Forge Global 10Q 2024 Q3 Quarterly report

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2024


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

For the transition period from to

Commission file number 001-04321

Forge Global Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware									99-4383083
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

4 Embarcadero Center Floor 15 San Francisco, CA 94111
(Address of principal executive offices, including zip code)

(415) 881-1612

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	FRGE	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 past 90 days. Yes x No o

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 and post such files). Yes x No o

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,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	o

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 Act). Yes o No x

As of November 7, 2024, the registrant had 185,013,425 shares of common stock, $0.0001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q (this "Report") to “Forge,” the “Company,” “us,” “we,” “our,” and any related terms are intended to mean Forge Global Holdings, Inc. and its consolidated subsidiaries.

Certain statements in this Report may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Report may include, for example, statements about our ability to:

•effectively respond to changing macroeconomic and business conditions;

•execute our business strategy, including monetization of services provided;

•anticipate the uncertainties inherent in the development of new business lines, strategies, products, and services;

•anticipate rapid technological changes and competitive threats;

•respond to uncertainties associated with product and service development and market acceptance;

•increase brand awareness;

•attract, train, and retain effective officers, employees, directors, and other key personnel;

•acquire, develop, and protect intellectual property;

•maintain key strategic relationships with partners;

•anticipate the significance and timing of contractual obligations;

•enhance future operating and financial results;

•respond to fluctuations in interest rates and foreign currency exchange rates;

•finance operations on an economically viable basis;

•meet future capital adequacy and liquidity requirements;

•obtain additional capital, including use of the debt market;

•comply with laws and regulations applicable to our business;

•stay abreast of modified or new laws and regulations that would apply to our business;

•manage cyber and technology risk management processes, including incident management processes;

•upgrade and maintain information technology systems;

•maintain disaster recovery and business continuity planning controls;

•manage vendor and third party processes;

•adequately support data governance and data privacy controls related to personal information and consumer data;

•maintain the listing of our securities on the NYSE or another national securities exchange;

•anticipate the impact of, and response to, new accounting standards;

•anticipate the impact of new tax laws that would apply to our business; and

•successfully defend litigation.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Report.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and

uncertainties that could have an impact on the forward-looking statements contained in this Report. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any after the date of this Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, partnerships, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Table of Contents

Part I - Financial Information

FORGE GLOBAL HOLDINGS, INC.

Consolidated Balance Sheets

(In thousands of U.S. dollars, except share and per share data)


	September 30, 2024 (Unaudited)		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	114,454	$	144,722
Restricted cash	1,103		1,062
Accounts receivable, net	4,955		4,067

Prepaid expenses and other current assets	8,891		13,253
Total current assets	$	129,403	$	163,104
Internal-use software, property and equipment, net	3,500		5,192
Goodwill and other intangible assets, net	126,983		129,919
Operating lease right-of-use assets	6,654		4,308
Payment-dependent notes receivable, noncurrent	7,436		5,593
Other assets, noncurrent	2,597		2,615
Total assets	$	276,573	$	310,731
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,640	$	1,831
Accrued compensation and benefits	11,306		11,004
Accrued expenses and other current liabilities	7,694		8,861
Operating lease liabilities, current	3,453		2,516

Total current liabilities	24,093		24,212
Operating lease liabilities, noncurrent	4,492		2,707
Payment-dependent notes payable, noncurrent	7,436		5,593
Warrant liabilities	1,958		9,616
Other liabilities, noncurrent	313		185
Total liabilities	38,292		42,313
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.0001 par value; 184,320,636 and 176,899,814 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	19		18
Treasury stock, at cost; 157,193 shares as of September 30, 2024 and December 31, 2023, respectively	(625)		(625)
Additional paid-in capital	565,529		543,846
Accumulated other comprehensive income	933		911
Accumulated deficit	(331,328)		(280,638)
Total Forge Global Holdings, Inc. stockholders’ equity	234,528		263,512
Noncontrolling interest	3,753		4,906
Total stockholders’ equity	238,281		268,418
Total liabilities and stockholders’ equity	$	276,573	$	310,731

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Operations

(In thousands of U.S. dollars, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues:
Marketplace revenues	$	8,713	$	7,283	$	28,912	$	17,638
Custodial administration fees	10,503		11,280		31,828		33,124
Total revenues	19,216		18,563		60,740		50,762
Transaction-based expenses:
Transaction-based expenses	(73)		(148)		(358)		(250)
Total revenues, less transaction-based expenses	19,143		18,415		60,382		50,512
Operating expenses:
Compensation and benefits	28,750		27,650		87,377		78,566
Technology and communications	3,185		3,763		8,894		10,628
Professional services	2,435		2,883		6,257		8,884
Advertising and market development	1,015		910		3,348		2,463
Rent and occupancy	1,036		1,142		3,278		3,616
General and administrative	1,877		1,870		9,447		8,143
Depreciation and amortization	1,748		1,710		5,345		5,246
Total operating expenses	40,046		39,928		123,946		117,546
Operating loss	(20,903)		(21,513)		(63,564)		(67,034)
Interest and other income (expense):
Interest income	1,307		1,725		4,511		4,553
Change in fair value of warrant liabilities	931		907		7,659		(2,715)
Other income, net	119		215		288		647
Total interest and other income	2,357		2,847		12,458		2,485
Loss before provision for income taxes	(18,546)		(18,666)		(51,106)		(64,549)
Provision for income taxes	298		291		772		769
Net loss	(18,844)		(18,957)		(51,878)		(65,318)
Net loss attributable to noncontrolling interest	(502)		(609)		(1,188)		(893)
Net loss attributable to Forge Global Holdings, Inc.	$	(18,342)	$	(18,348)	$	(50,690)	$	(64,425)
Net loss per share attributable to Forge Global Holdings, Inc. common stockholders:
Basic	$	(0.10)	$	(0.11)	$	(0.28)	$	(0.37)
Diluted	$	(0.10)	$	(0.11)	$	(0.28)	$	(0.37)
Weighted-average shares used in computing net loss per share attributable to Forge Global Holdings, Inc. common stockholders:
Basic	184,158,571		173,957,880		182,261,198		173,045,721
Diluted	184,158,571		173,957,880		182,261,198		173,045,721

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(In thousands of U.S. dollars)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net loss	$	(18,844)	$	(18,957)	$	(51,878)	$	(65,318)
Foreign currency translation adjustment	388		(333)		57		(158)
Comprehensive loss	(18,456)		(19,290)		(51,821)		(65,476)
Less: Comprehensive loss attributable to noncontrolling interest	(326)		(745)		(1,153)		(959)
Comprehensive loss attributable to Forge Global Holdings, Inc.	$	(18,130)	$	(18,545)	$	(50,668)	$	(64,517)

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity

(In thousands of U.S. dollars, except share data)


	Common Stock						Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total
	Shares		Amount		Treasury Stock
Balance as of December 31, 2023	176,899,814		$	18	$	(625)	$	543,846	$	(280,638)	$	911	$	4,906	$	268,418
Issuance of common stock upon release of restricted stock units	3,866,866		(*)		—		(*)		—		—		—		—
Tax withholding related to vesting of restricted stock units	(1,073,222)		(*)		—		(2,302)		—		—		—		(2,302)
Issuance of common stock upon exercise of vested options	317,769		(*)		—		227		—		—		—		227
Vesting of early exercised stock options and restricted stock awards	—		(*)		—		36		—		—		—		36
Stock-based compensation expense	—		—		—		9,467		—		—		—		9,467
Net loss	—		—		—		—		(18,624)		—		(370)		(18,994)
Foreign-currency translation adjustment	—		—		—		—		—		(146)		(109)		(255)
Balance as of March 31, 2024	180,011,227		$	18	$	(625)	$	551,274	$	(299,262)	$	765	$	4,427	$	256,597
Issuance of common stock upon release of restricted stock units	3,057,758		1		—		(1)		—		—		—		—
Tax withholding related to vesting of restricted stock units	(563,421)		(*)		—		(1,135)		—		—		—		(1,135)
Issuance of common stock upon exercise of vested options	174,659		(*)		—		234		—		—		—		234
Repurchase of early exercised stock options	(10,149)		—		—		—		—		—		—		—
Vesting of early exercised stock options and restricted stock awards	—		(*)		—		35		—		—		—		35
Stock-based compensation expense	—		—		—		7,859		—		—		—		7,859
Net loss	—		—		—		—		(13,724)		—		(316)		(14,040)
Foreign-currency translation adjustment	—		—		—		—		—		(44)		(32)		(76)
Balance as of June 30, 2024	182,670,074		$	19	$	(625)	$	558,266	$	(312,986)	$	721	$	4,079	$	249,474
Issuance of common stock upon release of restricted stock units	1,936,564		(*)		—		—		—		—		—		—
Tax withholding related to vesting of restricted stock units	(308,725)		(*)		—		(406)		—		—		—		(406)
Issuance of common stock upon exercise of vested options	22,723		(*)		—		12		—		—		—		12

Vesting of early exercised stock options and restricted stock awards	—		—		—		35		—		—		—		35
Stock-based compensation expense	—		—		—		7,622		—		—		—		7,622
Net loss	—		—		—		—		(18,342)		—		(502)		(18,844)
Foreign-currency translation adjustment	—		—		—		—		—		212		176		388
Balance as of September 30, 2024	$	184,320,636	$	19	$	(625)	$	565,529	$	(331,328)	$	933	$	3,753	$	238,281

(*) amount less than 1

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity

(In thousands of U.S. dollars, except share data)


	Common Stock						Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total
	Shares		Amount		Treasury Stock
Balance as of December 31, 2022	172,560,916		$	18	$	—	$	509,094	$	(190,418)	$	693	$	6,074	$	325,461
Issuance of common stock upon release of restricted stock units	1,464,968		(*)		—		(*)		—		—		—		—
Tax withholding related to vesting of restricted stock units	(326,812)		(*)		—		(557)		—		—		—		(557)
Issuance of common stock upon exercise of vested options	117,215		(*)		—		61		—		—		—		61
Repurchase of early exercised stock options	(8,132)		(*)		—		—		—		—		—		—
Vesting of early exercised stock options and restricted stock awards	—		—		—		131		—		—		—		131
Stock-based compensation expense	—		—		—		7,401		—		—		—		7,401
Net loss	—		—		—		—		(21,188)		—		(73)		(21,261)
Foreign-currency translation adjustment	—		—		—		—		—		137		91		228
Balance as of March 31, 2023	173,808,155		$	18	$	—	$	516,130	$	(211,606)	$	830	$	6,092	$	311,464
Issuance of common stock upon release of restricted stock units	243,473		(*)		—		(*)		—		—		—		—
Issuance of common stock upon exercise of vested options	335,085		(*)		—		269		—		—		—		269
Vesting of early exercised stock options and restricted stock awards	—		—		—		67		—		—		—		67
Stock-based compensation expense	—		—		—		8,809		—		—		—		8,809
Net loss	—		—		—		—		(24,889)		—		(211)		(25,100)
Foreign-currency translation adjustment	—		—		—		—		—		(32)		(21)		(53)
Balance as of June 30, 2023	174,386,713		$	18	$	—	$	525,275	$	(236,495)	$	798	$	5,860	$	295,456
Issuance of common stock upon release of restricted stock units	740,880		(*)		—		(*)		—		—		—		—
Issuance of common stock upon exercise of vested options	239,920		(*)		—		124		—		—		—		124
Repurchase of early exercised stock options	(194,400)		(*)		—		—		—		—		—		—
Vesting of early exercised stock options and restricted stock awards	—		—		—		27		—		—		—		27
Stock-based compensation expense	—		—		—		9,233		—		—		—		9,233
Net loss	—		—		—		—		(18,348)		—		(609)		(18,957)
Foreign-currency translation adjustment	—		—		—		—		—		(197)		(136)		(333)
Balance as of Balance as of September 30, 2023	$	175,173,113	$	18	$	—	$	534,659	$	(254,843)	$	601	$	5,115	$	285,550

(*) amount less than 1

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands of U.S. dollars)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(51,878)	$	(65,318)
Adjustments to reconcile net loss to net cash used in operations:
Share-based compensation	24,948		25,443
Depreciation and amortization	5,345		5,247
Amortization of right-of-use assets	1,975		2,327
Allowance for doubtful accounts	250		529
Impairment of right-of-use assets	186		—
Loss on impairment of long lived assets	—		536
Change in fair value of warrant liabilities	(7,659)		2,715
Changes in operating assets and liabilities:
Accounts receivable	(1,139)		(857)
Prepaid expenses and other assets	(2,179)		1,590
Accounts payable	(58)		(1,318)
Accrued expenses and other liabilities	(931)		2,011
Accrued compensation and benefits	302		(4,472)
Operating lease liabilities	(1,785)		(3,317)
Other	(10)		—
Net cash used in operating activities	(32,633)		(34,884)
Cash flows from investing activities:
Receipts of term deposit maturities	6,559		—
Purchases of property and equipment	(792)		(113)
Capitalized internal-use software development costs	(48)		—
Purchases of term deposits	—		(3,180)

Net cash provided by (used in) investing activities	5,719		(3,293)
Cash flows from financing activities:
Proceeds from exercise of options	473		353
Taxes withheld and paid related to net share settlement of equity awards	(3,843)		(557)
Net cash used in financing activities	(3,370)		(204)
Effect of changes in currency exchange rates on cash and cash equivalents	57		(158)
Net decrease in cash and cash equivalents	(30,227)		(38,539)
Cash, cash equivalents and restricted cash, beginning of the period	145,784		194,965
Cash, cash equivalents and restricted cash, end of the period	$	115,557	$	156,426

Reconciliation of cash, cash equivalents and restricted cash to the amounts reported within the consolidated balance sheets
Cash and cash equivalents	$	114,454	$	155,127
Restricted cash	1,103		1,299
Total cash, cash equivalents and restricted cash, end of the period	$	115,557	$	156,426

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands of U.S. dollars)


	Nine Months Ended September 30,
	2024		2023
Supplemental disclosure of non-cash investing and financing activities:
Lease liabilities arising from obtaining right-of-use assets	$	4,506	$	—
Capitalized internal-use software development costs accrued and not yet paid	$	117	$	—
Vesting of early exercised stock options and restricted stock awards	$	107	$	225

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Forge Global Holdings, Inc. (the “Company” and f/k/a Motive Capital Corp) is a financial services platform headquartered in San Francisco, California. The Company offers a trusted trading platform, proprietary data, and insights to inform investment strategies, along with custody services to help companies, stockholders, institutions, and accredited investors confidently navigate and transact in the private market. The Company's scaled and integrated business model is at the nexus of the private market ecosystem, which it believes creates a sustaining competitive advantage fueling its customers' participation in the private market and the Company's growth.

On March 21, 2022 (the “Closing Date”), the Company consummated the Business Combination (as defined below) pursuant to the terms of the Agreement and Plan of Merger dated September 13, 2021 (the "Merger Agreement"), by and among Motive Capital Corp, a blank check company incorporated as a Cayman Islands exempted company in 2020 (“MOTV”), FGI Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of MOTV (“Merger Sub”), and Forge Global, Inc., a Delaware corporation (“Legacy Forge”). Pursuant to the Merger Agreement, on the Closing Date, immediately prior to the consummation of the Business Combination, MOTV changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware and changed its corporate name to "Forge Global Holdings, Inc." (the “Domestication”). On the Closing Date, Merger Sub merged with and into Legacy Forge (the "Merger"), with Legacy Forge surviving the Merger as a direct, wholly-owned subsidiary of the Company (together with the Merger, the Domestication, and the other transactions contemplated by the Merger Agreement, the “Business Combination”). The Merger was accounted for as a reverse recapitalization with Legacy Forge being the accounting acquirer and MOTV as the acquired company for accounting purposes. The shares and net loss per common share prior to the Merger were retroactively restated as shares reflecting the exchange ratio (the "Exchange Ratio") as established by the Merger Agreement (each outstanding share of Legacy Forge Class A common stock was exchanged for 3.122931 shares of the Company’s common stock, including all shares of Legacy Forge preferred stock, which were converted to shares of Legacy Forge's Class A common stock immediately prior to the Merger). See Note 3, "Capitalization" for additional information.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated in consolidation.

In the normal course of business, the Company has transactions with various investment entities. In certain instances, the Company provides investment advisory services to pooled investment vehicles (each, an “Investment Fund”). The Company does not have discretion to make any investment, except for the specific investment for which an Investment Fund was formed. The Company performs an assessment to determine (a) whether the Company’s investments or other interests will absorb portions of a variable interest entity’s expected losses or receive portions of the entity’s expected residual returns and (b) whether the Company’s involvement, through holding interests directly or indirectly in the entity, would give it a controlling financial interest. The Company consolidates entities in which it, directly or indirectly, is determined to have a controlling financial interest. The Company has a majority ownership interest in Forge Europe GmbH ("Forge Europe") and accounts for Forge Europe as a fully consolidated subsidiary. The remaining interest, held by Deutsche Börse Aktiengesellschaft ("DBAG"), is reported as a noncontrolling interest in the unaudited condensed consolidated financial statements. DBAG is a related party of the Company.

There have been no changes to the Company's significant accounting policies described in the audited consolidated financial statements for the year ended December 31, 2023, that have had a material impact on these unaudited condensed consolidated financial statements and related notes.

Segment Information

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company operates as a single operating segment and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, allocating resources, and evaluating the Company’s financial performance.

Unaudited Interim Condensed Consolidated Financial Information

The accompanying interim condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023, and accompanying notes are unaudited. These unaudited interim condensed consolidated financial statements (the "unaudited condensed consolidated financial statements") have been prepared in accordance with GAAP applicable to interim financial statements. These financial statements are presented in accordance with the rules and regulations of the SEC and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. As such, the information included herein should be read in conjunction with the consolidated financial statements and accompanying notes as of and for the year ended December 31, 2023 (the “audited consolidated financial statements”) that were included in the Company’s Annual Report on Form 10-K filed on March 26, 2024, which provides a more complete discussion of the Company’s accounting policies and certain other information. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of September 30, 2024 and its condensed consolidated results of operations and cash flows for the three and nine months ended September 30, 2024 and 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results expected for the year ending December 31, 2024 or any other future interim or annual periods.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such management estimates include, but are not limited to, collectability of accounts receivable, the fair value of financial assets and liabilities, the useful lives of acquired intangible assets and property and equipment, the impairment of long-lived assets and goodwill, the fair value of warrants, equity awards, and share-based compensation expenses, including the derived service period for the awards containing market-based vesting conditions, and the valuation of deferred tax assets. These estimates are inherently subjective in nature and, therefore, actual results may differ from the Company’s estimates and assumptions. The Company bases its estimates on historical experience and also on assumptions that it believes are reasonable. Further, the Company applies judgment in determining whether, directly or indirectly, it has a controlling financial interest in the Investment Funds, in order to conclude whether any of the Investment Funds must be consolidated.

The Company believes the estimates and assumptions underlying the unaudited condensed consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2024. These estimates may change as new events occur and additional information is obtained, and related financial impacts will be recognized in the Company’s consolidated financial statements as soon as those events become known.

Goodwill and Other Intangible Assets, Net

Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized but is tested for impairment annually on October 1, or more frequently if events or changes in circumstances indicate the goodwill may be impaired. These events or circumstances could include a significant change in the business climate, regulatory environment, established business plans, operating performance indicators, or competition. Potential impairment indicators may also include, but are not limited to, (i) the results of the Company’s most recent annual or interim impairment testing, (ii) downward revisions to internal forecasts, (iii) declines in the Company’s market capitalization below its book value, and the magnitude and duration of those declines, (iv) a reorganization resulting in a change to the Company’s operating segments, and (v) other macroeconomic factors, such as increases in interest rates that may affect the weighted average cost of capital or volatility in the equity and debt markets.

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Acquired intangible assets also consist of identifiable intangible assets, primarily software technology, launched in-process research and development ("IPR&D") asset, website, trade name, and customer relationships, resulting from business acquisitions. Finite-lived intangible assets are recorded at fair value on the date of acquisition and are amortized over their estimated useful lives. The Company bases the useful lives and related amortization expense on its estimate of the period that the assets will generate revenues or otherwise be used.

Concentration of Credit Risks

The Company’s exposure to credit risk associated with its contracts with holders of private company equity (“sellers”) and investors (“buyers”) related to the transfer of private securities is measured on an individual counterparty basis. Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, the Company’s exposure is monitored in light of changing counterparty and market conditions. As of September 30, 2024 and December 31, 2023, the Company did not have any material concentrations of credit risk outside the ordinary course of business.

As of September 30, 2024 and December 31, 2023, no customers accounted for more than 10% of the Company’s accounts receivable. No customer accounted for more than 10% of total revenue, less transaction-based expenses, for the three and nine months ended September 30, 2024 and 2023.

Revenue by Geographic Location

For the three and nine months ended September 30, 2024 and 2023, revenue outside of the United States (including U.S. territories), based on customer billing address, was $1.1 million, $4.3 million, $1.0 million, and $3.0 million, respectively.

Comprehensive Loss

Comprehensive loss consists of Net loss and Other comprehensive income or loss. The Company's Other comprehensive income or loss is comprised of foreign currency translation gains and losses. Accumulated other comprehensive loss, as presented in the condensed consolidated financial statements, consists of changes in unrealized gains and losses on foreign currency translation.

3. Capitalization

Common Stock

Prior to the Merger, Legacy Forge was authorized to issue up to 257,968,554 shares of its capital stock, of which 171,153,360 shares were designated as Class AA common stock.

Merger Transaction

On the Closing Date, and in accordance with the terms and subject to the conditions of the Merger Agreement, each share of Legacy Forge Class AA common stock, par value $0.00001 per share, was canceled and converted into the right to receive the applicable portion of the merger consideration comprised of the Company’s common stock, par value $0.0001 per share, based on the Exchange Ratio.

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the Merger, the Company amended and restated its certificate of incorporation to authorize 2,100,000,000 shares of capital stock, consisting of (i) 2,000,000,000 shares of common stock, par value $0.0001 per share and (ii) 100,000,000 shares of preferred stock. The holders of common stock have exclusive voting power. Each share of common stock is entitled to one vote per share. The Company’s board of directors has the authority to issue shares of preferred stock in one or more series and to determine the preferences, privileges, and restrictions, including voting rights, of those shares. Upon the consummation of the Business Combination, the Company’s common stock and warrants began trading on the NYSE under the symbols “FRGE” and “FRGE WS”, respectively. On July 11, 2022, all such publicly listed warrants were redeemed and delisted from the NYSE. Additionally, on the Closing Date, all equity awards of Legacy Forge were assumed by the Company and converted into comparable equity awards that are settled or exercisable for shares of the Company’s common stock. As a result, each outstanding stock option of Legacy Forge was converted into an option to purchase shares of the Company’s common stock based on the Exchange Ratio and each outstanding warrant of Legacy Forge was converted into a warrant to purchase shares of the Company’s common stock based on the Exchange Ratio.

