|
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 |
|
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Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
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Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
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| | | |
Emerging growth company
☒
|
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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)
|
| | | $ | 26,100,000 | | | | | $ | 3,387.78 | | |
Underwriter Warrants(3)
|
| | | $ | — | | | | | | | | |
Common Stock underlying Underwriter Warrants(4)
|
| | | $ | 1,848,000 | | | | | $ | 239.87 | | |
Selling Shareholder(5)
|
| | | $ | 1,500,000 | | | | | $ | 194.70 | | |
Total
|
| | | $ | 29,448,000 | | | | | $ | 3,822.35(6)(7) | | |
| | |
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| | | | F-1 | | |
| Arizona | | | Indiana | | | Ohio | |
| Arkansas | | | Kentucky | | | Oklahoma | |
| California | | | Louisiana | | | Oregon | |
| Colorado | | | Maryland | | | South Carolina | |
| District of Columbia | | | Missouri | | | Tennessee | |
| Florida | | | Nevada | | | Texas | |
| Georgia | | | New Jersey | | | Virginia | |
| Illinois | | | North Carolina | | | Washington | |
| | |
Years ended December 31,
|
| |
Three months ended March 31,
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
2019
|
| |
2020
|
| ||||||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue
|
| | | $ | 77,305,562 | | | | | $ | 109,621,943 | | | | | $ | 18,134,726 | | | | | $ | 28,838,831 | | |
Cost of revenue
|
| | | | 73,436,660 | | | | | | 103,672,899 | | | | | | 16,852,772 | | | | | | 26,687,256 | | |
Gross profit
|
| | | | 3,868,902 | | | | | | 5,949,044 | | | | | | 1,281,954 | | | | | | 2,151,575 | | |
General and administrative
|
| | | | 5,130,920 | | | | | | 9,599,050 | | | | | | 2,662,045 | | | | | | 1,930,076 | | |
Marketing
|
| | | | 255,090 | | | | | | 340,582 | | | | | | 57,762 | | | | | | 230,433 | | |
Total operating expenses
|
| | | | 5,386,010 | | | | | | 9,939,632 | | | | | | 2,719,807 | | | | | | 2,160,509 | | |
Loss from operations
|
| | | | (1,517,108) | | | | | | (3,990,588) | | | | | | (1,437,853) | | | | | | (8,934) | | |
Other expense, net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense, net
|
| | | | 102,123 | | | | | | 109,709 | | | | | | 27,370 | | | | | | 32,837 | | |
Other expense
|
| | | | 16,819 | | | | | | — | | | | | | — | | | | | | — | | |
Other expense, net
|
| | | | 118,942 | | | | | | 109,709 | | | | | | 27,370 | | | | | | 32,837 | | |
Loss from operations before income taxes
|
| | | | (1,636,050) | | | | | | (4,100,297) | | | | | | (1,465,223) | | | | | | (41,771) | | |
Income tax (expense) benefit
|
| | | | (27,155) | | | | | | 8,000 | | | | | | (4,020) | | | | | | (1,000) | | |
Net loss
|
| | | $ | (1,663,205) | | | | | $ | (4,092,297) | | | | | $ | (1,469,243) | | | | | $ | (42,771) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | $ | (0.20) | | | | | $ | (0.42) | | | | | $ | (0.15) | | | | | $ | (0.00) | | |
Weighted average common shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | 8,264,547 | | | | | | 9,804,988 | | | | | | 9,655,644 | | | | | | 9,993,866 | | |
| | |
As of December 31,
|
| | ||||||||||||||
| | |
2018
|
| |
2019
|
| |
As of March 31, 2020
|
| |||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||
Balance Sheet Data: | | | | | |||||||||||||||
Cash and cash equivalents
|
| | | $ | 1,008,538 | | | | | $ | 579,416 | | | | | $ | 844,449 | | |
Working capital
|
| | | | 525,791 | | | | | | (1,282,468) | | | | | | (1,229,223) | | |
Total assets
|
| | | | 3,834,139 | | | | | | 2,490,033 | | | | | | 3,901,027 | | |
Loan payable, net of current portion
|
| | | | 52,188 | | | | | | 35,093 | | | | | | 30,773 | | |
Note payable
|
| | | | 500,000 | | | | | | 500,000 | | | | | | 500,000 | | |
Lease liability, net of current portion
|
| | | | — | | | | | | 177,578 | | | | | | 167,261 | | |
Total stockholders’ equity (deficit)
|
| | | | 232,042 | | | | | | (1,159,185) | | | | | | (994,221) | | |
| | |
As of March 31, 2020
(Unaudited) |
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma
|
| |
Pro Forma
As Adjusted |
| |||||||||
Cash and cash equivalents
|
| | | $ | 844,449 | | | | | $ | 844,449 | | | | | $ | 22,564,449 | | |
Notes Payable
|
| | | | 500,000 | | | | | | 500,000 | | | | | | 500,000 | | |
Loan Payable (including short-term maturities of $17,169)
|
| | | | 47,942 | | | | | | 47,942 | | | | | | 47,942 | | |
Total Debt
|
| | | | 547,942 | | | | | | 547,942 | | | | | | 547,942 | | |
Stockholders’ deficit: | | | | | | | | | | | | | | | | | | | |
Common stock, $0.00 par value, 100,000,000 shares authorized; 48,178,852 shares outstanding, actual; 10,223,168 shares outstanding pro forma; and 13,223,168 shares outstanding pro forma as adjusted
|
| | | | — | | | | | | — | | | | | | — | | |
Additional paid-in-capital
|
| | | | 5,196,117 | | | | | | 5,196,117 | | | | | | 26,916,117 | | |
Accumulated deficit
|
| | | | (6,190,338) | | | | | | (6,190,338) | | | | | | (6,190,338) | | |
Total stockholders’ deficit
|
| | | | (994,221) | | | | | | (994,421) | | | | | | 20,725,779 | | |
Total Capitalization
|
| | | $ | (446,279) | | | | | $ | (446,279) | | | | | $ | 21,273,721 | | |
|
Assumed initial public offering price
|
| | | $ | 8.00 | | |
|
Pro forma net tangible book value per share as of March 31, 2020
|
| | | $ | (0.10) | | |
|
Increase per share attributable to this offering
|
| | | $ | 1.67 | | |
|
Pro forma as adjusted net tangible book value per share after this offering
|
| | | $ | 20,725,779 | | |
|
Net tangible book value dilution per share to investors in this offering
|
| | | $ | 6.43 | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Average Price
per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percentage
|
| |
Amount
|
| |
Percentage
|
| ||||||||||||||||||
Existing Shareholders
|
| | | | 10,223,168 | | | | | | 77% | | | | | $ | 5,196,117 | | | | | | 18% | | | | | $ | 0.51 | | |
New Investors
|
| | | | 3,000,000 | | | | | | 23% | | | | | | 24,000,000 | | | | | | 82% | | | | | | 8.00 | | |
Total
|
| | | | 13,223,168 | | | | | | 100% | | | | | | 29,196,117 | | | | | | 100% | | | | | $ | 2.21 | | |
| | |
December 31,
|
| |
December 31,
|
| | | | | | | |
March 31,
|
| |
March 31,
|
| | | | | | | ||||||||||||
| | |
2018
|
| |
2019
|
| |
Change
|
| |
2018
|
| |
2019
|
| |
Change
|
| ||||||||||||||||||
Agents
|
| | | | 2,724 | | | | | | 4,006 | | | | | | 47% | | | | | | 3,089 | | | | | | 4,258 | | | | | | 38% | | |
| | |
Three months ended March 31,
|
| |
Change
|
| | ||||||||||||||||||||
| | |
2019
|
| |
2020
|
| |
Dollars
|
| |
Percentage
|
| | ||||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | | | | |||||||||
Revenue
|
| | | $ | 18,134,726 | | | | | $ | 28,838,831 | | | | | $ | 10,704,105 | | | | | | 59% | | | |
| | |
Three months ended March 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2019
|
| |
2020
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | |||||||||||||||||||
Cost of revenue
|
| | | $ | 16,852,772 | | | | | $ | 26,687,256 | | | | | $ | 9,834,484 | | | | | | 58% | | |
| | |
Three months ended March 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2019
|
| |
2020
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
General and administrative
|
| | | $ | 2,662,045 | | | | | $ | 1,930,076 | | | | | $ | (731,969) | | | | | | (27)% | | |
Marketing
|
| | | | 57,762 | | | | | | 230,433 | | | | | | 172,671 | | | | | | 299% | | |
Total operating expenses
|
| | | $ | 2,719,807 | | | | | $ | 2,160,509 | | | | | $ | (559,298) | | | | | | (21)% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Revenue
|
| | | $ | 77,305,562 | | | | | $ | 109,621,943 | | | | | $ | 32,316,381 | | | | | | 42% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Cost of revenue
|
| | | $ | 73,436,660 | | | | | $ | 103,672,899 | | | | | $ | 30,236,239 | | | | | | 41% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
General and administrative
|
| | | $ | 5,130,920 | | | | | $ | 9,599,050 | | | | | $ | 4,468,130 | | | | | | 87% | | |
Marketing
|
| | | | 255,090 | | | | | | 340,582 | | | | | | 85,492 | | | | | | 34% | | |
Total operating expenses
|
| | | $ | 5,386,010 | | | | | $ | 9,939,632 | | | | | $ | 4,553,622 | | | | | | 85% | | |
| | | | | | | | | | | | | | |
Change
|
| |||||||||
| | |
December 31, 2019
|
| |
March 31, 2020
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | | | | | | | |
(Unaudited)
|
| | | |||||||||||||
Current assets
|
| | | $ | 1,654,079 | | | | | $ | 2,967,991 | | | | | $ | 1,313,912 | | | | | | 79% | | |
Current liabilities
|
| | | | 2,936,547 | | | | | | 4,197,214 | | | | | | 1,260,667 | | | | | | 43% | | |
Net working capital
|
| | | $ | (1,282,468) | | | | | $ | (1,229,223) | | | | | $ | 53,245 | | | | | | 4% | | |
| | | | | |
Three months ended March 31,
|
| |
Change
|
| ||||||||||||||||||
| | | | | |
2019
|
| |
2020
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
| | | | | |
(Unaudited)
|
| | | | | | | | | | | | | |||||||||
Net cash (used in) provided by operating activities
|
| | | | | | $ | (411,944) | | | | | $ | 303,083 | | | | | $ | 715,027 | | | | | | 174% | | |
Net cash used in investing activities
|
| | | | | | $ | (61,900) | | | | | $ | (116,818) | | | | | $ | (54,918) | | | | | | (89)% | | |
Net cash provided by financing activities
|
| | | | | | $ | 571,827 | | | | | $ | 78,768 | | | | | $ | (493,059) | | | | | | (86)% | | |
| | |
Years ended December 31,
|
| |
Change
|
| ||||||||||||||||||
| | |
2018
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Net cash used in operating activities
|
| | | $ | (689,173) | | | | | $ | (1,110,972) | | | | | $ | (421,799) | | | | | | (61)% | | |
Net cash used in investing activities
|
| | | $ | (180,217) | | | | | $ | (372,816) | | | | | $ | (192,599) | | | | | | (107)% | | |
Net cash provided by financing activities
|
| | | $ | 1,723,490 | | | | | $ | 1,054,666 | | | | | $ | (668,824) | | | | | | (39)% | | |
| | |
For the Year Ended
|
| |
For the Three Months Ended
|
| ||||||||||||||||||
| | |
December 31, 2018
|
| |
December 31, 2019
|
| |
March 31, 2019
|
| |
March 31, 2020
|
| ||||||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||||||||
Net loss
|
| | | $ | (1,663,205) | | | | | $ | (4,092,297) | | | | | $ | (1,469,243) | | | | | $ | (42,771) | | |
Other expense, net
|
| | | | 118,942 | | | | | | 109,709 | | | | | | 27,370 | | | | | | 32,837 | | |
Income tax expense (benefit)
|
| | | | 27,155 | | | | | | (8,000) | | | | | | 4,020 | | | | | | 1,000 | | |
Depreciation & amortization
|
| | | | 23,400 | | | | | | 60,441 | | | | | | 6,022 | | | | | | 19,275 | | |
Restricted stock award compensation expense
|
| | | | 253,353 | | | | | | 1,570,151 | | | | | | 910,092 | | | | | | 103,158 | | |
Stock option compensation expense
|
| | | | — | | | | | | 59,453 | | | | | | — | | | | | | 21,563 | | |
Adjusted EBITDA
|
| | | $ | (1,240,355) | | | | | $ | (2,300,543) | | | | | $ | (521,739) | | | | | $ | 135,062 | | |
|
Arizona
|
| | Indiana | | | Ohio | |
|
Arkansas
|
| | Kentucky | | | Oklahoma | |
|
California
|
| | Louisiana | | | Oregon | |
|
Colorado
|
| | Maryland | | | South Carolina | |
|
District of Columbia
|
| | Missouri | | | Tennessee | |
|
Florida
|
| | Nevada | | | Texas | |
|
Georgia
|
| | New Jersey | | | Virginia | |
|
Illinois
|
| | North Carolina | | | Washington | |
Name
|
| |
Age
|
| |
Position
|
|
Joshua Harley | | |
43
|
| | Chairman, Chief Executive Officer, Director | |
Marco Fregenal | | |
56
|
| | President and Chief Financial Officer, and Director | |
Samantha Giuggio | | |
50
|
| | Chief Broker Operations Officer | |
Chris Bennett | | |
39
|
| | Director | |
Jeffrey Coats | | |
62
|
| | Director | |
David C. Hood | | |
58
|
| | Director | |
Glenn Sampson | | |
79
|
| | Director | |
Jennifer Venable | | |
49
|
| | 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
|
| | | | 405,562 | | | | | | 3,182,335 | | | | | | 37,130 | | | | | | 2,739,643 | | |
2019 Omnibus Stock Incentive Plan
|
| | | | 333,346 | | | | | | 1,060,778 | | | | | | — | | | | | | 727,433 | | |
Name
|
| |
Fees earned or
paid in cash ($) |
| |
Option
awards ($)(1) |
| |
All other
compensation ($) |
| |
Total
($) |
| ||||||||||||
Chris Bennett
|
| | | $ | 3,750 | | | | | $ | 25,000 | | | | | | — | | | | | $ | 28,750 | | |
Jeffrey H. Coats
|
| | | $ | 18,750 | | | | | $ | 40,000 | | | | | | — | | | | | $ | 58,750 | | |
Hoshi Printer(2)
|
| | | $ | 30,000 | | | | | $ | 40,000 | | | | | | — | | | | | $ | 70,000 | | |
David C. Hood
|
| | | $ | 15,000 | | | | | $ | 40,000 | | | | | | — | | | | | $ | 55,000 | | |
Glenn Sampson
|
| | | $ | 3,750 | | | | | $ | 25,000 | | | | | | — | | | | | $ | 28,750 | | |
Jennifer Venable
|
| | | $ | 3,750 | | | | | $ | 25,000 | | | | | | — | | | | | $ | 28,750 | | |
| | | | | |
No Exercise
of Underwriters’ Option |
| |
Full Exercise
of Underwriters’ Option |
| |||||||||||||||||||||||||||||||||||||||
| | |
Shares Beneficially
Owned before the Offering |
| |
Shares
Offered Hereby |
| |
Shares Beneficially
Owned after the Offering |
| |
Shares
Offered Hereby |
| |
Shares Beneficially
Owned after the Offering |
| |||||||||||||||||||||||||||||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percent(1)
|
| |
Number
|
| |
Percent(1)
|
| |
Number
|
| |
Percent(1)
|
| ||||||||||||||||||||||||||||||
Directors and Named Executive Officers: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Joshua Harley
|
| | | | 4,995,459(2) | | | | | | 48.9% | | | | | | — | | | | | | 4,995,459(2) | | | | | | 37.8% | | | | | | — | | | | | | 4,995,459(2) | | | | | | 37.1% | | |
Marco Fregenal
|
| | | | 1,488,635 | | | | | | 14.6% | | | | | | — | | | | | | 1,488,635 | | | | | | 11.3% | | | | | | — | | | | | | 1,488,635 | | | | | | 11.0% | | |
Samantha Giuggio
|
| | | | 31,350(3) | | | | | | * | | | | | | — | | | | | | 31,350(3) | | | | | | * | | | | | | — | | | | | | 31,350(3) | | | | | | * | | |
Christopher Bennett
|
| | | | 5,304(4) | | | | | | * | | | | | | — | | | | | | 5,304(4) | | | | | | * | | | | | | — | | | | | | 5,304(4) | | | | | | * | | |
Jeffrey H. Coats
|
| | | | 8,486(4) | | | | | | * | | | | | | — | | | | | | 8,486(4) | | | | | | * | | | | | | — | | | | | | 8,486(4) | | | | | | * | | |
David C. Hood
|
| | | | 8,486(4) | | | | | | * | | | | | | — | | | | | | 8,486(4) | | | | | | * | | | | | | — | | | | | | 8,486(4) | | | | | | * | | |
Glenn Sampson
|
| | | | 2,356,834(5) | | | | | | 23.1% | | | | | | — | | | | | | 2,356,834(5) | | | | | | 17.8% | | | | | | (187,500) | | | | | | 2,169,334(5) | | | | | | 16.1% | | |
Jennifer B. Venable
|
| | | | 5,304(4) | | | | | | * | | | | | | — | | | | | | 5,304(4) | | | | | | * | | | | | | — | | | | | | 5,304(4) | | | | | | * | | |
All directors and executive officers as a group (8 individuals)
|
| | | | 8,899,858 | | | | | | 86.8% | | | | | | — | | | | | | 8,899,858 | | | | | | 67.2% | | | | | | — | | | | | | 8,712,358 | | | | | | 64.5% | | |
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 | | | |
| Consolidated Financial Statements | | | | | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-23 | | | |
| | | | | F-24 | | | |
| | | | | F-25 | | | |
| | | | | F-26 | | | |
| | | | | F-27 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
ASSETS
|
| | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 1,008,538 | | | | | $ | 579,416 | | |
Accounts receivable
|
| | | | 1,494,580 | | | | | | 304,769 | | |
Agent annual fee receivable, net of allowance of $138,030 and $349,420
|
| | | | 322,070 | | | | | | 356,131 | | |
Due from affiliates
|
| | | | 668,597 | | | | | | 2,561 | | |
Prepaid and other current assets
|
| | | | 81,915 | | | | | | 411,202 | | |
Total current assets
|
| | | | 3,575,700 | | | | | | 1,654,079 | | |
Property and equipment, net
|
| | | | 90,619 | | | | | | 105,972 | | |
Capitalized software, net
|
| | | | 167,820 | | | | | | 464,842 | | |
Lease right of use assets
|
| | | | — | | | | | | 265,140 | | |
Total assets
|
| | | $ | 3,834,139 | | | | | $ | 2,490,033 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 3,023,045 | | | | | $ | 2,806,228 | | |
Due to affiliates
|
| | | | 10,064 | | | | | | 23,658 | | |
Loan payable – current portion
|
| | | | 16,800 | | | | | | 17,095 | | |
Lease liability – current portion
|
| | | | — | | | | | | 89,566 | | |
Total current liabilities
|
| | | | 3,049,909 | | | | | | 2,936,547 | | |
Loan payable, net of current portion
|
| | | | 52,188 | | | | | | 35,093 | | |
Note payable
|
| | | | 500,000 | | | | | | 500,000 | | |
Lease liability, net of current portion
|
| | | | — | | | | | | 177,578 | | |
Total liabilities
|
| | | | 3,602,097 | | | | | | 3,649,218 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Stockholders’ Equity (Deficit): | | | | | | | | | | | | | |
Common stock, $0.00 par value, 100,000,000 authorized and 9,440,061 and 10,211,658 issued and outstanding as of December 31, 2018 and December 31, 2019
|
| | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | 2,287,312 | | | | | | 4,988,382 | | |
Accumulated deficit
|
| | | | (2,055,270) | | | | | | (6,147,567) | | |
Total stockholders’ equity (deficit)
|
| | | | 232,042 | | | | | | (1,159,185) | | |
Total liabilities and stockholders’ equity
|
| | | $ | 3,834,139 | | | | | $ | 2,490,033 | | |
| | |
Years ended December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Revenue
|
| | | $ | 77,305,562 | | | | | $ | 109,621,943 | | |
Cost of revenue
|
| | | | 73,436,660 | | | | | | 103,672,899 | | |
Gross profit
|
| | | | 3,868,902 | | | | | | 5,949,044 | | |
General and administrative
|
| | | | 5,130,920 | | | | | | 9,599,050 | | |
Marketing
|
| | | | 255,090 | | | | | | 340,582 | | |
Total operating expenses
|
| | | | 5,386,010 | | | | | | 9,939,632 | | |
Loss from operations
|
| | | | (1,517,108) | | | | | | (3,990,588) | | |
Other expense, net | | | | | | | | | | | | | |
Interest expense, net
|
| | | | 102,123 | | | | | | 109,709 | | |
Other expense
|
| | | | 16,819 | | | | | | — | | |
Other expense, net
|
| | | | 118,942 | | | | | | 109,709 | | |
Loss from operations before income taxes
|
| | | | (1,636,050) | | | | | | (4,100,297) | | |
Income tax (expense) benefit
|
| | | | (27,155) | | | | | | 8,000 | | |
Net loss
|
| | | $ | (1,663,205) | | | | | $ | (4,092,297) | | |
Net loss per share | | | | | | | | | | | | | |
Basic and Diluted
|
| | | $ | (0.20) | | | | | $ | (0.42) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | 8,264,547 | | | | | | 9,804,988 | | |
| | |
Fathom
Realty Holdings, LLC |
| |
Fathom Realty Group, Inc.
|
| | | | | | | ||||||||||||||||||||||||||||||||||||||||||
| | |
Common
Stock and capital in excess of par |
| | | | | | | |
Fathom Holdings Inc.
|
| | |||||||||||||||||||||||||||||||||||||||||
| | |
Members’
equity |
| |
Retained
earnings |
| |
Series A
Shares |
| |
Common
Stock |
| |
Par
Value |
| |
APIC
|
| |
Accumulated
deficit |
| |
Total
|
| ||||||||||||||||||||||||||||||
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 Intelliagent, LLC (related party)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,337,143 | | | | | | — | | | | | | 174 | | | | | | — | | | | | | 174 | | |
Issuance of common shares for Fathom Realty Holdings, LLC
|
| | | | (323,785) | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,679,472 | | | | | | — | | | | | | 323,785 | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 364,399 | | | | | | — | | | | | | 1,710,000 | | | | | | — | | | | | | 1,710,000 | | |
Share based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 59,047 | | | | | | — | | | | | | 253,353 | | | | | | — | | | | | | 253,353 | | |
Net income (loss)
|
| | | | 247,551 | | | | | | — | | | | | | 69,083 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,979,839) | | | | | | (1,663,205) | | |
Balance at December 31, 2018
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,440,061 | | | | | | — | | | | | | 2,287,312 | | | | | | (2,055,270) | | | | | | 232,042 | | |
Issuance of common stock, net
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 216,194 | | | | | | — | | | | | | 1,071,466 | | | | | | — | | | | | | 1,071,466 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 555,403 | | | | | | — | | | | | | 1,629,604 | | | | | | — | | | | | | 1,629,604 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,092,297) | | | | | | (4,092,297) | | |
Balance at December 31, 2019
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | | — | | | | | | 10,211,658 | | | | | $ | — | | | | | $ | 4,988,382 | | | | | $ | (6,147,567) | | | | | $ | (1,159,185) | | |
|
| | |
Years ended December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (1,663,205) | | | | | $ | (4,092,297) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 23,400 | | | | | | 60,441 | | |
Bad debt expense
|
| | | | 111,467 | | | | | | 211,390 | | |
Share-based compensation
|
| | | | 253,353 | | | | | | 1,629,604 | | |
Change in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (134,223) | | | | | | 1,189,811 | | |
Agent annual fees receivable
|
| | | | (88,654) | | | | | | (245,451) | | |
Due from affiliates
|
| | | | (72,191) | | | | | | 666,036 | | |
Prepaid and other assets
|
| | | | (4,127) | | | | | | (329,287) | | |
Accounts payable and accrued liabilities
|
| | | | 885,008 | | | | | | (216,817) | | |
Operating lease right of use assets
|
| | | | — | | | | | | (3,326) | | |
Operating lease liabilities
|
| | | | — | | | | | | 5,330 | | |
Due to affiliates
|
| | | | (1) | | | | | | 13,594 | | |
Net cash used in operating activities
|
| | | | (689,173) | | | | | | (1,110,972) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | (12,397) | | | | | | (41,336) | | |
Purchase of capitalized software
|
| | | | (167,820) | | | | | | (331,480) | | |
Net cash used in investing activities
|
| | | | (180,217) | | | | | | (372,816) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Principal payments on loan payable
|
| | | | (16,510) | | | | | | (16,800) | | |
Proceeds from issuance of common stock
|
| | | | 1,710,000 | | | | | | 1,071,466 | | |
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
|
| | | | 1,723,490 | | | | | | 1,054,666 | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 854,100 | | | | | | (429,122) | | |
Cash and cash equivalents at beginning of period
|
| | | | 154,438 | | | | | | 1,008,538 | | |
Cash and cash equivalents at end of period
|
| | | $ | 1,008,538 | | | | | $ | 579,416 | | |
Supplemental disclosure of cash and non-cash transactions: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 102,151 | | | | | $ | 109,856 | | |
Income taxes paid
|
| | | $ | 12,505 | | | | | $ | 1,250 | | |
Issuance of non-voting units for Fathom Realty Group Inc.
|
| | | $ | 325,447 | | | | | $ | — | | |
Issuance of common stock for Fathom Realty Holdings LLC
|
| | | $ | 323,785 | | | | | $ | — | | |
Right of use assets obtained in exchange for lease liabilities
|
| | | $ | — | | | | | $ | 261,814 | | |
Asset category
|
| |
Depreciable life
|
|
Vehicles | | |
7 years
|
|
Computers and equipment | | |
5 years
|
|
Furniture and fixtures | | |
7 years
|
|
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Shares issuable upon exercise of stock options
|
| | | | — | | | | | | 37,130 | | |
Non-vested shares under restricted stock grants
|
| | | | — | | | | | | 227,981 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Vehicles
|
| | | $ | 119,324 | | | | | $ | 119,324 | | |
Computers and equipment
|
| | | | 45,545 | | | | | | 73,115 | | |
Furniture and fixtures
|
| | | | 16,292 | | | | | | 30,058 | | |
Total property and equipment
|
| | | | 181,161 | | | | | | 222,497 | | |
Accumulated depreciation
|
| | | | (90,542) | | | | | | (116,525) | | |
Total property and equipment, net
|
| | | $ | 90,619 | | | | | $ | 105,972 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Software Development
|
| | | $ | 167,820 | | | | | $ | 499,300 | | |
Total capitalized software
|
| | | | 167,820 | | | | | | 499,300 | | |
Accumulated amortization
|
| | | | — | | | | | | (34,458) | | |
Total capitalized software, net
|
| | | $ | 167,820 | | | | | $ | 464,842 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Accounts payable
|
| | | $ | 817,814 | | | | | $ | 922,373 | | |
Accrued professional fees
|
| | | | — | | | | | | 601,797 | | |
Deferred annual fee
|
| | | | 299,291 | | | | | | 463,667 | | |
Accrued commissions
|
| | | | 1,489,246 | | | | | | 261,161 | | |
Accrued compensation
|
| | | | 179,322 | | | | | | 196,948 | | |
Insurance premium liabilities
|
| | | | — | | | | | | 139,891 | | |
Other accrued liabilities
|
| | | | 21,715 | | | | | | 72,836 | | |
Accrued legal fees
|
| | | | — | | | | | | 71,724 | | |
Credit card liability
|
| | | | 71,757 | | | | | | 70,431 | | |
Accrued bonuses
|
| | | | 143,900 | | | | | | 5,400 | | |
Total accounts payable and accrued liabilities
|
| | | $ | 3,023,045 | | | | | $ | 2,806,228 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Loan payable – Automobile loan
|
| | | $ | 68,988 | | | | | $ | 52,188 | | |
Less current portion
|
| | | | (16,800) | | | | | | (17,095) | | |
Loan payable, net of current portion
|
| | | $ | 52,188 | | | | | $ | 35,093 | | |
Year ending December 31,
|
| |
Maturities of
Loan Payable |
| |||
2020
|
| | | $ | 17,095 | | |
2021
|
| | | | 17,394 | | |
2022
|
| | | | 17,699 | | |
| | | | $ | 52,188 | | |
| | |
Shares
|
| |
Weighted Average
Grant Date Fair Value |
| ||||||
Nonvested at December 31, 2018
|
| | | | — | | | | | | | | |
Granted
|
| | | | 555,403 | | | | | $ | 4.95 | | |
Vested
|
| | | | (327,422) | | | | | $ | (4.71) | | |
Forfeited
|
| | | | — | | | | | | — | | |
Nonvested at December 31, 2019
|
| | | | 227,981 | | | | | $ | 5.28 | | |
|
Annual dividend yield
|
| | | | — | | |
|
Expected life (years)
|
| | | | 5.5 | | |
|
Risk-free interest rate
|
| | | | 2.43% | | |
|
Expected volatility
|
| | | | 45.0% | | |
Components of total lease cost:
|
| |
Year ended
December 31, 2019 |
| |||
Operating lease expense
|
| | | $ | 104,794 | | |
Short-term lease expense
|
| | | | 38,414 | | |
Total lease cost
|
| | | $ | 143,208 | | |
|
| | |
As of
December 31, 2019 |
| |||
Assets | | | |||||
Lease right of use assets
|
| | | $ | 265,140 | | |
Total lease assets
|
| | | $ | 265,140 | | |
|
| | |
As of
December 31, 2019 |
| |||
Liabilities | | | |||||
Current liabilities: | | | |||||
Lease liability – current portion
|
| | | $ | 89,566 | | |
Noncurrent liabilities: | | | | | | | |
Lease liability, net of current portion
|
| | | | 177,578 | | |
Total lease liability
|
| | | $ | 267,144 | | |
|
Weighted average remaining lease term (in years) – operating leases
|
| | | | 4.51 | | |
|
Weighted average discount rate – operating leases
|
| | | | 8% | | |
Year ending December 31,
|
| |
Operating Leases
|
| |||
2020
|
| | | $ | 107,604 | | |
2021
|
| | | | 51,275 | | |
2022
|
| | | | 40,175 | | |
2023
|
| | | | 41,686 | | |
2024
|
| | | | 43,243 | | |
2025 and thereafter
|
| | | | 37,353 | | |
Total Minimum Lease Payments
|
| | | $ | 321,336 | | |
Less effects of discounting
|
| | | | (54,192) | | |
Present value of future minimum lease payments
|
| | | $ | 267,144 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Hometown Heroes Holdings, LLC
|
| | | $ | 601,729 | | | | | $ | — | | |
On Target Transactions LLC
|
| | | | 66,868 | | | | | | 2,561 | | |
Total due from affiliates
|
| | | $ | 668,597 | | | | | $ | 2,561 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Hometown Heroes Holdings, LLC
|
| | | $ | 10,064 | | | | | $ | 23,658 | | |
Total due to affiliates
|
| | | $ | 10,064 | | | | | $ | 23,658 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Current (provision) benefit: | | | | | | | | | | | | | |
Federal
|
| | | $ | — | | | | | $ | — | | |
State
|
| | | | (27,155) | | | | | | 8,000 | | |
Total Current
|
| | | | (27,155) | | | | | | 8,000 | | |
Deferred provision benefit: | | | | | | | | | | | | | |
Federal
|
| | | | — | | | | | | — | | |
State
|
| | | | — | | | | | | — | | |
Total deferred
|
| | | | — | | | | | | — | | |
Income tax (expense) benefit
|
| | | $ | (27,155) | | | | | $ | 8,000 | | |
| | |
Period/Year Ended
|
| |||||||||||||||||||||
| | |
12/31/2018
|
| |
12/31/2019
|
| ||||||||||||||||||
Provision for federal income taxes at statutory rates
|
| | | $ | 343,571 | | | | | | (21)% | | | | | $ | 861,062 | | | | | | (21)% | | |
Provision for state income taxes, net of federal benefit
|
| | | | 9,699 | | | | | | (1)% | | | | | | 79,435 | | | | | | (2)% | | |
Effect of flow-through entity
|
| | | | 2,542 | | | | | | 0% | | | | | | — | | | | | | 0% | | |
Change in valuation allowance
|
| | | | (410,754) | | | | | | 26% | | | | | | (926,681) | | | | | | 23% | | |
Nondeductible expenses
|
| | | | (698) | | | | | | 0% | | | | | | (7,437) | | | | | | 0% | | |
Tax effect of entities not included in consolidated return
|
| | | | 25,573 | | | | | | (2)% | | | | | | — | | | | | | 0% | | |
Return to provision adjustments
|
| | | | — | | | | | | 0% | | | | | | 2,172 | | | | | | 0% | | |
Other
|
| | | | 2,912 | | | | | | 0% | | | | | | (551) | | | | | | 0% | | |
Income tax (expense) benefit
|
| | | $ | (27,155) | | | | | | 2% | | | | | $ | 8,000 | | | | | | 0% | | |
Effective Tax Rate
|
| | | | 1.96% | | | | | | | | | | | | 0.20% | | | | | | | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Deferred tax assets | | | | | | | | | | | | | |
Net Operating Loss Carryforward
|
| | | $ | 484,058 | | | | | $ | 1,469,052 | | |
Property and equipment
|
| | | | 1,576 | | | | | | 430 | | |
Intangibles
|
| | | | 930 | | | | | | — | | |
Interest Expense Carryforward
|
| | | | 8,374 | | | | | | 33,741 | | |
Charitable Contributions Carryover
|
| | | | 322 | | | | | | 5,189 | | |
Other Accrued liabilities
|
| | | | — | | | | | | 457 | | |
Total deferred tax assets
|
| | | | 495,260 | | | | | | 1,508,869 | | |
Deferred tax liabilities | | | | | | | | | | | | | |
Internally Developed Software
|
| | | | (38,186) | | | | | | (105,869) | | |
Stock Compensation
|
| | | | — | | | | | | (19,093) | | |
Prepaid Expenses
|
| | | | (7,301) | | | | | | (7,453) | | |
Total deferred tax liabilities
|
| | | | (45,487) | | | | | | (132,415) | | |
Valuation Allowance
|
| | | | (449,773) | | | | | | (1,376,454) | | |
Deferred tax asset, net
|
| | | $ | — | | | | | $ | — | | |
| | |
December 31, 2019
|
| |
March 31, 2020
|
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
ASSETS
|
| | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 579,416 | | | | | $ | 844,449 | | |
Accounts receivable
|
| | | | 304,769 | | | | | | 743,193 | | |
Agent annual fees receivable, net of allowance of $349,420 and
$384,690 |
| | | | 356,131 | | | | | | 926,835 | | |
Due from affiliates
|
| | | | 2,561 | | | | | | 1,466 | | |
Prepaid and other current assets
|
| | | | 411,202 | | | | | | 452,048 | | |
Total current assets
|
| | | | 1,654,079 | | | | | | 2,967,991 | | |
Property and equipment, net
|
| | | | 105,972 | | | | | | 101,300 | | |
Capitalized software, net
|
| | | | 464,842 | | | | | | 567,057 | | |
Lease right of use assets
|
| | | | 265,140 | | | | | | 264,679 | | |
Total assets
|
| | | $ | 2,490,033 | | | | | $ | 3,901,027 | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 2,806,228 | | | | | $ | 4,054,983 | | |
Due to affiliates
|
| | | | 23,658 | | | | | | 25,102 | | |
Loan payable – current portion
|
| | | | 17,095 | | | | | | 17,169 | | |
Lease liability – current portion
|
| | | | 89,566 | | | | | | 99,960 | | |
Total current liabilities
|
| | | | 2,936,547 | | | | | | 4,197,214 | | |
Loan payable, net of current portion
|
| | | | 35,093 | | | | | | 30,773 | | |
Note payable
|
| | | | 500,000 | | | | | | 500,000 | | |
Lease liability, net of current portion
|
| | | | 177,578 | | | | | | 167,261 | | |
Total liabilities
|
| | | | 3,649,218 | | | | | | 4,895,248 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Stockholders’ Deficit: | | | | | | | | | | | | | |
Common stock, $0.00 par value, 100,000,000 authorized and
10,211,658 and 10,223,168 issued and outstanding as of December 31, 2019 and March 31, 2020 |
| | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | 4,988,382 | | | | | | 5,196,117 | | |
Accumulated deficit
|
| | | | (6,147,567) | | | | | | (6,190,338) | | |
Total stockholders’ deficit
|
| | | | (1,159,185) | | | | | | (994,221) | | |
Total liabilities and stockholders’ deficit
|
| | | $ | 2,490,033 | | | | | $ | 3,901,027 | | |
| | |
Three months ended March 31,
|
| |||||||||
| | |
2019
|
| |
2020
|
| ||||||
Revenue
|
| | | $ | 18,134,726 | | | | | $ | 28,838,831 | | |
Cost of revenue
|
| | | | 16,852,772 | | | | | | 26,687,256 | | |
Gross profit
|
| | | | 1,281,954 | | | | | | 2,151,575 | | |
General and administrative
|
| | | | 2,662,045 | | | | | | 1,930,076 | | |
Marketing
|
| | | | 57,762 | | | | | | 230,433 | | |
Total operating expenses
|
| | | | 2,719,807 | | | | | | 2,160,509 | | |
Loss from operations
|
| | | | (1,437,853) | | | | | | (8,934) | | |
Other expense, net | | | | | | | | | | | | | |
Interest expense, net
|
| | | | 27,370 | | | | | | 32,837 | | |
Other expense, net
|
| | | | 27,370 | | | | | | 32,837 | | |
Loss from operations before income taxes
|
| | | | (1,465,223) | | | | | | (41,771) | | |
Income tax expense
|
| | | | 4,020 | | | | | | 1,000 | | |
Net loss
|
| | | $ | (1,469,243) | | | | | $ | (42,771) | | |
Net loss per share | | | | | | | | | | | | | |
Basic and Diluted
|
| | | $ | (0.15) | | | | | $ | (0.00) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | |
Basic and Diluted
|
| | | | 9,655,644 | | | | | | 9,993,866 | | |
| | |
Three months ended March 31, 2019
|
| |||||||||||||||||||||||||||
| | |
Common Stock
|
| |
Additional
Paid in Capital |
| |
Accumulated
deficit |
| |
Total
|
| ||||||||||||||||||
| | |
Shares
|
| |
Par Value
|
| ||||||||||||||||||||||||
Balance at December 31, 2018
|
| | | | 9,440,061 | | | | | $ | — | | | | | $ | 2,287,312 | | | | | $ | (2,055,270) | | | | | $ | 232,042 | | |
Issuance of common stock
|
| | | | 122,255 | | | | | | — | | | | | | 576,000 | | | | | | — | | | | | | 576,000 | | |
Share-based compensation
|
| | | | 193,081 | | | | | | — | | | | | | 910,092 | | | | | | — | | | | | | 910,092 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (1,469,243) | | | | | | (1,469,243) | | |
Balance at March 31, 2019
|
| | | | 9,755,397 | | | | | $ | — | | | | | $ | 3,773,404 | | | | | $ | (3,524,513) | | | | | $ | 248,891 | | |
|
| | |
Three months ended March 31, 2020
|
| |||||||||||||||||||||||||||
| | |
Common Stock
|
| |
Additional
Paid in Capital |
| |
Accumulated
deficit |
| |
Total
|
| ||||||||||||||||||
| | |
Shares
|
| |
Par Value
|
| ||||||||||||||||||||||||
Balance at December 31, 2019
|
| | | | 10,211,658 | | | | | $ | — | | | | | $ | 4,988,382 | | | | | $ | (6,147,567) | | | | | $ | (1,159,185) | | |
Issuance of common stock
|
| | | | 15,726 | | | | | | — | | | | | | 83,014 | | | | | | — | | | | | | 83,014 | | |
Share-based compensation
|
| | | | (4,216) | | | | | | — | | | | | | 124,721 | | | | | | — | | | | | | 124,721 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (42,771) | | | | | | (42,771) | | |
Balance at March 31, 2020
|
| | | | 10,223,168 | | | | | $ | — | | | | | $ | 5,196,117 | | | | | $ | (6,190,338) | | | | | $ | (994,221) | | |
| | |
Three months ended March 31,
|
| |||||||||
| | |
2019
|
| |
2020
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (1,469,243) | | | | | $ | (42,771) | | |
Adjustments to reconcile net loss to net cash (used in) provided by operating
activities: |
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 6,022 | | | | | | 19,275 | | |
Bad debt expense
|
| | | | 54,450 | | | | | | 35,270 | | |
Share-based compensation
|
| | | | 910,092 | | | | | | 124,721 | | |
Change in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | 924,911 | | | | | | (438,424) | | |
Agent annual fees receivable
|
| | | | (251,905) | | | | | | (605,974) | | |
Due from affiliates
|
| | | | (25,679) | | | | | | 1,095 | | |
Prepaid and other assets
|
| | | | 3,299 | | | | | | (40,846) | | |
Accounts payable and accrued liabilities
|
| | | | (564,380) | | | | | | 1,248,755 | | |
Operating lease right of use assets
|
| | | | 21,129 | | | | | | 461 | | |
Operating lease liabilities
|
| | | | (20,641) | | | | | | 77 | | |
Due to affiliates
|
| | | | 1 | | | | | | 1,444 | | |
Net cash (used in) provided by operating activities
|
| | | | (411,944) | | | | | | 303,083 | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | — | | | | | | (3,117) | | |
Purchase of capitalized software
|
| | | | (61,900) | | | | | | (113,701) | | |
Net cash used in investing activities
|
| | | | (61,900) | | | | | | (116,818) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Principal payments on loan payable
|
| | | | (4,173) | | | | | | (4,246) | | |
Proceeds from issuance of common stock
|
| | | | 576,000 | | | | | | 83,014 | | |
Net cash provided by financing activities
|
| | | | 571,827 | | | | | | 78,768 | | |
Net increase in cash and cash equivalents
|
| | | | 97,983 | | | | | | 265,033 | | |
Cash and cash equivalents at beginning of period
|
| | | | 1,008,538 | | | | | | 579,416 | | |
Cash and cash equivalents at end of period
|
| | | $ | 1,106,521 | | | | | $ | 844,449 | | |
Supplemental disclosure of cash and non-cash transactions: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 27,394 | | | | | $ | 32,868 | | |
Income taxes paid
|
| | | $ | 12,505 | | | | | $ | 2,261 | | |
Right of use assets obtained in exchange for lease liabilities
|
| | | $ | 261,814 | | | | | $ | — | | |
Asset category
|
| |
Depreciable life
|
|
Vehicles | | |
7 years
|
|
Computers and equipment | | |
5 years
|
|
Furniture and fixtures | | |
7 years
|
|
| | |
March 31,
|
| |||||||||
| | |
2019
|
| |
2020
|
| ||||||
Shares issuable upon exercise of stock options
|
| | | | — | | | | | | 37,130 | | |
Non-vested shares under restricted stock grants
|
| | | | — | | | | | | 223,765 | | |
| | |
December 31,
2019 |
| |
March 31,
2020 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Vehicles
|
| | | $ | 119,324 | | | | | $ | 119,324 | | |
Computers and equipment
|
| | | | 73,115 | | | | | | 76,232 | | |
Furniture and fixtures
|
| | | | 30,058 | | | | | | 30,058 | | |
Total property and equipment
|
| | | | 222,497 | | | | | | 225,614 | | |
Accumulated depreciation
|
| | | | (116,525) | | | | | | (124,314) | | |
Total property and equipment, net
|
| | | $ | 105,972 | | | | | $ | 101,300 | | |
| | |
December 31,
2019 |
| |
March 31,
2020 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Software Development
|
| | | $ | 499,300 | | | | | $ | 613,000 | | |
Total capitalized software
|
| | | | 499,300 | | | | | | 613,000 | | |
Accumulated amortization
|
| | | | (34,458) | | | | | | (45,943) | | |
Total capitalized software, net
|
| | | $ | 464,842 | | | | | $ | 567,057 | | |
| | |
December 31,
2019 |
| |
March 31,
2020 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Accounts payable
|
| | | $ | 922,373 | | | | | $ | 1,305,358 | | |
Deferred annual fee
|
| | | | 463,667 | | | | | | 1,122,266 | | |
Accrued professional fees
|
| | | | 601,797 | | | | | | 459,923 | | |
Accrued commissions
|
| | | | 261,161 | | | | | | 402,324 | | |
Accrued legal fees
|
| | | | 71,724 | | | | | | 190,160 | | |
Accrued compensation
|
| | | | 196,948 | | | | | | 188,236 | | |
Credit card liability
|
| | | | 70,431 | | | | | | 187,768 | | |
Other accrued liabilities
|
| | | | 72,836 | | | | | | 100,422 | | |
Insurance premium liabilities
|
| | | | 139,891 | | | | | | 89,326 | | |
Accrued bonuses
|
| | | | 5,400 | | | | | | 9,200 | | |
Total accounts payable and accrued liabilities
|
| | | $ | 2,806,228 | | | | | $ | 4,054,983 | | |
| | |
December 31,
2019 |
| |
March 31,
2020 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Loan payable – Automobile loan
|
| | | $ | 52,188 | | | | | $ | 47,942 | | |
Less current portion
|
| | | | (17,095) | | | | | | (17,169) | | |
Loan payable, net of current portion
|
| | | $ | 35,093 | | | | | $ | 30,773 | | |
| | |
Shares
|
| |
Weighted
Average Grant Date Fair Value |
| ||||||
Nonvested at December 31, 2019
|
| | | | 227,981 | | | | | $ | 5.28 | | |
Granted
|
| | | | — | | | | | | — | | |
Vested
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (4,216) | | | | | $ | (5.28) | | |
Nonvested at March 31, 2020
|
| | | | 223,765 | | | | | $ | 5.28 | | |
| | |
Three months ended March 31,
|
| |||||||||
Components of total lease cost:
|
| |
2019
|
| |
2020
|
| ||||||
| | |
(Unaudited)
|
| |||||||||
Operating lease expense
|
| | | $ | 27,228 | | | | | $ | 35,350 | | |
Short-term lease expense
|
| | | | 15,399 | | | | | | 17,003 | | |
Total lease cost
|
| | | $ | 42,627 | | | | | $ | 52,353 | | |
| | |
As of
March 31, 2020 |
| |||
| | |
(Unaudited)
|
| |||
Assets | | | | | | | |
Lease right of use assets
|
| | | $ | 264,679 | | |
Total lease assets
|
| | | $ | 264,679 | | |
Liabilities | | | | | | | |
Current liabilities: | | | | | | | |
Lease liability – current portion
|
| | | $ | 99,960 | | |
Noncurrent liabilities: | | | | | | | |
Lease liability, net of current portion
|
| | | | 167,261 | | |
Total lease liability
|
| | | $ | 267,221 | | |
|
Weighted average remaining lease term (in years) – operating leases . . . . . . . . . . . . . . . . .
|
| | | | 4.14 | | |
|
Weighted average discount rate – operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 8% | | |
Year ending December 31,
|
| |
Operating
Leases |
| |||
2020 (remaining)
|
| | | | 103,180 | | |
2021
|
| | | | 51,275 | | |
2022
|
| | | | 40,175 | | |
2023
|
| | | | 41,686 | | |
2024
|
| | | | 43,243 | | |
2025 and thereafter
|
| | | | 37,353 | | |
Total Minimum Lease Payments
|
| | | $ | 316,912 | | |
Less effects of discounting
|
| | | | (49,691) | | |
Present value of future minimum lease payments
|
| | | $ | 267,221 | | |
| | |
December 31,
2019 |
| |
March 31,
2020 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
On Target Transactions LLC
|
| | | $ | 2,561 | | | | | $ | 1,466 | | |
Total due from affiliates
|
| | | $ | 2,561 | | | | | $ | 1,466 | | |
| | |
December 31,
2019 |
| |
March 31,
2020 |
| ||||||
| | | | | | | | |
(Unaudited)
|
| |||
Hometown Heroes Holdings, LLC
|
| | | $ | 23,658 | | | | | $ | 25,102 | | |
Total due to affiliates
|
| | | $ | 23,658 | | | | | $ | 25,102 | | |
Expense
|
| |
Amount Paid
or to be Paid |
| |||
SEC registration fee
|
| | | $ | 3,822 | | |
Financial Industry Regulatory Authority, Inc. Filing Fee
|
| | | $ | 2,600 | | |
Exchange Listing Fee
|
| | | $ | 45,000 | | |
Printing expenses
|
| | | $ | 60,000 | | |
Legal fees and expenses
|
| | | $ | 362,000 | | |
Transfer agent and registrar fees
|
| | | $ | 5,500 | | |
Accounting fees and expenses
|
| | | $ | 100,000 | | |
Miscellaneous expenses
|
| | | $ | 21,078 | | |
Total
|
| | | $ | 600,000 | | |
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Joshua Harley
Joshua Harley
|
| |
Chief Executive Officer, Director (Principal Executive Officer)
|
| |
July 28, 2020
|
|
|
/s/ Marco Fregenal
Marco Fregenal
|
| |
President and Chief Financial Officer, Director (Principal Financial Officer and Principal Accounting Officer)
|
| |
July 28, 2020
|
|
|
*
Chris Bennett
|
| |
Director
|
| |
July 28, 2020
|
|
|
*
Jeffrey H. Coats
|
| |
Director
|
| |
July 28, 2020
|
|
|
*
David C. Hood
|
| |
Director
|
| |
July 28, 2020
|
|
|
*
Glenn Sampson
|
| |
Director
|
| |
July 28, 2020
|
|
|
*
Jennifer B. Venable
|
| |
Director
|
| |
July 28, 2020
|
|
|
*By:
/s/ Marco Fregenal
Marco Fregenal,
as Attorney-in-Fact |
| | |