10-Q: Mag Mile Capital Reports Q2 Loss Amid Revenue Drop

Mag Mile Capital, Inc. reported a net loss of $65,584 for the second quarter of 2025, a significant decline from the prior year's profit, driven by a 44.1% decrease in revenue.

Summary

• Mag Mile Capital, Inc. reported a net loss of $65,584 for the three months ended June 30, 2025, compared to net income of $480,863 for the same period in 2024.
• Revenue for the three months ended June 30, 2025, decreased by 44.1% to $706,875 from $1,264,300 in the prior year, primarily due to large loans expected to close in Q3.
• For the six months ended June 30, 2025, the company incurred a net loss of $55,870, a significant decline from net income of $415,087 in the comparable 2024 period.
• Revenue for the six months ended June 30, 2025, was $1,487,375, down 17.2% from $1,796,893 in the prior year, attributed to sustained higher interest rates and lower deal activities.
• Gross profit decreased to $293,074 for the three months and $549,154 for the six months ended June 30, 2025, from $734,022 and $934,111 respectively in 2024.
• Operating expenses increased for both periods, with payroll expense up 58.1% to $139,369 for the quarter and 25.6% to $210,007 for the six months, due to analyst bonuses and CEO salary.
• General and administrative expenses rose 47.9% to $193,030 for the quarter and 18% to $340,752 for the six months, including $46,250 of non-cash consulting expense.
• Cash balance significantly increased to $343,390 as of June 30, 2025, from $484 at December 31, 2024, with $287,906 generated from operating activities during the six months.
• The company reported a working capital deficit of $93,704 as of June 30, 2025, worsening from a deficit of $59,962 at December 31, 2024.
• Management identified a material weakness in internal controls over financial reporting due to a lack of personnel with accounting expertise, inadequate supervisory review, and insufficient segregation of duties.

Sentiment

Score: 3

Explanation: The sentiment is negative due to significant financial deterioration (net losses, revenue decline, worsening working capital deficit) and explicit disclosure of 'going concern' doubt and material weaknesses in internal controls. While cash from operations improved and strategic plans are outlined, the fundamental financial health and control environment present substantial concerns.

Positives

• Cash balance significantly increased to $343,390 as of June 30, 2025, from $484 at December 31, 2024.
• Generated $287,906 in cash from operating activities for the six months ended June 30, 2025, compared to $67,063 in the prior year.
• Developed CapLogiq, a commercial real estate origination software platform utilizing automation and artificial intelligence to enhance loan closing efficiency.
• Strategic growth plans include investing in sales and marketing by leveraging public company stock for competitive compensation packages.
• Intends to explore potential high-quality acquisition opportunities, utilizing public company status to offer attractive purchase prices and growth prospects.

Negatives

• Reported a net loss of $65,584 for the three months ended June 30, 2025, a substantial decline from net income of $480,863 in the prior year.
• Revenue decreased by 44.1% for the three months ended June 30, 2025, and 17.2% for the six months ended June 30, 2025, compared to the same periods in 2024.
• Gross profit significantly declined for both the three-month and six-month periods ended June 30, 2025.
• Operating expenses, including payroll and general & administrative costs, increased for both the three-month and six-month periods.
• Working capital deficit worsened to $93,704 as of June 30, 2025, from $59,962 at December 31, 2024.
• Accumulated deficit increased to $(3,027,684) as of June 30, 2025, from $(2,971,814) at December 31, 2024.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to net losses and a working capital deficit.
• Material weakness in internal control over financial reporting identified due to a lack of personnel with accounting expertise and an inadequate supervisory review structure.
• Inadequate segregation of duties is a material weakness in internal controls.
• Dependence on a third party for accounting consulting services for the foreseeable future, with no assurances that material weaknesses will be resolved without a Chief Financial Officer with requisite expertise.
• Actual results may differ materially from forward-looking statements due to changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, and competition.
• The company's cash balances may at times exceed federally insured limits, posing a concentration of credit risk.

Future Outlook

The company anticipates realizing revenue from several new large Commercial Mortgage-Backed Securities (CMBS) loans by the end of summer, which are expected to be recognized in the third quarter. It plans to use the exercise of warrants to meet growth needs for more than twelve months from the filing date. Strategic growth initiatives include investing in sales and marketing by leveraging public company stock for competitive compensation and pursuing high-quality acquisition opportunities.

Management Comments

• Revenue in the current period decreased due to several new large loans signed up to close by end of the summer through the Commercial Mortgage Backed Securities (CMBS), which will be realized in the third quarter.
• Commission expense stayed about the same despite decreased commission revenue due to increases in some originator commission percentages to retain them.
• Payroll expense increased due to a bonus paid to the analyst and salary paid to the CEO, which was not paid during the same period last year.
• General and administrative expenses increased due to travel and client relations expense, and the recognition of $46,250 of non-cash consulting expense for common stock issued in a prior period.
• The company expects to use the exercise of warrants to meet its needs for growth for more than twelve months from the date of issuance of these unaudited financial statements.
• Management concluded that internal control over financial reporting was not sufficient as of June 30, 2025, citing a lack of personnel with accounting expertise, inadequate supervisory review, and inadequate segregation of duties.

Industry Context

The company operates in the commercial real estate mortgage banking sector, which has been impacted by sustained higher interest rates and lower deal activities. Despite these challenges, Mag Mile Capital is leveraging its national platform, diverse lending relationships, and equity capital connections across various real estate asset classes. The company is also investing in technology, such as its CapLogiq software platform, to increase efficiency in the loan closing process, aligning with broader industry trends towards digitalization and AI adoption in financial services.

Comparison to Industry Standards

• Not explicitly detailed in the filing. The filing does not provide specific comparable companies, projects, or results to assess against global benchmarks.

Management Changes

Corporate Governance

Related Party Transactions

• Loan payable to Loan-Park River Investment LLC (formerly Mag Mile Capital LLC) of $300,000 as of June 30, 2025 (increased from $245,000 at December 31, 2024).
• Office lease dated January 1, 2023, for 1,625 square feet at 1141 W. Randolph Street, Floor 2, Chicago, IL 60607, with 1141 W. Randolph, LLC, a company owned and controlled by Rushi Shah, CEO. Monthly rental payment of approximately $4,062 with an annual 3% adjustment.
• Additional office lease dated January 1, 2024, month-to-month term for 1,625 square feet at 1141 W. Randolph Street, Floor 2, Chicago, IL 60607, with 1141 W. Randolph, LLC. Monthly rental payment of approximately $1,900.
• Related party commission expense paid to Park River Investments, LLC, a company owned by Rushi Shah (Chairman and CEO), where Mr. Shah was the procuring cause for the revenue. Commissions were $49,500 for Q2 2025 and $229,900 for YTD Q2 2025, a decrease from prior year periods.

Stakeholder Impact

• Shareholders: Face increased accumulated deficit, worsening working capital deficit, and explicit 'going concern' doubt, which could negatively impact share value. Potential dilution from future warrant exercises.
• Employees: Payroll expenses increased due to bonuses and CEO salary, indicating some positive compensation adjustments, but overall financial performance could impact job security or future compensation.
• Customers: Continued service as a commercial real estate mortgage banking firm, with the introduction of CapLogiq software potentially improving service efficiency.
• Creditors: The company's 'going concern' doubt and increased related party loans may raise concerns regarding repayment ability.

Next Steps

• Realization of revenue from several new large CMBS loans expected by the end of summer, to be recognized in the third quarter.
• Investment in sales and marketing, leveraging public company stock to attract new salespeople and marketing personnel.
• Exploration of potential high-quality acquisition opportunities.
• Addressing the identified material weaknesses in internal control over financial reporting, including hiring personnel with accounting expertise and improving supervisory review and segregation of duties.

Key Dates

Recommendation

The company faces severe financial challenges, including significant net losses, substantial revenue decline, and a worsening working capital deficit. The explicit disclosure of 'substantial doubt about the Company's ability to continue as a going concern' is a critical red flag. Furthermore, identified material weaknesses in internal controls over financial reporting indicate fundamental operational and governance issues. While there's an increase in cash from operations and strategic growth plans, these are overshadowed by the immediate and severe financial and operational risks. A seasoned investor would likely view these factors as highly detrimental to the company's short-term and long-term viability, warranting a strong sell recommendation.

Keywords

Commercial Real Estate, Mortgage Banking, Capital Markets, SEC Filing, 10-Q, Financial Services, Real Estate Financing, AI, PropTech, Chicago