Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

New Way Homes funds and creates below-market-rate rental housing: affordable, workforce, supportive, and other discounted housing.  We are proving a scalable new model for filling the HUGE housing production gap.  We do not compete for the scarce, government dollars for housing construction that is already fully used. 

In 5 years, we want to have created an entire new part of the housing industry that has a fair balance between investor returns and maximizing affordability.  We hope to be creating thousands of units of mission-driven housing per year in the least affordable areas of California and others will be duplicating what we're doing here and across the country.  We already have non-profit land owners coming to us at the rate to achieve this and our first >300 units under design.

Milestones

New Way Homes, Inc. was incorporated in the State of California in April 2015.

Since then, we have:

• We have 19 units in construction and >300 units in design and permitting today.
• The majority of our pipeline of projects are creating housing to be owned by Black churches.
• We have a four-year track record of making interest payments to investors and lenders.
• Our team has decades of experience developing, designing, operating housing & social services.
• Our model can scale and be replicated to solve this housing crisis - and you can help.
• Thousands of non-profits own land & want to develop affordable housing; we unlock that potential.
• There isn't close to enough government funding to meet our affordable housing need.

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2019, the Company had revenues of $405,014 compared to the year ended December 31, 2018, when the Company had revenues of $65,320.
• Assets. As of December 31, 2019, the Company had total assets of $2,482,051, including $238,658 in cash. As of December 31, 2018, the Company had $1,675,845 in total assets, including $276,232 in cash.
• Net Income. The Company has had net income of $230,489 and net losses of $34,648 for the fiscal years ended December 31, 2019 and December 31, 2018, respectively.
• Liabilities. The Company's liabilities totaled $1,881,703 for the fiscal year ended December 31, 2019 and $1,305,987 for the fiscal year ended December 31, 2018.

Related Party Transaction

Refer to Question 26 of this Form C for disclosure of all related party transactions.

Liquidity & Capital Resources

To-date, the company has been financed with $2,828,116 in debt and $882,884 in additional financing.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 8 months before we need to raise further capital.

We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.

We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.

Runway & Short/Mid Term Expenses

New Way Homes, Inc. cash in hand is $363,609.98, as of May 2020. Over the last three months, revenues have averaged $19,225/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $25,150/month, for an average burn rate of $5,925 per month. We do not intend to be profitable.

Since 12/31/19, there are few material changes or trends in our finances or operations.  A new impact investment loan for $500,000 closed in early May 2020 with approved uses for providing loans for the development of affordable housing, to directly pay for affordable housing development owned by New Way Homes and for general operating expenses related to these purposes.  New Way Homes provided loans to two organizations that repaid those loans in February 2020 ($50,000 plus interest) and April 2020 ($15,000 plus interest).  

New Way Homes expects our revenues to include interest earned from impact investment loans made and to increase contributions through this raise.  Expenses are expected to include project expenses for two New Way Homes owned projects.  After the close of the raise, revenues and expenses for one month are projected to be $37,000 in revenues and $32,000 in expenses.

All current sources of capital are listed under Debt in Past Raises.  New Way Homes has received two commitments for $1,000,000 each towards our permanent supportive housing project.