Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 08, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Entity File Number | 001-39412 | |
Entity Registrant Name | FATHOM HOLDINGS INC. | |
Entity Incorporation, State or Country Code | NC | |
Entity Tax Identification Number | 82-1518164 | |
Entity Address, Address Line One | 2000 Regency Parkway Drive | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Cary | |
Entity Address State Or Province | NC | |
Entity Address, Postal Zip Code | 27518 | |
City Area Code | 888 | |
Local Phone Number | 455-6040 | |
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 | 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 | 17,074,582 | |
Entity Central Index Key | 0001753162 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 14,543 | $ 37,830 |
Restricted cash | 139 | 91 |
Accounts receivable | 4,232 | 3,981 |
Derivative assets | 294 | 53 |
Mortgage loans held for sale, at fair value | 8,815 | 9,862 |
Prepaid and other current assets | 4,799 | 2,633 |
Total current assets | 32,822 | 54,450 |
Property and equipment, net | 3,114 | 1,250 |
Lease right of use assets | 5,586 | 4,353 |
Intangible assets, net | 27,947 | 24,243 |
Goodwill | 25,472 | 20,541 |
Other assets | 52 | 93 |
Total assets | 94,993 | 104,930 |
Current liabilities: | ||
Accounts payable | 4,920 | 5,303 |
Accrued and other current liabilities | 5,182 | 4,491 |
Warehouse lines of credit | 8,516 | 9,577 |
Long-term debt - current portion | 514 | 831 |
Lease liability - current portion | 1,549 | 870 |
Total current liabilities | 20,681 | 21,072 |
Lease liability, net of current portion | 5,416 | 3,562 |
Long-term debt, net of current portion | 270 | 146 |
Total liabilities | 26,367 | 24,780 |
Commitments and contingencies (Note 18) | ||
Stockholders' equity: | ||
Common stock (no par value, shares authorized, 100,000,000; shares issued and outstanding, 17,074,582 and 16,751,606 as of September 30, 2022 and December 31, 2021, respectively) | 0 | 0 |
Additional paid-in capital | 106,283 | 100,129 |
Accumulated deficit | (37,657) | (19,979) |
Total stockholders' equity | 68,626 | 80,150 |
Total liabilities and stockholders' equity | $ 94,993 | $ 104,930 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,074,582 | 16,751,606 |
Common stock, shares outstanding | 17,074,582 | 16,751,606 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue | $ 111,264,000 | $ 100,940,000 | $ 329,526,000 | $ 234,769,000 |
Operating expenses | ||||
Commission and other agent-related costs | 99,448,000 | 91,263,000 | 295,237,000 | 214,392,000 |
Operations and support | 2,420,000 | 2,029,000 | 6,192,000 | 3,781,000 |
Technology and development | 1,456,000 | 571,000 | 3,931,000 | 1,912,000 |
General and administrative | 11,528,000 | 9,582,000 | 34,669,000 | 24,139,000 |
Marketing | 1,457,000 | 591,000 | 3,948,000 | 1,371,000 |
Depreciation and amortization | 852,000 | 589,000 | 2,238,000 | 1,049,000 |
Total operating expenses | 117,161,000 | 104,625,000 | 346,215,000 | 246,644,000 |
Loss from operations | (5,897,000) | (3,685,000) | (16,689,000) | (11,875,000) |
Other expense (income), net | ||||
Gain on extinguishment of debt | (76,000) | 0 | (127,000) | |
Interest expense (income), net | (11,000) | 2,000 | 4,000 | 3,000 |
Other nonoperating expense (income), net | 126,000 | (28,000) | 800,000 | (66,000) |
Other expense (income), net | 115,000 | (102,000) | 804,000 | (190,000) |
Loss before income taxes | (6,012,000) | (3,583,000) | (17,493,000) | (11,685,000) |
Income tax expense (benefit) | 0 | (210,000) | 185,000 | (2,820,000) |
Net loss | $ (6,012,000) | $ (3,373,000) | $ (17,678,000) | $ (8,865,000) |
Net loss per share: | ||||
Basic | $ (0.38) | $ (0.24) | $ (1.10) | $ (0.64) |
Diluted | $ (0.38) | $ (0.24) | $ (1.10) | $ (0.64) |
Weighted average common shares outstanding: | ||||
Basic | 15,804,644 | 14,312,675 | 16,054,025 | 13,948,862 |
Diluted | 15,804,644 | 14,312,675 | 16,054,025 | 13,948,862 |
Gross commission income | ||||
Revenue | $ 104,977,000 | $ 95,300,000 | $ 311,074,000 | $ 224,703,000 |
Other service revenue | ||||
Revenue | $ 6,287,000 | $ 5,640,000 | $ 18,452,000 | $ 10,066,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common stock | Additional Paid in Capital | Accumulated deficit | Total |
Balance at beginning at Dec. 31, 2020 | $ 37,139,000 | $ (7,488,000) | $ 29,651,000 | |
Balance at beginning (in shares) at Dec. 31, 2020 | 13,830,351 | |||
Changes in Stockholders' deficit | ||||
Issuance of common stock for purchase of business | 25,312,000 | 25,312,000 | ||
Issuance of common stock for purchase of business (in shares) | 777,380 | |||
Issuance of common stock pursuant to exercise of stock options | 80,000 | 80,000 | ||
Issuance of common stock pursuant to exercise of stock options (in shares) | 16,972 | |||
Stock-based compensation, net of forfeitures | 3,416,000 | 3,416,000 | ||
Stock-based compensation, net of forfeitures (in shares) | 171,504 | |||
Net loss | (8,865,000) | (8,865,000) | ||
Balance at ending at Sep. 30, 2021 | 65,947,000 | (16,353,000) | 49,594,000 | |
Balance at ending (in shares) at Sep. 30, 2021 | 14,796,207 | |||
Balance at beginning at Jun. 30, 2021 | 64,594,000 | (12,980,000) | 51,614,000 | |
Balance at beginning (in shares) at Jun. 30, 2021 | 14,744,539 | |||
Changes in Stockholders' deficit | ||||
Stock-based compensation, net of forfeitures | 1,353,000 | 1,353,000 | ||
Stock-based compensation, net of forfeitures (in shares) | 51,668 | |||
Net loss | (3,373,000) | (3,373,000) | ||
Balance at ending at Sep. 30, 2021 | 65,947,000 | (16,353,000) | 49,594,000 | |
Balance at ending (in shares) at Sep. 30, 2021 | 14,796,207 | |||
Balance at beginning at Dec. 31, 2021 | 100,129,000 | (19,979,000) | 80,150,000 | |
Balance at beginning (in shares) at Dec. 31, 2021 | 16,751,606 | |||
Changes in Stockholders' deficit | ||||
Issuance of common stock for purchase of business | 6,168,000 | 6,168,000 | ||
Issuance of common stock for purchase of business (in shares) | 470,982 | |||
Repurchase of common stock | (6,045,000) | (6,045,000) | ||
Repurchase of common stock (in shares) | (686,097) | |||
Stock-based compensation, net of forfeitures | 6,031,000 | 6,031,000 | ||
Stock-based compensation, net of forfeitures (in shares) | 538,091 | |||
Net loss | (17,678,000) | (17,678,000) | ||
Balance at ending at Sep. 30, 2022 | $ 0 | 106,283,000 | (37,657,000) | 68,626,000 |
Balance at ending (in shares) at Sep. 30, 2022 | 17,074,582 | |||
Balance at beginning at Jun. 30, 2022 | $ 0 | 104,391,000 | (31,645,000) | 72,746,000 |
Balance at beginning (in shares) at Jun. 30, 2022 | 17,052,263 | |||
Changes in Stockholders' deficit | ||||
Issuance of common stock for purchase of business | $ 0 | 0 | 0 | 0 |
Issuance of common stock for purchase of business (in shares) | 0 | |||
Repurchase of common stock | $ 0 | 0 | 0 | 0 |
Repurchase of common stock (in shares) | 0 | |||
Stock-based compensation, net of forfeitures | $ 0 | 1,892,000 | 0 | 1,892,000 |
Stock-based compensation, net of forfeitures (in shares) | 22,319 | |||
Net loss | $ 0 | 0 | (6,012,000) | (6,012,000) |
Balance at ending at Sep. 30, 2022 | $ 0 | $ 106,283,000 | $ (37,657,000) | $ 68,626,000 |
Balance at ending (in shares) at Sep. 30, 2022 | 17,074,582 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (17,678) | $ (8,865) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 3,785 | 1,778 |
Non-cash lease expense | 1,565 | |
Gain on extinguishment of debt | 0 | (127) |
Gain on sale of mortgages | (3,443) | (3,264) |
Stock-based compensation | 6,470 | 2,833 |
Deferred income taxes | 0 | (2,865) |
Bad debt expense | 0 | 248 |
Other non-cash | 0 | 44 |
Change in operating assets and liabilities: | ||
Accounts receivable | (672) | (908) |
Derivative assets | (241) | |
Prepaid and other current assets | (2,128) | (761) |
Other assets | 43 | 9 |
Accounts payable | (382) | 387 |
Accrued and other current liabilities | (284) | 4,121 |
Operating lease liabilities | (1,540) | 63 |
Mortgage loans held for sale | (205,137) | (108,562) |
Proceeds from sale and principal payments on mortgage loans held for sale | 213,172 | 109,299 |
Net cash used in operating activities | (6,470) | (6,570) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (981) | (576) |
Amounts paid for business and asset acquisitions, net of cash acquired | (2,479) | (10,969) |
Purchase of intangible assets | (2,473) | (2,017) |
Net cash used in investing activities | (5,933) | (13,562) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on long-term debt | (846) | (399) |
Proceeds from issuance of common stock | 0 | 80 |
Net borrowings on warehouse lines of credit | (4,499) | 2,347 |
Repurchase of common stock | (6,045) | |
Proceeds from note payable | 554 | 865 |
Net cash (used in) provided by financing activities | (10,836) | 2,893 |
Net decrease in cash, cash equivalents, and restricted cash | (23,239) | (17,239) |
Cash, cash equivalents, and restricted cash at beginning of period | 37,921 | 29,562 |
Cash, cash equivalents, and restricted cash at end of period | 14,682 | 12,323 |
Supplemental disclosure of cash and non-cash transactions: | ||
Cash paid for interest | 23 | |
Income taxes paid | 111 | |
Amounts due to sellers | 1,100 | 1,477 |
Right of use assets obtained in exchange for new lease liabilities | 2,219 | 1,839 |
Issuance of common stock for purchase of business | 6,168 | 25,312 |
Extinguishment of Paycheck Protection Program Loan | 0 | 127 |
Loan receivable forgiven and used as purchase consideration | 0 | 165 |
Reconciliation of cash and restricted cash: | ||
Cash and cash equivalents | 14,543 | 8,753 |
Restricted cash | 139 | 3,570 |
Total cash, cash equivalents, and restricted cash shown in statement of cash flows | $ 14,682 | $ 12,323 |
Organization, Consolidation and
