loans payable to related parties. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and loans payable to related parties approximates fair value because of their short maturities.

 

Construction Contracts

 

Revenue recognition:

 

The Company adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) on January 1, 2018. In accordance with ASC 606, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, in accordance with the following five-step process:

 

  Identify the contract(s) with a customer
  Identify the performance obligations
  Determine the transaction price
  Allocate the transaction price
  Recognize revenue when the performance obligations are met

 

For the periods presented prior to the adoption of ASC 606, revenues from long-term construction contracts were recognized in accordance with ASC Topic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.”

 

The Company recognizes construction contract revenue over time using the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost. Cost of revenue includes an allocation of depreciation, amortization and general overhead cost. Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined.

 

F-7
 

 

The Company generally provides limited warranties for work performed under its construction contracts with periods typically extending for a limited duration following substantial completion of the Company’s work on a project.

 

The Company classifies construction-related receivables and payables that may be settled in periods exceeding one year from the balance sheet date, if any, as current assets and liabilities consistent with the length of time of its project operating cycle. For example:

 

  Contract assets represent costs and estimated earnings in excess of billings represent the excess of contract costs and profits (or contract revenue) over the amount of contract billings to date and are classified as a current asset.
     
  Contract liabilities represent billings in excess of costs and estimated earnings represent the excess of contract billings to date over the amount of contract costs and profits (or contract revenue) recognized to date and are classified as a current liability.

 

Contract liabilities result when either: 1) costs are incurred related to certain claims and unapproved change orders, or 2) the appropriate contract revenue amount has been recognized in accordance with the percentage-of-completion accounting method, but a portion of the revenue recorded cannot be billed currently due to the billing terms defined in the contract. Claims occur when there is a dispute regarding both a change in the scope of work and the price associated with that change. Unapproved change orders occur when there is a dispute regarding only the price associated with a change in scope of work. For both claims and unapproved change orders, the Company recognizes revenue, but not profit, when it is determined that recovery of incurred cost is probable and the amounts can be reliably estimated.

 

Change in Estimates:

 

The Company’s estimates of contract revenue and cost are highly detailed and many factors change during a contract performance period that result in a change to contract profitability. These factors include, but are not limited to, differing site conditions: availability of skilled contract labor: performance of major material suppliers and subcontractors: on-going subcontractor negotiations and buyout provisions: unusual weather conditions: changes in the timing of scheduled work: change orders: accuracy of the original bid estimate: changes in estimated labor productivity and costs based on experience to date: achievement of incentive-based income targets: and the expected, or actual, resolution terms for claims. The factors that cause changes in estimates vary depending on the maturation of the project within its lifecycle. For example, in the ramp-up phase, these factors typically consist of revisions in anticipated project costs and during the peak and close-out phases, these factors include the impact of change orders and claims as well as additional revisions in remaining anticipated project costs. Generally, if the contract is at an early stage of completion, the current period impact is smaller than if the same change in estimate is made to the contract at a later stage of completion. Management focuses on evaluating the performance of contracts individually and uses the cumulative catch-up method to account for revisions in estimates. Material changes in estimates are disclosed in the notes to the consolidated financial statements.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the provision for income tax in the statements of operations. The Company evaluates the probability of realizing the future benefits of its deferred tax assets and provides a valuation allowance when realization of the assets is not reasonably assured.

 

The Company recognizes in its financial statements the impact of tax positions that meet a “more likely than not” threshold, based on the technical merits of the position. The tax benefits recognized from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

 

F-8
 

 

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.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification “ASC” Topic 606). The purpose of this ASU is to converge revenue recognition requirements per GAAP and International Financial Reporting Standards (“IFRS”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU were originally effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption not permitted by the FASB; however, in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date after public comment respondents supported a proposal to delay the effective date of this ASU to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. We adopted this ASU on January 1, 2018 and adoption of this ASU did not have a material impact on our financial position, results of operations and cash flows.

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, “Topic 842”), which provides guidance for accounting for leases. Topic 842 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight line basis over the term of the lease. The Company adopted this standard on January 1, 2020. As a result of the adoption, the Company recorded a Right of use asset and Lease liability of $20,603 on the consolidated balance sheet.

 

Certain other accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.

