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”) 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.

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, d/b/a MDB Capital (“Public Ventures”); and PatentVest, Inc. (“PatentVest”), has one majority-owned partner company MDB Minnesota One, Inc. (“MDB Minnesota One”), and one minority owned company eXoZymes Inc., formerly known as Invizyne Technologies, Inc., (“eXoZymes”), that was majority owned and is consolidated up to until November 14, 2024, when eXoZymes issued securities in its IPO and no longer majority owned by MDB.

Previous 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.

Current 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.

Previous wording

Public Ventures is a U.S. registered broker-dealer under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority (“FINRA”), the Depository Trust Company (“DTC”), and the National Securities Clearing Corporation (“NSCC”). Public Ventures is dual clearing, operating as a self-clearing firm and carrying accounts for its customers, and on a fully disclosed basis with a nonrelated FINRA member firm, Interactive Brokers, LLC (“Interactive Brokers”). Interactive Brokers serves as custodian of certain investments maintained by Public Ventures.

Current wording

Public Ventures is a U.S. registered broker-dealer under the Exchange Act and is a member of FINRA and the Texas State Securities Board. Public Ventures is managed by Christopher A. Marlett, who is also a founder of MDB. Public Ventures operates on a fully disclosed basis with a nonrelated FINRA member firm, Interactive Brokers, LLC (“Interactive Brokers”), and is not required to maintain a clearing deposit. Interactive Brokers is the clearing firm and custodian of investments maintained by Public Ventures. Public Ventures also operates as a self-clearing broker dealer, and began carrying accounts for customers in January 2024.

Previous 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,

Current 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. PatentVest also provides intellectual property validation services for other clients.

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) a broker dealer and intellectual property service segment, and (ii) a 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) the broker dealer and intellectual property service segment and (ii) the technology development segment.

Previous wording

General and Administrative Costs. During the three and nine-month periods ended September 30, 2024 and 2023, respectively, several factors contributed to changes in various expense categories:

Current wording

General and Administrative Costs. During the three-month period ended March 31, 2025, and 2024, respectively, several factors contributed to changes in various expense categories:

Previous 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.

Current wording

Financial Condition: Overall, the reduction in assets was primarily attributed to their utilization for operational activities during the period. The decrease in cash segregated in compliance with regulations stemmed from customer deposits being moved into securities. The drop in investment securities at fair value was due to a decrease in the value of common stock and warrants over the period, offset by the receipt of warrants for investment banking activities. Prepaid expenses remained stable compared to the previous period. The decrease in equity method investment is directly tied to the Company’s portion of the net loss. Finally, the reduction in property and equipment & right-of-use asset was due to its regular utilization.

Previous 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.

Current 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 annual audits. The increase in accrued expenses resulted from various expenses to be paid in 2025. Additionally, the decrease in payables to customers and non-customers stemmed from the movement of cash into securities. Finally, the reduction in lease liability was due to its routine utilization.

Previous wording

The increase in equity was primarily due to the Company’s IPO, which closed on September 20, 2023. This increase was partly offset by net losses from previous periods.

Current wording

The decrease in equity was primarily due from net losses from previous periods.

Previous wording

The decrease in non-controlling interest resulted from the net loss experienced by Invizyne.

Current wording

The increase in non-controlling interest resulted from the net loss experienced by M1.

Previous 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.

Current wording

At March 31, 2025, the Company had $20,174,376 of working capital. This is a decrease of $7,109,991, from the working capital of $27,284,367 that the Company had at March 31, 2024. The decrease in working capital is primarily attributed to the use of cash to fund operations for the three months ended on March 31, 2025.

Previous 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.

Current wording

***Operating Activities.***For the three months ended March 31, 2025, operating activities use of cash represented a combination of increased activity in the broker dealer, 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

***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.

Current wording

For the three months ending on March 31, 2024, 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 self-clearing operations. There was a decrease in the accrued expenses due to bonuses being paid in Q1 of 2024.

Previous 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.

Current wording

Investing Activities. There was no activity for the three months ended March, 31, 2025. 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.

Previous wording

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

Current wording

Financing Activities. There was no activity for the three months ended March, 31, 2025. For the three months ended March 31, 2024, financing activities consisted of costs related to the deferred costs of the IPO of eXoZymes.

Previous wording

The preparation of financial statements in conformity with general accepted accounting principles in the United States requires management 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 and the reported amounts of revenues and expenses during the reporting period. We have identified certain accounting policies as being critical because they require us to make difficult, subjective, or complex judgments about matters that are uncertain. We believe that the judgment, estimates, and assumptions used in the preparation of our unaudited condensed consolidated financial statements and unaudited condensed consolidated financial statements are appropriate given the factual circumstances at the time. However, actual results could differ, and the use of other assumptions or estimates could result in material differences in our results of operations or financial condition. Our critical accounting estimates are:

Current wording

The preparation of financial statements in conformity with general accepted accounting principles in the United States requires management 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 and the reported amounts of revenues and expenses during the reporting period. We have identified certain accounting policies as being critical because they require us to make difficult, subjective, or complex judgments about matters that are uncertain. We believe that the judgment, estimates, and assumptions used in the preparation of our financial statements are appropriate given the factual circumstances at the time. However, actual results could differ, and the use of other assumptions or estimates could result in material differences in our results of operations or financial condition. Our critical accounting estimates are:

Previous 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.

Current wording

The Company receives income from equity underwriting and similar fees. As an underwriter and placement agent, the Company helps clients raise capital via the private placement of various types of equity and debt instruments. The 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 balance sheets.

Previous wording

On September 20, 2023, the Company completed an initial public offering (IPO), which consisted of the sale of 1,666,666 shares of Class A common shares at $12.00 per share, for gross proceeds of $19,999,992 that will be used for the development of Invizyne, identifying and developing new partner companies, and general corporate and working capital requirements.

Current wording

On September 20, 2023, the Company completed an initial public offering (IPO), which consisted of the sale of 1,666,666 shares of Class A common shares at $12.00 per share, for gross proceeds of $19,999,992 that was used for the development of eXoZymes, identifying and developing new partner companies, and general corporate and working capital requirements.

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 to support Invizyne into their IPO, identifying and developing new partner companies, and general corporate and working capital requirements.

Current wording

On June 15, 2022, the Company completed a 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 was used for the development of eXoZymes, identifying and developing new partner companies, and general corporate and working capital requirements.

Previous wording

Potential Recession. There are various indications that the United States economy may be entering a recessionary period. Although unclear at this time an economic recession would likely impact the general business environment and the capital markets, which could, in turn, if there is a recession, such an event could affect the Company.

Current wording

Potential Recession. There are various indications that the United States economy may be entering a recessionary period. The effect of tariffs imposed by United States and other countries and changing global trade policies should not have a direct effect on the Company but are likely to influence the overall economy. Although unclear at this time an economic recession would likely impact the general business environment and the capital markets, which could, in turn, if there is a recession, such an event could affect the Company.

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 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.

Current wording

MDB Capital dba 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, 2025 and 2024, Public Ventures had net capital of $10,184,725 and $6,285,959, respectively, which was $9,934,725 and $6,035,959 in excess of the minimum $250,000, as required by the Securities and Exchange Commission Rule 15c3-1.

Previous 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.

Current wording

At March 31, 2025, the Company’s ratio of aggregate indebtedness of $7,067,718 to net capital was 0.69 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, 2025.

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 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.

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 March 31, 2025 and 2024 have subsequently settled with no resulting material liability to Public Ventures. For the three months ended March 31, 2025 and 2024 Public Ventures, had no material loss due to counterparty failure and had no obligations outstanding under the indemnification arrangement as of March 31, 2025 and 2024.