☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Delaware		85-2983036
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

14701 Philips Highway, Suite 300, Jacksonville, FL		32256
(Address of principal executive offices)		(Zip code)

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	DFH	NASDAQ Global Select Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

ITEM 1.

DREAM FINDERS HOMES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		September 30, 2021 (Unaudited)				December 31, 2020
Assets
Cash and cash equivalents		$	85,539,220			$	35,495,595
Restricted cash (VIE amounts of $2,854,685 and $8,793,201)			181,851,145				49,715,553
Accounts receivable (VIE amounts of $1,872,199 and $1,288,359)			31,845,905				24,927,903
Inventories:
Construction in process and finished homes			595,643,030				396,630,945
VIE owned land and lots			20,708,390				40,900,552
Company owned land and lots			50,140,666				46,839,616
Lot deposits			156,605,165				66,272,347
Equity method investments			7,343,797				4,545,349
Property and equipment, net			3,825,299				4,309,071
Operating lease right-of-use assets			12,665,167				14,219,248
Finance lease right-of-use assets			232,917				335,791
Intangible assets, net of amortization			1,995,000				2,660,003
Goodwill			30,360,997				28,566,232
Deferred tax asset			3,941,011				-
Other assets (VIE amounts of $2,460,576 and $0)			49,884,074				18,262,036
Total assets		$	1,232,581,783			$	733,680,241
Liabilities
Accounts payable (VIE amounts of $655,511 and $1,315,582)		$	72,306,819			$	37,418,693
Accrued expenses (VIE amounts of $7,284,286 and $9,977,268)			65,740,570				67,401,055
Customer deposits			109,780,976				59,392,135
Construction lines of credit			440,000,000				289,878,716
Notes payable (VIE amounts of $2,697,031 and $8,821,282)			3,913,031				29,653,282
Operating lease liabilities			12,981,615				14,410,560
Finance lease liabilities			242,623				345,062
Contingent consideration			27,712,570				23,157,524
Total liabilities		$	732,678,204			$	521,657,027
Commitments and contingencies (Note 6)
Mezzanine Equity
Preferred mezzanine equity			154,892,565				55,638,450
Common mezzanine equity			-				20,593,001
Total mezzanine equity		$	154,892,565			$	76,231,451
Members' Equity
Common members' equity			-				103,852,646
Total members' equity		$	-			$	103,852,646
Stockholders' Equity - Dream Finders Homes, Inc.
Class A common stock, $0.01 per share, 289,000,000 authorized, 32,295,329 outstanding			322,953				-
Class B common stock, $0.01 per share, 61,000,000 authorized, 60,226,153 outstanding			602,262				-
Additional paid-in capital			256,761,849				-
Retained earnings			64,552,332				-
Non-controlling interests			22,771,618				31,939,117
Total stockholders' and members' equity			499,903,579				212,023,214
Total liabilities, mezzanine equity, members' equity and stockholders' equity		$	1,232,581,783			$	733,680,241

DREAM FINDERS HOMES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(1) The Company calculated earnings per share (“EPS”) based on net income attributable to common stockholders for the period January 21, 2021 through September 30, 2021 over the weighted average diluted shares outstanding for the same period. EPS was calculated prospectively for the period subsequent to the Company’s initial public offering and corporate reorganization as described in Note 1 – Nature of Business and Significant Accounting Policies, resulting in 92,521,482 shares of common stock outstanding as of the closing of the initial public offering. The total outstanding shares of common stock are made up of Class A common stock and Class B common stock, which participate equally in their ratable ownership share of the Company. For the three and the nine months ended September 30, 2021, the diluted shares of common stock outstanding were 92,695,197. and 92,658,878, respectively. Diluted shares were calculated by using the treasury stock method for stock grants and the if-converted method for the conversion option to common stock related to preferred stock that is available in the event the company has redeemed the stock in October of 2026.

 

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

		Nine Months Ended September 30,
		2021				2020
Cash Flows from Operating Activities
Net income		$	73,223,646			$	44,339,312
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities
Depreciation and Amortization			3,024,576				2,433,385
Loss on sale of property and equipment			(72,830	)			(53,006	)
Amortization of debt issuance costs			1,266,784				1,560,795
Extinguishment of unamortized debt issuance costs			506,466				-
Amortization of right-of-use operating lease			2,494,013				2,416,233
Amortization of right-of-use financing lease			102,874				118,769
Stock compensation expense			4,032,108				697,054
Forgiveness of Paycheck Protection Program			7,219,794				-
Deferred Tax Expense (Benefit)			(1,072,457)				-
Income from equity method investments, net of distributions received			(2,234,084	)			468,221
Remeasurement of contingent consideration			5,761,815				451,573
Changes in Operating Assets and Liabilities
Inventories			(153,372,432	)			(44,404,006	)
Lot deposits			(89,889,494	)			(8,240,408	)
Other assets			(31,546,732	)			(7,696,268	)
Accounts payable and accrued expenses			14,333,342				3,472,247
Customer deposits			45,447,126				9,860,987
Operating Lease ROU Assets			(939,932	)			-
Operating lease liabilities			(1,428,945	)			(2,253,703	)
Net cash used in operating activities			(123,144,362	)			3,171,185
Cash Flows from Investing Activities
Purchase of property and equipment			(1,695,476	)			(2,264,476	)
Proceeds from disposal of property and equipment			441,055				91,279
Investments in equity method investments			(1,200,000	)			(246,036	)
Return of investments from equity method investments			635,636				6,545,833
Business combinations, net of cash acquired			(22,694,250	)			-
Net cash provided used in investing activities			(24,513,035	)			4,126,600
Cash Flows from Financing Activities
Proceeds from issuance of common stock			142,982,406				-
Proceeds from issuance of convertible preferred stock			148,500,000				-
Proceeds from construction lines of credit			1,536,317,365				481,584,545
Principal payments on construction li