What changed in this filing

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Item 1. Financial Statements

2023-11-06 compared with 2023-08-09 · 570 added, 543 removed, 229 unchanged (83% of the section changed)

Financial Statements

DOMINARI HOLDINGS INC.

Condensed Consolidated Balance Sheets

($ in thousands except share and per share amounts)

DOMINARI HOLDINGS

Condensed Consolidated

Balance Sheets

($ in thousands

except share and per share amounts)

September 30,

Current assets

17 unchanged sentences

Accrued salaries and benefits

Income taxes withheld

Accrued commissions

7 unchanged sentences

5,000,000 shares designated;

3,825 shares issued and outstanding at June 30, 2023 and December 31, 2022;

3,825 shares issued and outstanding at September 30, 2023 and December 31, 2022;

liquidation value of $ 0.0001 per share

5,000,000 shares designated;

834 shares issued and outstanding at June 30, 2023 and December 31, 2022;

834 shares issued and outstanding at September 30, 2023 and December 31, 2022;

liquidation value of $ 0.0001 per share

Common stock, $ 0.0001 par value, 100,000,000 shares authorized;

5,345,312 and 5,485,096 shares issued at June 30, 2023 and December 31, 2022, respectively;

5,285,164 and 5,017,079 shares outstanding at June 30, 2023 and December 31, 2022, respectively

5,345,312 and 5,485,096 shares issued at September 30, 2023 and December 31, 2022, respectively;

5,285,164 and 5,017,079 shares outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

Treasury stock, at cost, 60,148 and 468,017 shares at June 30, 2023 and December 31, 2022, respectively

Treasury stock, at cost, 60,148 and 468,017 shares at September 30, 2023 and December 31, 2022, respectively

Accumulated deficit

1 unchanged sentence

Total liabilities and stockholders’ equity

See accompanying notes to unaudited condensed consolidated

financial statements.

DOMINARI HOLDINGS INC.

Condensed Consolidated Statements of Operations

($ in thousands except share and per share amounts)

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Condensed Consolidated

Statements of Operations

($ in thousands

except share and per share amounts)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating costs and expenses

1 unchanged sentence

Research and development

Research and development - license acquired

Total operating expenses

2 unchanged sentences

Interest income

Gain (loss) on marketable securities

(Loss) gain on marketable securities

Unrealized loss on note receivable

Change in fair value of investments

Total other income (expenses)

Total other (expenses) income

Deemed dividends related to Series O and Series P Redeemable Convertible Preferred Stock

4 unchanged sentences

Basic and Diluted

See accompanying notes to unaudited condensed consolidated

financial statements.

DOMINARI H OLDINGS

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Condensed Consolidated

3 unchanged sentences

For the Three

Months Ended June 30, 2023 and 2022

Months Ended September 30, 2023 and 2022

Preferred Stock

Treasury Stock

Stockholders’

Balance at March 31, 2023

Total Stockholders’

Balance at June 30, 2023

$ ( 198,306 )

Stock-based compensation

Balance at June 30, 2023

Balance at September 30, 2023

$ ( 201,847 )

Redeemable Convertible

Preferred Stock

Treasury Stock

Stockholders’

Balance at March 31, 2022

Total Stockholders’

Balance at June 30, 2022

$ ( 172,386 )

Redemption of Series O Redeemable Convertible

Preferred Stock

Redemption of Series P Redeemable

Convertible Preferred Stock

Deemed dividends related

to Series O and Series P Redeemable Convertible Preferred Stock

Repurchase of treasury stock

Purchase of treasury stock

Stock-based compensation

Fractional shares adjusted

for reverse split

Balance at June 30,

Balance at September 30, 2022

$ ( 178,625 )

For the Six Months Ended June 30, 2023 and 2022

For the Nine Months Ended

September 30, 2023 and 2022

Preferred Stock

7 unchanged sentences

Retirement of treasury stock

Balance at June 30, 2023

Balance at September 30, 2023

$ ( 201,847 )

Redeemable Convertible

Redeemable Convertible Preferred Stock

Preferred Stock

Stockholders’

at December 31, 2021

Issuance of Series O redeemable convertible

preferred stock for cash

Treasury Stock

Balance at December 31, 2021

$ ( 163,774 )

Issuance of Series O redeemable convertible preferred stock for cash

Issuance of Series P redeemable convertible preferred stock for cash

Cost on issuance of Series

O and Series P Redeemable Convertible Preferred Stock

Deemed dividends related

to Series O and Series P Redeemable Convertible Preferred Stock

Redemption of Series

O Redeemable Convertible Preferred Stock

Redemption of Series

P Redeemable Convertible Preferred Stock

Repurchase of treasury stock

Cost on issuance of Series O and Series P Redeemable Convertible Preferred Stock

Deemed dividends related to Series O and Series P Redeemable Convertible Preferred Stock

Redemption of Series O Redeemable Convertible Preferred Stock

Redemption of Series P Redeemable Convertible Preferred Stock

Purchase of treasury stock

Stock-based compensation

Cancellation of common stock

related to investment in CBM

Fractional shares adjusted

for reverse split

at June 30, 2022

See accompanying notes to unaudited condensed consolidated

financial statements.

DOMINARI HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

Cancellation of common stock related to investment in CBM

Fractional shares adjusted for reverse split

Balance at September 30, 2022

$ ( 178,625 )

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Condensed Consolidated

Statements of Cash Flows

($ in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

3 unchanged sentences

Change in fair value of long-term investment

Research and development-acquired license, expensed

Stock-based compensation

5 unchanged sentences

Prepaid acquisition cost

Deposits with clearing broker

Clearing broker deposits

Accounts payable and accrued expenses

13 unchanged sentences

Funds to employee forgivable loan

Purchase of research and development licenses

Purchase of short-term and long-term investments

2 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of Series O and Series P

Redeemable Convertible Preferred Stock, net of discount and offering cost

Proceeds from issuance of Series O and Series P Redeemable Convertible Preferred Stock, net of discount and offering cost

Payment for fractional shares

13 unchanged sentences

Net cash paid

See accompanying notes to unaudited condensed

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Notes to Condensed

Consolidated Financial Statements

DOMINARI HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements

Organization and Description of Business

and Recent Developments

Organization and Description of Business

Dominari Holdings Inc.

(the “Company”),

formerly AIkido Pharma, Inc., was founded in 1967 as Spherix Incorporated.

Since 2017, the Company has operated as a biotechnology company

with a diverse portfolio of small-molecule anticancer and antiviral therapeutics and their related patent technology.

In an effort to

enhance shareholder value, in June of 2022, the Company formed a wholly owned financial services subsidiary, Dominari Financial Inc.

Financial”), with the intent of shifting the Company’s primary operating focus away from biotechnology to the fintech and

financial services industries.

Through Dominari Financial, the Company acquired Dominari Securities LLC (“Dominari Securities”), an introducing

broker-dealer, registered with the Financial Industry Regulatory Authority (“FINRA”) and an investment adviser registered

with the Securities and Exchange Commission (“SEC”).

