Our operations are currently organized into eight segments: Jacksonville, Orlando, DC Metro, Colorado, Texas (MHI), The Carolinas (H&H Homes), Other and Jet Home Loans. See Note 13. Segment Reporting to our consolidated financial statements. Our Jacksonville segment primarily consists of our Jacksonville, Florida homebuilding operations. Our Orlando segment primarily consists of our Orlando, Florida homebuilding operations. Our DC Metro segment primarily consistsmanagement of our homebuilding operations changed from a divisional level to a regional level during the third quarter of 2023. Our operations are now organized into four reportable segments: Southeast, Mid-Atlantic, Midwest and Financial Services. Our Southeast segment consists of the homebuilding operations in ~~the greater Washington D.C. metropolitan area.~~Jacksonville, Orlando, and Tampa, Florida; Savannah, Georgia; Hilton Head and Bluffton, South Carolina; and our Active Adult and Custom Homes homebuilding operations in northeast Florida. Our ~~Colorado~~Mid-Atlantic segment ~~primarily~~ consists of our ~~greater Denver homebuilding operations. Our H&H Homes segment consists of our~~North Carolina homebuilding operations in Charlotte, Fayetteville, Raleigh, Wilmington and the Triad (consisting of Greensboro, High Point and ~~Winston-Salem, North Carolina)~~Winston-Salem) (together, “The Carolinas”) and ~~Wilmington, North Carolina, and Myrtle Beach, South Carolina.~~DC Metro. Our ~~MHI~~Midwest segment consists of our Texas homebuilding operations in Austin, Dallas, Houston and San Antonio, ~~Texas. Our Other segment primarily consists of~~and our Colorado homebuilding operations ~~Austin, Texas, Hilton Head and Bluffton, South Carolina and Savannah, Georgia and our title insurance brokerage business, DF Title, LLC. The Other operations~~ in ~~Austin, Texas include legacy home building operations outside of those acquired from MHI.~~Denver. Our ~~Jet Home Loans~~Financial Services segment consists of our mortgage banking and title services operations, ~~conducted through~~which primarily consist of Jet HomeLoans and Golden Dog Title and Trust. The homebuilding operations of Crescent Homes will be included in our ~~mortgage banking joint venture, Jet LLC.~~Mid-Atlantic segment in 2024. Refer to Note 9, Segment Reporting to our consolidated financial statements for more information.

Asset-Light Business Strategy

We ~~are focused on controlling a capital efficient land pipeline sufficient~~operate an asset-light and capital-efficient lot acquisition strategy to meet our growth objectives. We ~~believe our~~generally seek to avoid engaging in land development, which requires significant capital expenditures, and can take several years to realize returns on the investment. Our asset-light ~~land financing~~lot acquisition strategy ~~represents a capital efficient platform that allows~~generally enables us to ~~effectively capitalize on growth opportunities~~purchase land in a “just-in-time” manner in both new and existing ~~markets.~~markets with reduced up-front capital commitments, and, in turn, allows us to increase our inventory turnover rate, enhance our return on equity and contributes to our growth. Our culture of building and developing external relationships with land sellers, developers and land finance partners enhances our success in both sourcing and executing finished lot and land bank option contracts that are fundamentalstrategy is intended to ~~this strategy. We believe these arrangements reduce our exposure to economic down cycles~~avoid the financial commitments and risks associated with direct land ownership and land development ~~and~~by allowing us to increase optionality and control a significant number of lots for a relatively low capital cost. We believe our asset-light business model reduces our balance sheet risk relative to ~~effectively manage~~homebuilders that own a higher percentage of their land supply. Refer to “—Land Acquisition and Development Process” and Note 6, Variable Interest Entities to our ~~pipeline~~consolidated financial statementsfor further information.

Land Acquisition and Development Process

Locating and analyzing attractive land positions is a critical challenge for any homebuilder. We remain focused on controlling as many quality land positions as possible while minimizing up-front capital outlay. Our land selection process begins with key economic drivers, such as demographic trends and employment growth. We typically pursue opportunities more aggressively in our markets that generate the greatest returns, while proceeding more cautiously in our markets where we have plans in process to improve our operational efficiencies.

While our land selection process is driven mainly by the local division and regional leadership, the land sourcing process, including final approval to move forward with a project, is a collaboration involving corporate leadership, including our President and Chief Executive Officer. Our multilevel cooperation allows us to remain flexible to react quickly to changing markets or project-specific conditions and maximize the potential of each new land opportunity. We believe our experience, top-down emphasis on relationship-building with land market participants and collaborative involvement of local, regional and corporate management in the land sourcing and acquisition process enable us to identify the ideal developers and efficiently source and secure options to control and close acquisitions of lots to meet our growth needs while mitigating risk.

We primarily employ two variations of our asset-light strategy—finished lot option contracts and land bank option contracts—pursuant to which we secure the right to purchase finished lots at predetermined fixed contractual pricing from various land developers, land sellers and land bank partners. When a land seller desires to sell finished lots in bulk or does not wish to develop finished lots, we often enter into land bank option contracts with land bank partners who fund any required land acquisition and land development costs and sell the finished lots to us over a period of time.

Table of Contents

These option contracts generally allow us, at our option, to forfeit our right to purchase the lots controlled for any reason, and our sole legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid pursuant to such option contracts and, in the case of land bank option contracts, our loss is limited to the related lot option fees paid to the land bank partner, and for certain land bank option contracts, any potential performance obligations, management of the land development to completion and any cost overruns relative to the project. We provide lot deposits typically averaging 10% of the land purchase price. Lot option fees are based on the outstanding capital balance held by the land banker and often are reflective of provisions under which delays in land development and/or longer land takedown periods result in additional costs.

As of December 31, 2023, our lot deposits for finished lot option and land bank option contracts were $247 million. As of December 31, 2023, we controlled 29,748 lots under finished lot option and land bank option contracts.

In the past, we have supplemented our lot option acquisition strategies by entering into joint venture agreements with external investors to acquire, develop and control lots. Due to the profit sharing requirements of the joint venture agreements, we have transitioned from these joint venture arrangements in favor of the more profitable option contract strategies described above. Refer to Note 6, Variable Interest Entities to our consolidated financial statements for the disclosure of our remaining equity interests in these joint ventures.

Owned and Controlled Lots

The following table presents our owned finished lots purchased just-in-time for production and controlled lots through option contracts by homebuilding segment as of December 31, 2023 and 2022:


	As of December 31,
	2023			2022
Segment(1)	Owned(2)(3)	Controlled	Total(4)	Owned(3)	Controlled	Total	% Change
Southeast	3,057	13,063	16,120	2,939	16,255	19,194	-16	%
Mid-Atlantic	1,802	4,795	6,597	1,766	14,891	16,657	-60	%
Midwest	2,070	11,890	13,960	1,238	6,469	7,707	81	%
Grand Total	6,929	29,748	36,677	5,943	37,615	43,558	-16	%

(1)Refer to Note 9, Segment Reporting to the consolidated financial statements for further explanation of our reportable segments.

(2)As of December 31, 2023, the Company had 6,929 owned lots, of which 4,133 were included in construction in process (“CIP”) and finished homes within the Consolidated Balance Sheet. Of the 4,133 owned lots included in CIP and finished homes, 3,632 were under construction, 391 were completed spec homes and 110 were model homes. The remaining owned lots were purchased just-in-time to start construction through existing lot option contracts.

(3)As of December 31, 2023 and 2022, owned land and lots, inclusive of lot option fees, property taxes, and due diligence costs, represented 13% and 17%, respectively, of total inventories.

(4)As of December 31, 2023, the Company had 1,782 owned lots and 1,413 controlled lots under built-for-rent contracts (see “—Sales and Backlog” for a definition of built-for-rent contracts).

DF Capital Management, LLC

Controlling a sufficient supply of finished ~~lots. We continue to emphasize the development~~lots is an important component of ~~strong external relationships and execute on~~ our asset-light strategy. Our land team routinely underwrites potential lot acquisitions that meet our capital allocation criteria. Once our land acquisition committee approves a transaction that requires financing ~~strategy to take advantage~~and meets our internal model, we will seek a land bank partner. Our primary operating subsidiary, Dream Finders Homes LLC, periodically enters into land bank arrangements with DF Capital Management, LLC, a Florida limited liability company (“DF Capital”). The Company owns a 49% membership interest in DF Capital, and a non-affiliated third party owns the remaining 51% of the ~~proven capital efficiencies this strategy provides.~~membership interests in DF Capital. Refer to Note 11, Related Party Transactions to the consolidated financial statements for more information.

~~We are focused on~~

Table of Contents

Sales and Backlog

A new order (“new sale”) is reported when a customer ~~satisfaction~~has received preliminary mortgage approval and ~~ensuring that each customer’s experience exceeds his or her expectations. We seek to maximize~~the sales contract has been signed by the customer, ~~satisfaction~~approved by ~~providing attentive one-on-one customer service throughout the home buying process, empowering our customers with flexibility to personalize their homes~~us and ~~actively soliciting feedback from all of our customers. Our emphasis on adapting to meet potential homebuyer needs led to increased use of our virtual home tours beginning in April 2020,~~secured by a deposit, which ~~has become an increasingly popular and effective marketing strategy following the outbreak~~ generally averages approximately 9% of the ~~COVID-19 virus. In addition, we launched our “Stay Home & Buy~~purchase price of the home. These deposits are typically nonrefundable, but each customer situation is evaluated individually. Sales to third-party investors that intend to lease the homes (“built-for-rent contracts”) are reported when the Company has received a ~~Home” program in April 2020 as another means for customers to safely and efficiently purchase a~~nonrefundable deposit.

Net new ~~home without leaving their current home. We believe these efforts have been crucial to our ability to sell~~orders are sales of homes during the ~~COVID-19 pandemic. Ultimately,~~period less cancellations of existing sales contracts during the ~~willingness~~period. Our cancellation rate for a given period is calculated as the total number of new sales contracts cancelled during the period, divided by the total number of new sales contracts entered into during the period. When a cancellation occurs, we generally retain the customer deposit and resell the home to a new customer. Cancellations can occur for various reasons outside of our ~~customers~~control, including customer credit issues or changes in other personal circumstances.

Our backlog consists of homes under contract that have not yet been delivered to ~~refer friends~~a homebuyer or third-party investor. Ending backlog represents the number of homes in backlog from the previous period, plus sales of homes during the current period less cancellations of existing sales contracts during the period (“net sales”), minus the number of home closings during the current period. Our backlog at any given time will be affected by cancellations and ~~family to us as homebuyers is a direct result of customer satisfaction, and we strive to ensure that each~~the number of our ~~customers will make~~active communities.

Homes in backlog are generally closed within one to nine months. Sustained supply chain challenges during 2022 and early 2023 have contributed to temporarily elongated cycle times impacting the Company’s backlog turnover rate. In addition, certain circumstances may impact our backlog conversion, such ~~referrals without reservation.~~

~~Table~~as built-for-rent contracts, which are customarily delivered over a longer period of ~~Contents~~

~~Jet LLC, offers financing to~~time, as well as pre-sales in new communities. The Company’s backlog may be impacted by customer cancellations for various reasons that are beyond our ~~homebuyers~~control, and, helps us more effectively convert backlog into home closings. We believe Jet LLC provides a distinct competitive advantage relative to homebuilders without holistic mortgage solutions for clients, as manyin light of our ~~homebuyers seek an integrated home buying experience. Jet LLC allows us~~minimal required deposit, there is little negative impact to ~~use mortgage finance as an additional~~the potential homebuyer from the cancellation of the purchase contract.

As of December 31, 2023 and 2022, ending backlog was 3,978 homes and 5,548 homes, valued at approximately $2 billion and $3 billion, respectively, based on average sales ~~tool, it helps ensure and enhance our customer experience, it allows us~~price. Homes in ending backlog are typically converted to ~~prequalify buyers early~~closings in the ~~home buying process~~subsequent year.

Refer to “Management’s Discussion and ~~it provides us better visibility in converting our sales backlog into closings. We believe that Jet LLC will continue to be a meaningful source~~Analysis of ~~incremental revenues~~Financial Condition and ~~profitability~~Results of Operations—Net Sales, Backlog and Closings” for ~~us.~~additional information.

Products, Communities and Construction

Homes, Homebuyers and Active Communities

~~Our Products and Customers~~

~~Our Homes and Homebuyers~~

We offer a range of single-family homes in each of our markets, ~~with~~placing a ~~core focus~~primary emphasis on entry-level and first-time move-up ~~homebuyers, but we~~homes. We also provide ~~offerings for~~ second-time move-up homes and ~~luxury homebuyers.~~ homes in the active adult market. Price points are tailored to each of these levels.Our homebuilding business is driven by our commitment to building ~~high quality~~high-quality homes at affordable prices in attractive locations while delivering excellent customer service. ~~We empower our~~Our customers ~~with~~enjoy the flexibility ~~to personalize~~of personalizing our desirable open floor plans with a wide array of finishes and upgrades to best fit their distinctive tastes and unique needs. ~~Price points in our markets vary for entry-level, first-time move-up and second-time move-up homebuyers.~~

~~Our Active Communities~~

~~We define an~~A community becomes active once the model is completed or the community ~~as a community where we have recorded five~~has its fifth net new ~~orders or a model home is currently open to customers.~~order. A community ~~is no longer active~~becomes inactive when ~~we have less~~it has fewer than five ~~home sites~~units remaining to ~~sell to customers.~~sell. Active community count is an important metric to forecast future net new orders for our business. As of December 31, ~~2021,~~2023, we had ~~205~~221 active communities, ~~a year over year~~an increase of 7915 communities, or ~~62.7%~~7%, when compared to ~~our 126~~206 active communities atas of December 31, ~~2020. Average monthly~~2022.

Our active community count excludes communities under the Company's built-for-rent contracts, as all sales ~~per community~~to third-party investors occur at one point in time and these communities would have no homesites remaining to sell. As of December 31, 2023, the Company had 15 communities delivering closings under built-for-rent contracts.

Table of Contents

Construction and Materials

When constructing our homes, we are dependent upon building material suppliers to provide a continuous flow of raw materials. It typically takes us between 150 and 240 days to construct a single-family home. The construction period for our custom homes is typically longer.

We have extensive experience managing construction processes without employing subcontractors directly. Instead, we rely on local and regional builder associations to identify and contract with reputable tradespeople. This approach also eliminates the need for equipment investment, as we do not employ our own construction base. Each division is led by a construction director, manager, or vice president who oversees area managers. Communities have dedicated superintendents supervising the work performed by the subcontractors. We use enterprise resource planning and integrated scheduling software for close construction progress monitoring and timely issue identification. Our software also enables our superintendents to monitor the completion of work, which, in turn, expedites payments to the subcontractors.

Our materials procurement strategy focuses on maximizing efficiency across local, regional, and national levels through established contracts and standard products from multiple suppliers, resulting in cost savings, streamlined offerings, and pre-negotiated rebates. We leverage our national presence and volume to secure better prices with manufacturers.

Our cost of sales includes the acquisition and finance costs of homesites or lots, municipality fees, the costs associated with obtaining building permits, materials and labor to construct the home, interest costs for construction loans, internal and external realtor commissions and other miscellaneous closing costs. Homesite costs range from 25-30% of the average cost of a home. Building materials range from 35-40% of the average cost to build the home, labor ranges from 25-30% of the average cost to build the home, and interest, commissions and closing costs range from 4-10% of the average cost to build the home.

Our materials are subject to price fluctuations. Once construction of a home begins, prices for the materials utilized in the construction of that particular home are generally locked via purchase orders, but fluctuations may occur as a result of market conditions. Price fluctuations may be caused by several factors, including seasonal variation in availability of materials, labor and supply chain disruptions, international trade disputes and resulting tariffs, and changes in demand for materials as a result of the housing market conditions where we operate. The price changes that most significantly influence our operations are price increases in commodities. Significant price increases of these materials may negatively impact our cost of sales and, in turn, our net income.

Customer Relations, Quality Control and Warranty Program

In our construction process, we prioritize product design, material quality, and subcontractor standards to minimize deficiencies and warranty costs. We enforce work quality standards through onboarding processes, require insurance from vendors, and conduct regular inspections. Our customer service team ensures quality assurance and positive experiences for customers from pre-sale to post-closing, utilizing feedback to enhance our standards.

We maintain professional staff dedicated to delivering excellent customer experiences, including pre-sale, construction, closing, and after-sales service. We utilize customer feedback and comprehensive home tours before closing to improve quality and satisfaction. We highly value customers' willingness to refer us, which influences our team's compensation and quality control efforts.

We provide each homeowner with product warranties covering workmanship and materials for one year ~~ended December 31, 2021 were 4.0, a decrease~~from the time of ~~0.1,~~home closing, and warranties covering structural systems for eight to ten years from the time of closing. Where possible, we utilize our subcontractors to repair the homes in accordance with our subcontractor agreements and as required by law. We believe our warranty program meets or ~~2.5%, from 4.1 average monthly sales per community during~~exceeds terms customarily offered in the ~~year ended December 31, 2020.~~homebuilding industry.

Financial Services

~~Our Title Insurance Business~~

~~Our wholly owned subsidiary, DF Title, LLC d/b/a Golden Dog Title & Trust (“DF Title”), is a licensed title insurance agency that provides closing, escrow~~By providing comprehensive mortgage and title ~~insurance services. Our philosophy is~~services in markets where we operate, our Financial Services segment serves as a valuable resource to ~~maintain a systematic approach to workflow management with a high level~~customers navigating the homebuying process and, in turn, enhances our efficiency in converting our backlog into home closings.

Table of care and communication during the closing process, thereby delivering an exceptional experience to each of our customers. DF Title is involved primarily in residential real estate transactions, including new home construction and resale and refinancing transactions.Contents

DF Title operates seven closing offices: four located in Florida, two in Colorado and one in South Carolina. DF Title’s staff includes attorneys, state licensed title agents, escrow officers and experienced support staff with over 200 years of collective closing experience. Closing, escrow and title insurance is primarily regulated at a state level, requiring that operations be conducted by skilled attorneys and/or licensed title insurance agents. Expansion of title operations into other markets is ongoing and consideration of new markets is driven by unit volume, average sales price for homes sold in the market and state-level legal considerations.

~~Our Mortgage Banking Business~~

Our mortgage banking joint venture, Jet ~~LLC, underwrites~~HomeLoans, offers conforming and ~~originates home mortgages across~~non-conforming mortgage financing to our ~~geographic footprint.~~homebuyers. We own a ~~49.9%~~60% interest in Jet ~~LLC,~~HomeLoans, and our joint venture partner, FBC Mortgage, LLC, an Orlando-based mortgage lender, owns the remaining ~~50.1%~~40% interest and performs a number of ~~back office~~back-office functions, such as accounting, compliance and secondary marketing activities. ~~Prior to October 1, 2020, our joint venture partner was Prime Lending Corp., a Dallas-based mortgage lender.~~

~~Table of Contents~~

FBC Mortgage, LLC has been approved by the Federal Housing Administration (“FHA”), the Veterans Administration (“VA”) and the U.S. Department of Agriculture (“USDA”) to originate mortgages that are insured and/or guaranteed by these entities. Jet LLC originates conforming and non-conforming mortgages for our homebuyers, as well as customers purchasing homes from third-party sellers. Jet LLC loan officers assist customers in identifying various loan options that meet their home financing goals, and Jet LLC underwriters assess borrowers’ ability to meet repayment options of various loans. When customers elect to finance the purchase of their home with a mortgage, Jet LLC has historically captured 60-70% of loan originations.

For the year ended December 31, 2021, Jet LLC originated and funded 2,256 home loans with an aggregate principal amount of approximately $729.0 million as compared to 1,961 home loans with an aggregate principal amount of approximately $564.0 million for the year ended December 31, 2020. For the years ended December 31, 2021 and 2020, respectively, Jet LLC had net income of approximately $12.9 million and $15.9 million. Our interest in Jet ~~LLC~~HomeLoans is accounted for under the equity method and is not consolidated in our consolidated financial statements, as we do not control and are not deemed the primary beneficiary of the variable interest entity (“VIE”). ~~See Note 11. Variable Interest Entities~~Refer to Note 1, Nature of Business and ~~Investments in Other Entities~~Significant Accounting Policies, to our consolidated financial statements for a ~~description~~discussion of ~~our joint ventures, including those that were determined to be VIEs, and the related~~ accounting ~~treatment.~~

treatment of VIEs.

~~Land Acquisition Strategy and Development Process~~

~~Locating and analyzing attractive land positions~~Our wholly owned subsidiary, DF Title, is a critical challenge for any homebuilder. We generally remain focused on controlling as many quality land positions as possible while minimizing up-front capital outlay. Our land selection process beginstitle insurance agency licensed in multiple states that provides closing, escrow and title insurance services. DF Title primarily closes residential real estate transactions, including new home construction, resale and refinance, and commercial real estate transactions.DF Title operates in Colorado, Florida, Georgia, North Carolina, South Carolina and Texas. DF Title’s staff includes attorneys, state licensed title agents, escrow officers and experienced support staff with ~~key economic drivers: population, demographic trends~~hundreds of years of collective closing experience. Closing, escrow and ~~employment growth,~~title insurance is primarily regulated at a state level, requiring that transactions be conducted by skilled attorneys and/or licensed title insurance agents. Expansion of title operations into our markets is ongoing and ~~we generally pursue opportunities more aggressively~~consideration of further expansion in our markets ~~that generate the greatest returns while proceeding more cautiously in our markets where we continue to improve our operational efficiencies.~~

~~While our land selection process~~ is driven ~~mainly~~ by ~~the local division leadership, the land sourcing process, including final approval to move forward with a project, is a collaboration involving both the local division~~unit volume, average sales price for homes sold and corporate leadership, including our President and Chief Executive Officer. This team effort, complimented by our company-wide emphasis on continually developing new and existing relationships with land sellers and developers, ensures that we leverage experience and resources throughout the organization for a thoughtful and strategic execution of every new land acquisition. Our management team leads by example in fostering our culture of external relationship building by taking an active, personal role in communications with land sellers and developers, an approach that we believe differentiates us from similarly situated homebuilders. This multilevel cooperation allows us to remain flexible and react quickly to changing market or project-specific conditions and maximize the potential of each new land opportunity. We believe our experience, top-down emphasis on relationship building with land market participants and collaborative involvement of local and corporate management in the land sourcing and acquisition process enables us to identify the ideal developers and efficiently source and secure options to control and close acquisitions of lots to meet our growth needs.

As part of our asset-light land acquisition strategy, we primarily enter into finished lot option contracts or land bank option contracts. See “Business—Business Opportunities” for further detail on our asset-light strategy. Finished lot option contracts are generally entered into with the land seller between six months and one year in advance of completion of the land development. Pursuant to our finished lot option contracts, the lots are offered to us for purchase on a rolling basis, which is designed to mirror our expected home sales. When a land seller desires to sell finished lots in bulk or does not wish to develop finished lots, we often enter into land bank option contracts with land bank partners who fund any required land development costs and sell the finished lots to us, at our option, over a period of time. These option contracts generally allow us, at our option, to forfeit our right to purchase the lots controlled by these option contracts for any reason, and our solestate-level legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid pursuant to such option contracts, any related fees paid to the land bank partner, management of the development to completion and any cost overruns relative to the project.

5considerations.

~~Table of Contents~~

As of December 31, 2021, our lot deposits and investments in finished lot option and land bank contracts were $241.4 million. As of December 31, 2021, we controlled 38,495 lots under lot option and land bank option contracts.

Historically, we have supplemented our lot option acquisition strategies by entering into joint venture agreements with external investors to acquire, develop and control lots. A typical joint venture arrangement requires us to contribute less than 10% of the total equity required to purchase the land and develop finished lots, with our joint venture partners contributing the remainder. These joint ventures typically provide for a preferred return on deployed capital and an allocation of the remaining profits in accordance with the corresponding joint venture agreement. If we were to exit a joint venture arrangement, we would forfeit the initial equity investment and all future compensation and profit sharing. Due to the profit sharing requirements of the joint venture agreements, we continue to strategically shift away from these joint venture arrangements in favor of the more profitable option contract strategies described above.

~~Owned and Controlled Lots~~

~~The following table presents our owned finished lots purchased just-in-time for production and our controlled lots by segment as of December 31, 2021 and 2020:~~

As of December 31,
2021 2020
Segment Owned Controlled Total Owned Controlled Total
Jacksonville
774

10,311

11,085

715

4,445

5,160
Colorado
152

4,883

5,035

106

4,145

4,251
Orlando
537

5,487

6,024

256

2,504

2,760
DC Metro
97

1,680

1,777

77

566

643
The Carolinas
1,452

5,196

6,648

1,348

4,107

5,455
Texas
1,569

6,304

7,873

-

-

-
Other⁽¹⁾

764

4,634

5,398

629

3,509

4,138
Grand Total 5,345 38,495 43,840 3,131 19,276 22,407

~~(1)~~

Austin, Savannah, Village Park Homes, Active Adult and Custom Homes. Austin refers to legacy DFH operations exclusive of MHI. See Note 13. Segment Reporting to our consolidated financial statements for further explanation of our reportable segments.

~~Owned Real Estate Inventory Status~~

~~The following table presents our owned real estate inventory status as of December 31, 2021 and 2020:~~

% of Owned Real Estate Inventory

As of
December 31, 2021

As of
December 31, 2020

Construction in process and finished homes ⁽¹⁾
92.0 % 88.8 %
Finished lots and land under development⁽²⁾
8.0 % 11.2 %
Total 100 % 100 %

~~(1)~~

~~Represents our owned homes that are completed or under construction, including sold, spec and model homes.~~

~~(2)~~

Represents finished lots purchased just-in-time for production and capitalized costs related to land under development held by third party land bank partners, including lot option fees, property taxes and due diligence. Land and lots from consolidated joint ventures are excluded.

~~Table of Contents~~

~~DF Residential I, LP, DF Residential II, LP and DF Capital Management, LLC~~

Controlling a sufficient supply of finished lots is an important component of our asset-light land financing strategy. Our land team routinely underwrites potential lot acquisitions that meet our capital allocation criteria. Once our land acquisition committee approves a transaction that requires financing above a deposit meeting our internal model, we will seek a land bank partner. Our primary operating subsidiary, Dream Finders Homes LLC (“DFH LLC”, has entered into six joint ventures and ten land bank projects with DF Residential I, LP (“Fund I”) since its formation in January 2017. Additionally, on March 11, 2021, the Company entered into land bank financing arrangements and a Memorandum of Right of First Offer with DF Residential Fund II (“Fund II”), under which Fund II has an exclusive right of first offer on any land bank financing projects up to $20.0 million that meet its investment criteria and are undertaken by the Company during Fund II’s investment period. DF Capital Management, LLC, a Florida limited liability company (“DF Capital”), is the investment manager of Fund I and Fund II. DFH LLC owns 49% of the membership interests in DF Capital and Christopher Butler, a non-affiliated third party, serves as the managing member and owns the remaining 51% of the membership interests in DF Capital.

Historically, we have provided DF Capital with the opportunity to have one of the funds that it manages participate in transactions that require additional funding. If DF Capital does not wish to participate in and finance the transaction, we turn to other potential financing sources. We believe our relationship with DF Capital allows us to act quickly when lot acquisition opportunities are presented to us because DF Capital generally provides for faster closings and is not subject to the time delays that we historically have experienced when seeking financing for projects.

As of December 31, 2021 and 2020, we controlled 434 and 1,500 lots, respectively, through Fund I, representing 1.0% and 6.7% of our total owned and controlled lots, as of December 31, 2021 and 2020, respectively.

Fund I was fully committed in early 2019. Subsequently, we identified lot acquisitions that met our investment threshold, and DF Capital agreed to provide land bank financing in a total of ten of these projects. As of December 31, 2021 and 2020, respectively, funds managed by DF Capital controlled an additional 347 and 595 lots as a result of these transactions outside of Fund I or Fund II. During the twelve months ended December 31, 2021, we purchased 248 of these lots for $15.6 million, and the outstanding lot deposit balance in relation to these projects was approximately $3.7 million.

As of December 31, 2021, we controlled 4,030 lots through Fund II, representing 9.2% of our total owned and controlled lots, as of December 31, 2021. As of December 31, 2020, we did not control any lots through Fund II.

~~Homebuilding,~~ Marketing and Sales ~~Process~~

We ~~are intently focused~~seek to ensure that each customer’s experience exceeds their expectations by focusing on customer satisfaction and ~~committed to~~ providing ~~our homebuyers~~ a unique ~~experience by personalizing each~~buying experience. We provide attentive one-on-one customer service throughout the home buying process, empowering our customers with flexibility to ~~fit~~personalize their ~~lifestyle while also offering high-quality~~homes, and ~~affordable homes. We generally market~~actively soliciting feedback from all of our ~~homes~~customers. The willingness of our customers to refer friends and family to ~~entry-level~~us as homebuyers is a direct result of customer satisfaction, and ~~first- and second-time move-up homebuyers through targeted product offerings in each of the communities in which~~ we ~~operate. We target what we believe~~strive to ~~be the most underserved customer groups in~~ensure that each of our ~~markets, and our architectural design team works with our land team to secure lots that permit the building of floor plans that we believe~~customers will ~~appeal to~~make such ~~target customers.~~

referrals.

While we occasionally utilize traditional printed media ~~such as fliers,~~ to advertise directly to potential homebuyers, digital marketing is the primary component of our marketing strategy, and we have refined our digital sales efforts in recent years through the work of our dedicated digital sales coordinators. We believe our online marketing efforts have become a key strength of our business, allowing us to reach a broad range of potential homebuyers at a relatively low expense compared to traditional advertising platforms. The digital marketing methods that we employ include strategic e-marketing efforts to our current database of potential customers, internet advertising enhanced by search engine marketing and search engine optimization, and campaigns and promotions across an array of social media platforms. Our proficiency with digital marketing and our commitment to meeting the customer service needs of our customers led to increased use of our virtual home tours beginning in April 2020, which has become an increasingly popular and effective marketing strategy following the outbreak of the COVID-19 virus.

~~Table of Contents~~

We also strategically open communities in ~~high visibility~~high-visibility areas that ~~permit~~allow us to take advantage of local traffic patterns. Model homes play a significant role in our marketing efforts by not only creating an attractive atmosphere, but by also by displaying options and upgrades. ~~For example, as~~As the ~~official homebuilder~~Official Homebuilder of the Jacksonville Jaguars, we maintain a fully decorated model home at the team’s stadium, which ~~typically attracts between two-~~attracts thousands of fans each game day.

We are also the Official Homebuilder of the PGA TOUR. This strategic alliance provides a national marketing footprint in regions where we operate and ~~three-thousand fans each game day. This model home is deconstructed every two or three years and donated to a local charity supporting veterans as part of our commitment to give back to our community.~~

where high-profile, annual PGA TOUR golf tournaments are held.

We sell our homes through our own sales representatives and through independent real estate brokers. We continuously work to maintain good relationships with independent real estate brokers in our markets and offer competitive programs to reward these brokers for selling our homes. Our in-house sales force typically works from sales offices located in model homes close to or in each community. Sales representatives assist potential homebuyers by providing them with ~~basic~~ floor plans, price information, development and construction timetables, tours of model homes and the home customization options that we offer. Sales representatives are trained by us and generally have prior experience selling new homes in the local market.

Our customer-tailored homebuilding process begins with a broad range of floor plans from which our customers can select. Our architectural design team modifies these floor plans over time based on customer buying trends in each of our markets to achieve the best results for our customers while offering a wide range of materials and upgrades to meet the varying preferences of the entry-level, first-time move-up and other homebuyers that we aim to service. We believe that every home is as important as the next, regardless of price point, and that everyone deserves the ability to ~~make modifications in order to build~~purchase a home that suits their needs. Accordingly, we are able to offer ~~an array~~a range of ~~customizations~~optionality within the homebuilding process, from move-in-ready inventory homes to ~~our homebuyers in any~~homes that can be tailored with additional features, including structural modifications. While most of our ~~product offerings, including cabinetry, countertops, fixtures, home automation, energy efficiency, appliances~~customers opt for inventory homes, for those seeking more options, we are able to provide access to a diverse range of materials and ~~flooring, as well as certain structural modifications. We empower our customers with the flexibility~~upgrades to ~~select these customizations for~~cater to their ~~homes~~specific preferences. Our architectural design team continually adapts floor plans in ~~collaboration~~response to customer buying trends in various markets and collaborates with our ~~design consultants at our design studios located in each of our markets.~~

~~Acquisitions~~

~~Our growth strategy includes both organic expansion and targeted acquisitions. Since we began operations, we have organically expanded from Jacksonville, Florida~~land team to Savannah, Georgia; Denver, Colorado; Austin, Texas; Orlando, Florida; and the greater Washington D.C. metropolitan (“DC Metro”) area. We have also demonstrated our ability to grow externally through (i) our expansion into Hilton Head, South Carolina with our 2019 acquisition of Village Park Homes, (ii) our expansion into Charlotte, Fayetteville, Raleigh, the Triad (consisting of Greensboro, High Point and Winston-Salem, North Carolina) and Wilmington, North Carolina and Myrtle Beach, South Carolina markets in 2020 with the H&H acquisition (iii) expanded our presence in the Orlando, Florida market in 2021 with the Century acquisition and (iv) expanded our presence in the Texas market in October 2021 with the MHI acquisition.

~~MHI Acquisition~~

On October 1, 2021, we completed the acquisition of certain assets, rights and properties, and assumed certain liabilities of MHI, including: (i) single-family residential home-building; (ii) model homes; (iii) acquisition, ownership and licensing of intellectual property (including architectural plans); (iv) purchasing and reselling homebuilding supplies; (v) development, construction and sale of condominium units in Austin, Texas; (vi) mortgage origination through a mortgage company; and (vii) title insurance, escrow and closing services through a title company.

~~The consideration given~~secure suitable lots for the MHI acquisition was (a) cash at the closing in the amount of $471.0 million, subject to customary post-closing adjustments based on the closing date net asset value of the purchased assets, (b) the assumption of approximately $97.0 million of liabilities, and (c) the future payment of additional consideration of up to 25% of pre-tax net income for up to five periods, the last of which ends 48 months after the closing, subject to certain minimum pre-tax income hurdles and thresholds and certain overhead expenses. Refer to Note 2 of the Consolidated Financial Statements reported herein for further discussion on the purchase price and post-closing adjustments.

We used $20.0 million of cash on hand, proceeds from the sale of the newly-issued convertible preferred stock (“Convertible Preferred Stock”) and from unsecured debt incurred under the Credit Agreement, to fund the MHI acquisition.

these customized plans.

Table of ~~our land inventory may decrease. Inflation may also raise our costs of capital and decrease our purchasing power, making it more difficult to maintain sufficient funds to operate our business.~~Contents

Difficulties with appraisal valuations in relation to the proposed sales price of our homes could force us to reduce the price of our homes for sale.

Each of our home sales may require an appraisal of the ~~home~~home’s value before closing. These appraisals are professional judgments of the market value of the property and are based on a variety of market factors. If our internal valuations of the market and pricing do not line up with the appraisal valuations, and appraisals are not at or near the agreed upon sales price, we may be forced to reduce the sales price of the home to complete the sale. These appraisal issues could have a material adverse effect on our business and results of operations.

If the market value of our inventory or controlled lot position declines, our profits could decrease and we may incur losses.

Inventory risk can be substantial for homebuilders. The market value of building lots and housing inventories can fluctuate significantly as a result of changing market conditions. In addition, inventory carrying costs can be significant and can result in losses in a poorly performing community or market. We may be required to write-down the book value of our real estate assets in accordance with accounting principles generally accepted in the United States (“GAAP”), and some of those write-downs could be material. Any material write-downs of assets could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

Additionally, we must continuously seek and make acquisitions of lots for expansion into new markets, as well as for replacement and expansion within our current markets, which we generally accomplish by entering into finished lot option contracts or land bank option contracts. In the event of adverse changes in economic, market or community conditions, we may cease further building activities in certain communities, restructure existing land purchase option contracts or elect not to exercise our land purchase options. Such actions would result in our forfeiture of some or all of any deposits, fees or investments paid or made in respect of such arrangements. The forfeiture of land contract deposits or inventory impairments may result in a loss that could have a material adverse effect on our profitability, stock performance, ability to service our debt obligations and future cash flows.

We are subject to warranty and liability claims arising in the ordinary course of business that can be significant.

26As a homebuilder, we are subject to construction defects, product liability and home and other warranty claims, including moisture intrusion and related claims, arising in the ordinary course of business. These claims are common to the homebuilding industry and can be costly. There can be no assurance that any developments we undertake will be free from defects once completed, and any defects attributable to us may lead to significant contractual or other liabilities. Although we provide subcontractors with detailed specifications and perform quality control procedures, subcontractors may, in some cases, use improper construction processes or defective materials. Defective products used in the construction of our homes can result in the need to perform extensive repairs.

~~Table of Contents~~

~~A major health~~When we discover these issues, we utilize our subcontractors to repair the homes in accordance with our subcontractor agreements, our new home warranty and ~~safety incident~~as required by law. We maintain and require our subcontractors to maintain general liability insurance (including construction defect and bodily injury coverage) naming the Company as an additional insured and workers’ compensation insurance and generally seek to require our subcontractors to provide a warranty to us and to defend and indemnify us for liabilities arising from their work. Therefore, any claims relating to workmanship and materials are generally the subcontractors’ responsibility.

While these indemnities and insurance policies, subject to deductibles and other coverage limits, protect us against a portion of our ~~business could~~risk of loss from claims related to our land development and homebuilding activities, we cannot provide assurance that these indemnities and insurance policies will be ~~costly in terms~~adequate to address all of ~~potential liabilities~~our home and ~~reputational damage.~~

~~Building sites are inherently dangerous,~~other warranty, product liability and ~~operating~~construction defect claims in the homebuilding and land development industry poses certain inherent health and safety risks. Due to health and safety regulatory requirements and the number of projects we work on, health and safety performance is critical to the success of all areas of our business.

~~Any failure in health and safety performance may result in penalties for non-compliance with relevant regulatory requirements~~future, or ~~litigation, and a failure~~ that ~~results in a major or significant health and safety incident is likely to be costly in terms of~~any potential ~~liabilities incurred as a result. Such a failure could generate significant negative publicity and~~inadequacies will not have ~~a corresponding impact on our reputation and our relationships with relevant regulatory agencies, governmental authorities and local communities, which in turn could have a material~~an adverse effect on our business, ~~prospects, liquidity,~~ financial condition ~~and~~or results of operations. The cost of performing such repairs (not covered by subcontractor warranty or indemnities) or litigation arising out of such issues, may be significant if we are unable to recover certain costs from subcontractors, suppliers and/or insurers. Warranty and construction defect matters can also result in negative publicity, including on social media platforms, which could damage our reputation and negatively affect our ability to sell homes.

~~Our~~

Table of Contents

Further, the coverage offered by, and the availability of, general liability insurance for completed operations and construction defects are currently limited and costly. While the Company records an estimate of warranty expense based on historical warranty costs, we cannot provide assurance that coverage will not become costlier and/or be further restricted, increasing our risks and financial exposure to claims.

Competing effectively within the mortgage banking and title ~~services business is competitive and we~~service sectors may ~~not~~ be ~~able to compete effectively in this area.~~

difficult.

The competitors toof our mortgage banking business include title companies and mortgage lenders, including national, regional and local mortgage banks and other financial institutions. Some of these competitors are subject to fewer governmental regulations and have greater access to capital than we do, and some of them may operate with different criteria than we do. These competitors may offer a broader or more attractive array of financing and other products and services to potential customers than we do. For these reasons, we may not be able to compete effectively in the mortgage banking and title service businesses.

Any limitation on, or reduction or elimination of, tax benefits associated with homeownership would have an adverse effect upon the demand for homes, which could be material to our business.

While tax laws generally permit significant expenses associated with homeownership, primarily mortgage interest expense and real estate taxes, to be deducted for the purpose of calculating an individual’s federal and, in many cases, state taxable income, the ability to deduct mortgage interest expense and real estate taxes for federal income tax purposes is limited. The federal government or a state government may change its income tax laws by eliminating, limiting or substantially reducing these income tax benefits without offsetting provisions, which may increase the after-tax cost of owning a new home for many of our potential homebuyers. For example, the Tax Cuts and Jobs Act, which became effective January 1, 2018, contained substantial changes to the Internal Revenue Code of 1986, as amended (the “Code”), including (i) limitations on the ability of our homebuyers to deduct property taxes, (ii) limitations on the ability of our homebuyers to deduct mortgage interest and (iii) limitations on the ability of our homebuyers to deduct state and local income taxes. Any similar future changes could also have a material adverse impact on our business, prospects, liquidity, financial condition and results of operations.

Federal income tax credits currently available to certain builders of energy-efficient new homes may not be extended by future legislation.

On August 12, 2022, the U.S. Congress passed the Inflation Reduction Act of 2022, which was signed into law on August 16, 2022. Such act extended the availability of the Code Section 45L credit for energy-efficient new homes (the “Federal Energy Credits”), which provides a tax credit of $2,000 per qualifying home ($1,600 after the benefit is deducted from cost of sales as required by the IRS) to eligible homebuilders, and made the Federal Energy Credits available for homes delivered through December 31, 2022. Additionally, the Inflation Reduction Act of 2022 also expanded the credit to eligible homebuilders, resulting in an increase from $2,000 to either $2,500 or $5,000 per qualifying home, depending on which specified energy efficiency standards are achieved, effective January 1, 2023 through December 31, 2032.

For the year ended December 31, 2022, we claimed $11 million of Federal Energy Credits. For the year ended December 31, 2023, we have estimated $3 million of Federal Energy Credits within our income tax provision. The decrease in the amount of expected Federal Energy Credits in 2023 compared to the amount claimed in 2022 was primarily due to homes delivered in 2023 that were already under construction around the time of the change in the eligibility criteria, for which modifications to fully qualify under the new standards were deemed impractical. Generally, in a given year, the Company aims to build as many energy-efficient new homes as possible.

If legislation to extend the Federal Energy Credits for periods after December 31, 2032, is not adopted, our effective income tax rates thereafter may increase and could potentially be material.

Table of Contents

New and existing laws and regulations or other governmental actions may increase our expenses, limit the number of homes that we can build or delay completion of our projects.

We are subject to numerous local, state, federal and other statutes, ordinances, rules and regulations concerning zoning, development, building design, construction, accessibility, anti-discrimination and other matters, which, among other things, impose restrictive zoning and density requirements, the result of which is to limit the number of homes that can be built within the boundaries of a particular area. We may encounter issues with entitlement, not identify all entitlement requirements during the pre-development review of a project site or encounter zoning changes that impact our operations. Projects for which we have not received land use and development entitlements or approvals may be subjected to periodic delays, changes in use, less intensive development or elimination of development in certain specific areas due to government regulations. We may also be subject to periodic delays or may be precluded entirely from developing in certain communities due to building moratoriums or zoning changes. Such moratoriums generally relate to insufficient water supplies, sewage facilities, delays in utility hook-ups or inadequate road capacity within specific market areas or subdivisions. Local governments also have broad discretion regarding the imposition of development fees for projects in their jurisdiction. Projects for which we have received land use and development entitlements or approvals may still require a variety of other governmental approvals and permits during the development process and can also be impacted adversely by unforeseen health, safety and welfare issues, which can further delay these projects or prevent their development. As a result of any of these statutes, ordinances, rules or regulations, the timing of our home sales could be delayed, the number of our home sales could decline and/or our costs could increase, which could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

Changes in U.S. trade policies and retaliatory responses from other countries may significantly increase the costs or limit supplies of building materials and products used in our homes.

The state of relationships between other countries and the U.S. with respect to trade policies, taxes, government relations and tariffs may impact our business. For example, the federal government has in the past imposed new or increased tariffs or duties on an array of imported materials and goods that are used in connection with the construction and delivery of our homes, including steel, aluminum, lumber, solar panels and washing machines, raising our costs for these items (or products made with them), which resulted in foreign governments, including China and Canada, and the European Union responding by imposing or increasing tariffs, duties and/or trade restrictions on U.S. goods, and may consider other measures. Such trading conflicts and related escalating governmental actions that result in additional tariffs, duties and/or trade restrictions could increase our construction costs further, cause disruptions or shortages in our supply chains and/or negatively impact the U.S., regional or local economies, and, individually or in the aggregate, materially and adversely affect our business and our operating results.

We and our subcontractors are subject to environmental, health and safety laws and regulations, which may increase our costs, result in liabilities, limit the areas in which we can build homes and delay completion of our projects.

We and our subcontractors are subject to a variety of local, state, federal and other environmental, health and safety laws, statutes, ordinances, rules and regulations, including those governing storm water and surface water management, discharge and releases of pollutants and hazardous materials into the environment, including air, groundwater, subsurface and soil, remediation activities, handling of hazardous materials such as asbestos, lead paint and mold, protection of wetlands, endangered plants and species and sensitive habitats and human health and safety.

The particular environmental requirements that apply to any given site vary according to multiple factors, including the site’s location and present and former uses, its environmental conditions, the presence or absence of endangered plants or species or sensitive habitats and environmental conditions at nearby or adjoining properties.

There is no guarantee that we will be able to identify all of these considerations during any pre-acquisition or pre-development review of project sites or that such factors will not develop during our development and homebuilding activities. Environmental requirements and conditions may result in delays, may cause us to incur substantial compliance, remediation and other costs and can prohibit or severely restrict development and homebuilding activity in certain areas, including environmentally sensitive regions or areas contaminated by others before we commenced development. In addition, in those cases where an endangered or threatened plant or species is involved and agency rulemaking and litigation are ongoing, the outcome of such rulemaking and litigation can be unpredictable and, at any time, can result in unplanned or unforeseeable restrictions on, or the prohibition of development in, identified environmentally sensitive areas. In some instances, regulators from different governmental agencies do not concur on development, remedial standards or property use restrictions for a project, and the resulting delays or additional costs can be material for a given project.

Table of Contents

Certain environmental laws and regulations also impose strict joint and several liability on former and current owners and operators of real property and in connection with third-party sites where parties have sent waste. As a result, we may be held liable for environmental conditions we did not create on properties we currently or formerly owned or operated, including properties we have developed, or where we sent waste. In addition, due to our wide range of historic and current ownership, operation, development, homebuilding and construction activities, we could be liable for future claims for damages as a result of the past or present use of hazardous materials, including building materials or fixtures known or suspected to contain hazardous materials, such as asbestos, lead paint and mold. A mitigation plan may be implemented during the construction of a home if a cleanup does not remove all contaminants of concern or to address a naturally occurring condition such as methane or radon. Some homebuyers may not want to purchase a home that is, or that may have been, subjected to a mitigation plan. In addition, we do not maintain separate insurance policies for claims related to hazardous materials, and insurance coverage for such claims under our general commercial liability insurance may be limited or nonexistent.

Pursuant to such environmental, health and safety laws, statutes, ordinances, rules and regulations, we are generally required to obtain permits and other approvals from applicable authorities to commence and conduct our development and homebuilding activities. These permits and other approvals may contain restrictions that are costly or difficult to comply with, or may be opposed or challenged by local governments, environmental advocacy groups, neighboring property owners or other interested parties, which may result in delays, additional costs and non-approval of our activities.

From time to time, the EPA and similar federal, state or local agencies review land developers’ and homebuilders’ compliance with environmental, health and safety laws, statutes, ordinance, rules and regulations, including those relating to the control of storm water discharges during construction. Failure to comply with such laws, statutes, ordinances, rules and regulations may result in civil and criminal fines and penalties, injunctions, suspension of our activities, remedial obligations, costs or liabilities, third-party claims for property or natural resource damages or personal injury, enforcement actions or other sanctions or additional requirements for future compliance as a result of past failures. Any such actions taken with respect to us may increase our costs and result in project delays. We expect that increasingly stringent requirements will be imposed on land developers and homebuilders in the future. We cannot assure you that environmental, health and safety laws will not change or become more stringent in the future in a manner that would not have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

We have provided environmental indemnities to certain lenders and other parties. These indemnities obligate us to reimburse the indemnified parties for damages related to environmental matters, and, generally, there is no term or damage limitations on these indemnities.

Environmental laws and regulations relating to climate change and energy can have an adverse impact on our activities, operations and profitability and on the availability and price of certain raw materials, such as lumber, steel and concrete.

There is a growing concern from advocacy groups and the general public that the emissions of greenhouse gases and other human activities have caused, and will continue to cause, significant changes in weather patterns and temperatures and the frequency and severity of natural disasters.

Government mandates, standards and regulations enacted in response to these projected climate change impacts and concerns could result in restrictions on land development in certain areas or increased energy, transportation and raw material costs. On February 19, 2021 the United States rejoined the Paris Agreement, which requires countries to review and “represent a progression” in their intended nationally determined contributions, which set greenhouse gas emission reduction goals, every five years. A variety of new legislation may be enacted or considered for enactment at the federal, state and local levels relating to climate change and energy, including in response to the United States’ reentry into the Paris Agreement. This legislation could relate to, for example, matters such as greenhouse gas emissions control and building and other codes that impose energy efficiency standards or require energy saving construction materials. New building or other code requirements that impose stricter energy efficiency standards or requirements for building materials could significantly increase our cost to construct homes. As climate change concerns continue to grow, legislation, regulations, mandates, standards and other requirements of this nature are expected to continue to be enacted and become costlier for us to comply with.

Table of Contents

Additionally, certain areas in the United States either have enacted or are considering a ban on the use of natural gas appliances and/or natural gas hookups, in new construction. Such bans, if enacted in areas in which we operate, could affect our cost to construct homes. Similarly, energy-related initiatives affect a wide variety of companies throughout the United States, and because our operations are heavily dependent on significant amounts of raw materials, such as lumber, steel and concrete, these initiatives could have an adverse impact on our operations and profitability to the extent the manufacturers and suppliers of our materials are burdened with expensive cap and trade or similar energy-related regulations or requirements.

Our mortgage banking and title services businesses may be adversely affected by changes in governmental regulation.

Changes in governmental regulation with respect to mortgage lenders and title service providers could adversely affect the financial results of this portion of our business. Our financial services businesses are subject to numerous federal, state and local laws and regulations, which, among other things: prohibit discrimination and establish underwriting guidelines; provide for audits and inspections; require appraisals and/or credit reports on prospective borrowers and disclosure of certain information concerning credit and settlement costs; establish maximum loan amounts; prohibit predatory lending practices; and regulate the referral of business to affiliated entities. In addition, our title insurance operations are also subject to applicable insurance and banking laws and regulations as well as government audits, examinations and investigations, all of which may limit our ability to provide title services to potential purchasers.

The regulatory environment for mortgage lending is complex and ever changing and has led to an increase in the number of audits, examinations and investigations in the industry. The 2008 housing downturn resulted in numerous changes in the regulatory framework of the financial services industry. More recently, in response to COVID-19, federal agencies, state governments and private lenders are proactively providing relief to borrowers in the housing market by, subject to requirements, suspending home foreclosures and granting payment forbearance, among other things. These relief measures are temporary, but these changes and others could become incorporated into the current regulatory framework. Any changes or new enactments could result in more stringent compliance standards, which could adversely affect our financial condition and results of operations and the market perception of our business. Additionally, if we are unable to originate mortgages for any reason going forward, our customers may experience significant mortgage loan funding issues, which could have a material impact on our homebuilding business and our consolidated financial statements.

Operational Risks

Our inability to successfully identify, secure and control an adequate inventory of lots at reasonable prices could adversely impact our operations.

The results of our homebuilding operations depend in part upon our continuing ability to successfully identify, control and acquire an adequate number of homebuilding lots in desirable locations. There can be no assurance that an adequate supply of homebuilding lots will continue to be available to us on terms similar to those available in the past, or that we will not be required to devote a greater amount of capital to controlling homebuilding lots than we have historically. In addition, because we employ an asset-light business model, we may have access to fewer and less attractive homebuilding lots than if we owned lots outright, like some of our competitors who do not operate under an asset-light model.

An insufficient supply of homebuilding lots in one or more of our markets, an inability of our developers to deliver finished lots in a timely fashion due to their inability to finance development activities,
delays in recording deeds, conveying controlled lots as a result of government shut downs, or for other reasons, or our inability to purchase or finance homebuilding lots on reasonable terms could have a material adverse effect on our sales, profitability, ability to service our debt obligations and future cash flows. Any land shortages or any decrease in the supply of suitable land at reasonable prices could limit our ability to develop new communities or result in increased lot deposit requirements or land costs. We may not be able to pass any increased land costs to our customers, which could adversely impact our revenues, earnings and margins.

Although when the fair market value of controlled lots deviates from that of which the option contracts were originally executed, we attempt to renegotiate the terms of the option contracts to ensure that the yields are aligned with current market conditions, there is no guarantee our renegotiating efforts will be successful.

Table of Contents

Increases in our cancellation rate could have a negative impact on our homebuilding revenues and gross margins.

Our backlog reflects sales contracts with customers for homes that have not yet been delivered. We have received a deposit from a homebuyer for most homes reflected in our backlog, and, generally, we have the right to retain the deposit if the homebuyer fails to comply with his or her obligations under the sales contract, subject to certain exceptions or contingencies, including as a result of state and local law, the homebuyer’s inability to sell his or her current home or, in certain circumstances, the homebuyer’s inability to obtain suitable financing. Cancellations negatively impact the number of closed homes, net new orders, homebuilding revenues and results of operations, as well as the backlog. In addition to the contingencies noted above, cancellations can result from declines or slow appreciation in the market value of homes, increases in the supply of homes available to be purchased, increased competition, higher mortgage interest rates, and adverse changes in economic conditions. Beginning in the fourth quarter of 2022 and continuing into 2023, demand further tightened in response to additional increases in mortgage rates caused by the Federal Reserve raising interest rates in response to inflationary conditions. The market's reaction to the interest rate environment negatively affected net new orders and continues to have a negative impact on the cancellation rate for the Company. Any continued increase in the level of our cancellations would have a negative impact on our business, prospects, liquidity, financial condition and results of operations. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Overview and Outlook” for more information.

Our business and results of operations are dependent on the availability, skill and performance of subcontractors.

We engage subcontractors to perform the construction of our homes and, in many cases, to obtain the raw materials used in constructing our homes. Accordingly, the timing and quality of our construction depend on the availability and skill of our subcontractors. While we anticipate being able to obtain sufficient materials and reliable subcontractors and believe that our relationships with subcontractors are good, we do not have long-term contractual commitments with any subcontractors, and we can provide no assurance that skilled subcontractors will continue to be available at reasonable rates and in our markets. In addition, as we expand into new markets, we typically must develop new relationships with subcontractors in such markets, and there can be no assurance that we will be able to do so in a cost-effective and timely manner, or at all. The sustained labor shortage in the United States has continued to make the engagement of subcontractors difficult. The inability to contract with skilled subcontractors at reasonable rates on a timely basis could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

A continued shortage of building materials or labor, or continued increases in materials or labor costs, could delay or increase the cost of home construction, which could materially and adversely affect us.

The residential construction industry experiences labor and raw material shortages from time to time, including shortages in qualified subcontractors, tradespeople and supplies of insulation, drywall, cement, steel and lumber. These labor and raw material shortages can be more severe during periods of strong demand for housing, during periods following natural disasters that have a significant impact on existing residential and commercial structures or a result of broader economic disruptions. We continue to experience labor shortages. It is uncertain whether these shortages will continue as is, improve or worsen. Further, pricing for labor and raw materials could be affected by the factors discussed above and various other national, regional, local, economic and political factors, including changes in immigration laws and trends in labor migration and tariffs. For instance, in 2023, Florida enacted legislation that will impose more stringent immigration eligibility requirements that could cause our labor shortage to worsen.

Our success in recently entered markets or those we may choose to enter in the future depends substantially on our ability to source labor and local materials on terms that are favorable to us. Our markets may exhibit a reduced level of skilled labor relative to increased homebuilding demand in these markets. In the event of shortages in labor or raw materials in such markets, local subcontractors, tradespeople and suppliers may choose to allocate their resources to homebuilders with an established presence in the market and with whom they have longer-standing relationships. Labor and raw material shortages and price increases for labor and raw materials could cause delays in and increase our costs of home construction, which in turn could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

Table of Contents

If we are unable to develop our communities successfully or within expected time-frames, our results of operations could be adversely affected.

Although our preference is to acquire finished lots, from time to time, we may also acquire property that requires further development before we can begin building homes. When a community requires additional developments, we devote substantial time and capital in order to obtain development approvals, acquire land and construct significant portions of project infrastructure and amenities before the community generates any revenue. In addition, our land bank option contracts often include provisions under which delays in land development and/or longer land takedown periods cause us to incur additional cost. It can take several years from the time we acquire control of an undeveloped property to the time we make our first home sale on the site. Delays in the development of communities, including delays associated with subcontractors performing the development activities or entitlements, expose us to the risk of changes in market conditions for homes. A decline in our ability to develop and market one of our new undeveloped communities successfully and to generate positive cash flow from these operations in a timely manner could have a material adverse effect on our business and results of operations and on our ability to service our debt and to meet our working capital requirements. In addition, higher than expected absorption rates in existing communities may result in lower than expected inventory levels until the development for replacement communities is completed.

We may be unable to obtain suitable bonding for the development of our communities.

We are often required to provide bonds, letters of credit or guarantees to governmental authorities and others to ensure the completion of our communities. As a result of market conditions, some municipalities and governmental authorities have been reluctant to accept surety bonds and instead require credit enhancements, such as cash deposits or letters of credit, in order to maintain existing bonds or to issue new bonds. If we are unable to obtain required bonds in the future for our communities, or if we are required to provide credit enhancements with respect to our current or future bonds or in place of bonds, our business, prospects, liquidity, financial condition and results of operations could be materially and adversely affected.

We may suffer significant financial harm and loss of reputation if we do not comply, cannot comply or are alleged to have not complied with applicable laws, rules and regulations concerning our classification and compensation practices for independent contractors.

Each of our divisions retains various independent contractors, either directly or indirectly through third-party entities formed by these independent contractors for their business purposes, including, without limitation, some of our sales agents. With respect to these independent contractors, we are subject to the Internal Revenue Service (the “IRS”) regulations and applicable state law guidelines regarding independent contractor classification. These regulations and guidelines are subject to judicial and agency interpretation, and it might be determined that the independent contractor classification is inapplicable to any sales agents, vendors or any other entity characterized as an independent contractor. Further, if legal standards for the classification of independent contractors change or appear to be changing, we may need to modify our compensation and benefits structure for such independent contractors, including by paying additional compensation or reimbursing expenses.

There can be no assurance that legislative, judicial, administrative or regulatory (including tax) authorities will not introduce proposals or assert interpretations of existing rules and regulations that would change the independent contractor classification of any individual or vendor currently characterized as independent contractors doing business with us. Although management believes that there are no proposals currently pending that would significantly change the independent contractor classification, potential changes, if any, with respect to such classification could have a significant effect on our operating model. Further, the costs associated with any such potential changes could have a significant effect on our results of operations and financial condition if we were unable to pass through an increase in price corresponding to such increased costs to our customers. Additionally, we could incur substantial costs, penalties and damages, including back pay, unpaid benefits, taxes, expense reimbursement and attorneys’ fees in defending future challenges to our employment classification or compensation practices.

We could be adversely affected by efforts to impose joint employer liability on us for labor law violations committed by our subcontractors.

Our homes are constructed by employees of subcontractors and other third parties. We do not have the ability to control what these parties pay their employees or the rules they impose on their employees.

Table of Contents

However, various governmental agencies have taken actions to hold parties like us responsible for violations of wage and hour laws and other labor laws by subcontractors. Governmental rulings that hold us responsible for labor practices by our subcontractors could create substantial exposures for us under our subcontractor relationships, which could have a material adverse impact on our business, prospects, liquidity, financial condition and results of operations.

Poor relations with the residents of our communities could negatively impact sales, which could cause our revenues or results of operations to decline.

Residents of communities we develop rely on us to resolve issues or disputes that may arise in connection with the operation or development of their communities. Efforts made by us to resolve these issues or disputes could be deemed unsatisfactory by the affected residents, and subsequent actions by these residents could adversely affect our sales or our reputation. In addition, we could be required to make material expenditures related to the settlement of such issues or disputes or to modify our community development plans, which could adversely affect our results of operations.

Strategic and Financial Risks ~~Related~~

Our future success depends upon our ability to ~~Our Business~~successfully adapt our business strategy to changing home buying patterns and trends.

Future home buying patterns and trends could reduce the demand for our homes and, as a result, could have a material adverse effect on our business and results of operations. Part of our business strategy is to offer homes that appeal to a broad range of entry-level and move-up homebuyers based in each local market in which we operate. However, given the significant increases in average home sales prices across our markets and the anticipated increased demand for more affordable homes due to generational shifts, changing demographics and other factors, we have increased our focus on offering more affordable housing options in our markets. We believe that, due to anticipated generational shifts, changing demographics and other factors, the demand for more affordable homes will increase.

We cannot make any assurances that our growth or expansion strategies will be successful, and we may incur a variety of costs to engage in such strategies, including through targeted acquisitions, and the anticipated benefits may never be realized.

We have expanded our business through selected investments in new geographic markets and by diversifying our products in certain markets. Investments in land, developed lots and home inventories can expose us to risks of economic loss and inventory impairments if housing conditions weaken or we are unsuccessful in implementing our growth strategies. Our long-term success and growth strategies depend in part upon continued availability of suitable land at acceptable prices. The availability of land, lots and home inventories for purchase at favorable prices depends on a number of factors outside of our control. We may compete for available land with entities that possess significantly greater financial, marketing and other resources. In addition, some state and local governments in markets where we operate have approved, and others may approve, slow-growth or no-growth initiatives and other ballot measures that could negatively impact the availability of land and building opportunities within those areas. Approval of these initiatives could adversely affect our ability to build and sell homes in the affected markets and/or could require the satisfaction of additional administrative and regulatory requirements, which could result in slowing the progress or increasing the costs of our homebuilding operations in these markets. Finally, our ability to begin new projects could be negatively impacted if we elect not to purchase land under our land banking option contracts.

We intend to grow our operations in existing markets, and we may expand into new markets or pursue opportunistic purchases of other homebuilders on attractive terms as such opportunities arise. We may be unable to achieve the anticipated benefits of any such growth or expansion, including through targeted acquisitions or through efficiencies that we may be unable to achieve, the anticipated benefits may take longer to realize than expected, or we may incur greater costs than expected in attempting to achieve the anticipated benefits. In such cases, we will likely need to employ additional personnel or consultants that are knowledgeable about such markets. There can be no assurance that we will be able to employ or retain the necessary personnel to successfully implement a disciplined management process and culture with local management, that our expansion operations will be successful or that we will be able to successfully integrate any acquired homebuilder. This could disrupt our ongoing operations and divert management resources that would otherwise focus on developing our existing business.

Table of Contents

We may develop more communities in which we build townhomes in addition to single-family homes or sell homes to investors or portfolio management ~~companies.~~companies under built-for-rent or other purposes. We can give no assurance that we will be able to successfully identify, acquire or implement these new strategies in the future. Accordingly, any such expansion, including through acquisitions, could expose us to significant risks beyond those associated with operating our existing business and may adversely affect our business, prospects, liquidity, financial condition and results of operations.

We may not be able to complete or successfully integrate our recent acquisitions or any potential future acquisitions or experience challenges in realizing the expected benefits of each such acquisition.

From time-to-time, we may evaluate possible acquisitions, some of which may be material. For example, in May 2019, we acquired Village Park Homes, in October 2020, we acquired H&H Homes, in January 2021, we acquired Century Homes, and in October 2021, we acquired MHI, in each caseacquire other businesses to ~~significantly~~ expand our presence in new and existing geographic markets. These and potential future acquisitions may pose significant risks to our existing operations if they cannot be successfully integrated. These acquisitions would place additional demands on our managerial, operational, financial and other resources and create operational complexity requiring additional personnel and other resources. In addition, weWe may not be able to successfully finance or integrate any businesses that we acquire. Furthermore, the integration of any acquisition may divert management’s time and resources from our core business and disrupt our operations. Moreover, even if we were successful in integrating newly acquired businesses or assets, expected synergies or cost savings may not materialize, resulting in lower than expected benefits to us from such transactions. We may spend time and money on projects that do not increase our revenue. Additionally, when making acquisitions, it may not be possible for us to conduct a detailed investigation of the nature of the business or assets being acquired, for instance, due to time constraints in making the decision and other factors. We may become responsible for additional liabilities or obligations not foreseen at the time of an acquisition. To the extent we pay the purchase price of an acquisition in cash, such an acquisition would reduce our cash reserves, and, to the extent the purchase price of an acquisition is paid with our stock, such an acquisition could be dilutive to our stockholders. To the extent we pay the purchase price of an acquisition with proceeds from ~~the incurrence of~~incurring debt, such an acquisition would increase our level of indebtedness and interest expense and could negatively affect our liquidity and restrict our operations.

Further, to the extent that a portion of the purchase price of an acquisition is paid in the form of an earn out on future financial results, the success of such an acquisition will not be fully realized by us for a period of time as it is shared with the sellers. In addition, changes to the fair value of estimated earn out payments could significantly impact our results of operations. All of the above risks could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

Our joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of our joint venture partners and disputes between us and our joint venture partners.

We have in the past, and may in the future, co-invest with third parties through partnerships, joint ventures or other entities, acquiring noncontrolling interests in, or sharing responsibility for managing the affairs of, a land acquisition and/or a development. In this event, we would not be in a position to exercise sole decision-making authority regarding the acquisition and/or development, and our investment may be illiquid due to our lack of control. Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve incremental risks from involving a third party, including the possibility that our joint venture partners might become bankrupt, fail to fund their share of required capital contributions, make poor business decisions or block or delay necessary decisions. Our joint venture partners may have economic or other business interests or goals that are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor our joint venture partners would have full control over the land acquisition or development. Disputes between us and our joint venture partners may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business. In addition, we may be liable for the actions of our joint venture partners in certain circumstances.

Table of Contents

There are various potential conflicts of interest in our relationship with DF Capital and certain of its managed funds, including with certain of our executive officers and directors who are investors in certain funds managed by DF Capital, which could result in decisions that are not in the best interest of our stockholders.

Conflicts of interest may exist or could arise in the future with DF Capital and certain of its managed funds, including with certain of our executive officers and directors who are also investors in certain funds managed by DF Capital. Once a potential lot acquisition that requires a significant upfront commitment of capital is approved by our land acquisition committee, we seek a land bank partner. Historically, we have provided, and we expect to continue to provide DF Capital with the opportunity to have one of its managed funds participate in transactions that require additional funding. Such transactions may not be on terms that are as attractive as those we might be able to achieve if we sought other partners. If DF Capital does not wish to participate in and finance the transaction, we turn to other potential financing sources. Conflicts with DF Capital and certain of its managed funds may include, without limitation: conflicts arising from the enforcement of agreements between us and DF Capital and/or certain of its managed funds; conflicts in determining whether to offer DF Capital the opportunity to participate in a potential lot acquisition financing; if DF Capital does participate, conflicts in determining the terms of the financing; and conflicts in future transactions that we may pursue with DF Capital and/or one of its managed funds.

Interest expense on debt we incur may limit our cash available to fund our growth strategies.

If our operations do not generate sufficient cash from operations at levels currently anticipated, we may seek additional capital in the form of debt financing. Our current indebtedness includes, and any additional indebtedness we subsequently incur may have, a floating rate of interest.

Higher interest rates could increase debt service requirements on our current floating rate indebtedness, and on any floating rate indebtedness we subsequently incur, and could reduce funds available for operations, future business opportunities or other purposes. If we need to repay existing indebtedness during periods of rising interest rates, we could be required to refinance our then-existing indebtedness on unfavorable terms or liquidate one or more of our assets to repay such indebtedness at times that may not permit realization of the maximum return on such assets and could result in a loss. The occurrence of either such event or both could materially and adversely affect our cash flows and results of operations.

Our ability to access and obtain capital in the future could be adversely affected as a result of a downgrade in any of our credit ratings.

Our ability to access and obtain financing on favorable terms is a key component of the Company’s operating capacity. If negative rating actions, including downgrades, were to occur for either the Company’s corporate credit rating or the credit ratings for our senior unsecured notes, it could impact our access to new debt or result in less-than-favorable terms for any future debt obtained, such as harsher covenants, increased cost to obtain new debt and higher interest rates. Either scenario could result in a material adverse effect on liquidity, financial condition and results of operations, which could serve to further compound negative rating actions and their effects on our business.

Our current financing arrangements contain, and our future financing arrangements likely will contain, restrictive covenants.

Our current financing agreements contain, and the financing arrangements we enter into in the future likely will contain, covenants that limit our ability to do certain things. For instance, our credit agreement requires the Company to meet certain financial ratios and comply with covenants, such as a maximum debt to capitalization ratio, minimum interest coverage ratios and minimum liquidity ratios. Furthermore, the Company issued senior unsecured notes in August 2023 which were issued pursuant to an indenture (the “Indenture”). In addition to customary events of default, the Indenture contains certain restrictive covenants that, among other things, limit our ability to incur or guarantee certain indebtedness, issue certain equity interests or engage in certain capital stock transactions, and impose constraints concerning mergers, consolidations, and asset transfers.

If we fail to meet or satisfy any of these provisions, we would be in default under such financing agreement and our lenders could elect to declare outstanding amounts due and payable and terminate their commitments. A default also could significantly limit our financing alternatives, which could cause us to curtail our investment activities and/or dispose of assets when we otherwise would not choose to do so. In addition, future indebtedness we obtain may contain financial covenants limiting our ability to, for example, incur additional indebtedness, make certain investments, reduce liquidity below certain levels and pay dividends to our stockholders and otherwise affect our operating policies.

Table of Contents

If we default on one or more of our debt agreements, it could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.

We have undrawn committed funding from numerous financial institutions under our syndicated revolving line of credit. Additionally, we may hold domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks which exceed the FDIC insurance limits. Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. The failure of banks, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, or have undrawn commitments under our revolving line of credit, could adversely impact our liquidity and financial performance. There can be no assurance other financial institutions would provide replacement commitments under our line of credit or that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.

Volatility in the credit and capital markets may impact our cost of capital and our ability to access necessary financing and the difficulty in obtaining sufficient capital could prevent us from acquiring lots for construction or increase costs and delays in the completion of our homes under construction.

If we require working capital greater than that provided by our operations and our credit facilities, we may be required to increase the amount available under the facilities or to seek alternative financing, which might not be available on terms that are favorable or acceptable or at all. If we are required to seek financing to fund our working capital requirements, volatility in credit or capital markets may restrict our flexibility to successfully obtain additional financing on terms acceptable to us, or at all. If we are at any time unsuccessful in obtaining sufficient capital to fund our planned homebuilding expenditures, we may experience a substantial delay in the completion of homes then under construction, or we may be unable to control or purchase finished lots. Any delay could result in cost increases and could have a material adverse effect on our sales, profitability, stock performance, cash flows and ability to service our debt obligations. We have access to the committed funds under our Credit Agreement, which is a senior unsecured revolving credit facility. Another source of liquidity includes our ability to use letters of credit and surety bonds. These letters of credit and surety bonds relate to certain performance-related obligations and serve as security for certain land option contracts. The majority of these letters of credit and surety bonds are in support of our land development and construction obligations to various municipalities, other government agencies and utility companies related to the construction of roads, sewers and other infrastructure. As of December 31, 2023, we had outstanding letters of credit and surety bonds totaling $1 million and $195 million, respectively. These letters of credit and surety bonds are generally subject to certain financial covenants and other limitations.

If we are unable to obtain letters of credit or surety bonds when required, or the conditions imposed by issuers increase significantly, our liquidity and results of operations could be adversely affected.

Access to financing sources may not be available on favorable terms, or at all, especially in light of current market conditions, which could adversely affect our ability to maximize our returns.

Our access to additional third-party sources of financing will depend, in part, on:

•general market conditions;

•the current interest rates;

•the market’s perception of our growth potential;

•with respect to land acquisition and/or development financing, the market’s perception of the value of the land parcels to be acquired and/or developed;

•our current debt levels;

Table of Contents

•our current and expected future earnings;

•our cash flow; and

•the market price per share of our common stock.

The global credit and equity markets and the overall economy can be extremely volatile, which could have a number of adverse effects on our operations and capital requirements. For the past decade, the domestic financial markets have experienced a high degree of volatility, uncertainty and, during certain periods, tightening of liquidity in both the high yield debt and equity capital markets, resulting in certain periods when new capital has been both more difficult and more expensive to access. If we are unable to access the credit markets, we could be required to defer or eliminate important business strategies and growth opportunities in the future. In addition, if there is prolonged volatility and weakness in the capital and credit markets, potential lenders may be unwilling or unable to provide us with financing that is attractive to us or may increase collateral requirements or may charge us prohibitively high fees in order to obtain financing. Consequently, our ability to access the credit market in order to attract financing on reasonable terms may be adversely affected. Investment returns on our assets and our ability to make acquisitions could be adversely affected by our inability to secure additional financing on reasonable terms, if at all.

Depending on market conditions at the relevant time, we may have to rely more heavily on additional equity financings or on less efficient forms of debt financing that require a larger portion of our cash flow from operations, thereby reducing funds available for our operations, future business opportunities and other purposes. We may not have access to such equity or debt capital on favorable terms at the desired times, or at all.

Risks Related to Our Organization and Structure

~~We are a holding company, and we are accordingly dependent upon distributions from our subsidiaries to pay dividends, if any, taxes and other expenses.~~

We are a holding company and will have no material assets other than our ownership of equity interests in our subsidiaries. We have no independent means of generating revenue. Substantially all of our assets are held through subsidiaries of our predecessor, DFH LLC. DFH LLC’s cash flow is dependent on cash distributions from its subsidiaries, and, in turn, substantially all of our cash flow is dependent on cash distributions from DFH LLC. The creditors of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its equity holders.

Therefore, DFH LLC’s ability to make distributions to us and to the holders of the Series B preferred units of DFH LLC depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and then to make distributions to DFH LLC. We intend to cause DFH LLC to make distributions to us in an amount sufficient to cover our expenses, all applicable taxes payable and dividends, if any, declared by us. The holders of the Series B preferred units of DFH LLC are entitled to receive preferred distributions from DFH LLC before payment of distributions to us. Thus, our ability to cover our expenses, all applicable taxes payable and dividends, if any, declared by us depends on DFH LLC’s ability first to satisfy its obligations to its creditors and make distributions to holders of the Series B preferred units of DFH LLC and then to us.

In addition, our participation in any distribution of the assets of any of our direct or indirect subsidiaries upon any liquidation, reorganization or insolvency is only after the claims of such subsidiaries’ creditors, including trade creditors and preferred unitholders, are satisfied. As of December 31, 2021, the aggregate liquidation preference of the Series B preferred units DFH LLC is $10.0 million.

Furthermore, our future financing arrangements may contain negative covenants, limiting the ability of our subsidiaries to declare or pay dividends or make distributions. To the extent that we need funds, and our subsidiaries are restricted from declaring or paying such dividends or making such distributions under applicable law or regulations, or otherwise unable to provide such funds, for example, due to restrictions in future financing arrangements that limit the ability of our operating subsidiaries to distribute funds, our liquidity and financial condition could be materially harmed.

We depend on key management personnel and other experienced employees.

Our success depends to a significant degree upon the contributions of certain key management personnel, including, but not limited to, Patrick Zalupski, our founder, President, Chief Executive Officer and Chairman of ~~our~~the Board of Directors, ~~and~~ our Senior Vice President and Chief Operating Officer, Doug ~~Moran.~~Moran, and our Senior Vice President and Chief Financial Officer, Anabel Fernandez. Although we have entered into employment agreements with Mr. Zalupski, ~~and~~ Mr. Moran and Ms. Fernandez, there is no guarantee that Mr. Zalupski, or Mr. Moran or Ms. Fernandez will remain employed by us. Our ability to retain our key management personnel or to attract suitable replacements should any members of our management team leave is dependent on the competitive nature of the employment market. The loss of services from key management personnel or a limitation in their availability could materially and adversely impact our business, prospects, liquidity, financial condition and results of operations. Further, such a loss could be negatively perceived in the capital markets. We have obtained key man life insurance that would provide us with proceeds in the event of the death or disability of ~~any of our key management personnel.~~

the Chief Executive Officer and/or the Chief Operating Officer.

Experienced employees in the homebuilding, land acquisition, development and construction industries are fundamental to our ability to generate, obtain and manage opportunities. In particular, local knowledge and relationships are critical to our ability to source attractive land acquisition opportunities. Experienced employees working in the homebuilding, development and construction industries are highly sought after. Failure to attract and retain such personnel or to ensure that their experience and knowledge is not lost when they leave the business through retirement, redundancy or otherwise may adversely affect the standards of our service and may have an adverse impact on our business, prospects, liquidity, financial condition and results of operations.

~~Table of Contents~~

~~Our current financing arrangements contain, and our future financing arrangements likely will contain, restrictive covenants.~~

Our current financing agreements contain, and the financing arrangements we enter into in the future likely will contain, covenants that limit our ability to do certain things. Our Credit Agreement contains covenants that, among other things, require that we (i) maintain a maximum debt ratio of 70.0% through March 2022, 62.5% through December 2022 and 60.0% thereafter; (ii) maintain an interest coverage ratio of 2.0 to 1.0; (iii) maintain a minimum liquidity equal to the ratio of not less than 1.0 to 1.0; (iv) maintain a minimum tangible net worth equal to the sum of (A) 75.0% of the tangible net worth as of the last fiscal quarter prior to the closing date of the Credit Agreement, (B) 50.0% of net income from the last fiscal quarter prior to the closing date of the Credit Agreement and (C) 50.0% of net proceeds received from all equity issuances after the closing date of the Credit Agreement; (v) maintain a maximum risks assets ratio of (A) the sum of the GAAP net book value for all finished lots, lots under development, unentitled land and land held for future development to (B) tangible net worth, of no greater than 1.0 to 1.0; (vi) not allow aggregate investments in unconsolidated affiliates to exceed 15.0% of tangible net worth, as of the last day of any fiscal quarter; and (vii) may not incur indebtedness other than (A) the obligations under the Credit Agreement, (B) non-recourse indebtedness in an amount not to exceed 15.0% of tangible net worth, (C) operating lease liabilities, finance lease liabilities and purchase money obligations for fixed or capital assets not to exceed $5.0 million in the aggregate, (D) indebtedness of financial services subsidiaries and VIEs and (E) indebtedness under hedge contracts entered into for purposes other than for speculative purposes.

Mr. Zalupski ~~has the ability to direct the voting~~owns a significant amount of ~~a majority of the voting power of~~ our ~~common~~ stock and his interests may conflict with those of our other stockholders.

Our common stock consists of two classes: Class A and Class B. Holders of Class A common stock are entitled to one vote per share, and holders of Class B common stock are entitled to three votes per share. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our certificate of incorporation. Mr. Zalupski, our founder, President, Chief Executive Officer and Chairman of ~~our~~the Board of Directors, owns, through personal holdings and an entity that he controls, 100% of our Class B common stock ~~(representing 84.8%~~ (representing approximately 85% of the total combined voting power of our Class A and Class B common ~~stock)~~stock as of December 31, 2023).

Table of Contents

As a result, Mr. Zalupski is able to control matters requiring stockholder approval, including the election and removal of directors, changes to our organizational documents and significant corporate transactions, including any merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership makes it unlikely that any holder or group of holders of our Class A common stock will be able to affect the way we are managed or the direction of our business. The interests of Mr. Zalupski with respect to matters potentially or actually involving or affecting us, such as future acquisitions, financings and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other stockholders. Mr. Zalupski would have to approve any potential acquisition of us. The existence of significant stockholders may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management or limiting the ability of our other stockholders to approve transactions that they may deem to be in our best interests. Mr. Zalupski’s concentration of stock ownership may also adversely affect the trading price of our Class A common stock to the extent investors perceive a disadvantage in owning stock of a company with significant stockholders.

Sales of shares pledged for margin loans by our directors and officers could cause our stock price to decrease.

~~Table~~Under the Dream Finders Homes, Inc. Insider Trading Policy (“our Insider Trading Policy”), our directors, officers and employees can pledge shares of ~~Contents~~

our common stock as collateral for a loan or hold shares of our common stock in a margin account if the value of Company securities held in one or more margin accounts does not exceed 30% of the total value of all of the Company securities owned by the shareholder at the time such loan or loans (individually or in the aggregate) are originated and the director, officer or employee obtains pre-clearance from the designated compliance officer. As of December 31, 2023, Mr. Zalupski had 17,500,000 shares of our Class B common stock pledged as security for a margin loan. In the event that such margin loan (or any other margin loan by an officer or director) were to be called and the shares of common stock were sold on the open market by the lender, the price of our common stock would likely decline materially.

Certain of our directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking acquisitions and business opportunities and, accordingly, may have conflicts of interest in pursuing business opportunities.

Certain of our directors hold positions of responsibility with other entities whose businesses are involved in certain aspects of the real estate industry, including in DF Capital, with which we partner for certain land banking opportunities. These directors may become aware of business opportunities that may be appropriate for presentation to us, as well as to the other entities with which they are or may become affiliated. Due to these existing and potential future affiliations, they may present potential business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest. They may also decide that certain opportunities are more appropriate for other entities with which they are affiliated, and, as a result, they may elect not to present those opportunities to us. These conflicts of interest may not be resolved in our favor.

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, , our amended and restated certificate of incorporation or our bylaws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity that purchases or otherwise acquires any interest in shares of our capital stock are deemed to have notice of, and consented to, the provisions of our amended and restated certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons.

Table of Contents

Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

~~We do not intend to pay cash dividends for the foreseeable future.~~

We have not declared or paid cash dividends on our Class A common stock and we currently do not intend to declare or pay cash dividends on our Class A common stock in the foreseeable future. Consequently, you may only achieve a return on your investment if the price of our Class A common stock appreciates and you sell your Class A common stock at a price greater than you paid for it. There is no guarantee that the price of our Class A common stock that will prevail in the market will ever exceed the price that you paid.

Provisions in our charter documents or Delaware law, as well as Mr. Zalupski’s beneficial ownership of all of our outstanding Class B common stock, could discourage acquisition bids or merger proposals, which may adversely affect the market price of our Class A common stock.

Some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:

•

providing that the Board of Directors is expressly authorized to determine the size of our Board of Directors;

•limiting the ability of our stockholders to call special meetings;

•establishing advance notice provisions for stockholder proposals and nominations for elections to the Board of Directors to be acted upon at meetings of stockholders;

~~Table of Contents~~

•providing that the Board of Directors is expressly authorized to adopt, or to alter or repeal, our bylaws; and

•establishing advance notice and certain information requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

Mr. Zalupski, through his beneficial ownership of all of our outstanding Class B common stock as of December 31, ~~2021,~~2023, controls ~~approximately 84.8% of~~approximately 85% of the total combined voting power of our outstanding Class A and Class B common stock, which gives him the ability to prevent a potential takeover of our company. If a change of control or change in management is delayed or prevented, the market price of our Class A common stock could decline.

In addition, some of the restrictive covenants contained in our various financing agreements may delay or prevent a change in control.

~~Even though we may want to redeem the Series B preferred units of DFH LLC, we may not have the ability to redeem the Series B preferred units of DFH LLC.~~

DFH LLC has the right to redeem the Series B preferred units from time to time on or prior to September 30, 2022. As of December 31, 2021, the redemption price for all of the outstanding Series B preferred units of DFH LLC was $10.0 million. Any decision we may make at any time regarding whether to redeem the Series B preferred units of DFH LLC will depend upon a wide variety of factors, including our evaluation of our capital position, our capital requirements and general market conditions at that time. Even though we may want to redeem the Series B preferred units of DFH LLC, we may be restricted from doing so by our debt agreements or we might not have sufficient cash available to redeem such preferred units.

We are a “controlled company” within the meaning of the ~~Nasdaq Global Select Market~~New York Stock Exchange rules, which allows us to rely on exemptions from certain corporate governance requirements.

Mr. Zalupski beneficially owns a majority of our outstanding voting interests. As a result, we are a “controlled company” within the meaning of the ~~Nasdaq Global Select Market~~New York Stock Exchange (“~~Nasdaq”~~NYSE”) corporate governance standards. Under the ~~Nasdaq~~NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a “controlled company” and may elect not to comply with certain ~~Nasdaq~~NYSE corporate governance requirements, including the requirements that:

•

a majority of such company’s board of directors consist of independent directors;

•such company have a nominating and governance committee that is composed entirely of independent ~~directors with a written charter addressing such committee’s purpose and responsibilities;~~directors;

•

such company have a compensation committee that is composed entirely of independent ~~directors with a written charter addressing such committee’s purpose~~directors; and ~~responsibilities; and~~

•such company conduct an annual performance evaluation of the nominating and governance and compensation committees.

