UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-41751

MDB CAPITAL HOLDINGS, LLC

(Exact name of registrant as specified in its charter)

Delaware

87-4366624

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

14135 Midway Road, Suite G-150

Addison, TX 75001

75001

(Address of principal executive offices)

(Zip code)

(945) 262-9010

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

None

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Shares, representing Limited Liability Interests		MDBH		Nasdaq Capital Markets

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☒
		Emerging Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

As of May 14, 2026, the number of outstanding shares of Class A Common Shares, representing limited liability interests, of the registrant was 5,438,632.

TABLE OF CONTENTS

		Page Number
PART I	FINANCIAL INFORMATION	2

Item 1	Unaudited Condensed Consolidated Financial Statements	2

Condensed Consolidated Balance Sheets –March 31, 2026 (unaudited) and December 31, 2025		2

Unaudited Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2026 and 2025		3

Unaudited Condensed Consolidated Statements of Changes in Equity – Three Months Ended March 31, 2026 and 2025		4

Unaudited Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2026 and 2025		5

Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	26

Item 3	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4	Controls and Procedures	34

PART II	OTHER INFORMATION	35

Item 1	Legal Proceedings	35

Item 1A	Risk Factors	35

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3	Defaults upon Senior Securities	36

Item 4	Mine Safety Disclosures	36

Item 5	Other Information	36

Item 6	Exhibits	36

PART I – FINANCIAL INFORMATION

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MDB CAPITAL HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share count):

	March 31, 2026 (Unaudited)			December 31, 2025

Cash and cash equivalents	$	12,194		$	13,217
Cash segregated in compliance with regulations		340			2,331
Accounts receivable		185			124
Related party receivables		27			13
Clearing deposits		2,000			2,000
Prepaid expenses and other current assets		396			433
Investment securities, at fair value, held by the licensed broker dealer (Notes 1 and 2)		5,141			7,166
Investment securities, at fair value, held by the non-licensed broker dealer (Notes 1 and 2)		119			235
Equity method investment		36,339			37,543
Deferred costs related to deferred revenue		19			14
Property and equipment, net		181			117
Operating lease right-of-use assets, net		522			547
Total assets	$	57,463		$	63,740

LIABILITIES AND EQUITY
Accounts payable	$	348		$	267
Accrued expenses		58			95
Related party payables		-			1
Payables to customers		252			2,189
Operating lease liabilities		581			609
Total liabilities		1,239			3,161
Commitments and Contingencies (Note 9)		-			-
Equity:
Preferred shares, 10,000,000 authorized shares at no par value; 0 issued and outstanding		-			-
Class A Common Shares, 95,000,000 authorized shares at no par value; 5,300,132 and 5,138,632 shares issued and outstanding, respectively		-			-
Class B Common Shares, 5,000,000 authorized shares at no par value; 5,000,000 shares issued and outstanding		-			-
Common Stock, value		-			-
Paid-in-capital		82,874			80,493
Accumulated deficit		(26,538	)		(19,803	)
Total MDB Capital Holdings, LLC Members’ equity		56,336			60,690
Non-controlling interest		(112	)		(111	)
Total equity		56,224			60,579
Total liabilities and equity	$	57,463		$	63,740

See accompanying notes to the unaudited condensed consolidated financial statements.

MDB CAPITAL HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share data and share count)

	2026			2025
	Three Months Ended March 31,
	2026			2025
Operating income (loss):
Unrealized (loss) on investment securities, net from the licensed broker dealer (Notes 1 and 2)	$	(3,047	)	$	(1,463	)
Fee income (from our licensed broker dealer)		2,862			2,140
Other operating income		229			151
Total operating income, net		44			828

Operating costs:
General and administrative costs:
Compensation		3,333			4,336
Operating expense, related party		447			455
Professional fees		684			789
Information technology		282			250
Clearing and other charges		428			289
General and administrative-other		351			619
Total general and administrative costs		5,525			6,738
Research and development costs		-			-
Total operating costs		5,525			6,738
Net operating loss		(5,481	)		(5,910	)
Other income:
Interest income		65			181
Loss related to dilution events		(96	)		-
Unrealized (loss) on investment securities, net from non-licensed broker dealer (Notes 1 and 2)		(116	)		-
Net loss before income taxes		(5,628	)		(5,729	)
Income taxes		-			-
Net loss before equity method investee		(5,628	)		(5,729	)
Equity in loss of equity method investee		(1,108	)		(873	)
Net loss		(6,736	)		(6,602	)
Net loss attributable to non-controlling interests		(1	)		(15	)
Net loss attributable to MDB Capital Holdings, LLC	$	(6,735	)	$	(6,587	)
Loss per share attributable to MDB Capital Holdings, LLC:
Loss per Class A common share – basic and diluted	$	(0.66	)	$	(0.66	)
Weighted average of Class A common shares outstanding – basic and diluted		5,241			4,951
Loss per Class B common share – basic and diluted	$	(0.65	)	$	(0.66	)
Weighted average of Class B common shares outstanding – basic and diluted		5,000			5,000

See accompanying notes to the unaudited condensed consolidated financial statements.

MDB CAPITAL HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

Three Months Ended March 31, 2026 and 2025

	Shares		Amount		Shares		Amount		Capital		Deficit			Interest			Equity
	Class A Common Shares				Class B Common Shares				Paid-In		Accumulated			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			Interest			Equity

Balance, December 31, 2025		5,139	$	-		5,000	$	-	$	80,493	$	(19,803	)	$	(111	)	$	60,579
Issuance of Class A Common Shares		161		-		-		-		-		-			-			-
Stock-based compensation		-		-		-		-		2,381		-			-			2,381
Net loss		-		-		-		-		-		(6,735	)		(1	)		(6,736	)
Balance, March 31, 2026		5,300	$	-		5,000	$	-	$	82,874		(26,538	)		(112	)		56,224

	Class A Common Shares				Class B Common Shares				Paid-In		Accumulated Income			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		(Deficit)			Interest			Equity

Balance, December 31, 2024		4,951	$	-		5,000	$	-	$	68,721	$	1,442		$	(90	)	$	70,073

Stock-based compensation		-		-		-		-		3,515		-			-			3,515
Net loss		-		-		-		-		-		(6,587	)		(15	)		(6,602	)
Balance, March 31, 2025		4,951	$	-		5,000	$	-	$	72,236	$	(5,145	)	$	(105	)	$	66,986

See accompanying notes to the unaudited condensed consolidated financial statements.

MDB CAPITAL HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	2026			2025
	Three Months Ended March 31,
	2026			2025

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(6,736	)	$	(6,602	)
Adjustments to reconcile net loss to net cash used in operating activities:
Unrealized loss on investment securities, held by the licensed broker dealer		3,044			1,463
Unrealized loss on investment securities, not held by the licensed broker dealer		116			-
Stock-based compensation		2,381			3,515
Depreciation of property and equipment		5			6
Deferred costs related to revenue		(5	)		(21	)
Warrants received as part of investment banking deal		(1,020	)		(990	)
Portion of loss from equity investment		1,108			873
Loss related to dilution events		96			-
Change in ROU Asset		25			23
Change in lease liability		(28	)		(25	)
Changes in operating assets and liabilities:
(Increase) decrease in -
Related party receivables		(14	)		(23	)
Accounts receivable		(61	)		-
Prepaid expenses and other current assets		37			40
Clearing deposits		-			723
Increase (decrease) in -
Accounts payable		81			51
Payables to customers		(1,937	)		(400	)
Related party payables		(1	)		11
Accrued expenses		(36	)		98
Net cash used in operating activities		(2,945	)		(1,258	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(69	)		-
Net cash used in investing activities		(69	)		-

CASH FLOWS FROM FINANCING ACTIVITIES:		-			-
Net cash used in financing activities		-			-

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(3,014	)		(1,258	)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - BEGINNING OF PERIOD		15,548			21,281

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - END OF PERIOD	$	12,534		$	20,023

Supplemental disclosures of cash flow information:
Cash paid for -
Interest	$	-		$	-
Income taxes	$	-		$	-

Non-cash investing and financing activities:

Warrants received as part of an investment banking deal	$	1,020		$	990

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the unaudited condensed consolidated balance sheets to the total of the same such amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands):

	March 31, 2026		December 31, 2025
Cash and cash equivalents	$	12,194	$	13,217
Cash segregated in compliance with regulations		340		2,331
Total cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows	$	12,534	$	15,548

See accompanying notes to the unaudited condensed consolidated financial statements.

MDB CAPITAL HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three Months Ended March 31, 2026 and 2025

1. Organization and Description of Business

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”), one majority owned subsidiary, MDB Minnesota One (“M1”), and one minority owned company eXoZymes Inc., formerly known as Invizyne Technologies, Inc., (“eXoZymes”), that was majority owned and was consolidated until November 14, 2024, when eXoZymes issued securities in its IPO and no longer was majority owned by MDB.

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.

Public Ventures is a U.S. registered broker-dealer under the Securities Exchange Act of 1934 (“Exchange Act”), and is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Texas State Securities Board. 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. The Company began carrying accounts for customers in January 2024. The Company does not carry proprietary accounts of broker dealers (“PAB accounts”) (as defined in Rule 15c3-3) for the period ended December 31, 2025.

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.

M1 is a majority owned subsidiary and was formed with the purpose of developing pharmaceuticals based on patents and licensed technology from an affiliate of the Mayo Clinic organization, the Mayo Foundation for Medical Education and Research.

