Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2024


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

For the transition period from to

Commission file number 001-04321

Forge Global Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware									98-1561111
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

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

(415) 881-1612

(Registrant's telephone number, including area code)

N/A

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

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


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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

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


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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of August 7, 2024, the registrant had 183,158,492 shares of common stock, $0.0001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

•effectively respond to changing macroeconomic and business conditions;

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

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

•anticipate rapid technological changes and competitive threats;

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

•increase brand awareness;

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

•acquire, develop, and protect intellectual property;

•maintain key strategic relationships with partners;

•anticipate the significance and timing of contractual obligations;

•enhance future operating and financial results;

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

•finance operations on an economically viable basis;

•meet future capital adequacy and liquidity requirements;

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

•comply with laws and regulations applicable to our business;

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

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

•upgrade and maintain information technology systems;

•maintain disaster recovery and business continuity planning controls;

•manage vendor and third party processes;

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

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

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

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

•successfully defend litigation.

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

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

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

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

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

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		Page
Part I - Financial Information
	Item 1. Condensed Consolidated Financial Statements (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	12
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
	Item 4. Controls and Procedures	40

Part II - Other Information
	Item 1. Legal Proceedings	42
	Item 1A. Risk Factors	42
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 3. Defaults Upon Senior Securities	43
	Item 4. Mine Safety Disclosures	43
	Item 5. Other Information	43
	Item 6. Exhibits	43

	Signatures	44

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Part I - Financial Information

FORGE GLOBAL HOLDINGS, INC.

Consolidated Balance Sheets

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


	June 30, 2024 (Unaudited)		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	120,475	$	144,722
Restricted cash	1,089		1,062
Accounts receivable, net	4,524		4,067

Prepaid expenses and other current assets	10,930		13,253
Total current assets	$	137,018	$	163,104
Internal-use software, property and equipment, net	3,993		5,192
Goodwill and other intangible assets, net	127,961		129,919
Operating lease right-of-use assets	7,324		4,308
Payment-dependent notes receivable, noncurrent	6,758		5,593
Other assets, noncurrent	2,606		2,615
Total assets	$	285,660	$	310,731
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,656	$	1,831
Accrued compensation and benefits	9,079		11,004
Accrued expenses and other current liabilities	6,818		8,861
Operating lease liabilities, current	3,357		2,516

Total current liabilities	20,910		24,212
Operating lease liabilities, noncurrent	5,326		2,707
Payment-dependent notes payable, noncurrent	6,758		5,593
Warrant liabilities	2,889		9,616
Other liabilities, noncurrent	303		185
Total liabilities	36,186		42,313
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.0001 par value; 182,670,074 and 176,899,814 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	19		18
Treasury stock, at cost; 157,193 shares as of June 30, 2024 and December 31, 2023, respectively	(625)		(625)
Additional paid-in capital	558,266		543,846
Accumulated other comprehensive income	721		911
Accumulated deficit	(312,986)		(280,638)
Total Forge Global Holdings, Inc. stockholders’ equity	245,395		263,512
Noncontrolling interest	4,079		4,906
Total stockholders’ equity	249,474		268,418
Total liabilities and stockholders’ equity	$	285,660	$	310,731

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

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Operations

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
Marketplace revenues	$	11,679	$	5,723	$	20,199	$	10,355
Custodial administration fees	10,603		10,997		21,325		21,844
Total revenues	22,282		16,720		41,524		32,199
Transaction-based expenses:
Transaction-based expenses	(256)		(83)		(285)		(102)
Total revenues, less transaction-based expenses	22,026		16,637		41,239		32,097
Operating expenses:
Compensation and benefits	28,784		25,154		58,627		50,916
Technology and communications	2,649		3,475		5,709		6,865
Professional services	1,605		3,265		3,822		6,001
Advertising and market development	1,243		876		2,333		1,553
Rent and occupancy	1,107		1,148		2,242		2,474
General and administrative	2,508		3,525		7,570		6,273
Depreciation and amortization	1,781		1,747		3,597		3,536
Total operating expenses	39,677		39,190		83,900		77,618
Operating loss	(17,651)		(22,553)		(42,661)		(45,521)
Interest and other income (expense):
Interest income	1,495		1,319		3,204		2,828
Change in fair value of warrant liabilities	2,280		(3,790)		6,727		(3,622)
Other income, net	94		217		170		432
Total interest and other income (expense)	3,869		(2,254)		10,101		(362)
Loss before provision for income taxes	(13,782)		(24,807)		(32,560)		(45,883)
Provision for income taxes	258		293		474		478
Net loss	(14,040)		(25,100)		(33,034)		(46,361)
Net loss attributable to noncontrolling interest	(316)		(211)		(686)		(284)
Net loss attributable to Forge Global Holdings, Inc.	$	(13,724)	$	(24,889)	$	(32,348)	$	(46,077)
Net loss per share attributable to Forge Global Holdings, Inc. common stockholders:
Basic	$	(0.08)	$	(0.14)	$	(0.18)	$	(0.27)
Diluted	$	(0.08)	$	(0.14)	$	(0.18)	$	(0.27)
Weighted-average shares used in computing net loss per share attributable to Forge Global Holdings, Inc. common stockholders:
Basic	182,681,065		173,289,549		181,680,268		172,565,508
Diluted	182,681,065		173,289,549		181,680,268		172,565,508

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

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(In thousands of U.S. dollars)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(14,040)	$	(25,100)	$	(33,034)	$	(46,361)
Foreign currency translation adjustment	(76)		(53)		(331)		175
Comprehensive loss	(14,116)		(25,153)		(33,365)		(46,186)
Less: Comprehensive loss attributable to noncontrolling interest	(348)		(232)		(827)		(214)
Comprehensive loss attributable to Forge Global Holdings, Inc.	$	(13,768)	$	(24,921)	$	(32,538)	$	(45,972)

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity

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


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

(*) amount less than 1

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity

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


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

(*) amount less than 1

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

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands of U.S. dollars)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(33,034)	$	(46,361)
Adjustments to reconcile net loss to net cash used in operations:
Share-based compensation	17,326		16,210
Depreciation and amortization	3,597		3,536
Amortization of right-of-use assets	1,305		1,579
Allowance for doubtful accounts	216		171
Impairment of right-of-use assets	186		—
Loss on impairment of long lived assets	—		536
Change in fair value of warrant liabilities	(6,727)		3,622
Changes in operating assets and liabilities:
Accounts receivable	(673)		(1,313)
Prepaid expenses and other assets	(4,228)		219
Accounts payable	62		(1,229)
Accrued expenses and other liabilities	(1,854)		1,288
Accrued compensation and benefits	(1,926)		(7,514)
Operating lease liabilities	(1,046)		(2,081)
Other	(10)		—
Net cash used in operating activities	$	(26,806)	$	(31,337)
Cash flows from investing activities:
Receipts of term deposit maturities	6,559		—
Purchases of property and equipment	(667)		(99)

Purchases of term deposits	—		(2,665)

Net cash provided by (used in) investing activities	5,892		(2,764)
Cash flows from financing activities:
Proceeds from exercise of options	461		330
Taxes withheld and paid related to net share settlement of equity awards	(3,437)		(557)
Net cash used in financing activities	(2,976)		(227)
Effect of changes in currency exchange rates on cash and cash equivalents	(331)		175
Net decrease in cash and cash equivalents	(24,221)		(34,153)
Cash, cash equivalents and restricted cash, beginning of the period	145,785		194,965
Cash, cash equivalents and restricted cash, end of the period	$	121,564	$	160,812

Reconciliation of cash, cash equivalents and restricted cash to the amounts reported within the consolidated balance sheets
Cash and cash equivalents	$	120,475	$	159,526
Restricted cash	1,089		1,286
Total cash, cash equivalents and restricted cash, end of the period	$	121,564	$	160,812

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FORGE GLOBAL HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands of U.S. dollars)


	Six Months Ended June 30,
	2024		2023
Supplemental disclosure of non-cash investing and financing activities:
Lease liabilities arising from obtaining right-of-use assets	$	4,506	$	—
Vesting of early exercised stock options and restricted stock awards	71		198
Property and equipment purchases not yet paid	13		—
Issuance of common stock upon release of restricted stock units	1		—

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

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

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

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

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

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

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

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

Segment Information

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Unaudited Interim Condensed Consolidated Financial Information

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

Use of Estimates

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

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

Goodwill and Other Intangible Assets, Net

Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized but is tested for impairment annually on October 1, or more frequently if events or changes in circumstances indicate the goodwill may be impaired. The Company's 2023 annual goodwill impairment test resulted in no goodwill impairment.

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

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risks

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

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

Revenue by Geographic Location

For the three and six months ended June 30, 2024 and 2023, revenue outside of the United States (including U.S. territories), based on customer billing address, was $1.8 million, $3.3 million, $1.0 million, and $1.9 million, respectively.

Comprehensive Loss

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

3. Capitalization

Common Stock

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

Merger Transaction

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

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

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2024, the Company had authorized 2,000,000,000 and 100,000,000 shares of common stock and preferred stock, respectively, and the Company had 182,670,074 shares of common stock and no shares of preferred stock issued and outstanding.

4. Fair Value Measurements

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

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

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


	As of June 30, 2024
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	73,766	$	—	$	—	$	73,766
Term deposits (less than 90 days)	—		6,459		—		6,459
Term deposits (greater than 90 days)(1)(2)	—		1,047		—		1,047
Payment-dependent notes receivable, non-current	—		—		6,758		6,758
Total financial assets	$	73,766	$	7,506	$	6,758	$	88,030

Payment-dependent notes payable, non-current	$	—	$	—	$	6,758	$	6,758
December 2023 Warrants(3)	—		1,042		—		1,042
Private Placement Warrants	—		—		1,847		1,847
Total financial liabilities	$	—	$	1,042	$	8,605	$	9,647

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

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

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

(2) Includes $0.6 million and $1.0 million term deposits required to fulfill the Company's obligations in connection with real estate lease agreements as of June 30, 2024 and December 31, 2023, respectively.

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

Payment-Dependent Notes Receivable and Payment-Dependent Notes Payable

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

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

Private Placement Warrants

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


	June 30, 2024		December 31, 2023
Fair value of underlying securities	$	1.46	$	3.43
Expected term (years)	2.7		3.2
Expected volatility	115.0%		117.0%
Risk-free interest rate	4.6%		4.0%
Expected dividend yield	0.0%		0.0%

Fair value per warrant	$	0.25	$	0.64

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Balance as of beginning of period	$	3,102	$	190	$	4,727	$	222
Change in fair value of warrant liability(1)	(1,255)		2,570		(2,880)		2,538
Balance as of June 30,	$	1,847	$	2,760	$	1,847	$	2,760

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

Transfers Into and Out of Level 3

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

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


	Total Level 3 Financial Assets		Total Level 3 Financial Liabilities
Balance as of December 31, 2023	$	5,593	$	10,320
Change in fair value of payment-dependent notes receivable	1,165		—
Change in fair value of payment-dependent notes payable	—		1,165
Change in fair value of Private Placement Warrants	—		(2,880)
Balance as of June 30, 2024	$	6,758	$	8,605


	Total Level 3 Financial Assets		Total Level 3 Financial Liabilities
Balance as of December 31, 2022	$	7,371	$	7,977
Change in fair value of payment-dependent notes receivable	(1,541)		—
Change in fair value of payment-dependent notes payable	—		(1,541)
Change in fair value of Junior Preferred Stock Warrants (1)	—		1,084
Change in fair value of Private Placement Warrants	—		2,538
Balance as of June 30, 2023	$	5,830	$	10,058

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

5. Condensed Consolidated Balance Sheet Components

Accounts Receivable, net

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

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	June 30, 2024		December 31, 2023
Accounts receivable	$	5,801	$	5,128
Allowance for doubtful accounts	(1,277)		(1,061)
Accounts receivable, net	$	4,524	$	4,067

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

Prepaid Expenses and Other Current Assets

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


	June 30, 2024		December 31, 2023
Indemnity escrow receivable(1)	$	3,003	$	1,581
Prepaid insurance	2,367		1,084
Prepaid software	1,804		1,484
Term deposits (greater than 90 days)	1,047		7,694
Other prepaid expenses	755		801
Other current assets	1,954		609
Prepaid expenses and other current assets	$	10,930	$	13,253

(1) As of June 30, 2024 and December 31, 2023, the Company had an indemnity escrow receivable of $3.0 million and $1.6 million, respectively, in prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets, which it expects to collect from the escrow related to the acquisition of IRA Services, Inc.

Internal-Use Software, Property and Equipment, Net

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


	June 30, 2024		December 31, 2023
Capitalized internal-use software	$	8,995	$	9,000
Leasehold improvements	1,208		866
Furniture and fixtures	535		485
Computer equipment	163		125
	$	10,901	$	10,476
Less: accumulated depreciation and amortization	(6,908)		(5,284)
Internal-use software, and property and equipment, net	$	3,993	$	5,192

The Company recorded depreciation expense related to property and equipment of $0.2 million and $0.3 million for the three and six months ended June 30, 2024 and less than $0.1 million and $0.1 million for the three and six months ended June 30, 2023. As of June 30, 2024 and December 31, 2023, long-lived assets located outside of the United States were not material.

For the three and six months ended June 30, 2024, the Company recorded amortization expense on capitalized internal-use software placed in service of $0.6 million and $1.4 million. For the three and six months ended June 30, 2023, the Company recorded amortization expense on capitalized internal-use software placed in service of $0.7 million and $1.4 million. There were no impairments on capitalized internal-use software for the three and six months ended June 30, 2024. For the three and six months ended June 30, 2023, the Company recorded impairment losses of $0.0 million and $0.5 million,

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

respectively, related to the capitalized costs of internally developed software. Impairments are recorded in general and administrative expense within the unaudited condensed consolidated statements of operations.

Accrued Expenses and Other Current Liabilities

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


	June 30, 2024		December 31, 2023
Payable to client(1)	$	1,669	$	1,693
Accrued taxes and deferred tax liabilities	1,384		1,479
Accrued other professional services	790		696
Accrued legal(2)	688		2,470
Common stock unvested liability	147		223
Other current liabilities(3)	2,140		2,300
Total	$	6,818	$	8,861

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

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

(3) The Company includes contract liabilities within Other current liabilities on the condensed consolidated balance sheets. Contract liabilities consist of deferred revenue, which relates to amounts invoiced in advance of performance under a revenue contract. The total contract liabilities related to advance billings for data subscriptions of $0.9 million and $0.4 million as of June 30, 2024 and December 31, 2023, respectively, are recorded in accrued expenses and other current liabilities on the unaudited condensed consolidated balance sheets. The Company recognized $0.2 million and $0.3 million of revenue during the three and six months ended June 30, 2024 that was included in deferred revenue recorded in accrued expenses and other current liabilities at December 31, 2023.

6. Goodwill and Intangible Assets, Net

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


	As of June 30, 2024
	Weighted Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Goodwill:
Goodwill from acquisitions	Indefinite	$	120,948	$	—	$	120,948
Finite-lived intangible assets:
Developed technology	0.3 years	13,200		(12,213)		987
Customer relationships	5.1 years	7,507		(4,137)		3,370
Launched in-process research and development assets	2.2 years	960		(528)		432
Total finite-lived intangible assets		21,667		(16,878)		4,789
Indefinite-lived intangible assets:
Trade name - website domain	Indefinite	2,224		—		2,224
Total infinite-lived intangible assets		2,224		—		2,224
Total intangible assets		$	144,839	$	(16,878)	$	127,961

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


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

Amortization expense related to finite-lived intangible assets for the three and six months ended June 30, 2024 was $1.0 million and $2.0 million, respectively, and is included in depreciation and amortization expense in the accompanying unaudited condensed consolidated statements of operations. Amortization expense related to finite-lived intangible assets for the three and six months ended June 30, 2023 was $1.0 million and $2.0 million, respectively, and is included in depreciation and amortization expense in the accompanying unaudited condensed consolidated statements of operations.

