MDB Capital Holdings LLC

Previous wording

MDB Capital Holdings, LLC (the “Company” or “MDB”), a Delaware limited liability company, is a holding company that has three wholly-owned subsidiaries: MDB CG Management Company (“MDB Management”); Public Ventures, LLC (“Public Ventures”); and PatentVest, Inc. (“PatentVest”), and has a majority-owned partner company, Invizyne Technologies, Inc. (“Invizyne”).

Current wording

MDB Capital Holdings, LLC (“the Company” or “MDB”), a Delaware limited liability company, is a holding company that has three wholly-owned subsidiaries: MDB CG Management Company (“MDB Management”); Public Ventures, LLC (“Public Ventures”) doing business under the name MDB Capital; and PatentVest, Inc. (“PatentVest”), and has a majority-owned partner company, Invizyne Technologies, Inc. (“Invizyne”), who is in the process of financing which will reduce the ownership by action of dilution.

Previous wording

MDB Management is principally an “administrative” entity whose purpose is to conduct, and wherever possible, to consolidate shared services/resources, for our US-based operations.

Current wording

MDB Management is an “administrative” entity whose purpose is to conduct, and to consolidate, wherever possible, shared services and other resources, for our US-based operations.

Previous wording

PatentVest is a wholly-owned subsidiary that performs intellectual property validation services for Public Ventures’ due diligence functions on the intellectual property of partner and prospective partner companies and creates an intellectual property roadmap for such partner companies.

Current wording

PatentVest performs intellectual property validation services for broker-dealer due diligence functions on the intellectual property of clients and prospective client companies and intellectual property assessment and roadmap for client companies, and it is also an Arizona licensed law firm specializing in patent matters,

Previous wording

Invizyne was formed with the objective of taking nature’s building blocks to make molecules of interest, effectively simplifying nature. Invizyne is a biology technology development company that is a majority-owned subsidiary. Invizyne’s technology is a differentiated and unique synthetic biology platform which is designed to enable the scalable exploration of a large number of molecules and properties found in nature.

Current wording

Invizyne was formed with the business objective of taking nature’s building blocks to make molecules of interest, effectively simplifying nature. Invizyne is a biology technology development company. Invizyne’s technology is a differentiated and unique synthetic biology platform which is designed to enable the scalable exploration of a large number of molecules and properties found in nature.

Previous wording

Prior to January 14, 2022, Public Ventures owned majority interests in PatentVest and Invizyne. On January 14, 2022, Public Ventures distributed 100% of its equity interests in PatentVest and Invizyne to its members in proportion to their respective interests. On January 15, 2022, Public Ventures filed with the Internal Revenue Service to be treated as a corporation for federal income tax purposes. On January 16, 2022, the members of Public Ventures contributed their entire interests in the equity of Public Ventures, Invizyne and PatentVest to MDB, as result of which MDB became the new parent holding company. There was no effective change in the beneficial ownership of Public Ventures as a result of this transaction. On the same day as part of the reorganization, MDB established a management company subsidiary, MDB Management. These reorganization steps are collectively referred to as the “reorganization. In connection with the reorganization, 5,000,000 Class B Common Shares were issued in exchange for the members’ equity.

Current wording

Prior to January 14, 2022, Public Ventures owned the majority of the equity interests in PatentVest and Invizyne. On January 14, 2022, Public Ventures distributed 100% of its equity interests in PatentVest and Invizyne to its members. On January 15, 2022, Public Ventures filed with the Internal Revenue Service to be treated as a corporation for federal income tax purposes. On January 16, 2022, the members of Public Ventures contributed their entire interests in the equity of Public Ventures, and their then equity interests in Invizyne and PatentVest to MDB, as result of which MDB became the new parent holding company of those three entities. There was no effective change in the beneficial ownership of Public Ventures as a result of this transaction. On the same day as part of the reorganization, MDB established MDB Management as a management company subsidiary. These reorganization steps are collectively referred to as the “reorganization”. In connection with the reorganization, 5,000,000 Class B common shares were issued in exchange for the transferred equity interests.

Previous wording

The reorganization was completed between entities that were under common control, and the assets contributed and liabilities assumed are recorded based on their historical carrying values. These financial statements retroactively reflect the financial statements of the Company and Public Ventures on an unaudited condensed consolidated basis for the periods presented.

