Earnings Call - ECO WAVE POWER GLOBAL AB (PUBL)

Financial Performance:

• The median offering size for microcap IPOs surged from approximately $8 million in 2025 to nearly $20 million (specifically $19.4 million) in the first three quarters of 2026, driven by exchanges raising minimum proceeds requirements.
• Total microcap IPO volume collapsed, dropping from 134 issuances in 2025 to just 17 in the first nine months of 2026.
• The volume of Foreign Private Issuers (FPIs) decreased drastically from 101 in 2025 to only 7 in the first three quarters of 2026.
• Post-listing performance for many microcap companies has been weak, with significant aftermarket volatility and valuation drops cited as a concern.
• Reverse mergers and alternative pathways are currently outpacing traditional IPOs; 53 microcap listings occurred in 2026 through September, with only 17 being traditional IPOs.

Guidance and Future Outlook:

• The Texas Stock Exchange (TSX) is scheduled to launch corporate listings in Q4 2026, with initial listing standards expected to be established for transfers first, followed by initial listings.
• Management expects a continued divergence between political rhetoric urging "more IPOs" and the reality of tighter, discretionary exchange standards through 2026 and 2027.
• The industry outlook suggests a consolidation where only companies with larger capital raises (often requiring $15M–$20M+ in anchors) can successfully navigate the current listing environment.
• The "revolving door" is widening: 11 new ways to get delisted were identified in 2025/2026, resulting in a net deficit of companies (209 delisted in 2025 vs. 134 new IPOs).
• Future listing standards on new platforms (like TSX) aim to modernize corporate governance and reduce litigation burdens, potentially easing costs for public companies.

Business Segments and Product Lines:

• NASDAQ has introduced "discretionary review" (Dec 2023 rule), adding a third qualification layer (beyond quantitative standards and concentration/distribution rules) that evaluates "do you belong" rather than "do you qualify."
• NYSE American raised its minimum stock price requirement from $2-$3 to $4 and redefined "market value of public float" to exclude locked-up shares, not just insider holdings.
• NYSE American continues to reject "Direct Listings" (capital D, capital L) for emerging growth companies, maintaining that these require capital raises for visibility and liquidity, though OTC uplistings without capital raises are permitted.
• New ecosystem players like Moody Capital Solutions have developed integrated platforms (broker-dealer, marketing, crowdfunding) to support private-to-public transitions.
• The Texas Stock Exchange plans to write new state laws to control proxy thresholds and corporate governance rules, aiming to reduce the cost and burden of being public.

Market and Competitive Landscape:

• Market share is heavily skewed toward NASDAQ (approx. 82-83% of listed microcaps) compared to NYSE American (approx. 17%), despite investor preference polls favoring NYSE for certain attributes.
• NASDAQ is perceived as having a "last-minute" discretionary review process that often fails companies shortly before pricing, whereas NYSE American is viewed as more proactive with front-end feedback.
• The microcap segment now represents 35.7% of all listed issuers on NASDAQ/NYSE, contradicting the perception held by some in the room that it is a smaller portion of the market.
• Foreign competition is rising as U.S. regulatory hurdles push innovative companies to consider listing in other jurisdictions or utilizing alternative U.S. pathways like reverse mergers.

Risks and Challenges:

• Discretionary Review: The shift from objective metrics to subjective "belonging" criteria creates high uncertainty, long deal timelines, and the risk of failure after significant legal and banking costs are incurred.
• Capital Requirements: The need for massive anchor investments ($15M-$20M) excludes many emerging growth companies from listing, potentially stalling innovation.
  Reverse Merger Volatility: Companies face high risk during the "sustained trading" period (often 10 days of price >$4) required for approval post-merger, leading to potential delisting if trading drops.
• Post-Listing Liquidity: Companies bear the primary burden of post-listing marketing and investor relations; exchanges provide limited active support to prevent stock price decay.
• Regulatory Disconnect: A perceived conflict between government desires for more IPOs and exchange standards designed to prevent manipulation and protect investors creates an unpredictable environment.

Management Commentary and Tone:

• Management tone is cautious, critical of the current "discretionary" environment, and sympathetic to the difficulties faced by microcap founders.
• Speakers frequently characterized the current market as "crushed" and "imperfect," with some panelists expressing frustration that the system may inadvertently favor foreign competitors.
• There is a strong emphasis on data transparency, with Lekoski-Brookman positioning itself as a data-driven authority on the "reality" of the microcap market.
• Panelists like Richard Krieg and Carlo Corzine displayed a confrontational tone toward NASDAQ's strictness, labeling their actions as "shutting down the market."
• Jeff Karcher (TSX) maintained a constructive but critical tone, positioning his new exchange as a solution to "overburdensome disclosure" and "weaponized litigation."

Analyst Questions and Answers:

• Question: How does the disconnect between political calls for IPOs and exchange strictness get resolved?
  • Answer: NYSE American noted that political goals and regulatory realities (investor protection, manipulation risks) often cannot be reconciled; exchanges focus on the "point of sale" due diligence regardless of political pressure.
• Question: Is the discretionary review process fair?
  • Answer: TAMARA (former NASDAQ) and others criticized the timing, noting NASDAQ often issues negative discretionary feedback weeks before pricing, whereas NYSE provides earlier, more transparent feedback.
• Question: Will the Texas Exchange list microcaps immediately?
  • Answer: Jeff Karcher indicated the TSX will initially focus on transfers and larger, higher-quality companies to establish market credibility before lowering standards for microcaps.
• Question: Why does NYSE American dislike direct listings for microcaps?
  • Answer: The exchange believes emerging growth companies need the capital raise and banking sponsorship that a traditional IPO provides to ensure visibility and sustainable trading; direct listings are reserved for large, established entities on the main NYSE board.
• Question: What is the specific process for reverse mergers regarding price maintenance?
  • Answer: Companies must sustain a stock price above $4 (often for 10 days) before regulatory approval to qualify, creating a "wait-and-see" period that increases volatility and risk of delisting.

Other Key Points:

• Interactive polling revealed a significant gap between audience perception (e.g., 58% thought >50% of NASDAQ issuers are microcaps) and actual data (35.7%).
• The "Revolving Door" data highlights that 2025 saw a net loss of 75 microcap companies (134 in, 209 out), a trend accelerating in 2026.
• Alternative pathways (direct listings, uplistings, cross-listings) have collectively outpaced traditional IPOs for the first time in seven years due to regulatory hurdles.
• The Texas Stock Exchange plans to launch with 9 new state laws, 7 specifically addressing issuer burdens, to be finalized before IPOs begin in late 2027.
• The industry is shifting from a process-based qualification model to an "advocacy-based" model where the exchange acts as a gatekeeper of quality rather than a passive validator of rules.