MDB Capital Holdings, LLC (MDBH) Earnings Call Transcript & Summary

Welcome, everyone, to the MDB Capital Holdings Third Quarter 2024 Financial Results Conference Call. I'm Lou Basenese, 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. [Operator Instructions] 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 12 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 with 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 Marlett, CEO and Co-Founder, who is joining me today on this call. Welcome, Chris.

Thanks, Lou.

Glad to have a year. 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. 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 microcap markets. It's been hard to make sense of what's happening in the global economy, obviously, elections and everything else. And 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 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 that I think we're pretty proud of, and we've taken the 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, I'm really excited about the future. And this is -- this first slide here is really a great sort of indication of 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 so this process has taken an enormous amount of thought, enormous amount of training, the development of PatentVest, 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, I really think we've differentiated what we do from what anybody does in venture or 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 1 company every 18 months. If we could do 2 a year even or 1 a year, the value creation to 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. So.

Chris, why don't you -- just for the benefit of everyone, we define ourselves as being public, 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 ventures?

Sure. I think that traditional venture quite simply has taken an approach where they invest in a lot of different companies hoping that 1 or 2 work out. And that where they can get all the returns by something that's 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 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, whether it be as an angel investor or in some of these venture funds, you wouldn't have done very well. And I think that you contrast what they do versus what we do, it's -- we're very rifle-shot focused. And I think that really just shows up and when we start these companies, 100% of them go public or have gone public. We just took Invizyne public, which was our 17th company that we brought into the public markets. And a very high percentage of them reach values that are significant. So what I'd 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 another -- 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.

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

So we use PatentVest 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 is doing in that particular space. And can we establish that market in that 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 in that -- 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 is 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 3 companies we took public before Invizyne, all 3 of them were ideas on the back of an envelope effectively that all got to $1 billion values. My wife always says I'm lucky and -- and I -- a lot of times, I do think I'm pretty lucky. But that wasn't luck. It was -- those were very intentional processes that created a leadership position in a particular technology vertical that enabled them to get to the values that they eventually got to. And so PatentVest serves that really important role of not only enabling us to curate them, but also to stand them up in the sense that we can create a winning narrative. 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, channel partners, potential codevelopment 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. So I don't think it's fully appreciated by really anybody. But 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, aren't I just coming to you for money," and we go, "Well, money is the least valuable thing we bring. We bring the ability to actually allow this company to actually become a market leader." And I think that's the value of PatentVest. And then...

So that's something we've always said. Now talk to us about just these 2 other things that we think of the 3-legged stool here that we didn't always necessarily have a self-clearing broker-dealer and a broad end community. How do those fit into the equation?

So the communities -- let me start with the community, but -- well, let me start with the self-clearing broker-dealer. So what's happened in the microcap arena is it's become increasingly difficult in this microcap/public venture area to operate a 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 that are financing microcap 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. 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 saying that it operates quite nicely. 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 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 reaching out to everybody. So 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 going to all start getting phone calls and start getting connected. And so we're very excited about that aspect of what we're doing. It's very counter to what everybody is doing in the industry. And so I think it really sets us apart. I've talked to people that used to work with 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 to this point. But now that 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 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 via community member, it's much easier to put together a potential new opportunity because they come in 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. Our community members get behind these companies. They help facilitate financings. They help facilitate new partnership deals. We have physicians and scientists and what have you in our community that are helping our companies right now, and 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 I think that as time goes on, that will become very apparent to everyone.

Yes. So not -- 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 [ charts ]?

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 microcap and public venture and also traditional venture, it's been a really ugly last couple of years. And in fact, anyone that bought into our IPO can testify it's been a -- it has not been a great start to anything. It's hurt us in a couple of ways. One, it's obviously our stock dropped after the IPO, but also it just really makes financings difficult. And so our financing volume was down. So what it really shows is that the companies that went public in 2023 under $200 million in market value, which is where 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 I guess we're the tallest midget, right? It's like we weren't quite...

I don't know if that's the analogy we should probably use, but yes, it was a tough setting and then the volumes were down.

But it's been a horrible time to be going public or timing -- is good in many ways because there's a lot of opportunities now, but...

That's a good transition. So this is the reality of the market backdrop. What is 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.

