MDB Capital Holdings, LLC

Welcome everyone to the MDB Capital Holdings Third Quarter 2024 Financial Results Conference Call. I'm Lou Bassanese, President and Chief Market Strategist. Before we begin today's call, I'd like to make everyone aware of a few things. This event is being recorded. We will post a replay on our website shortly afterwards. All participants are going to be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. We just ask that you use the Q&A function built into Zoom to submit those questions. I also want to make sure that you know on this call, we're going to be making forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. You can read more about these risks and uncertainties in the risk factors section. of our quarterly filings with the SEC on Form 10-Q, which was filed on November 12th, as well as our latest Form 10-K. Except as otherwise required by federal securities laws, MDB disclaims any obligation to update or make revisions to these forward-looking statements contained herein or elsewhere to reflect changes in expectations in regards to those events, conditions, and circumstances. So again, we just kindly ask you to refer to the company's SEC filings for more information about these risks and uncertainties related to our forward-looking statements. With that being said, I want to introduce you to Christopher Marlette, CEO and co-founder, who is joining me today on this call. Welcome, Chris. Thanks, Lou. Glad to have you here. And since we have a mix of longtime MDB investors and community members, as well as new shareholders and potential shareholders, why don't you start off and frame up this conversation and update today with an overview of who MDB is and what we do?

Sure. Thanks, Lou. Well, thanks everyone for joining today and listening. It's been a very interesting last couple of years since we've endeavored on this whole process of going public. And as you all know, there's been lots of ups and downs in the micro cap markets. It's been hard to make sense of what's happening in the global economy, obviously elections and everything else. And, you know, we have made an enormous amount of progress. But I think ultimately, when you strip back everything we're doing, which can be to someone that hasn't really known us for very long, I would say looks relatively confusing. If you look at our financial statements, if you look at our you know the description of what we do. I'm going to try and simplify it today. Try and take a very straightforward approach to it. And really what we've been doing for 27 years is transforming big ideas into valuable public companies. And there's a process by which we've refined over those 27 years and that I think we're pretty proud of. And we've taken a team and trained up a great group of people to hopefully scale this up a bit. And we created a lot of value for the shareholders of MDB when we were private and the stakeholders of MDB when we were private and for our investors. And now as a new public entity, you know, I'm really excited about the future. And, you know, this is this first slide here is really a great sort of indication of, you know, the front end of what we do, which is really curating these really fantastic big ideas that we can then transform into really meaningful companies. And, you know, And so this process has taken, you know, an enormous amount of thought, enormous amount of training, the development of patent vests, which enables us to get through these new ideas really quickly to figure out who can be a market leader. It hasn't been easy. And quite frankly, you know, I really think we've differentiated what we do from what anybody does in venture or, you know, in the public markets and so We're continuing to really build that. We've trained a lot of new analysts. They're getting really good, enables us to get through these ideas. And we now have more sort of late stage ideas that we can then hopefully turn into new market leaders and take public here in the not too distant future. As we've talked about before, we might do one company every 18 months, If we could do two a year even or one a year, the value creation of shareholders could be significant. And so we're doing a great job. We're continuing to curate great stuff. And like I said, the pipeline is bigger than it's ever been.

Chris, why don't you, just for the benefit of everyone, we define ourselves as being a public venture platform. Why don't you explain what the definition to us is for public venture and why we believe it's a preferred route versus traditional venture?

Sure. You know, I think that traditional venture quite simply has taken an approach where they invest in a lot of different companies, hoping that one or two work out and that where they can get all the returns by something that's a 10X or 20X or better. And what that does is leave lots of failures. And so I think people that are in the angel community and I'm hoping to get lucky. It's been a very, very difficult period. While money was very easy in a low to no interest rate environment, there were lots of companies funded. And you can see this data we've provided before, which is sort of 2018 vintage venture companies. Very few of these companies really get much value created from them. So if you were invested in a small subset of these companies, whether it be as an angel investor or in some of these venture funds, you wouldn't have done very well. And and I think that, you know, you contrast what they do versus what we do. It's you know, we're very rifle shot focused. And and I think that. And that really just shows up. And when we start these companies, 100% of them go public or have gone public. We just took Invisign Public, which was our 17th company that we brought into the public markets. And And a very high percentage of them reach values that are significant. So what I like to tell people is that these were companies that nobody else probably would have financed. In other words, we saw value where nobody else saw value. I don't think any of these companies had very good shots at raising venture capital. So we were able to actually see something that nobody else saw, but more importantly, take the steps necessary to create a meaningful company, which means we had to roll up our sleeves and really be a big part of the value creation. And that's really the big difference between what we do and what traditional venture does.

Yeah, no, it's a great segue because I was going to ask you, our performance stacks up very favorably to traditional venture. So how are we doing that? You talk about standing it up. Why don't you give some more details into that process of seeing value where others don't and actually turning it into proven value in the public markets?

So we use Pat Invest in a generic sense. It's a database that we created that enables us to quickly see with these deep tech companies whether or not they can become a leader. The great thing about focusing on deep tech is that. IP is important and it enables us to see what everybody's doing in that particular space and can we establish that market in a technology leadership position. PatentVest enables us to do that very quickly. So when you look at all those numbers, when you look at thousands of ideas that we get through, some of them we only have to spend a couple of hours on to screen through. It's not like We're doing hundreds of hours of work on 7,000 companies. That's not possible no matter how many analysts we hire. But it enables us to very quickly separate the wheat from the chaff and find really the unpolished gems or the needle in the haystack, if you will. But more importantly, PatentVest also enables us to create the business strategy for those companies. So if you know what everybody's doing in the space, you can create a rational business strategy. And I think we've gotten better and better with that over time. So whether it's the last three companies we took public before Invisign, all three of them were ideas on the back of an envelope effectively that all got to billion dollar values. You know, my wife always says I'm lucky. And I, you know, a lot of times, you know, I do think I'm pretty lucky. But, you know, that wasn't luck. It was those were very intentional processes that created a leadership position, in particular technology vertical, that enabled them to, you know, to get to the values that they eventually got to. And and so PatentVest serves that really important role of not only enable us to curate them, but also to stand them up in the sense that we can create a winning narrative. You know, when you're when you're standing up big ideas, you have to be a storyteller. You have to be able to really connect the dots. So investors can. channel partners, you know, potential co-development, you know, partners, et cetera, for all these companies have to clearly understand how you're going to get from where you're at to viability. And if you can't communicate that, you're kind of nowhere. And so I think that's the real value of PatentVest that I don't think is fully appreciated by, you know, really anybody. But, you know, I think over time it becomes more appreciated and we're learning how to communicate it to any company that walks in our door. A lot of companies come to us and they go, well, you know, aren't I just coming to you for money? And we go, well, money's the least valuable thing we bring. we bring the ability to actually, you know, allow this company to actually come, you know, become a market leader. And I think that's the value of patent best. And then. Yeah.

So then that's something we've always said.

Now talk to us about just these two other things that we think of the three-legged stool here that we didn't always necessarily have a self-clearing broker dealer and a broad end community. How did those fit in to the equation?

So the communities, you know, let me start with the community, but, you know, well, let me start with the self-clearing broker-dealer. So what's happened in the micro-cap arena is it's become increasingly difficult in this micro-cap slash public venture area to operate effectively. Combination of regulation and just market dynamics has been such where most of the large clearing firms don't see it as profitable for them to clear securities for companies. companies that are financing micro-cap companies or public venture companies. And so we recognize that for us to be really viable and build a community, we needed to have our own platform where we could self-clear to be able to clear those transactions, those IPOs, what have you. You know, and I think that that has, it was not easy to do. It was very difficult. It's a very regulatory heavy process, but we got through it and we got it operational. And I think anybody that's opened an account with us and used MDB Direct is seeing that it operates quite nicely. And it's a great way for our community to be able to transact in these securities in a relatively seamless way. We're trying to build a really good customer experience. I think if any of you have dealt with our people, I think a lot of our shareholders, we've now been reaching out to all of our shareholders. We have our team. um reaching out to everybody so we we plan to have a very high touch high communicative approach we've licensed all of our new people so they can now you're you know you're gonna all start getting phone calls and start getting connected um and so we're very excited about that aspect of what we're doing it's very counter to what everybody's doing in the industry. And so I think it really sets us apart. I've talked to people that used to work here and people that we've known and what have you. And I think that everybody is, has been surprised that we were able to get, get to this point. But now that they're here, we're here. I think they all see the value of what it could really mean as that community starts to develop. And our community is, as it builds is so critical because so many of the new companies coming in our door are brought to us by community members. And that's a super important aspect of what we do, because if that company or that opportunity, that new idea comes in by a community member, it's much easier to, to, put together a potential, you know, new opportunity because they come in, you know, backed by somebody, someone that can vouch for us, somebody that's been through the experience. And so the community plays a very important role. We're also finding in a lot of these companies that the community becomes absolutely critical. You know, our community members get behind these companies. They help facilitate financings. They help facilitate new partnership deals. You know, we have physicians and scientists and what have you in our community that are helping our companies right now. And, you know, we could give you a whole host of stories of where our community has really enabled success for the various companies. So when you put that all together, it's really a potent package. And, you know, and I think that as time goes on, that will become very apparent to everyone.

Yeah. So now we covered performance, how we differentiate ourselves, the people process platform that makes us different. I want to spend a little bit of time on this. You and I are slightly different. I'm a little bit more probably to my detriment, too optimistic. You're more realistic. But let's talk about the current market reality, because I know all of our investors, shareholders and people in the market understand where it's been difficult. But then let's focus on quickly from here. What's reality? And then what do we see as a result of this reality?

So the charts really just indicate we've been through a really difficult period. I know anybody that's been invested in the Magnificent Seven stocks or crypto or other things like that are saying, what are you crying about? It's been a great market. But in the micro cap and public venture and also traditional venture, it's been a really ugly last couple of years. And And in fact, you know, anyone that bought into our IPO, you know, can testify it's been a, it has not been a great start to anything. It's hurt us in a couple ways. One, it's obviously, you know, our stock dropped after the IPO. But also it just really makes financings difficult. And so our financing volume was down. So what really shows is that the companies that went public in 2023 under 200 million in market value, which is where, you know, the market segment that we're in, they were down on average 82%, which is a staggering number. Right. And I guess we did pretty bad, but, you know, I, I, I, I guess we're the tallest midget, right? It's like we weren't quite as- I don't know if that's the analogy we should probably use, but yeah, it was tough sledding and then the volumes were down. But it's been a horrible time to be going public. Our timing is good in many ways because there's a lot of opportunities now, but-

That's a good transition to this is the reality of the market backdrop. Now, what are we seeing? I think you and I have had conversations about this. I think it's important for everyone else to hear this as well.

Yeah. So, you know, really what's great is that there's a glut of venture stage companies are looking for financing and the traditional venture funds. You know, people have not made money investing in venture funds over the last decade. And so I think by and large, I don't want to indict the whole venture industry. There's obviously some funds have done well, but not very, very few. Yeah. So there are a number of companies that have been venture financed but are having a difficult time finding funding. We're seeing a lot of those right now, and it is difficult. It is difficult because these were sometimes financed at very premium valuations, and they're having to come – down to reality. But if you really look at what's happening in the venture market today, it's a very interesting time because many of these venture-backed companies trade in the private markets and they're trading at, I think the statistic I saw, they're trading at like half of the value that they were last funded at. And so I think a lot of the funds are struggling, but we're having really good conversations with a number of the VCs. a number of the companies have been backed by VCs. I do think there's going to become some opportunities where we can, um, you know, help take these companies to the next level, get them public and, um, provide value to them. And so I think I'm pretty excited about that. Also, you know, on the traditional stuff that we find that hasn't been VC financed, it just makes it easier when there's just not a bunch of crazy money around. So we're able to really, you know, find stuff at reasonable valuations. And so now is a great time to be looking around and, you know, like I said, we have a much larger, much larger universe of companies that we're really excited about that we've ever had. And I think it's part of it is we've increased our capabilities. I think the other part of it is that it's just the market environment. And so, and, and I think that as we've now strengthened our operations and our deal capacity, you know, we've just got everything operating. We didn't have, you know, we didn't have the clearing firm operating. We, you know, it was a lot of work. It was, Quite frankly, we underestimated how hard it was going to be. Everything took at least a year longer than what we thought. But it's up and operating, and I really don't see any real holes in our operations at this point. It's working. We're onboarding new accounts. Everything seems to be operating. So we've got this increased capacity, and the markets are giving us stuff. So I think I'm pretty excited that that just yields a – I think a much greater deal volume than you're used to have seen with MDB. Yeah.

So let's talk about how that excitement could translate into some very practical things for shareholders. I know we have some people that understand all this, but there's newer people here. So what are the ways that shareholders may realize value as we come out to this increased opportunity rich environment after some tough sledding?

So, listen, I think for people who have known us know this, but basically, you know, in a bad market for the last couple of years, having access to new pre-IPO financings or big company idea, you know, or financings or IPOs, that wasn't a real benefit. And so, but, you know, I think the tide does turn and I think being a shareholder is, enables you to get a front row seat. You get preference on all the financings and all the curated public company financings we do, which we'll be doing more of. I don't know how many more, but we will be doing more of. And our ability to do things that enable us to create a lot of value, like with a big idea company like InDesign, it adds significant enterprise value. And ultimately, you know, we face the law of large numbers. You know, we can't pile up cash. As we've said before, as you know, we create value, we'll be needing to make stock or cash distributions because we We just can't possibly put that much money to work. And what's nice is that virtually all of our companies are going to, you know, many of us thought we were going to have a democratic administration and higher taxes, but, you know, QSBS is still valuable and, you know, not having to pay capital gains tax. is a big thing. And I think that all of our companies for the most part are going to qualify for QSPS. So it's, what does that mean? It's really a great market segment for investors. We're getting tons of interest from, from just, you know, people we've never talked to before that are new to public venture. They see the value of, of, of public venture, you know, and, and really, how much more attractive it may look than traditional venture as a result. Yeah.

Let's talk too here. I know some people might say there hasn't been a ton of press releases, but we know that we've been really busy at work. I think this slide has a lot of information, but why don't you just focus on a couple of key highlights of the progress we made in areas that are leading indicators of the value that we look to create. And then we'll move on to actually looking at some of that value with Invisign going public recently.

Yeah, so again, sort of below the, you know, it's sort of like this iceberg that's, you know, below the surface of water, you might only see the tip of it. But the iceberg is these analysts that we've been training. And so we developed a formalized analyst training program and we've been hiring analysts that are, you know, that have advanced degrees, most all of them in Latin America. We have some that, you know, that work for us full-time, but we've also trained people to do work for us, both for internally for MDB and patent vest. And these are people that have the ability to help us get through these companies very rapidly. Very proud of the training program we've put together. You know, some of you have gotten a glimpse of it. You've had your kids participate or your family members participate in our analyst training program. You get a really good glimpse of how it works. And I would, you know, Make sure and invite you that if any of you, you know, have kids or, you know, relatives or friends that are, you know, college age that are science minded, you know, we we love having community members have their kids in our training program. It's a great training program. They get, you know, it's a six week program, but we've been doing this now and it's really phenomenal because it really, we really can comb the universe. It's amazing how many companies we're seeing where we're now getting referred by one or two different people. I do feel like we're achieving amazing reach, meaning I don't think there's anybody that's scouring the universe of potential entrepreneurs. big ideas any better than us on the planet right now. And so that's only going to grow. A lot of them are going to be what we call these associate analysts, whether it be former interns or other people that are doing contract work for us for PatentVest. We're really scaling up that capability. It's very capital light. We're not spending a fortune of money to do it, but it's really the iceberg that you don't see underneath the ocean there.

Okay. Let's move on here. I mean, I think all of this leads to value creation. I think now there's a point that really proves how the process and the outcomes is InVisign going public and the impact that you can quickly see on the big idea investment line item here. So why don't you spend a moment to talk about how InVisign demonstrates how the model works and then why we have good expectations heading forward of continuing to do this.

Yeah, so our financial statements are very messy from a number of perspectives. There's going to be swings in what I would call stock-based compensation, as well as swings because of our consolidation of Invisign. And so we referenced two quarters ago the idea of, or two calls ago, the idea of an investor toolkit, which sort of... Decomplicates the calculation of, you know, sort of enterprise value and what we have going and performance. We're going to be previewing. Now that Invisign is actually public, we're going to be breaking out those numbers. This is a preview of those numbers. We'll also be doing it on an operating basis. But, you know, really when you look at MDB as a whole, if you look at, you know, sort of the 930 numbers versus what it is today after InDesign's public, we basically, if you look at our net cash and equivalents, you know, we have about $23.8 million. That's after all liabilities. So that's net net cash. And And that doesn't include operating leases, which are not very big, actually. But the idea there is to represent, like, how much cash do we have on the balance sheet to not only back, you know, sort of the operations of the broker-dealer, but also, you know, invest in new opportunities. Public venture securities, those are the securities that we've – where we've earned equity positions like with HeartBeam and ClearSign. And so, you know, that's the current carrying value of those securities. And then if you look at, you know, the big ID investments now, so Invisign was, you know, we had invested about $5.9 million into Invisign. And at current market, our shares are valued at $54 million at current market. I completely realized that Invisign is going to be volatile. That number is going to be super volatile. But the idea is just to give you the idea of... the power of our operating model if we can create another InDesign. So if we can create another InDesign, then, you know, we'll balance out these big idea investments. There won't be one company swinging this around very much. And so our hope is once we get two or three more companies in there, you know, we start to have a portfolio along with the public venture securities that we, that we earned from public company financings and, and, So you can see sort of at market sort of $84 million-ish in value with all the caveats that come with that. and a stock price, and if you take the shares outstanding, it basically means that the enterprise value of MDB is effectively negative, meaning our ability to create another InDesign is not, we're not getting any credit for that. We're not getting any credit for our ability to, you know, create shareholder value. And, and so what does that mean? Well, unfortunately there's a, there's an ugly saying that one of our clients always said to me, he said, Chris value plays don't come with management. So that being said, I don't know if you're indicting yourself or whatnot.

I think the point is we have good value here.

But what I'm saying is I'm looking in the mirror and saying, you know, we need to do a better job of giving people faith that there's, you know, that, you know, I think that I always laugh, you know, that our last three ones we took public all went to billion dollar values. And but, you know, in the securities business, it's what have you done for me lately? And I think that, you know, it's reasonable for people saying, oh, they're washed up. They don't know what they and what I'm trying to tell people is, is that methodology that created those other ones, it didn't go anywhere. It only got better. And and so that's why I'm. But listen, we got to prove it, though, right? We got to do more of them. And, you know, and hopefully that's, we'll start to be able to prove that here shortly.

Well, that's a fair point. I think these next slides really, you've covered a bunch of this already. So I don't want to, like, these are really the developments that have happened. You've spoken to a lot of these points. It'll be available when we load it to the website. I think in the interest of time, let's keep talking about the ideas, almost a shark tank type thing. pitches of the companies that we do have those public venture, the public securities that are in the portfolio. So why don't you go ahead and tell people why you're so excited about those securities and the potential for market leadership in their technology category?

Yes. So Heartbeam is like a very personal thing to me. You know, Heartbeam is a company that came in and trusted us. They they trusted our process. Um, they'd gone public with a small underwriter had not worked out well for them. They were, their backs were against the wall, almost out of money. And, you know, our analyst team, when I first came in, I was like, wow, I, you know, this, uh, this looks, doesn't look any different than anything I've ever seen before in the cardiac monitoring. Um, but our team did the work and they said, wow, this has got the power to really transform cardiac care. And it's really simple. They have a little credit card that is the best signal acquisition device you can carry around for your heart. And what AI is doing to high resolution data is amazing. And so what we're seeing now is that not only can you convert that signal into a 12 lead, which is whatever doctor uses to look at a heart. More importantly, those signals, I believe, you know, I have to be careful I say this because It upsets doctors. I think that the AI is already proving, as you'll see in the published studies, does a better job of diagnosing whether a patient has got a real problem or not. It's going to prevent deaths and it's going to prevent really bad quality of life stuff because a dumb way to die is to ignore death. that you've got a developing problem with your heart. And that's what all the healthcare costs around with. If you either die right away, which doesn't, which, you know, is not good for your friends and family, or you have a heart attack, which really debilitates your quality of life. This has the power to change all that. This is the first device we've ever seen that has that capability that everybody can carry around with them. And I'm going to do a little video and explain it in greater detail. I can't wait to get it out to all of you. I think this is going to be one of the most important companies we've ever gotten behind. We're really hopeful they've been in sort of FDA... for a while. I hope that they're getting toward the end of that with any luck. But the good news is you can look at all the published studies. It works. It's working. It's getting really great KOL acceptance. I think it's going to be an extraordinary company. We have a really nice position in the company. We have 1.1 million shares and 1.6 million warrants. So effectively, for every point the stock goes up, we make $2.6 million or $2.7 million. And so I really think this could be, you know, one of the greatest companies we've ever gotten behind. Super excited about it.

Let's move on to ClearSign, a company we did a secondary for in April, raising about $10 million for them.

So this is a really great story because, you know, I'm going to say the intro and I'll let you do. But the great story is that we started this big idea company, I don't even know, over a decade ago, right? And it came back in our door. And I'll let Lou. Lou was really behind it. you know, getting this funded with my partner, Anthony. And so they're much closer to it. So Lou, you give the story.

Yeah, no, listen, in today's day and age where we talk about climate awareness, ESG, this is actually one of those technologies that from day one didn't need any subsidies or a political push to demonstrate it worked. It's economical. It's a way to reduce NOx emissions, which are a precursor to smog by upwards of 90 plus percent, 95 to 97 percent in certain indications. So the beauty here is this came back to us as an opportunity to fund the last stage of growth to get them to break even there was a change in management very strategic shift and product focus that was gaining traction and we've seen that play out since the financing in in april if you look at the latest press releases from the company you'll start seeing just a very regular cadence of new orders into new verticals expanding the product lines and then really the capstone was yesterday's conference call where they reported a record quarterly revenue So it's all these things coming to fruition. So we thought as a team that this was a really unique opportunity to continue to support a technology that Pat Invest in the process identified early on as very potentially disruptive. And now we're seeing that play out in the market, increasingly so, to the point where strategic partners, one of the two biggest partners, Burner Manufactured in the market, Zico, which I believe is around $800 million to a billion a year in sales, is now ramping up their co-sales initiatives with ClearSight. So excited about this one, just like HeartBeam. Completely different space, not MedDevice, but actually into industrial technology and have a meaningful ownership here that the stock was up, I think, up to $1.25 today, which a lot of headroom there as well. Invisign, which obviously, Chris, I'll let you run with this one. This is one that you know near and dear and is the most recent win for us.

Yeah. So listen, Invisign, I'm going to talk a little bit about the IPO. One, I really want to thank all the shareholders that stuck in there. We had, you know, there was a, you know, we had so many false starts with this deal. We've, you know, we've done lots of IPOs in our lifetime and we look like total amateurs when we were taking this thing public because there were so many fits and starts. But you know what? So many of you believed in us, believed in it. And I really want to thank you. for sticking in there. And, you know, there's nobody doing IPOs for, you know, for development stage companies right now. And I really appreciate the faith that you all had in standing behind us and, you know, It was a slog. We had the regulatory environment, both with the SEC and actually NASDAQ, which was crazy. We've never had any issues with NASDAQ. And there was nothing really substantive. It's just, I think... There were a number of these Chinese IPOs that were backed and were manipulated up. And I think they've just been very hesitant to allow these development stage companies to get through super easily. And so we experienced a level of regulatory scrutiny, which we've never seen in the history of our existence. I don't believe it has anything to do with us. It has totally to do with the backdrop. The great news, I'm not making any political statements other than to say that today we saw that Gary Gensler is going to be resigning as the head of the SEC. I think there's going to be a very different regulatory environment. I don't think that I think that this could be really good for the public venture side of the marketplace. Regulation has been a real bear in our segment of the market. And I really think the tide may be turning. We'll see. But I do think there's going to be changes. I think they're going to be positive. And I think that that will... you know, make it much easier to invest in the public venture marketplace. So InDesign, super simple. Synthetic biology using cells, it's not feasible. Billions of dollars were vaporized you know, trying that approach. Cell-free, we've demonstrated works. We can make kilos of drugs. We can make kilos of chemicals. We've demonstrated it. That is resonating with chemical companies. we're able to manufacture with synthetic biology, all the benefits. The reason that all those companies went to tens of billion dollars in value is that syn-bio is important. It's ecologically important. Whether you believe climate change is real or not, it doesn't really matter. A lot of people do. Europe is very much you know, all in on, on sustainability. And so, you know, these companies, you know, are very, they see the difference between Invisign and what Invisign is doing and what the guys that had raised billions of dollars are doing. And so we're very excited about it. Obviously we own a very large position in it. I'm very proud of the fact that, you know, we, you know, again, you know, created yet another company from, you know, something that was largely sitting on, you know, you know, not being recognized as something really valuable sitting, you know, in academia. And, um, You know, the team there has done a phenomenal job. We're very excited about Michael Helton as a CEO. He's doing a great job. The scientific team, our co-founders, have been phenomenal. They are, you know, world class. Don't get me wrong. It's not easy, man. These are hard to start up. But it's been really a great experience. Experience wasn't easy, but nothing really super valuable is. I think this is going to be an extraordinary company and great things are destined for the company. And hopefully we'll see material progress and evidence of that here shortly.

Let's finish up. I want to clarify something you said earlier about if we find another big idea like Amazinus and stress it's when, because we know that it's in process. We've got evidence to that. This could be one of them. Disclaim that that's not proven yet. But why don't you share? I think this is an example of your earlier point about the valuation focus we have and what's available in this market because of this opportunity that came along through Mayo Clinic.

Sure. You know, I think that, again, I don't think it's obvious to people how our business model works, but universities look at us as a great way to commercialize their technology. If you look at, you know, universities have had big wins off of companies we've started historically. And so we can point to those and show them that our model works. And so I would tell you that when we started doing this many years ago, you know, we had unbelievable amount of skepticism because we weren't a traditional venture firm. But what we're doing is starting these companies, making the university inventors and the university's partners. We make a relatively modest investment to license the technology. And we own a very large percentage of the company along with the university and the co-inventors. And we have the option to invest more money as we see fit to as we develop the company, because a lot of times when you're doing these licenses, you're still doing all the work to to decipher what the right commercialization path is. All that work we do at PatentVest is critical to say, OK, what preclinical studies should be done? You know, you know, who are potential partners, et cetera. All that work's got to be done after the license is actually executed. And and so we start to do that work and then we decide what is the right business plan, because we can't if we put the business plan together before we did the license, it would it's you know, it's it's it's it's at least a thousand hours of work to put a business plan together for one of these companies. It's probably more than a thousand hours of work. Right. So we do it this way. If for some reason we decide not to move forward with it, obviously we go back to, you know, Mayo and do the right thing and work out a deal with them. Right. But, you know, almost every time we decide to move forward with these, because we've done enough work to know that this is really a potentially disruptive platform. And so one of the things we're always looking at is, you know, what's the essence of aging? It's an essence. And when you start to look at, you know, the etiology of almost every disease is rooted in fibrosis, Inflammation, et cetera, right? They've basically, without boring you with science, they've been able to tie into one of the really key pathways and being able to drug it that could help actually reverse fibrosis. and inflammation and impact senescence without toxicity. Many others have tried it. They have outstanding preclinical data showing that they can do that in animals that looks like it could translate to humans. We want to develop a capital light strategy to get to proof of concept in humans Very rapidly. Again, it's all about asymmetric returns. You can't go, you know, we're not going to be doing companies where we raise 50 or 100 million dollars to see if it works. We're going to be doing these things where we can spend a modest amount of money to to see if we get proof of concept that shows that it works in humans. And that's our plan with this one. If it works, there's nothing bigger. And so with relatively modest investment, we have really asymmetric upside if we can develop a great plan to get this into humans and prove a concept.

Great. So we're going to get to questions here momentarily, but just what are milestones people should be looking for, shareholders should be looking for in coming months and quarters here?

So really, we need to in this environment. Yeah, we've had a little bit of a bump. Things are looking good. Stocks are moving up. But we can't count that that's going to be the situation. I think that there is a glut of venture capital companies out there. There's a lot of other investment options. We need to focus on capital like big asymmetric returns. more than ever. And so the good news is the environment is dictating that that's the way you have to get there. And we're building all of our companies in that regard. And you can see that with Invisign where we're taking a capital life, asymmetric return profile until it really warrants a lot more capital. And at that point, the markets will make that capital available. We're building out our patent best capabilities that, you know, when we say it's thousands of hours, it is thousands of hours. That's where patent best is so important. That capability to stand up a new deep tech company is really what sets us apart. But it also dictates it's the biggest throughput issue for us. Like we have a number of companies that. that we find or opportunities that we find attractive right now. But we need to develop that capability to stand them up because you can't just throw money at something. You actually have to develop the plan so it wins and becomes a new market leader. And so that capability is growing every day. It's exciting. We're You know, we're learning as we do. We don't have it all figured out yet, but I can tell you we got a lot better figured out than we ever have historically. Operational efficiency. Listen, you know, you know, we hired BDO. I shouldn't mention any names. We hired a you know, accounting firm and we were spending way too much money. We can't, you know, we're, we gotta be, we gotta be efficient at every level. We're, we're looking, you know, we're, we're definitely figuring out ways to, to, to create more operational efficiency across all areas of our businesses and, We don't know if this micro-cap malaise or this public venture marketplace is difficult for a lot longer. We need to be as efficient as possible for growth forward. We really have to deepen and broaden our community relationships, and we're really – it's exciting. We're out telling our story to people that don't know us and the reception we're getting, you know, great example is tech coast angels, new partner that, you know, we're, they have about, what is it? 450 members kind of, it was a West coast based angel group. They're looking at, it was like public venture to them was like, wow, this is really exciting. You know, their average hold times they said in their angel investments was 11 years. Right. And, and, You know, the angels weren't flying very well. They were pretty worn out. They were more worn out than the microcap public investors. And so we're getting a lot of people or new family offices that just say, wow, I've never thought about investing in public venture, you know, before. And, um, and, and not going into a traditional venture fund. And so we're broadening that and we're getting, you know, it's, it doesn't just happen overnight, but little by little it's, it's brought, you know, it's, it's, it's resonating with people. And so I'm, I'm kind of excited about that. And, um, And, you know, like I said, you know, I don't like, you know, feeling like we're undervalued. And so we have to do a better job of communicating. I think you're going to see that. Lou and I, you know, Lou's a great communicator. He's out all the time blowing the bugles. He's on TV. we need to do a better job with all of our companies. We did a little survey with some of our key investors. They gave us a lot of great feedback, which is we're not doing enough to really highlight the companies that we're working with and really being active in communication. We've listened to that. We're going to be much better with communication. Like I said, you're Every shareholder is getting a phone call from our team, from our customer service team and our MDB direct team. And so, you know, we're not calling to sell you anything. We're just calling to, you know, say hello, get to know you, you know, help you get whatever information, get feedback from you. And we really are excited about that. So those are really the initiatives we're focused on right now. And we hope that it'll really pay dividends here for all of us in the near future.

At this point, let's open up the call to questions and answers. I've got a few already that came in. Just encourage everyone to use the Q&A function built into Zoom to submit additional questions. Chris, one that comes off the top, you mentioned that there's seven private companies in late-stage diligence. Can you just give a breakdown of what areas of the market those are in, biotech, med device, et cetera, even if it's generalized?

Yeah, you know, I think that, let me talk to you about what I'm excited about. I'm excited about, you know, I was not a big believer in AI. I believe, I mean, I always knew, you know, we've looked at using AI for what we do in IP for a long time. And I just always, I just thought that all of a sudden, as a result of ChatGBT, it was getting, you know, the AI was just going to be a new fad. It was going to be cool, but it wasn't going to be that transformative. And I have to tell you that I think I'm really wrong. And we're seeing it. We're seeing it in companies like Heartbeam where you can take a device that creates a lot of data and yield answers very quickly with data. I think that a combination of just, you know, the various models that have been developed along with the increased processing power is bringing down the cost of doing this. And I think that we see a lot of opportunities in healthcare. Okay. So I think healthcare is going to be unbelievably transformed. I think it will be with devices that heretofore were instruments that generated a lot of data, but you couldn't really... accurately profile a sample, if you would. I think it's going to happen in healthcare information and informatics. You know, great example is, you know, cancer. You know, there's currently 3,000 breast cancer trials going on in the world. And, you know, if you're a doctor today, how in the heck could you possibly know? I don't care if you're at one of the major medical centers. How can you possibly know everything that's going on, even if you go to every conference and you're not treating patients, right? You're not, there's no way for you to know that. Well, the ability to take all that information and digest it and bring it back is going to have a profound impact on things like managing cancer patients. And so we're seeing opportunities, and hopefully we'll be able to present those kind of opportunities to you in AI. I think that we have, I'd say, three or four that kind of fit into that category. And I think that we have a couple in sort of biotech. We have a really unbelievable med device company that could transform I'm hesitant to really go too deeply into it, but a med device that could effectively eliminate the need for GLP-1 agonists, which is obviously a gargantuan market, right? It would, it would have earth shaking effect. And so, you know, stuff that is, you know, super big, super exciting. And I guess that's a flavor of it. And maybe we can get a little bit more organized and do a call and talk about some of this stuff in more detail later, Lou.

Yeah, no, it's definitely, we obviously have to be sensitive to things that are inactive negotiations, but we are hopeful that we can bring some of those to bear as opportunities that we can get into specifics. A couple of your questions that overlap, you know, we've had a track record, our last three companies, big ideas that we bought public have gone to at least a billion dollar valuation. What is the impact of Invisign has a similar performance? How do you view that impacting MDB? And a secondary question is how long do you plan to hold the investments that MDB Capital Holdings has?

So I think that it's a pretty simple question. So our goal is to distribute those to the investors as fast as possible. But we have to be mindful that these companies are public companies and they have their own capital formation needs. You know, you want there to be an active market for the stock. You don't want to just, you know, if the stock just went public, you distributed that, that wouldn't. It just it would be disruptive to the company itself. You know, we also have to manage our cash resources at MDB. You know, we on an operating basis, we we we we burn cash, you know, hopefully as we develop more transactions through the broker dealer and through Pat Invest. you know, our goal is to get to sort of operating cash break even. But the investment side of the portfolio does recharge the tanks to go make other big idea investments. So, you know, it's a balance. But I would say if, you know, if Amazon were to go to a billion dollar valuation, that would create so much excess cash that it would provide all the operating cash we need for Pretty ever as long as I need to live. And then and then also because we are, you know, relatively capitalized. But also, you know, us keeping money is dangerous, right? Because you get the law of, you know, you start to play God, which is what most VCs do. They have a win or two, then they go raise billions of dollars and then they can't invest it because what made them successful doesn't work when you have too much money. And so... We are at a distinct disadvantage with the more money we have. So we have to give it back to shareholders. So I think it's counterintuitive. Most people that generate money like to hold on to it. From my perspective, I'm a shareholder just like all of you. So I want the same thing that you do, which is I want to see it back. I want to see the money back in shareholders' hands as soon as possible.

So there's a follow-up question that's part and parcel to this. When do you think you might – do a dividend or distribution of shares or cash? I mean, is this something that's a potential in 2025? Is it, you know, based again, there's a lot of variables, but if Invisign continues on the direction it is, the pipeline continues. Is there that potential in 2025?

I would say it's, it's very hard to predict. I would just say it, you know, right now, because we have one you know, large position, you know, hard beam is a modest size position. Um, but you know, I don't know. We've seen some of our companies go parabolic and if they do, then there'll be a distribution. If, uh, if, you know, sometimes you wake up and I don't want to tell you there, the stocks are, you know, you know, one day, you know, you, we think we're broke and the next day, you know, uh, the whole world changes. And I would say that it's happened too many times to say that it isn't, you know, it's happened to us too many times. to where it's become ordinary to be surprised, you know? And so, um, you know, there's no way to predict it, but, um, you know, uh, suffice to say if, um, if Invisign did, you know, unbelievably well, it's, you know, it's going to get distributed if, uh, um, if it, you know, if, you know, if things take longer to develop, it probably won't. So it's just, we'll see.

Yeah. I want to end on this. There's a couple of notes here, just thanking people for being, you know, being part of a shareholder in this community. There's a question about how many deals are coming into that pipeline that are referenced for the community. I want to ask this because I'm an active member of the community building team. We see the value of this, but I want to make sure that everyone here is a shareholder understands that this is not the ordinary company. There's another avenue to participate, not just being a passive shareholder.

Yeah. I would say that, I would say that the, best opportunities that come into us come from our community because they know us best. They know what works at MDB, the people that invest their time to bring them in are the best opportunities. And while there's a very low percentage chance that any opportunity gets through the whole process, We still, you know, we hate to say no, but if we don't say no, we're not going to have good results, right? So You know, we think it's great if you looked at introducing a company as an opportunity to learn about our process. And, you know, we try to make you all look good. We don't we want we want to leave every one of those companies with more information than what they had when they came in the door. We want to enrich them even if we don't move forward with them as an investment. And so we really encourage you to bring, you know, any of these ideas in, you know, we really appreciate it. And obviously if any of them do go forward, you know, whoever brings them to us is going to benefit from it financially significantly. So yeah, it's super important. I would say that our community is, you know, the more engaged they become, the more successful we become and, and you will become as a shareholder.

Yeah, and we make it very simple. If you go to our website, mdb.com, on the upper right-hand side of the website, you can see a button, submit an idea, and that starts the process. So I encourage anyone that has things that you're looking at that would like to run through the process to go ahead and do that. I want to thank everyone for participating today. Before I turn it over to Chris for just kind of closing remarks, we appreciate you as shareholders. We are accessible. There are about 1,400 shareholders, so give us a little time to make those calls, but we will be in touch. Chris, I'll leave it to you for closing remarks.

Super. Well, thanks everyone. It's been a really tough two years. I can tell you internally, we've been, I've, I didn't expect it to start this way. Um, it's been, it's been really tough, but, um, you know, we've been through tough times before. This is not the first tough market that we've been through at MDB. Um, it's the first tough market we've been through at MDB as a public company, which, you know, we've always done it with our own money. We never had shoulder money, but, um, I'll tell you, man, I look at your money. I'd much rather lose my own money than shareholder money. And so I'm 100% committed. Everybody at MDB is 100% committed to making sure that we do our best. All we can do is our best. You know, our luck could run dry. You know, the world could come to an end, whatever. But I can tell you, we're not going to give up. We're going to die trying. And we care about you all as shareholders. So we appreciate you. All right.

Thank you, everyone.