Welcome, everyone, to the MDB Capital Holdings Second Quarter and First Half 2026 Update Conference Call. Thanks so much for joining us today. Operator instructions were provided. Please remember that statements made on this call and webcast may contain projections, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Also, please be aware that we are not obligating ourselves to revise or publicly release results or any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our projections. You should also review our most recent Form 10-Q for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A press release detailing these results, which crossed the wire this afternoon, is available in the Investor Relations section of our website, mdb.com. A replay of this call will also be provided later on mdb.com. Your host today is Chris Marlett, Chief Executive Officer and Co-Founder of MDB Capital Holdings. Chris will be joined later by George Brandon, MDB President and Head of Community Development. Chris will lead a business update for the quarter ending June 30, 2026, and subsequent developments. At this time, I will turn the call over to Chris Marlett.
Thanks, Tony. Well, great. Let's get the deck up here. Great. Thanks again, Tony. Everyone, thank you for joining today. I wanted to thank you all for joining. It's been a really interesting time period for us, and we are making a lot of very important changes. I'm excited to communicate our focus and where we're headed for the balance of the year. Quick overview of the agenda: I want to talk about the backdrop of the microcap markets and what it means for us and our plan for maximizing our core assets. I don't think we've done a good enough job talking about our core assets, so we like to change up the presentations occasionally to give you a different way of looking at what we've built at MDB and what we think the value is. Those four core assets I will describe in more detail as we go through the presentation. We also have real financial discipline. When you look at our financial statements, it's hard to really discern exactly what's going on, and we're trying to simplify that so you understand that we have a core operating platform that can be made very efficient and that has a lot of leverage. Our objective is to provide that leverage without any real dilution. That's the key with all of our companies, whether it be a portfolio company that we're trying to help get to commercialization and value creation or MDB doing the exact same thing. It's called leverage without dilution, and that's inherent in all the companies we get behind. To set some context, it's not generally well known that the sub-$200 million market cap area that we operate in has been really sort of evacuated to some degree. The concentration of market cap is at the very top: the top 20 public companies comprise over 50% of total equity market value in the U.S. Even venture funding is being directed to very large companies. The small companies are languishing not only in the public markets but also in the private markets. When you look at the headline numbers about big AI funding like Anthropic and OpenAI, the money moving around is staggering, but beneath that the small companies face a very different picture. About 70% of all funding has gone towards AI-focused companies. While we have AI-based companies in our portfolio, that does not necessarily translate immediately into valuation. We believe our AI-enabled companies have a great shot at participating in that trend, and that's what we're focused on for the balance of the year. Both ends of the barbell are very different. The tiny companies, both in traditional venture and public venture worlds, are being neglected. The number of public companies in the U.S. has been falling: we've gone from roughly 8,000 public companies around the year 2000 to less than 4,000 today. Even though there's about 1,000 companies in the sub-$200 million market value area, that group comprises only about 2% of total market capitalization. So while about 25% of the companies are in this space, they only comprise 2% of market value. This speaks to fund flows. What we find is that once a company reaches a certain market value and institutions begin to participate, we often see valuation expansion. The game is how you get enough coverage and enough people involved so that eventually, as companies get to a certain market value, their valuation scales. We've seen this consistently. There is a huge difference between a company trading at $100 million and one at $500 million. As a company grows, it attracts a wider audience. Even though small-cap indices rebounded sharply in the second quarter, the average market cap of, say, the Russell Microcap is over $2.5 billion, which is a totally different market than the one we're playing in. It's an artifact of how the market has changed. We do think money rotates and typically rotates to value at some point. If the very large end of the spectrum gets pressured, we don't necessarily see that as a real risk for our segment; money will have to rotate somewhere. We actually view the small-cap segment as being nearer the floor, so it may be hard to fall off much further. No promises—there's plenty of risk—but that's our view of the market and the potential opportunity as money rotates. What does this mean for us? We're not happy with where we are. We didn't go public expecting this market environment and the stock being down from where we took the company public is disappointing. When we went public, the last three companies we had taken public before MDB all reached $1 billion valuations, so we expected our shareholders would do very well if our next companies achieved similar outcomes. That has not happened broadly, but it doesn't mean our companies lack potential. Many companies we launched earlier traded at very low valuations at one point and then saw