These requirements will not apply to us as long as we remain a controlled company. Accordingly, ~~you do not have~~ the same protections afforded to stockholders of companies that are subject to all of the ~~Nasdaq~~ NYSE corporate governance ~~requirements.~~

requirements are not afforded to our Class A common stockholders.

Table of Contents

~~Selling, General and Administrative Expense. Selling, general and administrative expense~~Our Southeast segment total revenues for the year ended December 31, ~~2021~~2023 were $1.5 billion, an increase of $0.3 billion, or 23%, from $1.2 billion for the year ended December 31, 2022. This revenue growth was ~~$154.4~~primarily driven by an increase in home closings of 448, or 16%. Additionally, the ASP of homes closed of $470,405 for the year ended 2023, reflected an increase of 7% when compared to 2022, a result of price appreciation and product mix. Homebuilding gross margin percentage was 18.9% for the year ended December 31, 2023, representing a decrease of 50 bps, or 0.5%, when compared to the year ended December 31, 2022. The reduction in gross margin percentage was primarily attributed to higher financing and closing costs.

Mid-Atlantic. Our Mid-Atlantic segment total revenues for the year ended December 31, 2023 were $633 million, an increase of ~~$64.0~~$66 million, or ~~70.9%~~12%, from ~~$90.4~~$567 million for the year ended December 31, ~~2020.~~2022. This revenue growth was primarily driven by an increase in ASP of homes closed of 11% to $396,462. The increase in ~~selling,~~ASP of homes closed was largely influenced by changes in product mix. Additionally, there was an increase in home closings of 35, or 2%, for the year ended December 31, 2023 compared to 2022. Homebuilding gross margin percentage was 17.9% for the year ended December 31, 2023, representing an increase of 380 bps, or 3.8%, when compared to the year ended December 31, 2022. The improvement in gross margin percentage was primarily due to cost management efforts, including cycle time reductions, partially offset by higher financing costs.

Midwest. Our Midwest segment total revenues for the year ended December 31, 2023 were $1.6 billion, an increase of $0.1 billion, or 4%, from $1.5 billion for the year ended December 31, 2022. This additional revenue was due to an ASP of homes closed of $618,306 for the year ended 2023, an increase of 6% when compared to 2022, partially offset by a decrease in home closings of 47, or 2%. Homebuilding gross margin percentage was 20.6% for the year ended December 31, 2023, representing an increase of 150 bps, or 1.5%, when compared to the year ended December 31, 2022. The growth in gross margin percentage year over year is due to effective cost management including impacts from overall cycle time reduction, partially offset by higher financing and closing costs.

Selling, General and Administrative Expense. Selling, general and administrative expense ~~was primarily due to higher closing volume and the inclusion of expenses of H&H~~(“SG&A”) for the ~~full~~ year ended December 31, 2023 was $309 million, an increase of ~~2021~~$38 million, or 14%, from $271 million for the year ended December 31, 2022. SG&A as a percentage of homebuilding revenues for the year ended December 31, 2023 increased 20 bps to 8.3% compared to ~~the fourth quarter in 2020 and the inclusion of $29.8 million in expenses of MHI~~8.1% for the ~~fourth quarter~~year ended December 31, 2022. For the year ended December 31, 2023, SG&A included $28 million of ~~2021.~~

costs related to mortgage forward commitment programs, allowing our homebuyers to lock their interest rates on home loans at the point of sale, which were not incurred in 2022. We expense these costs as incurred.

Table of Contents

Income from ~~Equity in Earnings of~~ Unconsolidated Entities. Income from ~~equity in earnings of~~ unconsolidated entities for the year ended December 31, ~~2021~~2023 was ~~$9.4~~$18 million, an increase of ~~$1.4~~$2 million, or ~~18.0%~~12%, ~~as compared to $8.0~~from $16 million for the year ended December 31, ~~2020.~~2022. The increase ~~was mainly~~in income from unconsolidated entities is primarily attributable to ~~the results of the joint ventures interest purchased in conjunction with the MHI acquisition,~~increased income from Jet HomeLoans, partially offset by ~~lower net income~~fewer distributions of profits from ~~Jet LLC, our mortgage joint venture with FBC Mortgage, LLC.~~DF Capital funds, as Fund I is nearing its final stage, and as Fund II is still in its investment period.

~~Other Income – Other~~Contingent Consideration Revaluation. ~~Other income – Other~~Contingent consideration revaluation expense (“contingent consideration expense”) for the year ended December 31, ~~2021~~2023 was ~~$7.8~~$47 million, an increase of ~~$6.5~~$36 million, or ~~492.2%~~322%, ~~as compared to $1.3~~from $11 million for the year ended December 31, ~~2020.~~2022. The increase in ~~other income~~contingent consideration expense was primarily due to actual 2023 pre-tax earnings of previously acquired entities, primarily MHI, being better than projected as well as revised projections for the ~~re-sale~~MHI operations.

Contingent consideration liabilities are impacted by various inputs and estimates in addition to the fair value accretion, including: (i) updates to the applied discount rate, (ii) changes to current year inputs based on year to date actual results, (iii) changes to future year’s forecast assumptions, which are affected by macro-economic conditions and local market conditions, as well as management actions including capital allocation, growth plans, and restructuring, and (iv) contractual modifications that may merit additional adjustments to final pre-tax income prior to the calculation of ~~former model homes purchased from investors during~~ the ~~year.~~annual earn out payments. The change in estimates used to calculate the contingent consideration revaluation adjustment could be material at times and could potentially fluctuate between expense and income. Our policy is to separately disclose the impact of contingent consideration revaluation adjustments within the Consolidated Statements of Comprehensive Income.

Other ~~Expense – Other.~~ Income, Net. Other ~~expense – Other~~income, net for the year ended December 31, ~~2021~~2023 was ~~$12.8~~$5 million, an increase of ~~$9.6~~$3 million, or ~~300.6%~~157%, ~~as compared to $3.2~~from $2 million in other income, net for the year ended December 31, ~~2020.~~2022. The increase in other expense is primarily attributable to the settlement of the Silver Meadows Townhome Owners Association, Inc lawsuit (see Note 18. Subsequent events). The increase is also due to expenses related to the aforementioned purchase and re-sale of former model homes.

~~Other Income – Paycheck Protection Program Forgiveness.~~ ~~Other~~additional income ~~related to the forgiveness of the Paycheck Protection Program (“PPP”) grant for the year ended December 31, 2021~~ was ~~$7.2 million, which did not occur in 2020.~~

~~Other Expense – Contingent Consideration Revaluation.~~ Contingent consideration expense for the year ended December 31, 2021 was $7.5 million, an increase of $6.1 million or 446.4%, as compared to $1.4 million for the year ended December 31, 2020. The increase in contingent consideration expense is primarily due to ~~fair value adjustments of future expected earnout payments~~increased interest income from ~~the acquisition of H&H and the acquisition of MHI, which contributed one quarter of contingent consideration adjustment, not included in the previous year ended December 31, 2020.~~

our cash deposits with financial institutions.

Net and Comprehensive Income. Net and comprehensive income for the year ended December 31, ~~2021~~2023 was ~~$134.6~~$308 million, an increase of ~~$50.1~~$34 million, or ~~59.3%~~12%, from ~~$84.5~~$274 million for the year ended December 31, ~~2020.~~2022. The increase in net and comprehensive income was primarily attributable to an increase in gross margin on homes closed of ~~$142.0~~$115 million, or ~~86.0%~~19%, during the year ended December 31, ~~2021~~2023 as compared to the year ended December 31, ~~2020.~~2022. This increase was partially offset by an increase in contingent consideration expense of

$36 million, primarily related to the MHI acquisition,

~~Net~~ and ~~Comprehensive Income Attributable to Noncontrolling Interests. Net~~forward commitment program costs, both discussed above. The net and comprehensive income ~~attributable to noncontrolling interests~~ for the year ended December 31, ~~2021 was $13.5~~2023 includes income tax expense of $96 million, an increase of ~~$8.1~~$14 million, or ~~148.4%~~18%, ~~as compared to $5.4~~from $82 million of income tax expense for the year ended December 31, ~~2020.~~

~~Net~~2022. This increase is primarily due to the increase in income before taxes and ~~Comprehensive Income Attributable~~ to ~~Dream Finders Homes, Inc. Net and comprehensive~~a lesser extent the effective income ~~attributable to Dream Finders Homes, Inc. for the year ended December 31, 2021 was $121.1 million, an~~tax rate increase of ~~$42.0 million, or 53.2%, from $79.1 million for the year ended December 31, 2020.~~0.9%. The ~~increase was primarily attributable to a significant increase in home closings and gross margin. The change~~changes in net and comprehensive income attributable to Dream Finders Homes, Inc. ~~is reduced by $27.5 million~~were consistent with the changes in net and comprehensive income ~~tax expense~~as there were no significant changes in noncontrolling interests for the period.

Refer to the Form 10-K for the year ended December 31, ~~2021, which was not applicable to DFH LLC, as it was taxed as a pass-through entity.~~

~~Backlog. Backlog at~~2022 filed on March 2, 2023 for the results of operations and related discussion for December 31, ~~2021~~2022 compared to the year ended December 31, 2021.

Financial Services

Income before taxes for the year ended December 31, 2023 for our Financial Services segment, net of reconciling items from equity method investments, was ~~6,381~~$19 million, an increase of $4 million, or 27%, from $15 million for the year ended December 31, 2022. The increase in income before taxes for the Financial Services segment was primarily attributed to increased loans originated by Jet HomeLoans.

For the year ended December 31, 2023, Jet HomeLoans originated and funded 3,189 home loans with an aggregate principal amount of approximately $1.3 billion as compared to 2,370 home loans with an aggregate principal amount of approximately $879 million for the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, respectively, Jet HomeLoans had net income of approximately $20 million and $12 million. Our interest in Jet HomeLoans is accounted for under the equity method and is not consolidated in our consolidated financial statements, as we do not control and are not deemed the primary beneficiary of the VIE. Refer to Note 1, Nature of Business and Significant Accounting Policies, to our consolidated financial statements for a discussion of accounting treatment of VIEs.

Table of Contents

For the year ended December 31, 2023, our wholly owned subsidiary, DF Title, had income before taxes of $4 million, an increase of $1 million, or 33%, from $3 million for the year ended December 31, 2022. The increase in income before taxes was driven by the increase in home closings and ASP of homes closed, as well as effective cost management.

Net Sales, Backlog and Closings

The following table presents information concerning our net new orders (“net sales”), starts and closings in each of our homebuilding segments for the periods set forth below:


	Year Ended December 31,						Period Over Period Percent Change
	2023			2022
Segment	Net Sales(1)	Starts	Closings	Net Sales(1)	Starts	Closings	Net Sales		Starts		Closings
Southeast	1,822	2,693	3,170	3,113	3,034	2,722	-41	%	-11	%	16	%
Mid-Atlantic	1,360	1,627	1,597	1,151	1,224	1,562	18	%	33	%	2	%
Midwest	2,562	2,551	2,547	1,781	2,343	2,594	44	%	9	%	-2	%
Total	5,744	6,871	7,314	6,045	6,601	6,878	-5	%	4	%	6	%

(1) Net sales are sales of homes during the period, less cancellations of existing sales contracts during the period. Excluding net sales under built-for-rent contracts, 2023 net sales in the Southeast segment increased 19% when compared to 2022.

The following table presents information concerning our ending backlog in number of homes, ASP and aggregate value (in thousands) for our homebuilding segments as of the dates set forth below:


	As of December 31,
	2023					2022
Segment	Homes(1)	ASP		Value		Homes(1)	ASP		Value
Southeast	2,234	$	393,356	$	878,757	3,582	$	398,246	$	1,426,517
Mid-Atlantic	599	427,593		256,128		836	335,642		280,597
Midwest	1,145	657,190		752,483		1,130	703,938		795,450
Total	3,978	$	474,451	$	1,887,368	5,548	$	451,075	$	2,502,564

(1) Ending backlog represents the number of homes in backlog from the previous period, plus net sales during the period, minus the number of home closings during the current period.

Backlog of sold homes as of December 31, 2023 was 3,978 homes valued at approximately ~~$2,913.2 million~~$1.9 billion based on ~~average sales price, an increase~~ASP, a decrease of ~~3,957~~1,570 homes and ~~$2,048.1 million, respectively,~~$0.6 billion in value, or ~~163.2%~~28% and ~~236.7%~~25%, respectively, ~~as compared to 2,424~~from 5,548 homes valued at approximately ~~$865.1 million at~~$2.5 billion as of December 31, ~~2020. MHI contributed 1,734~~2022. The overall decrease in backlog is reflective of an increase in sales of move-in ready spec homes relative to pre-order sales. Spec homes typically result in quicker closings and turnover of the backlog. Approximately 704 of the homes in our backlog atare expected to be delivered in 2025 and beyond.

Southeast. Backlog for the Southeast segment as of December 31, ~~2021.~~2023 was 2,234 homes, a decrease of 1,348 from 3,582 homes as of December 31, 2022. The ~~overall increase in backlog~~decrease was primarily attributable to an increase in ~~net new orders~~sales of ~~2,618 or 62.5%, including 589~~move-in ready spec homes relative to pre-order sales and to a lesser extent built-for-rent sales in 2022 backlog that did not repeat in 2023.

Mid-Atlantic. Backlog for the Mid-Atlantic segment as of December 31, 2023 was 599 homes, a decrease of 237 from 836 homes as of December 31, 2022. The decrease in backlog was attributable to ~~MHI. Also, active community count increased by 79 or 62.7%, including 98~~the increase in spec inventory sales relative to pre-order sales and to a lesser extent fewer sales under built-for-rent contracts in 2023 relative to 2022.

Midwest. Backlog for the Midwest segment as of December 31, 2023 was 1,145 homes, an increase of 15 from 1,130 homes as of December 31, 2022. The modest increase was primarily attributable to ~~MHI.~~

the higher net sales relative to closings in 2023, when compared to 2022.

Table of Contents

~~Year Ended December 31, 2020 Compared to Year Ended December 31, 2019~~

The following table presents ~~summary consolidated results~~information concerning our cancellation rates for each of ~~operations~~our homebuilding segments for the periods ~~presented:~~set forth below:

Year Ended December 31,
2020 2019 Amount Change % Change
Revenues
$
1,133,806,607

$
744,292,323

$
389,514,284

52.3
%
Cost of sales
962,927,606

641,340,496

321,587,110

50.1
%
Selling, general and administrative expense
90,359,182

63,572,811

26,786,371

42.1
%
Income from equity in earnings of unconsolidated entities
(7,991,764
)

(2,208,182
)

(5,783,582
)

261.9
%
Gain on sale of assets
(117,840
)

(28,652
)

(89,188
)

311.3
%
Other Income
Other
(1,321,741
)
(2,447,879 )
1,126,138

-46.0
%
Paycheck Protection Program forgiveness
-

-

-

0.0
%
Other Expense
Other
3,188,183

2,888,526

299,657

10.4
%
Contingent consideration revaluation
1,378,686
(3,944,030 )
5,322,716

386.1
%
Interest expense
870,868

221,449

649,419

293.3
%
Income tax expense
-

-

-

0.0
%
Net and comprehensive income
$
84,513,427

$
44,897,784

39,615,643

46.9
%
Net and comprehensive income attributable to non-controlling interests
(5,419,972
)

(5,706,518
)

286,546

-5.0
%
Net and comprehensive income attributable to Dream Finders Homes, Inc.
$
79,093,455

$
39,191,266

$
39,902,189

50.4
%

Earnings per share
Basic
$
-

$
-

$
-

0.0
%
Diluted
$
-

$
-

$
-

0.0
%
Weighted-average number of shares
Basic
-

-

-

0.0
%
Diluted
-

-

-

0.0
%
Consolidated Balance Sheets Data (at period end):
Cash and cash equivalents
$
43,657,779

$
50,597,392

$
(6,939,613
)

-13.7
%
Total assets
$
733,680,241

$
514,919,450

$
218,760,791

42.5
%
Long-term debt, net
$
319,531,998

$
232,013,468

$
87,518,530

37.7
%
Finance lease liabilities
$
345,062

$
498,691

$
(153,629
)

-30.8
%
Preferred mezzanine equity
$
55,638,450

$
58,269,166

$
(2,630,716
)

-4.5
%
Common mezzanine equity
$
20,593,001

$
16,248,246

$
4,344,755

26.7
%
Common members' equity
$
103,852,646

$
56,502,464

$
47,350,182

83.8
%
Non-controlling interests
$
31,939,117

$
30,471,371

$
1,467,746

4.8
%
Other Financial and Operating Data (unaudited)
Active communities at end of period⁽¹⁾

126

85

41

48.2
%
Home closings
3,154

2,048

1,106

54.0
%
Average sales price of closed homes⁽²⁾

$
357,633

$
362,728

$
(5,095
)

-1.4
%
Net new orders
4,186

2,139

2,047

95.7
%
Cancellation rate
12.8
%

15.6
%

-2.8
%

-17.9
%
Backlog (at period end) - homes
2,424

854

1,570

183.8
%
Backlog (at period end, in thousands) - value
$
865,109

$
334,783

$
530,326

158.4
%
Gross margin (in thousands)⁽³⁾

$
165,048

$
98,405

$
66,643

67.7
%
Gross margin %⁽⁴⁾

14.6
%

13.3
%

1.3
%

10.0
%
Adjusted gross margin (in thousands)⁽⁵⁾

$
252,695

$
156,344

$
96,351

61.6
%
Adjusted gross margin %⁽³⁾

22.5
%

21.1
%

1.4
%

6.6
%
EBITDA (in thousands)⁽⁵⁾

$
120,885

$
70,522

$
50,363

71.4
%
EBITDA margin %⁽⁵⁾⁽⁶⁾

10.7
%

9.5
%

1.2
%

12.6
%
Adjusted EBITDA (in thousands) ⁽⁵⁾

$
121,832

$
71,417

$
50,415

70.6
%
Adjusted EBITDA margin ⁽⁵⁾⁽⁶⁾

10.7
%

9.6
%

1.1
%

11.5
%


	Year Ended December 31,
Segment	2023		2022
Southeast	21.5	%	16.0	%
Mid-Atlantic	14.4	%	31.0	%
Midwest	17.8	%	27.0	%
Total(1)	18.3	%	21.5	%

(1) Our cancellation rate for a given period is calculated as the total number of new sales contracts cancelled during the period, divided by the total number of new home sales contracts entered into during the period.

~~(1)~~

~~A community becomes active once the model is completed or the community has its fifth sale. A community becomes inactive when it has fewer than five units remaining to sell.~~

~~(2)~~

~~Average sales price of homes closed is calculated based on home sales revenue, excluding the impact of deposit forfeitures and percentage of completion revenues, over homes closed.~~

~~(3)~~

~~Gross margin is home sales revenue less cost of sales.~~

~~(4)~~

~~Calculated as a percentage of home sales revenue.~~

~~(5)~~

Adjusted gross margin, EBITDA and Adjusted EBITDA are non-GAAP financial measures. For definitions of these non-GAAP financial measures and a reconciliation to our most directly comparable financial measures calculated and presented in accordance with GAAP, see “—Non-GAAP Financial Measures.”

~~(6)~~

~~Calculated as a percentage of revenues.~~

~~Table of Contents~~

~~Revenues. Revenues~~Our cancellation rate for the year ended December 31, ~~2020 were $1,133.8 million,~~2023 was 18.3%, an ~~increase~~improvement of ~~$389.5 million, or 52.3%, from $744.3 million~~320 basis points when compared to the 21.5% cancellation rate for the year ended December 31, ~~2019.~~2022. The ~~increase~~reduction in ~~revenues~~the overall cancellation rate was primarily ~~attributable to an increase in home closings~~a result of 1,106 homes, or 54.0%, during the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase in home closings was attributable to a 48.2% increase in active communities from 85 at December 31, 2019 to 126 at December 31, 2020 and an increasesignificant improvement in the average monthly sales per community. The average monthly sales per community increased 38.5% from an average of 2.6 in 2019 to an average of 3.6 in 2020. In addition, H&H Homes contributed 312 home closings and $89.5 million in homebuilding revenues in 2020 after the acquisition was consummated. The average sales price of homes closed remained relatively consistent year over year as our shift to a higher proportionate share of first-time and move-up homebuyers with lower price points was offset by an increasing proportionate share of home closings from our operating segments with higher price points such as DC Metro and Colorado.

~~Cost of Sales and Gross Margin. Cost of sales~~cancellation rates for the year ended December 31, 2020 was $962.9 million, an increase of $321.6 million, or 50.1%, from $641.3 million for the year ended December 31, 2019. The increase in the cost of sales is primarily due to the increase in home closings in 2020 as compared to 2019. Gross margin for the year ended December 31, 2020 was $165.0 million, an increase of $66.6 million, or 67.7%, from $98.4 million for the year ended December 31, 2019. Gross margin as a percentage of home sales revenue was 14.6% for the year ended December 31, 2020, an increase of 130 bps, or 10.0%, from 13.3% for the year ended December 31, 2019. The increase in gross margin percentage was attributable to higher margins in certain of our operatingMid-Atlantic and Midwest segments, driven by ~~increased efficiencies~~improved homebuyer sentiments in ~~build times and costs.~~

~~Adjusted Gross Margin. Adjusted~~2023 following a sharp spike in interest rates that occurred in the latter half of 2022. This was partially offset by a higher proportion of 2022 gross ~~margin~~sales under built-for-rent contracts for the ~~year ended December 31, 2020 was $252.7 million, an increase of $96.4 million, or 61.6%, from $156.3 million for the year ended December 31, 2019. Adjusted gross margin as~~Southeast segment relative to 2023. Built-for-rent sales have a ~~percentage of home sales revenue for the year ended December 31, 2020 was 22.5%, an increase of 140 bps, or 6.6%, as compared to 21.1% for the year ended December 31, 2019.~~lower cancellation rate than retail sales. The ~~increases~~Southeast cancellation rate remained in adjusted gross margin and adjusted gross margin percentage was driven by increased efficiencies in build times and costs. Adjusted gross margin is a non-GAAP financial measure. For the definition of adjusted gross margin and a reconciliation to our most directly comparable financial measure calculated and presented in accordance with GAAP, see “—Non-GAAP Financial Measures.”

~~Selling, General and Administrative Expense~~. Selling, general and administrative expense for the year ended December 31, 2020 was $90.4 million, an increase of $26.8 million, or 42.1%, from $63.6 million for the year ended December 31, 2019. The increase in selling, general and administrative expense was primarily due to the inclusion of expenses for the operations of H&H Homes for the fourth quarter of 2020, an increase in payroll related costs of $17.0 million (of which $3.0 million related to H&H Homes payroll expenses) commensurateline with the ~~increasing scale and profitability of the Company as well as increased costs related to the Corporate Reorganization and IPO in January 2021.~~Company’s historical cancellation rates.

~~Income from Equity in Earnings of Unconsolidated Entities~~. Income from equity in earnings of unconsolidated entities for the year ended December 31, 2020 was $8.0 million, an increase of $5.8 million, or 261.9%, as compared to $2.2 million for the year ended December 31, 2019. The increase in income from equity in earnings of unconsolidated entities was largely attributable to an increase in mortgage loan fundings in 2020 as compared to 2019.

~~Other Income~~. Other income for the year ended December 31, 2020 was $1.3 million, a decrease of $1.1 million, or 46.0%, as compared to $2.4 million for the year ended December 31, 2019. The decrease in other income was primarily attributable to a decrease in joint venture home closings in the year ended December 31, 2020 as compared to the year ended December 31, 2019. Joint venture home closings were 247 and 254 for the years ended December 31, 2020 and 2019, respectively, with average sales prices of $319,200 and $397,300, respectively.

~~Other Expense~~. Other expense for the year ended December 31, 2020 was $3.2 million, an increase of $0.3 million, or 10.4%, as compared to $2.9 million for the year ended December 31, 2019. Other expense consists primarily of payments made to a land developer for homes closed in certain communities in our Colorado segment. This community was no longer active as of December 31, 2020.

~~Table of Contents~~

~~Other Income / Expense – Contingent Consideration.~~ Contingent consideration expense for the year ended December 31, 2020 was $1.4 million, a decrease of $5.3 million or 81.7%, as compared to $3.9 million in other income for the year ended December 31, 2019. The change in contingent consideration is primarily due to VPH coming in below initial projections in 2019 and H&H exceeding initial projections in 2020.

~~Net and Comprehensive Income~~. Net and comprehensive income for the year ended December 31, 2020 was $84.5 million, an increase of $39.6 million, or 88.2%, from $44.9 million for the year ended December 31, 2019. The increase in net and comprehensive income was primarily attributable to an increase in gross margin on homes closed of $66.6 million, or 67.7%, during the year ended December 31, 2020 as compared to the year ended December 31, 2019.

~~Net and Comprehensive Income Attributable to Dream Finders Homes, Inc.~~ Net and comprehensive income attributable to Dream Finders Homes, Inc. for the year ended December 31, 2020 was $79.1 million, an increase of $39.9 million, or 101.8%, from $39.2 million for the year ended December 31, 2019. The increase was primarily attributable to a significant increase in home closings and gross margin. We closed 3,154 homes for the year ended December 31, 2020, an increase of 1,106 units, or 54.0%, from the 2,048 homes closed for the year ended December 31, 2019. Gross margin for the year ended December 31, 2020 was $165.0 million, an increase of $66.6 million, or 67.7%, from $98.4 million for the year ended December 31, 2019.

~~Net and Comprehensive Income Attributable to Noncontrolling Interests~~. Net and comprehensive income attributable to noncontrolling interests for the year ended December 31, 2020 was $5.4 million, a decrease of $0.3 million, or 5.0%, as compared to $5.7 million for the year ended December 31, 2019.

~~Backlog~~. Backlog at December 31, 2020 was 2,424 homes valued at approximately $865.1 million, an increase of 1,570 homes and $530.3 million, respectively, or 183.8% and 158.4%, respectively, as compared to 854 homes valued at approximately $334.8 million at December 31, 2019. The increase in backlog was primarily attributable to an increase in active communities of 41, or 48.2%, during the year ended December 31, 2020.

Non-GAAP Financial Measures

Adjusted Gross Margin

Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define adjusted gross margin as gross margin excluding the effects of capitalized interest, lot option fees, amortization included in ~~the~~homebuilding cost of sales ~~(including adjustments~~(adjustments resulting from the application of purchase accounting in connection with acquisitions) and commission expense. Our management believes this information is meaningful because it isolates the impact that ~~capitalized interest, amortization (including purchase accounting adjustments) and commission expense~~these excluded items have on gross margin. ~~However, because adjusted gross margin information excludes capitalized interest, amortization (including purchase accounting adjustments)~~We include internal and external commission expense which have real economic effects and could impact our results of operations, the utility of adjusted gross margin information as a measure of our operating performance may be limited. We include commission expense in homebuilding cost of sales, not selling, general and administrative expense, and therefore commission expense is taken into account in gross margin.

As a result, in order to provide a meaningful comparison to the public company homebuilders that include commission expense below the gross margin line in selling, general and administrative expense, we have excluded commission expense from adjusted gross margin. However, because adjusted gross margin information excludes capitalized interest, lot option fees, purchase accounting amortization and commission expense, which have real economic effects and could impact our results of operations, the utility of adjusted gross margin information as a measure of our operating performance may be limited.

In addition, other companies may not calculate adjusted gross margin information in the same manner that we do. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance.

Table of Contents

The following table presents a reconciliation of adjusted gross margin to the GAAP financial measure of gross margin for each of the periods indicated (unaudited and in thousands, except percentages):


	Year Ended December 31,
	2023			2022			2021
Gross margin(1)	$	727,075		$	612,420		$	306,969
Interest charged to homebuilding cost of sales(2)	122,759			60,595			32,508
Amortization in homebuilding cost of sales(3)	—			6,701			9,873
Commission expense	165,790			140,442			67,032
Adjusted gross margin	$	1,015,624		$	820,158		$	416,382
Gross margin %(4)	19.4		%	18.4		%	16.0		%
Adjusted gross margin %(4)	27.2		%	24.6		%	21.7		%

Year Ended December 31,
2021 2020 2019
Revenues $ 1,923,910 $ 1,133,807 $ 744,292
Other revenue 6,609 5,831 4,547
Home sales revenue 1,917,301 1,127,976 739,745
Cost of sales 1,610,332 962,928 641,340
Gross margin⁽¹⁾
306,969 165,048 98,405
Interest expense in cost of sales 32,508 32,044 21,055
Amortization in cost of sales⁽³⁾
9,873 5,070 7,119
Commission expense 67,032 50,533 29,765
Adjusted gross margin $ 416,382 $ 252,695 $ 156,344
Gross margin %⁽²⁾
16.0 % 14.6 % 13.3 %
Adjusted gross margin %⁽²⁾
21.7 % 22.5 % 21.1 %

(1)
Gross margin is homebuilding revenues less homebuilding cost of sales.

~~(1)~~

~~Gross margin is home sales revenue less cost of sales.~~

~~(2)~~

~~Calculated as a percentage of home sales revenues.~~

~~(3)~~

~~Includes purchase accounting adjustments, as applicable.~~

(2)Includes interest charged to homebuilding cost of sales related to our construction lines of credit and senior unsecured notes, net, as well as lot option fees.

(3)Represents amortization of purchase accounting adjustments from the Company’s prior acquisitions.

(4)Calculated as a percentage of homebuilding revenues.

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA are not measures of net income as determined by GAAP. EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define EBITDA as net income before (i) interest income, (ii) capitalized interest ~~expensed~~charged in homebuilding cost of sales, (iii) interest expense, (iv) income tax expense and (v) depreciation and amortization. We define adjusted EBITDA as EBITDA before stock-based ~~compensation expense.~~

compensation.

Management believes EBITDA and adjusted EBITDA are useful because they allow management to more effectively evaluate our operating performance and compare our results of operations from period to period without regard to our financing methods or capital structure or other items that impact the comparability of financial results from period to period. EBITDA and adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. Our computations of EBITDA and adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA of other companies. We present EBITDA and adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business.

EBITDA and adjusted EBITDA information should be considered only as a supplement to net income information as a measure of our performance.

Table of Contents

Table of credit with the lenders from the Credit Agreement such that we could borrow an additional $49.4 million under the agreement. As of December 31, 2021, we were in compliance with the covenants set forth in our Credit Agreement.Contents

We enter into surety bonds and letter of credit arrangements with local municipalities, government agencies and land developers. These arrangements relate to certain performance-related obligations and serve as security for certain land option agreements. At December 31, 2021, we had outstanding letters of credit and surety bonds totaling $9.9 million, inclusive of the $8.1 million above, and $53.7 million, respectively.

Leases

The Company has operating leases primarily associated with office space that is used by divisions outside of the Jacksonville area, model home sale-leasebacks and a corporate office building sale-leaseback. The Company also has finance leases for corporate office furniture. As of December 31, ~~2021,~~2023, the future minimum lease payments required under these leases totaled ~~$25.1~~$25 million, with ~~$4.4~~$7 million payable within 12 months. Further information regarding our leases is provided in Note ~~8 –Commitments~~5, Commitments and Contingencies ~~to our consolidated financial statements.~~

~~Contingent Consideration~~

Based on the terms of the purchase agreement, at the time of an acquisition, the Company may record a contingent consideration liability based on the expected value of any future earn out payments due to the acquiree for a typical period of up to five years post-acquisition. This liability is remeasured to fair value quarterly and the adjustment is recorded in other expense. As of December 31, 2021, the contingent consideration liability totaled $124.1 million, with $6.8 million payable within 12 months. Further information regarding our contingent consideration liability is provided in Note 1 –~~Nature of Business and Significant Accounting Policies and Note 2 –Business Acquisition~~ to our consolidated financial statements.

Series B Preferred Units

On August 31, 2023, the Company redeemed all of its previously outstanding Series B preferred units

. The Company made an aggregate cash payment to the Series B holders of $11 million, which included $7 million in principal plus cumulative undistributed earnings, less a negotiated discount on that date. Following the ~~Corporate Reorganization and upon completion of the IPO, MOF II DF Home LLC and MCC Investment Holdings LLC (both controlled by Medley Capital Corporation) continue to hold the~~redemption, no Series B preferred units ~~of DFH LLC. As such, they have certain rights~~remain outstanding. Refer to Note 12, Mezzanine and ~~preferences with regard to DFH LLC that holders of our Class A common stock do not have.~~

In the event that the sole manager of DFH LLC elects, from time to time, to make distributions, the holders of the Series B preferred units are entitled to receive distributions until the holders of each outstanding Series B preferred unit have received distributions equaling 8% per annum cumulative preferred return on any outstanding and unreturned capital contribution applicable to such Series B preferred units (the “Series B Preferred Return”), which accrues quarterly. Once the holders of each Series B preferred unit have received distributions equaling the Series B Preferred Return, they are thereafter entitled to $1,000 per Series B preferred unit. Additionally, holders of the Series B preferred units are entitled to receive tax distributions sufficient to fund their federal and state income tax liabilities attributableStockholders’ Equity to the taxable income on their Series B preferred units, if any. The Series B preferred units shall be deemed cancelled once they have received distributions totaling their initial capital contribution plus the Series B Preferred Return.

~~Table of Contents~~

~~DFH LLC may not, without the prior approval of the holders of the Series B preferred units, issue or sell equity securities ranking senior to or pari passu with the Series B preferred units.~~

Holders of Series B preferred units have the right to vote on all matters submitted to a vote of the members of DFH LLC, but do not have the right to convert their Series B preferred units into shares of our common stock. Any holder of Series B preferred units desiring to transfer their Series B preferred units to a non-affiliated third party must either (i) obtain approval from the sole manager of DFH LLC or (ii) must first offer such units to DFH LLC at the same price that the proposed third-party transferee would have paid or, in certain cases, at fair market value.

~~At any time on or prior to September 30, 2022, DFH LLC has the right to redeem some or all of the outstanding Series B preferred units at a price equal~~consolidated financial statements for disclosure related to the sum of (i) the difference of (A) $1,000 and (B) the amount of previous distributions having already been paid towards each such unit and (ii) unreturned capital contributions for such unit plus the Series B Preferred Return (the “Series B Redemption Price”).redemption.

In the event of a liquidation or dissolution of DFH LLC, the holders of Series B preferred units shall have preference over our membership interest in DFH LLC. Further, in the event of (i) a sale of substantially all of DFH LLC’s assets or (ii) a merger or reorganization resulting in the members of DFH LLC immediately prior to such transaction no longer beneficially owning at least 50% of the voting power of DFH LLC, the holders of the Series B preferred units may demand redemption of their Series B preferred units at a price equal to the Series B Redemption Price.

~~Series C Preferred Units~~

Following the Corporate Reorganization and upon completion of the IPO on January 27, 2021, we redeemed all 26,000 outstanding Series C preferred units of DFH LLC at a redemption price of $26.0 million, plus accrued distributions and fees of $0.2 million.

Convertible Preferred Stock

On September 29, 2021, we sold 150,000 shares of newly-created ~~Convertible Preferred Stock~~convertible preferred stock with an initial liquidation preference of $1,000 per share and a par value $0.01 per share, for an aggregate purchase price of ~~$150.0~~$150 million. We used the proceeds from the sale of the ~~Convertible Preferred Stock~~convertible preferred stock to partially fund the MHI acquisition and for general corporate purposes. Pursuant to the Certificate of Designations, the ~~Convertible Preferred Stock~~convertible preferred stock ranks senior to the Class A and B common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. ~~Upon~~Accordingly, upon a liquidation, dissolution or winding up of the ~~company,~~Company, each share of ~~Convertible Preferred Stock~~convertible preferred stock is entitled to receive the initial liquidation preference of $1,000 per share, subject to adjustment, plus all accrued and unpaid dividends thereon. In addition, the ~~Convertible Preferred Stock~~convertible preferred stock has the following terms:

•Cumulative Dividends: The ~~Convertible Preferred Stock~~convertible preferred stock accumulates cumulative dividends at a rate per annum equal to ~~9.00%~~9% payable quarterly in arrears.

•Duration: The ~~Convertible Preferred Stock~~convertible preferred stock is perpetual with call and conversion rights. The ~~Convertible Preferred Stock~~convertible preferred stock is not convertible by the Purchasers in the first five years following issuance, with the exception of the acceleration of the Conversion Right (as defined below) upon breach of the protective covenants (described below). We can call the outstanding ~~Convertible Preferred Stock~~convertible preferred stock at any time for one-hundred and two percent (102%) of its liquidation preference during the fourth year following its issuance and for one-hundred and one percent (101%) of its liquidation preference during the fifth year following its issuance, ~~(in each case, for the avoidance of doubt,~~ plus accrued but unpaid dividends, if ~~any).~~any. Subsequent to the fifth anniversary of its issuance, a purchaser can convert the ~~Convertible Preferred Stock~~convertible preferred stock into Class A common stock (the “Conversion Right”). The conversion price will be based on the average of the ~~trailing 90 days’ closing price of~~ninety trading days for the Class A common stock immediately preceding but not including the date of the optional conversion notice (as defined in the certificate of designations for the convertible preferred stock), less 20% of the average and subject to a floor conversion price of $4.00 (the “Conversion Discount”).

~~Table of Contents~~

•Protective Covenants: The protective covenants of the ~~Convertible Preferred Stock~~convertible preferred stock require us to maintain compliance with all covenants related to (i) the Credit Agreement, as may be further amended from time to time; provided that any amendment, restatement, modification or waiver of the Credit Agreement that would adversely and materially affect the rights of the Purchasers will require the written consent of holders of a majority of the then-outstanding shares of ~~Convertible Preferred Stock;~~convertible preferred stock; and (ii) any agreement between the Company and any Purchaser (the covenants referred to in clauses (i) and (ii), collectively, the “Protective Covenants”). Non-compliance beyond any applicable cure period with the Protective Covenants (in the case of the Protective Covenants related to the Credit Agreement) will accelerate the Conversion Right, and in the event of such acceleration that occurs before the fifth anniversary following the issuance of the ~~Convertible Preferred Stock,~~convertible preferred stock, the ~~“Conversion Discount”~~Conversion Discount shall be increased from 20% to 25%.

•Voting Rights: Except as may be expressly required by Delaware law, the shares of ~~Convertible Preferred Stock~~convertible preferred stock have no voting rights.

Table of Contents

•Redemption in a Change of Control: The ~~Convertible Preferred Stock~~convertible preferred stock will be redeemed, contingent upon and concurrently with the consummation of a change of control of the Company. Shares of ~~Convertible Preferred Stock~~convertible preferred stock will be redeemed in a change of control of the Company at a price, in cash, equal to the liquidation preference, subject to adjustment, plus all accumulated and unpaid dividends, plus, if the change of control occurs before the fourth anniversary of the date of issuance of the ~~Convertible Preferred Stock,~~convertible preferred stock, a premium equal to the dividends that would have accumulated on such share of ~~Convertible Preferred Stock~~convertible preferred stock from and after the change of control redemption date and through the fourth anniversary of the issuance of the ~~Convertible Preferred Stock.~~

convertible preferred stock.

Pursuant to the terms of the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained, ~~as contemplated by Nasdaq listing rules,~~ no shares of Class A common stock will be issued or delivered upon conversion of any ~~Convertible Preferred Stock~~convertible preferred stock to the extent that such issuance would (i) result in the holder beneficially owning in excess of 19.99% of the outstanding Class A common stock as of the date of the Certificate of Designations or (ii) exceed 19.99% of the outstanding shares of Class A and Class B common stock combined as of the date of the Certificate of Designations.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):

Year Ended December 31,
2021 2020 2019
Net cash provided by (used in) operating activities $
65,109
$ 96,911 $ 30,429
Net cash provided by (used in) investing activities
(523,025
) (13,027 ) (17,820 )
Net cash provided by (used in) financing activities
645,882
(65,830 ) 26,077


	Year Ended December 31,
	2023		2022		2021
Net cash provided by/(used in) operating activities	$	374,234	$	(27,623)	$	64,972
Net cash used in investing activities	(4,484)		(5,524)		(523,043)
Net cash (used in)/provided by financing activities	(216,424)		146,955		646,020

Year Ended December 31, ~~2021~~2023 Compared to Year Ended December 31, ~~2020~~2022

Net cash provided by operating ~~activities~~activities was ~~$65.1~~$374 million for the year ended December 31, ~~2021, a decrease of $31.8 million, as~~2023, compared to ~~$96.9~~$28 million of net cash ~~provided by~~used in operating activities for the year ended December 31, ~~2020.~~2022. The ~~decrease~~change in net cash provided by operating activities was primarily driven by a lower increase in inventories when compared to the prior year of $250 million, as well as higher net income in 2023, largely driven by an increase in home closings when compared to 2022. There was also a decrease in lot deposits ~~of $134.2 million and inventories of $80.1 million, as the Company continues~~in 2023, compared to ~~deploy its available cash to secure finished lots~~an increase in lot deposits in 2022. Customer deposits also increased versus a decrease in customer deposits in the future and in building its backlog of homes. The decrease was partially offset by higher deposits of $78.2 million received from customers, higher accounts payable and accrued expenses of $63.4 million and the increase in net income generated on home closings.prior year.

Net cash used in investing activities was ~~$523.0~~$4 million for the year ~~ended~~ended December 31, ~~2021, an increase of $510.0 million, as~~2023, compared to ~~$13.0~~$6 million of cash used in investing activities for the year ended December 31, ~~2020. The increase in net~~2022, primarily attributable to higher purchases of property and equipment during the year ended December 31, 2022.

Net cash used in ~~investing activities was primarily attributable to the Company’s acquisitions of Century Homes and MHI during the first quarter and fourth quarter of 2021, respectively.~~

~~Table of Contents~~

~~Net cash provided by~~ financing activities was ~~$645.9~~$216 million for the year ended December 31, ~~2021, an increase of $711.7 million,~~2023, as ~~compared~~compared to ~~$65.8~~$147 million of cash ~~used in~~provided by financing activities for the year ended December 31, ~~2020.~~2022. The ~~increase~~change in net cash used in financing activities was primarily attributable to ~~borrowings from our Credit Agreement, including $300.0 million utilized to refinance~~higher net payments on the ~~vertical~~construction lines of credit of ~~MHI upon acquisition;~~$436 million in 2023 compared to $203 million of net proceeds in 2022, and to a lesser extent, a one-time payment related to the ~~Corporate Reorganization, which included IPO~~redemption of the Series B preferred units during the year ended December 31, 2023. The full net proceeds ~~of $130.0 million, and~~from the issuance of ~~$149.0~~unsecured senior notes of $300 million ~~of convertible preferred stock (net of issuance costs). The increases~~during the year were ~~partially offset by the redemption of Series C preferred units of DFH LLC of $26 million, payments~~used to ~~terminate the Company’s historical vertical construction lines of credit, as well as MHI’s vertical lines of credit and notes payable upon acquisition, and the repayment~~pay down a portion of the ~~$20 million bridge loan utilized~~outstanding balance under the Credit Agreement.

