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Item 9A. Controls and Procedures

2024-02-29 compared with 2023-03-02 · 56 added, 48 removed, 169 unchanged (38% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer (“CEO”) and 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) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2022.

Based upon that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of December 31, 2022.

Remediation of Previously Reported Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As previously reported, we did not document the design or operation of 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 controls over 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.

Since identifying these material weaknesses, we have implemented a remediation plan and completed the design, implementation and operating effectiveness testing to address the underlying causes of each material weakness.

Our efforts have included the following:

• Developed and implemented formal policies specific to corporate governance and accounting.

• Developed and implemented formal policies for IT general controls;

executed IT controls focused training;

and designed and implemented controls within user access, program change management, computer operations and program development domains.

• 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.

• 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.

• Designed and implemented controls to address the entity level and financial reporting risks identified.

• Implemented a formal testing program to evaluate the design and operating effectiveness of key internal controls.

As of December 31, 2022, the remediation plan has been fully designed, implemented and tested, and we have concluded that our controls have been operating effectively for a sufficient period of time.

As such, management concluded that the material weaknesses have been remediated.

Under the supervision and with the participation of our Chief Executive Officer (“CEO”) and 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, 2023 .

Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures as of December 31, 2023 were effective 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 Company’s management, including the CEO and CFO, in such a manner as 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 and Chief Financial Officer, 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.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework 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.

1 unchanged sentence

Based on our evaluation under the framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2023 .

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been audited by PwC, an independent registered public accounting firm, as stated in its report that appears in this Annual Report on Form 10-K.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLC, an independent registered public accounting firm, as stated in its report that appears in this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

1 unchanged sentence

OTHER INFORMATION

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

Directors and Executive Officers.

Our directors and executive officers may purchase or sell shares of our common stock in the market from time to time, including pursuant to equity trading plans adopted in accordance with Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and in compliance with guidelines specified by the Company.

In accordance with Rule 10b5-1 and the Company’s insider trading policy (which is attached as Exhibit 19.1), directors, officers and certain employees who, at 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 dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s 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 or executive officer when entering into the plan, without further direction from them.

None of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b6-1 trading arrangement during the three months ended December 31, 2023.

On November 11, 2023, the Company 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 its 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 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 May 5, 2024 and includes an aggregate amount of $25 million of Class A common stock.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

4 unchanged sentences

Such definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions thereof called for by Item 10 are incorporated herein by reference pursuant to Instruction G to Form 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 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.

Executive Compensation

10 unchanged sentences

Such definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions thereof called for by Item 14 are incorporated herein by reference pursuant to Instruction G to Form 10-K.

EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1) The following consolidated financial statements as set forth in Item 8 of this report are filed herein.

7 unchanged sentences

(2) Financial Statement Schedules.

All schedules are omitted because the required information is not present, in amounts sufficient to require submission of the schedule, or because the required information is included in the financial statements and related notes thereto.

All schedules are omitted because the required information is not 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.

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).

Membership Interest Purchase Agreement, dated as of January 29, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc.

67 unchanged sentences

filed with the SEC on January 25, 2021).

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).

Amended and Restated Credit Agreement, dated as of 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.

1 unchanged sentence

filed with the SEC on June 8, 2022).

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).

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).

Dream Finders Homes, Inc.

12 unchanged sentences

filed with the SEC on January 11, 2021).

Employment Agreement, effective as of January 25, 2021, by and between Dream Finders Homes, Inc.

and Patrick Zalupski (incorporated herein by reference to Exhibit 10.6 to the Form 10-K of Dream Finders Homes, Inc.

filed with the SEC on March 30, 2021).

Employment Agreement between Dream Finders Homes, Inc.

Anabel Fernandez (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K/A (File No.

Amended and Restated Employment Agreement, effective as of November 1, 2023, by and between Dream Finders Homes, Inc.

and Patrick Zalupski (incorporated herein by reference to Exhibit 10.3 to Form 10-Q (File No.

001-39916) of Dream Finders Homes, Inc.

filed with the SEC on October 12, 2021).

Employment Agreement, effective as of January 25, 2021, by and between Dream Finders Homes, Inc.

and Douglas Moran (incorporated herein by reference to Exhibit 10.8 to the Form 10-K of Dream Finders Homes, Inc.

filed with the SEC on March 30, 2021).

filed with the SEC on November 2, 2023).

Amended and Restated Employment Agreement, effective as of November 1, 2023, by and between Dream Finders Homes, Inc.

Anabel Fernandez (incorporated herein by reference to Exhibit 10.3 to Form 10-Q (File No.

001-39916) of Dream Finders Homes, Inc.

filed with the SEC on November 2, 2023).

Amended and Restated Employment Agreement, effective as of November 1, 2023, by and between Dream Finders Homes, Inc.

and Douglas Moran (incorporated herein by reference to Exhibit 10.3 to Form 10-Q (File No.

001-39916) of Dream Finders Homes, Inc.

filed with the SEC on November 2, 2023).

Form of Restricted Stock Grant Notice and Restricted Stock Agreement, by and between Dream Finders Homes, Inc.

10 unchanged sentences

filed with the SEC on September 13, 2021).

Dream Finders Homes, Inc.

Insider Trading Policy

List of Subsidiaries of Dream Finders Homes, Inc.

6 unchanged sentences

Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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).

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104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Filed herewith.

* Filed or furnished herewith.

† Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.

4 unchanged sentences

Dream Finders Homes, Inc.

March 2, 2023 /s/ Patrick O.

February 29, 2024 /s/ Patrick O.

President, Chief Executive Officer and Chairman of the Board of Directors

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/s/ Patrick O.

Zalupski President, Chief Executive Officer and Chairman of the Board of Directors March 2, 2023

Zalupski President, Chief Executive Officer and Chairman of the Board of Directors February 29, 2024

Zalupski (Principal Executive Officer)

Anabel Fernandez Senior Vice President and Chief Financial Officer March 2, 2023

Anabel Fernandez Senior Vice President and Chief Financial Officer February 29, 2024

Anabel Fernandez (Principal Financial and Accounting Officer)

Radford Lovett II Director March 2, 2023

Radford Lovett II Director February 29, 2024

Radford Lovett II

Parekh Director March 2, 2023

Parekh Director February 29, 2024

/s/ Leonard M.

Sturm Director March 2, 2023

Sturm Director February 29, 2024

/s/ Justin W.

Udelhofen Director March 2, 2023

/s/ William H.

Walton III Director March 2, 2023

Udelhofen Director February 29, 2024

/s/ William W.

Weatherford Director March 2, 2023

Weatherford Director February 29, 2024

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures