DFDV 10-Q Quarterly Report Sept. 30, 2023 | Alphaminr
DeFi Development Corp.
ALPHAMINR

DFDV 10-Q Quarter ended Sept. 30, 2023

Balance Sheet
Cash Flow
Income Statement
Janover Inc.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM  _________ to __________
COMMISSION FILE NUMBER 001-41748
JANOVER INC.
(Exact name of registrant as specified in its charter)
Delaware
83-2676794
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
6401 Congress Avenue, Suite 250
Boca Raton , FL 33487
( 561 ) 559-4111
(Address of principal executive offices) (Zip
Code)
(Registrant’s telephone number, including area
code)
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.00001 per

share
JNVR
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
No
As of November 14, 2023, the registrant had a total of 9,995,073 shares of its common stock, par value $0.00001 per share, issued and outstanding.



JANOVER INC.
INDEX TO FORM 10-Q
Page #











2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends impacting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “intend,” “seek,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “might,” “forecast,” “continue,” or the negative of those terms, and similar expressions and comparable terminology intended to reference future periods. Forward-looking statements include, but are not limited to, statements about:
The effect of and uncertainties related the ongoing volatility in interest rates;
Our ability to achieve and maintain profitability in the future;
The impact on our business of the regulatory environment and complexities with compliance related to such environment;
Our ability to respond to general economic conditions;
Our ability to manage our growth effectively and our expectations regarding the development and expansion of our business;
Our ability to access sources of capital, including debt financing and other sources of capital to finance operations and growth;
The success of our marketing efforts and our ability to expand our lender and borrower base;
Our ability to grow market share in existing markets or any new markets we may enter;
Our ability to develop new products, features and functionality that are competitive and meet market needs;
Our ability to realize the benefits of our strategy, including our financial services and platform productivity;
and
Our ability to make accurate credit and pricing decisions or effectively forecast our loss rates
.
Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Accordingly, the forward-looking statements in this Quarterly Report on Form 10-Q should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements.

3
P ART I
I tem 1. Financial Statements
Janover Inc.
C ondensed Balance Sheets
As of September 30, 2023 and December 31, 2022
September 30,
December 31,
2023
2022
Unaudited

ASSETS
Current assets:
Cash and cash equivalents
$
5,815,008
$
981,125
Accounts receivable
127,709
38,287
Prepaid expenses
191,411
7,566
Total current assets
6,134,128
1,026,978
Property and equipment, net
8,966
-
Intangible assets
16,178
16,178
Other assets
6,877
6,877
Right of use asset
74,763
109,661
Deferred offering costs
-
177,219
Total assets
$
6,240,912
$
1,336,913
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
165,708
$
159,380
Right of use liability, current portion
50,987
45,516
Total current liabilities
216,695
204,896
Future equity obligations
-
539,582
Right of use liability
27,658
67,057
Total liabilities
244,353
811,535
Commitments and contingencies
(Note 9)
Stockholders' equity:
Series A Preferred stock, $ 0.00001 par value, 100,000 shares authorized, 10,000 shares issued
and outstanding as of both September 30, 2023 and December 31, 2022
-
-
Series B Preferred stock, $ 0.00001 par value, 1,000 shares authorized, 0 shares issued
and outstanding as of both September 30, 2023 and December 31, 2022
-
-
Common stock, $ 0.00001 par value, 100,000,000 shares authorized, 9,995,073 and 7,064,008 shares
issued and outstanding as of September 30, 2023 and December 31, 2022
, respectively
100
71
Additional paid-in capital
11,462,705
3,794,988
Accumulated deficit
( 5,466,246
)
( 3,269,681
)
Total stockholders' equity
5,996,559
525,378
Total liabilities and stockholders' equity
$
6,240,912
$
1,336,913
See accompanying notes to the unaudited condensed financial statements.
4
Janover Inc.
C ondensed Statements of Operations
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)

Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenues
$
583,785
$
525,360
$
1,652,965
$
1,691,826
Operating expenses:
Sales and marketing
764,189
449,211
1,373,379
1,217,999
Research and development
246,883
94,199
442,502
381,117
General and administrative
1,211,359
584,042
1,996,164
1,632,210
Total operating expenses
2,222,431
1,127,452
3,812,045
3,231,326
Loss from operations
( 1,638,646
)
( 602,092
)
( 2,159,080
)
( 1,539,500
)
Other income (expense):
Change in fair value of future equity obligations
-
326,290
( 119,826
)
( 10,333
)
Interest income
57,587
3,005
77,115
5,528
Other income
2,531
5,155
5,226
12,906
Total other income (expense)
60,118
334,450
( 37,485
)
8,101
Net loss
$
( 1,578,528
)
$
( 267,642
)
$
( 2,196,565
)
$
( 1,531,399
)
Weighted average common shares outstanding - basic and diluted
9,180,889
6,845,236
7,769,635
6,920,939
Net loss per common share - basic and diluted
$
( 0.17
)
$
( 0.04
)
$
( 0.28
)
$
( 0.22
)
See accompanying notes to the unaudited condensed financial statements.
5
Janover Inc.
C ondensed Statements of Changes in Stockholders' Equity (Deficit)
For the Three and Nine Months Ended September 30, 2023
and 2022
(Unaudited)

Series A

Preferred Stock
Series B

Preferred Stock
Common

Stock
Class A

Common Stock
Class B

Common Stock
Additional

Paid-in
Accumulated
Total

Stockholders'
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Equity (Deficit)
Balances at December 31, 2021
-
$
-
-
$
-
-
$
-
199,562
$
2
6,598,240
$
66
$
2,427,244
$
( 2,008,006
)
$
419,306
Recapitalization (Note
7
)
10,000
-
-
-
6,797,802
68
( 199,562
)
( 2
)
( 6,598,240
)
( 66
)
-
-
-
Issuance of common stock, net of issuance costs
-
-
-
-
22,434
-
-
-
-
-
146,170
-
146,170
Stock-based compensation
-
-
-
-
-
-
-
-
-
-
258,420
-
258,420
Net loss
-
-
-
-
-
-
-
-
-
-
-
( 888,621
)
( 888,621
)
Balances at March 31, 2022
10,000
-
-
-
6,820,236
68
-
-
-
-
2,831,834
( 2,896,627
)
( 64,725
)
Shares issued as deferred offering costs
-
-
-
-
25,000
-
-
-
-
-
22,750
-
22,750
Stock-based compensation
-
-
-
-
-
-
-
-
-
-
208,786
-
208,786
Net loss
-
-
-
-
-
-
-
-
-
-
-
( 375,136
)
( 375,136
)
Balances at June 30, 2022
10,000
-
-
-
6,845,236
68
-
-
-
-
3,063,370
( 3,271,763
)
( 208,325
)
Stock-based compensation
-
-
-
-
-
-
-
-
-
-
206,366
-
206,366
Net loss
-
-
-
-
-
-
-
-
-
-
-
( 267,642
)
( 267,642
)
Balances at September 30, 2022
10,000
$
-
-
$
-
6,845,236
$
68
-
$
-
-
$
-
$
3,269,736
$
( 3,539,405
)
$
( 269,601
)
Balances at December 31, 2022
10,000
$
-
-
$
-
7,064,008
$
71
-
$
-
-
$
-
$
3,794,988
$
( 3,269,681
)
$
525,378
Stock-based compensation
-
-
-
-
-
-
-
-
-
-
99,156
-
99,156
Net loss
-
-
-
-
-
-
-
-
-
-
-
( 220,186
)
( 220,186
)
Balances at March 31, 2023
10,000
-
-
-
7,064,008
71
-
-
-
-
3,894,144
( 3,489,867
)
404,348
Issuance of preferred stock
-
-
1,000
-
-
-
-
-
-
-
1,000,000
-
1,000,000
Stock-based compensation
-
-
-
-
-
-
-
-
-
-
103,876
-
103,876
Net loss
-
-
-
-
-
-
-
-
-
-
-
( 397,851
)
( 397,851
)
Balances at June 30, 2023
10,000
-
1,000
-
7,064,008
71
-
-
-
-
4,998,020
( 3,887,718
)
1,110,373
Issuance of common stock pursuant to IPO
-
-
-
-
1,412,500
14
-
-
-
-
5,649,986
-
5,650,000
Offering costs
-
-
-
-
375,000

4
-
-
-
-
( 1,076,131
)
-
( 1,076,127
)
Conversion of future equity obligations
into common stock in connection with IPO
-
-
-
-
165,861
2
-
-
-
-
659,406
-
659,408
Conversion of preferred stock into common stock in connection with IPO
-
-
( 1,000
)
-
500,000
5
-
-
-
-
( 5
)
-
-
Issuance of common stock upon IPO for services and offering costs upon IPO
-
-
-
-
135,266
1
-
-
-
-
541,063
-
541,064
Exercise of stock options in connection with IPO
-
-
-
-
106,061
1
-
-
-
-
( 1
)
-
-
Cancellation of stock options and issuance of common stock in connection with IPO
-
-
-
-
236,377
2
-
-
-
-
571,257
-
571,259
Stock-based compensation
-
-
-
-
-
-
-
-
-
-
119,110
-
119,110
Net loss
-
-
-
-
-
-
-
-
-
-
-
( 1,578,528
)
( 1,578,528
)
Balances at September 30, 2023
10,000
$
-
-
$
-
9,995,073
$
100
-
$
-
-
$
-
$
11,462,705
$
( 5,466,246
)
$
5,996,559
See accompanying notes to the unaudited condensed financial statements.
6
Janover Inc.
C ondensed Statements of Cash Flows
For the Nine Months Ended September 30, 2023 and 2022

(Unaudited)

Nine Months Ended
Sept
e
mber 30,
2023
2022
Cash flows from operating activities:
Net loss
$
( 2,196,565
)
$
( 1,531,399
)
Adjustments to reconcile net loss to net cash used in

operating activities:
Depreciation
107
-
Issuance of common stock upon IPO for services
541,064
-
Stock-based compensation
893,400
673,572
Change in fair value of future equity obligations
119,826
10,333
Changes in operating assets and liabilities:
Accounts receivable
( 89,422
)
32,291
Prepaid expenses
( 183,845
)
( 9,874
)
Other assets
-
( 4,483
)
Accounts payable and accrued expenses
6,328
55,364
Right of use liability, net
968
-
Net cash used in operating activities
( 908,139
)
( 774,196
)
Cash flows from investing activities:
Purchases of property and equipment
( 9,073
)
-
Net cash used in investing activities
( 9,073
)
-
Cash flows from financing activities:
Proceeds from future equity obligations, net of financing fees
-
286,000
Issuance of preferred stock
1,000,000
-
Issuance of common stock
5,650,000
166,456
O
ffering costs
( 898,905
)
( 108,465
)
Net cash provided by financing activities
5,751,095
343,991
Net change in cash
4,833,883
( 430,205
)
Cash at beginning of period
981,125
1,707,267
Cash at end of period
$
5,815,008
$
1,277,062
Supplemental disclosure of cash flow information:
Cash paid for interest
$
-
$
-
Cash paid for taxes
$
-
$
-
Supplemental disclosure of non-cash financing activities:
Conversion of future equity obligations
into common stock in connection with IPO
$
659,408
$
-
Conversion of preferred stock into common stock in connection with IPO
$
1,000,000
$
-
Right of use asset and liability
$
-
$
143,132
Shares issued as deferred offering costs
$
-
$
22,750
See accompanying notes to the unaudited condensed financial statements.
7
Janover Inc.
N otes to the Condensed Financial Statements
1.
NATURE OF OPERATIONS

Janover Inc. (“Janover” or the “Company”) was originally formed as Janover Ventures, LLC on November 28, 2018 in the State of Florida as a limited liability company and converted to a corporation, incorporated in the State of Delaware on March 9, 2021. The Company provides technology connection to businesses and commercial property owners and lenders. The Company is headquartered in Boca Raton, Florida.
Reverse Stock Split
The Company effected a
1-for-6.82
reverse stock split of its outstanding common stock on June 8, 2023. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split. There was no effect on the number of shares of common stock or preferred stock authorized for issuance under the Company’s certificate of incorporation or the par value of such securities.
Initial Public Offering
On July 24, 2023, the Company’s registration statement on Form S-1 relating to its initial public offering of its common stock (“the IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). The IPO closed on July 27, 2023, which resulted in the sale of 1,412,500 shares of common stock at a public offering price of $ 4.00 per share. The aggregate net proceeds to the Company from the IPO were approximately $ 5.0 million after deducting underwriting discounts and commissions of $ 0.4 million and offering expenses of approximately $ 0.3 million.
2.
GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained net losses of $ 2,196,565 and $ 1,531,399 during the nine months ended September 30, 2023 and 2022, respectively, and had cash used in operations of $ 908,139 during the nine months ended September 30, 2023.
Management’s Plans
As of November 14, 2023,
the date of issuance of these unaudited interim condensed financial statements, the Company expects that its cash and cash equivalents of $ 5,815,008
as
of September 30, 2023 will be sufficient to fund its operating expenses and capital expenditure requirements for at least one year from the date these financial statements are issued.
8
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP"). The Company’s fiscal year is December 31.
Unaudited Interim Financial Information
The unaudited interim condensed financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, within the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the results for the interim periods presented and of the financial condition as of the date of the interim balance sheet. The financial data and the other information disclosed in these notes to the interim financial statements related to the nine-month periods are unaudited. Unaudited interim results are not necessarily indicative of the results for the full fiscal year.
The accompanying unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s prospectus that forms a part of the Company’s Registration Statement on Form S-1 ( File No. 333-267907). The prospectus was filed with the SEC pursuant to Rule 424(b)(4) on July 26, 2023.
Use of Estimates
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, valuation of future equity obligations and stock-based compensation. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. At September 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents were held at accredited financial institutions.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.
Fair Value Measurements
Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
Level 1—Quoted prices in active markets for identical assets or liabilities.
9
Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
The carrying values of the Company’s accounts receivable, prepaid expenses and accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

See Note 4 and
6
for fair value disclosures of future equity obligations.
Accounts Receivable
Accounts receivable are derived from services delivered to customers and are stated at their net realizable value. The Company accounts for allowance for doubtful accounts under ASC 310-10-35. Each month, the Company reviews its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of September 30, 2023 and December 31, 2022, the Company determined there was no allowance for doubtful accounts necessary.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the estimated useful life of the asset, which is three ( 3 ) to five ( 5 ) years for computer and hardware and five ( 5 ) to seven ( 7 ) years for the Company’s furniture and fixtures. Estimated useful lives are periodically assessed to determine if changes are appropriate. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the balance sheets and any resulting gains or losses are included in the statement of operations in the period of disposal.
Intangible Assets
Intangible assets represent various domain names the Company purchased. The Company owns the domain names indefinitely. Costs to renew domains are expensed as incurred.
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Revenue Recognition
The Company accounts for revenue under ASC 606
, Revenue from Contracts with Customers
. The Company determines revenue recognition through the following steps:
Identification of a contract with a customer;
10
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when or as the performance obligations are satisfied.
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.
The Company derives its revenue primarily from 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.
Advertising and Promotion
Advertising and promotional costs are expensed as incurred. Advertising expenses were approximately $ 30,000
and $ 118,000 for
the three months ended September 30, 2023 and 2022, and $ 63,000 and $ 248,000 for the nine months ended September 30, 2023 and 2022, all respectively, which are included in sales and marketing expenses.
Research and Development Costs
Research and development costs include costs to develop and refine technological processes used to carry out business operations, including personnel costs for website and non-capitalizable software design and development functions and related software and hosting costs. Research and development costs charged to expense were $ 246,883 and $ 94,199 for the three months ended September 30, 2023 and 2022, and $ 442,502 and $ 381,117 for the nine months ended September 30, 2023 and 2022, all respectively.
Concentrations
The Company had five customers which accounted for 73
% of accounts receivable as of September 30, 2023. The Company had four customers which accounted for 68 % of accounts receivable as of December 31, 2022. During the nine months ended September 30, 2023, one customer accounted for
33 % of the Company’s revenues. During the nine months ended September 30, 2022, two customers accounted for 43 % of the Company’s revenues. The Company may be negatively affected by the loss of one of these customers.
Future Equity Obligations
The Company has issued Simple Agreements for Future Equity (“SAFEs”) in exchange for cash financing. These funds were classified as long-term liabilities prior to their conversion into shares of common stock upon the Company’s IPO (see Note 5).
The Company has accounted for its SAFE investments as liability derivatives under the FASB’s ASC section 815-40 and ASC section 815-10. If any changes in the fair value of the SAFEs occur, the Company will record such changes through earnings, under the guidance prescribed by ASC 825-10.
Offering Costs
The Company complies with the requirements of ASC 340,
Other Assets and Deferred Costs
, with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs pertaining to future equity obligations are charged to interest expense upon completion of an offering. As of September 30, 2023, the Company had no deferred offering costs.
11
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718,
Compensation – Stock Compensation.
The Company measures all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. For awards with service-based vesting conditions, the Company records the expense for using the straight-line method. For awards with performance-based vesting conditions, the Company records the expense if and when the Company concludes that it is probable that the performance condition will be achieved.
The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient’s costs are classified.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company was a private company and lacks company-specific historical and implied volatility information for its stock. Therefore, it estimates its expected stock price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions.
The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards.
Net Loss per Share
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are anti-dilutive as of September 30, 2023, diluted net loss per share is the same as basic net loss per share. As of September 30, 2022, there were an indeterminable number of shares that were potentially dilutive based on the Company’s outstanding future equity obligations (see Note
6
). Other potentially dilutive items outstanding as of September 30, 2023 and 2022 are as follows:
September 30,
2023
2022
Series A Preferred Stock

10,000

10,000
Stock options
281,583
427,713
Restricted stock units
225,000
-
Warrants to purchase common stock
70,625
-
Total potentially dilutive shares

587,208
$
437,713
12
Recently Adopted Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
4.
FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows:
Fair Value Measurements

as of September 30, 2023 Using:
Level 1
Level 2
Level 3
Total
Liabilities:
Future equity obligations
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Fair Value Measurements

as of December 31, 2022 Using:
Level 1
Level 2
Level 3
Total
Liabilities:
Future equity obligations
$
-
$
-
$
539,582
$
539,582
$
-
$
-
$
539,582
$
539,582
The Company measured the future equity obligations at fair value based on significant inputs not observable in the market, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. The valuation of the future equity obligations uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. Changes in the fair value of the future equity obligations related to updated assumptions and estimates are recognized within the statements of operations.
The Company utilized a probability-weighted average approach based on the estimated market value of the underlying securities and the potential settlement outcomes of the future equity obligations, including a liquidity event or future equity financing as well as other settlement alternatives. Both the market value of the underlying securities and the probability of the settlement outcomes include unobservable Level 3 inputs.
As of December 31, 2022, the Company estimated a 95 % probability of a liquidity event pursuant to the Company’s intent of an initial public offering and estimated the potential price per share of the offering. Immediately prior to the IPO, the Company revalued the remaining outstanding SAFEs using a 100 % probability of an equity financing and $ 4.00 as the fair value of the underlying common stock. Upon the IPO, the SAFEs converted into 165,861 shares of common stock at a fair value of $ 659,408 .
The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2023:
Future Equity
Obligations
Balance, December 31, 2022
$
539,582
Change in fair value
119,826
Conversion to common stock
( 659,408
)
Balance, September 30, 2023
$
-
13
5.
PROPERTY AND EQUIPMENT, NET
The following is a summary of property and equipment, net:
September 30,
December 31,
2023
2022
Computer and hardware
$
5,464
$
-
Furniture and fixtures
3,609
-
Total
9,073
-
Less: accumulated depreciation
( 107
)
-
Property and equipment, net
$
8,966
$
-
Depreciation expense was $ 107 and $ 0 for the nine months ended September 30, 2023 and 2022, respectively.
6.
FUTURE EQUITY OBLIGATIONS
In 2020, the Company initiated a Regulation Crowdfunding (“Regulation CF”) offering of Crowdfunding Simple Agreement for Future Equity (“Crowd SAFE”) securities. Each Crowd SAFE agreement, which provided the right of the investors to future equity in the Company, was subject to a valuation cap of $
20,000,000 .
If there was an equity financing of at least $
2,000,000
in gross proceeds before the instrument expires or was terminated, the Company could either continue the term of the Crowd SAFE without conversion, or issue to the investor a number of units of the CF Shadow Series, as applicable, sold in the equity financing. The CF Shadow Series represent the same type of equity interests sold (preferred or common securities) in the equity financing, however members in the Shadow Series shall have no voting rights. The number of units of the CF Shadow Series equal the purchase amount divided by the Conversion Price. The Conversion Price is equivalent to a) the Safe Price, defined as the valuation cap divided by the number of dilutive units outstanding, or b) the Discount Price, which is the price per unit of the equity interests sold multiplied by the discount rate of
90 %; whichever calculation results in a greater number of equity interests. If the Company continues the term of the Crowd SAFE after the initial equity financing, and another equity financing occurs before the termination of the instrument, the Company may further continue the term of the Crowd SAFE or may issue the investor a number of units of the CF Shadow Series equal to the purchase amount by the first equity financing price.
In 2022, the Company entered into SAFE agreements with several investors for total proceeds of $ 286,000 . The agreements ha
d
a valuation cap of $ 50,000,000 and a discount of 20 %.
In October 2022, the Company issued an aggregate of 218,772 shares of common stock for the conversion of $ 668,898 of the 2020 and 2021 SAFEs previously issued.
Upon the Company’s IPO in July 2023, all remaining outstanding SAFEs were converted into 165,861 shares of common stock.
As of September 30, 2023 and December 31, 2022, the fair value of SAFEs was $ 0 and $ 539,582 , respectively. See Note 4 for fair value disclosures.
7.
STOCKHOLDERS’ EQUITY
Recapitalization and Amended and Restated Certificate of Incorporation
In April 2023, the Company filed with the Secretary of State of Delaware Series B Certificate of Designation, the Company is authorized to issue up to 1,000 shares of Series B Preferred Stock with a stated value of $1,000 per share.
14
In March 2022, the Company restated its Certificate of Incorporation to authorize 110,000,000 shares, consisting of 10,000,000 shares of preferred stock and 100,000,000 shares of common stock, both with a par value of $ 0.00001 per share. Upon the filing of the Amended and Restated Certification of Incorporation, each share of the Company’s Class A and Class B common stock was exchanged for one share of common stock, or an aggregate of 6,598,240 shares and 10,000 shares of Series A preferred stock.
As of September 30, 2023, there were 100,000 shares designated as Series A preferred stock.
Series A Preferred Stock
Each share of Series A Preferred Stock is entitled to 10,000 votes. The holders of shares of Preferred Stock are entitled to vote on all matters on which the common stock shall be entitled to vote.
The holders of the Series A Preferred Stock are not entitled to dividends. Upon the event of liquidation, dissolution or winding up of the Company, voluntary or involuntary, the holders of our Series A Preferred Stock would be entitled to receive the initial stated value of the Company’s preferred stock.
Series B Preferred Stock
All of the outstanding shares of Series B Preferred Stock shall automatically convert along with the aggregate accrued or accumulated and unpaid dividends thereon into an aggregate number of shares of common stock as is determined by dividing the stated value per share along with the aggregate accrued or accumulated and unpaid dividends on the outstanding shares of Series B Preferred Stock by the Conversion Price, which means 50 % of the purchase price per share in a Qualified Public Offering.
Upon the Company’s IPO in July 2023, all shares of Series B Preferred Stock were converted into 500,000 shares of common stock.
Stock Transactions
On April 11, 2023, the Company sold 1,000 shares of Series B Preferred Stock to one accredited investor for an aggregate purchase price of $ 1,000,000 , or value of $ 1,000 per share.
In the IPO, which closed on July 27, 2023, the Company issued and sold 1,412,500 shares of common stock at a public offering price of $ 4.00 per share. The aggregate gross proceeds to the Company from the IPO were $ 5.65 million.
The aggregate net proceeds to the Company from the IPO were approximately $ 5.0 million after deducting underwriting discounts and commissions of $ 0.4 million and offering expenses of approximately $ 0.3 million.

Upon the IPO, all outstanding SAFEs were converted into 165,861 shares of common stock.
Upon the IPO, an aggregate of 135,266 shares of common stock were issued for services at a fair value of $ 4 per share. The Company recognized stock-based compensation expense of $ 541,064 during the nine months ended September 30, 2023
related to the issuance
.


Upon the IPO, an aggregate of 106,061 shares of common stock were issued pursuant to exercise of stock options for no proceeds.
15
Upon the IPO, an aggregate of 236,377 shares of common stock to employees and consultants were issued pursuant to the cancellation of stock options issued to such holders. The Company revaluated the cancelled options using the Black-Scholes options model
immediately prior to modification
and compared to the fair value of the shares issued at $ 4.00 per share
and the remaining expense to be recognized under the original option grant.
Accordingly, the incremental difference of $ 571,259 was recognized as stock-based compensation expense in accordance with ASC 718-20-35 during the nine months ended September 30, 2023.
As of September 30, 2023 the Company had 10,000 shares of Series A preferred stock and 9,995,073 shares of common stock issued and outstanding. As of December 31, 2022, the Company had 10,000 shares of Series A preferred stock and 7,064,008 shares of common stock issued and outstanding.
Janover Inc. 2021 Equity Incentive Plan
In November 2021, the Board of Directors adopted the Company’s 2021 Equity Incentive Plan (the “2021 Plan”), effective as of November 1, 2021. The 2021 Plan provides for the grant of the following types of stock awards: (i) incentive stock options, (ii) non statutory stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards and (vi) other stock awards. The 2021 Plan is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any affiliate and provide a means by which the eligible recipients may benefit from increases in value of the common stock. The Board reserved 659,824 shares of common stock issuable upon the grant of awards. Stock options comprise all of the awards granted since the 2021 Plan’s inception.
Janover Inc. 2023 Equity Incentive Plan
In September 2023, the Board of Directors adopted the Company’s 2023 Equity Incentive Plan (the “2023 Plan”), effective as of September 29, 2023. The 2023 Plan provides for the grant of the following types of stock awards: (i) incentive stock options, (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock unit awards and (v) performance awards. The 2023 Plan is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any affiliate and provide a means by which the eligible recipients may benefit from increases in value of the common stock. The Board reserved 1,500,000 shares of common stock issuable upon the grant of awards, which includes the number of awards reserved per the 2021 Plan noted above. Stock options and restricted stock units comprise all of the awards granted since the 2023 Plan’s inception.
As of September 30, 2023, there were 880,634 shares available for grant under both the 2021 and 2023 Plans.
A summary of information related to stock options for the nine months ended September 30, 2023 is as follows:
Options
Weighted

Average

Exercise Price


Intrinsic

Value
Outstanding as of December 31, 2022
427,713
$
1.40
$
665,330
Granted
220,000
3.50
$
-
Exercised
( 106,061
)
0.07
$
-
Forfeited
( 21,995
)
4.32
$
-
Cancelled
( 238,074
)
2.42
$
-
Outstanding as of September 30, 2023
281,583
$
3.41
$
-
(1)
Exercisable as of September 30, 2023
61,584
$
3.10
$
-
(1)
Exercisable as of December 31, 2022
271,481
$
1.37
$
551,123
(1)
As of September 30, 2023, all outstanding and exercisable stock options had no intrinsic value as the stock option exercise prices were
above
the current fair market value of the stock price, thus were out of the money
.


16
The weighted average duration to expiration for outstanding options at September 30, 2023 was 9.46 years.
The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted:
Nine Months Ended
September 30,
2023
2022
Risk-free interest rate
4.07 %- 4.63 %
1.92
%
Expected term (in years)
5.75
5.61
Expected volatility
35.00
%
35.00
%
Expected dividend yield
0
%
0
%
Stock-based compensation expense
related to
stock
options was
$ 113,902
and
$ 206,366
for the three months ended September 30, 2023 and 2022, respectively.  Stock-based compensation expense related to
stock
options was
$ 316,124 and $ 673,572
for the nine months ended September 30, 2023 and 2022, respectively
. Total unrecognized compensation cost related to non-vested stock option awards amounted to $ 270,520 as of September 30, 2023, which will be recognized over a weighted average period of 1.15 years.
Warrants
In connection with the Company’s IPO, the Company granted an aggregate of 70,625 warrants to purchase common stock to the underwriters at
an exercise price of $ 4.40 , which is equal to 110 % of the offering price. The warrants may be exercised beginning on January 25, 2024 until July 24, 2028 .
Restricted Stock Units
In September 2023, the Company granted 225,000 restricted stock units (“RSUs”) under the 2021 Plan to the Chief Financial Officer (see Note 8). The RSUs vest over
a period of
4 years. The Company recorded stock-based compensation expense of $ 6,017 in the statements of operations for the nine months ended September 30, 2023. Total unrecognized compensation cost related to non-vested restricted common stock amounted to $ 286,483 as of September 30, 2023, which is expected to be recognized
over
4 year
s
.
Total stock-based compensation, including the cancellation of options, common shares issued for services and RSUs was classified in the statements of operations as follows:
Nine Months Ended
September 30,
2023
2022
Sales and marketing
$
513,330
$
219,518
Research and development
209,329
55,542
General and administrative
711,805
398,512
$
1,434,464
$
673,572
8.
RELATED PARTY TRANSACATIONS
Prior to the conversion to a corporation, the founder and Chief Executive Officer had control over 100 % of the outstanding units and membership of the Company, and accounted for all contributions and distributions within members’ deficit. Upon the conversion, the founder and Chief Executive Officer’s outstanding units were converted into Class B common shares, which were converted into 10,000 shares of Series A preferred stock and 6,598,240 shares of common stock upon the recapitalization in March 2022 (see Note
7
).
During the three and nine months ended September 30, 2023 and 2022, the Company incurred $ 13,269 , $ 14,154 , $ 128,267 and $ 128,267 , respectively, to an entity owned by the Chief Executive Officer for compensation. The amounts are included in general and administrative expenses in the statements of operations.
17
In consideration for serving as a member of the board of directors, each director shall be paid a cash fee of $ 8,000 per fiscal quarter with the chairmen of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee to receive an additional $ 9,000 , $ 3,500 , and $ 1,500 , respectively, each fiscal quarter, which begins accruing upon the IPO. During the nine months ended September 30, 2023, the Company incurred approximately $ 35,000 in director fees. The amounts are included in general and administrative expenses in the statements of operations.
During the three and nine months ended September 30, 2023, the Company paid Innovar Consulting Corporation, a consulting firm, wholly owned by Mr. Marcelo Lemos, a director, $ 1,500 and $ 10,500 , respectively, in consideration for consulting services rendered.
On September 6, 2023, Patrick Stinus resigned from his position as Senior Vice President and Interim Chief Financial Officer of the Company. Mr. Stinus indicated that his resignation from the Company is not due to any disagreement with respect to the Company’s operations, policies, or practices.

On September 7, 2023, the Company entered into an at-will employment agreement with Mr. Bruce S. Rosenbloom (the “Employment Agreement”) to serve as Chief Financial Officer of the Company, effective immediately (the “Effective Date”). The Employment Agreement has an initial term which shall commence from the Effective Date and continue until December 31, 2025 (the “Initial Term”) and shall automatically renew for an additional one-year period at the end of the Initial Term and each anniversary thereafter (a “Renewal Term”) provided that at least 90 days prior to the expiration of any Renewal Term either Party provides written notice of its intention not to extend the term of the Employment Agreement.
9.
COMMITMENTS AND CONTINGENCIES
Contingencies
The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matters will have a material adverse effect on its business, financial condition or results of operations.
10.
SUBSEQUENT EVENTS
Through the issuance date, the Company has granted 24,000 options to purchase common stock to employees and consultants.
18
I TEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the other information set forth in the Registration Statement. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports filed and to be filed with the SEC.
Overview
We provide a technology platform that connects commercial mortgage borrowers looking for debt to refinance, build, or buy commercial property including apartment buildings to commercial property lenders (banks, credit unions, real estate investment trusts (“REITs”), debt funds, and more) looking to deploy capital into commercial mortgages.
We have developed a flexible, two-sided, AI-enabled, B2B fintech marketplace that connects commercial borrowers and lenders, with a human touch. Commercial property owners, operators, and developers can quickly create an account on our platform, set up their own profile and submit and manage loan requests on their dashboard in a digital experience which is now enhanced by AI. Our algorithms automatically match borrowers to their best loan option(s) or to our internal capital markets advisors that guide the borrower through the process and connect them with the right loan product and lender. Originators that work at commercial mortgage lenders can log in and use their lender portal to view, sort, and engage with their new matches in real-time and communicate with the borrowers, tracking their loans right through our portal; they can setup the types of deals they are looking for as well. Our capital markets advisors (inbound sales team) have their own interface that gives them access to targeted loan opportunities, market intelligence, and data empowering them to better assist borrowers in managing their choices, leading to the best possible outcomes for both lenders and borrowers while building trust, all of which enhances our brand.
We currently have two different customer segments: lenders and borrowers. Borrowers include (but are not limited to) owners, operators, and developers of commercial real estate including multifamily properties and most recently, a growing segment of small business owners (which we believe represents a significant growth opportunity). Lenders include banks, credit unions, REITs, Fannie Mae® and Freddie Mac® multifamily lenders, FHA® multifamily lenders, debt funds, commercial mortgage-backed securities (“CMBS”) lenders and Small Business Administration (“SBA”) lenders, and more.
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, as we scale, we expect the obligation of payment to be increasingly paid by the lender only, possibly in the form of subscriptions. 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.
Strategy
Over the next 12 to 24 months, we plan to focus on our growth opportunities which are also the foundations of our competitive advantage.
We are focused on executing in the following ways:
1.
Accelerating our content machine, further delivering value to our borrowers, and improving our top-of-the-funnel net.
19
2.
Building out our product, enriching it with data and features, while making it easier for lenders to onboard, borrowers to access more options, and our internal capital markets advisors to provide deeper value to both borrowers and lenders. We aim to create a denser network and stickier experience for all stakeholders.
3.
Expanding our performance marketing within and beyond multifamily to accelerate our acquisition of high-intent office, retail, hotel, self-storage, and small business borrower accounts.
All of this will be done by continuing to:
1.
Hire high-performing and aligned personnel to help us execute our strategy.
2.
Invest in our platform and technology.
3.
Cultivate a culture of creativity, hard work, innovation, curiosity, and community.
Economic and Market Risks and Uncertainties in Our Business Model
We may be negatively impacted by periods of economic downturns, recessions, and disruptions in the capital markets, credit and liquidity issues in the capital markets, including international, national, regional and local markets, tax and regulatory changes and corresponding declines in the demand for commercial real estate investment and related services. Historically, commercial real estate markets and, in particular, the U.S. commercial real estate market, have tended to be cyclical and related to the flow of capital to the sector, the condition of the economy as a whole and the perceptions and confidence of market participants to the economic outlook. Cycles in the real estate markets may lead to similar cycles in our earnings and significant volatility in our stock price. Further real estate markets may “lag” behind the broader economy such that even when underlying economic fundamentals improve in a given market, additional time may be required for these improvements to translate into strength in the real estate markets. The “lag” may be exacerbated when banks delay their resolution of commercial real estate assets whose values are less than their associated loans.
Negative economic conditions, changes in interest rates, credit and the availability of capital, both debt and/or equity, disruptions in capital markets, the uncertainty of the tax and regulatory environment or declines in the demand for commercial real estate investment and related services in international and domestic markets or in significant markets in which we do business, have had and could have in the future a material adverse effect on our business, results of operations and/or financial condition. In particular, the commercial real estate market is directly impacted by (i) the lack of debt and/or equity financing for commercial real estate transactions, (ii) increased interest rates and changes in monetary policies by the U.S. Federal Reserve, (iii) changes in the perception that commercial real estate is an accepted asset class for portfolio diversification, (iv) changes in tax policy affecting the attractiveness of real estate as an investment choice, (v) changes in regulatory policy impacting real estate development opportunities and capital markets, (vi) slowdowns in economic activity that could cause residential and commercial tenant demand to decline, and (vii) declines in the regional or local demand for commercial real estate, or significant disruptions in other segments of the real estate markets could adversely affect our results of operations. Any of the foregoing would adversely affect the operation and income of commercial real estate properties.
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.
20
Seasonality
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.
Results of Operations
Three Months Ended September 30, 2023, Compared to the Three Months Ended September 30, 2022
The following table provides certain selected financial information for the periods presented:
Three Months Ended
September 30,
2023
2022
Change
Change %
Revenues
$
583,785
$
525,360

$
58,425

11
%
Operating expenses:
Sales and marketing
764,189
449,211
314,978
70
%
Research and development
246,883
94,199
152,684
162
%
General and administrative
1,211,359
584,042
627,317
107
%
Total operating expenses
2,222,431
1,127,452
1,094,979
97
%
Loss from operations
(1,638,646
)
(602,092

)
(1,036,554

)
172
%
Other income (expense)
60,118
334,450

(274,332

)
-82
%
Net loss
$
(1,578,528
)
$
(267,642
)
$
(1,310,886
)
490
%
Weighted average common shares outstanding -
basic and diluted
9,180,889
6,845,236
Net loss per common share - basic and diluted
$
(0.17
)
$
(0.04
)
Revenue

Revenue for the three months ended September 30, 2023 was $583,785 as compared to $525,360 for the three months ended September 30, 2022, an increase of 11%. The increase in revenue for the three months ended September 30, 2023 was significantly influenced by the growth of our Small Business Administration (“SBA”) loans. During the three months ended September 30, 2023 there were 60 transactions that closed on our marketplace, compared to 93 during the three months ended September 30, 2022. The average revenue per transaction was $9,673 in the three months ended September 30, 2023, compared to $5,419 for the three months ended September 30, 2022. This 78% increase in average revenue per transaction was the result of a change in the average loan size during the three months ended September 30, 2023 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. With the completion of our IPO in late July 2023, we will focus our efforts on revenue growth, with an emphasis on our most profitable cohorts of customers. We target increasing both our number of transactions closed and our revenue per transaction closed.

21
Operating Expenses

Our operating expenses by category for the three months ended September 30, 2023, and 2022 is as follows:
Three Months Ended
September 30,
2023
2022
Change
Change %
Sales and Marketing Expenses:
Compensation and benefits
$
270,314
$
239,709
$
30,605
13
%
Advertising & marketing
30,488
117,922
(87,434
)
-74
%
Stock-based compensation
444,346
72,135
372,211
516
%
Other
19,041
19,445
(404
)
-2
%
Total sales and marketing expenses
$
764,189
$
449,211
$
314,978
70
%
Research and Development Expenses:
Compensation and benefits
$
63,845
$
67,437
$
(3,592
)
-5
%
Stock-based compensation
170,977
10,025
160,952
1606
%
Software license fees
12,061
16,737
(4,676
)
-28
%
Total research and development expenses
$
246,883
$
94,199
$
152,684
162
%
General and Administrative Expenses:
Compensation and benefits
$
337,954
$
324,057
$
13,897
4
%
Stock-based compensation
616,110
124,206
491,904
396
%
Professional fees and insurance
175,326
28,721
146,605
510
%
Office related expenses
19,582
36,482
(16,900
)
-46
%
Information technology support
14,041
(11,267
)
25,308
-225
%
Other
48,346
81,843
(33,497
)
-41
%
Total general and administrative expenses
$
1,211,359
$
584,042
$
627,317
107
%
Sales and marketing expenses
Our sales and marketing costs are primarily comprised of personnel and advertising costs. Sales and marketing expenses for the three months ended September 30, 2023 were $764,189, compared to $449,211 for the three months ended September 30, 2022, an increase of $314,978, or 70%. The majority of the increase can be attributed to an increase in stock-based compensation expense during three months ended September 30, 2023, due to issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO, compared to the same period in 2022.  Offsetting this increase in sales and marketing expenses for the three months ended September 30, 2023, was a $87,434 reduction in advertising and marketing 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.
Research and development expenses
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, 2023 were $246,883 compared to $94,199 for the three months ended September 30, 2022, an increase of $152,684, or 162%. The majority of the increase can be attributed to an increase in stock-based compensation expense during three months ended September 30, 2023 due to issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO, compared to the same period in 2022.  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.
22
General and administrative expenses

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, 2023 were $1,211,359 compared to $584,042 for the three months ended September 30, 2022, an increase of $627,317, or 107%. The majority of the increase can be attributed to an increase in professional fees and stock-based compensation expense during the three months ended September 30, 2023 due to issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO, compared to the same period in 2022. This increase in professional fees and stock-based compensation were in support of our capital raising process, which led to our successful initial public offering in July 2023.
Other income (expense)
Other income (expense) for the three months ended September 30, 2023, was an income of $60,118, compared to income of $334,450 for the three months ended September 30, 2022, a decrease of $274,332. The decrease in other income was primarily the result of 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.


Nine Months Ended September 30, 2023, Compared to the Nine Months Ended September 30, 2022
The following table provides certain selected financial information for the periods presented:

Nine Months Ended
September 30,
2023
2022
Change
Change %
Revenues
$
1,652,965
$
1,691,826
$
(38,861
)
-2
%
Operating expenses:
Sales and marketing
1,373,379
1,217,999
155,380
13
%
Research and development
442,502
381,117
61,385
16
%
General and administrative
1,996,164
1,632,210
363,954
22
%
Total operating expenses
3,812,045
3,231,326
580,719
18
%
Loss from operations
(2,159,080
)
(1,539,500
)
(619,580
)
40
%
Other income (expense)
(37,485
)
8,101
(45,586
)
-563
%
Net loss
$
(2,196,565
)
$
(1,531,399
)
$
(665,166
)
43
%
Weighted average common shares outstanding -
basic and diluted
7,769,635
6,920,939
Net loss per common share - basic and diluted
$
(0.28
)
$
(0.22
)
Revenue
Revenue for the nine months ended September 30, 2023 was $1,652,965 as compared to $1,691,826 for the nine months ended September 30, 2022, a decrease of 2%.
The increase in revenue for the nine months ended September 30, 2023 was significantly influenced by the growth of our SBA loans.
During the nine months ended September 30, 2023 there were 154 transactions that closed on our marketplace, compared to 229 during the nine months ended September 30, 2022. The average revenue per transaction was $10,575 in the nine months ended September 30, 2023, compared to $7,146 for the nine months ended September 30, 2022 representing a 48% increase in revenue per transaction. This increase in average revenue per transaction was the result of a change in the average loan size during the nine months ended September 30, 2023 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. With the completion of our IPO in late July 2023, we will focus our efforts on revenue growth, with an emphasis on our most profitable customer cohorts. We target increasing both our number of transactions closed and our revenue per transaction closed.

23
Operating Expenses
Our operating expenses by category for the nine months ended September 30, 2023, and 2022 is as follows:
Nine Months Ended
September 30,
2023
2022
Change
Change %
Sales and Marketing Expenses:
Compensation and benefits
$
746,672
$
680,960
$
65,712
10
%
Advertising & marketing
62,692
248,303
(185,611
)
-75
%
Stock-based compensation
513,330
219,518
293,812
134
%
Other
50,685
69,218
(18,533
)
-27
%
Total sales and marketing expenses
$
1,373,379
$
1,217,999
$
155,380
13
%
Research and Development Expenses:
Compensation and benefits
$
207,941
287,388
$
(79,447
)
-28
%
Stock-based compensation
209,329
55,542
153,787
277
%
Software license fees
25,232
38,187
(12,955
)
-34
%
Total research and development expenses
$
442,502
$
381,117
$
61,385
16
%
General and Administrative Expenses:
Compensation and benefits
$
795,854
859,583
$
(63,729
)
-7
%
Stock-based compensation
711,805
398,512
313,293
79
%
Professional fees and insurance
287,412
139,115
148,297
107
%
Office related expenses
76,268
98,525
(22,257
)
-23
%
Information technology support
35,810
21,084
14,726
70
%
Other
89,015
115,391
(26,376
)
-23
%
Total general and administrative expenses
$
1,996,164
$
1,632,210
$
363,954
22
%
Sales and marketing expenses

Our sales and marketing costs are primarily comprised of personnel and advertising costs. Sales and marketing expenses for the nine months ended September 30, 2023 were $1,373,379, compared to $1,217,999 for the nine months ended September 30, 2022, an increase of $155,380, or 13%. The majority of the increase can be attributed to an increase in stock-based compensation expense during nine months ended September 30, 2023, due to issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO, compared to the same period in 2022.  Offsetting this increase in sales and marketing expenses for the nine months ended September 30, 2023, was a $185,611 reduction in advertising and marketing 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.

Research and development expenses
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, 2023 were $442,502, compared to $381,117, for the nine months ended September 30, 2022, an increase of $61,385, or 16%. The majority of the increase can be attributed to an increase in stock-based compensation expense during nine months ended September 30, 2023 due to issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO, compared to the same period in 2022.  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.
24
General and administrative expenses
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, 2023 were $1,996,164, compared to $1,632,210 for the nine months ended September 30, 2022, an increase of $363,954, or 22%.
The majority of the increase can be attributed to an increase in professional fees and stock-based compensation expense during nine months ended September 30, 2023, due to issuance of common stock upon our IPO for services, cancellation of employee stock options and issuance of common stock in connection with the IPO, compared to the same period in 2022.  This increase in professional fees and stock-based compensation were in support of our capital raising process, which led to our successful initial public offering in July 2023.
Other income (expense)
Other income (expense) for the nine months ended September 30, 2023 was an expense of ($37,485), compared to income of $8,101 for the nine months ended September 30, 2022, a decrease to income of $45,586. This decrease to income was the result of 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 for conversion into common stock upon IPO, which were capitalized on our balance sheet in connection with our IPO.

Liquidity and Capital Resources; Going Concern

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, 2023 and December 31, 2022, we had $5,815,008 and 981,125 of cash and cash equivalents, respectively. As of September 30, 2023, we an accumulated deficit of $5,466,246 incurred net losses of $2,196,565 and $1,531,399 during the nine months ended September 30, 2023 and 2022, respectively, had cash used in operations of $908,139 during the nine months ended September 30, 2023. With the $1.0 million of proceeds raised from the sale of Series B preferred stock in the second quarter of 2023 and the closing of our initial public offering in July 2023 for approximately $5.0 million, management believes capital is sufficient to sustain the Company’s operating expenses for at least one year. We expect to continue to generate operating losses for the foreseeable future as we focus on revenue growth.

Our business plan is focused on rapid growth to achieve significant market penetration over the shortest possible time horizon. As such, we intend to invest in research and development and sales and marketing to drive that rapid growth.
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities:
Nine Months Ended

September 30,


2023
2022
Change
Cash from used in operating activities
$
(908,139
)
$
(774,196
)
$
(133,943
)
Cash from investing activities
$
(9,073
)
$
-
$
(9,073
)
Cash from financing activities
$
5,751,095
$
343,991
$
5,407,104
Cash from used in operating activities
For the nine months ended September 30, 2023, cash used in operating activities was $908,139 compared to $774,196 for the nine months ended September 30, 2022. The increase in cash used in operating activities was the result of funding changes in our working capital balances, primarily accounts receivable, prepaid expenses and of our increased loss from operations.
25
Cash from investing activities

For the nine months ended September 30, 2023 cash from investing activities was $9,073 compared to $0 for the nine months ended September 30, 2022. The increase in cash used in investing activities was related to the purchase of property and equipment.

Cash from financing activities

For the nine months ended September 30, 2023, cash from financing activities was $5,751,095 compared to $343,991 for the nine months ended September 30, 2022. The increase was the result of $1.0 million of gross proceeds from the sale of Series B preferred stock in April 2023 and initial public offering in July 2023 for approximately $5.0 million in net proceeds.

Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA per share
To provide investors and the market with additional information regarding our financial results, we have disclosed (see below) adjusted EBITDA and adjusted EBITDA per share, non-GAAP financial measures that we calculate as net loss excluding; stock-based compensation expense; depreciation; and other income (expense). We have provided reconciliations below of adjusted EBITDA to net loss and adjusted EBITDA per share to earnings per share, the most directly comparable GAAP financial measures.
We have included adjusted EBITDA and adjusted EBITDA per share, herein, because they are key measures used by our management and Board of Directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses. Accordingly, we believe that adjusted EBITDA and adjusted EBITDA per share provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
We believe it is useful to exclude non-cash charges, such as, stock-based compensation expense and depreciation from our adjusted EBITDA and adjusted EBITDA per share, because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. In addition, we believe it is useful to exclude in our adjusted EBITDA and adjusted EBITDA per share other income (expense), as neither are components of our core business operations. Adjusted EBITDA and adjusted EBITDA per share have limitations as financial measures, these non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
Although depreciation are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA and adjusted EBITDA per share do not reflect capital expenditure requirements for such replacements or for new capital expenditures;
Adjusted EBITDA and adjusted EBITDA per share do not reflect stock-based compensation. Stock-based compensation has been, and will continue to be for the foreseeable future, a material recurring expense in our business and an important part of our compensation strategy;
Adjusted EBITDA and adjusted EBITDA per share do not reflect other income (expense); or changes in, or cash requirements for, our working capital; and
Other companies, including companies in our industry, may calculate adjusted EBITDA and adjusted EBITDA per share differently, which reduces these measures’ usefulness as comparative measures.
26
Because of these and other limitations, you should consider adjusted EBITDA and adjusted EBITDA per share only as supplemental to, and alongside with other GAAP based financial performance measures, including various cash flow metrics, net loss, and our other GAAP results.
The following table presents a reconciliation of net loss, the most directly comparable GAAP measure to adjusted EBITDA and adjusted EBITDA per share for each of the periods indicated:
Reconciliation of Non-GAAP Measures
Janover Inc.
(
Unaudited
)

Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Consolidated Reconciliation of GAAP Net Loss to Adjusted EBITDA:
Net loss
$
(1,578,528
)
$
(267,642
)
$
(2,196,565

)
$
(1,531,399
)
Add (subtract):
Share-based compensation
1,231,433
206,366
1,434,464
673,572
Depreciation
107
-
107
-
Other income (expense)
60,118
334,449
(37,485

)
8,101
Adjusted EBITDA
$
(407,106

)
$
(395,725
)
$
(724,509
)
$
(865,928
)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Consolidated Reconciliation of GAAP Net Loss per share to Adjusted EBITDA per share:
Net loss per share - basic and diluted
$
(0.17
)
$
(0.04
)
$
(0.28
)
$
(0.22
)
Add (subtract):
Share-based compensation
0.13
0.03
0.18
0.10
Depreciation
-
-
-
-
Other income (expense)
-

0.05
(0.01
)
0.01

Adjusted EBITDA per share
$
(0.04
)
$
(0.06
)
$
(0.09
)
$
(0.13
)
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting standards in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
27
Revenue Recognition
The Company accounts for revenue under ASC 606, Revenue from Contracts with Customers. The Company determines revenue recognition through the following steps:
Identification of a contract with a customer;
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when or as the performance obligations are satisfied.
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.
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.
Fair Value of Financial Instruments
Our financial instruments consist of cash and cash equivalents, certificates of deposit and amounts due to stockholders. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed.
Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
Stock-Based Compensation
We record stock-based compensation in accordance with ASC 718,
Compensation-Stock Compensation
. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employee’s required service period, which is generally the vesting period.
28
Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.
Item 3. Q uantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate risks and inflation risks. Periodically, we maintain deposits in accredited financial institutions in excess of federally insured limits. We deposit our cash in financial institutions that we believe have high credit quality and have not experienced any losses on such accounts and do not believe we are exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
Interest Rate Risk
Our cash consists of cash in readily available checking accounts. We may also invest in short-term money market fund investments. Such interest-earning instruments carry a degree of interest rate risk, however, historical fluctuations in interest income have not been significant.
Inflation Risk
Inflation generally affects us by increasing our cost of labor and research and development contract costs. We do not believe inflation has had a material effect on our results of operations during the periods presented.
I tem 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the rules and forms promulgated by the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Because of the inherent limitations to the effectiveness of any system of disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that all control issues and instances of fraud, if any, with a company have been prevented or detected on a timely basis. Even disclosure controls and procedures determined to be effective can only provide reasonable assurance that their objectives are achieved.
As of September 30, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective at the reasonable assurance level.
Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties. Therefore, it is difficult to effectively segregate accounting duties which comprises a material weakness in internal controls. This lack of segregation of duties leads management to conclude that the Company’s disclosure controls and procedures are effective to give reasonable assurance that the information required to be disclosed in reports that the Company files under the Exchange Act is recorded, processed, summarized and reported as and when required.
To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over our Exchange Act reporting disclosures.
Changes in Internal Control over Financial Reporting

There have been no changes in our internal control procedures over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our fiscal quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
29
P ART II – OTHER INFORMATION
I tem 1. Legal Proceedings
None.
I tem 1A. Risk Factors
As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item. In any event, there have been no material changes in our risk factors as previously disclosed in the Registration Statement on Form S-1 (File No. 333-
267907), as amended, originally filed with the U.S. Securities and Securities Exchange Commission (“SEC”) on October 14, 2022 (the “Registration Statement”).
I tem 2.
Unregistered Sales of Equity Securities and Use of Proceeds
On April 11, 2023, the Company sold 1,000 shares of Series B Preferred Stock to one accredited investor for an aggregate purchase price of $1,000,000, or value of $1,000 per share.
Upon the Company’s IPO in July 2023, all shares of Series B Preferred Stock were converted into 500,000 shares of common stock.
Upon the IPO, all outstanding SAFEs were converted into 165,861 shares of common stock.
Upon the IPO, an aggregate of 135,266 shares of common stock were issued for services at a fair value of $4 per share. The Company recognized stock-based compensation expense of $541,064 during the nine months ended September 30, 2023.
Upon the IPO, the Company issued 375,000 shares of common stock as direct offering costs. The fair value of $1,500,000, or $4.00 per share, was accounted for as offering costs and therefore was no effect to additional paid-in capital.
Upon the IPO, an aggregate of 106,061 shares of common stock were issued pursuant to exercise of stock options for no proceeds.
Upon the IPO, an aggregate of 236,377 shares of common stock to employees and consultants were issued pursuant to the cancellation of stock options issued to such holders.
In connection with the Company’s IPO, the Company granted an aggregate of 70,625 warrants to purchase common stock to the underwriter at an exercise price of $4.40, which is equal to 110% of the offering price
I tem 3. Defaults Upon Senior Securities.
None
I tem 4. Mine Safety Disclosures.
Not applicable.
I tem 5. Other Information.
None
30
I tem 6. Exhibits
Exhibit

No.
Description







#             Incorporated by reference to the same exhibit number in the Company’s Registration Statement No. 333-267907, filed with the Securities and Exchange Commission on July 14, 2023.
*             Filed herewith
**
Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.
31
S IGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
JANOVER INC.
(Registrant)
Date:
November 14, 2023
By:
/s/ Blake Janover
Chief Executive Officer, President and Chairman of the Board of Directors
(Principal Executive Officer)
Date: November 14, 2023
By:
/s/ Bruce S. Rosenbloom
Chief Financial Officer
(Principal Financial and Accounting Officer)
32
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