Forward-Looking Statements and Associated Risks.
This Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate," or "continue," or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
Based on our financial history since inception, our auditor has expressed
substantial doubt as to our ability to continue as a going concern in their
auditors' report on our
Plan of Operation
We intend to be engaged in the real estate and land development business in
On
RRDFPLLLP and DDH respectively own seventy-five percent (75%) and twenty-five
percent (25%) of the membership interest of Summit ("Interest") and both of
these parties sold their entire Interest or a total of one hundred percent
(100%) of the Interest of Summit to
The purchase price is equal to
The Closing date shall be 30 days from the date of the Purchase Agreement
(unless extended by mutual agreement), title will be provided free and clear
with exception of debt assumption and the Note and a special warranty deed is
agreed upon by the Parties. Closing of the transaction is formally pending audit
of Summit, but
Simultaneously with the execution of the Purchase Agreement,
The Parties also agree that as consideration for services provided within the
normal course of business since 2019 or initial acquisition of the Subject
Property by Summit, a development fee is due and payable to
15 Table of Contents
perform on the terms and provisions of the Note. The agreement with WGT becomes effective upon the Closing date of the Purchase Agreement.
We intend to develop a portfolio of development opportunities in various stages
along with opportunistic acquisitions and partnerships in our core-markets. We
operate solely under
ºEarly-Stage Land Development ºIn-fill Development of Single-Family Attached and Multi-Family Product ºOpportunistic Joint-Ventures , Partnerships, and Lending Organizational Structure Stratus Capital Corporation Organizational Structure LAND DEVELOPMENT COMMERCIAL, RESIDENTIAL & JOINT-VENTURES, MIXED-USE DEVELOPMENT PARTNERSHIPS AND LENDING ENTITLEMENT SINGLE & MULTI FAMILY INFILL JOINT-VENTURES PRODUCT ASSET REPOSITIONING SENIOR HOUSING STRATEGIC PARTNERSHIPS DEVELOPMENT CONSTRUCTION SERVICES STRATEGIC LENDING Current Projects
NOTE: We reserve the right to add or delete real estate projects or substitute projects in the event that the economics, timing or financing of one or more of the projects, proves to be infeasible under the circumstances. Management will have sole discretion in making those judgments.
Our procedure for contracting for projects:
The identified projects are sought and generated by
Accordingly, there are no contracts for real estate or development under which
the Company is obligated in any way to participate or incur any costs, at this
time.
Project Criteria:
The Company cannot predict or project any profits on any project as it has no history of development. Our project consideration criteria involve three primary elements:
1. Market projections during construction and product marketing period for the project locale.
2. Targeted yield of 24+% on cash cost-there is no assurance that this can be attained-it is a project qualification criteria.
3. Timely availability of financing for the project costs-equity, bank funding, or a combination, in many instances.
16 Table of Contents
Of course, there are many other subordinate considerations such as zoning, utilities, product selection and design, environmental, marketing strategies, that are somewhat variable to individual projects, and cannot be uniformly predicted, or estimated.
We are seeking funding through a Regulation A offering currently filed with the
Summary of current development projects under consideration:
Business Strategy Our long-term strategy:
• Pursuing opportunities within our core markets;
• Developing high-quality relationships with our asset partners;
• Maintaining a cost-efficient culture; and
• Appropriately balancing risk and opportunity.
We are committed to improving the communities we work within and enhancing the lifestyle of our neighborhoods. Delivering on this involves thoughtful planning to accommodate the needs of our various customers, homeowners and the surrounding community. We engage unaffiliated civil and architectural firms to develop and augment existing plans in order to ensure that our developments reflect current market updates to complement our surrounding communities.
We intend to acquire our assets in core locations where we can target maximizing long-term shareholder value and operate our business to capitalize on market appreciation and mitigate risks from economic downturns as we recognize the cyclical nature of the national real estate market. We intend to regularly assess our capital allocation strategy to drive shareholder return. We also take advantage of joint venture opportunities, partnerships and lending opportunities as they arise in order to secure asset allocations to share risk and maximize returns.
We intend to execute this strategy by:
• Increasing our existing land supply through expanding market presence;
• Combining land acquisition and development expertise with development operations;
• Maintaining an efficient capital structure;
• Selectively investing in joint-ventures, partnerships and lending opportunities; and
• Employing and retaining a highly experienced management team with a strong operating track record.