Dominari Securities provides investment advisory services and annuity

and insurance products of certain insurance carriers as an insurance agency through independent and affiliated brokers.

Additionally, AIkido Labs, LLC (“Aikido

Labs”), another wholly owned subsidiary of the Company, is in the process of winding down its historical pipeline of biotechnology

assets consisting of patented technologies from leading universities and researchers, including prospective treatments for pancreatic

cancer, acute myeloid leukemia, and acute lymphoblastic leukemia.

Aikido Labs has historically explored opportunities in high growth industries

and has equity holdings including Anduril Industries, Inc, Databricks, Inc., Discord, Inc., Epic Games, Inc., Payward, Inc.

Space Exploration Technologies Corp.

dba SpaceX, Tevva Motors Ltd., Thrasio, LLC, and Yanka Industries, Inc.

and Description of Business and Recent Developments

and Description of Business

Dominari Holdings

(the “Company”), formerly AIkido Pharma, Inc., was founded in 1967 as Spherix Incorporated.

Since 2017, the Company

has operated as a biotechnology company with a diverse portfolio of small-molecule anticancer and antiviral therapeutics and their related

patent technology.

In an effort to enhance shareholder value, in June of 2022, the Company formed a wholly owned financial services subsidiary,

Dominari Financial Inc.

(“Dominari Financial”), with the intent of shifting the Company’s primary operating focus away

from biotechnology to the fintech and financial services industries.

Through Dominari Financial, the Company acquired Dominari Securities

LLC (“Dominari Securities”), an introducing broker-dealer, registered with the Financial Industry Regulatory Authority (“FINRA”)

and an investment adviser registered with the Securities and Exchange Commission (“SEC”).

Dominari Securities provides investment

advisory services and annuity and insurance products of certain insurance carriers as an insurance agency through independent and affiliated

Related to the shift described above, AIkido Labs, LLC (“Aikido

Labs”), a wholly owned subsidiary of the Company, is in the process of winding down its historical pipeline of biotechnology assets.

Aikido Labs has historically explored opportunities in high growth industries and has equity holdings including Anduril Industries, Inc,

Databricks, Inc., Discord, Inc., Epic Games, Inc., Payward, Inc.

dba Kraken, Space Exploration Technologies Corp.

dba SpaceX, Tevva Motors

Ltd., Thrasio, LLC, and Yanka Industries, Inc.

dba Masterclass.

Liquidity and Capital Resources

The Company continues to incur ongoing administrative

and other expenses, including public company expenses, in excess of corresponding (non-financing related) revenue.

While the Company continues

to implement its business strategy, it intends to finance its activities through managing current cash on hand from the Company’s

past equity offerings.

Based upon projected cash flow requirements, the

Company has adequate cash and cash equivalents and marketable securities to fund its operations for at least the next twelve months from the date of the issuance of these unaudited

condensed consolidated financial statements.

Summary of Significant Accounting Policies

There have been no material changes in the Company’s

significant accounting policies from those previously disclosed in the 2022 Annual Report other than those discussed below.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated

financial statements have been prepared in conformity with U.S.

generally accepted accounting principles (“U.S.

in conformity with the rules and regulations of the SEC.

In the opinion of management, these financial statements contain all adjustments,

consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented.

The condensed

balance sheet at December 31, 2022, was derived from audited annual financial statements but does not contain all of the footnote disclosures

from the annual financial statements.

Accordingly, these financial statements should be read in conjunction with the audited consolidated

financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The Company’s policy is to consolidate all

entities that it controls by ownership of a majority of the membership interest or outstanding voting stock.

The accompanying unaudited

condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Aikido Labs, Dominari

Financial, and Dominari Securities.

All significant intercompany balances and transactions have been eliminated in consolidation.

Results for interim periods are not necessarily

indicative of results to be expected for a full year or any future period.

and Capital Resources

The Company continues

to incur ongoing administrative and other expenses, including public company expenses, in excess of corresponding (non-financing related)

While the Company continues to implement its business strategy, it intends to finance its activities through managing current

cash on hand from the Company’s past equity offerings.

Based upon projected

cash flow requirements, the Company has adequate cash and cash equivalents and marketable securities to fund its operations for at least

the next twelve months from the date of the issuance of these unaudited condensed consolidated financial statements.

of Significant Accounting Policies

There have been

no material changes in the Company’s significant accounting policies from those previously disclosed in the 2022 Annual Report.

Basis of Presentation

and Principles of Consolidation

The accompanying

unaudited condensed consolidated financial statements have been prepared in conformity with U.S.

generally accepted accounting principles

GAAP”), and in conformity with the rules and regulations of the SEC.

In the opinion of management, these financial

statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of

the interim periods presented.

The condensed consolidated balance sheet as of September 30, 2023,

condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022, condensed consolidated

statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and the condensed consolidated

statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited, but include all adjustments, consisting

only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating

results and cash flows for the periods presented.

The results for the three and nine months ended September 30, 2023 are not necessarily

indicative of results to be expected for the year ending December 31, 2023 or for any future interim period.

The condensed consolidated

balance sheet at December 31, 2022 has been derived from audited financial statements;

however, it does not include all of the information

and notes required by U.S.

GAAP for complete financial statements.

The accompanying unaudited condensed consolidated financial statements

should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual

report on Form 10-K for the year ended December 31, 2022.

The Company’s

policy is to consolidate all entities that it controls by ownership of a majority of the membership interest or outstanding voting stock.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries,

Aikido Labs, Dominari Financial, and Dominari Securities.

All significant intercompany balances and transactions have been eliminated

in consolidation.

Results for interim

periods are not necessarily indicative of results to be expected for a full year or any future period.

Use of Estimates

The accompanying unaudited condensed consolidated

financial statements have been prepared in conformity with U.S.

This requires management to make estimates and assumptions that

affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited

condensed consolidated financial statements, and the reported amounts of revenue and expenses during the period.

The Company’s significant

estimates and assumptions include stock-based compensation, the valuation of investments, the valuation of notes receivable and the valuation

allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates could be affected by external conditions,

including those unique to the Company and general economic conditions.

It is reasonably possible that these external factors could have

an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions.

Deposits with clearing broker

Deposits with Dominari Securities’ clearing

broker consisted of approximately $ 7.1 million held in money market funds and liquid insured deposits maintained by the Company with its

clearing broker as of June 30, 2023.

The Company accounts for its leases under ASC

842, Leases (“ASC 842”).

Under this guidance, arrangements meeting the definition of a lease are classified

as operating or financing leases and are recorded on the unaudited condensed consolidated balance sheet as both a right-of-use asset and

lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s

incremental borrowing rate.

Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset

is amortized over the lease term.

For operating leases, interest on the lease liability and the amortization of the right-of-use asset

result in straight-line rent expense over the lease term.

For finance leases, interest on the lease liability and the amortization of

the right-of-use asset results in front-loaded expense over the lease term.

Variable lease expenses are recorded when incurred (see Note

10 - Leases ).

The Company recognizes revenues under ASC

606 - Revenue from Contracts with Customers (“ASC 606”) .

Revenues are recognized when control

of the promised goods or performance obligations for services is transferred to the Company’s customers, in an amount that reflects

the consideration the Company expects to be entitled to in exchange for the goods or services.

following provides detailed information on the recognition of the Company’s revenues from contracts with customers:

● Underwriting

services include underwriting and placement agent services in both the equity and debt capital

markets, including private equity placements, initial public offerings, follow-on offerings,

and underwriting and distributing public and private debt.

Underwriting and placement agent

revenues are recognized at a point in time on trade-date, as the client obtains the control

and benefit of the underwriting offering at that point.

Costs associated with underwriting

transactions are deferred until the related revenue is recognized or the engagement is otherwise

concluded and are recorded on a gross basis within the general and administrative line item

in the unaudited condensed consolidated statements of operations as the Company is acting

as a principal in the arrangement.

Any expenses reimbursed by the Company’s clients

are recognized as other income.

The accompanying

unaudited condensed consolidated financial statements have been prepared in conformity with U.S.

This requires management to make

estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities

at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the

The Company’s significant estimates and assumptions include stock-based compensation, the valuation of investments, the

valuation of notes receivable and the valuation allowance related to the Company’s deferred tax assets.

Certain of the Company’s

estimates could be affected by external conditions, including those unique to the Company and general economic conditions.

It is reasonably

possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from

those estimates and assumptions.

Deposits with

clearing broker

Deposits with Dominari

Securities’ clearing broker consisted of approximately $ 7.2 million held in money market funds and liquid insured deposits maintained

by the Company with its clearing broker as of September 30, 2023.

The Company accounts

for its leases under ASC 842, Leases (“ASC 842”).

Under this guidance, arrangements meeting the definition

of a lease are classified as operating or financing leases and are recorded on the unaudited condensed consolidated balance sheet as

both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit

in the lease or the Company’s incremental borrowing rate.

Lease liabilities are increased by interest and reduced by payments each

period, and the right-of-use asset is amortized over the lease term.

For operating leases, interest on the lease liability and the amortization

of the right-of-use asset result in straight-line rent expense over the lease term.

For finance leases, interest on the lease liability

and the amortization of the right-of-use asset results in front-loaded expense over the lease term.

Variable lease expenses are recorded

when incurred (see Note 10 - Leases ).

The Company recognizes

revenues under ASC 606 - Revenue from Contracts with Customers (“ASC 606”) .

recognized when control of the promised goods or performance obligations for services is transferred to the Company’s customers,

in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services.

The following provides

detailed information on the recognition of the Company’s revenues from contracts with customers:

services include underwriting and placement agent services in both the equity and debt capital markets, including private equity

placements, initial public offerings, follow-on offerings, and underwriting and distributing public and private debt.

and placement agent revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the

underwriting offering at that point.

Costs associated with underwriting transactions are deferred until the related revenue is recognized

or the engagement is otherwise concluded and are recorded on a gross basis within the general and administrative line item in the

unaudited condensed consolidated statements of operations as the Company is acting as a principal in the arrangement.

reimbursed by the Company’s clients are recognized as other income.

● Commissions

are earned by executing, transactions for clients primarily in equity,

equity-related, and debt products.

Commission revenues associated with trade execution are recognized

at a point in time on trade-date.

Commissions revenues are generally paid on settlement date

and the Company records receivables to account for timing between trade-date and payment

on settlement date.

Recently adopted accounting standards

In October 2021, the FASB issued ASU 2021-08,

Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU

This update amends Topic 805 to add contract assets and contract liabilities to the list of exceptions to the

recognition and measurement principles that apply to business combinations and to require that an entity (acquirer) recognize and measure

contract assets and contract liabilities in accordance with ASC 606.

The Company adopted ASU 2021-08 on January 1, 2023.

There was no material impact to the Company’s unaudited condensed consolidated financial statements from the implementation of ASU

Effect of new accounting pronouncements not

In June 2022, the FASB issued ASU 2022-03, Fair

Value Measurement of Equity Securities Subject to Contractual Sale Restrictions , to clarify that a contractual restriction on the

sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring

the fair value of the equity security.

ASU 2022-03 also clarifies that an entity cannot recognize and measure a contractual

sale restriction as a separate unit of account.

The amendments in ASU 2022-03 may be early adopted and are effective on

a prospective basis for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

The Company is

currently evaluating the impact of the amendments on the Company’s consolidated financial statements and whether it will early adopt

the amendments in ASU 2022-03 .

In March 2023, the FASB issued ASU 2023-01,

Leases , to require entities to classify and account for leases with related parties on the basis of legally enforceable terms

and conditions of the arrangement.

The amendments are effective in periods beginning after December 15, 2023, including interim periods

within those fiscal years.

The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated

financial statements and whether it will early adopt the amendments in ASU 2023-01.

Effect of new accounting pronouncements to

be adopted in future periods

The Company reviewed all other recently issued

accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on these unaudited

condensed consolidated financial statements.

FPS Acquisition

On September 9, 2022, Dominari Financial entered

into a membership interest purchase agreement, as amended and restated on March 27, 2023 (the “FPS Purchase Agreement”) with

Fieldpoint Private Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint

Private Securities, LLC, a Connecticut limited liability company (“FPS”), that is a broker-dealer registered with FINRA and

an investment adviser registered with the SEC (the “FPS Acquisition”).

Pursuant to the terms of the FPS Purchase Agreement,

Dominari Financial purchased from the Seller 100 % of the membership interests in FPS (the “FPS Membership Interests”).

FPS’s registered broker-dealer and investment adviser businesses were renamed and will operate as Dominari Securities, a wholly

owned subsidiary of Dominari Financial.

The FPS Purchase Agreement provides for Dominari Financial’s acquisition of FPS’s

Membership Interests in two closings, the first of which occurred on October 4, 2022 (the “Initial Closing”), at which

Dominari Financial paid to the Seller $ 2.0 million in consideration for a transfer by the Seller to Dominari Financial of 20 %

of the FPS Membership Interests.

Following the Initial Closing, FPS filed a continuing membership application requesting approval

for a change of ownership, control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”).

The Rule 1017 Application was approved by FINRA on March 20, 2023.

are earned by executing, transactions for clients primarily in equity, equity-related, and

debt products.

Commission revenues associated with trade execution are recognized at a point

in time on trade-date.

Commissions revenues are generally paid on settlement date and the

Company records receivables to account for timing between trade-date and payment on settlement

advisory fees are earned in connection with investment advisory services.

Account advisory

fees are recognized over time using the time elapsed method as the Company determined that

the customer simultaneously receives and consumes the benefits of investment advisory services

as they are provided.

Account advisory fees are generally paid in advance of a specified

service period (e.g.

quarterly) and are initially deferred within in our Condensed Consolidated

Balance Sheet.

Long-term investments

Effective January

1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01 and related ASU 2018-03 and ASU 2019-04 concerning

recognition and measurement of financial assets and financial liabilities.

In adopting this guidance, the Company has made an accounting

policy election to adopt an adjusted cost method measurement alternative for investments in equity securities without readily determinable

For equity investments

that are accounted for using the measurement alternative, the Company initially records equity investments at cost but is required to

adjust the carrying value of such equity investments through earnings when there is an observable transaction involving the same or a

similar investment with the same issuer or upon an impairment.

Recently adopted

accounting standards

In October 2021,

the FASB issued ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts

with Customers (“ASU 2021-08”).

This update amends Topic 805 to add contract assets and contract liabilities

to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity

(acquirer) recognize and measure contract assets and contract liabilities in accordance with ASC 606.

The Company adopted ASU

2021-08 on January 1, 2023.

There was no material impact to the Company’s unaudited condensed consolidated financial statements

from the implementation of ASU 2021-08.

Effect of new

accounting pronouncements not yet adopted

In June 2022, the

FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ,

to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity

security and, therefore, is not considered in measuring the fair value of the equity security.

ASU 2022-03 also clarifies

that an entity cannot recognize and measure a contractual sale restriction as a separate unit of account.

The amendments in ASU 2022-03 may

be early adopted and are effective on a prospective basis for fiscal years beginning after December 15, 2023, and interim periods within

those fiscal years.

The Company is currently evaluating the impact of the amendments on the Company’s consolidated financial statements

and whether it will early adopt the amendments in ASU 2022-03 .

In March 2023,

the FASB issued ASU 2023-01, Leases , to require entities to classify and account for leases with related parties on

the basis of legally enforceable terms and conditions of the arrangement.

The amendments are effective in periods beginning after December

15, 2023, including interim periods within those fiscal years.

The Company is currently evaluating the provisions of the amendments and

the impact on its future consolidated financial statements and whether it will early adopt the amendments in ASU 2023-01.

Effect of new

accounting pronouncements to be adopted in future periods

The Company reviewed

all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant

impact on these unaudited condensed consolidated financial statements.

On September 9, 2022, Dominari Financial entered into a membership

interest purchase agreement, as amended and restated on March 27, 2023 (the “FPS Purchase Agreement”) with Fieldpoint Private

Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint Private Securities,

LLC, a Connecticut limited liability company (“FPS”), that is a broker-dealer registered with FINRA and an investment adviser

registered with the SEC (the “FPS Acquisition”).

Pursuant to the terms of the FPS Purchase Agreement, Dominari Financial

purchased from the Seller 100 % of the membership interests in FPS (the “FPS Membership Interests”).

FPS’s registered

broker-dealer and investment adviser businesses were renamed and will operate as Dominari Securities, a wholly owned subsidiary of Dominari

The FPS Purchase Agreement provided for Dominari Financial’s acquisition of FPS’s Membership Interests in

two closings, the first of which occurred on October 4, 2022 (the “Initial Closing”), at which Dominari Financial paid

to the Seller $ 2.0 million in consideration for a transfer by the Seller to Dominari Financial of 20 % of the FPS Membership

Following the Initial Closing, FPS filed a continuing membership application requesting approval for a change of ownership,

control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”).

1017 Application was approved by FINRA on March 20, 2023.

The second closing (the “Second Closing”) occurred on March 27,

Dominari Financial paid to the Seller an additional approximate $ 1.6 million consideration for a transfer by the Seller

to Dominari Financial of the remaining 80 % of the FPS Membership Interests.

Consideration Transferred

The FPS Acquisition was accounted for as a business

combination under ASC 805.

Under the terms of the FPS Purchase Agreement

and subsequent Amendments and Side Letters, 100 % of the FPS Membership Interests were acquired for cash consideration of approximately

$ 3.4 million, which reflected the fair value of net assets acquired, plus a $ 1 purchase price.

At March 31, 2023, Dominari Financial had

not finalized the purchase accounting related to the fair value of assets acquired in the FPS Acquisition.

Pursuant to the Initial Closing

and Second Closing, Dominari Financial had wired a total of approximately $ 3.6 million in cash to the Seller.

The purchase price allocation

identified net assets of approximately $ 3.4 million, resulting in a receivable due from the Seller for approximately $ 0.2 million.

receivable is not included within the consideration transferred as part of the FPS Acquisition but is included within prepaid expenses

and other assets within the unaudited condensed consolidated balance sheet as of March 31, 2023.

Under the acquisition method of accounting, the

assets acquired, and liabilities assumed of FPS were recorded as of the acquisition date, at their respective fair values, and consolidated

with those of the Company.

Acquisition-related costs are not included as a component of consideration transferred but are expensed in

the periods in which costs are incurred.

The Company incurred approximately $ 0.3 million of transaction costs associated with the FPS

The transaction costs are included in general and administrative expenses in the unaudited condensed consolidated statement

of operations.

Fair Value of Net Assets Acquired

The following table summarizes the fair values

of the assets acquired and liabilities assumed of FPS at the date of acquisition:

Cash and cash equivalents

Deposits with Clearing Broker-Dealer

Dominari Financial paid to the Seller an additional approximate $ 1.6 million consideration for a transfer by the Seller to

Dominari Financial of the remaining 80 % of the FPS Membership Interests.

Consideration

The FPS Acquisition

was accounted for as a business combination under ASC 805.

Under the terms of the FPS Purchase Agreement and subsequent amendments

and side letters to the agreement 100 % of the FPS Membership Interests were acquired for cash consideration of approximately $ 3.4 million,

which reflected the fair value of net assets acquired, plus a $ 1 purchase price.

At March 31, 2023, Dominari Financial had not finalized

the purchase accounting related to the fair value of assets acquired in the FPS Acquisition.

Pursuant to the Initial Closing and Second

Closing, Dominari Financial had wired a total of approximately $ 3.6 million in cash to the Seller.

The purchase price allocation identified

net assets of approximately $ 3.4 million, resulting in a receivable due from the Seller for approximately $ 0.2 million.

The receivable

is not included within the consideration transferred as part of the FPS Acquisition but is included within prepaid expenses and other

assets within the unaudited condensed consolidated balance sheet as of March 31, 2023.

Under the acquisition

method of accounting, the assets acquired, and liabilities assumed of FPS were recorded as of the acquisition date, at their respective

fair values, and consolidated with those of the Company.

Acquisition-related costs are not included as a component of consideration transferred

but are expensed in the periods in which costs are incurred.

The Company incurred approximately $ 0.3 million of transaction costs associated

with the FPS Acquisition.

The transaction costs are included in general and administrative expenses in the unaudited condensed consolidated

statement of operations.

Fair Value of

Net Assets Acquired

The following table

summarizes the fair values of the assets acquired and liabilities assumed of FPS at the date of acquisition ($ in thousands):

and cash equivalents

with Clearing Broker-Dealer

Other receivables

Prepaid and other current assets

Total assets acquired

and other current assets

assets acquired

Accrued expenses

Accrued commissions

Wealth management liabilities

Total liabilities assumed

Total net assets of FPS Acquisition

Dominari Securities reported a net loss of approximately

$ 7.7 million for the three-months ended June 30, 2023.