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


	Amount
Remainder of 2024	$	1,505
2025	802
2026	754
2027	610
2028	610
Thereafter	508
Total	$	4,789

7. Leases

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

As of June 30, 2024, the remaining lease terms varied from 0.25 to 5.1 years. For certain leases, the Company has an option to extend the lease term for a period of 5 years. This renewal option is not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options.

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

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	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease expense	$	923	$	834	$	1,706	$	1,792
Variable lease expense	97		223		201		472
Total operating lease expenses (1)	$	1,020	$	1,057	$	1,907	$	2,264

Sublease income (2)	$	95	$	226	$	191	$	452

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

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

As of June 30, 2024 and December 31, 2023, the weighted-average remaining lease term was 4.3 and 1.9 years, respectively. As of June 30, 2024 and December 31, 2023, the weighted-average discount rate was 7.1% and 7.0%, respectively.

The Company entered into a new office lease which commenced on March 8, 2024, and recorded a right-of-use asset and liability of $4.5 million. During the six months ended June 30, 2024, it was determined that office space under an existing lease would no longer be used and the associated right-of-use asset was reduced to $0 and an impairment of $0.2 million was recognized in rent and occupancy expense in the unaudited condensed consolidated statements of operations. There were no right-of-use impairments recognized during the three and six months ended June 30, 2023.

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


	Lease Payment Obligation		Sublease Income		Net Lease Obligation
Remaining 2024	$	1,817	$	(180)	$	1,637
2025	3,864		(210)		3,654
2026	1,084		—		1,084
2027	1,117		—		1,117
2028	1,150		—		1,150
2029	888		—		888
Total undiscounted lease payments	$	9,920	$	(390)	$	9,530
Less: imputed interest	(1,237)
Present value of future lease payments	8,683
Less: operating lease liabilities, current	3,357
Operating lease liabilities, noncurrent	$	5,326

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

8. Commitments and Contingencies

The Company is subject to claims and lawsuits in the ordinary course of business, including arbitration, class actions, and other litigation, some of which include claims for substantial or unspecified damages. The Company may also be the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies. The Company reviews these matters on an ongoing basis and provides disclosures and records loss contingencies in accordance with the loss contingencies accounting guidance. The Company establishes an accrual for losses at management’s best estimate when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If no amount within the range is considered a better estimate than any other amount, an accrual for losses is recorded based on the bottom amount of the range. The Company's accrual for probable and estimable loss contingencies was $0.0 million and $1.9 million as of June 30, 2024 and December 31, 2023, respectively, and is recorded in accrued expenses and other current liabilities on the unaudited condensed consolidated balance sheets and expensed in general and administrative expenses in the

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

unaudited condensed consolidated statements of operations. The Company monitors these matters for developments that would affect the likelihood of a loss and the accrued amount, if any, and adjusts the amount as appropriate.

Legal Proceedings

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

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

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

401(k) Plan

The Company has established a tax-qualified retirement plan under Section 401(k) of the Internal Revenue Code for all of its U.S. employees, including executive officers, who satisfy certain eligibility requirements, including requirements relating to age and length of service. The Company matches 2% of every dollar contributed to the plan by employees, including executive officers, up to a maximum of $6,900. During the three and six months ended June 30, 2024, the Company recorded 401(k) contribution expense related to the defined contribution plan of $0.3 million and $0.5 million in compensation and benefits in the unaudited condensed consolidated statements of operations. During the three and six months ended June 30, 2023, the Company recorded 401(k) contribution expense related to the defined contribution plan $0.2 million and $0.5 million, respectively, in compensation and benefits in the unaudited condensed consolidated statements of operations.

Non-Cancelable Purchase Obligations

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


	Amount
Remainder of 2024	$	565
2025	936
2026	886
2027	350
2028	—
Thereafter	—
Total	$	2,737

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Regulatory

We operate in a highly regulated environment and are subject to capital requirements, which may limit distributions to our company from its subsidiaries. Forge Securities LLC ("Forge Securities"), a wholly-owned subsidiary of the Company, is subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As such, Forge Securities is subject to the minimum net capital requirements promulgated by the SEC and has elected to calculate minimum capital requirements using the basic method permitted by Rule 15c3-1. As of June 30, 2024, Forge Securities had net capital of $16.2 million, which was $15.7 million in excess of its required net capital of $0.5 million.