Organization, Consolidation and Presentation of Financial Statements | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements | Note 1. Organization, Consolidation and Presentation of Financial Statements Fathom Holdings Inc. (“Fathom”, “Fathom Holdings”, or and collectively with its consolidated subsidiaries and affiliates, the “Company”) is a national, technology-driven, real estate services platform integrating residential brokerage, mortgage, title, insurance services, and supporting software called intelliAgent. The Company’s brands include Fathom Realty, Dagley Insurance, Encompass Lending, intelliAgent, LiveBy, Real Results, Verus Title and Cornerstone. 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. 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, 2021 included in the Company’s Annual Report on Form 10-K filed with the Security and Exchange Commission (“SEC”) on March 9, 2022 (the “Form 10-K”). 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. In January and February 2022, the Company acquired Cornerstone Financial (“Cornerstone”) and iPro realty Network (“iPro”), respectively, in separate transactions accounted for as business combinations. Cornerstone is a real estate mortgage business that is expected to help expand the Company’s reach in the Washington DC and surrounding markets. The acquisition of iPro, a real estate brokerage business, is expected to help expand the Company’s reach in the Utah real estate market. As previously disclosed in the Form 10-K, certain prior period amounts have been revised to conform to the current presentation. These changes have no impact on our previously reported consolidated balance sheets or statements of operations. |
Risks and Uncertainties
Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties | |
Risks and Uncertainties | Note 2. Risks and Uncertainties Certain Significant Risks and Business Uncertainties Liquidity COVID-19 Risks, Impacts and Uncertainties The Company is 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; (iii) deteriorating economic conditions, such as increased unemployment rates, recessionary conditions, lower yields on individual investment portfolios, and more stringent mortgage financing conditions; and (iv) global supply chain stresses, which have led to inflation, which had caused the Federal Reserve to increase interest rates. Given the continuing evolution of COVID-19 and the global responses to curb its spread, the Company is not able to estimate the effects of COVID-19, including any currently known and future variant, on its results of operations, financial condition, or liquidity for the year ending December 31, 2022 and beyond. While the development and availability of multiple COVID-19 vaccines lessened the impact of COVID-19 in 2021 and the nine months ended September 30, 2022, if COVID-19 continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations. Russia and Ukraine Conflict Use of Estimates |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2022 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 3. Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Acquisitions. | |
Acquisitions | Note 4. Acquisitions Acquisition of Red Barn On March 1, 2021, the Company completed the acquisition of Red Barn, in a transaction deemed immaterial to the Company. The Red Barn acquisition was accounted for as a business combination using the acquisition method of accounting. Acquisition of Naberly On March 1, 2021 the Company acquired substantially all of the assets of Naberly for cash consideration of $2.7 million. 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 $0.1 million was $2.8 million 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 $0.2 million with an interest rate of two percent (2%) per annum, compounded annually, and a maturity date of February 28, 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. Acquisition of E4:9 On April 16, 2021 the Company purchased 100% of outstanding capital stock of E4:9. The Company accounted for the E4:9 acquisition as a business combination. The purchase price consisted of $9.8 million cash consideration and $16.6 million common stock consideration for a total purchase price of $26.5 million. The aggregate purchase price exceeded the fair value of the net tangible and intangible assets acquired, and accordingly the Company recorded goodwill of approximately $14.9 million, including a $0.4 million subsequent fair value adjustment discussed below. The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows: Recognized amounts of identifiable assets acquired, and liabilities assumed (amounts in thousands): Cash $ 2,843 Accounts Receivable 516 Mortgage loans held for sale 8,147 Derivative assets 90 Prepaid and other current assets 122 Property & Equipment 356 Intangible assets 11,780 Lease right of use assets 1,498 Other long-term assets 7 Total identifiable assets acquired 25,359 Accounts payable and accrued liabilities 938 Escrow liabilities 75 Derivative liabilities 120 Warehouse lines of credit 7,958 Notes payable 486 Lease liability, current portion 337 Lease liability, net of current portion 1,160 Deferred tax liabilities 2,687 Total liabilities assumed 13,761 Total identifiable net assets 11,598 Goodwill 14,882 Net assets acquired $ 26,480 The Company recognized approximately $0.3 million of acquisition related costs that were expensed in the nine months ended September 30, 2021 and are included in general and administrative expenses. Goodwill of approximately $7.4 million and $7.0 million was assigned to the Company’s Mortgage and Other services reporting units, respectively, and is attributable primarily to its assembled workforce and the anticipated future economic benefits of the vertical integration of E4:9’s mortgage lending and insurance product offerings available to our real estate agents. None of the goodwill is expected to be deductible for income tax purposes. The fair value associated with identifiable intangible assets was $11.8 million, comprised of customer relationships of $6.2 million, tradenames of $5.2 million and know-how of $0.4 million. Customer relationships is being amortized on an accelerated basis over a useful life of 8 years. Tradenames and know-how are amortized on a straight-line basis over 10 years and 5 years, respectively. The Company finalized the fair value estimates used in the purchase price allocation related to the E4:9 acquisitions during the quarter ended June 30, 2022, resulting in a $0.4 million adjustment to lower the fair value of accounts receivable assumed to be $0.5 million with an offsetting increase to goodwill in our Corporate and other services reporting unit. The Company’s condensed consolidated financial statements include the results of operations of E4:9 since the closing on April 16, 2021. During the three-month periods ended September 30, 2022 and 2021 E4:9 contributed $4.6 million and $4.0 million in revenues and $1.2 million and $1.0 million in net loss, respectively. During the nine-month period ended September 30, 2022 and from the acquisition closing on April 16, 2021 through September 30, 2021, E4:9 contributed $13.2 million and $6.9 million in revenues and $5.1 million and $2.6 million in net loss, respectively. Acquisition of LiveBy On April 20, 2021 the Company purchased 100% of the outstanding capital stock of LiveBy Inc. The Company accounted for the LiveBy acquisition as a business combination. The purchase price consisted of $3.4 million cash consideration and $5.6 million common stock consideration for a total purchase price of $9.0 million. The aggregate purchase price exceeded the fair value of the net tangible and intangible assets acquired, and accordingly the Company recorded goodwill of approximately $4.2 million. The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows: Recognized amounts of identifiable assets acquired and liabilities assumed (amounts in thousands): Cash $ 516 Accounts receivable 138 intangible assets 4,920 Prepaid and other current assets 2 Total identifiable assets acquired 5,576 Deferred tax liabilities 621 Accounts payable and accrued liabilities 167 Total liabilities assumed 788 Total identifiable net assets 4,788 Goodwill 4,193 Net assets acquired $ 8,981 The Company recognized approximately $0.2 million acquisition related costs that were expensed in the nine months ended September 30, 2021 and are included in general and administrative expenses. Goodwill was assigned to the technology reporting unit and is attributable primarily to its assembled workforce and the anticipated future economic benefits to the Company’s agents through technology product offerings. None of the goodwill is expected to be deductible for income tax purposes. The Company’s condensed consolidated financial statements include the results of operations of LiveBy since the closing on April 20, 2021. During the three month periods ended September 30, 2022 and 2021 LiveBy contributed $0.7 million and $0.6 million in revenues and $0.4 million and $0.1 million in net loss, respectively. During the nine-month period ended September 30, 2022 and from the acquisition closing on April 20, 2021 through September 30, 2021, LiveBy contributed $2.0 million and $1.0 million in revenues and $0.3 million and less than $0.1 million in net loss, respectively. Acquisition of Epic Realty On June 30, 2021, the Company completed the acquisition of Epic Realty (“Epic”) in a transaction deemed immaterial to the Company. The Epic acquisition was accounted for as a business combination using the acquisition method of accounting. Supplemental Pro Forma Financial Information On an unaudited pro forma basis in thousands, the revenues and net loss of the Company assuming the acquisitions of E4:9 and LiveBy occurred on January 1, 2020, are shown below. The unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition happened on January 1, 2020, nor is the financial information indicative of the results of future operations. The pro forma financial information includes the estimated amortization expense based on the fair value and estimated useful lives of intangible assets as part of the acquisitions of E4:9 and LiveBy. Nine Months Ended September 30, 2021 Revenue $ 240,282 Net loss (15,709) Net loss per share (basic) $ (1.07) Acquisitions of Cornerstone Financial and iPro Realty Network The Company completed two acquisitions in the nine months ended September 30, 2022, both accounted for as business combinations. On January 24, 2022, the Company acquired Cornerstone Financial, a real estate mortgage business in the Washington DC and surrounding markets, for approximately $4.7 million. The purchase price was comprised of $1.1 million in cash consideration and 267,470 shares of common stock with an acquisition date fair value of $3.6 million. Approximately $0.6 million of the cash consideration is due within one year of the acquisition date. On February 8, 2022, the Company acquired iPro Realty Network, a real estate brokerage business in the Utah real estate market, for total consideration of approximately $4.2 million. The purchase price included cash consideration of approximately $1.8 million and 167,824 shares of common stock with an acquisition date fair value of $2.3 million. Approximately $0.1 million of the cash consideration is due within one year of the acquisition date. Assets acquired and liabilities assumed in the individual acquisitions were recorded on the Company’s condensed consolidated balance sheet at their estimated fair values as of the respective dates of acquisition, including mortgage loans held for sale of approximately $3.5 million, lease right of use assets and lease liabilities of approximately $0.6 million, accrued liabilities of approximately $0.4 million and warehouse lines of credit of approximately $3.4 million. The Company recorded finite-lived intangible assets of approximately $3.6 million and goodwill of approximately $4.9 million, prior to the updates to fair values noted below. None of the goodwill relating to the Cornerstone Financial acquisition is expected to be deductible for income tax purposes. Goodwill in the amount of approximately $1.4 million relating to the iPro Realty Network acquisition is expected to be deductible for income tax purposes. The Company updated the fair value estimates used in the purchase price allocation related to the Cornerstone and iPro acquisitions during the nine-month period ended September 30, 2022, resulting in an increase of $0.4 million in the fair value of assumed finite lived intangible assets, an increase of $0.3 million in other assets, and a $0.2 million increase in goodwill. Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2022, and in any case, no later than one year from the acquisition date in accordance with GAAP. Pro forma information has not been included as it is impracticable to obtain the information due to the lack of availability of historical GAAP financial data. The results of operations of these businesses do not have a material effect on the Company’s consolidated results of operations. Acquisition related costs incurred during the three and nine months ended September 30, 2022, were $8,000 and $60,000, respectively and are included in general and administrative expense. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2022 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 5. Intangible Assets, Net Intangible assets, net consisted of the following (amounts in thousands): September 30, 2022 Gross Carrying Accumulated Net Carrying Amount Amortization Value Trade names $ 7,915 (1,023) $ 6,892 Software development 11,662 (2,472) 9,190 Customer relationships 8,180 (1,781) 6,399 Agent relationships 5,856 (695) 5,161 Know-how 430 (125) 304,578 $ 34,043 $ (6,096) $ 27,947 December 31, 2021 Gross Carrying Accumulated Net Carrying Amount Amortization Value Trade names $ 6,326 $ (454) $ 5,872 Software development 9,017 (1,095) 7,922 Customer relationships 8,180 (897) 7,283 Agent relationships 3,030 (233) 2,797 Know-how 430 (61) 369 $ 26,983 $ (2,740) $ 24,243 Estimated future amortization intangible assets as of September 30, 2022 was as follows (amounts in thousands): Years Ending December 31, 2022 (remaining) $ 1,425 2023 5,093 2024 4,965 2025 4,687 2026 3,931 Thereafter 7,846 Total $ 27,947 During the three months ended September 30, 2022 and 2021, aggregate amortization expense for intangible assets was $1.2 million and $0.9 million, respectively, of which $0.5 million and $0.3 million, respectively, was included in technology and development expense. During the nine months ended September 30, 2022 and 2021, aggregate amortization expense for intangible assets was $3.4 million and $1.7 million, respectively, of which $1.6 million and $0.7 million, respectively, was included in technology and development expense. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill. | |
Goodwill | Note 6. Goodwill The changes in the carrying value of goodwill by segment as of September 30, 2022 are as noted in the table below (amounts in thousands): Real Estate Brokerage Mortgage Technology Other (a) Total Balance at December 31, 2021 $ 1,099 $ 7,399 $ 4,168 $ 7,875 $ 20,541 Goodwill acquired during the period 1,461 2,876 — — 4,337 Fair value measurement adjustment (see Note 4) 130 18 — 446 594 Balance at September 30, 2022 $ 2,690 $ 10,293 $ 4,168 $ 8,321 $ 25,472 (a) There were no accumulated impairment charges as of September 30, 2022 and December 31, 2021. |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Accrued and Other Current Liabilities | |
Accrued and Other Current Liabilities | Note 7. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following (amounts in thousands): September 30, 2022 December 31, 2021 Deferred annual fee $ 1,209 $ 546 Due to sellers 1,413 1,400 Accrued compensation 1,053 1,033 Other accrued liabilities 1,507 1,512 Total accrued and other current liabilities $ 5,182 $ 4,491 |
Warehouse Lines of Credit
Warehouse Lines of Credit | 9 Months Ended |
Sep. 30, 2022 | |
Warehouse Lines of Credit | |
Warehouse Lines of Credit | Note 8. Warehouse Lines of Credit Encompass Lending Group (“Encompass”), an indirect wholly owned subsidiary of the Company, utilizes line of credit facilities as a means of temporarily financing mortgage loans pending their sale. The underlying warehouse lines of credit agreements, as described below, contain financial and other debt covenants. Encompass maintains a master loan warehouse agreement with a bank whereby Encompass borrows funds to finance the origination or purchase of eligible loans. Interest on funds borrowed is equal to the greater of the 30-Day Secured Overnight Financing Rate (SOFR) rate plus 2.625% or 3.50%. The agreement expires in July 2023. The maximum funding available under these loans at September 30, 2022 and December 31, 2021 was $15.0 million. At September 30, 2022 and December 31, 2021, the outstanding balance on this warehouse line was approximately $2.1 million and $4.3 million, respectively. As of September 30, 2022, Encompass was in compliance with the debt covenants under this facility. Encompass maintains a mortgage participation purchase agreement with a bank whereby Encompass borrows funds to finance the origination or purchase of eligible loans. Interest on funds borrowed is equal to the greater of the London Inter-Bank Offered Rate (Libor) Rate plus 2.00% or 3.5%. The agreement expires in April 2023.The maximum funding available under these loans at September 30, 2022 and December 31, 2021 was $25.0 million. At September 30, 2022 and December 31, 2021, the outstanding balance on this warehouse line was approximately $3.3 million and $3.1 million, respectively. As of September 30, 2022, Encompass was not in compliance with certain of these debt covenants related to earnings, however, based on communications with the bank, Encompass has received a waiver on these covenants. Encompass maintains a warehousing credit and security agreement with a bank whereby Encompass borrows funds to finance the origination of eligible mortgage loans. Interest on funds borrowed is equal to the greater of the daily adjusting Bloomberg Short-Term Bank Yield (BSBY) rate plus 2.00% or 3.5% per annum. The agreement expires in September 2023. The daily adjusting BSBY rate plus 2.00% as of September 30, 2022 was 5.10% and the daily adjusting LIBOR plus 2.00% as of December 31, 2021 was 2.09%. The maximum funding available under these loans at September 30, 2022 and December 31, 2021 was $15.0 million. At September 30, 2022 and December 31, 2021, the outstanding balance on this warehouse line was approximately $3.1 million and $2.2 million, respectively. As of September 30, 2022, Encompass was in compliance with the debt covenants under this facility. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt | |
Debt | Note 9. Debt Long-term debt consisted of the following (amounts in thousands): September 30, 2022 December 31, 2021 3.75% Small Business Administration installment loan due May 2050 $ 159 $ 170 Notes payable: Non-interest-bearing promissory note due July 1, 2022 493 210 % director and officer insurance policy promissory note due July 31, 2023 — 385 6.0 % executive and officer insurance policy promissory note due October 9, 2022 132 211 Total debt 784 976 Less current portion of the Small Business Administration Loan (21) (25) Less current portion of notes payable (493) (806) Long-term debt, net of current portion $ 270 $ 145 During the nine-month period ended September 30, 2022, approximately $0.1 million of short-term debt associated with our January iPro acquisition was paid. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | Note 10. Fair Value Measurements FASB ASC 820, Fair Value Measurement ● Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). ● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially). ● Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available). A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. In general, fair value is based upon quoted market prices, where evaluated. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure the financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Mortgage loans held for sale – The fair value of mortgage loans held for sale is determined, when possible, using quoted secondary-market prices or purchaser commitments. If no such quoted price exists, the fair value of a loan is determined using quoted prices for a similar asset or assets, adjusted for the specific attributes of that loan, which would be used by other market participants. The loans are considered Level 2 on the fair value hierarchy. Derivative financial instruments – Derivative financial instruments are reported at fair value. Fair value is determined using a pricing model with inputs that are unobservable in the market or cannot be derived principally from or corroborated by observable market data. These instruments are Level 3 on the fair value hierarchy. The fair value determination of each derivative financial instrument categorized as Level 3 required one or more of the following unobservable inputs: ● Agreed prices from Interest Rate Lock Commitments (“IRLC”) ● Trading prices for derivative instruments ● Closing prices at September 30, 2022 and December 31, 2021 for derivative instruments The following are major categories of assets and liabilities measured at fair value on a recurring basis (amounts in thousands): September 30, 2022 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 8,815 $ — $ 8,815 Derivative assets — — 294 294 $ — $ 8,815 $ 294 $ 9,109 December 31, 2021 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 9,862 $ — $ 9,862 Derivative assets — — 53 53 $ — $ 9,862 $ 53 $ 9,915 The Company enters into IRLCs to originate residential mortgage loans held for sale, at specified interest rates and within a specific period of time (generally between 30 and 90 days), with customers who have applied for a loan and meet certain credit and underwriting criteria. These IRLCs meet the definition of a derivative and are reflected on the consolidated balance sheets at fair value with changes in fair value recognized in other service revenue on the consolidated statements of operations. Unrealized gains and losses on the IRLCs, reflected as derivative assets and derivative liabilities, respectively, are measured based on the fair value of the underlying mortgage loan, quoted agency mortgage-backed security (“MBS”) prices, estimates of the fair value of the mortgage servicing rights and the probability that the mortgage loan will fund within the terms of the IRLC, net of commission expense and broker fees. The fair value of the forward loan sales commitment and mandatory delivery commitments being used to economically hedge the IRLCs and mortgage loans held for sale not committed to purchasers are based on quoted agency MBS prices. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | Note 11. Leases Operating Leases The Company has operating leases primarily consisting of office space with remaining lease terms of less than one year to nine 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. The Company used estimated incremental borrowing rates for all active leases. The table below presents certain information related to lease costs for the Company’s operating leases (amounts in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating lease expense $ 479 $ 296 $ 1,188 $ 589 Short-term lease expense 96 120 216 244 Total lease cost $ 575 $ 416 $ 1,404 $ 833 The following table presents the weighted average remaining lease term and the weighted average discount rate related to operating leases: September 30, 2022 December 31, 2021 Weighted average remaining lease term (in years) - operating leases 4.87 4.98 Weighted average discount rate - operating leases 6.21 % 5.91 % The following table presents the maturities of lease liabilities (amounts in thousands): Operating Years Ended December 31, Leases 2022 (remaining) $ 484 2023 1,910 2024 1,617 2025 1,389 2026 1,031 2027 and thereafter 1,620 Total minimum lease payments 8,051 Less effects of discounting (1,086) Present value of future minimum lease payments $ 6,965 |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Shareholders' Equity | |
Shareholders' Equity | Note 12. Shareholders’ Equity On March 10, 2022, the Company’s Board of Directors authorized an expenditure of up to $10 million for the repurchase of shares of the Company’s common stock. The share repurchase program does not have a fixed expiration. Under the program, repurchases can be made from time-to-time using a variety of methods, including open market transactions, privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The actual timing and amount of future repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. The repurchase program does not obligate the Company to acquire any particular number of shares and may be suspended or discontinued at any time at the Company’s discretion. During the three months ended September 30, 2022, the Company did not reacquire any shares. During the nine months ended September 30, 2022, the Company reacquired 686,097 shares for approximately $6.0 million. As of September 30, 2022, the Company had approximately $4.0 million remaining under the share repurchase authorization. During the nine months ended September 30, 2022, the Company issued shares of common stock as part of the purchase consideration in connection with the acquisitions of iPro and Cornerstone. Refer to Note 4 for additional information about these acquisitions and the shares of common stock issued. The Company has an outstanding equity-classified warrant issued to an underwriter in August 2020 (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 through August 4, 2025. As of September 30, 2022, no portion of the Underwriter Warrant has been exercised or expired. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Stock-based Compensation | |
Stock-based Compensation | Note 13. Stock-based Compensation Stock-based compensation related to the Company’s stock plans was as follows (amounts in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Commission and other agent-related cost $ 476 $ 470 $ 2,102 $ 1,359 Operations and support 509 — 949 167 Technology and development 125 — 203 573 General and administrative 932 295 3,010 687 Marketing 81 — 206 47 Total stock-based compensation $ 2,123 $ 770 $ 6,470 $ 2,833 During the three and nine months ended September 30, 2022, the Company capitalized approximately $0.1 million and $0.2 million, respectively, of stock-based compensation expense associated with the cost of developing software for internal use. During the three and nine months ended September 30, 2021, the Company capitalized approximately $0.1 million of stock-based compensation expense associated with the cost of developing software for internal use. During the three and nine months ended September 30, 2022, the Company accrued $0.3 million and $0.23 million of stock compensation expense related to stock compensation earned but yet to be issued to agents. At September 30, 2022, a total of $0.5 million related to agent grant liabilities is included in accrued compensation. At September 30, 2022, total unrecognized compensation cost related to non-vested restricted stock awards was $10.7 million, which is expected to be recognized over a period of approximately 1.37 years. During the nine months ended September 30, 2022, the Company granted 662,217 restricted stock awards at a weighted-average grant-date fair value of $9.73. During the nine months ended September 30, 2022 the Company granted 103,711 stock options at an exercise price of $8.22. At September 30, 2022, unrecognized compensation cost related to stock options was $0.4 million which will be recognized over 0.87 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions | |
Related Party Transactions | Note 14. Related Party Transactions Marketing expense for the three months ended September 30, 2022 and 2021 includes approximately $0.1 million and, $0.1 million and for the nine months ended September 30, 2022 and 2021 includes approximately $0.4 million, 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 | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss per Share Attributable to Common Stock | |
Net Loss per Share Attributable to Common Stock | Note 15. 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 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 net loss. The calculation of basic and diluted net loss per share attributable to common stock was as follows (amounts in thousands except share data): Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Numerator: Net loss attributable to common stock—basic and diluted $ (6,012) $ (3,373) $ (17,678) $ (8,865) Denominator: Weighted-average basic and diluted shares outstanding 15,804,644 14,312,675 16,054,025 13,948,862 Net loss per share attributable to common stock—basic and diluted $ (0.38) $ (0.24) $ (1.10) $ (0.64) 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Stock options 147,707 43,996 147,707 43,966 Non-vested restricted stock awards 1,186,136 529,997 1,186,136 529,997 Common stock warrants 240,100 240,100 240,100 240,100 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Income Taxes | Note 16. Income Taxes In determining the quarterly provision for income taxes, the Company used the annual effective tax rate applied to year-to-date income. The Company’s annual estimated effective tax rate differs from the statutory rate primarily as a result of state taxes, permanent differences, and changes in the Company’s valuation allowance. The income tax effects of unusual or infrequent items including a change in the valuation allowance as a result of a change in judgment regarding the realizability of deferred tax assets are excluded from the estimated annual effective tax rate and are required to be discretely recognized in the interim period they occur. The Company has historically maintained a valuation allowance against deferred tax assets and reported only minimal current state tax expense. For the three and nine months ended September 30, 2022, the Company recorded income tax expense of approximately $0.0 and $185,000 respectively. The Company expects to maintain a valuation allowance on current year remaining net deferred tax assets by year-end due to historical operating losses. The Company recorded an income tax benefit of approximately $0.2 million and $2.8 million for the three and nine months ended September 30, 2021, respectively. The tax benefit was primarily the result of the release of the valuation allowance against historical deferred tax assets and recognition of benefit from the current year projected loss. Net deferred tax liabilities of approximately $3.3 million recorded in connection with the E4:9 Holdings, Inc. and LiveBy, Inc. acquisitions provided a source of taxable income to support the realizability of approximately $1.6 million of pre-existing deferred tax assets, as well as deferred tax assets from the projected loss for the year ended December 31, 2021. The taxable temporary differences relating to the amortizable intangible assets supported the realization of the net operating loss carryforwards. As a result of the transactions, the Company discretely released the historical valuation allowance and recognized a deferred tax benefit on a portion of losses for the three and nine months ended September 30, 2021. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting | |
Segment Reporting | Note 17. Segment Reporting The Company’s three reportable segments are Real Estate Brokerage, Mortgage and Technology. Through its Real Estate Brokerage segment, the Company provides real estate brokerage services. Through its Mortgage segment, the Company provides residential loan origination and underwriting services. Through its Technology segment, the Company provides SaaS solutions and data mining for third party customers to develop its intelliAgent platform for current use by the Company’s real estate agents. Revenue and Adjusted EBITDA are the primary measures used by the Chief Operating Decision Maker (“CODM”) to evaluate financial performance of the reportable segments and to allocate resources. Adjusted EBITDA represents the revenues of the operating segment less operating expenses directly attributable to the respective operating segment. Adjusted EBITDA is defined by the Company as net income (loss), excluding other expense, costs related to acquisitions, income tax benefit, depreciation and amortization, and stock-based compensation expense. In particular, the Company believes the exclusion of non-cash stock-based compensation expense related to restricted stock awards and stock options and transaction-related costs provides a useful supplemental measure in evaluating the performance of the Company’s operations and provides better transparency into its results of operations. The Company’s presentation of Adjusted EBITDA might not be comparable to similar measures used by other companies. The Company does not allocate assets to its reportable segments as they are not included in the review performed by the CODM for purposes of assessing segment performance and allocating resources. The balance sheet is managed on a consolidated basis and is not used in the context of segment reporting. The Company has included the results of the acquisitions during the reported periods from the acquisition date of the respective acquisition. Key operating data for the reportable segments for the three and nine months ended September 30, 2022 and 2021 are set forth in the tables below (amounts in thousands): Revenue Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Real Estate Brokerage $ 104,977 $ 95,300 $ 311,074 $ 224,702 Mortgage 2,839 2,623 8,345 4,125 Technology 702 679 2,003 1,278 Corporate and other services (a) 2,746 2,338 8,104 4,664 Total revenue $ 111,264 $ 100,940 $ 329,526 $ 234,769 Adjusted EBITDA Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Real Estate Brokerage $ 576 $ 199 $ 3,311 $ 188 Mortgage (406) (101) (1,726) (991) Technology (372) 56 (1,091) (566) Total Segment Adjusted EBITDA (202) 154 494 (1,369) Corporate and other services (a) (2,123) (1,961) (6,801) (4,755) Total Company Adjusted EBITDA (2,325) (1,807) (6,307) (6,124) Depreciation and amortization 1,436 931 3,839 1,778 Other expense (income), net 115 (102) 804 (190) Income tax expense (benefit) — (210) 185 (2,820) Stock based compensation 2,123 770 6,470 2,833 Transaction-related costs 13 177 73 1,140 Net loss $ (6,012) $ (3,373) $ (17,678) $ (8,865) (a) Transactions between segments are eliminated in consolidation. Such amounts are eliminated through the Corporate and other services line. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 18. Commitments and Contingencies 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 of employees versus independent contractors, 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 various liabilities 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 September 30, 2022, there was no material litigation against the Company. In conducting its operations, the Company routinely holds customers’ assets in escrow, pending completion of real estate transactions, and is responsible for the proper disposition of these balances for its customers. Certain of these amounts are maintained in segregated bank accounts and have not been included in the accompanying consolidated balance sheets, consistent with GAAP and industry practice. The balances amounted to $1.3 million and $2.3 million at September 30, 2022 and December 31, 2021, respectively. Encompass Net Worth Requirements In order to maintain approval from the U.S. Department of Housing and Urban Development to operate as a Title II non-supervised mortgagee, our indirect subsidiary Encompass is required to maintain adjusted net worth of $1,000,000 and must maintain liquid assets (cash, cash equivalents, or readily convertible instruments) of 20% of the required net worth. As of September 30, 2022, Encompass had adjusted net worth of approximately $3.7 million and liquid assets of $4.3 million. Commitments to Extend Credit Encompass enters into IRLCs with borrowers who have applied for residential mortgage loans and have met certain credit and underwriting criteria. These commitments expose Encompass to market risk if interest rates change and the underlying loan is not economically hedged or committed to a purchaser. Encompass is also exposed to credit loss if the loan is originated and not sold to a purchaser and the mortgagor does not perform. The collateral upon extension of credit typically includes a first deed of trust in the mortgagor’s residential property. Commitments to originate loans do not necessarily reflect future cash requirements as commitments are expected to expire without being drawn upon. Regulatory Commitments Encompass is subject to periodic audits and examinations, both formal and informal in nature, from various federal and state agencies, including those made as part of the regulatory oversight of mortgage origination, servicing and financing activities. Such audits and examinations could result in additional actions, penalties or fines by state or federal government bodies, regulators or the courts. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Acquisitions | |
Schedule of supplemental pro forma financial Information | Nine Months Ended September 30, 2021 Revenue $ 240,282 Net loss (15,709) Net loss per share (basic) $ (1.07) |
E4:9 | |
Acquisitions | |
Schedule of purchase consideration and the fair values of the assets and liabilities | Recognized amounts of identifiable assets acquired, and liabilities assumed (amounts in thousands): Cash $ 2,843 Accounts Receivable 516 Mortgage loans held for sale 8,147 Derivative assets 90 Prepaid and other current assets 122 Property & Equipment 356 Intangible assets 11,780 Lease right of use assets 1,498 Other long-term assets 7 Total identifiable assets acquired 25,359 Accounts payable and accrued liabilities 938 Escrow liabilities 75 Derivative liabilities 120 Warehouse lines of credit 7,958 Notes payable 486 Lease liability, current portion 337 Lease liability, net of current portion 1,160 Deferred tax liabilities 2,687 Total liabilities assumed 13,761 Total identifiable net assets 11,598 Goodwill 14,882 Net assets acquired $ 26,480 |
LiveBy | |
Acquisitions | |
Schedule of purchase consideration and the fair values of the assets and liabilities | Recognized amounts of identifiable assets acquired and liabilities assumed (amounts in thousands): Cash $ 516 Accounts receivable 138 intangible assets 4,920 Prepaid and other current assets 2 Total identifiable assets acquired 5,576 Deferred tax liabilities 621 Accounts payable and accrued liabilities 167 Total liabilities assumed 788 Total identifiable net assets 4,788 Goodwill 4,193 Net assets acquired $ 8,981 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Intangible Assets, Net | |
Schedule of components of intangible assets, net | Intangible assets, net consisted of the following (amounts in thousands): September 30, 2022 Gross Carrying Accumulated Net Carrying Amount Amortization Value Trade names $ 7,915 (1,023) $ 6,892 Software development 11,662 (2,472) 9,190 Customer relationships 8,180 (1,781) 6,399 Agent relationships 5,856 (695) 5,161 Know-how 430 (125) 304,578 $ 34,043 $ (6,096) $ 27,947 December 31, 2021 Gross Carrying Accumulated Net Carrying Amount Amortization Value Trade names $ 6,326 $ (454) $ 5,872 Software development 9,017 (1,095) 7,922 Customer relationships 8,180 (897) 7,283 Agent relationships 3,030 (233) 2,797 Know-how 430 (61) 369 $ 26,983 $ (2,740) $ 24,243 |
Schedule of estimated future amortization expense for definite-lived intangible assets | Estimated future amortization intangible assets as of September 30, 2022 was as follows (amounts in thousands): Years Ending December 31, 2022 (remaining) $ 1,425 2023 5,093 2024 4,965 2025 4,687 2026 3,931 Thereafter 7,846 Total $ 27,947 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill. | |
Schedule of changes in the carrying value of goodwill | The changes in the carrying value of goodwill by segment as of September 30, 2022 are as noted in the table below (amounts in thousands): Real Estate Brokerage Mortgage Technology Other (a) Total Balance at December 31, 2021 $ 1,099 $ 7,399 $ 4,168 $ 7,875 $ 20,541 Goodwill acquired during the period 1,461 2,876 — — 4,337 Fair value measurement adjustment (see Note 4) 130 18 — 446 594 Balance at September 30, 2022 $ 2,690 $ 10,293 $ 4,168 $ 8,321 $ 25,472 (a) |
Accrued and Other Current Lia_2
Accrued and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accrued and Other Current Liabilities | |
Schedule of components of Accrued and other current liabilities | Accrued and other current liabilities consisted of the following (amounts in thousands): September 30, 2022 December 31, 2021 Deferred annual fee $ 1,209 $ 546 Due to sellers 1,413 1,400 Accrued compensation 1,053 1,033 Other accrued liabilities 1,507 1,512 Total accrued and other current liabilities $ 5,182 $ 4,491 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt | |
Schedule of debt | Long-term debt consisted of the following (amounts in thousands): September 30, 2022 December 31, 2021 3.75% Small Business Administration installment loan due May 2050 $ 159 $ 170 Notes payable: Non-interest-bearing promissory note due July 1, 2022 493 210 % director and officer insurance policy promissory note due July 31, 2023 — 385 6.0 % executive and officer insurance policy promissory note due October 9, 2022 132 211 Total debt 784 976 Less current portion of the Small Business Administration Loan (21) (25) Less current portion of notes payable (493) (806) Long-term debt, net of current portion $ 270 $ 145 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Schedule of financial assets that are measured at fair value on a recurring basis | The following are major categories of assets and liabilities measured at fair value on a recurring basis (amounts in thousands): September 30, 2022 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 8,815 $ — $ 8,815 Derivative assets — — 294 294 $ — $ 8,815 $ 294 $ 9,109 December 31, 2021 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 9,862 $ — $ 9,862 Derivative assets — — 53 53 $ — $ 9,862 $ 53 $ 9,915 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Schedule of lease cost | The table below presents certain information related to lease costs for the Company’s operating leases (amounts in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating lease expense $ 479 $ 296 $ 1,188 $ 589 Short-term lease expense 96 120 216 244 Total lease cost $ 575 $ 416 $ 1,404 $ 833 |
Schedule of weighted average remaining lease term and the weighted average discount rate for the Company's operating leases | September 30, 2022 December 31, 2021 Weighted average remaining lease term (in years) - operating leases 4.87 4.98 Weighted average discount rate - operating leases 6.21 % 5.91 % |
Schedule of future lease payments | The following table presents the maturities of lease liabilities (amounts in thousands): Operating Years Ended December 31, Leases 2022 (remaining) $ 484 2023 1,910 2024 1,617 2025 1,389 2026 1,031 2027 and thereafter 1,620 Total minimum lease payments 8,051 Less effects of discounting (1,086) Present value of future minimum lease payments $ 6,965 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stock-based Compensation | |
Schedule of stock based compensation | Stock-based compensation related to the Company’s stock plans was as follows (amounts in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Commission and other agent-related cost $ 476 $ 470 $ 2,102 $ 1,359 Operations and support 509 — 949 167 Technology and development 125 — 203 573 General and administrative 932 295 3,010 687 Marketing 81 — 206 47 Total stock-based compensation $ 2,123 $ 770 $ 6,470 $ 2,833 |
Net Loss per Share Attributab_2
Net Loss per Share Attributable to Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss per Share Attributable to Common Stock | |
Schedule of basic and diluted net loss | The calculation of basic and diluted net loss per share attributable to common stock was as follows (amounts in thousands except share data): Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Numerator: Net loss attributable to common stock—basic and diluted $ (6,012) $ (3,373) $ (17,678) $ (8,865) Denominator: Weighted-average basic and diluted shares outstanding 15,804,644 14,312,675 16,054,025 13,948,862 Net loss per share attributable to common stock—basic and diluted $ (0.38) $ (0.24) $ (1.10) $ (0.64) |
Schedule 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Stock options 147,707 43,996 147,707 43,966 Non-vested restricted stock awards 1,186,136 529,997 1,186,136 529,997 Common stock warrants 240,100 240,100 240,100 240,100 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting | |
Schedule of key operating data for the reportable segments | Key operating data for the reportable segments for the three and nine months ended September 30, 2022 and 2021 are set forth in the tables below (amounts in thousands): Revenue Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Real Estate Brokerage $ 104,977 $ 95,300 $ 311,074 $ 224,702 Mortgage 2,839 2,623 8,345 4,125 Technology 702 679 2,003 1,278 Corporate and other services (a) 2,746 2,338 8,104 4,664 Total revenue $ 111,264 $ 100,940 $ 329,526 $ 234,769 Adjusted EBITDA Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Real Estate Brokerage $ 576 $ 199 $ 3,311 $ 188 Mortgage (406) (101) (1,726) (991) Technology (372) 56 (1,091) (566) Total Segment Adjusted EBITDA (202) 154 494 (1,369) Corporate and other services (a) (2,123) (1,961) (6,801) (4,755) Total Company Adjusted EBITDA (2,325) (1,807) (6,307) (6,124) Depreciation and amortization 1,436 931 3,839 1,778 Other expense (income), net 115 (102) 804 (190) Income tax expense (benefit) — (210) 185 (2,820) Stock based compensation 2,123 770 6,470 2,833 Transaction-related costs 13 177 73 1,140 Net loss $ (6,012) $ (3,373) $ (17,678) $ (8,865) (a) Transactions between segments are eliminated in consolidation. Such amounts are eliminated through the Corporate and other services line. |
Risks and Uncertainties (Detail
Risks and Uncertainties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Risks and Uncertainties | |||||
Net loss | $ (6,012) | $ (3,373) | $ (17,678) | $ (8,865) | |
Cash and cash equivalents | $ 14,543 | $ 8,753 | $ 14,543 | $ 8,753 | $ 37,830 |
Acquisitions - Acquisition of N
Acquisitions - Acquisition of Naberly (Details) - Naberly - USD ($) $ in Millions | 12 Months Ended | |
Mar. 01, 2021 | Dec. 31, 2020 | |
Acquisitions | ||
Cash consideration | $ 2.7 | |
Transaction costs | 0.1 | |
Acquisition cost, including transaction costs | $ 2.8 | |
Loans receivable, outstanding principal amount | $ 0.2 | |
Interest rate | 2% |
Acquisitions - Schedule of Acqu
Acquisitions - Schedule of Acquisition of E4:9 (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Apr. 16, 2021 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Acquisitions | |||||||
Common stock consideration | $ 6,168,000 | $ 25,312,000 | |||||
Goodwill | $ 25,472,000 | 25,472,000 | $ 20,541,000 | ||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Goodwill | 25,472,000 | 25,472,000 | 20,541,000 | ||||
Acquisition related costs | 8,000 | 60,000 | |||||
Revenue | 111,264,000 | $ 100,940,000 | 329,526,000 | 234,769,000 | |||
Net loss | (6,012,000) | (3,373,000) | (17,678,000) | (8,865,000) | |||
Mortgage | |||||||
Acquisitions | |||||||
Goodwill | 10,293,000 | 10,293,000 | 7,399,000 | ||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Goodwill | 10,293,000 | 10,293,000 | $ 7,399,000 | ||||
Revenue | 2,839,000 | 2,623,000 | 8,345,000 | 4,125,000 | |||
E4:9 | |||||||
Acquisitions | |||||||
Percentage of outstanding capital acquired | 100% | ||||||
Cash consideration | $ 9,800,000 | ||||||
Common stock consideration | 16,600,000 | ||||||
Total purchase price | 26,500,000 | ||||||
Goodwill | 14,882,000 | ||||||
Adjusted fair value on goodwill | 400,000 | ||||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Cash | 2,843,000 | ||||||
Accounts Receivable | 516,000 | ||||||
Mortgage loans held for sale | 8,147,000 | ||||||
Derivative assets | 90,000 | ||||||
Prepaid and other current assets | 122,000 | ||||||
Property & Equipment | 356,000 | ||||||
Intangible assets | 11,780,000 | ||||||
Lease right of use assets | 1,498,000 | ||||||
Other long-term assets | 7,000 | ||||||
Total identifiable assets acquired | 25,359,000 | ||||||
Accounts payable and accrued liabilities | 938,000 | ||||||
Escrow liabilities | 75,000 | ||||||
Derivative liabilities | 120,000 | ||||||
Warehouse lines of credit | 7,958,000 | ||||||
Notes payable | 486,000 | ||||||
Lease liability, current portion | 337,000 | ||||||
Lease liability, net of current portion | 1,160,000 | ||||||
Deferred tax liabilities | 2,687,000 | ||||||
Total liabilities assumed | 13,761,000 | ||||||
Total identifiable net assets | 11,598,000 | ||||||
Goodwill | 14,882,000 | ||||||
Net assets acquired | 26,480,000 | ||||||
Acquisition related costs | 300,000 | 300,000 | |||||
Goodwill for tax purpose | 0 | ||||||
Intangible assets | 11,780,000 | ||||||
Revenue | 4,600,000 | 4,000,000 | 13,200,000 | 6,900,000 | |||
Net loss | $ 1,200,000 | $ 1,000,000 | $ 5,100,000 | $ 2,600,000 | |||
E4:9 | Customer Relationships | |||||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Intangible assets | 6,200,000 | ||||||
Intangible assets | $ 6,200,000 | ||||||
Estimated Useful Life (Years) | 8 years | ||||||
E4:9 | Trade names. | |||||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Intangible assets | $ 5,200,000 | ||||||
Intangible assets | $ 5,200,000 | ||||||
Estimated Useful Life (Years) | 10 years | ||||||
E4:9 | Know-how Relationships | |||||||
Acquisitions | |||||||
Total purchase price | $ 400,000 | ||||||
Goodwill | 500,000 | ||||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Intangible assets | $ 400,000 | ||||||
Goodwill | $ 500,000 | ||||||
Intangible assets | $ 400,000 | ||||||
Estimated Useful Life (Years) | 5 years | ||||||
E4:9 | Mortgage | |||||||
Acquisitions | |||||||
Goodwill | $ 7,400,000 | ||||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Goodwill | 7,400,000 | ||||||
E4:9 | Other service revenue. | |||||||
Acquisitions | |||||||
Goodwill | 7,000,000 | ||||||
Recognized amounts of identifiable assets acquired, and liabilities assumed | |||||||
Goodwill | $ 7,000,000 |
Acquisitions - Schedule of Ac_2
Acquisitions - Schedule of Acquisition of LiveBy, Inc. (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Apr. 20, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Apr. 20, 2022 | Dec. 31, 2021 | |
Acquisitions | |||||||
Common stock consideration | $ 6,168,000 | $ 25,312,000 | |||||
Goodwill | $ 25,472,000 | 25,472,000 | $ 20,541,000 | ||||
Recognized amounts of identifiable assets acquired and liabilities assumed | |||||||
Goodwill | 25,472,000 | 25,472,000 | $ 20,541,000 | ||||
Acquisition related costs | 8,000 | 60,000 | |||||
Revenue | 111,264,000 | $ 100,940,000 | 329,526,000 | 234,769,000 | |||
Net loss | (6,012,000) | (3,373,000) | (17,678,000) | (8,865,000) | |||
LiveBy | |||||||
Acquisitions | |||||||
Percentage of outstanding capital acquired | 100% | ||||||
Cash consideration | $ 3,400,000 | ||||||
Common stock consideration | 5,600,000 | ||||||
Total purchase price | 9,000,000 | ||||||
Goodwill | 4,200,000 | $ 4,193,000 | |||||
Recognized amounts of identifiable assets acquired and liabilities assumed | |||||||
Cash | 516,000 | ||||||
Accounts receivable | 138,000 | ||||||
intangible assets | 4,920,000 | ||||||
Prepaid and other current assets | 2,000 | ||||||
Total identifiable assets acquired | 5,576,000 | ||||||
Deferred tax liabilities | 621,000 | ||||||
Accounts payable and accrued liabilities | 167,000 | ||||||
Total liabilities assumed | 788,000 | ||||||
Total identifiable net assets | 4,788,000 | ||||||
Goodwill | 4,200,000 | 4,193,000 | |||||
Net assets acquired | $ 8,981,000 | ||||||
Acquisition related costs | 200,000 | 200,000 | |||||
Goodwill for tax purpose | $ 0 | ||||||
Revenue | 700,000 | 600,000 | 2,000,000 | 1,000,000 | |||
Net loss | $ 400,000 | $ 100,000 | $ 300,000 | $ 100,000 |
Acquisitions - Supplemental Pro
Acquisitions - Supplemental Pro Forma Financial Information (Details) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2021 USD ($) $ / shares | |
Acquisitions. | |
Revenue | $ 240,282 |
Net loss | $ (15,709) |
Net loss per share (basic) | $ / shares | $ (1.07) |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||||
Feb. 08, 2022 USD ($) shares | Jan. 24, 2022 USD ($) shares | Sep. 30, 2022 USD ($) item | Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) item | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Acquisitions | |||||||
Common stock consideration | $ 6,168,000 | $ 25,312,000 | |||||
Proceeds from sale and principal payments on mortgage loans held for sale | 213,172,000 | $ 109,299,000 | |||||
Accrued liabilities | $ 5,182,000 | 5,182,000 | $ 4,491,000 | ||||
Goodwill | 25,472,000 | 25,472,000 | $ 20,541,000 | ||||
Increase in goodwill | 594,000 | ||||||
Acquisition related costs | $ 8,000 | $ 60,000 | |||||
Acquisitions | |||||||
Acquisitions | |||||||
Number of business combinations completed | item | 2 | 2 | |||||
Finite-lived intangible assets acquired | $ 3,600,000 | ||||||
Goodwill | $ 4,900,000 | $ 4,900,000 | |||||
Increase in fair value of assumed finite lived intangible assets | $ 400,000 | ||||||
Increase in other assets | 300,000 | ||||||
Increase in goodwill | $ 200,000 | ||||||
Acquisition Period | 1 year | ||||||
Cornerstone | |||||||
Acquisitions | |||||||
Total consideration | $ 4,700,000 | ||||||
Cash consideration | $ 1,100,000 | ||||||
Purchase consideration in shares | shares | 267,470 | ||||||
Common stock consideration | $ 3,600,000 | ||||||
Cash consideration due | $ 600,000 | ||||||
iPro | |||||||
Acquisitions | |||||||
Total consideration | $ 4,200,000 | ||||||
Cash consideration | $ 1,800,000 | ||||||
Purchase consideration in shares | shares | 167,824 | ||||||
Common stock consideration | $ 2,300,000 | ||||||
Cash consideration due | 100,000 | ||||||
Proceeds from sale and principal payments on mortgage loans held for sale | 3,500,000 | ||||||
Lease right of use assets and lease liabilities | 600,000 | ||||||
Accrued liabilities | 400,000 | ||||||
Warehouse lines of credit | $ 3,400,000 | ||||||
Goodwill | $ 1,400,000 | $ 1,400,000 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 34,043 | $ 26,983 |
Accumulated Amortization | (6,096) | (2,740) |
Net Carrying Value | 27,947 | 24,243 |
Trade names. | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 7,915 | 6,326 |
Accumulated Amortization | (1,023) | (454) |
Net Carrying Value | 6,892 | 5,872 |
Software development | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 11,662 | 9,017 |
Accumulated Amortization | (2,472) | (1,095) |
Net Carrying Value | 9,190 | 7,922 |
Customer relationships | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 8,180 | 8,180 |
Accumulated Amortization | (1,781) | (897) |
Net Carrying Value | 6,399 | 7,283 |
Agent relationships | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 5,856 | 3,030 |
Accumulated Amortization | (695) | (233) |
Net Carrying Value | 5,161 | 2,797 |
Know-how | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 430 | 430 |
Accumulated Amortization | (125) | (61) |
Net Carrying Value | $ 305 | $ 369 |
Intangible Assets, Net - Future
Intangible Assets, Net - Future amortization expense of intangible assets (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Intangible Assets, Net | |
2022 (remaining) | $ 1,425 |
2023 | 5,093 |
2024 | 4,965 |
2025 | 4,687 |
2026 | 3,931 |
Thereafter | 7,846 |
Total | $ 27,947 |
Intangible Assets, Net - Additi
Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Finite-Lived Intangible Assets | ||||
Amortization expense for capitalized software and trade names | $ 1.2 | $ 0.9 | $ 3.4 | $ 1.7 |
Technology and development expense | ||||
Finite-Lived Intangible Assets | ||||
Amortization expense for capitalized software and trade names | $ 0.5 | $ 0.3 | $ 1.6 | $ 0.7 |
Goodwill (Details)
Goodwill (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Carrying Value | ||
Beginning balance | $ 20,541,000 | |
Goodwill acquired during the period | 4,337,000 | |
Fair value measurement adjustment (see Note 4) | 594,000 | |
Ending balance | 25,472,000 | |
Accumulated impairment charges | 0 | $ 0 |
Technology | ||
Carrying Value | ||
Beginning balance | 4,168,000 | |
Ending balance | 4,168,000 | |
Operating segments | ||
Carrying Value | ||
Beginning balance | 1,099,000 | |
Goodwill acquired during the period | 1,461,000 | |
Fair value measurement adjustment (see Note 4) | 130,000 | |
Ending balance | 2,690,000 | |
Mortgage | ||
Carrying Value | ||
Beginning balance | 7,399,000 | |
Goodwill acquired during the period | 2,876,000 | |
Fair value measurement adjustment (see Note 4) | 18,000 | |
Ending balance | 10,293,000 | |
Other | ||
Carrying Value | ||
Beginning balance | 7,875,000 | |
Fair value measurement adjustment (see Note 4) | 446,000 | |
Ending balance | $ 8,321,000 |
Accrued and Other Current Lia_3
Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued and Other Current Liabilities | ||
Deferred annual fee | $ 1,209 | $ 546 |
Due to sellers | 1,413 | 1,400 |
Accrued compensation | 1,053 | 1,033 |
Other accrued liabilities | 1,507 | 1,512 |
Total accrued and other current liabilities | $ 5,182 | $ 4,491 |
Warehouse Lines of Credit (Deta
Warehouse Lines of Credit (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Warehouse Lines of Credit | ||
Line of credit, Outstanding, current | $ 8,516 | $ 9,577 |
Master loan agreement | ||
Warehouse Lines of Credit | ||
Maximum borrowing capacity | 15,000 | 15,000 |
Line of credit, Outstanding, current | $ 2,100 | 4,300 |
Master loan agreement | 30-Day SOFR | Minimum | ||
Warehouse Lines of Credit | ||
Spread on variable rate | 2.625% | |
Master loan agreement | 30-Day SOFR | Maximum | ||
Warehouse Lines of Credit | ||
Effective interest rate | 3.50% | |
Mortgage participation purchase agreement | ||
Warehouse Lines of Credit | ||
Maximum borrowing capacity | $ 25,000 | 25,000 |
Line of credit, Outstanding, current | $ 3,300 | 3,100 |
Mortgage participation purchase agreement | LIBOR | Minimum | ||
Warehouse Lines of Credit | ||
Interest Rate | 2% | |
Mortgage participation purchase agreement | LIBOR | Maximum | ||
Warehouse Lines of Credit | ||
Effective interest rate | 3.50% | |
Warehousing credit and security agreement | ||
Warehouse Lines of Credit | ||
Maximum borrowing capacity | $ 15,000 | 15,000 |
Line of credit, Outstanding, current | $ 3,100 | $ 2,200 |
Warehousing credit and security agreement | LIBOR | ||
Warehouse Lines of Credit | ||
Spread on variable rate | 2% | |
Effective interest rate | 2.09% | |
Warehousing credit and security agreement | BSBY rate | ||
Warehouse Lines of Credit | ||
Spread on variable rate | 2% | |
Effective interest rate | 5.10% | |
Warehousing credit and security agreement | BSBY rate | Minimum | ||
Warehouse Lines of Credit | ||
Spread on variable rate | 2% | |
Warehousing credit and security agreement | BSBY rate | Maximum | ||
Warehouse Lines of Credit | ||
Effective interest rate | 3.50% |
Debt - Loan Payable and Notes P
Debt - Loan Payable and Notes Payable (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument | ||
Less current portion | $ (514) | $ (831) |
Short-Term Debt | $ 100 | |
3.75% Small Business Administration installment loan due May 2050 | ||
Debt Instrument | ||
Interest rate per annum | 3.75% | |
6.0 % executive and officer insurance policy promissory note | ||
Debt Instrument | ||
Interest rate per annum | 6% | |
Notes Payable | ||
Debt Instrument | ||
Long term debt | $ 784 | 976 |
Less current portion of notes payable | 493 | 806 |
Debt, Net of current portion | 270 | 145 |
Notes Payable | Small Business Administration Loan | ||
Debt Instrument | ||
Less current portion | (21) | (25) |
Notes Payable | 3.75% Small Business Administration installment loan due May 2050 | ||
Debt Instrument | ||
Long term debt | 159 | 170 |
Notes Payable | Non-interest-bearing promissory note | ||
Debt Instrument | ||
Long term debt | 493 | 210 |
Notes Payable | % director and officer insurance policy promissory note due July 31, 2023 | ||
Debt Instrument | ||
Long term debt | 385 | |
Notes Payable | 6.0 % executive and officer insurance policy promissory note | ||
Debt Instrument | ||
Long term debt | $ 132 | $ 211 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Derivative assets | $ 294 | $ 53 |
Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Mortgage loans held for sale | 8,815 | 9,862 |
Derivative assets | 294 | 53 |
Total | 9,109 | 9,915 |
Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Mortgage loans held for sale | 8,815 | 9,862 |
Total | 8,815 | 9,862 |
Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Derivative assets | 294 | 53 |
Total | $ 294 | $ 53 |
Leases (Details)
Leases (Details) | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Lessee, Lease, Description [Line Items] | ||
Option to extend | true | |
Residual value guarantee | false | |
Weighted average remaining lease term (in years) - operating leases | 4 years 10 months 13 days | 4 years 11 months 23 days |
Weighted average discount rate - operating leases | 6.21% | 5.91% |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 9 years |
Leases - Lease costs (Details)
Leases - Lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases | ||||
Operating lease expense | $ 479 | $ 296 | $ 1,188 | $ 589 |
Short-term lease expense | 96 | 120 | 216 | 244 |
Total lease cost | $ 575 | $ 416 | $ 1,404 | $ 833 |
Leases - Maturities of lease li
Leases - Maturities of lease liabilities (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Future Minimum Lease Payments | |
2022 (remaining) | $ 484 |
2023 | 1,910 |
2024 | 1,617 |
2025 | 1,389 |
2026 | 1,031 |
2027 and thereafter | 1,620 |
Total minimum lease payments | 8,051 |
Less effects of discounting | (1,086) |
Present value of future minimum lease payments | $ 6,965 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Mar. 10, 2022 | |
Shareholders' Equity | |||
Stock repurchase program remaining authorized repurchase amount | $ 4 | $ 4 | $ 10 |
Stock repurchase program authorized amount | $ 6 | ||
Underwriter Warrant to purchase shares | 240,100 | 240,100 | |
Warrant exercise price (in dollars per share) | $ 11 | $ 11 | |
Number of underwriters warrants exercised or expired | 0 | 0 | |
Number of shares reacquired | 0 | 686,097 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of stock based compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total stock-based compensation | $ 2,123 | $ 770 | $ 6,470 | $ 2,833 |
Accrued compensation expenses | 300 | 230 | ||
Grant liabilities included in accrued compensation | 500 | 500 | ||
Stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total Unrecognized compensation expense | 400 | $ 400 | ||
Exercise price of stock options granted (in dollars per share) | $ 8.22 | |||
Options exercisable | 10 months 13 days | |||
Stock options granted (in shares) | 103,711 | |||
Non-vested restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total Unrecognized compensation expense | 10,700 | $ 10,700 | ||
Unrecognized compensation expense period for recognition | 1 year 4 months 13 days | |||
Restricted stock awards | 662,217 | |||
Weighted average grant-date fair value of options granted (in dollars per share) | $ 9.73 | |||
Commission and other agent-related cost | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total stock-based compensation | 476 | 470 | $ 2,102 | 1,359 |
Operations and support | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total stock-based compensation | 509 | 949 | 167 | |
Technology and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total stock-based compensation | 125 | 203 | 573 | |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total stock-based compensation | 932 | 295 | 3,010 | 687 |
Marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total stock-based compensation | 81 | 206 | 47 | |
Cost of developing software | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total stock-based compensation | $ 100 | $ 100 | $ 200 | $ 100 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Related Party Transactions | ||||
Marketing expense | $ 100 | $ 100 | $ 400 | $ 400 |
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 ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net Loss per Share Attributable to Common Stock | ||||
Net loss attributable to common stock-basic and diluted | $ (6,012) | $ (3,373) | $ (17,678) | $ (8,865) |
Weighted-average basic shares outstanding | 15,804,644 | 14,312,675 | 16,054,025 | 13,948,862 |
Weighted-average diluted shares outstanding | 15,804,644 | 14,312,675 | 16,054,025 | 13,948,862 |
Net loss per share - basic | $ (0.38) | $ (0.24) | $ (1.10) | $ (0.64) |
Net loss per share - diluted | $ (0.38) | $ (0.24) | $ (1.10) | $ (0.64) |
Net Loss per Share Attributab_4
Net Loss per Share Attributable to Common Stock - Antidilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
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 | 147,707 | 43,996 | 147,707 | 43,966 |
Non-vested restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
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 | 1,186,136 | 529,997 | 1,186,136 | 529,997 |
Common stock warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
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 | 240,100 | 240,100 | 240,100 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Taxes | |||||
Income tax expense (benefit) | $ 0 | $ (210,000) | $ 185,000 | $ (2,820,000) | |
Net deferred tax liabilities | $ 3,300,000 | $ 3,300,000 | |||
Pre existing deferred tax assets | $ 1,600,000 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information | ||||
Revenue | $ 111,264,000 | $ 100,940,000 | $ 329,526,000 | $ 234,769,000 |
Adjusted EBITDA | (2,325,000) | (1,807,000) | (6,307,000) | (6,124,000) |
Depreciation and amortization | (1,436,000) | (931,000) | (3,839,000) | (1,778,000) |
Other (income) expense, net | 115,000 | (102,000) | 804,000 | (190,000) |
Income tax expense (benefit) | 0 | (210,000) | 185,000 | (2,820,000) |
Stock-based compensation | 2,123,000 | 770,000 | 6,470,000 | 2,833,000 |
Transaction-related costs | 13,000 | 177,000 | 73,000 | 1,140,000 |
Net loss | (6,012,000) | (3,373,000) | (17,678,000) | (8,865,000) |
Technology | ||||
Segment Reporting Information | ||||
Revenue | 702,000 | 679,000 | 2,003,000 | 1,278,000 |
Real Estate Brokerage | ||||
Segment Reporting Information | ||||
Revenue | 104,977,000 | 95,300,000 | 311,074,000 | 224,702,000 |
Mortgage | ||||
Segment Reporting Information | ||||
Revenue | 2,839,000 | 2,623,000 | 8,345,000 | 4,125,000 |
Corporate and other services | ||||
Segment Reporting Information | ||||
Revenue | 2,746,000 | 2,338,000 | 8,104,000 | 4,664,000 |
Operating segments | ||||
Segment Reporting Information | ||||
Adjusted EBITDA | (202,000) | 154,000 | 494,000 | (1,369,000) |
Operating segments | Technology | ||||
Segment Reporting Information | ||||
Adjusted EBITDA | (372,000) | 56,000 | (1,091,000) | (566,000) |
Operating segments | Real Estate Brokerage | ||||
Segment Reporting Information | ||||
Adjusted EBITDA | 576,000 | 199,000 | 3,311,000 | 188,000 |
Operating segments | Mortgage | ||||
Segment Reporting Information | ||||
Adjusted EBITDA | (406,000) | (101,000) | (1,726,000) | (991,000) |
Eliminated in consolidation | Corporate and other services | ||||
Segment Reporting Information | ||||
Adjusted EBITDA | $ (2,123,000) | $ (1,961,000) | $ (6,801,000) | $ (4,755,000) |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting | |
Number of reporting segment | 3 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Loss Contingencies | ||
Cash balance commitment amount | $ 1,300,000 | $ 2,300,000 |
Encompass | ||
Loss Contingencies | ||
Adjusted net worth to maintained | $ 1,000,000 | |
Percentage of required net worth Liquid assets for compliance | 20% | |
Net worth adjusted | $ 3,700,000 | |
Liquid assets to maintained | $ 4,300,000 |