Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 10, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Entity Registrant Name | FATHOM HOLDINGS INC. | |
Title of 12(b) Security | Common Stock, No Par Value | |
Trading Symbol | FTHM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
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 | 14,672,292 | |
Entity Central Index Key | 0001753162 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 24,918,369 | $ 28,577,396 |
Restricted cash | 992,205 | 984,238 |
Accounts receivable | 1,629,028 | 1,595,444 |
Agent annual fees receivable, net | 455,437 | 284,725 |
Loan receivable | 165,000 | |
Prepaid and other current assets | 615,454 | 1,249,650 |
Total current assets | 28,610,493 | 32,856,453 |
Property and equipment, net | 538,768 | 154,599 |
Lease right of use assets | 2,223,059 | 437,421 |
Intangible assets, net | 4,925,696 | 922,147 |
Goodwill | 1,008,268 | 799,058 |
Other assets | 57,186 | 55,301 |
Total assets | 37,363,470 | 35,224,979 |
Current liabilities: | ||
Accounts payable | 3,262,188 | 2,596,206 |
Accrued liabilities | 2,083,119 | 1,063,889 |
Escrow liabilities | 990,774 | 933,336 |
Long term debt - current portion | 244,922 | 256,324 |
Lease liability - current portion | 252,404 | 140,100 |
Total current liabilities | 6,833,407 | 4,989,855 |
Long-term debt, net of current portion | 260,538 | 282,950 |
Lease liability, net of current portion | 1,976,087 | 301,429 |
Total liabilities | 9,070,032 | 5,574,234 |
Commitments and contingencies | ||
Stockholders' Equity (Deficit) | ||
Common stock, no par value, 100,000,000 authorized and 13,979,556 and 13,830,351 issued and outstanding as of March 31, 2021 and December 31, 2020 | ||
Treasury Stock, at cost, 5,683 shares as of March 31, 2021 and December 31, 2020 | (30,000) | (30,000) |
Additional paid-in capital | 39,211,307 | 37,168,896 |
Accumulated deficit | (10,887,869) | (7,488,151) |
Total stockholders' equity | 28,293,438 | 29,650,745 |
Total liabilities and stockholders' equity | $ 37,363,470 | $ 35,224,979 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 13,979,556 | 13,830,351 |
Common stock, outstanding shares | 13,979,556 | 13,830,351 |
Treasury stock, shares | 5,683 | 5,683 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenue | $ 49,645,489 | $ 28,838,831 |
Cost of revenue | 46,468,617 | 26,781,363 |
Gross profit | 3,176,872 | 2,057,468 |
General and administrative | 6,223,783 | 1,835,969 |
Marketing | 402,163 | 230,433 |
Total operating expenses | 6,625,946 | 2,066,402 |
Loss from operations | (3,449,074) | (8,934) |
Other (income) expense, net | ||
Gain on the extinguishment of debt | (50,936) | |
Interest (income) expense, net | 1,312 | 32,837 |
Other income, net | (4,732) | |
Other (income) expense, net | (54,356) | 32,837 |
Loss from operations before income taxes | (3,394,718) | (41,771) |
Income tax expense | (5,000) | (1,000) |
Net loss | $ (3,399,718) | $ (42,771) |
Net loss per share | ||
Basic and Diluted | $ (0.25) | $ 0 |
Weighted average common shares outstanding | ||
Basic and Diluted | 13,450,111 | 9,993,866 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated deficit | Total |
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 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, 2020 | $ 0 | $ (30,000) | 37,168,896 | (7,488,151) | 29,650,745 |
Beginning balance (in shares) at Dec. 31, 2020 | 13,830,351 | 5,683 | |||
Changes in Stockholders' deficit | |||||
Issuance of common stock for the purchase of business | 1,172,336 | 1,172,336 | |||
Issuance of common stock for the purchase of business (in shares) | 26,644 | ||||
Share-based compensation | 870,075 | 870,075 | |||
Share-based compensation (in shares) | 122,561 | ||||
Net loss | $ 0 | $ 0 | 0 | (3,399,718) | (3,399,718) |
Ending balance at Mar. 31, 2021 | $ 0 | $ 30,000 | $ 39,211,307 | $ (10,887,869) | $ 28,293,438 |
Ending balance (in shares) at Mar. 31, 2021 | 13,979,556 | 5,683 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,399,718) | $ (42,771) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 102,359 | 19,275 |
Non-cash lease expense | 28,644 | 461 |
Gain on the extinguishment of debt | (50,936) | |
Bad debt expense | 76,975 | 35,270 |
Share based compensation | 870,075 | 124,721 |
Change in operating assets and liabilities: | ||
Accounts receivable | 1,857 | (438,424) |
Agent annual fees receivable | (247,687) | (605,974) |
Prepaid and other assets | 634,196 | (39,751) |
Accounts payable | 571,014 | 384,428 |
Accrued liabilities | 560,972 | 865,771 |
Escrow liabilities | (100,230) | |
Operating lease liabilities | (27,320) | 77 |
Other assets | (1,415) | |
Net cash (used in) provided by operating activities | (981,214) | 303,083 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (401,513) | (3,117) |
Amounts paid for business and asset acquisitions, net of cash acquired | (2,115,449) | |
Purchase of intangible assets | (148,564) | (113,701) |
Net cash used in investing activities | (2,665,526) | (116,818) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on long-term debt | (4,320) | (4,246) |
Proceeds from issuance of common stock | 83,014 | |
Net cash (used in) provided by financing activities | (4,320) | 78,768 |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (3,651,060) | 265,033 |
Cash, cash equivalents, and restricted cash at beginning of period | 29,561,634 | 579,416 |
Cash, cash equivalents, and restricted cash at end of period | 25,910,574 | 844,449 |
Supplemental disclosure of cash and non-cash transactions: | ||
Cash paid for interest | 4,448 | 32,868 |
Income taxes paid | 2,261 | |
Right of use assets obtained in exchange for lease liabilities | 1,785,509 | |
Issuance of common stock for the purchase of business | 1,172,336 | |
Extinguishment of Paycheck Protection Program Loan | 50,600 | |
Loan receivable forgiven and used as purchase consideration | 165,000 | |
Reconciliation of cash and restricted cash | ||
Total cash, cash equivalents, and restricted cash shown in statement of cash flows | $ 25,910,574 | $ 844,449 |
Description of Business and Nat
Description of Business and Nature of Operations | 3 Months Ended |
Mar. 31, 2021 | |
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. Historically, management has not made operating decisions nor assessed performance based on geographic locations. Rather, the chief operating decision maker makes operating decisions and assesses performance based on the services of identified operating segments. While management does consider real estate and brokerage services and affiliated services (e.g., title insurance) to be identified operating segments, the profits and losses and assets of the affiliated services segment are not material. Therefore, the Company aggregates the identified operating segments for reporting purposes. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
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 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 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. 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, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2021. 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 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 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. Furthermore, 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. Liquidity — The Company has a history of negative cash flows from operations and operating losses. The Company generated net losses of approximately $3.4 million and $42,771 for the three months ended March 31, 2021 and 2020, respectively. The Company had cash and cash equivalents of $24.9 million and $28.6 million as of March 31, 2021 and December 31, 2020, respectively. Additionally, the Company anticipates further expenditures associated with the process of expanding its business. Management believes that existing cash from the $31.1 million in net proceeds from its Initial Public Offering (the “IPO”) completed on August 4, 2020, along with 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, provide sufficient funding to continue as a going concern for a period of at least one year from the date of the issuance of the unaudited interim 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 (“COVID‑19”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified COVID‑19 as a pandemic, based on the rapid increase in exposure globally. We are subject to the risks arising from COVID‑19 including its social and economic impacts on the residential real estate industry in the United States. Our management believes that these social and economic impacts, which to date have included but not been limited to the following, could have a significant impact on the Company’s 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. Given the daily evolution of COVID‑19 and the global responses to curb its spread, the Company is not able to estimate the effects of COVID‑19 on its results of operations, financial condition, or liquidity for the year ending December 31, 2021 or beyond. If COVID‑19 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 the unaudited interim 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 tax asset valuation allowances, share-based compensation, goodwill, estimated lives of intangible assets, and intangible asset impairment. 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. Business Combinations — The Company accounts for its business combinations under the provisions of Accounting Standards Codification Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed are recorded at the date of acquisition at their respective fair values. For transactions that are business combinations, the Company evaluates the existence of goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. A fair value measurement is determined as the price received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In the context of purchase accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The estimated fair values reflected in the purchase accounting rely on management’s judgment and the expertise of a third-party valuation firm engaged to assist in concluding on the fair value measurements. For the business combination completed during the three-month period ended, March 31, 2021, the estimated fair value of identifiable intangible assets, primarily consisting of agent relationships, was determined using a multi-period excess earnings method. The most significant assumptions under the multi-period excess earnings method include the estimated remaining useful life, expected future revenue, annual agent revenue attrition, costs to develop new agents, charges for contributory assets, tax rate, discount rate and tax amortization benefit. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of Management, and such variations may be significant to estimated values. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates based on the risk inherent in the acquired assets, specific risks, industry beta and capital structure of guideline companies. The valuation of an acquired business is based on available information at the acquisition date and assumptions that are believed to be reasonable. However, a change in facts and circumstances as of the acquisition date can result in subsequent adjustments during the measurement period, but no later than one year from the acquisition date. Asset Acquisitions — The Company follows the guidance in ASC 805, Business Combinations, for determining the appropriate accounting treatment for asset acquisitions. ASU No. 2017-01, Clarifying the Definition of a Business, provides an initial fair value screen to determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If the initial screening test is not met, the set is considered a business based on whether there are inputs and substantive processes in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived. If the acquisition is deemed to be a business, the purchase method of accounting is applied. Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value. If the transaction is deemed to be an asset acquisition, the cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values. Intangible Assets, Net — Intangible Assets, net is comprised of definite-lived intangibles and capitalized internal use software. Trade names and Agent Relationships: The Company’s definite-lived intangible assets primarily consist of trade names and agent relationships acquired as part of the Company's business acquisitions.For definite-lived intangible assets, such as trade names and agent relationships, whenever impairment indicators are present, the Company performs a review for impairment. The Company calculates the undiscounted value of the projected cash flows associated with the asset, or asset group, and compares this estimated amount to the carrying amount. If the carrying amount is found to be greater, the Company will record an impairment loss for the excess of book value over the fair value. In addition, in all cases of an impairment review, the Company will reevaluate the remaining useful lives of the assets and modify them, as appropriate. Currently, trade names and agent relationships have a useful life estimated at ten years and seven years, respectively. Capitalized internal use software: The Company’s capitalized internal use software consists of internally developed software and developed software acquired pursuant to acquisitions.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 capitalized software, net 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 the applicable software. Currently, capitalized software for internal use has a useful life estimated between five and seven years. The software acquired pursuant to the Naberly acquisition discussed in Note 3 has a useful life estimated at seven 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. Goodwill - Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. The Company is organized in one reporting unit and evaluates the goodwill for the Company as a whole. Goodwill is assessed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. Under the authoritative guidance issued by the FASB, the Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the goodwill impairment test is performed. The goodwill impairment test requires the Company to estimate the fair value of the reporting unit and to compare the fair value of the reporting unit with its carrying amount. If the fair value exceeds the carrying amount, then no impairment is recognized. If the carrying amount recorded exceeds the fair value calculated, then an impairment charge is recognized for the difference. The judgments made in determining the projected cash flows used to estimate the fair value can materially impact the Company’s financial condition and results of operations. There was no impairment of goodwill during the three months ended March 31, 2021. 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's revenue also includes fees charged for title search and examination, property settlement and title insurance services provided in association with property acquisitions and refinance transactions. We provide the title search and property settlement services ourselves and control the services before they are transferred to our customers since we are primarily responsible for fulfilling the promise and also have full discretion in establishing the price for the settlement services (except in states where fees are set statutorily). As such, we are defined as the principal. As principal, we satisfy our obligation upon the closing of a real estate transaction. Upon satisfaction of our obligation, we recognize revenue in the gross amount of consideration we are entitled to receive. The transaction price for title and property settlement services is determined by the fixed fees we charge for our services. We provide our services to the buyers and sellers involved in the purchase transaction, as well as to the borrower in a refinance transaction. Title and property settlement 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 is not entitled to any title and property settlement revenue until the performance obligation is satisfied and is not owed any consideration for unsuccessful transactions, even if services have been provided. For title insurance services, we work in conjunction with insurance underwriters to perform these services, obtain the insurance policy premiums associated with title insurance on behalf of customers and remit the policy premium to the insurance underwriters. Since the insurance underwriter is ultimately providing the insurance policy to the borrower, we are not responsible for fulfilling the promise to provide the specified services. Additionally, we do not have discretion in dictating the price for the insurance policy, which is set by each jurisdiction and is either filed by insurance underwriters or set by the state insurance commissioners. Therefore, we do not control the specified service provided by the insurance underwriter. As such, in these circumstances, we act as an agent. As the agent, we satisfy our obligation upon the closing of a real estate transaction. Upon satisfaction of our obligation, we recognize revenue in the net amount of consideration we are entitled to receive, which is our fee for brokering the insurance policy less any consideration paid to the insurance underwriters. The transaction price for title insurance services is fixed, based on statutory rates depending on the jurisdiction. We negotiate with insurance underwriters the percentage they receive, and the rest is recognized as revenue. Title insurance 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 is not entitled to any title insurance revenue until the performance obligation is satisfied and is not owed any consideration 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. Reclassifications — Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation with no effect on the previously reported net loss or stockholders’ equity. These reclassifications primarily relate to the inclusion of share-based compensation paid to agents within cost of revenue . |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2021 | |
Acquisitions | |
Acquisitions | Note 3. Acquisitions On March 1, 2021, the Company completed the acquisition of Red Barn Real Estate, LLC ("Red Barn") deemed immaterial to the Company. The Red Barn acquisition was accounted for as a business combination using the purchase method of accounting. On March 1, 2021 the Company acquired substantially all of the assets of Naberly, Inc. ("Naberly") for cash consideration of $2,665,000. Based on the Company’s preliminary estimation of the fair value of the assets acquired, the Naberly acquisition was accounted for as an asset acquisition. The total acquisition cost, including transaction costs of approximately $95,000, was $2,760,000 and was recorded as software intangible assets. During the year ended December 31, 2020, in connection with, and in advance of the closing under the asset purchase agreement to acquire the assets of Naberly, the Company issued to Naberly, an unsecured loan (the "Loan") in the principal amount of up to $165,000 with an interest rate of two percent (2%) per annum, compounded annually, and a maturity date of February 28, 2021. As of March 31, 2021, the outstanding principal balance of the Loan was forgiven in connection with the closing of the acquisition, and was accounted for as part of the purchase consideration transferred to Naberly. |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2021 | |
Property and Equipment, Net | |
Property and Equipment, Net | Note 4. Property and Equipment, Net Property and equipment, net consisted of the following at the dates indicated: March 31, 2021 December 31, 2020 (Unaudited) Vehicles $ 119,324 $ 119,324 Computers and equipment 182,863 138,842 Furniture and fixtures 401,822 44,330 Leasehold improvements 3,402 3,402 Total property and equipment 707,411 305,898 Accumulated depreciation (168,643) (151,299) Total property and equipment, net $ 538,768 $ 154,599 Depreciation expense for property and equipment was approximately $17,000 and $8,000 for the three months ended March 31, 2021 and 2020, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 5. Intangible Assets, Net Intangible assets, net consisted of the following at the dates indicated: March 31, 2021 Gross Carrying Accumulated Net Carrying Amount Amortization Value (Unaudited) Trade names $ 166,000 $ (5,533) $ 160,467 Software development 3,829,812 (244,583) 3,585,229 Agent relationships 1,180,000 — 1,180,000 $ 5,175,812 $ (250,116) $ 4,925,696 December 31, 2020 Gross Carrying Accumulated Net Carrying Amount Amortization Value Trade names $ 166,000 $ (1,383) $ 164,617 Software development 921,248 (163,718) 757,530 $ 1,087,248 $ (165,101) $ 922,147 As of March 31, 2021, the estimated future amortization expense for definite-lived intangible assets was: Years Ended December 31, 2021 (remaining) $ 600,065 2022 800,086 2023 800,086 2024 787,586 2025 619,701 Thereafter 1,318,172 Total $ 4,925,696 Amortization expense was approximately $85,000 and $11,000 for the three months ended March 31, 2021 and 2020 respectively. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill. | |
Goodwill | Note 6. Goodwill The Company recorded goodwill in connection with the acquisition of Verus Title Inc. ("Verus"), which closed on November 24, 2020 and in connection with the March 1, 2021 acquisition of Red Barn. These acquisitions have been accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the Company allocated the total purchase price to the tangible and identifiable intangible assets acquired, and assumed liabilities based on their estimated fair values as of the acquisition date, as determined by management. The excess of the purchase price over the aggregate fair values of the identifiable assets was recorded as goodwill. The changes in the carrying value of goodwill as of March 31, 2021 are as noted in the table below: Carrying Value Balance at December 31, 2020 $ 799,058 Goodwill acquired during the period 209,210 Impairment losses — Balance at March 31, 2021 $ 1,008,268 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Liabilities | |
Accrued Liabilities | Note 7. Accrued Liabilities Accrued liabilities consisted of the following at the dates indicated: March 31, 2021 December 31, 2020 (Unaudited) Deferred annual fee $ 457,019 $ 292,696 Accrued compensation 421,578 201,587 Due to sellers 400,000 — Other accrued liabilities 245,080 157,925 Credit card liability 242,104 177,986 Accrued legal fees 200,000 75,000 Accrued professional fees 89,917 54,420 Accrued tax liabilities 27,421 104,275 Total accrued liabilities $ 2,083,119 $ 1,063,889 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt | |
Debt | Note 8. Debt Long-term debt consisted of the following at the dates indicated: March 31, 2021 December 31, 2020 (Unaudited) Paycheck Protection Program Loan $ 303,681 $ 354,281 Small Business Administration Loan 171,006 149,900 Loan payable - Automobile Loan 30,773 35,093 Long-term debt 505,460 539,274 Less current portion of the Paycheck Protection Program Loan (203,810) (237,182) Less current portion of the Small Business Administration Loan (23,642) (1,748) Less current portion of the Loan Payable (17,470) (17,394) Long-term debt, net of current portion $ 260,538 $ 282,950 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: Maturities of the loan payable obligation as of March 31, 2021 are as follows: Maturities of Loan Years Ended December 31, Payable 2021 (remaining) $ 13,074 2022 17,699 $ 30,773 Note Payable – Paycheck Protection Program Loan In May 2020, the Company applied for and received $303,681 in unsecured loan funding (the "PPP Loan") 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”). Under the terms of the promissory note (the “PPP Note”) and the PPP Loan, interest accrued on the outstanding principal at the rate of 1% per annum. Interest expense under the PPP Loan amounted to $628 and $0 for the three months ended March 31, 2021 and 2020, respectively. The Company believes it has used the entire PPP Note amount for qualifying expenses and applied for forgiveness in March 2021, however, until forgiveness is approved by the SBA there is no assurance that the Company will obtain forgiveness of the PPP Loan in whole or in part. Additionally, in connection with the acquisition of Verus, the Company assumed $50,600 in loan funding from the PPP. The Company received full forgiveness of all outstanding principal, accrued, and unpaid interest on this Loan as of January 6, 2021. The forgiveness of this Loan qualified for debt extinguishment in accordance with ASC 470-50, Debt Modifications and Extinguishments , and as a result, the outstanding principal and accrued and unpaid interest was written off in the amount of $ 50,600 and $336, respectively, and the Company recorded a gain on extinguishment totaling $50,936 for the three months ended March 31, 2021. 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. 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 a rate of 3.75% per annum, and installment payments, including principal and interest, of $731 monthly, will begin in June 2021. All remaining principal and accrued interest is due and payable in May 2050. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
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 estimated incremental borrowing rates for all active leases. Lease Costs The table below presents certain information related to the lease costs for the Company’s operating leases for the periods indicated: Three months ended March 31, Components of total lease cost: 2021 2020 (Unaudited) Operating lease expense $ 47,674 $ 35,350 Short-term lease expense 28,462 17,003 Total lease cost $ 76,136 $ 52,353 Lease Position as of March 31, 2021 and December 31, 2020 Right of use lease assets and lease liabilities for our operating leases were recorded in the unaudited interim consolidated balance sheet as follows: March 31, 2021 December 31, 2020 (Unaudited) Assets Lease right of use assets $ 2,223,059 $ Total lease assets $ 2,223,059 $ Liabilities Current liabilities: Lease liability - current portion $ 252,404 $ Noncurrent liabilities: Lease liability, net of current portion 1,976,087 Total lease liability $ 2,228,491 $ 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: March 31, 2021 2020 (Unaudited) Weighted average remaining lease term (in years) - operating leases 6.40 4.51 Weighted average discount rate - operating leases 6.40 % 8 % Undiscounted Cash Flows Future lease payments included in the measurement of lease liabilities on the consolidated balance sheet as of March 31, 2021, for the following five fiscal years and thereafter were as follows: Years Ended December 31, Operating Leases 2021 (remaining) $ 266,236 2022 472,273 2023 426,467 2024 368,388 2025 337,104 2026 and thereafter 881,775 Total Minimum Lease Payments $ 2,752,243 Less effects of discounting (523,752) Present value of future minimum lease payments $ 2,228,491 |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Compensation | |
Share-based Compensation | Note 10. 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. As of March 31, 2021, there were 2,739,261 shares available for future grants under the Plan. The Company’s 2019 Omnibus Stock Incentive Plan (the “2019 Plan”) provides for granting stock options and restricted stock awards to employees, directors, agents, contractors and consultants of the Company. A total of 1,060,778 shares of common stock are authorized to be issued pursuant to the 2019 Plan. As of March 31, 2021, there were 460,033 shares available for future grants under the 2019 Plan. Restricted Stock Awards Weighted Average Grant Shares Date Fair Value Nonvested at December 31, 2020 390,787 13.56 Granted 153,215 38.04 Vested (31,208) (42.37) Forfeited (4,010) (11.84) Nonvested at March 31, 2021 508,784 $ 19.18 In March 2021, pursuant to the 2019 Plan, the Company granted 82,003 restricted stock awards to certain employees and agents, of which 4,564 awards vested immediately and the remaining 77,439 awards will vest three years from the grant date subject to continuous service with the Company. The fair value of these restricted stock awards was $32.87 per share based on the Company’s closing stock price on the grant date. In March 2021 , pursuant to the 2019 Plan, in connection with the Acquisitions (See Note 3), the Company granted 44,568 restricted stock awards to former founders of the target companies in the Acquisitions who are now employees of the Company, of which 10,478 will vest one year from the grant date , and the remaining 34,090 will 18 months from the grant date. The fair value of the Company’s restricted stock awards granted in March 2021 was $44.00 per share based on the Company’s closing stock price on the grant date. The Company recognized stock compensation expense for restricted stock awards to employees in the amount of $556,709, net of forfeitures of $1,264, and $9,051, net of forfeitures of $0, for the three months ended March 31, 2021 and 2020, respectively, which is included in general and administrative expense. The Company recognized stock compensation expense for restricted stock awards to agents in the amount of $272,186, net of forfeitures of $18,455, and $94,107, net of forfeitures of $2,371, for the three months ended March 31, 2021 and 2020, respectively, which is included in cost of revenue. At March 31, 2021, the total unrecognized compensation expense related to unvested restricted stock awards granted was $8,437,964, which the Company expects to recognize over a period of approximately 2.05 years. Stock Option Awards A summary of stock option activity under the Plans are as follows: Weighted Weighted Average Options Average Remaining Contractual Aggregate Outstanding Exercise Price Term in Years intrinsic value Balance at December 31, 2020 47,332 $ 8.03 8.8 $ 1,325,903 Granted 13,638 44.00 10.0 — Balance at March 31, 2021 60,970 $ 16.07 8.9 $ 1,353,829 Options exercisable at March 31, 2021 37,130 $ 4.71 8.2 $ 1,185,190 In March 2021, pursuant to the 2019 Plan, the Board granted stock option awards to the independent directors to acquire shares of common stock with an exercise price of $44.00 per share. The stock options will vest on the earlier of (a) one year from the date of grant and (b) the next annual stockholder meeting, subject to the director’s continued service on the Board. For the three months ended March 31, 2021 and 2020, the Company recognized $41,180 and $21,563, respectively, of share-based compensation expense for stock options in general and administrative expense. At March 31, 2021, the total unrecognized compensation related to unvested stock option awards granted was $280,574, which the Company expects to recognize over a period of approximately 0.78 years. The weighted-average grant-date fair value of options granted during the three months ended March 31, 2021 and 2020, was $18.64 and $0, respectively. |
Equity-classified Warrants
Equity-classified Warrants | 3 Months Ended |
Mar. 31, 2021 | |
Equity-classified Warrants | |
Equity-classified Warrants | Note 11. Equity-classified Warrants On August 4, 2020, the Company issued a warrant to the underwriter of its IPO (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, and is exercisable at any time from and after January 31, 2021 through August 4, 2025. During the three months ended March 31, 2021, no warrants to purchase common stock were issued, exercised, or expired. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions | |
Related Party Transactions | Note 12. Related Party Transactions Included in revenue for the three months ended March 31, 2021 and 2020 was approximately $0 and $158,500, respectively, from a related party in exchange for the Company providing lead generation services. Included in cost of revenue for the three months ended March 31, 2021 and 2020 was approximately $780 and $12,052, respectively, from related parties in exchange for the Company receiving lead generation services. Included in marketing expense for the three months ended March 31, 2021 and 2020 was approximately $143,123 and $48,901, respectively, from related parties in exchange for the Company receiving marketing services. |
Net Loss per Share Attributable
Net Loss per Share Attributable to Common Stock | 3 Months Ended |
Mar. 31, 2021 | |
Net Loss per Share Attributable to Common Stock | |
Net Loss per Share Attributable to Common Stock | Note 13. Net Loss per Share Attributable to Common Stock Basic loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Diluted loss per share excludes, when applicable, the potential impact of stock options, unvested shares of restricted stock awards, and common stock warrants because their effect would be anti-dilutive due to our net loss. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same. The calculation of basic and diluted net loss per share attributable to common stock was as follows: Three months ended March 31, 2021 2020 (Unaudited) Numerator: Net loss attributable to common stock—basic and diluted $ (3,399,718) $ (42,771) Denominator: Weighted average shares—basic and diluted 13,450,111 9,993,866 Net loss per share attributable to common stock—basic and diluted $ (0.25) $ (0.00) The following outstanding shares of common stock equivalents were excluded from the computation of the diluted net loss per share attributable to common stock for the periods presented because their effect would have been anti-dilutive. Three months ended March 31, 2021 2020 Stock options 60,970 37,130 Unvested restricted stock awards 508,784 223,765 Common stock warrants 240,100 — |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 14. Income Taxes As of December 31, 2020, the Company had federal net operating loss carryforwards of approximately $9.2 million and state net operating loss carryforwards of approximately $4.5 million. 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 three months ended March 31, 2021 or the year ended December 31, 2020. Currently, the statute of limitations remains open subsequent to and including the year ended December 31, 2016. |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2021 | |
Legal Proceedings | |
Legal Proceedings | Note 15. 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 March 31, 2021, there was no material litigation against the Company. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events | |
Subsequent Events | Note 16. Subsequent Events On April 20, 2021, the Company acquired E4:9 Holdings, Inc. (“E4:9”) for approximately $28.9 million , subject to final working capital adjustments, consisting of cash consideration of approximately $9.8 million and stock consideration of $16.6 million. E4:9 is a holding company with three operating subsidiaries serving the residential real estate sector: Encompass Lending Group, Dagley Insurance Agency and Real Results. The Company is expected to benefit by gaining new opportunities to grow the business, while consumers will have a one-stop shop for all of their housing needs. On April 26, 2021, the Company acquired LiveBy Inc. (“LiveBy”) for approximately $9.3 million , subject to final working capital adjustments, consisting of cash consideration of approximately $3.3 million and stock consideration of approximately $5.6 million. LiveBy’s technology pairs local data with its geospatial boundaries to create key insights that help boost website management, inform and attract customers, and nurture agent leads. The Company intends to fully integrate LiveBy into the Company’s proprietary intelliAgent software suite. Determination of the final fair value and purchase price allocations for both the E4:9 and LiveBy acquisitions have not been completed as of the financial statement filing date as respective valuation determinations have yet to be performed. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation — The accompanying unaudited interim 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 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. 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, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2021. 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 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 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. Furthermore, 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. |
Liquidity | Liquidity — The Company has a history of negative cash flows from operations and operating losses. The Company generated net losses of approximately $3.4 million and $42,771 for the three months ended March 31, 2021 and 2020, respectively. The Company had cash and cash equivalents of $24.9 million and $28.6 million as of March 31, 2021 and December 31, 2020, respectively. Additionally, the Company anticipates further expenditures associated with the process of expanding its business. Management believes that existing cash from the $31.1 million in net proceeds from its Initial Public Offering (the “IPO”) completed on August 4, 2020, along with 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, provide sufficient funding to continue as a going concern for a period of at least one year from the date of the issuance of the unaudited interim 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 (“COVID‑19”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified COVID‑19 as a pandemic, based on the rapid increase in exposure globally. We are subject to the risks arising from COVID‑19 including its social and economic impacts on the residential real estate industry in the United States. Our management believes that these social and economic impacts, which to date have included but not been limited to the following, could have a significant impact on the Company’s 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. Given the daily evolution of COVID‑19 and the global responses to curb its spread, the Company is not able to estimate the effects of COVID‑19 on its results of operations, financial condition, or liquidity for the year ending December 31, 2021 or beyond. If COVID‑19 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 the unaudited interim 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 tax asset valuation allowances, share-based compensation, goodwill, estimated lives of intangible assets, and intangible asset impairment. 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. |
Business Combinations | Business Combinations — The Company accounts for its business combinations under the provisions of Accounting Standards Codification Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed are recorded at the date of acquisition at their respective fair values. For transactions that are business combinations, the Company evaluates the existence of goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. A fair value measurement is determined as the price received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In the context of purchase accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The estimated fair values reflected in the purchase accounting rely on management’s judgment and the expertise of a third-party valuation firm engaged to assist in concluding on the fair value measurements. For the business combination completed during the three-month period ended, March 31, 2021, the estimated fair value of identifiable intangible assets, primarily consisting of agent relationships, was determined using a multi-period excess earnings method. The most significant assumptions under the multi-period excess earnings method include the estimated remaining useful life, expected future revenue, annual agent revenue attrition, costs to develop new agents, charges for contributory assets, tax rate, discount rate and tax amortization benefit. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of Management, and such variations may be significant to estimated values. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates based on the risk inherent in the acquired assets, specific risks, industry beta and capital structure of guideline companies. The valuation of an acquired business is based on available information at the acquisition date and assumptions that are believed to be reasonable. However, a change in facts and circumstances as of the acquisition date can result in subsequent adjustments during the measurement period, but no later than one year from the acquisition date. |
Assets Acquisitions | Asset Acquisitions — The Company follows the guidance in ASC 805, Business Combinations, for determining the appropriate accounting treatment for asset acquisitions. ASU No. 2017-01, Clarifying the Definition of a Business, provides an initial fair value screen to determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If the initial screening test is not met, the set is considered a business based on whether there are inputs and substantive processes in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived. If the acquisition is deemed to be a business, the purchase method of accounting is applied. Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value. If the transaction is deemed to be an asset acquisition, the cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values. |
Intangible Assets, Net | Intangible Assets, Net — Intangible Assets, net is comprised of definite-lived intangibles and capitalized internal use software. Trade names and Agent Relationships: The Company’s definite-lived intangible assets primarily consist of trade names and agent relationships acquired as part of the Company's business acquisitions.For definite-lived intangible assets, such as trade names and agent relationships, whenever impairment indicators are present, the Company performs a review for impairment. The Company calculates the undiscounted value of the projected cash flows associated with the asset, or asset group, and compares this estimated amount to the carrying amount. If the carrying amount is found to be greater, the Company will record an impairment loss for the excess of book value over the fair value. In addition, in all cases of an impairment review, the Company will reevaluate the remaining useful lives of the assets and modify them, as appropriate. Currently, trade names and agent relationships have a useful life estimated at ten years and seven years, respectively. Capitalized internal use software: The Company’s capitalized internal use software consists of internally developed software and developed software acquired pursuant to acquisitions.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 capitalized software, net 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 the applicable software. Currently, capitalized software for internal use has a useful life estimated between five and seven years. The software acquired pursuant to the Naberly acquisition discussed in Note 3 has a useful life estimated at seven 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. |
Goodwill | Goodwill - Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. The Company is organized in one reporting unit and evaluates the goodwill for the Company as a whole. Goodwill is assessed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. Under the authoritative guidance issued by the FASB, the Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the goodwill impairment test is performed. The goodwill impairment test requires the Company to estimate the fair value of the reporting unit and to compare the fair value of the reporting unit with its carrying amount. If the fair value exceeds the carrying amount, then no impairment is recognized. If the carrying amount recorded exceeds the fair value calculated, then an impairment charge is recognized for the difference. The judgments made in determining the projected cash flows used to estimate the fair value can materially impact the Company’s financial condition and results of operations. There was no impairment of goodwill during the three months ended March 31, 2021. |
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's revenue also includes fees charged for title search and examination, property settlement and title insurance services provided in association with property acquisitions and refinance transactions. We provide the title search and property settlement services ourselves and control the services before they are transferred to our customers since we are primarily responsible for fulfilling the promise and also have full discretion in establishing the price for the settlement services (except in states where fees are set statutorily). As such, we are defined as the principal. As principal, we satisfy our obligation upon the closing of a real estate transaction. Upon satisfaction of our obligation, we recognize revenue in the gross amount of consideration we are entitled to receive. The transaction price for title and property settlement services is determined by the fixed fees we charge for our services. We provide our services to the buyers and sellers involved in the purchase transaction, as well as to the borrower in a refinance transaction. Title and property settlement 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 is not entitled to any title and property settlement revenue until the performance obligation is satisfied and is not owed any consideration for unsuccessful transactions, even if services have been provided. For title insurance services, we work in conjunction with insurance underwriters to perform these services, obtain the insurance policy premiums associated with title insurance on behalf of customers and remit the policy premium to the insurance underwriters. Since the insurance underwriter is ultimately providing the insurance policy to the borrower, we are not responsible for fulfilling the promise to provide the specified services. Additionally, we do not have discretion in dictating the price for the insurance policy, which is set by each jurisdiction and is either filed by insurance underwriters or set by the state insurance commissioners. Therefore, we do not control the specified service provided by the insurance underwriter. As such, in these circumstances, we act as an agent. As the agent, we satisfy our obligation upon the closing of a real estate transaction. Upon satisfaction of our obligation, we recognize revenue in the net amount of consideration we are entitled to receive, which is our fee for brokering the insurance policy less any consideration paid to the insurance underwriters. The transaction price for title insurance services is fixed, based on statutory rates depending on the jurisdiction. We negotiate with insurance underwriters the percentage they receive, and the rest is recognized as revenue. Title insurance 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 is not entitled to any title insurance revenue until the performance obligation is satisfied and is not owed any consideration 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. |
Reclassifications | Reclassifications — Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation with no effect on the previously reported net loss or stockholders’ equity. These reclassifications primarily relate to the inclusion of share-based compensation paid to agents within cost of revenue . |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | Property and equipment, net consisted of the following at the dates indicated: March 31, 2021 December 31, 2020 (Unaudited) Vehicles $ 119,324 $ 119,324 Computers and equipment 182,863 138,842 Furniture and fixtures 401,822 44,330 Leasehold improvements 3,402 3,402 Total property and equipment 707,411 305,898 Accumulated depreciation (168,643) (151,299) Total property and equipment, net $ 538,768 $ 154,599 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets, Net | |
Schedule of components of intangible assets, net | Intangible assets, net consisted of the following at the dates indicated: March 31, 2021 Gross Carrying Accumulated Net Carrying Amount Amortization Value (Unaudited) Trade names $ 166,000 $ (5,533) $ 160,467 Software development 3,829,812 (244,583) 3,585,229 Agent relationships 1,180,000 — 1,180,000 $ 5,175,812 $ (250,116) $ 4,925,696 December 31, 2020 Gross Carrying Accumulated Net Carrying Amount Amortization Value Trade names $ 166,000 $ (1,383) $ 164,617 Software development 921,248 (163,718) 757,530 $ 1,087,248 $ (165,101) $ 922,147 |
Schedule of estimated future amortization expense for definite-lived intangible assets | As of March 31, 2021, the estimated future amortization expense for definite-lived intangible assets was: Years Ended December 31, 2021 (remaining) $ 600,065 2022 800,086 2023 800,086 2024 787,586 2025 619,701 Thereafter 1,318,172 Total $ 4,925,696 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill. | |
Schedule of changes in the carrying value of goodwill | The changes in the carrying value of goodwill as of March 31, 2021 are as noted in the table below: Carrying Value Balance at December 31, 2020 $ 799,058 Goodwill acquired during the period 209,210 Impairment losses — Balance at March 31, 2021 $ 1,008,268 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Liabilities | |
Schedule of components of accrued liabilities | Accrued liabilities consisted of the following at the dates indicated: March 31, 2021 December 31, 2020 (Unaudited) Deferred annual fee $ 457,019 $ 292,696 Accrued compensation 421,578 201,587 Due to sellers 400,000 — Other accrued liabilities 245,080 157,925 Credit card liability 242,104 177,986 Accrued legal fees 200,000 75,000 Accrued professional fees 89,917 54,420 Accrued tax liabilities 27,421 104,275 Total accrued liabilities $ 2,083,119 $ 1,063,889 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Instrument [Line Items] | |
Schedule of debt | March 31, 2021 December 31, 2020 (Unaudited) Paycheck Protection Program Loan $ 303,681 $ 354,281 Small Business Administration Loan 171,006 149,900 Loan payable - Automobile Loan 30,773 35,093 Long-term debt 505,460 539,274 Less current portion of the Paycheck Protection Program Loan (203,810) (237,182) Less current portion of the Small Business Administration Loan (23,642) (1,748) Less current portion of the Loan Payable (17,470) (17,394) Long-term debt, net of current portion $ 260,538 $ 282,950 |
Loans Payable | |
Debt Instrument [Line Items] | |
Schedule of maturities of the loan payable obligation | Maturities of the loan payable obligation as of March 31, 2021 are as follows: Maturities of Loan Years Ended December 31, Payable 2021 (remaining) $ 13,074 2022 17,699 $ 30,773 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases | |
Schedule of lease cost | Three months ended March 31, Components of total lease cost: 2021 2020 (Unaudited) Operating lease expense $ 47,674 $ 35,350 Short-term lease expense 28,462 17,003 Total lease cost $ 76,136 $ 52,353 |
Schedule of balance sheet location disclosure | March 31, 2021 December 31, 2020 (Unaudited) Assets Lease right of use assets $ 2,223,059 $ Total lease assets $ 2,223,059 $ Liabilities Current liabilities: Lease liability - current portion $ 252,404 $ Noncurrent liabilities: Lease liability, net of current portion 1,976,087 Total lease liability $ 2,228,491 $ |
Schedule of weighted average remaining lease term and the weighted average discount rate for the Company's operating leases | March 31, 2021 2020 (Unaudited) Weighted average remaining lease term (in years) - operating leases 6.40 4.51 Weighted average discount rate - operating leases 6.40 % 8 % |
Schedule of future lease payments | Future lease payments included in the measurement of lease liabilities on the consolidated balance sheet as of March 31, 2021, for the following five fiscal years and thereafter were as follows: Years Ended December 31, Operating Leases 2021 (remaining) $ 266,236 2022 472,273 2023 426,467 2024 368,388 2025 337,104 2026 and thereafter 881,775 Total Minimum Lease Payments $ 2,752,243 Less effects of discounting (523,752) Present value of future minimum lease payments $ 2,228,491 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Compensation | |
Summary of activity related to restricted stock awards | Weighted Average Grant Shares Date Fair Value Nonvested at December 31, 2020 390,787 13.56 Granted 153,215 38.04 Vested (31,208) (42.37) Forfeited (4,010) (11.84) Nonvested at March 31, 2021 508,784 $ 19.18 |
Summary of stock option activity under the Plans | Weighted Weighted Average Options Average Remaining Contractual Aggregate Outstanding Exercise Price Term in Years intrinsic value Balance at December 31, 2020 47,332 $ 8.03 8.8 $ 1,325,903 Granted 13,638 44.00 10.0 — Balance at March 31, 2021 60,970 $ 16.07 8.9 $ 1,353,829 Options exercisable at March 31, 2021 37,130 $ 4.71 8.2 $ 1,185,190 |
Net Loss per Share Attributab_2
Net Loss per Share Attributable to Common Stock (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Net Loss per Share Attributable to Common Stock | |
Summary of basic and diluted net loss | Three months ended March 31, 2021 2020 (Unaudited) Numerator: Net loss attributable to common stock—basic and diluted $ (3,399,718) $ (42,771) Denominator: Weighted average shares—basic and diluted 13,450,111 9,993,866 Net loss per share attributable to common stock—basic and diluted $ (0.25) $ (0.00) |
Summary of outstanding shares of common stock equivalents were excluded from the computation of the diluted net loss per share attributable to common stock | Three months ended March 31, 2021 2020 Stock options 60,970 37,130 Unvested restricted stock awards 508,784 223,765 Common stock warrants 240,100 — |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | Aug. 04, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
COVID-19 Risks, Impacts and Uncertainties | ||||
Net loss | $ (3,399,718) | $ (42,771) | ||
Cash and cash equivalents | $ 24,918,369 | 844,449 | $ 28,577,396 | |
Proceeds from issuance of common stock | $ 31,100,000 | $ 83,014 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Intangible Assets, Net (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Trade names | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (Years) | 10 years |
Agent Relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (Years) | 7 years |
Internally developed software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (Years) | 7 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Capitalized (Details) - Software development | 3 Months Ended |
Mar. 31, 2021 | |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Capitalized software costs | 7 years |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Capitalized software costs | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Goodwill (Details) | 3 Months Ended |
Mar. 31, 2021USD ($)item | |
Summary of Significant Accounting Policies | |
Number of reporting units | item | 1 |
Impairment of goodwill | $ | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Practical (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Practical expedient | |
Practical expedient | true |
Acquisition (Details)
Acquisition (Details) - USD ($) | Mar. 01, 2021 | Dec. 31, 2020 |
Asset Acquisition [Line Items] | ||
Loans receivable, outstanding principal amount | $ 165,000 | |
Interest rate | 2.00% | |
Naberly | ||
Asset Acquisition [Line Items] | ||
Cash consideration | $ 2,665,000 | |
Transaction costs | 95,000 | |
Acquisition cost, including transaction costs | $ 2,760,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Property and Equipment, Net | |||
Total property and equipment | $ 707,411 | $ 305,898 | |
Accumulated depreciation | (168,643) | (151,299) | |
Total property and equipment, net | 538,768 | 154,599 | |
Depreciation expense | 17,000 | $ 8,000 | |
Vehicles | |||
Property and Equipment, Net | |||
Total property and equipment | 119,324 | 119,324 | |
Computers and equipment | |||
Property and Equipment, Net | |||
Total property and equipment | 182,863 | 138,842 | |
Furniture and fixtures | |||
Property and Equipment, Net | |||
Total property and equipment | 401,822 | 44,330 | |
Leasehold improvements | |||
Property and Equipment, Net | |||
Total property and equipment | $ 3,402 | $ 3,402 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 5,175,812 | $ 1,087,248 |
Accumulated Amortization | (250,116) | (165,101) |
Net Carrying Value | 4,925,696 | 922,147 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 166,000 | 166,000 |
Accumulated Amortization | (5,533) | (1,383) |
Net Carrying Value | 160,467 | 164,617 |
Software development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,829,812 | 921,248 |
Accumulated Amortization | (244,583) | (163,718) |
Net Carrying Value | 3,585,229 | $ 757,530 |
Agent Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,180,000 | |
Net Carrying Value | $ 1,180,000 |
Intangible Assets, Net - Future
Intangible Assets, Net - Future amortization expense of intangible assets (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Intangible Assets, Net | ||
2021 (remaining) | $ 600,065 | |
2022 | 800,086 | |
2023 | 800,086 | |
2024 | 787,586 | |
2025 | 619,701 | |
Thereafter | 1,318,172 | |
Total | $ 4,925,696 | $ 922,147 |
Intangible Assets, Net - Additi
Intangible Assets, Net - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Intangible Assets, Net | ||
Amortization expense for capitalized software and trade names | $ 85,000 | $ 11,000 |
Goodwill (Details)
Goodwill (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Carrying Value | |
Beginning balance | $ 799,058 |
Goodwill acquired during the period | 209,210 |
Impairment losses | 0 |
Ending balance | $ 1,008,268 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Accrued Liabilities | ||
Deferred annual fee | $ 457,019 | $ 292,696 |
Accrued compensation | 421,578 | 201,587 |
Due to sellers | 400,000 | |
Other accrued liabilities | 245,080 | 157,925 |
Credit card liability | 242,104 | 177,986 |
Accrued legal fees | 200,000 | 75,000 |
Accrued professional fees | 89,917 | 54,420 |
Accrued tax liabilities | 27,421 | 104,275 |
Total accrued liabilities | $ 2,083,119 | $ 1,063,889 |
Debt (Details)
Debt (Details) - USD ($) | Jun. 05, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Nov. 24, 2020 | May 31, 2020 | Jul. 31, 2016 |
Debt Instrument [Line Items] | ||||||
Interest rate per annum | 1.74% | |||||
Outstanding principal written off | $ 50,600 | |||||
Gain on extinguishment | 50,936 | |||||
PPP Loan | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding principal written off | 50,600 | |||||
Accrued and unpaid interest written off | 336 | |||||
Gain on extinguishment | 50,936 | |||||
Notes Payable | Small Business Administration Loan | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate per annum | 3.75% | |||||
Borrowed amount | $ 150,000 | |||||
Debt issuance costs | 100 | |||||
Equal installment payments | $ 731 | |||||
Notes Payable | Paycheck Protection Program Loan | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate per annum | 1.00% | |||||
Borrowed amount | $ 303,681 | |||||
Interest expense | $ 628 | $ 0 | ||||
Notes Payable | PPP Loan | Verus Title Inc. | ||||||
Debt Instrument [Line Items] | ||||||
Borrowed amount | $ 50,600 |
Debt - Loan Payable and Notes P
Debt - Loan Payable and Notes Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Long term debt | $ 505,460 | $ 539,274 |
Less current portion | (244,922) | (256,324) |
Loans payable | ||
Debt Instrument [Line Items] | ||
Long term debt | 30,773 | |
Debt, Net of current portion | 260,538 | 282,950 |
Loans payable | Automobile Loan | ||
Debt Instrument [Line Items] | ||
Long term debt | 30,773 | 35,093 |
Less current portion | (17,470) | (17,394) |
Notes Payable | Paycheck Protection Program Loan | ||
Debt Instrument [Line Items] | ||
Long term debt | 303,681 | 354,281 |
Less current portion | (203,810) | (237,182) |
Notes Payable | Small Business Administration Loan | ||
Debt Instrument [Line Items] | ||
Long term debt | 171,006 | 149,900 |
Less current portion | $ (23,642) | $ (1,748) |
Debt - Maturities of the loan p
Debt - Maturities of the loan payable obligation (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Long-term Debt, Total | $ 505,460 | $ 539,274 |
Loans payable | ||
Debt Instrument [Line Items] | ||
2021 (remaining) | 13,074 | |
2022 | 17,699 | |
Long-term Debt, Total | $ 30,773 |
Leases (Details)
Leases (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Lessee, Lease, Description [Line Items] | ||
Option to extend | true | |
Residual value guarantee | false | |
Weighted average remaining lease term (in years) - operating leases | 6 years 4 months 24 days | 4 years 6 months 4 days |
Weighted average discount rate - operating leases | 6.40% | 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 ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Leases | ||
Operating lease expense | $ 47,674 | $ 35,350 |
Short-term lease expense | 28,462 | 17,003 |
Total lease cost | $ 76,136 | $ 52,353 |
Leases - Lease position (Detail
Leases - Lease position (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Lease right of use assets | $ 2,223,059 | $ 437,421 |
Total lease assets | 2,223,059 | 437,421 |
Liabilities | ||
Lease liability - current portion | 252,404 | 140,100 |
Lease liability, net of current portion | 1,976,087 | 301,429 |
Total lease liability | $ 2,228,491 | $ 441,529 |
Leases - Undiscounted cash flow
Leases - Undiscounted cash flow (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Undiscounted Cash Flows | ||
2021 (remaining) | $ 266,236 | |
2022 | 472,273 | |
2023 | 426,467 | |
2024 | 368,388 | |
2025 | 337,104 | |
2026 and thereafter | 881,775 | |
Total Minimum Lease Payments | 2,752,243 | |
Less effects of discounting | (523,752) | |
Total lease liability | $ 2,228,491 | $ 441,529 |
Share-based Compensation (Detai
Share-based Compensation (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards granted (in shares) | 153,215 | |||
Fair value of awards granted (in dollars per share) | $ 42.37 | |||
Stock options granted (in shares) | 13,638 | |||
Exercise price of stock options granted (in dollars per share) | $ 44 | |||
Stock options outstanding (in shares) | 60,970 | 60,970 | 47,332 | |
Weighted average grant-date fair value of options granted (in dollars per share) | $ 18.64 | $ 0 | ||
2017 Stock Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 3,182,335 | 3,182,335 | ||
Number of shares available for future grants | 2,739,261 | 2,739,261 | ||
2019 Omnibus Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 1,060,778 | 1,060,778 | ||
Number of shares available for future grants | 460,033 | 460,033 | ||
Exercise price of stock options granted (in dollars per share) | $ 44 | |||
Vesting Tranche One | 2019 Omnibus Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards granted (in shares) | 4,564 | |||
Vesting Tranche One | 2019 Plan, in connection with the Acquisitions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards granted (in shares) | 10,478 | |||
Vesting Tranche Two | 2019 Omnibus Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards granted (in shares) | 77,439 | |||
Vesting Tranche Two | 2019 Plan, in connection with the Acquisitions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards granted (in shares) | 34,090 | |||
Vesting period | 18 months | |||
Unvested restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 8,437,964 | $ 8,437,964 | ||
Unrecognized compensation expense period for recognition | 2 years 18 days | |||
Unvested restricted stock awards | General and administrative expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated Share Based Compensation Expense | $ 556,709 | $ 9,051 | ||
Shares forfeiture | 1,264 | 0 | ||
Unvested restricted stock awards | Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated Share Based Compensation Expense | 272,186 | 94,107 | ||
Shares forfeiture | $ 18,455 | 2,371 | ||
Unvested restricted stock awards | 2019 Omnibus Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards granted (in shares) | 82,003 | |||
Fair value of awards granted (in dollars per share) | $ 32.87 | |||
Vesting period | 3 years | |||
Unvested restricted stock awards | 2019 Plan, in connection with the Acquisitions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards granted (in shares) | 44,568 | |||
Fair value of awards granted (in dollars per share) | $ 44 | |||
Unvested restricted stock awards | Vesting Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Stock option awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 280,574 | $ 280,574 | ||
Unrecognized compensation expense period for recognition | 9 months 11 days | |||
Stock option awards | General and administrative expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated Share Based Compensation Expense | $ 41,180 | $ 21,563 |
Share-based Compensation - Move
Share-based Compensation - Movements in Restricted Stock Awards (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Shares | ||
Non-vested at beginning | 390,787 | |
Granted | 153,215 | |
Vested | (31,208) | |
Forfeited | (4,010) | |
Non-vested at ending | 508,784 | |
Weighted-Average Grant Date Fair Value | ||
Non-vested at beginning | $ 19.18 | $ 13.56 |
Granted | 38.04 | |
Vested | (42.37) | |
Forfeited | (11.84) | |
Non-vested at ending | $ 19.18 | $ 13.56 |
Share-based compensation - Summ
Share-based compensation - Summary of stock option activity under the Plans (Details) | 3 Months Ended | |
Mar. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | |
Options Outstanding | ||
Beginning balance | shares | 47,332 | |
Granted | shares | 13,638 | |
Ending balance | shares | 60,970 | 47,332 |
Options exercisable | shares | 37,130 | |
Weighted Average Exercise Price | ||
Beginning balance | $ / shares | $ 8.03 | |
Granted | $ / shares | 44 | |
Ending balance | $ / shares | 16.07 | $ 8.03 |
Options exercisable | $ / shares | $ 4.71 | |
Weighted Average Remaining Contractual Term in Years | ||
Weighted average remaining contractual term | 8 years 10 months 24 days | 8 years 9 months 18 days |
Granted | 10 years | |
Options exercisable | 8 years 2 months 12 days | |
Aggregate intrinsic value | ||
Beginning balance | $ | $ 1,325,903 | |
Ending balance | $ | 1,353,829 | $ 1,325,903 |
Options exercisable | $ | $ 1,185,190 |
Equity-classified Warrants - Is
Equity-classified Warrants - Issuance of warrants (Details) - $ / shares | Mar. 31, 2021 | Aug. 04, 2020 |
Equity-classified Warrants | ||
Underwriter Warrant to purchase shares | 0 | 240,100 |
Warrant exercise price (in dollars per share) | $ 11 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party Transactions | ||
Revenue | $ 0 | $ 158,500 |
Cost of revenue | 780 | 12,052 |
Marketing expense | $ 143,123 | $ 48,901 |
Net Loss per Share Attributab_3
Net Loss per Share Attributable to Common Stock - Calculation of Basic and Diluted Net Loss per Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||
Net loss attributable to common stock-basic and diluted | $ (3,399,718) | $ (42,771) |
Denominator: | ||
Weighted average shares-basic and diluted | 13,450,111 | 9,993,866 |
Net loss per share attributable to common stock-basic and diluted | $ (0.25) | $ 0 |
Net Loss per Share Attributab_4
Net Loss per Share Attributable to Common Stock - Antidilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock option awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents excluded from computation of diluted net loss per share attributable to common stock for the periods presented because their effect would have been anti-dilutive | 60,970 | 37,130 |
Unvested restricted stock awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents excluded from computation of diluted net loss per share attributable to common stock for the periods presented because their effect would have been anti-dilutive | 508,784 | 223,765 |
Common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents excluded from computation of diluted net loss per share attributable to common stock for the periods presented because their effect would have been anti-dilutive | 240,100 |
Income Taxes - Income tax (Deta
Income Taxes - Income tax (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Income Taxes | ||
Federal net operating loss carryforwards | $ 9,200,000 | |
State net operating loss carryforwards | $ 4,500,000 | |
Unrecognized tax benefits | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Apr. 26, 2021 | Apr. 20, 2021 | Mar. 31, 2021 |
Subsequent Event [Line Items] | |||
Stock Consideration | $ 1,172,336 | ||
E4:9 | Subsequent events | |||
Subsequent Event [Line Items] | |||
Total purchase consideration | $ 28,900,000 | ||
Cash consideration | 9,800,000 | ||
Stock Consideration | $ 16,600,000 | ||
LiveBy | Subsequent events | |||
Subsequent Event [Line Items] | |||
Total purchase consideration | $ 9,300,000 | ||
Cash consideration | 3,300,000 | ||
Stock Consideration | $ 5,600,000 |