FATHOM HOLDINGS INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations.

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 I, Item 1.A of the Form 10-K, 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 the likely impact of COVID-19 and other 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 Realty LLC was originally founded in January of 2010 and later
incorporated as Fathom Holdings Inc. in the state of North Carolina on May 5,
2017. We are a national, technology-driven, real estate services platform
integrating residential brokerage, mortgage, title, insurance, and Software as a
Service ("SaaS") offerings to brokerages and agents by leveraging our
proprietary cloud-based software, intelliAgent. The Company's brands include
Fathom Realty, Dagley Insurance, Encompass Lending, intelliAgent, LiveBy, Real
Results, and Verus Title.

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 35 subsidiaries, each an LLC representing the state in which the
entity operates (e.g., Fathom Realty NJ, LLC).

Our reportable segments are Real Estate Brokerage, Mortgage and Technology.

Corporate Developments During 2022 and 2021

In January 2022, the Company acquired Cornerstone, a real estate mortgage
business that is expected to help expand the Company's reach in the Washington
DC and surrounding markets.

In February 2022, the Company acquired iPro, a real estate brokerage business
that is expected to help expand the Company's reach in the Utah real estate
market.

In March 2021, the Company completed its acquisitions of Red Barn Real Estate,
LLC ("Red Barn") and Naberly Inc. ("Naberly"). The acquisition of Red Barn, a
real estate brokerage business, is expected to help us to expand our reach in
the Atlanta region real estate market. The acquisition of Naberly is
facilitating our further development of our proprietary intelliAgent platform to
enhance offerings and improve operational efficiency.

In April 2021, the Company completed its acquisition of E4:9 Holdings, Inc.
("E4:9"). The acquisition of E4:9 is part of our vision to build a vertically
integrated, end-to-end real estate operation by offering mortgage and insurance
services to our agents to further serve our customers.

Also in April 2021, the Company completed its acquisition of LiveBy, Inc.
("LiveBy"). We believe the acquisition of LiveBy and its hyperlocal data and
technology platform builds credibility for our real estate agents in their
respective geographic areas by showcasing their local expertise and helping
customers discover the best locations in which to live.

In June 2021, the Company completed its acquisition of Epic Realty ("Epic"). The
acquisition of Epic, a real estate brokerage business, should help us to expand
our reach in the Idaho real estate market. We further augmented our realty
presence in Idaho with the addition of Woodhouse Group Realty ("Woodhouse") in
November 2021.

In November 2021, the Company completed an offering of common stock, which
resulted in the issuance and sale by the Company of 1,750,000 shares of common
stock, at a public offering price of $25.00 per share, generating gross proceeds
of approximately $35 million, of which the Company received approximately $32.5
million, after deducting underwriting discounts and other offering costs (the
"2021 Equity Offering").

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COVID-19 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, increasing interest rates and declining consumer confidence
generally decreases demand. These are the trends we are currently facing.
Additionally, 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, including geopolitical instability, that
impact economic conditions and financial markets, including interest rates, can
adversely impact the housing market.

In December 2019, a novel strain of coronavirus, COVID-19, was identified in
Wuhan, China. This new coronavirus has caused a global health emergency and was
declared a pandemic by the World Health Organization in March 2020 ("COVID-19''
or the "Pandemic"). In an effort to contain and slow the spread of COVID-19,
governments implemented various measures, such as, ordering non-essential
businesses to close, issuing travel advisories, cancelling large scale public
events, ordering residents to shelter in place, and requiring the public to
practice social distancing. In most states, real estate has been considered an
essential business. The emergence and spread of the Delta and Omicron variants
of COVID-19 or other more transmissible variants may extend the impact of
COVID-19 on our business.

