Business Context and Reporting Period
Company: MDB Capital Holdings, LLC (MDBH)
Filing Type: Form 10-Q (Unaudited Quarterly Report)
Period Ended: March 31, 2026
Business Overview: MDB is a holding company operating through two primary segments: (1) Broker Dealer & Intellectual Property Services (Public Ventures and PatentVest) and (2) Technology Development (MDB Minnesota One, or M1). The company also holds a minority equity interest in eXoZymes Inc., accounted for under the equity method following eXoZymes' IPO in November 2024.
Key Financial Metrics
| Metric (in thousands) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Operating Income (Net) | $44 | $828 |
| Net Operating Loss | $(5,481) | $(5,910) |
| Net Loss (Consolidated) | $(6,736) | $(6,602) |
| Net Loss Attributable to MDB | $(6,735) | $(6,587) |
| Cash and Cash Equivalents | $12,194 | $13,217 |
| Total Assets | $57,463 | $63,740 |
| Total Liabilities | $1,239 | $3,161 |
| Working Capital | $14,200 | $20,100 |
| Loss Per Share (Class A) | $(0.66) | $(0.66) |
Material Changes vs. Prior Period
- Operating Income Decline: Total operating income dropped from $828,000 in Q1 2025 to $44,000 in Q1 2026. This was driven by a significant increase in unrealized losses on investment securities held by the licensed broker dealer, which rose from $(1,463,000) to $(3,047,000). This was partially offset by a $722,000 increase in fee income due to larger investment banking transactions.
- Expense Reduction: Total operating costs decreased by $1.2 million to $5.5 million. Compensation expenses fell by $1.0 million due to personnel departures and reduced stock-based compensation. Professional fees decreased by $105,000.
- Equity Method Investment Loss: The company recognized a $1.1 million equity in loss from its investment in eXoZymes, an increase of $235,000 compared to the prior year period.
- Liquidity and Assets: Total assets decreased by $6.3 million. Cash segregated for regulatory compliance dropped significantly by $2.0 million following the closing of an investment banking deal in early January 2026. Investment securities at fair value declined by $2.1 million due to market value decreases.
- Liabilities: Total liabilities decreased by $1.9 million, primarily due to a $1.9 million reduction in payables to customers as deposits were released upon deal closing.
Guidance, Outlook, and Risks
- Management Commentary: Management attributes the increase in fee income to successful execution of larger investment banking transactions. The reduction in operating costs is viewed as a result of operational efficiencies and personnel changes. The company continues to fund operations through existing cash reserves and has not drawn on its $2.0 million revolving credit facility.
- Outlook: The Technology Development segment (M1) remains in the pre-clinical stage with no revenue. The company is focused on developing a small molecule senescence platform under license from the Mayo Foundation. Future cash requirements will depend on the progress of clinical trials and the ability to raise capital.
- Risks and Contingencies:
- Market Volatility: Significant unrealized losses on investment securities (warrants and equities) continue to impact net income.
- Regulatory Capital: The broker-dealer subsidiary (Public Ventures) must maintain minimum net capital of $250,000 and a $5.0 million excess for DTC membership. As of March 31, 2026, net capital was $10.01 million, well above requirements.
- Macroeconomic Factors: Risks include potential recession, inflation, supply chain disruptions, and geopolitical conflicts (Persian Gulf, Ukraine, Israel) which could impact global trade and capital markets.
- Government Policy: Changes in U.S. tariffs, trade policies, and reductions in federal research grants could impede the company's ability to conduct research and raise capital for partner companies.
- Unusual Items: The company recorded a $96,000 loss related to dilution events and received $1.02 million in warrants as part of an investment banking deal (non-cash).
Investor Verification Checklist
- Investment Portfolio Valuation: Verify the fair value assumptions and volatility inputs used for the $5.1 million in investment securities held by the broker dealer, which generated a $3.0 million unrealized loss.
- Cash Burn Rate: Assess the sustainability of the $2.9 million net cash used in operating activities against the $12.2 million cash balance.
- eXoZymes Performance: Monitor the financial performance of eXoZymes, as MDB's net loss is increasingly impacted by its 46% equity interest in this entity.
- M1 Milestone Obligations: Review the progress of M1's drug development to assess future cash outflows for milestone payments to the Mayo Foundation (ranging from $250k to $5M per product).
- Stock-Based Compensation: Confirm the remaining unrecognized compensation expense of approximately $18.7 million ($4.5M RSUs + $5.8M time-based options + $12.9M market-based options) and its impact on future earnings.