Dream Finders Homes, Inc.

Current report

We may not be able to successfully integrate Beazer’s operations or may experience challenges in realizing the expected benefits of such acquisition.

Current report

We paid a material amount to acquire Beazer and we may not be able to successfully integrate Beazer’s business into our operations and may not achieve the synergies we expected from the acquisition. The integration of Beazer will divert management’s time and resources from our core business and likely disrupt our operations. We may also be unsuccessful in realizing expected synergies and cost savings, resulting in lower than expected benefits to us from such transaction. We may become responsible for additional liabilities or obligations not foreseen. The acquisition also materially increased our level of indebtedness, as discussed below. All of the above risks could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.

Current report

We have a significant amount of debt that may limit our future operations and adversely impact our financial condition.

Current report

Following the acquisition of Beazer, we have substantial debt and interest payment obligations that may restrict our future operations and impair our ability to meet our obligations. Our outstanding indebtedness could adversely affect our financial condition. Our outstanding indebtedness could also increase our vulnerability to adverse general economic and industry conditions; require us to dedicate a substantial portion of our cash flows from operating activities to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, capital expenditures, potential acquisitions, lot deposits on future land acquisition and other general corporate purposes; limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; place us at a competitive disadvantage compared to our competitors that have less debt; and limit our ability to borrow additional funds on terms that are satisfactory to us or at all.

Current report

Our ability to generate sufficient cash flows from operating activities to make scheduled payments on our debt obligations will depend on our future financial performance, which will be affected by a range of economic, competitive, regulatory, legislative and business factors, many of which are outside of our control. If we do not generate sufficient cash flows from operating activities to satisfy our debt obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any refinancing would be possible or that any assets could be sold on acceptable terms or otherwise. Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have a material adverse effect on our business, financial condition and results of operations. In addition, any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

Current report

Certain rights of the holders of the Series B preferred stock could require us to redeem the Series B preferred stock for cash, cause the conversion of the Series B preferred stock into shares of our Class A common stock, or could prevent a change of control.

Current report

Subsequent to the sixth anniversary of its issuance (or earlier in the event of our non-compliance with a protective covenant), a holder can convert the Series B preferred stock into shares of Class A common stock at a conversion price that will be based on the average of the last reported sales price of the Company’s Class A common stock for the ninety trading days immediately preceding but not including the date of the conversion, less 20% of the aforementioned average (increasing to 25% in the event of non-compliance with a protective covenant) and subject to a floor conversion price of $4.19. Although we intend to call the shares of the Series B preferred stock for redemption prior to their conversion, in the event the shares of the Series B preferred stock are converted into shares of Class A common stock, such issuance will cause substantial dilution to the holders of our Class A common stock.

Current report

In addition, upon the occurrence of a Fundamental Change (as defined in the Certificate of Designations for the Series B preferred stock, which includes, among other events, a change of control, sale of substantially all assets, or Patrick Zalupski ceasing to beneficially own at least 50.0% of both the voting power and economic interest of the Company), each holder of Series B preferred stock will have the right to (i) convert all or any portion of such holder’s Series B preferred stock into Class A common stock at a conversion price equal to the volume-weighted average price of the Class A common stock for the 30 trading days beginning on, and including, September 14, 2026, and/or (ii) require the Company to redeem all or any portion of such holder’s Series B preferred stock for an amount in cash equal to the greater of the as-converted value and the liquidation preference, plus (a) accumulated and unpaid dividends and (b) if and only if the Fundamental Change Redemption Date (as defined in the Certificate of Designations for the Series B preferred stock) occurs on or prior to September 14, 2029, an amount equal to the regular dividends that would have accumulated on such share of Series B preferred stock from and after the date of the Fundamental Change and through September 14, 2029.

Current report

The redemption amount under the Fundamental Change provision of the Series B preferred stock could make it more expensive for a third party to acquire us.

Current report

In addition, in the event we are required to redeem the Series B preferred stock upon a Fundamental Change or otherwise, we may have to seek additional capital to fund such redemption, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any refinancing would be possible or that any assets could be sold on acceptable terms or otherwise that would be sufficient to fund such redemption. Any requirement to redeem the Series B preferred stock could have a material adverse impact on our results of operations, liquidity and financial position.