Executive Summary

Q2 2016 was operationally minimal: revenue was $0.012K and net loss narrowed year over year to $18.1K, reflecting a near-standstill in sales and ongoing austerity in operating expenses .
Sequentially, revenue collapsed from Q1’s $2.567K (boosted by $2.558K of consulting revenue) to $0.012K in Q2, driving a sharp q/q deterioration despite lower operating expense levels .
Corporate transformation began post-quarter: the company formed Dream Building LLC, acquired builder licensing/registrations, and disclosed $179.5K of new construction contracts expected to accrete to revenue in Q4 2016–Q2 2017, establishing a nascent backlog outside education SaaS .
Governance turnover was material in Q2–Q3: change in control to Athena Monahan (April), appointment/resignation of executives, and board changes culminating in Vincent Simonelli assuming CEO/CFO roles in July, a potential catalyst for strategic pivot execution .
Liquidity remained strained with cash of $0.893K and stockholders’ deficit of $62.0K at quarter-end, elevating going-concern risk and financing dependency .

What Went Well and What Went Wrong

What Went Well

Year-over-year net loss improved in Q2 2016 to $18.1K from $23.0K in Q2 2015, aided by reduced SG&A and absence of stock-for-services expense versus the prior year .
Management began pivoting to construction services via Dream Building LLC, securing 6–7 residential projects and a $139.8K elevation/renovation contract, laying early groundwork for revenue diversification beyond education .
Post-quarter, two additional elevation/renovation projects totaling $179.5K were signed, with explicit timing guidance that revenue would accrete across Q4 2016 and Q1–Q2 2017, providing visibility into near-term backlog conversion .

What Went Wrong

Sequential revenue collapsed from $2.567K in Q1 to $0.012K in Q2 as consulting revenue ($2.558K) did not repeat, exposing the lack of a durable sales engine in the core SaaS business .
Liquidity and capital structure deteriorated: quarter-end cash was $0.893K, convertible notes payable and accrued interest were $61.6K (in default), and stockholders’ deficit widened to $62.0K, heightening going-concern uncertainties .
Disclosures acknowledged control weaknesses and inability to ensure timely/complete reporting, compounding execution risk during strategic transition and potential listing aspirations (OTC quotation cleared by FINRA, but listing not yet approved) .

Financial Results

Metric	Q2 2015	Q1 2016	Q2 2016
Revenue ($USD Thousands)	$0.015	$2.567	$0.012
Net Income (Loss) ($USD Thousands)	$(23.0)	$(13.149)	$(18.087)
Basic/Diluted EPS ($USD)	$(0.00)	$(0.00)	$(0.00)
Total Operating Expenses ($USD Thousands)	$10.486	$11.341	$14.558
Weighted Avg Shares (Millions)	16.303	16.304	16.304
Net Income Margin (%)	(153,100%)	(513%)	(150,724%)

Notes: Net income margin is computed as Net Income / Revenue using cited figures; extreme percentages reflect de minimis revenue base .

KPIs and balance sheet indicators:

Cash and equivalents: $0.893K (quarter-end) .
Convertible notes payable + accrued interest (net): $61.623K; past due and in default .
Capitalized curriculum development costs (net): $35.934K; amortization $7.7K in Q2 .
Stockholders’ deficit: $(61.975)K .

Segment breakdown: No formal segments reported; core activity in Q2 was education SaaS with minimal revenue; construction services activity initiated post-quarter via acquisitions/subsidiary .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue from construction projects (contracted)	Q4 2016–Q2 2017	None disclosed	$179,509 contracted revenue expected to accrete over Q4 2016 and Q1–Q2 2017	Newly disclosed backlog
Gross revenues (indicator of strategic pivot progress)	3 months ended Sep 6, 2016	None disclosed	$505,724 reported for three months ended Sep 6, 2016 (reflecting acquired related/non-related businesses)	First disclosure post-pivot
Corporate listing status	2016	Not listed; no guidance	FINRA cleared unpriced OTC quotation (VRTR); company has yet to apply to OTCMarkets; approval uncertain	Informational update

Earnings Call Themes & Trends

No formal Q2 2016 earnings call transcript was filed; themes are drawn from Q1/Q2 10-Q MD&A and subsequent 8-Ks.

