MDB Capital Holdings, LLC Class A common (MDBH) S-1IPO registration

As filed with the Commission on November 10, 2022

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

MDB CAPITAL HOLDINGS, LLC

(Exact name of registrant as specified in its charter)

4209 Meadowdale Lane

Dallas, TX 75229

(310) 526-5000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Christopher A. Marlett

Chief Executive Officer

MDB CAPITAL HOLDINGS, LLC

4209 Meadowdale Lane

Dallas, TX 75229

(310) 526-5000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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.

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 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

This registration statement contains two forms of prospectus, as set forth below.

The Public Offering Prospectus and the Security Holder Prospectus will be identical in all respects, except for the following principal parts which will detail the securities of and offering by the Selling Security Holders:

The registrant has included in this registration statement, after the financial statements, a set of alternate pages to reflect the foregoing differences between the Public Offering Prospectus and the Security Holder Prospectus. The Public Offering Prospectus will exclude the alternate pages and will be used for the public offering by the Registrant. The Security Holder Prospectus will be substantively identical to the Public Offering Prospectus, except for the addition or substitution of the alternate pages and will be used for the resale offering by the Selling Security Holders.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS

Subject to Completion, Dated November 10, 2022

MDB CAPITAL HOLDINGS, LLC

833,333 CLASS A COMMON SHARES

This is the initial public offering of class A common shares of MDB Capital Holdings, LLC. Prior to this offering, there has been no public market for our class A common shares. The initial public offering price of our class A common shares is expected to be $12.00 per share.

We have two classes of common equivalent equity representing our limited liability membership interests, class A common shares and class B common shares. The rights of the holders of class A common shares and class B common shares are identical, except for voting and conversion rights. Each class A common share is entitled to one vote. Each class B common share is entitled to five votes and is convertible at any time, in any amount, as determined by the holder of the class B common share into one class A common share. Prior to this offering, the holders of our outstanding class B common shares, being two persons, hold approximately 90.8% of the voting power of our actual outstanding capital equity, and those persons with our directors, executive officers, and 5% shareholders, and their respective affiliates, hold approximately 91.1% of the voting power of our actual outstanding capital equity. Shareholders who hold class B common shares must convert their class B common shares into class A common shares before they may sell any of their shares in a public market.

Prior to this offering, there has been no public market for our class A common shares. We intend to apply to list our class A common shares on The Nasdaq Capital Market, sometimes referred to as Nasdaq, under the symbol “MDBH.” No assurance can be given that our application will be approved or that an active trading market for the class A common shares will develop. We will not consummate and close this offering without a listing approval letter from the Nasdaq Capital Market.

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012. As such, in this prospectus we have taken advantage of certain reduced disclosure obligations that apply to emerging growth companies regarding selected financial data and executive compensation arrangements. See “Prospectus Summary— Implications of Being an Emerging Growth Company.”

After completion of this offering, Christopher Marlett, our Chief Executive Officer and Chairman, and Anthony DiGiandomenico, our Chief of Transactions and a director, through ownership of all our outstanding class B common shares, will continue to control a majority of the voting power of our outstanding common shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq and eligible for certain exemptions from these rules. We intend to rely on any such exemptions. See “Risk Factors – If the class A common shares are listed on Nasdaq, we will be deemed a “controlled company” under the listing rules because our class B common shares are held by two persons who have more than 50% control. As a controlled company, we will be exempt from many of the corporate governance obligations that other companies must follow when listing on Nasdaq” on page 30 for more information.

Digital Offering, LLC, or Digital Offering, is the lead managing selling agent, or selling agent, for this offering. The selling agent is selling our class A common shares in this offering on a best efforts basis and is not required to sell any specific number or dollar amount of class A common shares offered by this prospectus, but will use its best efforts to sell such class A common shares.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 12 of this prospectus to read about factors you should consider before deciding to invest in our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

In addition, we will issue to the selling agent warrants to purchase an aggregate number of series A common shares equal to five percent (5%) of the number of class A common shares sold in this offering, exercisable for class A common shares at a per share price equal to 125% of the per share price of the series A common shares offered hereby. The registration statement of which this prospectus forms a part also registers the issuance of the class A common shares issuable upon exercise of such selling agent’s warrants. We do not intend to list the selling agent’s warrants on a national securities exchange or an over-the-counter quotation system. See “Plan of Distribution” for a description of these arrangements.

The date of this prospectus is                       , 2022

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission, or SEC. We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We do not take any responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the class A common shares. Our business, financial condition, operating results, and prospects may have changed since that date.

For investors outside of the United States: we have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of class A common shares by the registered shareholders and the distribution of this prospectus outside of the United States.

ABOUT THIS PROSPECTUS

Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.

You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission, or the SEC. We have not, and the selling agent has not, authorized anyone to provide you with any information other than that contained in this prospectus. We are offering to sell, and seeking offers to buy, the securities covered hereby only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities covered hereby. Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the selling agent is not, making an offer of these securities in any jurisdiction where the offer is not permitted.

For investors outside the United States: We have not, and the selling agent has not, taken any action that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities covered hereby or the distribution of this prospectus outside the United States.

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We believe that the data obtained from these industry publications and third-party research, surveys and studies are reliable. We are ultimately responsible for all disclosure included in this prospectus.

We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to the registration statement of which this prospectus is a part were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU SHOULD NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR BUY ANY SHARES IN ANY STATE OR OTHER JURISDICTION IN WHICH IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE ON THE COVER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS

PROSPECTUS SUMMARY

This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our class A common shares. You should carefully read this prospectus in its entirety before investing in our class A common shares, including the sections titled “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the accompanying notes, provided elsewhere in this prospectus. Some of the statements in this prospectus constitute forward-looking statements. See the section titled “Special Note Regarding Forward-Looking Statements.”

The words “MDB,” “us,” “we,” the “Company” and any variants thereof used herein refer to MDB Capital Holdings, LLC and our consolidated subsidiaries. Also, we refer to certain subsidiary companies in which we have invested or might invest in from time to time as “partner companies;” the use of the term “partner company,” “partner” or any similar term should not be interpreted or otherwise taken to suggest that any of the companies referred to as such, are in any form of legal partnership or similar arrangement with the Company or any other company or entity within the holding company structure represented by the Company and its partly and wholly owned subsidiaries or affiliates.

Overview

MDB was founded in 1997, originally operating as MDB Capital Group, LLC, with the purpose of backing companies with visionary technology, inventors, and technology entrepreneurs. To maximize the impact of our actions and culture, under our business plan, we embark on each journey with a company at an early point, typically at the seed investment stage, in the manner of a partner and usually before a specified management structure having been put in place. We often act as co-founders, bringing not only capital to the table but also assisting with creating plans for the initial commercialization, the intellectual property strategy, business objectives, and financing. We refer to these companies as “partner companies” and we usually also plan, manage and/or facilitate the initial public offering (“IPO”) or public listing of a partner company.

We believe we have pioneered a new form of public venture capital in which we finance pre-revenue, early- stage technology companies through public offerings, primarily listed on Nasdaq. Our public venture model typically consists of a two-step financing approach with our partner companies: raising initial capital of between $5 million to $10 million dollars to set the business and operational foundations, and then raising an additional $20 million to $60 million via a public offering. Our community of sophisticated individual investors with like-minded goals and values supports our public venture capital model both with their capital and with their knowledge, connections and expertise while we incubate and subsequently launch the partner companies into the public markets.

We believe we have a substantial track record. We successfully have used the public markets to finance 16 companies through our approach. In each of these companies, we have either served as co-founders, were involved at the early stages of the company’s development, or enabled the company to make a significant strategic pivot. To date, for every company that we conducted an initial round of private funding, we have launched a successful IPO. We consider the IPO to be the beginning of the road for our companies, and we generally remain involved with them for several years thereafter. The stocks of all of these 16 companies have traded at premiums to the IPO offering price at some point post-IPO. Most importantly, these companies have all successfully completing public and private follow-on offerings that provided funds for the companies to continue supporting their growth, development and exploration of their technologies’ potential. MDB does not currently hold any investment in these companies.

MDB Capital Holdings, LLC (“the Company”), a Delaware limited liability company, was formed on August 10, 2021, to become the parent of MDB Capital Group, LLC. On January 10, 2022, MDB Capital Group, LLC filed a Certificate of Amendment with the Texas Secretary of State to change its name to Public Ventures, LLC (Public Ventures). On January 14, 2022, Public Ventures distributed 100% of its equity interests in PatentVest, Inc. (PatentVest) and Invizyne Technologies, Inc. (Nevada) (Invizyne) to its members in proportion to their respective interests. On January 15, 2022, Public Ventures filed with the Internal Revenue Service to be treated as a corporation for federal income tax purposes. On January 16, 2022, the members of Public Ventures contributed their entire interests in the equity of Public Ventures, Invizyne and PatentVest to MDB Capital Holdings, LLC, as result of which MDB Capital Holdings, LLC became the new parent holding company, holding 100% of each of those companies. In exchange for these interests, 5,000,000 Class B common shares were issued in connection with the reorganization. There was no effective change in the beneficial ownership of Public Ventures as a result of this transaction. On the same day as part of the reorganization, MDB Capital Holdings, LLC established a wholly owned management company subsidiary called MDB CG Management Company, Inc.

Public Ventures (formerly known as MDB Capital Group, LLC) and its subsidiaries, which together constitute our predecessor for accounting purposes, were under the common control. As a result, their contribution to the Company was recorded as a combination of entities under common control, whereby the assets contributed and liabilities assumed are recorded based on their historical carrying values. After the contribution of the predecessor’s business and net assets on January 16, 2022, we have retroactively reported our financial statements to include the historical results of our predecessor. This report includes information pertaining to periods prior to the closing of the business combination. In January 2022 of Public Ventures, PatentVest, and Invizyne were contributed to the Company. For comparative purposes, the prior reporting company of Public Ventures is presented for periods before January 1, 2022, referred to in statements as the “predecessor”.

Our Public Venture Capital Model

Since inception, we have defined and refined the key pillars that support what we believe is our successful public venture approach. These three pillars are our investment criteria, our process, and our community. We believe that our model is only suitable for companies that can be sustained in the public markets at an early stage. Typically, these companies own what appears to be category-defining platforms capable of solving big problems.

Seed to IPO path:

Investment Criteria

Our investment criteria focus first on the probability that an early-stage technology company can sustain its value in the public markets. We look for novel technology platforms that are category-defining and solve big unmet needs. Our investment criteria are founded on the following:

Rational Design Process

We begin our process by seeking to gain a deep understanding all of the relevant players in a given space and the key issues that, if solved, could effectively create a new category and enable the partner company to rapidly become a category leader,. We work to develop a clear understanding of our companies’ potential sustainable competitive advantage. Once the “Theory of Opportunity” is established, we develop the business strategy, financing strategy and intellectual property strategy and the innovation and Research and Development (“R&D”) prioritization road map. We test our assumptions by seeking input regarding our strategic decisions with experts in the space until we are comfortable that they are credible and convincing. With a clearly articulated understanding of what we believe to be the partner company’s potential, we endeavor to recruit the best possible talent to execute the strategy and bring the vision to fruition. We strive to instill a corporate culture that is constantly re-evaluating the partner company’s working thesis, which we believe will establish and keep the partner company as the leader in a given category or enable the partner company to pivot its strategy to a new area based upon changing circumstances.

Our Community

Our community, we believe, is critical for our model as it provides a solid base from which our partner companies may be developed and sustained. Our community consists of more than 500 sophisticated investors that have significant experience with our public venture approach. In addition to funding our partner companies, these investors also will bring subject matter expertise, resources and contacts from multiple industries and invaluable access and reach to our partner companies.

We work to keep our community engaged and curious such that they continuously help us to improve our decision process. Our community, as a whole, is an advocate for our public venture mission. Importantly, it consists of patient investors with a long-term focus on unlocking value upon the de-risking of our partner companies’ technologies. The long-term focus of our investor base is key to building value and stability for early-stage ventures in the public markets.

Corporate Structure

The following diagram displays our corporate structure as of the date of this prospectus

MDB is a limited liability company, established through a reorganization of several companies, that was initially funded with the proceeds from a private placement consummated in June 2022. Through this offering, MDB will become a publicly traded partnership. MDB currently has three wholly-owned subsidiaries: MDB CG Management Company (“MDB Management”); Public Ventures; and PatentVest; and has a majority-owned partner company, Invizyne. MDB is also in the process of expanding the business scope of Public Ventures to include securities self-clearing capabilities to enhance the investment banking services for both issuer and investor clients. PatentVest also is expanding its business scope to offer legal services through a licensed law firm in Arizona, that will focus on intellectual property matters.

MDB CG Management Company

MDB Management is principally an “administrative” entity whose purpose is to conduct, and wherever possible, to consolidate shared services/resources, for our US-based operations. This includes entering into service agreements that are broadly applicable to one or several of the group entities, hiring employees and independent contractors for the wholly owned entities within the group, performing certain unregulated administrative tasks, conducting unregulated recording keeping, leasing office premises, and offering employee benefit programs, such as healthcare and 401K plans.

Public Ventures

Public Ventures is the backbone of our community-oriented financing approach. Public Ventures is a registered broker-dealer (CRD#: 42677/SEC#: 8-49951) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and a member of Financial Industry Regulatory Authority, Inc. (“FINRA”). We are expanding Public Ventures’ capabilities to act as a licensed securities clearing firm. Public Ventures has elected under the Internal Revenue Service (“IRS”) Code to be classified as an association treated as a C-corporation for U.S. federal tax purposes.

Public Ventures’ strategy seeks to foster venture-stage businesses that are supported and financed by a community of like-minded investors and entrepreneurs experienced in the development of successful companies and have a long-term investment horizon. We envision developing a subset of this close-knit community of long-term public venture investor that will also be considered Public Ventures “Members.” Member involvement may include suggesting start-up and developing companies as potential investment opportunities and partner company candidates, making investments in these entities and other targeted companies, and consulting with our partner companies to help them grow into tomorrow’s leaders.

We are building a robust infrastructure for the proper functioning of the Public Ventures community. Our plan is that the FINRA licensed self-clearing broker-dealer will enable the community to structure and place or underwrite financing transactions and provide securities clearing services so that investors can trade, clear, and settle stocks in the partner companies and other small and micro-cap company securities. Our objective is to create a high-end service platform that will make investing in the small and micro-cap segment more accessible and efficient for our investor community.

We have successfully operated our broker-dealer specializing in public venture investments for more than 25 years. During this time, we have built internal processes to perform diligence and prioritize deals based on our proprietary criteria. We intend to leverage the lessons learned during our long operating history to create processes, rating systems, and reports that will be made available to the community, allowing participants to appropriately evaluate their investment risk and to foster informed decision making.

PatentVest

We believe PatentVest is the first venture invention and commercialization intelligence platform created to assist technologists, advisors, venture capital investors, and established companies optimize technology commercialization. Our process, which we have named “innovation in a box,” takes in information from our proprietary patent database and transforms the information about inventions and intellectual property from a complex legal process into a manageable, measurable business process. The PatentVest process clearly defines the boundaries of an invention by providing context for previously developed ideas and analyzes how the invention, and therefore patent claims, differ from the discovered prior art in order to rationalize the essential distinctions that are the key value drivers. Understanding these boundaries, as well as how protectable and valuable these boundaries are, is essential to better guide strategic business and patentability decisions. In our experience, this PatentVest process answers the most important questions for a technology platform: how to innovate, how to improve its ideas, and how to deploy these ideas where they matter most.

Invizyne

Invizyne, a partner company, was created in early 2019 with the vision of simplifying nature by using nature’s building blocks to create molecules of interest. Invizyne has differentiated technology underlying its unique synthetic biology platform which potentially solves the inherent production bottlenecks of certain legacy technologies. The promise of synthetic biology, we believe, has no bounds. If Invizyne’s technology platform is successful at an industrial scale, we believe that it could significantly impact several industries by enabling the exploration of a large number of molecules and properties found in nature. For example, we believe that therapeutic molecules found in nature could be tested for efficacy and quickly created and scaled. Examples of where this has been important include with respect to multiple cannabinoids and other natural compounds, quick replication of novel properties of rare chemicals found in nature, creation of natural flavors and fragrances to naturally enrich food, and the sustainable creation of fuel from renewable energy sources.

Impact of the COVID-19 Pandemic on Our Business

The COVID-19 pandemic has prompted national, regional, and local governments, including those in the markets that the Company operates in, to implement preventative or protective measures to control its spread. As a result, there have been disruptions in business operations around the world. As our operations may largely be conducted remotely and are largely office and service work based and not involved in manufacturing or direct face to face client service contacts, we have not been impacted significantly by the COVID-19 pandemic.

While the Company will continue to navigate the financial, operational, and personnel challenges presented by the COVID-19 pandemic, the full impact of COVID-19 on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic, the potential uncertainty related to (and proliferation of) new strains, and related actions taken by federal, state, local and international government officials, to prevent and manage the spread of COVID-19. All of these efforts are uncertain, out of our control, and cannot be predicted at this time.

Impact of Ukrainian Conflict

Currently, we believe that the conflict between Ukraine and Russia does not have any direct impact on our operations, financial condition or financial reporting. We believe the conflict will have only a general impact on our operations in the same manner as it is having a general impact on all businesses that have their operations in North America as a result of international sanctions and embargo regulations, possible shortages of goods and goods incorporating parts that may be supplied from the Ukraine or Russia, supply chain challenges, and the international and US domestic inflationary results of the conflict and government spending for and funding of our country’s response. We do not believe we will be targeted for cyber-attacks in connection with the conflict, but as a financial institution, we are aware that we may be a general target for cyber-attacks. We have no operations in the countries directly involved in the conflict or are specifically impacted by any of the sanctions and embargoes, as we principally operate in the United States. We do not believe that the conflict will have any impact on our internal control over financial reporting. Other than general securities market trends, we do not have reason to believe that investors will evaluate the company as having special risks or exposures related to the Ukrainian conflict.

Recent Developments

On June 8, 2022, the Company completed the first closing of a private placement, closing on 2,517,966 class A common shares, for gross proceeds of $25,179,660. On June 15, 2022, we completed the second closing of the private placement, closing on an additional 11,000 class A common shares, for gross proceeds of $110,000. The Company received net proceeds from the two closings of approximately $25,289,660, which will be used for development of the current partner companies, setting up new partner companies, and our general corporate and working capital requirements. The Company also issued warrants to purchase 18,477 class A common shares to two sales agents engaged by the Company that are registered broker-dealers, which are exercisable for 10 years at $12.00 per share.

All the investors in the private placement are locked-up until the commencement of trading of our class A common shares on The Nasdaq Capital Market. We intend to list the class A common shares on The Nasdaq Capital Market, but no assurance can be given that our application will be approved or that an active trading market for the class A common shares will develop. We will not consummate and close this offering without a listing approval letter from the Nasdaq Capital Market.

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties, including those risks discussed at length under the heading “Risk Factors” starting on page 12 hereof. These risks include risks in addition to those that are briefly noted below. Investing in our Company and its securities involves a high degree of risk. The following is a summary of some of the principal risks we face.

- An investment in the Company will be an interest taxed as a partnership interest, therefore you may have taxable income whether or not you receive any cash distributions.

- If we are treated as a corporation rather than a partnership, and there is no pass through of losses to the investors as currently intended, the value of the class A common stock may be adversely affected.

- Allocations of income and loss may be re-determined by the IRS if the IRS determines that the operating agreement and our business do not have substantial economic effect. Our structure is subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis.

- Investors will receive Schedule K-1 reports indicating their profit and loss amounts for completing their annual tax return; however these reports may be distributed after April 15 of the following year.

- We believe that the partner company model of investing in growth companies has been successful in the past, however, there is no assurance that going forward we will be successful in selecting our partner companies with future potential, nurturing them with investment and management, and taking them public resulting in profit to the holders of class A common stock.

- We may require additional capital to support our business operations and to make investments in our partner companies; additional capital may not be available when needed. Where we sell additional equity or equity linked securities, there will be dilution of prior investors’ interest in the Company.

- Our partner companies likely will need to raise additional capital to fund their operations from time to time. We may not be able to fund some or all of these amounts, and the amounts may not be available from third parties on acceptable terms, if at all.

- Our model and our overall business success and return on investment depends on our partner companies being successful in their respective fields of operation and the marketplace they will address.

- Our business strategy and operations will rely on our ability to identify and retain appropriately qualified personnel for the holding company and the various subsidiaries, including the partner companies.

- Developing and protecting the intellectual property rights of our partner companies and avoiding infringement will be paramount to the success of our partner companies. Protecting such intellectual property may be costly and complicated, and ultimately may not be fully adequate to create or protect a competitive position.

- Collaboration agreements of various sorts, by our partner companies, such as with respect to research, testing, clinical trials, manufacturing and distribution, will be important to their respective businesses. Their inability to enter into collaboration agreements as needed, or if any collaborations that the partner companies undertake are not successful, may adversely impact their respective businesses.

- Invizyne may not be successful in its efforts to use its proprietary synthetic biological platform to build a pipeline of products.

- The synthetic biology market is a rapidly growing and changing market, and if Invizyne is unable to keep up to date with developments, its business may be adversely affected.

- The market, including clients and potential investors, may be skeptical of the viability and benefits of Invizyne’s pipeline of products because they are relatively novel and are based on complex technology.

- If we do not identify the full range of patent opportunities relevant to a client’s intellectual property portfolio, our reputation will be harmed and we may be liable for service failure.

- If clients do not agree that the patents opportunities identified in our reports are relevant to their businesses, we will have difficulty retaining and attracting new clients, and our operating results will be harmed.

- We believe patent analysis is a highly competitive business, and if we fail to develop widespread brand awareness cost-effectively, our business may suffer.

- Public Ventures plans on conducting offerings where we will act as an underwriter, and thus we will be subject to underwriter liability.

- As a broker-dealer, Public Ventures will have to expend considerable resources on maintaining adequate compliance practices. The failure to maintain required compliance practices or otherwise be in regulatory compliance will result in fines, sanctions and possibly the curtailment of operations.

- The clearing operations of Public Ventures will require contractual arrangements with several key industry entities, which, if not followed, will require us to terminate our business.

- Public Ventures will have to maintain adequate capitalization levels to conduct its broker-dealer and clearing businesses. Settlement bank services are difficult to arrange, without which Public Ventures will not be able to pursue a clearing business.

- We plan to operate as a company not regulated under the Investment Company Act of 1940. We may have to buy, sell or retain assets when we would otherwise not wish to do so in order to avoid registration under the Investment Company Act.

- Invizyne may face unique regulatory hurdles because of the novelty of its bio-synthesized compounds. Because its compounds are novel, Invizyne will have to perform tests for safety, use, and claim validation.

- To the extent that Invizyne pursues medical-related products, it will be subject to the full range of regulation by the Food and Drug Administration (“FDA”) and other medical related regulatory requirements.

- PatentVest is licensed to offer legal services under Arizona law that it plans to offer as part of the package of intellectual property service offerings of PatentVest, which licensing imposes on those services the responsibilities and obligations of a law firm under the ethical and legal provisions of the State of Arizona.

- One of our subsidiaries, Public Ventures, is subject to Securities and Exchange Commission and FINRA regulation, which if not followed may result in fines, limitations on activity and financial impairment.

- The collection, processing, use, storage, sharing and transmission of personal information and other sensitive data are subject to stringent and changing state, federal and international laws, regulations and standards and policies and could give rise to liabilities as a result of our failure or perceived failure to protect such data, comply with privacy and data protection laws and regulations or adhere to the privacy and data protection practices that we articulate to our clients. Cyberattacks and other security breaches or disruptions suffered by us or third parties upon which we rely could have a materially adverse effect on our business, harm our reputation and expose us to public scrutiny or liability.

- Control by management may limit your ability to influence the outcome of director elections and other transactions requiring class A common shareholder’s approval.

- If the class A common shares are listed on Nasdaq, we will be deemed a “controlled company” under the listing rules because our class B common shares are held by two persons who have more than 50% control. As a controlled company, we will be exempt from certain of the corporate governance obligations that other companies must follow when listing on Nasdaq.

-The dual class structure of our currently issued equity securities may adversely affect the trading market for our class A common shares.

-The dual common share structure and existence of our registered broker-dealer subsidiary may delay or prevent takeover attempts of our Company.

-We currently have limited accounting personnel with the background in public company accounting and reporting. We will have to add personnel and devote personnel and financial resources to meet our reporting obligations as a publicly listed company.

-Except for the holders of 171,078 class A common shares, none of the other shareholders of the class A common shares are party to any contractual lock-up agreement or other contractual restrictions on transfer. Their shares are being registered for resale at the same time as the Offering to which this prospectus relates. 

Corporate Information

Our executive offices are located at 4209 Meadowdale Lane, Dallas, TX 75229. Our phone number is (310) 526-5000. Our website address is www.mdb.com. The information on our website is deemed not to be incorporated in this prospectus or to be part of this prospectus.

JOBS Act

We will be treated as an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. As such, in this prospectus we have elected to take advantage of certain reduced disclosure obligations that apply to emerging growth companies regarding selected financial data and executive compensation arrangements. We expect to continue to rely on the emerging growth company reduced disclosure and reporting obligations once we are a public company.

Implications of Being an “Emerging Growth Company”

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act. As such, we are eligible to, and intend to, take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” such as not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenue exceeds $1.07 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of all our class A common shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.

Summary Consolidated Financial and Other Data

The following tables summarize our consolidated financial and other data. We derived our summary consolidated statements of operations data for the years ended December 31, 2021 and December 31, 2020 (except for the pro forma share and pro forma net income per class A common share information) and the consolidated balance sheet data as of December 31, 2021 from our audited consolidated financial statements included elsewhere in this prospectus.

The summary consolidated statements of operations data for the six months ended June 30, 2022 and 2021 and the summary consolidated balance sheet data as of June 30, 2022, are derived from our unaudited interim consolidated financial statements and notes that are included elsewhere in this prospectus. We have prepared the unaudited consolidated financial statements in accordance with generally accepted accounting principles (GAAP) and on the same basis as the audited consolidated financial statements.

Our historical results are not necessarily indicative of the results that may be expected in any other period in the future. The following summary consolidated financial and other data should be read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

SUMMARY CONSOLIDATED FINANCIAL DATA AND OTHER DATA

The following tables summarize our consolidated financial data and other data. The summary consolidated statements of operations data for the years ended December 31, 2021, and 2020, respectively and consolidated balance sheet data as of December 31, 2021, and 2020 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the following summary consolidated financial data and other data below in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

THE OFFERING

Unless we indicate otherwise or the context otherwise requires, all information in this prospectus relating to the class A common shares:

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” All statements other than statements of historical facts contained in this prospectus may be forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “continues,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “would” or “should” or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this prospectus, and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, future acquisitions and the industry in which we operate.

These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. These forward-looking statements are based on assumptions regarding our present and future business strategies and the environment in which we operate. Important factors that could cause those differences include, but are not limited to:

These factors should not be construed as exhaustive and should be read with the other cautionary statements in this prospectus.

Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this prospectus. The matters summarized under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus could cause our actual results to differ significantly from those contained in our forward-looking statements. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.

In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this prospectus speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments, except as required by applicable law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

RISK FACTORS

Investing in our class A common shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, before making a decision to invest in our class A common shares. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. If any of the following risks occur, our business, operating results, financial condition and future prospects could be materially and adversely affected. In that event, the market price of our class A common shares could decline, and you could lose part or all of your investment.

Risks Relating to Holding Company Taxation

You may be subject to U.S. federal income tax on your share of our taxable income, regardless of whether you receive any cash distributions from us.

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

You may be subject to state, local and other taxes, including with respect to your own particular circumstances.

In addition to U.S. federal income taxes, each shareholder may incur income tax liabilities under the state or local income tax laws of certain jurisdictions in which MDB will operate, as well as in the jurisdiction of that shareholder’s residence or domicile. State and local income tax laws vary from one location to another, and federal, state and local income tax laws are both complex and subject to change. The income tax aspects of an investment in MDB are complicated, and each shareholder should review them with his, her or its own professional advisors familiar with the shareholder’s own income tax situation and with the income tax laws and regulations applicable to the shareholder.

Allocations of income and loss may be re-determined by the IRS.

A shareholder’s distributive share of MDB income, gains, losses, deductions and credits for U.S. federal income tax purposes is generally determined as set forth in the limited liability company agreement governing our company, which we refer to as the operating agreement, unless such items are allocated in a manner that has no “substantial economic effect.” If it is determined that the allocations in the operating agreement do not possess substantial economic effect, then the IRS might seek to allocate MDB related items in a different manner.

MDB may provide delayed final Schedules K-1.

MDB may not be able to provide final Schedules K-1 to shareholders for any given fiscal year until after April 15 of the following year. The board of directors will endeavor to provide shareholders with final Schedules K-1 or with estimates of the taxable income or loss allocated to their shares on or before April 15, but final Schedules K-1 may not be available until MDB has received tax–reporting information necessary to prepare final Schedules K-1. Shareholders may be required to obtain extensions of time to file their U.S. federal, state, and local income tax returns (which do not provide taxpayers with an extension of time to pay any tax that may be due on such tax returns). Each prospective shareholder should consult with its own advisor as to the advisability and tax consequences of an investment in MDB.

If we are treated as a corporation for U.S. federal income tax purposes, the value of the shares could be materially adversely affected.

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

Our structure involves complex provisions of U.S. federal and state income tax law for which no clear precedent or authority may be available. Our structure is also subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis.

The U.S. federal income tax treatment of holders of our shares depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. You should be aware that the U.S. federal and state income tax rules are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, and state governments frequently resulting in revised interpretations of established concepts, statutory changes, revisions to regulations and other modifications and interpretations. The IRS pays close attention to the proper application of tax laws to partnerships and entities taxed as partnerships. The present U.S. federal income tax treatment of an investment in our shares may be modified by administrative, legislative or judicial interpretation at any time, and any such action may affect investments and commitments previously made.

Complying with certain tax-related requirements may cause us to forego otherwise attractive business or investment opportunities or enter into acquisitions, borrowings, financings or arrangements we may not have otherwise entered into.

In order for us to be treated as a partnership for U.S. federal income tax purposes, and not as a publicly traded partnership taxable as a corporation, we expect that at least 90% of our gross income in each taxable year will need to be “qualifying income” on a continuing basis and we must not be, if we were a corporation, required to register as an investment company under the Investment Company Act. In order to obtain such treatment, we (or our subsidiaries) may decide to forego attractive business or investment opportunities. This may cause us to incur additional tax liabilities and/or adversely affect our ability to operate solely to maximize our cash flow.

Shareholders may be subject to restrictions on deductibility of expenses and other losses.

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

Future legislative or regulatory action could significantly change the tax aspects of an investment in our shares.

The discussion of tax aspects contained in this prospectus is based on law currently in effect and certain proposed Treasury Regulations. Nonetheless, shareholders should be aware that new administrative, legislative or judicial action could significantly change the tax aspects of an investment in our shares. Any such change may be retroactive with respect to transactions entered into or contemplated before the effective date of such change and could have a material adverse effect on the tax consequences of your investment in MDB.

Risks Relating to Our General Business Operations

Although our partner company model has been successful in the past, there is no assurance that we will continue to be successful in selecting our partner companies or that these partner companies will generate investment returns at the same or similar levels as those of our prior partner companies.

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

Investors are cautioned that the past successes of the management as executed via their privately held broker-dealer are no assurance that the newly re-reorganized company will continue to have the same successes or result in same value creation. Investors may lose part or all of their investment in MDB.

We might require additional capital to support operations and business growth and to make investment in our partner companies; this capital might not be available when needed.

We have funded MDB operations since inception in 2022 primarily through equity financings and revenue generated by the services provided through Public Ventures. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments in our business, particularly in our partner companies, to respond to business opportunities and challenges, including developing new products and services, enhancing our operating infrastructure, expanding our operations, and acquiring complementary businesses and technologies. All of the foregoing may require us to secure additional funds. Additional financing may not be available on terms favorable to us, if at all. If we incur additional debt, or issue preferred equity securities, the holders of these debt or preferred security holders would have rights senior to holders of our equity to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to make distributions on our equity. Because our decision to raise capital in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, dilutive effect or nature of any future issuances of securities. As a result, our equity holders bear the risk that future issuances of debt or equity securities could reduce the value of our class A common shares and dilute their interests. Our inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability to continue supporting our business growth and responding to business opportunities and challenges.

Our business depends upon our ability to make good decisions regarding the deployment of capital into new or existing partner companies and, ultimately, the performance of our partner companies, both of which are uncertain.

If we make poor decisions regarding the deployment of capital into new or existing partner companies, our business model will not succeed. Our success as a holding company ultimately depends on our ability to choose the right partner companies, develop these companies, such that these partner companies are operationally successful. If one or more of our partner companies does not succeed, the value of our assets could be significantly reduced resulting in substantial impairments or write-offs, which could cause the results of our operations and the price of our class A common shares to decline.

The risks relating to our partner companies include:

● most of our partner companies have a history of operating losses and a limited operating history;

● the new technologies that our partner companies attempt to develop and launch commercially may never be developed or may never adequately developed to be commercial or even if commercially developed, may not be accepted in the marketplace;

● the new technologies that our partner companies develop may not be accepted quickly enough or broadly enough resulting in additional need funding to sustain the partner company or the decision to abandon the business at a loss;

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

● technologies of our partner companies that are subject to regulatory examination, testing and approval, may not be approved by any required regulatory authorities;

● inability to adapt to the rapidly changing marketplaces;

● inability to manage growth;

● the need for additional capital to fund partner company operations, which we may not be able to fund or which may not be available from third parties on acceptable terms, if at all;

● inability to protect partner company intellectual property rights and/or the costs and limitations that partner companies infringe on the intellectual property rights of others;

● inability to put into place, monitor and maintain appropriate compliance programs related to employees, safety or other regulatory requirements which could result in legal liability, bad press and significant additional costs to investigate, address and remediate such issues;

● certain of our partner companies could face legal liabilities from claims made against them based upon their operations, products or work;

● the impact of economic downturns on their operations, results and growth prospects;

● inability to attract and retain qualified personnel; and

● government regulations and legal uncertainties may place financial burdens on the businesses of our partner companies.

Our business model does not rely upon the receipt of operating cash flows from our partner companies.

Our partner companies currently provide us with no cash flow from their operations, and it is not anticipated that our partner companies will generate cash flow in the early stages of development and during our ownership. To the extent our partner companies generate any cash from operations, they will retain the funds to develop their own businesses. We will rely on cash on hand, liquidity events and our ability to generate cash from capital raising activities to finance our operations. We may need capital from time to time to develop new partner company relationships and to fund the capital needs of our existing partner companies. We also will need cash to finance our corporate overhead and meet our existing funding commitments. As a result, we have substantial cash requirements. If we are unable to find ways of monetizing our holdings or to raise additional capital on attractive terms, we may face liquidity issues that will require us to curtail our new business efforts, constrain our ability to execute our business strategy and limit our ability to provide financial support to our existing partner companies. There is no assurance that we will be able to raise any such funding or funding in sufficient amounts to support the early stages of development of our partner companies.

Our overall success will depend on the success of our partner companies. Our business model and return on investment depends on the success of our partner companies in their respective fields of operation and the markets they seek to address.

At this time, we cannot identify the various specific risks that our partner companies will face other than the challenges typically faced by early-stage companies, as well as risks related to general regulatory issues, general technology and product development issues, meeting capital requirements, and market approach and penetration issues that all such early stage and development companies will face in their evolution. To the extent that any of our partner companies fail during the development phase or experience delay until they reach a point where they are able to successfully market their technologies or products in a financially sustainable way, our investment in those partner companies and your investment in MDB will be impaired and you may sustain a loss in your investment and return on investment.

To be successful, we will need to grow the overall size of MDB and, more particularly, the number and businesses of partner companies. Our success will depend on finding and nurturing early-stage companies and transforming them into successful companies through our managerial and funding resources, including sources of external funding. Our model is to repeatedly and over an extended period of time create, develop and launch partner companies. Expanding the number of partner companies will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain, motivate and integrate additional employees at the MDB (parent) level and at the partner company level. In addition, our management may have to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities at our partner companies. Our future financial and business performance and our ability to compete effectively will depend, in part, on our ability to effectively manage our future growth.

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

The partner companies are and will continue to be early-stage companies, none of which, it is anticipated, will have any finalized products or well-defined development, intellectual property, marketing or distribution plans. Because of these factors and the absence of an operating history, it will be difficult for potential investors to fully evaluate the planned technologies and prospective operations and future potential of our partner companies. As early-stage companies, they will be subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays associated with new businesses. Investors should evaluate an investment in us in light of all of the risks inherent and uncertainties encountered by early-stage companies operating in competitive environments. There can be no assurance that our efforts to finance and nurture our partner companies will be successful or that any of our partner companies will ultimately develop their products to a point where the companies reach profitability.

MDB and our partner companies may not have developed sufficient infrastructure to accurately and timely report their financial results and may otherwise have material weaknesses over internal systems of control leading to delay, errors and restatement of financial reports.

Prior to this offering, MDB has been a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting. The partner companies are similarly private companies, also with limited accounting personnel and other resources that are available to conduct their audit functions, which may impact the internal controls over financial reporting of the holding company, MDB. We are not yet subject to the certification or attestation requirements of the Sarbanes-Oxley Act in connection with the preparation of our consolidated financial statements included elsewhere in this prospectus. We and our independent registered public accounting firm will evaluate our internal controls over financial reporting, at both the level of our partner companies, subsidiaries and the holding company, to identify material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

We cannot provide assurance that material weaknesses or control deficiencies do not currently exist or will not occur in the future. There were material weaknesses reported in prior years for our partner companies. If we identify material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our shares could be negatively affected. Additionally, allegations of fraud may have a direct and adverse effect on the value of our brand and shares, which may further negatively impact our financial situation.

One of our subsidiaries, Public Ventures, is subject to Securities and Exchange Commission and FINRA regulation, and, if not compliant with those regulations, may be subject to fines, limitations on activity and financial impairment.

One of our subsidiaries is a broker-dealer, subject to a wide range of regulations under the oversight of the Securities and Exchange Commission, FINRA and state securities regulators, and other financially-oriented governmental authorities. Public Ventures is currently subject to regulations related to its status as a broker-dealer and, if we are able to establish our securities clearing operations, the Company will also be subject to all the regulatory requirements of the Securities and Exchange Commission applicable our securities clearing operations. As is common in the securities industry, we are subject to regular reviews of and investigations into our operations, some of which progress to regulatory actions that may result in fines, censures, and limitations on activity. Currently, we are the subject of two reviews of past broker-dealer activities, which may be either resolved or escalated. We do not know at this time whether these reviews will be escalated to regulatory action, and if they are, what the regulatory assertions would be and what the resolution of such assertions might. Any adverse result, may impair the value of the overall company and a loss of investment value in MDB.

Our partner companies are likely to be operating in businesses that are subject to extensive regulation, which if not compliant with those regulations may be subject to fines, limitations on activity and financial impairment.

Our partner companies will likely be subject to a large range of regulations, especially if they are engaged in development of medical or pharmaceutical therapies, medical devices and technologies subject to export and import controls. The failure to adhere to any applicable laws or regulations relating to their business conduct may result in investigations, fines, limitations on activities and recalls. The partner company subject to these kinds of sanctions, and possibly MDB, also could suffer from development, marketing, financial and reputational damage. There may be consequential impairment of the value of the overall company and a loss of investment value in the Company.

We plan to operate as a company not regulated under the Investment Company Act of 1940.We may have to buy, sell or retain assets when we would otherwise not wish to do so in order to avoid registration under the Investment Company Act.

We believe our operations are not subject to the Investment Company Act of 1940 (the “Investment Company Act”). We do not hold ourselves out as conducting the business of investing, reinvesting or trading in securities, and we do not hold ourselves out as being engaged in those activities. Rather, we invest in partner companies to develop their businesses. We will seek to control our partner companies through a majority ownership position, by being actively engaged on the board of directors and by being involved in the certain management decision processes of the partner companies. We are actively engaged in the development of these companies including creation of the business strategy and path to value creation.

The Investment Company Act regulates companies that are engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities. Under the Investment Company Act, a company may be deemed to be an investment company if it owns investment securities with a value exceeding 40% of the value of its total assets (excluding government securities and cash items) on an unconsolidated basis, unless an exemption or safe harbor applies. We refer to this test as the “40% Test.” Securities issued by companies other than majority-owned partner companies are generally considered “investment securities” for the purpose of the Investment Company Act, unless other circumstances exist, such as management being actively involved in the management of the underlying company. Additionally, there may be other exemptions that we might be eligible to use to avoid regulation under the Investment Company Act. As a company that builds value by cofounding early-stage technology and life sciences companies, we believe we are not engaged primarily in the business of investing, reinvesting or trading in securities. Consequently, we do not believe that we are not now and will not be an investment company under the Investment Company Act.

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

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

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

We plan on sourcing aspects of our business operations in Nicaragua.

We plan on engaging companies and direct employees who will be located in Nicaragua. Some of the services provided by personnel in Nicaragua will be for the Company and some for PatentVest. We believe that having services and employees in Nicaragua will provide cost benefits for our operations that will enhance the competitiveness of our business operations carried out in the United States. Nicaragua has strict and complicated employment laws, many of which are more oriented for the benefit of the employee than the employer. We must comply with these laws or suffer various penalties. In order to function effectively and efficiently when engaging companies and employees in Nicaragua, we will have to locate and train the employed persons so as to be able to build up and maintain our staffing There can be no assurance that our sourcing services in Nicaragua will be at competitive and at cost saving rates or that we will be able to find the services and personnel there that are able to carry out the required functions.

Whether or not we will be able to continue to use the services of companies and persons in Nicaragua will depend on the extent that the United States imposes restrictions on commerce of various kinds by US persons and entities with Nicaraguan persons and entities. Currently there are Executive Orders in place that restrict immigration of designated groups of individuals into the United States and restrictive sanctions on certain trade-related activities between United States and Nicaragua. In conjunction with the Executive Orders, other departments of the United States government have imposed complimentary sanctions on activities under their jurisdictions to expand the effect of the Executive Orders. The effect and extent of the sanctions, including Executive Order 13851, dated October 24, 2022, is not yet known, but could potentially prohibit both imports from and exports to Nicaragua. Whether these sanctions will be interpreted to include a prohibition on our current and proposed activities with companies and persons in Nicaragua is yet unknown. But if the sanctions extend to our activities in Nicaragua, we will face disruption in our employee team and have to find replacement personnel. We may have difficulty in finding qualified, competent replacements for those functions fulfilled by our Nicaraguan personnel, contract partners and entities with which we work. If we have to find those kinds of replacements, we also would expect our costs to increase, thereby losing the advantage of our use of Nicaraguan resources.

There may be securities market risks resulting from owning the equity securities of our partner companies.

Although we are not primarily engaged in the business of investing, reinvesting, or trading in securities, we will own a controlling position in the securities of our partner companies pursuant to our business model. These investments carry the risk of partial or total loss of investment. We generally will be active in the management and development of our partner companies, as well as actively monitor our investments to keep abreast of the businesses in which we have invested. We plan to take many of the partner companies public. As our partner companies become publicly traded, the value of our investments in them will become subject to market fluctuations until they are liquidated. The fluctuations in value of our partner companies’ securities may affect the value of your investment in the Company resulting in a partial or total loss of your investment.