Yes. So really, what's great is that there's a glut of venture stage companies who are looking for financing. And the traditional venture funds, 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 that have done well, but not -- very, very few. 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 guys 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 and -- but we're having really good conversations with a number of the VCs. A number of the companies have been back by VCs. I do think there's going to become some opportunities where we can help take these companies to the next level, get them public and provide value to them. And so I think I'm pretty excited about that. Also 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 find stuff at reasonable valuations. And so now it's a great time to be looking around. And like I said, we have a 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 your market environment. And so -- and I think that as we've now strengthened our operations and our deal capacity, we've just got everything operating. We didn't have the clearing firm operating. 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 just yields, I think, a much greater deal volume than you're used to have seen with MDB.

Yes. 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?

Yes. So listen, I think for people who have known us to know this, but basically, while we've been in a bad market the last couple of years having access to pre-IPO financings or big company [ IDF ] or financings or IPOs, that wasn't a real benefit. And so -- but I think the tide does turn, and I think being a shareholder 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 the big idea company like Invizyne, it adds significant enterprise value. And ultimately, we face the law of large numbers. We can't pile up cash. As we've said before, as we create value, we'll be needing to make stock or cash distributions because 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 -- we -- many of us thought we were going to have a democratic administration and higher taxes, but QSBS is still valuable and 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 QSBS. So it's -- what does that mean? It's really a great market segment for investors. We're getting tons of interest from just people we've never talked to before that are new to public venture. They see the value of public venture and really how much more attractive it may look than traditional venture as a result.

Yes. Let's talk to -- 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 Invizyne going public recently?

Yes. So again, sort of below the -- it's sort of like this iceberg that's below the surface of the water, you might only see the tip of it. And -- 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 -- that have advanced degrees. Most all of them are in Latin America. We have some that work for us full time. We've also trained people to do work for us both for -- internally for MDB and PatentVest. And these are people have the ability to help us get through these companies very rapidly. Very proud of the training program we've put together. Some of you have gotten a glimpse of it. You've had 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 make sure and invite you that if any of you have kids or relatives or friends that are college age that are science minded, we love having community members have their kids in our training program. It's a great training program. They get -- it's a 6-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 were saying, "Well, we're now getting referred by 1 or 2 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 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. It's not -- we're not spending a fortune of money to do it. It's -- 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 is a point that really proves how the process and the outcomes is Invizyne going public and the impact that you can quickly see on the big idea investment line item there. So why don't you spend a moment to talk about how Invizyne demonstrates how the model works and then why we have good expectations heading forward of continuing to do this?

Yes. 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 Invizyne. And so we referenced 2 quarters ago, the idea of -- or 2 calls ago, the idea of an investor toolkit which sort of decomplicates the calculation of sort of enterprise value and what we have going and performance. We're going to be -- now that Invizyne 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 really, when you look at MDB as a whole, if you look at sort of the 9/30 numbers versus what it is today after Invizyne is public, we basically -- if you look at our net cash and equivalents, 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 trying to -- the idea there is to represent like how much cash do we have on the balance sheet, to not only back sort of the operations of the broker-dealer, but also 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 that's the current carrying value of those securities. And then if you look at the big ID investments now, so Invizyne was -- we had invested about $5.9 million into Invizyne and at current market, our shares represent -- are valued at $54 million at current market. I completely realize that Invizyne 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 Invizyne. So -- if we can create another Invizyne, then we'll balance out these big ID investments. There won't be one company swinging this around very much. And so our hope is once we get 2 or 3 more companies in there, we start to have a portfolio along with the public venture securities that we earned from public company financings. 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 if -- that the enterprise value of MDB is effectively negative, meaning our ability to create another Invizyne is not -- we're not getting any credit for that. We're not getting any credit for our ability to create shareholder value. And so what does that mean? Well, unfortunately, 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 what. Well, I think the point is we have good value share?