We are continually monitoring the affects COVID-19 could have on our business.
We believe that in the states and regions in which we operate the social and
economic impacts, which include, but are not limited to, the following, could
have a significant bearing on our future financial condition, liquidity, and
results of operations: (i) restrictions on in-person activities associated with
residential real estate transactions arising from shelter-in-place, or similar
isolation orders; (ii) decline in consumer demand for in-person interactions and
physical home tours; and (iii) deteriorating economic conditions, such as
increased unemployment rates, recessionary conditions, lower yields on
individual investment portfolios, and more stringent mortgage financing
conditions. In response to COVID-19, the Company implemented cost-saving
measures early on to include the elimination of non-essential travel and
in-person training activities, and deferral of certain planned expenditures.

For the year ended December 31, 2021, and the nine months ended September 30,
2022, due in part to the widespread availability of multiple COVID-19 vaccines,
the effects of the COVID-19 on business worldwide lessened. However, the
continuing impact from COVID-19, as well as the Ukraine conflict, including
inflationary pressure in the U.S. and world economies due to supply chain and
other issues, including recent increases in interest rates, is not fully known
and cannot be estimated as the U.S. and global economies continue to react.

The impact of COVID-19 to the Company for the year ended December 31, 2021, and
for the nine months ended September 30, 2022, has been minimal. Despite the
ongoing Pandemic, the Company's transactions and base of agents increased during
2021 and the first nine months of 2022. However, while the Company believes it
is well positioned in times of economic uncertainty, it is not able to estimate
the effects of COVID-19 on its results of operations, financial condition, or
liquidity for the year ending December 31, 2022 the nine months ended September
30, 2022 and beyond. If the Pandemic continues, it might have a material adverse
effect on the Company's financial condition, liquidity, and future results of
operations, as would the economic policies enacted in the United States and
other countries in response to the Pandemic, as well as world conditions
resulting from the Pandemic.

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.

We had the following number of agents as of:

           September 30,
           2022     2021     Change
Agents     9,991    7,536        33 %


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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, home and other 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

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 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 point in time upon 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.

Title Services 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.

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Operating Expenses

Commission and other agent-related costs

Commission and other agent-related costs consists primarily of agent
commissions, less fees paid to us by our agents, order fulfillment, share-based
compensation for agents, title searches, and direct cost to fulfill the services
provided. We expect commission and other agent-related costs to continue to rise
in proportion to the expected growth in our operations.

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. We expect operations and support to continue to rise in proportion to
the expected growth in our operations.

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,
including base pay, bonuses, benefits, and share based compensation, and fees
for professional services. 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 as we are able to increase revenue.

Marketing

Marketing expenses consist primarily of expenses for 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, including promotion of our newly acquired business lines
and we anticipate marketing expenses as a percentage of revenue to decrease over
time, if and as we are able to increase revenue.

Depreciation and amortization

Depreciation and amortization represent the depreciation charged on our fixed
assets 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

We have not recorded any U.S. federal or state tax benefits for the net losses
incurred during the three and nine months ended September 30, 2022 due to our
uncertainty of realizing a benefit from those items.

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Results of Operations

Comparison of the Three Months Ended September 30, 2022 and 2021 (amounts in
thousands)

Revenue

                             Three Months Ended
                                September 30,                 Change
                              2022         2021       Dollars     Percentage
Gross commission income    $  104,977    $  95,300    $  9,677            10 %
Other service revenue           6,287        5,640         647            11 %
Total revenue              $  111,264    $ 100,940    $ 10,324            10 %


For the three months ended September 30, 2022, gross commission income increased
by approximately $9.7 million or 10%, as compared with the three months ended
September 30, 2021. This increase was primarily attributable to an increase in
transaction volume and to an increase in average revenue per transaction due to
rising home prices. During the three months ended September 30, 2022,
transaction volume increased by 5% to approximately 12,077 transactions compared
to approximately 11,500 transactions for the three months ended September 30,
2021. Our transaction volume increased primarily due to the organic growth in
the number of agents contracted with us and agents acquired through the
acquisitions of Red Barn, Epic, and iPro. During the three months ended
September 30, 2022, average revenue per transaction increased by 5% to $8,692
from $8,288 during the three months ended September 30, 2021.

For the three months ended September 30, 2022, other service revenue was
approximately $6.2 million, an increase of $0.6 million, or 11%, over the three
months ended September 30, 2021, and was primarily attributable to increases in
insurance revenues and higher LiveBy sales.

Operating Expenses

                                                Three Months Ended
                                                   September 30,                 Change
                                                 2022         2021       Dollars     Percentage
Commission and other agent-related costs      $   99,448    $  91,263    $  8,185             9 %
Operations and support                             2,420        2,029         391            19 %
Technology and development                         1,456          571         885           155 %
General and administrative                        11,528        9,582       1,946            20 %
Marketing                                          1,457          591         866           147 %
Depreciation and amortization                        852          589         263            45 %
Total operating expenses                      $  117,161    $ 104,625    $ 12,536            12 %


For the three months ended September 30, 2022, commission and other
agent-related costs increased by approximately $8.2 million, or 9%, as compared
with the three months ended September 30, 2021. Commission and other
agent-related 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 other agent-related
costs compared to the same period in 2021 was primarily attributable to an
increase in agent commissions paid due to higher transaction volume and rising
home prices.

For the three months ended September 30, 2022, operations and support expenses
were approximately $2.4 million as compared to $2.0 million for the three months
ended September 30, 2021. The $0.4 million, or 19%, increase is primarily due to
an increase in non-cash stock compensation expense,

For the three months ended September 30, 2022, technology and development
expenses increased by approximately $0.9 million, or 155%, as compared with the
three months ended September 30, 2021. The increase was primarily attributable
to our ongoing investment in our intelliAgent platform and our LiveBy business
acquired in April 2021. See Note 4 for detailed information about this
acquisition.

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For the three months ended September 30, 2022, general and administrative
expense increased by approximately $1.9 million, or 41%, as compared with the
three months ended September 30, 2021. The increase in general and
administrative expense was primarily attributable to recently completed
acquisitions and to increases in non-cash stock compensation expense. It is
anticipated that general and administrative expense, excluding non-cash stock
compensation expense, will decrease on an absolute dollar basis going forward
driven by management's strategic cost cutting measures.

For the three months ended September 30, 2022, marketing expense increased by
approximately $0.9 million, or 147%, as compared with the three months ended
September 30, 2021. The increase was attributable to an increase in direct
advertising costs primarily related to the Company's expansion in new regions
and markets and to promoting its businesses acquired in 2022 and 2021.

For the three months ended September 30, 2022, depreciation and amortization
expense increased by approximately $0.3 million, or 45%, as compared with the
three months ended September 30, 2021. The increase in depreciation and
amortization expense is due to the incremental amortization of the intangible
assets (other than capitalized and purchased software for which amortization is
included in technology and development expense) recorded in connection with

our
acquisitions in early 2022.

Income Taxes

The Company recorded no income tax expense and an income tax benefit of $0.2
million for the three months ended September 30, 2022 and 2021, respectively.
The tax benefit for the three months ended September 30, 2021 was primarily the
result of recognition of benefit from the projected loss for the year ended
December 31, 2021.

Comparison of the Nine Months Ended September 30, 2022 and 2021 (amounts in
thousands)

Revenue

                             Nine Months Ended
                               September 30,                 Change
                             2022         2021       Dollars     Percentage
Gross commission income    $ 311,074    $ 224,703    $ 86,371            38 %
Other service revenue         18,452       10,066       8,386            83 %
Total revenue              $ 329,526    $ 234,769    $ 94,757            40 %


For the nine months ended September 30, 2022, gross commission income increased
by approximately $86.4, or 38%, as compared with the nine months ended September
30, 2021. This increase was primarily attributable to an increase in transaction
volume and to an increase in average revenue per transaction due to rising home
prices. During the nine months ended September 30, 2022, transaction volume
increased by 25% to approximately 35,464 transactions compared to approximately
28,400 transactions for the nine months ended September 30, 2021. Our
transaction volume increased primarily due to our expanding agent base which
grew by approximately 33%, due to the Company acquiring agents via acquisitions
of iPro, Red Barn and Epic and to our heightened agent recruiting efforts.

For the nine months ended September 30, 2022, other service revenue was
approximately $18.5 million, an increase of $8.4 million, or 83%, over the nine
months ended September 30, 2021 and was attributable to the Company's
acquisitions of E4:9 and LiveBy in April 2021. and Cornerstone in January 2022.
See Note 3 to our consolidated financial statements in the Form 10-K for
detailed information about these acquisitions.

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Operating Expenses

                                                    Nine Months Ended
                                                      September 30,                 Change
                                                    2022         2021       Dollars     Percentage
Commission and other agent-related costs          $ 295,237    $ 214,392    $ 80,845            38 %
Operations and support                                6,192        3,781       2,411            64 %
Technology and development                            3,931        1,912       2,019           106 %
General and administrative                           34,669       24,139      10,530            44 %
Marketing                                             3,948        1,371       2,577           188 %
Depreciation and amortization                         2,238        1,049       1,189           113 %
Total operating expenses                          $ 346,215    $ 246,644    $ 99,571            40 %


For the nine months ended September 30, 2022, commission and other agent-related
costs increased by approximately $80.8 million, or 38%, as compared with the
nine months ended September 30, 2021. Commission and other agent-related costs
primarily includes costs related to agent commissions, net of fees paid to us by
our agents. These costs are generally correlated with recognized revenues. As
such, the increase in commission and other agent-related costs compared to the
same period in 2021 was primarily attributable to an increase in agent
commissions paid due to higher transaction volume and rising home prices.

For the nine months ended September 30, 2022, operations and support expenses
were approximately $6.2 million as compared with $3.8 million for the nine
months ended September 30, 2021. The higher expenses in the 2022 period were
primarily attributable to the Company's acquisitions of E4:9 and LiveBy in April
2021, including increases in related non-cash stock compensation expense. See
Note 4 for detailed information about these acquisitions.

For the nine months ended September 30, 2022, technology and development
expenses increased by approximately $2.0 million, or 106%, as compared with the
nine months ended September 30, 2021. The increase was attributable to having a
full nine months of operations and amortization expense of our LiveBy business
acquired in April 2021 and to our ongoing investment in our intelliAgent
platform.

For the nine months ended September 30, 2022, general and administrative
expenses increased by approximately $10.5 million, or 44%, as compared with the
nine months ended September 30, 2021. The increase in general and administrative
expense was primarily attributable to our 2021 and 2022 completed acquisitions
and to increases in non-cash stock compensation expense. It is anticipated that
general and administrative expense, excluding non-cash stock compensation
expense, will decrease on an absolute dollar basis going forward, driven by
management's strategic cost cutting measures.

For the nine months ended September 30, 2022, marketing expenses increased by
approximately $2.6 million, or 188%, as compared with the nine months ended
September 30, 2021. The increase was primarily attributable to an increase in
direct advertising costs and incremental compensation for new hires primarily
related to the Company's expansion in new regions and markets and to promoting
its businesses acquired in 2022 and 2021.

For the nine months ended September 30, 2022, depreciation and amortization
expenses increased by approximately $1.2 million, or 113%, as compared with the
nine months ended September 30, 2021. The increase in depreciation and
amortization expense is due to the amortization of the intangible assets (other
than capitalized and purchased software for which amortization is included in
technology and development expense) recorded in connection with the acquisitions
in 2022 and 2021 as well as an increase in depreciation expense due to an
increase in our depreciable asset base.

Income Taxes

The Company recorded income tax expense of $0.2 million and an income tax
benefit of $2.8 million for the nine months ended September 30, 2022 and 2021,
respectively. The tax expense for the nine months ended September 30, 2022 is
primarily the result of current state income tax liabilities. The tax benefit
for the nine months ended September 30, 2021 is primarily the result of the
release of the valuation allowance against historical deferred tax assets and
recognition of benefit from the current year projected loss. Net deferred tax
liabilities of $3.3 million recorded in connection with the E4:9 and LiveBy
acquisitions provide a source of taxable income to support the realization of
$1.6 million of pre-existing deferred tax assets, as well as deferred tax assets
from the projected loss for the year ended December 31, 2021. The taxable
temporary differences relating to the amortizable intangible assets support the
realization of the net operating loss carryforwards. As a result of the
transactions, the Company discretely released the historical valuation allowance
and recognized a deferred tax benefit on a portion of 2021 losses.

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Liquidity and Capital Resources

Capital Resources

                        September 30,      December 31,              Change
                            2022               2021          Dollars      Percentage
Current assets         $        32,822    $       54,450    $ (21,628)          (40) %
Current liabilities             20,681            21,072         (391)           (2) %
Net working capital    $        12,141    $       33,378    $ (21,237)          (64) %

To date, our principal sources of liquidity have been revenues and the net
proceeds we received through public offerings and private sales of our common
stock, as well as proceeds from loans. As of September 30, 2022, our cash
totaled approximately $14.5 million, which represented a decrease of $23.3
million compared to December 31, 2021. As of September 30, 2022, we had net
working capital of approximately $12.1 million, which represented a decrease of
$21.2 million compared to December 31, 2021. We anticipate that our existing
balances of cash and cash equivalents and future expected cash flows generated
from our operations will be sufficient to satisfy our operating requirements for
at least the next twelve months from the date of the issuance of the unaudited
interim consolidated financial statements for the quarter ended September 30,
2022.

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, 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
COVID-19 and other world events, such as the ongoing conflict in Ukraine, 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 Nine Months Ended September 30, 2022 and 2021 (amounts in
thousands)

                                                    Nine Months Ended September 30,                 Change
                                                       2022                  2021           Dollars      Percentage

Net cash used in operating activities            $        (6,470)      $        (6,570)    $      100           (2) %
Net cash used in investing activities            $        (5,933)      $       (13,562)    $    7,629            56 %
Net cash (used in) provided by financing
activities                                       $       (10,836)      $   

2,893 $ (13,729) (475) %

Cash Flows from Operating Activities

Net cash used in operating activities for the nine months ended September 30,
2022 consisted of a net loss of $17.7 million, non-cash charges of $11.9
million, including $6.5 million of stock-based compensation expense and $3.8
million of depreciation and amortization and 1.6 million in lease expense,
partially offset by $3.8 million in gains on the sales of mortgages. Changes in
assets and liabilities were primarily driven by a $8.0 million net decrease in
proceeds from the sales and principal payments on mortgage loans held for sale,
partially offset by a $2.1 increase in prepaids and other current assets, a $0.7
million increase in accounts receivable and a $2.2 million combined decrease in
operating lease liabilities, accounts payable, accrued and other current
liabilities.

Net cash used in operating activities for the nine months ended September 30,
2021 consisted of a net loss of $8.9 million, non-cash charges of $1.4 million,
including $2.8 million of share-based compensation expense, $0.2 million of bad
debt, $0.1 million of gain on extinguishment of debt, and $1.8 million of
depreciation and amortization, offset by $3.3 million in gains on the sales of
mortgages and $2.9 million in deferred income taxes. Changes in assets and
liabilities were primarily driven by a $0.4 million increase in accounts payable
due primarily to the increase in agent transaction volume, a $1.8 million
increase in accrued liabilities, a $2.4 million increase in escrow liabilities,
and $0.7 million change in mortgage loans held for sale; partially offset by a
$0.9 million increase in accounts receivable and a $0.8 million increase in
prepaid and other current assets.

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Cash Flows from Investing Activities

Net cash used in investing activities for the nine months ended September 30,
2022 consisted of $2.5 million for business acquisitions, net of cash acquired,
$1.0 million for purchases of property and equipment and $2.5 million for
purchases of intangible assets.

Net cash used in investing activities for the nine months ended September 30,
2021 consisted of $11.0 million for the purchases of businesses and assets, net
of cash acquired, $0.6 million for purchases of property and equipment, and $2.0
million for purchase of tangible assets.

Cash Flows from Financing Activities

Net cash used in financing activities for the nine months ended September 30,
2022 consisted primarily of the change of $5.5 million on our warehouse lines of
credit, net of the effect of the Cornerstone acquisition, $6.0 million in
repurchase of common stock and $0.8 million in principal payments on notes
payable.