We could experience competition from other potential acquirers when we seek to invest in partner companies, which may result in not being able to make investments in targeted partner companies or having to invest at higher valuations, thus increasing the risk of loss and reducing potential future gains from such investments.

We face competition from other capital providers as we seek to acquire and develop interests in our partner companies. Some of our competitors have more experience identifying and acquiring companies and have greater financial and management resources, brand name recognition or industry contacts than we possess. We compete with those firms on a number of factors, including our history and reputation, our ability to partner, encourage and support development of each company, the abilities and experience of our professionals in working with development-stage companies, and our ability to source and perform due diligence on new technologies and companies. There can be no assurances that we will be able to make investments in targeted partner companies. In addition, even though we seek to make acquisitions when our partner companies are in their very early stages and not yet publicly traded, we may still pay higher prices for our investments because of competition from other potential acquirers for such investments and higher values for similar public companies. This could increase the risk of loss and result in lower gains from such investments.

Our sale of equity interests in partner companies to the public may harm our ability to provide equity compensation to our personnel, which could make it more difficult to attract and retain them.

We might not be able to provide our personnel with equity interests in our business. Therefore, in order to recruit and retain existing and future personnel, we may need to increase the level of compensation that we pay to them. Accordingly, as we promote or hire new personnel over time, we may increase the level of compensation we pay to our personnel, which would cause our total employee compensation and benefits expense as a percentage of our total revenue to increase and adversely affect our profitability. In addition, any issuance of equity interests in our business to investment professionals would dilute the holders of class A common shares and the other holders of our equity securities.

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

There is significant competition for the time and capital of our community members and they have no obligation to continue to own MDB member interests, participate in the development of the companies and fund partner companies as envisioned by our business model.

We will rely on our community of sophisticated investors that have experience with our public venture approach for funding our partner companies, subject matter expertise and contacts. There is competition for their time and capital. There is no obligation for an investor that is part of our community to continue to participate or even to hold securities of MDB. As is common, investors will circulate in and out of our community as their interests change over time. The loss of a prominent or an active community participant may diminish the effectiveness of our community and may lead others to change their participation level within the community.

The COVID-19 pandemic, or any other pandemic, epidemic or outbreak of an infectious disease, may materially and adversely affect our business and operations.

The COVID-19 pandemic has prompted national, regional, and local governments, including those in the markets that the Company operates in, to implement preventative or protective measures to control its spread. As a result, there have been disruptions in business operations around the world. To date, we have not been impacted significantly by the COVID-19 pandemic as our work can be conducted remotely due to being largely office and service-based rather than manufacturing or requiring face to face client service.

While the Company will continue to navigate the financial, operational, and personnel challenges presented by the COVID-19 pandemic, the full impact of COVID-19 on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic, the potential uncertainty related to (and proliferation of) new strains, and related actions taken by federal, state, local and international government officials, to prevent and manage the spread of COVID-19. All of these efforts are uncertain, out of our control, and cannot be predicted at this time.

Impact of Ukrainian Conflict

Currently, we believe that the conflict between Ukraine and Russia does not have any direct impact on our operations, financial condition or financial reporting. We believe the conflict will have only a general impact on our operations in the same manner as it is having a general impact on all businesses that have their operations in North America as a result of international sanctions and embargo regulations, possible shortages of goods and goods incorporating parts that may be supplied from the Ukraine or Russia, supply chain challenges, and the international and US domestic inflationary results of the conflict and government spending for and funding of our country’s response. We do not believe we will be targeted for cyber-attacks in connection with the conflict, but as a financial institution, we are aware that we may be a general target for cyber-attacks. We have no operations in the countries directly involved in the conflict or are specifically impacted by any of the sanctions and embargoes, as we principally operate in the United States. Other than general securities market trends, we do not have reason to believe that investors will evaluate the company as having special risks or exposures related to the Ukrainian conflict.

The collection, processing, use, storage, sharing and transmission of personal information and other sensitive data are subject to stringent and changing state, federal and international laws, regulations and standards and policies and could give rise to liabilities as a result of our failure or perceived failure to protect such data, comply with privacy and data protection laws and regulations or adhere to the privacy and data protection practices that we articulate to our clients.

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

Additionally, the California Privacy Rights Act (“CPRA”) was passed in November 2020 and it will be effective in most material respects starting on January 1, 2023. The CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding clients’ rights with respect to certain sensitive personal information. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. The effects of the CCPA and the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.

We expect more states to enact legislation similar to the CCPA and the CPRA, which provide clients with new privacy rights and increase the privacy and security obligations of entities handling certain personal information of such clients. The CCPA has prompted a number of proposals for new federal and state-level privacy legislation, such as in Virginia and Colorado, both with laws to take effect in 2023. It is anticipated that all such laws will add additional complexity, have variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.

Additionally, our broker-dealer, Public Ventures is subject to SEC Regulation S-P, which requires that businesses maintain policies and procedures addressing the protection of client information and records. This includes protecting against any anticipated threats or hazards to the security or integrity of client records and information and against unauthorized access to or use of client records or information. Regulation S-P also requires businesses to provide initial and annual privacy notices to clients describing information sharing policies and informing clients of their rights.

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

Cyberattacks and other security breaches or disruptions suffered by us or third parties upon which we rely could have a materially adverse effect on our business, harm our reputation and expose us to public scrutiny or liability.

In the normal course of business, we collect, process, use and retain sensitive and confidential information regarding our clients and prospective clients, including data provided by and related to clients and their transactions, as well as other data of the counterparties to their payments. We also have arrangements in place with certain third-party service providers that require us to share client information. Although we devote resources and management focus to ensuring the integrity of our systems through information security and business continuity programs, our facilities and systems, and those of third-party service providers, are vulnerable to actual or threatened external or internal security breaches, acts of vandalism, theft, fraud or misconduct on the part of employees, other internal sources or third parties, computer viruses, phishing attacks, internet interruptions, disruptions or losses, misplaced or lost data, ransomware, unauthorized encryption, denial-of-service attacks, social engineering, unauthorized access, spam or other attacks, natural disasters, fires, terrorism, war, telecommunications or electrical interruptions or failures, programming or human errors or malfeasance and other similar malicious or inadvertent disruptions or events. We and our third-party service providers from time to time have experienced and may in the future continue to experience such instances. In some cases, the bad actors facilitated unauthorized financial transactions. We also face security threats from malicious third parties that could obtain unauthorized access to our systems and networks, which threats we anticipate will continue to grow in scope and complexity over time. These events could interrupt our business or operations, result in legal claims or proceedings, result in significant legal and financial exposure, supervisory liability under U.S. federal or state, or non-U.S. laws regarding the privacy and protection of information, including personal information, damage to our reputation and a loss of confidence in the security of our systems, products and services. Although the impact to date from these events has not had a material adverse effect on us, no assurance is given that this will be the case in the future.

Information security risks in the financial services industry have increased recently, in part because of new technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized criminals, perpetrators of fraud, hackers, terrorists and other malicious third parties. In addition to cyberattacks and other security breaches involving the theft of sensitive and confidential information, hackers, terrorists, sophisticated nation-state and nation-state supported actors and other malicious third parties recently have engaged in attacks that are designed to disrupt key business services, such as consumer-facing websites. We and our third-party service providers may not be able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used to sabotage or to obtain unauthorized access to our or our third-party service providers’ technology, systems, networks and/or physical facilities in which data is stored or through which data is transmitted change frequently and because attacks can originate from a wide variety of sources. We employ detection and response mechanisms designed to contain and mitigate security incidents. Nonetheless, early detection efforts may be thwarted by sophisticated attacks and malware designed to avoid detection. We also may fail to detect the existence of a security breach related to the information of our clients and to prevent or detect service interruption, system failure or data loss. Further, as a significant number of people work from home, these cybersecurity risks may be heightened by an increased attack surface across our business and those of our clients and third-party service providers. We cannot guarantee that our efforts, or the efforts of those upon whom we rely and partner with, will be successful in preventing any such information security incidents.

The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our clients or our proprietary information, software, methodologies and business secrets could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, damage to our reputation or a loss of confidence in the security of our systems, products and services, all of which could have a material adverse impact on our business. In addition, there recently have been a number of well-publicized attacks or breaches affecting companies in the financial services industry that have heightened concern by clients, which could also intensify regulatory focus, cause clients to lose trust in the security of the industry in general and result in reduced use of our services and increased costs, all of which could also have a material adverse effect on our business.

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

A security breach may also cause us to breach client contracts. Our agreements with certain partners and service providers may require us to use industry-standard or reasonable measures to safeguard personal information. We also may be subject to laws that require us to use industry-standard or reasonable security measures to safeguard personal information. A security breach could lead to claims by our clients or other relevant stakeholders that we have failed to comply with such legal or contractual obligations. As a result, we could be subject to legal action or our clients could end their relationships with us. There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages, and in some cases our client agreements may not limit our remediation costs or liability with respect to data breaches.

Litigation resulting from security breaches may adversely affect our business. Unauthorized access to our technology, systems, networks or physical facilities, or those of our third-party service providers, could result in litigation with our clients or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business or adversely affect our reputation. We could be required to fundamentally change our business activities and practices or modify our products and/or technology capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach were to occur, and the confidentiality, integrity or availability of personal information was disrupted, we could incur significant liability, or our technology, systems or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.

We may not have adequate insurance coverage with respect to liabilities that result from any cyberattacks or other security breaches or disruptions suffered by us or third parties upon which we rely. The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.

While we take precautions to prevent consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect the performance of our products and services or subject us to scrutiny or penalties.

Risks Pertaining to Partner Companies in General

Based on our business model, some or all of our partner companies likely will need to raise additional capital to fund their operations from time to time. We may not be able to fund some or all of these amounts, and the amounts may not be available from third parties on acceptable terms, or at all.

We cannot be certain that our partner companies will be able to obtain initial and additional financing on acceptable terms, or at all, when needed. Because our resources and our ability to raise capital are limited and we do not have funds in reserve for additional investment, we may not be able to provide our partner companies with sufficient capital resources at times when needed to enable them to reach a cash flow positive position. We also may fail to accurately project the capital needs of our partner companies for purposes of our cash flow planning. If our partner companies need to, but are not able to, raise capital from us or other outside sources, then they may need to cease or scale back operations. If our partner companies raise capital from outside sources, the terms of such financings may significantly reduce or eliminate the value of our investment in such partner companies. In all such events, our interest in any such partner company could lose some or all of its value.

If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. In addition, the loss of the services of the founders of our partner companies could adversely impact their business prospects and the value of our investment in the partner company.

Our ability to properly develop our partner companies and be successful in our business model depends in large part upon our ability to attract and retain at the partner company level and at the MDB level highly qualified managerial, scientific, and technical personnel. We will need to hire additional personnel as we further develop and grow our partner companies. Competition for skilled personnel usually is intense. We may not be able to hire and retain highly qualified personnel on acceptable terms. If we are unable to attract and retain high-quality personnel, especially for our partner companies, the rate and success at which they can develop and commercialize products or succeed at all could be limited.

Some intellectual property of our partner companies will be funded through government programs, thus subject to federal regulation such as “march-in” rights, certain reporting requirements and a preference for U.S. industry. Compliance with these regulations may limit exclusive rights, subject the companies to expenditure of resources with respect to reporting requirements, and limit the ability to contract with foreign manufacturers.

When research is funded in part by the U.S. government, the resulting intellectual property is subject to certain federal regulations pursuant to the Bayh-Dole Act of 1980, or the Bayh-Dole Act. In particular, the federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit to inventions produced with its financial assistance. The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent or other intellectual property to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the intellectual property owner refuses to do so, the government may grant the license itself. Intellectual property discovered under government-funded programs is also subject to certain reporting requirements, compliance with which may require our partner companies or licensors to expend substantial resources. Such intellectual property is also subject to a preference for U.S. industry, which may limit the ability to contract with foreign product manufacturers for products covered by the intellectual property. Moreover, collaboration with academic institutions to accelerate research or development may be limited or create the march in right. Further, the partner companies may choose to license intellectual property in the future that may be subject to government rights pursuant to the Bayh-Dole Act. If, in the future, a partner company co-owns or licenses in technology that is critical to its business that is developed in whole or in part with federal funds subject to the Bayh-Dole Act, its ability to enforce or otherwise exploit patents covering the technology may be adversely affected.

Some of our partner companies may be unable to protect their proprietary rights and may infringe on the proprietary rights of others.

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

Some of our partner companies also license intellectual property from third parties, and it is possible that they could become subject to infringement actions based upon their use of the intellectual property licensed from those third parties. Our partner companies generally obtain representations as to the origin and ownership of such licensed intellectual property; however, this may not adequately protect them. Any claims against our partner companies’ proprietary rights, with or without merit, could subject our partner companies to costly litigation and the diversion of their technical and management personnel from other business concerns. If our partner companies incur costly litigation and their personnel are not effectively deployed, the expenses and losses incurred by our partner companies will increase and their profits, if any, will decrease.

Where our partner companies enter into intellectual property license agreements, if they fail to adhere to their obligations thereunder, they may lose the ability to continue the license. Such a loss may be materially adverse to the business and future of a partner company.

Third parties have and may assert infringement or other intellectual property claims against our partner companies based on their patents or other intellectual property claims. Even though we believe our partner companies’ products do not infringe any third-party’s patents, they may have to pay substantial legal fees to defend against such claims as well as damages, possibly including treble damages, if it is ultimately determined that such claims have merit. They may have to obtain a license to sell their products if it is determined that their products infringe another person’s intellectual property. Our partner companies might be prohibited from selling their products before they obtain a license, which, if available at all, may require them to pay substantial royalties. Even if infringement claims against our partner companies are without merit, defending these types of lawsuits takes significant time, may be expensive and may divert management attention from other business concerns.

Our partner companies have limited foreign intellectual property rights and may not be able to protect their intellectual property rights throughout the world.

Currently, our partner companies have limited intellectual property rights outside the United States. Filing, prosecuting and defending patents in all countries throughout the world would be prohibitively expensive, and intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as do federal and state laws in the United States. Consequently, our partner companies may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If our partner companies or any of their licensors are forced to grant a license to third parties with respect to any patents relevant to their business, their competitive position may be impaired, and their business, financial condition, results of operations and prospects may be adversely affected. Also, competitors may use the technologies in jurisdictions where our partner companies have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where there is patent protection but where enforcement is not as strong as that in the United States. These products may compete with the products of our partner companies in jurisdictions where they do not have any issued patents and patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biopharmaceutical products, which could make it difficult for our partner companies to stop the infringement of patents or marketing of competing products by third parties in violation of proprietary rights generally. Proceedings to enforce patent and other intellectual property rights in foreign jurisdictions could result in substantial costs and divert management efforts and attention from other aspects of business operations, could put the patents at risk of being invalidated or interpreted narrowly and patent applications at risk of not issuing and could provoke third parties to assert claims against our partner companies. The intellectual property holder may not prevail in any lawsuits that are initiated and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, efforts by our partner companies to enforce their intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that they develop or license.

Our partner companies may incur substantial costs as a result of litigation or other proceedings relating to intellectual property, including patents, and they may be unable to protect their rights to their products and technology.

If our partner companies or their licensors choose to go to court to stop a third party from using the inventions claimed in their owned or in-licensed patents, that third party may ask the court to rule that the patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and would consume time and other resources even if our partner companies were successful in stopping the infringement of these patents. In addition, there is a risk that the court will decide that these patents are not valid and that our partner companies do not have the right to stop others from using the inventions. There is also the risk that, even if the validity of these patents is upheld, the court will refuse to stop the third party on the ground that such third party’s activities do not infringe our owned or in-licensed patents.

Patent terms may be inadequate to protect a competitive position for an adequate amount of time.

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

Our efforts to maintain and protect our intellectual property rights through means in addition to registration may not be sufficient to protect our business.

The patents that our partner companies and we have are important assets. Our partner companies and we also rely on our unpatented proprietary technology, trade secrets, processes and know-how. Generally, protection of intellectual property rights will be through filed patents, registered trademarks and registered copyrights. Other proprietary information will be protected through a combination of trade secret laws and confidentiality, non-disclosure and assignment of invention agreements with employees, contractors, collaborators, vendors, consultants, advisors and third parties. Despite these measures, intellectual property rights could be challenged, invalidated, circumvented or misappropriated. To pursue enforcement of these kinds of agreements could involve significant expense, potentially hinder or limit use of intellectual property rights, or potentially result in the inability to use the intellectual property rights in question. If an alternative cost-effective solution were not available, there may be an adverse effect on our financial position and performance.

Enforcing intellectual property rights against one or more third parties can be expensive and time-consuming, and an adverse result in any proceeding could put the intellectual property rights at risk of being invalidated or narrowed in scope of coverage. Patent and trademark challenges would increase the cost of development, engineering and marketing our products. There may not be adequate resources available to enforce any of the intellectual property rights. In addition, the ability to enforce intellectual property rights depends on the ability to detect infringement, and the ability to obtain evidence of infringement. Where enforcement is sought, a claim may not prevail or the damages, if any, may not be commercially meaningful.

If trademarks and trade names are not adequately protected, then our partner companies may not be able to build name recognition in the markets of interest and their business may be adversely affected.

A trademark or trade name may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. Our partner companies may not be able to protect their rights to their trademarks and trade names or may be forced to stop using their names. At times, competitors may adopt trade names or trademarks similar to those of our partner companies, thereby impeding their ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trade names or trademarks that incorporate variations of our unregistered trade names or trademarks. If the partner companies are unable to establish name recognition based on our trademarks and trade names, they may not be able to compete effectively and our business may be adversely affected.

Collaborations of various sorts, by our partner companies, such as with respect to research, testing, clinical trials, manufacturing and distribution, will be important to their respective businesses. Their inability to enter into collaboration arrangements as needed, or if such collaborations are not successful, may adversely impact their respective businesses.

Our partner companies will likely seek to collaborate with third parties to engage in product research, clinical trials, marketing, manufacturing, and distribution as part of its strategy. If our partner companies fail to enter into or maintain collaboration arrangements, as needed and on reasonable terms, their ability to develop their business could be delayed, or the costs of development and commercialization increased beyond what would be reasonable and ultimately hindered to the point of business cessation. Furthermore, our partner companies may need to obtain the use of intellectual property rights held by third parties in order to develop their products. As a result, the growth of a particular business or product may depend in part on the ability to acquire or in-license these intellectual property rights.

Future collaboration arrangements between partner companies and third parties may pose a number of risks, including, but not limited to, the following:

(i) collaborators have significant discretion in determining the efforts and resources that they will apply;

(ii) collaborators may not perform their obligations as expected;

(iii) collaborators may elect not to continue or renew development or commercialization programs or license arrangements;

(iv) collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with products of our partner companies or products the collaborators have may be viewed as competitive with product of our partner companies causing them to cease to devote resources to the commercialization of our partner company products;

(v) collaborators may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product;

(vi) collaborators may not commit sufficient resources to the marketing and distribution of our partner company product or products;

(vii) disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of products, might lead to additional responsibilities for our partner companies, or might result in litigation or arbitration, any of which would be time- consuming and expensive;

(viii) collaborations may be terminated by the collaborator, and, if terminated, our partner companies may require more capital to pursue further development or commercialization of the applicable product; and

(ix) collaborations may not be negotiated on a timely basis or acceptable terms, if at all, or they may require substantial additional capital so as to be able to pursue and fund a collaboration.

If collaborations do not result in the successful discovery, development and commercialization of product candidates or if one of the collaborators terminates its agreement, our partner companies may not receive any future research funding or milestone or royalty payments under such collaboration. If a collaborator terminates its agreement, the partner company may find it more difficult to attract new collaborators, and the perception of the product or the business and financial condition of our partner company could be adversely affected.

Risks Related to Invizyne

Invizyne has a limited operating history on which to evaluate its future operating success and profitability.

Invizyne was founded in 2019, has a limited operating history, and only incurred losses to date. Therefore, there can be no assurance that the efforts of Invizyne will produce a commercial product, market acceptance or profits that will sustain its business. With a limited operating history and no commercialized products at this time, it will be difficult for investors to make predictions about its future success or viability and any predictions may not be as accurate as they could be if it had a longer operating history or a company history of successfully developing, commercializing and generating revenue from products for a mass market.

Invizyne may not be successful in its efforts to use its proprietary synthetic biological platform to build a pipeline of products.

A key element of Invizyne’s strategy is to use its experienced management, engineering and scientific teams to build a pipeline of products using its synthetic biological platform and further develop those pipeline products into commercially viable products faster and cheaper than possible using traditional materials and methods. Although its R&D efforts to date have resulted in what it believes to be potential pipeline products, it may not be successful in further developing such products to commercial viability or be able to continue to identify and develop these and other pipeline products. Even if it is successful in continuing to build its product pipeline, not all potential pipeline products it identifies will be suitable for development and use in commercial products. If Invizyne is unsuccessful in these efforts, our invested capital in the company will be lost, our investors may suffer a loss in relation to their investment in the Company, and Invizyne may have to curtail or cease its business.

The market, including clients and potential investors, may be skeptical of the viability and benefits of Invizyne’s pipeline products because they are relatively novel and are based on complex technology.

The viability and benefits of Invizyne’s pipeline products may be difficult to assess because they are based on a relatively novel and complex technology. There can be no assurance that its products will be understood, approved, or accepted by clients, regulators and potential investors or that it will be able to sell its products profitably at competitive prices and with features sufficient to establish demand. If it is unable to convince potential clients of the utility and value of its products, it will not be successful in entering the markets that it has identified and its business and results of operations will be adversely affected. If potential investors are skeptical of the success of its pipeline products, its ability to raise capital other than from the Company may also be adversely affected.

The synthetic biology market is a rapidly growing and changing market, and if Invizyne is unable to keep up to date with developments, its business may be adversely affected.