As of September 30, 2024, the Company had authorized 2,000,000,000 and 100,000,000 shares of common stock and preferred stock, respectively, and the Company had 184,320,636 shares of common stock and no shares of preferred stock issued and outstanding.

4. Fair Value Measurements

Financial instruments consist of cash equivalents, restricted cash, term deposits, accounts receivable, accounts payable, accrued liabilities, payment-dependent notes receivable, payment-dependent notes payable, and warrant liabilities. Cash equivalents, term deposits, payment-dependent notes receivable, payment-dependent notes payable, and warrant liabilities are stated at fair value on a recurring basis. Restricted cash, accounts receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value, due to the short time these financial instruments are held to the expected receipt or payment date.

The Company classifies cash equivalents, including money market funds and U.S. government treasury bills, within Level 1 of the fair value hierarchy because the Company values these investments using quoted market prices. The Company classifies term deposits as level 2 of the fair value hierarchy because these investments are valued using observable market inputs without quoted market prices. The Company classifies the December 2023 Warrants (as defined herein) within level 2 of the fair value hierarchy as these warrants are valued using a Black-Scholes option-pricing model with observable market inputs. The Company classifies Payment-dependent notes receivable and payable and its Private Placement Warrants (as defined herein) as Level 3 of the fair value hierarchy as the fair value measurements are based on valuation techniques that use significant inputs that are unobservable which are described in more detail below.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis (in thousands):


	As of September 30, 2024
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	48,685	$	—	$	—	$	48,685

U.S. government treasury bills	21,228		—		—		21,228
Term deposits (greater than 90 days)(1)(2)	—		1,058		—		1,058
Payment-dependent notes receivable, non-current	—		—		7,436		7,436
Total financial assets	$	69,913	$	1,058	$	7,436	$	78,407

Payment-dependent notes payable, non-current	$	—	$	—	$	7,436	$	7,436
December 2023 Warrants(3)	—		628		—		628
Private Placement Warrants	—		—		1,330		1,330
Total financial liabilities	$	—	$	628	$	8,766	$	9,394

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	130,132	$	—	$	—	$	130,132
Term deposits (less than 90 days)	—		2,221		—		2,221
Payment-dependent notes receivable, non-current	—		—		5,593		5,593
Term deposits (greater than 90 days)(1)(2)	—		7,694		—		7,694
Total financial assets	$	130,132	$	9,915	$	5,593	$	145,640

Payment-dependent notes payable, non-current	$	—	$	—	$	5,593	$	5,593
December 2023 Warrants(3)	—		4,889		—		4,889
Private Placement Warrants	—		—		4,727		4,727
Total financial liabilities	$	—	$	4,889	$	10,320	$	15,209

(1) Included in Prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023.

(2) Includes $0.7 million and $1.0 million term deposits required to fulfill the Company's obligations in connection with real estate lease agreements as of September 30, 2024 and December 31, 2023, respectively.

(3) On December 18, 2023, the then outstanding Junior Preferred Stock Warrants were modified and replaced with the December 2023 Warrants. See Note 10, "Warrants" for additional information.

Payment-Dependent Notes Receivable and Payment-Dependent Notes Payable

The Company classifies payment-dependent notes receivable and payment-dependent notes payable within Level 3 of the fair value hierarchy if the underlying securities are equity of private companies whose regular financial and nonfinancial information is generally not available other than when it is publicly disclosed, or significant unobservable inputs are used to estimate fair value.

The Company estimates the fair value of payment-dependent notes receivable and payment-dependent notes payable utilizing completed transactions made through the Company’s platform for the relevant private securities as well as mutual fund valuations of private companies as relevant data inputs.

Private Placement Warrants

The Company classifies the Private Placement Warrants within Level 3 due to the valuation technique used to estimate fair value. The Company used a combination of a Monte Carlo simulation and a binomial lattice model to estimate the fair value of the Private Placement Warrants. The Monte Carlo simulation was used for September 30, 2024 and a combination of the binomial lattice model and Monte Carlo simulation was used for December 31, 2023. The Company estimated the fair value of the Private Placement Warrant liabilities, as of September 30, 2024 and December 31, 2023, respectively, using the following key assumptions:


	September 30, 2024		December 31, 2023
Fair value of underlying securities	$	1.31	$	3.43
Expected term (years)	2.5		3.2
Expected volatility	112.5%		117.0%
Risk-free interest rate	3.6%		4.0%
Expected dividend yield	0.0%		0.0%

Fair value per warrant	$	0.18	$	0.64

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded changes in the fair value of the liability related to the Private Placement Warrants for the three and nine months ended September 30, 2024, and 2023, as follows:


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Balance as of beginning of period	$	1,847	$	2,760	$	4,727	$	222
Change in fair value of warrant liability(1)	(517)		(544)		(3,397)		1,994
Balance as of September 30,	$	1,330	$	2,216	$	1,330	$	2,216

(1) The change in fair value of warrant liability is recorded in the unaudited condensed consolidated statements of operations within Change in fair value of warrant liabilities.

Transfers Into and Out of Level 3

The Company transfers financial instruments out of Level 3 on the date when underlying input parameters are readily observable from existing market quotes. On December 18, 2023, the Junior Preferred Stock Warrants (as defined herein) were modified and replaced with the December 2023 Warrants and transferred from Level 3 to Level 2 upon modification as these warrants are valued using a Black-Scholes Option pricing model using observable market inputs. See Note 10, "Warrants" for additional information. For Payment-dependent notes payable and receivable, transfers from Level 3 to Level 1 generally relate to a company going public and listing on a national securities exchange. During the nine months ended September 30, 2024 and 2023, there were no transfers of securities into or out of Level 3.

The following tables provide reconciliation for all financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2024 and 2023 (in thousands):


	Total Level 3 Financial Assets		Total Level 3 Financial Liabilities
Balance as of December 31, 2023	$	5,593	$	10,320
Change in fair value of payment-dependent notes receivable	1,843		—
Change in fair value of payment-dependent notes payable	—		1,843
Change in fair value of Private Placement Warrants	—		(3,397)
Balance as of September 30, 2024	$	7,436	$	8,766


	Total Level 3 Financial Assets		Total Level 3 Financial Liabilities
Balance as of December 31, 2022	$	7,371	$	7,977
Change in fair value of payment-dependent notes receivable	(1,608)		—
Change in fair value of payment-dependent notes payable	—		(1,608)
Change in fair value of Junior Preferred Stock Warrants(1)	—		721
Change in fair value of Private Placement Warrants	—		1,994
Balance as of September 30, 2023	$	5,763	$	9,084

(1) On December 18, 2023, the Junior Preferred Stock Warrants were modified and replaced with the December 2023 Warrants and transferred from Level 3 to Level 2 upon modification as these warrants are valued using a Black-Scholes Option pricing model using observable market inputs. See Note 10, "Warrants" for additional information.

5. Condensed Consolidated Balance Sheet Components

Accounts Receivable, net

Accounts receivable and allowance for doubtful accounts consisted of the following (in thousands):

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	September 30, 2024		December 31, 2023
Accounts receivable	$	6,267	$	5,128
Allowance for doubtful accounts	(1,312)		(1,061)
Accounts receivable, net	$	4,955	$	4,067

During the three and nine months ended September 30, 2024, the Company increased the allowance for doubtful accounts by less than $0.1 million and $0.3 million, respectively. During the three and nine months ended September 30, 2023, the Company increased the allowance for doubtful accounts by $0.2 million and $0.4 million, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Indemnity escrow receivable(1)	$	3,068	$	1,581
Prepaid insurance	1,661		1,084
Prepaid software	2,000		1,484
Term deposits (greater than 90 days)	1,058		7,694
Other prepaid expenses	557		801
Other current assets	547		609
Prepaid expenses and other current assets	$	8,891	$	13,253

(1) As of September 30, 2024 and December 31, 2023, the Company had an indemnity escrow receivable of $3.1 million and $1.6 million, respectively, in prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets, which it expects to collect from the escrow related to the acquisition of IRA Services, Inc. The Company filed its claim against the indemnity escrow during the nine months ended September 30, 2024.

Internal-Use Software, Property and Equipment, Net

Internal-use software, property and equipment, net consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Capitalized internal-use software	$	9,160	$	9,000
Leasehold improvements	1,275		866
Furniture and fixtures	579		485
Computer equipment	163		125
	$	11,177	$	10,476
Less: accumulated depreciation and amortization	(7,677)		(5,284)
Internal-use software and property and equipment, net	$	3,500	$	5,192

The Company recorded depreciation expense related to property and equipment of $0.2 million and $0.4 million for the three and nine months ended September 30, 2024 and $0.1 million and $0.2 million for the three and nine months ended September 30, 2023. As of September 30, 2024 and December 31, 2023, long-lived assets located outside of the United States were not material.

For the three and nine months ended September 30, 2024, the Company recorded amortization expense on capitalized internal-use software placed in service of $0.6 million and $2.0 million, respectively. For the three and nine months ended September 30, 2023, the Company recorded amortization expense on capitalized internal-use software placed in service of $0.7 million and $2.1 million, respectively. There were no impairments on capitalized internal-use software for the three and nine months ended September 30, 2024. For the three and nine months ended September 30, 2023, the

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company recorded impairment losses of $0.0 million and $0.5 million, respectively, related to the capitalized costs of internally developed software. Impairments are recorded in general and administrative expense within the unaudited condensed consolidated statements of operations.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2024		December 31, 2023
Payable to client(1)	$	1,671	$	1,693
Accrued taxes and deferred tax liabilities	1,756		1,479
Accrued other professional services	1,013		696
Accrued legal(2)	937		2,470
Common stock unvested liability	111		223
Other current liabilities(3)	2,206		2,300
Total	$	7,694	$	8,861

(1) Payable to client represents funds held on account for the benefit of custodial customers.

(2) Accrued legal includes regular recurring legal fees and accruals for loss contingencies. See Note 8, "Commitments and Contingencies" for additional information.

(3) The Company includes contract liabilities within Other current liabilities on the unaudited condensed consolidated balance sheets. Contract liabilities consist of deferred revenue, which relates to amounts invoiced in advance of performance under a revenue contract. The total contract liabilities related to advance billings for data subscriptions of $0.8 million and $0.4 million as of September 30, 2024 and December 31, 2023, respectively, are recorded in accrued expenses and other current liabilities on the unaudited condensed consolidated balance sheets. The Company recognized $0.1 million and $0.4 million of revenue during the three and nine months ended September 30, 2024, respectively, that was included in deferred revenue recorded in accrued expenses and other current liabilities at December 31, 2023.

