# Fathom Holdings Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [Fathom Holdings Inc.](/companies/fthm.md) (CIK 1753162)
- Form: 10-Q
- Filed: 2025-08-12
- Accepted by EDGAR: Aug 12, 2025, 20:25 ET
- Period: 2025-06-30
- Accession: 0001628280-25-039906
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1753162/000162828025039906/fthm-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1753162/000162828025039906/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $121.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $214.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$2.4m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$6.8m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $62.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $78.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$3.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$9.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.13 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.36 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.13 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.36 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 27,487,816 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 25,459,131 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$11.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $54.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $4.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $33.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $80.4m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $28.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $39.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $5.1m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-06-30 | $428.0k | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2025-06-30 | $187.0k | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2025-06-30 | $40.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 41,224 characters.

*The information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s consolidated financial statements and the related notes set forth in Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in the Form 10-K, and our audited consolidated financial statements and related notes set forth in the Form 10-K. See Part II, Item 1A, “Risk Factors,” below, and “Special Note Regarding Forward-Looking Information,” above, and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. All statements herein regarding potential risks constitute forward-looking statements. When we cross-reference to a “Note,” we are referring to our “Notes to Unaudited Condensed Consolidated Financial Statements,” unless the context indicates otherwise. All amounts noted within the tables are in thousands except per share amounts or where otherwise noted and percentages are approximate due to rounding.*

### Overview

Fathom Holdings Inc. (the “Company”, “Our”, “We”), headquartered in Cary, North Carolina, is a national, technology-driven, end-to-end real estate services company integrating residential brokerage, mortgage, title, and software-as-a-service ("SaaS") offerings for brokerages and agents. The Company’s brands include Fathom Realty, Encompass Lending, intelliAgent, LiveBy, Real Results, Verus Title and Cornerstone. Our primary operation, Fathom Realty (as defined below), operates as a real estate brokerage company, working with real estate agents to help individuals purchase and sell residential and commercial properties, primarily in the South, Atlantic, Southwest, and Western parts of the United States, with the intention of expanding into all states.

Fathom Realty Holdings, LLC, a Texas limited liability company (“Fathom Realty”), is a wholly-owned subsidiary of Fathom Holdings Inc. Fathom Realty owns 100% of 43 subsidiaries, each an LLC representing the state in which the entity operates (e.g. Fathom Realty NJ, LLC).

### Corporate Developments During 2025

On March 10, 2025, the Company issued and sold shares of its common stock to certain investors and members of the Company’s Board in a registered direct offering (the “2025 Offering”). The cash proceeds to the Company from the issuance of the shares of common stock in the 2025 Offering were $2.9 million after deducting the offering expenses.

During the quarter ended March 31, 2025, the Company launched “Elevate,” a concierge-level service program designed to significantly enhance agent productivity and improve transaction efficiency. Elevate provides participating agents with dedicated lead generation support, transaction management, personalized coaching, comprehensive marketing packages, recruiting assistance, and priority customer service. This initiative is expected to increase agent retention, improve profitability per transaction, and bolster our overall market competitiveness.

### Rising Interest Rates and Other Risks

Our business is dependent on the economic conditions within the markets in which we operate. Changes in these conditions can have a positive or negative impact on our business. The economic conditions influencing the housing markets primarily include economic growth, interest rates, unemployment, consumer confidence, mortgage availability, and supply and demand.

In periods of economic growth, demand typically increases resulting in increasing home sales transactions and home sales prices. Similarly, a decline in economic growth, uncertainty surrounding interest rates and declining consumer confidence generally decreases demand. These are the trends we have been facing. Additionally, industry litigation, and regulations imposed by local, state, and federal government agencies can also negatively impact the housing markets in which we operate. Finally, national and global events, geopolitical instability, that impact economic conditions and financial markets, including interest rates, can adversely impact the housing market.

On October 31, 2023, a federal jury in Missouri found that the National Association of Realtors (the "NAR") and certain companies conspired to artificially inflate brokerage commissions, which violates federal antitrust law. The judgment was appealed on October 31, 2023, while the plaintiffs have now sued a number of other companies, including us. See Part II, Item I below. On or about March 15, 2024, NAR agreed to settle these lawsuits, by agreeing to pay $418 million over approximately four years, and changing certain of its rules surrounding agent commissions. In accordance with the terms of the settlement, effective August 17, 2024, NAR put in place a new rule prohibiting offers of compensation on the MLS and adopted new rules requiring written agreements between buyers and buyers’ agents. However, the direct and indirect effects, if any, of the litigation upon the real estate industry are not yet entirely clear.

