Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 19, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 66,327,887 | ||
Entity Common Stock, Shares Outstanding | 20,776,292 | ||
Documents Incorporated by Reference | The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days after the end of the fiscal year ended December 31, 2023. Portions of such proxy statement are incorporated by reference into Part III of this Form 10-K. | ||
Entity Central Index Key | 0001753162 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Auditor Information [Abstract] | |
Auditor Firm ID | 34 |
Auditor Name | Deloitte & Touche LLP |
Auditor Location | Raleigh, North Carolina |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 7,399 | $ 8,320 |
Restricted cash | 141 | 60 |
Accounts receivable | 3,352 | 3,074 |
Mortgage loans held for sale, at fair value | 8,602 | 3,694 |
Prepaid and other current assets | 3,700 | 3,668 |
Total current assets | 23,194 | 18,816 |
Noncurrent assets: | ||
Property and equipment, net | 2,340 | 2,945 |
Lease right of use assets | 4,150 | 5,508 |
Intangible assets, net | 23,909 | 27,259 |
Goodwill | 25,607 | 25,607 |
Other assets | 58 | 52 |
Total assets | 79,258 | 80,187 |
Current liabilities: | ||
Accounts payable | 3,396 | 3,343 |
Accrued and other current liabilities | 2,681 | 3,403 |
Warehouse lines of credit | 8,355 | 3,580 |
Lease liability - current portion | 1,504 | 1,609 |
Long-term debt - current portion | 416 | 564 |
Total current liabilities | 16,352 | 12,499 |
Noncurrent liabilities: | ||
Lease liability, net of current portion | 3,824 | 5,241 |
Long-term debt, net of current portion | 3,467 | 129 |
Other long-term liabilities | 381 | 297 |
Total liabilities | 24,024 | 18,166 |
Commitments and contingencies (Note 18) | ||
Stockholders’ equity: | ||
Common stock (no par value, shares authorized, 100,000,000; shares issued and outstanding, 20,671,515 and 17,468,562 as of December 31, 2023 and 2022, respectively) | 0 | 0 |
Additional paid-in capital | 126,820 | 109,626 |
Accumulated deficit | (71,586) | (47,605) |
Total stockholders’ equity | 55,234 | 62,021 |
Total liabilities and stockholders’ equity | $ 79,258 | $ 80,187 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 20,671,515 | 17,468,562 |
Common stock, shares outstanding (in shares) | 20,671,515 | 17,468,562 |
Additional paid-in capital | $ 126,820 | $ 109,626 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue | $ 345,226 | $ 412,964 |
Operating expenses | ||
Commission and other agent-related costs | 308,094 | 372,246 |
Operations and support | 7,513 | 8,249 |
Technology and development | 7,609 | 7,715 |
General and administrative | 38,751 | 43,217 |
Marketing | 3,348 | 5,218 |
Depreciation and amortization | 3,164 | 3,096 |
Total operating expenses | 368,479 | 439,741 |
Loss from operations | (23,253) | (26,777) |
Other expense (income), net | ||
Interest expense (income), net | 245 | (11) |
Other nonoperating expense, net | 335 | 914 |
Other expense, net | 580 | 903 |
Loss before income taxes | (23,833) | (27,680) |
Income tax expense (benefit) | 148 | (54) |
Net loss | $ (23,981) | $ (27,626) |
Net loss per share: | ||
Basic (in dollars per share) | $ (1.47) | $ (1.73) |
Diluted (in dollars per share) | $ (1.47) | $ (1.73) |
Weighted average common shares outstanding: | ||
Basic (in shares) | 16,265,993 | 16,001,367 |
Diluted (in shares) | 16,265,993 | 16,001,367 |
Gross commission income | ||
Revenue | $ 325,405 | $ 390,615 |
Other service revenue | ||
Revenue | $ 19,821 | $ 22,349 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Balance at beginning (in shares) at Dec. 31, 2021 | 16,751,606 | |||
Balance at beginning at Dec. 31, 2021 | $ 80,150 | $ 0 | $ 100,129 | $ (19,979) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation, net of forfeitures (in shares) | 932,071 | |||
Stock-based compensation, net of forfeitures | 9,351 | 9,351 | ||
Issuance of common stock for purchase of business (in shares) | 470,982 | |||
Issuance of common stock for purchase of businesses | 6,191 | 6,191 | ||
Repurchase of common stock (in shares) | (686,097) | |||
Repurchase of common stock | (6,045) | (6,045) | ||
Net loss | (27,626) | (27,626) | ||
Balance at ending (in shares) at Dec. 31, 2022 | 17,468,562 | |||
Balance at ending at Dec. 31, 2022 | 62,021 | $ 0 | 109,626 | (47,605) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock for public offering (in shares) | 2,450,000 | |||
Issuance of common stock for public offering | 4,900 | 4,900 | ||
Offering costs in connection with public offering | (745) | (745) | ||
Stock-based compensation, net of forfeitures (in shares) | 734,511 | |||
Stock-based compensation, net of forfeitures | 12,994 | 12,994 | ||
Issuance of common stock for purchase of business (in shares) | 18,442 | |||
Issuance of common stock for purchase of businesses | 45 | 45 | ||
Net loss | (23,981) | (23,981) | ||
Balance at ending (in shares) at Dec. 31, 2023 | 20,671,515 | |||
Balance at ending at Dec. 31, 2023 | $ 55,234 | $ 0 | $ 126,820 | $ (71,586) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (23,981) | $ (27,626) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 5,947 | 5,346 |
Non-cash lease expense | 1,663 | 1,856 |
Deferred financing costs amortization | 71 | 0 |
Gain on sale of mortgages | (3,696) | (3,819) |
Stock-based compensation | 12,994 | 9,131 |
Deferred income taxes | 84 | 297 |
Change in operating assets and liabilities: | ||
Accounts receivable | (278) | 485 |
Prepaid and other current assets | (232) | (958) |
Other assets | 195 | 78 |
Accounts payable | 53 | (1,959) |
Accrued and other current liabilities | (353) | (1,081) |
Operating lease liabilities | (1,827) | (1,867) |
Mortgage loans held for sale originations | (154,480) | (246,327) |
Proceeds from sale and principal payments on mortgage loans held for sale | 153,268 | 259,861 |
Net cash (used in) operating activities | (10,572) | (6,583) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (22) | (945) |
Amounts paid for business and asset acquisitions, net of cash acquired | (35) | (1,639) |
Purchase of intangible assets | (1,811) | (3,112) |
Other investing activities | 0 | (1,400) |
Net cash used in investing activities | (1,868) | (7,096) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on debt | (718) | (1,307) |
Proceeds from debt | 4,036 | 924 |
Cash paid for debt issuance costs | (200) | 0 |
Other financing activities | (449) | 0 |
Borrowings from warehouse lines of credit | 150,265 | 210,433 |
Repayment on warehouse lines of credit | (145,489) | (219,867) |
Repurchase of common stock | 0 | (6,045) |
Proceeds from the issuance of common stock in connection with a public offering | 4,900 | 0 |
Payment of offering cost in connection with issuance of common stock in connection with public offering | (745) | 0 |
Net cash provided by (used in) financing activities | 11,600 | (15,862) |
Net decrease in cash, cash equivalents, and restricted cash | (840) | (29,541) |
Cash, cash equivalents, and restricted cash at beginning of period | 8,380 | 37,921 |
Cash, cash equivalents, and restricted cash at end of period | 7,540 | 8,380 |
Supplemental disclosure of cash and non-cash transactions: | ||
Cash paid for interest | 188 | 4 |
Income taxes paid | 50 | 111 |
Amounts due to sellers | 80 | 1,100 |
Right of use assets obtained in exchange for new lease liabilities | 305 | 2,385 |
Issuance of common stock for purchase of business | 45 | 6,168 |
Capitalized share- based compensation | 0 | 220 |
Reconciliation of cash and restricted cash: | ||
Cash and cash equivalents | 7,399 | 8,320 |
Restricted cash | 141 | 60 |
Total cash, cash equivalents, and restricted cash shown in statement of cash flows | $ 7,540 | $ 8,380 |
Description of Business and Nat
Description of Business and Nature of Operations | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Nature of Operations | Description of Business and Nature of Operations Fathom Holdings Inc. (“Fathom”, “Fathom Holdings,” 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, Encompass Lending, intelliAgent, LiveBy, Real Results, Verus Title and Cornerstone. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation — The accompanying 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 (the “FASB”) Accounting Standards Codification (“ASC”) for financial information. All adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. The 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 consolidated financial statements have been included. Certain Significant Risks and Business Uncertainties — The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Furthermore, during the period required to achieve substantially higher revenue in order to become consistently profitable, the Company may require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. Liquidity — The Company has a history of negative cash flows from operations and operating losses. The Company generated net losses of approximately $24.0 million and $27.6 million, for the years ended December 31, 2023 and 2022, respectively. Additionally, the Company anticipates further expenditures associated with the process of expanding its business organically and via acquisitions. The Company had cash and cash equivalents of $7.4 million and $8.3 million as of December 31, 2023 and 2022, respectively. Management believes that existing cash along with its planned budget, which includes an increase in agent fees implemented in January 2024, growth from increasing attach rates across the Company’s businesses from internal referrals, reduction of certain expenses given initiatives implemented throughout 2023, and the expected ability to achieve sales volumes necessary to cover forecasted expenses, provide sufficient funding to continue as a going concern for a period of at least one year from the date of the issuance of these consolidated financial statements. Use of Estimates — The preparation of consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates its estimates and assumptions related to provisions for doubtful accounts, legal contingencies, income taxes, deferred tax asset valuation allowances, share-based compensation, goodwill, estimated lives of intangible assets, and intangible asset impairment. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company might differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of money market instruments. From time to time, the Company’s cash deposits exceed federally insured limits. The Company has not experienced any losses resulting from these excess deposits. Fair Value Measurements — FASB ASC 820, Fair Value Measurement , (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: • Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially). • Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available). The fair value of cash and cash equivalents, restricted cash, accounts receivable, agent annual fees receivable, net, prepaid and other current assets, accounts payable and accrued liabilities, and due to affiliates approximate their carrying value due to their short-term maturities. The loan and notes payable, and lease liability are presented at their carrying value, which based on borrowing rates currently available to the Company for loans and leases with similar terms, approximate their fair values. Nonfinancial assets, such as goodwill, are accounted for at fair value on a nonrecurring basis. Accounts Receivable — Accounts receivable consist of balances due from customers. The Company records no allowances due to the Company’s ability to collect substantially all receivables. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. Agent Annual Fees Receivable - Agent annual fees receivable, net of estimated allowances for uncollectible accounts were approximately $2.4 million and $2.3 million as of December 31, 2023 and 2022, respectively, and are recorded in prepaid and other current assets on the consolidated balance sheet. The agent annual fees receivable represents the $600 fee, increased from $500 in 2022, that agents pay on their first sale or their one-year anniversary date, which is recognized as a reduction to cost of revenue ratably over the year in which the fee pertains. The Company estimates the allowance for uncollectible accounts based on historical write-off experience each period. Property and Equipment — Property and equipment is stated at cost, less accumulated depreciation. Maintenance and repairs are charged to expense when incurred. Additions and improvements that extend the economic useful life of the asset are capitalized and depreciated over the remaining useful lives of the assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any resulting gain or loss is reflected in current earnings. Depreciation is provided using the straight-line method in amounts considered to be sufficient to amortize the cost of the assets to operations over their estimated useful lives, as follows: Asset category Depreciable life Vehicles 7 years Computers and equipment 3 — 5 years Furniture and fixtures 7 years Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets might not be recoverable. Recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets were considered to be impaired, an impairment loss would be recognized as the difference between the fair value and carrying value when the carrying amount of the asset exceeds the fair value of the asset. To date, no such impairment has occurred. Business Combinations — The Company accounts for its business combinations under the provisions of Accounting Standards Codification (“ASC”) Topic 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed are recorded at the date of acquisition at their respective fair values. For transactions that are business combinations, the Company evaluates the existence of goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. A fair value measurement is determined as the price received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In the context of acquisition accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The estimated fair values reflected in the acquisition accounting rely on management’s judgment and the expertise of a third-party valuation firm engaged to assist in concluding on the fair value measurements. The estimated fair value of identifiable intangible assets, primarily consisting of agent relationships, tradenames customer relationships, know-how and technology, was determined using relief-from-royalty method. The most significant assumptions under the relief-from-royalty method used to value trade names include estimated remaining useful life, expected future revenue, annual agent revenue attrition, costs to develop new agents, charges for contributory assets, tax rate, discount rate and tax amortization benefit. The most significant variables in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates based on the risk inherent in the acquired assets, specific risks, industry beta and capital structure of guideline companies. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of Management, and such variations may be significant to estimated values. The Company includes the results of operations from the acquisition date in the financial statements for all businesses acquired. Asset Acquisitions — The Company follows the guidance in ASC 805-10 for determining the appropriate accounting treatment for asset acquisitions. ASC 805-10 provides an initial fair value screen to determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If the initial screening test is not met, the asset is considered a business based on whether there are inputs and substantive processes in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived. If the acquisition is deemed to be a business, the acquisition method of accounting is applied. Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value. If the transaction is deemed to be an asset acquisition, the cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values. Mortgage Loans Held for Sale —Mortgage loans held for sale are carried at fair value under the fair value option with changes in fair value recorded in other service revenue on the statements of operations. The fair value of mortgage loans held for sale is typically calculated using observable market information including pricing from actual market transactions, purchaser commitment prices, or broker quotations. The fair value of mortgage loans held for sale covered by purchaser commitments is generally based on commitment prices. The fair value of mortgage loans held for sale not committed to a purchaser is generally based on current delivery pricing using best execution pricing. Intangible Assets, Net — Intangible assets, net is comprised of definite-lived intangibles and capitalized internal use software. Definite-lived intangibles — The Company’s definite-lived intangible assets primarily consist of trade names, agent relationships, customer relationships, know-how and technology acquired as part of the Company’s business acquisitions. For definite-lived intangible assets, whenever impairment indicators are present, the Company performs a review for impairment. The Company calculates the undiscounted value of the projected cash flows associated with the asset, or asset group, and compares this estimated amount to the carrying amount. If the carrying amount is found to be greater, the Company will record an impairment loss for the excess of book value over the fair value. In addition, in all cases of an impairment review, the Company will reevaluate the remaining useful lives of the assets and modify them, as appropriate. Currently, trade names, agent relationships, customer relationships, know-how and software development have a useful life estimated at ten years, seven years, eight years, five years and five years, respectively. Capitalized internal use software — Costs incurred in the preliminary stages of website and software development are expensed as incurred. Once an application has reached the development stage, direct internal and external costs relating to upgrades or enhancements that meet the capitalization criteria are capitalized in capitalized software, net and amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs (including those costs in the post-implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the websites (or software) that result in added functionality, in which case the costs are capitalized as well. Capitalized software costs are amortized over the expected useful lives of the applicable software and such amortization is recorded in technology and development on the statement of operations. Currently, capitalized software costs for internal use have a useful life estimated at five years. Estimated useful lives of website and software development activities are reviewed annually or whenever events or changes in circumstances indicate that intangible assets may be impaired and are adjusted as appropriate to reflect upcoming development activities that may include significant upgrades or enhancements to the existing functionality. Goodwill - Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Goodwill is assessed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. Under the authoritative guidance issued by the FASB, the Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the goodwill impairment test is performed. The goodwill impairment test requires the Company to estimate the fair value of the reporting unit and to compare the fair value of the reporting unit with its carrying amount. If the fair value exceeds the carrying amount, then no impairment is recognized. If the carrying amount recorded exceeds the fair value calculated, then an impairment charge is recognized for the difference. The judgments made in determining the projected cash flows used to estimate the fair value can materially impact the Company’s financial condition and results of operations. There was no impairment of goodwill for the year ended December 31, 2023. Revenue Recognition — The Company applies the provisions of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when a performance obligation is satisfied. The Company has utilized the practical expedient in ASC 606 and elected not to capitalize contract costs for contracts with customers with durations less than one year. The Company does not have significant remaining unfulfilled performance obligations or contract balances. The Company generates revenue from real estate brokerage services which consists of commissions generated from real estate transactions, which the Company classifies as gross commission income. The Company also generates revenues through mortgage lending, SaaS solutions, as well as title and insurance services, which the Company classifies as other service revenue. Revenues from real estate brokerage services The Company’s real estate brokerage services revenue consists substantially of commissions generated from real estate brokerage services. The Company is contractually obligated to provide for the fulfillment of transfers of real estate between buyers and sellers. The Company provides these services itself and controls the services of its agents necessary to legally transfer the real estate. Correspondingly, the Company is defined as the principal. The Company, as principal, satisfies its obligation upon the closing of a real estate transaction. The Company has concluded that agents are not employees of the Company, rather deemed to be independent contractors. Upon satisfaction of its obligation, the Company recognizes revenue in the gross amount of consideration it is entitled to receive. The transaction price is calculated by applying the Company’s portion of the agreed-upon commission rate to the property’s selling price. The Company may provide services to the buyer, seller, or both parties to a transaction. When the Company provides services to the seller in a transaction, it recognizes revenue for its portion of the commission, which is calculated as the sales price multiplied by the commission rate less the commission separately distributed to the buyer’s agent, or the “sell” side portion of the commission. When the Company provides services to the buyer in a transaction, the Company recognizes revenue in an amount equal to the sales price for the property multiplied by the commission rate for the “buy” side of the transaction. In instances in which the Company represents both the buyer and the seller in a transaction, it recognizes the full commission on the transaction. Commission revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company’s customers remit payment for the Company’s services to the title company or attorney closing the sale of property at the time of closing. The Company receives payment upon close of property or within days of the closing of a transaction. The Company is not entitled to any commission until the performance obligation is satisfied and is not owed any commission for unsuccessful transactions, even if services have been provided. Revenues from mortgage services The revenue streams for the Company’s mortgage lending services business are primarily comprised of gains and losses from loans sold, and origination and other fees. The majority of these revenue streams are exempted from ASC 606, as the scope of the standard does not apply to revenue on contracts accounted for under ASC 860 Transfers and Servicing. Origination and other fees are not specifically separable from actual mortgage loans. The gain on sale of mortgage loans represents the difference between the net sales proceeds and the carrying value of the mortgage loans sold, including the servicing rights release premiums and is recorded in the statement of operations in other service revenue. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity. Servicing rights release premiums represent revenues earned when the risk and rewards of ownership of servicing rights are transferred to third parties. Retail origination fees are principally revenues earned from loan originations. Direct loan origination costs and expenses associated with the loans are charged to expenses when the loans are sold. Interest income is interest earned on originated loans prior to the sale of the asset. Revenues from technology The Company generates revenue from subscription and services related to the use of the LiveBy platform. The SaaS contracts are generally annual contracts paid monthly in advance of service and cancellable upon 30 days’ notice after the first year. The Company’s subscription arrangements do not provide customers with the right to take possession of the software supporting the platform. Subscription revenue, which includes support, is recognized on a straight-line basis over the non-cancellable contractual term of the arrangement, generally beginning on the date that the Company’s service is made available to the customer, and recorded as other service revenue in the statement of operations. Revenues from title services The Company’s title services revenue includes fees charged for title search and examination, property settlement and title insurance services provided in association with property acquisitions and refinance transactions. The Company provides the title search and property settlement services itself and controls the services before they are transferred to its customers since the Company is primarily responsible for fulfilling the promise and also has full discretion in establishing the price for the settlement services (except in states where fees are set statutorily). As such, the Company is defined as the principal. As principal, the Company satisfies its obligation upon the closing of a real estate transaction. Upon satisfaction of its obligation, the Company recognizes revenue in the gross amount of consideration the Company is entitled to receive. The transaction price for title and property settlement services is determined by the fixed fees the Company charges for its services. The Company provides services to the buyers and sellers involved in the purchase transaction, as well as to the borrower in a refinance transaction. Title and property settlement revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company is not entitled to any title and property settlement revenue until the performance obligation is satisfied and is not owed any consideration for unsuccessful transactions, even if services have been provided. For title insurance services, the Company works in conjunction with insurance underwriters to perform these services, obtains the insurance policy premiums associated with title insurance on behalf of customers and remits the policy premium to the insurance underwriters. Since the insurance underwriter is ultimately providing the insurance policy to the borrower, the Company is not responsible for fulfilling the promise to provide the insurance. Additionally, the Company does not have discretion in dictating the price for the insurance policy, which is set by each jurisdiction and is either filed by insurance underwriters or set by the state insurance commissioners. Therefore, the Company does not control the specified service provided by the insurance underwriter. As such, in these circumstances, the Company acts as an agent. As the agent, the Company satisfies its obligation upon the closing of a real estate transaction. Upon satisfaction of its obligation, the Company recognizes revenue in the net amount of consideration the Company is entitled to receive, which is its fee for brokering the insurance policy less any consideration paid to the insurance underwriters. The transaction price for title insurance services is fixed, based on statutory rates depending on the jurisdiction. The Company negotiates with insurance underwriters the percentage they receive, and the rest is recognized as revenue. Title insurance revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company is not entitled to any title insurance revenue until the performance obligation is satisfied and is not owed any consideration for unsuccessful transactions, even if services have been provided. Revenues from insurance agency services The revenue streams for the Company’s insurance agency services business are primarily comprised of new and renewal commissions paid by insurance carriers. The transaction price is set as the estimated commissions to be received over the term of the policy based upon an estimate of premiums placed, policy changes and cancellations, net of restraint. The commissions are earned at the effective date of the associated policies when control of the policy transfers to the client. The Company is also eligible for certain contingent commissions from insurers based on the attainment of specific metrics (i.e., volume growth, loss ratios) related to underlying polices placed. Revenue for contingent commissions is estimated based on historical and current evidence of achievement towards each insurer’s annual respective metrics and is recorded as the underlying policies that contribute to the achievement are placed. Due to the uncertainty of the amount of contingent consideration that will be received, the estimated revenue is constrained to an amount that is probable to not have a significant negative adjustment. Contingent consideration is generally received in the first quarter of the subsequent year. Commission and other agent-related costs — Commission and other agent-related costs consists primarily of agent commissions, less fees paid by the Company to agents, order fulfillment, share-based compensation for agents, title searches, and direct cost to fulfill the services provided. Operations and support — Operations and support consist primarily of direct cost to fulfill the services from our mortgage lending, title services, insurance services and other services provided. Technology and development — Technology and development expenses primarily include personnel costs, including base pay, bonuses, benefits, and share-based compensation, related to ongoing development and maintenance of our proprietary software for use by our agents, customers, and support staff. Technology and development expenses also include amortization of capitalized software and development costs, data licenses, other software, and equipment costs, as well as infrastructure and operational expenses, such as, for data centers, communication, and hosted services. General and Administrative — General and administrative expenses consist primarily of personnel costs, share-based compensation, and fees for professional services. Professional services principally consist of external legal, audit, and tax services. Marketing — Marketing expenses consist primarily of marketing and promotional materials. Marketing costs are expensed as they are incurred. Leases —The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Share-based Compensation — Share-based compensation for employees and non-employees (principally independent contractor agents) is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are recognized when they occur. Fully vested restricted stock awards are measured on grant date at fair value. Common Stock Warrant — The Company accounts for common stock warrants as either equity instruments or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), depending on the specific terms of the warrant agreement. If warrants are issued in exchange for services the Company evaluates whether they should be accounted for in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). Under ASC 718, the warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the issuing entity can be required under any circumstances to settle the warrant by transferring cash or other assets. For additional discussion on warrants, see Note 11 – Equity-classified Warrants. Derivative financial instruments — The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (“interest rate lock commitments”). Interest rate lock commitments on loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees from potential borrowers, are recorded at fair value in derivative assets and liabilities, with changes in fair value recorded in the statement of operations in other service revenue. Fair value is based upon changes in the fair value of the underlying mortgages, estimated to be realized upon sale into the secondary market. Fair value estimates take into account interest rate lock commitments not expected to be exercised by customers, commonly referred to as fall out. The Company manages the interest rate risk associated with its outstanding interest rate lock commitments and loans held for sale by entering into derivative loan instruments such as forward loan commitments, mandatory delivery commitments, options and future contracts, whereby the Company maintains the right to deliver residential loans to purchasers in the future at a specified yield. Fair value is based upon estimated amounts that the Company would receive or pay to terminate the commitment at the report |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Acquisitions of Cornerstone Financial and iPro Realty Network The Company completed two acquisitions in 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 was 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 was 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 period from acquisition through December 31, 2022, resulting in an increase of $0.5 million in the fair value of assumed finite lived intangible assets, an increase of $0.3 million in other assets, and a $0.5 million decrease in goodwill, and a $0.1 increase in deferred tax liabilities. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The Company recorded goodwill in connection with the acquisition of Verus which closed in November 2020 and in connection with the acquisitions of Red Barn, E4:9, LiveBy, Epic and Woodhouse which closed in 2021. These acquisitions have been accounted for using the acquisition method accounting. Under the acquisition method of accounting, the Company allocated the total purchase price to the tangible and identifiable intangible assets acquired, and assumed liabilities based on their estimated fair values as of the acquisition date, as determined by management. The excess of the purchase price over the aggregate fair values of the identifiable assets was recorded as goodwill. The were no changes in the carrying value of goodwill by segment during 2023 as noted in the table below (amount in thousands): Real Estate Mortgage Technology Other 1 Total Balance at December 31, 2023 and 2022 $ 2,690 $ 10,428 $ 4,168 $ 8,321 $ 25,607 (1) Other comprises goodwill not assigned to a reportable segment. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment, Net [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following at the dates indicated (amount in thousands): December 31, 2023 2022 Computers and equipment $ 802 $ 774 Furniture and fixtures 1,263 1,269 Leasehold improvements 1,711 1,711 Total property and equipment 3,776 3,754 Accumulated depreciation (1,436) (809) Total property and equipment, net $ 2,340 $ 2,945 |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | Intangible Assets, Net Intangible assets, net, consisted of the following at the dates indicated (amount in thousands): December 31, 2023 Gross Carrying Accumulated Net Carrying Trade names $ 7,956 $ (2,058) $ 5,898 Software development 14,159 (5,517) 8,642 Customer relationships 8,180 (3,199) 4,981 Agent relationships 6,016 (1,825) 4,191 Know-how 430 (233) 197 $ 36,741 $ (12,832) $ 23,909 December 31, 2022 Gross Accumulated Net Carrying Trade names $ 7,956 $ (1,263) $ 6,693 Software development 12,349 (3,029) 9,320 Customer relationships 8,180 (2,085) 6,095 Agent relationships 5,856 (988) 4,868 Know-how 430 (147) 283 $ 34,771 $ (7,512) $ 27,259 As of December 31, 2023, the estimated future amortization expense for definite-lived intangible assets will be (amount in thousands): Years Ended December 31, 2024 $ 5,447 2025 5,194 2026 4,558 2027 3,559 2028 2,419 Thereafter 2,732 Total $ 23,909 Amortization expense for purchased and capitalized software included in technology and development expense was approximately $2.8 million and $2.2 million for the years ended December 31, 2023 and 2022, respectively. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following at the dates indicated (amount in thousands): December 31, December 31, Deferred annual fee $ 948 $ 1,100 Due to sellers 488 857 Accrued compensation 526 884 Other accrued liabilities 719 562 Total accrued liabilities $ 2,681 $ 3,403 |
Warehouse Lines of Credit
Warehouse Lines of Credit | 12 Months Ended |
Dec. 31, 2023 | |
Warehouse Lines of Credit | |
Warehouse Lines of Credit | Warehouse Lines of Credit Encompass Lending Group (“Encompass”), a 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 5.00% or the 30-Day Secured Overnight Financing Rate (SOFR) plus 2.625%. The agreement expires in July 2024. The maximum funding available under these loans at December 31, 2023 and December 31, 2022 was $7.5 million and $15.0 million, respectively. At December 31, 2023 and 2022, the outstanding balance on this warehouse line was approximately $3.5 million and $1.7 million, respectively. As of December 31, 2023, Encompass was in compliance with the debt covenants under this facility. Encompass discontinued use of a mortgage participation purchase agreement with a bank whereby Encompass borrows funds to finance the origination or purchase of eligible loans. The agreement was discontinued on December 31, 2023 for the facility in the amount of $7.5 million and there was no outstanding balance as of December 31, 2023. Encompass was in compliance at the time of discontinuation of the agreement. At December 31, 2022, the outstanding balance on this warehouse line was approximately $0.8 million. Encompass had a warehousing credit and security agreement with a bank whereby Encompass borrowed funds to finance the origination of eligible mortgage loans. The agreement expired in September 2023 for the facility in the amount of $7.5 million and there was no outstanding balance as of September 30, 2023. Encompass was in compliance at the time of expiration of the agreement. 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 5.75% or the 1-month CME Term SOFR plus 2.00%. The agreement expires in August 2024. The maximum funding available under these loans at December 31, 2023 was $10 million. At December 31, 2023, there was $4.8 million outstanding balance on this warehouse line. As of December 31, 2023, Encompass was in compliance with debt covenants under this facility. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consisted of the following at the dates indicated (amount in thousands): December 31, December 31, 3.75% Small Business Administration installment loan due May 2050 $ 117 $ 151 Convertible note payable, less unamortized costs $129 3,372 — Director and Officer (D&O) insurance policy promissory note 1 179 246 Executive and Officer (E&O) insurance policy promissory note 2 215 296 Total debt 3,883 693 Long-term debt, current portion (416) (564) Long-term debt, net of current portion $ 3,467 $ 129 (1) The 2023 D&O note carries a 6.85% interest rate and is payable quarterly with the last quarterly payment due in July 2024. The 2022 D&O note carried a 6.0% interest rate and final payment was made in April 2023. (2) The October 2023 E&O note carries 13.50% interest rate and is payable monthly with the last monthly payment being due in August 2024. The October 2022 E&O note carried a 9.0% interest rate and final payment was made in August 2023. Debt maturities and principal amortization of our consolidated existing debt as of December 31, 2023 for the next five years and thereafter are as follows (in thousands): Calendar Year Amount 2024 $ 394 2025 3,372 2026 — 2027 — 2028 — Thereafter 117 Total $ 3,883 Notes Payable On April 13, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Holder”) and issued a Senior Secured Convertible Promissory Note in the principal amount of $3,500,000 (the “Note”), in a private placement (the “Offering”). The Company paid a placement agent fee in the amount of $175,000 in connection with the Offering. The cash proceeds disbursed to the Company from the issuance of the Note were $3,300,000, after deducting the placement agent fee and approximately $25,000 in purchaser expenses. The Company shall pay interest to the Holder quarterly in cash on the principal amount of this Note at a rate which fluctuates every calendar month, and is equal to (i) the monthly average Secured Overnight Financing Rate (SOFR) plus (ii) 5%, per annum (which interest rate may be increased as provided by the Purchase Agreement); provided, however, that in no event will the rate of interest for any month be less than 8% per annum. Interest shall be due and payable on the last calendar day of each quarter and on the maturity date, April 12, 2025 (the “Fixed Interest Payment Date”); provided, however, notwithstanding anything to the contrary provided in the Purchase Agreement or the Note, interest accrued but not yet paid will be due and payable upon any conversion, prepayment, and/or acceleration whether as a result of an Event of Default, as defined, or otherwise with respect to the principal amount being so converted, prepaid and/or accelerated. In connection with the Offering, the Company also entered into a Security Agreement pursuant to which the Note is secured by all the Company’s existing and future assets. All or any portion of the principal amount of the Note, plus accrued and unpaid interest and any late charges thereon, is convertible at any time, in whole or in part, at the Investor’s option, into shares of the Company’s common stock at an initial fixed conversion price of $6.00 per share, subject to certain customary adjustments. The Note imposes penalties on the Company for any failure to timely deliver any shares of the Company’s common stock issuable upon conversion. The Note may not be converted by the Investor into shares of common stock if such conversion would result in the Investor and its affiliates owning an aggregate of in excess of 4.99% of the then-outstanding shares of the Company’s common stock, provided that upon 61 days’ notice, such ownership limitation may be adjusted by the Investor, but in any case, to no greater than 9.99%. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements FASB ASC 820, Fair Value Measurement , (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: • Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially). • Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available). 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 hedges; and • Closing prices at December 31, 2023 for derivative hedges. The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022, respectively (amount in thousands): December 31, 2023 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 8,602 $ — $ 8,602 Derivative assets — — 32 32 Derivative liabilities — — (52) (52) $ — $ 8,602 $ (20) $ 8,582 December 31, 2022 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 3,694 $ — $ 3,694 Derivative assets — — 7 7 $ — $ 3,694 $ 7 $ 3,701 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 hedge the IRLCs and mortgage loans held for sale not committed to purchasers are based on quoted agency MBS prices. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ 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 year ended December 31, 2022, the Company reacquired 686,097 shares for approximately $6.0 million. There were no equity repurchases during the year ended December 31, 2023. The approximate dollar value of shares that may yet be purchased pursuant to the repurchase program is $4.0 million. During the year ended December 31, 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 3 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 December 31, 2023, no portion of the Underwriter Warrant has been exercised or expired. During the year ended December 31, 2023, the Company completed an offering of common stock, which resulted in the issuance and sale by the Company of 2,450,000 shares of common stock, at a public offering price of $2.00 per share, generating gross proceeds of $4.9 million, of which the Company received approximately $4.2 million, after deducting underwriting discounts and other offering costs. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Compensation | Share-based Compensation The Company’s 2017 Stock Plan (the “2017 Plan”) provides for granting stock options and restricted stock awards to employees, directors, contractors and consultants of the Company. A total of 3,182,335 shares of common stock are authorized to be issued pursuant to the 2017 Plan. As of December 31, 2023, there were 2,739,261 shares available for future grants under the 2017 Plan. The Company has not since August 2019 granted, and in the future does not intend to grant, awards under the 2017 Stock Plan. The Company’s 2019 Omnibus Stock Incentive Plan (the “2019 Plan”) provides for granting stock options and restricted stock awards to employees, directors, contractors and consultants of the Company. During 2023 and 2022, the Company amended the 2019 Plan by adding an additional 1.7 million and 2 million of shares authorized to be issued, respectively. A total of 5,760,778 shares of common stock are authorized to be issued pursuant to the 2019 Plan. As of December 31, 2023, there were 835,951 shares available for future grants under the 2019 Plan. Restricted Stock Awards Shares Weighted Average Nonvested at December 31, 2021 717,097 $ 11.02 Granted 1,097,045 8.72 Vested (302,869) (13.12) Forfeited (136,128) (15.88) Nonvested at December 31, 2022 1,375,145 $ 14.23 Granted 829,335 4.42 Vested (323,654) (12.15) Forfeited (114,409) (14.23) Nonvested at December 31, 2023 1,766,417 $ 10.01 At December 31, 2023, the total unrecognized compensation related to unvested restricted stock awards granted was $4.4 million which the Company expects to recognize over a period of approximately 7 months. Restricted Stock Units Shares Weighted Average Nonvested at December 31, 2021 — $ — Granted 392,564 6.58 Vested — — Forfeited — — Nonvested at December 31, 2022 392,564 $ 6.58 Granted 2,004,147 4.67 Vested (31,321) (7.04) Forfeited (174,093) (5.10) Nonvested at December 31, 2023 2,191,297 $ 4.94 During 2022, the Company commenced granting restricted stock units to employees and agents. At December 31, 2023, the total unrecognized compensation related to unvested restricted stock units was granted was $6.3 million which the Company expects to recognize over a period of approximately one year. Stock Option Awards A summary of stock option activity under the 2017 and 2019 Plans are as follows: Stock Options Options Weighted Weighted Aggregate Balance at December 31, 2021 43,996 $ 20.46 8.5 $ 510 Granted 103,711 8.22 9.67 — Exercised — — — — Balance at December 31, 2022 147,707 $ 11.87 9.32 $ — Granted — — — — Exercised — — — — Balance at December 31, 2023 147,707 $ 11.87 9.32 — Options exercisable at December 31, 2023 147,707 $ 11.87 9.32 $ — The weighted-average grant-date fair value of options granted during the year ended December 31, 2022 was $8.22 There were no options granted in the year ended December 31, 2023. At December 31, 2023, all stock option awards were vested and all related compensation expense had been recognized. Stock based compensation related to the Company’s 2019 Plan is reported within the consolidated statement of operations as follows (amount in thousands): Year Ended December 31, 2023 2022 Commission and other agent-related cost $ 3,934 $ 2,920 Operations and support 614 609 Technology and development 185 79 General and administrative 7,857 5,334 Marketing 404 189 Total stock-based compensation $ 12,994 $ 9,131 The Company capitalized $0 and $0.2 million of stock-based compensation expense associated with the cost of developing software for internal use during the years ended December 31, 2023 and 2022, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases Operating Leases The Company has operating leases primarily consisting of office space with remaining lease terms of 1 to 7 years, subject to certain renewal options as applicable. Leases with an initial term of twelve months or less are not recorded on the balance sheet, and the Company does not separate lease and non-lease components of contracts. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Certain leases include variable payments related to common area maintenance and property taxes, which are billed by the landlord, as is customary with these types of charges for office space. Our lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived an imputed rate, which was used in a portfolio approach to discount its real estate lease liabilities. We used estimated incremental borrowing rates for all active leases. Lease Costs The table below presents certain information related to the lease costs for the Company’s operating leases for the periods indicated (amount in thousands): Year Ended December 31, 2023 2022 Operating lease expense $ 1,663 $ 1,856 Short-term lease expense 701 550 Total lease cost $ 2,364 $ 2,406 Lease Position as of December 31, 2023 and 2022 Right of use lease assets and lease liabilities for our operating leases were recorded in the consolidated balance sheet as follows (amount in thousands): December 31, 2023 2022 Assets Lease right of use assets $ 4,150 $ 7,363 Total lease assets $ 4,150 $ 7,363 Liabilities Current liabilities: Lease liability - current portion $ 1,504 $ 1,609 Noncurrent liabilities: Lease liability, net of current portion 3,824 5,241 Total lease liability $ 5,328 $ 6,850 Lease Terms and Discount Rate The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of: December 31, 2023 2022 Weighted average remaining lease term (in years) - operating leases 3.9 4.7 Weighted average discount rate - operating leases 6.33 % 6.19 % Future Minimum Lease Payments Future lease payments included in the measurement of lease liabilities on the consolidated balance sheet as of December 31, 2023, for the following five fiscal years and thereafter were as follows (amount in thousands): Years Ended December 31, Operating Leases 2024 $ 1,785 2025 1,479 2026 1,066 2027 969 2028 709 2028 and thereafter — Total Minimum Lease Payments 6,008 Less effects of discounting (680) Present value of future minimum lease payments $ 5,328 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We lease office space from entities affiliated with certain of our employees. We paid $0.4 million and $0.5 million in total rent expense under these leases for the year ended December 31, 2023 and 2022, respectively. Included in marketing expense for each of the years ended December 31, 2023 and 2022 was approximately $0.4 million and $0.5 million from related parties in exchange for the Company receiving marketing services, respectively. |
Net Loss per Share Attributable
Net Loss per Share Attributable to Common Stock | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss per Share Attributable to Common Stock | Net Loss per Share Attributable to Common Stock Basic loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Diluted loss per share excludes, when applicable, the potential impact of stock options, unvested shares of restricted stock awards, and common stock warrants because their effect would be anti-dilutive due to our net loss. The calculation of basic and diluted net loss per share attributable to common stock was as follows (amount in thousands except share data): Year Ended December 31, 2023 2022 Numerator: Net loss attributable to common stock—basic and diluted $ (23,981) $ (27,626) Denominator: Weighted- average basic and diluted shares outstanding 16,265,993 16,001,367 Net loss per share attributable to common stock—basic and diluted $ (1.47) $ (1.73) 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. Year Ended December 31, 2023 2022 Stock options 147,707 147,707 Non-vested restricted stock awards 1,766,417 1,375,145 Non-vested restricted stock units 2,191,297 392,564 Common stock warrants 240,100 240,100 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes consists of the following (amount in thousands): December 31, 2023 2022 Current provision: Federal $ — $ — State 63 22 Total current 63 22 Deferred expense (benefit): Federal 135 40 State (50) (116) Total deferred 85 (76) Income tax expense (benefit) $ 148 $ (54) A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate consists of the following (amount in thousands): For the Years Ended December 31, 2023 2022 Provision for federal income taxes at statutory rates $(5,006) 21 % $(5,822) 21 % Provision for state income taxes, net of federal benefit (388) 2 % (505) 2 % Change in valuation allowance 4,785 (20) % 6,274 (23) % Nondeductible expenses 10 — % 6 — % Return to provision adjustments 737 (3) % — — % Other 10 — % (7) — % Income tax expense (benefit) $148 — % $(54) — % Effective Tax Rate 0.6% 0.2% The tax effects of the temporary differences and carryforwards that give rise to the deferred tax assets consist of the following (amount in thousands): December 31, 2023 2022 Deferred tax assets Net operating loss carryforward $ 11,376 $ 9,383 Property and equipment 112 — Reserves 134 94 Share based compensation 3,963 2,270 Interest expense carryforward 60 18 Research and development credits 35 35 Lease liability 1,228 1,566 Basis in partnership 2 2 Charitable contributions carryover 36 28 Total deferred tax assets 16,946 13,396 Deferred tax liabilities Property and equipment — (54) Intangibles (2,693) (3,247) Internally developed software (499) (692) Unrealized gain/loss — (29) Right-of-Use assets (956) (1,259) Prepaid expenses (269) (287) Total deferred tax liabilities (4,417) (5,568) Valuation allowance (12,911) (8,125) Deferred tax liability, net $ (382) $ (297) As of December 31, 2023, and December 31, 2022, the Company had federal net operating loss carryforwards of approximately $49.4 million and $40.8 million and state net operating loss carryforwards of approximately $26.0 million and $20.8 million, respectively. Federal net operating losses in the amount of $48.4 million carryforward indefinitely; the remainder are subject to expiration beginning in 2035. State net operating losses will begin to expire if not utilized, in 2032. Utilization of the net operating loss carryforwards may be subject to an annual limitation according to Section 382 of the Internal Revenue Code of 1986 as amended, and similar provisions. The Company applies the standards on uncertainty in income taxes contained in ASC Topic 740, Accounting for Income Taxes. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements, as the Company did not have any significant unrecognized tax benefits during the years ended December 31, 2023 and 2022. Due to the Company's carryforward of net operating losses the statute of limitations remains open subsequent to and including the year ended December 31, 2015. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) that has available discrete financial information; and (iii) whose operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to allocate resources and to assess the operating results and financial performance of each operating segment. Our Chief Operating Decision Maker makes operating decisions and assesses performance based on the services of identified operating segments and has identified three reportable segments: 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 and continues 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 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 us as net income (loss), excluding other income and expense, costs related to acquisitions, income taxes, depreciation and amortization, and share-based compensation expense. In particular, the Company believes the exclusion of non-cash share-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 our operations and provides better transparency into our 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. Key operating data for the reportable segments for the years ended December 31, 2023 and 2022 and are set forth in the tables below (amount in thousands). The Company has included the results of the acquisitions from the acquisition date. Year Ended Revenue 2023 2022 Real Estate Brokerage $ 325,405 $ 390,616 Mortgage 7,251 9,637 Technology 3,172 2,709 Corporate and other services (a) 9,398 10,002 Total revenue $ 345,226 $ 412,964 Year Ended Adjusted EBITDA 2023 2022 Real Estate Brokerage $ 5,674 $ 2,025 Mortgage (1,866) (2,902) Technology (1,644) (1,440) Total Segment Adjusted EBITDA 2,164 (2,317) Corporate and other services (a) (6,275) (9,910) Total Company Adjusted EBITDA (4,111) (12,227) Depreciation and amortization (5,947) (5,346) Other expense (income), net (580) (903) Income tax expense (benefit) (148) 54 Stock based compensation (12,994) (9,131) Other non-cash items and transactions costs (201) (73) Net loss $ (23,981) $ (27,626) _________________________________________ (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 | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification of employees verse 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 previously reported by us in a Current Report on Form 8-K filed on November 28, 2023, we have been named as a defendant in a purported class action complaint in the United States District Court for the Eastern District of Texas Sherman Division, filed on November 13, 2023, by plaintiffs QJ Team, LLC and Five Points Holdings, LLC, individually and on behalf of all other persons similarly situated. A second purported class action complaint was filed on December 14, 2023, by plaintiffs Julie Martin, Mark Adams and Adelaida Matta in the same court, naming us as a defendant along with others, many of whom are also named in the first lawsuit. These lawsuits are purportedly brought on behalf of a class consisting of all persons who listed properties on a Multiple Listing Service in Texas (the “MLS) using a listing agent or broker affiliated with one of the defendants named in the lawsuits and paid a buyer broker commission beginning on November 13, 2019. The lawsuits allege unlawful conspiracy in violation of federal antitrust law and, against certain defendants (but not us) deceptive trade practices under the Texas Deceptive Trade Practices Act. Given the breadth of the residential real estate industry and the volume of participants in the residential real estate industry in Texas and the rest of the United States, we expect additional lawsuits to be filed, although no additional cases filed to date have named us as a defendant. Though we intend to vigorously defend ourselves as we believe the lawsuits are particularly without merit with respect to us because of our flat fee business model, we cannot predict with certainty the cost of our defense, the cost of prosecution, insurance coverage, or the ultimate outcome of the lawsuits and any others that might be filed in the future, including remedies or damage awards. Adverse results in such litigation might harm our business and financial condition. Moreover, defending these lawsuits, regardless of their merits, could entail substantial expense and require the time and attention of our key management personnel. Assets in Escrow In conducting our operations, we routinely hold customers’ assets in escrow, pending completion of real estate transactions, and are responsible for the proper disposition of these balances for our customers. Certain of these amounts are maintained in segregated bank accounts and have not been included in the accompanying consolidated balance sheet at December 31, 2023, consistent with GAAP and industry practice. The balances amounted to $1.4 million and $1.8 million at December 31, 2023 and 2022, 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 Lending Group 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 December 31, 2023, Encompass had adjusted net worth of approximately $2.4 million and liquid assets of $2.6 million. Commitments to Extend Credit Encompass enters into IRLCs with borrowers who have applied for residential mortgage loans and have met certain credit and underwriting criteria. These commitments expose the Encompass to market risk if interest rates change and the underlying loan is not economically hedged or committed to a purchaser. Encompass is also exposed to credit loss if the loan is originated and not sold to a purchaser and the mortgagor does not perform. The collateral upon extension of credit is typically a first deed of trust in the mortgagor’s residential property. Commitments to originate loans do not necessarily reflect future cash requirements as commitments are expected to expire without being drawn upon. Regulatory Commitments Encompass is subject to periodic audits and examinations, both formal and informal in nature, from various federal and state agencies, including those made as part of the regulatory oversight of mortgage origination, servicing and financing activities. Such audits and examinations could result in additional actions, penalties or fines by state or federal government bodies, regulators or the courts. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated the impact of events that have occurred subsequent to December 31, 2023, through the date the consolidated financial statements were filed with the SEC. Based on this evaluation, other than as recorded or disclosed within these consolidated financial statements and related notes, the Company has determined that there are no material subsequent events that would require recognition or disclosure. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net loss | $ (23,981) | $ (27,626) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 12 Months Ended |
Dec. 31, 2023 shares | Dec. 31, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Marco Fregenal [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | During the three months ended December 31, 2023, a written trading plan (the “Trading Plan”) was adopted on December 15, 2023 by Marco Fregenal, our Chief Executive Officer, President, and Chief Financial Officer. The Trading Plan consists of the sale of 165,563 shares and is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The plan’s maximum duration is until October 11, 2024, and the first trade will not occur until April 9, 2024, at the earliest. The Trading Plan is intended to cover the income tax obligations related to already issued restricted stock awards scheduled to vest in the year ended December 31, 2024. As such, Mr. Fregenal will sell only enough shares to cover these income tax burdens and intends to retain all of the remaining shares under the restricted stock awards. | |
Name | Marco Fregenal | |
Title | Chief Executive Officer, President, and Chief Financial Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | December 15, 2023 | |
Arrangement Duration | 301 days | |
Aggregate Available | 165,563 | 165,563 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation — The accompanying 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 (the “FASB”) Accounting Standards Codification (“ASC”) for financial information. All adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. The 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 consolidated financial statements have been included. |
Certain Significant Risks and Business Uncertainties | Certain Significant Risks and Business Uncertainties — The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Furthermore, during the period required to achieve substantially higher revenue in order to become consistently profitable, the Company may require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. |