Land and Development Strategies
Community development includes the acquisition and development of communities, which may include obtaining significant planning and entitlement approvals and completing construction of off-site and on-site utilities and infrastructure. We intend to generally operate as small community developers, but in some communities, we operate solely as merchant builders, in which case, we acquire fully planned and entitled lots and may construct on-site improvements or in-fill opportunities.
In order to maximize our expected risk-adjusted return, the allocation of capital for land investment is performed in the discretion of our management (2 persons) at the corporate level with a disciplined approach to overall portfolio management. Macro and micro indices, including but not limited to employment, housing starts, new home sales, re-sales and foreclosures, along with market related shifts in competition, land availability and consumer preferences, are carefully analyzed to determine our land and homebuilding strategy. Our
17 Table of Contents
long-term plan is compared on an ongoing basis to current conditions in the marketplace as they evolve and is adjusted to the extent necessary.
Community Integration
We intend to complement each community or neighborhood and governing municipality we interact with, beginning with an overall community master plan and then determining the specific asset opportunity to maximize returns for our shareholders and the stakeholders of the area. After necessary governmental and other approvals have been obtained, we intend to improve the assets as planned.
The life cycle of an asset generally ranges from two to five years, commencing with the acquisition or investment in the asset and continuing through the development phase, concluding with the sale, construction or delivery of product types. The actual life cycle will vary based on the asset type, the development cycle and the general market conditions.
Sources and Availability of Raw Materials
When we commence our business plan of development, based on local market practices, we either directly, or indirectly through our subcontractors, intend to purchase drywall, cement, steel, lumber, insulation and the other building materials necessary to construct the various residential product asset classes we develop. While these materials are generally widely available from a variety of sources, from time to time we may experience material shortages on a localized basis which can substantially increase the price for such materials and our construction process can be slowed. We have multiple sources for the materials we intend to purchase, which will decrease the likelihood that we would experience significant delays due to unavailability of necessary materials.
Trades and Labor
Our construction, land and purchasing teams will coordinate subcontracting services and supervise all aspects of construction work and quality control. We intend to act as a general contractor for residential projects.
Subcontractors perform construction and land development scopes of work, generally under fixed-price contracts. The availability of labor, specifically as it relates to qualified tradespeople, at reasonable prices can be challenging in some markets as the supply chain responds to uneven industry growth and other economic factors that affect the number of people in the workforce.
Procurement and Construction
We plan to have a comprehensive procurement program that leverages our size and regional presence to achieve efficiencies and cost savings. Our procurement objective is to maximize cost and process efficiencies to ensure consistent utilization of established contractual arrangements.
Sales and Marketing
Our marketing program will be built out utilizing a balanced approach of corporate support and local expertise to attract potential lot buyers or homebuyers in a focused, efficient and cost-effective manner. Our sales and marketing teams will provide a generalized marketing framework across our regional operations. We hope to maintain product and price level differentiation through market and customer research to meet the need of our homebuilders and homebuyers.
The central element of our marketing platform is our web presence at www.StratusCap.com. The main purpose of this website is to connect with potential customers.
Competition
The land development and homebuilding business is highly competitive and fragmented. We compete with numerous national and local competitors of varying sizes, most of which have greater sales and financial resources than us. We compete primarily on the basis of location, lot availability, product design, quality, service, price and reputation.
In order to maximize our sales volumes, profitability and product strategy, we strive to understand our competition and their pricing, product and sales volume strategies and results. Competition among residential land developers and homebuilders of all sizes is based on a number of interrelated factors, including location, lot sizes, reputation, amenities, floor plans, design, quality and price.
18 Table of Contents
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED
We are a publicly are a quoted real estate development company seeking to develop or redevelop residential, commercial or mixed-use properties
Revenue
We recognized no revenue during the three-month periods ended
General and Administrative Expenses
During the three months ended
Operating Loss
During the three months ended
Other Income (Expenses)
During the three months ended
Loss before Income Tax
During the three months ended
Provision for Income Tax
No provision for income taxes was recorded during the three months ended
Net Loss
During the three months ended
© Edgar Online, source