Financial Metrics

Understanding how money moves in and out of our business is the foundation of our financial operations. This includes bookkeeping, budgeting, and financial modeling, which help us to:

• Understand how we are spending money and where to reduce costs
• Identify areas for growth and opportunities to invest
• Communicate the financial health of the business to investors and stakeholders

This document outlines when and why we report on our finances, as well as what metrics we track.

Management

The following team members are involved in the financial reporting process:

• Chief Executive Officer (CEO) — responsible for budget updates and external reporting to investors
• Strategic Growth Lead — responsible for budget updates, managing financial reporting tools, financial model integrity, and performance analysis
• Heads of Customer Success,Engineering, Product, and Revenue — responsible for managing team-level budgets, resource allocation, and hiring plans
• Bookkeeper — responsible for maintaining accurate financial records, transaction classification, reconciliations, and aligning actuals with the approved budget and forecasts

When We Report Finances & Why

Internal Reporting

• Daily: Key performance and financial insights shared in the daily ping channel on Discord

• Monthly, Quarterly, and Year-End: Assess financial position, spending efficiency, and identify levers to accelerate or pull back

• Internal reporting often includes breakdowns of expenses, budget versus actuals, projections and team-level performance metrics — including a Department Spend Report shared with team leads to give visibility into actual spend versus budget, enabling informed and efficient spending decisions.

External Reporting

• Quarterly to investors to communicate business performance relative to the revenue and financial model they expect

• Investor reporting typically includes the Profit and Loss, Balance Sheet, and key financial metrics relevant to investment terms or agreements.

Financial Metrics We Track

We expect to expand this list as the business grows or as new performance indicators become necessary.

Metric	Why We Track & Source
Revenue	Measures how much money we are generating through sales of our product. Used to understand overall financial health, make informed decisions on resource allocation, identify new revenue opportunities, and evaluate operational efficiency (for example, revenue compared to expenses). Referenced internally and externally. Sources: QuickBooks Online (P&L) for actuals — both accrual and cash basis; QuickBooks Online (Budget) for forecast
Transaction Fees	Cumulative total of transaction fees (YTD), also tracked as a percentage of revenue. Transaction fees are part of our income. Source: QuickBooks Online.
Subscription Run Rate	As a subscription-based software company (Software-as-a-Service), this metric reflects the projected annualized recurring subscription revenue if current subscription levels remain constant. Calculated as current month accrual subscription fees × 12. Helps evaluate long-term sustainability and growth trajectory. Source: QuickBooks Online (P&L), accrual basis.
Net Burn (Monthly Accrual)	Measures how much cash we spend each month beyond what we bring in on an accrual basis: Revenue + Other Income minus Total Expenses for the current month. This metric is important before a company reaches profitability to help determine runway and if we are operating more or less efficiently over time. Source: Calculation using QuickBooks Online P&L actuals (accrual).
Net Burn (YTD-to-Last Month, Cash)	Same measurement as Net Burn Monthly but reported on a year-to-date basis smoothing out the noise of any single month - such as uneven revenue collection.. Over the course of a year, we expect this calculation to start high, then gradually decline as revenue grows and operating costs stabilize. By year-end this number should align with Net Burn Monthly. A core indicator of financial health and spending efficiency. Source: Calculation using QuickBooks Online P&L actuals (cash basis).
Projected Year-End Cash Balance	Forward-looking estimate of cash on hand at year-end, calculated as total current assets minus the projected remaining monthly burn. Allows us to anticipate year-end cash needs and operational adjustments. Source: QuickBooks Online balance sheet and P&L actuals.
Cash Runway (Months)	Cash on hand divided by average monthly expenses. Indicates how many months the business can sustain operations at current spending levels without additional revenue or funding. Source: QuickBooks Online balance sheet and P&L (last 3 months average).
AR Collection Analysis	Cash collected divided by total invoices issued in the same period. Measures how efficiently we are converting invoiced revenue into actual cash. Our goal rate is 85–90% in a given month. Source: QuickBooks Online transaction list (payments) and invoice list.
Accounts Receivable	Total amount owed to us by customers as of month-end. Note: “outstanding” is not the same as “overdue.” Helps identify the gap between accrual revenue and cash collected. Source: QuickBooks Online — Accounts Receivable Summary Report.
Expenses by Department	All costs required to run and deliver the business, broken down by department: COGS, G&A, R&D, and Sales. Each department’s spending is tracked equally to monitor efficiency across teams and identify opportunities to optimize spend. Source: QuickBooks Online (P&L).
Buffer Account Coverage (Months)	This is the same calculation as runway, but it becomes a measure of financial resilience rather than survival after becoming profitable. It tells us how long the business could absorb a shock - slow paying customers, loss in revenue - without needing to raise money or cut costs. As an early stage startup, 3–6 months with a 10% sensitivity band is a reasonable first target though healthy, profitable companies aim for 12-24 months of cash coverage.
Revenue Concentration Risk	Largest single customer revenue divided by total revenue. Flags customers representing 25–30% or more of total revenue to assess dependency risk. Source: QuickBooks Online — QBO Budget (current scenario
Break-Even Sensitivity Analysis	Evaluates how changes in revenue or cost levels affect the point at which the business becomes break-even. Used for financial decision-making and strategic planning. Source: QuickBooks Online actuals and budget.

How We Calculate Our Net Burn

We evaluate net burn under both accrual basis (used for strategic visibility) and cash basis (used for cash flow awareness). Timing is the primary factor that can create variance.

• On accrual basis, revenue is recognized when it is invoiced, regardless of cash collection. Example: For customers we invoice on the first of the month (such as Willdan), it is included in revenue for that month even if payment arrives several days later.

• On cash basis, revenue only appears once the cash has actually been received in our bank account. If a payment is expected but has not yet arrived by the time we prepare the report, it will not be reflected.

• Our income is generally predictable due to annual billing spread across months using deferred revenue accounting.

• Expenses are the biggest driver of changes in net burn, not income. Fluctuations in legal fees, employer-paid benefits (such as retirement contributions), or increased consultant spend are common causes for month-to-month variance.

• Because preparing reports early in the month means not all expenses have occurred yet, using year-to-last-month (YLM) ensures we only calculate net burn based on fully closed and accurate months, avoiding skewed results.

  Note: It is possible for the business to be accrual profitable while still being cash flow negative. This occurs when invoiced revenue has not yet been collected — the gap between accrual revenue and cash revenue will be reflected in Accounts Receivable. Until those receivables convert to cash, the business may draw on cash reserves even while showing an accrual surplus.

Financial Reporting Timeline

Report	Due Date
Quarterly
Kresge Report (Unaudited financial statements, covenant compliance worksheet, CPC transaction fees)	Within 30 days after quarter end
Quarterly reports to investors (unaudited financial statements)	Within 30 days after quarter end
Annual
Operating budget for the upcoming year to Kresge	By November 30
Kresge annual report (Unaudited financial statements, covenant compliance worksheet, CPC transaction fee report)	Within 45 days after fiscal year end
STARTUP NY reports (employee report, tax report)	Within 45 days after fiscal year end
NYSERDA and CEN annual program report	Within 45 days after fiscal year end
JLL Foundation (Loan proceeds report and unaudited financial statements)	Within 45 days after fiscal year end
CPC contract revenue report	Within 45 days after fiscal year end
Annual reports to investors (unaudited financial statements)	Within 45 days after fiscal year end
Other Reports for Kresge (As Needed)
Documents delivered to Board	Within 10 days
Material litigation notices	Promptly
Material adverse effect notices	Promptly
Loan purpose change notices	Promptly
Default notices	Promptly
Final loan proceeds report	Within 45 days after loans are repaid