|
North Carolina
|
| |
6531
|
| |
82-1518164
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
Please send copies of all communications to:
|
| |||
|
Donald R. Reynolds
Andrew J. Gibbons Lorna A. Knick Wyrick Robbins Yates & Ponton LLP 4101 Lake Boone Trail, Suite 300 Raleigh, North Carolina 27607 (919) 781-4000 |
| |
M. Ali Panjwani, Esq.
Pryor Cashman LLP 7 Times Square New York, New York 10036 (212) 421-4100 |
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
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| | | |
Emerging growth company
☒
|
|
CALCULATION OF REGISTRATION FEE
|
| ||||||||||||
Title of Each Class of Securities To Be Registered
|
| |
Proposed Maximum
Aggregate Offering Price(1) |
| |
Amount of
Registration Fee |
| ||||||
Common Stock, no par value per share(2)
|
| | | $ | 11,500,000 | | | | | $ | 1,492.70 | | |
Underwriter Warrants(3)
|
| | | | — | | | | | | | | |
Common Stock underlying
|
| | | | | | | | | | | | |
Underwriter Warrants(4)
|
| | | | 1,001,000 | | | | | | 129.93 | | |
Selling Shareholder(5)
|
| | | $ | 1,500,000 | | | | | | 194.70 | | |
Total | | | | $ | 14,001,000 | | | | | | 1,817.33(6) | | |
| | |
Per Share
|
| |
Total
|
| ||||||
Initial public offering price
|
| | | $ | | | | | $ | | | ||
Underwriting discount(1)
|
| | | $ | | | | | | $ | | | |
Proceeds, before expenses, to us
|
| | | $ | | | | | | $ | | | |
Proceeds to Selling Shareholder
|
| | | $ | | | | | | $ | | | |
| | |
Page
|
| |||
| | | | 1 | | | |
| | | | 8 | | | |
| | | | 10 | | | |
| | | | 12 | | | |
| | | | 28 | | | |
| | | | 29 | | | |
Dilution | | | | | 30 | | |
| | | | 31 | | | |
| | | | 32 | | | |
| | | | 41 | | | |
| | | | 43 | | | |
| | | | 52 | | | |
| | | | 57 | | | |
| | | | 66 | | | |
| | | | 67 | | | |
| | | | 69 | | | |
| | | | 71 | | | |
| | | | 73 | | | |
Underwriting | | | | | 76 | | |
| | | | 84 | | | |
| | | | 84 | | | |
| | | | 84 | | | |
| | | | F-1 | | |
| Arizona | | | Illinois | | | North Carolina | |
| Arkansas | | | Indiana | | | Ohio | |
| California | | | Kentucky | | | Oregon | |
| Colorado | | | Louisiana | | | South Carolina | |
| District of Columbia | | | Maryland | | | Tennessee | |
| Florida | | | Nebraska | | | Texas | |
| Georgia | | | Nevada | | | Virginia | |
| Hawaii | | | New Jersey | | | Washington | |
| | |
Years ended December 31,
|
| |
Nine months ended September 30,
|
| ||||||||||||||||||
| | |
2017
|
| |
2018
|
| |
2018
|
| |
2019
|
| ||||||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue
|
| | | $ | 55,378,037 | | | | | $ | 77,305,562 | | | | | $ | 59,320,554 | | | | | $ | 78,017,017 | | |
Cost of revenue
|
| | | | 51,902,836 | | | | | | 73,436,660 | | | | | | 55,891,217 | | | | | | 73,197,739 | | |
Gross profit
|
| | | | 3,475,201 | | | | | | 3,868,902 | | | | | | 3,429,337 | | | | | | 4,819,278 | | |
General and administrative
|
| | | | 3,502,850 | | | | | | 5,130,920 | | | | | | 3,295,713 | | | | | | 7,334,534 | | |
Marketing
|
| | | | 315,942 | | | | | | 255,090 | | | | | | 280,604 | | | | | | 159,432 | | |
Total operating expenses
|
| | | | 3,818,792 | | | | | | 5,386,010 | | | | | | 3,576,317 | | | | | | 7,493,966 | | |
Loss from operations
|
| | | | (343,591) | | | | | | (1,517,108) | | | | | | (146,980) | | | | | | (2,674,688) | | |
Other (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest (expense), net
|
| | | | (76,971) | | | | | | (102,123) | | | | | | (74,848) | | | | | | (81,816) | | |
Other income (expense)
|
| | | | — | | | | | | (16,819) | | | | | | — | | | | | | 1,643 | | |
Other (expense), net
|
| | | | (76,971) | | | | | | (118,942) | | | | | | (74,848) | | | | | | (80,173) | | |
Loss from operations before income taxes
|
| | | | (420,562) | | | | | | (1,636,050) | | | | | | (221,828) | | | | | | (2,754,861) | | |
Income tax expense (benefit)
|
| | | | — | | | | | | 27,155 | | | | | | — | | | | | | (7,980) | | |
Net loss
|
| | | | (420,562) | | | | | | (1,663,205) | | | | | | (221,828) | | | | | | (2,746,881) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | | | | | | $ | (0.04) | | | | | | | | | | | $ | (0.06) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | | | | | | | 38,955,107 | | | | | | | | | | | | 46,075,924 | | |
Pro forma Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | $ | (0.01) | | | | | | | | | | | $ | (0.01) | | | | | | | | |
Pro forma Weighted average common shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | 32,455,711 | | | | | | | | | | | | 37,125,511 | | | | | | | | |
|
| | |
As of December 31,
|
| |
As of September 30,
2019 |
| ||||||||||||
| | |
2017
|
| |
2018
|
| ||||||||||||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 154,438 | | | | | $ | 1,008,538 | | | | | $ | 1,055,028 | | |
Working capital(1)
|
| | | | 369,086 | | | | | | 525,791 | | | | | | (367,267) | | |
Total assets
|
| | | | 2,635,320 | | | | | | 3,834,139 | | | | | | 3,117,604 | | |
Loan payable, net of current portion
|
| | | | 68,988 | | | | | | 52,188 | | | | | | 39,395 | | |
Note payable
|
| | | | 400,000 | | | | | | 500,000 | | | | | | 500,000 | | |
Lease liability, net of current portion
|
| | | | — | | | | | | — | | | | | | 121,259 | | |
Total stockholders’ equity (deficit)
|
| | | | 180,933 | | | | | | 232,042 | | | | | | (359,740) | | |
| | |
As of September 30, 2019
|
| |||||||||
| | |
Actual
|
| |
Pro Forma
as Adjusted |
| |
Pro Forma
|
| |||
Cash and cash equivalents
|
| | | $ | 1,055,028 | | | |
|
| |
|
|
Notes Payable
|
| | | | 500,000 | | | | | | | | |