Refer to ~~fund~~ the ~~H&H Acquisition.~~

~~Year Ended December 31, 2020 Compared to Year Ended December 31, 2019~~

~~Net cash provided by operating activities was $96.9 million~~Form 10-K for the year ended December 31, ~~2020, an increase of $66.5 million, as~~2022 filed on March 2, 2023 for the cash flows and related discussion for December 31, 2022 compared to ~~$30.4 million of net cash provided by operating activities for the~~ year ended December 31, ~~2019. The increase in net cash provided by operating activities was driven by higher deposits received from customers~~2021.

Table of ~~$37.6 million~~Contents

Off-Balance Sheet Arrangements

Asset-Light Lot Acquisition Strategy

We employ an asset-light and cost-effective lot acquisition strategy to achieve our growth goals. This strategy involves two key approaches: finished lot option contracts and land bank option contracts. These contracts grant us the ~~increase in net income generated on home closings, partially offset by an increase of lot deposits of $37.9 million~~right to ~~secure~~purchase finished lots ~~in the future.~~

Net cash used in investing activities was $13.0 million for the year ended December 31, 2020, a decrease of $4.8 million, as compared to $17.8 million of cash used in investing activities for the year ended December 31, 2019. The decrease in net cash used in investing activities was primarily attributable to the Company converting several joint ventures toat predetermined fixed prices from various land developers, sellers, and land bank ~~financing structures during 2020. The cash outflow for the land bank structures is presented in the operating section of the Consolidated Statements of Cash Flows.~~

partners.

Net cash used in financing activities was $65.8 million for the year ended December 31, 2020, a decrease of $91.9 million, as compared to $26.1 million of cash provided by financing activities for the year ended December 31, 2019. The decrease in net cash used in financing activities was primarily attributable to the redemption of the Series D preferred units of DFH LLC of $12.0 million, increased payments on construction lines of creditOur sole legal obligation and economic loss as a result of ~~higher home closings of 1,106, as well as increased tax distributions of $7.9 million~~such forfeitures is limited to the ~~members~~amount of ~~DFH LLC.~~

~~Factors Affecting Our Results of Operations~~

~~We believe that our future performance will depend on many factors, including those described below~~the deposits paid pursuant to such option contracts and, in the ~~sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.~~

~~Changes in Price and Availability of Land~~

Acquiring home sites or finished lots in desirable geographic areas with prices and acquisition terms that drive profitable home delivery is an important component of our business. Our infrastructure is designed to build a certain number of homes each year and an adequate lot supply is crucial to meeting our business objectives. Our sourcing of finished lots is affected by changes in the general availability of finished lots in the markets in which we operate, the willingness of land sellers to sell finished lots at competitive prices, competition for available finished lots and other market conditions. Lot value appreciation or depreciation varies across the markets in which we operate. Our acquisition costs associated with finished lots have increased in certain of our markets where job and population growth are outpacing lot supply. If the supply of finished lots is limited because of these or other factors, we may build and sell fewer homes as a result. To the extent that we are unable to acquire finished lots at competitive prices, or at all, our revenues, margins and other results of operations could be negatively impacted.

~~Table of Contents~~

Historically, we have utilized joint ventures to finance the acquisition and development of finished lots. We consolidate the assets, liabilities and income from certain of these joint ventures under GAAP. The revenues and cost of sales associated with homes closed from these consolidated joint ventures are recognized in revenues and cost of sales, respectively, on our Consolidated Statements of Comprehensive Income contained in our consolidated financial statements included elsewhere herein. The portion of income that is due and the equity that is attributable to our joint venture partners is recognized under the net and comprehensive income attributable to noncontrolling interests on our Consolidated Statements of Comprehensive Income contained in our consolidated financial statements included elsewhere herein. In the future, our primary financing strategy for controlling finished lots will be through the utilizationcase of land bank ~~relationships.~~ option contracts, our loss is limited to the related lot option fees paid to the land bank partner, any potential performance obligations, management of the land development to completion and any cost overruns relative to the project.

As of December 31, 2023, our lot deposits for finished lot option and land bank option contracts that are within the Consolidated Balance Sheets were $247 million. As of December 31, 2023, we controlled 29,748 lots under finished lot option and land bank option contracts.

Refer to “Item 1. Business—Land ~~bank relationships may result in a higher cost~~Acquisition and Development Process” for more information.

Surety Bonds, Letters of ~~sales, but~~Credit and Financial Guarantees

We enter into surety bonds and letters of credit arrangements with local municipalities, government agencies and land developers. These arrangements relate to certain performance-related obligations and serve as security for certain land option agreements.

As of December 31, 2023, we had outstanding surety bonds and letters of credit totaling $195 million and $1 million, respectively. We believe we will ~~not be required to share home closing gross margin with our land bank partners. This may reduce the net and comprehensive income attributable to noncontrolling interests and gross margin.~~

~~Availability of Mortgages; Applicable Interest Rates~~

The majority of our homebuyers in 2021 obtained a mortgage to purchase their home. As a result, the availability of mortgages on terms that make purchases of our homes affordable to a broad base of consumers has a significant impact on our business. The availability and accessibility of mortgages can depend in part on current interest rates and down payment requirements, which are not within our control. The majority of our customers that obtain mortgages obtain loans that conform to the terms established by Freddie Mac and Fannie Mae. Interest rates available to homebuyers obtaining conforming loans are driven by Freddie Mac’s and Fannie Mae’s ability to package and sell loans in the secondary market. Disruptions in this supply chain could impact our business significantly if our homebuyers are unable to obtain mortgages on terms that are acceptable, or at all.

~~Costs of Building Materials and Labor~~

Our cost of sales includes the acquisition and finance costs of home sites or lots, municipality fees, the costs associated with obtaining building permits, materials and labor to construct the home, interest rates for construction loans, internal and external realtor commissions and other miscellaneous closing costs. Home site costs range from 20-25% of the average cost of a home. Building materials range from 40-50% of the average cost to build the home, labor ranges from 30-40% of the average cost to build the home and interest, commissions and closing costs range from 4-10% of the average cost to build the home.

In general, the cost of building materials fluctuates with overall trends in the underlying prices of raw materials. The cost of certain of our building materials, such as lumber and oil-based products, fluctuates with market-based pricing curves. We often obtain volume discounts and/or rebates with certain suppliers of our building materials, which in turn reduces our cost of sales.

However, increases in the cost of building materials may reduce gross margin to the extent that market conditions prevent the recovery of increased costs through higher home sales prices. The price changes that most significantly influence our operations are price increases in commodities, including lumber. Significant price increases of these materials may negatively impact our cost of sales and, in turn, our net income. For example, in the last 18 months, the cost of lumber has been volatile due to the U.S. government-imposed tariffs on imports of Canadian lumber and the supply-chain disruptions caused by the closing of lumber mills in response to the COVID-19 pandemic. The recent increases in lumber commodity prices may result in the renewal of our lumber contracts at more expensive rates, which may significantly impact the cost to construct our homes and our business. If the current lumber shortage, and related pricing impacts, continue, our cost of sales and, in turn, our net income could be negatively impacted.

~~Housing Supply and Demand~~

When the supply of new homes exceeds new home demand, new home prices may generally be expected to decline. Although the COVID-19 pandemic initially caused a sharp decline in our homebuilding business in March and April 2020, the decline was followed by a sharp increase in our sales that began in May 2020 and has continued to steadily increase. As a result of the COVID-19 pandemic, we continue to observe an increase in demand from entry-level homebuyers, our primary customer focus, seeking to move out of apartments and into more spacious homes in anticipation of spending more time at home with remote-working arrangements increasing in prevalence. The U.S. housing market is expected to continue to weather the COVID-19 pandemic relatively well given supply dynamics and lack of distressed home sales. Recent job losses are more concentrated in lower income bands, impacting apartment rentals more than for sale housing. We expect housing market conditions to remain relatively healthy in 2022 based on the limited supply of resale homes, population growth continuing to outpace new home construction and relatively low interest rates.

~~Table of Contents~~

~~Seasonality~~

In all of our markets, we have historically experienced similar variability in our results of operations and capital requirements from quarter to quarter due to the seasonal nature of the homebuilding industry. We generally sell more homes in the first and second quarters and close more homes in our third and fourth quarters. As a result, our revenue may fluctuate on a quarterly basis and we may have higher capital requirements in our second, third and fourth quarters in order to maintain our inventory levels. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular quarter, especially our first quarter, are not necessarily representative of the results we expect at year end. We expect this seasonal pattern to continue in the long term.

~~Factors Affecting the Comparability of Our Financial Condition and Results of Operations~~

Our historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, as a result of our recent acquisitions as well as the following reasons:

~~Corporate Reorganization~~

~~For information regarding our Corporate Reorganization, see “Business—Corporate Reorganization.”~~

~~Income Taxes~~

Prior to the IPO and the related Corporate Reorganization, we were composed of various pass-through entities that are all treated as partnerships for federal income tax purposes, but are subject to certain minimal taxes and fees; however, income taxes on taxable income or losses realized by our predecessor, DFH LLC, are generally the obligation of the individual members or partners. Following the consummation of the IPO, we became be a corporation subject to corporate-level taxes, our income taxes became dependent upon our taxable income and our net income in future periods now reflects such taxes. We will recognize the financial statement impacts of GAAP and tax timing differences on a quarterly basis. See “—Results of Operations” for further clarity on the comparability differences between our current and future financial statements.

~~Selling, General and Administrative Expense~~

Our selling, general and administrative expense have increased as a result of the H&H acquisition and the initial and on-going compliance costs associated with being a public company, including certain provisions of the Sarbanes-Oxley Act and related SEC regulations, and the requirements associated with our Class A common stock being approved for listing on Nasdaq. As a result of being a public company, we will need to increase our operating expenses in order to pay our employees, legal counsel and accountants to assist us in, among other things, external reporting, instituting and monitoring a more comprehensive compliance and board governance function, establishing and maintaining internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act and preparing and distributing periodic public reports in compliance withfulfill our obligations under ~~applicable federal securities laws. We may need to hire additional employees to perform this compliance~~the related arrangements and ~~reporting function. We also recognized the acceleration~~do not anticipate any material losses under these surety bonds and letters of ~~certain of our predecessor’s, DFH LLC, costs, such as capitalized debt issuance costs and unvested stock compensation, which vested at the date of the IPO.~~

~~Equity Incentive Plan~~

To incentivize individuals providing services to us or our affiliates, the Board of Directors adopted the 2021 Equity Incentive Plan in connection with the IPO. Our 2021 Equity Incentive Plan provides for the grant, from time to time, at the discretion of our Board of Directors or a committee thereof, of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards, substitute awards and performance awards. Any individual who is our officer or employee or an officer or employee of any of our affiliates, and any other person who provides services to us or our affiliates, including our directors, is eligible to receive awards under our 2021 Equity Incentive Plan at the discretion of our Board of Directors or the Compensation Committee of our Board of Directors.

59credit.

~~Table of Contents~~

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with GAAP. Our critical accounting policies are those that we believe have the most significant impact to the presentation of our financial position and results of operations and that require the most difficult, subjective or complex judgments. In many cases, the accounting treatment of a transaction is specifically dictated by GAAP without the need for the application of judgment.

In certain circumstances, however, the preparation of consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

While our significant accounting policies are more fully described in Note 1. 1,Nature of Business and Significant Accounting Policies to our consolidated financial statements, we believe the following topics reflect our critical accounting policies and our more significant judgment and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

We recognize revenue in two ~~ways. In~~ways in accordance with Accounting Standards Codification (“ASC”) ~~606,~~ ~~Revenue from Contracts with Customers~~,606. This includes revenues from home sales with respect to homes that we construct on homesites to which we own title that are recorded at the time each home sale is closed and title and possession are transferred to the ~~buyer. In accordance with ASC 606,~~buyer, or upon delivery of homes sold to third-party investors intending to lease the homes, as well as revenues from home sales in which the buyer retains title to the homesite while we build the home that are recognized based on the percentage of completion of the home construction, which is measured on a quarterly basis. We determine the percentage of completion based on the number of days of construction completed to the total estimated number of days to construct the home.

Table of Contents

Real Estate Inventory and Homebuilding Cost of ~~Home~~ Sales

Inventories include the cost of direct land acquisition, land development, construction, capitalized interest, lot option fees, real estate taxes and direct overhead costs incurred related to land acquisition and development and home construction. Indirect overhead costs are charged to selling, general and administrative expense as incurred.

Land and development costs are typically allocated to individual residential lots on a ~~pro-rata~~pro rata basis based on the number of lots in the development, and the costs of residential lots are transferred to construction work in progress when home construction begins. Sold units are expensed on a specific identification basis as homebuilding cost of ~~contract revenues earned. Cost~~sales. Homebuilding cost of ~~contract revenues earned~~sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs allocated to each residential lot.

Inventories are carried at the lower of accumulated cost or net realizable value. We periodically review the performance and outlook of our inventories for indicators of potential impairment. ~~No impairments were recognized during the years ended December 31, 2021, 2020 and 2019.~~

Business Combinations and Valuation of Contingent Consideration

The Company accounts for business combinations using the acquisition method. Under ASC 805 a business combination occurs when an entity obtains control of a “business.” The Company determines whether or not the gross assets acquired meet the definition of a business. If they meet this criteria, the Company accounts for the transaction as a stock purchase. If they do not meet this criteria the transaction is accounted for as an asset purchase. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issuance of debt or equity securities. Any contingent consideration is measured at fair value at the date of acquisition and is based on expected cash flow of the acquisition target discounted over time using an observable market discount rate. The Company generally utilizes outside valuation experts to determine the amount of contingent consideration. Contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in other income or other expense onin the Consolidated Statements of Comprehensive Income.

~~Table of Contents~~

Recent Accounting Pronouncements

~~See~~Refer to Note 1. 1,Nature of Business and Significant Accounting Policies to our consolidated financial statements.

~~Inflation~~

Inflation in the United States has been relatively low in recent years and did not have a material impact on our results of operations for the years ended December 31, 2021, 2020 and 2019. Although the impact of inflation has not been significant in recent years, it is still a factor in the U.S. economy, and we tend to experience inflationary pressure on wages and raw materials. Our operations may be negatively impacted by inflation due to increasing construction costs, labor, materials as well as land acquisition and financing costs. Inflation can also result in rising mortgage interest rates, which can, in turn, substantially limit the ability of a typical homebuyer, relying on mortgage financing, to purchase a new home. During 2021, although there were increases in the cost of labor and materials, the costs were outpaced by price increases in homes closed, and as such, did not have a material impact on our gross margins.

~~Off-Balance Sheet Arrangements~~

~~Asset-Light Lot Acquisition Strategy~~

We operate an asset-light and capital efficient lot acquisition strategy primarily through finished lot option contracts and land bank option contracts. See “Business—Business Opportunities” for further information on these option contracts, but these contracts generally allow us to forfeit our right to purchase the lots controlled by these option contracts for any reason, and our sole legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid pursuant to such option contracts and, in the case of land bank option contracts, any related fees paid to the land bank partner. We do not have any financial guarantees or completion obligations, and we do not guarantee lot purchases on a specific performance basis under these agreements.

As of December 31, 2021, we controlled over 38,300 lots through finished lot option contracts and land bank option contracts. Our entire risk of loss pertaining to the aggregate purchase price of contractual commitments resulting from our non-performance under our finished lot option contracts and land bank option contracts is limited to approximately $241.4 million in lot deposits as of December 31, 2021. In addition, we have capitalized costs of $33.5 million relating to our off-balance sheet arrangements and land development due diligence.

~~Surety Bonds and Letters of Credit~~

We enter into letter of credit and surety bond arrangements with local municipalities, government agencies and land developers. These arrangements relate to certain performance-related obligations and serve as security for certain land option agreements. At December 31, 2021, we had outstanding letters of credit and surety bonds totaling $9.9 million and $53.7 million, respectively. We believe we will fulfill our obligations under the related arrangements and do not anticipate any material losses under these letters of credit or surety bonds.

~~ITEM 7A.~~

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations are ~~interest rate~~interest-rate sensitive. As overall housing demand is adversely affected by increases in interest rates, a significant increase in interest rates may negatively affect the ability of homebuyers to secure adequate financing. Higher interest rates could adversely affect our revenues, gross margins and net income. We do not enter into, nor do we intend to enter into in the future, derivative financial instruments for trading or speculative purposes to hedge against interest rate fluctuations.

~~Table of Contents~~

Quantitative and Qualitative Disclosures About Interest Rate Risk

Market risk is the risk of loss arising from adverse changes in market prices and interest rates. Our market risk arises from interest rate risk inherent in our financial instruments and debt obligations. Interest rate risk results from the possibility that changes in interest rates will cause unfavorable changes in net income or in the value of interest ~~rate-sensitive~~rate sensitive assets, liabilities and commitments. Lower interest rates tend to increase demand for mortgage loans for home purchasers, while higher interest rates make it more difficult for potential borrowers to purchase residential properties and to qualify for mortgage loans. We have no market ~~rate sensitive~~rate-sensitive instruments held for speculative or trading purposes.

The Credit Agreement provides for interest rate options on advances at rates equal to either: (a) in the case of base rate advances, the highest of (1) Bank of America, N.A.’s announced “prime rate”, (2) the federal funds rate plus 0.5%, and (3) the one-month LIBOR plus 1.0%, in each case not to be less than 1.5%; or (b) in the case of Eurodollar rate advances, the reserve adjusted LIBOR, not to be less than 0.5%. Borrowings underUnder the Credit Agreement, the Company has the option to draw “Term SOFR Rate Loans” or “Daily Simple SOFR Rate Loans”. Term SOFR Rate Loans bear interest ~~at the~~based on Term SOFR rates for one, three or six-month interest periods, which include SOFR adjustments of 10, 15 and 25 basis points for each interest period, respectively. Daily Simple SOFR Rate Loans bear interest based on Daily Simple SOFR rates and include a SOFR adjustment of 10 basis points. Interest under Term SOFR Rate Loans and Daily Simple SOFR Rate Loans also include an “applicable rate option plus an applicable margin ranging from (i) 2.00% to 2.75% per annum for base rate advances and (ii) 3.00% to 3.75% per annum for Eurodollar rate advances. The applicable margin will vary dependingmargin” determined based on the Company’s net debt to capitalization ~~ratio.~~ratio, equivalent to credit spreads of 2.5% to 3.3%.

Table of Contents

Interest on ~~base rate~~Base Rate or Daily Simple SOFR Rate advances borrowed under the Credit Agreement isare payable in arrears on a monthly basis. Interest on ~~each Eurodollar~~Term SOFR rate ~~advance~~advances borrowed under the Credit Agreement isare payable in arrears at the end of the interest period applicable to such advance, or, if less than such interest period, three months after the beginning of such interest period. The Company pays the lenders a commitment fee on the amount of the unused commitments on a quarterly basis at a rate per annum that will vary from 0.20% to 0.30% depending on the Company’s ~~net~~ debt to ~~net~~ capitalization ratio.

Outstanding borrowings under the Credit Agreement are subject to, among other things, a borrowing base. The borrowing base includes, among other things, (a) 90% of the net book value of presold housing units, (b) 85% of the net book value of model housing units, (c) 85% of the net book value of speculative housing units, ~~and~~ (d) 70% of the net book value of finished lots, (e) 85% of the net book value of certain built-for-rent units, and (f) 75% of the net book value of other built-for-rent units, in each case subject to certain exceptions and limitations set forth in the Credit Agreement.

The borrowing base availability is reduced dollar-for-dollar for any outstanding unsecured indebtedness permitted under the Credit Agreement.

Our mortgage banking joint venture, Jet ~~LLC,~~HomeLoans, is exposed to interest rate risk as it relates to its lending activities. Jet ~~LLC~~HomeLoans underwrites and originates mortgage loans, which are sold through either optional or mandatory forward delivery contracts into the secondary markets. ~~All~~The loan portfolio of ~~the mortgage banking segment’s loan portfolio~~Jet HomeLoans is held for sale and subject to forward sale commitments. Jet ~~LLC~~HomeLoans also sells all of its mortgages held for sale on a servicing released basis.

Table of Contents

~~Dream Finders Homes, Inc. and Subsidiaries~~

~~Consolidated Statements of Cash Flows~~

Twelve Months Ended December 31,
2021
2020
2019

Cash Flows from Operating Activities
Net income

$
134,593,818
$ 84,513,427 $ 44,897,784
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities
Depreciation and amortization

5,938,061

3,851,876

3,035,451

Gain on sale of property and equipment

(87,023
)

(117,840
)

(28,652
)
Amortization of debt issuance costs

1,959,943

2,090,711

2,318,286

Extinguishment of unamortized debt issuance costs
506,466 0 0
Amortization of right-of-use operating lease

3,786,381

3,842,801

2,622,569

Amortization of right-of-use financing lease

126,568

158,358

366,241

Stock compensation expense

5,233,676

946,609

895,000

Income from Paycheck Protection Program
7,219,794 0 0
Deferred tax benefit
(945,534 ) 0 0
Income from equity method investments, net of distributions received

(3,918,264
)

(2,679,894
)

(86,242
)
Remeasurement of contingent consideration

7,532,830

1,378,786

(3,944,030
)
Changes in Operating Assets and Liabilities, Net of Effects from Acquisitions

Inventories

(80,195,985
)

23,512,992

(30,902,010
)
Lot deposits

(134,238,066
)

(37,913,129
)

(11,216,250
)
Other assets and accounts receivable

(20,421,568
)

(22,793,864
)

(1,325,489
)
Accounts payable and accrued expenses

63,360,881

6,197,891

19,398,115

Customer deposits

78,167,415

37,556,519

6,792,918

Operating lease ROU Assets
(7,418,285 )
Operating lease liabilities

3,907,881

(3,633,859
)

(2,394,942
)
Net cash provided by operating activities 65,108,989 96,911,384 30,428,749

Cash Flows from Investing Activities
Purchase of property and equipment

(2,774,372
)

(2,924,040
)

(2,892,130
)
Proceeds from disposal of property and equipment

508,168

241,918

91,397

Investments in equity method investments

(1,979,813
)

(89,767
)

(2,717,593
)
Return of investments from equity method investments

668,139

6,578,525

704,703

Business combinations, net of cash acquired

(519,464,971
)

(16,833,369
)

(13,006,396
)
Net cash used in investing activities
(523,042,849
)

(13,026,733
)

(17,820,019
)

Cash Flows from Financing Activities
Proceeds from issuance of common stock in IPO, net
143,630,400 0 0
Proceeds from issuance of convertible preferred stock, net
148,500,000 0 0
Proceeds from construction lines of credit

1,894,574,866

713,917,939

550,865,562

Principal payments on construction lines of credit

(1,424,960,047
)

(758,681,883
)

(522,926,492
)
Proceeds from notes payable

2,964,323

28,472,680

12,696,227

Principal payments on notes payable

(25,679,162
)

(13,180,967
)

(11,454,898
)
Payment of debt issue costs

(7,656,655
)

(1,994,858
)

(2,264,196
)
Payments of equity issuance costs
(14,008,637 ) 0 0
Payments on financing leases

(127,479
)

(153,629
)

(375,390
)
Payments on contingent consideration
(1,206,769 ) 0 0
Other financing activities
(9,264 ) 0 0
Contributions from non-controlling interests

2,000,000

3,882,625

9,783,371

Distributions to non-controlling interests

(23,319,363
)

(7,834,849
)

(13,948,375
)
Contributions

0

0

12,000,000

Distributions

(23,289,322
)

(17,256,938
)

(8,298,586
)
Redemptions

(25,530,506
)

(13,000,000
)

0

Contribution from conversion of converted LLC units
123,657,597 0 0
Conversion of LLC units
(123,657,596 ) 0 0
Net cash provided by (used in) financing activities
645,882,386

(65,829,880
)

26,077,223

Net increase in cash, cash equivalents and restricted cash

187,948,526

18,054,771

38,685,953

Cash, cash equivalents and restricted cash at beginning of period

93,373,332

75,318,561

36,632,608

Cash, cash equivalents and restricted cash at end of period

281,321,858

93,373,332

75,318,561

Supplemental Disclosure of Cash Flow Information
Cash paid for interest, net of amounts capitalized

672,172

900,225

299,689

Non-cash Financing Activities
Financed land payments to seller

8,916,211

0

0

Leased assets obtained in exchange for new operating lease liabilities

8,148,973

2,962,682

3,234,033

Accrued distributions

3,450,000

718,907

1,802,177

Equity issuance costs incurred
1,281,565 0 0
Contingent Consideration
94,572,694 16,310,000 9,412,768
Non-cash Investing Activities
Investment capital reallocation
(3,468,761
)

1,171,112

0

Total non-cash financing and investing activities
112,900,682

21,162,701

14,448,978

Reconciliation of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents

227,227,020

43,657,779

50,597,392

Restricted cash

54,094,838

49,715,553

24,721,169

Total cash, cash equivalents and restricted cash shown on the Consolidated Statements of Cash Flows

$
281,321,858

$
93,373,332

$
75,318,561


	Redeemable Preferred Units/Stock Mezzanine			Redeemable Common Units Mezzanine			Common Units Members’			Common Stock - Class A			Common Stock - Class B			Additional Paid-in Capital		Retained Earnings		Total Non- Controlling Interests		Total Equity
	Units	Amount		Units	Amount		Units	Amount		Shares	Amount		Shares	Amount
Balance as of December 31, 2020	48,543	$	55,638	7,010	$	20,593	76,655	$	103,853	—	$	—	—	$	—	$	—	$	—	$	31,939	$	212,023
Reorganization transactions	(15,400)	(19,958)		(7,010)	(19,227)		(76,655)	(84,473)		21,255,329	213		60,226,153	602		122,843		—		—		—
Issuance of common stock, net	—	—		—	—		—	—		11,040,000	110		—	—		129,887		—		—		129,997
Issuance of convertible preferred stock	150,000	148,124		—	—		—	—		—	—		—	—		—		—		—		148,124
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		5,233		—		—		5,233
Contributions	—	—		—	—		—	—		—	—		—	—		—		—		2,000		2,000
Redemptions	(26,000)	(25,530)		—	—		—	—		—	—		—	—		—		—		—		(25,530)
Distributions	—	(3,617)		—	(1,275)		—	(18,384)		—	—		—	—		—		(13)		(23,319)		(46,608)
Preferred stock dividends declared	—	—		—	—		—	—		—	—		—	—		—		(3,450)		—		(3,450)
Net income and comprehensive income	—	563		—	(91)		—	(996)		—	—		—	—		—		121,657		13,461		134,594
Balance as of December 31, 2021	157,143	$	155,220	—	$	—	—	$	—	32,295,329	$	323	60,226,153	$	602	$	257,963	$	118,194	$	24,081	$	556,383
Stock-based compensation	—	—		—	—		—	—		238,554	2		—	—		6,794		—		—		6,796
Distributions	—	—		—	—		—	—		—	—		—	—		—		—		(23,095)		(23,095)
Preferred stock dividends declared	—	—		—	—		—	—		—	—		—	—		—		(13,688)		—		(13,688)
Net income and comprehensive income	—	825		—	—		—	—		—	—		—	—		—		261,488		11,984		274,297
Balance as of December 31, 2022	157,143	$	156,045	—	$	—	—	$	—	32,533,883	$	325	60,226,153	$	602	$	264,757	$	365,994	$	12,970	$	800,693
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		14,098		—		—		14,098
Vesting of stock-based compensation	—	—		—	—		—	—		371,841	4		—	—		(4)		—		—		—
Withholding of common stock for taxes	—	—		—	—		—	—		(23,600)	—		—	—		(322)		—		—		(322)
Distributions	—	—		—	—		—	—		—	—		—	—		—		—		(11,946)		(11,946)
Redemption of Series B preferred units	(7,143)	(8,132)		—	—		—	—		—	—		—	—		(3,288)		343		—		(11,077)
Preferred stock dividends declared	—	—		—	—		—	—		—	—		—	—		—		(13,238)		—		(13,238)
Net income and comprehensive income	—	587		—	—		—	—		—	—		—	—		—		295,313		12,042		307,942
Balance as of December 31, 2023	150,000	$	148,500	—	$	—	—	$	—	32,882,124	$	329	60,226,153	$	602	$	275,241	$	648,412	$	13,066	$	1,086,150

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

Table of Contents

DREAM FINDERS HOMES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Year Ended December 31,
	2023		2022		2021
Cash Flows from Operating Activities
Net and comprehensive income	$	307,942	$	274,297	$	134,594
Adjustments to reconcile net and comprehensive income to net cash provided by/(used in) operating activities
Depreciation and amortization	10,651		11,252		6,065
Gain on sale of property and equipment	(56)		(92)		(87)
Extinguishment of unamortized debt issuance costs	—		283		507
Amortization of lease right-of-use assets	7,245		5,839		3,786
Stock-based compensation	14,098		6,796		5,233
Income from Paycheck Protection Program	—		—		7,220
Deferred income tax benefit	(22,345)		(294)		(946)
Return on investments, net of income from unconsolidated entities	(1,286)		1,810		(3,918)
Contingent consideration revaluation	46,590		11,053		7,533
Payments of contingent consideration	(12,331)		(4,461)		—
Changes in Operating Assets and Liabilities
Accounts receivable	12,616		(11,850)		(16,717)
Inventories	(61,623)		(311,523)		(80,196)
Lot deposits	30,051		(35,852)		(134,238)
Other assets	(1)		(2,868)		(1,746)
Accounts payable and accrued expenses	22,750		65,748		63,361
Customer deposits	26,921		(32,031)		78,167
Lease liabilities	(6,988)		(5,730)		(3,646)
Net cash provided by/(used in) operating activities	374,234		(27,623)		64,972
Cash Flows from Investing Activities
Purchase of property and equipment	(4,781)		(5,545)		(2,774)
Proceeds from disposal of property and equipment	367		152		508
Investments in unconsolidated entities	(300)		(300)		(1,980)
Return of investments from unconsolidated entities	230		449		668
Business combinations, net of cash acquired	—		(280)		(519,465)
Net cash used in investing activities	(4,484)		(5,524)		(523,043)

Cash Flows from Financing Activities
Proceeds from senior unsecured notes	300,000		—		—
Proceeds from construction lines of credit	5,410,000		11,023,077		1,897,540
Repayments on construction lines of credit	(5,845,864)		(10,820,121)		(1,450,639)
Payments of debt issuance costs	(11,385)		(5,539)		(7,657)
Proceeds from common stock issuance	—		—		143,630
Proceeds from issuance of convertible preferred stock	—		—		148,500
Payments of equity issuance costs	—		—		(14,009)
Payments of preferred stock dividends	(13,238)		(13,688)		—
Payments for common stock withheld for taxes	(322)		—		—
Conversion of LLC units	—		—		(123,658)
Contributions	—		—		125,658
Distributions	(11,946)		(23,095)		(46,608)
Redemptions of preferred units	(11,077)		—		(25,530)
Payments of contingent consideration	(32,592)		(13,679)		(1,207)
Net cash (used in)/provided by financing activities	(216,424)		146,955		646,020

Net increase in cash, cash equivalents and restricted cash	153,326		113,808		187,949
Cash, cash equivalents and restricted cash at beginning of period	395,130		281,322		93,373
Cash, cash equivalents and restricted cash at end of period	$	548,456	$	395,130	$	281,322

Table of Contents

DREAM FINDERS HOMES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)


Year Ended December 31,
2023	2022	2021


Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	494,145	$	364,531	$	227,227
Restricted cash	54,311		30,599		54,095
Total cash, cash equivalents and restricted cash	$	548,456	$	395,130	$	281,322

Supplemental disclosures of cash payments:
Cash paid for interest	$	80,111	$	105,224	$	33,946
Cash paid for income taxes, net of refunds	81,320		47,935		27,819

Supplemental disclosures of noncash activities:
Noncash Financing Activities
Contingent consideration	—		(1,841)		94,573
Financed land payments to seller	—		—		8,916
Total noncash financing activities	$	—	$	(1,841)	$	103,489

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

~~Dream Finders Homes, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

Table of Contents

1.	DREAM FINDERS HOMES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of Business and Significant Accounting Policies

Nature of Business

Dream Finders Homes, Inc. ~~(the~~(together with its subsidiaries, “Dream Finders”, the “Company” or “DFH, Inc.”)designs, builds and sells homes in markets throughout the United States. The Companyalso offers title insuranceand mortgage banking solutions. The Company was incorporated in the State of Delaware on September 11, 2020. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its common stock and related transactions in order to carry on the business of Dream Finders Holdings LLC, a Florida limited liability company (“DFH LLC”), as a publicly-traded entity. Pursuant to a corporate reorganization and completion of its Initial Public Offering (“IPO”) on January 25, 2021, the Company became a holding company for DFH LLC and its subsidiaries.

In connection with the IPO and pursuant to the terms of the Agreement and Plan of Merger by and among DFH, Inc., DFH LLC and DFH Merger Sub LLC, a Delaware limited liability company and direct, wholly owned subsidiary of DFH, Inc., DFH Merger Sub LLC merged with and into DFH LLC with DFH LLC as the surviving entity (the “Merger”). As a result of the Merger, all of the outstanding non-voting common units and Series A Preferred Units of DFH LLC converted into 21,255,329 shares of Class A common stock of DFH, Inc., all of the outstanding common units of DFH LLC converted into 60,226,152 shares of Class B common stock of DFH, Inc. and all of the outstanding Series B Preferred Units and Series C Preferred Units of DFH LLC remained outstanding. We refer to this and certain other related events and transactions, as the “Corporate Reorganization”.

The Company successfully completed its IPO of 11,040,000 shares of Class A common stock (which included full exercise of the over-allotment option) at an IPO price of $13.00 per share. Shares of the Company’s Class A common stock began trading on the NASDAQ Global Select Market under the ticker symbol “DFH” on January 21, 2021, and the IPO closed on January 25, 2021. The Company is the sole manager of DFH LLC and owns 100% of the voting membership interest in DFH LLC.

The following is a description of the significant accounting policies and practices, which conform to accounting principles generally accepted in the United States of America (U.S. GAAP).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of DFH, Inc., its wholly owned subsidiaries and its investments that qualify for consolidation treatment ~~(see Note 11)~~(Note 6, Variable Interest Entities). ~~As a result~~The noncontrolling interests represent equity interests held by others in certain of ~~the reorganization transactions in connection with the IPO, for accounting purposes,~~ our historical results included herein present the combined assets, liabilities and results of operations of Dream Finders Homes, Inc. since the date of its formation and Dream Finders Holdings LLC, a Florida limited liability company (“DFH LLC”) and its direct and indirect subsidiaries prior to the IPO.subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. There are no other components of comprehensive income not already reflected in net and comprehensive income on our Consolidated Statements of Comprehensive Income.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. ~~GAAP~~GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. ~~Significant estimates include the valuation and impairment of goodwill, impairment of inventories and business combination estimates.~~ Actual results could differ materially from those estimates.

Cash and Cash Equivalents and Concentration Risk

Cash and cash equivalents consist of highly liquid instruments, with original maturities of three months or less. Cash and cash equivalents ~~includes~~include cash proceeds from home closings in-transit from or held by third-party title company escrow ~~agents~~accounts for the ~~Company’s~~ benefit of the Company, typically for less than five ~~days, which are considered deposits in-transit.~~ days.

At various times throughout the year, the Company may have cash deposited with financial institutions that exceed the federally insured deposit amount. ~~Management~~The Company has entered into insured cash sweep account agreements that protect material deposit balances with certain financial institutions. In addition, management reviews the financial viability of these financial institutions on a periodic basis and does not anticipate that any potential nonperformance by the financial ~~institutions. The Company had $372,726 and $9,676,416~~institutions would have a material impact to the Company’s results of operations or cash ~~and cash equivalents in interest bearing money market accounts at December 31, 2021 and 2020, respectively.~~

~~Table of Contents~~

flows.

Restricted Cash

Restricted cash represents funds held in accounts that are restricted for specific ~~purposes. Restricted cash at December 31, 2021, includes $48,597,903 of~~purposes, primarily related to escrow monies held in ~~the~~ title company, and $5,496,935 of funds related to specific future projects. Restricted cash at December 31, 2020, includes $39,837,702 of escrow monies held in the title company, and $9,877,851 of funds related to specific future projects.

~~Revenue Recognition~~

The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which requires an entity to recognize revenue when it transfers 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. We recognize revenue by following the five-step model: (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied.

The Company’s revenues consist primarily of home sales in the United States, which is its principal market. Home sale transactions are made pursuant to contracts under which the Company typically has a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. The Company generally determines the selling price per home based on the expected cost-plus margin. The Company has performed an assessment and its contracts do not contain significant financing terms. Performance obligations are satisfied at the point in time when control of the asset is transferred to the customer, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under home sale contracts, the Company typically receives an initial cash deposit from the homebuyer at the time the sales contract is executed and receives the remaining consideration to which the Company is entitled, through an escrow agent, at closing. In certain contracts, the customer controls the underlying land upon which the home is constructed. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts based on the percentage of completion of the project. Typically, the Company has two types of percentage of completion contracts. The first type is with individual customers for which the Company acts as a general contractor on land owned by the homebuyer. The second is with institutional buyers for which the Company acts as a general contractor on land owned by the institution. Individual customers generally have construction-to-permanent loans that are taken out by the customer. During the underwriting process for our individual customers and institutional customers a draw schedule is agreed upon by the bank, the customer and the Company. Funds are disbursed for labor and materials that have been completed or installed. These both result in a contract asset as work is being completed prior to receiving funds. A contract liability would be recorded in cases where we have received funds in excess of costs incurred. At December 31, 2021 and 2020, the contract asset related to percentage of completion contracts was $21,030,708 and $6,259,567, respectively, and included in other assets on the Consolidated Balance Sheets. At December 31, 2021 and 2020, the contract liability related to percentage of completion contracts was $3,906,312 and $0, respectively, included in accrued expenses on the Consolidated Balance Sheets.

Sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. The cost of sales incentives in the form of free or discounted products or services provided to homebuyers, including option upgrades, are reflected as construction and land costs because such incentives are identified in home sale contracts with homebuyers as an intrinsic part of the Company’s single performance obligation to deliver and transfer title to the home for the transaction price stated in the contracts.

~~Revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled.~~

~~A large portion of the Company’s contracts with customers and the related performance obligations have an original expected duration of one year or less.~~

~~Refer to Note 13 for a more detailed disaggregation of our revenues by reportable segments.~~

~~Other Income and Expense~~

Other income includes income related to the forgiveness of the Paycheck Protection Program (“PPP”) grant, proceeds from sale of non-core assets and interest income and management fees we earn for managing certain joint ventures. In general, we earn ~~four~~ to ~~six~~ percent of the sales price of homes built by us on behalf of the joint ventures. Other expense consists primarily of expenses related to the sale of non-core assets and contingent consideration valuation changes associated with earn out agreements with former owners of acquired entities.

~~Table of Contents~~

~~Inventories~~companies.

Inventories ~~include~~and Cost of Sales

Inventories include the costs of direct land acquisition, land development, construction, capitalized interest on qualifying assets, lot option fees, real estate taxes and direct overhead costs incurred related to land acquisition and development, home construction, and ~~home construction.~~sales commissions. Indirect overhead costs are charged to selling, general, and administrative expenses ~~(SG&A)~~ as incurred.

Land and development costs are typically allocated to individual residential lots on a pro rata basis based on the number of lots in the ~~development, and the~~development. The costs of residential lots are transferred to construction ~~work~~ in ~~progress~~process when home construction ~~begins. Sold units~~begins and are expensed on a specific identification basis as homebuilding cost of ~~contract revenues earned. Cost~~sales as the homes close. Homebuilding cost of ~~contract revenues earned~~sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs allocated to each residential ~~lot.~~lot, as well as interest and sales commissions.

Table of Contents

Inventories are carried at the lower of accumulated cost or net realizable value. The Company reviews the performance and outlook of its inventories for indicators of potential impairment at the community level on a quarterly ~~basis at the community level.~~basis. In addition to considering market and economic conditions, the Company assesses current sales absorption levels and recent profitability. The Company looks for instances where sales prices for ~~a home~~homes in backlog or potential sales prices for a future sold ~~home~~homes (expected undiscounted future cash flows) would be at a level at which the carrying value of the home may not be recoverable. ~~NaN impairments were recognized during the years ended December 31, 2021, 2020 or 2019.~~

~~Property and Equipment~~

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred and betterments are capitalized. When items of property and equipment are sold or otherwise disposed, the asset and related accumulated depreciation accounts are eliminated and any gain or loss is included in operations.

~~Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets as follows:~~

~~Asset Class~~	~~Useful Lives~~
~~Furnitures and fixtures~~		~~2-7~~
~~Office equipment~~		4
~~Software~~		~~1-4~~
~~Vehicles~~		5
~~Buildings~~		39

~~Long-Lived Assets~~

~~The Company evaluates the carrying value of its long-lived assets for impairment whenever events or changes in circumstances indicate an impairment may exist.~~ Recoverability is measured by comparing the expected undiscounted future cash flows of the ~~assets compared~~inventory to ~~the~~its carrying amount of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.amount. There were ~~0 triggering events or impairments~~$2.0 million and $1.8 million in inventory impairment charges recorded ~~during~~for the years ended December 31, ~~2021, 2020~~2023 and 2022, respectively, and no impairment charges recorded for the year ended December 31, 2021.

Debt Issuance Costs

Debt issuance costs that are recorded to capitalized interest are amortized to interest expense over the estimated economic life of the underlying debt instrument using the straight-line method, which approximates the effective interest method. Portions of this amortization are evaluated for capitalization as inventories and subsequently expensed through cost of sales at the home closing.