dramatic recoveries. For example, Pulse Biosciences: we started and took that company public, it traded very low, then went up to the high 30s and $40s, fell again, and later made new highs. Provention was acquired for $2.9 billion after trading at much lower levels. These are examples of volatility and turnaround. While past performance is not a guarantee, it does inform our conviction in the potential of these companies. We still feel very bullish about what we've built and our ability to create new companies and value. We believe we have a great team, platform, and process, but you have to have winners and you need the right rotation of the asset class and pick the right things that get to commercialization. We are working hard to realize the potential of each asset and have redoubled our focus on our existing portfolio to get them to key value inflection points. We previously discussed scaling from one launch every 18 months to three to five per year. We discussed AI transforming our sourcing, diligence, and launch models. We still believe in those ideas and in building a diversified venture portfolio to broaden risk. Much of our operating expenses have been invested in big ideas like PatentVest and our clearing platform, which we believe are smart investments. Right now, launching new companies remains important—we're still sourcing new companies and want to launch more—but monetizing our four core assets is crucial. Those four are Public Ventures, PatentVest, eXoZymes, and Paulex Bio. We see great potential in each and are doubling down to move each to a value inflection point. Our plan after going public was never to significantly dilute MDB shareholders. We're not looking to raise excessive capital or increase spending. Nothing has changed from our founding ethos: we want to distribute the value of the assets we create as we create them. Given the current market, it's more about running a very lean platform. We can operate on $5 million to $6 million per year while still monetizing companies that historically had $1 billion upside, and still create new companies in a cost-efficient manner. That's what we did prior to going public. Timing for scaling launches is not right today; we expect the environment to change and when it does we can step on the gas. For now, we need to monetize and leverage the companies we've already created and adopt a rifle-shot approach until conditions improve. I'll delve into each of the four companies and explain why we're excited and our view on their trajectories. Public Ventures: We always saw self-clearing as important as markets transform. Securities markets have changed from being funded by traditional institutional investors at the low end to being heavily influenced by retail platforms and momentum flows. Having a platform that can respond to that is important. That's why we started Public Ventures. It took about five years to get it up and running on a lean budget. We built our back office in Latin America to be able to support the platform and focused on customer service—clients can always pick up the phone and get help. But we are not leveraging it fully if we're not launching many companies. If we are not putting out four or five new companies a year to build the marketplace, the platform's value is limited. We're looking to partner it with a broader platform that can use it and enable MDB to focus on launching big ideas. We've been in discussions with several parties—about four or five so far—and we expect more. We've received letters of intent to explore partnerships or sales of the platform and hope to have something wrapped up in the next quarter. To our knowledge, there are few clearing platforms available for sale or partnership. There are around 100 discrete clearing platforms today, many owned by household names. We're one of the smaller ones, and it's a unique opportunity for various potential partners. Investment banking and public-venture activities, sometimes called crowd-funding, are attractive to different groups. We're seeking the best fit so that, long term, as we create new ideas, we have a strong partner and platform to launch them. PatentVest: AI took us by surprise in how rapidly capabilities changed and how the space became commoditized in many ways. We realized our PatentVest platform was well positioned to pair with AI to build the patent law firm of the future. We pivoted our strategy accordingly. Legal tech has attracted substantial funding recently, and tools serving law firms have been valued highly. Patent law is different from other legal practices because it's a federal-only practice, which enabled us to structure an ABS law firm in Arizona, allowing us to be an owner of a law firm and bring in business processes critical to delivering great patent work. We see an opportunity to build a home for great patent lawyers and provide a platform with AI-enabled workflows to handle associate work, paralegal work, foreign filings, and other needs. This approach brings efficiency while enabling patent lawyers to capture more value, not less. Great lawyers will still be paid for their value, but delivered via a much more efficient platform. We believe lawyers will want to join PatentVest and innovative companies will see our ability to transform patent prosecution. We observe a precedent: an AI-enabled ABS law firm in the immigration space was recently funded at a $750 million pre-money valuation, and the logic of pairing ABS law with a federal practice can have huge strategic value. Javier Chamorro and his team have done a great job putting together the strategy. We are executing a financing for PatentVest to spin it out as an independent entity funded by independent investors, giving them the opportunity to invest in and participate in the growth of the platform. This will remove the ongoing development funding from MDB while allowing the company to scale