Loan Payable (including short-term maturities of $17,020)
|
| | | | 56,415 | | | | | | | | |
Total Long-Term Debt
|
| | | | 556,415 | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Common stock, $0.00 par value, 100,000,000 authorized and 46,719,768 shares issued and outstanding, actual; [•] shares authorized, [•] shares issued and outstanding, as adjusted
|
| | | | — | | | | | | | | |
Additional paid-in-capital
|
| | | | 4,442,411 | | | | | | | | |
Accumulated deficit
|
| | | | (4,802,151) | | | | | | | | |
Total stockholders’ equity (deficit)
|
| | | | (359,740) | | | | | | | | |
Total Capitalization
|
| | | | 196,675 | | | | | | | | |
|
Assumed initial public offering price
|
| | | $ | | | |
|
Pro forma net tangible book value per share as of September 30, 2019
|
| | | $ | (0.02) | | |
|
Increase per share attributable to this offering
|
| | | $ | | | |
|
Pro forma as adjusted net tangible book value per share after this offering
|
| | | $ | | | |
|
Net tangible book value dilution per share to investors in this offering
|
| | | $ | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Average Price
per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percentage
|
| |
Amount
|
| |
Percentage
|
| ||||||||||||||||||
Existing Shareholders
|
| |
|
| | | | % | | | | | $ | | | | | | % | | | | | $ | | | |||||
New Investors
|
| | | | | | | | | % | | | | | | | | | | | % | | | | | | | | |||
Total | | | | | | | | | | % | | | | | | | | | | | % | | | | | | | |
| | |
December 31,
2017 |
| |
December 31,
2018 |
| |
Change
|
| |
September 30,
2018 |
| |
September 30,
2019 |
| |
Change
|
| ||||||||||||||||||
Agents
|
| | | | 1,734 | | | | | | 2,724 | | | | | | 57% | | | | | | 2,507 | | | | | | 3,629 | | | | | | 45% | | |
| | |
Three months ended September 30,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
Revenue
|
| | | $ | 23,075,575 | | | | | $ | 32,089,978 | | | | | $ | 9,014,403 | | | | | | 39% | | |
| | |
Three months ended September 30,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
Cost of revenue
|
| | | $ | 22,167,756 | | | | | $ | 30,318,582 | | | | | $ | 8,150,826 | | | | | | 37% | | |
| | |
Three months ended September 30,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
General and administrative
|
| | | $ | 972,595 | | | | | $ | 1,927,407 | | | | | $ | 954,812 | | | | | | 98% | | |
Marketing
|
| | | $ | 83,600 | | | | | $ | 55,483 | | | | | $ | (28,117) | | | | | | (34)% | | |
Total operating expenses
|
| | | $ | 1,056,195 | | | | | $ | 1,982,890 | | | | | $ | 926,695 | | | | | | 88% | | |
| | |
Nine months ended September 30,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
Revenue
|
| | | $ | 59,320,554 | | | | | $ | 78,017,017 | | | | | $ | 18,696,463 | | | | | | 32% | | |
| | |
Nine months ended September 30,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
Cost of revenue
|
| | | $ | 55,891,217 | | | | | $ | 73,197,739 | | | | | $ | 17,306,522 | | | | | | 31% | | |
| | |
Nine months ended September 30,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
General and administrative
|
| | | $ | 3,295,713 | | | | | $ | 7,334,534 | | | | | $ | 4,038,821 | | | | | | 123% | | |
Marketing
|
| | | $ | 280,604 | | | | | $ | 159,432 | | | | | $ | (121,172) | | | | | | (43)% | | |
Total operating expenses
|
| | | $ | 3,576,317 | | | | | $ | 7,493,966 | | | | | $ | 3,917,649 | | | | | | 110% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2017
|
| |
2018
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Revenue
|
| | | $ | 55,378,037 | | | | | $ | 77,305,562 | | | | | $ | 21,927,525 | | | | | | 40% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2017
|
| |
2018
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Cost of revenue
|
| | | $ | 51,902,836 | | | | | $ | 73,436,660 | | | | | $ | 21,533,824 | | | | | | 41% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2017
|
| |
2018
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
General and administrative
|
| | | $ | 3,502,850 | | | | | $ | 5,130,920 | | | | | $ | 1,628,070 | | | | | | 46% | | |
Marketing
|
| | | | 315,942 | | | | | | 255,090 | | | | | | (60,852) | | | | | | (19)% | | |
Total operating expenses
|
| | | $ | 3,818,792 | | | | | $ | 5,386,010 | | | | | $ | 1,567,218 | | | | | | 41% | | |
| | |
December 31,
2018 |
| |
September 30, 2019
|
| |
Change
|
| |||||||||||||||
| | |
Dollars
|
| |
Percentage
|
| ||||||||||||||||||
| | | | | | | | |
(Unaudited)
|
| | | | | | | | ||||||||
Current assets
|
| | | $ | 3,575,700 | | | | | $ | 2,449,423 | | | | | $ | (1,126,277) | | | | | | (31)% | | |
Current liabilities
|
| | | $ | 3,049,909 | | | | | $ | 2,816,690 | | | | | $ | (233,219) | | | | | | (8)% | | |
Net working capital
|
| | | $ | 525,791 | | | | | $ | (367,267) | | | | | $ | (893,058) | | | | | | (170)% | | |
| | |
Nine months ended September 30,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
Net cash provided by (used in) operating activities
|
| | | $ | 92,534 | | | | | $ | (264,429) | | | | | $ | (356,963) | | | | | | (386)% | | |
Net cash used in investing activities
|
| | | $ | (119,140) | | | | | $ | (252,508) | | | | | $ | (133,368) | | | | | | 112% | | |
Net cash provided by financing activities
|
| | | $ | 1,502,818 | | | | | $ | 563,427 | | | | | $ | (939,391) | | | | | | (63)% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2017
|
| |
2018
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Net cash used in operating activities
|
| | | $ | (342,631) | | | | | $ | (689,173) | | | | | $ | (346,542) | | | | | | 101% | | |
Net cash used in investing activities
|
| | | $ | (7,405) | | | | | $ | (180,217) | | | | | $ | (172,812) | | | | | | 2,334% | | |
Net cash provided by financing activities
|
| | | $ | 183,775 | | | | | $ | 1,723,490 | | | | | $ | 1,539,715 | | | | | | 838% | | |
|
Arizona
|
| | Illinois | | | North Carolina | |
|
Arkansas
|
| | Indiana | | | Ohio | |
|
California
|
| | Kentucky | | | Oregon | |
|
Colorado
|
| | Louisiana | | | South Carolina | |
|
District of Columbia
|
| | Maryland | | | Tennessee | |
|
Florida
|
| | Nebraska | | | Texas | |
|
Georgia
|
| | Nevada | | | Virginia | |
|
Hawaii
|
| | New Jersey | | | Washington | |
Name
|
| |
Age
|
| |
Position
|
|
Joshua Harley | | |
43
|
| | Chairman, Chief Executive Officer, Director | |
Marco Fregenal | | |
56
|
| | President and Chief Financial Officer, and Director | |
Samantha Giuggio | | |
49
|
| | Chief Broker Operations Officer | |
Chris Bennett | | |
39
|
| | Director | |
Jeffrey Coats | | |
62
|
| | Director | |
David C. Hood | | |
57
|
| | Director | |
Glenn Sampson | | |
79
|
| | Director | |
Jennifer Venable | | |
48
|
| | Director | |
Name and principal position
|
| |
Fiscal
Year |
| |
Salary
($)(1) |
| |
Bonus
($) |
| |
Stock
awards ($) |
| |
Option
awards ($) |
| |
All other
compensation ($) |
| |
Total
($) |
| |||||||||||||||||||||
Joshua Harley,
Chief Executive Officer |
| | | | 2019 | | | | | $ | 379,167 | | | | | $ | 176,050 | | | | | | — | | | | | | — | | | | | $ | 11,112(2) | | | | | $ | 566,329 | | |
| | | 2018 | | | | | $ | 381,095 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 31,140(3) | | | | | $ | 412,235 | | | ||
| | | 2017 | | | | | $ | 372,500 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 7,802(4) | | | | | $ | 380,302 | | | ||
Marco Fregenal,
President and Chief Financial Officer |
| | | | 2019 | | | | | $ | 416,846 | | | | | $ | 164,830 | | | | | | — | | | | | | — | | | | | $ | 8,128(5) | | | | | $ | 589,804 | | |
| | | 2018 | | | | | $ | 397,157 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 22,808(6) | | | | | $ | 419,965 | | | ||
| | | 2017 | | | | | $ | 283,397 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 28,830(7) | | | | | $ | 312,227 | | | ||
Samantha Giuggio,
Chief Broker Operations Officer |
| | | | 2019 | | | | | $ | 177,000 | | | | | | — | | | | | $ | 75,000 | | | | | | — | | | | | $ | 11,850(8) | | | | | $ | 263,850 | | |
| | | 2018 | | | | | $ | 140,000 | | | | | | — | | | | | $ | 43,000 | | | | | | — | | | | | $ | 22,422(9) | | | | | $ | 205,422 | | | ||
| | | 2017 | | | | | $ | 120,000 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 1,510(10) | | | | | $ | 121,510 | | |
Plan
|
| |
Number of
Shares Issued |
| |
Number of
Shares Reserved for Issuance |
| |
Number of
Shares Underlying Outstanding Options or Warrant |
| |
Number of
Shares Remaining Available for Future Issuance |
| ||||||||||||
2017 Stock Plan
|
| | | | 1,911,624 | | | | | | — | | | | | | 195,000 | | | | | | — | | |
2019 Omnibus Stock Incentive Plan
|
| | | | 1,074,594 | | | | | | 5,000,000 | | | | | | — | | | | | | 3,925,406 | | |
| | | | | |
No Exercise of
Underwriters’ Option |
| |
Full Exercise of
Underwriters’ Option |
| |||||||||||||||||||||
| | |
Shares Beneficially
Owned before the Offering |
| | | | |
Shares Beneficially
Owned after the Offering |
| | | | |
Shares Beneficially
Owned after the Offering |
| |||||||||||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percent
|
| |
Shares
Offered Hereby |
| |
Number
|
| |
Percent
|
| |
Shares
Offered Hereby |
| |
Number
|
| |
Percent
|
| ||||||
Directors and Named Executive Officers:
|
| | | | | | | | | | | | | | | | | | | | | | | ||||||||
Joshua Harley
|
| | | | 23,705,302 | | | | | | 50.7% | | | | | | | | | | | ||||||||||
Marco Fregenal
|
| | | | 7,016,710 | | | | | | 15.0% | | | | | | | | | | | ||||||||||
Samantha Giuggio
|
| | | | 125,000 | | | | | | * | | | | | | | | | | | ||||||||||
Christopher Bennett
|
| | | | — | | | | | | * | | | | | | | | | | | | | ||||||||
Jeffrey H. Coats
|
| | | | — | | | | | | * | | | | | | | | | | | | |
| | | | | |
No Exercise of
Underwriters’ Option |
| |
Full Exercise of
Underwriters’ Option |
| |||||||||||||||||||||
| | |
Shares Beneficially
Owned before the Offering |
| | | | |
Shares Beneficially
Owned after the Offering |
| | | | |
Shares Beneficially
Owned after the Offering |
| |||||||||||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percent
|
| |
Shares
Offered Hereby |
| |
Number
|
| |
Percent
|
| |
Shares
Offered Hereby |
| |
Number
|
| |
Percent
|
| ||||||
David C. Hood
|
| | | | — | | | | | | * | | | | | | | | | | | | | ||||||||
Glenn Sampson
|
| | | | 11,083,983 | | | | | | 23.7% | | | | | | | | | | | ||||||||||
Jennifer B. Venable
|
| | | | — | | | | | | * | | | | | | | | | | | | | ||||||||
All directors and executive officers as a group (8 individuals)
|
| | |
|
41,930,995
|
| | | |
|
89.8%
|
| | | | | | | | | | | |
Underwriter
|
| |
Number of Shares
|
|
Roth Capital Partners, LLC
|
| | | |
Total
|
| | | |
| | |
Total
|
| | | | | | | |||||||||||||||
| | |
Per Share
|
| |
Without Option
|
| |
With Option
|
| | | |||||||||||||
Public offering price
|
| | | $ | | | | | $ | | | | | $ | | | | | |||||||
Underwriting discounts and commissions (7%)
|
| | | $ | | | | | | $ | | | | | | $ | | | | | | ||||
Proceeds, before expenses, to us
|
| | | $ | | | | | | $ | | | | | | $ | | | | | |
| | | | | F-2 | | | |
| Combined and Consolidated Financial Statements | | | | | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-21 | | | |
| | | | | F-22 | | | |
| | | | | F-23 | | | |
| | | | | F-24 | | | |
| | | | | F-25 | | |
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
ASSETS
|
| | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 154,438 | | | | | $ | 1,008,538 | | |
Accounts receivable, net of allowance for doubtful accounts of $26,562 and $138,030
|
| | | | 1,705,241 | | | | | | 1,816,650 | | |
Due from affiliates
|
| | | | 596,232 | | | | | | 668,597 | | |
Prepaid and other current assets
|
| | | | 77,787 | | | | | | 81,915 | | |
Total current assets
|
| | | | 2,533,698 | | | | | | 3,575,700 | | |
Property and equipment, net
|
| | | | 101,622 | | | | | | 90,619 | | |
Capitalized internal use software
|
| | | | — | | | | | | 167,820 | | |
Total assets
|
| | | $ | 2,635,320 | | | | | $ | 3,834,139 | | |
LIABILITIES AND MEMBERS’ AND STOCKHOLDERS’ EQUITY
(DEFICIT) |
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 2,138,037 | | | | | $ | 3,023,045 | | |
Due to affiliates
|
| | | | 10,065 | | | | | | 10,064 | | |
Loan payable – current portion
|
| | | | 16,510 | | | | | | 16,800 | | |
Total current liabilities
|
| | | | 2,164,612 | | | | | | 3,049,909 | | |
Loan payable, net of current portion
|
| | | | 68,988 | | | | | | 52,188 | | |
Note payable
|
| | | | 400,000 | | | | | | 500,000 | | |
Total liabilities
|
| | | | 2,633,600 | | | | | | 3,602,097 | | |
Commitments and contingencies (Note 8) | | | | | | | | | | | | | |
Members’ and stockholders’ equity: | | | | | | | | | | | | | |
Fathom Realty Holdings, LLC members’ equity (deficit)
|
| | | | (179,213) | | | | | | — | | |
Fathom Realty Group Inc. stockholders’ equity
|
| | | | | | | | | | | | |
Retained earnings
|
| | | | 256,364 | | | | | | — | | |
Total Fathom Realty Group Inc. stockholders’ equity
|
| | | | 256,364 | | | | | | — | | |
Fathom Holdings Inc. stockholders’ equity
|
| | | | | | | | | | | | |
Common stock, Series A, $0.00 par value, 85,000,000 authorized and 85,000,000 and nil issued as of December 31, 2017 and December 31, 2018
|
| | | | — | | | | | | — | | |
Common stock, $0.00 par value, 100,000,000 authorized and nil and 44,488,311 issued and outstanding as of December 31, 2017 and December 31, 2018
|
| | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | — | | | | | | 2,287,312 | | |
Accumulated deficit
|
| | | | (75,431) | | | | | | (2,055,270) | | |
Total Fathom Holdings Inc. stockholders’ (deficit) equity
|
| | | | (75,431) | | | | | | 232,042 | | |
Total stockholders’ equity
|
| | | | 180,933 | | | | | | 232,042 | | |
Total members’ and stockholders’ equity
|
| | | | 1,720 | | | | | | 232,042 | | |
Total liabilities and members’ and stockholders’ equity
|
| | | $ | 2,635,320 | | | | | $ | 3,834,139 | | |
|
| | |
Years ended December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Revenue
|
| | | $ | 55,378,037 | | | | | $ | 77,305,562 | | |
Cost of revenue
|
| | | | 51,902,836 | | | | | | 73,436,660 | | |
Gross profit
|
| | | | 3,475,201 | | | | | | 3,868,902 | | |
General and administrative
|
| | | | 3,502,850 | | | | | | 5,130,920 | | |
Marketing
|
| | | | 315,942 | | | | | | 255,090 | | |
Total operating expenses
|
| | | | 3,818,792 | | | | | | 5,386,010 | | |
Loss from operations
|
| | | | (343,591) | | | | | | (1,517,108) | | |
Other income (expense), net | | | | | | | | | | | | | |
Interest (expense), net
|
| | | | (76,971) | | | | | | (102,123) | | |
Other expense
|
| | | | — | | | | | | (16,819) | | |
Other income (expense), net
|
| | | | (76,971) | | | | | | (118,942) | | |
Loss from operations before income taxes
|
| | | | (420,562) | | | | | | (1,636,050) | | |
Income tax expense
|
| | | | — | | | | | | 27,155 | | |
Net loss
|
| | | $ | (420,562) | | | | | $ | (1,663,205) | | |
Net loss per share | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | | | | | | $ | (0.04) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | | | | | | | 38,955,107 | | |
Pro forma Net loss per share | | | | | | | | | | | | | |
Basic and Diluted
|
| | | $ | (0.01) | | | | | | | | |
Pro forma Weighted average common shares outstanding | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | 32,455,711 | | | | | | | | |
| | |
Fathom
Realty Holdings, LLC |
| |
Fathom Realty Group, Inc.
|
| |
Fathom Holdings Inc.
|
| | ||||||||||||||||||||||||||||||||||||||
| | |
Members’
equity (deficit) |
| |
Common Stock
and capital in excess of par |
| |
Retained
earnings |
| |
Series A
Common Stock |
| |
Common
Stock |
| |
Additional
Paid in Capital |
| |
Accumulated
deficit |
| |
Total
|
| ||||||||||||||||||||||||
Balance at December 31, 2016
|
| | | $ | 237,135 | | | | | $ | — | | | | | $ | 185,147 | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | 422,282 | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | 85,000,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Net income (loss)
|
| | | | (416,348) | | | | | | — | | | | | | 71,217 | | | | | | — | | | | | | — | | | | | | — | | | | | | (75,431) | | | | | | (420,562) | | |
Balance at December 31, 2017
|
| | | | (179,213) | | | | | | — | | | | | | 256,364 | | | | | | 85,000,000 | | | | | | — | | | | | | — | | | | | | (75,431) | | | | | | 1,720 | | |
Cancellation of Series A
|
| | | | — | | | | | | — | | | | | | — | | | | | | (85,000,000) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Exchange agreement Fathom Realty Group, Inc.