Revenue for the period ended June 30, 2023, was approximately $ 0.07 million.

net loss was primarily a result of approximately $ 5.4 million of bonus and employee compensation expense and professional services of

approximately $ 0.9 million.

The bonus and compensation expense and professional service fees related to establishing the operations of

the broker-dealer and are included in the general and administrative expenses line item within the unaudited condensed consolidated statement

of operations.

Investments in Marketable Securities

The realized gain or loss, unrealized gain or

loss, and dividend income related to marketable securities for the three and six months ended June 30, 2023 and 2022, which are recorded

as a component of gains and (losses) on marketable securities on the unaudited condensed consolidated statements of operations, are as

follows ($ in thousands):

management liabilities

liabilities assumed

net assets of FPS Acquisition

in Marketable Securities

The realized gain

or loss, unrealized gain or loss, and dividend income related to marketable securities for the three and nine months ended September

30, 2023 and 2022, which are recorded as a component of gains and (losses) on marketable securities on the unaudited condensed consolidated

statements of operations, are as follows ($ in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Realized loss

1 unchanged sentence

Dividend income

Short-term investments

The following table presents the Company’s

short-term investments as of June 30, 2023, and December 31, 2022 ($ in thousands):

Investment in Vicinity Motor Corp.

There was no change in the fair value of the short-term

investments for the six months ended June 30, 2023.

The following table provides quantitative information

regarding Level 3 fair value measurement inputs at their measurement dates:

Option term (in years)

The following table

presents the Company’s short-term investments as of September 30, 2023, and December 31, 2022 ($ in thousands):

September 30,

in Vicinity Motor Corp.

There was approximately

$ 12,000 reduction in the fair value of the short-term investments for the nine months ended September 30, 2023.

The following table

provides quantitative information regarding Level 3 fair value measurement inputs at their measurement dates:

September 30,

Option term (in

Risk-free interest rate

Expected dividends

Long-Term Investments

The Company holds interests in several privately

held companies as long-term investments that the Company perceives as potential IPO candidates.

The following table presents the Company’s

long-term investments as of June 30, 2023, and December 31, 2022 ($ in thousands):

The Company holds

interests in several privately held companies as long-term investments that the Company perceives as potential IPO candidates.

The following

table presents the Company’s long-term investments as of September 30, 2023, and December 31, 2022 ($ in thousands):

September 30,

Investment in Kerna Health Inc

2 unchanged sentences

Investment in ASP Isotopes

Investment in AerocarveUS Corporation

Investment in Unusual Machines

Investment in Qxpress

9 unchanged sentences

Investment in Anduril

Investment in AerocarveUS Corporation

On November 22, 2021, the Company entered

into an agreement (the “AerocarveUS Agreement”) with AerocarveUS Corporation, (“AerocarveUS”).

AerocarveUS Agreement, the Company agreed to purchase 250,000 shares of common stock of AerocarveUS for $ 1.0 million.

in Unusual Machines, Inc.

On November 22, 2021, the Company entered into an agreement (the “AerocarveUS

Agreement”) with AerocarveUS Corporation, (“AerocarveUS”).

Under the AerocarveUS Agreement, the Company agreed to purchase 250,000 shares

of common stock of AerocarveUS for $ 1.0 million.

AerocarveUS changed its name to “Unusual Machines, Inc.” on July 5,

In March of 2023, the Company was issued an

additional 64,377 shares at no cost.

In June 2023, the Company purchased an additional 150,000 shares of common stock for

approximately $ 0.08 million.

The investment in AerocarveUS Corporation (a.k.a.

Unusual Machines, Inc.) was valued at approximately

$ 1.08 million as of June 30, 2023.

Notes Receivable

The following table presents the Company’s

notes receivable as of June 30, 2023 ($ in thousands):

In March of 2023, the Company was issued an additional 64,377 shares at no cost.

In June 2023, the Company purchased an additional 150,000 shares

of common stock for approximately $ 0.08 million.

On July 10, 2023, Unusual Machines, Inc.

effected a reverse stock split pursuant to which

each two shares of common stock of the Corporation issued and outstanding was combined and reclassified into one share of common stock

of the Corporation.

The investment in Unusual Machines, Inc.

was valued at approximately $ 1.0 million as of September 30, 2023.

The following table

presents the Company’s notes receivable as of September 30, 2023 ($ in thousands):

Maturity Date

9 unchanged sentences

Notes receivable, at fair value - non-current portion

Convergent Therapeutics, Inc.

The Company’s 8 % convertible promissory

note (“Convergent Convertible Note”) issued by Convergent Therapeutics, Inc.

(“Convergent”) in the principal amount

of approximately $ 1.8 million pursuant to a Note Purchase Agreement matured on January 29, 2023 .

Upon maturity, Convergent entered

into a contractual repayment schedule with the Company.

Pursuant to the schedule, Convergent will make a total of eight payments in the

amount of $ 250 thousand and accrued interest, every three months until fully satisfied.

The principal balance of the Convergent Convertible

Note was approximately $ 1.8 million as of June 30, 2023.

The Company recorded principal repayment of $ 0.5 million and interest income

of approximately $ 0.1 million on the Convergent Convertible Note for the six months ended June 30, 2023.

Raefan Industries LLC Investment

The Company recorded an interest income receivable

of approximately $ 0.6 million on the Raefan Industries Promissory Note as of June 30, 2023 and an unrealized loss on the note of

approximately $ 0.2 million.

American Innovative Robotics, LLC Investment

The Company recorded interest income of approximately

$ 44,000 on the Robotics Promissory Note for the six months ended June 30, 2023.

Kaya Now Inc.

During the fourth quarter of 2022, the Company

identified indicators of impairment for the Kaya investment as a result of adverse changes in Kaya’s business operations, including

liquidity concerns.

As a result, the Company recorded an impairment charge of $ 0.5 million in the fourth quarter of 2022.

The impairment

charge represents an impairment loss of the total investment held as a promissory note resulting in a $ 0 balance for the Kaya Now

Promissory Note as of June 30, 2023.

The Company received and recorded interest income

related to the Kaya Now Promissory Note of approximately $ 10,000 for the six months ended June 30, 2023.

Fair Value of Financial Assets and

Financial instruments, including cash and cash

equivalents, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the

short-term nature of these instruments.

The Company measures the fair value of financial assets and liabilities based on the exchange

price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market

for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company maximizes the use

of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

The Company uses three levels of inputs that may

be used to measure fair value:

Level 1 - quoted prices in active markets

for identical assets or liabilities

Level 2 - quoted prices for similar

assets and liabilities in active markets or inputs that are observable

Level 3 - inputs that are unobservable

(for example, cash flow modeling inputs based on assumptions)

Observable inputs are based on market data obtained

from independent sources, while unobservable inputs are based on the Company’s market assumptions.