There could also be further changes in real estate industry practices. All of this has prompted discussion of changes to rules established by local or state real estate boards or multiple listing services. All of this may require changes to many brokers’ business models, including changes in agent and broker compensation. For example, many of our competitors may need to develop mechanisms and a plan that enable buyers and sellers to negotiate commissions. In contrast, our flat fee per real estate transaction model has always enabled our agents to negotiate their own fees. Our flat fee allows our agents greater ability to negotiate commissions, and we have no direct incentive to interfere with their doing so. Our flat fee per real estate transaction model enables our agents to freely settle their transaction commissions at their own discretion, and our revenue share models enable our agents to freely settle their transaction commissions at their own discretion. The Company will continue to monitor ongoing and similar antitrust litigation against our competitors, however, as our agent compensation model fully supports commission negotiation, we do not expect to have to change our compensation model in a manner that would adversely affect our financial condition and results of operations. However, the litigation and its ramifications could cause unforeseen turmoil in our industry, the impacts of which could have a negative effect on us as an industry participant.

We believe that our strategic recruiting and acquisition strategy supported by our new competitive revenue share program have positioned our businesses for profitable growth in the future.

### Real Estate Agents

Due to our low-overhead business model, which leverages our proprietary technology, we can offer our agents the ability to keep significantly more of their commissions compared to traditional real estate brokerage firms. We believe we offer our agents some of the best technology, training, and support available in the industry. We believe our business model and our focus on treating our agents well will attract more agents and higher-producing agents.

As of June 30, 2025 and June 30, 2024, we had approximately 14,981 and 12,224 agent licenses, respectively, representing growth of approximately 22.6%.

### Reportable Segments

The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer (CEO), who is responsible for evaluating the performance of the Company's operating segments and allocating resources. 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 CODM. The Company does not conduct business outside of the United States and no single customer accounts for more than 10% of total revenue in any reporting period.

Our CODM makes operating decisions and assesses performance based on the services of identified operating segments and has identified three operating and reportable segments: (i) Real Estate Brokerage; (ii) Mortgage; and (iii) 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.

The CODM reviews revenue and adjusted EBITDA 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 excluding of non-cash share-based compensation expense related to restricted stock awards and stock options and transaction-related costs provides a useful supplemental measure to evaluate 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 has determined that the main expenses regularly reviewed by the CODM in assessing segment performance are:

- Compensation Expense – Includes salaries and wages for personnel across the Real Estate Brokerage, Mortgage, Technology, and Corporate and Other Services functions.
- Commission Expense – Includes commissions and related agent payments incurred in connection with revenue-generating transactions, across the Real Estate Brokerage, Mortgage, Technology, and Corporate and Other Services functions.

These expenses are presented within the segment disclosures below as they represent the most significant cost drivers impacting the Company’s operating segments and are used by management to evaluate performance, allocate resources, and assess operating efficiency.

The Company does not allocate assets to its operating 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. See "NON-GAAP FINANCIAL MEASURE" below for more information.

### Components of Our Results of Operations

### Revenue

Our revenue primarily consists of commissions generated from real estate brokerage services. We also have other service revenue, including mortgage lending, title insurance, and SaaS revenues.

### Gross commission income

We recognize commission-based revenue on the closing of a transaction, less the amount of any closing-cost reductions. Revenue is affected by the number of real estate transactions we close, the mix of transactions, home sale prices, and commission rates.

### Other Services Revenue

#### Mortgage Lending Revenue

We recognize revenue streams for our mortgage lending services business which are primarily comprised of loans sold, origination and other fees.

The gain on sale of mortgage loans represents the difference between the net sales proceeds and the carrying value of the mortgage loans sold and includes the servicing rights release premiums.

Servicing rights release premiums represent one-time fee revenues earned for transferring the risk and rewards of ownership of servicing rights to third parties.

Retail origination fees are principally revenues earned from loan originations and recorded in the statement of operations in other service revenue. 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.

#### Insurance Agency Service Revenues

The revenue streams for the Company’s home and other insurance agency services business were primarily comprised of new and renewal commissions paid by insurance carriers. The transaction price was determined based on the estimated commissions to be received over the term of the policy, which were based on estimates of premiums placed, policy changes, and cancellations, net of constraints. Commissions were earned upon the effective date of the associated policies, which was the point at which control of the policy transferred to the client.

The Company was also eligible for certain contingent commissions from insurers based on the attainment of specific metrics related to the underlying policies placed, such as volume growth and loss ratios. Revenue for contingent commissions was estimated based on historical and current evidence of achievement toward each insurer’s respective annual metrics and was recognized as the underlying policies contributing to those achievements were placed. Due to the uncertainty in the amount of contingent consideration, the Company constrained estimated revenue to an amount for which a significant negative adjustment was not probable. Contingent consideration was generally received in the first quarter of the subsequent year.

The Company sold its home and other insurance agency services business on May 3, 2024.

#### Title Service Revenues

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.

#### SaaS Revenues

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 is recorded as other service revenue in the statement of operations.

### Operating Expenses

#### Commission and service costs

Commission and service 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 for our brokerage, mortgage lending, title service, insurance services and other services provided.

#### Technology and development

Technology and development expenses primarily include personnel costs, related to ongoing development and maintenance of proprietary software for use by our own agents, customers, and support staff. Such personnel costs including base pay, bonuses, benefits, and share based compensation. 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 fees for professional services and personnel costs, including base pay, bonuses, benefits, and share based compensation. Professional services principally consist of external legal, audit, and tax services. In the short term, we expect general and administrative expenses to increase in absolute dollars due to the anticipated growth of our business and to meet the increased compliance requirements associated with operation as a public company. However, in the long term, we anticipate general and administrative expenses as a percentage of revenue to decrease over time, if and when revenue increases.

#### Marketing

Marketing expenses consist primarily of online and traditional advertising, as well as costs for marketing and promotional materials. Advertising costs are expensed as they are incurred. We expect marketing expenses to increase in absolute dollars as we continue to expand our advertising programs, and promote our newly acquired business lines, but we anticipate marketing expenses as a percentage of revenue to decrease over time, if and when revenue increases.

#### Litigation contingency

Litigation contingency expenses consist primarily of litigation costs related to the settlement related to claims asserted in Burnett v. The National Association of Realtors., et al.

#### Depreciation and amortization

Depreciation and amortization represent how we expense our fixed and intangible assets other than capitalized software. Depreciation expense is recorded on a straight-line method, based on estimated useful lives of five years for computer hardware, seven years for furniture and equipment and seven years for vehicles. Leasehold improvements are depreciated over the lesser of the life of the lease term or the useful life of the improvements. Amortization expense consists of amortization recorded on acquisition-related intangible assets, excluding purchased software. Customer relationships are amortized on an accelerated basis, which coincides with the period of economic benefit we expect to receive. All other finite-lived intangibles are amortized on a straight-line basis over the term of the expected benefit. Purchased software and capitalized software development costs are amortized on a straight-line basis over the term of the expected benefit and the respective amortization expense is included in technology and development expense. In accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), we do not amortize goodwill.

### Income Taxes

Income tax expense primarily consists of deferred tax liabilities in excess of the Company's deferred tax assets and also includes current state income tax expense not offset by state net operating loss carryforwards.

### Results of Operations

### Comparison of the Three Months Ended June 30, 2025 and 2024 (dollar amounts in thousands)

#### Revenue

|  | Three Months Ended June 30, 2025 | 2024 | Change Dollars | Percentage |
| --- | ---: | ---: | ---: | ---: |
| Gross commission income | $115,979 | $83,125 | $32,854 | 40% |
| Other service revenue | 5,444 | 6,082 | (638) | (10)% |
| Revenue | $121,423 | $89,207 | $32,216 | 36% |

For the three months ended June 30, 2025, gross commission income increased by approximately $32.9 million, or 40%, as compared with the three months ended June 30, 2024. This increase was primarily attributable to a 25.4% increase in transaction volume; 12,710 real estate transactions during the three months ended June 30, 2025, compared to 10,137 transactions during the three months ended June 30, 2024. Our transaction volume increased primarily due to the addition of My Home Group in November 2024. During the three months ended June 30, 2025, average revenue per transaction was $9,125, a 11.3% increase compared to $8,200 during the three months ended June 30, 2024, primarily attributable to a higher transaction value at My Home Group.

For the three months ended June 30, 2025, other service revenue decreased by approximately $0.6 million, or 10%, as compared with the three months ended June 30, 2024. This decrease is primarily attributable to the reduction of insurance revenue as a result of our sale of the insurance business in May 2024, offset by an increase in title service transaction volume, which were primarily attributable to organic growth and walkovers.

|  | Three Months Ended June 30, 2025 | 2024 | Change Dollars | Percentage |
| --- | ---: | ---: | ---: | ---: |
| Commission and service costs | $112,025 | $81,072 | $30,953 | 38% |
| General and administrative | 7,975 | 8,331 | (356) | (4)% |
| Marketing | 1,404 | 1,332 | 72 | 5% |
| Technology and development | 1,839 | 1,555 | 284 | 18% |
| Litigation contingency | 6 | — | 6 | 100% |
| Depreciation and amortization | 553 | 546 | 7 | 1% |
| Total operating expenses | $123,802 | $92,836 | $30,966 | 33% |

For the three months ended June 30, 2025, commission and service costs increased by approximately $31.0 million, or 38%, as compared with the three months ended June 30, 2024. Commission and service costs primarily includes costs related to agent commissions, net of fees paid to us by our agents. These costs generally correlate with recognized revenues. As such, the increase in commission and service costs compared to the same period in 2024 was primarily attributable to an increase in agent commissions.

For the three months ended June 30, 2025, general and administrative expenses decreased by approximately $0.4 million, or 4%, as compared with the three months ended June 30, 2024. The decrease was primarily due to a $1.5 million decrease in stock compensation expense partially offset by an increase in compensation expense relative to the Company's investment in growth.

For the three months ended June 30, 2025, total marketing expenses increased by approximately $0.1 million, or 5%, as compared with the three months ended June 30, 2024. The increase was primarily due to the Company's investment in growth.

For the three months ended June 30, 2025, total technology and development expenses increased by approximately $0.3 million, or 18%, as compared with the three months ended June 30, 2024. The increase was primarily due to our ongoing investment in the intelliAgent platform and our LiveBy business.

For the three months ended June 30, 2025, depreciation and amortization expenses decreased by approximately $0.01 million, or 1%, as compared with the three months ended June 30, 2024. The decrease was due to the absence of amortization related to our insurance business that we sold in May 2024.

For the three months ended June 30, 2025, the Company did not recognize any gain on sale of business, compared to a gain of $3.0 million recognized during the three months ended June 30, 2024.

#### Income Taxes

The Company recorded income tax (benefit) expense of approximately $0.06 million and $(0.01) million for the three months ended June 30, 2025 and 2024, respectively. This tax expense is primarily the result of current state income tax liabilities and deferred tax expense related to deferred tax liabilities that cannot be fully offset by deferred tax assets.

### Comparison of the Six Months Ended June 30, 2025 and 2024 (dollar amounts in thousands)

|  | Six Months Ended June 30, 2025 | 2024 | Change Dollars | Percentage |
| --- | ---: | ---: | ---: | ---: |
| Gross commission income | $204,854 | $148,510 | $56,344 | 38% |
| Other service revenue | 9,704 | 11,200 | (1,496) | (13)% |
| Total revenue | $214,558 | $159,710 | $54,848 | 34% |

For the six months ended June 30, 2025, gross commission income increased by approximately $56.3 million, or 38%, as compared with the six months ended June 30, 2024. This increase was primarily attributable to a 28.5% increase in transaction volume; 22,425 real estate transactions during the six months ended June 30, 2025, compared to 17,446 transactions during the six months ended June 30, 2024. Our transaction volume increased primarily due to the addition of My Home Group in November 2024. During the six months ended June 30, 2025, average revenue per transaction was $9,135, a 7.3% increase compared to $8,513 during the six months ended June 30, 2024, primarily attributable to a higher transaction value at My Home Group.

For the six months ended June 30, 2025, other service revenue decreased by approximately $1.5 million, or 13%, as compared with the six months ended June 30, 2024. This decrease is primarily attributable to the reduction of insurance revenue as a result of the sale of our insurance business in May 2024, offset by an increase in title service transaction volume, which were primarily attributable to organic growth and walkovers.

|  | Six Months Ended June 30, 2025 | 2024 | Change Dollars | Percentage |
| --- | ---: | ---: | ---: | ---: |
| Commission and service costs | $197,071 | $144,709 | $52,362 | 36% |
| General and administrative | 16,624 | 17,327 | (703) | (4)% |
| Marketing | 2,774 | 2,534 | 240 | 9% |
| Technology and development | 3,776 | 3,148 | 628 | 20% |
| Litigation contingency | 10 | — | 10 | 100% |
| Depreciation and amortization | 1,107 | 1,274 | (167) | (13)% |
| Total operating expenses | $221,362 | $168,992 | $52,370 | 31% |

For the six months ended June 30, 2025, commission and service costs increased by approximately $52.4 million, or 36%, as compared with the six months ended June 30, 2024. Commission and service costs primarily includes costs related to agent commissions, net of fees paid to us by our agents. These costs generally correlate with recognized revenues. As such, the increase in commission and service costs compared to the same period in 2024 was primarily attributable to an increase in agent commissions.

For the six months ended June 30, 2025, general and administrative expenses decreased by approximately $0.7 million, or 4%, as compared with the six months ended June 30, 2024. The decrease was primarily due to a $2.5 million decrease in stock compensation expense partially offset by an increase in compensation expense relative to the Company's investment in growth.

For the six months ended June 30, 2025, total marketing expenses increased by approximately $0.2 million, or 9%, as compared with the six months ended June 30, 2024. The increase was primarily due to the Company's investment in growth.

For the six months ended June 30, 2025, total technology and development expenses increased by approximately $0.6 million, or 20%, as compared with the six months ended June 30, 2024. The increase was primarily due to our ongoing investment in the intelliAgent platform and our LiveBy business.

For the six months ended June 30, 2025, depreciation and amortization expenses decreased by approximately $0.2 million, or 13%, as compared with the three months ended June 30, 2024. The decrease was due to the absence of amortization related to our insurance business that we sold in May 2024.

For the six months ended June 30, 2025, the Company did not recognize any gain on sale of business, compared to a gain of $3.0 million recognized during the six months ended June 30, 2024.

#### Income Taxes

The Company recorded income tax expense of approximately $0.08 million and $0.01 million for the six months ended June 30, 2025 and 2024, respectively. This tax expense is primarily the result of current state income tax liabilities and deferred tax expense related to deferred tax liabilities that cannot be fully offset by deferred tax assets.

### Liquidity and Capital Resources (dollar amounts in thousands)

#### Capital Resources

|  | June 30, 2025 | December 31, 2024 Dollars | Change Percentage |  |
| --- | ---: | ---: | ---: | ---: |
| Current assets | 33,946 | 24,956 | 8,990 | 36% |
| Current liabilities | 28,271 | 19,381 | 8,890 | 46% |
| Net working capital | $5,675 | $5,575 | $100 | 2% |

To date, our principal sources of liquidity have been the net proceeds we received through public offerings and private sales of our common stock, the sale of one of our businesses, as well as proceeds from loans. As of June 30, 2025, our cash and cash equivalents (including restricted cash) totaled approximately $5.1 million, which represented a decrease of approximately $2.3 million compared to December 31, 2024. As of June 30, 2025, we had net working capital of approximately $5.7 million, which represented an increase of $0.1 million compared to December 31, 2024. As noted above, in May 2024 we sold our wholly-owned subsidiary Dagley Insurance Agency for approximately $15.0 million in cash, $7.4 million of which we received at closing. The Company received $4.0 million during the first six months of 2025 related to the sale of its insurance business, which was completed in May 2024. The Company expects to receive the remaining $3.0 million in May 2026. On April 7, 2025, the Company repaid its $3.5 million convertible note (the “2023 Note”) in full. In March 2025, the Company completed an offering of common stock (the "2025 Offering"), which resulted in the issuance and sale by the Company of 3,505,364 shares of common stock at an offering price of $0.68 per share and 832,639 shares of common stock at an offering price of $0.72 per share, generating gross proceeds of $3.0 million, of which the Company received total net proceeds of $2.9 million, after deducting underwriting discounts and other offering costs.

We anticipate that our existing balances of cash and cash equivalents and future expected cash flows generated from our operations and from the sale of our insurance business will be sufficient to satisfy our operating requirements for at least the next twelve months from the date of the issuance of these unaudited interim consolidated financial statements.

Our future capital requirements depend on many factors, including any future acquisitions, our level of investment in technology, and our rate of growth into new markets. Our capital requirements might also be affected by factors which we cannot control such as the residential real estate market, litigation, interest rates, and other monetary and fiscal policy changes, any of which could adversely affect the manner in which we currently operate. Additionally, as the impact of national and other world events, such as the crises in Ukraine and in the Middle East, on the economy and our operations evolves, we will continuously assess our liquidity needs. In the event of a sustained market deterioration, we may need or seek advantageously to obtain additional funding through equity or debt financing, which might not be available on favorable terms or at all and could hinder our business and dilute our existing shareholders.

### Cash Flows

### Comparison of the Six Months Ended June 30, 2025 and 2024 (dollar amounts in thousands)

|  | Six Months Ended June 30, 2025 | 2024 | Change Dollars | Percentage |
| --- | ---: | ---: | ---: | ---: |
| Net cash (used in) operating activities | (11,671) | (4,041) | (7,630) | 189% |
| Net cash provided by investing activities | 2,441 | 6,100 | (3,659) | (60)% |
| Net cash provided by financing activities | 6,962 | 1,181 | 5,781 | 490% |

#### Cash Flows from Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 consisted of a net loss of $9.2 million, non-cash charges of $6.1 million, including $2.5 million of stock-based compensation expense and $2.9 million of depreciation and amortization, partially offset by $3.2 million in gains on the sales of mortgages. Changes in assets and liabilities were primarily driven by $120.0 million in mortgage loan originations, partially offset by $115.0 million in proceeds from the sales and principal payments on mortgage loans held for sale.

Net cash used in operating activities for the six months ended June 30, 2024 consisted of a net loss of $7.2 million, a gain on sale of a business of $2.9 million, non-cash charges of $5.7 million, including $5.2 million of stock-based compensation expense and $2.8 million of depreciation and amortization, partially offset by $3.2 million in gains on the sales of mortgages. Changes in assets and liabilities were primarily driven by $131.5 million in mortgage loan originations; partially offset by $132.8 million in proceeds from the sales and principal payments on mortgage loans held for sale, a decrease in operating lease liabilities of $1.0 million, as well as a $0.3 million increase in accrued and other current liabilities, and a $1.2 million decrease in prepaid and other current assets.

#### Cash Flows from Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2025 primarily consisted of proceeds from the sale of Dagley Insurance Agency completed in May 2024 of $4.0 million, partially offset by the purchases of intangible assets related to technology development of $1.4 million.

Net cash provided by investing activities for the six months ended June 30, 2024 primarily consisted of proceeds from the sale of Dagley Insurance Agency of $7.8 million, partially offset by the purchases of intangible assets related to technology development of $1.2 million

#### Cash Flows from Financing Activities

Net cash provided in financing activities for the six months ended June 30, 2025 consisted primarily of the $3.0 million in proceeds from the issuance of common stock in connection with a public offering and the change of $8.1 million on our warehouse lines of credit, and the repayment of a $3.5 million convertible note.

Net cash used in financing activities for the six months ended June 30, 2024 consisted primarily of approximately $1.7 million in net activity on our warehouse lines of credit, partially offset by $0.3 million in principal payments on debt and $0.2 million in deferred acquisition payments.

### NON-GAAP FINANCIAL MEASURE

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use Adjusted EBITDA, a non-GAAP financial measure, to understand and evaluate our core operating performance. This non-GAAP financial measure, which may be different than similarly titled measures used by other companies, is presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We define the non-GAAP financial measure of Adjusted EBITDA as net income (loss), excluding other expense, income tax benefit, depreciation and amortization, stock-based compensation expense, other non-cash items and transaction costs.

We believe that Adjusted EBITDA provides useful information about our financial performance, enhances the overall understanding of our past performance and future prospects, and allows for greater transparency with respect to a key metric used by our management for financial and operational decision-making. We believe that Adjusted EBITDA helps identify underlying trends in our business that otherwise could be masked by the effect of the expenses that we exclude in Adjusted EBITDA. In particular, we believe the exclusion of share-based compensation expense and transaction-related costs associated with our acquisition activity provides a useful supplemental measure in evaluating the performance of our operations and provides better transparency into our results of operations. Adjusted EBITDA also excludes other income and expense, net which primarily includes typically nonrecurring expense items, such as, professional fees related to investigating potential financing and acquisition opportunities, if applicable.

We are presenting the non-GAAP measure of Adjusted EBITDA to assist investors in seeing our financial performance through the eyes of management, and because we believe this measure provides an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA compared to net income (loss), the closest comparable GAAP measure. Some of these limitations are that:

- Adjusted EBITDA excludes stock-based compensation expense related to restricted stock awards, restricted stock units, and stock options, which have been, and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of our compensation strategy;
- Adjusted EBITDA excludes transaction-related costs primarily consisting of professional fees and any other costs incurred directly related to acquisition activity, which is an ongoing part of our growth strategy and therefore likely to occur; and
- Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation and amortization of property and equipment and capitalized software costs, however, the assets being depreciated and amortized may have to be replaced in the future.

The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure, for each of the periods presented (amount in thousands):

|  | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Loss before income tax | $(3,530) | $(1,300) | $(9,160) | $(7,210) |
| Gain on sale of business | - | (2,958) | - | (2,958) |
| Stock based compensation | 945 | 2,499 | 2,450 | 5,151 |
| Depreciation and amortization | 1,458 | 1,319 | 2,897 | 2,799 |
| Litigation contingency | 6 | - | 10 | - |
| Other expense, net | 1,151 | 629 | 2,356 | 886 |
| Adjusted EBITDA | $29 | $189 | $(1,447) | $(1,332) |

### Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Our Annual Report on Form 10-K for the year ended December 31, 2024 contains a discussion of our critical accounting estimates in the Management's Discussion and Analysis of Financial Condition and Results of Operations section. There have been no material changes to these estimates during the six months ended June 30, 2025.

### Recent Accounting Standards

For information on recent accounting standards, see Note 3 to our consolidated financial statements above.

### JOBS Act Transition Period

In April 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (the “Securities Act”) for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Subject to certain conditions, as an emerging growth company, we may rely on certain other exemptions and reduced reporting requirements under the JOBS Act. Certain of these exemptions are, including without limitation, from the requirements of (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier to occur of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO in 2020, (b) in which we have total annual gross revenues of at least $1.07 billion, or (c) in which we are deemed to be a “large accelerated filer” under the rules of the U.S. Securities and Exchange Commission, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. Our status as an emerging growth company ends as of December 31, 2025.

The Company is also considered a small reporting company ("SRC") as of June 30, 2025. Under the terms of the JOBS Act, a SRC has public float of less than $250 million or has less than $100 million in annual revenue and no public float or public float less than $700 million. Being a SRC allows the Company to include less extensive narrative disclosure than required of other reporting companies, particularly concerning executive compensation. Being a SRC also only requires providing audited financial statements for two fiscal years, in contrast to non-SRCs, which must provide audited financial statements for three fiscal years.

## Controls and procedures

As filed, 2,334 characters.

### (a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on the evaluation of our Chief Executive Officer, who is also currently serving as our Chief Financial Officer, it was concluded that, as of June 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

### (b) Changes in Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our Chief Executive Officer, who is also currently serving as our Chief Financial Officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter.

We are in the process of implementing new accounting systems. We have updated and continue to update our processes related to internal control over financial reporting, as necessary, to accommodate applicable changes in our business processes resulting from the implementation of the new accounting systems.

There were no changes, other than described above, in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 971 characters.

For more information regarding risk factors that could affect our results of operations, financial condition, and liquidity, see the risk factors previously disclosed in our most recent Annual Report on Form 10-K, as filed with the SEC on March 28, 2025 and amended on April 29, 2025, and in our most recent Quarterly Report on Form 10-Q, as filed with the SEC on May 13, 2025. The risks described in our Annual Report and Quarterly Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or future results of operations and the trading price of our common stock. Other than the risk described in our Quarterly Report for the period ended March 31, 2025, there have been material changes in risk factors relevant to our results of operations, financial condition, or liquidity since December 31, 2024.

Filed Aug 12, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-039906. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.