 

2 - Property and Equipment

 

Property and equipment is summarized as follows:

 

    June 30, 2020     December 31, 2019  
             
Office equipment   $ 5,115     $ 6,115  
Vehicles/Modular homes     58,065       58,065  
Less: Accumulated depreciation     (33,986 )     (30,679 )
                 
Property and Equipment- net   $ 29,194     $ 33,501  

 

Depreciation expense for the six months ended June 30, 2020 and 2019 was $ 3,307 and $ 2,923, respectively.

 

F-9
 

 

3-Deposits and Costs Coincident to Acquisition of Land for Development

 

Deposits and costs coincident to acquisition of land for development are summarized as follows:

 

    June 30, 2020     December 31, 2019  
             
Lacey Township, New Jersey, Pines contract:                
                 
Deposit   $ -     $ -  
Cost to acquire contract     10,000       10,000  
Site engineering, permits, and other costs     111,833       111,833  
Total Pines contract     121,833       121,833  
                 
Berkeley Township, New Jersey, Tallwoods contract:                
Deposit     10,000       10,000  
Site engineering, permits, and other costs     55,518       90,146  
Total Tallwoods contract     65,518       100,146  
                 
Other Deposits:                
Clayton, New Jersey - 120 apartments     62,662       62,662  
71 Sheridan Avenue, Waretown, New Jersey     44,438       44,438  
Louis Avenue, Bayville, New Jersey-17 units     36,271       36,271  
Berkeley Terrace – Bayville, New Jersey 70 units     20,000       20,000  
Station Dr – Forked River, New Jersey     99,032       99,032  
201 East Ave – Clayton, New Jersey – 77 units     78,000       78,000  
Academy St – Clayton, New Jersey – 2 lots     36,133       36,133  
Other     22,542       7,726  
                 
Total   $ 586,429     $ 606,241  

 

Lacey Township, New Jersey, “Dream Homes at the Pines”, Contract

 

On December 15, 2016, the Company acquired from General Development Corp. (“GDC”) rights to a contract to purchase over 9 acres of undeveloped land without amenities in Lacey Township, New Jersey (the “Lacey Contract or Dream Homes at the Pines”) for $15,000 cash (paid in December 2016) and 100,000 restricted shares of Company common stock (issued in April 2017) valued at $5,000. GDC acquired the rights to the contract from DHL on December 14, 2016 for $10,000 cash. As discussed in Note 9, Commitments and Contingencies under Line of Credit, the Company also has an available line of credit of $50,000 with GDC.

 

The Lacey Contract between DHL and the seller of the land was dated March 18, 2016 and provides for a $1,000,000 purchase price with closing on or about 60 days after memorialization of final Development Approvals has been obtained. DHL paid the seller a $10,000 refundable deposit in March 2016 pursuant to the Lacey Contract. In the event the transaction has not closed on at least a portion of the property within 24 months of the completion of the Due Diligence Period (as may be extended by two 6- month extensions), the seller has the option of terminating the contract. Notwithstanding this provision, the Company retains the right at all times to waive any remaining contingencies and proceed to close on the property.

 

Due diligence for the above property was completed as of May 17, 2016, and all costs were incurred by Dream Homes Ltd., which was in the contract for the property at the time. No additional costs for due diligence have been incurred by the Company, nor are any anticipated. The Company will incur all current costs associated with this property necessary to obtain all approvals, acquire the land, install the infrastructure and prepare the property to commence construction.

 

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 will be scheduled upon receipt of outside agency permits and the other requested information.

 

F-10
 

 

It is anticipated that complete development approvals will cost approximately $50,000 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 $2,090,000.

 

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.

 

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). The Tallwoods Contract between DHL and the seller of the land was dated January 5, 2017 and provides for a $700,000 purchase price with closing on or about 60 days after final development approvals have been obtained and memorialized. DHL paid the seller a refundable $10,000 deposit in January 2017 pursuant to the Tallwoods contract.

 

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 developmental 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.

 

Lacey Township, New Jersey, “Dream Homes at Forked River”, Marina Contract

 

In December of 2017, the Company had acquired the rights to a purchase contract via contract assignment for 48 waterfront townhomes with boat slips in Lacey, NJ. The project has been in the approval process and significant engineering, environmental, traffic and architectural work has been completed. The property is a waterfront property, and is partially improved with all boat slips currently installed, the Department of Transportation permit received and the curb cut from Route 9 in place.

 

Little Egg Harbor Township, New Jersey, “Dream Homes at Radio Road”, Contract

 

On March 14, 2018, the Company signed a contract to purchase 4 improved lots in Little Egg Harbor Township, NJ (the “Dream Homes at Radio Road”) for a total of $260,000. The Contract between the Company and the seller of the land provides for a $65,000 per lot purchase price with closing occurring on a rolling basis, as each house is built and sold. In addition, the Company has obtained a term sheet on April 5, 2018 and is waiting for a formal commitment from a lender for a funding facility comprised of acquisition and development funding.

 

The Company intends to begin construction in the second quarter and the homes are projected to sell in the $350,000 - $375,000 range.

 

Glassboro Township, New Jersey – Robin’s Nest Solar Farm

 

On May 28, 2018, the Company signed a contract to purchase a 700 KW property to be developed as a solar farm in Glassboro, NJ. The purchase price is $900,000 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 acquisition has been put on hold pending availability of funding.

 

F-11
 

 

71 Sheridan Street, Waretown, NJ – Property purchased for renovation and sale

 

On July 12, 2018, the Company purchased a single-family home property located at 71 Sheridan Street in Waretown, NJ. The home was originally damaged by Storm Sandy, and requires elevation and renovation in order to be brought into compliance with the latest FEMA flood zone requirements. The Company completed a full height elevation, enclosed the lower level, installed 2 levels of deck facing the water, renovated the house completely and the property was sold in May of 2020.

 

Louis Avenue – Bayville, NJ – Property being developed

 

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 and is awaiting a date for a planning board hearing. Municipal scheduling has been delayed due to the Covid-19 virus. The planning board date has been tentatively scheduled for August 6, 2020.

 

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 fall of 2020, at which time improvements will commence. The Company is in discussion with several lenders to arrange an acquisition, development and construction finance facility.

 

4-Loans Payable to Related Parties

 

Loans payable to related parties is summarized as follows:

 

    March 31, 2020     December 31, 2019  
             
Loans payable to chief executive officer   $ 3,672     $ 3,672  
Loans payable to GPIL (see Note 5)     518       3,118  
Total   $ 4,190     $ 6,790  

 

All the loans above are non-interest bearing and due on demand.

 

5 - Common Stock Issuances

 

On January 31, 2018, DHDC committed to issue 16,000 restricted shares of DHDC’s common stock for cash proceeds of $11,400 at $ .40 per share per the subscription agreement.

 

On February 9, 2018, DHL assigned 40,000 restricted shares of Company common stock it held to a minority stockholder of DHL. This minority stockholder of DHL had contributed $10,000 out of approximately $500,000 in a private placement of common stock of DHL in 2010. In addition, this minority stockholder of DHL also received 30,000 restricted shares of DHL common stock in 2011 for legal services. Accordingly, no stock-based compensation was recognized by DHDC for this assignment of 40,000 shares.

 

On February 9, 2018, DHL assigned 25,000 restricted shares of Company common stock it held to the Secretary of both DHDC and DHL for accounting and administrative services rendered to DHL. Accordingly, no stock-based compensation was recognized by DHDC for this assignment of 25,000 shares.

 

On February 9, 2018, DHL assigned 25,000 restricted shares of Company common stock it held to a director of DHDC and service provider to DHL for legal services provided to DHL. Accordingly, no stock-based compensation was recognized by DHDC for this assignment of 25,000 shares.

 

F-12
 

 

On February 26, 2018 DHDC issued 12,500 restricted shares of DHDC’s common stock for cash proceeds of $ 5,000 at $.40 per share per the Subscription Agreement.

 

On May 9, 2019, the Company issued 58,000 restricted shares of restricted common shares to two individuals for consulting services at $.10 per share.

 

On June 6, 2019, the Company issued 520,000 restricted shares for stock-based compensation at $.10 per share to six individuals.

 

On June 6, 2019, the Company issued 1,000,000 restricted shares for debt reduction to the Chief Executive Officer at $.10 per share.

 

On June 6, 2019, the Company issued 100,000 restricted shares for reduction of note payable at $.10 per share.

 

In March 2020, the Company issued 2,997,500 restricted shares for compensation valued at $ 119,500.

 

6 – Income Taxes

 

As of June 30, 2020 the Company has available for federal and state income tax purposes a net operating loss carry forward that may be used to offset future taxable income. For the six months ended June 30, 2020 and 2019, there was no income tax or benefit recorded.

 

7- Commitments and Contingencies

 

Construction Contracts

 

As of June 30, 2020, the Company was committed under 19 construction contracts outstanding with home owners with contract prices totaling $ 4,078,828, which are being fulfilled in the ordinary course of business. None of these construction projects are expected to take significantly in excess of one year to complete from commencement of construction. The Company has no significant commitments with material suppliers or subcontractors that involve any sums of substance or of long-term duration at the date of issuance of these financial statements.