Lot Deposits

Lot deposits represent amounts paid by the Company to secure the ability to acquire finished lots or ~~2019.~~land for development through an option contract. The contracts provide for a due diligence period, during which the deposit is refundable. After this period, the deposit may be partially or completely forfeited should the Company decide not to proceed. The Company reviews lot deposits for impairment on a quarterly basis and will record an impairment charge if it believes it will forfeit its deposit on an individual or portfolio of lots. Impairment charges are included in selling, general and administrative expense (“SG&A”) on the Consolidated Statements of Comprehensive Income. There were $3.3 million and $3.0 million in impairment charges recorded for the years ended December 31, 2023 and 2022, respectively, and no impairment charges recorded for the year ended December 31, 2021.

Variable Interest Entities and Investments in Unconsolidated Entities

Pursuant to Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities (“VIEs”), management analyzes the Company’s investments first under the variable interest model to determine if they are VIEs and, if so, whether the Company is the primary beneficiary.Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion if changes to the Company’s involvement arise. To make this determination, management considers factors such as whether the Company could direct finance, determine or limit the scope of the entity, sell or transfer property, direct development or direct other operating decisions. The primary beneficiary is defined as the entity having both of the following characteristics: 1) the power to direct the activities that most significantly impact the VIE’s performance, and 2) the obligation to absorb losses and rights to receive the returns from the VIE that would be potentially significant to the VIE. Management consolidates the entity if the Company is the primary beneficiary or if a standalone primary beneficiary does not exist and the Company and its related parties collectively meet the definition of a primary beneficiary. If the investment does not qualify as a VIE under the variable interest model, management then evaluates the entity under the voting interest model to assess if consolidation is appropriate.

Refer to Note 6, Variable Interest Entities, for a description of the Company’s interests, including which entities were determined to be VIEs.

Accounting for Unconsolidated VIEs

Investments for which the Company is not identified as the primary beneficiary, but the Company has significant influence are accounted for as equity method investments.

Investments for which the Company does not have significant influence are accounted for at cost under the cost method. Equity and cost method investments are classified as investments in unconsolidated entities on the Consolidated Balance Sheets.

~~Intangibles Asset, Net~~

Table of ~~Amortization~~
Contents

For equity method investments, the Company shares in the earnings (losses) of these unconsolidated entities generally in accordance with its respective equity interests. In some instances, the Company recognizes earnings (losses) that differ from its equity interest in the unconsolidated entity.

For distributions received from equity method investments, the Company has elected to use the cumulative earnings approach for the Consolidated Statements of Cash Flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that amount are treated as returns of investment within investing cash flows.

When applicable dividends are declared for the cost method investments, we record them as income of unconsolidated entities on the Consolidated Statements of Comprehensive Income.

Leases

The Company ~~has intangible~~determines if an arrangement is, or contains, a lease at inception. We recognize leases when the contract provides us the right to use an identified asset for a period of time in exchange for consideration. Leases are included in right-of-use (“ROU”) assets ~~that consist of tradenames that~~and lease liabilities in the Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are ~~recorded in connection with acquisitions~~recognized at ~~their fair value~~the commencement date based on the ~~results~~present value of ~~valuation analyses. Trademarks acquired~~lease payments over the lease term. As most of the Company’s leases do not provide an explicit rate, management uses the Company’s incremental borrowing rate based on the information available at the commencement date in ~~business combinations~~determining the present value of lease payments. An explicit rate is used when readily determinable. The ROU assets also include any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term. The Company applies the practical expedient to combine lease and nonlease components when accounting for the ROU assets and liabilities for all asset classes. Variable lease costs are ~~generally valued using~~expensed as incurred. Leases with an initial term of 12 months or less are not recorded in the ~~relief-from-royalty method, which are Level 3-type measurements. Trademarks with finite lives are amortized over five-year periods.~~

Consolidated Balance Sheets.

Goodwill

Goodwill represents the excess of purchase price over the fair value of the assets acquired ~~and~~less the liabilities assumed in a business combination. ~~See~~Refer to Note 27, Contingent Consideration, for details on recent acquisitions. The Company tests for impairment at least annually as of October 1, but the Company tests for impairment more frequently if a triggering event occurs. This test assesses qualitative factors to determine if it is more likely than not that the fair value of the reporting units is less than their carrying value. These qualitative factors include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall performance of the reporting unit and other entity and reporting unit specific events. If the qualitative assessment indicates a stable fair value, no further testing is required. However, if the qualitative assessment indicates that the fair value of a reporting unit has declined past its carrying value, the Company will then calculate the fair value of the reporting unit based on discounted future cash flows. An impairment loss is recorded if this assessment concludes that the fair value of the reporting unit is less than its current carrying value. The Company completed its most recent goodwill impairment test onas of October 1, ~~2021,~~2023 and determined that the fair value of ~~all~~each of the reporting units was not less than carrying value. ~~NaN~~No goodwill impairment was recognized during the years ended December 31, ~~2021, 2020~~2023, 2022 or ~~2019. In addition, the~~2021.

Intangible Assets

The Company has ~~not recognized any impairment relating to triggering events~~intangible assets that ~~would cause additional impairment testing~~consist of trade names that are recorded in connection with acquisitions at their fair value based on the results of valuation analyses. Trademarks acquired in business combinations are generally valued using the relief-from-royalty method, which is a Level 3-type measurement. Trademarks with finite lives are amortized over ~~goodwill.~~

no more than five-year periods.

Table of Contents

6.	~~Inventories~~

Inventories consist of ~~finished~~owned land and finished lots, and construction in process (“CIP”) and finished homes, including capitalized ~~interest.~~interest costs incurred under our debt obligations discussed in Note 2. In addition, preconstruction costs related to finished lots or land under development held by third-party land bank partners incurred prior to the Company’s purchase of the land, including lot option fees, ~~related to off-balance sheet arrangements~~property taxes and due diligence costs ~~related to land development~~ are ~~also~~ capitalized into ~~inventories – finished lots~~owned land and ~~land.~~lots. Finished lots ~~are purchased with the intent of building and selling a home, and~~ are generally purchased just-in-time for ~~construction.~~construction, whether for speculative (“spec”) or sold homes, and are included within owned land and lots in the table below until construction begins when the finished lot cost is transferred to CIP. CIP represents ~~the homebuilding activity associated with both~~ homes ~~to be~~under construction or completed, including sold, spec and ~~speculative~~model homes. CIP includes the cost of ~~the~~ finished ~~lot as well as~~lots and all ~~of the~~ direct costs incurred to build ~~the home.~~homes. The cost of ~~the home~~homes is expensed on a specific identification ~~basis.~~basis when the home is delivered to the customer.

Table of Contents

~~As mentioned in Note 11,~~Inventories consisted of the ~~Company consolidated several joint ventures that own land~~following as of December 31, 2023 and finished lots. The Company owns a percentage of these joint ventures, but does not own the underlying assets. The table below shows the Company’s owned real estate inventory and real estate inventory owned by the joint ventures:2022 (in thousands):


	As of December 31,
	2023		2022
Construction in process and finished homes	$	1,251,767	$	1,148,654
Owned land and lots	188,482		229,531
Inventories	$	1,440,249	$	1,378,185

As of
December 31,

2021
2020

Construction in process and finished homes

$
961,778,789

$
396,630,945

Finished lots and land

83,197,267

46,839,616

Inventories owned by the Company
1,044,976,056

443,470,561

Inventories owned by consolidated joint ventures

21,685,688

40,900,552

Total inventories
$
1,066,661,744

$
484,371,113

Inventories owned by the Company
as a percentage of total inventories
Construction in process and finished homes

90%

82
%
Finished lots and land

8%

10
%

~~Interest is capitalized and included within each inventory category above.~~ Capitalized interest activity related to our construction lines of credit and senior unsecured notes, net is summarized in the table below for the years ended December 31, 2023 and 2022 (in thousands):


	Year Ended December 31,
	2023		2022
Capitalized interest as of beginning of the period	$	27,682	$	16,317
Interest incurred	77,278		52,972
Interest expensed	(1)		(32)
Interest charged to homebuilding cost of sales	(77,648)		(41,575)
Capitalized interest as of end of the period	$	27,311	$	27,682

4. Property and Equipment

Property and equipment, net consisted of the following as of December 31, 2023 and 2022 (in thousands):


	As of December 31,
	2023		2022
Furniture and fixtures	$	22,787	$	18,753
Buildings	401		401
Land	216		216
Vehicles	92		64
Office equipment and software	2,156		3,733
Total property and equipment	25,652		23,167
Less: Accumulated depreciation	(18,609)		(15,830)
Property and equipment, net	$	7,043	$	7,337

Depreciation expense was $4.8 million, $5.0 million and $3.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

5. Commitments and ~~2020:~~Contingencies

Legal Proceedings

As of
December 31,

2021
2020

Capitalized interest at the beginning of the period
$
21,091,297

$
25,335,924

Interest incurred

45,354,727

28,670,194

Interest expensed

(672,172
)

(870,868
)
Interest charged to cost of contract revenues earned

(32,507,799
)

(32,043,953
)
Capitalized interest at the end of the period
$
33,266,053

$
21,091,297

~~Table of Contents~~

7.	~~Warranty Reserves~~

The Company establishes warranty reserves to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to its homebuilding business. Estimates are determined based on management’s judgment considering factors such as historical spend and the most likely current cost of corrective action.

~~The table below presents the activity related to warranty reserves, which are included in accrued expenses in the accompanying Consolidated Balance Sheets:~~

As of
December 31,
2021
2020
Warranty reserves at the beginning of the year
$
3,530,461

$
1,652,634
Additions to reserves for new home deliveries
4,818,481

3,686,123
Payments for warranty costs
3,178,619

1,808,296
Warranty reserves at the end of the period
$
5,170,323

$
3,530,461

8.	~~Commitments and Contingencies~~

~~The Company is~~ currently involved in the appeals phase of civil litigation related to defective products provided by Weyerhaeuser NR Company (“Weyerhaeuser”) (NYSE: WY), one of our lumber suppliers. Our Colorado division builds a number of floor plans that include basements using specialized fir lumber. On July 18, 2017, Weyerhaeuser issued a press release indicating a recall and potential solution for TJI Joists with Flak Jacket Protection manufactured after December 1, 2016. The press release indicated the TJI Joists used a Flak Jacket coating that included a formaldehyde-based resin that could be harmful to consumers and produced an odor in certain newly constructed homes. We had 38 homes impacted by the harmful and odorous Flak Jacket coating and incurred significant costs directly related to Weyerhaeuser’s defective TJI Joists. Accordingly, we sought remediation and damages from Weyerhaeuser. The press release by Weyerhaeuser had a pronounced impact on our sales and cancellation rates in Colorado. We filed suit on December 27, 2017—Dream Finders Homes LLC and DFH Mandarin, LLC v. Weyerhaeuser NR Company, No. 17CV34801 (District Court, City and County of Denver, State of Colorado)—and included claims against Weyerhaeuser for manufacturer’s liability based on negligence, negligent misrepresentation causing financial loss in a business transaction and fraudulent concealment. Weyerhaeuser asserted a counterclaim asserting an equitable claim for unjust enrichment. After completion of a jury trial on November 18, 2019, the District Court issued a verdict in our favor on our claims, awarding Dream Finders Homes LLC $3,000,000 in damages and DFH Mandarin, LLC $11,650,000 in damages. On February 21, 2020, the District Court dismissed Weyerhaeuser’s counterclaim. Weyerhaeuser appealed the Colorado District Court’s jury verdict and on December 2, 2021, the Colorado Court of Appeals reversed the judgment entered against Weyerhaeuser for negligence, negligent misrepresentation and fraudulent concealment. As a result, Dream Finders Homes LLC and DFH Mandarin, LLC filed a petition for writ of certiorari to the Colorado Supreme Court on January 13, 2022 to appeal the Colorado Court of Appeals ruling —Dream Finders Homes LLC and DFH Mandarin, LLC v. Weyerhaeuser NR Company, Case No. 2022SC24 (Colorado Supreme Court)—and that appeal is currently pending. We are ~~awaiting~~party to legal matters from time to time that typically are derived from the ~~Colorado Supreme Court’s decision on whether it will grant our petition for writ of certiorari. We have incurred all costs to date~~Company’s general business practices, primarily related to the ~~Weyerhaeuser matter and have recognized 0 gain on the damages awarded to us by the District Court.~~

~~In April 2020,~~construction of homes. The Company believes that if a claim has merit, parties other than the Company ~~received proceeds from~~would be, at least in part, liable for the ~~PPP grant in~~claim, and the ~~amount $7,219,794, which is classified in accrued expenses on the Consolidated Balance Sheets and accounted for as an in-substance grant. The Company utilized all~~eventual outcome of the ~~PPP proceeds to pay payroll~~claim would not have a material adverse effect upon our consolidated financial statements. When we believe that a loss is probable and ~~permissible operating expenses. On June 16, 2021, approximately~~estimable, we record the ~~total amount of the PPP proceeds were forgiven by the Small Business Association (“SBA”). As such, the Company has included the PPP proceeds as other income on the~~estimated contingency loss in our Consolidated Statements of Comprehensive ~~Income for the year ended December 31, 2021.~~Income.

We do not believe that any future outcomes of any claims or lawsuits currently outstanding will have a material adverse effect upon our consolidated financial statements.

Table of Contents

Leases

The Company has operating leases primarily associated with office space that is used by our divisions, ~~outside of the Jacksonville area,~~ model home sale-leasebacks and a corporate office building ~~sale-leaseback.~~sale-leaseback in Jacksonville, Florida. This corporate office building lease has a remaining ~~lease~~lease term of ~~12 years. The Company also has finance leases for corporate office furniture.~~

11 years83

~~Table of Contents~~

~~Leases~~ with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Lease and nonlease components for new and reassessed leases are combined.potential renewal options. There are no significant operating or finance leases that have not yet commenced as of December 31, 2021. Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at the Company’s sole discretion. The Company only includes these renewal options in its lease terms if they are reasonably certain to be exercised.

~~Finance lease assets are recorded net of accumulated amortization of $333,407 and $919,552 as of December 31, 2021 and 2020, respectively.~~

~~Model Home Sale-Leaseback~~

On May 30, 2019, the Company sold 11 completed Model Homes for $4,417,674. The Company simultaneously entered into 11 individual lease agreements. The Company is responsible for paying the operating expenses associated with the homes while under lease. The Company is also responsible for preparing and actively marketing the homes for sale. The Company recorded a gain related to this transaction in the amount of $321,128.

On December 27, 2019, the Company sold 20 completed Model Homes for $9,240,680. The Company simultaneously entered into 17 individual lease agreements. The Company is responsible for paying the operating expenses associated with the homes while under lease. The Company is also responsible for preparing and actively marketing the homes for sale. The Company recorded a gain related to this transaction in the amount of $1,928,671.

For the Years Ended
December 31,
Lease Cost Classification 2021 2020 2019
Operating lease cost⁽¹⁾

Selling, general and administrative expenses

$
6,402,483

$
5,931,776

$
3,690,165
Finance lease cost:

Amortization of right of use assets
Selling, general and administrative expenses

158,358

158,359

366,241
Interest on lease liabilities
Interest expense

19,050

29,356

78,240
Total finance lease cost

$
177,408

$
187,715

$
444,481
Net lease cost

$
6,579,891

$
6,119,491

$
4,134,646

~~(1)~~

~~Includes short-term leases and variable lease costs which are immaterial.~~

2023.

The following table shows the ~~maturities of our~~operating lease ~~liabilities as of~~costs for the years ended December 31, ~~2021:~~2023, 2022 and 2021 (in thousands):


		Year Ended December 31,
Lease Cost	Classification	2023		2022		2021
Operating lease cost(1)	Selling, general and administrative expense	$	12,378	$	11,547	$	6,403

Maturity of Lease Liabilities
Operating
Leases⁽¹⁾

Finance
Leases⁽¹⁾

Total⁽¹⁾
2022

$
4,271,598

$
111,880

$
4,383,478
2023

3,679,385

35,310

3,714,695
2024

3,049,009

0

3,049,009
2025

2,853,355

0

2,853,355
2026

2,617,537

0

2,617,537
Thereafter
8,648,723

0

8,648,723
Total lease payments

$
25,119,607

$
147,190

$
25,266,797
Less: Interest

5,293,374

7,609

Present value of lease liabilities

$
19,826,233

$
139,581

~~(1)~~

~~We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.~~

84(1)Includes short-term leases and variable lease costs which are immaterial.

~~Table~~Supplemental disclosure of ~~Contents~~noncash activities related to leases was as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Leased assets obtained in exchange for new operating lease liabilities	$	3,442	$	10,564	$	8,149

During the year ended December 31, ~~2021,~~2023, there have been no material changes in our lease liabilities for the next five years.

As of December 31,
2021
2020
Weighted average remaining lease term
Operating leases 8 years 10 years
Financing leases 2 years 2 years

Weighted average discount rate
Operating leases 5.6%

6.5%
Financing leases 7.5%

6.8%

9.	~~Mezzanine Equity, Members’ Equity and Stockholders’ Equity~~

All of the Company’s outstanding preferred units are classified in mezzanine equity as they can be redeemed in a deemed liquidation of the Company outside of the Company’s control. Additionally, prior to the Corporate Reorganization, the Company had certain non-voting common units that could have been redeemed outside the Company’s control, and therefore, were classified in mezzanine equity (the “Redeemable Common Units Mezzanine”). ~~In April~~ ~~2020,~~ ~~the Company redeemed 1,000 Series C Preferred Units for~~ ~~$1,000,000~~ ~~plus accrued unpaid preferred distributions of~~ ~~$62,500.~~

Pursuant to the Corporate Reorganization effective January 25, 2021, the Company is authorized to issue 350,000,000 shares of common stock, par value of $0.01 per share, consisting of 289,000,000 shares of Class A common stock and 61,000,000 shares of Class B common stock. The Board of Directors of the Company (the “Board of Directors”) has the authority to issue 1 or more series of preferred stock, par value $0.01 per share, without stockholder approval.

As a result of the Corporate Reorganization, all of the outstanding non-voting common units and Series A Preferred Units of DFH LLC converted into 21,255,329 shares of the Company’s Class A common stock and all of the outstanding common units of DFH LLC converted into 60,226,153 shares of the Company’s Class B common stock. ~~On January~~ ~~27,2021,~~ ~~the Company redeemed all of the outstanding Series C Preferred Units for~~ ~~$26,000,000,~~ ~~including~~ ~~$500,000~~ ~~of discounted costs, plus accrued unpaid preferred distributions of~~ ~~$200,000. Following the Corporate Reorganization, the Company owns all of the voting membership interest of DFH LLC.~~

~~Redeemable Series B Preferred Units of DFH LLC~~

~~As of December~~ ~~31,2021~~ ~~and~~ ~~2020,~~ ~~the Company had~~ ~~7,143~~ ~~and~~ ~~7,143,~~ ~~respectively, of Redeemable Series B~~ ~~Preferred Units (“Series B Preferred Units”) issued and outstanding with a carrying value of~~ ~~$7,095,178~~ ~~and~~ ~~$6,333,036,~~ ~~respectively. In the event of a liquidation, dissolution or winding up of DFH LLC, the Series B Preferred Units have a liquidation preference of~~ ~~$1,000~~ ~~per unit and are senior to common units. The Series B Preferred Units have an~~ 8% annual cumulative preferred distribution on the liquidation preference that is payable if and when distributions are declared. The Series B Preferred units do not participate in discretionary distributions, and each unit has the right to 1 vote on any matter presented for a vote of the members of DFH LLC. As of December ~~31,2021~~ ~~and~~ ~~2020,~~ ~~these units have an aggregate unpaid amount of cumulative preferred distributions of~~ ~~$2,864,834~~ ~~and~~ ~~$2,102,692,~~ ~~respectively, which is~~ ~~$401.07~~ ~~and~~ ~~$294.37,~~ ~~respectively, per unit.~~

~~The Series B Preferred Units can be redeemed at DFH LLC’s option for~~ ~~$1,000~~ ~~per unit plus any accrued and unpaid preferred distributions per unit at any time prior to December~~ ~~31,2022.~~ ~~The units may also be redeemed at the option of the holder upon a sale of DFH LLC for~~ ~~$1,000~~ ~~per unit plus any accrued and unpaid preferred distributions. As the units are not currently probable of becoming redeemable outside the Company’s~~ ~~control, 0 accretion has been recorded.~~

~~Table of Contents~~

~~Series A Convertible Preferred Stock of the Company~~

On September 29, 2021, the Company filed a Certificate of Designations with the State of Delaware establishing 150,000 shares of Series A Convertible Preferred Stock with an initial liquidation preference of $1,000 per share and a par value $0.01 per share (the “Convertible Preferred Stock”) and sold 150,000 shares of Convertible Preferred Stock for an aggregate purchase price of $150,000,000. The Company used the proceeds from the sale of the Convertible Preferred Stock to fund a portion of the MHI acquisition (See Note 2).

Pursuant to the Certificate of Designations, the Convertible Preferred Stock ranks senior to the Company’s Class A and B common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Upon a liquidation, dissolution or winding up of the Company, each share of Convertible Preferred Stock will be entitled to receive the initial liquidation preference of $1,000 per share, subject to adjustment, plus all accrued and unpaid dividends thereon. In addition, the Convertible Preferred Stock has the following terms:

~~Cumulative Dividends: The Convertible Preferred Stock accumulates cumulative dividends at a rate per annum equal to 9.00% payable quarterly in arrears.~~

•

Duration: The Convertible Preferred Stock is perpetual with call and conversion rights. The Convertible Preferred Stock is not convertible by the Purchasers in the first five years following issuance, with the exception of the acceleration of the Conversion Right (as defined below) upon breach of the protective covenants (described below). The Company can call the outstanding Convertible Preferred Stock at any time for one-hundred and two percent (102%) of its liquidation preference during the fourth year following its issuance and for one-hundred and one percent (101%) of its liquidation preference during the ~~fifth~~ ~~year following its issuance (in each case, for the avoidance of doubt, plus accrued but unpaid dividends, if any).~~ Subsequent to the fifth anniversary of its issuance, a Purchaser can convert the Convertible Preferred Stock into Class A common stock of the Company (the “Conversion Right”). The conversion price will be based on the average of the trailing 90 days’ closing price of Class A common stock of the Company, less 20% of the average and subject to a floor conversion price of $4.00 (the “Conversion Discount”).

Protective Covenants: The protective covenants of the Convertible Preferred Stock require the Company to maintain compliance with all covenants related to (i) the Credit Agreement, as may be further amended from time to time; provided that any amendment, restatement, modification or waiver of the Credit Agreement that would adversely and materially affect the rights of the Purchasers will require the written consent of holders of a majority of the then-outstanding shares of Convertible Preferred Stock; and (ii) any agreement between the Company and any Purchaser (the covenants referred to in clauses (i) and (ii), collectively, the “Protective Covenants”). Non-compliance beyond any applicable cure period with the Protective Covenants (in the case of the Protective Covenants related to the Credit Agreement) will accelerate the Conversion Right, and in the event of such acceleration that occurs before the fifth anniversary following the issuance of the Convertible Preferred Stock, the “Conversion Discount” shall be increased from 20% to 25%.

~~Voting Rights: Except as may be expressly required by Delaware law, the shares of Convertible Preferred Stock have no voting rights.~~

Redemption in a Change of Control: The Convertible Preferred Stock will be redeemed, contingent upon and concurrently with the consummation of a change of control of the Company. Shares of Convertible Preferred Stock will be redeemed in a change of control of the Company at a price, in cash, equal to the liquidation preference, subject to adjustment, plus all accumulated and unpaid dividends, plus, if the change of control occurs before the fourth anniversary of the date of issuance of the Convertible Preferred Stock, a premium equal to the dividends that would have accumulated on such share of Convertible Preferred Stock from and after the change of control redemption date and through the fourth anniversary of the issuance of the Convertible Preferred Stock.

~~Table of Contents~~

Pursuant to the terms of the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained as contemplated by Nasdaq listing rules, no shares of Class A common stock will be issued or delivered upon conversion of any Convertible Preferred Stock to the extent that such issuance would (i) result in the holder beneficially owning in excess of 19.99% of the outstanding Class A common stock as of the date of the Certificate of Designations or (ii) exceed 19.99% of the outstanding shares of Class A and Class B common stock combined as of the date of the Certificate of Designations.

In addition, in connection with the sale of the Convertible Preferred Stock, on September 29, 2021, the Company and the Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company granted the Purchasers certain registration rights. Under the Registration Rights Agreement, the Company is required to register the Convertible Preferred Stock owned by the Purchasers and the shares of Class A common stock issuable upon conversion of such shares equal to 19.99% of the outstanding shares of Class A common stock for resale within the earlier of (i) 3 business days after the filing of the Company’s Form 10-K for the fiscal year ended December 31, 2021 and (ii) six months after September 29, 2021. If the Company fails to comply with its registration requirements under the Registration Rights Agreement, the Purchasers, in addition to any regular dividends, will be entitled to an additional 2% per annum dividend for an additional quarter period on the Convertible Preferred Stock if the breach is cured within 30 days and for each additional 30 day period in which the Company fails to cure such breach, each Purchaser will be entitled to an additional 2% per annum for an additional quarter period until cured. In addition, the Purchaser has rights to demand the registration of the Convertible Preferred Stock and the shares of Class A common stock in certain instances.

~~10.~~

~~Equity-Based Compensation~~

~~Dream Finders Homes, Inc.~~

On January 20, 2021, the Board of Directors approved and adopted the DFH, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan is administered by the Compensation Committee of the Board of Directors, and authorizes the Company to grant incentive stock-based awards. The Company granted 759,709 restricted stock grants to certain executives and directors, which had a weighted-average grant date fair value of $23.15 per share, in conjunction with the adoption of the 2021 Plan. These stock grants vest over a period of three years of continuous service, commencing on the date of the grant and vesting ratably in ~~one third~~ increments at the end of each year of a three-year term. The fair value of these grants was derived by using the closing stock price on the date of the grant. Expense related to equity-based compensation under the 2021 Plan was $5,233,676 and $0 for the year ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the total unrecognized compensation expense under the 2021 Plan was $16,690,354 and $0, respectively. The unrecognized compensation expense will be recognized over a weighted-average period of 2.0 years.

~~Table of Contents~~

As of
December 31,

2023

2022

Weighted average remaining lease term

Operating leases

6 years

Weighted average discount rate

Operating leases

6.3%

The ~~Company’s restricted stock awards~~following table shows the maturities of our lease liabilities as of December 31, ~~2021 and changes during~~2023 (in thousands):


Maturity of Lease Liabilities	Operating Leases(1)
2024	$	7,072
2025	4,661
2026	3,595
2027	2,120
2028	1,695
Thereafter	6,102
Total lease payments	25,245
Less: Interest	4,131
Present value of lease liabilities	$	21,114

(1)We use our incremental borrowing rate based on the ~~year then ended are presented below:~~information available at the commencement date in determining the present value of lease payments.

Shares
Weighted Average
Grant Date
Fair Value

Outstanding - December 31, 2020
0

$
0

Granted

762,945

17,647,585

Forfeited

(41,347
)

(957,231
)
Vested

0

0

Outstanding - December 31, 2021
721,598

$
16,690,354

~~Dream Finders Holdings LLC~~
AsTable of December 31, 2020, the Company had 3,532 non-vested, non-voting units issued to employees, valued at $4,741,657, which converted into shares of the Company’s Class A common stock on January 21, 2021. As a result, the Company expensed the remaining unrecognized stock compensation expense associated with these units in the amount of $1,240,309 for the year ended December 31, 2021. Expense related to equity-based compensation for these units was $697,054 for the year ended December 31, 2020. There were 0 outstanding non-vested, non-voting units at December 31, 2021.

Contents

~~11.~~

6. Variable Interest Entities ~~and Investments in Other Entities~~

The Company holds investments in certain limited partnerships and similar entities that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located, which are considered variable interests.

The ~~Company also has an~~Company’s investments create a variable interest in ana VIE, depending on the contractual terms of the arrangement. Additionally, the Company, in the ordinary course of business, enters into option contracts with third parties and unconsolidated ~~variable interest entity (“VIE”), Jet LLC, where~~entities for the ~~primary activities include underwriting, originating and selling home mortgages. The aforementioned investments together with Jet LLC, comprise~~ability to acquire rights to finished lots for the ~~Company’s VIEs.~~ construction of homes. Under these contracts, the Company typically makes a specified earnest money deposit in consideration for the right to purchase finished lots in the future, usually at a predetermined price.

The VIEs are funded by initial capital contributions from the Company, as well as its other partners, and generally do not have significant debt. In some cases, an unrelated third party is the general partner or managing member and, in others, the general partner or managing member is a related party.

The primary risk of loss associated with the Company’s involvement in these VIEs is limited to the Company’s initial capital contributions due to bankruptcy or insolvency of the VIE; however, management has deemed the likelihood of this as remote. The maximum exposure to loss related to the VIEs is disclosed below for both consolidated and unconsolidated VIEs, which equals the Company’s capital investment in each entity.

In some cases, an unrelated third party is the general partner or managing member and in others, the general partner or managing member is a related party. Management analyzed the Company’s investments first under the variable interest model to determine if they are VIEs and, if so, whether the Company is the primary beneficiary. Management consolidates the entity if the Company is the primary beneficiary or if a standalone primary beneficiary does not exist and the Company and its related parties collectively meet the definition of a primary beneficiary. If the joint venture does not qualify as a VIE under the variable interest model, management then evaluates the entity under the voting interest model to assess if consolidation is appropriate.

The assets of a VIE can only be used to satisfy the obligations of that specific VIE, even for assets that are included within the Consolidated Balance Sheets. The Company and its partners do not have an obligation to make capital contributions to the VIEs and there are no liquidity arrangements or other agreements that could require the Company to provide financial support to the VIEs. Furthermore, the creditors of the VIEs have no recourse to the Company’s general credit.

~~Table of Contents~~

~~Consolidated VIEs~~

For VIEs that the Company does consolidate, management has the power to direct the activities that most significantly impact the ~~VIE’s~~VIEs’ economic performance. The Company typically serves as the party with homebuilding expertise in the VIE. The Company does not guarantee the debts of the VIEs, and creditors of the VIEs have no recourse against the Company. ~~There were 0 new consolidated VIEs during the years ended December 31, 2021, 2020 or 2019.~~

~~The table below displays the carrying amounts of the assets and liabilities related to the consolidated VIEs:~~

As of
December 31,
Consolidated 2021 2020
Assets $
30,830,222
$
50,982,111
Liabilities
10,203,170

20,114,132

~~Unconsolidated VIEs~~

For VIEs that the Company does not consolidate, the Company does not hold the power to direct the activities that most significantly impact the ~~VIE’s~~VIEs’ economic performance is held by a third party. These entities are accounted for as equity method investments and, other than Jet Home Loans, are not individually significant. The amount of retained earnings that represents undistributed earnings of 50-percent-or-less-owned entities accounted for by the equity method was $9,972,266 and $2,966,644 as of December 31, 2021 and 2020, respectively. There were no significant entities that were deconsolidated during the years ended December 31, 2021 or 2020.performance. The Company’s maximum exposure to loss is limited to its investment in the entities because the Company is not obligated to provide them any additional capital ~~to or~~and does not guarantee any of the unconsolidated VIEs’ ~~debt.~~

debt or other liabilities.

The ~~table~~tables below ~~shows~~display the carrying amounts of the assets and liabilities related to the consolidated VIEs, as well as the Company’s ~~investment~~investments in unconsolidated VIEs (in thousands):


	As of December 31,
Consolidated	2023		2022
Assets	$	4,075	$	13,344
Liabilities	1,766		4,787


	As of December 31,
Unconsolidated	2023		2022
Jet HomeLoans(1)	$	9,301	$	7,102
Other unconsolidated VIEs	6,063		6,906
Total investment in unconsolidated VIEs	$	15,364	$	14,008

(1) On September 30, 2023, the ~~unconsolidated VIEs:~~

As of
December 31,
Unconsolidated 2021
2020
Jet Home Loans $
6,133,399
$
3,872,089
Other unconsolidated VIEs

9,833,977

673,260
Total investment in unconsolidated VIEs

$
15,967,376

$
4,545,349

joint venture was converted into a limited partnership, now known as Jet HomeLoans LP (“Jet HomeLoans”). Refer to Note 11, Related Party Transactions for more information.

Lot Option Contracts

The Company generally does not engage in the land development business. Instead, ~~we employ~~the Company employs an asset-light land financing strategy, providing us optionality to purchase lots on a ‘‘just-in-time’’ basis for construction and affording us flexibility to acquire lots at a rate that matches the expected sales pace in a given community. We

Table of Contents

The Company primarily ~~employ 2~~employs two variations of our asset-light land financing ~~strategy,~~ strategy—finished lot option contracts and land bank option ~~contracts,~~ contracts—pursuant to which ~~we secure~~the Company secures the right to purchase finished lots at predetermined market prices from various land sellers and land bank partners, by paying deposits based on the aggregate purchase price of the finished ~~lots (typically 10% or less in the case of finished lot option contracts and 15% or less in the case of land bank option contracts).~~lots. These option contracts generally allow us, at our option, to forfeit our right to purchase the lots controlled for any reason, and our sole legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid pursuant to such option contracts and, in the case of land bank option contracts, ~~any~~our loss is limited to the related lot option fees paid to the land bank ~~partner.~~partner, and for certain land bank option contracts, any potential performance obligations, management of the land development to completion and any cost overruns relative to the project.

None of the creditors of any of the land bank entities with which ~~we enter~~the Company enters into lot option contracts have recourse to our general credit. WeThe Company generally dodoes not have any specific performance obligations to purchase ~~a certain number or~~ any of the lots or guarantee any of the land bankers’ ~~financial or other~~ liabilities. ~~We are~~The Company is not involved in the design or creation of the land bank entities from which ~~we purchase~~the Company purchases lots under lot option contracts. The land bankers’ equity holders have the power to direct 100% of the operating activities of the land bank ~~entity. We have~~entity and the Company has no voting ~~rights in any of the land bank entities.~~rights. The sole purpose of the land bank entity’s activities is to generate ~~positive cash flow~~ returns for such entity’s equity holders. Further, ~~we do~~the Company does not share in any of the profit or loss generated by the project’s development. The profits and losses are passed directly to the land ~~banker’s~~bankers’ equity holders.

The deposit placed by us pursuant to the lot option contracts is deemed to be a variable interest in the respective land bank entities. Certain of those land bank entities are deemed to be VIEs. Therefore, the land bank entities with which ~~we enter~~the Company enters into lot option contracts are evaluated for possible consolidation by the Company. ~~We believe~~

The Company believes the activities that most significantly impact a land bank entity’s economic performance are the operating activities of the land bank entity. In the case of development projects, unless and until a land bank entity delivers finished lots for sale, the land bank entity’s equity investors bear the risk of land ownership and do not earn any ~~revenues.~~revenues, except for lot option fees paid by the Company. The operating development activities are ~~managed~~directed by the land bank entity’s equity investors.

~~We possess~~Dream Finders possesses no more than limited protective legal rights through the lot option contracts in the specific finished lots that we are ~~purchasing,~~purchased, and ~~we possess 0~~possesses no participative rights in the land bank entities. Accordingly, ~~we do~~the Company does not have the power to direct the activities of a land bank entity that most significantly impact its economic performance. For the aforementioned reasons, the Company concluded that it is not the primary beneficiary of the land bank entities with which it enters into lot option contracts, and therefore the Company does not consolidate any of these VIEs. The Company’s ~~total~~ risk of loss related to finished lot option and land bank option ~~contracts~~deposits and related fees was ~~$274,868,933~~$328.0 million and ~~$70,130,710~~ $461.6 million as of December 31, ~~2021~~2023 and ~~2020, respectively.~~

892022, respectively.

7. Contingent Consideration

~~Table~~As of ~~Contents~~

~~12.~~

~~Asset Purchase of Joint Venture Interests~~

In December ~~2018,~~31, 2023 and 2022, the Company ~~purchased~~remeasured the ~~membership interests~~fair value of ~~its joint venture partner in PSJ JV Owner LLC, HM7 JV Owner~~contingent consideration related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC and ~~ANT JV Owner LLC. After~~adjusted the ~~transaction,~~liability to $11.7 million and $11.6 million, respectively, based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability. The Company recorded contingent consideration adjustments resulting in $2.9 million of expense, $2.0 million of income, and $4.6 million of expense for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, there were 9 months remaining under the contingent consideration agreement.

As of December 31, 2023 and 2022, the Company ~~owned 100%~~remeasured the fair value of ~~these companies,~~contingent consideration related to the September 2021 acquisition of McGuyer Homebuilders, Inc. (“MHI”) and ~~received all~~adjusted the liability to $105.1 million and$102.1 million, respectively, based on actual results achieved, revised pre-tax income ~~expenses~~forecasts and ~~margin. Since all~~revised discount rates as of the ~~identified assets in these companies were their land assets~~balance sheet date and ~~no systems, people or processes were acquired, the transactions were accounted for as an asset purchase. The combined purchase price of these entities was $27,532,174, net~~from accretion of the ~~Company’s outstanding equity investment~~liability. The Company recorded contingent consideration adjustments resulting in ~~joint ventures, which was paid to the former owner in January 2019. As such,~~expense of $43.3 million, $12.4 million, and $2.2 million for the year ended December 31, ~~2019,~~2023, 2022 and 2021, respectively. As of December 31, 2023, there were 21 months remaining under the contingent consideration agreement.

Refer to Note 10, Fair Value Disclosures for the fair value measurement for contingent consideration.

Table of Contents

8. Income Taxes

The Company is a ~~cash outflow from operating activities~~corporation subject to U.S. federal income taxes, in addition to state and local income taxes. Income tax expense for the years ended December 31, 2023, 2022 and 2021, consists of ~~$27,532,174 included within~~ the ~~accounts payable~~following (in thousands):


	Year Ended December 31,
	2023		2022		2021
Current:
Federal	$	101,093	$	66,473	$	26,336
State	17,734		15,680		5,088
Total current	118,827		82,153		31,424
Deferred:
Federal	(19,471)		5		(3,305)
State	(2,873)		(299)		(664)
Total deferred	(22,344)		(294)		(3,969)
Total income tax expense	$	96,483	$	81,859	$	27,455

The following table reconciles the statutory federal income tax rate to the effective income tax rate:


	Year Ended December 31,
	2023		2022		2021
Income taxes at federal statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes, net of federal tax	2.8		3.5		2.4
Federal tax credits	(0.6)		(3.9)		(5.9)
Non-deductible executive compensation	1.0		1.3		0.8
Other	(0.3)		1.1		0.2
Effective tax rate	23.9	%	23.0	%	18.5	%

The significant components of deferred income tax assets and ~~accrued expenses line item in~~liabilities as of December 31, 2023 and 2022, consist of the ~~Consolidated Statements of Cash Flows.~~

following (in thousands):


	As of December 31,
	2023		2022
Deferred tax assets:
Contingent consideration	$	14,876	$	4,145
Incentive compensation plans	9,232		246
Lease liabilities	4,951		5,809
Other	9,705		2,493
Total deferred tax asset	38,764		12,693

Deferred tax liabilities:
Right-of-use assets	(4,789)		(5,674)
Other	(7,106)		(2,493)
Total deferred tax liabilities	(11,895)		(8,167)

Net deferred tax asset	$	26,869	$	4,526

~~13.~~

~~Segment Reporting~~

Table of Contents

Management believes that we will have sufficient future taxable income to make it more likely than not that the net deferred tax assets will be realized.

As of December 31, 2023 and 2022, the Company had no valuation allowance recorded against deferred tax assets, no uncertain tax positions that qualify for inclusion in our consolidated financial statements, and we have not recognized or accrued for any interest or penalties.

9. Segment Reporting

The Company primarily operates in the homebuilding business and is organized and reported primarily by ~~division.~~region. During the third quarter of 2023, organization of the homebuilding segments for making operating decisions and assessing performance changed from divisional to regional. There are ~~12 operating~~now four reportable segments, which are comprised of the following:

•Southeast (Jacksonville, Orlando, and 8 reportable segments: (i) Jacksonville, (ii) Colorado, (iii) Orlando, (iv) Washington DC (“DC Metro”), (v) the Carolinas, (vi) Texas, (vii) Jet Home Loans LLC (“Jet”), the Company’s mortgage operations,Tampa, Florida; Savannah, Georgia; Hilton Head and ~~(viii) Other. The Company includes Century~~Bluffton, South Carolina; Active Adult and Custom Homes operations ~~acquired within the Orlando segment~~in northeast Florida)

•Mid-Atlantic (The Carolinas and ~~the MHI operations comprises the~~DC Metro)

•Midwest (Austin, Dallas, Houston and San Antonio, Texas ~~segment. The revenues of each remaining operating segment are not material~~ and ~~are therefore combined into an “Other” category for the purposes of segment reporting.~~ Denver, Colorado)

•Financial Services (primarily Jet HomeLoans and Golden Dog Title and Trust)

The corporate component, ~~of the Company’s operations,~~ which is not considered an operating segment, is ~~also included in the “Other” category.~~

reported separately as “Corporate”.

In accordance with ASC ~~Topic~~ 280, ~~Segment Reporting,~~ operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision-makers (“~~CODMs”~~CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM primarily ~~evaluates~~evaluate performance based on the number of homes closed, average sales price and financial results. Segment profitability is primarily measured by income before taxes.

~~The Company’s homebuilding operations employ an asset-light business model with a focus on the design, construction and sale of single-family entry-level and first-time move-up homes.~~

On October 1, 2020, an unrelated party, FBC Mortgage, Inc., an Orlando-based mortgage lender, purchased Prime Lending Corp.’s membership interest in Jet for book value. The Company’s mortgage operations are conducted through Jet, which is a licensed home mortgage broker that underwrites, originates and sells mortgages to FBC Mortgage LLC. The Company owns 49.9% of Jet, and FBC Mortgage, LLC owns the remaining 50.1%. Jet is accounted for as an equity method investment.

Summarized financial information relating to the Company’s reportable segments is shown in the following tables. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

The following tables summarize ~~home sale~~ revenues and net and comprehensive income by segment for the years ended December 31, ~~2021, 2020~~2023, 2022 and ~~2019~~2021 as well as total assets and goodwill by segment as of December 31, ~~2021~~2023 and ~~2020:~~2022 (in thousands):


	Year Ended December 31,
Revenues:	2023		2022		2021
Southeast	$	1,521,414	$	1,237,389	$	914,765
Mid-Atlantic	633,131		566,632		464,070
Midwest	1,584,343		1,530,538		538,466
Financial Services	48,878		34,175		34,665
Total segment revenues	3,787,766		3,368,734		1,951,966
Reconciling items from equity method investments	(39,180)		(26,399)		(28,056)
Consolidated revenues	$	3,748,586	$	3,342,335	$	1,923,910

For the Years Ended
December 31,

Revenues: 2021
2020
2019

Jacksonville $ 452,890,488 $ 430,810,955 $ 333,687,948
Colorado 114,259,610 122,274,508 115,835,632
Orlando 244,142,831 124,768,549 109,710,225
DC Metro 93,593,242 126,240,188 39,043,345
The Carolinas 370,477,256 89,324,360 0
Texas 361,138,232 0 0
Jet Home Loans 28,055,783 28,628,954 18,932,000
Other ⁽¹⁾
287,408,147 240,388,047 146,015,173
Total segment revenues 1,951,965,589 1,162,435,561 763,224,323

Reconciling items from equity method investments (28,055,783 ) (28,628,954 ) (18,932,000 )

Consolidated revenues $ 1,923,909,806 $ 1,133,806,607 $ 744,292,323


	Year Ended December 31,
Income before taxes	2023		2022		2021
Southeast	$	183,537	$	165,367	$	103,136
Mid-Atlantic	54,646		40,028		25,277
Midwest	168,115		164,377		35,585
Financial Services	28,915		21,219		11,782
Corporate(1)	(21,334)		(28,971)		(7,110)
Total segment income before taxes	413,879		362,020		168,670
Reconciling items from equity method investments	(9,454)		(5,864)		(6,621)
Consolidated income before taxes	$	404,425	$	356,156	$	162,049

Table of Contents


	Assets:				Goodwill:
	December 31,				December 31,
	2023		2022		2023		2022
Southeast	$	781,162	$	770,029	$	14,003	$	14,003
Mid-Atlantic	404,657		422,490		16,853		16,853
Midwest	915,199		1,007,604		141,071		141,071
Financial Services	207,385		170,151		280		280
Corporate(1)	407,932		89,696		—		—
Total segments	2,716,335		2,459,970		172,207		172,207
Reconciling items from equity method investments	(153,896)		(88,833)		—		—
Consolidated	$	2,562,439	$	2,371,137	$	172,207	$	172,207

For the Years Ended
December 31,

Net and comprehensive income: 2021
2020
2019

Jacksonville $ 55,577,768 $ 41,380,258 $ 26,358,703
Colorado 3,970,961 14,051,978 10,424,803
Orlando 15,936,707 10,679,556 3,732,935
DC Metro 5,545,937 5,142,556 (2,709,651 )
The Carolinas 14,623,398 6,033,844 0
Texas 21,797,018 0 0
Jet Home Loans 10,630,401 15,921,440 4,506,242
Other ⁽¹⁾
13,132,496 (766,529 ) 4,882,812
Total segment net and comprehensive income 141,214,686 92,443,103 47,195,844

Reconciling items from equity method investments (6,620,868 ) (7,929,676 ) (2,298,060 )

Consolidated net and comprehensive income $ 134,593,818 $ 84,513,427 $ 44,897,784

Assets:
Goodwill:
As of December 31,
2021
2020
2021
2020

Jacksonville $ 207,501,540 $ 162,668,740 $ 0 $ 0
Colorado 116,121,155 51,605,969 0 0
Orlando 131,882,130 77,299,028 1,794,765 0
DC Metro 62,050,969 41,327,694 0 0
The Carolinas 247,250,074 177,599,834 16,853,013 16,357,450
Texas 743,306,444 0 141,070,731 0
Jet Home Loans 77,073,645 38,696,793 0 0
Other ⁽¹⁾
379,859,445 219,306,886 12,208,782 12,208,782
Total segment 1,965,045,402 768,504,944 171,927,291 28,566,232

Reconciling items from equity method investments (70,797,779 ) (34,824,703 ) 0 0

Consolidated $ 1,894,247,623 $ 733,680,241 $ 171,927,291 $ 28,566,232

~~(1)~~

~~Other~~(1)Corporate includes ~~the Company’s title operations, homebuilding operations in non-reportable segments,~~ operations of the corporate component, and corporate assets such as cash and cash equivalents, cash held in trust, prepaid insurance, operating and financing leases, ~~lot deposits, goodwill, as well as property and equipment.~~

~~Table of Contents~~

~~16.~~

~~Related Party Transactions~~

~~During~~ The fair value of the ~~years ended~~construction lines of credit approximate their carrying amounts since they are subject to short-term floating interest rates that reflect current market rates. The senior unsecured notes are Level 2 financial instruments. The estimated fair value of the 2028 Notes as of December 31, ~~2021, 2020 and 2019, the~~2023 is $318.2 million, based on recent trades or quoted market prices for debt of similar terms, including maturity, to achieve comparable yields.

11. Related Party Transactions

The Company ~~entered~~enters into or ~~participated~~participates in related party transactions. The majority of these transactions ~~were~~are entered into to secure finished lots for ~~homebuilding. In addition,~~ the ~~Company has built and sold homes for employees and members~~construction of ~~their immediate families.~~

~~Consolidated Joint Ventures~~

~~The Company has entered into joint venture arrangements to acquire land, finished lots and build~~new homes. Certain members of the Company, directors and members of management, have invested in these joint ventures and some are limited partners in these joint ventures DFH Investors LLC (which owned 15,400 Series A Preferred Units, representing 11.65% of the membership interest in DFH LLC, prior to the Corporate Reorganization) is the managing member of certain of these joint ventures. The joint ventures are consolidated for accounting purposes. Details of each are included in Note 1.

DF ~~Residential I, LP~~Capital Management, LLC Funds

DF Residential I, LP (Fund I) is a real estate investment vehicle, organized for the purpose of acquiring and developing finished lots. Dream Finders Homes LLC, has entered into 6 joint ventures and 10 land bank projects with Fund I since its formation in January 2017. DF Capital Management, LLC (“DF Capital”) organizes real estate investment funds to acquire land and develop and sell finished lots. DF Capital is the investment manager ~~in Fund I.~~of the funds. The Company owns a 49% membership interest in DF Capital. DF Capital is controlled by unaffiliated parties. ~~Certain directors and executive officers have made investments~~DF Residential I, LP (“Fund I”), the first of such investment vehicles was fully committed in ~~Fund I as limited partners. In addition, certain members~~2019 with total capital commitments of management have made investments in Fund I. The total committed capital in Fund I was $36,706,163 as of December 31, 2021 and 2020. Collectively, the Company’s directors, executive officers and members of management have invested $8,725,000 or 23.77% of the total committed capital of Fund I as of December 31, 2021 and 2020.

~~Table of Contents~~

The general partner of Fund I is DF Management GP, LLC (“DF Management”). Dream Finders Homes LLC is one of four members of DF Management with a 25.81% membership interest. Certain members of DFH Investors LLC, including one of the Company’s directors, have a 65.33% membership interest. Collectively,$36.7 million. Dream Finders Homes LLC and DFH Investors LLC, ~~have~~collectively, invested ~~$1,400,000 in Fund I as of December 31, 2021 and 2020. This investment represents 3.81%~~$1.4 million or 3.8% of the total committed ~~Capital in~~capital of Fund I. Fund I is nearing its final stage in which residual earnings are distributed.

Table of ~~$36,706,163.~~Contents

DF Residential II, LP

~~DF Residential II, LP, a Delaware limited partnership~~ (“Fund II”) ~~initiated its~~ ~~first~~ ~~close on March~~ ~~11,~~was organized in 2021. DF Management GP II, LLC, ~~a Florida limited liability company,~~ serves as the general partner of Fund II (the “General Partner”). ~~Fund II raised total capital commitments of~~ ~~$322,090,000~~ ~~and was fully committed as of January 2022. DF Capital is the investment manager of Fund II.~~

The Company indirectly owns ~~72%~~72.0% of the membership interests in the General Partner and receives ~~72%~~72.0% of the economic interests. The General Partner is controlled by unaffiliated parties. Fund II was fully committed as of January 2022 with total capital commitments of $322.1 million. The ~~Company’s investment commitment~~Company invested $3.0 million or 0.9% of the total committed capital of Fund II.

Certain directors, executive officers and members of management invested as limited partners in Fund II is ~~$3,000,000~~in an aggregate amount of $33.9 million or ~~0.9%~~10.5% of the total ~~expected capital commitment~~committed capital. In addition, Rockpoint Group, LLC, an affiliate of a former director of the Company invested $100.0 million in Fund II of ~~$322,090,000.~~II.

On March 11,2021, the Company entered into land bank financing arrangements and a Memorandum of Right of First Offer with Fund II, under which Fund II has an exclusive right of first offer on any land bank financing projects ~~up to~~ ~~$20,000,000~~ that meet its investment criteria and are undertaken by the Company during Fund II’s investment period.

~~Certain directors, executive officers and other officers have made investment commitments as limited partners in Fund II in an aggregate amount~~ ~~$33,900,000~~ ~~and~~ ~~$0,~~ or ~~10.5%~~ ~~and 0.0%, as of December~~ ~~31,2021~~ ~~and~~ ~~2020,~~ ~~respectively, of the total expected capital commitment of Fund II.~~

~~Land Bank Transactions with~~ DF Capital

~~After Fund I was fully committed, DF Capital provided land bank financing in a total of 7 further projects and subsequently~~ raised additional commitments from limited partners inthrough deals other than Fund I ~~as well as other parties.~~and Fund II, which provided land bank financing for specific projects. One of the Company’s officers invested ~~$180,000~~$0.2 million in one of these funds managed by DF Capital as a limited partner in 2019. The Company continues to purchase lots controlled by these funds.

As of December 31, ~~2021, funds managed by DF Capital (other than Fund I~~2023 and Fund II) controlled an additional 347 lots as a result of these transactions outside of Fund I and Fund II. As of December 31, 2020, funds managed by DF Capital (other than Fund I and Fund II) controlled an additional 595 lots as a result of these transactions outside of Fund I and Fund II. During the years ended December 31, 2021 and 2020,2022, the Company ~~purchased 248~~had $48.5 million and ~~140 of these lots and the~~$58.6 million, respectively, in outstanding lot ~~deposit balance~~deposits primarily related to Fund II and other land bank transaction deals in relation to ~~these~~DF Capital projects, was $3,676,096 and $6,200,000, respectively. In addition, the Company paid lot option fees related to these transactions of $293,812, $974,250 and $106,394 for the years ended December 31, 2021, 2020 and 2019, respectively.controlling approximately 4,028 lots.

~~Land Bank Transactions with LB Parker Owners, LLC~~

Aircraft Agreement

~~On August 10,~~

~~2021,~~In November 2023, the Company entered into an aircraft dry lease agreement with a ~~land banking transaction with LB Parker Owners, LLC,~~company owned by Patrick Zalupski, DFH’s President, Chief Executive Officer, and Chairman of the Board (the “Aircraft Agreement”). The Aircraft Agreement provides the Company access to an airplane owned by Mr. Zalupski on a ~~Delaware limited liability company,~~non-exclusive basis at a fixed monthly rate for an annually set number of hours. The Aircraft Agreement has an eight-year term, which is ~~beneficially owned~~automatically extended for up to two successive one-year periods unless terminated by either party. The Company and Mr. Zalupski have separately contracted with a non-affiliated aviation management entity to provide aircraft-related services. The Company incurred $1.3 million in expense related to the use of the airplane during the year ended December 31, 2023, inclusive of one-time set-up and other costs incurred prior to the commencement of the Aircraft Agreement, included in selling, general and administrative expense on the Consolidated Statement of Comprehensive Income.

Transactions with Rockpoint Group, LLC and affiliates

From time to time, the Company enters into land bank option contracts with Rockpoint Group, LLC (“Rockpoint”) or its affiliates in connection with the Company’s acquisition and development of ~~certain residential real property located in Parker, Colorado known as “Looking Glass” pursuant to which LB Parker Owners, LLC provided~~ ~~$3,300,000~~land. Rockpoint or its affiliate provides the funding for the land acquisition and the Company secures the right to purchase finished lots at market prices by paying deposits based on the aggregate purchase price of the ~~real property.~~finished lots and any related fees, similar to land bank option contracts with third-party land bankers. William H. Walton III is the founding principal and chief executive officer of ~~Rockpoint and also~~Rockpoint. Mr. Walton served as a member of the ~~Company’s~~ Board ~~of Directors, its Audit Committee~~through May 21, 2023. During the year ended December 31, 2023, no transactions were entered into between Rockpoint and ~~its Compensation Committee.~~the Company.

~~Table of Contents~~

Jet ~~Home Loans~~

HomeLoans LP, formerly Jet HomeLoans LLC

Jet HomeLoans performs mortgage origination activities for the ~~Company. Jet underwrites~~Company, including underwriting and ~~originates~~originating home mortgages for Company customers and non-Company customers. ~~The~~On September 30, 2023, the Company ~~owns 49.9%~~entered into a limited partnership agreement with the partners of Jet HomeLoans LLC to convert the venture into Jet HomeLoans LP. As part of the limited partnership agreement, the Company’s ownership percentage changed from 49.9% to 60.0%, but the Company is not the primary beneficiary. The change in ownership was effectuated through a distribution to the partners in exchange for the additional 10.1% ownership. Jet HomeLoans is accounted for under the equity method and is a related party of the ~~Company, accounted for in its own~~Company. Jet HomeLoans is included within the Financial Services segment ~~(see Note 13)~~(Note 9, Segment Reporting).

Table of Contents

12. Mezzanine and Stockholders’ Equity

Series B Preferred Units

On August 31, 2023, the Company redeemed all of its previously 7,143 outstanding Series B preferred units. The Company made an aggregate cash payment to the Series B holders of $11.1 million, which included $7.1 million in principal plus cumulative undistributed earnings, less a negotiated discount on that date. Following the redemption, no Series B preferred units remain outstanding. The difference between the carrying amount and the cash redemption was reclassified to retained earnings as it reflects a return from the Series B unit holders and resulted in a one-time, non-cash increase to net income available to common stockholders of $0.3 million utilized in the computations of basic and diluted earnings per share for the year ended December 31, 2023.

Share Buyback Program

In June 2023, the Company’s Board of Directors (the “Board”) approved a share buyback program under which the Company can repurchase up to $25.0 million of its Class A common stock through June 30, 2026 in open market purchases, privately negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

The actual timing, number and value of shares repurchased under the share buyback program will depend on a number of factors, including constraints specified in relation to price, general business and market conditions, and alternative investment opportunities. The share buyback program does not obligate the Company to acquire any specific number of shares in any period, and may be expanded, extended, modified or discontinued at any time. As of February 29, 2024, we have not executed any repurchases under our share buyback program.

Series A Convertible Preferred Stock

On September 29, 2021, the Company filed a Certificate of Designations with the State of Delaware establishing 150,000 shares of Series A convertible preferred stock with an initial liquidation preference of $1,000 per share and a par value $0.01 per share (the “convertible preferred stock”) and sold 150,000 shares of convertible preferred stock for an aggregate purchase price of $150.0 million. The Company used the proceeds from the sale of the convertible preferred stock to fund a portion of the MHI acquisition (Note 7, Contingent Consideration). Pursuant to the Certificate of Designations, the convertible preferred stock ranks senior to the Company’s Class A and B common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Upon a liquidation, dissolution or winding up of the Company, each share of convertible preferred stock will be entitled to receive the initial liquidation preference of $1,000 per share, subject to adjustment, plus all accrued and unpaid dividends thereon. In addition, the convertible preferred stock has the following terms:

•Cumulative Dividends: The convertible preferred stock accumulates cumulative dividends at a rate per annum equal to 9% payable quarterly in arrears.

•Duration: The convertible preferred stock is perpetual with call and conversion rights. The convertible preferred stock is not convertible by the Purchasers in the first five years following issuance, with the exception of the acceleration of the Conversion Right (as defined below) upon breach of the protective covenants (described below). The Company can call the outstanding convertible preferred stock at any time for one-hundred and two percent (102%) of its liquidation preference during the fourth year following its issuance and for one-hundred and one percent (101%) of its liquidation preference during the fifth year following its issuance, plus accrued but unpaid dividends, if any. Subsequent to the fifth anniversary of its issuance, a Purchaser can convert the convertible preferred stock into Class A common stock of the Company (the “Conversion Right”). The conversion price will be based on the average of the trailing 90 days’ closing price of Class A common stock of the Company, less 20% of the average and subject to a floor conversion price of $4.00 (the “Conversion Discount”).

17.	~~Earnings per Share~~

Table of Contents

•Protective Covenants: The protective covenants of the convertible preferred stock require the Company to maintain compliance with all covenants related to (i) the Credit Agreement, as may be further amended from time to time; provided that any amendment, restatement, modification or waiver of the Credit Agreement that would adversely and materially affect the rights of the Purchasers will require the written consent of holders of a majority of the then-outstanding shares of convertible preferred stock; and (ii) any agreement between the Company and any Purchaser (the covenants referred to in clauses (i) and (ii), collectively, the “Protective Covenants”). Non-compliance beyond any applicable cure period only with the Protective Covenants related to the Credit Agreement will accelerate the Conversion Right, and in the event of such acceleration that occurs before the fifth anniversary following the issuance of the convertible preferred stock, the Conversion Discount shall be increased from 20% to 25%.

•Voting Rights: Except as may be expressly required by Delaware law, the shares of convertible preferred stock have no voting rights.

•Redemption in a Change of Control: The convertible preferred stock will be redeemed, contingent upon and concurrently with the consummation of a change of control of the Company. Shares of convertible preferred stock will be redeemed in a change of control of the Company at a price, in cash, equal to the liquidation preference, subject to adjustment, plus all accumulated and unpaid dividends, plus, if the change of control occurs before the fourth anniversary of the date of issuance of the convertible preferred stock, a premium equal to the dividends that would have accumulated on such share of convertible preferred stock from and after the change of control redemption date and through the fourth anniversary of the issuance of the convertible preferred stock.

Pursuant to the terms of the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained, no shares of Class A common stock will be issued or delivered upon conversion of any convertible preferred stock to the extent that such issuance would (i) result in the holder beneficially owning in excess of 19.99% of the outstanding Class A common stock as of the date of the Certificate of Designations or (ii) exceed 19.99% of the outstanding shares of Class A and Class B common stock combined as of the date of the Certificate of Designations.

In addition, in connection with the sale of the convertible preferred stock, on September 29, 2021, the Company and the Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company granted the Purchasers certain registration rights. Under the Registration Rights Agreement, the Company is required to register the convertible preferred stock owned by the Purchasers and the shares of Class A common stock issuable upon conversion of such shares equal to 19.99% of the outstanding shares of Class A common stock for resale, which registration statement was filed and declared effective during March 2022.

13. Stock-Based Compensation

The Company is authorized to grant up to an aggregate of 9.1 million of Class A common stock under the 2021 Equity Incentive Plan (the “2021 Plan”), which is administered by the Compensation Committee of the Board of Directors. The Company grants restricted stock to certain executives, directors and members of management, primarily as incentive awards. These stock grants typically vest over a period of three to five years of continuous service, commencing on the date of the grant and vesting ratably, in approximately one-third or one-fifth increments, at the end of each year of the term. The fair value of these grants is derived by using the closing stock price on the date of the grant. Expense, net of forfeitures related to stock-based compensation under the 2021 Plan was $14.1 million, $6.8 million and $5.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023 and 2022, the total unrecognized stock-based compensation under the 2021 Plan was $20.3 million and $11.3 million, respectively. The unrecognized stock-based compensation will be recognized over a weighted-average period of two years.

Table of Contents

The Company’s restricted stock units as of December 31, 2023 and changes during the year then ended are presented below (in thousands, except share amounts):


	Shares	Weighted Average Grant Date Fair Value
Balance as of December 31, 2022	892,556	$	20.29
Granted	1,874,176	$	12.59
Forfeited	(59,958)	$	13.50
Vested	(347,524)	$	21.22
Balance as of December 31, 2023	2,359,250	$	14.21

14. Earnings Per Share

The following weighted-average shares and share equivalents were used to calculate basic and diluted earnings per share (“EPS”) for the years ended December 31, 2023, 2022 and 2021 (in thousands, except share amounts):


	Year Ended December 31,
	2023		2022		2021
Numerator
Net and comprehensive income attributable to Dream Finders Homes, Inc.	$	295,900	$	262,313	$	121,133
Less: Preferred dividends, net(1)	13,482		14,513		4,845
Add: Loss prior to reorganization attributable to DFH LLC members	—		—		1,244
Net and comprehensive income available to common stockholders(2)	$	282,418	$	247,800	$	117,532
Denominator
Weighted-average number of common shares outstanding - basic	93,066,564		92,745,781		92,521,482
Add: Common stock equivalent shares(3)	12,960,984		13,945,467		2,792,111
Weighted-average number of shares outstanding - diluted	106,027,548		106,691,248		95,313,593

(1)Includes a one-time increase of $0.3 million to the numerator of the computations of basic and diluted EPS for the year ended December 31, ~~2021:~~

For the Year
Ended
December 31,

2021
Numerator

Net and comprehensive income attributable to Dream Finders Homes, Inc.
$
121,132,501

Less: Preferred dividends
4,844,913

Add: Loss prior to reorganization attributable to DFH LLC members
(1,244,083 )
Net and comprehensive income available to common stockholders

$
117,531,671

Denominator
Weighted-average number of common shares outstanding - basic

92,521,482

Add: Common stock equivalent shares

2,792,111

Weighted-average number of shares outstanding - diluted
95,313,593

2023 for the excess of the carrying amount over the redemption amount of the Series B preferred units. Refer to Note 12, Mezzanine and Stockholders’ Equity.

(2)

~~The Corporate Reorganization created~~For the ~~current capital structure of DFH, Inc. Therefore,~~diluted EPS calculation, $13.2 million, $13.7 million and $3.5 million in preferred dividends associated with convertible preferred stock that are assumed to be converted have been added back to the ~~net income per share for DFH, Inc. is not shown~~numerator for the ~~fiscal~~ years ended December 31, ~~2020 or 2019. In addition,~~2023, 2022 and 2021, respectively.

(3)Since the ~~basic and diluted net income per share only includes earnings subsequent to January 21, 2021, the date~~conversion price of the ~~Corporate Reorganization.~~

~~Basic net income per share~~Company’s convertible preferred stock is ~~calculated by dividing net income attributable to DFH, Inc. for~~based on an average of the ~~period subsequent to the Corporate Reorganization, by the weighted-average number of shares~~closing price of Class A common stock ~~and Class B common stock outstanding~~ for the ~~period. The total outstanding shares~~90 trading days immediately preceding the end of ~~common stock are made up~~the current period, changes in the price of the Class A common stock may significantly affect the number of additional assumed common shares outstanding under the if-converted method for diluted EPS, even when the number of convertible preferred stock shares outstanding is unchanged. Stock-based compensation awards are excluded from the calculation of diluted EPS in the event they are antidilutive. There were 0.6 million, 0.8 million, and ~~Class B~~0.2 million of common stock ~~which participate equally in their ratable ownership share of~~equivalent shares excluded from the ~~Company. Diluted net income~~diluted earnings per share ~~has been calculated in a manner consistent with that of basic net income per share while giving effect~~calculation during the years ended December 31, 2023, 2022 and 2021, respectively, related to ~~shares of potentially dilutive~~unvested restricted stock ~~grants outstanding during the period and the convertible preferred stock.~~

~~There~~that were ~~0 anti-dilutive shares for the year ended December 31, 2021.~~antidilutive.

Table of Contents

15. Subsequent Events

~~ITEM 9.~~

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~None~~None.

~~ITEM 9A.~~

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer (“CEO”) and ~~interim~~ Chief Financial Officer (“CFO”), management evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, ~~2021.~~2023. Based ~~upon~~on that evaluation, ~~our Chief Executive Officer~~the CEO and ~~interim Chief Financial Officer have~~CFO concluded that ~~that our~~the Company’s disclosure controls and procedures as of December 31, 2023were ~~not~~ effective ~~due~~in providing reasonable assurance that information required to be disclosed in the reports the Company files, furnishes, submits or otherwise provides the SEC under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed in reports filed by the Company under the Exchange Act is accumulated and communicated to the ~~material weaknesses that existed~~Company’s management, including the CEO and CFO, in such a manner as ~~of December 31, 2021 as described below.~~

to allow timely decisions regarding the required disclosure

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our ~~Chief Executive Officer~~CEO and ~~Interim Chief Financial Officer,~~CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Based on our evaluation under the framework, our management concluded that our internal control over financial reporting was ~~ineffective~~effective as of December 31, ~~2021 due to~~2023. The effectiveness of the ~~same material weaknesses that rendered our disclosure controls and procedures ineffective. A material weakness is a deficiency, or a combination of deficiencies, in~~Company’s internal control over financial reporting ~~such that there is a reasonable possibility that a material misstatement~~as of ~~a company’s annual or interim financial statements will not be prevented or detected on a timely basis.~~

~~We did not document the design or operation of~~December 31, 2023 has been audited by PricewaterhouseCoopers LLC, an effective control environment commensurate with the financial reporting requirements of an SEC registrant. Specifically, we did not design and maintain adequate formal documentation of certain policies and procedures, controls over the segregation and duties within our financial reporting function and the preparation and review of journal entries. In addition, we did not design or maintain effective control activities that contributed to the following additional material weaknesses; we did not design control activities to adequately address identified risks, evidence of performance, or operate at a sufficient level of precision that would identify material misstatements to our financial statements and we did not design and maintain effective controls over certain IT general controls for information systems that are relevant to the preparation of our financial statements.

The material weaknesses did not result in a misstatement of our annual or interim financial statements. However, each of the material weaknesses involve control deficiencies that could result in a misstatement of one or more account balances or disclosures that would result in a material misstatement to our annual or interim condensed consolidated financial statements that would not be prevented or detected, and, accordingly, we determined that these control deficiencies constitute material weaknesses.

~~This annual report does not include an attestation report of our~~ independent registered public accounting firm, ~~regarding internal control over financial reporting. Management's~~as stated in its report ~~was not subject to attestation by our independent registered public accounting firm pursuant to a permanent exemption for non-accelerated filers.~~

~~Table of Contents~~

~~Remediation Plan for Material Weaknesses~~

~~Since identifying these material weaknesses and reporting them~~that appears in ~~our 2020~~this Annual Report on ~~10-K, we have developed a remediation plan and begun implementing measures to address the underlying causes of each material weakness. Our efforts to date have included the following:~~

~~Developed formal policies specific to corporate governance and accounting.~~

Developed formal policies for IT general controls; executed IT controls focused training; and designed and implemented controls within user access, program change management, and computer operations domains.

~~Designed and implemented segregation of duties controls over financial reporting and review of journal entries.~~

~~Performed a financial statement risk assessment and designed and implemented or identified existing controls designed to prevent or detect a material misstatement in our financial statements.~~

~~Began implementing a formal testing program to evaluate the design and operating effectiveness of key internal controls.~~

Further augmented leadership and staff responsible for internal control over financial reporting, including adding a Vice President of Internal Audit to assess and report on the Company’s processes and internal controls and a Director of SEC Reporting to address SEC reporting and technical accounting matters.

While we believe these efforts will improve our internal control over financial reporting and address the underlying causes of the material weaknesses, such material weaknesses will not be remediated until our remediation plan has been fully implemented, and we have concluded that our controls are operating effectively for a sufficient period of time.

We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from occurring. In addition, we cannot be certain that we have identified all material weaknesses in our internal control over financial reporting or that in the future we will not have additional material weaknesses in our internal control over financial reporting.

Form 10-K.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f) that occurred during the quarter ended December 31, ~~2021~~2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

~~ITEM 9B.~~

ITEM 9B. OTHER INFORMATION

Rule 10b5-1 Trading Plans and Insider Trading Policies and Procedures

~~None.~~

~~ITEM 9C.~~

~~DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.~~

~~Not applicable.~~

~~Table of Contents~~

~~PART III~~

Directors and Executive Officers.

~~Item 10.~~

~~Directors~~Our directors and ~~Executive Officers of the Registrant~~

~~Executive Officers~~

~~The following table sets forth information regarding our~~ executive officers ~~as of March 16, 2022:~~

~~Name~~	~~Age~~	~~Position~~
~~Patrick O. Zalupski~~	41	~~President, Chief Executive Officer and Chairman of the Board of Directors~~
~~J. Douglas Moran~~	50	~~Senior Vice President and Chief Operations Officer~~
~~L. Anabel Fernandez~~	40	~~Senior Vice President and Interim Chief Financial Officer~~

~~Patrick O. Zalupski—President, Chief Executive Officer and Chairman of the Board of Directors.~~ Patrick O. Zalupski has served as our President, Chief Executive Officer and Chairman of our Board of Directors since our formation in September. Mr. Zalupski has served as the Chief Executive Officer of our primary operating subsidiary, Dream Finders Homes LLC (“DFH LLC”), since forming the company in December 2008, and as the Chief Executive Officer and a member of the board of managers of DFH LLC since its formation in 2014. He is responsible for our overall operations and management and is heavily involved in the origination, underwriting and structuring of all investment activities. Under Mr. Zalupski’s leadership, we have grown from closing 27 homes in Jacksonville, Florida during our inaugural year in 2009 to establishing operations in markets across the State of Texas and the Southeast, Mid-Atlantic and Mountain Regions of the United States and closing over 15,300 homes as of December 31, 2021. Prior to founding DFH LLC, Mr. Zalupski was a Financial Auditor for FedEx Corporation’s Internal Audit Department in Memphis, Tennessee and worked in the real estate sales and construction industry as Managing Partner of Bay Street Condominiums, LLC from 2006 to 2008. He has served on the investment committee of DF Capital since April 2018 and on the board of directors for Jet LLC since December 2017. Mr. Zalupski holds an inactive Florida Real Estate License and received a B.A. in Finance from Stetson University.

~~J. Douglas Moran—Senior Vice President and Chief Operations Officer.~~ Doug Moran has served as our Senior Vice President and Chief Operations Officer since our formation in September 2020, and has served as the Chief Operations Officer of DFH LLC since January 2017. He joined Dream Finders as the Division President in Northeast Florida in August 2015 while also overseeing the management and growth of our business in other markets. Mr. Moran is responsible for sales, marketing, land acquisition and development, home construction, operations and purchasing. Under his direction, we have grown from closing 500 homes per year to over 4,500 homes per year, expanding into multiple new markets across the United States. Mr. Moran has over 20 years of broad industry experience in all aspects of operating a real estate company, including as an executive with publicly traded homebuilders, and has overseen the construction of over 15,000 homes throughout his career. He previously worked at Richmond American Homes (“RAH”), a subsidiary of M.D.C. Holdings, Inc. (NYSE: MDC), from 2012 to 2015, where he served as Regional President for Florida. Prior to joining RAH, Mr. Moran worked at KB Home (NYSE: KBH) from 2007 to 2012, where he served as DC Metro Division President. Prior to joining KB Home, Mr. Moran served his first of two stints at RAH from 1997 to 2007, where he joined as a member of the Mergers & Acquisitions team that acquired two homebuilders in Florida, before ascending the ranks to become RAH’s Southeast Regional Division President. Mr. Moran received B.S. in Business from the University of Maryland.

~~L. Anabel Fernandez—Vice President, Treasurer and Interim Chief Financial Officer.~~ Anabel Fernandez joined us 2018, serving in the position of Treasurer and Vice President and as a member of the Asset Management Committee and was appointed Interim Chief Financial Officer on October 6, 2021. Ms. Fernandez has been responsible for balance sheet management, capital allocation, cash forecasting and overall supervision of our treasury functions, including overall management of our debt, compliance, and reporting for lenders, investors and shareholders. Post-IPO, Ms. Fernandez developed the Company’s Investor Relations function. Prior to joining us, Ms. Fernandez served as the Vice President of Finance for the Americas region at Macquarie Group Limited, an Australian multinational independent investment bank and financial services company, from April 2016 to May 2018, overseeing financial and internal tax reporting for over 200 U.S. legal entities in the energy, capital and credit markets space and subsequently managing the financial audit process for Macquarie Group Limited’s aircraft leasing business. Prior to joining the Macquarie Group Limited, Ms. Fernandez served as the Corporate Accounting Manager at Fidelity National Financial, a provider of title insurance and settlement services to the real estate and mortgage industries, in the title insurance business from 2014 to April 2016. Ms. Fernandez started her career at Aeroflex Incorporated (NASDAQ: ARX INC), a publicly listed aerospace and defense electronics manufacturer, where she worked from 2002 to 2014. Ms. Fernandez serves on the Board of the Jacksonville Housing Authority, an agency dedicated to creating and sustaining healthy communities through its public housing programs. Ms. Fernandez is a Certified Public Accountant. Ms. Fernandez received a B.B.A in Accounting, Financial Economics and Economics from Lincoln Memorial University

~~Table of Contents~~

~~Board of Directors~~

~~The following information regarding our directors is as of March 16, 2022:~~

~~Patrick O. Zalupski~~ ~~–See above for additional information.~~

~~W. Radford Lovett II~~, age 61, has served as a member of the Board of Directors since January 2021. He has also served on the board of managers of DFH LLC from December 2014 to January 2021. Mr. Lovett was the founder, Chairman and Chief Executive Officer of two highly successful growth companies: TowerCom, Ltd, an owner and developer of broadcast communication towers that he founded in 1994, and TowerCom Development, LP, a developer of wireless communications infrastructure that he founded in 1997. TowerCom, Ltd and TowerCom Development, LP have each generated over 90% compounded annual rates of return for their investors. In 2007 he founded TowerCom, LLC and has since served as its Chairman and Chief Executive Officer. Mr. Lovett also co-founded Lovett Miller & Co. in 1997, a venture capital firm that focuses in technology-enhanced services and healthcare companies. Prior to co-founding Lovett Miller & Co., he served as the President of Southcoast Capital Corporation, a family holding company that invests in private equities, public equities and real estate. Prior to serving as President of Southcoast Capital Corporation, Mr. Lovett worked for the Lincoln Property Company and in the Corporate Finance Department of Merrill Lynch. Mr. Lovett has made venture capital investments in the following companies: RxStrategies, Inc., EverBank Financial Corporation, Healthcare Solutions, Inc. (formerly Cypress Care, Inc.), Care Anywhere, Inc., K&G Men’s Centers, Inc., Sigma International Medical Apparatus, Go Software, Inc., Main Bank Corporation, PowerTel, Inc. and Southcoast Boca Associates. He currently serves on the board of directors of the following companies: DocuFree Corporation and TowerCom, LLC. Mr. Lovett also currently serves on the board of directors for Florida Prepaid College Board. Mr. Lovett previously served on the board of trustees and was co-chairman of the Capital Campaign for the University of North Florida. Mr. Lovett also previously served on the board of directors of EverBank Financial Corporation (formerly a publicly traded company) and was the chairman of the Youth Crisis Center and the Jacksonville Jaguars Honor Rows Program. Mr. Lovett’s extensive experience serving on boards of directors and 20 years of executive leadership experience and management experience make him qualified to serve on the Board of Directors. Mr. Lovett is the chair of our Compensation Committee and a member of our Nominating and Governance Committee.

~~Megha H. Parekh~~, age 36, has served as a member of the Board of Directors since January 2021. In 2013, Ms. Parekh joined the Jacksonville Jaguars, a professional football franchise based in Jacksonville, Florida, as Vice President and General Counsel and, in 2016, was promoted to her current position as Senior Vice President and Chief Legal Officer. Ms. Parekh manages the legal, technology, security, capital improvements and people development teams at the Jacksonville Jaguars. Since joining the Jacksonville Jaguars, Ms. Parekh has also worked on a number of other acquisitions and business ventures for Shad Khan, the Jacksonville Jaguars’ owner, including serving as Chief Legal Officer for Iguana Investments Florida, LLC and Chief Legal Officer for All Elite Wrestling, LLC. Prior to joining the Jacksonville Jaguars, Ms. Parekh worked in the New York office of the international law firm Proskauer Rose LLP, where she practiced corporate law and worked on public and private acquisitions and financings and securities offerings. Ms. Parekh currently serves on the board of directors of the Jacksonville Jaguars Foundation, Inc. and the Florida Sports Foundation, Inc. and on the board of managers of the Black News Channel, an American broadcast television news channel based in Tallahassee, Florida targeting the African American demographic. Ms. Parekh’s 12 years of experience in acquisitions and business ventures and her legal expertise make her qualified to serve on the Board of Directors. Ms. Parekh is the chair of our Nominating and Governance Committee and a member of our Audit Committee and our Compensation Committee.

~~100~~

~~Table of Contents~~

~~Justin W. Udelhofen~~, age 42, has served as a member of the Board of Directors since January 2021. He also served on the board of managers of DFH LLC from December 2014 to January 2021. Mr. Udelhofen has been a private investor since July 2020. He previously founded Durant Partners LLC in October 2016, an investment fund that focuses on small-to-mid-capitalization equities, and served as Principal until June 2020. Prior to founding Durant Partners LLC, Mr. Udelhofen worked from 2006 to April 2016 at Water Street Capital, a multi-billion-dollar private investment firm in Jacksonville, Florida. Prior to joining Water Street Capital, Mr. Udelhofen researched businesses at growth-oriented mutual fund, Fred Alger Management. Prior to his services at Fred Alger Management, Mr. Udelhofen worked at Needham & Company, where he provided strategic insights to publicly traded companies, several initial public offerings and secondary offerings. He previously served on the board of managers of Durant Partners LLC. Mr. Udelhofen’s extensive leadership experience, his investment expertise, his background of providing strategic insights to publicly traded companies and his involvement with initial public offerings and secondary offerings make him qualified to serve on the Board of Directors. Mr. Udelhofen is the chair of our Audit Committee and a member of our Nominating and Governance Committee. The Board of Directors has determined that Mr. Udelhofen qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d) of Regulation S-K.

~~William H. Walton, III~~, age 69, has served as a member of the Board of Directors since January 2021. In 2003, he co-founded, and has since served as a managing member of Rockpoint Group, LLC (“Rockpoint”), a global real estate private equity firm that sponsors real estate investment funds capitalized by domestic and foreign institutional investors. Mr. Walton is responsible for the overall operations and management of Rockpoint, as well as overseeing the origination, structuring and asset management of all of Rockpoint’s investment activities. The Rockpoint founding managing members have invested more than $60 billion of real estate since 1994. In 1994, Mr. Walton also co-founded Westbrook Real Estate Partners, L.L.C. (“Westbrook”), a similar real estate investment management firm. Prior to co-founding Rockpoint and Westbrook, Mr. Walton served as a managing director in the real estate group of Morgan Stanley & Company, Inc., which he joined in 1979. Mr. Walton is involved with several real estate industry organizations and serves on the board of directors of Boston Properties, Inc. (NYSE: BXP), Crow Holdings and FRP Holdings, Inc. (NASDAQ: FRPH). He also servesmay purchase or has served as a member of or trustee on the board of directors for several non-profit organizations, with a particular interest in educational and policy entities. Mr. Walton’s 40 years of investment and real estate industry experience make him qualified to serve on the Board of Directors. Mr. Walton is a member of our Audit Committee, Compensation Committee and Nominating and Governance Committee.

~~Corporate Governance Matters~~

~~Controlled Company Status~~

Mr. Zalupski, our President, Chief Executive Officer and Chairman of the Board, holds more than a majority of the voting power of our common stock eligible to vote in the election of our directors. As a result, we are a “controlled company” within the meaning of the NASDAQ corporate governance standards. Under these corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NASDAQ corporate governance standards, including the requirements that (1) a majority of such company’s board of directors consist of independent directors, (2) such company’s board of directors have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) such company’s board of directors have a nominating and governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (4) such company conduct an annual performance evaluation of the nominating and governance and compensation committees. We have elected to utilize certain of these exemptions. As a result, no committees of the Board, other than our Audit Committee, is composed entirely of independent directors. In the event that we cease to be a “controlled company” andsell shares of our common stock ~~continue~~in the market from time to ~~be listed on NASDAQ, we will be required~~time, including pursuant to ~~comply~~equity trading plans adopted in accordance with ~~these provisions within the applicable transition periods.~~

~~Board Committees~~

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. The Board may also establish special committees as necessary to address specific issues. Each of these committees reports to the Board as it deems appropriate and as the Board may request. The Board has adopted written charters for each of the committees, which are posted under the “Investor Relations—Governance—Documents & Charters” link on the Company’s website at www.dreamfindershomes.com. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this Form 10-K.

~~101~~

~~Table of Contents~~

The Board does not currently have a lead director. However, because of its capable and experienced independent directors and its strong committee system (as described more fully below), we believe this leadership structure is appropriate for the Company and allows the Board to maintain effective oversight and management and, therefore, a lead director is not necessary at this time.

~~Audit Committee~~

Our Audit Committee consists of Mr. Udelhofen, who serves as chair of the committee, Ms. Parekh and Mr. Walton. The Board has determined that the members of our Audit Committee are independent for purposes of serving on such committee under the NASDAQ listing standards and applicable federal law, including Rule ~~10A-3 promulgated~~10b5-1 under the Exchange ~~Act. In addition, the Board has determined that each current member of our Audit Committee is financially literate under the NASDAQ listing standards~~Act (“Rule 10b5-1”) and ~~that Mr. Udelhofen qualifies as an “audit committee financial expert,” as such term is defined~~ in ~~Item 407(d) of Regulation S-K.~~

~~Our Audit Committee operates pursuant to an Audit Committee Charter, which was approved and adopted~~compliance with guidelines specified by the ~~Board~~Company. In accordance with Rule 10b5-1 and ~~is posted under the “Investor Relations—Governance—Documents & Charters” link on~~ the Company’s ~~website~~insider trading policy (which is attached as Exhibit 19.1), directors, officers and certain employees who, at ~~www.dreamfindershomes.com. The duties~~such time, are not in possession of material non-public information about the Company are permitted to enter into written plans that pre-establish amounts, prices and ~~responsibilities~~dates (or formula for determining the amounts, prices and dates) of ~~our Audit Committee are set forth in its charter. Our Audit Committee is responsible for, among other matters:~~

overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC and earnings press releases;

~~appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;~~

delineating relationships between our independent registered public accounting firm and us and requesting information from our independent registered public accounting firm and management to determine the presencefuture purchases or ~~absence of a conflict of interest;~~

~~reviewing with our independent registered public accounting firm the scope and results of their audit;~~

~~approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;~~

~~reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and our compliance with legal and regulatory requirements;~~

~~establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters;~~

~~reviewing and discussing with management cybersecurity, risk assessment and risk management and monitoring controls related to such exposures; and~~

~~reviewing and approving related-person transactions.~~

~~Compensation Committee~~

Our Compensation Committee consists of Mr. Lovett, who serves as chair of the committee, and Ms. Parekh and Mr. Walton. Pursuant to our controlled company status, we have elected to utilize our exemption to the requirement that each of the members of our Compensation Committee be an independent director under the NASDAQ listing standards, qualify as an “outside director” in accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and be a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act.