Unobservable inputs require significant

management judgment or estimation.

In some cases, the inputs used to measure an asset or liability may fall into different levels of the

fair value hierarchy.

In those instances, the fair value measurement is required to be classified using the lowest level of input that

is significant to the fair value measurement.

Such determination requires significant management judgment.

The following table presents the Company’s

assets and liabilities that are measured at fair value as of June 30, 2023, and December 31, 2022 ($ in thousands):

Fair value measured as of June 30, 2023

active markets

Significant other

Therapeutics, Inc.

The Company’s 8 %

convertible promissory note (“Convergent Convertible Note”) issued by Convergent Therapeutics, Inc.

(“Convergent”)

in the principal amount of approximately $ 1.8 million pursuant to a Note Purchase Agreement matured on January 29, 2023 .

maturity, Convergent entered into a contractual repayment schedule with the Company.

Pursuant to the schedule, Convergent will make a

total of eight payments in the amount of $ 250 thousand and accrued interest, every three months until fully satisfied.

The principal balance

of the Convergent Convertible Note was approximately $ 1.3 million as of September 30, 2023.

The Company recorded principal repayment

of $ 0.8 million and interest income of approximately $ 0.2 million on the Convergent Convertible Note for the nine months ended September

Raefan Industries

LLC Investment

The Company recorded

an interest income receivable of approximately $ 0.7 million on the Raefan Industries Promissory Note as of September 30, 2023 and

an unrealized loss on the note of approximately $ 0.2 million.

Innovative Robotics, LLC Investment

The Company recorded

interest income of approximately $ 67,000 on the Robotics Promissory Note for the nine months ended September 30, 2023.

During the fourth

quarter of 2022, the Company identified indicators of impairment for the Kaya investment as a result of adverse changes in Kaya’s

business operations, including liquidity concerns.

As a result, the Company recorded an impairment charge of $ 0.5 million in the

fourth quarter of 2022.

The impairment charge represents an impairment loss of the total investment held as a promissory note resulting

in a $ 0 balance for the Kaya Now Promissory Note as of September 30, 2023.

The Company received

and recorded interest income related to the Kaya Now Promissory Note of approximately $ 10,000 for the nine months ended September 30,

Value of Financial Assets and Liabilities

Financial instruments,

including cash and cash equivalents, accounts payable and accrued liabilities are carried at cost, which management believes approximates

fair value due to the short-term nature of these instruments.

The Company measures the fair value of financial assets and liabilities

based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most

advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

The Company uses

three levels of inputs that may be used to measure fair value:

1 - quoted prices in active markets for identical assets or liabilities

2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

Observable inputs

Significant unobservable

are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions.

Unobservable inputs require significant management judgment or estimation.

In some cases, the inputs used to measure an asset or liability

may fall into different levels of the fair value hierarchy.

In those instances, the fair value measurement is required to be classified

using the lowest level of input that is significant to the fair value measurement.

Such determination requires significant management

The following table

presents the Company’s assets and liabilities that are measured at fair value as of September 30, 2023, and December 31, 2022 ($

in thousands):

Fair value measured as of September 30, 2023

Total at September 30,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Marketable securities:

3 unchanged sentences

Notes receivable at fair value, non-current portion

Fair value measured as of December 31, 2022

Significant other

value measured as of December 31, 2022

observable inputs

Marketable securities:

Total marketable securities

Short-term investment

Notes receivable at fair value, current portion

Notes receivable at fair value, non-current portion

marketable securities

receivable at fair value, current portion

receivable at fair value, non-current portion

Level 3 Measurement

The following table sets forth a summary of the

changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis ($ in thousands):

The following table

sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value

on a recurring basis ($ in thousands):

Short-term investment at December 31, 2022

Short-term investment at June 30, 2023

Change in fair value of investment

Short-term investment at September 30, 2023

Notes receivable at fair value, current portion at December 31, 2022

3 unchanged sentences

Accrued interest receivable

Notes receivable at fair value, current portion at June 30, 2023

Notes receivable at fair value, current portion at September 30, 2023

Notes receivable at fair value, non-current portion at December 31, 2022

1 unchanged sentence

Accrued interest receivable

Notes receivable at fair value, non-current portion at June 30, 2023

Note Receivable at fair value

As of June 30, 2023, the fair value of the notes

receivable was measured taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating

results and other qualitative and quantitative factors.

No material change was noted in the fair value of the notes receivable during

the three months ended June 30, 2023.

On December 1, 2021, the Company entered into

a Lease Agreement (the “Company’s Lease”) with Trump Tower Commercial LLC, a New York limited liability company.

the Company’s Lease, the Company rents a portion of the twenty-second floor at 725 Fifth Avenue, New York, New York (the “22 nd Floor

The Company currently uses the 22 nd Floor Premises to run its day-to-day operations.

The initial term

of the Company’s Lease is seven (7) years commencing on July 11, 2022 (“Commencement Date).

Under the Company’s Lease,

the Company is required to pay monthly rent, commencing on January 11, 2023, equal to $ 12,874 .

Effective for the sixth and seventh years of the

Company’s Lease, the rent shall increase to $ 13,502 .

The Company took possession of the 22 nd Floor Premises on the

Notes receivable at fair value, non-current portion at September 30, 2023

Note Receivable

at fair value

As of September

30, 2023, the fair value of the notes receivable was measured taking into consideration cost of the investment, market participant inputs,

market conditions, liquidity, operating results and other qualitative and quantitative factors.

No material change was noted in the fair

value of the notes receivable during the three months ended September 30, 2023.

On December 1,

2021, the Company entered into a Lease Agreement (the “Company’s Lease”) with Trump Tower Commercial LLC, a New York

limited liability company.

Under the Company’s Lease, the Company rents a portion of the twenty-second floor at 725 Fifth Avenue,

New York, New York (the “22 nd Floor Premises”).

The Company currently uses the 22 nd Floor

Premises to run its day-to-day operations.

The initial term of the Company’s Lease is seven ( 7 ) years commencing on July 11, 2022

(“Commencement Date).

On September 23, 2022, Dominari Financial entered

into a Lease Agreement (“Dominari Financial’s Lease”) with Trump Tower Commercial LLC, a New York limited liability

Under Dominari Financial’s Lease, Dominari Financial rents a portion of a floor at 725 Fifth Avenue, New York, New York

(the “Premises”).

Under the Company’s Lease, the Company is required to pay monthly rent, commencing on January 11, 2023,

equal to $ 12,874 .

Effective for the sixth and seventh years of the Company’s Lease, the rent shall increase to $ 13,502 .

took possession of the 22 nd Floor Premises on the Commencement Date.

On September 23,

2022, Dominari Financial entered into a Lease Agreement (“Dominari Financial’s Lease”) with Trump Tower Commercial

LLC, a New York limited liability company.

Under Dominari Financial’s Lease, Dominari Financial rents a portion of a floor at 725

Fifth Avenue, New York, New York (the “Premises”).

Dominari Financial currently uses the Premises to run its day-to-day operations.

The initial term of Dominari

Financial’s Lease is seven (7) years commencing on the date that possession of the Premises is delivered to Dominari Financial.

The initial term of Dominari Financial’s Lease is seven ( 7 ) years commencing on the date that possession of the Premises is delivered

to Dominari Financial.

Under Dominari Financial’s Lease, Dominari Financial is required to pay monthly rent equal to $ 49,368 .

Effective for the sixth and

seventh years of Dominari Financial’s Lease, the rent shall increase to $ 51,868 per month.

The Company took possession of the

Premises in February 2023.

The tables below represent the Company’s

lease assets and liabilities as of June 30, 2023:

Operating lease right-of-use-assets

The following tables summarize quantitative information

about the Company’s operating leases, under the adoption of ASC 842:

Weighted-average remaining lease term – operating leases (in years)

Weighted-average discount rate – operating leases

During the six months ended June 30, 2023, the

Company recorded approximately $ 0.4 million of lease expense to current period operations.

Three Months Ended

Six Months Ended

for the sixth and seventh years of Dominari Financial’s Lease, the rent shall increase to $ 51,868 per month.

The Company took

possession of the Premises in February 2023.

The tables below

represent the Company’s lease assets and liabilities as of September 30, 2023:

September 30,

lease right-of-use-assets

The following tables

summarize quantitative information about the Company’s operating leases, under the adoption of ASC 842:

September 30,

Weighted-average

remaining lease term – operating leases (in years)

Weighted-average discount

rate – operating leases

During the nine

months ended September 30, 2023, the Company recorded approximately $ 0.6 million of lease expense to current period operations.

September 30,

Operating leases

Operating lease cost

Operating lease expense

Short-term lease rent expense

Net rent expense

Supplemental cash flow information related to

leases were as follows:

Operating cash flows - operating leases

Right-of-use assets obtained in exchange for operating lease liabilities

As of June 30, 2023, future minimum payments during

the next five years and thereafter are as follows:

Remaining Period Ended December 31, 2023

lease rent expense

Supplemental cash

flow information related to leases were as follows:

September 30,

Operating cash

flows - operating leases

Right-of-use assets obtained

in exchange for operating lease liabilities

As of September

30, 2023, future minimum payments during the next five years and thereafter are as follows:

Remaining Period

Ended December 31, 2023

Year Ended December 31, 2024

3 unchanged sentences

Year Ended December 31, 2028

Less present value discount

Operating lease liabilities

Net Loss per Share

Basic loss per share of common stock is computed

by dividing the net loss allocable to common stockholders by the weighted-average number of shares of common stock or common stock equivalents

Diluted loss per common share is computed similar to basic loss per share except that it reflects the potential dilution

that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share for the

six months ended June 30, 2023, and 2022 are as follows:

As of June 30,

present value discount

lease liabilities

Loss per Share

Basic loss per

share of common stock is computed by dividing the net loss allocable to common stockholders by the weighted-average number of shares

of common stock or common stock equivalents outstanding.

Diluted loss per common share is computed similar to basic loss per share except

that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised

or converted into common stock.

Securities that could potentially dilute loss per share in the future that were not included in the computation

of diluted loss per share for the nine months ended September 30, 2023, and 2022 are as follows:

As of September 30,

Convertible preferred stock

Warrants to purchase common stock

Restricted stock awards

Options to purchase common stock

Stockholders’ Equity and Convertible

Preferred Stock

On March 6, 2023, the Company cancelled 644,499

shares of common stock as a result of retirement of 644,499 shares of treasury stock.

On March 20, 2023, the Company cancelled 25,000

shares of common stock owned by a board member.

June 27, 2023, pursuant to Soo Yu’s employment

agreement and the Company’s 2022 Equity Incentive Plan, the Company executed a Grant Agreement, through which Soo Yu was granted

1,033,591 shares of the Company’s common stock.

Upon issuance, the shares were fully-vested and nonforfeitable with a total fair

value of approximately $ 2.7 million.

Pursuant to the Grant Agreement, the Company withheld 503,876 of the shares granted to satisfy

Soo Yu’s tax obligation of approximately $ 1.3 million and recorded as income taxes withheld within the unaudited condensed consolidated

balance sheet.

Stockholders’

Equity and Convertible Preferred Stock

On March 6, 2023,

the Company cancelled 644,499 shares of common stock as a result of retirement of 644,499 shares of treasury stock.

On March 20, 2023,

the Company cancelled 25,000 shares of common stock owned by an executive.

June 27, 2023,

pursuant to Soo Yu’s employment agreement and the Company’s 2022 Equity Incentive Plan, the Company executed a Grant Agreement,

through which Soo Yu was granted 1,033,591 shares of the Company’s common stock.

Upon issuance, the shares were fully vested and

nonforfeitable with a total fair value of approximately $ 2.7 million.

Pursuant to the Grant Agreement, the Company withheld 503,876

of the shares granted to satisfy Soo Yu’s tax obligation of approximately $ 1.3 million and recorded as income taxes withheld within

the unaudited condensed consolidated balance sheet.

See Restricted Stock roll-forward below.

Treasury Stock

On January 21, 2022, the Company’s board

of directors authorized a share buyback program (the “Share Buyback Program”), pursuant to which the Company authorized the

Share Buyback Program in an amount of up to three million dollars.

During the six months ended June 30, 2023, the Company repurchased

236,630 shares at a cost of approximately $ 0.9 million or $ 3.97 per share through marketable securities account under the Share

Buyback Program.

On January 21,

2022, the Company’s board of directors authorized a share buyback program (the “Share Buyback Program”), pursuant to

which the Company authorized the Share Buyback Program in an amount of up to three million dollars.

During the nine months

ended September 30, 2023, the Company repurchased 236,630 shares at a cost of approximately $ 0.9 million or $ 3.97 per share

through marketable securities account under the Share Buyback Program.

The Company records treasury stock using the cost method.

On March 6, 2023, the Company retired 644,499

shares of treasury stock with original cost of approximately $ 3.8 million.

A summary of warrant activity for the six months

ended June 30, 2023, is presented below:

Exercise Price

On March 6, 2023,

the Company retired 644,499 shares of treasury stock with original cost of approximately $ 3.8 million.

A summary of warrant

activity for the nine months ended September 30, 2023, is presented below:

Outstanding as of December 31, 2022

Outstanding as of June 30, 2023

Restricted Stock Awards

A summary of restricted stock awards activity

for the six months ended June 30, 2023, is presented below:

Number of Restricted

Weighted Average

Grant Day Fair Value

Outstanding as of September 30, 2023

A summary of restricted

stock awards activity for the nine months ended September 30, 2023, is presented below:

Number of Restricted Stock Awards

Weighted Average Grant Day Fair Value

Nonvested at December 31, 2022

Nonvested at June 30, 2023

As of June 30, 2023, there is no unrecognized

stock-based compensation expense related to restricted stock awards.

