Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 14, 2020 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Entity Registrant Name | FATHOM HOLDINGS INC. | |
Trading Symbol | FTHM | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,640,381 | |
Entity Central Index Key | 0001753162 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 1,490,278 | $ 579,416 |
Accounts receivable | 1,203,947 | 304,769 |
Agent annual fees receivable, net of allowance for doubtful accounts of $449,076 and $349,420 | 769,899 | 356,131 |
Due from affiliates | 1,476 | 2,561 |
Prepaid and other current assets | 398,010 | 411,202 |
Total current assets | 3,863,610 | 1,654,079 |
Property and equipment, net | 99,391 | 105,972 |
Capitalized software, net | 644,421 | 464,842 |
Lease right of use assets | 213,501 | 265,140 |
Total assets | 4,820,923 | 2,490,033 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 4,346,927 | 2,806,228 |
Due to affiliates | 23,087 | 23,658 |
Loan payable - current portion | 17,244 | 17,095 |
Notes payable - current portion | 135,349 | |
Lease liability - current portion | 63,767 | 89,566 |
Total current liabilities | 4,586,374 | 2,936,547 |
Loan payable, net of current portion | 26,433 | 35,093 |
Notes payable, net of current portion | 818,232 | 500,000 |
Lease liability, net of current portion | 152,814 | 177,578 |
Total liabilities | 5,583,853 | 3,649,218 |
Stockholders' Deficit | ||
Common stock, $0.00 par value, 100,000,000 authorized and 10,210,571 and 10,211,658 issued and outstanding as of June 30, 2020 and December 31, 2019 | ||
Treasury Stock, at cost, 5,683 and 0 shares as of June 30, 2020 and December 31, 2019 | (30,000) | |
Additional paid-in capital | 5,296,610 | 4,988,382 |
Accumulated deficit | (6,029,540) | (6,147,567) |
Total stockholders' deficit | (762,930) | (1,159,185) |
Total liabilities and stockholders' equity | $ 4,820,923 | $ 2,490,033 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Agent annual fees receivable, allowance for doubtful accounts | $ 449,076 | $ 349,420 |
Common stock, par value | $ 0 | $ 0 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 10,210,571 | 10,211,658 |
Common stock, outstanding shares | 10,210,571 | 10,211,658 |
Treasury stock, shares | 5,683 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenue | $ 38,688,744 | $ 27,792,313 | $ 67,527,575 | $ 45,927,039 |
Cost of revenue | 36,356,779 | 26,026,425 | 63,044,034 | 42,879,197 |
Gross profit | 2,331,965 | 1,765,888 | 4,483,541 | 3,047,842 |
General and administrative | 2,009,277 | 2,743,398 | 3,939,353 | 5,405,443 |
Marketing | 138,231 | 46,187 | 368,664 | 103,949 |
Total operating expenses | 2,147,508 | 2,789,585 | 4,308,017 | 5,509,392 |
Income (loss) from operations | 184,457 | (1,023,697) | 175,524 | (2,461,550) |
Other expense (income), net | ||||
Interest expense, net | 32,659 | 27,061 | 65,497 | 54,431 |
Other income, net | (10,000) | (10,000) | ||
Other expense (income), net | 22,659 | 27,061 | 55,497 | 54,431 |
Income (loss) from operations before income taxes | 161,798 | (1,050,758) | 120,027 | (2,515,981) |
Income tax (expense) benefit | (1,000) | 12,000 | (2,000) | 7,980 |
Net income (loss) | $ 160,798 | $ (1,038,758) | $ 118,027 | $ (2,508,001) |
Net income (loss) per share | ||||
Basic | $ 0.02 | $ (0.11) | $ 0.01 | $ (0.26) |
Diluted | $ 0.02 | $ (0.11) | $ 0.01 | $ (0.26) |
Weighted average common shares outstanding | ||||
Basic | 9,996,775 | 9,779,753 | 9,996,939 | 9,745,574 |
Diluted | 10,030,025 | 9,779,753 | 10,016,269 | 9,745,574 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated deficit | Total |
Beginning balance at Dec. 31, 2018 | $ 2,287,312 | $ (2,055,270) | $ 232,042 | ||
Beginning balance (in shares) at Dec. 31, 2018 | 9,440,061 | ||||
Changes in Stockholders' deficit | |||||
Issuance of common stock | 576,000 | 576,000 | |||
Issuance of common stock (in shares) | 122,255 | ||||
Share-based compensation | 910,092 | 910,092 | |||
Share-based compensation (in shares) | 193,081 | ||||
Net income (loss) | (1,469,243) | (1,469,243) | |||
Ending balance at Mar. 31, 2019 | 3,773,404 | (3,524,513) | 248,891 | ||
Ending balance (in shares) at Mar. 31, 2019 | 9,755,397 | ||||
Beginning balance at Dec. 31, 2018 | 2,287,312 | (2,055,270) | 232,042 | ||
Beginning balance (in shares) at Dec. 31, 2018 | 9,440,061 | ||||
Changes in Stockholders' deficit | |||||
Net income (loss) | (2,508,001) | ||||
Ending balance at Jun. 30, 2019 | 4,418,436 | (4,563,271) | (144,835) | ||
Ending balance (in shares) at Jun. 30, 2019 | 9,888,462 | ||||
Beginning balance at Dec. 31, 2018 | 2,287,312 | (2,055,270) | 232,042 | ||
Beginning balance (in shares) at Dec. 31, 2018 | 9,440,061 | ||||
Changes in Stockholders' deficit | |||||
Net income (loss) | 4,100,000 | ||||
Ending balance at Dec. 31, 2019 | 4,988,382 | (6,147,567) | (1,159,185) | ||
Ending balance (in shares) at Dec. 31, 2019 | 10,211,658 | ||||
Beginning balance at Mar. 31, 2019 | 3,773,404 | (3,524,513) | 248,891 | ||
Beginning balance (in shares) at Mar. 31, 2019 | 9,755,397 | ||||
Changes in Stockholders' deficit | |||||
Share-based compensation | 645,032 | 645,032 | |||
Share-based compensation (in shares) | 133,065 | ||||
Net income (loss) | (1,038,758) | (1,038,758) | |||
Ending balance at Jun. 30, 2019 | 4,418,436 | (4,563,271) | (144,835) | ||
Ending balance (in shares) at Jun. 30, 2019 | 9,888,462 | ||||
Beginning balance at Dec. 31, 2019 | 4,988,382 | (6,147,567) | (1,159,185) | ||
Beginning balance (in shares) at Dec. 31, 2019 | 10,211,658 | ||||
Changes in Stockholders' deficit | |||||
Issuance of common stock | 83,014 | 83,014 | |||
Issuance of common stock (in shares) | 15,726 | ||||
Share-based compensation | 124,721 | 124,721 | |||
Share-based compensation (in shares) | (4,216) | ||||
Net income (loss) | (42,771) | (42,771) | |||
Ending balance at Mar. 31, 2020 | 5,196,117 | (6,190,338) | (994,221) | ||
Ending balance (in shares) at Mar. 31, 2020 | 10,223,168 | ||||
Beginning balance at Dec. 31, 2019 | 4,988,382 | (6,147,567) | $ (1,159,185) | ||
Beginning balance (in shares) at Dec. 31, 2019 | 10,211,658 | ||||
Changes in Stockholders' deficit | |||||
Issuance of common stock (in shares) | 15,726 | ||||
Purchase of treasury stock | $ (30,000) | ||||
Purchase of treasury stock (in shares) | (5,683) | ||||
Net income (loss) | $ 118,027 | ||||
Ending balance at Jun. 30, 2020 | $ (30,000) | 5,296,610 | (6,029,540) | (762,930) | |
Ending balance (in shares) at Jun. 30, 2020 | 10,210,571 | ||||
Beginning balance at Mar. 31, 2020 | 5,196,117 | (6,190,338) | (994,221) | ||
Beginning balance (in shares) at Mar. 31, 2020 | 10,223,168 | ||||
Changes in Stockholders' deficit | |||||
Purchase of treasury stock | $ (30,000) | (30,000) | |||
Purchase of treasury stock (in shares) | (5,683) | 5,683 | |||
Share-based compensation | 100,493 | 100,493 | |||
Share-based compensation (in shares) | (6,914) | ||||
Net income (loss) | 160,798 | 160,798 | |||
Ending balance at Jun. 30, 2020 | $ (30,000) | $ 5,296,610 | $ (6,029,540) | $ (762,930) | |
Ending balance (in shares) at Jun. 30, 2020 | 10,210,571 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 118,027 | $ (2,508,001) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 63,771 | 23,633 |
Bad debt expense | 99,656 | 81,694 |
Share based compensation | 225,214 | 1,555,124 |
Change in operating assets and liabilities: | ||
Accounts receivable | (899,178) | 784,693 |
Agent annual fees receivable | (513,424) | (388,122) |
Due from affiliates | 1,085 | 188,621 |
Prepaid and other assets | 13,192 | 10,641 |
Accounts payable and accrued liabilities | 1,540,699 | (198,592) |
Operating lease right of use assets | 51,639 | 42,674 |
Operating lease liabilities | (50,563) | (41,735) |
Due to affiliates | (571) | 1 |
Net cash provided by (used in) operating activities | 649,547 | (449,369) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (9,369) | (11,137) |
Purchase of capitalized software | (227,400) | (136,600) |
Net cash used in investing activities | (236,769) | (147,737) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on loan payable | (8,511) | (8,364) |
Proceeds from issuance of common stock | 83,014 | 576,000 |
Purchase of treasury stock | (30,000) | |
Proceeds from note payable | 453,581 | |
Net cash provided by financing activities | 498,084 | 567,636 |
Net increase (decrease) in cash and cash equivalents | 910,862 | (29,470) |
Cash and cash equivalents at beginning of period | 579,416 | 1,008,538 |
Cash and cash equivalents at end of period | 1,490,278 | 979,068 |
Supplemental disclosure of cash and non-cash transactions: | ||
Cash paid for interest | 65,560 | 54,500 |
Income taxes paid | $ 2,261 | 12,505 |
Right of use assets obtained in exchange for lease liabilities | $ 261,814 |
Description of Business and Nat
Description of Business and Nature of Operations | 6 Months Ended |
Jun. 30, 2020 | |
Description of Business and Nature of Operations | |
