MDB Capital Holdings LLC

Previous wording

Unaudited Condensed Consolidated Results of Operations for the Six-Months Ended June 30, 2024 and 2023

Current wording

Unaudited Condensed Consolidated Results of Operations for the Nine-Months Ended September 30, 2024 and 2023

Previous wording

Operating Income. For the three and six-month period ended June 30, 2024, there were unrealized gains primarily related to stock and warrants received in prior investment banking transactions. For the three and six-month periods ended June 30, 2024, operating income was generated from the Company’s fee from an investment banking transaction that closed in the second quarter of 2024 in the broker-dealer and intellectual property service segment. For the three-month and six-month periods ended June 30, 2023, operating income was generated from the Company’s fee income and unrealized gains related to warrants received in a large investment banking transaction closed in the second quarter of 2023 in the broker-dealer and intellectual property service segment.

Current wording

Operating Income. For the three and nine-month periods ended September 30, 2024, there were unrealized losses primarily related to stock and warrants received in prior investment banking transactions. For the three-month period ended September 30, 2024, operating income was generated from the self-clearing operations in the broker-dealer and intellectual property service segment. For the nine-month period ended September 30, 2024, operating income was generated from the Company’s fee from an investment banking transaction that closed in the second quarter of 2024 in the broker-dealer and intellectual property service segment. For the three-month and nine-month periods ended September 30, 2023, operating income was generated from the Company’s fee income and unrealized gains related to warrants received as compensation for investment banking services in the second quarter of 2023 in the broker-dealer and intellectual property service segment.

Previous 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.

Current wording

Research and Development Costs. Research and development costs were derived from the Company’s technology development segment. For the three and nine-month periods ended September 30, 2024, respectively, there was an increase in research and development costs 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 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.

Current wording

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

Previous wording

***Income Taxes.***For the three and six-month periods ended June 30, 2024, respectively, the decrease in income taxes was a direct result of the reduction in fee income as compared to the three and six-month periods ended, June 30, 2023, respectively.

Current wording

***Income Taxes.***For the three and nine-month periods ended September 30, 2024, respectively, the decrease in income taxes was a direct result of the reduction in fee income as compared to the three and nine-month periods ended, September 30, 2023, respectively.

Previous wording

Broker Dealer and Intellectual Property Service Segment (Public Ventures and PatentVest) Results of Operations for the Six-Months Ended June 30, 2024 and 2023

Current wording

Broker Dealer and Intellectual Property Service Segment (Public Ventures and PatentVest) Results of Operations for the Nine-Months Ended September 30, 2024 and 2023

Previous wording

Operating Income. For the three and six-month period ended June 30, 2024, there were unrealized gains primarily related to stock and warrants received in prior investment banking deals. For the three and six-month periods ended June 30, 2024, operating income was generated from the Company’s fee from an investment banking deal closed in the second quarter of 2024. For the three-month and six-month periods ended June, 30, 2023, operating income was generated from the Company’s fee income and unrealized gains related to warrants received in a large investment banking deal closed in the second quarter of 2023.

Current wording

Operating Income. For the three and nine-month period ended September 30, 2024, there were unrealized losses primarily related to investment securities and to warrants previously received as fees for in investment banking activities. For the three-month period ended September 30, 2024, operating income was generated from the self-clearing operations of the broker-dealer and intellectual property service segment. For the nine-month period ended September 30, 2024, operating income was generated from fees earned on the broker-dealer’s investment banking activities and at the intellectual property service segment. For the three-month and nine-month periods ended September 30, 2023, operating income was generated from the Company’s fee income and unrealized gains related to warrants received as fees for investment banking activity in the second quarter of 2023 in the broker-dealer, and fees earned at the intellectual property service segment.

Previous wording

Other Income. For the three and six-month periods ended, June 30, 2024, respectively, the rise in the interest expense is an inter-company subordinated loan for the broker-dealer and is eliminated for consolidation purposes. There was an increase interest income due to the broker-dealer having increased funds held in high-yield money market accounts.

Current wording

Other Income. For the three and nine-month periods ended, September 30, 2024, respectively, the rise in the interest expense is due to inter-company subordinated loans for the broker-dealer and is eliminated for consolidation purposes. There was an increase in interest income due to the broker-dealer having increased funds held in high-yield money market accounts.

Previous wording

***Income Taxes.***For the three and six-month periods ended June 30, 2024, respectively, the decrease in income taxes was a direct result of the reduction in fee income as compared to the three and six-month periods ended, June 30, 2023, respectively.

Current wording

***Income Taxes.***For the three-month period ended September 30, 2024 there was no revenue activity requiring tax accrual. For the nine-month period ended September 30, 2024, the decrease in income taxes was a direct result of the reduction in fee income as compared to the three and nine-month periods ended, September 30, 2023.

Previous 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.

Current wording

Operating Income. For the nine-month period ending September 30, 2024, the decline in operating income was primarily due to a 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 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.

Current wording

Research and Development Costs. The research and development costs were derived from the Company’s technology development segment. For the three and nine-month periods ended September 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

Other Income. For the three and six-month periods ended, June 30, 2024, respectively, is due to a rise in the interest expense is an inter-company loan and is eliminated for consolidation purposes..

Current wording

Other Income. For the three and nine-month periods ended, September 30, 2024, is due to a rise in the interest expense is related to inter-company loans and is eliminated for consolidation purposes.

Previous 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.

Current wording

Financial Condition: Overall, the increase in cash and cash equivalents was due to the transfer of T-Bills to cash, and was offset by cash 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 and moved to high-yield money-market accounts to provide liquidity for operating expenses. The decrease in investment securities at fair value was due to a decrease 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 a decrease 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 normal utilization.

Previous wording

The increase in accounts payable was primarily driven by payments for audit and legal services associated with audits and legal matters related to the IPO of Invizyne. The decrease in accrued expenses resulted from the settlement of bonus liabilities that were accrued in the fourth quarter of 2023. Additionally, the rise in payables to customers and non-customers stemmed from increased activity in the self-clearing operations of the broker-dealer. Deferred grant reimbursements remained consistent with the previous period. Finally, the reduction in lease liability was due to its routine utilization.

Current wording

The increase in accounts payable was primarily driven by payments for audit and legal services related to the IPO of Invizyne. The decrease in accrued expenses resulted from the settlement of bonus liabilities that were accrued in the fourth quarter of 2023. Additionally, the rise in payables to customers and non-customers stemmed from increased activity in the self-clearing operations of the broker-dealer. Deferred grant reimbursements remained consistent with the previous period. Finally, the reduction in lease liability was due to its normal utilization.

Previous 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.

Current wording

At September 30, 2024, the Company had $19,553,039 of working capital, which is a decrease of $14,273,850 from the working capital of $33,826,889 that the Company had at September 30, 2023. The decrease in working capital is primarily due to the use of cash to fund operations for the nine-months ended on September 30, 2024. Additionally, as of September 30, 2024, the Company had $16,679,428 of cash and $5,084,197 of short-term U.S. Treasury bills available to fund its operations.

Previous 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.

Current wording

***Operating Activities.***For the nine-months ended September 30, 2024, there was an increase in the net loss compared to the prior period due to expense of stock-based compensation expense. Additionally, there was an accretion of investments at amortized costs (U.S. Treasury Bills) and the acquisition of investment securities. An increase in accounts payable, grants receivable for the technology segment, clearing deposits, and payables to customer was 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 a decrease in payables to non-customers.

Previous 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.

Current wording

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

Previous 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.

Current wording

Investing Activities. For the nine-months ended September 30, 2024 and 2023, 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 six-months ended June 30, 2024, financing activities consisted of costs related to the deferred costs of the IPO of Invizyne.

Current wording

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

Previous 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.

Current wording

For the nine-months ended September 30, 2023 financing activities consisted of costs related to MDB Capital Holdings’ initial public offering incurred during the period.

Previous wording

The Company receives income from equity underwriting fees. As an underwriter, the Company helps clients raise capital via the private placement of various types of equity instruments. Underwriting fees are primarily based on the issuance price and quantity of the underlying instruments and are recognized as revenue typically upon execution of the client’s transaction. The Company generally does not incur costs to obtain contracts with customers that are eligible for deferral or receive fees prior to recognizing revenue related to investment banking transactions. If the Company did have any contract assets or liabilities related to these revenues it would be recorded on the unaudited condensed consolidated balance sheets.

Current wording

The Company receives income from investment banking fees earned as an underwriter. As an underwriter, the Company helps clients raise capital via the sale of various types of equity instruments. Underwriting fees are primarily based on the issuance price and quantity of the underlying instruments and are recognized as revenue typically upon execution of the client’s transaction. The Company generally does not incur costs to obtain contracts with customers that are eligible for deferral or receive fees prior to recognizing revenue related to investment banking transactions. If the Company did have any contract assets or liabilities related to these revenues it would be recorded on the unaudited condensed consolidated balance sheets.

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 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.

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 September 30, 2024 and 2023, Public Ventures had net capital of $11,765,823 and $6,037,743, respectively, which was $11,515,823 and $5,787,743 in excess of the minimum $250,000, as required by the Securities and Exchange Commission Rule 15c3-1.

Previous 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.

Current wording

At September 30, 2024, the Company’s ratio of aggregate indebtedness of $7,034,937 to net capital was 0.60 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 September 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 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.

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 September 30, 2024 and 2023 have subsequently settled with no resulting material liability to Public Ventures. For the nine-months ended September 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 September 30, 2024 and 2023.