Invizyne has experienced a rapidly growing and changing business space within the synthetic biology market. The intellectual property aspects of this market are evolving, and patents filed several years ago by potential competitors are currently being granted, which may force Invizyne to license technologies it needs for its processes or to develop a workaround to the valid claims of others. Invizyne may not be able to obtain any necessary licenses or develop processes that do not infringe on others; in which case its business will be impaired and it will be prevented from executing its business plan. The cell-free synthetic biology market in which Invizyne seeks to compete, is relatively new, and therefore the extent to which it may encounter intellectual property of others that limits or restricts its processes is unpredictable

Invizyne may face unique regulatory hurdles because its bio-synthesized compounds are novel.

Because bio-synthesized compounds are novel, regulators and the public, may perceive them differently from naturally occurring molecules, notwithstanding the fact that molecules are the same whether synthetically created or naturally occurring. Therefore, Invizyne may have to provide additional validation related to the science of its compounds in order to obtain regulatory and market approval to gain product adoption. Providing additional validation will cause delays, which will result in additional funding requirements than have been anticipated. It may never achieve the required approvals in which case its business model will be impaired. Invizyne may not be able to achieve commercial success.

Because its compounds are novel, Invizyne will have to perform tests for safety, use, and claim validation.

We anticipate, because its compounds are unique, that Invizyne will face all the hurdles of a new technology in the marketplace. Depending on the use of the compounds, Invizyne may have to comply with the extensive array of medically related regulation. In addition, it anticipates having to conduct many forms of tests to convince regulators, commercialization partners and potential users of the safety, uses, and claim validation to be able to commercialize and gain market acceptance for its compounds. If it is unable to successfully justify the efficacy, safety and potential of its compounds, or do so in a timely manner, it will not be able to successful develop its business and may have to curtail or cease its business. Investors may lose up to the entire value of their investment in the Company as a result.

Invizyne is highly dependent on its ability to retain its current scientific and other staff to hire additional employees with specialized backgrounds as needed.

In this early stage of its development, Invizyne is highly dependent on retaining and motivating its current scientific and other staff. We believe that its future success depends on retaining such persons with key knowledge about its platform, potential products and business objectives. Success also depends on being able to expand its employee base as required. We believe there are relatively few persons with specific knowledge of cell-free synthetic biology. Persons with the talents that Invizyne seeks to hire tend to be in high demand and it may not be able to hire such persons as and when needed. The inability to hire and retain necessary employees may have an adverse impact on its business implementation.

The ability to scale up commercial manufacturing may not be possible.

Although we believe Invizyne is having success in creating molecules in its laboratories, there can be no assurance that its compounds can be produced cost-efficiently on a commercial basis or at all. It has no experience in large-scale production, and anticipates having to either develop the scale production expertise or instead to rely on others to undertake commercial manufacturing on its behalf. Because its compounds are novel and complex, there may be no third parties available to manufacture Invizyne’s compounds. Large-scale manufacturing will need a supply of proteins to run its reactions. We believe that there are not many suppliers of the critical components for the development and manufacturing of its compounds. There is no assurance that these components will be available, or if available, will produce the reactions that Invizyne requires. There may be delays in locating suitable suppliers and manufacturer partners, which could delay, limits or make actual production unfeasible.

Risks Related to PatentVest

If we do not identify the full range of patent opportunities relevant to our clients’ intellectual property portfolio, our reputation will be harmed and we may be liable for service failure.

One of the primary services that PatentVest provides its clients is an analysis of their intellectual property portfolio and how the portfolio may be protected and expanded through additional patent and other IP protection opportunities. We believe that our ability to attract and retain clients depends on our ability to identify actual and potential patent assets for our clients. Although there is no guarantee that we will be able to identify all potential patent opportunities, if we miss a patent opportunity or fail to provide the services contracted by our clients in a workmanlike manner, then our reputation will be harmed and we may be liable for damages due to providing our services negligently.

If clients do not agree that the patents opportunities identified in our reports are relevant to their businesses, we will have difficulty retaining and attracting new clients, which could harm our operating results.

Our clients use our services to help them analyze their existing and potential intellectual property. If the clients perceive that our analysis and the opportunities are not relevant to their business requirements, then they will not find value in our reports and services. This may harm our reputation and make it difficult to retain a client and attract new clients, with an adverse consequence to our operating results.

We are dependent on relationships with third parties, including public sources, to provide us with data, information and other services; if any of these relationships change, we could be adversely affected.

Our reports and services are developed using data, information or services obtained from third-party providers and public sources. Our commercial relationships with third-party providers whose capabilities complement our own, may also be our competitors which might make us vulnerable to unpredictable price increases and unfavorable licensing terms. If public sources of data that we rely on were to begin competing with us directly, or if they were to increase the cost that we pay to access their data, otherwise prohibit us from collecting and synthesizing the data they provide, or cease existing altogether, we may not be able to perform our services and our operating results could be adversely impacted.

We might not be able to scale our business as fast as we believe we can or be able to maintain the quality of our services and reports.

We have not proven our ability to commercialize our services on a large scale. In order to do this successfully, we may have to make additional investments that could delay or limit our ability to develop and commercialize our reports. Our reports may be found to be ineffective, unreliable or otherwise unsatisfactory to potential clients as we may experience unforeseen complications in the processes of scaling. These complications could delay or limit our ability to provide our services or reports, could increase the cost of our products, prevent us from implementing processes at our current appropriate quality and scale levels, and thereby cause our business to suffer. Moreover, we may need to grow our sales, marketing and support staff or make appropriate arrangements with strategic partners to market, sell and support its products. We may not be able to compete effectively with others while scaling commercially on a timely basis, in sufficient quantities or on commercially reasonable terms.

We believe patent analysis is a highly competitive business, and if we fail to develop widespread brand awareness in a cost-effective manner, our business may suffer.

The services and reports we offer compete with many other providers of similar services, such as other companies performing intellectual property analytics, law firms, and patent filing firms. The services we provide are subject to technological changes and evolving client demands. We believe that in order to achieve market acceptance and to maintain and grow our client base, it is critical to develop and maintain the quality of our services and reports and to increase the awareness of our brand. If we fail to provide what the client requires, and we fail to promote and maintain our brand successfully, we may fail to attract or retain clients to the extent necessary to realize a sufficient return on our brand-building efforts and to sustain our business.

PatentVest is licensed to offer legal services under Arizona law and it plans to offer legal services as part of its package of intellectual property service offerings. As a result, PatentVest must comply with the ethical and legal provisions, licensing responsibilities and obligations of a law firm under the laws of the State of Arizona.

PatentVest has obtained a license from the State of Arizona to provide legal service, and it is expected to provide such services in order to enhance the overall package of the PatentVest intellectual property related offerings. Being licensed to provide legal services will likely impact the non-legal aspects of PatentVest’s business as it must comply with the regulatory responsibilities and ethical obligations of operating a law firm as dictated by Arizona law and ethical standards. In respect of those services provided to clients that constitute providing legal advice, PatentVest will have to abide by the many obligations that must be observed by attorneys, including (i) complying with confidentiality obligations towards its legal clients, (ii) discharging attorney-client privilege obligations, (iii) adhering to legal compliance, ethical and regulatory standards of Arizona, (iv) avoiding conflicts of interest, (v) handling of client funds, if any, and (vi) acting in the best interests of the client. There may be instances when the legal rights of a client of the PatentVest law group must take precedence over a business interest of PatentVest and may limit our ability to provide advice or business services to others with respect to intellectual property matters, scope of claims and pursuit of patent claims or require PatentVest to cease providing intellectual property advice and strategy to a particular client altogether. The failure to operate the legal business in compliance with the responsibilities and ethical requirements placed by Arizona on law firms will subject the PatentVest law practice to sanctions by regulators and the bar association and may result in malpractice liability for PatentVest. Additionally, the legal regulatory authorities of Arizona may require PatentVest to cease operation of this aspect of our business altogether.

Risks related to Public Ventures

Public Ventures plans on conducting offerings where we will act as a placement agent or an underwriter, and thus we will be subject to underwriter and similar liability.

As part of our business, as it has been conducted over the last 25 or so years, through Public Ventures, we expect to act as an underwriter in a number of capacities. We may be a single underwriter of a securities offering or a co-underwriter participating in a securities offering. There are other types of offering where we may be characterized as an underwriter. In each of these instances, we will bear a liability dictated by Section 11(a) of the Securities Act of 1933, as amended (“Securities Act”). Under the Securities Act, an underwriter is liable at law or in equity if any part of the registration statement used in the offering of securities, in which we participate as an underwriter, “contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading….” What constitutes an offering document with respect to underwriter liability applies to any manner of offering materials. This liability also extends to private offerings of securities and their documentation, where we may act as a placement agent. In determining materiality, a court will not inquire into limitations on the underwriter’s or placement agent’s ability to conduct its due diligence investigation and assessment of the offeror, but will instead assess whether the statements, taken together and in context, would have misled a reasonable investor about the nature of the investment. Section 11(b) of the Securities Act provides two affirmative defenses to Section 11(a) liability: the expert defense and the non-expert defense, which are collectively known as the due diligence defense. Although we conduct due diligence for all our transactions, there is no assurance that the level of due diligence will uncover any failings in the materials used by investors, or that it will uncover deliberate misstatements. Therefore, for any offering of securities, we may become liable as an underwriter or selling agent. Such a liability will have a significant impact on our business in terms of monetary cost and also on our reputation.

Public Ventures is in the process of developing self- clearing capabilities which will be necessary to operate our business.

Public Ventures is in the process of developing capabilities for self-clearing Untied States equity securities. This process requires members to demonstrate their financial, operational and systems capacities to perform this business and be capable of complying with the regulations that apply to Public Ventures. We have recently obtained regulatory approval from certain pertinent regulatory entities and are in the process of obtaining the required memberships and making the contractual arrangements necessary to operate in this business.

As a broker-dealer, Public Ventures will have to expend considerable resources on maintaining adequate compliance practices. The failure to be in regulatory compliance will result in fines, sanctions and the possible curtailment of operations.

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

In addition to the direct employees of Public Ventures, other persons in our overall corporate structure may be considered subject to FINRA review and subject to the supervision of the broker-dealer. If persons who are employed by parts of our company engage in securities transaction, but are not employed by the broker-dealer and/or are not licensed persons with FINRA, Public Ventures may be in violation of its FINRA license and subject to fines, limitations on the ability to conduct business. Therefore, we will need to create a structure that ensures we strictly adhere to FINRA rules so as to avoid any such fines, limitations on the ability to conduct business or actual business closure. The loss or curtailment of the business of Public Ventures would result in a significant loss of business opportunity and revenues to the Company, and would result in a significant impairment to our reputation.

We may be exposed to more cybersecurity threats as we expand our business.

With the expansion in the business to include clearing services, the Company will handle increased amounts of sensitive financial and other information about investors and company clients’ holdings and transactions that can be targeted by cybercriminals. We will need to have in place an adequate internal security infrastructure to protect clients’ information and assets and minimize potential liabilities for the business. In addition, as cybersecurity threats become more and more sophisticated, we will have to continually expend funds to upgrade and expand our security measures, maintain insurance and overall be vigilant to protect our operations and clients.

The clearing operations of Public Ventures will require contractual arrangements with several key industry entities, which, if not followed, will require us to terminate our business.

To establish and operate our clearing business Public Ventures must enter into contractual arrangements with the Depository Trust Company, National Securities Clearing Corporation and a settlement bank. These are complex sets of arrangements that must be strictly adhered to otherwise Public Ventures will not be able to use their services. Without these services, Public Ventures will not be able to clear trades for clients. Not only does Public Ventures need these agreements, but as a result of them, will need to implement systems and interaction platforms with them and other parties in the settlement process. New information technology to be implemented will include a core clearing system, an order management system, and corporate communications system, amongst others. These many activities will happen in parallel and require significant effort to successfully implement them and maintain them thereafter. Failure to complete any of the individual tasks will prevent Public Ventures from launching and conducting its self-clearing business. Part of the implementation risk the firm will face includes the vendor’s capacity to fulfill the service levels promised to Public Ventures. Public Ventures has chosen novel providers with excellent technology but lesser track records. Assuring these suppliers will deliver their promised services is necessary for the successful implementation of the technological platform the business requires to operate. The failure in any of the many aspects described above will delay or prevent our operations from being implemented and performed or possibly require us to terminate our business.

Public Ventures will have to maintain adequate capitalization levels to conduct its broker-dealer and clearing businesses.

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

Settlement bank services are difficult to arrange, without which Public Ventures will not be able to pursue a clearing business.

There are only a limited number of banks currently offering settlement services to clearing firms. Public Ventures could be unable to continue providing clearing services if it is unable to enter into and then maintain a settlement bank arrangement, or if the selected settlement bank decides to exit this business.

Hiring and organizing personnel for the clearing operations.

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

Where permitted by regulation, we will use an overseas office for some of our self-clearing operation activities although political and social instability and the threat of sanctions by other countries including the United States may disrupt or hinder the delivery of such services and result in increased costs and lower profitability.

We have developed an overseas back-office in Nicaragua that has supported investment banking activities over the years. We plan to expand and use this facility, where permitted, for certain aspects of the self-clearing operations. We believe that these operations will provide a competitive advantage to the firm and be a key aspect of developing this new business profitably as human resources and technological infrastructure in this location can provide quality service at the level expected by US clients at a fraction of the cost. Any disruption to social and political stability in Nicaragua could affect the firm’s capacity to achieve its goals. The current political environment in Nicaragua is unsettled due to a political crisis that erupted in 2018, which has yet to be resolved. Continued or escalated political instability and the possibility of sanctions from other countries, including the United States, could disrupt local business and may hinder or disrupt the delivery of services to our United States operations. The United States has several Executive Orders in force which impose sanctions regarding immigration of certain groups of persons and imposing wider sanctions in respect of certain trading activities. Worsening economic conditions could increase immigration and precipitate a brain-drain effect thereby affecting our ability to staff this office. We are constantly monitor the situation and have a business continuity strategy in place to assure the consistent operations and activities in the United States. To the extent we are prohibited from using our Nicaraguan employees and contacting with persons and entities in Nicaragua, our expenses may increase, and there may be disruption in our workforce that will have to be replaced.

Risks Related to this Being a Public Company and Owning Our Class A Common Shares

Control by management may limit your ability to influence the outcome of director elections and other transactions requiring shareholder approval.

Two persons, Anthony DiGiandomenico and Christopher Marlett, own all the class B common shares. The class A common shares have one vote per share, and the class B common shares have five votes per share. The class A common shares and class B common shares vote together as a single class on all matters, including the election of directors. There are 5,000,000 class B common shares issued and outstanding, currently representing 65.5% of the aggregate voting authority of our equity. Therefore, the class B common shares will be able to dictate the outcome of all matters put before the shareholders. There is no automatic or voluntary conversion of the class B common shares into class A common shares, thus the class B common shares will have control of MDB for an indefinite period of time.

Based on the foregoing, the class B common shares will have significant influence over corporate actions requiring shareholder approval, including the following actions:

The existence of the class B common shares may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of MDB, which in turn could reduce our stock price or prevent our class A common shareholders from realizing a premium over our stock price.

Future transfers by holders of class B common shares generally will result in those shares converting to class A common shares, subject to limited exceptions, such as certain transfers effected for estate planning purposes. The conversion of class B common shares to class A common shares will have the effect, over time, of increasing the relative voting power of those holders of class B common shares who retain their shares in the long term. As a result, it is possible that the persons or entities continuing to hold our class B common shares could gain significant voting control as other holders of class B common shares sell or otherwise convert their shares into class A common shares.

If, and when, the class A common shares are listed on Nasdaq, we will be deemed a “controlled company” under the listing rules because our class B common shares are held by two persons who have more than 50% control. As a controlled company, MDB will be exempt from certain of the corporate governance obligations that other companies must follow when listing on Nasdaq.

The class B common shares are held by two persons who have control over the operations of the Company. Therefore, MDB is a controlled company under the Nasdaq listing rules and will be exempt from certain listing requirements, including having (i) a board comprised of a majority of independent directors, (ii) a compensation committee, and (iii) a director nominations committee. Additionally, we will not be required to hold annual meetings. Management intends to take advantage of these exemptions. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. Notwithstanding the exemption, currently we have a board that has several independent directors, we are required to have and will have an audit committee, and related party transactions will have to be reviewed by the audit committee. Shareholder approval will be required for stock options or purchase plans, and the financial statements must be audited by an independent public accountant that is registered with the PCAOB.

The dual class structure of our currently issued equity securities may adversely affect the trading market for our class A common shares.

Certain stock index providers, such as S&P Dow Jones, exclude companies with multiple classes of shares of equity from being added to certain stock indices, including the S&P 500. In addition, several stockholder advisory firms and large institutional investors oppose the use of multiple class structures. As a result, the dual class structure of our currently issued equity may prevent the inclusion of our class A common shares in such indices, may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure, and may result in large institutional investors not purchasing shares of our class A common shares. Any exclusion from stock indices could result in a less active trading market for our class A common shares. Any actions or publications by stockholder advisory firms or institutional investors critical of our corporate governance practices or capital structure could also adversely affect the value of our class A common shares.

The existence of our registered broker-dealer subsidiary may delay or prevent takeover attempts of our Company.

A third party attempting to acquire us or a substantial position in our equity securities may be delayed or ultimately prevented from doing so by change in ownership or control regulations to which our regulated broker-dealer subsidiary is subject. FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with any transaction resulting in a single person or entity owning, directly or indirectly, 25% or more of a member firm’s equity and would include a change of control of a parent company.

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

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

We will incur increased costs as a result of operating as a public company, and our board of directors will be required to devote substantial time to oversight of new compliance requirements and corporate governance practices.

As a public company listed in the U.S., we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations impose various requirements on listed public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our board of directors, management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified members of our board of directors.

However, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we will be required to furnish a report by our board of directors on our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal controls over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe, that our internal controls over financial reporting are effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements. We cannot predict if investors will find our class A common shares less attractive because we may rely on these exemptions. If some investors find our class A common shares less attractive as a result, there may be a less active trading market for our class A common shares, and our share price may be lower or more volatile.

We are a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:

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

In addition to our “controlled” company status, we are also a “smaller reporting company” Therefore we may at some time in the future choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders.

Under Nasdaq rules, a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act, is not subject to certain corporate governance requirements otherwise applicable to companies listed on Nasdaq. If, in the future, we are no longer a “controlled company” and we elect to utilize any of the “smaller reporting company” exemptions, our company may be subject to greater risks of poor corporate governance, poorer management decision-making processes, and reduced results of operations from problems in our corporate organization. Consequently, if we were to avail ourselves of these exemptions, our stock price might suffer, and there is no assurance that we would be able to continue to meet all continuing listing requirements of Nasdaq from which we would not be exempt, including minimum stock price requirements.

We currently have limited accounting personnel with the background in public company accounting and reporting. We will have to add personnel and devote personnel and financial resources to meet our reporting obligations as a public, listed company.

We have been a private company with limited operating scale and with the appropriate accounting personnel to adequately execute our accounting processes and other supervisory resources with which to address our internal control over financial reporting. We are progressing those activities necessary to implement appropriate accounting policies, processes and controls to comply with the required expansion in scale of operations and with Section 404. These activities include identifying and recruiting additional individuals with requisite expertise to assist in implementation activities designed to strengthen our internal control over financial reporting to avoid control deficiencies and initiating the design and implementation of improvements to our financial control environment to address our future needs. However, we cannot assure you that the measures we have taken to date, and actions we plan to take in the future, will be sufficient to prevent or avoid potential future material weaknesses in our controls.

Material weaknesses in internal control over financial reporting have been identified by management for the years ended December 31, 2021 and 2020 for MDB and their partner companies, and there can be no assurances that we will be able to remedy these material weaknesses.

Management of MDB, including Invizyne and Public Ventures, with the participation of our principal executive, financial and accounting officer, has identified material weaknesses in the MDB internal control over financial reporting related to the ability to record transactions in the accounting records and preparation of financial statements that are in compliance with accounting principles generally accepted in the United States of America (“US GAAP”). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statement will not be prevented or detected on a timely basis. Management arrived at such conclusion after numerous adjustments were recorded and missing and incorrect financial statement disclosures were adjusted for after the close of the Company’s books of record and preparation of the financial statements for the purposes of the audited financial statements for the years ended December 31, 2021 and 2020, respectively. Furthermore, there was a segregation of duties with the CFO prepares/reviews reconciliation, and could add a vendor in the system and also approves disbursements. In addition, there are control deficiencies including in connection with review and approval of expenses, documentation of changes to accounting systems and testing those changes, and monitoring and verification of access of accounting systems Although management has put remediation measures into place in response to the identified weaknesses and continue to strengthen and oversee our financial close and reporting processes, we cannot assure you that a full remediation is complete at this time, which could impair our ability to accurately and timely meet our public company reporting requirements.

Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” which will be for up to five years after this offering.

Although our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404, we will need to provide effective internal controls over financial reporting, safeguarding of assets, as well as other internal controls. If we are unsuccessful in building an appropriate accounting infrastructure, we may not be able to prepare and disclose, in a timely manner, our financial statements and other required disclosures, or comply with existing or new reporting requirements. Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from Nasdaq or other adverse consequences that would materially harm our business. If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could lose confidence in our reported financial information. Any of the foregoing occurrences, should they come to pass, could negatively impact the public perception of our company, which could have a negative impact on the trading price of our class A common shares.

We do not have key-man insurance.

We do not now have or plan on having key-man insurance on our principal officers. We are dependent on the services of these persons. If we lose their services, and do not have sufficient funds that are typically provided by insurance to hire replacements, our business will be harmed by the lack of leadership talent.

The price of our class A common shares may be volatile, and could, upon listing on the Nasdaq Capital Market, decline significantly and rapidly. Market volatility may affect the value of an investment in our class A common shares and could subject us to litigation.