6. Goodwill and Intangible Assets, Net

The components of goodwill and intangible assets and accumulated amortization are as follows (in thousands):


	As of September 30, 2024
	Weighted Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Goodwill:
Goodwill from acquisitions	Indefinite	$	120,948	$	—	$	120,948
Finite-lived intangible assets:
Developed technology	0.1 years	13,200		(12,909)		291
Customer relationships	5.0 years	7,507		(4,371)		3,136
Launched in-process research and development assets	2.0 years	960		(576)		384
Total finite-lived intangible assets		21,667		(17,856)		3,811
Indefinite-lived intangible assets:
Trade name - website domain	Indefinite	2,224		—		2,224
Total infinite-lived intangible assets		2,224		—		2,224
Total intangible assets		$	144,839	$	(17,856)	$	126,983

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	As of December 31, 2023
	Weighted Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Goodwill:
Goodwill from acquisitions	Indefinite	$	120,948	$	—	$	120,948
Finite-lived intangible assets:
Developed technology	0.8 years	13,200		(10,820)		2,380
Customer relationships	5.4 years	7,507		(3,669)		3,838
Launched in-process research and development assets	2.7 years	960		(431)		529
Total finite-lived intangible assets		21,667		(14,920)		6,747
Indefinite-lived intangible assets:
Trade name - website domain	Indefinite	2,224		—		2,224
Total infinite-lived intangible assets		2,224		—		2,224
Total intangible assets		$	144,839	$	(14,920)	$	129,919

Amortization expense related to finite-lived intangible assets for the three and nine months ended September 30, 2024 was $1.0 million and $2.9 million, respectively, and is included in depreciation and amortization expense in the accompanying unaudited condensed consolidated statements of operations. Amortization expense related to finite-lived intangible assets for the three and nine months ended September 30, 2023 was $1.0 million and $3.0 million, respectively, and is included in depreciation and amortization expense in the accompanying unaudited condensed consolidated statements of operations.

The table below presents estimated future amortization expense for finite-lived intangible assets as of September 30, 2024 (in thousands):


	Amount
Remainder of 2024	$	526
2025	802
2026	754
2027	610
2028	610
Thereafter	509
Total	$	3,811

7. Leases

The Company leases real estate for office space under operating leases.

As of September 30, 2024, the remaining lease terms varied from 0.8 years to 5.0 years. For certain leases, the Company has an option to extend the lease term for periods of up to 5 years. This renewal option is not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options.

Operating lease expense, included in rent and occupancy in the unaudited condensed consolidated statements of operations, were as follows (in thousands):

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease expense	$	898	$	855	$	2,604	$	2,655
Variable lease expense	96		231		298		704
Total operating lease expenses (1)	$	994	$	1,086	$	2,902	$	3,359

Sublease income (2)	$	95	$	226	$	286	$	678

(1) Operating lease expense is included in rent and occupancy in the unaudited condensed consolidated statements of operations.

(2) Sublease income is included in other income (expenses), net in the unaudited condensed consolidated statements of operations.

As of September 30, 2024 and December 31, 2023, the weighted-average remaining lease term was 4.4 and 1.9 years, respectively. As of September 30, 2024 and December 31, 2023, the weighted-average discount rate was 7.2% and 7.0%, respectively.

The Company entered into a new office lease which commenced on March 8, 2024, and recorded a right-of-use asset and liability of $4.5 million. During the nine months ended September 30, 2024, it was determined that office space under an existing lease would no longer be used and the associated right-of-use asset was fully impaired, resulting in an impairment of $0.2 million which was recognized in rent and occupancy expense in the unaudited condensed consolidated statements of operations. There were no right-of-use impairments recognized during the three and nine months ended September 30, 2023.

Future undiscounted lease payments under operating leases as of September 30, 2024, were as follows (in thousands):


	Lease Payment Obligation		Sublease Income		Net Lease Obligation
Remaining 2024	$	927	$	(90)	$	837
2025	3,864		(210)		3,654
2026	1,084		—		1,084
2027	1,117		—		1,117
2028	1,150		—		1,150
2029	888		—		888
Total undiscounted lease payments	$	9,030	$	(300)	$	8,730
Less: imputed interest	(1,085)
Present value of future lease payments	7,945
Less: operating lease liabilities, current	3,453
Operating lease liabilities, noncurrent	$	4,492

As of September 30, 2024, the Company did not have any lease contracts that had not yet commenced.

8. Commitments and Contingencies

The Company is subject to claims and lawsuits in the ordinary course of business, including arbitration, class actions, and other litigation, some of which include claims for substantial or unspecified damages. The Company may also be the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies. The Company reviews these matters on an ongoing basis and provides disclosures and records loss contingencies in accordance with the loss contingencies accounting guidance. The Company establishes an accrual for losses at management’s best estimate when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If no amount within the range is considered a better estimate than any other amount, an accrual for losses is recorded based on the bottom amount of the range. The Company's accrual for probable and estimable loss contingencies was $0.0 million and

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

$1.9 million as of September 30, 2024 and December 31, 2023, respectively, and is recorded in accrued expenses and other current liabilities on the unaudited condensed consolidated balance sheets and expensed in general and administrative expenses in the unaudited condensed consolidated statements of operations. The Company monitors these matters for developments that would affect the likelihood of a loss and the accrued amount, if any, and adjusts the amount as appropriate.

Legal Proceedings

The Company is involved in a legacy matter arising prior to the Company’s October 2019 acquisition of IRA Services, Inc. On May 6, 2019, IRA Services, Inc. was named as a defendant in a matter (see Todd Allen Yancey v. Edwin Blue, et al., case no. 19-civ-0251, as amended) alleging claims including conversion, breach of oral contract, breach of fiduciary duty, and fraudulent misrepresentation. On June 27, 2024, the trial court entered a judgment that Forge Services, Inc. is not a successor-in-interest to IRA Services, Inc. and as such, the Company is no longer a party to this matter. Costs incurred by the Company in its defense are recoverable from the escrow related to the acquisition of IRA Services, Inc. See Note 5, "Consolidated Balance Sheet Components", for additional information.

On March 29, 2023, the Company was named as a defendant in a lawsuit brought in a case captioned Alta Partners, LLC v. Forge Global Holdings, Inc., No. 1:23-cv-2647 in the United States District Court for the Southern District of New York. On June 21, 2023, Plaintiff filed an amended complaint in the action. In May 2024, the parties settled this matter.

In January 2022, Erika McKiernan, in her capacity as Stockholder Representative for the former stockholders of SharesPost, filed a lawsuit against the Company in the Court of Chancery of the State of Delaware. In December 2023, the parties settled this matter.

401(k) Plan

The Company has established a tax-qualified retirement plan under Section 401(k) of the Internal Revenue Code for all of its U.S. employees, including executive officers, who satisfy certain eligibility requirements, including requirements relating to age and length of service. The Company provides a discretionary match on 100% of employee contributions up to 2% of eligible earnings. During the three and nine months ended September 30, 2024, the Company recorded 401(k) contribution expense related to the defined contribution plan of $0.3 million and $0.8 million, respectively, in compensation and benefits in the unaudited condensed consolidated statements of operations. During the three and nine months ended September 30, 2023, the Company recorded 401(k) contribution expense related to the defined contribution plan $0.2 million and $0.6 million, respectively, in compensation and benefits in the unaudited condensed consolidated statements of operations.

Non-Cancelable Purchase Obligations

In the normal course of business, the Company enters into non-cancelable purchase commitments with various parties mainly for its operating leases, software products, and services. As of September 30, 2024, the Company had outstanding non-cancelable purchase obligations with a term of 12 months or longer, excluding operating lease obligations (see Note 7, "Leases," for additional information), as follows:

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Amount
Remainder of 2024	$	143
2025	936
2026	886
2027	350
2028	—
Thereafter	—
Total	$	2,315

Other

The Company is required to file extensive informational returns and forms to various tax authorities in connection with its custodial and trading solutions. If such filings are incomplete or untimely, the Company may be subjected to fines or penalties if the Company does not meet the requirements of reasonable cause, safe harbor, or other relief as may be provided by the relevant tax authorities. In October 2024, the Company self-identified a failure to submit certain informational filings to the Internal Revenue Service in connection with its custodial solutions. At this time, the Company is unable to determine if it will be subject to any fines or penalties due to these incomplete filings, the amount of any potential fines or penalties, and whether such amount, if any, could materially affect the Company’s financial condition and operations.

9. Regulatory

We operate in a highly regulated environment and are subject to capital requirements, which may limit distributions to the Company. Forge Securities LLC ("Forge Securities"), a wholly-owned subsidiary of the Company, is subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As such, Forge Securities is subject to the minimum net capital requirements promulgated by the SEC and has elected to calculate minimum capital requirements using the basic method permitted by Rule 15c3-1. As of September 30, 2024, Forge Securities had net capital of $11.8 million, which was $11.2 million in excess of its required net capital of $0.6 million.

Forge Trust Co., a wholly-owned subsidiary of the Company, is subject to South Dakota state trust regulatory requirements. South Dakota state legislature 51A-61-19.2 requires public trust companies registered within the state boundaries to pledge funds for the security of the trust creditors. Forge Trust Co. had $1.1 million pledged on behalf of trust creditors as of September 30, 2024 which is reported in restricted cash on the unaudited condensed consolidated balance sheets.

10. Warrants

December 2023 Warrants and Warrants to Purchase Junior Preferred Stock

In November 2020, in connection with the SharesPost acquisition, Legacy Forge issued a total of 3,122,931 warrants (“Junior Preferred Stock Warrants”) to purchase shares of Legacy Forge's Junior Preferred Stock at an exercise price of $3.9760 per share, with a cap of extended value of $5.0 million. The Junior Preferred Stock Warrants have a five-year contractual life and may be exercised at any time during that period.

Prior to the Merger, the warrants were classified as a liability in the unaudited condensed consolidated balance sheets, as the Company's obligation with respect to these warrants was capped at a fixed monetary amount of $5.0 million and could be settled in a variable number of common shares. The Company remeasured the warrants at each balance sheet date using a hybrid method. Subsequent to the Merger, the Junior Preferred Stock Warrants were converted into the Company's common stock warrants. As a result, the Junior Preferred Stock Warrants were adjusted to fair value prior to conversion and remain classified as a liability.

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In December 2023, the Company modified 2,631,146 of the then outstanding Junior Preferred Stock Warrants (the "December 2023 Warrants"). The December 2023 Warrants were issued at an exercise price of $3.9760 per share, with a cap of extended value of $5.0 million when net exercised, and without a cap when cash exercised. The December 2023 Warrants remain classified as a liability.

The Company recorded gains of $0.4 million and $4.3 million for the December 2023 Warrants related to change in fair value of warrant liabilities within the Company's unaudited condensed consolidated statements of operations during the three and nine months ended September 30, 2024, respectively. The Company recorded a gain of $0.4 million and loss of $0.7 million for the Junior Preferred Stock Warrants as change in fair value of warrant liabilities in the Company's unaudited condensed consolidated statements of operations during the three and nine months ended September 30, 2023, respectively.

Private Placement Warrants

As the accounting acquirer, Legacy Forge is deemed to have assumed 7,386,667 warrants for Class A common stock that were held by Motive Capital Funds Sponsor, LLC (the “Sponsor”) at an exercise price of $11.50 (the "Private Placement Warrants"). The warrants are exercisable subject to the terms of the warrant agreement, including but not limited to, the Company having an effective registration statement under the Securities Act of 1933, as amended, covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. The warrants expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation. All of the Private Placement Warrants are still outstanding as of September 30, 2024.

Subsequent to the Merger, the Private Placement Warrants met liability classification requirements since the warrants may be required to be settled in cash under a tender offer and are potentially subject to a different settlement amount as a result of being held by the Sponsor which precludes the Private Placement Warrants from being considered indexed to the entity's own stock. Therefore, these warrants are classified as liabilities on the unaudited condensed consolidated balance sheets. The Company recorded gains of $0.5 million and $3.4 million in fair value of warrant liabilities in the Company's unaudited condensed consolidated statements of operations during the three and nine months ended September 30, 2024, respectively, and a gain of $0.5 million and a loss of $2.0 million during the three and nine months ended September 30, 2023, respectively.

11. Share-Based Compensation

Prior Stock Plan

In March 2018, Legacy Forge adopted its 2018 Equity Incentive Plan (as amended from time to time, the “2018 Plan”), which provides for grants of share-based awards, including stock options and restricted stock awards, and other forms of share-based awards. The 2018 Plan was terminated in March 2022 in connection with the adoption of the 2022 Stock Option and Incentive Plan (the “2022 Plan”). Accordingly, no shares are available for future grants under the 2018 Plan following the adoption of the 2022 Plan.

2022 Stock Plan

In March 2022, prior to and in connection with the Merger, the Company adopted the 2022 Plan, which provides for grants of share-based awards, including stock options, restricted stock units (“RSUs”) and other forms of share-based awards. The Company has authorized 23,383,325 shares of common stock for the issuance of awards under the 2022 Plan. In addition, the number of shares of common stock reserved and available for issuance under the 2022 Plan will automatically increase on January 1 of each year for a period of ten years, beginning on January 1, 2023 and on each January 1 thereafter and ending on the tenth anniversary of the adoption date of the 2022 Plan, in an amount equal to (i) 3% of the outstanding number of shares of common stock of the Company on the preceding December 31, or (ii) a lesser number of shares as approved by the Company's board of directors.

2022 Employee Stock Purchase Plan

In March 2022, prior to and in connection with the Merger, the Company adopted the 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The Company has authorized the issuance of 7,566,607 shares of common stock under

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

purchase rights granted to the Company's employees or to employees of any of its designated affiliates. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each year, beginning on January 1, 2023 and each January 1 thereafter until the 2022 ESPP terminates according to its terms, by the lesser of (i) 4,072,000 shares of common stock, or (ii) 1% of the outstanding number of shares of common stock on the immediately preceding December 31. The Company's board of directors may determine that such increase will be less than the amount set forth in (i) and (ii) above.

Reserve for Issuance

The Company has the following shares of common stock reserved for future issuance, on an as-if converted basis:


	September 30, 2024	December 31, 2023
Warrants to purchase common stock	3,282,652	3,282,652
Stock options issued and outstanding under 2018 Plan	7,187,837	7,813,366
Shares available for grant under 2022 Plan(1)	442,031	2,052,669
RSUs issued and outstanding under 2022 Plan	14,625,747	17,434,138
Shares available for grant under 2022 ESPP	7,566,607	5,797,609
Outstanding Private Placement Warrants	7,386,667	7,386,667
Total shares of common stock reserved	40,491,541	43,767,101

(1) To the extent outstanding options granted under the 2018 Plan are cancelled, forfeited, or otherwise terminated without being exercised and would have been returned to the share reserve under the 2018 Plan following the closing date of the Merger, the number of shares of common stock underlying such awards will be available for future awards under the 2022 Plan.

Stock Compensation

The stock compensation for the periods indicated below are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
RSUs
Time-based	$	5,737	$	6,304	$	19,412	$	16,556
Performance-based	614		546		1,417		950
Market-based	173		1,418		1,446		4,043
Total RSUs	6,524		8,268		22,275		21,549
Stock options	1,098		965		2,673		3,894
Total stock compensation	$	7,622	$	9,233	$	24,948	$	25,443

Stock Options

Stock options generally vest over four years and expire ten years from the date of grant. Vested stock options generally expire three months to five years after termination of employment. Stock option activity during the nine months ended September 30, 2024 consisted of the following (in thousands, except for share and per share data):

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Stock Options	Weighted Average Exercise Price		Weighted- Average Life (Years)	Aggregate Intrinsic Value
Balance as of December 31, 2023	7,813,366	$	2.06	6.0	$	14,929
Exercised	(510,598)	0.92
Cancelled/Forfeited/Expired	(114,931)	4.26
Balance as of September 30, 2024	7,187,837	$	2.12	5.4	$	3,076

Vested and exercisable as of September 30, 2024	6,815,326	$	2.04	5.3	$	3,031

There were no stock options granted during the three and nine months ended September 30, 2024 and 2023. The total grant date fair value of stock options vested during the three and nine months ended September 30, 2024 was $1.1 million and $2.7 million, respectively. The total grant date fair value of stock options vested during the three and nine months ended September 30, 2023 was $1.0 million and $4.0 million, respectively. The total intrinsic value of options exercised during the three and nine months ended September 30, 2024 were less than $0.1 million and $0.6 million, respectively. The total intrinsic value of options exercised during the three and nine months ended September 30, 2023 were $0.4 million and $0.9 million, respectively.

Unrecognized share-based compensation expense for unvested stock options granted and outstanding as of September 30, 2024, is $1.5 million, which is to be recognized over a weighted-average period of 0.8 years.

Early Exercised Options

Under the 2018 Plan, certain stock option holders may have the right to exercise unvested options, subject to a repurchase right held by the Company at the original exercise price, in the event of voluntary or involuntary termination of employment of the option holders, until the options are fully vested. As of September 30, 2024 and December 31, 2023, the cash proceeds received for unvested shares of common stock recorded within accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets were $0.1 million and $0.2 million, respectively, which will be transferred to additional paid-in capital upon vesting.

RSUs

The Company’s RSUs are convertible into shares of the Company’s common stock upon vesting on a one-to-one basis. RSUs generally vest upon the satisfaction of service-based vesting conditions. RSUs granted to certain executives also contain market or performance-based vesting conditions, which vest on attainment of specified stock prices or certain performance metrics. The RSUs generally vest over the service period of one to three years.

RSU activity during the nine months ended September 30, 2024, was as follows:


	RSUs	Service-based	Performance-based(2)	Market-based(3)	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2023	17,434,138	12,351,544	1,805,550	3,277,044	$	4.30
Granted	8,576,496	7,108,327	1,468,169	—	1.90
Vested(1)	(9,851,103)	(8,200,523)	(1,181,573)	(469,007)	3.70
Forfeited	(1,533,784)	(1,300,775)	(233,009)	—	5.79
Unvested as of September 30, 2024	14,625,747	9,958,573	1,859,137	2,808,037	$	3.15

(1) Common stock has not been issued in connection with 613,029 vested RSUs because such RSUs were unsettled as of September 30, 2024. These RSUs will be settled by December 31, 2024.

(2) For performance-based awards granted in 2024, the performance condition was not met as of September 30, 2024.

(3) Market-based RSUs consist of CEO RSUs and Executive Retention RSUs as defined in the Company’s Annual Report on Form 10-K filed on March 26, 2024.

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Future share-based compensation expense for unvested RSUs as of September 30, 2024 was $24.3 million, which is to be recognized over a weighted-average period of 1.6 years.

Modifications

In May 2024, the Company accelerated vesting of 228,575 RSUs in connection with the termination of one of its executives. As a result, the Company recognized share-based compensation expense of $0.6 million. Upon subsequent transition to a consultant under a consulting agreement, the former executive is eligible to vest in up to 403,249 RSUs over the duration of the consulting period. Under the terms of ASC 718, the former executive is not obliged to perform substantive consulting services to the Company for the continued vesting of RSUs, thus the Company recognized an additional share-based compensation expense of $0.6 million, calculated by using the fair value of the Company's stock price as of the date of modification.

In August 2024, the Company accelerated vesting of 104,095 stock options, 401,463 RSUs with service-based vesting conditions, and up to 73,529 RSUs with performance-based vesting conditions in connection with the termination of one of its executives. As a result, the Company recognized share-based compensation expense of $1.3 million. Upon subsequent transition to a consultant under a consulting agreement, the former executive is eligible to vest in up to 34,766 RSUs over the duration of the consulting period. Under the terms of ASC 718, the former executive is not obliged to perform substantive consulting services to the Company for the continued vesting of RSUs, thus the Company recognized an additional share-based compensation expense of less than $0.1 million, calculated by using the fair value of the Company's stock price as of the date of modification.

12. Income Taxes

The Company’s effective tax rate from continuing operations was 1.4% and 1.5% for the three and nine months ended September 30, 2024, respectively. The Company’s effective tax rate from continuing operations was 1.6% and 1.2% for the three and nine months ended September 30, 2023, respectively. The Company’s full valuation allowance in the United States, which is partially offset by state current taxes, caused the year-to-date effective tax rate to be different from the U.S. federal statutory tax rate.

13. Net Loss per Share

The Company has one class of common stock. The diluted net loss per share attributable to common stockholders is calculated by giving effect to all potentially dilutive common stock equivalents during the period using the two-class method. The Company’s stock options, warrants, and early exercised stock options are considered to be potential common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders because the holders of these securities do not have a contractual right to share in the Company's losses, and their effect would be antidilutive. Therefore, the net loss for the three and nine months ended September 30, 2024 and 2023 was attributed to common stockholders only.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods presented (in thousands, except for share and per share data):

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net loss attributable to Forge Global Holdings, Inc., basic	$	(18,342)	$	(18,348)	$	(50,690)	$	(64,425)

Net loss attributable to common stockholders, diluted	$	(18,342)	$	(18,348)	$	(50,690)	$	(64,425)
Denominator:
Weighted-average number of shares used to compute net loss per share attributable to common stockholders, basic	184,158,571		173,957,880		182,261,198		173,045,721

Weighted-average number of shares used to compute net loss per share attributable to common stockholders, diluted	184,158,571		173,957,880		182,261,198		173,045,721
Net loss per share attributed to common stockholders:
Basic	$	(0.10)	$	(0.11)	$	(0.28)	$	(0.37)
Diluted	$	(0.10)	$	(0.11)	$	(0.28)	$	(0.37)

The following potentially dilutive shares were excluded in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:


	September 30, 2024	September 30, 2023
Warrants to purchase common stock(1)	3,282,652	3,282,652
Private Placement Warrants	7,386,667	7,386,667
Early exercised options	216,651	505,104
Outstanding options	7,187,837	8,401,764
Restricted stock units	14,625,747	18,777,909
Total	32,699,554	38,354,096

(1) Warrants to purchase common stock includes the December 2023 Warrants. See Note 10, "Warrants" for additional information.

14. Related Party Transactions

On September 7, 2022 the Company and DBAG formed Forge Europe. DBAG is a stockholder of the Company and one of the Company's directors is affiliated with DBAG. See Note 2, "Summary of Significant Accounting Policies" for additional information.

Forge Global Advisors LLC ("FGA"), a wholly-owned subsidiary of the Company and an investment adviser registered under the Investment Advisers Act of 1940, as amended, advises investment funds, each of which are organized as a series of Forge Investments LLC and segregated portfolio companies of Forge Investments SPC and Forge Investments II SPC (such investment funds and portfolio companies are individually and collectively referred to as “Investment Funds”). The Investment Funds are each formed for the purpose of investing in securities relating to a single private company and are owned by different investors. FGA serves as the manager of the Forge Investments LLC series Investment Funds. The Company utilizes a third-party fund administrator to manage the Forge Investments SPC and Forge Investments II SPC Investment Funds. The Company has no ownership interest nor participation in the gains or losses of the Investment Funds. The Company does not consolidate Forge Investments LLC, Forge Investments SPC, Forge Investments II SPC, or any of the Investment Funds, because the Company has no direct or indirect interest in the Investment Funds and the amount of expenses the Company pays on behalf of the Investment Funds are not significant to the entities. Investors in the Investment Funds do not have any recourse to the assets of the Company.

While not contractually required, FGA may, at its sole discretion, absorb certain expenses on behalf of the Investment Funds. Audit and accounting related services are recorded in professional services in the unaudited condensed consolidated statements of operations. Professional services expenses of $0.2 million and $0.6 million were recognized during the three and nine months ended September 30, 2024. Professional services expenses of $0.2 million and $1.3 million were recognized during the three and nine months ended September 30, 2023.

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A family member of one of the Company’s executive officers is a portfolio manager for investment funds that engage in secondary transactions with the Company and receive data services from the Company in the ordinary course of business. Such transactions became related party transactions upon the employee's appointment to executive officer in April 2023. For the three and nine months ended September 30, 2024, aggregate marketplace revenue, less transaction-based expenses, that the Company received from the funds for such transactions was $0.0 million and less than $0.1 million, respectively. For the three and nine months ended September 30, 2023, aggregate marketplace revenue, less transaction-based expenses, that the Company received from the funds for such transactions was $0.3 million and $0.4 million, respectively.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provide information that our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion and analysis should be read together with the unaudited condensed consolidated financial statements and related notes to those statements in this Report, as well as our audited consolidated financial statements and related notes to those statements included in our Annual Report on Form 10-K filed with the SEC on March 26, 2024 (the "Annual Report"). This discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading “Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in this Report.

Effective with our Annual Report filed on March 26, 2024, we have renamed a category of our revenue, previously described as “Placement Fee” revenue, to “Marketplace” revenue in order to align with the types of revenue included in this category. Marketplace revenue includes placement fees, subscription fees earned from our data products, and private company solutions revenue. We believe this name better describes the revenue included therein and therefore is more useful to investors by better characterizing the underlying types of revenue included. We have not adjusted methodology, assumptions, or otherwise changed any aspects of “Placement Fee” revenue in making this name change to “Marketplace" revenue, and this category of revenue remains comparable to prior period presentations.

Unless the context otherwise requires, references in this section to "Forge," the “Company,” “we,” “us,” and “our,” refer to Forge Global Holdings, Inc. and its subsidiaries.

Business Overview

Forge is building the private market of the future — a more accessible, transparent, and liquid market for participating in private market growth. We offer a trusted trading platform, proprietary data, and insights to inform investment strategies, along with custody services to help companies, stockholders, institutions, and accredited investors confidently navigate and transact in the private market. Our scaled and integrated business model is at the nexus of the private market ecosystem, which we believe creates a sustaining competitive advantage fueling our customers' participation in the private market and our growth. The key solutions offered by our platform include:

•Trading Solutions — Forge Markets is our platform that connects potential investors with private company stockholders and enables them to efficiently facilitate private share transactions.

•Custody Solutions — Forge Trust Co. is our non-depository trust company that enables clients to securely custody and manage assets through a robust and user-friendly online portal.

•Data Solutions — Forge Data is our data business that provides market participants the information and insight to confidently navigate, analyze, and make investment decisions in the private market.

Key Factors Affecting our Performance

The key factors affecting our performance described below are not the only ones applicable to us. We believe that the growth of our business and our future success are dependent upon a number of key factors, including the following:

Growing our Customer Base

Our growth requires continued adoption of our platform by new customers and increased usage by current customers. We plan to continue to introduce products and features to attract and retain current and new customers, and we plan to seek to increase brand awareness and customer adoption of our platform through digital and broad-scale advertising.

Expanding our Relationship with Existing Customers

Our revenue generally grows as our customers increase their usage of our platform, as well as when we introduce new products and features to our customers. We aim to grow with our customers over time and to grow our relationship with

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our customers as they build and manage their wealth. Through our customer-centric and complementary solutions, we seek a future where sellers become buyers, buyers become custody account holders, and account holders continue to participate in the private market. Our ability to expand our relationship with our customers is therefore an important contributor to our long-term growth.

Investing in our Platform

We intend to continue to invest in our platform capabilities and regulatory and compliance functions to support new and existing customers and products that we believe will drive our growth. As our customer base and platform functionalities expand, areas of investment priority include product innovation, automation, technology and infrastructure improvements, and customer support. We believe these investments will contribute to our long-term growth. Additionally, we strive to strengthen our relationships with our customers by responding to customer feedback not only through the introduction of new products, but also through improvements to our existing products and services. In this period of market disruption, we are focused on building by improving our platform to drive down the cost and time of trading.

Market Trends

Our results of operations are impacted by the overall health of the economy and consumer and institutional investing patterns, which include the following key drivers:

•Private Market Trends. Supply of and demand for private company shares fluctuates with various factors, including but not limited to, anticipated and planned IPOs, mergers and acquisitions activity in the public and private space, the level of closed and committed private company funding rounds, exits by private equity or investment firms, the number of venture and private equity backed companies participating in the private market generally, existing stockholders looking for liquidity, and demand from individual and institutional accredited investors.

•Consumer Behavior. Buyers' and sellers' behaviors vary over time and are affected by numerous conditions. For example, behavior may be impacted by social or economic factors such as changes in disposable income levels and the need for liquidity, employee tenure, general interest in investing, interest rate levels, and reaction to stock market volatility. There may also be high profile IPOs, SPACs, or idiosyncratic events impacting single companies that impact consumer behavior. These shifts in consumer behavior may influence interest in our platform over time.

•Macroeconomic Environment. Behavior and risk appetites by individual and institutional accredited investors, as well as businesses, are impacted by various factors in the overall macroeconomic environment, including but not limited to, the interest rate environment, volatility and liquidity risks to private equity valuations, and uncertainty around settlement prices for illiquid assets. These factors could all, individually or together, impact investor appetite and investment preferences across the alternative investment and private markets space.

Types of Structures

We have facilitated direct trades, trades in both our own special purpose vehicles (each, an "Investment Fund") and other firms’ funds, and certain forward agreements. We may adjust marketplace revenue to account for the operational costs of these transaction types, and we incur certain transaction-based costs depending on the structure. The mix of trades in different structures will impact our overall take rate and revenues.

Types of Buyers/Sellers

The type of customer may influence our marketplace revenue. Examples of a type of customer are institutional and individual customers, who may receive various placement fee rates depending on different factors. Having customers that come to our platform through third-party brokers or our private company solutions may also impact our marketplace revenue. The mix of customers in any given period may impact our overall take rate and revenues.

Use of Third-Party Brokers and Referral Partners

When working with a third-party broker or partner, we share a portion of the marketplace revenue, which are recognized in our unaudited condensed consolidated financial statements under transaction-based expenses. The mix of fees

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paid to third-party brokers and partners fluctuates each time period, which we expect to continue based on the size of our order book and our number of partners, as well as changes in the market overall.

Custodial administration fees

We generate revenue from account maintenance fees, asset fees, and cash administration fees. The cash administration fees are based on prevailing interest rates and customer cash balances, and currently make up the majority of custodial administration fee revenue. With respect to the account maintenance fees, we assess a flat quarterly fee per account, with additional fees based on the number and types of assets held and the number and type of transactions executed. The account revenues depend on the number of Total Custodial Accounts, which include accounts customers open directly with us and the activity within these accounts, as well as accounts we custody on behalf of partners. Our business depends on maintaining and growing the number of Total Custodial Accounts.

Segment Information

We operate as a single operating segment and reportable segment. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, allocating resources, and evaluating our financial performance. Accordingly, we have concluded that we consist of a single operating segment and reportable segment for accounting and financial reporting purposes.

Key Business Metrics

We monitor the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. The tables below reflect period-over-period changes in our key business metrics, along with the percentage change between such periods. We believe the following business metrics are useful in evaluating our business.


	Three Months Ended		QoQ		Nine Months Ended		YoY
Dollars in thousands	September 30, 2024	June 30, 2024	Change	% Change	September 30, 2024	September 30, 2023	Change	% Change
TRADING SOLUTIONS
Trades	680	831	(151)	(18)%	2,116	1,321	795	60%
Volume	$338,075	$426,318	$(88,243)	(21)%	$1,026,931	$515,486	$511,445	99%
Net Take Rate	2.6%	2.7%	(0.1)%	(4)%	2.8%	3.4%	(0.6)%	(18)%
Marketplace revenues, less transaction-based expenses	$8,640	$11,423	$(2,783)	(24)%	$28,554	$17,388	$11,166	64%

•Trades are defined as the total number of orders executed by us and entities we have acquired on behalf of private investors and stockholders. Increasing the number of orders is critical to increasing our revenue and, in turn, to achieving profitability.

•Volume is defined as the total sales value for all securities traded through our Forge Markets platform, which is the aggregate value of the issuer company’s equity attributed to both the buyer and seller in a trade and as such a $100 trade of equity between buyer and seller would be captured as $200 of volume for us. Although we typically capture a commission on each side of a trade, we may not in certain cases due to factors such as the use of a third-party broker by one of the parties or supply factors that would not allow us to attract sellers of shares of certain issuers. Volume is influenced by, among other things, the pricing and quality of our services as well as market conditions that affect private company valuations, such as increases in valuations of comparable companies at IPO.

•Net Take Rates are defined as our marketplace revenues, less transaction-based expenses, divided by Volume. These represent the percentage of fees earned by our platform on any transactions executed from the commission we charged on such transactions, less transaction-based expenses, which is a determining factor in our revenue. The Net

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Take Rate can vary based upon the service or product offering and is also affected by the average order size and transaction frequency.


	Three Months Ended		QoQ		Nine Months Ended		YoY
Dollars in thousands	September 30, 2024	June 30, 2024	Change	% Change	September 30, 2024	September 30, 2023	Change	% Change
CUSTODY SOLUTIONS
Total Custodial Accounts	2,281,976	2,211,108	70,868	3%	2,281,976	2,023,756	258,220	13%
Assets Under Custody	$16,620,450	$16,600,408	$20,042	—%	$16,620,450	$15,148,480	$1,471,970	10%

•Total Custodial Accounts are defined as our customers’ custodial accounts that are established on our platform and billable. These relate to our Custodial Administration fees revenue stream and are an important measure of our business as the number of Total Custodial Accounts is an indicator of our future revenues from certain account maintenance, transaction, and cash administration fees.

•Assets Under Custody is the reported value of all client holdings held under our agreements, including cash submitted to us by the responsible party. These assets can be held at various financial institutions, issuers, and in our vault. As the custodian of the accounts, we collect all interest and dividends, handle all fees and transactions, and any other considerations for the assets concerned. Our fees are earned from the overall maintenance activities of all assets and are not charged on the basis of the dollar value of Assets Under Custody, but we believe that Assets Under Custody is a useful metric for assessing the relative size and scope of our business.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), we present Adjusted EBITDA, a non-GAAP financial measure. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, when taken together with the corresponding GAAP financial measure, provides meaningful supplemental information regarding our performance by excluding specific financial items that have less bearing on our core operating performance. We consider Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. A reconciliation is provided below for Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review Adjusted EBITDA and the reconciliation of Adjusted EBITDA to net loss, and not to rely on any single financial measure to evaluate our business.

We define Adjusted EBITDA as net loss attributable to Forge Global Holdings, Inc., adjusted to exclude: (i) net loss attributable to noncontrolling interest, (ii) provision for income taxes, (iii) interest (income) expense, net, (iv) depreciation and amortization, (v) share-based compensation expense, (vi) change in fair value of warrant liabilities, and (vii) other significant gains, losses, and expenses such as impairments or acquisition-related transaction costs that we believe are not indicative of our ongoing results.

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The following table reconciles net loss attributable to Forge Global Holdings, Inc. to our Adjusted EBITDA for the periods presented (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		June 30, 2024		September 30, 2024		September 30, 2023
Net loss attributable to Forge Global Holdings, Inc.	$	(18,342)	$	(13,724)	$	(50,690)	$	(64,425)
Add:
Net loss attributable to noncontrolling interest	(502)		(316)		(1,188)		(893)
Provision for income taxes	298		258		772		769
Interest (income) expense, net	(1,307)		(1,495)		(4,511)		(4,553)
Depreciation and amortization	1,748		1,781		5,345		5,246
Share-based compensation expense	7,622		7,859		24,948		25,443
Change in fair value of warrant liabilities	(931)		(2,280)		(7,659)		2,715
Impairment of right-of-use assets	—		—		186		—
Loss on impairment of long lived assets	—		—		—		536
Adjusted EBITDA	$	(11,414)	$	(7,917)	$	(32,797)	$	(35,162)

Some of the limitations of Adjusted EBITDA include: (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. We compensate for these limitations by providing specific information regarding the GAAP items excluded from Adjusted EBITDA. When evaluating our performance, consider Adjusted EBITDA in addition to, and not a substitute for, other financial performance measures, including our net loss and other GAAP results.

Basis of Presentation

The unaudited condensed consolidated financial statements and accompanying notes included elsewhere in this Report include our accounts and accounts of our consolidated subsidiaries and were prepared in accordance with GAAP.

Components of Results of Operations

Revenue

We generate revenue from providing private market services, which include fees charged for private placements on our platform, and fees charged for account and asset management to customers.

We categorize our services into the following categories:

Marketplace revenue — We maintain a platform which generates revenues through our Forge Markets offering with volume-based fees sourced from institutions, individual investors, and private equity holders. Marketplace revenue represents fees charged by us for executing a private placement on our platform. We earn agency marketplace revenue in non-underwritten transactions, such as private placements of equity securities. We receive marketplace revenue on these transactions and believe that our trade execution performance obligation is completed upon the placement and consummation of a transaction and, as such, revenue is earned on the transaction date with no further obligation to the customer at that time. We enter into arrangements with individual accredited customers or Investment Funds to execute private placements in the secondary market. Revenues generated from our data solutions are classified as part of marketplace revenue in our unaudited condensed consolidated statements of operations (see Subscription Fees below).

Custodial administration fees — We generate revenue from account maintenance fees, asset fees, transaction fees, and cash administration fees. The cash administration fees are based on prevailing interest rates and customer cash balances, and currently make up the majority of custodial administration fee revenue. With respect to the account maintenance fees, we

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assess a flat quarterly fee per account, with additional fees based on the number and types of assets held and the number and type of transactions executed. The account revenues depend on the number of Total Custodial Accounts, which include accounts customers opened directly with us and the activity within these accounts as well as accounts we custody on behalf of partners. Revenues from custodial administration fees are recognized either over time as underlying performance obligations are met and day-to-day maintenance activities are performed for custodial accounts, or at a point in time upon completion of transactions requested by custodial account holders.

Subscription Fees — We generate revenues through our Forge Data offerings with subscription fees earned from our data products, including Forge Intelligence and Forge Pro, and subscription fees earned from our private company solutions. Subscription fees for the periods presented were included as part of marketplace revenue in the unaudited condensed consolidated statements of operations.

Transaction-based expenses

Transaction-based expenses represent fees incurred to support placement activities. These include, but are not limited to, third-party broker fees, transfer fees, fund management, and fund and trade settlement.

Compensation and benefits

Compensation and benefits expense is our most significant operating expense and includes employee wages, bonuses, share-based compensation, severance costs, benefits, and employer taxes. The incentive component of our compensation and benefits expense consists of amounts paid on the achievement of sales targets and discretionary bonuses, which are based on both our financial performance and individual employee performance.

Professional services

Professional services expense includes fees for accounting, tax, auditing, consulting, and legal.

Advertising and market development

Advertising and market development is an important driver of our value and we intend to continue making meaningful investments in the Forge brand and growth marketing. This includes brand advertising, thought leadership, content marketing, public relations, partnerships, and other strategies that amplify our brand. We have a rigorous approach to measuring customer lifetime value and optimizing our customer acquisition investments according to market dynamics and effective return on investment ("ROI"). We manage our discretionary expenses in growth marketing in real-time, as audience-specific dynamics show positive ROI.

Rent and occupancy

Rent and occupancy expense is related to our leased property and includes rent, maintenance, real estate taxes, utilities, and other related costs.

Technology and communications

Technology and communications consist of costs for our hosting fees paid to third-party data centers, software subscriptions, software development engineers, and maintenance of our computer hardware and software required to support our technology and cybersecurity. Technology and communications also include costs for network connections for our electronic platforms and telecommunications.

General and administrative

General and administrative includes corporate insurance, travel and entertainment, reserves for contingent losses, including allowances for bad debts and legal proceedings, and other general and administrative costs.

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Depreciation and amortization

Depreciation and amortization is attributable to property and equipment, intangible assets, and capitalized internal-use software.

Interest income

Interest income primarily includes interest income earned on our cash, cash equivalents, and term deposits.

Change in fair value of warrant liabilities

Changes in the fair value of warrant liabilities are related to warrant liabilities that are marked-to-market each reporting period with the change in fair value recorded in the accompanying unaudited condensed consolidated statements of operations until the warrants are exercised, expire, or other facts and circumstances that could lead the warrant liabilities to be reclassified to stockholders’ equity occur.

Other income (expenses), net

Other income (expenses), net, includes other non-operating income and expenditures and sublease income.

Provision for income taxes

Income tax expense consists of federal, state, and foreign income taxes. We maintain a valuation allowance against deferred tax assets net of deferred tax liabilities, with the exception of certain indefinite-lived liabilities, as we have concluded it is not more likely than not that we will realize our net deferred tax assets.

Results of Operations

The following table sets forth our unaudited condensed consolidated statements of operations for the interim periods indicated (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		June 30, 2024		September 30, 2024		September 30, 2023
Total revenues, less transaction-based expenses	$	19,143	$	22,026	$	60,382	$	50,512
Operating expenses:
Compensation and benefits	28,750		28,784		87,377		78,566
Other	11,296		10,893		36,569		38,980
Total operating expenses	40,046		39,677		123,946		117,546
Operating loss	$	(20,903)	$	(17,651)	$	(63,564)	$	(67,034)
Total interest and other income	2,357		3,869		12,458		2,485
Loss before provision for income taxes	$	(18,546)	$	(13,782)	$	(51,106)	$	(64,549)
Provision for income taxes	298		258		772		769
Net loss	$	(18,844)	$	(14,040)	$	(51,878)	$	(65,318)
Net loss attributable to noncontrolling interest	(502)		(316)		(1,188)		(893)
Net loss attributable to Forge Global Holdings, Inc.	$	(18,342)	$	(13,724)	$	(50,690)	$	(64,425)

Revenue

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	Three Months Ended				QoQ				Nine Months Ended				YoY
(in thousands)	September 30, 2024		June 30, 2024		Change		% Change		September 30, 2024		September 30, 2023		Change		% Change
Marketplace revenues	$	8,713	$	11,679	$	(2,966)	(25)	%	$	28,912	$	17,638	$	11,274	64	%
Custodial administration fees	10,503		10,603		(100)		(1)	%	31,828		33,124		(1,296)		(4)	%
Total revenues	$	19,216	$	22,282	$	(3,066)	(14)	%	$	60,740	$	50,762	$	9,978	20	%
Transaction-based expenses	(73)		$	(256)	183		(71)	%	$	(358)	$	(250)	$	(108)	43	%
Total revenues, less transaction-based expenses	$	19,143	$	22,026	$	(2,883)	(13)	%	$	60,382	$	50,512	$	9,870	20	%

Comparison of Three Months Ended September 30, 2024 and June 30, 2024

Total revenues, less transaction-based expenses, decreased $2.9 million, or 13%.

Marketplace revenue decreased $3.0 million, or 25%, driven by a 21% decrease in volume along with a 10 basis point decrease in net take rate to 2.6% for the three months ended September 30, 2024. Third quarter transactional volume is historically influenced by seasonal investment behavior in the summer months. Net take rate in the three months ended September 30, 2024 was lower due to large block transactions executed at lower net take rates.

Custodial administration fees decreased by $0.1 million, or 1%. Average cash deposits were down slightly in the three months ended September 30, 2024, with slightly lower interest rates leading to lower revenue for cash administration services. Total custodial accounts increased 3%, to 2,281,976, as of September 30, 2024.

Comparison of Nine Months Ended September 30, 2024 and September 30, 2023

Total revenues, less transaction-based expenses, increased $9.9 million, or 20%.

Marketplace revenue increased $11.3 million, or 64%, driven by a 99% increase in trade volume partially offset by a 60 basis point decrease in net take rate to 2.8%. Net take rate in the nine months ended September 30, 2024 was lower due to large block transactions executed at lower net take rates.

Custodial administration fees decreased by $1.3 million, or 4%, driven by declining cash deposits offset in part by rate increases.

Compensation and benefits


	Three Months Ended				QoQ			Nine Months Ended				YoY
(in thousands)	September 30, 2024		June 30, 2024		Change		% Change	September 30, 2024		September 30, 2023		Change		% Change
Salary	$	16,176	$	14,472	$	1,704	12%	$	45,520	$	40,453	$	5,067	13%
Incentive compensation and other bonus	3,279		4,843		(1,564)		(32)%	12,058		7,995		4,063		51%
Share-based compensation	7,622		7,859		(237)		(3)%	24,948		25,443		(495)		(2)%
Benefits and other	1,673		1,610		63		4%	4,851		4,675		176		4%
Total compensation and benefits	$	28,750	$	28,784	$	(34)	—%	$	87,377	$	78,566	$	8,811	11%

Comparison of Three Months Ended September 30, 2024 and June 30, 2024

Compensation and benefits remained flat for the quarter.

Salary expense increased $1.7 million primarily due to higher severance costs as the Company continues to align headcount to current and future business needs.

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Incentive compensation and other bonus expense decreased $1.6 million primarily due to lower commissions related to decreased trading volume and marketplace revenue and lower discretionary bonus accruals.

Comparison of Nine Months Ended September 30, 2024 and September 30, 2023

Compensation and benefits expense increased $8.8 million, or 11%.

Salary expense increased $5.1 million due to the impact of annual increases, employer paid payroll-related taxes, and higher severance costs.

Incentive compensation and other bonus expense increased $4.1 million primarily driven by higher commissions in connection with the increase in marketplace revenue and higher discretionary bonus accruals.

Other operating expenses


	Three Months Ended				QoQ					Nine Months Ended				YoY
(in thousands)	September 30, 2024		June 30, 2024		Change			% Change		September 30, 2024		September 30, 2023		Change		% Change
Professional services	$	2,435	$	1,605	$	830		52	%	$	6,257	$	8,884	$	(2,627)	(30)	%

Advertising and market development	1,015		1,243		(228)			(18)	%	3,348		2,463		885		36	%
Rent and occupancy	1,036		1,107		(71)			(6)	%	3,278		3,616		(338)		(9)	%
Technology and communications	3,185		2,649		536			20	%	8,894		10,628		(1,734)		(16)	%
General and administrative	1,877		2,508		(631)			(25)	%	9,447		8,143		1,304		16	%
Depreciation and amortization	1,748		1,781		(33)		100	(2)	%	5,345		5,246		99		2	%
Total other operating expenses	$	11,296	$	10,893	$	403		4	%	$	36,569	$	38,980	$	(2,411)	(6)	%

Comparison of Three Months Ended September 30, 2024 and June 30, 2024

Other operating expenses increased $0.4 million, or 4%.

Other operating expenses in the three months ended September 30, 2024 increased due to the timing of certain accounting services and legal matters, recorded in professional services, and increased software development expense, recorded in technology and communications. These increases were partially offset by lower travel related expenses, recorded in general and administrative, and timing driven reductions in advertising and market development costs.

Comparison of Nine Months Ended September 30, 2024 and September 30, 2023

Other operating expenses decreased $2.4 million, or 6%.

Other operating expenses in the nine months ended September 30, 2024, include certain non-recurring charges, including $2.8 million related to litigation accruals, recorded in general and administrative expenses, and an impairment of $0.2 million in connection with the Company's right-of-use asset, recorded in rent and occupancy expense. The nine months ended September 30, 2023 include certain non-recurring charges, including $1.5 million related to litigation accruals and capitalized software impairment losses of $0.5 million, recorded in general and administrative expenses. Cost containment efforts resulted in decreases of $2.6 million in professional services, $1.6 million in third-party software engineer expense, recorded in technology and communication expense, $0.5 million in rent expense, recorded in rent and occupancy expense, from rationalization of the Company's office space needs, and $1.1 million in company liability insurance costs, recorded in general and administrative expense. These savings were partially offset by increases in advertising and market development expenses and travel costs, recorded in general and administrative expense, as the Company moves to a hybrid workplace and more in-office activities.

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Total interest and other income (expenses)


	Three Months Ended				QoQ				Nine Months Ended				YoY
(in thousands)	September 30, 2024		June 30, 2024		Change		% Change		September 30, 2024		September 30, 2023		Change		% Change
Interest income	$	1,307	$	1,495	$	(188)	(13)	%	$	4,511	$	4,553	$	(42)	(1)	%
Change in fair value of warrant liabilities	931		2,280		(1,349)		(59)	%	7,659		(2,715)		10,374		(382)	%
Other income, net	119		94		25		27	%	288		647		(359)		(55)	%
Total interest and other income	$	2,357	$	3,869	$	(1,512)	(39)	%	$	12,458	$	2,485	$	9,973	401	%

Comparison of Three Months Ended September 30, 2024 and June 30, 2024

Total interest and other income (expenses) decreased $1.5 million, or 39%, primarily from the change of $1.3 million in the fair value of warrant liabilities during the three months ended September 30, 2024. Changes in the fair value of warrant liabilities are primarily driven by changes in the closing price of the Company's stock on the valuation date and the stock price volatility assumption. Declining interest income is the result of lower average cash balances.

Comparison of Nine Months Ended September 30, 2024 and September 30, 2023

Total interest and other income (expenses) increased $10.0 million, primarily from the favorable change of $10.4 million in the fair value of warrant liabilities.

Liquidity and Capital Resources

To date, we have financed our operations primarily through revenue from operations, issuances of securities, issuances of debt, and proceeds from the Business Combination. Our primary requirements for liquidity and capital are to finance working capital, capital expenditures, and investments in business acquisitions.

As of September 30, 2024, our principal source of liquidity is our cash and cash equivalents balance of $114.5 million. Since our inception, we have generated operating losses as reflected in our accumulated deficit. We had an accumulated deficit of $331.3 million as of September 30, 2024.

We believe our existing cash and cash equivalents as of September 30, 2024 will be sufficient to meet our operating working capital and capital expenditure requirements for at least twelve months from the date of this Report. Our future financing and capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support development of our platform, and the expansion of sales and marketing activities. Although we currently are not a party to any agreement and do not have any understanding with any third parties with respect to potential investments in, or acquisitions of, businesses or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

We intend to continue to make investments in product development, sales efforts, and additional general and administrative costs. We expect to continue to maintain financing flexibility in the current market conditions. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.

We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be materially and adversely affected.

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Cash Flow Summary

The following table summarizes our cash flows for the periods presented (in thousands):


	Nine Months Ended September 30,
	2024		2023
Net cash provided by (used in):
Operating activities	$	(32,633)	$	(34,884)
Investing activities	$	5,719	$	(3,293)
Financing activities	$	(3,370)	$	(204)

Operating Activities

Cash used in operating activities for the nine months ended September 30, 2024 of $32.6 million was primarily driven by our net loss of $51.9 million, adjusted for non-cash charges of $25.0 million and net cash outflows of $5.8 million in connection with changes in our operating assets and liabilities. Non-cash charges primarily consisted of share-based compensation of $24.9 million, a decrease in the fair value of warrant liabilities of $7.7 million, and depreciation and amortization of $5.3 million. The main driver of the cash outflows from the changes in operating assets and liabilities was related to an increase in prepaid expenses and other assets of $2.2 million attributable to payment of annual corporate insurance premiums and legal defense costs recoverable under an indemnification claim and a decrease in operating lease liabilities of $1.8 million.

Cash used in operating activities for the nine months ended September 30, 2023 of $34.9 million was primarily related to our net loss of $65.3 million, adjusted for non-cash charges of $36.8 million, and net cash outflows of $6.4 million related to changes in our operating assets and liabilities. Non-cash charges primarily consisted of share-based compensation of $25.4 million, depreciation and amortization of $5.2 million, and change in fair value of warrant liabilities of $2.7 million. The main driver of the cash outflows from the changes in operating assets and liabilities were driven by a decrease in accrued compensation and benefits of $4.5 million attributable to the payments made during the nine months ended September 30, 2023, for incentive compensation related to the prior year.

Investing Activities

Cash provided by investing activities for the nine months ended September 30, 2024 of $5.7 million was primarily cash received for the maturity of term deposits. Cash used in investing activities for the nine months ended September 30, 2023 of $3.3 million was primarily cash paid for the purchase of term deposits.

Financing Activities

Cash used in financing activities was $3.4 million and $0.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively, which consisted primarily of cash paid related to net share settlements of equity awards.

Contractual Obligations

Our contractual obligations have not changed materially outside of the normal course of business as disclosed in our Annual Report, except as described in Note 8, "Commitments and Contingencies" to our unaudited condensed consolidated financial statements included elsewhere in this Report.

Off-Balance Sheet Arrangements

Refer to Note 14, "Related Party Transactions" to our unaudited condensed consolidated financial statements included elsewhere in this Report.

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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our audited annual consolidated financial statements and accompanying notes. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider forming a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. We are subject to uncertainties such as the impact of future events, economic and political factors, and changes in our business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of our audited annual consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to our unaudited condensed consolidated financial statements.

On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions. The most significant judgments, estimates, and assumptions relate to the critical accounting policies.

There have been no material changes to our critical accounting policies and estimates as compared to those described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report.

Recent Accounting Pronouncements

See the section titled "Summary of Significant Accounting Policies" in Note 2 of our Annual Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this Report and designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the requisite time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the

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benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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Part II - Other Information

Item 1. Legal Proceedings

Information regarding legal proceedings is available in Note 8, "Commitments and Contingencies", to the unaudited condensed consolidated financial statements in this Report.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously described in the section titled "Item 1A. Risk Factors" in our Annual Report, other than as set forth below.

Changes and complexities in tax laws, incomplete filings, differences in interpretation of tax laws and regulations, and proposed legislation that would impose taxes on certain financial transactions could have a material adverse effect on our business, financial condition, and results of operations.

We operate in multiple jurisdictions and are subject to tax laws and regulations of the U.S. federal, state, and local and non-U.S. governments. U.S. federal, state, and local and non-U.S. tax laws and regulations are complex and subject to change (possibly with retroactive effect) and to varying interpretations. U.S. federal, state, and local and non-U.S. tax authorities may interpret tax laws and regulations differently than we do and challenge tax positions that we have taken. This may result in differences in the treatment of revenues, deductions, credits and/or differences in the timing of these items. The differences in treatment may result in payment of additional taxes, interest, or penalties that could have an adverse effect on our financial condition and results of operations. Further, future changes to U.S. federal, state, and local and non-U.S. tax laws and regulations could increase our tax obligations in jurisdictions where we do business or require us to change the manner in which we conduct some aspects of our business.

In addition, we are required to file extensive informational returns and forms to various tax authorities in connection with our custodial and trading solutions. If such filings are incomplete or untimely, we may be subjected to fines or penalties if we do not meet the requirements of reasonable cause, safe harbor, or other relief as may be provided by the relevant tax authorities. In October 2024, we self-identified a failure to submit certain informational filings to the Internal Revenue Service (“IRS”) in connection with our custodial solutions. At this time, we are unable to determine if we will be subject to any fines or penalties due to these incomplete filings, the amount of any potential fines or penalties, and whether such amount, if any, could materially affect our financial condition and operations.

On August 16, 2022, the Inflation Reduction Act (“IRA”) was enacted in the United States, which introduced, among other provisions, a new minimum corporate income tax on certain large corporations, an excise tax of 1% on certain share repurchases by corporations, and increased funding for the IRS. Both the minimum corporate income tax and share repurchase excise tax do not currently apply to us, nor do we expect them to apply to us in the foreseeable future. However, changes in our business and any future regulations or other guidance on the interpretation and application of these provisions, may result in additional taxes payable by us, which could materially and adversely affect our financial results and operations.

We have in the past recorded, and may in the future record, significant valuation allowances on our deferred tax assets, which may have a material impact on our results of operations and cause fluctuations in such results. As of December 31, 2023, we had a valuation allowance for deferred tax assets in the United States and in other countries. Our net deferred tax assets relate predominantly to the U.S. federal and state tax jurisdictions. The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable; such assessment is required on a jurisdiction-by-jurisdiction basis. In making such an assessment, significant weight is given to evidence that can be objectively verified. We continue to monitor the likelihood that we will be able to recover our deferred tax assets in the future. Future adjustments in our valuation allowance may be required. The recording of any future increases in our valuation allowance could have a material impact on our reported results, and both the recording and release of the valuation allowance could cause fluctuations in our quarterly and annual results of operations.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its net operating loss carryforwards ("NOLs") to offset future taxable income. Future changes in our stock ownership as well as other changes that may be outside

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of our control, could result in additional ownership changes under Section 382 of the Code. Our NOLs may also be impaired under similar provisions of state law. Further, additional changes to federal or state tax laws or technical guidance relating to such laws that would further reduce the corporate tax rate could operate to effectively reduce or eliminate the value of any deferred tax asset. Our tax attributes as of December 31, 2023 may expire unutilized or underutilized, which could prevent us from offsetting future taxable income.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Securities Trading Plans of Directors and Executive Officers

During the three months ended September 30, 2024, no director or officer, as defined in Rule 16a-1(f) under the Exchange Act, adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.

Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Report.

Exhibit Index

Table of Contents

Exhibit Number

Description

Incorporated by Reference From Form

Incorporated by Reference From Exhibit Number

Date Filed

10.1+#

Separation and General Release Agreement, dated as of August 3 0 , 2024, by and among the Company and Drew Sievers .

Filed herewith

10.2#

Consulting Agreement, dated as of September 9 , 2024, by and among the Company and Drew Sievers .

Filed herewith

31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.

Filed herewith

31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.

Filed herewith

32.1*

Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.

Furnished herewith

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

Filed herewith

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

Filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

Filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Filed herewith

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Filed herewith

+ Certain of the information, exhibits and schedules, as applicable, to this Exhibit have been omitted in accordance with Regulation S-K Item 601. The registrant agrees to furnish a copy with all omitted information, exhibits and schedules, as applicable, to the SEC upon its request.

# Indicates a management contract or compensatory plan, contract or arrangement.

* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Report and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Forge Global Holdings, Inc.

Date: November 7, 2024

By: /s/ Kelly Rodriques

Kelly Rodriques

Chief Executive Officer (Principal Executive Officer)

Date: November 7, 2024

By: /s/ Mark Lee

Mark Lee

Chief Financial Officer (Principal Financial Officer)

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Readability	H.S. sophomore Bad

Forge Global (FRGE) 10-Q2024 Q3 Quarterly report

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