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

Mag Mile Capital, Inc. reported a net loss for the second quarter of 2026, despite a significant increase in revenue, citing increased deal activity and large loan originations.

Summary

• Mag Mile Capital, Inc. reported a net loss of $163,258 for the three months ended June 30, 2026, compared to a net loss of $65,584 for the same period in 2025.
• Revenue for the second quarter of 2026 increased by 24.4% to $879,050 from $706,875 in the prior year, driven by increased deal activity and large CMBS loans.
• Gross profit decreased by 21.5% to $229,938 due to a significant increase in related-party commission expense.
• Operating expenses saw increases in professional fees, general and administrative expenses, and the introduction of bad debt expense.
• The company reported a net income of $138,175 for the six months ended June 30, 2026, a significant improvement from a net loss of $55,870 in the same period of 2025.
• As of June 30, 2026, the company had cash of $612,760 and a working capital deficit of $57,551.
• Material weaknesses in internal control over financial reporting were identified, including a lack of accounting expertise and inadequate segregation of duties.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed to slightly negative sentiment due to the reported net loss for the quarter, ongoing working capital deficit, and material weaknesses in internal controls, despite revenue growth.

Positives

• Revenue for the three months ended June 30, 2026, increased by 24.4% to $879,050 from $706,875 in the prior year.
• Revenue for the six months ended June 30, 2026, increased by 119.3% to $3,261,425 from $1,487,375 in the prior year.
• The company achieved a net income of $138,175 for the six months ended June 30, 2026, a substantial improvement from a net loss of $55,870 in the same period of 2025.
• Cash from operating activities for the six months ended June 30, 2026, was $98,983.
• The company has a strong pipeline of lending relationships and equity capital connections, having collectively raised over $9 billion in real estate financing.
• The company has developed a commercial real estate origination software platform named CapLogiq.

Negatives

• The company reported a net loss of $163,258 for the three months ended June 30, 2026, compared to a net loss of $65,584 in the prior year.
• Gross profit decreased by 21.5% to $229,938 for the three months ended June 30, 2026, compared to $293,074 in the prior year, primarily due to increased related-party commission expense.
• Related-party commission expense increased significantly by 517.2% to $305,500 for the three months ended June 30, 2026, from $49,500 in the prior year.
• Bad debt expense of $40,391 was recognized for the three and six months ended June 30, 2026, compared to $0 in the prior year.
• The company has a working capital deficit of $57,551 as of June 30, 2026.
• Material weaknesses in internal control over financial reporting were identified, including a lack of accounting expertise and inadequate segregation of duties.

Risks

• The company's ability to continue as a going concern is dependent on its ability to generate future profitable operations and/or obtain necessary financing.
• Material weaknesses in internal control over financial reporting could lead to errors in financial statements and potential restatements.
• The company's reliance on large transactions means revenues can fluctuate significantly from month to month and quarter to quarter.
• The company's revenue is dependent on deal flow, lender activity, pricing, and individual lenders' credit appetites, which can change.
• The company is dependent on a third party for accounting consulting services.
• The company has elected the short-term lease exemption under ASC 842-20-25-2 and has not made full lease payments since fiscal year 2024, intending to resume when funds are available.

Future Outlook

The company's growth strategies include investing in sales and marketing to attract new customers and pursuing strategic acquisitions using its public company status. The 2026 Stock Incentive Plan is expected to become effective on August 17, 2026, providing for the issuance of up to 20,000,000 shares of common stock.

Management Comments

• The Company continues to experience fluctuations in monthly and quarterly revenue as a result of the timing and size of transactions closed. Revenue is dependent on overall deal flow, lender activity, pricing, and individual lenders credit appetites.
• The Company intends to continue to attract new customers through an increase in the number of salespeople we engage by leveraging our public company stock to provide a more competitive compensation package than many of our private company competitors that can only offer cash incentives as well as to attract highly talented marketing personnel.
• We intend to explore potential high-quality acquisition opportunities, subject to availability of capital and market conditions, using our public company status to offer attractive purchase prices and growth prospects to such targets.

Industry Context

StockSavvy.ai notes that Mag Mile Capital operates in the highly competitive commercial real estate mortgage banking sector. The reported increase in revenue, particularly from CMBS, aligns with a generally active market for such financing. However, the significant increase in related-party commissions and the resulting decrease in gross profit for the quarter highlight internal cost management challenges that are critical in this commission-driven industry.

Comparison to Industry Standards

• The company's revenue growth of 24.4% for the quarter is strong, but the decrease in gross profit margin due to high related-party commissions is a concern. Industry benchmarks for gross profit margins in mortgage banking can vary, but a significant drop like this warrants scrutiny.
• The company's reliance on a few large customers for a substantial portion of its revenue (e.g., 26.7% from two customers in Q2 2026) is typical for the industry, but it also represents a concentration risk.
• The development of proprietary software like CapLogiq is a positive step towards operational efficiency, a trend seen across leading mortgage banking firms aiming to streamline processes and leverage technology.
• The company's stated goal of raising over $9 billion in financing over its personnel's careers indicates significant experience, but current financial performance and control weaknesses may hinder future large-scale capital raises compared to more established players.

Corporate Governance

Legal Proceedings

• No material, existing or pending legal proceedings against the company are known.

Related Party Transactions

• Loan payable to Park River Investments LLC (formerly Mag Mile Capital LLC) of $300,000, non-interest bearing and due on demand.
• Office lease with 1141 W. Randolph, LLC (owned by CEO Rushi Shah) for 1,625 sq ft at $4,062/month, with rent increases and a renewal option extending to December 31, 2028.
• Commercial lease for basement space at 1141 W. Randolph St. for $1,900/month, with $22,800 accrued as of June 30, 2026.
• Related-party commission expense paid to Park River Investments, LLC (owned by Chairman and CEO Rushi Shah) was $305,500 for Q2 2026 and $1,406,163 for H1 2026.
• Commissions payable to Park River Investments, LLC was $79,750 as of June 30, 2026.

Stakeholder Impact

• Shareholders: Potential for share price volatility due to net loss in the quarter, working capital deficit, and material weaknesses in internal controls. However, revenue growth and improved six-month net income may offer some positive outlook.
• Employees: The 2026 Stock Incentive Plan could provide incentives. Changes in payroll management and bonus structures may impact compensation.
• Creditors: The working capital deficit and going concern uncertainties could raise concerns for creditors regarding the company's ability to meet short-term obligations.
• Management: Increased related-party commissions for the CEO may be viewed critically by some stakeholders, despite driving revenue.

Next Steps

• The company intends to continue attracting new customers through an increase in the number of salespeople.
• The company intends to explore potential high-quality acquisition opportunities.
• The 2026 Stock Incentive Plan is expected to become effective on August 17, 2026, providing for awards to eligible employees, officers, directors, and consultants.
• Management intends to resume making lease payments when funds are available.

Key Dates

Recommendation

The company shows strong revenue growth and a significant improvement in net income for the six-month period, indicating operational progress. However, the net loss in the current quarter, a persistent working capital deficit, and material weaknesses in internal controls present substantial risks that temper a more positive outlook. A 'hold' recommendation reflects a balanced view of the growth potential against the significant operational and control challenges.

Keywords

Commercial Real Estate, Mortgage Banking, Financing, Capital Markets, Real Estate Finance, CMBS, Mezzanine Debt, Equity Arrangements