~~102~~

~~Table of Contents~~

The Compensation Committee Charter has been posted under the “Investor Relations—Governance—Documents & Charters” link on the Company’s website at www.dreamfindershomes.com. The Compensation Committee Charter provides that our Compensation Committee is responsible for, among other matters:

~~establishing the Company’s compensation programs and the compensation~~sales of the Company’s ~~executive officers;~~

~~monitoring incentive and equity-based compensation plans;~~

~~reviewing and approving~~stock, including shares acquired pursuant to the Company’s equity plans (“Rule 10b5-1 Trading Plans”). Under a Rule 10b5-1 Trading Plan, a broker executes trades pursuant to parameters established by the director ~~compensation; and~~

~~monitoring director and~~or executive officer ~~compliance with~~when entering into the ~~stock ownership guidelines.~~plan, without further direction from them.

~~Nominating and Governance Committee~~

~~Our Nominating and Governance Committee consists of Ms. Parekh, who serves as chair~~None of the ~~committee, and Messrs. Walton, Lovett and Udelhofen. Pursuant to our controlled company status, we have elected to utilize our exemption to~~Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b6-1 trading arrangement during the ~~requirement that each of the members of our Nominating and Governance Committee be an independent director under the NASDAQ listing standards.~~three months ended December 31, 2023.

The Nominating and Governance Committee Charter has been posted under the “Investor Relations—Governance—Documents & Charters” link on the Company’s website at www.dreamfindershomes.com. The Nominating and Governance Committee’s primary purpose, as described in its charter, is to provide assistance to the Board in fulfilling its responsibility to our stockholders by:

~~overseeing the evaluation of the Board and its committees;~~

~~identifying and recommending to the Board individuals qualified, consistent with criteria approved by the Board, for directorships to be filled by the Board or by our stockholders;~~

~~overseeing the size, composition and structure of the Board in order to discharge the Board’s duties and responsibilities properly and efficiently;~~

~~developing and recommending to the Board a set of corporate governance guidelines and principles; and~~

~~reviewing the disclosure regarding corporate governance and the operation of the committee included in our proxy statements and other filings required by the SEC, as applicable.~~

~~Selection and Evaluation of Director Candidates~~

Our Nominating and Governance Committee is responsible for identifying and recommending individuals who are qualified to become members of the Board and for filling vacancies that may arise on the Board. To facilitate the search process, our Nominating and Governance Committee may obtain the advice of, or retain the services of, outside legal counsel and such other advisors, including director search firms, as it deems necessary to help identify qualified candidates. Our Nominating and Governance Committee may also consider director candidates recommended by our stockholders. Our Nominating and Governance Committee seeks to identify a diverse slate of potential candidates, consisting of diverse skills, expertise, backgrounds and experiences, among other factors. Our Nominating and Governance Committee is also responsible for developing and recommending to the Board the standards to be applied when evaluating potential candidates’ independence fromCompany. On November 11, 2023, the Company ~~and potential conflicts~~adopted a new Rule 10b5-1 Trading Plan to replace its previous Rule 10b5-1 Trading Plan, which expired on November 6, 2023. The Company entered into the new Rule 10b5-1 plan to execute repurchases of ~~interest, which is used by the Board when determining whether a candidate is suitable for election as director.~~

~~Our Nominating and Governance Committee annually reviews and evaluates with the Board the appropriate skills and experience required for the Board, as a whole, and~~ its individual members. In such evaluation and resulting recommendation of director candidates, our Nominating and Governance Committee will consider such factors and criteria as it deems appropriate, including such director candidate’s judgment, skill, integrity, diversity and business or other experience.

We believe that diverse skills, expertise, backgrounds and experiences are important components of director qualifications and characteristics. These qualifications and characteristics are discussed further below.

~~103~~

~~Table of Contents~~

~~Key Director Qualifications and Experiences~~

~~Experience in corporate management, such as serving as an officer, former officer or other leadership role for a publicly held company or large private company;~~

~~Experience as a board member of another publicly held company or large private company;~~

~~Real estate industry professional and academic expertise, including homebuilding, land development, sales, marketing and operations;~~

~~Experience in accounting, finance, capital markets transactions and/or technology;~~

~~Legal, regulatory and/or risk management expertise; and~~

~~Information technology and cybersecurity expertise.~~

~~Key Director Characteristics~~

~~High personal and professional ethical standards, integrity and values;~~

~~Strong leadership skills and solid business judgment;~~

~~Commitment to representing the long-term interests of our stockholders;~~

~~The time required for preparation, participation and attendance at Board meetings and committee meetings, as applicable; and~~

~~Lack of potential conflict of interest with other personal and professional pursuits.~~

We consider director candidates recommended by our stockholders in the same manner as those recommendations made by directors, executive officers, outside advisors or search firms. Pursuant to Article II, Section 2(b) of our Bylaws, any stockholder desiring to recommend a director candidate to our Nominating and Governance Committee for consideration should deliver written notice and the other required information to the Corporate Secretary of the Company. Any such notice should be delivered by the date required by such section of our Bylaws in order to permit our Nominating and Governance Committee to complete its review in a timely fashion.

~~Delinquent Section 16(a) Reports~~

~~Section 16(a) of the Exchange Act (“Section 16(a)”) requires our officers, directors and persons who own more than 10% of our~~ Class A common stock under its share buyback program. Under the Company’s Rule 10b5-1 Trading Plan, a broker will execute purchases pursuant to ~~file reports~~parameters and prices pre-established by the Company without further direction. The Company’s Rule 10b5-1 Trading Plan has a scheduled expiration date of ~~ownership~~May 5, 2024 and ~~changes in ownership with the SEC. These officers, directors and persons who own more than 10%~~includes an aggregate amount of ~~our~~$25 million of Class A common ~~stock are also required~~stock.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

Table of Contents

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information called for by Item 10, to the extent not set forth in “Business—Executive Officers” in Item 1, will be set forth in the definitive proxy statement relating to the 2024 Annual Meeting of Stockholders of Dream Finders Homes, Inc. (the “2024 Annual Meeting of Stockholders”) pursuant to SEC ~~rules~~Regulation 14A. Such definitive proxy statement relates to ~~furnish~~a meeting of stockholders involving the ~~Company with copies~~election of all Section 16(a) reports they file. Since we became subject to Section 16(a) requirements on January 20, 2021, based solely on a review of copies of Forms 3, 4 or 5 filed by the Company on behalf of its directors and ~~officers or otherwise provided~~the portions thereof called for by Item 10 are incorporated herein by reference pursuant to the Company, the Company believes that its officers, directors and persons who own more than 10% of our Class A common stock complied with all applicable Section 16(a) filing requirements except as follows: W. Radford Lovett II, William H. Walton, III and L. Anabel Fernandez each filed their initialInstruction G to Form ~~3 report late due to a delay in their receipt of the required Edgar access codes.~~

10-K.

Code of Business Conduct and Ethics

All of our employees, officers and directors, including those responsible for financial reporting, operate under a written Code of Business Conduct and Ethics. All employees are required, upon their initial employment with the Company and annually thereafter, to affirm in writing their receipt and review of the Code of Business Conduct and Ethics and their compliance with its provisions. Additionally, the Corporate Governance Guidelines prohibit directors and executive officers from entering into any form of hedging or other monetization transaction involving shares of our common stock.

The Code of Business Conduct and Ethics was adopted in January 2021 and can be accessed under the “Investor Relations—Governance” link on our website at www.dreamfindershomes.com. We intend to satisfy any disclosure requirements pursuant to Item 5.05 of Form 8-K and the ~~NASDAQ~~NYSE rules regarding any amendment to, or waiver from, certain provisions of the Code of Business Conduct and Ethics by posting such information on our website.

~~104~~

~~Table of Contents~~

~~Item 11.~~

~~Executive Compensation.~~

Item 11. Executive Compensation

~~This section describes executive compensation of DFH’s directors and named executive officers.~~

~~COMPENSATION DISCUSSION AND ANALYSIS~~

~~In this Compensation Discussion and Analysis, we provide an overview of our executive compensation program and describe the material components of our executive compensation program~~The information called for ~~our 2021 named executive officers (NEOs), whose compensation is~~by Item 11 will be set forth in the ~~Summary Executive Compensation Table and other compensation tables contained in this Form 10-K. Our NEOs for 2021 were:~~

•	~~Patrick O. Zalupski, our President, Chief Executive Officer and Chairman of the Board;~~
• •	~~J. Douglas Moran, our Senior Vice President and Chief Operations Officer;~~ ~~L. Anabel Fernandez, our Senior Vice President and Interim Chief Financial Officer (1); and~~
•	~~Rick A. Moyer, our Former Senior Vice President and Chief Financial Officer (2).~~ ~~(1) On October 6, 2021 Ms. Fernandez was appointed to the position of Senior Vice President and Interim Chief Financial Officer.~~ ~~(2) Mr. Moyer resigned from his position as Senior Vice President and Chief Financial Officer, effective September 30, 2021.~~

~~Our Executive Compensation Practices~~

~~2021 Business Highlights~~

~~We concluded the full year 2021 with record results, achieving revenue growth of 70%, despite the~~

sustained, industry-wide labor, material, and supply chain challenges that remain prevalent to date. We closed 4,874 homes during the year, representing 33% organic growth and 55% overall growth inclusive of the strategic MHI acquisition, granting DFH immediate accessdefinitive proxy statement relating to the ~~robust Texas markets. We also concluded~~2024 Annual Meeting of Stockholders pursuant to SEC Regulation 14A. Such definitive proxy statement relates to a meeting of stockholders involving the ~~year with our greatest backlog in history valued at nearly $3.0 billion based on average sales price. Refer to “Management’s Discussion and Analysis~~election of ~~Financial Condition and Results of Operations—Key Results” for detailed business results for the year.~~

~~Philosophy and Context of Our Executive Compensation Program~~

Our executive compensation program has been designed to motivate, reward, attract and retain the talent necessary to ensure our continued success as the Company evolves. The program seeks to align executive compensation with our short- and long-term objectives, business strategy, financial performance and long-term value creation for our stockholders.

In connection with our IPO, our overall executive pay strategy began to shift in early 2021 to better align with competitive market practices for a publicly traded company, while maintaining a significant emphasis on equity awards. In connection with this shift in our executive pay strategy:

•	~~We increased base salaries to reflect competitive market levels, individual merit and internal parity considerations;~~

•	~~We paid certain IPO-related bonuses and will pay certain future bonuses in the form of equity awards that contain a three-year time-based vesting schedule as a retention mechanism; and~~

•	~~We transitioned away from a profit sharing model for certain executives and toward an incentive structure that considers achievement of Company specific performance factors.~~

~~105~~

~~Table of Contents~~

~~Compensation Governance Practices~~

In addition to these compensation practices, we are dedicated to the highest standards of good governance for our executive compensation plans, and we are in the process of establishing our governance framework for executive pay.

~~What We Do~~		~~What We Don’t Do~~
✔	~~Annual Compensation Review.~~ ~~The Compensation Committee conducts an annual review of compensation for our NEOs and a review of compensation-related risks.~~	✘	~~No “Single Trigger” Change of Control Arrangements.~~ ~~No change of control payments or benefits are triggered simply by the occurrence of a change of control.~~

✔	~~Compensation At-Risk and Performance-based.~~ ~~A significant portion of our NEO’s compensation is subject to variable pay arrangements that are determined by the Compensation Committee in connection with our performance.~~	✘	~~No Tax “Gross Ups.”~~ We do not provide any tax reimbursement payments (including “gross ups”) on any tax liability that our NEOs might owe, including as a result of the application of Sections 280G and 4999 of the Code.

✔	~~Multi-Year Vesting Requirements.~~ ~~Time-based restricted stock awards granted to our NEOs generally vest over three years.~~	✘	~~No Special Executive Benefit Plans.~~ ~~Our NEOs participate in the same company-sponsored benefit programs as our other full time, salaried employees.~~

✔	~~Rigorous Share Ownership Guidelines.~~ ~~We have established minimum share ownership requirements of 5x base salary for our Chief Executive Officer and 3x base salary for our other NEOs.~~	✘	~~No Hedging. We have a policy that restricts employees from hedging our securities.~~

✔	~~Limited Perquisites.~~ ~~We provide minimal perquisites and other personal benefits to our NEOs, except where they serve a legitimate business purpose.~~

~~Compensation Decision-making Process~~

~~Role of the Compensation Committee~~

We formed the Compensation Committee of our Board of Directors in January 2021 in connection with our corporate reorganization and IPO. Our Compensation Committee is responsible for setting and overseeing our executive compensation policies and programs, and for determining the compensation of our executives, including our NEOs. Our Compensation Committee is guided by our charter found on our website at https://investors.dreamfindershomes.com/static-files/ea75c82c-706d-44b4-bfdb-410bd70ac083.

~~Role of Management~~

Our Chief Executive Officer and other members of management provide information, data, analysis, updates and compensation recommendations to our Compensation Committee. In addition, our Chief Executive Officer makes recommendations to our Compensation Committee on compensation arrangements for executives (other than for himself), as well as the design of all material compensation and benefit plans.

~~106~~

~~Table of Contents~~

~~Role of Compensation Consultant~~

DFH retained Compensation Advisory Partners (“CAP”) to assist it by providing information, analysis and other advice relating to our executive compensation program. CAP provided the following advisory services in 2021:

~~consulting with the Chairman of the Compensation Committee between board meetings;~~

~~providing competitive market data for our NEO positions;~~

~~advising on market practices for compensation of founder CEOs with significant ownership; and~~

~~reviewing incentive plan design features and market practices for equity plan pool size~~

~~assisting in evaluation of the effectiveness of our overall executive compensation program.~~

~~CAP did not provide any services to us other than the consulting services to the Compensation Committee of the Board of Directors.~~

~~Competitive Considerations~~

In 2021 with the assistance of CAP, the Board of Directors reviewed and considered the compensation levels and practices of a group of comparable homebuilding companies within a reasonable size range as compared to our company. The peer companies that our Board of Directors considered consisted of the following:

~~Beazer Homes USA~~	~~Hovnarian Enterprises~~	~~Skyline Champion~~

~~Cavco Industries~~	~~LGI Homes~~	~~The New Home Company~~

~~Century Communities~~	~~M.D.C Holdings~~	~~TRI Pointe Group~~

~~Green Brick Partners~~	~~M/I Homes~~

~~In addition, CAP collected market data from nationally recognized compensation surveys for general industry companies with revenues between $1.0 billion and $3.0 billion.~~

The purpose of the comparison was to gain an additional point of reference, but was just one of several analytic tools that were used in making compensation decisions. The Compensation Committee did not target any specific positioning or percentile, or utilize a formulaic approach in designing our overall executive compensation packages. Rather, the Compensation Committee considered the comparative peer data together with a number of factors, including market practices, company and individual performance and internal parity, when making compensation decisions for 2021, without placing any particular weight on any one factor.

~~2021 Executive Compensation Program Detail~~

We believe our executive compensation program emphasizes variable pay and promotes long-term stockholder value, but as described above, our Compensation Committee does not target a particular pay mix. Our Compensation Committee endeavors to balance pay for performance objectives with retention considerations so that, even during a temporary downturn in the economydirectors and the homebuilding industry, the program continues to ensure that qualified, successful, performance-driven employees stay committed to increasing our long-term value. Furthermore, to attract and retain highly skilled management, our executive compensation program must remain competitive with those of comparable employers who compete with usportions thereof called for ~~talent.~~

~~The following is a summary of the elements of our compensation arrangements paid to our NEOs for 2021.~~

~~107~~

~~Table of Contents~~

~~Base Salary~~

~~We pay our NEOs an annual base salary to provide them with a fixed and stable level of pay that compensates them for their scope of responsibility, skill level and performance. Base salaries~~by Item 11 are generally reviewed annually and may be adjusted depending on an NEO’s job responsibilities and performance, as well as taking Company growth, total pay mix and internal parity into consideration. Following our IPO and through consultation with CAP, we increased the annual base salaries of our NEOs in order to provide market- competitive salaries more in line with our new status as a public company. Base salaries for 2021 were as follows:

~~Name~~	~~2021 ($)~~
~~Patrick O. Zalupski~~		~~1,050,000~~
~~J. Douglas Moran~~		~~650,000~~
~~L. Anabel Fernandez~~ ⁽¹⁾		~~400,000~~

~~(1)~~

~~Effective October 6, 2021 when Ms. Fernandez was appointed to the position of Senior Vice President and Interim Chief Financial Officer.~~

~~Short-Term Incentive—Annual Cash Bonus~~

Annual cash bonuses are designed to incentivize our NEOs at a variable level of compensation based on the Company’s performance as well as the individual’s performance. For 2021, our Compensation Committee established the following annual incentive targets for our NEOs:

	~~Target Bonus~~
~~Name~~	~~2021 ($)~~
~~Patrick O. Zalupski~~		~~2,012,500~~
~~J. Douglas Moran~~		~~1,812,500~~
~~L. Anabel Fernandez~~ ⁽¹⁾		~~400,000~~

~~(1)~~

~~In connection with her appointment as Interim CFO, Ms. Fernandez’s target bonus was established as 100% of her base salary.~~

In 2021, the Compensation Committee established a process to evaluate performance for short-term incentives that includes a comprehensive review of Company performance, with a focus on Adjusted Pre-Tax Income, and individual NEO performance. The Compensation Committee set a 2021 Adjusted Pre-Tax income target of $145M as the primary measure when determining bonuses. The committee established a threshold level of performance at 80% of target and a maximum level of performance at 125% of target that would result in a short-term incentive payout at 50% and 140% of target bonus, respectively. Performance below 80% of target would result in a 0% payout. Ultimately, the short-term incentive awards are determined by the Compensation Committee through the use of its structured discretion. The Compensation Committee believes that it is important to retain its discretion to determine NEO compensation in the first few years as a public company in order to build stockholder value while promoting the stability and growth of the Company. This process for determining compensation provides the Compensation Committee flexibility to make appropriate compensation decisions.

The Company achieved an Adjusted Pre-Tax Income of $169.0M, which reflects 117% of target performance. When determining actual Adjusted Pre-Tax Income, the committee may decide to exclude one-time items including merger / acquisition costs, litigation expense, restructuring costs, changes in accounting, etc. Based on the committee’s review of Company and NEO performance, Messrs. Zalupski and Moran, and Ms. Fernandez, received annual cash bonuses equal to $2.5 million, $2.3 million and $0.2 million, respectively for 2021. Ms. Fernandez’s bonus is reflective of her appointment occurring in October 2021, and was payable 50% in cash and 50% in the form of restricted shares of Class A common stock vesting in equal annual installments over three years, subject to continued service.

~~108~~

~~Table of Contents~~

~~Long-Term Incentive—Equity Awards~~

In 2021 annual equity awards became a component of our compensation structure for executives in order to more effectively align the interests of executive officers and our stockholders and increase retention through ensuring long-term incentive arrangements remain in place.

As noted below under the heading “Executive Employment Agreements—Special Bonus Rights”, following our IPO we granted restricted stock awards to each of our NEOs from our 2021 Equity Incentive Plan. In the case of Messrs. Zalupski and Moyer, such awards were granted as special one-time bonuses in connection with our IPO, and in the case of Mr. Moran, his equity award was granted as part of his profit sharing bonus for 2020. All such awards provide for a three-year vesting schedule.

~~Benefits~~

Our NEOs are eligible for the benefits generally available to full-time Company employees, including, without limitation: 401(k), disability, dental vision, group sickness, accident and/or health insurance programs of the Company as well as any other fringe benefit programs that may be established by the Company. We believe many of these benefits are required to remain competitive in attracting and retaining executive talent.

We pay the premiums for key man life insurance for Mr. Zalupski. Senior executives, including the NEOs, are encouraged to occasionally have their spouses accompany them at business functions in connection with certain business meetings and other corporate-sponsored events, and the Company pays all expenses associated with their spouses’ travel to and attendance at these business-related functions.

~~Our NEO’s are afforded personal use of private, chartered aircrafts and it is Company policy that 100% of the associated costs are reimbursed by the executives.~~

~~Executive Employment Agreements~~

In connection with our IPO, we entered into new executive employment agreements in January 2021 with each of our NEOs. As of October 6, 2021 and in conjunction with Ms. Fernandez’ appointment to Senior Vice President and Interim Chief Financial Officer, we entered into a new executive employment agreement with her. Each such agreement provides for “at-will” employment and contains customary confidentiality, invention assignment and non-competition and other restrictive covenants. In addition, such agreements provide for increased base salaries, certain special bonus rights and severance benefits as described below.

~~Special Bonus Rights~~

~~IPO Bonuses. As contemplated in the employment agreements with Messrs. Zalupski and Moyer, in January 2021,~~the Board approved the grant of restricted stock awards for each of Messrs. Zalupski, Moyer and Moran in consideration of their substantial contributions leading to the successful completion of our IPO (the “IPO Bonus Awards”), effective on the date of our IPO. Mr. Zalupski’s IPO Bonus Award consisted of 461,538 shares of our Class B common stock, representing a target value of $6,000,000 based on our initial offering price of $13.00. Mr. Moyer’s and Mr. Moran’s IPO Bonus Award covered 38,462 shares and 72,115 of our Class A common stock, respectively, representing a target value of $500,000 and $937,500, respectively based on our initial offering price of $13.00 per share. The IPO Bonus Awards were granted on January 29, 2021. All of the IPO Bonus Awards vest in three equal annual installments measured from the date of our IPO, subject to continued service with the Company on the vesting date.

~~Severance and Change in Control Benefits~~

Messrs. Zalupski’s and Moyer’s and Ms. Fernandez’ executive employment agreements provide for the payment of three months’ worth of Company-paid Consolidated Omnibus Budget Reconciliation Act (“COBRA”) premiums as severance benefits in the event of an involuntary termination by us without cause.

Additionally, in the event the Company hires a full time Chief Financial Officer and Ms. Fernandez terminates her employment with the Company, the Company will pay Ms. Fernandez $150,000. In the event Ms. Fernandez is terminated by the Company without cause prior to the payment of any bonus for 2021, Ms. Fernandez shall receive a severance payment of $350,000.

~~109~~

~~Table of Contents~~

Mr. Moran’s employment agreement provides that if we terminate Mr. Moran’s employment involuntarily without cause, he would be entitled to receive severance payments equal to 12 months’ worth of his then-current base salary as in effect at the time of such termination, plus 12 months’ worth of company-paid COBRA premiums. If we terminate Mr. Moran’s employment involuntarily without cause within the 24-month period following a change in control of the Company, Mr. Moran would be entitled to receive severance payments equal to two years’ then-current base salary as in effect at the time of such termination, plus 24 months’ worth of company-paid COBRA premiums.

All severance and change in control benefits are subject to execution by the executive officer of an effective general release of claims in our favor, and continued compliance with certain non-competition and other restrictive covenants.

~~Tax and Accounting Considerations~~

~~Deductibility of Executive Compensation~~

Section 162(m) of the Code limits the amount of compensation that may be deducted per covered employee to $1 million per taxable year. Following the enactment of the Tax Cuts and Jobs Act (the “TCJA”), beginning with the 2018 calendar year, this $1.0 million annual deduction limitation applies to compensation paid to any individual who serves as the chief executive officer, chief financial officer or one of the other three most highly compensated executive officers for 2017 or any subsequent calendar year, and there is no longer any exception to this limitation for qualified performance-based compensation (as was the case for periods prior to 2018). Thus, it is expected that any compensation deductions for any covered employee will be subject to a $1.0 million annual deduction limitation. The Compensation Committee considers the applicability of Section 162(m) of the Code in designing our compensation programs but also considers numerous factors that may in some cases lead to the payment of compensation that is not deductible as result of the application of Section 162(m) of the Code.

~~Accounting for Stock-Based Compensation~~

We follow the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and members of our Board of Directors, including restricted stock awards, options to purchase our equity securities, and other stock awards, based on the grant date fair value of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.

~~Stock Ownership Guidelines~~

Ownership of our common stock by our directors and executive officers is very important to align their interests with those of our stockholders. We have stock ownership guidelines requiring that our executive officers acquire and continuously hold a specified minimum level of our common stock. For our executive officers, we express these requirements as a multiple of annual base salary.

~~The minimum stock ownership requirements by level are as follows:~~

~~Stock Ownership Guidelines~~
~~Chief Executive Officer~~			~~5X Base Salary~~
~~Chief Operating Officer and Chief Financial Officer~~			~~3X Base Salary~~
~~Other Executive Officers~~			~~1X Base Salary~~

~~110~~

~~Table of Contents~~

Upon the appointment or election of a new executive officer, such executive officer will be expected to reach full compliance with these requirements by the date that is five years after his or her appointment or election. Until the targeted ownership levels are attained, executive officers covered by this policy are required to retain at least 50% of the shares of our common stock acquired upon the vesting of share-based awards.

~~Anti-Hedging Policy~~

We have an Insider Trading Policy that prohibits, among other things, short sales, hedging of stock ownership positions, and transactions involving derivative securities relating to our common stock. See “Anti-Hedging and Insider Trading Policy” for a discussion of our anti-hedging policy.

~~Compensation Risk Assessment~~

The Compensation Committee monitors the Company’s incentive and equity-based compensation plans for both executive and non-executive employees, and annually reviews the programs against the Company’s strategic goals, industry practices and emerging trends in order to ensure alignment with stockholder interests. As part of this evaluation, the Compensation Committee considers whether the program components encourage or otherwise promote the taking of inappropriate or unacceptable risks that could threaten the Company’s long-term value. Based on a review by our Compensation Committee, such directors determined that the mix and design of the elements of such programs do not encourage our employees to assume excessive risks and accordingly are not reasonably likely to have a material adverse effect on the Company.

~~Summary Compensation Table for 2021~~

The following table provides information concerning compensation of NEOs as of December 31, 2021. The amounts shown below are discussed further under “Compensation Discussion and Analysis—2021 Executive Compensation Program in Detail.

Name and Principal Position Year Salary ($) Bonus ($)
Stock
Awards
($)⁽¹⁾
Non-equity
Incentive Plan
Compensation
($)⁽²⁾
All Other
Compensation
($)⁽⁵⁾
Total ($)
Patrick O. Zalipski⁽³⁾
2021 1,220,389 2,465,625 10,684,605 — 21,045 14,391,664
President, Chief Executive Officer 2020 450,000 4,000,000 — — 96,813 4,546,813
and Chairman of the Board 2019 375,000 — — — 159,980 534,980
Rick A. Moyer 2021 487,500 — 890,395 — 6,051 1,383,946
Former Senior Vice President 2020 450,000 500,000 — — 12,856 962,856
and Chief Financial Officer 2019 400,000 400,000 — — 9,800 809,800
J. Douglas Moran 2021 627,507 2,265,625 1,669,462 — 10,150 4,572,744
Senior Vice President 2020 350,000 — — 937,500 11,958 1,299,458
and Chief Operating Officer 2019 300,000 — — 1,015,450 9,800 1,325,250
L. Anabel Fernandez 2021 240,923 200,000 222,587 — 10,150 673,660
Senior Vice President 2020 — — — — — —
and Interim Chief Financial Officer⁽⁴⁾
2019 — — — — — —

~~(1)~~

Based on grant date fair value of restricted stock awards and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10 to our consolidated financial statements for the fiscal year ended December 31, 2021, included herewith. Mr. Moyer’s stock awards were forfeited upon his resignation.

~~(2)~~

Mr. Moran earned a profit sharing bonus for 2020 and 2019 in an amount equal to 2.5% of the yearly pre-tax net profits of DFH LLC, as provided in his prior employment agreement. Such profit sharing bonus amount in 2020 and 2021 was paid 50% in cash and 50% in the form of a restricted stock award with a three-year vesting schedule, while such profit sharing bonus amount was paid in cash for 2019.

~~(3)~~

~~Mr. Zalupski does not receive any additional compensation for serving as the Chairman of our Board.~~

~~(4)~~

~~Ms. Fernandez was appointed to the position of Senior Vice President and Interim Chief Financial Officer on October 6, 2021.~~

~~(5)~~

~~Amounts reflected within the “All Other Compensation” column are comprised of the following amounts:~~

~~111~~

~~Table of Contents~~

Name and Principal Position Year
Employer
Contributions
to 401(k) Plan ($)
Key Man Life Insurance Premiums ($)
Reimbursements
for
Personal
Expenses ($)
Total
($)
Patrick O. Zalupski 2021 10,150 10,895 — 21,045
2020 11,112 16,342 65,000 92,454
2019 9,800 16,342 126,202 152,344
Rick A. Moyer 2021 6,051 — — 6,051
2020 12,856 — — 12,856
2019 9,800 — — 9,800
J. Douglas Moran 2021 10,150 — — 10,150
2020 11,958 — — 11,958
2019 9,800 — — 9,800
L. Anabel Fernandez 2021 10,150 — — 10,150
2020 — — — —
2019 — — — —

~~Pay Ratio~~

We have estimated the ratio between our 2021 CEO’s total compensation and the median annual total compensation of all employees (except the chief executive officer). In searching for the median employee we considered taxable compensation totals in 2021. We identified the “Median Employee” based on the taxable compensation of all full-time, part-time, and temporary employees employed by us on December 31, 2021, excluding MHI, as the MHI acquisition occurred on October 1, 2021. Then we calculated the Median Employee’s compensation under the Summary Compensation Table rules. Our Chief Executive Officer in 2021 had annual total compensation of $14,221,275 and our Median Employee had annual total compensation of $77,286. Therefore, we estimate that our Chief Executive Officer’s annual total compensation in 2021 is 184 times that of the median of the annual total compensation of all of our employees.

~~Grants of Plan-Based Awards During 2021~~

~~The following table sets forth information with respect to plan-based awards made to NEOs during the year ended December 31, 2021:~~

~~Name~~	~~Type~~	~~Grant Date~~	~~All Other Stock Awards ($)~~	~~Grant Date Fair Value of Stock Awards ($)~~ ⁽¹⁾
~~Patrick O. Zalupski~~	~~Restricted stock - 2021 Equity Incentive Plan~~	~~1/29/2021~~	—	~~10,684,605~~
~~J. Douglas Moran~~	~~Restricted stock - 2021 Equity Incentive Plan~~	~~1/29/2021~~	—	~~1,669,462~~
~~L. Anabel Fernandez~~	~~Restricted stock - 2021 Equity Incentive Plan~~	~~1/29/2021~~	—	~~222,587~~
~~Rick A. Moyer~~	~~Restricted stock - 2021 Equity Incentive Plan~~	~~1/29/2021~~	—	~~890,395~~

~~(1)~~

~~112~~

~~Table of Contents~~

~~Outstanding Equity Awards at December 31, 2021~~

Stock Awards
Name
Number of shares that
have not vested (#)⁽¹⁾
Value of shares that
have not vested ($)⁽²⁾
Patrick O. Zalupski                   461,538 8,976,923
J. Douglas Moran                     72,115 1,402,637
L. Anabel Fernandez                        9,615 187,019

~~(1)~~

~~Restricted stock awards as of December 31, 2021, which were granted under the 2021 Equity Incentive Plan in connection with our IPO in January 2021.~~

~~(2)~~

~~Market value of unvested restricted stock awards is based on a closing price of $19.45 for a share of our common stock on the Nasdaq Global Select Market on December 31, 2021.~~

~~Options Exercised and Stock Vested in 2021~~

No restricted stock awards of DFH, Inc. held by NEOs vested during the year ended December 31, 2021. These stock grants vest over a period of three years, ratably in one third increments at the end of each year of a three-year term, which started on January 21, 2021, the grant date. In addition, our NEOs do not have any options outstanding and did not exercise any options in 2021.

~~Nonqualified Deferred Compensation~~

The following table sets forth information with respect to the deferred portions of Mr. Moran’s profit sharing bonus during the year ended December 31, 2021. Such deferred amounts do not earn interest.

Name

Executive contributions
in last fiscal year ($)⁽¹⁾

Aggregate withdrawals/
distributions ($)⁽²⁾

Aggregate balance at
last fiscal year end ($)⁽³⁾
J. Douglas Moran

—

195,182

101,546

~~(1)~~

For the year ended December 31, 2021, Mr. Moran’s bonus structure transitioned from profit sharing to an incentive structure comprised of a cash bonus and equity awards in line with the other NEOs. The cash portion is included in the Summary Compensation Table under the heading “Bonus” and the equity award portion is included in “Long Term Incentive Plan Compensation.”

~~(2)~~

~~Represents deferred amounts paid to Mr. Moran in 2021 attributable to his 2018 and 2019 profit sharing bonuses.~~

~~(3)~~

~~Represents remaining deferred amounts as of December 31, 2021 attributable to Mr. Moran’s 2019 profit sharing bonuses.~~

~~113~~

~~Table of Contents~~

~~Potential Payments Upon Termination or Change in Control~~

The following table quantifies the amount of cash payments and the value of any equity acceleration and other benefits NEOs would have received in connection with certain terminations of employment or in connection with a change in control of DFH, Inc. as if such event had occurred on December 31, 2021. Additional information regarding the prior and current employment agreements for NEOs and our 2021 Equity Incentive Plan is contained in our Compensation Discussion and Analysis under the headings “Executive Employment Agreements” and “Long-Term Incentive—Equity Awards.”

Mr. Zalupski’s and Ms. Fernandez’ executive employment agreements provide for the payment of three months’ worth of Company-paid Consolidated Omnibus Budget Reconciliation Act (“COBRA”) premiums as severance benefits in the event of an involuntary termination by us without cause.

The actual amounts that would be paid to any NEO can only be determined at the time of an actual termination of employment and would vary from those listed below. Generally, in the event of a termination for “cause” or a resignation for any reason (other than retirement, in the case of Mr. Moran under his prior employment agreement and voluntary termination, in the case of Ms. Fernandez under her employment agreement), NEOs are entitled only to earned but unpaid salary, vested benefits under applicable benefit plans and reimbursement of business expenses. The amounts shown in the table below assume that all applicable contingencies, such as execution of a release of claims and continuing compliance with any restrictive covenants, as applicable, will be satisfied.

Name Event
Salary
($)

Bonus
($)

Health/Welfare
Benefits
($)

Other Benefits
($)

Equity Acceleration
($)

Total
($)
L. Anabel Fernandez
Voluntary Termination ⁽¹⁾
— — — 150,000 — 150,000

Involuntary Termination ⁽²⁾
350,000 — 2,681 — — 352,681
J. Douglas Moran⁽³⁾
Involuntary Termination 350,000 — 22,572 — — 372,572

Change in Control 604,444 — — — — 604,444

Retirement⁽⁴⁾
— — — 101,546 — 101,546
Patrick O. Zalupski Involuntary Termination — — 4,191 — — 4,191

~~(1)~~

In the event the Company hires a full time Chief Financial Officer and Ms. Fernandez terminates her employment with the Company within 30 days thereafter, the Company will pay Ms. Fernandez $150,000 following the execution by Ms. Fernandez of a general release.

~~(2)~~

In the event Ms. Fernandez is terminated by the Company without Cause (as defined in the employment agreement) prior to the payment of any bonus for 2021, Ms. Fernandez shall receive a severance payment of $350,000 following the execution by Ms. Fernandez of a general release.

~~(3)~~

~~(4)~~

Mr. Moran’s prior employment agreement provided for accelerated payment of accrued, unpaid profit sharing bonuses on his “Retirement,” which was generally defined as a voluntary resignation after reaching age 65.

~~114~~

~~Table of Contents~~

~~COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION~~

None of our executive officers serves, or in the past has served, as a member of the Board or Compensation Committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of the Board or our Compensation Committee. None of the members of our Compensation Committee is, or has ever been, an officer or employee of the Company. Information regarding certain related party transactions involving Mr. Lovett, our director and member of the Compensation Committee, is contained in our Certain Relationships and Related Party Transactions section.

~~COMPENSATION COMMITTEE REPORT~~

Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, our Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included herein.

~~W. Radford Lovett II (Chair)~~

~~Megha H. Parekh~~

~~William H. Walton, III~~

~~The foregoing report is not soliciting material, is not deemed filed with the SEC and is not to be~~ incorporated herein by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

pursuant to Instruction G to Form 10-K.

~~NON-EMPLOYEE DIRECTOR COMPENSATION~~

~~For 2021, the DFH Board was comprised of Patrick O. Zalupski, William H. Walton, W. Radford Lovett II, Justin Udelhofen and Megha H. Parekh.~~

On January 29, 2021, (i) each of Messrs. Lovett and Walton and Ms. Parekh was granted a restricted stock award covering 3,846 shares of our Class A common stock, with a grant date fair value of approximately $89,035, in consideration for their appointment and future service on the Board; and (ii) Mr. Udelhofen was granted a restricted stock award covering 11,538 shares of our Class A common stock, with a grant date fair value of approximately $267,105, in consideration for his past service as a manager of our predecessor, DFH LLC, and his appointment as chair of the Audit Committee and future service on the Board. Each of these restricted stock awards was granted under the terms of the Dream Finders Homes, Inc. 2021 Equity Incentive Plan (our “2021 Equity Incentive Plan”) and will vest in three equal annual installments measured from January 21, 2021 (the date of our IPO), subject to such director’s continued service on the Board.

Our Compensation Committee is responsible for evaluating and approving compensation for our non-employee directors. For 2021, our Compensation Committee has approved the following compensation for our non-employee directors:

~~an annual cash retainer of $50,000; and~~

~~an annual restricted stock award granted under our 2021 Equity Incentive Plan with an aggregate fair market value of approximately $50,000 on the date of grant.~~

~~We also reimburse our directors for reasonable out-of-pocket expenses incurred for travel in connection with attendance in-person at Board or committee meetings.~~

~~115~~

~~Table of Contents~~

~~Director Compensation~~

The following table provides information regarding compensation earned by our directors for services rendered during the year ended December 31, 2021. Mr. Zalupski, our President, Chief Executive Officer and Chairman of the Board, received no additional compensation for serving on the Board, and his 2021 compensation is disclosed under “Executive Compensation” above.

Name
Fees earned or
paid in cash
($)⁽¹⁾

Stock awards
($)⁽²⁾
Total ($)
William H. Walton, III 50,000 89,035 139,035
W. Radford Lovett II 50,000 89,035 139,035
Justin W. Udelhofen 50,000 267,105 317,105
Megha H. Parekh 50,000 89,035 139,035

~~(1)~~

~~Represents annual retainers which directors received in cash.~~

~~(2)~~

Based on grant date fair value of restricted stock awards granted during 2021 and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10 to our consolidated financial statements for the fiscal year ended December 31, 2021, included herewith.

~~STOCK OWNERSHIP POLICY FOR NON-EMPLOYEE DIRECTORS~~

In order to evidence the financial alignment of the Company’s directors with the interest of the Company’s stockholders, the Board has established a stock ownership policy for non-employee directors. Under these guidelines, each director is required to own shares of our common stock that have a fair market value (determined as of each annual meeting of the Company’s stockholders) equal to five times the annual cash retainer paid to the applicable independent director, and each director shall have five years from his or her initial appointment or election to the Board within which to satisfy the foregoing stock ownership policy. Once our Class A common stock has been listed for a full year, we will determine the director share ownership requirement based on the average monthly closing stock price of our Class A common stock.

~~116~~

~~Table of Contents~~

~~Item 12.~~

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

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The ~~following table sets~~information called for by Item 12 will be set forth ~~certain information regarding~~in the ~~beneficial ownership~~definitive proxy statement relating to the 2024 Annual Meeting of ~~shares~~Stockholders pursuant to SEC Regulation 14A. Such definitive proxy statement relates to a meeting of ~~our common stock as~~stockholders involving the election of ~~March 16, 2022, by (i) each of our~~ directors and ~~NEOs, individually and as a group, and (ii) each person known~~the portions thereof called for by Item 12 are incorporated herein by reference pursuant to ~~our management~~Instruction G to ~~be the beneficial owner of more than 5.0% of the outstanding shares of our common stock.~~Form 10-K.

Shares Beneficially Owned⁽¹⁾

Class A Class B Combined
Common Stock Common Stock
Voting Power⁽²⁾

5% Stockholders: Number % Number % Number %
Patrick O. Zalupski⁽³⁾⁽⁴⁾
—
0%

60,687,691
100.0%

182,063,073
84.9%

W. Radford Lovett II^(9)(10)
5,069,729
15.4%

—
0.0%

5,069,729
*%

Boston Omaha Corporation ⁽¹³⁾
2,868,037
8.8%

—
0.0%

2,868,037
3.1%

The Vanguard Group ⁽¹⁴⁾
1,646,559
5.1%

—
0.0%

1,646,559
1.8%

Directors and Named Executive Officers:

Patrick O. Zalupski⁽³⁾⁽⁴⁾
—
0.0%

60,687,691
100.0%

182,063,073
84.9%

J. Douglas Moran⁽⁵⁾
887,605
2.7%

—
0.0%

887,605
*%

L. Anabel Fernandez⁽⁶⁾
32,615
*%

—
0.0%

32,615
*%

William H. Walton, III⁽⁷⁾⁽⁸⁾
2,536,787
7.7%

—
0.0%

2,536,787
1.2%

W. Radford Lovett II^(9)(10)
5,069,729
15.4%

—
0.0%

5,069,729
2.4%

Justin W. Udelhofen⁽¹¹⁾
86,538
*%

—
0.0%

86,538
*%

Megha H. Parekh⁽¹²⁾
5,846
*%

—
0.0%

5,846
*%

Directors and executive officers as a group (7 persons) 8,619,120
26.2%

60,687,691
100%

190,682,193
89.3%

~~Less than 1%.~~

~~(1)~~

Subject to the terms of our Certificate of Incorporation and our Bylaws, our Class B common stock is convertible at any time by the holder into shares of our Class A common stock on a share-for-share basis. The table above does not reflect shares of our Class A common stock issuable upon conversion of our Class B common stock.

~~(2)~~

Each holder of our Class A common stock shall be entitled to one vote per share of our Class A common stock, and each holder of our Class B common stock shall be entitled to three votes per share of our Class B common stock. Holders of our Class A common stock and our Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law, our Certificate of Incorporation or our Bylaws. Represents percentage of voting power of our Class A common stock and our Class B common stock, voting together as a single class, reflecting (i) all shares of our Class A common stock held by such holder and (ii) all shares of our Class B common stock held by such holder. The table above does not reflect voting power of shares of our Class A common stock issuable upon conversion of our Class B common stock.