The trading price of our class A common shares may fluctuate substantially. The price of our class A common shares in the market on any particular day will depend on many factors including, but not limited to, the following:

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Due to the potential volatility of our stock price, we may therefore be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

In addition, if the market for equity stocks of companies in our industry or industry segments, or the stock market in general, experiences a loss of investor confidence, the market price of our class A common shares could decline for reasons unrelated to our business, financial condition, or results of operations. If any of the foregoing occurs, it could cause the price of our class A common shares to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to our Board of Directors and management.

The offering price of the primary offering and resale offering could differ.

The offering price of our class A common shares in the primary offering (the initial public offering) has been determined by negotiations between us and the selling agent based upon several factors, including prevailing market conditions, our historical performance, estimates of our business potential and earnings prospects, and the market valuations of similar companies. The offering price in the primary offering bears no relationship to our assets, earnings or book value, or any other objective standard of value. The estimated offering price in this offering is higher than the $10.00 price at which the selling shareholders acquired their class A common shares. The selling shareholders may sell their shares at prevailing market prices or privately negotiated prices after the close of the primary offering and listing of our class A common shares on the Nasdaq Capital Market. Therefore, the offering prices of our class A common shares in the primary offering and the selling shareholder resale offering could differ. As a result, purchasers in the resale offering could pay more or less than the offering price in the primary offering.

The resale by the selling shareholders may cause the market price of our class A common shares to decline.

The resale of class A common shares by the selling shareholders could increase the share selling volume and sell their shares at a price less than the offering price of this offering, both with the effect of depressing the market price for our class A common shares.

The absence of security analytical reports or the existence of negative security analytical reports may have an adverse effect on the public market price and volume of our class A common shares.

Any trading market for our class A common shares may be influenced by whether or not any analytical research reports are publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our class A common shares could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our class A common shares could be negatively affected.

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

The stock market has recently experienced significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, with the financial service and technology sectors more volatile than others. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as inflation, the prospect of a recession, and interest rate changes may negatively impact the market price of our class A common shares. These fluctuations may be even more pronounced in the trading market for our class A common shares shortly following the listing of our class A common shares on the Nasdaq Capital Market as a result of the supply and demand forces described above. If the market price of our class A common shares after our listing does not exceed the opening public price, you may not realize any return on your investment in us and may lose some or all of your investment. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could harm our business.

The price of our class A common shares may have little or no relationship to the historical sales price of our capital stock in our first and only private transaction to date.

Prior to the registration and listing of our class A common shares on the Nasdaq Capital Market there has been no public market for our capital stock. We have conducted only one private placement, therefore we do not have any history of sales by which to judge the value of our class A common shares in a public market or to gage demand for the class A common shares in a public market.

None of the shareholders of the class A common shares are party to any contractual lock-up agreement or other contractual restrictions on transfer. Their shares are being registered for resale at the same time as the Offering to which this prospectus relates.

Following our listing and commencement of trading on the Nasdaq market, the sales or distribution of substantial amounts of our class A common shares, or the perception that such sales or distributions might occur, could cause the market price of our class A common shares to decline. In addition to the supply and demand and volatility factors discussed above, the sale or distribution of a substantial number of shares of our class A common shares, particularly sales by us or our directors, executive officers, and principal shareholders, or the perception that these sales or distributions might occur in large quantities, could cause the market price of our class A common shares to decline.

USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of our class A common shares in this offering will be approximately $8.7 million, based on the public offering price of $12.00 per class A common share, after deducting underwriting commissions and the estimated offering expenses payable by us.

We intend to use the net proceeds for working capital and other general corporate business purposes. The expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve and change. As a result, our management will have broad discretion over how these proceeds are used. Proceeds held by us will be invested in short-term investments until needed for the uses described above.

DIVIDEND POLICY

Since our inception as a holding company, except for distributions made in connection with the re-organization of Public Ventures to become a part of the holding company, we have not paid any dividends or made distributions related to our equity securities.

We plan to make distributions of the securities of our partner companies and cash to our holders of the class A common shares and class B common shares as a fundamental aspect of our business plan. It is our plan to distribute the securities of our partner companies after they go public, including rights to purchase the equity of these companies, and cash and other property, from time to time.

Whether any distributions, the kinds of distributions, and the value of distributions are made will depend on many factors and will be determined by the management of MDB, from time to time. Investors should not look to any distribution that we might make to be a regular income item in an investor’s portfolio. Distributions of a right to purchase the equity of a partner company may come at a time when a recipient does not have the ability to exercise the right, and thereby the recipient may lose the opportunity that the right affords. Any distribution of securities of a partner company, cash and other property may have an adverse impact on the value of class A common shares in the market. Distributions of the equity of our partner companies may not result in an overall investor gain on the class A common shares.

CAPITALIZATION

The following table sets forth our cash and capitalization as of June 30, 2022 on:

The table above excludes the following shares:

DILUTION

If you invest in our class A common shares in this offering, your interest will be diluted to the extent of the difference between the public offering price per class A common share and the pro forma as adjusted net tangible book value per share of our class A and class B common shares immediately after the closing of this offering. Net tangible book value per share represents our total tangible assets less our total liabilities, divided by the number of outstanding class A and class B common shares. Our net tangible book value of our class A and class B common shares as of June 30, 2022, was $25.9 million, or $3.39 per class A and class B common share.

After giving effect to the receipt of the net proceeds from our sale of 833,333 class A common shares in this offering at the public offering price of $12.00 per class A common share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of June 30, 2022, would have been $34.6 million, or $4.08 per class A and class B common share. This represents an immediate increase in pro forma net tangible book value of $0.69 per class A and class B common share to our existing shareholders and an immediate dilution of $7.92 per class A common share to investors purchasing the class A common shares in this offering.

We calculate dilution per class A common share to new investors by subtracting the pro forma net tangible book value per class A common share from the public offering price paid by the new investor. The following table illustrates the dilution to new investors on a per share basis:

The following table summarizes, on the pro forma as adjusted basis described above as of June 30, 2022, the differences between the existing shareholders and the new investors in this offering with respect to the number of shares, including shares represented by shares purchased from us, the total consideration paid to us and the average price per share based on an assumed public offering price of $12.00 per share before deducting estimated underwriting commissions and estimated offering expenses payable by us.

The table above excludes the following shares:

To the extent that any outstanding options or warrants are exercised, new options, restricted share units or other securities are issued under our stock-based compensation plans, or new class B common shares or preferred shares are issued, or we issue additional class A common shares or warrants in the future, there will be further dilution to investors participating in this offering.

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

Overview

MDB Capital Holdings, LLC (“the Company” or “MDB”), a Delaware limited liability company, is a holding company that has three wholly-owned subsidiaries: MDB CG Management Company (“MDB Management”); Public Ventures, LLC (“Public Ventures”); and PatentVest, Inc. (“PatentVest”), and has a majority-owned partner company, Invizyne Technologies, Inc. (“Invizyne”).

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

Public Ventures is a U.S. registered broker-dealer under the Securities Exchange Act of 1934, and is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Texas State Securities Board. Public Ventures is managed by Christopher A. Marlett and Anthony DiGiandomenico, who are also the founders of MDB. Public Ventures operates on a fully disclosed basis with a nonrelated FINRA member firm, Interactive Brokers, LLC (“Interactive Brokers”), and is not required to maintain a clearing deposit. Interactive Brokers is the clearing firm and custodian of investments maintained by Public Ventures.

PatentVest is a wholly-owned subsidiary that performs intellectual property validation services for Public Ventures’, due diligence functions on the intellectual property of partner and prospective partner companies, and creates an intellectual property roadmap for such partner companies.

Invizyne was formed with the objective of taking nature’s building blocks to make molecules of interest, effectively simplifying nature. Invizyne is a biology technology development company that is a majority-owned subsidiary. Invizyne’s technology is a differentiated and unique synthetic biology platform which is designed to enable the scalable exploration of a large number of molecules and properties found in nature.

Prior to January 14, 2022, Public Ventures owned majority interests in PatentVest and Invizyne. On January 14, 2022, Public Ventures distributed 100% of its equity interests in PatentVest and Invizyne to its members in proportion to their respective interests. On January 15, 2022, Public Ventures filed with the Internal Revenue Service to be treated as a corporation for federal income tax purposes. On January 16, 2022, the members of Public Ventures contributed their entire interests in the equity of Public Ventures, Invizyne and PatentVest to MDB, as result of which MDB became the new parent holding company. There was no effective change in the beneficial ownership of Public Ventures as a result of this transaction. On the same day as part of the reorganization, MDB established a management company subsidiary called MDB CG Management Company, Inc. These reorganization steps are collectively referred to as the “reorganization. In connection with the reorganization, 5,000,000 Class B common shares were issued in exchange for the members’ equity. The Company plans to issue a public offering of Class A shares, no exact date has been established.

The reorganization was completed between entities that were under common control, and the assets contributed and liabilities assumed are recorded based on their historical carrying values. These financial statements retroactively reflect the financial statements of the Company and Public Ventures on a consolidated basis for the periods presented.

On June 8, 2022, MDB completed the first closing of a private placement, consisting of the sale of 2,517,966 shares of Class A common stock at $10.00 per share, for gross proceeds of $25,179,660. On June 15, 2022, the Company completed the second closing of the private placement, consisting of the sale of an additional 11,000 shares of Class A common stock, for gross proceeds of $110,000. Accordingly, the Company received total gross proceeds of $25,289,660 from the sale of 2,528,966 shares of Class A common stock, or $24,946,142 net of $343,518 of offering expenses, which will be used for development of the current partner companies, identifying and developing new partner companies, and general corporate and working capital requirements. In conjunction with the private placement, the Company issued warrants to the placement agent to purchase 18,477 shares of Class A common stock, exercisable upon issuance for a period of 10 years at $13.00 per share, for a cash consideration of $0.001/share. The placement agent’s warrants had a fair value of $106,640, as calculated pursuant to the Black-Scholes option-pricing model and were accounted for as

Results of Operations

The Company has determined its reporting units in accordance with ASC 280, Segment Reporting. The Company currently operates in two reportable segments: investment banking and technology development.

The Company’s consolidated statements of operations as discussed herein are presented below.

Consolidated Results of Operations for the six months ended June 30, 2022 and 2021

Operating Income (Loss). For the six months ended June 30, 2022 and 2021, respectively, the operating income (loss) were derived from the Company’s investment banking segment.

The decrease in operating loss was primarily driven by the sale or distribution of equity investment securities from the prior year. There was also a decrease in the realized gain on investments that was also driven by a decreased market value of securities sold or distributed to members, and by the increased cost of closing out positions of securities sold, not yet purchased. The decreases were offset by an increase gain on investment securities that were distributed to the members as part of the preparation of the upcoming January 2022 business combination. The decrease in other operating income was driven by the lower trading volume in 2022 due to market conditions.

General and Administrative Costs. The increase in compensation expense driven by salaries increase, offset by two people leaving the company. Operating expenses, related party decrease from the prior period was driven by the discontinuation of the related party office rent at 2425 Cedar Springs Road The increase in professional fees increase was driven by increased spending for legal, tax, and consulting fees related to the reorganization and private placement offering. Information technology costs increase from the prior period from increased infrastructure around the preparation to become self-clearing and development of the new website. Clearing and other charges decrease was driven by lower trading value in 2022 due to a decline in the market. Finally, general and administrative (other) decrease was driven by the termination of the business development contractor.

Research and Development Costs. For the six months ended June 30, 2022 and 2021, respectively, the research and development costs were derived from the Company’s technology segment.

The slight increase research and development costs were not due to reduced costs, but to an increase in grant funding that directly offsets research and development costs. The six months ended June 30, 2022 the total research and development costs were $1,198,076, with $1,005,930 reimbursed for net research and development costs of $192,146. For the six months ended June 30, 2021, the total research and development costs were $945,645, with $763,106 reimbursed net of research and development costs of $182,539. The increase in grant funds were from new grants that were awarded to the technology operating segment. The increase in research and development costs were driven by an increase in compensation due to the hiring of additional R&D staff, an increase in lab supplies expense, and an overall increase of grant sub-award expense issued to a third-party research partner.

Other Income. The decrease was due to the forgiveness of Paycheck Protection Program loan in the prior period.

Investment Banking Segment (Public Ventures and PatentVest) Results of Operations for the six months ended June 30, 2022 and 2021 (unaudited)

Operating Income (Loss). The decrease in the operating loss and increase in operating income primarily driven by the sale or distribution of equity investment securities from the prior year. There was also a decrease in the realized gain on investments that was also driven by a decreased market value of securities sold or distributed to members, and by the increased cost of closing out positions of securities sold, not yet purchased. The losses were offset by an increase gain on investment securities that were distributed to the members as part of the preparation of the upcoming January 2022 business combination. The decrease in other operating income was driven by the lower trading volume in 2022 due to market conditions.

General and Administrative Costs. The decrease in compensation expense driven by two people leaving the company. Operating expenses, related party decrease was driven by the discontinuation of the related party office rent at 2425 Cedar Springs Road. Professional fees increase was driven by increased spending for legal, tax, and consulting fees relating to the reorganization and private placement offering. Information technology costs increase was driven by the increased infrastructure around the preparation to become self-clearing and development of the new website. Clearing and other charges decrease was driven by lower trading value in 2022 due to a decline in the market and a dividend expense on a short position in the prior period. Finally, the decrease in other general and administrative expenses (other) for the year ended December 31, 2021 over the prior year was driven primarily by a decrease in commissions from a decline in market activity.

Other Income. For the six months ended June 30, 2022 and 2021, respectively, the investment banking segment had no other income.

Income Tax Expense. For the six months ended June 30, 2022 and 2021, respectively, the Company had no income tax expense.

Technology Segment (Invizyne) Results of Operations for the six months ended June 30, 2022 and 2021 (unaudited)

General and Administrative Costs. The increase in compensation expense driven by increase in health benefit costs. The professional fees increase was driven by increased spending for legal fees relating to the patent filing costs. Information technology costs were increased due to new computer equipment. Finally, general and administrative (other) decrease was driven by the termination of the business development contractor.

Research and Development Costs \ The slight increase research and development costs were not due to reduced costs, but to an increase in grant funding that directly offsets research and development costs. The six months ended June 30, 2022 the total research and development costs were $1,198,076, with $1,005,930 reimbursed for net research and development costs of $192,146. For the six months ended June 30, 2021, the total research and development costs were $945,645, with $763,106 reimbursed net of research and development costs of $182,539. The increase in grant funds were from new grants that were awarded to the technology operating segment. The increase in research and development costs were driven by an increase in compensation due to the hiring of additional R&D staff, an increase in lab supplies expense, and an overall increase of grant sub-award expense issued to a third-party research partner.

Other Income. The decrease in other income of $83,318, from the forgiveness of Paycheck Protection Program loan in the prior period.

Liquidity and Capital Resources – June 30, 2022

The Company’s consolidated statements of cash flows as discussed herein are presented below.

At June 30, 2022, the Company had working capital of $25,014,806, as compared to working capital of $12,189,027 at June 30, 2021, reflecting an increase in working capital of $12,825,779 for the year ended June 30, 2022. The increase in working capital during the six months ended June 30, 2022 was primarily the result of cash proceeds of $24,660,259 from the private placement, offset by a decrease in proceeds from sales of equity securities of $4,041,992, and a decrease in realized loss on investment securities of $10,875,660. At June 30, 2022, the Company had cash of $28,354,468 available to fund its operations.

Operating Activities. For the six months ended June 30, 2022, operating activities utilized cash of $2,398,754, as compared to cash proceeds of $290,527 for the six months ended June 30, 2021, to fund the Company’s investment banking and research and development activities and to fund its other ongoing operating expenses. This was driven by a combination of increased activity in Invizyne, increased professional and consulting fees in preparation for the business reorganization and subsequent private placement offering, reduced realized gains on equity securities, and increased unrealized gains on equity securities. For the six months ended June 30, 2021, operating activities consisting of the proceeds from the sales of equity securities of $4,041,992 and the purchase of investment securities of $990,047.

Investing Activities. For the six months ended June 30, 2022, investing activities consisting of the purchase of property and equipment in the amount of $127,636. This was driven by the purchase laboratory equipment for the expansion of Invizyne. There were no investing activities for the six months ended June 30, 2021.

Financing Activities. For the six months ended June 30, 2022 financing activities consisting of proceeds of $24,660,259 from net proceeds from a private placement. For the six months ended June 30, 2021 the Company had no financing activities.

Consolidated Results of Operations for the years ended December 31, 2021 and 2020

Operating Income (Loss). For the years ended December 31, 2021 and 2020, respectively, the operating losses were derived from the Company’s investment banking segment.

For the year ended December 31, 2021, the operating loss derived from the Company’s investment banking segment of $9,833,998, a decrease of $13,286,335 from the prior period, was primarily due to unrealized loss on equity securities and warrants that was driven by a decrease in the market value of the securities held. There was also a decrease in the realized gain on investments that was also driven by a decreased market value of securities sold or distributed to members, and by the increased cost of closing out positions of securities sold, not yet purchased. The losses were offset by an increase gain on investment securities that were distributed to the members as part of the preparation of the upcoming January 2022 business combination. A small decrease in other operating income was driven by the lower trading volume in 2021 due to market conditions.

General and Administrative Costs. The increase in compensation was expense driven by stock compensation awards in the technology segment, as well an increase in compensation benefits expense. The increase in related party operating expenses was due to the hiring of two additional people in our location administered by MDB Capital, S.A., which provides contracted labor to the Company. The increase in professional fees was driven by increased spending for legal, tax, and consulting fees related to the upcoming reorganization and private placement offering. Information technology costs were consistent with the prior period. The increase in clearing and other charges was driven by dividend expense related to securities sold, not yet purchased. Finally, the increase in general and administrative (other) expenses was driven primarily by conference and travel expenses.

Research and Development Costs. For the years ended December 31, 2021 and 2020, respectively, the research and development costs were derived from the Company’s technology segment.

The decreased research and development costs were not due to reduced costs, but rather to an increase in grant funding that directly offsets research and development costs. For the year ended December 31, 2021, total research and development costs were $1,995,675, with $1,541,221 of these costs reimbursed by grants, resulting in net research and development costs of $454,454. For the year ended December 31, 2020, total research and development costs were $1,172,076, with $594,911 of these costs reimbursed by grants, resulting in net research and development costs of $577,165. The increase in grant reimbursement was primarily due to new grants that were awarded to the technology operating segment. The increase in research and development costs were driven by an increase in facility lease expense, an increase in compensation due to the hiring of additional R&D staff, an increase in lab supplies expense, and an overall increase of grant sub-award expense issued to a third-party research partner.

Other Income. For the year ended December 31, 2021, there was an increase in other income of $251,861, from the forgiveness of Paycheck Protection Program loans.

Income Tax Expense. For the year ended December 31, 2021, the Company had no income tax expense. For the year ended December 31, 2020, the Company’s investment banking segment had an income tax expense of $40,072.

Investment Banking Segment (Public Ventures and PatentVest) Results of Operations for the years ended December 31, 2021 and 2020

Operating Income (Loss). For the years ended December 31, 2021 and 2020, respectively, the operating losses were derived from the Company’s investment banking segment.

The increase in the loss was primarily due to unrealized loss on equity securities and warrants that was driven by a decrease in the market value of the securities held. There was also a decrease in the realized gain on investments that was also driven by a decreased market value of securities sold or distributed to members, and by the increased cost of closing out positions of securities sold, not yet purchased. The losses were offset by an increase gain on investment securities that were distributed to the members as part of the preparation of the upcoming January 2022 business combination. A small decrease in other operating income was driven by the lower trading volume in 2021 due to market conditions.

General and Administrative Costs. The increase in compensation expense was driven primarily by an increase health benefits costs. Operating expenses, related party increase from the prior period was driven by the hiring of two additional people MDB Capital, S.A. who provides contracted labor to the Company for ramping up for the future growth. The increase in professional fees was driven by increased spending for legal, audit, tax, and consulting relating to the January 2022 reorganization and subsequent private placement offering. Information technology costs were consistent with the prior period. The increase in clearing and other charges was driven by dividend expense related to securities sold, not yet purchased. Finally, the increase in other general and administrative expenses for the year ended December 31, 2021 over the prior year was driven primarily by conference and travel to more normal travel post-pandemic.

Other Income. For the year ended December 31, 2021, there was an increase in other income of $168,122, from the forgiveness of Paycheck Protection Program loans.

Income Tax Expense. For the year ended December 31, 2021, the Company had no income tax expense. For the year ended December 31, 2020, the Company’s investment banking segment had an income tax expense of $40,072.

Technology Segment (Invizyne) Results of Operations for the years ended December 31, 2021 and 2020

General and Administrative Costs. The increase in compensation expense was driven by newly awarded stock compensation awards, as well an increase health benefits cost. The increase in professional fees was driven by increased spending for legal, audit, tax, and consulting fees relating to the January 2022 reorganization. Information technology costs for the year ended December 31, 2021 were driven by the purchase of new computers\. Finally, the increase in other general and administrative expenses for the year ended December 31, 2021 over the prior year was driven primarily by conference and travel to more normal travel post-pandemic.

Research and Development Costs: The decreased research and development costs were not due to reduced costs, but rather to an increase in grant funding that directly offsets research and development costs. For the year ended December 31, 2021, total research and development costs were $1,995,675, with $1,541,221 of these costs reimbursed by grants, resulting in net research and development costs of $454,454. For the year ended December 31, 2020, total research and development costs were $1,172,076, with $594,911 of these costs reimbursed by grants, resulting in net research and development costs of $577,165. The increase in grant reimbursement was primarily due to new grants that were awarded to the technology operating segment. The increase in research and development costs were driven by an increase in facility lease expense, an increase in compensation due to the hiring of additional R&D staff, an increase in lab supplies expense, and an overall increase of grant sub-award expense issued to a third-party research partner.

Other Income. The increase in other income was due to the forgiveness of Paycheck Protection Program loans.