Current wording

The reorganization was completed between entities that were under common control, and the assets contributed and liabilities assumed are recorded based on their historical carrying values. These unaudited condensed consolidated financial statements retroactively reflect the financial statements of the Company and Public Ventures on an unaudited condensed consolidated basis for the periods presented.

Previous wording

On June 8, 2022, MDB completed the first closing of a private placement, consisting of the sale of 2,517,966 shares of Class A Common Shares at $10.00 per share, for gross proceeds of $25,179,660. On June 15, 2022, the Company completed the second closing of the private placement, consisting of the sale of an additional 11,000 shares of Class A Common Shares, for gross proceeds of $110,000. Accordingly, the Company received total gross proceeds of $25,289,660 from the sale of 2,528,966 shares of Class A Common Shares, or $24,746,142 net of $343,518 of offering expenses, which will be used for development of the current partner companies, identifying and developing new partner companies, and general corporate and working capital requirements. In conjunction with the private placement, the Company issued warrants to the placement agent to purchase 18,477 shares of Class A Common Shares, exercisable upon issuance for a period of 10 years at $13.00 per share, for a cash consideration of $0.001/share. The placement agent’s warrants had a fair value of $106,940, as calculated pursuant to the Black-Scholes option-pricing model and were accounted for as issuance costs that were recorded against paid in capital and paid in capital for the warrants issued.

Current wording

On June 8, 2022, MDB completed the first closing of a private placement, consisting of the sale of 2,517,966 Class A common shares at $10.00 per share, for gross proceeds of $25,179,660. On June 15, 2022, the Company completed the second closing of the private placement, consisting of the sale of an additional 11,000 Class A common shares, for gross proceeds of $110,000. Accordingly, the Company received total gross proceeds of $25,289,660 from the sale of 2,528,966 Class A common shares, or $24,746,142 net of $543,518 of offering expenses. In conjunction with the private placement, the Company issued warrants to the placement agent to purchase 18,477 Class A common shares, exercisable upon issuance for a period of 10 years at $13.00 per share, for a cash consideration of $0.001/share. The placement agent’s warrants had a fair value of $106,940, as calculated pursuant to the Black-Scholes option-pricing model and were accounted for as issuance costs that were recorded against paid in capital. The warrants issued are accounted for as equity and recorded under paid in capital.

Previous wording

The Company has determined its reporting units in accordance with ASC (Accounting Standards Codification) 280, Segment Reporting. The Company currently operates in two reportable segments: (i) the broker dealer and intellectual property service segment and (ii) the technology development segment.

Current wording

The Company has determined its reporting units in accordance with ASC (Accounting Standards Codification) 280, Segment Reporting. The Company currently operates in two reportable segments: (i) a broker dealer and intellectual property service segment, and (ii) a technology development segment.

Previous wording

Research and Development Costs. The research and development costs were derived from the Company’s technology development segment. For the three-month period ended March 31, 2024 there was an increase in research and development costs that was due to a decrease of grant funding. It is important to note that the upswing in grant funding was not linked to any specific event and is expected to fluctuate throughout the year.

Current wording

Research and Development Costs. The research and development costs were derived from the Company’s technology development segment. For the three and six-month periods ended June 30, 2024, respectively, there was an increase in research and development costs that was due to a decrease of grant funding. It is important to note that the upswing in grant funding was not linked to any specific event and is expected to fluctuate throughout the year.

Previous wording

***Other Income.***For the three-month period ended March 31, 2024, the increase in other income was the result of interest generated on U.S. Treasury Bill interest from capital raised from the initial public offering.

Current wording

***Other Income.***For the three and six-month periods ended June 30, 2024, respectively, the increase in other income was the result of interest generated on U.S. Treasury Bill interest from capital raised from the initial public offering.

Previous wording

Operating Income. For the three-month period ending March 31, 2024, the decline in operating income was primarily due to a feasibility study conducted in the previous period.

Current wording

Operating Income. For the three and six-month periods ending June 30, 2024, respectively, the decline in operating income was primarily due to an one-off feasibility study that was conducted in the previous period.

Previous wording

Research and Development Costs. The research and development costs were derived from the Company’s technology development segment. For the three-month period ended March 31, 2024 there was an increase in research and development costs that was due to a decrease of grant funding. It is important to note that the upswing in grant funding was not linked to any specific event and is expected to fluctuate throughout the year.

Current wording

Research and Development Costs. The research and development costs were derived from the Company’s technology development segment. For the three and six-month periods ended June 30, 2024, respectively, there was an increase in research and development costs that was due to a decrease of grant funding. It is important to note that the downswing in grant funding was not linked to any specific event and is expected to fluctuate throughout the year.

Previous wording

Financial Condition: Overall, the reduction in assets was primarily attributed to their utilization for operational activities during the period. The rise in cash segregated in compliance with regulations stemmed from customer deposits. The decline in investment securities at amortized cost occurred because U.S. Treasury bills were sold to provide liquidity for operating expenses. Similarly, the drop in investment securities at fair value was due to a decrease in the value of common stock and warrants over the period. Prepaid expenses remained stable compared to the previous period. There was an increase in grants receivable, which was influenced by the timing of the collection of grant funds from the previous period. The growth in deferred offering costs was associated with expenses related to Invizyne’s IPO. Finally, the reduction in the right-of-use asset was due to its regular utilization.

Current wording

Financial Condition: Overall, the reduction in cash assets was primarily attributed to their utilization for operational activities during the period. The rise in cash segregated in compliance with regulations stemmed from customer deposits. The decline in investment securities at amortized cost occurred because U.S. Treasury bills were sold to provide liquidity for operating expenses, as wells as moving into high-yield money-market accounts. The increase in investment securities at fair value was due to an increase in the value of common stock and warrants over the period. Clearing deposits increased due to the launch of the self-clearing operations. Prepaid expenses remained stable compared to the previous period. There was an increase in grants receivable, which was influenced by the timing of the collection of grant funds from the previous period. The growth in deferred offering costs was associated with expenses related to Invizyne’s planned IPO. Finally, the reduction in the right-of-use asset was due to its regular utilization.

Previous wording

At March 31, 2024, the Company had $27,284,367 of working capital. This is an increase of $7,511,642, from the working capital of $19,772,725 that the Company had at March 31, 2023. The increase in working capital is primarily attributed to the funds received from the initial public offering in 2023, which was offset by the use of cash to fund operations for the three months ended on March 31, 2024. Additionally, as of March 31, 2024 and 2023, respectively, the Company had $21,381,362 of cash and $16,347,720 of short-term U.S. Treasury bills available to fund its operations.

Current wording

At June 30, 2024, the Company had $24,928,197 of working capital. This is an increase of $7,114,822, from the working capital of $17,813,375 that the Company had at June 30, 2023. The increase in working capital is primarily attributed to the funds received from the initial public offering of the Company in 2023, which was offset by the use of cash to fund operations for the six-months ended on June 30, 2024. Additionally, as of June 30, 2024, the Company had $17,523,769 of cash and $5,041,692 of short-term U.S. Treasury bills available to fund its operations.

Previous wording

***Operating Activities.***For the three months ending on March 31, 2024, there was an increase in the net loss compared to Q1 2023. Additionally, there was accretion of investments at amortized costs (U.S. Treasury Bills) and the acquisition of investment securities. However, this decrease in cash was partly offset by an increase in accounts payable, grants receivable for the technology segment. Furthermore, clearing deposits, payables to customers, and payables were non-customers all increased due to the implementation of the self-clearing operations. There was a decrease in the accrued expenses due to bonuses being paid in Q1 of 2024.

Current wording

***Operating Activities.***For the six-months ending on June 30, 2024, there was an increase in the net loss compared to the prior period due to expense of stock-based compensation. Additionally, there was accretion of investments at amortized costs (U.S. Treasury Bills) and the acquisition of investment securities. There an increase in accounts payable, grants receivable for the technology segment, clearing deposits, and payables to customer due to the implementation of the self-clearing operations. There was a decrease in the accrued expenses due to bonuses being paid in Q1 of 2024 and payables were non-customers.

Previous wording

For the three months ended March 31, 2023, operating activities use of cash represented a combination of increased activity in Invizyne, increased professional and consulting fees related to year end audits and issuance of the tax preparation fees related to the publicly traded partnership.

Current wording

For the six-months ended June 30, 2023, operating activities use of cash represented a combination of increased activity in Invizyne, increased professional and consulting fees related to year end audits and issuance of the tax preparation fees related to the publicly traded partnership.

Previous wording

Investing Activities. For the three months ended March 31, 2024, investing activities consisted of the proceeds from the sale and the maturing of U.S. Treasury Bills and purchases of investment securities, which was offset by the reinvestment of the proceeds into new U.S. Treasury Bills and the transfer of cash for operating activities.