|
| | | | 325,447 | | | | | | — | | | | | | (325,447) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Purchase of membership units Fathom Realty Holdings, LLC
|
| | | | (70,000) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (70,000) | | |
Issuance of common shares for Fathom Realty Holdings, LLC
|
| | | | (323,785) | | | | | | — | | | | | | — | | | | | | — | | | | | | 36,197,344 | | | | | | 323,785 | | | | | | — | | | | | | — | | |
Issuance of common shares for IntelliAgent,
LLC (related party) |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,302,650 | | | | | | 174 | | | | | | — | | | | | | 174 | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,710,000 | | | | | | 1,710,000 | | | | | | — | | | | | | 1,710,000 | | |
Share based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 278,317 | | | | | | 253,353 | | | | | | — | | | | | | 253,353 | | |
Net income (loss)
|
| | | | 247,551 | | | | | | | | | | | | 69,083 | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,979,839) | | | | | | (1,663,205) | | |
Balance at December 31, 2018
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | | — | | | | | | 44,488,311 | | | | | $ | 2,287,312 | | | | | $ | (2,055,270) | | | | | $ | 232,042 | | |
|
| | |
Years ended December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (420,562) | | | | | $ | (1,663,205) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 23,365 | | | | | | 23,400 | | |
Bad debt expense
|
| | | | 26,562 | | | | | | 111,467 | | |
Share based compensation
|
| | | | — | | | | | | 253,353 | | |
Change in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (617,147) | | | | | | (222,877) | | |
Due from affiliates
|
| | | | (7,058) | | | | | | (72,191) | | |
Prepaid and other assets
|
| | | | (13,833) | | | | | | (4,127) | | |
Accounts payable and accrued liabilities
|
| | | | 680,912 | | | | | | 885,008 | | |
Due to affiliates
|
| | | | (14,870) | | | | | | (1) | | |
Net cash used in operating activities
|
| | | | (342,631) | | | | | | (689,173) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | (7,405) | | | | | | (12,397) | | |
Purchase of capitalized software
|
| | | | — | | | | | | (167,820) | | |
Net cash used in investing activities
|
| | | | (7,405) | | | | | | (180,217) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Principal payments on loan payable
|
| | | | (16,225) | | | | | | (16,510) | | |
Proceeds from issuance of stock
|
| | | | — | | | | | | 1,710,000 | | |
Proceeds from note payable
|
| | | | 400,000 | | | | | | 500,000 | | |
Payments on note payable
|
| | | | (200,000) | | | | | | (400,000) | | |
Purchase of Fathom Realty Holdings, LLC membership interest
|
| | | | — | | | | | | (70,000) | | |
Net cash provided by financing activities
|
| | | | 183,775 | | | | | | 1,723,490 | | |
Net (decrease) increase in cash and cash equivalents
|
| | | | (166,261) | | | | | | 854,100 | | |
Cash and cash equivalents at beginning of period
|
| | | | 320,699 | | | | | | 154,438 | | |
Cash and cash equivalents at end of period
|
| | | $ | 154,438 | | | | | $ | 1,008,538 | | |
Supplemental disclosure of cash and non-cash transactions: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 76,971 | | | | | $ | 102,151 | | |
Income taxes paid
|
| | | $ | — | | | | | $ | 12,505 | | |
Issuance of non-voting units for Fathom Realty Group Inc.
|
| | | $ | — | | | | | $ | 325,447 | | |
Issuance of common stock for Fathom Realty Holdings LLC
|
| | | $ | — | | | | | $ | 323,785 | | |
Asset category
|
| |
Depreciable life
|
|
Vehicles | | |
7 years
|
|
Computers and equipment | | |
5 years
|
|
Furniture and fixtures | | |
7 years
|
|
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Vehicles
|
| | | $ | 119,324 | | | | | $ | 119,324 | | |
Computers and equipment
|
| | | | 34,456 | | | | | | 45,545 | | |
Furniture and fixtures
|
| | | | 14,984 | | | | | | 16,292 | | |
Total property and equipment
|
| | | | 168,764 | | | | | | 181,161 | | |
Less: Accumulated depreciation
|
| | | | (67,142) | | | | | | (90,542) | | |
Total property and equipment, net
|
| | | $ | 101,622 | | | | | $ | 90,619 | | |
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Accounts payable
|
| | | $ | 253,485 | | | | | $ | 817,814 | | |
Deferred annual fee
|
| | | | 83,542 | | | | | | 299,291 | | |
Accrued expenses
|
| | | | 33,401 | | | | | | 179,322 | | |
Accrued commissions
|
| | | | 1,582,463 | | | | | | 1,489,246 | | |
Accrued bonuses
|
| | | | 60,700 | | | | | | 143,900 | | |
Credit card liability
|
| | | | 74,809 | | | | | | 71,757 | | |
Other accrued liabilities
|
| | | | 49,637 | | | | | | 21,715 | | |
Total accounts payable and accrued liabilities
|
| | | $ | 2,138,037 | | | | | $ | 3,023,045 | | |
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Loan payable – Automobile loan
|
| | | $ | 85,498 | | | | | $ | 68,988 | | |
Less: current portion
|
| | | | (16,510) | | | | | | (16,800) | | |
Loan payable, net of current portion
|
| | | $ | 68,988 | | | | | $ | 52,188 | | |
|
Year ending December 31,
|
| |
Maturities of
Loan Payable |
| |||
2019
|
| | | $ | 16,800 | | |
2020
|
| | | | 17,095 | | |
2021
|
| | | | 17,394 | | |
2022
|
| | | | 17,699 | | |
| | | | $ | 68,988 | | |
| | |
Shares
|
| |
Weighted Average
Grant Date Fair Value |
| ||||||
Nonvested at December 31, 2017
|
| | | | — | | | | | | N/A | | |
Granted
|
| | | | 278,317 | | | | | $ | 0.91 | | |
Vested
|
| | | | (278,317) | | | | | $ | (0.91) | | |
Forfeited
|
| | | | — | | | | | | — | | |
Nonvested at December 31, 2018
|
| | | | — | | | | | | — | | |
Year ending December 31,
|
| |
Operating
Leases |
| |||
2019
|
| | | $ | 99,198 | | |
2020
|
| | | | 89,604 | | |
2021
|
| | | | 33,275 | | |
2022
|
| | | | 21,950 | | |
2023 and thereafter
|
| | | | 67,425 | | |
Total Minimum Lease Payments
|
| | | $ | 311,452 | | |
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Hometown Heroes Holdings, LLC
|
| | | $ | 582,408 | | | | | $ | 601,729 | | |
IntelliAgent, LLC
|
| | | | 2,514 | | | | | | — | | |
On Target Transactions LLC
|
| | | | 11,310 | | | | | | 66,868 | | |
Total due from affiliates
|
| | | $ | 596,232 | | | | | $ | 668,597 | | |
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Hometown Heroes Holdings, LLC
|
| | | | 10,065 | | | | | | 10,064 | | |
Total due to affiliates
|
| | | $ | 10,065 | | | | | $ | 10,064 | | |
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Current provision (benefit): | | | | | | | | | | | | | |
Federal
|
| | | $ | — | | | | | $ | — | | |
State
|
| | | | — | | | | | | 27,155 | | |
Total current
|
| | | | — | | | | | | 27,155 | | |
Deferred provision (benefit): | | | | | | | | | | | | | |
Federal
|
| | | | — | | | | | | — | | |
State
|
| | | | — | | | | | | — | | |
Total deferred
|
| | | | — | | | | | | — | | |
Income tax expense
|
| | | $ | — | | | | | $ | 27,155 | | |
| | |
Years ended December 31,
|
| |||||||||||||||||||||
| | |
2017
|
| |
2018
|
| ||||||||||||||||||
| | |
$
|
| |
%
|
| |
$
|
| |
%
|
| ||||||||||||
Provision for federal income taxes at statutory rates
|
| | | $ | — | | | | | | 0% | | | | | $ | (343,571) | | | | | | 21% | | |
Provision for state income taxes, net of federal benefit
|
| | | | — | | | | | | 0% | | | | | | (9,699) | | | | | | 1% | | |
Effect of flow-through entity
|
| | | | — | | | | | | 0% | | | | | | (2,542) | | | | | | 0% | | |
Change in valuation allowance
|
| | | | — | | | | | | 0% | | | | | | 410,754 | | | | | | -26% | | |
Nondeductible expenses
|
| | | | — | | | | | | 0% | | | | | | 698 | | | | | | 0% | | |
Tax effect of entities not included in consolidated return
|
| | | | — | | | | | | | | | | | | (25,573) | | | | | | 2% | | |
Effect of state rate change
|
| | | | — | | | | | | 0% | | | | | | — | | | | | | 0% | | |
Other
|
| | | | — | | | | | | 0% | | | | | | (2,912) | | | | | | 0% | | |
Income tax expense
|
| | | $ | — | | | | | | 0% | | | | | $ | 27,155 | | | | | | -2% | | |
Effective tax rate
|
| | | | | | | | | | | | | | | | -1.66% | | | | | | | | |
| | |
December 31,
|
| |||||||||
| | |
2017
|
| |
2018
|
| ||||||
Deferred tax assets | | | | | | | | | | | | | |
Net operating loss carryforward
|
| | | $ | 1,354 | | | | | $ | 484,058 | | |
Property and equipment
|
| | | | — | | | | | | 1,576 | | |
Intangibles
|
| | | | — | | | | | | 930 | | |
Interest expense carryforward
|
| | | | — | | | | | | 8,374 | | |
Charitable contributions carryover
|
| | | | 35 | | | | | | 322 | | |
Other accrued liabilities
|
| | | | — | | | | | | — | | |
Total deferred tax assets
|
| | | | 1,389 | | | | | | 495,260 | | |
Deferred tax liabilities | | | | | | | | | | | | | |
Investment in partnership
|
| | | | (1,622) | | | | | | — | | |
Internally developed software
|
| | | | — | | | | | | (38,186) | | |
Prepaid expenses
|
| | | | — | | | | | | (7,301) | | |
Total deferred tax liabilities
|
| | | | (1,622) | | | | | | (45,487) | | |
Valuation allowance
|
| | | | 233 | | | | | | 449,773 | | |
Deferred tax asset, net
|
| | | $ | — | | | | | $ | — | | |
| | |
December 31, 2018
|
| |
September 30, 2019
|
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
ASSETS
|
| | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 1,008,538 | | | | | $ | 1,055,028 | | |
Accounts receivable, net of allowance for doubtful accounts of $138,030 and $248,481
|
| | | | 1,816,650 | | | | | | 1,250,291 | | |
Due from affiliates
|
| | | | 668,597 | | | | | | 93,568 | | |
Prepaid and other current assets
|
| | | | 81,915 | | | | | | 50,536 | | |
Total current assets
|
| | | | 3,575,700 | | | | | | 2,449,423 | | |
Property and equipment, net
|
| | | | 90,619 | | | | | | 91,800 | | |
Capitalized software
|
| | | | 167,820 | | | | | | 377,628 | | |
Lease right of use assets
|
| | | | — | | | | | | 198,753 | | |
Total assets
|
| | | $ | 3,834,139 | | | | | $ | 3,117,604 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 3,023,045 | | | | | $ | 2,697,152 | | |
Due to affiliates
|
| | | | 10,064 | | | | | | 23,658 | | |
Loan payable – current portion
|
| | | | 16,800 | | | | | | 17,020 | | |
Lease liability – current portion
|
| | | | — | | | | | | 78,860 | | |
Total current liabilities
|
| | | | 3,049,909 | | | | | | 2,816,690 | | |
Loan payable, net of current portion
|
| | | | 52,188 | | | | | | 39,395 | | |
Note payable
|
| | | | 500,000 | | | | | | 500,000 | | |
Lease liability, net of current portion
|
| | | | — | | | | | | 121,259 | | |
Total liabilities
|
| | | | 3,602,097 | | | | | | 3,477,344 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Stockholders’ Equity (Deficit): | | | | | | | | | | | | | |
Common stock, $0.00 par value, 100,000,000 authorized and 44,488,311 and 46,719,768 issued and outstanding as of December 31, 2018 and September 30, 2019
|
| | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | 2,287,312 | | | | | | 4,442,411 | | |
Accumulated deficit
|
| | | | (2,055,270) | | | | | | (4,802,151) | | |
Total stockholders’ equity (deficit)
|
| | | | 232,042 | | | | | | (359,740) | | |
Total liabilities and stockholders’ equity
|
| | | $ | 3,834,139 | | | | | $ | 3,117,604 | | |
| | |
Three months ended September 30,
|
| |
Nine months ended September 30,
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
2018
|
| |
2019
|
| ||||||||||||
Revenue
|
| | | $ | 23,075,575 | | | | | $ | 32,089,978 | | | | | $ | 59,320,554 | | | | | $ | 78,017,017 | | |
Cost of revenue
|
| | | | 22,167,756 | | | | | | 30,318,582 | | | | | | 55,891,217 | | | | | | 73,197,739 | | |
Gross profit
|
| | | | 907,819 | | | | | | 1,771,396 | | | | | | 3,429,337 | | | | | | 4,819,278 | | |
General and administrative
|
| | | | 972,595 | | | | | | 1,927,407 | | | | | | 3,295,713 | | | | | | 7,334,534 | | |
Marketing
|
| | | | 83,600 | | | | | | 55,483 | | | | | | 280,604 | | | | | | 159,432 | | |
Total operating expenses
|
| | | | 1,056,195 | | | | | | 1,982,890 | | | | | | 3,576,317 | | | | | | 7,493,966 | | |
Loss from operations
|
| | | | (148,376) | | | | | | (211,494) | | | | | | (146,980) | | | | | | (2,674,688) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest (expense), net
|
| | | | (20,095) | | | | | | (27,385) | | | | | | (74,848) | | | | | | (81,816) | | |
Other income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,643 | | |
Other income (expense), net
|
| | | | (20,095) | | | | | | (27,385) | | | | | | (74,848) | | | | | | (80,173) | | |
Loss from operations before income taxes
|
| | | | (168,471) | | | | | | (238,879) | | | | | | (221,828) | | | | | | (2,754,861) | | |
Income tax benefit
|
| | | | — | | | | | | | | | | | | — | | | | | | (7,980) | | |
Net loss
|
| | | $ | (168,471) | | | | | $ | (238,879) | | | | | $ | (221,828) | | | | | $ | (2,746,881) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | | | | | | $ | (0.01) | | | | | | | | | | | $ | (0.06) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | | | | | | | 46,607,620 | | | | | | | | | | | | 46,075,924 | | |
Pro forma Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | $ | (0.00) | | | | | | | | | | | $ | (0.01) | | | | | | | | |
Pro forma Weighted average common shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | 38,812,791 | | | | | | | | | | | | 37,125,511 | | | | | | | | |
| | |
Common Stock
|
| |
Additional
Paid in Capital |
| |
Accumulated
deficit |
| |
Total
|
| ||||||||||||||||||
| | |
Shares
|
| |
Par Value
|
| ||||||||||||||||||||||||
Balance at December 31, 2018
|
| | | | 44,488,311 | | | | | $ | — | | | | | $ | 2,287,312 | | | | | $ | (2,055,270) | | | | | $ | 232,042 | | |
Sale of common stock
|
| | | | 576,000 | | | | | | — | | | | | | 576,000 | | | | | | — | | | | | | 576,000 | | |
Share based compensation
|
| | | | 1,655,457 | | | | | | — | | | | | | 1,579,099 | | | | | | — | | | | | | 1,579,099 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (2,746,881) | | | | | | (2,746,881) | | |
Balance at September 30, 2019 (Unaudited)
|
| | | | 46,719,768 | | | | | $ | — | | | | | $ | 4,442,411 | | | | | $ | (4,802,151) | | | | | $ | (359,740) | | |
| | |
Nine months ended September 30,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (221,828) | | | | | $ | (2,746,881) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 17,495 | | | | | | 41,519 | | |
Bad debt expense
|
| | | | 68,541 | | | | | | 110,451 | | |
Share based compensation
|
| | | | 153,353 | | | | | | 1,579,099 | | |
Change in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | 701,674 | | | | | | 455,908 | | |
Due from affiliates
|
| | | | (65,994) | | | | | | 575,029 | | |
Prepaid and other assets
|
| | | | 21,083 | | | | | | 31,379 | | |
Accounts payable and accrued liabilities
|
| | | | (581,790) | | | | | | (325,894) | | |
Operating lease right of use assets and liabilities
|
| | | | — | | | | | | 1,367 | | |
Due to affiliates
|
| | | | — | | | | | | 13,594 | | |
Net cash provided by (used in) operating activities
|
| | | | 92,534 | | | | | | (264,429) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | (11,320) | | | | | | (19,728) | | |
Purchase of capitalized software
|
| | | | (107,820) | | | | | | (232,780) | | |
Net cash used in investing activities
|
| | | | (119,140) | | | | | | (252,508) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Principal payments on loan payable
|
| | | | (12,356) | | | | | | (12,573) | | |
Proceeds from issuance of common stock
|
| | | | 1,485,174 | | | | | | 576,000 | | |
Proceeds from note payable
|
| | | | 500,000 | | | | | | — | | |
Payments on note payable
|
| | | | (400,000) | | | | | | — | | |
Purchase of Fathom Realty Holdings, LLC membership interest
|
| | | | (70,000) | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 1,502,818 | | | | | | 563,427 | | |
Net increase in cash and cash equivalents
|
| | | | 1,476,212 | | | | | | 46,490 | | |
Cash and cash equivalents at beginning of period
|
| | | | 154,437 | | | | | | 1,008,538 | | |
Cash and cash equivalents at end of period
|
| | | $ | 1,630,649 | | | | | $ | 1,055,028 | | |
Supplemental disclosure of cash and non-cash transactions: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 74,848 | | | | | $ | 81,945 | | |
Issuance of non-voting units for Fathom Realty Group Inc.