Topic	Previous Mentions (Q2 2015 and Q1 2016)	Current Period (Q2 2016)	Trend
Technology platform migration	Converting website from Adobe Flash to WordPress to improve device compatibility; ongoing	Continues; migration described as ongoing project	Ongoing execution; extended timeline
Macro demand sensitivity	Education software sales affected by general economic conditions; risk of downturns	Reinforced; lack of funding limiting hiring and product development	Persistent headwinds
Liquidity/going concern	Negative working capital; financing needed; convertible notes in default (2015 notes past due)	Cash $0.893K; deficit worsened; notes past due/default; significant going-concern risk	Deteriorating
Regulatory/listing	None prior	FINRA cleared unpriced OTC quotation; OTCMarkets listing not yet applied/approved	Emerging listing pathway
Strategic pivot to construction	None prior	Post-quarter acquisition: builder licensing/registrations; formation of Dream Building LLC; 6–7 projects and $139.8K contract disclosed in September	New strategy forming
IP/branding	Learning is Basic trademark canceled in 2014; continued use of other marks/URLs	Reiterated status; continued reliance on other URLs	Stable but constrained

Management Commentary

“We are a subscription-based, software-as-a-service provider of education products who at the present time is making our math courses available to all students free of charge… as an incentive to utilize our www.mathisbasic.com website.”
“For the six months ended June 30, 2016, we have been involved with converting our website… from Adobe Flash to WordPress… This is an ongoing process.”
“Demand for our products and services is affected by the general economic conditions… any significant economic downturn… could have a material adverse effect on our financial condition and results of operations.”
Post-quarter: “Virtual Learning acquired the rights to all new home builder licensing as well as home improvement contractor registrations… [and] has since signed 2 additional elevation and renovation projects… combined total… $179,509… revenue from these projects will accrete to Q4 2016 and Q1 & Q2 in 2017.”
“Virtual Learning… acquired… Dream Builders LLC… [to] pursue opportunities in… new home construction and renovations… [including] rights to complete 6 single family construction projects… [and] an additional… contract… $139,800.”

Q&A Highlights

No Q2 2016 earnings call transcript or Q&A session was filed; therefore, no analyst Q&A highlights or management clarifications are available from company transcripts .

Estimates Context

Wall Street consensus estimates via S&P Global for Q2 2016 EPS and revenue were unavailable in our query; coverage appears limited for this micro-cap transition-stage issuer. Values could not be retrieved due to access limitations, and no alternate consensus source was identified in company filings [SPGI query error].
Implication: With no published consensus, post-pivot disclosures (e.g., $505.7K gross revenues in the three months ended Sep 6 and $179.5K contracted backlog) will likely drive any near-term expectation setting rather than formal Street models .

Key Takeaways for Investors

Core SaaS business remains non-operational from a revenue standpoint; Q2 revenue of $0.012K underscores the need for either monetization of educational content or full strategic pivot to construction services .
Liquidity and capital structure risks are acute (cash $0.893K; notes in default; deficits widening), making timely financing essential to prevent operational disruption and to execute the pivot .
Early construction backlog and builder licensing/registrations create tangible near-term revenue opportunities; watch for conversion of $179.5K projects into recognized revenue over Q4 2016–Q2 2017 and expansion beyond initial 6–7 projects .
Governance overhaul and new leadership could accelerate decision-making; monitor further board appointments, compensation decisions, and control improvements given prior disclosure control weaknesses .
Listing pathway update (FINRA OTC quotation cleared; OTCMarkets listing pending) is a potential liquidity/capital access catalyst; execution depends on application and approval outcomes .
Operating expense control helped narrow YOY losses; however, absent recurring revenue, margin metrics are dominated by fixed amortization and SG&A; sustainable improvement requires sales growth, not just cost containment .
Limited Street coverage and consensus complicate trading setups; near-term price drivers likely hinge on contract wins, backlog conversion, financing announcements, and listing progress rather than traditional quarterly beats/misses .

Appendix: Additional Context from Prior Two Quarters

Q1 2016: Revenue $2.567K (including $2.558K consulting fees), net loss $13.149K; negative working capital and notes in default already present, with explicit going-concern language .
Q2 2015: Revenue $0.015K; net loss $22.965K; higher operating expenses then due in part to stock-for-services ($40K in early 2015), indicating year-over-year cost actions but no material revenue traction .

Sources: Company 10-Qs and 8-Ks as cited above.

Dream Homes & Development Corp. (DREM)·Q2 2016 Earnings Summary