independently. eXoZymes: eXoZymes has been making a major transformation. A common misunderstanding since we took the company public is that the company has not shown real commercial traction. In fact, we focused on pivoting eXoZymes to scale manufacturing because the bane of synthetic biology has been that it didn't scale. Some public companies in this area announced commercial deals but could not deliver at scale. We felt it was critical for eXoZymes to demonstrate scalable manufacturing. That started with NCT, and now there are several other molecules that broaden the company's ability to bring in commercial partners. eXoZymes is close to executing a relationship with contract manufacturers as strategic partners that could produce the small molecules being developed, which would remove the manufacturing bottleneck across multiple compounds and open up deeper commercial discussions. Commercial discussions have already been taking place and should accelerate as we demonstrate scalable manufacturing. When other companies expanded valuation, they often signed commercial relationships that led people to believe scaling was possible, but then they disappointed on delivery. We believe we can prove we can scale manufacturing and that commercial relationships will therefore have much more value, driving the multibillion-dollar potential we've always seen for this space. Stay tuned: it's been a long road, but we believe we're close to tangible commercial inflection points that will bring significant value. Paulex Bio: Paulex is getting to an exciting point and is close to filing its registration statement for an IPO. We believe this drug has a reasonably good shot at enabling beta cell expansion and increasing insulin production in type 1 and type 2 diabetes. If this holds up, the implications across the diabetes and obesity treatment landscape are substantial and could be synergistic with GLP-1 platforms and other combination therapies. In preclinical models, our drug is synergistic with GLP-1s and increases beta cell production, creating a different metabolic profile. We think big pharma will have to take notice and see huge valuation inflection potential, much like what we saw with Provention, which had the first disease-modifying type 1 diabetes drug. The market for a successful diabetes therapy could dwarf what we saw at Provention. We expect data to start playing out in early 2027, and everything with the clinical trial appears on track. We expect the company will come out with updates soon and aim for an IPO in the fourth quarter of this year. We hope this could be both groundbreaking for patients and a major value inflection for Paulex and MDB. Looking at our core four positions: we own 4.1 million shares plus some warrants of eXoZymes, approximately 7.1 million shares plus warrants of Paulex, and we own 100% of Public Ventures and PatentVest. When you do the math against shares outstanding, there is a lot of embedded leverage in MDB that we do not think is reflected in current stock price. There are no value predictions here, but we have core belief in these assets and are focused on getting them to value inflection points as soon as possible. Risk factors remain: the microcap market is the biggest variable we can't control, and we still must execute. We're working every day to execute. Zooming out, our strategy is simple: protect against dilution, distribute the value, monetize or reach value inflection points, and operate lean. If we can operate on $5 million to $6 million a year and generate fees to offset that, there is enormous leverage in MDB ownership. In the first half, we completed two transactions and participated in an IPO for Ticketplus that closed after the quarter. The pipeline remains active and our quality bar is unchanged, but the market backdrop affects the number and timing of launches. Historically, MDB has sometimes launched in very difficult markets through conviction and persistence, which provided exceptional returns. We continue to pursue life-changing opportunities, but the timing and pace of launches will be more measured while markets remain challenging. We are looking at two potential transactions in the second half, possibly Paulex or another, and we are working on one fee transaction that could be significant. With capital discipline, as we spin out PatentVest and pursue a partner for Public Ventures, we can bring down our platform to around $6 million in total operational expenses that can be offset. That is a critical number because it provides sustainability without dilution. The assets we've already invested in are ready to operate on their own or be funded externally. The results will be lumpy because we are not currently doing three to five new launches per year, but the underlying value is still there. Historically, 17 IPOs launched over 29 years have traded at significant premiums at some point post-IPO, enabling follow-on capital. We remain confident that as rotation occurs, our companies will get noticed. Microcaps are difficult right now, but they present opportunity for patient, well-researched investors and our community. We're focused on creating companies that make a positive difference. That's why we're doing this work. The combination of AI and other developments is transformative for companies like eXoZymes and PatentVest. Thank you for being part of the MDB community and helping us drive value. With that, George, I'll open it up to you.
Look, so the first question is: can you talk a little bit about how these portfolio companies—obviously with PatentVest and the Public Ventures broker-dealer you have control of those—but for companies like eXoZymes and Paulex Bio, what are you doing to help these companies recognize their full value or help people know about them and learn about them? What are you doing for portfolio companies, and what impact are we having as a firm on those companies?