|
| | | $ | 325,447 | | | | | $ | — | | |
Issuance of common stock for Fathom Realty Holdings LLC
|
| | | $ | 323,785 | | | | | $ | — | | |
Asset category
|
| |
Depreciable life
|
|
Vehicles | | |
7 years
|
|
Computers and equipment | | |
5 years
|
|
Furniture and fixtures | | |
7 years
|
|
| | |
September 30,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Shares issuable upon exercise of stock options
|
| | | | — | | | | | | 195,000 | | |
Non-vested shares under restricted stock grants
|
| | | | — | | | | | | 112,148 | | |
| | |
December 31,
2018 |
| |
September 30,
2019 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Vehicles
|
| | | $ | 119,324 | | | | | $ | 119,324 | | |
Computers and equipment
|
| | | | 45,545 | | | | | | 56,960 | | |
Furniture and fixtures
|
| | | | 16,292 | | | | | | 24,605 | | |
Total property and equipment
|
| | | | 181,161 | | | | | | 200,889 | | |
Less: Accumulated depreciation
|
| | | | (90,542) | | | | | | (109,089) | | |
Total property and equipment, net
|
| | | $ | 90,619 | | | | | $ | 91,800 | | |
|
| | |
December 31,
2018 |
| |
September 30,
2019 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Accounts payable
|
| | | $ | 817,814 | | | | | $ | 1,095,066 | | |
Deferred annual fee
|
| | | | 299,291 | | | | | | 718,748 | | |
Accrued expenses
|
| | | | 179,322 | | | | | | 417,112 | | |
Accrued commissions
|
| | | | 1,489,246 | | | | | | 340,729 | | |
Credit card liability
|
| | | | 71,757 | | | | | | 82,725 | | |
Other accrued liabilities
|
| | | | 21,715 | | | | | | 33,972 | | |
Accrued bonuses
|
| | | | 143,900 | | | | | | 8,800 | | |
Total accounts payable and accrued liabilities
|
| | | $ | 3,023,045 | | | | | $ | 2,697,152 | | |
| | |
December 31,
2018 |
| |
September 30,
2019 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Loan payable – Automobile loan
|
| | | $ | 68,988 | | | | | $ | 56,415 | | |
Less current portion
|
| | | | (16,800) | | | | | | (17,020) | | |
Loan payable, net of current portion
|
| | | $ | 52,188 | | | | | $ | 39,395 | | |
| | |
Shares
|
| |
Weighted
Average Grant Date Fair Value |
| ||||||
Nonvested at December 31, 2018
|
| | | | — | | | | | | — | | |
Granted
|
| | | | 910,092 | | | | | $ | 1.00 | | |
Vested
|
| | | | (910,092) | | | | | $ | (1.00) | | |
Forfeited
|
| | | | — | | | | | | — | | |
Nonvested at March 31, 2019
|
| | | | — | | | | | | — | | |
Granted
|
| | | | 633,217 | | | | | $ | 1.00 | | |
Vested
|
| | | | (633,217) | | | | | $ | (1.00) | | |
Forfeited
|
| | | | — | | | | | | — | | |
Nonvested at June 30, 2019
|
| | | | — | | | | | | — | | |
Granted
|
| | | | 112,148 | | | | | $ | 1.12 | | |
Vested
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | |
Nonvested at September 30, 2019
|
| | | | 112,148 | | | | | $ | 1.12 | | |
|
Annual dividend yield
|
| | | | — | | |
|
Expected life (years)
|
| | | | 5.5 | | |
|
Risk-free interest rate
|
| | | | 2.43% | | |
|
Expected volatility
|
| | | | 45.0% | | |
Components of total lease cost:
|
| |
Nine months ended
September 30, 2019 |
| |||
| | |
(Unaudited)
|
| |||
Operating lease expense
|
| | | $ | 76,582 | | |
Short-term lease expense
|
| | | | 40,442 | | |
Total lease cost
|
| | | $ | 117,024 | | |
| | |
As of
September 30, 2019 |
| |||
| | |
(Unaudited)
|
| |||
Assets | | | | | | | |
Other assets
|
| | | $ | 198,753 | | |
Total lease assets
|
| | | $ | 198,753 | | |
|
| | |
As of
September 30, 2019 |
| |||
| | |
(Unaudited)
|
| |||
Liabilities | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 78,860 | | |
Noncurrent liabilities: | | | | | | | |
Other long-term liabilities
|
| | | | 121,259 | | |
Total lease liability
|
| | | $ | 200,119 | | |
|
Weighted average remaining lease term (in years) – operating leases
|
| | | | 3.97 | | |
|
Weighted average discount rate – operating leases
|
| | | | 8% | | |
| | |
Nine months ended
September 30, 2019 |
| |||
| | |
(Unaudited)
|
| |||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
Operating cash flows for operating leases
|
| | | $ | 1,367 | | |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets
|
| | | $ | 261,814 | | |
Year ending December 31,
|
| |
Operating
Leases |
| |||
Remaining 2019
|
| | | $ | 23,456 | | |
2020
|
| | | | 89,604 | | |
2021
|
| | | | 33,275 | | |
2022
|
| | | | 21,950 | | |
2023 and thereafter
|
| | | | 67,425 | | |
Total Minimum Lease Payments
|
| | | $ | 235,710 | | |
Less: effects of discounting
|
| | | | (35,591) | | |
Present value of future minimum lease payments
|
| | | $ | 200,119 | | |
| | |
December 31,
2018 |
| |
September 30,
2019 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Hometown Heroes Holdings, LLC
|
| | | $ | 601,729 | | | | | $ | — | | |
On Target Transactions LLC
|
| | | | 66,868 | | | | | | 93,568 | | |
Total due from affiliates
|
| | | $ | 668,597 | | | | | $ | 93,568 | | |
| | |
December 31,
2018 |
| |
September 30,
2019 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Hometown Heroes Holdings, LLC
|
| | | $ | 10,064 | | | | | $ | 23,658 | | |
Total due to affiliates
|
| | | $ | 10,064 | | | | | $ | 23,658 | | |
Expense
|
| |
Amount Paid
or to be Paid |
| |||
SEC registration fee
|
| | | $ | * | | |
Financial Industry Regulatory Authority, Inc. Filing Fee
|
| | | $ | * | | |
Exchange Listing Fee
|
| | | $ | * | | |
Printing expenses
|
| | | $ | * | | |
Legal fees and expenses
|
| | | $ | * | | |
Transfer agent and registrar fees
|
| | | $ | * | | |
Accounting fees and expenses
|
| | | $ | * | | |
Miscellaneous expenses
|
| | | $ | * | | |
Total
|
| | | $ | * | | |
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Joshua Harley
Joshua Harley
|
| |
Chief Executive Officer, Director (Principal Executive Officer)
|
| |
January 17, 2020
|
|
|
/s/ Marco Fregenal
Marco Fregenal
|
| |
President and Chief Financial Officer, Director (Principal Financial Officer and Principal Accounting Officer)
|
| |
January 17, 2020
|
|
|
/s/ Chris Bennett
Chris Bennett
|
| |
Director
|
| |
January 17, 2020
|
|
|
/s/ Jeffrey H. Coats
Jeffrey H. Coats
|
| |
Director
|
| |
January 17, 2020
|
|
|
/s/ David C. Hood
David C. Hood
|
| |
Director
|
| |
January 17, 2020
|
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Glenn Sampson
Glenn Sampson
|
| |
Director
|
| |
January 17, 2020
|
|
|
/s/ Jennifer Venable
Jennifer B. Venable
|
| |
Director
|
| |
January 17, 2020
|
|