Income Tax Expense. For the years ended December 31, 2021 and 2020, respectively, the technology segment had no income tax expense.  

Liquidity and Capital Resources – December 31, 2021

The Company’s consolidated statements of cash flows as discussed herein are presented below.

At December 31, 2021, the Company had working capital of $5,980,484, as compared to working capital of $24,559,221 at December 31, 2020, reflecting a decrease in working capital of $18,578,737 for the year ended December 31, 2021. The decrease in working capital during the year ended December 31, 2021 was primarily the decrease in value of and subsequent distributed securities to members of $10,809,183, a decrease in securities sold not yet purchased of $2,292,229, and the purchase of property and equipment of $423,386, and $6,090,833 expended to fund the Company’s operating expenses, offset by cash proceeds from the sales of investment securities of $4,211,837. At December 31, 2021, the Company had cash of $6,225,458 available to fund its operation.

Operating Activities. For the year ended December 31, 2021, operating activities utilized cash of $5,832,314, this was driven by a combination of increased activity in Invizyne, increased professional and consulting fees in business reorganization and subsequent private placement offering, reduced realized gains on equity securities, and increased unrealized gains on equity securities, net.

For the year ended December 31, 2020 operating proceeds of $9,500,354 were received, they were drive by proceeds from the sales of securities of $14,061,045, as well as realized gains in investment securities and unrealized losses on investment securities. The gains were offset by the Company funding the investment banking and research and development activities and to fund its other ongoing operating expenses.

Investing Activities. For the year ended December 31, 2021, investing activities consisted of the purchase of property and equipment in the amount of $423,386. This was driven by the purchase of laboratory equipment and the build out of leasehold improvements for the expansion of Invizyne’s lab facility. For the year ended December 31, 2020, investing activities consisted of the purchase of property and equipment in the amount of $62,125.

Financing Activities. For the year ended December 31, 2021, the Company had no financing activities. For the year ended December 31, 2020, financing activities consisting of proceeds totaling $250,961 from two Paycheck Protection Program loans.

Recently Issued Accounting Pronouncements

See Note 2 in the consolidated financial statements for the discussion on recently accounting pronouncements.

Critical Accounting Policies and Estimates

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

Valuation Allowance for Net Deferred Tax Asset

A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. At December 31, 2021 and 2020, Invizyne has established a full valuation allowance against all net deferred tax assets.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis is as follows:

Warrants: Warrants to purchase common stocks were not actively traded and therefore these securities were valued using black-scholes model. The warrants were categorized in level 3 of the fair value hierarchy. The significant unobservable inputs were volatility of the common stock and it ranged from 25.0% to 138.0%. There was a weighted average rate of 26%.

Equity securities: Non-public equity securities are valued based on the initial investment, less impairment. The Company determined that no impairment was warranted. Since these securities are not actively traded, we will apply valuation adjustments when they become available, and they are categorized in level 3 of the fair value hierarchy. The are no significant unobservable inputs.

Accounting for Research Grants

Invizyne receives grant reimbursements, which are netted against research and development expenses in the consolidated statement of operations. Grant reimbursements for capitalized assets are recognized over the useful life of the assets, with the unrecognized portion considered a deferred liability and are included in accounts payable and accrued expenses in the consolidated balance sheet.

Grants that operate on a reimbursement basis are recognized on the accrual basis are revenues to extent of disbursements and commitments that are allowable for reimbursement of allowable expenses incurred as of December 31, 2021 and 2020, respectively, and expected to be received from funding sources in the subsequent year. Management considers such receivables at December 31, 2021 and 2020, respectively, to be fully collectable. Accordingly, no allowance for grants receivable was recorded in the accompanying consolidated financial statements.

Research grants received from organizations are subject to the contract agreement as to how Invizyne conducts its research activities, and Invizyne is required to comply with the agreement terms relating to those grants. Amounts received under research grants are nonrefundable, regardless of the success of the underlying research project, to the extent that such amounts are expended in accordance with the approved grant project. Invizyne is permitted to draw down (a process of submitting expenses for reimbursement) the research grants after incurring the related expenses. Amounts received under research grants are offset against the related research and development costs in the Company’s consolidated statement of operations.  

Patent and Licensing Legal and Filing Fees and Costs

Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and related patent applications, all patent and licensing legal and filing fees and costs related to the development and protection of its intellectual property are charged to operations as incurred. Patent and licensing legal and filing fees and costs were $91,377 and $149,503 for the six months ended June 30, 2022 and 2021, respectively, and $185,195 and $123,816 for the years ended December 31, 2021 and 2020, respectively. Patent and licensing legal and filing fees and costs are included in general and administrative costs in the Company’s consolidated statements of operations.

Stock Based Compensation

The Company and its subsidiaries may periodically issue common stock, stock options and restricted stock units to officers, directors, employees and consultants for services rendered. Options vest and expire according to terms established at the issuance date of each grant. Stock grants, which are generally time vested, are measured at the grant date fair value and charged to operations ratably over the vesting period.

The Company accounts for stock-based payments to officers, directors, employees and consultants by measuring the cost of services received in exchange for equity awards utilizing the grant date fair value of the awards, with the cost recognized as compensation expense on the straight-line basis in the Company’s financial statements over the vesting period of the awards.

The fair value of stock options granted as stock-based compensation is determined utilizing the Black-Scholes option-pricing model, and is affected by several variables, the most significant of which are the expected life of the stock option, the exercise price of the stock option as compared to the fair market value of the common stock on the grant date, and the estimated volatility of the common stock. Unless sufficient historical exercise data is available, the expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The estimated volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair market value of the common stock is determined by reference to the quoted market price of the Company’s common stock on the grant date. The expected dividend yield is based on the Company’s expectation of dividend payouts and is assumed to be zero.

On February 1, 2021, stock options to purchase 513,750 shares of common stock were granted at an exercise price of $2.53 per share, which was equal to the fair value of the common stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 5 years. As of June 30, 2022 and December 31, 2021, respectively, stock options to purchase 94,187 shares of common stock have vested, with a weighted average $2.53, an aggregate intrinsic value of $0.00. The weighted average contractual term of remaining unvested stock options is 5.58 years for the six months ended June 30, 2022 and 6.08 years for the year ended December 31, 2021. Compensation cost is being recognized on a straight-line basis. There has been no change in inputs over the period.

The fair value of each option on the date of grant was estimated using the Black-Scholes option-pricing model with the following assumptions:

Summary of Business Activities and Plans

As stated above, the Company completed the first closing of a private placement, consisting of total gross proceeds of $25,289,660 from the sale of 2,528,966 shares of Class A common stock, which will be used for development of the current partner companies, identifying and developing new partner companies, and general corporate and working capital requirements.

Through this prospectus the Company plans to raise additional capital through its initial public offering. Funds from the offering will be used for development of the current partner companies, identifying and developing new partner companies, and general corporate and working capital requirements.

External Risks Associated with the Company’s Business Activities

Covid-19 Virus. The global outbreak of the novel coronavirus (Covid-19) has led to disruptions in general economic activities worldwide, as businesses and governments have taken broad actions to mitigate this public health crisis.

The Covid- 19 pandemic has and may continue to impact the Company’s investments and potential investments, which could disrupt its business activities. The effects of various public health directives and the Company’s work- from-home policies may negatively impact productivity, disrupt the Company’s business activities, and delay timelines and future results, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on the Company’s ability to conduct business activities in the ordinary course. These disruptions, and perhaps more severe disruptions to the Company’s operations could negatively impact the Company’s business activities and results of operations and financial condition, including the Company’s ability to obtain financing. To date, the Company has not incurred impairment losses in the carrying values of its investments as a result of the pandemic and is not aware of any specific related event or circumstance that would require the Company to revise the estimates reflected in the consolidated financial statements.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the “CARES Act”) was enacted in response to market conditions related to the coronavirus (“COVID-19”) pandemic. The CARES Act includes many measures to help companies, including providing loans to qualifying companies, under the Paycheck Protection Program (the “PPP”) offered by the U.S. Small Business Administration (the “SBA”). During 2020, the Company received proceeds from loans in the aggregate amount of $250,960 pursuant to the Paycheck Protection Program (the “PPP Loan”). The proceeds of the PPP Loans were available to be used to pay for payroll costs, rent and other eligible costs. As of December 31, 2021, the Company has used all of the PPP Loan proceeds for eligible costs. The PPP Loans were unsecured and had an interest rate of 1.00% per annum and was subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act. In 2021, the PPP Loans totaling $250,960 plus accrued interest of $901 were forgiven in their entirety, are recognized as other income in the Consolidated Statement of operations.

In light of the uncertain and continually evolving situation relating to the spread of Covid-19, this pandemic could pose a risk to the Company. The extent to which the coronavirus may impact the Company’s business activities and capital raising efforts will depend on future developments, which are highly uncertain and cannot be predicted at this time. The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become available.

Inflation Risk. The Company does not believe that inflation has had a material effect on its operations to date, other than its impact on the general economy.

Supply Chain Issues. The Company does not currently expect that supply chain issues will have a significant impact on its business activities.

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

The Company is continuing to monitor these matters and will adjust its current business and financing plans as more information and guidance become available.

Principal Commitments

Net Capital Requirement (Public Ventures)

Public Ventures is subject to the uniform net capital rule (SEC Rule 15c3-1) of the Securities and Exchange Commission (the “SEC”), which requires both the maintenance of minimum net capital and the maintenance of maximum ratio of aggregate indebtedness to net capital. At June 30, 2022, Public Ventures, LLC had net capital of $2,849,092, which was $2,599,092 in excess of the minimum $250,000. At December 31, 2021 and 2020, Public Ventures had net capital of $5,379,323 and $12,388,941, respectively, which was $5,129,323 and $12,288,941 in excess of the minimum $250,000 and $100,000 required, respectfully.

At June 30, 2022, the Company’s ratio of aggregate indebtedness of $530,092 to net capital was 0.1861 to 1, respectively, as compared to the maximum of a 15 to 1 allowable ratio of a broker dealer. Minimum net capital is based upon the greater of the statutory minimum net capital of $250,000 or 6 2/3% of aggregate indebtedness, which was calculated as $35,339 at June 30, 2022.

At December 31, 2021 and 2020 the Company’s ratio of aggregate indebtedness of $337,096 and $402,280 to net capital was 0.0627 to 1 and 0.0325 to 1, respectively, as compared to the maximum of a 15 to 1 allowable ratio of a broker dealer. Minimum net capital is based upon the greater of the statutory minimum net capital of $250,000 or 6 2/3% of aggregate indebtedness, which was calculated as $22,473 and $26,819 at December 31, 2021 and 2020, respectively.

Indemnification Provisions

Public Ventures has agreed to indemnify its clearing brokers for losses that the clearing brokers may sustain from the accounts of customers. Should a customer not fulfill its obligation on a transaction, Public Ventures, may be required to buy or sell securities at prevailing market prices in the future on behalf of its customer. The indemnification obligations of Public Ventures to its clearing brokers have no maximum amount. All unsettled trades at June 30, 2022 and 2021, as well as December 31, 2021 and 2020., have subsequently settled with no resulting material liability to Public Ventures. For the six months ended June 30, 2022 and 2021 and the years ended December 31, 2021 and 2020, Public Ventures, had no material loss due to counterparty failure and had no obligations outstanding under the indemnification arrangement as of June 30, 2022 and 2021, as well as December 31, 2021 and 2020.

Invizyne Funding Requirements

The Company has entered into a funding agreement (the “Funding Agreement”) to purchase shares in Invizyne up to a maximum of $5,000,000 at a pre-determined purchase price, subject to continuing financial covenants being met.

As of June 30, 2022, $5,000,000, the maximum amount, and $3,644,930 has been funded, bringing the ownership interest of MDB Capital Holdings, LLC in Invizyne to 59.5% at June 30, 2022. MDB Capital Holdings, LLC waived its 10% cash fee relative to the Funding Agreement in exchange for other modifications. As a condition of the Funding Agreement, warrants to purchase 197,628 shares of Invizyne common stock were issuable (the “Funding Warrants”), which vest as amounts are funded. Through June 30, 2022 197,628 of Funding Warrants have vested.

As of December 31, 2021 and 2020, $3,644,930 and $1,332,510 has been funded, bringing the ownership interest of Public Ventures, LLC in Invizyne to 56.4% and 49.2% at December 31, 2021 and 2020, respectively. Public Ventures waived its 10% cash fee relative to the Funding Agreement in exchange for other modifications. As a condition of the Funding Agreement, warrants to purchase 197,629 shares of Invizyne common stock were issuable (the “Funding Warrants”), which vest as amounts are funded. Through December 31, 2021 and 2020, 144,071 and 95,916, respectively, of Funding Warrants have vested.

Trends, Events and Uncertainties

Other than as discussed above, we are not currently aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition in the near term, although it is possible that new trends or events may develop in the future that could have a material effect on our financial condition.

BUSINESS

Overview

MDB was founded in 1997, originally operating as MDB Capital Group, LLC, with the purpose of backing companies with visionary technology, inventors, and technology entrepreneurs. To maximize the impact of our actions and culture, under our business plan, we embark on each journey with a company at an early point, typically at the seed investment stage, in the manner of a partner and usually before a specified management structure having been put in place. We often act as co-founders, bringing not only capital to the table but also assisting with creating plans for the initial commercialization, the intellectual property strategy, business objectives, and financing. We refer to these companies as “partner companies” and we usually also plan, manage and/or facilitate the initial public offering (“IPO”) or public listing of a partner company.

We believe we have pioneered a new form of public venture capital in which we finance pre-revenue, early-stage technology companies through public offerings, primarily listed on Nasdaq. Our public venture model typically consists of a two-step financing approach with our partner companies: raising initial capital of between $5 to $10 million dollars to set the business and operational foundations, and then raising an additional $20 to $60 million via a public offering. Our community of sophisticated individual investors with like-minded goals and values supports our public venture capital model both with their capital and with their [knowledge, connections and expertise while we incubate and subsequently launch the partner companies into the public markets.

MDB builds value by building partner companies with the right foundations by providing them with strategic management, operating guidance, and innovative financing. MDB’s corporate personnel provides guidance and assistance to partner companies in the areas of management, IP development and strategy, finance, marketing, messaging, executive recruitment, structure of employee and executive compensation, licensing,, and in other areas as well.

Track Record

We believe we have a substantial track record. We successfully have used the public markets to finance 16 companies through our approach. In each of these companies, we have either served as co-founders, were involved at the early stages of the company’s development, or enabled the company to make a significant strategic pivot. To date, for every company that we conducted an initial round of private funding, we have launched a successful IPO. We consider the IPO to be the beginning of the road for our companies, and we generally remain involved with them for several years thereafter. The stocks of all of these 16 companies have traded at premiums to the IPO offering price at some point post-IPO. Most importantly, these companies have all successfully completing public and private follow-on offerings that provided funds for the companies to continue supporting their growth, development and exploration of their technologies’ potential.

We believe that our results demonstrate success for early stage venture investments with which we were actively involved. Out of the 16 companies that we took public utilizing our strategy, more than 60% of those companies traded for a period of time above $500 million in market value after their IPO. Our greatest success, to date, was Medivation, Inc., which was acquired in 2016 for approximately $14 billion, returning 209x for investors that purchased and held their stock in its reverse merger through the acquisition. We raised the first $14 million for the reorganized Medivation, Inc., and upon assembling the board of directors and drafting the initial business strategy, we took Medivation, Inc. to the public markets in 2005.

Our latest three companies for which we completed IPOs and started as founders, have traded for a period of time at near or over $1 billion in market value, which we believe is crucial for maximizing the probability the companies can raise sufficient capital to get to commercialization These companies are as follows:

● Provention Bio (Nasdaq: PRVB) - $64 Million IPO July 2018, $28 Million pre-public funding round January 2017. PRVB’s mission is to intercept and prevent immune-mediated diseases by studying upstream autoimmune signaling cascades. PRVB focuses on licensing clinical-stage assets and designing quick go/no-go trials for improved return on investment.

● Cue BioPharma (Nasdaq: CUE) - $66 Million IPO January 2018, $10 Million pre- public founding round January 2015, $16 Million pre-public funding round January 2017. CUE is an immunotherapy company developing a novel, proprietary class of biologics engineered to selectively modulate the human immune system.

● Pulse Biosciences (Nasdaq: PLSE) - $23 Million IPO June 2016, Nasdaq: PLSE - $8 Million founding round November 2014. PLSE is a medical therapy company developing Nano-Pulse Stimulation (NPS™) technology which is characterized by ultrafast electrical energy. When applied to targeted tissue, NPS energy pulses enter cells and alter the function of the internal cellular organelles without disrupting extracellular tissue, leading to regulated cell death (RCD).

Key Pillars

Since inception, we have defined and refined the key pillars that support what we believe is our successful public venture approach. These three pillars are our investment criteria, our process, and our community. We believe that our model is only suitable where these for companies that can be sustained in the public markets at an early stage. Typically, these companies own what appear to be category-defining platforms capable of solving big problems.

We have established a process to position partner companies for success with the intention of maximizing the value early in a company’s history. We seek to create a strong foundation during the development phase of the partner company. We believe that this helps the partner company attract the best people who are capable of building a successful enterprise over the long term. We call this our “Rational Design Process For New Companies.”

A traditional perceived shortcoming of the public markets is that they attract short-sighted investors. We understand that to make early-stage public venture feasible; we need to create a community of investors that have the intention of helping our companies get off the ground. Unlike most investors in traditional IPOs, our investors are committed community members who seek to create value at the companies in which they invest and are critical to sustaining value. Our investors, unlike traditional institutional investors, have long holding periods and value long-term impact over quarterly performance numbers.

Seed to IPO

Our Investment Criteria

Our investment criteria focus first on the probability that an early-stage technology company can sustain its value in the public markets. We look for novel technology platforms that are category-defining and solve big unmet needs. Our investment criteria are founded in the following:

Rational Design Process

We recognize that early visionary technologies are frail ideas that need to be nurtured correctly with the right corporate and financial foundation in order for them to become commercially viable and established companies. This is especially true with respect to platform technologies in which the overall corporate and asset development and positioning can have a drastic impact on the early development of the partner company.

We begin our process by seeking to gain a deep understanding all of the relevant players in a given space and the key issues that, if solved, could effectively create a new category and enable the partner company to rapidly become a category leader. We work to develop a clear understanding of our companies’ potential sustainable competitive advantage. Once the “Theory of Opportunity” is established, we develop the business strategy, financing strategy and intellectual property strategy and the innovation and R&D prioritization road map. We test our assumptions by seeking input regarding our strategic decisions with experts in the space until we are comfortable that they are credible and convincing. With a clearly articulated understanding of what we believe to be the partner company’s potential, we endeavor to recruit the best possible talent to execute the strategy and bring the vision to fruition. We strive to instill a corporate culture that is constantly re-evaluating the partner company’s working thesis, which we believe will establish and keep the partner company as the leader in a given category or enable the partner company to pivot its strategy to a new area based upon changing circumstances.

Our Community

A key element of our public venture model is our community of more than 500 sophisticated investors, entrepreneurs and microcap and smallcap market participants who have significant experience with our approach and who we believe will advocate for our public venture mission. In addition, investors can have a significant impact by supporting the companies they invest in. We believe that this community is vital to the success of our public venture model.

We have strived to create community of like-minded investors who share our vision and are supportive of the partner companies we have co-founded. This group consists of patient investors with a long-term focus on the value that can be unlocked upon the de-risking of our partner companies’ technologies. This long-term focus is key to building value and stability for early-stage companies in the public markets. In addition, we believe that our community members are often authorities in multiple industries and are capable of providing support to our partner companies with their invaluable access and reach. We believe that MDB shareholders will comprise this community and will continue to participate in the partner companies through their MDB share ownership as well as participation in partner company IPOs by becoming Public Ventures Members as more fully described below. MDB plans to sustain a cohesive community by keeping persons engaged and curious so that they continuously help us improve our decision process as and when selecting partner companies with which to work.

By becoming a publicly traded entity, we believe that MDB is strengthening our community of MDB shareholders and can simplify our process of developing partner companies. We intend to use a portion of the capital raised in this offering to invest directly in the partner companies we co-found. We believe that being a public company will give us greater flexibility and nimbleness to source new technologies and make it quicker and easier to deploy capital towards opportunities that arise.

We also will seek to foster community in connection with our broker-dealer, Public Ventures. In that regard, we intend to follow a “Member-focused” model (further discussed below) for conducting Public Ventures-led company financings. Our typical Public Ventures Member will be a long-term investor and/or entrepreneur who is motivated to help develop the next generation of growth companies. Public Ventures Members may or may not be MDB shareholders.

Holistic and Sustainable Model

Our public venture model is fundamentally different than the typical venture capital fund model. We believe that bringing companies earlier to the public markets, while still taking care to address the unique nature and needs of these early-stage companies, provides more liquidity, efficiency, transparency, better protections for investors and alignment of the interests of everyone involved as described below.

Inventors/Universities/Co-founders

Taking companies public at an early stage typically enables shareholders to own the same class of common stock as the company’s early founders. In addition, the ownership interests of inventors, universities, and other co-founders become valuable, tradable shares when a company is public and listed on an exchange. As a result, we believe that, in most cases, these ownership stakes will have much greater value than they would otherwise have in the traditional venture capital model. We also believe that our model gives companies greater leeway to execute pivots or to pursue other strategic initiatives, and, as a result, if any of the partner companies that we nurture fail, they will do so at lower rates.

Partner Company Management & Board Members

The management and board members of our partner companies benefit from being public and being able to raise substantial capital more easily than as private companies or through traditional venture capital. The ability to grant valuable, liquid equity as part of an employment compensation package is a strong incentive to attract and retain employees and align their interests with those of the company at which they work.