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

10. Warrants

December 2023 Warrants and Warrants to Purchase Junior Preferred Stock

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

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

During the year ended December 31, 2022, 491,785 Junior Preferred Stock Warrants were net exercised in exchange for 123,379 shares of common stock. In December 2023, the Company modified a total of 2,631,146 Junior Preferred Stock Warrants (the "December 2023 Warrants"). The December 2023 Warrants were issued at an exercise price of $3.9760 per share, with a cap of extended value of $5.0 million when net exercised, and without a cap when cash exercised. The December 2023 Warrants remain classified as a liability

The Company recorded a gain of $1.0 million and $3.8 million for the December 2023 Warrants related to change in fair value of warrant liabilities within the Company's unaudited condensed consolidated statements of operations during the three and six months ended June 30, 2024, respectively. The Company recorded a loss of $1.2 million and loss of $1.1 million for the Junior Preferred Stock Warrants as change in fair value of warrant liabilities in the Company's unaudited condensed consolidated statements of operations during the three and six months ended June 30, 2023, respectively.

Private Placement Warrants

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

Subsequent to the Merger, the Private Placement Warrants met liability classification requirements since the warrants may be required to be settled in cash under a tender offer and are potentially subject to a different settlement amount as a result of being held by the Sponsor which precludes the Private Placement Warrants from being considered indexed to

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FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the entity's own stock. Therefore, these warrants are classified as liabilities on the unaudited condensed consolidated balance sheets. The Company recorded gains of $1.3 million and $2.9 million in fair value of warrant liabilities in the Company's unaudited condensed consolidated statements of operations during the three and six months ended June 30, 2024, respectively, and losses of $2.6 million and $2.5 million during the three and six months ended June 30, 2023, respectively.

11. Share-Based Compensation

Prior Stock Plan

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

2022 Stock Plan

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

2022 Employee Stock Purchase Plan

In March 2022, prior to and in connection with the Merger, the Company adopted the 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The Company has authorized the issuance of 7,566,607 shares of common stock under purchase rights granted to the Company's employees or to employees of any of its designated affiliates. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each year, beginning on January 1, 2023 and each January 1 thereafter until the 2022 ESPP terminates according to its terms, by the lesser of (i) 4,072,000 shares of common stock, or (ii) 1% of the outstanding number of shares of common stock on the immediately preceding December 31. The Company's board of directors may determine that such increase will be less than the amount set forth in (i) and (ii) above.

Reserve for Issuance

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


	June 30, 2024	December 31, 2023
Warrants to purchase common stock	3,282,652	3,282,652
Stock options issued and outstanding under 2018 Plan	7,219,729	7,813,366
Shares available for grant under 2022 Plan(1)	1,411,139	2,052,669
RSUs issued and outstanding under 2022 Plan	15,610,442	17,434,138
Shares available for grant under 2022 ESPP	7,566,607	5,797,609
Outstanding Private Placement Warrants	7,386,667	7,386,667
Total shares of common stock reserved	42,477,236	43,767,101

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

Table of Contents

FORGE GLOBAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock Compensation

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
RSUs
Time-based	$	6,380	$	6,016	$	13,675	$	10,524
Performance-based	637		133		802		133
Market-based	66		1,323		1,273		2,625
Total RSUs	7,083		7,472		15,750		13,282
Stock options	776		1,337		1,576		2,928
Total stock compensation	$	7,859	$	8,809	$	17,326	$	16,210

Stock Options

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


	Stock Options	Weighted Average Exercise Price		Weighted- Average Life (Years)	Aggregate Intrinsic Value
Balance as of December 31, 2023	7,813,366	$	2.06	6.0	$	14,929
Exercised	(487,875)	0.94
Cancelled/Forfeited/Expired	(105,762)	3.88
Balance as of June 30, 2024	7,219,729	$	2.11	5.6	$	3,670

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