I think what we offer, especially after launching, is close to three decades of experience in how to manage these companies. eXoZymes is a great example: our team has spent a lot of time working with eXoZymes. The markets have pivoted and changed, and we've had to focus on commercialization. We pick up the phone and help eXoZymes secure commercial relationships. Our community has relationships that can be brought to bear, and we're spending real time with the eXoZymes team. We are hands on deck in supporting them. Recognition requires translation: the science is complex and you have to simplify and communicate it effectively. We have done that with eXoZymes and are doing it with Paulex as well. For Paulex, there are strategic decisions about the best way to go public—whether to have a partner onboard before an IPO or to do an IPO first. There are many real considerations in developing these companies and unlocking value. Connecting the dots is the key for these small companies, which face a wall of doubt and worry. We help make it clear to investors that these companies have the right plans to get to inflection points and then we get them in front of people who can make a difference. We're not just an investment bank interested in getting a transaction done and getting paid; we want to see the stocks go up. We're redoubling our efforts. When markets are slow, it gives our small organization more time to help these companies and focus on launch priorities like PatentVest and seeking a value-creating partner for Public Ventures. If the market is slow and new launches are more difficult, we focus on the ones we have and help get them to their milestones. The purpose of this presentation was to clarify that we're focused on getting the core assets to realization of their value.
So it's great hearing about the different companies. As a shareholder for MDB, can you talk a little bit about what you've been doing and what you're planning to do to get this story out so more shareholders and potential investors join in at the current stock price? What have you been up to?
I've been doing a few podcasts and attending conferences. We went to the Planet MicroCap conference; they put on a wonderful event, but attendance and new blood at these conferences can be sparse right now. We've been to two microcap conferences and the turnout has been light. Podcasts can help, but reach is variable. We try to simplify the story and tell it in different ways, but when your asset class is out of favor, it's challenging. We also talk to Family Office platforms and RIA platforms. People like the concept of what we do intellectually, but that is not where the money is flowing right now—investors are often allocating to the big names instead of small ventures because of liquidity and perceived safety. We continue to be consistent in informing the market and telling our story. We're open to bright ideas from shareholders and the community and welcome input on how to improve outreach. We don't claim to have it all figured out and we rely on our shareholders' feedback.
HeartBeam didn't make your four horsemen list, and our share position there is small compared to the other four. How do you feel about HeartBeam right now, the technology, and where the company is at?
HeartBeam can be completely transformative. Nothing has changed about our view of the technology: their ambulatory device can read ECG signals better than most alternatives we know of. They acknowledged that launching the product on their own was not the right approach. There are many potential partners that can integrate the technology into existing product or service categories. Partnering is more capital efficient—if the market won't give you capital at a reasonable valuation, diluting shareholders is not the right move. They have one of the best technologies and should partner with companies that have channels rather than trying to execute a capital-intensive launch with limited team capacity. We offer counsel but we don't run the company. Their new strategy to pursue partnerships is the right strategy: work with other ECG makers, wearable companies, or institutions that can distribute the product. The device should be widely deployed in airports, airplanes, public offices, sports teams, and clinics because it can save lives. By partnering, they can extend runway, get to commercialization with less dilution, and increase the opportunity for investors who take the time to understand the technology and management strategy.
Back to eXoZymes—final question. They were hoping to raise a lot more money but ended up raising around $6 million. Can you characterize the challenges, where they were at, and where they're going?
They need to manage dilution. eXoZymes is capital efficient and has huge asymmetric upside. Their operating expenses, depending on grants and other support, are around $10 million a year. One approach is to make NCT its own separately funded platform, which could be a value-creating event and reduce the capital needs on the core company. There are other molecules that could be spun out or partnered, enabling strategic investments and spin-outs that are nondilutive and create value. These are things the team is actively working on. Once commercial deals happen and the company demonstrates scalable manufacturing, valuations and financings become less dilutive and more straightforward. Right now, once people see commercial deals and a clear path to commercialization, the market will better understand the opportunity.
Okay. Well, we're going to go ahead and wrap it up. Tony, do you have any closing comments before Chris wraps up?
No, George. If that's all we've got for today, we just want to say again: thank you for attending, and this will wrap up today's call. Thanks, everyone.