MDBH 10-K & 10-Q changes, risk factors and insider trading

Under current law, so long as certain conditions are satisfied (see “Certain Material U.S. Federal Tax Considerations — Classification as a Partnership”),satisfied, we should be treated, for U.S. federal income tax purposes, as a partnership and not as a corporation. As such, MDB will generally not be subject to U.S. federal income tax. Instead, each shareholder of MDB will be required to take into account its allocable share of each item of MDB’s income, gain, loss, deduction or credit, whether or not MDB distributes any cash to it, including distributions or dividends MDB receives from its corporate entities (i.e., in partner companies). Consequently, it is possible that in any year, a shareholder’s tax liability arising from MDB could exceed the distributions made to him, her or it by MDB. Thus, there may be years in which a shareholder’s tax liability exceeds its share of distributed cash from MDB. If this were to occur, a shareholder would have to use funds from other sources to satisfy his, her or its tax liability.

The value of the Class A Common Shares of MDB that you hold will depend in part on MDB being treated as a partnership for U.S. federal income tax purposes. We intend to manage our affairs so that, upon becoming a “publicly traded partnership” within the meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Code”), we will not be taxable as a corporation because 90% or more of our gross income in each taxable year will be “qualifying income” (see “Certain Material U.S. Federal Tax Considerations—Classification as a Partnership” for a discussion of the rules relating to qualifying income and publicly-traded partnerships). However, there is no assurance or guarantee that we will meet on an ongoing basis the applicable requirements to be taxable as a partnership and, as discussed below, current law may change so as to cause, in either event, MDB to be treated as a corporation for U.S. federal income tax purposes. If we were treated as a corporation for U.S. federal income tax purposes, then, among other things, (i) we would become subject to corporate income tax and (ii) distributions to our shareholders would be taxable as dividends for U.S. federal income tax purposes to the extent of our earnings and profits. In addition, because a tax would be imposed upon MDB as a corporation, its cash available for distribution would be substantially reduced. We have not requested, and do not plan to request, a ruling from the IRS on this or any other tax matter affecting us.

The ability of the shareholders to utilize any tax losses generated by an investment in MDB may be subject to a number of limitations under the Code, including the basis limitations, the passive activity loss limitations, the “at-risk” limitations, and the excess business loss limitations. See “Certain Material U.S. Federal Tax Considerations” for more information regarding such limitations.

There is no assurance that MDB will continue to be as successful as when our broker-dealer business was operating as a single, stand-alone business. As a reorganized holding company, we have a limited operating history. We believe that because of the reorganization of our Company, we are subject to some or all of the risks inherent in the establishment of a new enterprise. Some of the risks may arise from the absence of a significant consolidated operating history, the addition of management responsibilities as a public company, including the production of K-1 tax documents for owners of the Company’s shares, and lack of experience in complying with reporting and other obligations associated with being a publicly-tradedpublicly traded company listed on Nasdaq. If our business plan, operating as a holding company, turns out to be unsuccessful, investors may lose some or all of their investment in MDB.

We might require additional capital to support operations and business growth and to fund our partner companies; this capital might not be available on terms favorable to us, or all, when needed.

● intensifying competition affecting the products and services that our partner companies offer could adversely affect their businesses, financial condition, results of operationsoperations, cash flows and prospects for growth;

Our partner companies willare expected to be early-stage development companies, which will make it difficult to judge and evaluate their businesses and their future success.

We willare monitormonitoring our compliance with the 40% Test and conduct our business activities to comply with this test and other exemptions such that we are exempt from the Investment Company Act. It is not feasible for us to be regulated as an investment company because the Investment Company Act rules are inconsistent with our strategy of actively helping our partner companies in their efforts to build value. We may need to take various actions, however, that we would otherwise not pursue in order to remain in compliance with the 40% Test. For example, we may need to retain a majority interest in a partner company that we no longer consider strategic, we may not be able to acquire an interest in a company unless we are able to obtain a majority ownership interest in the company, or we may be limited in the manner or timing in which we sell or distribute our interests in a partner company. Our ownership levels also may be affected if our partner companies are acquired by third parties or if our partner companies issue stock which dilutes our majority ownership. The actions may require us to take actions to avoid application of the Investment Company Act of 1940 so as to maintain compliance with the 40% Test that could adversely affect our ability to create and realize value at our partner companies. The Company’s Broker-Dealer subsidiary is excluded from the Investment Company Act of 1940, and therefore all securities held by the Broker-Dealer are excluded from the asset calculation.

Our ability to retain our senior professionals and recruit additional professionals is critical to the success of our business, and our failure to do so may adversely affect our reputation, business, results of operationsoperations, cash flows and financial condition.

Our people are one of our most valuable resources. Our ability to source attractive technologies and companies to deploy our capital depends depends upon the reputation, judgment, and execution skills of our senior professionals, particularly our directors and senior management. Despite our efforts to retain valuable employees, members of our management team may terminate their employment with us on short notice. The loss of the services of any of our executive officers or other key employees could potentially harm our business, operating results, cash flows or financial condition. Currently, we do not maintain key man insurance policies with respect to any of our executive officers or employees.

Since November 2024, eXoZymes has been a publicly traded company and its operational and strategic decisions have been directed by its board and management. As a public company its stock price will beis determined by the market and investor reaction to its product developmental decisions and performance. The actual performance of eXoZymes will depend on many factors, such as its product discovery and development, its ability to enter into strategic alliances or licensing arrangements, its ability to generate revenues, the maintenance of its financial resources, regulatory compliance and developments that impact its products, and broader economic conditions.

Although we are not engaged in the business of investing, reinvesting, or trading in securities, we will own a controlling positionor other positions in our partner companies companies pursuant to our business model. We generally will be active in the management and development of our partner companies, as well as actively monitoring their operations to keep abreast of their business development. In time, we anticipate that we will monetize the value we hold in our partner companies. Our monetization process will contemplate the typical forms of merger and acquisition transactions, such as licensing, private and public offerings, asset or company sales and registered common stock distributions. To the extent that any of our partner companies become publicly traded, their value will become subject to market fluctuations. Any fluctuation in the value of our partner companies’ securities, for whatever reason, may affect the value of MDB as a holding company resulting in a partial or total loss of your investment.

We could experience competition from other potential acquirers when we seek to establish partner companies, which may result in not being able to acquire them or having to payinvest at a higher valuation, thus increasing our risk of loss and reducing potential future gains.

We believe that we will face competition from other capital providers and acquisition orientedacquisition-oriented entities as we seek to acquire and develop our partner companies. Some of our competitors have more experience identifying and acquiring companies in various industries and have greater financial and management resources, brand name recognition or industry contacts than we possess. We compete with those firms on a number of factors, including our history and reputation, our ability to partner, encourage and support development of each company, the abilities and experience of our professionals in working with development-stage companies, and our ability to source and perform due diligence on new technologies and companies. In addition, even though we seek to acquire technologies at their very early stages of development, we may still pay higher prices in our acquisitions and partner company creation because of competition from other potential acquirers and higher valuations. This could increase the risk of loss and result in lower gains to the holding company.

We strive to maintain a work environment that reinforces our culture of collaboration, motivation and alignment of interests with investors. The effects of becoming public, including potential changes in our compensation structure, could adversely affect this culture. If we do not continue to develop and implement the right processes and tools to manage our changing enterprise and maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition andcondition, results of operations.operations and cash flows.

In the course of our operations and the processing of transactions, we collect, process, store, disclose, use, share and/or transmit personal information and other sensitive data from current, past and prospective clients as well as our employees in and across multiple jurisdictions. The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. There are federal, state and foreign laws and regulations regarding privacy, data security and the collection, processing, use, storage, protection, sharing and/or transmission of personal information and sensitive data. For example, the Gramm-Leach-Bliley Act (“GLBA”) (along with its implementing regulations) restricts certain collection, processing, storage, use and disclosure of personal information, requires notice to individuals of privacy practices and provides individuals with certain rights to prevent the use and disclosure of certain nonpublicnon-public or otherwise legally protected information. Additionally, many states continue to enact legislation on matters of privacy, information security, cybersecurity, data breach and data breach notification requirements. For example, as of January 1, 2020, the California Consumer Privacy Act (“CCPA”) grants additional consumer rights with respect to data privacy in California. The CCPA, among other things, entitles California residents to know how their personal information is being collected and shared, to access or request the deletion of their personal information and to opt out of certain sharing of their personal information. The CCPA is subject to further amendments pending certain proposed regulations that are being reviewed and revised by the California Attorney General. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. We cannot predict the impact of the CCPA on our business, operations or financial condition, but it could result in liabilities and/or require us to modify certain processes or procedures, which could result in additional costs.

