NOTE 2

Management’s Plan

The Corporation’s consolidated financial statements were prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business. Due to recurring losses during certain periods, the Corporation has historically experienced negative cash flows from operating activities. The level of historical negative cash flows from operations raise substantial doubt about the Corporation’s ability to continue as a going concern. To continue as a going concern, management determined that certain strategies need to be pursued.

These strategies include but are not limited to:

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Divest Non-Core Assets: Management is focused on driving profitable growth in the Corporation’s core housing business.

Progress:

In October 2014, the Corporation sold its recreational vehicle segment to focus solely on its core housing business and to raise cash. Additional information regarding the sale is in Note 3 of Notes to Consolidated Financial Statements.

In addition to the sale of the RV business, the Corporation sold an idle housing facility in fiscal 2015. A buyer is also being sought for an undeveloped parcel of land the Corporation owns.

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Increase Sales:

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Working to increase sales to manufactured housing dealers by gaining a greater presence on their properties.

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Continuing to work with manufactured housing communities to identify opportunities for increasing sales.

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Increasing sales of modular homes and park models by cultivating relationships with modular housing developers and campground owners that are outside the Corporation’s historical distribution channels.

Progress:

Manufactured housing net sales in the first quarter of fiscal 2016 decreased 0.9 percent compared to the first quarter of fiscal 2015. Management believes the decrease is attributable to a temporary softness in demand among the Corporation’s manufactured housing dealers and communities.

Park model net sales in the first quarter of fiscal 2016 decreased 21.8 percent compared with the first quarter of fiscal 2015. Management also believes the decrease is due to a temporary softness in demand among dealers, communities and campgrounds.

Modular housing net sales for the first quarter of fiscal 2016 increased 1.6 percent as compared to the fiscal quarter of 2015.

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Decrease Production Costs: The Corporation continues to streamline costs with a focus on maximizing efficiencies and resources.

Progress:

The Corporation’s Purchasing Department has obtained significant price concessions from certain suppliers.

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Raise Additional Capital:

Progress:

On March 20, 2015, the Corporation entered into a Loan and Security Agreement with First Business Capital Corp. providing for a renewable three-year secured revolving credit facility. Under the new credit facility, the Corporation may obtain loan advances up to a maximum of $10 million, subject to certain collateral-obligation ratios.

Outstanding loan advances under the facility will bear interest at 3.75% in excess of The Wall Street Journal’s published one year LIBOR rate. The facility will be used to support the Company’s working capital needs and other general corporate purposes, and is secured by substantially all of the Corporation’s assets. Additional information regarding the revolving credit facility is in Note 9 of Notes to Consolidated Financial Statements.