Current wording

Investing Activities. For the six-months ended June 30, 2024 and 2023, respectively, investing activities consisted of the proceeds from the sale and the maturing of U.S. Treasury Bills and purchases of investment securities, which was offset by the reinvestment of the proceeds into new U.S. Treasury Bills and the transfer of cash for operating activities and investments in money market funds.

Previous wording

Financing Activities. For the three months ended March 31, 2024, financing activities consisted of costs related to the deferred costs of the IPO of Invizyne.

Current wording

Financing Activities. For the six-months ended June 30, 2024, financing activities consisted of costs related to the deferred costs of the IPO of Invizyne.

Previous wording

For the three months ended March 31, 2023 financing costs were for the preparation of the initial public offering incurred during the period.

Current wording

For the six-months ended June 30, 2023 financing costs were for the preparation of MDB Capital Holdings’ initial public offering incurred during the period.

Previous wording

On June 15, 2022, the Company completed the first closing of a private placement, consisting of total gross proceeds of $25,289,660 from the sale of 2,528,966 shares of Class A common shares, which have been and will continue to be used for the development of Invizyne, identifying and developing new partner companies, and general corporate and working capital requirements.

Current wording

On June 15, 2022, the Company completed the first closing of a private placement, consisting of total gross proceeds of $25,289,660 from the sale of 2,528,966 shares of Class A common shares, which have been and will continue to be used to support Invizyne into their IPO, identifying and developing new partner companies, and general corporate and working capital requirements.

Previous wording

Public Ventures is subject to the uniform net capital rule (SEC Rule 15c3-1) of the Securities and Exchange Commission (the “SEC”), which requires both the maintenance of minimum net capital and the maintenance of maximum ratio of aggregate indebtedness to net capital. At March 31, 2024 and 2023, Public Ventures had net capital of $6,285,959 and $2,534,695, respectively, which was $6,035,959 and $2,284,695 in excess of the minimum $250,000, as required by the Securities and Exchange Commission Rule 15c3-1.

Current wording

Public Ventures is subject to the uniform net capital rule (SEC Rule 15c3-1) of the Securities and Exchange Commission (the “SEC”), which requires both the maintenance of minimum net capital and the maintenance of maximum ratio of aggregate indebtedness to net capital. At June 30, 2024 and 2023, Public Ventures had net capital of $6,012,368 and $3,112,041, respectively, which was $5,762,368 and $2,862,041 in excess of the minimum $250,000, as required by the Securities and Exchange Commission Rule 15c3-1.

Previous wording

At March 31, 2024, the Company’s ratio of aggregate indebtedness of $6,175,623 to net capital was 0.98 to 1, as compared to the maximum of a 15 to 1 allowable ratio of a broker dealer. Minimum net capital is based upon the greater of the statutory minimum net capital of $250,000 or 2% of customer debits, which was calculated as $0 at March 31, 2024.

Current wording

At June 30, 2024, the Company’s ratio of aggregate indebtedness of $5,606,016 to net capital was 0.93 to 1, as compared to the maximum of a 15 to 1 allowable ratio of a broker dealer. Minimum net capital is based upon the greater of the statutory minimum net capital of $250,000 or 2% of customer debits, which was calculated as $0 at June 30, 2024.

Previous wording

Public Ventures has agreed to indemnify its clearing broker for losses that the clearing broker may sustain from the accounts of customers. Should a customer not fulfill its obligation on a transaction, Public Ventures may be required to buy or sell securities at prevailing market prices in the future on behalf of its customer. The indemnification obligations of Public Ventures to its clearing broker have no maximum amount. All unsettled trades at March 31, 2024 and 2023 have subsequently settled with no resulting material liability to Public Ventures. For the three months ended March 31, 2024 and 2023 Public Ventures, had no material loss due to counterparty failure and had no obligations outstanding under the indemnification arrangement as of March 31, 2024 and 2023.

Current wording

Public Ventures has agreed to indemnify its clearing broker for losses that the clearing broker may sustain from the accounts of customers. Should a customer not fulfill its obligation on a transaction, Public Ventures may be required to buy or sell securities at prevailing market prices in the future on behalf of its customer. The indemnification obligations of Public Ventures to its clearing broker have no maximum amount. All unsettled trades at June 30, 2024 and 2023, have subsequently settled with no resulting material liability to Public Ventures. For the six-months ended June 30, 2024 and 2023 Public Ventures, had no material loss due to counterparty failure and had no obligations outstanding under the indemnification arrangement as of June 30, 2024 and 2023.