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business plan

THE COMPANY

The Company is a corporation organized under the laws of the State of Utah.  It was formed by Hall Labs in December 2018 from a combination of several pre-existing Hall Labs projects.  Its management structure was organized formally in October 2020.  David Hall served as the Company’s CEO from its inception and currently serves as the Technology CEO.  Scott Kohea became the Company’s Business CEO in October 2021.

The mission of the Company is to provide the most ecologically sustainable housing per square foot in the world by making it possible for individuals and families to live comfortably on a small footprint. 

PRODUCTS AND SERVICES

The Company will design, manufacture, and manage modular residential units that include a place for all necessary furnishings and appliances for comfortable living.  Each unit incorporates proprietary technologies that permit less than 400 square feet of space to transform from bathroom to laundry and from bedroom to living room, exercise room, and office, with kitchen and dining area always available. Rather than individuals having to move from room to room, the room adapts to the user’s needs.

The AdaptiveTM units are usable as tiny homes, backyard accessory dwelling units, or apartments.  They are functional as single free standing living spaces or may be combined horizontally for larger families and/or stacked vertically to form multi-family housing.  The units are affixed to piles rather than reinforced concrete foundations.  They can be disassembled easily and moved if necessary to a different location.

Three key characteristics of the Company’s Adaptive units are (1) conveniently transforming space, (2) modularity, and (3) connectability.  Transforming space means it is possible for an occupant to enjoy all of the comfort and utility of 1,000+ square feet of living space on less than a 400 square-foot footprint.  Modularity means it is easy to swap in and out appliances, furnishings, and appearances to make the space one’s own.  Connectability means units can be combined horizontally for increased living space for a larger household as well as vertically, like building blocks, for large multi-family developments.

Adaptive provides housing-as-a-service for end consumers and provides living space on short term rental contracts. In the backyard accessory dwelling unit market, Adaptive will partner with and pay property owners a percentage fee of the revenues in exchange for use of their yard and the necessary utility connections.  

MARKET

The US housing market is a $43 trillion with $540 billion added each year. This ranges from single family homes to multi-story and multi-family housing stock. A growing market within housing is small-scale private rental arrangements such as backyard accessory dwelling units and letting services such as AirBnB.  Currently there are over 1.4 million ADUs and over 660,000 airbnb listings in the USA.  We believe demand for such arrangements could be much higher if solutions such as the Company’s adaptive units were readily available. 

 

Beyond the backyard accessory dwelling units, Adaptive is designed for vertical and horizontal stacking for low to mid rise multi-family developments. This addresses both the need for increasing density in the suburban markets as well as urban infill projects to enjoy the benefits of city services. We expect current trends to remain with approximately 50% of customers opting for rental arrangements rather than home ownership. 

BUSINESS MODEL

The Company’s business model begins with a manufacturing approach that resembles automotive manufacturing. This includes 8 feet by 8 feet repeatable subassemblies that can be joined with other subassemblies in the field. This 8' squared section is simpler to manufacture, requires less complicated machinery and labor, and more efficient to transit. Final assembly occurs in the field as simple connection and aligning points bring the subassemblies together to create a larger space. This enables far better quality control and cost efficiency than is possible for on-site construction or even existing modular homes.  Components of a finished unit can be delivered to a site in two shipping containers and then assembled on site within a matter of hours.  Using an on-site crane, multiple units can be attached horizontally or vertically as quickly as each unit can be assembled.

Our initial business model will be to manufacture and place AdaptiveTM units in backyards or vacant lots in residential areas. We have dual customers.  First, we will offer the owner of the back yard or lot a rental opportunity.  We will pay the owner a fee for the right to place the unit on his/her/its property.  Our ultimate customer will be the occupant of the unit, who will pay a weekly fee for his/her/its use of the unit.  The property owner’s fee will be a percentage of rental fees received from occupants.  We will take care of all on-site requirements, building permits, and any regulatory requirements related to the rental to the occupants and will remove the unit from the property if our relationship with the property owner terminates.

Our rental model can be leveraged with bank financing and provides significant cash flow while maintaining ownership of the asset that is expected to appreciate over time. This is managed to optimize short term rental opportunities and, because of the mobility. of the Adaptive units, can be moved to another location for greater profitability. 

This business model can expand easily from backyard units to tiny homes. And then from tiny homes to multi-family housing developments. The same business model applies where Adaptive will partner with property owners and provide rental housing on the property. 

Adaptive will make make a profit from rental income. Primary expenses include unit maintenance, unit financing expense (similar to a mortgage), and payment for the use of property. 

 

Products will be offered direct to consumer to include both the property owner and the renter. To reach the property owner, Adaptive will have demo units available as well as digital marketing to the backyard ADU market. To reach the renter, Adaptive will use short term rental services such as airBnB. 

The unique value proposition for Adaptive is 1) an appealing technology enabled multi-use space, 2) a flexible rental model for both property owners and renters, and 3) a truly sustainable living unit. 

MARKETING STRATEGY

The built environment is responsible for 40% of greenhouse gas emissions, with over 70% of that from housing. As a result, there are significant capital commitments made by governments and the capital markets towards a resilient and more sustainable built environment. This has been described in terms ESG, green finance, and climate technology.  Adaptive has spent years developing a resilient and repeatable building system that can be attainable and appealing to many with a focus on sustainability. 

California has been a leader in providing legislation that favors ADUs and this is our initial target market with a specific focus on San Francisco Bay Area. California governments view the ADUs as a way to increase housing density and thereby increase the tax base without the need to create new infrastructure as an ADU will tie into existing property utilities. And other states are following their lead. It is now common to have an expedited approval process to add an accessory dwelling unit on a parcel, and in many cases, to add up to 4 units, and to even have a simplified process to subdivide a parcel for ADU’s. Sustainable building codes are also starting to be considered with aims to minimize waste, minimize carbon, improve efficiencies, and reduce local disturbances. These all point towards the Adaptive solution with off-site fabrication and on-site craning and installation.  

Property owners enjoy the additional income provided by Adaptive in exchange for making their backyard available. This is estimated to be $700 to $1,100 per unit per month. And with building codes allowing up to four ADUs, a property owner could make up to $4,400 in monthly Adaptive income. 

Renters enjoy staying in the suburban neighborhoods and having a unique stay. The Adaptive unit with various features provides functionality to live, work, and exercise with all of the included amenities. This includes bathroom, kitchen, gym, living room, bedroom, office, patio, and plenty of storage. 

Within 24 months, the Company will expand its marketing to developers and large corporations seeking to respond to demands from communities and governments for additional workforce housing. Adaptive provides rapid housing with full functionality in a compact space. 

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