Nonvested at September 30, 2023

Stock-based compensation

associated with the amortization of restricted stock awards expense was approximately $ 93,000 and $ 1.4 million for the nine months ended

September 30, 2023, and 2022, respectively.

All stock compensation was recorded as a component of general and administrative expenses.

As of September

30, 2023, there is approximately $ 0.2 million unrecognized stock-based compensation expense related to restricted stock awards.

Stock Options

A summary of option activity under the Company’s

stock option plan for the six months ended June 30, 2023 is presented below:

A summary of option

activity under the Company’s stock option plan for the nine months ended September 30, 2023, is presented below:

Number of Shares

Weighted Average

Exercise Price

Total Intrinsic Value

Weighted Average

Remaining Contractual

Life (in years)

Weighted Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2022

Employee options granted

Employee options forfeited

Employee options expired

Outstanding as of June 30, 2023

Outstanding as of September 30, 2023

Options vested and exercisable

Stock-based compensation associated with the amortization

of stock option expense was approximately $ 8,000 and $ 0 for the six months ended June 30, 2023, and 2022, respectively.

All stock compensation

was recorded as a component of general and administrative expenses.

Estimated future stock-based compensation expense

relating to unvested stock options is approximately $ 7,000 .

The following table presents our total revenues

disaggregated by revenue type for the three and six months ended June 30, 2023 and 2022 (in thousands):

Stock-based compensation

associated with the amortization of stock option expense was approximately $ 26,000 and $ 40,000 for the nine months ended September 30,

2023, and 2022, respectively.

All stock compensation was recorded as a component of general and administrative expenses.

Estimated future

stock-based compensation expense relating to unvested stock options is approximately $ 0.7 million.

The following table

presents our total revenues disaggregated by revenue type for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

Six Months Ended

Commitments and Contingencies

September 30,

Nine Months Ended

September 30,

Advisory fees

and Contingencies

Legal Proceedings

In the past, in the ordinary course of business,

the Company actively pursued legal remedies to enforce its intellectual property rights and to stop unauthorized use of the Company’s

Other than ordinary routine litigation incidental to the business, the Company is not aware of any material, active or pending

legal proceedings brought against it.

Dominari Securities, the Company’s broker-dealer

subsidiary, is registered with the SEC as an introducing broker-dealer and is a member of FINRA.

The Company’s broker-dealer subsidiary

is subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of minimum net capital and requires that the ratio

of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1.

As such, the subsidiary is subject to the minimum

net capital requirements promulgated by the SEC and has elected to calculate minimum capital requirements using the basic method permitted

by Rule 15c3-1.

As of June 30, 2023, Dominari Securities had net capital of approximately $ 7.3 million, which was approximately $ 7.2 million

in excess of required minimum net capital of $ 0.1 million.

Related Party Transaction

In 2021, the Company engaged the services of Revere

Securities, LLC (“Revere”) to strategically manage and build the Company’s investment processes.

Kyle Wool, Board Member,

is also a member of the board of directors of Revere.

The Company incurred fees of approximately $ 0.08 million and $ 0.6 million during

the six months ending June 30, 2023, and 2022, respectively.

These fees were included in general and administrative expense in the unaudited

condensed consolidated statements of operations.

Segment Reporting

The Company operates in two reportable

business segments:

(1) Dominari Securities and (2) Legacy AIkido Pharma.

The Dominari Securities reportable business segment represents

the Company’s broker-dealer business, which is composed of underwriting and transactional service activities.

The Legacy AIkido

Pharma reportable business segment includes Aikido Labs, which manages the investments holdings of the legacy entity.

Prior to the FPS Acquisition, the Company operated as a single operating segment comprised of Legacy AIkido Pharma.

The chief operating decision-maker (“CODM”)

has access to and regularly reviews internal financial reporting for each business and uses that information to make operational decisions

and allocate resources.

Accounting policies applied by the reportable segments are the same as those used by the Company and described

in the “ Summary of Significant Accounting Policies.

” While assets are primarily held within the Legacy AIkido Pharma

reportable business segment, total assets by segment is not disclosed as the CODM does not assess performance, make strategic decisions,

or allocate resources based on assets.

The measures of segment profitability that are most

relied upon by the CODM are gross revenues and net loss, as presented within the table below and reconciled to the statement of operations.

Three Months Ended June 30, 2023

In the past, in

the ordinary course of business, the Company actively pursued legal remedies to enforce its intellectual property rights and to stop

unauthorized use of the Company’s technology.

Other than ordinary routine litigation incidental to the business, the Company is

not aware of any material, active or pending legal proceedings brought against it.

Dominari Securities,

Legacy AIkido Pharma

the Company’s broker-dealer subsidiary, is registered with the SEC as an introducing broker-dealer and is a member of FINRA.

Company’s broker-dealer subsidiary is subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of minimum

net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1.

the subsidiary is subject to the minimum net capital requirements promulgated by the SEC and has elected to calculate minimum capital

requirements using the basic method permitted by Rule 15c3-1.

As of September 30, 2023, Dominari Securities had net capital of approximately

$ 6.2 million, which was approximately $ 6.1 million in excess of required minimum net capital of $ 0.1 million.

Party Transaction

In 2021, the Company

engaged the services of Revere Securities, LLC (“Revere”) to strategically manage and build the Company’s investment

Kyle Wool, Board Member, was previously a member of the board of directors of Revere.

The Company incurred fees of approximately

$ 75,000 and $ 0.8 million during the nine months ending September 30, 2023, and 2022, respectively.

These fees were included in general

and administrative expenses in the unaudited condensed consolidated statements of operations.

The Company operates

in two reportable business segments:

(1) Dominari Financial and (2) Legacy AIkido.

The Dominari Financial reportable business

segment represents the Company’s broker-dealer business, which is composed of mostly underwriting and transactional service activities.

The Legacy AIkido reportable business segment includes Aikido Labs, which manages the investments holdings of the legacy entity.

to the FPS Acquisition, the Company operated as a single operating segment comprised of Legacy AIkido.

The chief operating

decision-maker (“CODM”) has access to and regularly reviews internal financial reporting for each business and uses that

information to make operational decisions and allocate resources.

Accounting policies applied by the reportable segments are the same

as those used by the Company and described in the “ Summary of Significant Accounting Policies.

” While assets are primarily

held within the Legacy AIkido reportable business segment, total assets by segment is not disclosed as the CODM does not assess performance,

make strategic decisions, or allocate resources based on assets.

The measures of

segment profitability that are most relied upon by the CODM are gross revenues and net loss, as presented within the table below and

reconciled to the statement of operations.

Three Months Ended

September 30, 2023

Operating Costs

6 unchanged sentences

Unrealized loss on note receivable

Change in fair value of investments

Total other (expenses) income

Six Months Ended June 30, 2023

Dominari Securities

Legacy AIkido Pharma

Nine Months Ended

September 30, 2023

Operating Costs

4 unchanged sentences

Interest income

Loss on marketable securities

Gain on marketable securities

Unrealized loss on note receivable

Change in fair value of investments

Total other (expenses) income

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements