UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-39412

FATHOM HOLDINGS INC.

(Exact name of Registrant as specified in its Charter)


North Carolina		82-1518164
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2000 Regency Parkway Drive, Suite 300, Cary, North Carolina 27518

(Address of principal executive offices) (Zip Code)

(888) 455-6040

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, No Par Value		FTHM		The NASDAQ Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2023, the registrant had 18,071,111 shares common stock outstanding.

Table of Contents

FATHOM HOLDINGS INC.

FORM 10-Q

For the Quarterly Period Ended March 31, 2022

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022	3
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022	4
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2023 and 2022	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	6
	Notes to Unaudited Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 4.	Controls and Procedures	30
PART II - OTHER INFORMATION		30
ITEM 1.	Legal Proceedings	30
ITEM 1A.	Risk Factors	30
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
ITEM 6.	Exhibits	32
SIGNATURES		33

Table of Contents

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements.

FATHOM HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	March 31, 2023		December 31, 2022
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	6,723	$	8,320
Restricted cash		78		60
Accounts receivable		3,410		3,074
Mortgage loans held for sale, at fair value		4,619		3,694
Prepaid and other current assets		3,466		3,668
Total current assets		18,296		18,816
Property and equipment, net		2,828		2,945
Lease right of use assets		5,175		5,508
Intangible assets, net		26,608		27,259
Goodwill		25,607		25,607
Other assets		55		52
Total assets	$	78,569	$	80,187
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,987	$	3,343
Accrued and other current liabilities		3,814		3,403
Warehouse lines of credit		4,477		3,580
Lease liability - current portion		1,636		1,609
Long-term debt - current portion		269		564
Total current liabilities		14,183		12,499
Lease liability, net of current portion		4,843		5,241
Long-term debt, net of current portion		106		129
Other long-term liabilities		297		297
Total liabilities		19,429		18,166
Commitments and contingencies (Note 18)
Stockholders’ equity:
Common stock (no par value, shares authorized, 100,000,000; shares issued and outstanding, 18,071,111 and 17,468,562 as of March 31, 2023 and December 31, 2022, respectively)		—		—
Additional paid-in capital		112,446		109,626
Accumulated deficit		(53,306)		(47,605)
Total stockholders’ equity		59,140		62,021
Total liabilities and stockholders’ equity	$	78,569	$	80,187

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

FATHOM HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share data)


	Three Months Ended March 31,
	2023		2022
Revenue
Gross commission income	$	73,170	$	84,044
Other service revenue		4,371		6,038
Total revenue		77,541		90,082
Operating expenses
Commission and other agent-related costs		69,172		79,479
Operations and support		1,614		2,175
Technology and development		1,290		1,474
General and administrative		9,601		10,854
Marketing		715		1,163
Depreciation and amortization		695		572
Total operating expenses		83,087		95,717
Loss from operations		(5,546)		(5,635)
Other expense (income), net
Interest expense (income), net		(16)		1
Other nonoperating expense (income), net		159		336
Other expense (income), net		143		337
Loss before income taxes		(5,689)		(5,972)
Income tax expense (benefit)		12		25
Net loss	$	(5,701)	$	(5,997)
Net loss per share:
Basic	$	(0.36)	$	(0.37)
Diluted	$	(0.36)	$	(0.37)
Weighted average common shares outstanding:
Basic		16,011,068		16,323,157
Diluted		16,011,068		16,323,157

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

FATHOM HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

(in thousands, except share data)

Common Stock

Number of

Additional

Outstanding

Par

Paid-in

Accumulated

Shares

Value

Capital

Deficit

Total

Balance at December 31, 2022

17,468,562

—

109,626