 

Employment Agreements

 

On May 8, 2017, DHDC executed an Employment Agreement with a Sales Manager. The original term of the agreement was from May 8, 2017 to May 8, 2019 and was renewable thereafter at 1-year intervals based on certain sales targets. That agreement has been renewed and is currently in force. The agreement provides for compensation based on sales.

 

Lease Agreements

 

On June 20, 2017, DHDC executed a lease for office and storage space located at 2109 Bridge Avenue, Point Pleasant, New Jersey. This lease ended as of December 31, 2019 and the Company has vacated the premises.

 

For the six months ended June 30, 2020 and 2019, rent expense under these leases agreements was $0 and $19,800, respectively.

 

On February 28, 2020 the Company executed a lease for an office space located at 800 Riverview Drive in Brielle, which the Company feels will better serve the southern Monmouth clientele. The lease term is 2 years, and the total rent is $25,140.

 

The Company continues to operate an office/showroom located at 884 Rt. 9 in Little Egg Harbor. This lease was originally incepted in November 2018, and the Company continues to utilize the facility to service clients in Long Beach Island, Little Egg Harbor as well as points south.

 

F-13
 

 

Line of Credit

 

On September 15, 2016, DHDC established a $500,000 line of credit with General Development Corp., a non-bank lender. Advances under the line bear interest at a rate of 12%, with interest being payable on demand. The outstanding principal is due and payable in 60 months. The line is secured by the personal guarantee of the Company’s Chief Executive Officer. The agreement to fund automatically renews on a yearly basis as long as interest payments are current. To date, the Company has received several advances under the line of credit. As of June 30, 2020, the outstanding principal balance was $146,660. Interest expense for the six months ended June 30, 2020 and 2019 was $ 10,717 and $ 1,470, respectively.

 

Private Placement

 

On November 3, 2017, the Company released a Private Placement Memorandum, which consists of an equity and debt offering for up to $5,000,000 in new capital. This capital will be utilized for acquisition and development of several of the properties the Company has under contract, as well as expansion into the Florida market. The offering is comprised of Units for sale as well as convertible debt. Each Unit is priced at $.40 per common share and includes 1 warrant to purchase an additional share of common stock for $.60 within 3 years of the date of Unit purchase. The convertible debt is offered at an 8% coupon, paid quarterly, has a maturity of 4 years and is convertible at $.75 per share. The offering was scheduled to close on January 2, 2018 and was extended unchanged by the Company to September 2, 2018.

 

As of May 21, 2018, the Company has sold a total of 68,810 units and received $16,400 in cash ($5,000 in December 2017 for 12,500 units, $6,400 in January 2018 for 16,000 units and $5000 in February 2018 for 12,500 units) and was granted a reduction in accounts payable from a lumber vendor of 10,138 for 25,340 units issuable to the vendor as of December 31, 2017.

 

8. Related Party Transactions

 

Dream Homes Ltd. Allocated payroll

 

The Company uses the services of Dream Homes Ltd. (DHL) personnel for its operations. For the six months ended June 30, 2020 and 2019, selling, general and administrative expenses include $169,340 and $135,520, respectively, for the Company’s estimated share of DHL’s gross payroll and payroll taxes.

 

Office Space

 

The Company has occupied office space located in Forked River, New Jersey which is owned by an affiliated company. Commencing April 2017, the Company has paid monthly rent of $2,500 for this office space.

 

9 - Stock Warrants

 

On July 12, 2017, DHDC issued 750,000 stock warrants to various members of Dream Homes & Development Corporation’s executive team (including 500,000 to the Company’s Chief Executive Officer, 100,000 to the Company’s Secretary, and a total of 60,000 to the Company’s two other directors and 50,000 to a non-executive DHL project manager employee).

 

Effective April 1, 2019, all remaining warrants were cancelled.