Net cash used in financing activities for the nine months ended September 30,
2021 consisted primarily of $2.4 million in net proceeds on our warehouse line
of credit and $0.9 million in proceeds from notes payable, offset by $0.4
million in principal payments on notes payable.

NON-GAAP FINANCIAL MEASURE

To supplement our unaudited interim consolidated financial statements, which are
prepared and presented in accordance with U.S. Generally Accepted Accounting
Principles ("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 (income) expense, income tax expense (benefit),
depreciation and amortization, transaction costs and stock-based compensation
expense.

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 stock-based
compensation expense related to restricted stock awards and stock options 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
nonrecurring items, such as, gain on debt extinguishment and severance costs, 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 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 be reoccurring; and


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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 (amounts in thousands):

                                   Three Months Ended         Nine Months Ended
                                     September 30,              September 30,
                                   2022         2021          2022         2021
Net loss                         $ (6,012)    $ (3,373)    $ (17,678)    $ (8,865)
Other expense (income), net            115        (102)           804        (190)
Income tax expense (benefit)             -        (210)           185      (2,820)
Depreciation and amortization        1,436          931         3,839        1,778
Transaction-related cost                13          177            73        1,140
Stock based compensation             2,123          770         6,470        2,833
Adjusted EBITDA                  $ (2,325)    $ (1,807)    $  (6,307)    $ (6,124)

Critical Accounting Policies and Estimates

Discussion and analysis of our financial condition and results of operations are
based on our financial statements, which have been prepared in accordance with
GAAP. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets and
liabilities and related disclosure of contingent assets and liabilities,
revenue, and expenses at the date of the financial statements. Generally, we
base our estimates on historical experience and on various other assumptions in
accordance with GAAP that we believe to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions or
conditions.

Critical accounting estimates are those that we consider the most important to
the portrayal of our financial condition and results of operations because they
require our most difficult, subjective, or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain.

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, was determined using
established valuation techniques. A fair value measurement is determined as the
price we would receive to sell an asset or pay to transfer a liability in an
orderly transaction between market participants at the measurement date. In the
context of purchase accounting, the determination of fair value often involves
significant judgments and estimates by management, including the selection of
valuation methodologies, estimates of future revenues, costs and cash flows,
discount rates, and selection of comparable companies. The estimated fair values
reflected in the purchase accounting rely on management's judgment and the
expertise of a third-party valuation firm engaged to assist in concluding on the
fair value measurements. For each business combination completed during the nine
months ended September 30, 2022, the estimated fair value of identifiable
intangible assets, primarily consisting of agent relationships and tradenames,
was determined using the relief-from-royalty and multi-period excess earnings
methods. The most significant assumptions under these methods include the
estimated remaining useful life, expected future revenue, annual agent revenue
attrition, costs to develop new agents, charges for contributory assets, tax
rate, discount rate and tax amortization benefit. Management has developed these
assumptions on the basis of historical knowledge of the business and projected
financial information of the Company. These assumptions may vary based on future
events, perceptions of different market participants and other factors outside
the control of management, and such variations may be significant to estimated
values.

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The determination and allocation of fair values to the identifiable assets
acquired and liabilities assumed are based on various assumptions and valuation
methodologies requiring considerable management judgment. The most significant
variables in these valuations are discount rates and the number of years on
which to base the cash flow projections, as well as other assumptions and
estimates used to determine the cash inflows and outflows. Management determines
discount rates based on the risk inherent in the acquired assets, specific
risks, industry beta and capital structure of guideline companies. The valuation
of an acquired business is based on available information at the acquisition
date and assumptions that are believed to be reasonable. However, a change in
facts and circumstances as of the acquisition date can result in subsequent
adjustments during the measurement period, but no later than one year from

the
acquisition date.

Recent Accounting Standards

For information on recent accounting standards, see Note 3 to our consolidated
financial statements included elsewhere in this report.

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 September 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.