Well, what I'm saying is I'm looking in the mirror and saying, we need to do a better job of giving people faith that there's -- that -- I think that -- I always laugh we -- our last 3 ones we took public all went to $1 billion values. And -- but in the securities business, it's what have you done for me lately. And I think that 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 -- listen, we've got to prove it, though, right? We're going to do more of them. 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, that it will 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 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. HeartBeam is a company that came in and trusted us. They trusted our process. They had 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 our analyst team -- when I first came in, I was like, wow, this looks -- doesn't look any different than anything I've ever seen before in the cardiac monitoring. 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 single acquisition device you could 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 -- I have to be careful how I say this because it upsets doctors. I think that the AI is already proving as you'll see in the published studies, it 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 that you've got a developing problem with your heart. And that's what all the health care costs around with -- if you either die right away, which doesn't -- which 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 morass 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 that 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 one of the greatest companies we've ever gotten behind, super excited about it.

Let's move on the ClearSign company. We did a secondary floor in April, raising about $10 million for them?

So this is a really great story because 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 getting this funded with my partner, Anthony. And so they're much closer to it. So Lou, you gave the story.

Yes. 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% 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 breakeven. 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 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 in 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 PatentVest and the process identified early on is very potentially disruptive. And now we're seeing that play out in the market increasingly so, to the point where strategic partners, 1 of the 2 biggest burner manufacturers in the market, Zeeco, which I believe is around $800 million to $1 billion a year in sales, is now ramping up their co sales initiatives with ClearSign. So excited about this one just like HeartBeam. A completely different space, not med device, 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. Invizyne, which obviously, Chris, I'll let you run this one. This is one that you know near and dear and is the most recent win for us.

Yes. So listen, Invizyne, I'm going to talk a little bit about IPO. One, I really want to thank all the shareholders that stuck in there. We had -- there was a -- we had so many false starts with this deal. We've done lots of IPOs in our lifetime and we looked 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 there's nobody doing IPOs for development stage companies right now. And I really appreciate the faith that you all had in standing behind us. And -- 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 get -- 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. And I don't believe that 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 is 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 make it much easier to invest in the public venture marketplace. So Invizyne, super simple. Synthetic biology using cells it doesn't -- it's not feasible. Billions of dollars were vaporized 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 [ Syndic Biology ]. All the benefits. The reason that all those companies went to tens of billion dollars of value at Synbio 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 all-in on sustainability. And so these companies are very -- they see the difference between Invizyne -- what Invizyne is doing and what the guys that have raised billions of dollars we're doing. And so we're very excited about it. Obviously, we own a very large position in it. Very proud of that we -- again, created yet another company from something that was largely sitting on -- not being recognized as something really valuable sitting in academia. And -- the team there has done a phenomenal job. We're very excited about Michael Heltzen as the CEO. He's doing a great job. The scientific team, our cofounders have been phenomenal. They are world-class. Don't get me wrong, it's not easy [ managed ]. These are hard to start up. But it's been really a great 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.

Okay. Let's finish up. I want to clarify something you said about if we find another big idea like Invizyne, 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. 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 -- 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, 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 decipher what the right commercialization path is. All that work we do at PatentVest is critical to say, okay, what preclinical study should be done, who are potential partners, et cetera. All that work has got to be done after the license is actually executed. 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 at least 1,000 hours of work to put a business plan together for one of these companies. It's probably more than 1,000 hours of work, right? So we do it this way. If for some reason we decided not to move forward with it, obviously, we go back to Mayo and do the right thing and work out a deal with them, right? But 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 what's the essence of aging and senescence. And when you start to look at the etiology of almost every disease is rooted in fibrosis, inflammation, et cetera, right? They've basically -- without boring you with science, they're 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 impacts senescence without toxicity. Others -- 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 -- we're not going to be doing companies where we raise $50 million or $100 million to see if it works. We're going to be doing these things where we can spend a modest amount of money 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 proof of concept.

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

So really, we need to, in this environment -- yes, 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-light, 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. You can see that with Invizyne, where we're taking a capital-light, asymmetric return profile until we -- until it really warrants a lot more capital. And at that point, the markets will make that capital available. We're building out our PatentVest capabilities. When we say it's thousands of hours, it is thousands of hours. That's where PatentVest 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 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 learning as we do. It's -- we don't have it all figured out yet, but I can tell you we've got a lot better figured out than we ever have historically. Operational efficiency. Listen, we hired media -- well, I shouldn't mention any names. We hired an accounting firm and we were spending way too much money. We can't -- we've got to be efficient at every level. We're looking -- we're definitely figuring out ways to create more operational efficiency across all areas of our businesses. We don't know if this microcap malaise or this public venture marketplace is difficult for a lot longer. We need to be as efficient as possible for go 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 -- [ Greg Sample ] is Tech Coast Angels, a new partner that 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 and was like, wow, this is really exciting. Their average hold time, they said in their angel investments was 11 years, right? And the Angels were -- 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 before and not going into traditional venture fund." And so we're [ branding ] that. And we're getting -- it doesn't just happen overnight. But little by little, it's resonating with people. And so I'm kind of excited about that. And like I said, I don't like 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 lose a great communicator. He's out all the time blowing the bugles. He's on TV. We're -- 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 we're not calling to sell you anything. We're just calling to say hello, get to know you, help you get whatever information and get the 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 will really pay dividends here for all of us in the near future.

Sure. At this point, let's open up the call for questions and answers. I've got a few already that came in. I just encourage everyone to use the Q&A function built into Zoom to submit additional questions. Chris, one that comes off the top. You said -- you mentioned that there are 7 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.

Yes. I think that -- let me talk about what I'm excited about. I'm excited about -- I was not a big believer in AI. I believe -- I mean I always knew -- 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 ChatGPT it was -- 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 companies like HeartBeam where you can take a device that creates a lot of data and get -- and yield answers very quickly with AI. I think that a combination of just 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 health care. So I think health care is going to be unbelievably transformed. I think it will be with devices that heretofore were instruments that generated a lot of data but couldn't -- but you couldn't really accurately profile a sample, if you would. I think it's going to happen in health care information and informatics. A great example is cancer. There's currently 3,000 breast cancer trials going on in the world. And 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, 3 or 4 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 agonist, which is obviously a gargantuan market, right? It would have earthshaking effect. And so stuff that is 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.

Yes. No, it's definitely. We obviously have to be sensitive to the things that are in active 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 at overlap. We've had a track record of our last 3 companies, big ideas that we brought public have gone to at least $1 billion valuation. What is the impact of Invizyne as a similar performance? How do you view that impacting MDB? And then secondary question is, how long do you plan to hold the investments that MDB Capital Holdings has?

So I think that, that'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 want there to be an active market for the stock. You don't want to just -- if the stock just went public, you distribute that, that wouldn't -- it just -- it would be disruptive to the company itself. We also have to manage our cash resources at MDB. We, on an operating basis, we've earned cash. Hopefully, as we develop more transactions through the broker-dealer and through PatentVest, our goal is to get to sort of operating cash breakeven. But the investment side of the portfolio does recharge the tanks to go make other big ID investments. So it's a balance. But I would say if Invizyne were to go to $1 billion valuation, that would create so much excess cash that would provide all the operating cash we need for pretty -- as long as I need to live. And then also -- because we are relatively capital light. But also -- us keeping money is dangerous, right? Because you get the law of -- 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 and as soon as possible.

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

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

Yes. I want to end on this. There's a couple of notes here just thanking people for being part of a shareholder and its 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 a team. We see the value of this, but I want to make sure that everyone here as a shareholder understands that this is not the ordinary company. There's another avenue to participate, not just being a passive shareholder?

Yes. 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 -- we hate to say no, but if we don't say no, we're not going to have good results, right? So we think it's great. If you looked at introducing a company as an opportunity to learn about our process. And we try to make you all look good. We don't -- 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 any of these ideas in. We really appreciate it. And obviously, if any of them do go forward, whoever brings them to us is going to benefit from it financially significantly. So yes, it's super important. I would say that our community is -- the more engaged they become, the more successful we become and you become as a shareholder.

Yes. 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 and would like to run it 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, to leave it to you for closing remarks.

Super, well, thanks, everyone. It's been a really tough 2 years. I can tell you internally, we've been -- I didn't expect it to start this way. It's been really tough. But -- we've been through tough times before. This is not the first tough market that we've been through at MDB. It's the first tough market we've been through at MDB as a public company, which we've always done it with our own money, we never had shareholder money. But 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. I mean our luck could run dry, 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.

Thanks.