 

F-14
 

 

10- Receivable from Arbitration and settlement of in process customer construction contract in dispute and related losses recognized and recorded by the Company

 

The Company began work on a construction contract in the amount of $307,000 in August 2016. Through September 30, 2017 the Company billed the customer a total of $219,565, collected a total of $130,247 from the customer, and accordingly had a balance due from the customer of $89,318 at September 30, 2017. When the customer refused to pay the $89,318 balance, the Company ceased working on the contract in July 2017, filed a request for arbitration on October 3, 2017 and filed a Construction Lien Claim in October 18, 2017. On March 6, 2018, the American Arbitration Association awarded the Company $75,000 in connection with its claim. On July 10, 2018, the Superior Court of New Jersey confirmed the arbitration award and entered a judgement against the customer for the $75,000 and prejudgment interest of $488. To date the Company has not yet collected the $75,000 owing to it under the arbitration award. Based upon advice of Company Counsel it still has further legal actions available to it to ultimately facilitate payment from the customer of the $75,000 in the contract dispute. Accordingly, at December 31, 2017 the Company has recognized a loss of $14,318 on the write-down of accounts receivable from this customer which has been reflected as a reduction in revenue from construction contracts and gross profit for the year ended December 31, 2017.

 

At December 31, 2017 there was a “Cost and estimated earnings in excess of billings” asset relating to the Arbitration Award disputed contract of $48,419 representing the difference between the amount billed to the customer of $219,565 and costs and estimated earnings of $267,984 through December 31, 2017. Accordingly, at December 31, 2017 the Company recognized a loss of $48,419 on the write-down of the “Costs and estimated earnings in excess of billings” asset attributable to this disputed customer contract, which has been reflected as a reduction in revenue from construction contracts and gross profit for the year ended December 31, 2017. Over the life of this contract the Company recognized a cumulative gross profit of $17,658 through December 31, 2017, which is net of a negative gross profit of ($9,012) for the year ended December 31, 2017, based upon the write-down of $14,318 described in the second preceding paragraph and the $48,419 write-down described in this paragraph, which aggregate to $62,737.

 

10 – Subsequent Events

 

Subsequent events have been detailed in respective categories herein.

 

F-15
 

 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This Quarterly Report on Form 10-Q 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 three months ended June 30, 2020 and 2019. 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),

 

3
 

 

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.

 

The Company has been focusing recently on new single-family homes along the shore of New Jersey, both modular and site-built construction. DHDC is also working on development of new subdivisions in both Ocean and Gloucester counties, with a 70-unit townhome project scheduled to come online in Ocean County in the latter part of 2020.

 

In the 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.

 

Recognizing the growing preference for modular homes, in October of 2018, DHDC purchased the assets of Premier Modular Homes, which has operated successfully in southern Ocean County for over 25 years. The Company also opened a modular showroom and design center in Little Egg Harbor, which allows much stronger coverage of the Long Beach Island market.

 

In the first quarter of 2020, the Company signed a lease for an office in Brielle, NJ, which will better serve the Company’s growing Monmouth county market.

 

In addition to the New Jersey market, the Company 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. Operations in Florida have been put on hold due to the excessive amount of new business in the New Jersey market due to the effects of the Covid-19 virus. An excessive number of buyers from north Jersey have decided to act immediately towards building 2nd homes, with immediate plans for retirement.

 

Dream Homes and Development Corporation, through its subsidiaries and affiliate companies, 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, 2020 is $5,490,929.

 

In addition to the above projects, which are in process, the Company has also estimated an additional $6,500,000 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.

 

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 68 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 2021 and is projected to add approximately $17,000,000 to the Company’s gross sales, through its Shore Custom Homes Corp. division.

 

4
 

 

The Company has received preliminary CAFRA approval for the 68-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 has been determined to be in an area designated as a CAFRA Town Center property, which has enabled greater density. Application is currently being made before the planning board for preliminary approval.

 

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. 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.

 

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. This application heard before the planning board on August 6 of 2020, and will be heard again on October 1, 2020 for finalization of preliminary approvals.

 

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 was approved as proposed. Further action before the planning board is pending due to delays caused by township closures due to Covid-19.

 

A contract was signed in October of 2019 to acquire 70 townhouse lots in Ocean County, NJ. This property is approved and unimproved. The project is slated to begin in the late part of 2020 and has a retail value of $17 million. It is anticipated that this property will close in fall of 2020 and construction will begin immediately.

 

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. 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.

 

5
 

 

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. Though the Company has enjoyed steady growth in the renovation/elevation portion of the company the new homes division continues to represent a greater percentage of total revenue. By the end of 2020, new home construction and development should represent over 70% of revenue.

 

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 will continue to pursue opportunities in the construction and real estate field, specifically in new home construction, home elevations and renovations.

 

6
 

 

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, 2020 and 2019.

 

STATEMENTS OF OPERATIONS

Unaudited

 

    Six months ended
June 30, 2020
    Six months ended
June 30, 2019
 
             
Revenue:                
Construction contracts   $ 2,134,271     $ 1,543,647  
                 
Cost of construction contracts     1,677,470       1,016,978  
                 
Gross profit     456,801       526,669  
                 
Operating Expenses:                
Selling, general and administrative, including stock based compensation of $119,900 and $110,194, respectively     518,196       559,052  
Depreciation expense     3,307       2,923  
                 
Total operating expenses     521,503       561,975  
                 
Loss from operations     (64,702 )     (35,306 )
                 
Other income (expenses):                
Cancellation of debt     -       12,000  
Interest expense     (10,717 )     (1,470 )
Total other income (expenses)     (10,717 )     10,530  
                 
Net loss before income taxes     (75,419 )     (24,776 )
Provision for income taxes     -       (25,,626 )
                 
Net loss   $ (75,419 )   $ (50,402 )
                 
Basic and diluted loss per common share   $ (.00 )   $ (.00 )
                 
Weighted average common shares outstanding-basic and diluted     27,645,601       24,433,523  

 

Results of Operations - Comparison for the six months ended June 30, 2020 and 2019.

 

Revenues

 

For the six months ended June 30, 2020 and 2019, revenues were $2,134,271 and $1,543,647, respectively. The increase in revenue of $590,624, was due to new contracts.

 

Cost of Sales

 

For the six months ended June 30, 2020 and 2019, cost of construction contracts were $1,677,470 and $1,016,978, respectively. This increase of $660,492 was due mainly to increased production.

 

Operating Expenses

 

Operating expenses decreased $40,472 from $561,975 in 2019 to $521,503 in 2020. This decrease was mainly due to the decrease in selling, general and administrative expenses.

 

7
 

 

Liquidity and Capital Resources

 

As of June 30, 2020 and December 31, 2019, our cash balance was $270,066 and $233,402, respectively, total assets were $1,541,702 and $1,693,629, respectively, and total current liabilities amounted to $989,030 and $1,195,740, respectively, including loans payable to related parties of $4,190 and $6,790, respectively. As of June 30, 2020 and December 31, 2019, the total stockholders’ equity was $542,370 and $497,889, respectively. We may seek additional capital to fund potential costs associated with expansion and/or acquisitions.

 

Inflation

 

The impact of inflation on the costs of our company, and the ability to pass on cost increases to its subscribers 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.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s President concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s President, as appropriate, to allow timely decisions regarding required disclosure.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosure

 

Not Applicable.

 

Item 5. Other Information.

 

None.

 

8
 

 

Item 6. Exhibits.

 

The following exhibits are included with this filing:

 

3.1* Articles of Incorporation (Form S-1 Registration No. 333-174674 filed June 2, 2011).

 

3.2* By-laws (Form S-1 Registration No. 333-174674 filed June 2, 2011).

 

4.1* Specimen Stock Certificate (Form S-1 Registration No. 333-174674 filed June 2, 2011).

 

10.1* Intellectual Property Purchase Agefreement (Form S-1 Registration No. 333-174674 filed June 2, 2011).

 

10.2* Consulting Agreement with William Kazmierczak 5-22-2010 (Form S-1 Registration No. 333-174674 filed June 2, 2011).

 

31 Sarbanes-Oxley Section 302 certification by Vincent Simonelli

 

32 Sarbanes-Oxley Section 906 certification by Vincent Simonelli

 

* Previously filed and Incorporated by reference.

 

9
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned; duly authorized.

 

Date: August 18, 2020 Dream Homes & Development Corporation
   
  By: /s/ Vincent Simonelli
    Vincent Simonelli
    Chief Executive Officer and Chief Financial Officer

 

10

 

 

EXHIBIT 31

 

CERTIFICATIONS

 

I, Vincent C. Simonelli, certify that:

 

1. I have reviewed this quarterly report of Dream Homes & Development Corporation.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

 

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as 4efined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

 

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

 

Date: August 18 , 2020  
   
/s/ Vincent C. Simonelli  
CEO and CFO  

 

 

 

EXHIBIT 32

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the annual report of Dream Homes & Development Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2020 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Vincent C. Simonelli, CEO and CFO of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Vincent C. Simonelli  
CEO and CFO  

 

Dated: August 18, 2020

 

A signed original of this written statement required by Section 906 has been provided to Dream Homes & Development Corporation and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.