~~(3)~~

Includes 596,158 shares of our Class B common stock held by POZ Holdings, Inc., an entity Mr. Zalupski controls. The address for POZ Holdings, Inc. is 14701 Philips Highway, Suite 300, Jacksonville, FL 32256.

~~(4)~~

Includes 461,538 shares of our Class B common stock granted to Mr. Zalupski on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class B common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.

~~(5)~~

Includes 72,115 shares of our Class A common stock granted to Mr. Moran on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.

~~117~~

~~Table of Contents~~

~~(6)~~

Includes 9,615 shares of our Class A common stock granted to Ms. Fernandez on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.

~~(7)~~

Consists of (i) 633,235 shares of our Class A common stock owned directly by William H. Walton, III Living Trust, u/a dated 6/6/2014, of which Mr. Walton is the sole trustee, and (ii) 1,899,706 shares of our Class A common owned directly by The Theodora D. and William H. Walton, III Irrevocable Trust, of which Mr. Walton’s brother is one of three trustees.

~~(8)~~

Includes 3,846 shares of our Class A common stock granted to Mr. Walton on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.

~~(9)~~

~~Consists of 5,065,883 shares of our Class A common stock owned directly by the W. Radford Lovett II GST Exempt Trust u/a dated 12/28/2004, of which Mr. Lovett is the sole trustee.~~

~~(10)~~

Includes 3,846 shares of our Class A common stock granted to Mr. Lovett on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.

~~(11)~~

Includes 11,538 shares of our Class A common stock granted to Mr. Udelhofen on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.

~~(12)~~

Includes 3,846 shares of our Class A common stock granted to Ms. Parekh on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.

~~(13)~~

Information from Schedule 13G/A filed on October 7, 2021. Boston Omaha Corporation has shared voting power and shared dispositive power with regard to 2,868,037 shares. United Casualty & Surety Insurance Company has shared voting power and shared dispositive power with regard to 120,000 shares. BOC DFH LLC has shared voting power and shared dispositive power with regard to 2,748,037 shares. The address of Boston Omaha Corporation is 1411 Harney St., Suite 200, Omaha, NE 68102.

~~(14)~~

Information from Schedule 13G filed on February 9, 2022. The Vanguard Group, Inc.'s clients, including investment companies registered under the Investment Company Act of 1940 and other managed accounts, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities included herein. The Vanguard Group, Inc.'s address is 100 Vanguard Blvd., Malvern, PA 19355.

Additionally, our director Mr. Lovett, his brother Philip Lovett, and The William H. Walton Living Trust U/A Dated 6/6/2014, for which our director Mr. Walton is the sole trustee, each hold interests in certain of our subsidiaries as follows: DFH Amelia, LLC (each hold a 9.28% interest); DFH Clover, LLC (each hold a 3.86% interest); DFH Leyden, LLC (each hold an 8.33% interest); DFH Leyden 2, LLC (each hold a 7.15% interest); and DCE DFH JV, LLC (each hold a 5.80% interest).

~~118~~

~~Table of Contents~~

~~Equity Compensation Plan Information~~

~~The following table sets forth information as of December 31, 2021, with respect to the Company’s compensation plans under which its Common Stock is authorized for issuance:~~

(a) (b) (c)
Number of Securities
Number of Securities remaining available
to be issued upon Weighted average for future issuance
exercise of exercise price of (excluding securities
Directors, Nominees outstanding options, outstanding options, reflected in
and Executive Officers warrants and rights
warrants and rights
(1)
column (a))

Equity Compensation Plans:

Approved by security holders 721,598 $ - 8,378,402

Not approved by security holders - $ - -

Total 721,598 $ - 8,378,402

~~(1)~~

~~All of the outstanding shares are restricted stock awards, which do not have exercise prices.~~

~~119~~

~~Table of Contents~~

~~Item 13.~~

Item 13. Certain ~~Relationships and Related Transactions, and Director Independence.~~

~~CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS~~

~~Review and Approval of Transactions with Related Persons~~

The Board has adopted the Dream Finders Homes, Inc. Related Party Transaction Policy (the “Related Party Transaction Policy”) in writing, which provides that our executive officers, directors, holders of more than 5% of any class of our voting securities and any member of the immediate family of, and any entity affiliated with, any of the foregoing persons are not permitted to enter into a related-party transaction with us without the prior consent of our Audit Committee, or other independent members of the Board in the event it is inappropriate for our Audit Committee to review such transaction due to a conflict of interest. In addition, any member of our Audit Committee who is a related person with respect to a transaction under review is not permitted to participate in the deliberations or vote on approval or ratification of such transaction. Any request for us to enter into a transaction with an executive officer, director or holder of more than 5% of any class of our voting securities, or any of their immediate family members or affiliates, in which the amount involved exceeds $120,000 must first be presented to our Audit Committee for review, consideration and approval. In approving or rejecting any such proposal, our Audit Committee considers the relevant facts and circumstances available and deemed relevant to our Audit Committee, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction.

Notwithstanding the foregoing, as further discussed below, the Related Party Transaction Policy provides that we may enter into land acquisition and/or financing transactions with DF Capital, any funds managed by DF Capital and any other joint venture that meets the preapproved transaction criteria established from time to time by our Audit Committee and that such transaction shall be deemed to have been approved by our Audit Committee. If any proposed transaction involving the Company, on the one hand, and DF Capital or any funds managed by DF Capital, on the other hand, does not meet the preapproved transaction criteria established by our Audit Committee, then our Audit Committee would be required to review such transaction as required by the Related Party Transaction Policy.

~~DF Capital~~

The Company has a 49.9% ownership interest in DF Capital, an investment manager focused on investments in land banks and land development joint ventures to deliver finished lots to the Company and other homebuilders for the construction of new homes. Certain of the Company’s directors, officers and employees have invested in certain of the funds managed by DF Capital. Management and the Board believe that the Company’s relationship with DF Capital allows the Company to act quickly as lot acquisition opportunities are presented and, therefore, put in place a mechanism to preapprove certain related-party transactions involving DF Capital, any of the funds that it manages or any DF Capital affiliated entity (collectively, the “DF Capital Entities”).

At least quarterly, the Company’s General Counsel provides our Audit Committee with a list of current transactions involving the Company, on the one hand, and any DF Capital Entity, on the other hand. The list sets forth all investments and commitments in any DF Capital Entity made by any of the Company’s directors, officers and employees.

So long as a new related-party transaction involving any DF Capital Entity meets the criteria set forth below (the “DF Capital Transaction Criteria”), it is deemed to have been approved by our Audit Committee. If any related-party transaction involving any DF Capital Entity does not meet the criteria set forth below, such related-party transaction will require approval under the Related Party Transaction Policy as set forth above.

~~DF Capital Transaction Criteria~~

	~~Lot Deposit Amount~~			~~Lot Option Fees~~
	~~Up to 20% of the total transaction price of all lots.~~			~~Up to 15% paid currently or 20% accrued and paid at lot purchase.~~

Our Audit Committee periodically reviews the DF Capital Transaction Criteria to confirm that such criteria are consistent with comparable land bank financing transactions with or involving unaffiliated third parties.

~~120~~

~~Table of Contents~~

~~Related Party Transactions~~

~~DF Residential I, LP, DF Residential II, LP and DF Capital Management, LLC~~

DFH LLC, our primary operating subsidiary, has entered into joint ventures and land bank projects with funds managed by DC Capital. The Company owns 49% of the membership interests in DF Capital and Christopher Butler, a non-affiliated third party, serves as the managing member and owns the remaining 51% of the membership interests in DF Capital. See “Business - DF Residential I, LP, DF Residential II, LP and DF Capital Management, LLC” and Note 16. Related Parties to the consolidated financial statements for detail discussion on these related party joint ventures.

The general partner of Fund I is DF Management GP, LLC (“DF Management”), for which Mr. Butler is the managing member. DFH LLC is one of four members of DF Management with a 26.13% membership interest and an 85% carried interest. Mr. Lovett, one of our directors, has invested $0.5 million in DF Management and holds a 32.26% membership interest and a 5% carried interest therein. For Fund I investments are sourced by Mr. Butler, however, DFH LLC’s carried interest decreases to 80%.

Mr. Lovett, one of our directors, has invested $0.5 million in Fund I through his investment in DF Management and holds a 1.36% limited partnership interest in Fund I. Through its investment in DF Management, DFH LLC has invested $0.4 million in Fund I and holds a 1.09% limited partnership interest therein.\

Since Fund I became fully committed in early 2019, DF Capital has agreed to provide land bank financing for a total of ten other projects. Mr. Moran, our Senior Vice President and Chief Operations Officer, has invested $0.5 million in one of these funds managed by DF Capital and holds a 16.29% limited partnership interest therein. As of December 31, 2021, funds managed by DF Capital (other than Fund I and Fund II) controlled an additional 347 lots. During the year ended December 31, 2021, we purchased 248 of these lots for $15.6 million and the outstanding lot deposit balance in relation to these projects was $3.7 million.

DF Residential II, LP, a Delaware limited partnership (“Fund II”), launched on March 11, 2021. DF Management GP II, LLC, a Florida limited liability company (“DF Management II”), will serve as the general partner of Fund II. DF Management II has raised approximately $221.4 million capital commitments to date for Fund II and will remain open for a period of at least three, seeking to raise a total of at least $322.1 million in capital commitments. DF Capital is the investment manager of Fund II.

The Company has invested $3.0 million in Fund II as a limited partner and indirectly owns 72% of the membership interests in DF Management II and receives 72% of the economic interests. DF Management II is controlled by unaffiliated parties. The Company’s investment commitment in Fund II is of $3.0 million or 0.9% of the total expected commitment of Fund II.

As of March 16, 2022, certain directors, executive officers and other officers have made investment commitments as limited partners in Fund II in an aggregate amount of $33.9 million, or 10.5% of the total expected commitment of Fund II. The individual investments exceeding $120,000 are as follows:

~~Name~~	~~Commitment Amount ($)~~
~~Rockpoint Group, LLC~~⁽¹⁾		~~100,000,000~~
~~Patrick O. Zalupski~~		~~25,000,000~~
~~W. Radford Lovett II~~		~~5,000,000~~
~~J. Douglas Moran~~		~~500,000~~
~~L. Anabel Fernandez~~		~~175,000~~

~~(1)~~

~~Mr. Walton is the founding principal of Rockpoint Group, LLC~~

~~121~~

~~Table of Contents~~

~~Series B Loan~~

In September 2013, the Series B Investors issued a collateralized loan to us for the purposes of land acquisition and development. The loan carried monthly interest at an annual rate of 10%. In March 2020, the outstanding loan balance plus accrued interest of $4.7 million was paid in full. In connection with the loan payoff, Medley Capital Corporation released back to us reserve funds in the amount of $0.5 million.

~~Director Independence~~

In accordance with the NASDAQ listing requirements, the Board is composed of a majority of independent directors. The Board has determined that, with the exception of Messrs. Lovett and Zalupski, all members of the Board are independent. In making such determination, the Board affirmed that each of the independent directors meets the objective requirements for independence set forth by the NASDAQ listing requirements. The independent directors are Messrs. Udelhofen and Walton and Ms. Parekh. Mr. Zalupski is not independent because he serves as our President and Chief Executive Officer. Mr. Lovett is not independent because he is the managing partner of several joint ventures that the Company formed with DFH Investors, LLC (“DFH Investors”).

The independence standards included in the NASDAQ listing requirements specify the criteria by which the independence of our directors is determined, including strict guidelines for directors and their immediate family members with respect to past employment or affiliation with the Company, its management or its independent registered public accounting firm.

In evaluating and determining the independence of our directors, the Board considered that the Company may have certain relationships with its directors. Specifically, the Board considered Specifically, the Board considered, among other things, the transactions described under “Certain Relationships and Related ~~Party Transactions”.~~

Transactions, and Director Independence

The information called for by Item 13 will be set forth in the definitive proxy statement relating to the 2024 Annual Meeting of Stockholders pursuant to SEC Regulation 14A. Such definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions thereof called for by Item 13 are incorporated herein by reference pursuant to Instruction G to Form 10-K.

~~Item 14.~~

~~Principal Accountant Fees and Services.~~

Item 14. Principal Accountant Fees and Services

The ~~following table shows the fees paid or accrued~~information called for by ~~the Company for the audit and other services provided by PricewaterhouseCoopers LLP (“PwC”) for the years ended December 31, 2021 and 2020.~~

2021 2020
Audit Fees⁽¹⁾
$ 1,395,000 $ 1,970,093
Audit-Related Fees – aggregate fees for audit-related services
— —
Tax Fees⁽²⁾
225,000 199,050
All Other Fees – aggregate fees for all other services
— —
Total $ 1,615,000 $ 2,169,143

~~(1)~~	Audit Fees include the annual audit, services related to the review of quarterly financial information and registration statement filings with the SEC. The decreased audit fees in 2021 are due to one-time fees in 2020 related to the issuance of consents and comfort letters to underwriters in connection with our IPO and related filings with the SEC.
~~(2)~~	~~Tax Fees generally consist of fees for tax compliance and return preparation, and tax planning and advice.~~

~~122~~

~~Table of Contents~~

~~Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services~~

~~It is our Audit Committee’s policy to pre-approve all audit, audit-related and permissible non-audit services rendered to us by our independent registered public accounting firm. The fees~~Item 14 will be set forth in the ~~tables above were incurred prior~~definitive proxy statement relating to the ~~formation~~2024 Annual Meeting of ~~our Audit Committee~~Stockholders pursuant to SEC Regulation 14A. Such definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions thereof called for ~~services rendered~~ by ~~RSM and PwC and, therefore, were not pre-approved~~Item 14 are incorporated herein by ~~our Audit Committee.~~reference pursuant to Instruction G to Form 10-K.

The report of PwC relating to our consolidated financial statements for the years ended December 31, 2021 and 2020 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. Moreover, during the years ended December 31, 2021 and 2020, there were no (i) disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference to the subject matter of the disagreements in connection with its reports on the consolidated financial statements of the Company or (ii) reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.

~~123~~

Table of Contents

PART IV

~~ITEM 15.~~

~~EXHIBITS AND FINANCIAL STATEMENTS~~

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1)The following ~~Consolidated Financial Statements~~consolidated financial statements as set forth in Item 8 of this report are filed herein.

Dream Finders Homes, Inc.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Comprehensive Income

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

(2)~~Dream Finders Homes, Inc.~~

~~Report of Independent Registered Public Accounting Firm~~

~~Consolidated Balance Sheets~~

~~Consolidated Statements of Comprehensive Income~~

~~Consolidated Statements of Mezzanine Equity, Members’ Equity, and Stockholders’ Equity~~

~~Consolidated Statements of Cash Flows~~

~~Notes to the Consolidated Financial Statements~~

~~(2)~~ Financial Statement ~~Schedules~~

Schedules.

All schedules are omitted because the required information is not ~~present, in amounts sufficient to require submission of the schedule,~~applicable, not material, or because the required information is included in the consolidated financial statements and related notes thereto.

(3)Exhibits.

The exhibits filed or furnished as part of this Annual Report on Form 10-K are listed in the Index to Exhibits, which Index includes the management contracts or compensatory plans or arrangements required to be filed as exhibits to this Annual Report on Form 10-K by Item 601(b)(10)(iii) of Regulation S-K and is incorporated in this Item by reference.


Exhibit No.		Description
~~2.1~~2.1 +		Agreement and Plan of Merger, dated as of January 20, 2021, by and among Dream Finders Homes, Inc., Dream Finders Holdings LLC and DFH Merger Sub LLC (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).

~~2.2+~~	Membership Interest Purchase Agreement, dated as of January 29, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~2.3~~2.2		First Amendment to Membership Interest Purchase Agreement, dated as of March 17, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.2 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~2.4~~2.3		Second Amendment to Membership Interest Purchase Agreement, dated as of April 30, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.3 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~2.5~~2.4		Third Amendment to Membership Interest Purchase Agreement, dated as of June 30, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.4 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~124~~

~~Table of Contents~~

~~2.6~~2.5						Fourth Amendment to Membership Interest Purchase Agreement, dated as of August 18, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.5 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

Table of Contents


~~2.7~~2.6						Fifth Amendment to Membership Interest Purchase Agreement, dated as of August 31, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.6 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~2.8~~2.7						Sixth Amendment to Membership Interest Purchase Agreement, dated as of September 18, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.7 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~2.9~~2.8						Seventh Amendment to Membership Interest Purchase Agreement, dated as of September 22, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.8 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~2.10~~2.9						Eighth Amendment to Membership Interest Purchase Agreement, dated as of October 2, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.9 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).

~~2.11+~~2.1 0 +						Membership Interest Purchase Agreement, effective as of January 31, 2021, by and between Dream Finders Holdings LLC and Four Seventeen, LLC (incorporated herein by reference to Exhibit 2.11 to the Form 10-K of Dream Finders Homes, Inc. filed with the SEC on March 30, 2021).

~~2.12+~~2.11+						Purchase and Sale Agreement, dated as of June 17, 2021, among Dream Finders Holdings LLC, MHI Partnership, Ltd., MHI Models, Ltd., McGuyer Homebuilders, Inc., FMR IP, LLC, HomeCo Purchasing Company, Ltd., 2019 Sonoma, LLC, Frank B. McGuyer and McGuyer Interests, Ltd. (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).

~~2.13+~~2.12+						First Amendment to Purchase and Sale Agreement, dated as of August 31, 2021, among Dream Finders Holdings LLC, MHI Partnership, Ltd., MHI Models, Ltd., McGuyer Homebuilders, Inc., FMR IP, LLC, HomeCo Purchasing Company, Ltd., 2019 Sonoma, LLC, Frank B. McGuyer and McGuyer Interests, Ltd. (incorporated herein by reference to Exhibit 2.2 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).

~~2.14+~~2.13+						Second Amendment to Purchase and Sale Agreement, dated as of September 7, 2021, among Dream Finders Holdings LLC, DFH Coventry, LLC, MHI Partnership, Ltd., MHI Models, Ltd., McGuyer Homebuilders, Inc., FMR IP, LLC, HomeCo Purchasing Company, Ltd., 2019 Sonoma, LLC, Frank B. McGuyer and McGuyer Interests, Ltd. (incorporated herein by reference to Exhibit 2.3 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).

3.1						Amended and Restated Certificate of Incorporation of Dream Finders Homes, Inc. (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).

3.2						Amended and Restated Bylaws of Dream Finders Homes, Inc. (incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).

3.3						Certificate of Designations of Dream Finders Homes, Inc., dated September 29, 2021 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on October 5, 2021).

~~125~~

Table of Contents


4.1*4.1						Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of ~~1934.~~1934 (incorporated by reference hereto Exhibit 4.1 to Form 10-K filed with the SEC on March 16, 2022).

4.2						Registration Rights Agreement, dated January 25, 2021, by and among Dream Finders Homes, Inc. and certain stockholders party thereto (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).

4.3						Indenture, dated as of August 22, 2023, by and among the Company, the Guarantors and U.S. Bank Trust Company, National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on August 22, 2023).

10.1+						Amended and Restated Credit Agreement, dated as of ~~January 25, 2021,~~June 2, 2022, among Dream Finders Homes, Inc., Bank of America, N.A., as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on ~~January 25, 2021)~~June 8, 2022).

10.1 .1 +						Second Amendment to Amended and Restated Credit Agreement, dated as of July 19, 2023, among Dream Finders Homes, Inc., Bank of America, N.A., as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties thereto (incorporated herein by reference to Exhibit 10.1 to Form 10-Q (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on November 2, 2023).


10.1.2 +						Third Amendment to Amended and Restated Credit Agreement, dated as of July 19, 2023, among Dream Finders Homes, Inc., Bank of America, N.A., as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties thereto (incorporated herein by reference to Exhibit 10.2 to the Form 10-Q (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on November 2, 2023).

10.2†						Dream Finders Homes, Inc. 2021 Equity Incentive Plan. (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).

10.3†						Form of Restricted Stock Grant Notice and Restricted Stock Agreement under the 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on January 11, 2021).

10.4†						Form of Stock Option Grant Notice and Stock Option Agreement under the 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on January 14, 2021).

10.5†						Form of Director and Employee Indemnification Agreement (incorporated herein by reference to Exhibit 10.8 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on January 11, 2021).

10.6†						Amended and Restated Employment Agreement, effective as of ~~January 25, 2021,~~November 1, 2023, by and between Dream Finders Homes, Inc. and Patrick Zalupski (incorporated herein by reference to Exhibit ~~10.6~~10.3 to ~~the~~ Form ~~10-K~~10-Q (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on ~~March 30, 2021)~~November 2, 2023).

10.7†						Amended and Restated Employment Agreement, effective as of November 1, 2023, by and between Dream Finders Homes, Inc. and L. Anabel Fernandez (incorporated herein by reference to Exhibit ~~10.1~~10.3 to ~~the Current Report on~~ Form ~~8-K/A~~10-Q (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on ~~October 12, 2021)~~November 2, 2023).

10.8†						Amended and Restated Employment Agreement, effective as of ~~January 25, 2021,~~November 1, 2023, by and between Dream Finders Homes, Inc. and Douglas Moran (incorporated herein by reference to Exhibit ~~10.8~~10.3 to ~~the~~ Form ~~10-K~~10-Q (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on ~~March 30, 2021)~~November 2, 2023).

Table of Contents



10.9†		Form of Restricted Stock Grant Notice and Restricted Stock Agreement, by and between Dream Finders Homes, Inc. and Patrick Zalupski (incorporated herein by reference to Exhibit 10.12 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on January 14, 2021).

~~10.10+~~10.10		First Amendment and Commitment Increase Agreement, dated as of September 8, 2021, among Dream Finders Homes, Inc., Bank of America, N.A., as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).

~~10.11+~~	Joinder, Commitment Increase, and Reallocation Agreement, dated as of September 29, 2021, among Dream Finders Homes, Inc., Bank of America, N.A., as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on October 5, 2021).

~~126~~

~~Table of Contents~~


~~10.12~~	Registration Rights Agreement, dated September 29, 2021, by and among Dream Finders Homes, Inc. and the Purchasers listed thereto (incorporated herein by reference to Exhibit 10.210.2 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on October 5, 2021).

~~10.13~~10.11		Subscription Agreement, dated September 8, 2021, by and between Dream Finders Homes, Inc. and the Purchasers listed thereto (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).

19.1 *		Dream Finders Homes, Inc. Insider Trading Policy

21.1*		List of Subsidiaries of Dream Finders Homes, Inc.

23.1*		Consent of Independent Registered Public Accounting Firm

23.231.1		~~Preferability Letter of Independent Registered Public Accounting Firm~~

31.1*	CEO Certification, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		CFO Certification, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97.1 *		Dream Finders Homes, Inc. Compensation Recovery Policy

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Filed or furnished herewith.

*	~~Filed herewith.~~

†	~~Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.~~

+	Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

† Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.

Table of Contents

+ Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

~~ITEM 16.~~

ITEM 16. FORM 10-K SUMMARY

None.

~~127~~

Table of Contents

SIGNATURES

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


		Dream Finders Homes, Inc.

Date:	~~March 16, 2022~~February 29, 2024	/s/ Patrick O. Zalupski
		Patrick O. Zalupski
		President, Chief Executive Officer and Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

~~Title~~

Date

/s/ Patrick O. Zalupski

President, Chief Executive Officer and Chairman of the Board of Directors

~~March 16, 2022~~February 29, 2024

Patrick O. Zalupski

(Principal Executive Officer)

/s/ L. Anabel Fernandez

~~Vice President, Treasurer and Interim Chief Financial Officer~~

~~March 16, 2022~~

~~L. Anabel Fernandez~~

~~(Principal Financial Officer)~~

~~/s/ John O. Blanton~~

Senior Vice President and Chief ~~Accounting~~Financial Officer

~~March 16, 2022~~February 29, 2024

~~John O. Blanton~~L. Anabel Fernandez

(Principal Financial and Accounting Officer)

/s/ W. Radford Lovett II

Director

February 29, 2024

W. Radford Lovett II

~~/s/ Radford Lovett~~

~~Director~~

~~March 16, 2022~~

~~Radford Lovett~~

/s/ Megha H. Parekh

Director

~~Director~~

~~March 16, 2022~~February 29, 2024

Megha H. Parekh

/s/ Leonard M. Sturm

Director

February 29, 2024

Leonard M. Sturm

/s/ Justin W. Udelhofen

Director

~~Director~~

~~March 16, 2022~~February 29, 2024

Justin W. Udelhofen

/s/ William ~~H. Walton, III~~W. Weatherford

Director

~~Director~~

~~March 16, 2022~~February 29, 2024

William ~~H. Walton, III~~W. Weatherford

~~128~~


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


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	~~DFH~~	~~NASDAQ~~ ~~Global Select Market~~New York Stock Exchange


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


				Page
PART I
Item 1.			Business	1
Item 1.1A.			~~Business~~	1
~~Item 1A.~~	Risk Factors	15 10
Item 1B.			Unresolved Staff Comments	39 35
Item 2.1C.			~~Properties~~Cybersecurity	39 34
Item 2.			Properties	36
Item 3.			Legal Proceedings	39 37
Item 4.			Mine Safety Disclosures	40 37
PART II
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	40 38
Item 6.			Reserved	41 39
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	41 39
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk	61 54
Item 8.			Financial Statements and Supplementary Data	63 56
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	97 82
Item 9A.			Controls and Procedures	97 82
Item 9B.			Other Information	98 83
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent ~~Inspections.~~Inspections	98 83
PART III
Item 10.			Directors, Executive Officers and Corporate Governance	99 84
Item 11.			Executive Compensation	~~105~~ 84
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~117~~ 84
Item 13.			Certain Relationships and Related Transactions, and Director Independence	~~120~~ 84
Item 14.			Principal Accounting Fees and Services	~~122~~ 84
PART IV
Item 15.			Exhibits and Financial Statement Schedules	~~124~~ 85
Item 16.			Form 10-K Summary	~~127~~ 89

SIGNATURES				~~128~~ 90


Report of Independent Registered Public Accounting Firm (PCAOB ID: 238))		64 57

~~Consolidated Financial Statements~~

Consolidated Balance Sheets	66 59

Consolidated Statements of Comprehensive Income		67 60

Consolidated Statements of ~~Mezzanine~~ Equity ~~Members’ Equity and Stockholders’ Equity~~		68 61

Consolidated Statements of Cash Flows		69 62

Notes to Consolidated Financial Statements		~~70-96~~ 64-81

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

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


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


(904) 644-7670
(~~Registrant~~’sRegistrant’s Telephone Number, Including Area Code)

	As of December 31,
	2021						2020
Segment	Owned		Controlled		Total		Owned		Controlled		Total
Jacksonville		774		10,311		11,085		715		4,445		5,160
Colorado		152		4,883		5,035		106		4,145		4,251
Orlando		537		5,487		6,024		256		2,504		2,760
DC Metro		97		1,680		1,777		77		566		643
The Carolinas		1,452		5,196		6,648		1,348		4,107		5,455
Texas		1,569		6,304		7,873		-		-		-
Other⁽¹⁾		764		4,634		5,398		629		3,509		4,138
Grand Total		5,345		38,495		43,840		3,131		19,276		22,407

	% of Owned Real Estate Inventory
	As of December 31, 2021			As of December 31, 2020
Construction in process and finished homes ⁽¹⁾		92.0	%		88.8	%
Finished lots and land under development⁽²⁾		8.0	%		11.2	%
Total		100	%		100	%

			Year Ended December 31,										Period Over Period
	2021⁽²⁾						2020⁽³⁾						Percent Change
Segment	Sales		Starts		Closings		Sales		Starts		Closings		Sales			Starts			Closings
Jacksonville		1,933		1,448		1,237		1,712		1,418		1,395		12.9	%		2.1	%		-11.3	%
Colorado		296		313		230		277		254		269		6.9	%		23.2	%		-14.5	%
Orlando		1,101		614		604		508		471		355		116.7	%		30.4	%		70.1	%
DC Metro		104		135		140		228		195		232		-54.4	%		-30.8	%		-39.7	%
The Carolinas		1,859		1,751		1,233		379		318		312		390.5	%		450.6	%		295.2	%
Texas		579		512		689		-		-		-		-			-			-
Other⁽¹⁾		936		998		741		1,082		757		591		-13.5	%		31.8	%		25.4	%
Grand Total		6,808		5,771		4,874		4,186		3,413		3,154		62.6	%		69.1	%		54.5	%


Name	Age	Position
Patrick O. Zalupski	43	President, Chief Executive Officer and Chairman of the Board of Directors
Doug Moran	52	Senior Vice President and Chief Operations Officer
L. Anabel Fernandez	42	Senior Vice President and Chief Financial Officer


	Year Ended December 31, 2023			As of December 31, 2023
Segment	Home Closings	ASP		Active Communities
Southeast	3,170	$	470,405	57
Mid-Atlantic	1,597	396,462		44
Midwest	2,547	618,306		120
Total	7,314	$	505,764	221


	Year Ended December 31, 2022			As of December 31, 2022
Segment	Home Closings	ASP		Active Communities
Southeast	2,722	$	439,150	57
Mid-Atlantic	1,562	358,548		37
Midwest	2,594	580,865		112
Total	6,878	$	474,292	206

	Year Ended December 31,
	2020			2019			Amount Change			% Change
Revenues	$	1,133,806,607		$	744,292,323		$	389,514,284			52.3	%
Cost of sales		962,927,606			641,340,496			321,587,110			50.1	%
Selling, general and administrative expense		90,359,182			63,572,811			26,786,371			42.1	%
Income from equity in earnings of unconsolidated entities		(7,991,764	)		(2,208,182	)		(5,783,582	)		261.9	%
Gain on sale of assets		(117,840	)		(28,652	)		(89,188	)		311.3	%
Other Income
Other		(1,321,741	)		(2,447,879	)		1,126,138			-46.0	%
Paycheck Protection Program forgiveness		-			-			-			0.0	%
Other Expense
Other		3,188,183			2,888,526			299,657			10.4	%
Contingent consideration revaluation		1,378,686			(3,944,030	)		5,322,716			386.1	%
Interest expense		870,868			221,449			649,419			293.3	%
Income tax expense		-			-			-			0.0	%
Net and comprehensive income	$	84,513,427		$	44,897,784			39,615,643			46.9	%
Net and comprehensive income attributable to non-controlling interests		(5,419,972	)		(5,706,518	)		286,546			-5.0	%
Net and comprehensive income attributable to Dream Finders Homes, Inc.	$	79,093,455		$	39,191,266		$	39,902,189			50.4	%

Earnings per share
Basic	$	-		$	-		$	-			0.0	%
Diluted	$	-		$	-		$	-			0.0	%
Weighted-average number of shares
Basic		-			-			-			0.0	%
Diluted		-			-			-			0.0	%
Consolidated Balance Sheets Data (at period end):
Cash and cash equivalents	$	43,657,779		$	50,597,392		$	(6,939,613	)		-13.7	%
Total assets	$	733,680,241		$	514,919,450		$	218,760,791			42.5	%
Long-term debt, net	$	319,531,998		$	232,013,468		$	87,518,530			37.7	%
Finance lease liabilities	$	345,062		$	498,691		$	(153,629	)		-30.8	%
Preferred mezzanine equity	$	55,638,450		$	58,269,166		$	(2,630,716	)		-4.5	%
Common mezzanine equity	$	20,593,001		$	16,248,246		$	4,344,755			26.7	%
Common members' equity	$	103,852,646		$	56,502,464		$	47,350,182			83.8	%
Non-controlling interests	$	31,939,117		$	30,471,371		$	1,467,746			4.8	%
Other Financial and Operating Data (unaudited)
Active communities at end of period⁽¹⁾		126			85			41			48.2	%
Home closings		3,154			2,048			1,106			54.0	%
Average sales price of closed homes⁽²⁾	$	357,633		$	362,728		$	(5,095	)		-1.4	%
Net new orders		4,186			2,139			2,047			95.7	%
Cancellation rate		12.8	%		15.6	%		-2.8	%		-17.9	%
Backlog (at period end) - homes		2,424			854			1,570			183.8	%
Backlog (at period end, in thousands) - value	$	865,109		$	334,783		$	530,326			158.4	%
Gross margin (in thousands)⁽³⁾	$	165,048		$	98,405		$	66,643			67.7	%
Gross margin %⁽⁴⁾		14.6	%		13.3	%		1.3	%		10.0	%
Adjusted gross margin (in thousands)⁽⁵⁾	$	252,695		$	156,344		$	96,351			61.6	%
Adjusted gross margin %⁽³⁾		22.5	%		21.1	%		1.4	%		6.6	%
EBITDA (in thousands)⁽⁵⁾	$	120,885		$	70,522		$	50,363			71.4	%
EBITDA margin %⁽⁵⁾⁽⁶⁾		10.7	%		9.5	%		1.2	%		12.6	%
Adjusted EBITDA (in thousands) ⁽⁵⁾	$	121,832		$	71,417		$	50,415			70.6	%
Adjusted EBITDA margin ⁽⁵⁾⁽⁶⁾		10.7	%		9.6	%		1.1	%		11.5	%


	December 31, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	494,145	$	364,531
Restricted cash	54,311		30,599
Accounts receivable	30,874		43,490
Inventories	1,440,249		1,378,185
Lot deposits	247,207		277,258
Other assets	80,759		59,438
Investments in unconsolidated entities	15,364		14,008
Property and equipment, net	7,043		7,337
Right-of-use assets	20,280		24,084
Goodwill	172,207		172,207
Total assets	$	2,562,439	$	2,371,137

Liabilities
Accounts payable	$	134,115	$	134,702
Accrued expenses	207,389		184,051
Customer deposits	172,574		145,654
Construction lines of credit	530,384		966,248
Senior unsecured notes, net	293,918		—
Lease liabilities	21,114		24,661
Contingent consideration	116,795		115,128
Total liabilities	1,476,289		1,570,444
Commitments and contingencies (Note 5)
Mezzanine Equity
Preferred mezzanine equity	148,500		156,045
Stockholders’ Equity
Class A common stock, $0.01 per share, 289,000,000 authorized, 32,882,124 and 32,533,883 outstanding as of December 31, 2023 and December 31, 2022, respectively	329		325
Class B common stock, $0.01 per share, 61,000,000 authorized, 60,226,153 outstanding	602		602
Additional paid-in capital	275,241		264,757
Retained earnings	648,412		365,994
Noncontrolling interests	13,066		12,970
Total mezzanine and stockholders’ equity	1,086,150		800,693
Total liabilities, mezzanine equity and stockholders’ equity	$	2,562,439	$	2,371,137

	Twelve Months Ended December 31,
	2021			2020			2019

Revenues	$	1,923,909,806		$	1,133,806,607		$	744,292,323
Cost of sales		1,610,331,738			962,927,606			641,340,496
Selling, general and administrative expense		154,404,500			90,359,182			63,572,811
Income from equity in earnings of unconsolidated entities		(9,427,868	)		(7,991,764	)		(2,208,182	)
Gain on sale of assets		(87,023	)		(117,840	)		(28,652	)
Loss on extinguishment of debt		711,485			0			0
Other Income
Other		(7,827,391	)		(1,321,741	)		(2,447,879	)
Paycheck Protection Program forgiveness		(7,219,794	)		0			0
Other Expense
Other		12,770,697			3,188,183			2,888,526
Contingent consideration revaluation		7,532,830			1,378,686			(3,944,030	)
Interest expense		672,172			870,868			221,449
Income before taxes		162,048,460			84,513,427			44,897,784
Income tax expense		(27,454,642	)		0			0
Net and comprehensive income	$	134,593,818		$	84,513,427		$	44,897,784
Net and comprehensive income attributable to non-controlling interests		(13,461,317	)		(5,419,972	)		(5,706,518	)
Net and comprehensive income attributable to Dream Finders Homes, Inc.	$	121,132,501		$	79,093,455		$	39,191,266
Earnings per share⁽¹⁾
Basic	$	1.27		$	0		$	0
Diluted	$	1.27		$	0		$	0
Weighted-average number of shares
Basic		92,521,482			0			0
Diluted		95,313,593			0			0


Asset Class						Useful Life Years
Furniture and fixtures						2-7
Office equipment						4
Software						1-4
Vehicles						5
Buildings						39

As of and for the year ended December 31, 2021:	Under previous accounting principle		Under current accounting principle		Effect of change
Cash and cash equivalents	$	190,277,511	$	227,227,020	$	36,949,509
Accounts receivable		70,431,850		33,482,341		(36,949,509	)
Net cash provided by operating activities	$	36,321,664	$	65,108,989	$	28,787,325

As of and for the year ended December 31, 2020:	As previously reported		As adjusted		Effect of change
Cash and cash equivalents	$	35,495,595	$	43,657,779	$	8,162,184
Other assets		43,189,939		35,027,755	$	(8,162,184	)
Net cash provided by operating activities	$	95,339,347	$	96,911,384	$	1,572,037

For the year ended December 31, 2019:		As previously reported				As adjusted				Effect of change
Net cash provided by operating activities		$	23,838,602			$	30,428,749			$	6,590,147

	As Originally Reported			Measurement period adjustments ⁽¹⁾			Acquired Value

Cash acquired	$	10,956,359						10,956,359
Other assets		8,255,301			680,748			8,936,049
Tradename		2,660,000						2,660,000
Goodwill		16,357,450			495,564			16,853,014
Inventories		143,817,075			(1,176,312	)		142,640,763
Construction lines of credit		(116,894,907	)					(116,894,907	)
Other liabilities		(21,054,830	)					(21,054,830	)
Total purchase price	$	44,096,448			0			44,096,448

Cash acquired	$	3,993,396
Other assets		754,879
Goodwill		1,794,765
Inventories		34,324,050
Property and equipment, net		548,552
Liabilities		(5,831,266	)
Total purchase price	$	35,584,376

Cash consideration	$	488,177,838
Contingent consideration based on future earnings		94,572,694
Total consideration	$	582,750,532

Cash acquired	$	296,740
Other assets		14,722,191
Lot deposits		40,451,993
Inventories		473,037,286
Equity method investments		6,192,088
Intangible assets, net of amortization		8,840,000
Goodwill		141,070,730
Property and equipment, net		3,163,143
Operating lease right-of-use assets		1,507,792
Accounts payable		(41,466,363	)
Accrued expenses		(25,801,750	)
Customer deposits		(37,755,526	)
Operating lease liabilities		(1,507,792	)
Total purchase price	$	582,750,532

	For the Year Ended December 31,
Unaudited Pro Forma	2021		2020
Total revenue	$	2,432,947,396	$	2,291,993,087
Net and comprehensive income attributable to Dream Finders Homes, Inc.	$	151,161,683	$	128,102,223

	For the Years Ended December 31,
	2021			2020
Furniture and fixtures	$	17,755,490		$	13,705,844
Buildings		401,290			0
Land		215,962			0
Vehicles		21,093			21,093
Office equipment and software		4,384,212			3,620,154
Total property and equipment		22,778,047			17,347,091
Less: Accumulated depreciation		(15,989,042	)		(13,038,020	)
Property and equipment, net	$	6,789,005		$	4,309,071

		As of December 31,
Maturity Date	Payment Terms	2021		2021 Effective Rate			2020		2020 Effective Rate
May 1, 2021	Interest is payable monthly at 14.00%	$	0		0.00	%	$	20,000,000		14.00	%
February 28, 2022	Non-interest bearing		1,312,000		0.00	%		832,000		0.00	%
April 1, 2022	Interest is payable monthly at 12.50%		0		0.00	%		1,735,161		12.50	%
July 31, 2022	Interest is payable monthly at 9.25%		1,979,389		9.25	%		3,984,174		9.25	%
March 25, 2023	Interest is payable monthly at 5.00%		0		0.00	%		3,101,947		5.00	%
Total notes payable		$	3,291,389				$	29,653,282

Maturity of Notes Payable
2022	$	3,291,389
2023		0
2024		0
2025		0
2026		0
Thereafter		0
Total	$	3,291,389

Maturity of Lease Liabilities	Operating Leases⁽¹⁾		Finance Leases⁽¹⁾		Total⁽¹⁾
2022	$	4,271,598	$	111,880	$	4,383,478
2023		3,679,385		35,310		3,714,695
2024		3,049,009		0		3,049,009
2025		2,853,355		0		2,853,355
2026		2,617,537		0		2,617,537
Thereafter		8,648,723		0		8,648,723
Total lease payments	$	25,119,607	$	147,190	$	25,266,797
Less: Interest		5,293,374		7,609
Present value of lease liabilities	$	19,826,233	$	139,581

	Shares			Weighted Average Grant Date Fair Value
Outstanding - December 31, 2020		0		$	0
Granted		762,945			17,647,585
Forfeited		(41,347	)		(957,231	)
Vested		0			0
Outstanding - December 31, 2021		721,598		$	16,690,354

	For the Years Ended December 31,
Net and comprehensive income:	2021			2020			2019
Jacksonville	$	55,577,768		$	41,380,258		$	26,358,703
Colorado		3,970,961			14,051,978			10,424,803
Orlando		15,936,707			10,679,556			3,732,935
DC Metro		5,545,937			5,142,556			(2,709,651	)
The Carolinas		14,623,398			6,033,844			0
Texas		21,797,018			0			0
Jet Home Loans		10,630,401			15,921,440			4,506,242
Other ⁽¹⁾		13,132,496			(766,529	)		4,882,812
Total segment net and comprehensive income		141,214,686			92,443,103			47,195,844

Reconciling items from equity method investments		(6,620,868	)		(7,929,676	)		(2,298,060	)

Consolidated net and comprehensive income	$	134,593,818		$	84,513,427		$	44,897,784

	2021
Current expense:
Federal	$	26,336,096
State		5,087,506
Total current expense	$	31,423,602
Deferred expense:
Federal	$	(3,304,766	)
State		(664,194	)
Total deferred (benefit)	$	(3,968,960	)
Total income tax expense	$	27,454,642

	~~2021~~
~~Income taxes at federal statutory rate~~		~~21.0~~	%
~~State and local income taxes, net of federal tax~~		~~2.4~~
~~Federal tax credits~~		~~(5.9~~	)
~~Non-deductible executive compensation~~		~~0.8~~
~~Other~~		~~0.2~~
~~Effective rate~~		~~18.5~~	%