Janover Inc

Previous wording

TEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Current wording

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Previous wording

Our business model includes earning a transaction fee each time a loan closes with a lender through our platform. We are either paid a share of the revenue from the transaction by the lender and/or receive some fixed sum in an amount we negotiate from the borrower. While we are generally paid by the lender or the borrower and are paid by both sometimes. Our average fee earned per transaction is approximately 1% of the loan amount generally earned at the time of closing. We do not make loans or share risk with the lenders, with whom we conduct business with. With the acquisition of Groundbreaker and the recent launch of our Insurtech subsidiary, an increasing portion of our total revenue is recurring software subscription revenue.

Current wording

Our business model includes earning a transaction fee each time a loan closes with a lender through our platform. We are either paid a share of the revenue from the transaction by the lender and/or receive some fixed sum in an amount we negotiate from the borrower. We receive compensation from both the lender and/or the borrower. Our average fee earned per transaction is approximately 1% of the loan amount generally earned at the time of closing. We do not make loans or share risk with the lenders, with whom we conduct business with. With the acquisition of Groundbreaker, our real estate syndication software and investor portal, and the recent launches of our Insurtech subsidiary, Janover Insurance Group, Janover AI (AI Software), Janover Engage

Previous wording

These and other types of events could lead to a decline in transaction activity as well as a decrease in property values which, in turn, would likely lead to a reduction in financing fees relating to such transactions. These effects would likely cause us to realize lower revenues. Such declines in transaction activity and value would likely also significantly reduce our financing activities and revenues. Fiscal uncertainty, significant changes and volatility in the financial markets and business environment, and similar significant changes in the global, political, security and competitive landscape, make it increasingly difficult for us to predict our revenue and earnings into the future. As a result, any revenue or earnings projections or economic outlook which we may give may be materially affected by such events. Fiscal 2023 was one of the most challenging years for the commercial real estate industry and the first half of fiscal 2024 has continued with this trend.

Current wording

These and other types of events could lead to a decline in transaction activity as well as a decrease in property values which, in turn, would likely lead to a reduction in financing fees relating to such transactions. These effects would likely cause us to realize lower revenues. Such declines in transaction activity and value would likely also significantly reduce our financing activities and revenues. Fiscal uncertainty, significant changes and volatility in the financial markets and business environment, and similar significant changes in the global, political, security and competitive landscape, make it increasingly difficult for us to predict our revenue and earnings into the future. As a result, any revenue or earnings projections or economic outlook which we may give may be materially affected by such events. Fiscal 2023 was one of the most challenging years for the commercial real estate industry and the first half of fiscal 2024 has continued with this trend. However, we expect the overall outlook to improve in the second half of fiscal 2024.

Previous wording

Traditionally, the commercial real estate market is seasonal in nature, with the first and fourth fiscal quarters being more active than the sec

Current wording

Traditionally, the commercial real estate market is seasonal in nature, with the first and fourth fiscal quarters being more active than the second and third fiscal quarters. However, during fiscal 2023 the commercial real estate market was less seasonal due to the significant macroeconomic pressures in the commercial real estate market.

Previous wording

On August 1, 2024, the Company entered into an At-the-Market Offering Agreement (the “Sales Agreement”) with R.F. Lafferty & Co., Inc., as sales agent, to sell, from time to time, shares of its common stock having an aggregate offering price of up to $0.99, through an “at the market” offering pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-281185), as may be supplemented by a prospectus supplement.

Current wording

On August 1, 2024, the Company entered into an At-the-Market Offering Agreement (the “ATM Sales Agreement”) with R.F. Lafferty & Co., Inc., as sales agent, to sell, from time to time, shares of its common stock having an aggregate offering price of up to $0.99, through an “at the market” offering pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-281185), as supplemented by a prospectus supplement. At September 30, 2024, there has been no activity to report with the Form S-3 Registration Statement and ATM Sales Agreement. We expect overall conditions to improve for the raising of capital for the remainder of fiscal 2024 and into fiscal 2025.

Previous wording

Revenue for the three months ended June 30, 2024 was approximately $441,000 as compared to approximately $602,000 for the three months ended June 30, 2023, a decrease of approximately $161,000, or 27%. Revenue for the three months ended June 30, 2024 increased sequentially by approximately 7% compared to the three months ended March 31, 2024. During the three months ended June 30, 2024 there were 23 transactions that closed on our marketplace, compared to 45 during the three months ended June 30, 2023. The average revenue per transaction was approximately $12,000 in the three months ended June 30, 2024, compared to $13,000 for the three months ended June 30, 2023. This 6% decrease in average revenue per transaction was the result of a change in the average loan size during the three months ended June 30, 2024 compared to the similar period in the prior year. Our average revenue per transaction closed will vary from period to period, depending on the size of the underlying loan transactions in any given period. We will focus our efforts on revenue growth, with an emphasis on our most profitable cohorts of customers. We will target increasing both our number of transactions closed and our revenue per transaction closed. During fiscal 2024, we will be focusing on larger loan opportunities, which should increase our average loan size. With the acquisition of Groundbreaker and the recent launch of our Insurtech, an increasing portion of our total revenue will be recurring revenue, where we receive annual, quarterly, and monthly subscriptions, and annual insurance premium commissions. For the quarter ended June 30, 2024 approximately 20% of our total revenue was recurring revenue compared to 18% for the quarter ended March 31, 2024. There was no recurring revenue for the comparable periods in fiscal 2023. The Company will continue to migrate our revenue to recurring and subscription revenue for the remainder of fiscal 2024 and beyond.

Current wording

Revenue for the three months ended September 30, 2024 was approximately $619,000 as compared to approximately $584,000 for the three months ended September 30, 2023, an increase of approximately $35,000, or 6%. Revenue for the three months ended September 30, 2024 increased sequentially by approximately 40% compared to the three months ended June 30, 2024. During the three months ended September 30, 2024 there were 36 transactions that closed on our marketplace, compared to 60 during the three months ended September 30, 2023. The average revenue per transaction was approximately $12,000 in the three months ended September 30, 2024, compared to approximately $10,000 for the three months ended September 30, 2023. This 26% increase in average revenue per transaction was the result of a change in the average loan size during the three months ended September 30, 2024 compared to the similar period in the prior year. Our average revenue per transaction closed will vary from period to period, depending on the size of the underlying loan transactions in any given period. We will focus our efforts on revenue growth, with an emphasis on our most profitable cohorts of customers. We will target increasing both our number of transactions closed and our revenue per transaction closed. During fiscal 2024, we focused on larger loan opportunities, which should increase our average loan size. With the acquisition of Groundbreaker and the recent launch of our Insurtech, an increasing portion of our total revenue will transition to recurring revenue, where we receive annual, quarterly, and monthly subscriptions, and annual insurance premium commissions. For the quarter ended September 30, 2024 approximately 22% of our total revenue was recurring revenue compared to 20% for the quarter ended June 30, 2024. There was no recurring revenue for the comparable periods in fiscal 2023. The Company will continue to migrate our revenue to recurring and subscription revenue for the remainder of fiscal 2024 and beyond.

Previous wording

Cost of revenue for the three months ended June 30, 2024 was approximately $8,000 as compared to $0 for the three months ended June 30, 2023. The entire cost of revenue balance consists of software and hosting costs related Groundbreaker. Cost of revenue represents approximately 2% of total revenue for the three months ended June 30, 2024.

Current wording

Cost of revenue for the three months ended September 30, 2024 was approximately $8,000 as compared to $0 for the three months ended September 30, 2023. The entire cost of revenue balance consists of software and hosting costs related to Groundbreaker. Cost of revenue represents approximately 1% of total revenue for the three months ended September 30, 2024.

Previous wording

Our sales and marketing costs are primarily comprised of personnel and advertising costs. Sales and marketing expenses for the three months ended June 30, 2024 were approximately $414,000, compared to approximately $315,000 for the three months ended June 30, 2023, an increase of $98,000, or 31%. The majority of the increase can be attributed to an increase in compensation and benefits expense during the three months ended June 30, 2024, due to an increase in employees, compared to the same period in 2023. Offsetting this increase in sales and marketing expenses for the three months ended June 30, 2024, was a $34,000 reduction in stock-based compensation. Advertising and marketing expenses increased 61%, to approximately $25,000 for the three months ended June 30, 2024, compared to approximately $16,000 for the same period in the prior year, which was primarily due to an increase in online advertising and business development expenses. As we continue to improve the efficiency of our sales and marketing efforts, leveraging our search engine optimization and our artificial intelligence engine, we expect to continue to optimize our advertising and marketing expenses while lowering our customer acquisition costs to drive a more productive sales and marketing spend.

Current wording

Our sales and marketing costs are primarily comprised of personnel and advertising costs. Sales and marketing expenses for the three months ended September 30, 2024 were approximately $299,000, compared to approximately $764,000 for the three months ended September 30, 2023, an decrease of $465,000, or 61%. The majority of the decrease can be attributed to a decrease in stock-based compensation expense during the three months ended September 30, 2024, due to a decrease in employees and a reduction in stock issuances, compared to the same period in 2023. Advertising and marketing expenses decreased 49%, to approximately $15,000 for the three months ended September 30, 2024, compared to approximately $30,000 for the same period in the prior year, which was primarily due to a decrease in online advertising and other business development expenses. As we continue to improve the efficiency of our sales and marketing efforts, leveraging our search engine optimization and our artificial intelligence engine, we expect to continue to optimize our advertising and marketing expenses while lowering our customer acquisition costs to drive a more productive sales and marketing spend.

Previous wording

Our research and development costs are primarily comprised of personnel costs and software license fees to support the development of our marketplace. Research and development expenses for the three months ended June 30, 2024 were approximately $154,000, compared to approximately $90,000 for the three months ended June 30, 2023, an increase of approximately $64,000, or 70%. The majority of the increase can be attributed to an increase in compensation and benefits expense during the three months ended June 30, 2024, due to an increase in employees, compared to

Current wording

Our research and development costs are primarily comprised of personnel costs and software license fees to support the development of our marketplace. Research and development expenses for the three months ended September 30, 2024 were approximately $151,000, compared to approximately $247,000 for the three months ended September 30, 2023, an decrease of approximately $96,000, or 39%. The majority of the decrease can be attributed to a decrease in stock-based compensation expense during the three months ended September 30, 2024, due to a reduction in stock issuances, compared to the same period in 2023. Offsetting this decrease in research and development expenses for the three months ended September 30, 2024, was a $64,000 increase to compensation and benefits due to an increase research and development related employees and consultants. We will continue to focus on developing our digital marketplace and our AI for the benefit of driving customer value on both sides of our marketplace which we believe will drive long term value to customers and our shareholders.

Previous wording

Our general and administrative costs include personnel costs, accounting, legal, rent, and other overhead expenses. General and administrative expenses for the three months ended June 30, 2024 were approximately $667,000 compared to approximately $442,000 for the three months ended June 30, 2023, an increase of approximately $225,000, or 51%. Most of the increase can be attributed to an increase in professional fees and insurance, compensation and benefits, and stock-based compensation expense during the three months ended June 30, 2024, primarily due to an increase in employees and increased costs associated with being a public company, compared to the same period in 2023.

Current wording

Our general and administrative costs include personnel costs, accounting, legal, rent, and other overhead expenses. General and administrative expenses for the three months ended September 30, 2024 were approximately $564,000 compared to approximately $1.2 million, for the three months ended September 30, 2023, a decrease of approximately $647,000, or 53%. The majority of the decrease can be attributed to a decrease in stock-based compensation expense and a reduction in compensation and benefits during the three months ended September 30, 2024, primarily due to a reduction in stock-based issuances and a decrease in employees, compared to the same period in 2023. During the quarter ended September 30, 2024 there was a large decrease in stock-based compensation expense which was primarily related to the issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO in the prior year.

Previous wording

Depreciation and amortization expenses were approximately $50,000 for the three months ended June 30, 2024, compared to $0 for the three months ended June 30, 2023. Amortization expense relates to Groundbreaker’s developed technology, which will be amortized over a 3-year period. Depreciation expense relates to the company’s fixed assets which comprises of computer equipment and furniture.

Current wording

Depreciation and amortization expenses were approximately $51,000 for the three months ended September 30, 2024, compared to $107 for the three months ended September 30, 2023. Amortization expense, which makes up the majority of the balance, relates to Groundbreaker’s developed technology, which will be amortized over a three-year period. Depreciation expense relates to the company’s fixed assets which comprises of computer equipment and furniture.

Previous wording

Revenue for the six months ended June 30, 2024 was approximately $852,000 as compared to approximately $1.1 million for the six months ended June 30, 2023, a decrease of approximately $217,000, or 20%. During the six months ended June 30, 2024 there were 56 transactions that closed on our marketplace, compared to 94 during the six months ended June 30, 2023. The average revenue per transaction was approximately $11,000 for both the six months ended June 30, 2024 and 2023. Our average revenue per transaction closed will vary from period to period, depending on the size of the underlying loan transactions in any given period. We will focus our efforts on revenue growth, with an emphasis on our most profitable cohorts of customers. We will target increasing both our number of transactions closed and our revenue per transaction closed. During fiscal 2024, we will be focusing on larger loan opportunities, which should increase our average loan size. With the acquisition of Groundbreaker and the recent launch of our Insurtech, an increasing portion of our total revenue will be recurring revenue, where we receive annual, quarterly, and monthly subscriptions and annual insurance premium commissions. For the six months ended June 30, 2024 approximately 19% of our total revenue was recurring revenue. There was no recurring revenue for the comparable periods in fiscal 2023. The Company will continue to migrate our revenue to recurring and subscription revenue for the remainder of fiscal 2024 and beyond.

Current wording

Revenue for the nine months ended September 30, 2024 was approximately $1.5 million as compared to approximately $1.7 million for the nine months ended September 30, 2023, a decrease of approximately $182,000, or 11%. During the nine months ended September 30, 2024 there were 92 transactions that closed on our marketplace, compared to 154 during the nine months ended September 30, 2023. The average revenue per transaction was approximately $12,000 in the nine months ended September 30, 2024, compared to approximately $11,000 for the nine months ended September 30, 2023. This 9% increase in average revenue per transaction was the result of a change in the average loan size during the nine months ended September 30, 2024 compared to the similar period in the prior year. Our average revenue per transaction closed will vary from period to period, depending on the size of the underlying loan transactions in any given period. We will focus our efforts on revenue growth, with an emphasis on our most profitable cohorts of customers. We will target increasing both our number of transactions closed and our revenue per transaction closed. During fiscal 2024, we focused on larger loan opportunities, which should increase our average loan size. With the acquisition of Groundbreaker and the recent launch of our Insurtech, an increasing portion of our total revenue will transition to recurring revenue, where we receive annual, quarterly, and monthly subscriptions, and annual insurance premium commissions. For the nine months ended September 30, 2024 approximately 20% of our total revenue was recurring revenue. There was no recurring revenue for the comparable periods in fiscal 2023. The Company will continue to migrate our revenue to recurring and subscription revenue for the remainder of fiscal 2024 and beyond.

Previous wording

Cost of revenue for the six months ended June 30, 2024 was approximately $17,000 as compared to $0 for the six months ended June 30, 2023. The entire cost of revenue balance consists of software and hosting costs related Groundbreaker. Cost of revenue represents approximately 2% of total revenue for the six months ended June 30, 2024.

Current wording

Cost of revenue for the nine months ended September 30, 2024 was approximately $24,000 as compared to $0 for the nine months ended September 30, 2023. The entire cost of revenue balance consists of software and hosting costs related to Groundbreaker. Cost of revenue represents approximately 2% of total revenue for the nine months ended September 30, 2024.

Previous wording

Our operating expenses by category for the six months ended June 30, 2024 and 2023 is as follows:

Current wording

Our operating expenses by category for the nine months ended September 30, 2024 and 2023 is as follows:

Previous wording

Our sales and marketing costs are primarily comprised of personnel and advertising costs. Sales and marketing expenses for the six months ended June 30, 2024 were approximately $829,000, compared to approximately $609,000 for the six months ended June 30, 2023, an increase of $220,000, or 36%. The majority of the increase can be attributed to an increase in compensation and benefits expense during the six months ended June 30, 2024, due to an increase in employees, compared to the same period in 2023. Offsetting this increase in sales and marketing expenses for the six months ended June 30, 2024, was a $62,000 reduction in stock-based compensation. Advertising and marketing expenses increased 76%, to approximately $57,000 for the six months ended June 30, 2024, compared to approximately $32,000 for the same period in the prior year, which was primarily due to an increase in online advertising and business development expenses. As we continue to improve the efficiency of our sales and marketing efforts, leveraging our search engine optimization and our artificial intelligence engine, we expect to continue to optimize our advertising and marketing expenses while lowering our customer acquisition costs to drive a more productive sales and marketing spend.

Current wording

Our sales and marketing costs are primarily comprised of personnel and advertising costs. Sales and marketing expenses for the nine months ended September 30, 2024 were approximately $1.1 million, compared to approximately $1.4 million for the nine months ended September 30, 2023, a decrease of approximately $245,000, or 18%. The majority of the decrease can be attributed to a decrease in stock-based compensation during the nine months ended September 30, 2024. Stock-based compensation for the nine months ended September 30, 2024 was approximately $9,000 compared to approximately $513,000 for the nine months ended September 30, 2023, a decrease of approximately $504,000 which was primarily related to the issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO in the prior year. Offsetting this decrease was an increase in compensation and benefits expense of approximately $228,000 during the nine months ended September 30, 2024, due to an increase in employees, compared to the same period in 2023.

Previous wording

the same period in 2023. Offsetting this increase in research and development expenses for the three months ended June 30, 2024, was a $16,000 reduction in stock-based compensation. We will continue to focus on developing our digital marketplace and our AI for the benefit of driving customer value on both sides of our marketplace which we believe will drive long term value to customers and our shareholders.

Current wording

Our research and development costs are primarily comprised of personnel costs and software license fees to support the development of our marketplace. Research and development expenses for the nine months ended September 30, 2024 were approximately $479,000, compared to approximately $443,000 for the nine months ended September 30, 2023, an increase of approximately $36,000, or 8%. The majority of the increase can be attributed to an increase in compensation and benefits expense during the nine months ended September 30, 2024, due to an increase in employees, compared to the same period in 2023. Offsetting this increase in research and development expenses for the nine months ended September 30, 2024, was approximately $200,000 reduction in stock-based compensation expense, which was primarily related to the issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO in the prior year. We will continue to focus on developing our digital marketplace and our AI for the benefit of driving customer value on both sides of our marketplace which we believe will drive long term value to customers and our shareholders.

Previous wording

Our general and administrative costs include personnel costs, accounting, legal, rent, and other overhead expenses. General and administrative expenses for the six months ended June 30, 2024 were approximately $1.4 million compared to approximately $785,000 for the six months ended June 30, 2023, an increase of approximately $641,000, or 82%. Most of the increase can be attributed to an increase in professional fees and insurance, compensation and benefits, and stock-based compensation expense during the six months ended June 30, 2024, primarily due to an increase in employees and increased costs associated with being a public company, compared to the same period in 2023.

Current wording

Our general and administrative costs include personnel costs, accounting, legal, rent, and other overhead expenses. General and administrative expenses for the nine months ended September 30, 2024 were approximately $2.0 million for both the nine months ended September 30, 2024 and 2023. During the nine months ended September 30, 2024 there was a large decrease in stock-based compensation expense which was primarily related to the issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO in the prior year. Offsetting this decrease were increased costs associated with being a public company, which included professional fees and insurance, compared to the same period in 2023.

Previous wording

Depreciation and amortization expenses were approximately $123,000 for the six months ended June 30, 2024, compared to $0 for the six months ended June 30, 2023. Amortization expense relates to Groundbreaker’s developed technology, which will be amortized over a 3-year period. Depreciation expense relates to the company’s fixed assets which comprises of computer equipment and furniture.

Current wording

Depreciation and amortization expenses were approximately $173,000 for the nine months ended September 30, 2024, compared to $107 for the nine months ended September 30, 2023. Amortization expense, which makes up the majority of the balance, relates to Groundbreaker’s developed technology, which will be amortized over a three-year period. Depreciation expense relates to the company’s fixed assets which comprises of computer equipment and furniture.

Previous wording

Other income for the three months ended June 30, 2024 was approximately $46,000 compared to other expense of approximately $151,000 for the three months ended June 30, 2023. The majority of the other income balance for the three months ended June 30, 2024, represented interest income earned during the period. The majority of the other expense balance for the three months ended June 30, 2023, represented a change in the fair value of future equity obligations. The change in fair value was primarily related to changes in the underlying assumptions for the valuation of future equity obligations, which were capitalized on our balance sheet in connection with our IPO, which took place in July 2023.

Current wording

Other income for the nine months ended September 30, 2024 was approximately $83,000 compared to other expense of approximately $37,000 for the nine months ended September 30, 2023. The majority of the other income balance for the nine months ended September 30, 2024, represented interest income earned during the period. Offsetting other income during the nine months ended September 30, 2024 was an expense of approximately $52,000 which represented a change in the fair value of marketable securities. The majority of the other expense balance for the nine months ended September 30, 2023, represented a change in the fair value of future equity obligations. The change in fair value was primarily related to changes in the underlying assumptions for the valuation of future equity obligations, which were capitalized on our balance sheet in connection with our IPO, which took place in July 2023.

Previous wording

Our principal liquidity requirements are for working capital to fund our sales, marketing, research and development and administrative expenditures. To date, we have funded our liquidity requirements primarily through cash on hand, cash flows from operations, as well as equity and equity-related financing. As of June 30, 2024 and December 31, 2023, we had approximately $3.2 million and $5.1 million of cash and cash equivalents, respectively. As of June 30, 2024, we had an accumulated deficit of approximately $8.4 million and incurred net losses of approximately $1.8 million and $618,000 during the six months ended June 30, 2024 and 2023, respectively, had cash used in operations of approximately $1.8 million during the six months ended June 30, 2024. Management believes capital is sufficient to sustain the Company’s operating expenses for at least one year. We may continue to generate operating losses for the foreseeable future as we focus on revenue growth.

Current wording

Our principal liquidity requirements are for working capital to fund our sales, marketing, research and development and administrative expenditures. To date, we have funded our liquidity requirements primarily through cash on hand, cash flows from operations, as well as equity and equity-related financing. As of September 30, 2024 and December 31, 2023, we had approximately $2.8 million and $5.1 million of cash and cash equivalents, respectively. As of September 30, 2024, we had an accumulated deficit of approximately $8.9 million and incurred net losses of approximately $2.2 million during both the nine months ended September 30, 2024 and 2023. Management believes capital is sufficient to sustain the Company’s operating expenses for at least one year. We may continue to generate operating losses for the foreseeable future as we focus on revenue growth.

Previous wording

For the six months ended June 30, 2024, cash used in operating activities was approximately $1.8 million compared to approximately $322,000 for the six months ended June 30, 2023. The increase in cash used in operating activities was the result our increased net loss which is a result of investing our IPO proceeds in people and process to set up the company for future growth. This increase was also related to funding changes in our working capital balances, primarily accounts receivable, other assets, and accounts payable accounts.

Current wording

For the nine months ended September 30, 2024, cash used in operating activities was approximately $2.2 million compared to approximately $908,000 for the nine months ended September 30, 2023. The increase in cash used in operating activities was the result our increased net loss which is a result of investing our IPO proceeds in people and process to set up the company for future growth. This increase was also related to funding changes in our working capital balances, primarily accounts receivable, other assets, and accounts payable accounts.

Previous wording

For the six months ended June 30, 2024 cash used in investing activities was approximately $13,000 compared to $0 for the six months ended June 30, 2023. The increase in cash used in investing activities was related to the purchase of property and equipment.

Current wording

For the nine months ended September 30, 2024 cash used in investing activities was approximately $16,000 compared to approximately $9,000 for the nine months ended September 30, 2023. The increase in cash used in investing activities was related to the purchase of property and equipment and the purchase of an intangible asset during the period.

Previous wording

For the six months ended June 30, 2024, cash provided by financing activities was approximately $1,000 which was related to the issuance of 17,595 common shares from the exercise of stock options within the period.

Current wording

For the nine months ended September 30, 2024, cash used in financing activities was approximately $53,000 which the majority of the decrease was related to the accumulation of deferred offering costs in conjunction with future capital raises. During the quarter the company repurchased 10,322 shares of common stock for approximately $5,000, these shares were all cancelled by the end of the quarter. As of September 30, 2024, the company had approximately $995,000 remaining in its share repurchase plan authorization, which was authorized by the Company’s Board on November 15, 2023. Offsetting the decrease was the issuance of 17,595 common shares from the exercise of stock options within the period. For the nine months ended September 30, 2023, cash provided by financing activities was approximately $5.8 million for the nine months ended September 30, 2023 which was the result of receiving $1.0 million of gross proceeds from the sale of Series B preferred stock in April, 2023 and the initial public offering in July 2023 for approximately $4.8 million in net proceeds.

Previous wording

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Current wording

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

Previous wording

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied and the promised services have been transferred to the customer. The Company’s services are generally transferred to the customer at a point in time, which is when the underlying lending transaction has closed and successfully funded. The Company may act as an agent for both lenders and borrowers.

Current wording

The Company derives its revenue primarily from platform fees, which also includes referral and advisory fees. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied and the promised services have transferred to the customer. The Company's services are generally transferred to the customer at a point in time, which is when the underlying lending transaction has closed and successfully funded. The Company may act as an agent for both lenders and borrowers.

Previous wording

Goodwill and indefinite-lived intangibles are not amortized but are instead evaluated annually for impairment as part of the Company’s annual financial review, or when indicators of a potential impairment are present. The annual test for impairment performed for goodwill can be qualitative or quantitative, taking into consideration certain factors surrounding the fair value of the goodwill including, level by which fair value exceeded carrying value in the prior valuation, as well as macroeconomic factors, industry conditions and actual results at the test date.

Current wording

Goodwill and indefinite-lived intangibles are not amortized but are instead evaluated annually for impairment as part of the Company’s annual financial review, or when indicators of a potential impairment are present. The annual test for impairment performed for goodwill can be qualitative or quantitative, taking into consideration certain factors surrounding the fair value of the goodwill including, level by which fair value exceeded carrying value in the prior valuation, as well as macroeconomic factors, industry conditions and actual results at the test date. As of September 30, 2024 and December 31, 2023, the Company determined that no impairment was necessary.