On September 20, 2023, MDB completed an initial public offering “IPO”, consisting 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. In conjunction with the IPO, the Company issued warrants to the placement agent to purchase 16,667 shares of Class A Common Shares, exercisable upon issuance for a period of 5 years at $15.00 per share, for a cash consideration of $0.001/share. The placement agent’s warrants had a fair value of $65,411.

On July 1, 2024, the founding ownership of M1 had MDB owning 67% and Mayo Foundation for Medical Education and Research (“Mayo”) owning 33% of the issued and outstanding common stock. M1 was formed with the purpose of developing pharmaceuticals, based on patents and licensed technology from Mayo. After the initial formation of M1 and finalization and entry into a license agreement between Mayo and M1, MDB entered into a Term Equity Purchase Agreement (“Purchase Agreement”) to provide capital for operations of M1 in exchange for the issuance of shares of common stock of M1 to MDB (see note 11 for the description of the license agreement).

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the financial statements of wholly-owned and majority owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Non-controlling interests at March 31, 2026 and 2025 relate to the interests of third parties in the partially owned subsidiaries.

The managing members of the Company have a controlling interest in PatentVest, S.A., a company organized and based in Nicaragua (which was renamed MDB Capital, S.A in 2022). As the Company itself does not have a controlling financial interest in this entity, management has determined PatentVest, S.A. is not a variable interest entity and should not be consolidated as it has no ownership interests, so has excluded this entity from the Company’s consolidated financial statements. It is the Company’s policy to reevaluate this conclusion on an annual basis or if there are significant changes in ownership.

Equity method investment

The Company applies the equity method to account for investments in entities where it has the ability to exercise significant influence over the operating and financial policies of the investee. Under the equity method, the investment in eXoZymes Inc, (“eXoZymes “), formerly Invizyne Technologies Inc. (“Invizyne”)”, is initially recorded at cost and subsequently adjusted to reflect the Company’s proportional share of the investee’s results of operations in its consolidated financial statements. Equity method investments are periodically reviewed for any other-than-temporary declines in value. The Company’s investment in eXoZymes is presented as “Equity method investment” on the consolidated balance sheet.

Any excess of the acquisition cost over the Company’s share of the net fair value of eXoZymes’ identifiable assets and liabilities at the acquisition date is recognized as goodwill, which is included in the carrying amount of the investment.

When the Company increases its interest in an affiliate accounted for under the equity method while retaining significant influence, it applies the acquisition method only to the additional interest acquired, leaving the previous interest unchanged. Conversely, when there is a decrease in the interest in an affiliate accounted for under the equity method while retaining significant influence, the Company derecognizes a proportionate part of its investment and recognizes any resulting gain or loss in profit or loss.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which it recognizes the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the financial statements or tax returns. The Company measures current and deferred tax assets and liabilities based on provisions of enacted tax law. It evaluates the realization of our deferred tax assets based on all available evidence and establish a valuation allowance to reduce deferred tax assets when it is more likely than not that they will not be realized.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the disclosure of contingent assets and liabilities. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include those related to assumptions used in the valuation of investment securities, accruals for potential liabilities, valuing equity instruments issued for services, assumptions used in the valuation of the equity method investment and gains on the deconsolidation of the subsidiary, the estimate of the fair value of the lease liability and related right of use assets, net realizable value of receivables, useful life of property and equipment, determining impairment of long-lived assets, and the realization of any deferred tax assets.

Emerging Growth Company

The Company is an “emerging growth company,” or “EGC” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected to opt out of the extended transition periods.

Cash and Cash Equivalents

The Company considers highly liquid investments with original maturities or remaining maturities upon purchase of three months or less to be cash equivalents.

The Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”) and/or by the Securities Investor Protection Corporation (the “SIPC”). The Company may periodically have cash balances in financial institutions in excess of the FDIC and SIPC insurance limits of $250 thousand and $500 thousand, respectively.

The Company periodically reviews the financial condition of the financial institutions and assesses the credit risk of such investments. The Company did not experience any credit risk losses during the three months ended March 31, 2026 and 2025.

Segregated Cash and Deposits

The Company provides deposits or enters into agreements that would require funds to be held in a segregated cash account. At March 31, 2026, the Company had $0.3 million of segregated cash consisting of funds held in reserve for customers. At December 31, 2025, the Company had $2.3 million of segregated cash consisting of funds held in reserve for customers and non-customers.

Clearing Deposits

The Company is obligated to maintain security deposits with the DTC and NSCC. At March 31, 2026 and December 31, 2025, these deposits totaled $2.0 million and $2.0 million.

