10-Q: Mag Mile Capital Reports Q3 Loss Amid Higher Marketing Spend

Mag Mile Capital reported a net loss of $447,064 for Q3 2025, despite increased revenue, driven by significant marketing expenses and ongoing concerns about its ability to continue as a going concern.

Summary

• Net loss for the three months ended September 30, 2025, was $447,064, a slight improvement from $450,515 in the prior year period.
• Revenue for the three months ended September 30, 2025, increased by 27.5% to $324,600, up from $254,550 in the same period last year.
• Gross margin significantly improved to $136,676 for the three months ended September 30, 2025, compared to a gross deficit of $212,497 in the prior year.
• General and administrative expenses surged by 226.7% to $473,057 for the three months, primarily due to a $270,000 marketing event in Lisbon and $46,250 in non-cash consulting expense.
• For the nine months ended September 30, 2025, the company reported a net loss of $502,934, significantly wider than the $35,428 loss in the prior year period.
• Nine-month revenue decreased by 11.7% to $1,811,975, down from $2,051,443 in the comparable period.
• Cash at the end of September 30, 2025, was $58,677, an increase from $484 at December 31, 2024.
• The company had a working capital deficit of $568,210 as of September 30, 2025.
• Substantial doubt exists about the company's ability to continue as a going concern due to cumulative losses and negative cash flow from operations.
• A $200,000 working capital loan from CEO Rushi Shah was received on July 24, 2025, and repaid in November 2025.
• Subsequent to the quarter, the company closed two transactions totaling $73.5 million, generating $1.045 million in gross revenue on October 24, 2025.

Sentiment

Score: 3

Explanation: While Q3 revenue and gross margin showed improvement, the nine-month results reveal a significant widening of net loss and increased cash burn from operations. The company faces substantial doubt about its ability to continue as a going concern, has material weaknesses in internal controls, and has deferred lease payments. The large marketing expense, while attributed to a subsequent deal, contributed to the current period's losses. The reliance on related party financing and future warrant exercises highlights ongoing capital needs.

Positives

• Revenue for the three months ended September 30, 2025, increased by 27.5% to $324,600 compared to $254,550 in the prior year.
• Gross margin for the three months ended September 30, 2025, improved significantly to $136,676 from a deficit of $212,497 in the prior year.
• Cash balance increased to $58,677 as of September 30, 2025, from $484 at December 31, 2024.
• Subsequent to the quarter, the company closed a $59 million refinance transaction and a $14.5 million transaction with HKB Hotels Group on October 24, 2025, resulting in $1.045 million in gross revenue.
• The extraordinary marketing event in Lisbon in August 2025 was cited as helping to close a large transaction in October 2025.

Negatives

• Net loss for the nine months ended September 30, 2025, significantly widened to $502,934 from $35,428 in the prior year period.
• Revenue for the nine months ended September 30, 2025, decreased by 11.7% to $1,811,975 compared to $2,051,443 in the prior year.
• Gross profit for the nine months decreased by 5% to $685,830 from $721,614 in the prior year.
• General and administrative expenses for the nine months increased by 87.8% to $813,809, largely due to a $296,000 marketing expense and $92,500 non-cash consulting expense.
• The company used $256,807 of cash in operating activities for the nine months ended September 30, 2025, an increase from $60,592 in the prior year.
• A working capital deficit of $568,210 as of September 30, 2025.
• Total stockholders' equity (deficit) deepened to $(669,512) as of September 30, 2025, from $(166,578) at December 31, 2024.
• Management concluded that internal control over financial reporting was not sufficient as of September 30, 2025, citing a material weakness in inadequate segregation of duties and lack of accounting expertise.
• The company has not made office lease payments since fiscal year 2024 to manage cash flows, accumulating a liability to a related party.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to a net loss of $502,934, $256,807 cash used in operations, and a working capital deficit of $568,210 for the nine months ended September 30, 2025.
• Dependence on a third party for accounting consulting services for the foreseeable future, with no assurances that material weaknesses in internal controls will not result in financial statement errors or restatements.
• Exposure to changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, and competition, which could materially adversely affect operations and future prospects.
• Concentration of credit risk as cash is maintained in bank deposit accounts that may exceed federally insured limits.
• Significant customer concentration, with top four customers accounting for 36%, 23.7%, 16.9%, and 16% of revenue for the three months ended September 30, 2025. One customer accounted for 73.2% of revenue for the three months ended September 30, 2024.

Future Outlook

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. It also intends to continue to attract new customers through an increase in the number of salespeople by leveraging its public company stock for competitive compensation and to pursue strategic acquisitions using its public company status to offer attractive purchase prices and growth prospects.

Management Comments

• "We expect to use the exercise of warrants to meet our needs for growth for more than twelve months from the date of issuance of these unaudited financial statements."
• "We intend 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 using our public company status to offer attractive purchase prices and growth prospects to such targets."
• "The rationale behind this [Lisbon marketing] expense was to celebrate Mag Mile Capital's success and its clients, shareholders, employees, and capital sources' trust in the CEO Rushi Shah for many years."

Industry Context

The company's nine-month revenue decline is attributed to sustained higher interest rates and lower deal activities, reflecting broader challenges in the commercial real estate financing market. Despite these headwinds, the company is actively pursuing growth strategies by investing in sales and marketing and exploring strategic acquisitions, aiming to differentiate itself through its public company status and proprietary technology like CapLogiq.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• No material, existing or pending legal proceedings against the company.
• No involvement as a plaintiff in any material proceeding or pending litigation.
• No proceedings where directors, officers, affiliates, or shareholders are adverse parties or have a material adverse interest.

Related Party Transactions

• Loan payable to Loan-Park River Investment LLC (formerly Mag Mile Capital LLC), owned by CEO Rushi Shah, increased from $245,000 at December 31, 2024, to $360,000 at September 30, 2025.
• CEO Rushi Shah made a $200,000 working capital loan to the company on July 24, 2025, which was repaid in November 2025.
• Office lease agreements with 1141 W. Randolph, LLC, a company owned and controlled by CEO Rushi Shah, for two office spaces.
• Related party commission expense paid to Park River Investments, LLC, a company owned by CEO Rushi Shah, for deals where he was the procuring cause. Commissions for Mr. Shah decreased to $0 for the three months and $229,900 for the nine months ended September 30, 2025, from $250,594 and $522,749 respectively in the prior year.
• The company has not made lease payments to the related party landlord (1141 W. Randolph, LLC) since fiscal year 2024 to manage cash flows, with the liability being amortized and allocated to a separate accrual account for future repayment to Mr. Shah.

Stakeholder Impact

• Shareholders: Deepening accumulated deficit and substantial doubt about going concern status could negatively impact shareholder value. Future warrant exercises could lead to dilution.
• Employees: Payroll expenses increased due to bonuses and CEO salary, indicating some compensation, but overall financial health could pose long-term concerns.
• Creditors: Increased related party loans and deferred lease payments to a related party indicate reliance on insider financing and potential strain on creditor relationships. The SBA loan remains at $150,000 with payments applied only to interest.
• Customers: Revenue decline over nine months suggests potential impact from market conditions, but subsequent large deal closure indicates continued business activity.
• Suppliers: The company's decision to defer lease payments to a related party landlord suggests potential cash flow constraints that could affect other suppliers if not managed carefully.

Next Steps

• Generate future profitable operations and/or obtain necessary financing to meet obligations and repay liabilities.
• Use the exercise of warrants to meet growth needs for more than twelve months.
• Attract new customers by increasing the number of salespeople, leveraging public company stock for competitive compensation.
• Attract highly talented marketing personnel.
• Explore potential high-quality acquisition opportunities.
• Resume making lease payments when funds are available.
• Address material weaknesses and significant deficiencies in internal control over financial reporting.

Key Dates

Recommendation

The company faces significant financial distress, evidenced by a widening net loss over nine months, increased cash burn from operations, a substantial working capital deficit, and deepening shareholder deficit. The "going concern" warning is a critical red flag. While Q3 showed some revenue growth, it was accompanied by an extraordinary marketing expense that contributed to the overall loss. Material weaknesses in internal controls further undermine confidence. Despite a subsequent large deal, the fundamental financial health and governance issues suggest high risk and potential for further value erosion.

Keywords

Commercial Real Estate, Mortgage Banking, SEC Filing, 10-Q Report, Financial Results, Net Loss, Revenue, Gross Margin, Operating Expenses, Going Concern, Internal Controls, Related Party Transactions, Capital Markets, Real Estate Financing, CMBS, Structured Debt, Equity Advisory, Rushi Shah