10-Q: MDB Capital Holdings Reports Q3 2026 Losses Amid Investment Declines

MDB Capital Holdings, LLC filed its Q3 2026 Form 10-Q, revealing significant net losses and a substantial decrease in total assets, largely due to market value declines in investment securities and an impairment charge on an equity method investment.

Summary

• MDB Capital Holdings, LLC reported a net loss of $16.44 million for the three months ended September 30, 2026, and a net loss of $32.50 million for the nine months ended September 30, 2026.
• Total assets decreased significantly from $63.74 million at December 31, 2025, to $37.49 million at September 30, 2026.
• Total equity also saw a substantial decrease, falling from $60.58 million to $36.06 million over the same period.
• The company experienced unrealized losses on investment securities totaling $1.04 million for the three-month period and $5.92 million for the nine-month period.
• An impairment charge of $9.86 million was recognized on the equity method investment in eXoZymes Inc. due to its declining stock price.
• Fee income from investment banking transactions increased, but was offset by investment security losses and increased operating costs.
• The company's broker-dealer segment reported a net loss of $2.65 million for the three months and $7.95 million for the nine months ended September 30, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to significant net losses, a substantial decrease in total assets, and a notable decline in equity, primarily driven by unrealized losses on investment securities and an impairment charge on an equity method investment.

Positives

• Fee income from investment banking transactions increased by $1.2 million (54%) to $3.3 million for the nine months ended September 30, 2026, compared to $2.1 million in the prior year period.
• Related party fee income of $892 thousand was earned from one investment banking transaction during the nine months ended September 30, 2026.
• Other operating income from patent-related intellectual property services and self-clearing fees increased to $161 thousand and $669 thousand for the three and nine months ended September 30, 2026, respectively.
• The company's broker-dealer subsidiary maintained net capital significantly in excess of the minimum required by SEC Rule 15c3-1.

Negatives

• The company reported a net loss of $16.44 million for the three months ended September 30, 2026, and $32.50 million for the nine months ended September 30, 2026.
• Total assets decreased by $26.25 million from $63.74 million at December 31, 2025, to $37.49 million at September 30, 2026.
• Total equity decreased by $24.52 million from $60.58 million at December 31, 2025, to $36.06 million at September 30, 2026.
• Unrealized losses on investment securities held by the licensed broker dealer were $1.04 million for the three months and $5.92 million for the nine months ended September 30, 2026.
• An impairment charge of $9.86 million was recognized on the equity method investment in eXoZymes Inc.
• The equity method investment in eXoZymes Inc. decreased from $37.54 million to $22.92 million due to net losses, dilution, and the impairment charge.
• Payables to customers decreased by $1.82 million, primarily due to the closing of an investment banking transaction.

Risks

• Changes to U.S. tariff and import/export regulations, and geopolitical conflicts (Persian Gulf, Ukraine, Israel, Iran) may adversely affect the company's business, financial condition, and results of operations, particularly its financial services segment and the value of its financial assets.
• Government actions on tariffs, research grants, and funding may impede the company's ability to conduct research and raise capital for its partner companies and clients.
• Tariffs are likely to increase the cost of doing business and make it more difficult to obtain imported equipment.
• Curtailment of direct funding may adversely impact partner companies and clients' development work.
• The company's financial services segment and the value of its financial assets may be adversely impacted by global economic conditions and financial market stability.
• The company is aware that as a financial institution, it may be a general target for cyber-attacks.
• The requirement to comply with the Uniform Net Capital Rule 15c3-1 may limit Public Ventures' ability to issue dividends to its parent company.

Future Outlook

The filing does not contain specific forward-looking statements or guidance regarding future financial performance. However, it notes that the company is monitoring economic trends such as potential recession, inflation, and geopolitical conflicts, and will adjust business and financing plans as more information becomes available.

Management Comments

• Management believes that the disclosure controls and procedures are effective to provide reasonable assurance that required information is recorded, processed, and reported within specified time periods.
• Management has concluded that there were no changes in internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
• Management believes that the judgment, estimates, and assumptions used in the preparation of financial statements are appropriate given the factual circumstances at the time, but actual results could differ.

Industry Context

StockSavvy.ai notes that MDB Capital Holdings operates in the financial services sector, specifically as a broker-dealer and intellectual property service provider. The reported unrealized losses on investment securities and the impairment of an equity method investment are common risks in this industry, particularly during periods of market volatility and economic uncertainty. The increase in fee income from investment banking suggests activity in capital raising, a core function of broker-dealers.

Comparison to Industry Standards

• The company's broker-dealer subsidiary, Public Ventures, maintains net capital significantly in excess of the minimum required by SEC Rule 15c3-1 ($7.85 million vs. $0.25 million minimum at September 30, 2026), which is a positive indicator of financial health relative to regulatory requirements.
• The net operating loss for the nine months ended September 30, 2026, of $17.84 million, indicates a challenging operational period compared to many established financial institutions, though direct comparisons are difficult without specific industry benchmarks for companies of similar size and business model.
• The significant unrealized losses on investment securities highlight market risk exposure, a common challenge for firms holding investment portfolios, though the magnitude of these losses relative to the company's asset base is a key concern.

Legal Proceedings

• The company is not currently a party to any material legal proceedings and is not aware of any pending or threatened litigation that would have a material adverse effect on its business, operating results, cash flows, or financial condition.

Related Party Transactions

• The company paid $1.44 million for contracted labor from MDB Capital, S.A. during the nine months ended September 30, 2026.
• PatentVest engaged in financial transactions with Paulex Bio Inc., for which an executive officer serves as a board member.
• PatentVest recognized revenues of $88 thousand from eXoZymes during the nine months ended September 30, 2026.
• Public Ventures recognized revenues of $892 thousand from eXoZymes during the nine months ended September 30, 2026.
• Related party receivables totaled $10 thousand for services performed by PatentVest on behalf of eXoZymes during the nine months ended September 30, 2026.

Stakeholder Impact

• Shareholders are impacted by the significant net losses and the decrease in total equity, which reduces the book value of their investment.
• The impairment of the eXoZymes investment may negatively affect future profitability and shareholder value.
• The company's ability to generate future revenue from investment banking and intellectual property services is crucial for its financial health and stakeholder returns.
• The net capital requirements for the broker-dealer subsidiary may limit dividend distributions to the parent company, potentially impacting the flow of capital to shareholders.

Next Steps

• Continue to monitor economic trends, including potential recession, inflation, and geopolitical conflicts, and adjust business and financing plans accordingly.
• Continue to develop pharmaceuticals based on licensed technology from Mayo Foundation for Medical Education and Research through MDB Minnesota One.
• Continue to provide intellectual property validation services through PatentVest.
• Continue to operate as a broker-dealer through Public Ventures.

Key Dates

Recommendation

The filing indicates significant financial deterioration with substantial net losses, a sharp decline in assets and equity, and a large impairment charge on an investment. While fee income from investment banking shows some growth, it is insufficient to offset the negative impacts of market volatility on investments and operational costs. The overall financial health appears weak, suggesting a sell recommendation.

Keywords

broker-dealer, investment banking, intellectual property, equity method investment, unrealized losses, net capital rule, Form 10-Q, financial services