Liquidity | Liquidity — The Company has a history of negative cash flows from operations and operating losses. The Company generated net losses of approximately $24.0 million and $27.6 million, for the years ended December 31, 2023 and 2022, respectively. Additionally, the Company anticipates further expenditures associated with the process of expanding its business organically and via acquisitions. The Company had cash and cash equivalents of $7.4 million and $8.3 million as of December 31, 2023 and 2022, respectively. Management believes that existing cash along with its planned budget, which includes an increase in agent fees implemented in January 2024, growth from increasing attach rates across the Company’s businesses from internal referrals, reduction of certain expenses given initiatives implemented throughout 2023, and the expected ability to achieve sales volumes necessary to cover forecasted expenses, provide sufficient funding to continue as a going concern for a period of at least one year from the date of the issuance of these consolidated financial statements. |
Use of Estimates | Use of Estimates — The preparation of consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates its estimates and assumptions related to provisions for doubtful accounts, legal contingencies, income taxes, deferred tax asset valuation allowances, share-based compensation, goodwill, estimated lives of intangible assets, and intangible asset impairment. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company might differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of money market instruments. From time to time, the Company’s cash deposits exceed federally insured limits. The Company has not experienced any losses resulting from these excess deposits. |
Fair Value Measurements | Fair Value Measurements — FASB ASC 820, Fair Value Measurement , (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: • Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially). • Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available). The fair value of cash and cash equivalents, restricted cash, accounts receivable, agent annual fees receivable, net, prepaid and other current assets, accounts payable and accrued liabilities, and due to affiliates approximate their carrying value due to their short-term maturities. The loan and notes payable, and lease liability are presented at their carrying value, which based on borrowing rates currently available to the Company for loans and leases with similar terms, approximate their fair values. Nonfinancial assets, such as goodwill, are accounted for at fair value on a nonrecurring basis. |
Accounts Receivable | Accounts Receivable — Accounts receivable consist of balances due from customers. The Company records no allowances due to the Company’s ability to collect substantially all receivables. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. |
Agent Annual Fees Receivable | Agent Annual Fees Receivable - Agent annual fees receivable, net of estimated allowances for uncollectible accounts were approximately $2.4 million and $2.3 million as of December 31, 2023 and 2022, respectively, and are recorded in prepaid and other current assets on the consolidated balance sheet. The agent annual fees receivable represents the $600 fee, increased from $500 in 2022, that agents pay on their first sale or their one-year anniversary date, which is recognized as a reduction to cost of revenue ratably over the year in which the fee pertains. The Company estimates the allowance for uncollectible accounts based on historical write-off experience each period. |
Property and Equipment | Property and Equipment — Property and equipment is stated at cost, less accumulated depreciation. Maintenance and repairs are charged to expense when incurred. Additions and improvements that extend the economic useful life of the asset are capitalized and depreciated over the remaining useful lives of the assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any resulting gain or loss is reflected in current earnings. Depreciation is provided using the straight-line method in amounts considered to be sufficient to amortize the cost of the assets to operations over their estimated useful lives, as follows: Asset category Depreciable life Vehicles 7 years Computers and equipment 3 — 5 years Furniture and fixtures 7 years Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets might not be recoverable. Recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets were considered to be impaired, an impairment loss would be recognized as the difference between the fair value and carrying value when the carrying amount of the asset exceeds the fair value of the asset. To date, no such impairment has occurred. |
Business Combinations | Business Combinations — The Company accounts for its business combinations under the provisions of Accounting Standards Codification (“ASC”) Topic 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed are recorded at the date of acquisition at their respective fair values. For transactions that are business combinations, the Company evaluates the existence of goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. A fair value measurement is determined as the price received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In the context of acquisition accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The estimated fair values reflected in the acquisition accounting rely on management’s judgment and the expertise of a third-party valuation firm engaged to assist in concluding on the fair value measurements. The estimated fair value of identifiable intangible assets, primarily consisting of agent relationships, tradenames customer relationships, know-how and technology, was determined using relief-from-royalty method. The most significant assumptions under the relief-from-royalty method used to value trade names include estimated remaining useful life, expected future revenue, annual agent revenue attrition, costs to develop new agents, charges for contributory assets, tax rate, discount rate and tax amortization benefit. The most significant variables in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates based on the risk inherent in the acquired assets, specific risks, industry beta and capital structure of guideline companies. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of Management, and such variations may be significant to estimated values. The Company includes the results of operations from the acquisition date in the financial statements for all businesses acquired. |
Asset Acquisitions | Asset Acquisitions — The Company follows the guidance in ASC 805-10 for determining the appropriate accounting treatment for asset acquisitions. ASC 805-10 provides an initial fair value screen to determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If the initial screening test is not met, the asset is considered a business based on whether there are inputs and substantive processes in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived. If the acquisition is deemed to be a business, the acquisition method of accounting is applied. Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value. If the transaction is deemed to be an asset acquisition, the cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values. |
Mortgage Loans Held for Sale | Mortgage Loans Held for Sale —Mortgage loans held for sale are carried at fair value under the fair value option with changes in fair value recorded in other service revenue on the statements of operations. The fair value of mortgage loans held for sale is typically calculated using observable market information including pricing from actual market transactions, purchaser commitment prices, or broker quotations. The fair value of mortgage loans held for sale covered by purchaser commitments is generally based on commitment prices. The fair value of mortgage loans held for sale not committed to a purchaser is generally based on current delivery pricing using best execution pricing. |
Intangible Assets, Net | Intangible Assets, Net — Intangible assets, net is comprised of definite-lived intangibles and capitalized internal use software. Definite-lived intangibles — The Company’s definite-lived intangible assets primarily consist of trade names, agent relationships, customer relationships, know-how and technology acquired as part of the Company’s business acquisitions. For definite-lived intangible assets, whenever impairment indicators are present, the Company performs a review for impairment. The Company calculates the undiscounted value of the projected cash flows associated with the asset, or asset group, and compares this estimated amount to the carrying amount. If the carrying amount is found to be greater, the Company will record an impairment loss for the excess of book value over the fair value. In addition, in all cases of an impairment review, the Company will reevaluate the remaining useful lives of the assets and modify them, as appropriate. Currently, trade names, agent relationships, customer relationships, know-how and software development have a useful life estimated at ten years, seven years, eight years, five years and five years, respectively. Capitalized internal use software — Costs incurred in the preliminary stages of website and software development are expensed as incurred. Once an application has reached the development stage, direct internal and external costs relating to upgrades or enhancements that meet the capitalization criteria are capitalized in capitalized software, net and amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs (including those costs in the post-implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the websites (or software) that result in added functionality, in which case the costs are capitalized as well. Capitalized software costs are amortized over the expected useful lives of the applicable software and such amortization is recorded in technology and development on the statement of operations. Currently, capitalized software costs for internal use have a useful life estimated at five years. Estimated useful lives of website and software development activities are reviewed annually or whenever events or changes in circumstances indicate that intangible assets may be impaired and are adjusted as appropriate to reflect upcoming development activities that may include significant upgrades or enhancements to the existing functionality. |
Goodwill | Goodwill - Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Goodwill is assessed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. Under the authoritative guidance issued by the FASB, the Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the goodwill impairment test is performed. The goodwill impairment test requires the Company to estimate the fair value of the reporting unit and to compare the fair value of the reporting unit with its carrying amount. If the fair value exceeds the carrying amount, then no impairment is recognized. If the carrying amount recorded exceeds the fair value calculated, then an impairment charge is recognized for the difference. The judgments made in determining the projected cash flows used to estimate the fair value can materially impact the Company’s financial condition and results of operations. There was no impairment of goodwill for the year ended December 31, 2023. |
Revenue Recognition | Revenue Recognition — The Company applies the provisions of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when a performance obligation is satisfied. The Company has utilized the practical expedient in ASC 606 and elected not to capitalize contract costs for contracts with customers with durations less than one year. The Company does not have significant remaining unfulfilled performance obligations or contract balances. The Company generates revenue from real estate brokerage services which consists of commissions generated from real estate transactions, which the Company classifies as gross commission income. The Company also generates revenues through mortgage lending, SaaS solutions, as well as title and insurance services, which the Company classifies as other service revenue. Revenues from real estate brokerage services The Company’s real estate brokerage services revenue consists substantially of commissions generated from real estate brokerage services. The Company is contractually obligated to provide for the fulfillment of transfers of real estate between buyers and sellers. The Company provides these services itself and controls the services of its agents necessary to legally transfer the real estate. Correspondingly, the Company is defined as the principal. The Company, as principal, satisfies its obligation upon the closing of a real estate transaction. The Company has concluded that agents are not employees of the Company, rather deemed to be independent contractors. Upon satisfaction of its obligation, the Company recognizes revenue in the gross amount of consideration it is entitled to receive. The transaction price is calculated by applying the Company’s portion of the agreed-upon commission rate to the property’s selling price. The Company may provide services to the buyer, seller, or both parties to a transaction. When the Company provides services to the seller in a transaction, it recognizes revenue for its portion of the commission, which is calculated as the sales price multiplied by the commission rate less the commission separately distributed to the buyer’s agent, or the “sell” side portion of the commission. When the Company provides services to the buyer in a transaction, the Company recognizes revenue in an amount equal to the sales price for the property multiplied by the commission rate for the “buy” side of the transaction. In instances in which the Company represents both the buyer and the seller in a transaction, it recognizes the full commission on the transaction. Commission revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company’s customers remit payment for the Company’s services to the title company or attorney closing the sale of property at the time of closing. The Company receives payment upon close of property or within days of the closing of a transaction. The Company is not entitled to any commission until the performance obligation is satisfied and is not owed any commission for unsuccessful transactions, even if services have been provided. Revenues from mortgage services The revenue streams for the Company’s mortgage lending services business are primarily comprised of gains and losses from loans sold, and origination and other fees. The majority of these revenue streams are exempted from ASC 606, as the scope of the standard does not apply to revenue on contracts accounted for under ASC 860 Transfers and Servicing. Origination and other fees are not specifically separable from actual mortgage loans. The gain on sale of mortgage loans represents the difference between the net sales proceeds and the carrying value of the mortgage loans sold, including the servicing rights release premiums and is recorded in the statement of operations in other service revenue. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity. Servicing rights release premiums represent revenues earned when the risk and rewards of ownership of servicing rights are transferred to third parties. Retail origination fees are principally revenues earned from loan originations. Direct loan origination costs and expenses associated with the loans are charged to expenses when the loans are sold. Interest income is interest earned on originated loans prior to the sale of the asset. Revenues from technology The Company generates revenue from subscription and services related to the use of the LiveBy platform. The SaaS contracts are generally annual contracts paid monthly in advance of service and cancellable upon 30 days’ notice after the first year. The Company’s subscription arrangements do not provide customers with the right to take possession of the software supporting the platform. Subscription revenue, which includes support, is recognized on a straight-line basis over the non-cancellable contractual term of the arrangement, generally beginning on the date that the Company’s service is made available to the customer, and recorded as other service revenue in the statement of operations. Revenues from title services The Company’s title services revenue includes fees charged for title search and examination, property settlement and title insurance services provided in association with property acquisitions and refinance transactions. The Company provides the title search and property settlement services itself and controls the services before they are transferred to its customers since the Company is primarily responsible for fulfilling the promise and also has full discretion in establishing the price for the settlement services (except in states where fees are set statutorily). As such, the Company is defined as the principal. As principal, the Company satisfies its obligation upon the closing of a real estate transaction. Upon satisfaction of its obligation, the Company recognizes revenue in the gross amount of consideration the Company is entitled to receive. The transaction price for title and property settlement services is determined by the fixed fees the Company charges for its services. The Company provides services to the buyers and sellers involved in the purchase transaction, as well as to the borrower in a refinance transaction. Title and property settlement revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company is not entitled to any title and property settlement revenue until the performance obligation is satisfied and is not owed any consideration for unsuccessful transactions, even if services have been provided. For title insurance services, the Company works in conjunction with insurance underwriters to perform these services, obtains the insurance policy premiums associated with title insurance on behalf of customers and remits the policy premium to the insurance underwriters. Since the insurance underwriter is ultimately providing the insurance policy to the borrower, the Company is not responsible for fulfilling the promise to provide the insurance. Additionally, the Company does not have discretion in dictating the price for the insurance policy, which is set by each jurisdiction and is either filed by insurance underwriters or set by the state insurance commissioners. Therefore, the Company does not control the specified service provided by the insurance underwriter. As such, in these circumstances, the Company acts as an agent. As the agent, the Company satisfies its obligation upon the closing of a real estate transaction. Upon satisfaction of its obligation, the Company recognizes revenue in the net amount of consideration the Company is entitled to receive, which is its fee for brokering the insurance policy less any consideration paid to the insurance underwriters. The transaction price for title insurance services is fixed, based on statutory rates depending on the jurisdiction. The Company negotiates with insurance underwriters the percentage they receive, and the rest is recognized as revenue. Title insurance revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company is not entitled to any title insurance revenue until the performance obligation is satisfied and is not owed any consideration for unsuccessful transactions, even if services have been provided. Revenues from insurance agency services The revenue streams for the Company’s insurance agency services business are primarily comprised of new and renewal commissions paid by insurance carriers. The transaction price is set as the estimated commissions to be received over the term of the policy based upon an estimate of premiums placed, policy changes and cancellations, net of restraint. The commissions are earned at the effective date of the associated policies when control of the policy transfers to the client. The Company is also eligible for certain contingent commissions from insurers based on the attainment of specific metrics (i.e., volume growth, loss ratios) related to underlying polices placed. Revenue for contingent commissions is estimated based on historical and current evidence of achievement towards each insurer’s annual respective metrics and is recorded as the underlying policies that contribute to the achievement are placed. Due to the uncertainty of the amount of contingent consideration that will be received, the estimated revenue is constrained to an amount that is probable to not have a significant negative adjustment. Contingent consideration is generally received in the first quarter of the subsequent year. |
Commission and other agent-related costs | Commission and other agent-related costs — Commission and other agent-related costs consists primarily of agent commissions, less fees paid by the Company to agents, order fulfillment, share-based compensation for agents, title searches, and direct cost to fulfill the services provided. |
Operations and support | Operations and support — Operations and support consist primarily of direct cost to fulfill the services from our mortgage lending, title services, insurance services and other services provided. |
Technology and development | Technology and development — Technology and development expenses primarily include personnel costs, including base pay, bonuses, benefits, and share-based compensation, related to ongoing development and maintenance of our proprietary software for use by our agents, customers, and support staff. Technology and development expenses also include amortization of capitalized software and development costs, data licenses, other software, and equipment costs, as well as infrastructure and operational expenses, such as, for data centers, communication, and hosted services. |
General and Administrative | General and Administrative — General and administrative expenses consist primarily of personnel costs, share-based compensation, and fees for professional services. Professional services principally consist of external legal, audit, and tax services. |
Marketing | Marketing — Marketing expenses consist primarily of marketing and promotional materials. Marketing costs are expensed as they are incurred. |
Leases | Leases —The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. |
Share-based Compensation | Share-based Compensation — Share-based compensation for employees and non-employees (principally independent contractor agents) is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are recognized when they occur. Fully vested restricted stock awards are measured on grant date at fair value. |
Common Stock Warrant | Common Stock Warrant — The Company accounts for common stock warrants as either equity instruments or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), depending on the specific terms of the warrant agreement. If warrants are issued in exchange for services the Company evaluates whether they should be accounted for in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). Under ASC 718, the warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the issuing entity can be required under any circumstances to settle the warrant by transferring cash or other assets. For additional discussion on warrants, see Note 11 – Equity-classified Warrants. |
Derivative financial instruments | Derivative financial instruments — The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (“interest rate lock commitments”). Interest rate lock commitments on loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees from potential borrowers, are recorded at fair value in derivative assets and liabilities, with changes in fair value recorded in the statement of operations in other service revenue. Fair value is based upon changes in the fair value of the underlying mortgages, estimated to be realized upon sale into the secondary market. Fair value estimates take into account interest rate lock commitments not expected to be exercised by customers, commonly referred to as fall out. The Company manages the interest rate risk associated with its outstanding interest rate lock commitments and loans held for sale by entering into derivative loan instruments such as forward loan commitments, mandatory delivery commitments, options and future contracts, whereby the Company maintains the right to deliver residential loans to purchasers in the future at a specified yield. Fair value is based upon estimated amounts that the Company would receive or pay to terminate the commitment at the reporting date. The Company takes into account various factors and strategies in determining the portion of the mortgage pipeline it wants to economically hedge. Management expects the derivatives used to manage interest rate risk will experience changes in fair value opposite to changes in the fair value of the derivative loan commitments and loans held for sale, thereby reducing earnings volatility. |
Income Taxes | Income Taxes — Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the combined financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. The Company will establish a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before either the Company is able to realize their benefit or that future deductibility is uncertain. The Company believes that it is currently more likely than not that its deferred tax assets will not be realized and as such, it has recorded a full valuation allowance for these assets. The Company evaluates the likelihood of the ability to realize deferred tax assets in future periods on a quarterly basis, and when appropriate evidence indicates it would release its valuation allowance accordingly. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income, and accumulated deficit, the Company provided a full valuation allowance against the U.S. tax assets resulting from the tax losses as of December 31, 2023 and 2022. |
Recently Implemented Accounting Pronouncements | Recently Implemented Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” . The provisions of ASU 2019-12 include eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance is effective for the reporting period beginning after December 15, 2021, and the interim periods therein. The Company adopted this standard effective January 1, 2022 and the application of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. In addition, an entity will have to disclose significantly more information about allowances and credit quality indicators. Based on the Company’s status as a smaller reporting company, the new standard is effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted this standard effective January 1, 2023 and the application of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06 Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) . The objective of the amendments in this ASU is to address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The amendments in this ASU reduce the number of accounting models for convertible debt instruments and redeemable convertible preference shares. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. The amendments in the ASU are effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted the standard during the quarter ended June 30, 2023, and the impact of the new standard on its consolidated financial statements was immaterial. Recent Upcoming Accounting Pronouncement In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 – Segment Reporting (Topic 280) (“ASU 2023-07”). ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses. The amendments in this update require, among other things, that a public company disclose on an annual and interim basis significant segment expense, as well as other segment expenses, that are regularly provided to the CODM. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, early adoption is permitted. The Company is currently evaluating the effect the amendments in ASU 2023-07 will have on its segment disclosures. In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740) (“ASU 2023-09”). ASU 2023-09 improves reporting for income taxes, primarily by requiring disclosure of specific categories in the tax rate reconciliation and providing additional annual information for reconciling items that meet a quantitative threshold. The amendments in ASU 2023-09 also require additional annual information regarding income taxes paid, as well as other additional disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, early adoption is permitted. The Company is currently evaluating the effect the amendments in ASU 2023-09 will have on its tax disclosures. The FASB issued an ASU that provides temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance in this ASU is optional and may be elected now through December 31, 2024 as reference rate reform activities occur. We will continue to evaluate the impact of this ASU; however, we currently expect to avail ourselves of such optional expedients and exceptions should our modified contracts meet the required criteria. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives | Depreciation is provided using the straight-line method in amounts considered to be sufficient to amortize the cost of the assets to operations over their estimated useful lives, as follows: Asset category Depreciable life Vehicles 7 years Computers and equipment 3 — 5 years Furniture and fixtures 7 years |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Amount of Goodwill | The were no changes in the carrying value of goodwill by segment during 2023 as noted in the table below (amount in thousands): Real Estate Mortgage Technology Other 1 Total Balance at December 31, 2023 and 2022 $ 2,690 $ 10,428 $ 4,168 $ 8,321 $ 25,607 (1) Other comprises goodwill not assigned to a reportable segment. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following at the dates indicated (amount in thousands): December 31, 2023 2022 Computers and equipment $ 802 $ 774 Furniture and fixtures 1,263 1,269 Leasehold improvements 1,711 1,711 Total property and equipment 3,776 3,754 Accumulated depreciation (1,436) (809) Total property and equipment, net $ 2,340 $ 2,945 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Components of Intangible Assets, Net | Intangible assets, net, consisted of the following at the dates indicated (amount in thousands): December 31, 2023 Gross Carrying Accumulated Net Carrying Trade names $ 7,956 $ (2,058) $ 5,898 Software development 14,159 (5,517) 8,642 Customer relationships 8,180 (3,199) 4,981 Agent relationships 6,016 (1,825) 4,191 Know-how 430 (233) 197 $ 36,741 $ (12,832) $ 23,909 December 31, 2022 Gross Accumulated Net Carrying Trade names $ 7,956 $ (1,263) $ 6,693 Software development 12,349 (3,029) 9,320 Customer relationships 8,180 (2,085) 6,095 Agent relationships 5,856 (988) 4,868 Know-how 430 (147) 283 $ 34,771 $ (7,512) $ 27,259 |
Schedule of Estimated Future Amortization Expense for Definite-Lived Intangible Assets | As of December 31, 2023, the estimated future amortization expense for definite-lived intangible assets will be (amount in thousands): Years Ended December 31, 2024 $ 5,447 2025 5,194 2026 4,558 2027 3,559 2028 2,419 Thereafter 2,732 Total $ 23,909 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Components of Accrued Liabilities | Accrued liabilities consisted of the following at the dates indicated (amount in thousands): December 31, December 31, Deferred annual fee $ 948 $ 1,100 Due to sellers 488 857 Accrued compensation 526 884 Other accrued liabilities 719 562 Total accrued liabilities $ 2,681 $ 3,403 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long-term debt consisted of the following at the dates indicated (amount in thousands): December 31, December 31, 3.75% Small Business Administration installment loan due May 2050 $ 117 $ 151 Convertible note payable, less unamortized costs $129 3,372 — Director and Officer (D&O) insurance policy promissory note 1 179 246 Executive and Officer (E&O) insurance policy promissory note 2 215 296 Total debt 3,883 693 Long-term debt, current portion (416) (564) Long-term debt, net of current portion $ 3,467 $ 129 (1) The 2023 D&O note carries a 6.85% interest rate and is payable quarterly with the last quarterly payment due in July 2024. The 2022 D&O note carried a 6.0% interest rate and final payment was made in April 2023. |
Schedule of Debt Maturities and Principal Amortization | Debt maturities and principal amortization of our consolidated existing debt as of December 31, 2023 for the next five years and thereafter are as follows (in thousands): Calendar Year Amount 2024 $ 394 2025 3,372 2026 — 2027 — 2028 — Thereafter 117 Total $ 3,883 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022, respectively (amount in thousands): December 31, 2023 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 8,602 $ — $ 8,602 Derivative assets — — 32 32 Derivative liabilities — — (52) (52) $ — $ 8,602 $ (20) $ 8,582 December 31, 2022 Level 1 Level 2 Level 3 Total Mortgage loans held for sale $ — $ 3,694 $ — $ 3,694 Derivative assets — — 7 7 $ — $ 3,694 $ 7 $ 3,701 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Activity Related to Restricted Stock Awards and Units | Shares Weighted Average Nonvested at December 31, 2021 717,097 $ 11.02 Granted 1,097,045 8.72 Vested (302,869) (13.12) Forfeited (136,128) (15.88) Nonvested at December 31, 2022 1,375,145 $ 14.23 Granted 829,335 4.42 Vested (323,654) (12.15) Forfeited (114,409) (14.23) Nonvested at December 31, 2023 1,766,417 $ 10.01 Shares Weighted Average Nonvested at December 31, 2021 — $ — Granted 392,564 6.58 Vested — — Forfeited — — Nonvested at December 31, 2022 392,564 $ 6.58 Granted 2,004,147 4.67 Vested (31,321) (7.04) Forfeited (174,093) (5.10) Nonvested at December 31, 2023 2,191,297 $ 4.94 |
Summary of Stock Option Activity Under the Plans | A summary of stock option activity under the 2017 and 2019 Plans are as follows: Stock Options Options Weighted Weighted Aggregate Balance at December 31, 2021 43,996 $ 20.46 8.5 $ 510 Granted 103,711 8.22 9.67 — Exercised — — — — Balance at December 31, 2022 147,707 $ 11.87 9.32 $ — Granted — — — — Exercised — — — — Balance at December 31, 2023 147,707 $ 11.87 9.32 — Options exercisable at December 31, 2023 147,707 $ 11.87 9.32 $ — |
Schedule of Stock Based Compensation | Stock based compensation related to the Company’s 2019 Plan is reported within the consolidated statement of operations as follows (amount in thousands): Year Ended December 31, 2023 2022 Commission and other agent-related cost $ 3,934 $ 2,920 Operations and support 614 609 Technology and development 185 79 General and administrative 7,857 5,334 Marketing 404 189 Total stock-based compensation $ 12,994 $ 9,131 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule of Lease Cost | The table below presents certain information related to the lease costs for the Company’s operating leases for the periods indicated (amount in thousands): Year Ended December 31, 2023 2022 Operating lease expense $ 1,663 $ 1,856 Short-term lease expense 701 550 Total lease cost $ 2,364 $ 2,406 |
Schedule of Balance Sheet Location | Right of use lease assets and lease liabilities for our operating leases were recorded in the consolidated balance sheet as follows (amount in thousands): December 31, 2023 2022 Assets Lease right of use assets $ 4,150 $ 7,363 Total lease assets $ 4,150 $ 7,363 Liabilities Current liabilities: Lease liability - current portion $ 1,504 $ 1,609 Noncurrent liabilities: Lease liability, net of current portion 3,824 5,241 Total lease liability $ 5,328 $ 6,850 |
Schedule of Weighted Average Remaining Lease Term and Discount Rate | The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of: December 31, 2023 2022 Weighted average remaining lease term (in years) - operating leases 3.9 4.7 Weighted average discount rate - operating leases 6.33 % 6.19 % |
Schedule of Future Lease Payments | Future lease payments included in the measurement of lease liabilities on the consolidated balance sheet as of December 31, 2023, for the following five fiscal years and thereafter were as follows (amount in thousands): Years Ended December 31, Operating Leases 2024 $ 1,785 2025 1,479 2026 1,066 2027 969 2028 709 2028 and thereafter — Total Minimum Lease Payments 6,008 Less effects of discounting (680) Present value of future minimum lease payments $ 5,328 |
Net Loss per Share Attributab_2
Net Loss per Share Attributable to Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss | The calculation of basic and diluted net loss per share attributable to common stock was as follows (amount in thousands except share data): Year Ended December 31, 2023 2022 Numerator: Net loss attributable to common stock—basic and diluted $ (23,981) $ (27,626) Denominator: Weighted- average basic and diluted shares outstanding 16,265,993 16,001,367 Net loss per share attributable to common stock—basic and diluted $ (1.47) $ (1.73) |
Schedule of Outstanding Shares of Common Stock Equivalents | 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. Year Ended December 31, 2023 2022 Stock options 147,707 147,707 Non-vested restricted stock awards 1,766,417 1,375,145 Non-vested restricted stock units 2,191,297 392,564 Common stock warrants 240,100 240,100 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Provision for Income Taxes | The provision for income taxes consists of the following (amount in thousands): December 31, 2023 2022 Current provision: Federal $ — $ — State 63 22 Total current 63 22 Deferred expense (benefit): Federal 135 40 State (50) (116) Total deferred 85 (76) Income tax expense (benefit) $ 148 $ (54) |
Schedule of Reconciliation of the Statutory U.S. Federal Rate to the Company's Effective Tax Rate | A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate consists of the following (amount in thousands): For the Years Ended December 31, 2023 2022 Provision for federal income taxes at statutory rates $(5,006) 21 % $(5,822) 21 % Provision for state income taxes, net of federal benefit (388) 2 % (505) 2 % Change in valuation allowance 4,785 (20) % 6,274 (23) % Nondeductible expenses 10 — % 6 — % Return to provision adjustments 737 (3) % — — % Other 10 — % (7) — % Income tax expense (benefit) $148 — % $(54) — % Effective Tax Rate 0.6% 0.2% |
Schedule of Tax Effects of the Temporary Differences and Carryforwards | The tax effects of the temporary differences and carryforwards that give rise to the deferred tax assets consist of the following (amount in thousands): December 31, 2023 2022 Deferred tax assets Net operating loss carryforward $ 11,376 $ 9,383 Property and equipment 112 — Reserves 134 94 Share based compensation 3,963 2,270 Interest expense carryforward 60 18 Research and development credits 35 35 Lease liability 1,228 1,566 Basis in partnership 2 2 Charitable contributions carryover 36 28 Total deferred tax assets 16,946 13,396 Deferred tax liabilities Property and equipment — (54) Intangibles (2,693) (3,247) Internally developed software (499) (692) Unrealized gain/loss — (29) Right-of-Use assets (956) (1,259) Prepaid expenses (269) (287) Total deferred tax liabilities (4,417) (5,568) Valuation allowance (12,911) (8,125) Deferred tax liability, net $ (382) $ (297) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Key Operating Data for the Reportable Segments | Key operating data for the reportable segments for the years ended December 31, 2023 and 2022 and are set forth in the tables below (amount in thousands). The Company has included the results of the acquisitions from the acquisition date. Year Ended Revenue 2023 2022 Real Estate Brokerage $ 325,405 $ 390,616 Mortgage 7,251 9,637 Technology 3,172 2,709 Corporate and other services (a) 9,398 10,002 Total revenue $ 345,226 $ 412,964 Year Ended Adjusted EBITDA 2023 2022 Real Estate Brokerage $ 5,674 $ 2,025 Mortgage (1,866) (2,902) Technology (1,644) (1,440) Total Segment Adjusted EBITDA 2,164 (2,317) Corporate and other services (a) (6,275) (9,910) Total Company Adjusted EBITDA (4,111) (12,227) Depreciation and amortization (5,947) (5,346) Other expense (income), net (580) (903) Income tax expense (benefit) (148) 54 Stock based compensation (12,994) (9,131) Other non-cash items and transactions costs (201) (73) Net loss $ (23,981) $ (27,626) _________________________________________ (a) Transactions between segments are eliminated in consolidation. Such amounts are eliminated through the Corporate and other services line. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property and Equipment, Net | ||
Net loss | $ 23,981,000 | $ 27,626,000 |
Cash and cash equivalents | 7,399,000 | 8,320,000 |
Agent annual fees receivable | 2,400,000 | 2,300,000 |
Agents fee on first sale | 600,000 | $ 500 |
Impairment of goodwill | $ 0 | |
Trade names | ||
Property and Equipment, Net | ||
Estimated useful life | 10 years | |
Agent relationships | ||
Property and Equipment, Net | ||
Estimated useful life | 7 years | |
Customer relationships | ||
Property and Equipment, Net | ||
Estimated useful life | 8 years | |
Know-how relationships | ||
Property and Equipment, Net | ||
Estimated useful life | 5 years | |
Software development | ||
Property and Equipment, Net | ||
Estimated useful life | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives (Details) | Dec. 31, 2023 |
Vehicles | |
Summary of Significant Accounting Policies | |
Estimated useful lives | 7 years |
Computers and equipment | Minimum | |
Summary of Significant Accounting Policies | |
Estimated useful lives | 3 years |
Computers and equipment | Maximum | |
Summary of Significant Accounting Policies | |
Estimated useful lives | 5 years |
Furniture and fixtures | |
Summary of Significant Accounting Policies | |
Estimated useful lives | 7 years |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Thousands | 11 Months Ended | 12 Months Ended | |||
Feb. 08, 2022 USD ($) shares | Jan. 24, 2022 USD ($) shares | Dec. 31, 2022 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) acquisition | |
Acquisitions | |||||
Number of acquisitions | acquisition | 2 | ||||
Acquisition date fair value of shares | $ 45 | $ 6,168 | |||
Goodwill | $ 25,607 | $ 25,607 | $ 25,607 | ||
Cornerstone | |||||
Acquisitions | |||||
Consideration transferred for acquisition | $ 4,700 | ||||
Cash consideration | $ 1,100 | ||||
Shares of common stock transferred (in shares) | shares | 267,470 | ||||
Acquisition date fair value of shares | $ 3,600 | ||||
Cash consideration due within one year of acquisition date | $ 600 | ||||
iPro | |||||
Acquisitions | |||||
Consideration transferred for acquisition | $ 4,200 | ||||
Cash consideration | $ 1,800 | ||||
Shares of common stock transferred (in shares) | shares | 167,824 | ||||
Acquisition date fair value of shares | $ 2,300 | ||||
Cash consideration due within one year of acquisition date | 100 | ||||
Cornerstone and IPro | |||||
Acquisitions | |||||
Mortgage loans held for sale | 3,500 | ||||
Lease right of use assets | 600 | ||||
Lease liabilities | 600 | ||||
Accrued liabilities | 400 | ||||
Warehouse lines of credit | 3,400 | ||||
Finite-lived intangible assets | 3,600 | ||||
Goodwill | 4,900 | ||||
Goodwill expected to be deductible for income tax purposes | $ 1,400 | ||||
Increase in fair value of assumed finite lived intangible assets | 500 | ||||
Increase in other assets | 300 | ||||
Decrease in goodwill | 500 | ||||
Increase in deferred tax liabilities | $ 100 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Carrying Value | |
Beginning balance | $ 25,607 |
Ending balance | 25,607 |
Corporate, Non-Segment | |
Carrying Value | |
Beginning balance | 8,321 |
Ending balance | 8,321 |
Real Estate Brokerage | Operating segments | |
Carrying Value | |
Beginning balance | 2,690 |
Ending balance | 2,690 |
Mortgage | Operating segments | |
Carrying Value | |
Beginning balance | 10,428 |
Ending balance | 10,428 |
Technology | Operating segments | |
Carrying Value | |
Beginning balance | 4,168 |
Ending balance | $ 4,168 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property and Equipment, Net | ||
Total property and equipment | $ 3,776 | $ 3,754 |
Accumulated depreciation | (1,436) | (809) |
Total property and equipment, net | 2,340 | 2,945 |
Depreciation expense | 600 | 600 |
Computers and equipment | ||
Property and Equipment, Net | ||
Total property and equipment | 802 | 774 |
Furniture and fixtures | ||
Property and Equipment, Net | ||
Total property and equipment | 1,263 | 1,269 |
Leasehold improvements | ||
Property and Equipment, Net | ||
Total property and equipment | $ 1,711 | $ 1,711 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Components of Intangible Assets, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Intangible assets | ||
Gross Carrying Amount | $ 36,741 | $ 34,771 |
Accumulated Amortization | (12,832) | (7,512) |
Net Carrying Value | 23,909 | 27,259 |
Trade names | ||
Intangible assets | ||
Gross Carrying Amount | 7,956 | 7,956 |
Accumulated Amortization | (2,058) | (1,263) |
Net Carrying Value | 5,898 | 6,693 |
Software development | ||
Intangible assets | ||
Gross Carrying Amount | 14,159 | 12,349 |
Accumulated Amortization | (5,517) | (3,029) |
Net Carrying Value | 8,642 | 9,320 |
Customer relationships | ||
Intangible assets | ||
Gross Carrying Amount | 8,180 | 8,180 |
Accumulated Amortization | (3,199) | (2,085) |
Net Carrying Value | 4,981 | 6,095 |
Agent relationships | ||
Intangible assets | ||
Gross Carrying Amount | 6,016 | 5,856 |
Accumulated Amortization | (1,825) | (988) |
Net Carrying Value | 4,191 | 4,868 |
Know-how | ||
Intangible assets | ||
Gross Carrying Amount | 430 | 430 |
Accumulated Amortization | (233) | (147) |
Net Carrying Value | $ 197 | $ 283 |
Intangible Assets, Net - Sche_2
Intangible Assets, Net - Schedule of Estimated Future Amortization Expense for Definite-Lived Intangible Assets (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
2024 | $ 5,447 |
2025 | 5,194 |
2026 | 4,558 |
2027 | 3,559 |
2028 | 2,419 |
Thereafter | 2,732 |
Total | $ 23,909 |
Intangible Assets, Net - Narrat
Intangible Assets, Net - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Software development | ||
Intangible assets | ||
Amortization expense for capitalized software and trade names | $ 2.8 | $ 2.2 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Deferred annual fee | $ 948 | $ 1,100 |
Due to sellers | 488 | 857 |
Accrued compensation | 526 | 884 |
Other accrued liabilities | 719 | 562 |
Total accrued liabilities | $ 2,681 | $ 3,403 |
Warehouse Lines of Credit (Deta
Warehouse Lines of Credit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Warehouse Lines of Credit | |||
Warehouse lines of credit | $ 8,355 | $ 3,580 | |
30-Day SOFR | Minimum | |||
Warehouse Lines of Credit | |||
Spread on variable rate | 2.625% | ||
Master loan agreement | |||
Warehouse Lines of Credit | |||
Warehouse lines of credit | $ 3,500 | 1,700 | |
Master loan agreement | 30-Day SOFR | Maximum | |||
Warehouse Lines of Credit | |||
Effective interest rate | 5% | ||
Warehousing credit and security agreement | |||
Warehouse Lines of Credit | |||
Maximum borrowing capacity | $ 10,000 | ||
Warehouse lines of credit | $ 4,800 | $ 0 | |
Warehousing credit and security agreement | 30-Day SOFR | Maximum | |||
Warehouse Lines of Credit | |||
Effective interest rate | 5.75% | ||
Warehousing credit and security agreement | 30-Day SOFR | Minimum | |||
Warehouse Lines of Credit | |||
Interest rate | 2% | ||
Warehousing credit and security agreement | Prime rate | |||
Warehouse Lines of Credit | |||
Maximum borrowing capacity | $ 7,500 | 15,000 | |
Mortgage participation purchase agreement | |||
Warehouse Lines of Credit | |||
Maximum borrowing capacity | 7,500 | ||
Warehouse lines of credit | $ 0 | $ 800 | |
Agreement expiration | $ 7,500 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Oct. 31, 2023 | Dec. 31, 2022 | Oct. 31, 2022 |
Debt | ||||
Total debt | $ 3,883 | |||
Long-term debt - current portion | $ (416) | $ (564) | ||
3.75% Small Business Administration Installment Loan Due May 2050 | ||||
Debt | ||||
Interest rate per annum | 3.75% | |||
6.0% Director And Officer Insurance Policy Promissory Note Due July 31, 2023 | ||||
Debt | ||||
Interest rate per annum | 6.85% | 6% | ||
9.0 % Executive And Officer Insurance Policy Promissory Note Due August 1, 2023 | ||||
Debt | ||||
Interest rate per annum | 13.50% | 9% | ||
Notes Payable | ||||
Debt | ||||
Total debt | $ 3,883 | $ 693 | ||
Long-term debt - current portion | (416) | (564) | ||
Long-term debt, net of current portion | 3,467 | 129 | ||
Notes Payable | 3.75% Small Business Administration Installment Loan Due May 2050 | ||||
Debt | ||||
Total debt | 117 | 151 | ||
Notes Payable | 6.0% Director And Officer Insurance Policy Promissory Note Due July 31, 2023 | ||||
Debt | ||||
Total debt | 179 | 246 | ||
Notes Payable | 9.0 % Executive And Officer Insurance Policy Promissory Note Due August 1, 2023 | ||||
Debt | ||||
Total debt | 215 | 296 | ||
Senior Secured Convertible Promissory Note | ||||
Debt | ||||
Unamortized costs | 129 | |||
Total debt | $ 3,372 | $ 0 |
Debt - Schedule of Debt Maturit
Debt - Schedule of Debt Maturities and Principal Amortization (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2024 | $ 394 |
2025 | 3,372 |
2026 | 0 |
2027 | 0 |
2028 | 0 |
Thereafter | 117 |
Total debt | $ 3,883 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Apr. 13, 2023 | Dec. 31, 2023 | |
30-Day SOFR | Minimum | ||
Debt | ||
Spread on variable rate | 2.625% | |
Senior Secured Convertible Promissory Note | Private Placement | ||
Debt | ||
Principal amount | $ 3,500 | |
Placement agent fee paid | 175 | |
Net proceeds from issuance of convertible notes | 3,300 | |
Purchaser expenses | $ 25 | |
Initial fixed conversion price (in dollars per share) | $ 6 | |
Maximum ownership holding percentage post conversion | 4.99% | |
Notice term for adjustment of ownership limitation | 61 days | |
Maximum adjusted ownership holding percentage post conversion | 9.99% | |
Senior Secured Convertible Promissory Note | Private Placement | Minimum | ||
Debt | ||
Interest rate per annum | 8% | |
Senior Secured Convertible Promissory Note | Private Placement | 30-Day SOFR | ||
Debt | ||
Spread on variable rate | 5% |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value Measurements | ||
Derivative Asset Current Statement Of Financial Position Extensible Enumeration Not Disclosed Flag | true | |
Derivative Liability Statement Of Financial Position Extensible Enumeration Not Disclosed Flag | true | |
Fair Value, Recurring | ||
Fair Value Measurements | ||
Mortgage loans held for sale | $ 8,602 | $ 3,694 |
Derivative assets | 32 | 7 |
Derivative liabilities | (52) | |
Total | 8,582 | 3,701 |
Fair Value, Recurring | Level 1 | ||
Fair Value Measurements | ||
Mortgage loans held for sale | 0 | 0 |
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | |
Total | 0 | 0 |
Fair Value, Recurring | Level 2 | ||
Fair Value Measurements | ||
Mortgage loans held for sale | 8,602 | 3,694 |
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | |
Total | 8,602 | 3,694 |
Fair Value, Recurring | Level 3 | ||
Fair Value Measurements | ||
Mortgage loans held for sale | 0 | 0 |
Derivative assets | 32 | 7 |
Derivative liabilities | (52) | |
Total | $ (20) | $ 7 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Dec. 31, 2023 |
Minimum | |
Fair Value Measurements | |
Residential mortgage loans held for sale term | 30 days |
Maximum | |
Fair Value Measurements | |
Residential mortgage loans held for sale term | 90 days |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Mar. 10, 2022 | Aug. 04, 2020 | |
Equity, Class of Treasury Stock [Line Items] | ||||
Stock repurchase program remaining authorized repurchase amount | $ 4 | $ 10 | ||
Number of shares reacquired (in shares) | 0 | 686,097 | ||
Stock repurchase program authorized amount | $ 6 | |||
Underwriter warrant to purchase shares (in shares) | 240,100 | |||
Warrant exercise price (in dollars per share) | $ 11 | |||
Number of underwriters warrants exercised or expired (in shares) | 0 | |||
Common Stock | Secondary public offering | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Stock issued and sold (in shares) | 2,450,000 | |||
Public offering price (in dollars per share) | $ 2 | |||
Gross proceeds | $ 4.9 | |||
Consideration received | $ 4.2 |
Share-based Compensation - Narr
Share-based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Stock-based Compensation | ||
Weighted average grant-date fair value of options granted (in dollars per share) | $ 8.22 | |
Stock options granted (in shares) | 0 | 103,711 |
Capitalized of stock-based compensation expense | $ 0 | $ 0.2 |
Non-vested restricted stock awards | ||
Stock-based Compensation | ||
Total unrecognized compensation expense | $ 6.3 | |
Unrecognized compensation expense period for recognition | 1 year | |
Stock options | ||
Stock-based Compensation | ||
Stock options granted (in shares) | 0 | |
2017 Stock Plan | ||
Stock-based Compensation | ||
Shares authorized (in shares) | 3,182,335 | |
Stock option granted (in shares) | 2,739,261 | |
2019 Omnibus Stock Incentive Plan | ||
Stock-based Compensation | ||
Shares authorized (in shares) | 5,760,778 | |
Stock option granted (in shares) | 835,951 | |
Additional shares authorized to be issued (in shares) | 1,700,000 | 2,000,000 |
Total unrecognized compensation expense | $ 4.4 | |
Unrecognized compensation expense period for recognition | 7 months |
Share-based Compensation - Summ
Share-based Compensation - Summary of Activity Related to Restricted Stock Awards and Units (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restricted Stock Awards | ||
Shares | ||
Non-vested at beginning (in shares) | 1,375,145 | 717,097 |
Granted (in shares) | 829,335 | 1,097,045 |
Vested (in shares) | (323,654) | (302,869) |
Forfeited (in shares) | (114,409) | (136,128) |
Non-vested at ending (in shares) | 1,766,417 | 1,375,145 |
Weighted Average Grant Date Fair Value | ||
Nonvested at beginning (in dollars per share) | $ 14.23 | $ 11.02 |
Granted (in dollars per share) | 4.42 | 8.72 |
Vested (in dollars per share) | (12.15) | (13.12) |
Forfeited (in dollars per share) | (14.23) | (15.88) |
Nonvested at ending (in dollars per share) | $ 10.01 | $ 14.23 |
Restricted Stock Units | ||
Shares | ||
Non-vested at beginning (in shares) | 392,564 | 0 |
Granted (in shares) | 2,004,147 | 392,564 |
Vested (in shares) | (31,321) | 0 |
Forfeited (in shares) | (174,093) | 0 |
Non-vested at ending (in shares) | 2,191,297 | 392,564 |
Weighted Average Grant Date Fair Value | ||
Nonvested at beginning (in dollars per share) | $ 6.58 | $ 0 |
Granted (in dollars per share) | 4.67 | 6.58 |
Vested (in dollars per share) | (7.04) | 0 |
Forfeited (in dollars per share) | (5.10) | 0 |
Nonvested at ending (in dollars per share) | $ 4.94 | $ 6.58 |
Share-based Compensation - Su_2
Share-based Compensation - Summary of Stock Option Activity Under the Plans (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Options Outstanding | |||
Beginning balance (in shares) | 147,707 | 43,996 | |
Granted (in shares) | 0 | 103,711 | |
Exercised (in shares) | 0 | 0 | |
Ending balance (in shares) | 147,707 | 147,707 | 43,996 |
Options exercisable (in shares) | 147,707 | ||
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 11.87 | $ 20.46 | |
Granted (in dollars per share) | 0 | 8.22 | |
Exercised (in dollars per share) | 0 | 0 | |
Ending balance (in dollars per share) | 11.87 | $ 11.87 | $ 20.46 |
Options exercisable (in dollars per share) | $ 11.87 | ||
Weighted Average Remaining Contractual Term in Years | |||
Weighted average remaining contractual term | 9 years 3 months 25 days | 9 years 3 months 25 days | 8 years 6 months |
Weighted Average Remaining Contractual Term in Years, Granted | 9 years 8 months 1 day | ||
Options exercisable | 9 years 3 months 25 days | ||
Aggregate intrinsic value | |||
Aggregate intrinsic value (in thousands) | $ 0 | $ 0 | $ 510 |
Options exercisable | $ 0 |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Stock Based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Stock-based Compensation | ||
Total stock-based compensation | $ 12,994 | $ 9,131 |
Commission and other agent-related cost | ||
Stock-based Compensation | ||
Total stock-based compensation | 3,934 | 2,920 |
Operations and support | ||
Stock-based Compensation | ||
Total stock-based compensation | 614 | 609 |
Technology and development | ||
Stock-based Compensation | ||
Total stock-based compensation | 185 | 79 |
General and administrative | ||
Stock-based Compensation | ||
Total stock-based compensation | 7,857 | 5,334 |
Marketing | ||
Stock-based Compensation | ||
Total stock-based compensation | $ 404 | $ 189 |
Leases - Narrative (Details)
Leases - Narrative (Details) | Dec. 31, 2023 |
Minimum | |
Leases | |
Lease term | 1 year |
Maximum | |
Leases | |
Lease term | 7 years |
Leases - Lease costs (Details)
Leases - Lease costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease expense | $ 1,663 | $ 1,856 |
Short-term lease expense | 701 | 550 |
Total lease cost | $ 2,364 | $ 2,406 |
Leases - Lease position (Detail
Leases - Lease position (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Total lease assets | $ 4,150 | $ 7,363 |
Current liabilities: | ||
Lease liability - current portion | 1,504 | 1,609 |
Noncurrent liabilities: | ||
Lease liability, net of current portion | 3,824 | 5,241 |
Total lease liability | $ 5,328 | $ 6,850 |
Leases - Schedule of Weighted A
Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate (Details) | Dec. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Weighted average remaining lease term (in years) - operating leases | 3 years 10 months 24 days | 4 years 8 months 12 days |
Weighted average discount rate - operating leases | 6.33% | 6.19% |
Leases - Maturities of lease li
Leases - Maturities of lease liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Future Minimum Lease Payments | ||
2024 | $ 1,785 | |
2025 | 1,479 | |
2026 | 1,066 | |
2027 | 969 | |
2028 | 709 | |
2028 and thereafter | 0 | |
Total Minimum Lease Payments | 6,008 | |
Less effects of discounting | (680) | |
Present value of future minimum lease payments | $ 5,328 | $ 6,850 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Rent expense under leases | $ 0.4 | $ 0.5 |
Related Party | ||
Related Party Transaction [Line Items] | ||
Marketing expense | $ 0.4 | $ 0.5 |
Net Loss per Share Attributab_3
Net Loss per Share Attributable to Common Stock - Schedule of Basic and Diluted Net Loss (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator: | ||
Net loss attributable to common stock-basic | $ (23,981) | $ (27,626) |
Net loss attributable to common stock-diluted | $ (23,981) | $ (27,626) |
Denominator: | ||
Weighted-average basic shares outstanding (in shares) | 16,265,993 | 16,001,367 |
Weighted-average diluted shares outstanding (in shares) | 16,265,993 | 16,001,367 |
Net loss per share attributable to common stock - basic (in dollars per share) | $ (1.47) | $ (1.73) |
Net loss per share attributable to common stock - diluted (in dollars per share) | $ (1.47) | $ (1.73) |
Net Loss per Share Attributab_4
Net Loss per Share Attributable to Common Stock - Schedule of Outstanding Shares of Common Stock Equivalents (Details) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents (in shares) | 392,564 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents (in shares) | 147,707 | 147,707 |
Non-vested restricted stock awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents (in shares) | 1,766,417 | 1,375,145 |
Non-vested restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents (in shares) | 2,191,297 | |
Common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents (in shares) | 240,100 | 240,100 |
Income Taxes - Components of pr
Income Taxes - Components of provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current provision: | ||
Federal | $ 0 | $ 0 |
State | 63 | 22 |
Total current | 63 | 22 |
Deferred expense (benefit): | ||
Federal | 135 | 40 |
State | (50) | (116) |
Total deferred | 85 | (76) |
Income tax expense (benefit) | $ 148 | $ (54) |
Income Taxes - Effective Tax Re
Income Taxes - Effective Tax Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Effective Income Tax Rate Reconciliation, Amount | ||
Provision for federal income taxes at statutory rates | $ (5,006) | $ (5,822) |
Provision for state income taxes, net of federal benefit | (388) | (505) |
Change in valuation allowance | 4,785 | 6,274 |
Nondeductible expenses | 10 | 6 |
Return to provision adjustments | 737 | 0 |
Other | 10 | (7) |
Income tax expense (benefit) | $ 148 | $ (54) |
Effective Income Tax Rate Reconciliation, Percent | ||
Provision for federal income taxes at statutory rates | 21% | 21% |
Provision for state income taxes, net of federal benefit | 2% | 2% |
Change in valuation allowance | (20.00%) | (23.00%) |
Nondeductible expenses | 0% | 0% |
Return to provision adjustments | (3.00%) | 0% |
Other | 0% | 0% |
Income tax expense (benefit) | 0% | 0% |
Effective Tax Rate | 0.60% | 0.20% |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets | ||
Net operating loss carryforward | $ 11,376 | $ 9,383 |
Property and equipment | 112 | 0 |
Reserves | 134 | 94 |
Share based compensation | 3,963 | 2,270 |
Interest expense carryforward | 60 | 18 |
Research and development credits | 35 | 35 |
Lease liability | 1,228 | 1,566 |
Basis in partnership | 2 | 2 |
Charitable contributions carryover | 36 | 28 |
Total deferred tax assets | 16,946 | 13,396 |
Deferred tax liabilities | ||
Property and equipment | 0 | (54) |
Intangibles | (2,693) | (3,247) |
Internally developed software | (499) | (692) |
Unrealized gain/loss | 0 | (29) |
Right-of-Use assets | (956) | (1,259) |
Prepaid expenses | (269) | (287) |
Total deferred tax liabilities | (4,417) | (5,568) |
Valuation allowance | (12,911) | (8,125) |
Deferred tax liability, net | $ (382) | $ (297) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Federal | ||
Income Taxes | ||
Net operating loss carryforwards | 49,400,000 | 40,800,000 |
Indefinite operating loss carryforwards | 48,400,000 | |
State | ||
Income Taxes | ||
Net operating loss carryforwards | $ 26,000,000 | $ 20,800,000 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Key Operating Data for the Reportable Segments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues | ||
Revenue | $ 345,226 | $ 412,964 |
Total Company Adjusted EBITDA | (4,111) | (12,227) |
Depreciation and amortization | (5,947) | (5,346) |
Other expense (income), net | (580) | (903) |
Income tax expense (benefit) | (148) | 54 |
Stock-based compensation | (12,994) | (9,131) |
Other non-cash items and transactions costs | (201) | (73) |
Net loss | (23,981) | (27,626) |
Operating segments | ||
Revenues | ||
Total Company Adjusted EBITDA | 2,164 | (2,317) |
Operating segments | Real Estate Brokerage | ||
Revenues | ||
Revenue | 325,405 | 390,616 |
Total Company Adjusted EBITDA | 5,674 | 2,025 |
Operating segments | Mortgage | ||
Revenues | ||
Revenue | 7,251 | 9,637 |
Total Company Adjusted EBITDA | (1,866) | (2,902) |
Operating segments | Technology | ||
Revenues | ||
Revenue | 3,172 | 2,709 |
Total Company Adjusted EBITDA | (1,644) | (1,440) |
Corporate, Non-Segment | ||
Revenues | ||
Revenue | 9,398 | 10,002 |
Total Company Adjusted EBITDA | $ (6,275) | $ (9,910) |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Commitments and Contingencies | ||
Cash balance commitment amount | $ 1.4 | $ 1.8 |
Encompass | ||
Commitments and Contingencies | ||
Adjusted net worth to maintained | $ 1 | |
Percentage of required net worth Liquid assets for compliance | 20% | |
Net worth adjusted | $ 2.4 | |
Liquid assets to maintained | $ 2.6 |