MDB Shareholders

When operating as MDB Capital Group, prior to our re-organization, we believe that we provided our clients, who purchased equity along with us in the companies we co-founded, the opportunity to potentially earn the type of returns sought by traditional venture capital funds. Because our clients directly owned shares in publicly traded companies, they had greater liquidity than if they had purchased interests in a private fund that then made investments in private companies. Under our current model, MDB shareholders can buy or sell their shares in MDB at any time. Our shareholders will also be able to choose how they deploy additional capital into our partner companies as, pursuant to our model and as further described below, we plan to distribute to the MDB shareholders rights to purchase additional shares of the partner companies as part of the partner company funding and IPO process for partner companies. This process will give MDB shareholders the choice of whether or not to exercise these rights and/or to invest in the public offerings of our partner companies. Moreover, we believe that many of the MDB shareholders are motivated by the opportunity to contribute their knowledge and experience to and engage with our partner companies in an effort to improve them and enhance their value.

MDB Employees

Pursuant to our 2022 Equity Incentive Plan, we have granted our employees interests in the Company as part of their compensation in order to align their interests with those of our shareholders and partner company stakeholders.

Distribution of Rights to our Shareholders

Subsequent to the initial private funding rounds that we plan to conduct for our partner companies, and once we believe each company is ready, we intend to spin-out and raise capital for our partner companies partially or entirely through rights offerings. As part of the rights offering process, we intend to allocate the rights to purchase shares of our partner companies to our shareholders in proportion to their ownership of MDB shares. We believe that the rights offering process is an inherently fair method of allocating an equity opportunity in our partner companies and gives the MDB shareholders the choice to exercise or let expire these rights to invest in the public offerings of our partner companies.

Our Corporate Structure

We anticipate that we will co-found and deploy capital in one or two partner companies per year, deploying between $5 million to $10 million for each company while in the privately owned, pre-public period.

While each partner company will present its own investment dynamic, at the onset, we intend to take a majority ownership stake in the partner companies we co-found and to hold a controlling position through the early stages of development. Subsequent to the public offerings of these partner companies, we expect to own thirty-five percent (35%) or more of the voting stock, assuming that we had initially raised $8 million in private equity financing in the pre-IPO period of the partner company. We expect to maintain the right to appoint a number of board members and otherwise be instrumental in the management and direction of the strategy and business development efforts of our partner companies for a period of time before and after each IPO.

In order to not be deemed an investment company under the regulation of the Investment Company Act of 1940, MDB will have to maintain what are characterized as investment securities below forty percent (40%) of the value of the total assets of MDB on an unconsolidated basis, unless an exemption or safe harbor applies under that legislation applies. Securities issued by companies other than consolidated companies are generally considered “investment securities” for purposes of the Investment Company Act, unless other circumstances exist that have the holding company being actively involved in the management of the underlying company. We will consolidate these companies for financial statement purposes as long as they are majority-owned subsidiaries in which we hold voting power of fifty percent (50%) or greater. We expect to continue to have an active role in the management of our partner companies for a period of time after the IPO. Control is measured using three criteria: the power to control the relevant activities of the investee, exposure to variable returns, and the ability to use the power to affect those returns.

Not only for purposes of the Investment Company Act, but also to maintain our focus on exploring new investment opportunities through partner companies, rather than holding partner companies for long term investment and increasing our asset base, our intention is to distribute our partner companies and excess assets beyond what is needed to support the investments we plan to make under our public venture model.

Competition

Getting access to and deploying early-stage capital is very competitive. We believe our main competitors are traditional venture capital firms, other funds specializing in microcap and smallcap investing and investment banks focusing on microcap and smallcap companies.

We believe that our approach provides multiple benefits compared to existing models and traditional methods. However, many of our competitors are larger, have greater brand recognition, longer operating histories, established business relationships, access to greater amounts of capital, and significantly greater resources. We believe that we will be able to compete on many fronts based on our history and reputation, our plan to partner, encourage and support the development of our partner companies and their founders, our wide-ranging contacts in the financial and industry sectors, our ability to provide capital as needed, our ability to source and diligence new technologies and the experience of our professional human capital.

Our partner companies will face strong competition in multiple areas. The technology development industry is characterized by strong competition and rapid technological change. Invizyne Technologies Inc., for example, will face competition from other synthetic biology companies developing products in yeast or other microorganisms such as Ginkgo Bioworks, Zymergen, Amyris, Gevo, Genomatica, Evolva, and others, as well as new cell-free synthetic biology companies. It will also face competition from companies utilizing traditional chemistry and/or plant-based extracts in the area of cannabinoids and whatever other natural products that it chooses to target.

Our Group of Companies

Public Ventures

Our wholly-owned subsidiary, Public Ventures, licensed under the name Public Ventures LLC, a registered broker- dealer (CRD-: 42677/SEC-: 8-49951) is the backbone of our financing business. We are currently expanding its capabilities to act as a licensed clearing firm.

The Vision

We believe that venture stage businesses are more likely to succeed when supported and financed by a community of long-term oriented, like-minded investors and entrepreneurs who are experienced in the development of successful companies. We envision developing a close-knit community of such customers for Public Ventures who we will refer to as our Public Ventures “Members.” Our Members will be able to submit start-up and developing companies as potential candidates for obtaining financing through Public Ventures and/or as candidates to become partner companies for MDB. If they so choose and as dictated by their expertise, our Members will have opportunities to assist in development of companies that we finance at Public Ventures or who become partner companies and help them grow into tomorrow’s leaders.

We believe that such a community of investors can foster the growth of promising public companies under $500 million in market value, also known as microcap and/or smallcap companies, by leveraging the knowledge of the community and sharing risk amongst its Members.

We believe that we are building a robust infrastructure to support our vision for Public Ventures. Our objective is to create a high-end service platform that will make investing in the microcap and/or smallcap segment more accessible to and efficient for the Public Ventures Member community. Part of our plan is for Public Ventures to be a FINRA licensed self-clearing broker-dealer capable of structuring and underwriting financing transactions as well as providing clearing services that will enable clients to trade, clear, and settle stocks in these companies. We are engaged in that licensing process at this time.

We have successfully operated our broker-dealer for more than 25 years during which we have specialized in transactions for public venture companies. During that time, we built internal processes to perform diligence and prioritize the financing of deals based on the investment criteria that we have developed. We intend to leverage the lessons we have learned during these experiences to create processes, rating systems and reports that will be made available to our Member community and can be used to supplement their own processes for evaluating each opportunity and associated risks and making informed investment decisions.

Our Principles

Our investment and operational principles play a substantive role throughout our organization. They are at the heart of our decision-making, determine our priorities, support our vision, and shape our culture. These principles are the main drivers of our business:

(1) Our primary mission is to enable promising companies to meaningfully improve humanity through the sponsorship of people and their businesses.

(2) We look to elevate each company with our collective experience by offering insightful and thoughtful feedback. We believe that advice and mentorship, in many respects, are more valuable than money. It takes a village to raise a company.

(3) We recognize that struggling and learning together is the basis of creating meaningful relationships. During difficult times in the markets, our community relationships will sustain our enthusiasm for and focus on our mission.

(4) Company leadership requires a vision, a plan for execution, and, importantly, accountability for execution with kindness, as every team member needs guidance that motivates them.

(5) We reason from first principles, not by analogy. John Kenneth Galbraith said, “The conventional view serves to protect us from the painful job of thinking.”

(6) We believe in growth by opening ourselves to our fellow Members for advice and by being introspective. Our collective reputation for fair and honest dealing will be our greatest long-term asset.

(7) By being diligent and disciplined, we can help companies create the best version of themselves.

(8) Great discoveries and achievements usually require the collaboration of great minds. We will help our leaders pitch the vision for the company in the absence of certainty, relying always on clarity and transparency.

(9) Our Members seek the real art of conversation, which is not only to say the right thing at the right time but also to leave unsaid the wrong thing at the tempting moment.

(10) Long-term sustainability comes from doing the “right thing” (as hard as it may be) in the short term.

The Public Venture Opportunity

Historically, the public markets have served as a significant funding source for companies with new ideas and enabled the growth and development of visionary technologies that lead to advancements in our society. We believe that venture investing in the public markets is the most transparent and liquid method for investors to participate in venture capital. Public venture is available to all classes of investors who all receive typically equal amounts of information about their investments. Companies like Amazon, Tesla, Walmart, Home Depot, among others, were brought public at very early stages, and capital provided through the public markets enabled their spectacular development into industry leaders.

Market dynamics have resulted in companies backed by traditional venture capital staying private for longer periods of time. In addition, regulatory changes affecting broker-dealers have resulted in a shift to high volume trading that relies on payment for order flow to make up for commission-less trading. This has resulted in broker-dealers devoting more resources to trading high volume popular equities and away from providing service to microcap and smallcap public venture companies and their securities. As a result, the needs of long-term investors looking to support venture stage public companies and those of venture stage companies are not addressed by today’s brokerage firms who cater to traders.

We believe that the expected Public Ventures Member community, consisting of sophisticated individual investors, who are aware of the nature of venture investments and seek to build tomorrow’s leading companies, can drive the future of public venture capital formation. We believe that only this type of community can provide suitable financing options that will meet the needs of small public venture companies. We have the unique opportunity provide the right framework and platform infrastructure to this community that will enable its Members to collectively underwrite public venture financings.

We expect our Members to be entrepreneurial and deeply involved in different ventures. Under our framework, they will be encouraged and rewarded for successfully identifying investment opportunities for the community that meet our criteria. We envision that our platform will encourage and allow Members to share information and formulate the nature of and pricing for any financing opportunities through the exchange of information about a particular opportunity. In addition, our framework is expected to consist of conducting diligence, creating comparative analysis, providing company information, and implementing rating systems. We believe that this information and transparency will enable high quality, informed decisions and facilitate market integrity.

Members and Member Sponsors

It is our intention to build our community of participants who share the collective goal of elevating and supporting development-stage companies and have an investor rather than a trader mindset. Investors who share the values and vision of the organization can be invited into the community as Members. We expect to encourage active participation of our Members such that they may be mentors of growth through starting, running, or connecting companies within the community or by being active early investors in the various investment opportunities that arise for our partner companies. We plan to sponsor community Member forums, organized by geographic location, investing style, subject matter expertise and/or industry segments. We believe these forums will facilitate in-person meetings with companies, enable due diligence, and support investor engagement and camaraderie.

Members who originate investment opportunities will be known as “Member Sponsors” and will have additional roles, as regulations permit, in the financing of our partner companies. A Member Sponsor likely will be a liaison among a company looking for financing, Public Ventures’ internal team, and our community of Members. They will help the potential partner company complete required documentation, shepherding the company through the diligence process, and fostering introductions to Members and coordinating roadshow meetings. To the extent required, Member Sponsors will hold the required securities licenses and registrations.

Processes

We believe that establishing a process that is transparent, thorough, efficient, and timely is essential for the success of Public Ventures. We are building the right infrastructure to support our processes, including the human capital and technology. The following diagram demonstrates the deal process at Public Ventures.

Deal origination and execution process:

● A Member Sponsor identifies a company in need of financing and is appointed via an engagement letter where the company acknowledges the diligence and sales process and the roles and responsibilities of the Member Sponsor.

● Public Ventures diligence team prepares a company summary with the information provided by the MS and presents the summary to the Investment Committee of Public Ventures.

● The Investment Committee, formed in compliance with applicable securities and FINRA requirements, intended to be comprised of Members and select MDB employees, will analyze the summary and present a preliminary decision to the Member Sponsor.

● If the preliminary decision is positive, the start-up company will engage Public Ventures for a comprehensive due diligence report which includes a confidential discussion with key opinion leaders for feedback.

● The Investment Committee, after study and deliberation of the comprehensive diligence report, shall issue a formal opinion regarding the feasibility of the deal.

● If the Investment Committee issues a positive opinion and expresses confidence as to the potential success of a deal, then an engagement agreement for an offering is executed and deal is thoroughly prepared.

● The deal is presented to the community for pricing and closing.

Public Ventures Launch

We intend to launch by:

● Converting a small number of existing accounts to the trading and clearing platform to ensure that our systems running smoothly.

● Bringing together our Member community with events that include respected thought leaders in public venture microcap and smallcap investing. These events are intended to seed key investment centers (or Chapters) in the US and to identify local Members to lead such Chapters to build out local Public Ventures’ communities.

● Refining our diligence, rating systems, and reports processes to ensure that they can be deployed successfully.

● Creating roadshow programs and processes for investor-led-financings

● Training Member Sponsors to execute the transparent diligence processes that we have developed.

Sustainable Business

We believe that a key to operating sustainably in the development and financing of microcap and smallcap businesses is to offer services to investors that participate in this investment segment investment opportunities that are thoroughly vetted and well-priced. Additionally, the availability of funding for the company over time, the investment structure, and the related cost of investment needs to be geared to the nature of the investment opportunity so that a partner company has the ability to concentrate on its technology and product development. We believe that our community approach, our Member selection process, and our diligence processes conducted in part by our trained team of analysts located in Nicaragua, will provide that support and lower cost structure. Based on recent Executive Orders imposing new and expanding prior sanctions on Nicaraguan businesses and persons doing business in Nicaragua, however, there may be disruption to our use of Nicaraguan based personnel and contracting with Nicaraguan persons and entities. Therefore, we may have to adjust our business plan accordingly.

PatentVest

We believe PatentVest is the first venture invention and commercialization intelligence platform created to assist technologists, advisors, venture capital investors, and established companies optimize technology commercialization. Our process, which we have named “innovation in a box,” takes in information from our proprietary patent database and transforms the information about inventions and intellectual property from a complex legal process into a manageable, measurable business process. The PatentVest process clearly defines the boundaries of an invention by providing context for previously developed ideas and analyzes how the invention, and therefore patent claims, differ from the discovered prior art in order to rationalize the essential distinctions that are the key value drivers. Understanding these boundaries, as well as how protectable and valuable these boundaries are, is essential to better guide strategic business and patentability decisions. In our experience, this PatentVest process answers the most important questions for a technology platform: how to innovate, how to improve its ideas, and how to deploy these ideas where they matter most.

Our innovation in a box process seeks to include the following elements and outcomes:

● Improve idea prioritization – Allows inventors and financial backers to weigh the value of a given idea by ascertaining the uniqueness of such invention.

● Enhance the value of an invention – Understanding invention boundaries allows patent attorneys to draft patent claims in a way that confers the most available protection without being encumbered by prior art.

● Optimize strategic decisions – Deeply understand the competitive landscape, identify issues that possible partners are trying to solve, prioritize markets where an invention might be the most valuable, and identify possible acquirers.

PatentVest History

Eighteen years ago, PatentVest’s founders recognized that intellectual property was the most valuable asset for technology companies and began building a proprietary patent database and software platform to help companies manage these assets. Over these years, PatentVest has been continuously iterating uses for available information to potentially enable better investment decisions as well as to guide the development of such technology once investment decisions were made. We believe that PatentVest has helped start-up companies move from having novel ideas to becoming technology leaders. As a result, in our opinion, PatentVest is capable of providing the backbone of an investment idea selection process, as well as forming intellectual property and business development strategies. We believe utilizing the PatentVest Innovation in a Box process will enhance our ability to optimize our investment selection process with respect to partner companies as well as when selecting underwriting candidates for Public Ventures.

We also believe that the PatentVest services will aid companies to define their intellectual property assets in their capital raising activities and will be available to other companies that see to build their intellectual property outside of the context of working with MDB and Public Ventures.

PatentVest Objective

It has been our experience when evaluating, investing in or advising technology companies that intellectual property strategy development and related processes are most often led by attorneys and is separate from the other invention and business processes at these companies. We have seen that this work is typically outsourced and, as a result, key company personnel are often neither engaged in the claim drafting process nor are aware of how their patents have potentially changed during prosecution. Many of the inventors and business executives with whom we have engaged have a modest knowledge regarding what their claims cover or what the boundaries of their claims are in relation to other companies. We believe that it is very difficult, if not impossible, to truly understand either what a company “owns” or to effectively evaluate a given invention’s potential uniqueness and ultimately its potential value without this perspective.

We believe the companies that will derive the greatest benefit from PatentVest’s services are technology companies with a few current active patent applications that are expected to primarily drive the value of their companies with their inventions. The analysis and information provided by the PatentVest process, as documented in reports to its clients, is expected to guide technology companies as they seek to prioritize ideas and develop their intellectual property and business strategies. We believe that PatentVest will not only provide MDB with additional clarity in selecting its partner companies and Public Ventures in selecting underwriting candidates, but also to any technology company in their decision-making processes seeking to maximize the value of their inventions.

The PatentVest Model

We plan to use PatentVest to help technology companies innovate and deploy their innovations in the most valuable manner as well as to support our processes. We believe that PatentVest has one of the most comprehensive global patent databases available, containing more than 148 million patents and covering 116 countries. PatentVest has built software processes and tools that make it possible to efficiently mine vast amounts of data and structure this data in a way that can be analyzed by its team of analysts. In addition, PatentVest has assembled the human capital required to cost-effectively analyze such data and build the reports for companies that are expected to be the backbone of our services.

PatentVest has developed different report formats that provide information within context in a way that we think can be quickly processed by decision-makers and help provide answers to the most valuable questions for the companies we will target as our investments. The insights presented in our reports are the culmination of a long, iterative process that we have refined by the constant questioning of which data is valuable to building technology companies.

PatentVest Reports and Solutions

PatentVest has strived to provide focus and insight within its reports and solutions. Other traditional patent data providers with whom we compete focus for the most part on presenting only data. The PatentVest reports, solutions, and feedback are focused on providing strategic guidance to answer technology companies’ most pertinent questions.

Prior Art Plus: The Prior Art Plus report is an entry-level report that provides the basic information to assist in understanding the value of a given invention. It identifies key patents and publications relevant to a specific invention, provides an understanding of the history of a technology space, depicts the key players and their patents, and provides an overview of the countries where patents are being filed. This data provides the tools necessary to quickly ascertain the value of a given invention or patent while identifying core aspects that could serve as differentiators for developing a potentially new invention. Moreover, by understanding how claims have changed during prosecution, this report could deliver insights into how broad or narrow a patent might be. Understanding the protection conferred by a patent and the value of such protection can lead to better prioritization decisions over the jurisdictions in which to apply for patent protection, should a global protection strategy be considered. The ultimate goal is to maintain valuable patents that are in alignment with a company’s business, IP and R&D strategy, which we believe leads to a capital-efficient technology business.

Targeted Landscape Report: The Targeted Landscape report is a premium-focused report offering. It seeks to answer the question of “who is developing something similar to our technology?” and provide data for competitive intelligence, innovation management, M&A, partnering, licensing, IP strategy, litigation and risk management, and prosecution analysis. We believe most companies are unaware of true direct IP competitors operating in their space, which leads to a poor IP and business strategy. Moreover, the knowledge of competing patents and the structure of these claims allows companies to strategically craft their claims for broader coverage. A Targeted Landscape report usually analyzes 25-300 patent families.

Broad Industry Landscape Report: PatentVest offers two versions of a broad landscape report: the top innovator’s awards report and a custom report. The top innovator’s awards report covers top assignees in a specific space focusing on topical landscapes for new/trending industries, in which assignees have valuable patents and a strong IP position. The custom report will be created specifically for a client in a particular industry or technology sector. The Broad Industry Landscape report analyzes 5,000 to 10,000+ patents to provide a high-level overview of how companies are applying a specific technology or how different technologies are being deployed across a particular market. In other words, this report answers, “which companies are in the space?” and “what are they doing?”. Such answers and data, we believe, allow the client to identify and investigate adjacent market verticals and technology categories that a company could both create and lead, as well as to explore different potential applications of their technology.

Competitor Watch: Competitor Watch identifies and monitors competitors by actively observing the changes in direct competitor patent filings. This report allows a company to efficiently keep track of competitors’ technology innovations and strategic direction. We believe tracking patent filings can allow a company to have an early understanding of a competitor’s strategy and could be valuable to guide business and R&D strategy to maintain technology leadership.

Prosecution Monitor: Prosecution Monitor keeps track of a company’s and competitors’ patents in prosecution. Patents are traditionally written broadly and might be subsequently narrowed during prosecution. Strategically monitoring and managing the prosecution process can lead to claims that better protect the invention. Additionally, a competitor’s application that could be considered problematic might get narrowed significantly during prosecution. The information covered in this report includes amendments to claims, rejections, prior art cited by the examiner, applicant arguments, and notice of allowance.

Additionally, we will offer two annual enterprise solutions. These solutions will be offered after the completion of a Prior Art Plus report depending on a company’s needs.

Strategic Compass: Our Strategic Compass solution includes annual Targeted Landscape and Competitor Watch reports. Strategic Compass is designed to help companies keep track of a few innovations in a given space and provides them with a framework to transform innovation into a manageable business process.

Strategic Co-Pilot: Our Strategic Co-pilot solution includes an annual Targeted Landscape, Competitor Watch, Prior Art Plus reports on all invention disclosures, and Prosecution Monitor reports. It also includes Invention Management, which we have conceived as a process to filter new ideas and determine if a company should file a new patent for an invention or keep it as a trade secret. Strategic Co-Pilot is our most comprehensive offering and we intend to introduce it to companies that have used our Strategic Compass solution but have increased needs warranting additional services.

PatentVest as a Law Firm

On September 20, 2022, the Supreme Court of the State of Arizona licensed PatentVest to practice law as an Alternative Business Structure, or ABS. An ABS is a business entity that includes non-lawyers that have an economic interest or decision making authority in a law firm. We intend to develop and maintain a team of highly trained legal professionals and staff that will principally provide legal services related to intellectual property matters under federal law. Through offering legal services we intend to enhance the value of inventions by addressing questions of strategy and perspective along with the technical merits of an invention. The provision of legal services by PatentVest will be limited to those technology companies specifically engaged by PatentVest for such services and is intended to provide all the rights and privileges of the attorney-client relationship.

Invizyne

Invizyne, a partner company, was created in early 2019 with the vision of simplifying nature by using nature’s building blocks to create molecules of interest. Invizyne has differentiated technology underlying its unique synthetic biology platform which potentially solves the inherent production bottlenecks of certain legacy technologies. The promise of synthetic biology, we believe, has no bounds. If Invizyne’s technology platform is successful at an industrial scale, we believe that it could significantly impact several industries by enabling the exploration of a large number of molecules and properties found in nature. For example, we believe that therapeutic molecules found in nature could be tested for efficacy and quickly created and scaled. Examples of where this has been important include with respect to multiple cannabinoids and other natural compounds, quick replication of novel properties of rare chemicals found in nature, creation of natural flavors and fragrances to naturally enrich food, and the sustainable creation of fuel from renewable energy sources.

Synthetic biology at its core re-wires a unicellular organism, such as yeast, via genetic engineering to produce desired molecules. The problems with traditional methods of producing molecules such as chemical synthesis and extraction include the expense and damage to the environment. For example, chemical synthesis methods are traditionally inefficient, produce significant waste, are often dependent on petroleum-derived chemicals, and expensive. Natural extraction also can be taxing on the environment due to inefficiencies when desired compounds are only found in small concentrations. In addition, it has long production cycles and presents issues with foreign contaminants. The promise of synthetic biology over these traditional methods is that desired molecules can be produced in sustainable ways, production can be scaled consistently and reliably, rare molecules can become readily available, and new and novel compounds can be more readily accessed.

There are several synthetic biology companies that also recognize this opportunity, including a few that have recently gone public and had valuations at certain points of up to multiple billions. All these companies are engineering complex microbes and we believe that engineering microbes presents several significant drawbacks.

Invizyne identified a fundamental problem in synthetic biology and set out to solve it– namely, that engineering a cell involves engineering a multitude, perhaps thousands, of interrelated and/or interdependent processes and systems. As a living, breathing metabolic entity, cells have evolved and intricately balanced systems that permit survival and success. Within each cell, myriad enzymes turn starter molecules into others and some of these molecules are essential for the survival of the cell while others are waste compounds. The field of synthetic biology seeks to modify cells to express different enzymatic pathways to produce a given molecule. The drawback of this approach is that of the inherent difficulties of dealing with an organism and the complexities noted above. The strain engineering process, which results in an organism that will produce the molecule of interest, is an expensive and long iterative process in which the survival of the cell is balanced with the productivity of the strain.

Invizyne is pioneering multi-stage enzymatic bioconversions that are fully cell-free. Invizyne believes that its process, named SimplePath, solves the inherent limitations of traditional synthetic biology. SimplePath uses only the specific enzymes that are involved in the process of making the molecule of interest, therefore radically simplifying the process. Not being bound to the limitations of traditional synthetic biology brings several advantages, including:

Invizyne believes that SimplePath can significantly enable the scalability of synthetic biology. Decoupling the enzymes from a cell’s metabolism, we believe, can greatly increase productivity and throughput while simplifying product development. These benefits, we believe, will allow Invizyne to make the same amount of product using a much smaller footprint and reactor size that will potentially result in lower production costs and CapEx. Invizyne’s systems have both fast conversion times as well as the ability to keep reactions running continuously for long periods of time, both of which increase the ability to produce molecules of interest more efficiently. Additionally, it is believed that the simplicity of Invizyne’s systems will allow faster design, build, test, and learn development cycles for new products thereby increasing the feasibility of creating more products and novel molecules.

Invizyne’s core inventions relate to enzyme and co-factor recyclability, which are both key to maintaining the energy balance within an enzymatic system and enabling reactions to run continuously for long periods of time. Invizyne initially licensed a portfolio of patents from University of California Los Angeles (UCLA) and has since filed for several additional patents in addition to developing significant know-how in connection with its systems that it has elected to maintain as trade-secrets. This basket of IP protects different aspects of Invizyne’s co-factor regeneration system, cannabinoid pathways, novel molecules, and stable enzymes. Invizyne believes that its IP portfolio provides it with a strong position to dominate the field of cell-free enzymatic bioconversions as well as to foster additional innovation and know-how that will permit Invizyne to remain the leader in cell-free biosynthesis

Invizyne has been awarded grant funding in excess of $10 million from different institutions, including Department of Energy, Advance Research Projects Agency – Energy, Small Business Innovation Research, and the National Institute of Health. The Invizyne scientific team has published 9 academic papers in reputable journals, including Nature, about cell-free synthetic biology processes and topics.

Invizyne is currently focusing on the development of high-value molecules in markets with quick paths to commercialization. Invizyne is validating SimplePath by undertaking efforts to demonstrate linear scale while maintaining high productivity in a commercially-relevant product within a short period of time. As a demonstration, Invizyne has scaled production of cannabigerolic acid (CBGA) from 1ml to up to 100 liters, a 100,000x increase, and in the process and to its knowledge, maintained productivity at a rate several times higher than competitors. While there can be no assurances that Invizyne will be able to achieve production on a commercial scale as a result of increasing the scale of the CBGA reaction volume from 1 ml to 100 liters, Invizyne believes that it will be successful in scaling its SimplePath systems to commercial production. Once Invizyne has established manufacturing feasibility at scale with established molecules, it intends to develop a portfolio of products that will include both proprietary and rare molecules.

Invizyne also intends to partner with research organizations to validate its ability to produce several novel and rare molecules and as well as with pharmaceutical organizations to seek value creation and commercialization opportunities. Invizyne believes that, as a result of the many clinical trials underway for cannabinoid and other natural molecules showing activity across a range of different indications, there is currently a big shift in contemporary understanding of the therapeutic potential of cannabinoids and other natural molecules. Invizyne believes that its process is potentially well-suited to take advantage of the trends around natural molecules by being able to meet their requirements of pharmaceutical companies for pure and consistent products. Invizyne also believes that its system is better suited for making a wide range of active pharmaceutical ingredients, including novel cannabinoids and other molecules, each potentially having different therapeutic properties.

Additionally, Invizyne is making substantial inroads in the space of 2G biofuels by both pioneering effective methods to make isobutanol at titers and scales that would otherwise be toxic to cellular organisms as well as upgrading ethanol to other more useful and higher value products.

Invizyne is currently exploring a number of commercial engagements, collaborations, partnerships and joint venture opportunities that could permit market insertion and accelerate the commercialization of Invizyne’s technology.

Regulation

Broker-Dealer Regulation

Our broker-dealer subsidiary, Public Ventures, is subject to regulations governing every aspect of its securities business, including the execution of securities transactions; capital requirements; record-keeping and reporting procedures; relationships with clients, including the handling of cash and margin accounts; the experience of and training requirements for certain employees; and business interactions with firms that are not members of regulatory bodies. As a participant in the financial services industry, it is subject to the complex and extensive regulation of the U.S. federal and state regulatory agencies, self-regulatory organizations and securities exchanges and certain other authorities with oversight on banking and money laundering. The laws, rules and regulations comprising the regulatory framework applicable to broker-dealers are constantly changing, as are the interpretation and enforcement of existing laws, rules and regulations. The effect of any such changes cannot be predicted and may impact our operations and affect our profitability.

Public Ventures is registered as a securities broker-dealer with the SEC and is required to be a member of FINRA. FINRA is a self-regulatory body composed of members, such as our broker-dealer subsidiary, that have agreed to abide by its rules and regulations. FINRA may expel, fine and otherwise discipline member firms and their employees. Public Ventures is also licensed as a broker-dealer in 33 states in the U.S., requiring it to comply with the laws, rules and regulations of each state. Additionally, Public Ventures might register in additional states from time to time as needed. Each state may revoke the license to conduct securities business, fine, and otherwise discipline broker-dealers and their employees.

Public Ventures is subject to the SEC’s Uniform Net Capital Rule, Rule 15c3-1, which may limit our ability to make withdrawals of capital from the broker-dealer subsidiary. The Uniform Net Capital Rule sets the minimum level of net capital a broker-dealer must maintain and also requires that a portion of a broker-dealer’s assets be relatively liquid. In addition, Public Ventures is subject to certain notification requirements related to withdrawals of excess net capital.

We are also subject to the USA PATRIOT Act of 2001 (the “Patriot Act”), which imposes obligations regarding the prevention and detection of money-laundering activities, including the establishment of client due diligence, client verification and other compliance policies and procedures. Failure to comply with these requirements may result in monetary, regulatory and, in the case of the USA Patriot Act, criminal penalties. We are subject to the Securities Investor Protection Act of 1970, which created the Securities Investors Protection Corporation (SIPC), which provides certain client protection to clients related to their brokerage accounts. We are subject to certain treasury regulations, such as Regulation T, relating to how money may be lent to clients and used, and the rules related to margin accounts.

Broker-dealers are also subject to ongoing duties of financial responsibility, client protection and good conduct. These include, among other things, (i) client funds and securities must be segregated from the broker-dealer’s proprietary business operations, (ii) maintaining basic bookkeeping requirements including records of trades, receipts, positions held in different securities, trial balances, complaints, and compliance, together with reports to be filed periodically, (iii) executing orders on behalf of clients to ensure the best execution possible, disclosing information relevant to investors, charging prices in line with market conditions, and disclosing conflicts of interest, (iv) only recommending investments or strategies that are suitable for the clients concerned, (v) communicating in a fair, balanced, and not misleading way with clients, (vi) observing rules concerning maximum value of gifts made to clients and political contributions, and (vii) filing reports of any suspicious activities noted by the broker-dealer, including investments over predefined monetary limits.

SEC Regulation Best Interest requires that a broker-dealer and its associated persons act in a retail client’s best interest and not place their own financial or other interests ahead of a retail client’s interests when recommending securities transactions or investment strategies, including recommendations of types of accounts. To meet this best interest standard, a broker-dealer must satisfy four component obligations, including a disclosure obligation, a care obligation, a conflict of interest obligation, and a compliance obligation, and both broker-dealers and investment advisers are required to provide disclosures about their standard of conduct and conflicts of interest.

In addition to the SEC, various states have proposed or adopted laws and regulations seeking to impose new standards of conduct on broker-dealers that, as written, differ from the SEC’s new regulations and may lead to additional implementation costs if adopted. The SEC did not indicate an intent to preempt state regulation in this area, and some of the state proposals would allow for a private right of action.

Various regulators, including the SEC, FINRA and state securities regulators and attorneys general, conduct both targeted and industry-wide investigations of certain practices relating to the financial services industry, including sales and marketing practices, valuation practices, and compensation arrangements. In addition, the SEC staff has conducted studies with respect to soft dollar practices in the brokerage and asset management industries and proposed interpretive guidance regarding the scope of permitted brokerage and research services in connection with soft dollar practices.

A variety of data privacy laws to protect personal information obligate broker-dealers to provide notice about its data handling practices, to offer certain opt-outs, and to implement reasonable security measures to deter unauthorized access. Broker-dealer internal and external electronic communications may only be made on approved devices and platforms that are encrypted and secure and will capture all communications in the broker-dealer’s records. The cost and burden of taking cybersecurity measures, having personnel oversee compliance and staying current with respect to new technology developments continues to grow.

Our broker-dealer accounting, administrative and operations personnel are responsible for financial controls, internal and external financial reporting, compliance with regulatory and legal requirements, office and personnel services, management information and telecommunications systems, and the processing of our securities transactions. We are subject to the privacy laws applicable to financial institutions in respect of our securities business.

As is common in the securities industry, our broker-dealer subsidiary is subject to regular reviews of and investigations into our operations, some of which progress to regulatory actions that may result in fines, censures, and limitations on activity. Currently, we are the subject of two reviews of past broker-dealer activities, which may be either resolved without further regulatory action or escalated such that we could be subject to one or more penalties. At this time, we are cooperating with the reviews, and we do not know whether or not they will escalate to regulatory action and, if they do, what violations of rules and regulations may be asserted against the broker-dealer and what potential final resolutions might be.

Self-Clearing Regulation

Public Ventures is in the process of developing the capabilities of self-clearing United States equity securities. As part of the this process, in addition to the broker-dealer regulation described above, Public Ventures will be subject to regulation directed to self-clearing operations that demonstrates its financial, operational and systems capacities to perform this business and being able to comply with the related regulation, including those of SEC, Depository Trust Corporation, or the DTC, and National Securities Clearing Corporation, or the NSCC. To operate the self-clearing activities we must meet different capitalization requirements to those of a broker-dealer. To do this, we will have to maintain within the capital structure various cash and cash equivalent assets and retain access to necessary lines of credit that can assure our ability to comply with changing deposit requirements of the SEC and of DTC and NSCC. We expect that these regulations will undergo substantial changes, which will require additional capital as settlement operations move to T+1 and T+0 settlement in the future.

Data Protection and Cyberattack Regulation

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

Additionally, the California Privacy Rights Act (“CPRA”) was passed in November 2020 and it will be effective in most material respects starting on January 1, 2023. The CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding clients’ rights with respect to certain sensitive personal information. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. The effects of the CCPA and the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.

We expect more states to enact legislation similar to the CCPA and the CPRA, which provide clients with new privacy rights and increase the privacy and security obligations of entities handling certain personal information of such clients. The CCPA has prompted a number of proposals for new federal and state-level privacy legislation, such as in Virginia and Colorado, both with laws to take effect in 2023. It is anticipated that all such laws will add additional complexity, have variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.

Additionally, our broker-dealer, Public Ventures, is subject to SEC Regulation S-P, which requires that businesses maintain policies and procedures addressing the protection of client information and records. This includes protecting against any anticipated threats or hazards to the security or integrity of client records and information and against unauthorized access to or use of client records or information. Regulation S-P also requires businesses to provide initial and annual privacy notices to clients describing information sharing policies and informing clients of their rights.

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

In the normal course of business, we collect, process, use and retain sensitive and confidential information regarding our clients and prospective clients, including data provided by and related to clients and their transactions, as well as other data of the counterparties to their payments. We also have arrangements in place with certain third-party service providers that require us to share client information. Although we devote resources and management focus to ensuring the integrity of our systems through information security and business continuity programs, our facilities and systems, and those of third-party service providers, are vulnerable to actual or threatened external or internal security breaches, acts of vandalism, theft, fraud or misconduct on the part of employees, other internal sources or third parties, computer viruses, phishing attacks, internet interruptions, disruptions or losses, misplaced or lost data, ransomware, unauthorized encryption, denial-of-service attacks, social engineering, unauthorized access, spam or other attacks, natural disasters, fires, terrorism, war, telecommunications or electrical interruptions or failures, programming or human errors or malfeasance and other similar malicious or inadvertent disruptions or events. We and our third-party service providers from time to time have experienced and may in the future continue to experience such instances. In some cases, the bad actors facilitated unauthorized financial transactions. We also face security threats from malicious third parties that could obtain unauthorized access to our systems and networks, which threats we anticipate will continue to grow in scope and complexity over time. These events could interrupt our business or operations, result in legal claims or proceedings, result in significant legal and financial exposure, supervisory liability under U.S. federal or state, or non-U.S. laws regarding the privacy and protection of information, including personal information, damage to our reputation and a loss of confidence in the security of our systems, products and services. Although the impact to date from these events has not had a material adverse effect on us, no assurance is given that this will be the case in the future.

Information security risks in the financial services industry have increased recently, in part because of new technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized criminals, perpetrators of fraud, hackers, terrorists and other malicious third parties. In addition to cyberattacks and other security breaches involving the theft of sensitive and confidential information, hackers, terrorists, sophisticated nation-state and nation-state supported actors and other malicious third parties recently have engaged in attacks that are designed to disrupt key business services, such as consumer-facing websites. We and our third-party service providers may not be able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used to sabotage or to obtain unauthorized access to our or our third-party service providers’ technology, systems, networks and/or physical facilities in which data is stored or through which data is transmitted change frequently and because attacks can originate from a wide variety of sources. We employ detection and response mechanisms designed to contain and mitigate security incidents. Nonetheless, early detection efforts may be thwarted by sophisticated attacks and malware designed to avoid detection. We also may fail to detect the existence of a security breach related to the information of our clients and to prevent or detect service interruption, system failure or data loss. Further, as a significant number of people work from home, these cybersecurity risks may be heightened by an increased attack surface across our business and those of our clients and third-party service providers. We cannot guarantee that our efforts, or the efforts of those upon whom we rely and partner with, will be successful in preventing any such information security incidents.

The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our clients or our proprietary information, software, methodologies and business secrets could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, damage to our reputation or a loss of confidence in the security of our systems, products and services, all of which could have a material adverse impact on our business. In addition, there recently have been a number of well-publicized attacks or breaches affecting companies in the financial services industry that have heightened concern by clients, which could also intensify regulatory focus, cause clients to lose trust in the security of the industry in general and result in reduced use of our services and increased costs, all of which could also have a material adverse effect on our business.

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

A security breach may also cause us to breach client contracts. Our agreements with certain partners and service providers may require us to use industry-standard or reasonable measures to safeguard personal information. We also may be subject to laws that require us to use industry-standard or reasonable security measures to safeguard personal information. A security breach could lead to claims by our clients or other relevant stakeholders that we have failed to comply with such legal or contractual obligations. As a result, we could be subject to legal action or our clients could end their relationships with us. There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages, and in some cases our client agreements may not limit our remediation costs or liability with respect to data breaches.

Litigation resulting from security breaches may adversely affect our business. Unauthorized access to our technology, systems, networks or physical facilities, or those of our third-party service providers, could result in litigation with our clients or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business or adversely affect our reputation. We could be required to fundamentally change our business activities and practices or modify our products and/or technology capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach were to occur, and the confidentiality, integrity or availability of personal information was disrupted, we could incur significant liability, or our technology, systems or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.

We may not have adequate insurance coverage with respect to liabilities that result from any cyberattacks or other security breaches or disruptions suffered by us or third parties upon which we rely. The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.

While we take precautions to prevent consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect the performance of our products and services or subject us to scrutiny or penalties.

Medical Regulation

We anticipate that a number of our partner companies will be engaged in developing, testing, conducting, clinical trials and manufacturing and marketing medical therapies and devices, which has been one of our investment areas of interest historically. Those of our partner companies operating in the medical field will be subject to various medical- oriented regulations depending on the stage of development and areas of business endeavors they pursue.

For those partner companies involved in developing medical therapies and devices, they will be subject to the U.S. Food and Drug Administration’s, or the FDA’s, and similar foreign agencies’ requirements for testing, conducting clinical trials, documenting efficacy and safety requirements, research protocols and standards, manufacturing and many of the related obligations for record-keeping and reporting, labeling, notification, repairs, replacements and refunds, importation and export restrictions, and performance standards. The regulatory requirements imposed by the FDA and other regulatory bodies govern a wide variety of product-related activities, from quality management, design and development to labeling, manufacturing, promotion, sales, and distribution. The process of obtaining approval for clinical trials, marketing approval, authorizations, or clearances from the FDA and comparable foreign regulatory authorities for new products, or for enhancements or modifications to existing products, could take a significant amount of time, require the expenditure of substantial financial and other resources, and require rigorous and expensive pre-clinical and clinical testing. Additionally, the FDA or comparable foreign regulatory authorities could impose limitations on the indications for use of any technologies, therapies or products. The failure to receive clearance, authorization, or approval for significant new technologies, therapies and products or modifications thereto on a timely basis or at all could have a material, adverse effect on our financial condition and results of operations.

FDA and foreign regulations include ongoing compliance with good manufacturing requirements, requirements related to design controls, production and process controls, process validation, purchasing controls, supplier oversight, complaint handling and investigation, corrective and preventative actions, and record-keeping. Typically there are continuing reporting regulation that requires a company to provide information to regulators if there is evidence that reasonably suggests that a medical technologies or device may have caused or contributed to a death or serious injury or, that a malfunction occurred which would be likely to cause or contribute to a death or serious injury upon recurrence. The FDA and comparable foreign regulatory authorities also regulate the promotion and marketing of medical technologies and devices and require that manufacturers only make promotional claims or statements that are consistent with the indications and labeling cleared, authorized, or approved by the regulatory authorities.

U.S. Foreign Corrupt Practices Act

The U.S. Foreign Corrupt Practices Act, or FCPA, prohibits U.S. corporations and individuals from engaging in certain activities to obtain or retain business abroad or to influence a person working in an official capacity. It is illegal to pay, offer to pay or authorize the payment of anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity. The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Equivalent laws have been adopted in other foreign countries that impose similar obligations.

Human Capital

As of the date of this prospectus, MDB, through either MDB CG Management Company, Public Ventures, Invizyne, and PatentVest employs 30 people on a full-time basis. We also engage from time to time consultants for various activities. Currently, MDB also employs or hires on a contractual basis fourteen persons who perform services to MDB and its subsidiaries. We plan to increase the number of our employees and contractors to expand and accelerate our research and development activities to identify, invest in and guide our partner companies.

As our business develops and we invest in additional partner companies or acquire companies that enhance our operations, we anticipate the number of employees and consultants will grow as we advance our product candidates and source additional development assets. In addition, we will utilize contractors, consultants, clinical research organizations and partners to perform our clinical studies, toxicology, manufacturing, regulatory, and other operational functions.

Properties

Our current executive offices and the offices of Public Ventures, MDB CG Management Company, and PatentVest are presently located in a 2,630 square foot facility in Dallas, Texas, rented from an affiliate of the Company. We intend to relocate our existing facilities to a new office space in Dallas, Texas, under a multi-year lease in the fourth quarter of 2022.

Invizyne’s current executive offices, laboratory space, and pilot production are presently located in a 5,098 square foot facility in Monrovia, California. The rental amount is $14,020 per month/$168,240 per year, under a 5-year lease term increasing at 2.5% per annum. Invizyne has the option under its lease to increase the number of square feet it rents in the same facility, which it plans on exercising in the future.

Legal Matters

We are not currently subject to any material legal proceedings. However, we may from time to time become a party to various legal proceedings arising in the ordinary course of our business.

MANAGEMENT

Set forth below are our directors and officers: