Business Context and Reporting Period
Company: MDB Capital Holdings, LLC (MDBH)
Filing Type: Form 10-Q (Unaudited)
Period Ended: June 30, 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. (formerly Invizyne), accounted for under the equity method following its IPO in November 2024.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
|---|---|---|
| Total Assets | $50.8 million | $63.7 million |
| Fee Income | $3.9 million | $2.1 million |
| Net Operating Loss | $(11.6) million | $(13.3) million |
| Net Loss | $(16.1) million | $(14.9) million |
| Net Loss Per Share (Class A) | $(1.57) | $(1.49) |
| Cash and Cash Equivalents | $9.6 million | $13.2 million |
| Working Capital | $12.2 million | $17.7 million |
| Debt | $0 (Undrawn Revolver) | $0 |
Material Changes vs. Prior Period
- Revenue Growth: Fee income increased by $1.1 million (53%) year-over-year, driven by larger investment banking transactions and related party fee income of $0.6 million.
- Investment Losses: Unrealized losses on investment securities held by the licensed broker-dealer increased to $4.9 million (from $3.7 million), reflecting mark-to-market adjustments on warrants and equity securities.
- Equity Method Impairment: The company recognized a $0.6 million impairment charge on its eXoZymes investment due to a decline in share price below the carrying value. Additionally, a $1.4 million loss related to dilution events was recorded.
- Expense Reduction: Total operating costs decreased by $1.1 million, primarily due to a $1.4 million reduction in compensation expenses resulting from personnel departures and lower stock-based compensation.
- Liquidity: Cash and cash equivalents decreased by $3.6 million, and segregated cash dropped by $2.0 million following the release of customer deposits related to an investment banking deal that closed in January 2026.
Outlook, Risks, and Contingencies
- Subsequent Event (Critical): Following the quarter-end, the eXoZymes share price declined further to $5.76 (August 12, 2026). This represents a potential additional impairment of approximately $11.3 million relative to the June 30 carrying value, though it is classified as a non-recognized subsequent event for this filing.
- Capital Requirements: The broker-dealer subsidiary (Public Ventures) maintains net capital of $8.96 million, significantly exceeding the $0.25 million regulatory minimum and the $5.0 million DTC membership requirement.
- Debt Facility: The company has a $2.0 million revolving credit facility maturing in July 2027. No drawdowns have been made as of June 30, 2026.
- Risk Factors: Management highlights risks related to U.S. tariff policies, potential recession, and geopolitical conflicts (Persian Gulf, Ukraine, Israel/Iran) which could impact global trade and capital markets. There are no pending material legal proceedings.
- Technology Segment: M1 remains in the pre-clinical development stage with no revenue. Future cash outflows are contingent on achieving development milestones under its license agreement with the Mayo Foundation.
Investor Verification Checklist
- eXoZymes Valuation: Verify the magnitude of the subsequent price decline in eXoZymes stock and the potential impact on future impairment charges.
- Investment Portfolio Composition: Review the breakdown of Level 3 assets (warrants) and the volatility assumptions used in the Black-Scholes valuation model.
- Related Party Transactions: Confirm the nature and arm's-length status of the $0.6 million in related party fee income and $0.1 million in related party receivables.
- Cash Burn Rate: Assess the sustainability of the current cash position ($9.6 million) against the operating cash burn of $5.5 million for the six-month period.
- Stock-Based Compensation: Review the remaining unrecognized compensation expense ($4.7 million for time-based options and $12.5 million for market-based options) and its impact on future earnings.