Prepaid Expenses and Other Current Assets

The Company has prepaid and other current assets totaling $396 thousand at March 31, 2026, consisting of acquired intangible assets totaling $44 thousand, prepaid professional fees totaling $50 thousand, security deposits totaling $19 thousand, prepaid insurance of $139 thousand, various prepaid expenses of $124 thousand, and other assets of $20 thousand. Prepaid and other assets totaling $433 thousand at December 31, 2025, consisting of acquired intangible assets totaling $44 thousand, prepaid professional fees totaling $50 thousand, security deposits totaling $19 thousand, prepaid insurance of $169 thousand, various prepaid expenses of $130 thousand, and other assets of $21 thousand.

Leases

Leases of the Company consist primarily of contracts for the right to use and direct use of an individual property. Leases were analyzed for evidence of significant additional components and to determine if these components were separately identifiable within the context of the contract. As an accounting policy, to account for these components, the Company has elected the practical expedient for property leases that have both lease and non-lease components for them to be combined into a single component and account for as a lease. This policy is effective for all current and future property operating leases and applied uniformly and will be disclosed as such within the financial statements. Operating lease assets are included within right-of-use assets and the corresponding operating lease liabilities are included within liabilities on the Company’s consolidated balance sheet as of March 31, 2026 and December 31, 2025.

The Company has elected not to present short-term leases on the consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise. All other right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date. Because the Company’s leases do not provide an implicit rate of return, the Company used the Company’s incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.

Stock Based Compensation

Stock-based compensation primarily consists of restricted stock units with service or market/performance conditions. Equity awards are measured at the fair market value of the underlying stock at the grant date. The Company recognized stock based compensation expense using the straight-line attribution method over the requisite service period. The Company’s subsidiary issued stock-options and the fair value is determined utilizing Black-Scholes options-pricing model. The Company accounts for forfeitures as they occur, rather than applying an estimated forfeiture rate. For performance-based restricted stock units, the compensation cost is recognized based on the number of units expected to vest upon the achievement of the performance conditions. Shares are issued on the vesting dates net of the applicable statutory tax withholding to be paid by us on behalf of our employees. As a result, fewer shares are issued to the employee than the number of awards outstanding. The Company records a liability for the tax withholding to be paid by it as a reduction to Additional paid-in capital.

Investment Securities

The Company strategically invests funds in U.S. Treasury Bills, early-stage technology companies, and equity securities and options of publicly traded and privately held companies. The Company classifies investment securities as investment securities, at amortized cost, investment securities, at fair value, or investment securities, at cost less impairment.

Investment securities, at amortized cost – From time to time the Company will hold funds in investment securities, at amortized cost. This is comprised of debt securities held by MDB and are classified as investment securities held-to-maturity and carried at amortized cost if management has the positive intent and ability to hold the securities to maturity. Initially, the cost of these securities was recorded, and later on, they were assessed at amortized cost, which was modified for unamortized purchase premiums and discounts, and also for credit losses provision. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the effective-interest method. Such amortization and accretion are included in the other operating income in the statements of operations. Interest income is recognized when earned. The Company recognizes estimated expected credit losses over the life of the investment security through the allowance for credit losses account. The allowance for credit losses is a valuation account that is deducted from, or added to, the amortized cost basis of the investment security to present the net amount expected to be collected. In determining expected credit losses, the Company considers relevant qualitative factors including, but not limited to, term and structure of the instrument, credit rating by rating agencies and historic credit losses adjusted for current conditions and reasonable and supportable forecasts. The Company holds investments in U.S. Treasury Bills or money market funds backed by U.S. Treasury Bills, so there are no expected credit losses. Declines in fair value of these securities is due to changes in market interest rates, and because it expects to hold these securities until maturity, it does not expect to realize any losses. There were no investment securities, at amortized cost as of March 31, 2026 and December 31, 2025.

Investment securities, at fair value - This is comprised of equity investments held by the broker dealer subsidiary and are reported at fair value with changes in fair value recognized in the statement of operations. Purchases and sales of equity securities, consisting of common stock and warrants to purchase common stock, are recorded based on the respective market price quotations on the trade date. Realized gains and losses on investments represent the net gains and losses on investments sold during the period based on the average cost method. Differences between the fair value of investments at the beginning of the year and the end of the year are recorded on the income statement as unrealized gains and losses.

Investment securities, at cost less impairment - This is comprised of equity securities without a readily determinable fair value held by the broker dealer subsidiary, the Company has elected to apply the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes. The Company will reassess whether such an investment qualifies for the measurement alternative at each reporting period. In evaluating an investment for impairment or observable price changes, we will use inputs including recent financing events, as well as other available information regarding the investee’s historical and forecasted performance. The Company has assessed this investment and determined that the current impairment of such securities held at March 31, 2026 is accurate.

SEC Form 10-Q filed by MDB Capital Holdings LLC