Because the interpretation and application of many privacy and data protection laws are uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our services and platform capabilities. If so, in addition to the possibility of being subjected to fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our platform, which could have an adverse effect on our business. Any violations or perceived violations of these laws, rules and regulations by us, or any third parties with which we do business, may require us to change our business practices or operational structure, including limiting our activities in certain states and/or jurisdictions, addressing investigations or being subjected to legal claims by governmental entities or private actors, sustaining monetary penalties, sustaining reputational damage, expending substantial costs, time and other resources and/or sustaining other harms to our business. Furthermore, our online, external-facing privacy policy and website make certain statements regarding our privacy, information security and data security practices with regard to information collected from our clients or visitors to our website. Failure or perceived failure to adhere to such practices may result in regulatory scrutiny and investigation, complaints by affected clients or visitors to our website, reputational damage and/or other harm to our business. If either we, or the third-party service providers with which we share client data, are unable to address privacy concerns, even if unfounded, or to comply with applicable privacy or data protection laws, regulations and policies, it could result in additional costs and liability to us, damage our reputation, inhibit sales and harm our business, financial conditioncondition, and results of operations.operations, and cash flows.

Most jurisdictions (includingin allthe United 50 states)States have enacted laws requiring companies to notify individuals, regulatory authorities and/or others of security breaches involving certain types of data. In addition, our agreements with certain partners and service providers may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, may cause our clients, partners and service providers to lose confidence in the effectiveness of our security measures and require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach. A security breach of any of our vendors that processes personal information of our clients may pose similar risks.

Our partner companies, during their development, will typically assert various forms of intellectual property protection. Intellectual property is likely to constitute an important part of our partner companies’ assets and competitive strengths. Federal law, most typically, copyright, patent, trademark and trade secret laws, generally protects intellectual property rights. State law also addresses property rights. Although we expect that our partner companies will take reasonable efforts to protect the rights to their intellectual property, the complexity of United States, individual state and international trade secret, copyright, trademark and patent law, coupled with the limited resources of these partner companies and the demands of quick delivery of products and services to market, create a risk that their efforts will prove inadequate to prevent misappropriation of our partner companies’ technology, third parties may develop similar technology independently, or they will otherwise be unable to adequately protected their trade secrets.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensionsextensions, such as patent term adjustments and/or extensions, may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering a product are obtained, once the patent life has expired, our partner companies may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of new products, patents protecting new products might expire before or shortly after such products are commercialized. As a result, a patent portfolio may not provide sufficient rights to exclude others from commercializing products similar or identical to those of the partner companies.

PatentVest has operated, to date, on a small scale, and it has not yet proven its ability to commercialize services on a large scale. PatentVest has plans to serve approximately 30 clients at any one time. In order to do this successfully, it may have to make additional technology and relationship investments that could delay or limit its ability to develop its client base and commercialize its reports and consultative services. The reports may be found to be ineffective, unreliable or otherwise unsatisfactory to potential clients as there may be unforeseen complications in the processes of scaling. These complications could delay or limit the ability of PatentVest to provide client services or reports, could increase the cost of its consultative and report products, prevent it from implementing processes of the appropriate quality and completeness, and thereby cause the business to suffer. Moreover, PatentVest needs to grow sales, marketing and support staff or make appropriate arrangements with strategic partners to market, sell and support its clients and service and report products. If PatentVest is not able to compete effectively with others while scaling commercially on a timely basis, in sufficient quantities or on commercially reasonable terms, it will suffer a loss of business reputation and clients.

Public Ventures self-clearing capabilities are necessary to operate facilitate its business as planned.operations.

Both the broker-dealer operations and the self-clearing operations are subject to extensive regulation. In addition, regulators perceive that engaging in business with “small and micro-cap” companies (those with market capitalizations of $300 million and under) and “penny” stocks (stocks with market prices of less than $1.00) is an especially high-risk activity, and therefore extensively review and supervise such business activities. Public Ventures focuses on this niche as we believe it offers a significant opportunity for clients of Public Ventures and other persons to gain value on their securities holdings, and we believe that such companies need access to capital. By focusing on this business, however, Public Ventures we will likely increase the potential for regulatory oversight oversight and the potential for regulatory action against the firm. Certain aspects of the regulatory regime, including the Know Your Client (KYC) and Anti Money Laundering (AML) requirements. The ability to oversee KYC and AML requirements is critical to its ability to expand our client networks and increase the volume of transactions the firm performs as required by its business model. If Public Ventures is not able to fulfill its regulatory obligations, it may be fined, have to change its business at greater cost, or be required to cease its business.

To operate the broker-dealer and self-clearing operations, Public Ventures must meet different capitalization requirements in the Company. Company. To do this, it will have to maintain within the capital structure of the various cash and cash equivalent assets and retain access to necessary lines of credit that can assure its ability to comply with changing deposit requirements of the SEC and of the Depositary Trust Clearing Company (“DTCC”), and the National Securities Clearing Corporation (“NSCC”). It is expected that these regulations regulations will undergo substantial changes, from time to time, which could require additional capital as settlement operations move to T+1 (one day after the settlement date) and T+0 settlement in the future. Without the required capital at any time, Public Ventures will not be able to operate its business.

To be able to operate its self-clearing activities, Public Ventures must hire and retain the human talent capable of handling the operational activities and fulfilling the compliance requirements of the business. Trading and settlement and compliance personnel are necessary to manage the operations. Further expertise in financial matters and obligations for self-clearing are also required. Although it has following a conservative approach to launching the business and onboarding clients to cause less stress on the organization, the firm’s ability to perform going forward nonetheless depends on successfully recruiting, training and retaining new personnel. As part of these recruitment and retention efforts, the firm must ensure that it can maintain an adequate supervising and leadership structure capable capable of supporting the successful development of its business model.

Two persons, Anthony DiGiandomenico and Christopher Marlett, own all the Class B Common Shares. The Class A Common Shares have one vote per per share, and the Class B Common Shares have five votes per share. The Class A Common Shares and Class B Common Shares vote together as a single class on all matters, including the election of directors. There are 5,000,000 Class B Common Shares issued and outstanding, outstanding, currently representing 90.8% of the aggregate voting authority of our common shares immediately prior to the date of this filing. Therefore, even if the maximum Class A offered sharesshares, as currently approved by the Board of the Directors, are sold, the Class B Common Shares will continue to be able to dictate the outcome of all matters put before the shareholders. There is no automatic or voluntary conversion of the Class B Common Shares into Class A Common Shares, thus the Class B Common Shares will have control of MDB for an indefinite period of time.

Based on the foregoing, the Class B Common Shares will have significant influence over corporate actions requiring shareholder approval, including the following actions:

We may make distributions of the securities of our partner companies, including cash and rights to purchase equity of a partner companiescompanies.

An aspect of our business plan willis beto distributingdistribute to our shareholders assets of the parent company, which may include the securities of our partner companies after they go public, rights to purchase the equity of these companies, and/or cash and other property, from time to time. The distribution of a right to purchase the equity of a partner company may come at a time when a recipient does not have the ability to exercise the right, and thereby lose the opportunity that the right affords. Any distribution of securities of a partner company, cash and other property may have an adverse impact on the value of your Class A Common Shares. On the other hand, we do not plan to regularly make any periodic distributions, therefore investors should not look to any distribution that we might make to be a regular income item in an investor’s portfolio.

As a smaller reporting company, we are not be required and may notto include a Compensation Discussion and Analysis section in our proxy statements; we needprovided only provide onlythe required two years of financial statements; and we need not provideprovided the table of selected financial data.data as required for a smaller reporting company. We also have other other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which which could make our securities less attractive to potential investors, which could make it more difficult for our security holders to sell their securities.investors.

The United States stock markets recently have experienced price and volume fluctuations due to many factors, including federal government policies, inflationary pressures, changing interest rates, and the conflictconflicts in Ukraine.Ukraine and Iran.

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 Capital (“Public Ventures”); and PatentVest, Inc. (“PatentVest”), and has one majority-owned partner company MDB MDB Minnesota One, Inc. (“MDB Minnesota One”) and one minority owned company eXoZymes Technologies, Inc., formerly known as as Invizyne Technologies, Inc., (“eXoZymes”), that was majority owned and is consolidated up to until November 14, 2024, when eXoZymes eXoZymes issued securities in its IPOIPO. andBecause MDB no longer holds a majority ownedownership byinterest MDB.in eXoZymeseXoZymes, the company is no longer consolidated intoin the financial statements of MDB.statements.

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

eXoZymes, formerly known as Invizyne,eXoZymes was formed with the objective of taking nature’s building blocks to make molecules of interest, effectively simplifying nature. eXoZymes is a biology technology development company that is a minority-owned subsidiary as of the date of the financial statements included in this annual report. Invizyne’seXoZymes’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. eXoZymes was majority owned by MDB Capital Holdings, Holdings, up until November 14, 2024.

On November 14, 2024, eXoZymes completed its initial public offering (IPO),offering, in which it sold common stock, reducing MDB Capital Holdings’ ownership interest from approximately 60% to 47%. As a result, effective November 14, 2024, eXoZymes became a minority owned company and is now accounted for under the equity method of accounting. As noted below, we recognized a gain of $39,307,217$39.3 million on the date of deconsolidation.

Consolidated Results of Operations for the Years Ended December 31, 20242025 and 20232024 (in thousands):

Operating Income. Income. For the years ended December 31, 20242025 and 2023, respectively,2024, operating income werewas derived primarily from the Company’s broker broker dealer and intellectual property service segment.

General and Administrative Costs. During the year ended December 31, 2024,2025, and 2023, respectively,2024, several factors contributed to changes in various expense categories:

Research and Development Costs. For the years ended December 31, 20242025 and 2023, respectively, the2024, research and development costs derived from the Company’s technology segment.

Income Taxes. For the year ended December 31, 2024,2025 theresearch decreaseand indevelopment incomeexpenses taxes was a direct result of the reduction in fee income asdecreased compared to the same period in the year ended,ended December 31,31. 2023.2024, due to the deconsolidation of eXoZymes.

IncomeEquity Taxes.Method Investee. For the year ended December 31, 2024,2025, the decreaseincrease in incomeequity taxesin loss of equity method investee was a direct result of the reduction in taxable grant income as compareddue to recording the yearnet ended,loss Decemberfor 31,eXoZymes 2023.as equity investee.

Operating Income.Income Taxes. For the year ended December 31, 2023,2025, operatingthe increase in income taxes was a generatedresult fromincreased onerevenues feasibilityat studythe conducted.broker-dealer.

FinancingIncome Taxes. Activities. For the year ended December 31, 2024,2025, financingthe activitiesincrease consistedin income taxes was a result of deferredincreased IPOrevenues costsat beingthe recognized.broker-dealer.

Financing Activities. For the year ended December 31, 20232024, financing activities consisted primarily of the receiptnon-cash recognition of netpreviously proceedsdeferred initial public offering costs, which were reclassified to additional paid-in capital upon completion of $17,763,991the from MDB’s initial public offering.IPO.

See Note 2 into the consolidated financial statements for the discussion of on recentlyrecent accounting pronouncements.

The preparation of financial statements in conformity with accounting principles general accepted accounting principles in the United States requires management 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 consolidated financial statements and audited 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:

A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. At December 31, 20242025 and 2023, eXoZymes, formerly known as Invizyne,2024, Public Ventures, PatentVest, MDB Minnesota One, and MDB CG Management have established a full valuation allowance against all net deferred tax assets.

The Company havehas and will develop partner companies that receivesreceives, grant reimbursements, which are netted against research and development expenses in the consolidated statement of operations. Grant reimbursements for capitalized assets are recognized over the useful life of the assets, with the unrecognized portion considered a deferred liability and are included in accounts payable and accrued expenses in the consolidated balance sheet.

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,dealer and began carrying accounts for customers in January 2024.

On November 14, 2024, eXoZymes completed its initial public offering (IPO), in which it sold common stock, reducing the Company’s ownership interest from approximately 60% to 47%. As a result, effective November 14, 2024, eXoZymes became a minority owned company and is now accounted for under the equity method of accounting.accounting, which 40.75% is owned by the company.

Unaudited Condensed Consolidated Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025 (in thousands):

TechnologyUnaudited SegmentCondensed (MDB Minnesota One).Consolidated Results of Operations for the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025 (in thousands):

General and Administrative Costs. During the three and six months ended MarchJune 31,30, 20262026, and 2025, thererespectively, wasseveral littlefactors activitycontributed to changes in thisvarious segment andexpense the decrease in professional fees was attributable to less activity and legal fees with M1.categories:

Condensed Consolidated Balance Sheets MarchJune 31,30, 2026 and December 31, 2025 (in thousands):

Financial Condition: Overall, the reduction in assets was primarily attributed to their utilization for operational activities during during the period. The decrease in cash segregated in compliance with regulations stemmed from customer deposits held at December 31, 2025, for an investment banking deal that was closingclosed in early January.January 2026. The decrease 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. The decrease increase in prepaid expenses and other assets stemmed from cash due to the amortizationcompany as part of prepaidan insuranceinvestment over the period.banking deal. The increase in accounts receivable is due to an increase in activity from legal and strategy fees earned. The increase in related party receivable is due to increased activity by PatentVest for eXoZymes. The decrease in equity method investment is directly tied to the Company’s portion of the net loss.loss, the dilution due to the issuance of shares, and the impairment of the investment due to the declining stock price. Finally, the reduction in property and equipment and right-of-use assets was due to its regular utilization.

The increase in accounts payable and decrease in accrued expenses stemmed from normal course of business activity. The decrease in payables to customers stemmed from customer deposits. Finally, the reduction in lease liability was due to its routine utilization.

Stockholders’ equity decreased from December 31, 2025, to MarchJune 31,30, 2026, primarily due to the net loss for the threesix months ended MarchJune 31,30, 2026, partially partially offset by the recognition of stock-based compensation expense during the period.

Liquidity and Capital Resources – MarchJune 31,30, 2026 and 2025

At MarchJune 31,30, 2026, the Company had $14.2$12.2 million of working capital. This is a decrease of $5.9$5.4 million, from the working capital of $20.1$17.7 that the Company had at MarchJune 31,30, 2025. The decrease in working capital is primarily attributed to the use of cash to fund operations.

Operating Activities. For the threesix months ended MarchJune 31,30, 2026, in addition to cash used in normal operating activities, there was an an approximately $2.0 million decrease in cash resulting from the release of customer deposits that had been held in segregated accounts in compliance with regulatory requirements at December 31, 2025. These deposits related to an investment banking transaction that closed in early January 2026.

For the threesix months ending on MarchJune 31,30, 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.

Investing Activities. There was an investment into the deferred IT costs for development of the self-clearing system, for the threesix months months ended March,June 31,30, 2026. There was no activity for the threesix months ended March,June 31,30, 2025.

Financing Activities. There was no activity for the three or six months ended March,June 31,30, 2026 and 2025.

Public Ventures, LLC, d/b/a MDB Capital, 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 MarchJune 31,30, 2026 and 2025, Public Ventures had net capital of $10.01$8.96 million and $10.18$8.61 million, respectively, which was $9.76$8.71 million and $9.93$8.36 million in excess of the minimum $0.25 million, as required by the Securities and Exchange Commission Rule Rule 15c3-1.

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 brokers have no maximum amount. All unsettled trades at MarchJune 31,30, 2026 and 2025, have subsequently settled with no resulting material liability to Public Ventures. For the years ended MarchJune 31,30, 2026 and 2025, Public Ventures had no material loss due to counterparty failure and had no obligations outstanding under the indemnification arrangement as of MarchJune 31,30, 2026 and 2025.

As part of initial consideration for the License Agreement, M1 issued 1.98 million shares of common stock equity to Mayo; which at that time represented thirty-three percent of its shares. M1 also paid an initial license fee of $0.15 million as part of the initial consideration. M1 will pay earned royalties on future net sales (including modest minimum annual royalties, which commence in the second year of the term of the License Agreement and gradually increase and plateau over time, and which will be credited against earned royalties due on net sales), and a percentage of any sublicensing income. The earned royalty commences after the first commercial sale of a licensed product. At MarchJune 31,30, 2026, there were no accrued royalties recorded.