Description of Business and Nature of Operations | Note 1. Description of Business and Nature of Operations Fathom Holdings Inc. (“Fathom Holdings,” and collectively with its consolidated subsidiaries and affiliates, the “Company”) is a cloud-based, technology-driven platform-as-a-service company, working with agents, to help individuals purchase and sell residential properties primarily in the South, Atlantic, Southwest and Western parts of the United States. The Company has operations located in multiple states nationwide. The Company is engaged by its customers to assist with buying, selling, or leasing property. In exchange for its services, the Company is compensated by commission income earned upon closing of the sale of a property or execution of a lease. Typically, within the brokerage industry, all brokers involved in a sale are compensated based on commission rates negotiated in a listing agreement. Agents on the “buy” and “sell” sides of each transaction share the total commission identified in the listing agreement. The Company may provide services to the buyer, seller, or both parties to a transaction. When the Company provides services to the seller in a transaction, it recognizes revenue for its portion of the commission, which is calculated as the sales price multiplied by the commission rate less the commission separately distributed to the buyer’s agent, or the “sell” side portion of the commission. When the Company provides services to the buyer in a transaction, the Company recognizes revenue in an amount equal to the sales price for the property multiplied by the commission rate for the “buy” side of the transaction. In instances in which the Company represents both the buyer and the seller in a transaction, it recognizes the full commission on the transaction. The Company operates as one operating and reporting segment. On July 10, 2020, the Company approved a 4.71352-for-one reverse stock split of the Company’s common stock. No fractional shares were issued in connection with the reverse stock split. All fractional shares as a result of the reverse stock split were rounded up to a full share. The par value and other terms of the common stock were not affected by the reverse stock split. All share and per share amounts, including stock options, have been retroactively adjusted in these financial statements for all periods presented to reflect the 4.71352-for-one reverse stock split. Further, exercise prices of stock options have been retroactively adjusted in these financial statements for all periods presented to reflect the 4.71352-for-one reverse stock split. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation — The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s final prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933 with the SEC on July 31, 2020. The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period. The unaudited interim condensed consolidated financial statements include the accounts of Fathom Holdings’ wholly owned subsidiaries. All transactions and accounts between and among its subsidiaries have been eliminated. All adjustments and disclosures necessary for a fair presentation of these unaudited interim condensed consolidated financial statements have been included. Certain Significant Risks and Business Uncertainties — The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Further, during the period required to achieve substantially higher revenue in order to become consistently profitable, the Company may require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. Consideration of Going Concern — The Company has a history of negative cash flows from operations and operating losses and experienced net income of $0.1 million for the six months ended June 30, 2020 and a net loss of approximately $4.1 million for the year ended December 31, 2019. Additionally, the Company anticipates further expenditures associated with the process of expanding the business. Combined with the Company’s negative working capital and stockholders’ deficit, management determined these conditions raised substantial doubt as to the Company’s ability to continue as a going concern. Management believes that its planned budget, which includes continued increases in the number of our agents and transactions at rates consistent with historical growth, and the expected ability to achieve sales volumes necessary to cover forecasted expenses along with the $31.3 million in proceeds from the IPO completed on August 4, 2020 (See Note 13) alleviates the substantial doubt about our ability to continue as a going concern for a period of at least one year from the date of the issuance of the unaudited interim condensed consolidated financial statements. COVID‑19 Risks, Impacts and Uncertainties — On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID‑19 Outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID‑19 Outbreak as a pandemic, based on the rapid increase in exposure globally. We are subject to the risks arising from the COVID‑19 Outbreak’s social and economic impacts on the residential real estate industry. Our management believes that the social and economic impacts, which include but are not limited to the following, could have a significant impact on future financial condition, liquidity, and results of operations: (i) restrictions on in-person activities associated with residential real estate transactions arising from shelter-in-place, or similar isolation orders; (ii) decline in consumer demand for in-person interactions and physical home tours; and (iii) deteriorating economic conditions, such as increased unemployment rates, recessionary conditions, lower yields on individual investment portfolios, and more stringent mortgage financing conditions. In response to the COVID‑19 Outbreak, the Company has implemented cost saving measures including elimination of non-essential travel and in-person training activities, and deferral of certain planned expenditures. Additionally, our Chief Executive Officer, Joshua Harley, and our President and Chief Financial Officer, Marco Fregenal, voluntarily took no base salary for March and April 2020. In addition, our Chief Broker Operations Officer, Samantha Giuggio, and one other senior employee voluntarily took 50% reductions in their base salary for those months. Based in part on business operations and results through the end of April, the Company resumed paying all of these salaries in full in May. Given the daily evolution of the COVID‑19 Outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID‑19 Outbreak on its results of operations, financial condition, or liquidity for the year ending December 31, 2020 and beyond. If the COVID‑19 Outbreak continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations. Use of Estimates — The preparation of consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to provisions for doubtful accounts, legal contingencies, income taxes, deferred income tax, asset valuation allowances, and share-based compensation. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company might differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of money market instruments. From time to time, the Company’s cash deposits exceed federally insured limits. The Company has not experienced any losses resulting from these excess deposits. Fair Value Measurements — FASB ASC 820, Fair Value Measurement , (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: · Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). · Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially). · Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available). The fair value of cash and cash equivalents, accounts receivable, agent annual fees receivable, prepaids and other current assets, due from affiliates, accounts payable and accrued liabilities, and due to affiliates approximate their carrying value due to their short-term maturities. The loan and note payable, and lease liability are presented at their carrying value, which based on borrowing rates currently available to the Company for loans and leases with similar terms, approximates their fair values. Accounts Receivable — Accounts receivable consist of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. Agent Annual Fees Receivable — Agent annual fees receivable consist of the $500 fee every agent pays on their first sale or their one year anniversary date, which is recognized as a reduction to Cost of Revenue ratably over the year in which the fee pertains. Property and Equipment — Property and equipment is stated at cost, less accumulated depreciation. Maintenance and repairs are charged to expense when incurred. Additions and improvements that extend the economic useful life of the asset are capitalized and depreciated over the remaining useful lives of the assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any resulting gain or loss is reflected in current earnings. Depreciation is provided using the straight-line method in amounts considered to be sufficient to amortize the cost of the assets to operations over their estimated useful lives, as follows: Asset category Depreciable life Vehicles 7 years Computers and equipment 5 years Furniture and fixtures 7 years Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets might not be recoverable. Recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets were considered to be impaired, an impairment loss would be recognized as the difference between the fair value and carrying value when the carrying amount of the asset exceeds the fair value of the asset. To date, no such impairment has occurred. Capitalized internal use software — Costs incurred in the preliminary stages of website and software development are expensed as incurred. Once an application has reached the development stage, direct internal and external costs relating to upgrades or enhancements that meet the capitalization criteria are capitalized in property and equipment and amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs (including those costs in the post-implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the websites (or software) that result in added functionality, in which case the costs are capitalized as well. Capitalized software costs are amortized over the expected useful lives of those releases. Currently, capitalized software costs for internal use has a useful life estimated at three years. Estimated useful lives of website and software development activities are reviewed annually or whenever events or changes in circumstances indicate that intangible assets may be impaired and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades or enhancements to the existing functionality. Revenue Recognition — We apply the provisions of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when a performance obligation is satisfied. The Company’s revenue substantially consists of commissions generated from real estate brokerage services. The Company is contractually obligated to provide for the fulfillment of transfers of real estate between buyers and sellers. The Company provides these services itself and controls the services of its agents necessary to legally transfer the real estate. Correspondingly, the Company is defined as the principal. The Company, as principal, satisfies its obligation upon the closing of a real estate transaction. The Company has concluded that agents are not employees of the Company, rather deemed to be independent contractors. Upon satisfaction of its obligation, the Company recognizes revenue in the gross amount of consideration it is entitled to receive. The transaction price is calculated by applying the Company’s portion of the agreed-upon commission rate to the property’s selling price. The Company may provide services to the buyer, seller, or both parties to a transaction. When the Company provides services to the seller in a transaction, it recognizes revenue for its portion of the commission, which is calculated as the sales price multiplied by the commission rate less the commission separately distributed to the buyer’s agent, or the “sell” side portion of the commission. When the Company provides services to the buyer in a transaction, the Company recognizes revenue in an amount equal to the sales price for the property multiplied by the commission rate for the “buy” side of the transaction. In instances in which the Company represents both the buyer and the seller in a transaction, it recognizes the full commission on the transaction. Commissions revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company’s customers remit payment for the Company’s services to the title company or attorney closing the sale of property at the time of closing. The Company receives payment upon close of property or within days of the closing of a transaction. The Company is not entitled to any commission until the performance obligation is satisfied and is not owed any commission for unsuccessful transactions, even if services have been provided. The Company has utilized the practical expedient in ASC 606 and elected not to capitalize contract costs for contracts with customers with durations less than one year. The Company does not have significant remaining unfulfilled performance obligations or contract balances. Cost of Revenue — Cost of revenue consists primarily of agent commissions less transaction and annual fees paid by our agents. Marketing Expenses — Marketing expenses consist primarily of marketing and promotional materials. Marketing costs are expensed as they are incurred. Leases — The Company adopted FASB ASC Topic 842, Leases, (“ASC 842”) on January 1, 2019. The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Share-based Compensation — Share-based compensation for employees and non-employees (principally independent contractor agents) is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are recognized when they occur. Fully vested restricted stock awards are measured on grant date at fair value. Income Taxes — Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the combined financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. The Company will establish a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before either the Company is able to realize their benefit or that future deductibility is uncertain. The Company believes that it is currently more likely than not that its deferred tax assets will not be realized and as such, it has recorded a full valuation allowance for these assets. The Company evaluates the likelihood of the ability to realize deferred tax assets in future periods on a quarterly basis, and when appropriate evidence indicates it would release its valuation allowance accordingly. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income, and accumulated deficit, the Company provided a full valuation allowance against the U.S. tax assets resulting from the tax losses as of June 30, 2020 and December 31, 2019. Deferred Offering Costs — Deferred offering costs are included in prepaid and other current assets and consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Company’s initial public offering (“IPO”) and that will be charged to stockholders’ equity upon the completion of the IPO. The Company’s IPO closed on August 4, 2020. For the six months ended June 30, 2020 and the year ended December 31, 2019, the Company capitalized approximately $213,000 and $37,000, respectively, of deferred offering costs related to the IPO. For the six months ended June 30, 2019, the Company did not capitalize any deferred offering costs related to the IPO. Earnings (Loss) Per Share — Basic earnings (loss) per share is computed by dividing net income (loss) attributable to the Company by the weighted-average number of shares of common stock outstanding for the period. Our diluted earnings per share of common stock is computed similarly to basic earnings per share, except that it reflects the effect of shares of common stock issuable for presently unvested restricted stock and upon exercise of stock options, using the treasury stock method in periods in which they have a dilutive effect. The following table shows the computation of weighted-average diluted shares for the three and six months ended June 30, 2020 and June 30, 2019: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Weighted-average basic shares outstanding 9,996,775 9,779,753 9,996,939 9,745,574 Effect of dilutive securities: Stock options 3,483 — 1,441 — Unvested restricted stock awards 29,767 — 17,889 — Weighted-average diluted shares 10,030,025 9,779,753 10,016,269 9,745,574 Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016‑13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. In addition, an entity will have to disclose significantly more information about allowances and credit quality indicators. The new standard is effective for the Company for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements and intends to adopt the standard on January 1, 2023. In December 2019, the FASB issued ASU 2019‑12, Simplifying the Accounting for Income Taxes (“ASU 2019‑12”), which modifies ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019‑12 is effective for the Company for interim and annual reporting periods beginning after December 15, 2021. The Company is currently assessing the impact of ASU 2019‑12, but it is not expected to have a material impact on the Company’s consolidated financial statement. |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2020 | |
Property and Equipment, Net | |
Property and Equipment, Net | Note 3. Property and Equipment, Net Property and equipment, net consisted of the following at the dates indicated: June 30, 2020 December 31, 2019 (Unaudited) Vehicles $ 119,324 $ 119,324 Computers and equipment 82,484 73,115 Furniture and fixtures 30,058 30,058 Total property and equipment 231,866 222,497 Accumulated depreciation (132,475) (116,525) Total property and equipment, net $ 99,391 $ 105,972 Depreciation expense for property and equipment was approximately $8,000 and $6,000 for the three months ended June 30, 2020 and 2019, respectively, and $16,000 and $12,000 for the six months ended June 30, 2020 and 2019, respectively. |
Capitalized Software, Net
Capitalized Software, Net | 6 Months Ended |
Jun. 30, 2020 | |
Capitalized Software, Net | |
Capitalized Software, Net | Note 4. Capitalized Software, Net Capitalized software, net consisted of the following at the dates indicated: June 30, 2020 December 31, 2019 (Unaudited) Software development $ 726,700 $ 499,300 Total capitalized software 726,700 499,300 Accumulated amortization (82,279) (34,458) Total capitalized software, net $ 644,421 $ 464,842 Amortization expense for capitalized software was approximately $37,000 and $11,000 for the three months ended June 30, 2020 and 2019, respectively, and $48,000 and $11,000 for the six months ended June 30, 2020 and 2019, respectively. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | Note 5. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following at the dates indicated: June 30, 2020 December 31, 2019 (Unaudited) Accounts payable $ 1,802,129 $ 922,373 Deferred annual fee 958,700 463,667 Accrued commissions 370,405 261,161 Accrued compensation 363,690 196,948 Accrued professional fees 356,139 601,797 Accrued legal fees 173,542 71,724 Other accrued liabilities 142,888 72,836 Credit card liability 141,065 70,431 Insurance premium liabilities 36,269 139,891 Accrued bonuses 2,100 5,400 Total accounts payable and accrued liabilities $ 4,346,927 $ 2,806,228 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt | |
Debt | Note 6. Debt Loan Payable The Company obtained a loan for an automobile used by the Chief Executive Officer. The term of the loan is from July 2016 through December 2022 with an annual interest rate of 1.74%. The components of the loan payable were as follows: June 30, 2020 December 31, 2019 (Unaudited) Loan payable – Automobile loan $ 43,677 $ 52,188 Less current portion (17,244) (17,095) Loan payable, net of current portion $ 26,433 $ 35,093 Notes Payable June 30, 2020 December 31, 2019 (Unaudited) Quail Point Corp. $ 500,000 $ 500,000 Paycheck Protection Program Loan 303,681 — Small Business Administration Loan 149,900 — Long term debt 953,581 500,000 Less current portion the Paycheck Protection Program Loan (135,093) — Less current portion of the Small Business Administration Loan (256) — Note payable, net of current portion $ 818,232 $ 500,000 Note Payable – Quail Point Corp. On April 14, 2017, Fathom Realty entered into a Loan Agreement with Quail Point Corp. (the “Lender”) whereby Fathom Realty borrowed $400,000 from the Lender. Interest is payable each month at 1.6675% (20% annually) and the note was due to mature on March 1, 2037 with the principal due at that time. The Loan Agreement allowed for principal payments at any time without pre-payment penalty. On February 6, 2018, Fathom Realty entered into a new Loan Agreement (‘New Loan Agreement”) for $500,000 with the Lender. The New Loan Agreement extinguished the original loan and established a new loan. The fair value of the New Loan Agreement equaled the carrying value. Interest is payable each month at 1.6675% (20% annually) and the note matures on March 1, 2023 with the principal due at that time. The New Loan Agreement allows for principal payments at any time without pre-payment penalty. Note Payable – Paycheck Protection Program Loan On May 5, 2020, the Company received $303,681 in loan funding from the Paycheck Protection Program (the “PPP”), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The application for these funds requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account current business activity and ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The unsecured loan (the “PPP Loan”) is evidenced by a promissory note of the Company dated May 5, 2020 (the “ PPP Note”) in the principal amount of $303,681, to Bank of America (the “Bank”), the lender. Under the terms of the PPP Note and the PPP Loan, interest accrues on the outstanding principal at the rate of 1% per annum, and there is a deferment period of six months until equal installment payments of $17,090 of principal and interest are due. The term of the PPP Note is two years, though payments greater than the monthly payment or additional payments may be made at any time without prepayment penalty but shall not relieve the Company of its obligations to pay the next succeeding monthly payment. The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP, the Company may apply for and be granted forgiveness for all or part of the PPP Loan. The amount of loan proceeds eligible for forgiveness is based on a formula that takes into account a number of factors, including the amount of loan proceeds used by the Company during the twenty-four week period after the loan origination for certain purposes including payroll costs, rent payments on certain leases, and certain qualified utility payments, provided that at least 60% of the loan amount is used for eligible payroll costs; the employer maintaining or rehiring employees and maintaining salaries at certain levels; and other factors. Subject to the other requirements and limitations on loan forgiveness, only loan proceeds spent on payroll and other eligible costs during the covered twenty-four-week period will qualify for forgiveness. Forgiveness of the loan is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on future adherence to the forgiveness criteria. The Company intends to use the entire Loan amount for qualifying expense, though no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part. Note Payable – Small Business Administration Loan On June 5, 2020, the Company received $150,000 in loan funding from the SBA (the “SBA Note”) under the Economic Injury Disaster Loan program (“EIDL”). The Company will use all the proceeds of this secured SBA Note solely as working capital to alleviate economic injury caused by COVID‑19. The SBA Note is evidenced by a promissory note of the Company dated June 5, 2020 in the principal amount of $150,000, to the SBA, the lender. Debt issuance costs incurred in connection with the SBA Note of $100 were expensed. Under the terms of the SBA Note, interest accrues on the outstanding principal at the rate of 3.75% per annum, and installment payments, including principal and interest, of $731 monthly, will begin twelve months from the date of the SBA Note. All remaining principal and accrued interest is due and payable thirty years from the date of the Note. In connection with the SBA Note, the Company received a $10,000 grant, which does not need to be repaid, and is recorded in other income. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | Note 7. Stockholders’ Equity On July 10, 2020, the Company approved a 4.71352‑for-one reverse stock split of the Company’s common stock. No fractional shares were issued in connection with the reverse stock split. All fractional shares as a result of the reverse stock split were rounded up to a full share. The par value and other terms of the common stock were not affected by the reverse stock split. All share and per share amounts, including stock options, have been retroactively adjusted in these financial statements for all periods presented to reflect the 4.71352‑for-one reverse stock split. Further, exercise prices of stock options have been retroactively adjusted in these financial statements for all periods presented to reflect the 4.71352‑for-one reverse stock split. Common Stock During the six months ended June 30, 2020, the Company sold, in aggregate, 15,726 shares of common stock for gross proceeds of $83,014. Treasury Stock During the six months ended June 30, 2020, the Company repurchased, in aggregate, 5,683 shares of common stock for a total of $30,000. |
Share-based Compensation
Share-based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Compensation | |
Share-based Compensation | Note 8. Share-based Compensation The Company’s 2017 Stock Plan (the “Plan”) provides for granting stock options and restricted stock awards to employees, directors, contractors and consultants of the Company. A total of 3,182,335 shares of common stock are authorized to be issued pursuant to the Plan. Determining the appropriate fair value of share-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and, for stock options, the expected life of the option, and expected stock price volatility. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards. Restricted Stock Awards Weighted Average Grant Date Shares 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 Granted — — Vested — — Forfeited (6,914) $ (5.28) Nonvested at June 30, 2020 216,851 $ 5.28 The Company recognized stock compensation expense for restricted stock awards of $97,862, net of forfeitures of $8,984, and $633,217 for the three months ended June 30, 2020 and June 30, 2019, respectively, and $201,020, net of forfeitures of $11,355, and $1,543,309, for the six months ended June 30, 2020 and June 30, 2019, respectively, which is included in general and administrative expense. At June 30, 2020, the total unrecognized compensation expense related to unvested restricted stock awards granted was $923,992, which the Company expects to recognize over a period of approximately 2.32 years. No shares were granted during the six months ended June 30, 2020. Stock Option Awards For the three months ended June 30, 2020 and June 30, 2019, the Company recognized $2,631 and $11,815, respectively, and for the six months ended June 30, 2020 and June 30, 2019, the Company recognized $24,194 and $11,815, respectively, of share-based compensation expense in general and administrative expense. At June 30, 2020, the total unrecognized compensation related to unvested stock option awards granted was $0. No stock option awards were granted during the six months ended June 30, 2020. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | Note 9. Leases Operating Leases The Company has operating leases primarily consisting of office space with remaining lease terms of 1 to 7 years, subject to certain renewal options as applicable. Leases with an initial term of twelve months or less are not recorded on the balance sheet, and the Company does not separate lease and non-lease components of contracts. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Certain leases include variable payments related to common area maintenance and property taxes, which are billed by the landlord, as is customary with these types of charges for office space. Our lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived an imputed rate, which was used in a portfolio approach to discount its real estate lease liabilities. We used an estimated incremental borrowing rate of 8% on December 31, 2018 for all leases that commenced prior to that date. There was no sublease rental income for the six months ended June 30, 2020, the Company is not the lessor in any lease arrangement, and no related party transactions for lease arrangements have occurred. Lease Costs The table below presents certain information related to the lease costs for the Company’s operating leases for the six months ended June 30, 2020 and June 30, 2019: Six months ended June 30, Components of total lease cost: 2020 2019 (Unaudited) Operating lease expense $ 70,151 $ 54,456 Short-term lease expense 35,047 29,994 Total lease cost $ 105,198 $ 84,450 Lease Position as of June 30, 2020 Right of use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheet as follows: As of June 30, 2020 (Unaudited) Assets Lease right of use assets $ 213,501 Total lease assets $ 213,501 Liabilities Current liabilities: Lease liability – current portion $ 63,767 Noncurrent liabilities: Lease liability, net of current portion 152,814 Total lease liability $ 216,581 Lease Terms and Discount Rate The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of June 30, 2020: Weighted average remaining lease term (in years) - operating leases 4.48 Weighted average discount rate - operating leases 8 % Undiscounted Cash Flows Future lease payments included in the measurement of lease liabilities on the condensed consolidated balance sheet as of June 30, 2020, for the following five fiscal years and thereafter were as follows: Year ending December 31, Operating Leases 2020 (remaining) $ 58,314 2021 39,350 2022 40,175 2023 41,686 2024 43,243 2025 37,353 Total Minimum Lease Payments $ 260,121 Less effects of discounting (43,540) Present value of future minimum lease payments $ 216,581 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions | |
Related Party Transactions | Note 10. Related Party Transactions Due from affiliates Fathom Realty has loaned monies to other entities controlled by shareholders of the Company. Due from affiliates consists of the following: June 30, 2020 December 31, 2019 (Unaudited) On Target Transactions LLC $ 1,476 $ 2,561 Total due from affiliates $ 1,476 $ 2,561 On Target Transactions LLC (“On Target Transactions”) is a transaction management company for real estate agents. Messrs. Harley and Fregenal own a total of 60% of On Target Transactions. Due to affiliates Fathom Realty has outstanding monies due to related parties and other entities controlled by shareholders of the Company. Due to affiliates consists of the following: June 30, 2020 December 31, 2019 (Unaudited) Hometown Heroes Holdings, LLC $ 23,087 $ 23,658 Total due to affiliates $ 23,087 $ 23,658 Hometown Heroes Holdings, LLC (“Hometown Heroes Holdings”) is a real estate portal that generates real estate leads. Hometown Heroes Holdings is fully owned by Joshua Harley, Marco Fregenal and Glenn Sampson, who are officers (Harley and Fregenal), directors and shareholders of the Company. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | Note 11. Income Taxes As of June 30, 2020, and December 31, 2019, the Company had federal net operating loss carryforwards of $ 6.4 million and $6.5 million and state net operating loss carryforwards of $ 3.1 million and $3.2 million, respectively. Losses will begin to expire, if not utilized, in 2032. Utilization of the net operating loss carryforwards may be subject to an annual limitation according to Section 382 of the Internal Revenue Code of 1986 as amended, and similar provisions. The Company applies the standards on uncertainty in income taxes contained in ASC Topic 740, Accounting for Income Taxes. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements, as the Company did not have any significant unrecognized tax benefits during the six months ended June 30, 2020 or the year ended December 31, 2019. Currently, the statute of limitations remains open subsequent to and including the year ended December 31, 2016. |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2020 | |
Legal Proceedings | |
Legal Proceedings | Note 12. Legal Proceedings From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, brokerage or real estate disputes, or other consumer protection statutes, ordinary-course brokerage disputes like the failure to disclose property defects, commission disputes, and vicarious liability based upon conduct of individuals or entities outside of the Company’s control, including agents and third-party contractor agents. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of June 30, 2020, there was no material litigation against the Company. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events | |
Subsequent Events | Note 13. Subsequent Events On August 4, 2020 the Company completed an IPO of its common stock, which resulted in the issuance and sale of 3,430,000 shares of its common stock at a public offering price of $10.00 per share, generating net proceeds of $31.3 million after deducting underwriting discounts and other offering costs. The shares commenced trading on the Nasdaq Capital Market on July 31, 2020 under the ticker symbol “FTHM.” On July 30, 2020, the effective date of the registration statement used in the IPO, the Company agreed to issue warrants to the underwriter (the “Underwriter Warrant”) to purchase 240,100 shares of common stock. The Underwriter Warrant is exercisable at a per share exercise price of $11.00, which is equal to 110% of the public offering price per share of common stock sold in the IPO. The Underwriter Warrant is exercisable at any time and from time to time from and after January 26, 2021, which is 180 days following the effective date of the registration statement used in the IPO. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation — The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s final prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933 with the SEC on July 31, 2020. The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period. The unaudited interim condensed consolidated financial statements include the accounts of Fathom Holdings’ wholly owned subsidiaries. All transactions and accounts between and among its subsidiaries have been eliminated. All adjustments and disclosures necessary for a fair presentation of these unaudited interim condensed consolidated financial statements have been included. |
Certain Significant Risks and Business Uncertainties | Certain Significant Risks and Business Uncertainties — The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Further, during the period required to achieve substantially higher revenue in order to become consistently profitable, the Company may require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. |
Consideration of Going Concern | Consideration of Going Concern — The Company has a history of negative cash flows from operations and operating losses and experienced net income of $0.1 million for the six months ended June 30, 2020 and a net loss of approximately $4.1 million for the year ended December 31, 2019. Additionally, the Company anticipates further expenditures associated with the process of expanding the business. Combined with the Company’s negative working capital and stockholders’ deficit, management determined these conditions raised substantial doubt as to the Company’s ability to continue as a going concern. Management believes that its planned budget, which includes continued increases in the number of our agents and transactions at rates consistent with historical growth, and the expected ability to achieve sales volumes necessary to cover forecasted expenses along with the $31.3 million in proceeds from the IPO completed on August 4, 2020 (See Note 13) alleviates the substantial doubt about our ability to continue as a going concern for a period of at least one year from the date of the issuance of the unaudited interim condensed consolidated financial statements. |
COVID-19 Risks, Impacts and Uncertainties | COVID‑19 Risks, Impacts and Uncertainties — On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID‑19 Outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID‑19 Outbreak as a pandemic, based on the rapid increase in exposure globally. We are subject to the risks arising from the COVID‑19 Outbreak’s social and economic impacts on the residential real estate industry. Our management believes that the social and economic impacts, which include but are not limited to the following, could have a significant impact on future financial condition, liquidity, and results of operations: (i) restrictions on in-person activities associated with residential real estate transactions arising from shelter-in-place, or similar isolation orders; (ii) decline in consumer demand for in-person interactions and physical home tours; and (iii) deteriorating economic conditions, such as increased unemployment rates, recessionary conditions, lower yields on individual investment portfolios, and more stringent mortgage financing conditions. In response to the COVID‑19 Outbreak, the Company has implemented cost saving measures including elimination of non-essential travel and in-person training activities, and deferral of certain planned expenditures. Additionally, our Chief Executive Officer, Joshua Harley, and our President and Chief Financial Officer, Marco Fregenal, voluntarily took no base salary for March and April 2020. In addition, our Chief Broker Operations Officer, Samantha Giuggio, and one other senior employee voluntarily took 50% reductions in their base salary for those months. Based in part on business operations and results through the end of April, the Company resumed paying all of these salaries in full in May. Given the daily evolution of the COVID‑19 Outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID‑19 Outbreak on its results of operations, financial condition, or liquidity for the year ending December 31, 2020 and beyond. If the COVID‑19 Outbreak continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations. |
Use of Estimates | Use of Estimates — The preparation of consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to provisions for doubtful accounts, legal contingencies, income taxes, deferred income tax, asset valuation allowances, and share-based compensation. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company might differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of money market instruments. From time to time, the Company’s cash deposits exceed federally insured limits. The Company has not experienced any losses resulting from these excess deposits. |
Fair Value Measurements | Fair Value Measurements — FASB ASC 820, Fair Value Measurement , (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: · Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). · Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially). · Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available). The fair value of cash and cash equivalents, accounts receivable, agent annual fees receivable, prepaids and other current assets, due from affiliates, accounts payable and accrued liabilities, and due to affiliates approximate their carrying value due to their short-term maturities. The loan and note payable, and lease liability are presented at their carrying value, which based on borrowing rates currently available to the Company for loans and leases with similar terms, approximates their fair values. |
Accounts Receivable | Accounts Receivable — Accounts receivable consist of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. |
Agent Annual Fees Receivable | Agent Annual Fees Receivable — Agent annual fees receivable consist of the $500 fee every agent pays on their first sale or their one year anniversary date, which is recognized as a reduction to Cost of Revenue ratably over the year in which the fee pertains. |
Property and Equipment | Property and Equipment — Property and equipment is stated at cost, less accumulated depreciation. Maintenance and repairs are charged to expense when incurred. Additions and improvements that extend the economic useful life of the asset are capitalized and depreciated over the remaining useful lives of the assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any resulting gain or loss is reflected in current earnings. Depreciation is provided using the straight-line method in amounts considered to be sufficient to amortize the cost of the assets to operations over their estimated useful lives, as follows: Asset category Depreciable life Vehicles 7 years Computers and equipment 5 years Furniture and fixtures 7 years Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets might not be recoverable. Recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets were considered to be impaired, an impairment loss would be recognized as the difference between the fair value and carrying value when the carrying amount of the asset exceeds the fair value of the asset. To date, no such impairment has occurred. |
Capitalized internal use software | Capitalized internal use software — Costs incurred in the preliminary stages of website and software development are expensed as incurred. Once an application has reached the development stage, direct internal and external costs relating to upgrades or enhancements that meet the capitalization criteria are capitalized in property and equipment and amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs (including those costs in the post-implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the websites (or software) that result in added functionality, in which case the costs are capitalized as well. Capitalized software costs are amortized over the expected useful lives of those releases. Currently, capitalized software costs for internal use has a useful life estimated at three years. Estimated useful lives of website and software development activities are reviewed annually or whenever events or changes in circumstances indicate that intangible assets may be impaired and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades or enhancements to the existing functionality. |
Revenue Recognition | Revenue Recognition — We apply the provisions of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when a performance obligation is satisfied. The Company’s revenue substantially consists of commissions generated from real estate brokerage services. The Company is contractually obligated to provide for the fulfillment of transfers of real estate between buyers and sellers. The Company provides these services itself and controls the services of its agents necessary to legally transfer the real estate. Correspondingly, the Company is defined as the principal. The Company, as principal, satisfies its obligation upon the closing of a real estate transaction. The Company has concluded that agents are not employees of the Company, rather deemed to be independent contractors. Upon satisfaction of its obligation, the Company recognizes revenue in the gross amount of consideration it is entitled to receive. The transaction price is calculated by applying the Company’s portion of the agreed-upon commission rate to the property’s selling price. The Company may provide services to the buyer, seller, or both parties to a transaction. When the Company provides services to the seller in a transaction, it recognizes revenue for its portion of the commission, which is calculated as the sales price multiplied by the commission rate less the commission separately distributed to the buyer’s agent, or the “sell” side portion of the commission. When the Company provides services to the buyer in a transaction, the Company recognizes revenue in an amount equal to the sales price for the property multiplied by the commission rate for the “buy” side of the transaction. In instances in which the Company represents both the buyer and the seller in a transaction, it recognizes the full commission on the transaction. Commissions revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company’s customers remit payment for the Company’s services to the title company or attorney closing the sale of property at the time of closing. The Company receives payment upon close of property or within days of the closing of a transaction. The Company is not entitled to any commission until the performance obligation is satisfied and is not owed any commission for unsuccessful transactions, even if services have been provided. The Company has utilized the practical expedient in ASC 606 and elected not to capitalize contract costs for contracts with customers with durations less than one year. The Company does not have significant remaining unfulfilled performance obligations or contract balances. |
Cost of Revenue | Cost of Revenue — Cost of revenue consists primarily of agent commissions less transaction and annual fees paid by our agents. |
Marketing Expenses | Marketing Expenses — Marketing expenses consist primarily of marketing and promotional materials. Marketing costs are expensed as they are incurred. |
Leases | Leases — The Company adopted FASB ASC Topic 842, Leases, (“ASC 842”) on January 1, 2019. The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. |
Share-based Compensation | Share-based Compensation — Share-based compensation for employees and non-employees (principally independent contractor agents) is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are recognized when they occur. Fully vested restricted stock awards are measured on grant date at fair value. |
Income Taxes | Income Taxes — Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the combined financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. The Company will establish a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before either the Company is able to realize their benefit or that future deductibility is uncertain. The Company believes that it is currently more likely than not that its deferred tax assets will not be realized and as such, it has recorded a full valuation allowance for these assets. The Company evaluates the likelihood of the ability to realize deferred tax assets in future periods on a quarterly basis, and when appropriate evidence indicates it would release its valuation allowance accordingly. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income, and accumulated deficit, the Company provided a full valuation allowance against the U.S. tax assets resulting from the tax losses as of June 30, 2020 and December 31, 2019. |
Deferred Offering Costs | Deferred Offering Costs — Deferred offering costs are included in prepaid and other current assets and consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Company’s initial public offering (“IPO”) and that will be charged to stockholders’ equity upon the completion of the IPO. The Company’s IPO closed on August 4, 2020. For the six months ended June 30, 2020 and the year ended December 31, 2019, the Company capitalized approximately $213,000 and $37,000, respectively, of deferred offering costs related to the IPO. For the six months ended June 30, 2019, the Company did not capitalize any deferred offering costs related to the IPO. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share — Basic earnings (loss) per share is computed by dividing net income (loss) attributable to the Company by the weighted-average number of shares of common stock outstanding for the period. Our diluted earnings per share of common stock is computed similarly to basic earnings per share, except that it reflects the effect of shares of common stock issuable for presently unvested restricted stock and upon exercise of stock options, using the treasury stock method in periods in which they have a dilutive effect. The following table shows the computation of weighted-average diluted shares for the three and six months ended June 30, 2020 and June 30, 2019: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Weighted-average basic shares outstanding 9,996,775 9,779,753 9,996,939 9,745,574 Effect of dilutive securities: Stock options 3,483 — 1,441 — Unvested restricted stock awards 29,767 — 17,889 — Weighted-average diluted shares 10,030,025 9,779,753 10,016,269 9,745,574 |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016‑13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. In addition, an entity will have to disclose significantly more information about allowances and credit quality indicators. The new standard is effective for the Company for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements and intends to adopt the standard on January 1, 2023. In December 2019, the FASB issued ASU 2019‑12, Simplifying the Accounting for Income Taxes (“ASU 2019‑12”), which modifies ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019‑12 is effective for the Company for interim and annual reporting periods beginning after December 15, 2021. The Company is currently assessing the impact of ASU 2019‑12, but it is not expected to have a material impact on the Company’s consolidated financial statement |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of estimated useful lives of Property, Plant and Equipment | Asset category Depreciable life Vehicles 7 years Computers and equipment 5 years Furniture and fixtures 7 years |
Schedule of computation of weighted-average diluted shares | Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Weighted-average basic shares outstanding 9,996,775 9,779,753 9,996,939 9,745,574 Effect of dilutive securities: Stock options 3,483 — 1,441 — Unvested restricted stock awards 29,767 — 17,889 — Weighted-average diluted shares 10,030,025 9,779,753 10,016,269 9,745,574 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | Property and equipment, net consisted of the following at the dates indicated: June 30, 2020 December 31, 2019 (Unaudited) Vehicles $ 119,324 $ 119,324 Computers and equipment 82,484 73,115 Furniture and fixtures 30,058 30,058 Total property and equipment 231,866 222,497 Accumulated depreciation (132,475) (116,525) Total property and equipment, net $ 99,391 $ 105,972 |
Capitalized Software, Net (Tabl
Capitalized Software, Net (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Capitalized Software, Net | |
Schedule of capitalized software, net | Capitalized software, net consisted of the following at the dates indicated: June 30, 2020 December 31, 2019 (Unaudited) Software development $ 726,700 $ 499,300 Total capitalized software 726,700 499,300 Accumulated amortization (82,279) (34,458) Total capitalized software, net $ 644,421 $ 464,842 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Payable and Accrued Liabilities | |
Schedule of accounts payable and accrued liabilities | June 30, 2020 December 31, 2019 (Unaudited) Accounts payable $ 1,802,129 $ 922,373 Deferred annual fee 958,700 463,667 Accrued commissions 370,405 261,161 Accrued compensation 363,690 196,948 Accrued professional fees 356,139 601,797 Accrued legal fees 173,542 71,724 Other accrued liabilities 142,888 72,836 Credit card liability 141,065 70,431 Insurance premium liabilities 36,269 139,891 Accrued bonuses 2,100 5,400 Total accounts payable and accrued liabilities $ 4,346,927 $ 2,806,228 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Loans Payable | |
Debt Instrument [Line Items] | |
Schedule of debt | June 30, 2020 December 31, 2019 (Unaudited) Loan payable – Automobile loan $ 43,677 $ 52,188 Less current portion (17,244) (17,095) Loan payable, net of current portion $ 26,433 $ 35,093 |
Notes Payable | |
Debt Instrument [Line Items] | |
Schedule of debt | June 30, 2020 December 31, 2019 (Unaudited) Quail Point Corp. $ 500,000 $ 500,000 Paycheck Protection Program Loan 303,681 — Small Business Administration Loan 149,900 — Long term debt 953,581 500,000 Less current portion the Paycheck Protection Program Loan (135,093) — Less current portion of the Small Business Administration Loan (256) — Note payable, net of current portion $ 818,232 $ 500,000 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Compensation | |
Summary of activity related to restricted stock awards | Weighted Average Grant Date Shares 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 Granted — — Vested — — Forfeited (6,914) $ (5.28) Nonvested at June 30, 2020 216,851 $ 5.28 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of lease cost | Six months ended June 30, Components of total lease cost: 2020 2019 (Unaudited) Operating lease expense $ 70,151 $ 54,456 Short-term lease expense 35,047 29,994 Total lease cost $ 105,198 $ 84,450 |
Schedule of balance sheet location disclosure | As of June 30, 2020 (Unaudited) Assets Lease right of use assets $ 213,501 Total lease assets $ 213,501 Liabilities Current liabilities: Lease liability – current portion $ 63,767 Noncurrent liabilities: Lease liability, net of current portion 152,814 Total lease liability $ 216,581 |
Schedule of future lease payments | Year ending December 31, Operating Leases 2020 (remaining) $ 58,314 2021 39,350 2022 40,175 2023 41,686 2024 43,243 2025 37,353 Total Minimum Lease Payments $ 260,121 Less effects of discounting (43,540) Present value of future minimum lease payments $ 216,581 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions | |
Schedule of related party transactions | Due from affiliates consists of the following: June 30, 2020 December 31, 2019 (Unaudited) On Target Transactions LLC $ 1,476 $ 2,561 Total due from affiliates $ 1,476 $ 2,561 Due to affiliates consists of the following: June 30, 2020 December 31, 2019 (Unaudited) Hometown Heroes Holdings, LLC $ 23,087 $ 23,658 Total due to affiliates $ 23,087 $ 23,658 |
Description of Business and N_2
Description of Business and Nature of Operations (Details) | Jul. 10, 2020 | Jun. 30, 2020segment |
Description of Business and Nature of Operations | ||
Number of operating segment | 1 | |
Number of reporting segment | 1 | |
Reverse stock split | 4.71352 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Aug. 04, 2020USD ($) | Apr. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2020USD ($)employee | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
COVID-19 Risks, Impacts and Uncertainties | |||||||||
Net income (loss) | $ 160,798 | $ (42,771) | $ (1,038,758) | $ (1,469,243) | $ 118,027 | $ (2,508,001) | $ 4,100,000 | ||
Proceeds from issuance of common stock | $ 83,014 | $ 576,000 | |||||||
Base salary drawn | $ 0 | ||||||||
Number of senior employee | employee | 1 | ||||||||
Reduction in base salary (as a percent) | 50.00% | ||||||||
Subsequent Events | |||||||||
COVID-19 Risks, Impacts and Uncertainties | |||||||||
Proceeds from issuance of common stock | $ 31,300,000 | ||||||||
IPO | Subsequent Events | |||||||||
COVID-19 Risks, Impacts and Uncertainties | |||||||||
Proceeds from issuance of common stock | $ 31,300,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Fees Receivable (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Agent Annual Fees Receivable | |
Agent annual fees receivable | $ 500 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Property, Plant and Equipment [Line Items] | |
Impairment of assets held for use | $ 0 |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 7 years |
Computers and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Capitalized (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Capitalized software costs | 3 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Practical (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Practical expedient | |
Practical expedient | true |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Deferred (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Deferred Offering Costs | ||
Deferred offering costs | $ 213,000 | $ 37,000 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of Weighted Average (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Summary of Significant Accounting Policies | ||||
Weighted-average basic shares outstanding | 9,996,775 | 9,779,753 | 9,996,939 | 9,745,574 |
Effect of dilutive securities: | ||||
Stock options | 3,483 | 1,441 | ||
Unvested restricted stock awards | 29,767 | 17,889 | ||
Weighted-average diluted shares | 10,030,025 | 9,779,753 | 10,016,269 | 9,745,574 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Property and Equipment, Net | |||||
Total property and equipment | $ 231,866 | $ 231,866 | $ 222,497 | ||
Accumulated depreciation | (132,475) | (132,475) | (116,525) | ||
Total property and equipment, net | 99,391 | 99,391 | 105,972 | ||
Depreciation expense | 8,000 | $ 6,000 | 16,000 | $ 12,000 | |
Vehicles | |||||
Property and Equipment, Net | |||||
Total property and equipment | 119,324 | 119,324 | 119,324 | ||
Computers and equipment | |||||
Property and Equipment, Net | |||||
Total property and equipment | 82,484 | 82,484 | 73,115 | ||
Furniture and fixtures | |||||
Property and Equipment, Net | |||||
Total property and equipment | $ 30,058 | $ 30,058 | $ 30,058 |
Capitalized Software, Net (Deta
Capitalized Software, Net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Property and Equipment, Net | |||||
Total capitalized software | $ 726,700 | $ 726,700 | $ 499,300 | ||
Accumulated amortization | 82,279 | 82,279 | 34,458 | ||
Total capitalized software, net | 644,421 | 644,421 | 464,842 | ||
Amortization expense for capitalized software | 37,000 | $ 11,000 | 48,000 | $ 11,000 | |
Software development | |||||
Property and Equipment, Net | |||||
Total capitalized software | $ 726,700 | $ 726,700 | $ 499,300 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 1,802,129 | $ 922,373 |
Deferred annual fee | 958,700 | 463,667 |
Accrued commissions | 370,405 | 261,161 |
Accrued compensation | 363,690 | 196,948 |
Accrued professional fees | 356,139 | 601,797 |
Accrued legal fees | 173,542 | 71,724 |
Other accrued liabilities | 142,888 | 72,836 |
Credit card liability | 141,065 | 70,431 |
Insurance premium liabilities | 36,269 | 139,891 |
Accrued bonuses | 2,100 | 5,400 |
Total accounts payable and accrued liabilities | $ 4,346,927 | $ 2,806,228 |
Debt (Details)
Debt (Details) - USD ($) | Jun. 05, 2020 | May 05, 2020 | Feb. 06, 2018 | Apr. 14, 2017 | Jun. 30, 2020 | Jun. 30, 2020 | Jul. 31, 2016 |
Debt Instrument [Line Items] | |||||||
Interest rate per annum | 1.74% | ||||||
Grant | $ 10,000 | $ 10,000 | |||||
Notes Payable | Quail Point Corp | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate per month | 1.6675% | 1.6675% | |||||
Interest rate per annum | 20.00% | 20.00% | |||||
Borrowed amount | $ 500,000 | $ 400,000 | |||||
Notes Payable | Small Business Administration Loan | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate per annum | 3.75% | ||||||
Equal installment payments | $ 731 | ||||||
Debt issuance costs | 100 | ||||||
Borrowed amount | 150,000 | ||||||
Grant | $ 10,000 | ||||||
Notes Payable | Paycheck Protection Program Loan | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate per annum | 1.00% | ||||||
Equal installment payments | $ 17,090 | ||||||
Borrowed amount | $ 303,681 | ||||||
Utility payments | 60.00% |
Debt - Loan Payable and Notes P
Debt - Loan Payable and Notes Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Loans payable | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 43,677 | $ 52,188 |
Less current portion | (17,244) | (17,095) |
Debt, Net of current portion | 26,433 | 35,093 |
Notes Payable | ||
Debt Instrument [Line Items] | ||
Long term debt | 953,581 | 500,000 |
Debt, Net of current portion | 818,232 | 500,000 |
Notes Payable | Quail Point Corp | ||
Debt Instrument [Line Items] | ||
Long term debt | 500,000 | $ 500,000 |
Notes Payable | Small Business Administration Loan | ||
Debt Instrument [Line Items] | ||
Long term debt | 149,900 | |
Less current portion | (256) | |
Notes Payable | Paycheck Protection Program Loan | ||
Debt Instrument [Line Items] | ||
Long term debt | 303,681 | |
Less current portion | $ (135,093) |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | Jul. 10, 2020 | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) |
Stockholders' Equity | ||||
Reverse stock split | 4.71352 | |||
Common stock shares issued | shares | 15,726 | |||
Proceeds from sale of common stock | $ | $ 83,014 | $ 576,000 | ||
Treasury stock shares repurchased | shares | 5,683 | |||
Treasury stock amount | $ | $ 30,000 | $ 30,000 |
Share-based Compensation - Rest
Share-based Compensation - Restricted Stock Awards (Details) - $ / shares | 3 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2020 | |
Restricted Stock | ||
Shares | ||
Non-vested at beginning | 223,765 | 227,981 |
Forfeited | (6,914) | (4,216) |
Non-vested at ending | 216,851 | 223,765 |
Weighted-Average Grant Date Fair Value | ||
Non-vested at beginning | $ 5.28 | $ 5.28 |
Forfeited | (5.28) | (5.28) |
Non-vested at ending | $ 5.28 | $ 5.28 |
Stock Option Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized | 3,182,335 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restricted Stock | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Shares forfeiture | $ 8,984 | $ 11,355 | ||
Unrecognized compensation expense | 923,992 | $ 923,992 | ||
Unrecognized compensation expense period for recognition | 2 years 3 months 26 days | |||
Shares granted (shares) | 0 | |||
Stock Option Awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Unrecognized compensation expense | 0 | $ 0 | ||
Shares granted (shares) | 0 | |||
General and administrative expense | Restricted Stock | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated Share Based Compensation Expense | 97,862 | $ 633,217 | $ 201,020 | $ 1,543,309 |
General and administrative expense | Stock Option Awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated Share Based Compensation Expense | $ 2,631 | $ 11,815 | $ 24,194 | $ 11,815 |
Leases (Details)
Leases (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | ||
Option to extend | true | |
Residual value guarantee | false | |
Incremental borrowing rate | 8.00% | |
Sub lease income | $ 0 | |
Weighted average remaining lease term (in years) - operating leases | 4 years 5 months 23 days | |
Weighted average discount rate - operating leases | 8.00% | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 7 years |
Leases - Lease costs (Details)
Leases - Lease costs (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Leases | ||
Operating lease expense | $ 70,151 | $ 54,456 |
Short-term lease expense | 35,047 | 29,994 |
Total lease cost | $ 105,198 | $ 84,450 |
Leases - Lease position (Detail
Leases - Lease position (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases | ||
Lease right of use assets | $ 213,501 | $ 265,140 |
Total lease assets | 213,501 | 265,140 |
Lease liability - current portion | 63,767 | 89,566 |
Lease liability, net of current portion | 152,814 | $ 177,578 |
Total lease liability | $ 216,581 |
Leases - Undiscounted cash flow
Leases - Undiscounted cash flow (Details) | Jun. 30, 2020USD ($) |
Leases | |
2020 (remaining) | $ 58,314 |
2021 | 39,350 |
2022 | 40,175 |
2023 | 41,686 |
2024 | 43,243 |
2025 | 37,353 |
Total Minimum Lease Payments | 260,121 |
Less effects of discounting | (43,540) |
Total lease liability | $ 216,581 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Related Party Transaction [Line Items] | ||
Total due from affiliates | $ 1,476 | $ 2,561 |
Total due to affiliates | 23,087 | 23,658 |
On Target Transactions LLC | ||
Related Party Transaction [Line Items] | ||
Total due from affiliates | $ 1,476 | 2,561 |
Ownership interest | 60.00% | |
Hometown Heroes Holdings, LLC | ||
Related Party Transaction [Line Items] | ||
Total due to affiliates | $ 23,087 | $ 23,658 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Income Taxes | ||
Federal net operating loss carryforwards | $ 6,400,000 | $ 6,500,000 |
Total due from affiliates | 1,476 | 2,561 |
State net operating loss carryforwards | 3,100,000 | 3,200,000 |
Unrecognized tax benefits | $ 0 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Aug. 04, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 30, 2020 |
Subsequent Events | ||||
Issuance of common stock (in shares) | 15,726 | |||
Proceeds from issuance of common stock | $ 83,014 | $ 576,000 | ||
Subsequent Events | ||||
Subsequent Events | ||||
Issuance of common stock (in shares) | 3,430,000 | |||
Share price (in dollars per share) | $ 10 | |||
Proceeds from issuance of common stock | $ 31,300,000 | |||
Underwriter Warrant to purchase shares | 240,100 | |||
Warrant exercise price (in dollars per share) | $ 11 | |||
Public offering price per share of common stock (as a percent) | 110.00% | |||
Warrant exercisable term | 180 days |