MDB Capital Holdings, LLC Class A common LD Micro 20th Annual Main Event Conference

Welcome. All right. Thank you.

All right. Thanks everyone for joining today. We'll let everybody else sit down here, and then I'll get going. We've been doing the same. That's good music. Who is that? All right. We've been doing the same thing for 30 years. We've been launching companies that we believe can make a difference, companies that have a moat, generally around IP. We've taken some companies public recently that varied from that strategy a little bit. One of the companies you might have seen here, Buda Juice, was a friend of ours in Dallas that we took public that we think is defining a new category, but not a deep tech company. We think they have a real moat around this whole idea of fresh juice, and so we're very proud of them. They're doing great and it's been a lot of fun.

They've been public for a little less than a year. But we've been doing the same thing for 30 years. We just did our 18th IPO. Some of these companies were companies that we licensed technology from university, put the company together, so we owned big chunks of those companies. So we were really co-founders more than we were an investment bank. Then some companies like Buda, we were an investment bank, but we think a value-added investment bank in helping them to define themselves as a category leader. So that's basically what we've done for a long time. I've been in this business my whole life, so about 40 years doing the same thing. I joke we sell dreams, but we really launch great companies is the way I look at it.

Over those years, in the early 1990s, I wrote a paper that basically described that once companies got to about a $75 million market valuation, they really would take on flight. Institutions would get involved in them, they would start to do very well, and they would get more of an audience to invest in them. That number has gone up quite a bit, and so that's really what we've seen. Really in the last 25 years, we've gone from about 8,000 public companies down to about 4,000 public companies or less now. It's much harder for these small companies to really get noticed. The really tiny ones, sub $100 million market value. So you see here at the conference, a lot of these companies really struggling to get people to pay attention to them.

What we've tried to do is always get these category-defining companies that we believe are really big ideas, and that's why one of our taglines you've seen is "We launch big ideas." We went public a couple of years ago with the idea of we would scale up what we were doing. It was really the wrong time to do that, because what's happened is everything that's sub $100 million market value, which is typically where we take these companies public, has been evacuated, and it's been probably the worst asset class over the last few years. We definitely made a mistake probably going public. We did this being private for so many years, and scaling was probably not the right time. The good news is that it brings a lot of opportunity, and right now, a lot of these companies are-- Nobody cares about them.

One of my quotes is that it's hard to fall off the floor and we might be on the floor. It really has caused us to reassess where we're going, how we're going to do it. We have to pivot and figure out what to do because we can't just sit here and pray that these micro-cap companies are going to get a lot of attention paid to them. We're really focused on leveraging the companies that we have in our portfolio and maximizing the value of them and try to deliver as much shareholder value as we can back to our shareholders. I just ran a little thing with AI this last week where basically the sub $100 million market cap companies this year are on average down about 20% versus what we've seen, obviously, in the rest of the market.

It's not really an excuse, it's just a fact of how we're going to have to run our business and take the realities of what's happened. Again, this is not new news to you, but it really has caused us to say, "Okay, what are we going to do to really return the most value back to our shareholders?" And that's where, again, we might be at the absolute bottom. It always gets like this where no one wants to buy these nano caps, and then all of a sudden something changes. We hope that's going to happen, but we can't bet that that's going to happen. We're taking action to really monetize or to really focus on those companies we've already launched or the companies that are in our portfolio to transform them and generate a lot of value.

We have companies that we think are category-defining companies in our portfolio, and we really believe in these companies, and we're excited about them, and we're working hard to maximize the value of them right now. Those four companies are Public Ventures. Public Ventures was an idea which was all these small broker-dealers have to clear through large companies. These large clearing firms don't really want micro caps or Public Ventures to be a thing. We started a clearing firm and got it up and running, and it took us about five years to do. We're now looking to partner with somebody that wants to be a clearing firm. There's only 100 independent clearing firms in the U.S. today. It's basically like having a bank charter, and we're now in discussions with numerous larger companies that want to go self-clearing.

We're hoping that we can not only monetize that, but also take what we developed with that and leverage it so we can continue to do these offerings when the market comes back for these smaller IPOs. PatentVest was something we've worked on for a long time. We'd originally built a database that helped us to really evaluate new technologies. Because we wanted moats around these technologies, we would always want to make sure that we would own the space that we were in, and we started to build this database. We invested a lot of money over the years, and then we transitioned. We had this idea when this Arizona law came about that enabled us to be a non-lawyer-owned firm. Now with the advent of AI, we had the ability to really disrupt the whole legal process around patent prosecution.

We think that everyone's seeing it, of course, in the practice of law today. We see a big opportunity to roll up the industry and support lawyers in a way that they've never been supported. The way we see the world transforming is that PatentVest is going to be a great place for the most brilliant legal minds to do their work and be supported by our analyst team, by AI, our analysts that enable the AI, and process and string all those processes together. We're very excited about that. We're currently going to spin that off as its own business unit and fund it separately through outside investors. eXoZymes is public. It definitely is the most disruptive synthetic biology company that we've ever seen. We launched that company, took it public almost 2 years ago. We own about 40% of the company.

We think it's a multi-billion dollar opportunity. They're not here at the conference, but you guys should take a look at them. We just filed a registration statement for Paulex Bio, which could be one of the best treatments or potentially even a cure for type 1 and type 2 diabetes. We own 7 million shares of that. That IPO should go out sometime next year, and we're very excited about it. It's a company that we started with people that we had a big success with in a company called Provention Bio. They got bought out. I talked about this a bit. I won't go into too much more detail, but really the team at our firm did a phenomenal job getting this off the ground. It is not easy to do it, to get a new self-clearing firm up and running. We got it up and running.

It's operating great. You can go to MDB Direct. The app works great. We've built that firm, and now we want to partner with somebody, and we think that we've had multiple people show interest in it, and so we're hoping to announce something quite soon with that. PatentVest. Patent prosecution in the U.S. is about a $15 billion business. It's very fragmented. There's very few law firms that have any material share of the market, and everybody knows that the way patents are going to be prosecuted are going to change very dramatically. There is probably 1,000 legal tech AI firms out there. That's not what we're selling.

We're using all of those legal tech folks, or we're developing our own agents to work with our analysts to support the best lawyers, to create a great work environment for the best lawyers, to create the best IP, and really enable these companies in the AI era. The thing that I find so exciting about what's happening is that AI is going to probably cause an explosion in new patent applications. The reason why is that not only is AI enable inventions to happen at a much greater rate, but AI is also going to, I think, cause what I call a land grab in IP. Because now that invention is happening so much faster, people are going to be racing to get there faster with IP, with patents.