Item 9A. Controls and Procedures
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,”
as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required
to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required
disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures,
no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.
The design of any disclosure controls and procedures
also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. With respect to the annual period ended December 31, 2023,
under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and
operations of our disclosure controls and procedures. Based upon this evaluation, our management has concluded that as of December 31,
2023, our disclosure controls and procedures were not effective due to the material weakness in our internal controls.
A material weakness
is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely
basis.
Material
Weaknesses in Internal Controls
The Company’s management has concluded
that our control around the accounting for certain notes receivable accounted for at fair value was not effectively designed or
maintained, and therefore initially were not accounted for correctly. As a result, our management performed additional analysis as
deemed necessary to ensure that our financial statements were prepared in accordance with accounting principles generally accepted
in the United States of America. Management understands that the accounting standards applicable to our financial statements are
complex and will seek to enhance controls over its experienced third-party professionals with whom management can consult with
respect to accounting issues and remediate this material weakness.
Management’s Annual Report on Internal
Control over Financial Reporting
Management is responsible for establishing and maintaining
adequate internal controls over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our management, including
our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as
of December 31, 2023 and concluded that our internal controls over financial reporting were not effective, due to the material weakness
in our internal control over financial reporting as described above. In making this assessment, our management used the 2013 framework
established in “Internal Control-Integrated Framework” promulgated by the Committee of Sponsoring Organizations of the Treadway
Commission, commonly referred to as the “COSO” criteria.
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore,
even those systems determined to be effective can provide only reasonable assurance with respect to the preparation and presentation of
the consolidated financial statements.
This Annual Report does not contain an attestation
report of our independent registered public accounting firm regarding internal control over financial reporting since the rules for smaller
reporting companies provide for this exemption.
Changes in Internal Control over Financial
Reporting
Other than the material weakness described above,
there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) that occurred during the year ended December 31, 2023 which have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Item 9B. OTHER INFORMATION
None .
Item 9C. DISCLOSURE REGARDING FOREIGN
JURISDICTIONS THAT PREVENT INSPECTIONS
None.
27
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth the name, age and
position of each current director and executive officer of the Company.
Director
Name
Age
Position
Since
Anthony Hayes(4)(6)
56
Chief Executive Officer and Chairman of the Board
2013
Tim S. Ledwick (1)(5)
66
Director
2015
Gregory James Blattner(3)(4)(7)
46
Director
2018
Robert Dudley(1)(2)(3)(6)
68
Director
2020
Kyle Wool(4)(7)
46
President and Director
2021
Soo Yu(6)
53
Director
2022
Kyle Haug(1)(2)(4)(5)
41
Director
2023
George Way
57
Chief Financial Officer
-
Christopher Devall
42
Chief Operating Officer
-
(1)
Member of our Audit Committee.
(2)
Member of our Compensation Committee.
(3)
Member of our Nominating Committee.
(4)
Member of our Investment Committee.
(5)
Class I Director whose directorship will be voted on by stockholders at the 2024 Annual Stockholder Meeting.
(6)
Class II Director whose directorship will be voted on by stockholders at the 2025 Annual Stockholder Meeting.
(7)
Class III Director whose directorship will be voted on by stockholders at the 2026 Annual Stockholder Meeting.
The biographies of our current directors and significant
employees are as follows:
Anthony Hayes
Mr. Anthony Hayes, a director and Chief Executive
Officer since 2013, has served as the Chief Executive Officer of North South since March 2013 and since June 2013, as a consultant to
our Company. Mr. Hayes was the fund manager of JaNSOME IP Management LLC and JaNSOME Patent Fund LP from August 2012 to August 2013, both
of which he co-founded. Mr. Hayes was the founder and Managing Member of Atwater Partners of Texas LLC from March 2010 to August 2012
and a partner at Nelson Mullins Riley & Scarborough LLP from May 1999 to March 2010. Mr. Hayes received his Juris Doctorate from Tulane
University School of Law and his B.A. in economics from Mary Washington College. The Board of Directors believes Mr. Hayes is qualified
to serve as a director of the Company based on his intimate knowledge of the Company through his service as Chief Executive Officer.
Tim S. Ledwick
Mr. Tim S. Ledwick, who joined as a director in
2015, was most recently the Chief Financial Officer of SYFT, a private equity-backed company that provides software solutions and services
to hospitals focused on reducing costs through superior inventory management practices which was successfully sold to GHX in 2022. In
addition, since 2012 he has served on the board and Chair of the Audit Committee of Telkonet, Inc. (TKOI) a smart energy management technology
company. From 2007 to 2011, Mr. Ledwick provided CFO consulting services to a $150 million services firm and, in addition, from 2007-2008
also acted as special advisor to The Dellacorte Group, a middle market financial advisory firm focused on transactions between $100 million
and $1 billion. From 2002 through 2006, Mr. Ledwick was a member of the Board of Directors and Executive Vice President-CFO of Dictaphone
Corporation playing a lead role in developing a business plan which revitalized the company, resulting in the successful sale of the firm
and delivering seven times return to stockholders. From 2001-2002, Mr. Ledwick was brought on as CFO to lead the restructuring efforts
of Lernout & Hauspie Speech Products, a Belgium-based Nasdaq listed speech technology company, whose market cap had at one point reached
a high of $9 billion. From 1999 through 2001, he was CFO of Cross Media Marketing Corp, an $80 million public company headquartered in
New York City, playing a lead role in the firm’s acquisition activity, tax analysis and capital raising. Mr. Ledwick is a member
of the Connecticut Society of Certified Public Accountants and received his BBA in Accounting from The George Washington University and
his MS in Finance from Fairfield University. The Board of Directors believes that Mr. Ledwick’s executive experience and financial
expertise qualifies him to serve as a director of the Company.
28
Robert Dudley
Mr. Robert Dudley, who joined as a member of our
Board of Directors in 2020, currently serves as the National and Metropolitan New York City Regional Sales Manager for Select Sector Standard
& Poor’s Depositary Receipts (“SPDRs”). Prior to joining Select Sector SPDRs in 2008, Mr. Dudley held several managerial
positions at Merrill Lynch from 1981 through 2007. Mr. Dudley began his career in the Merrill Lynch White Weld Capital Markets in Corporate
Bond Syndicate, later moving to Sales Manager for Taxable Fixed Income and Equity Marketing. Later, Mr. Dudley managed Merrill Lynch Consults
for the New York City District and ended his career as a Financial Advisor and Sales Manager at the Merrill Lynch Rockefeller Center Branch
Office. The Board of Directors believes that Mr. Dudley’s executive experience and financial expertise qualifies him to serve as
a director of the Company.
Kyle Wool
Mr. Kyle Wool, who joined as a member of our Board
of Directors in 2021, currently serves as the President of Dominari Holdings, CEO of Dominari Financial, and the CEO of Dominari Securities.
He boasts over 20 years in various aspects of global finance previously as a Managing Director of Oppenheimer & Co., Head of Wealth
Management for their Asian branch, Executive Director at Morgan Stanley, and President of Revere Securities LLC. His extensive knowledge
allows him to provide strategic guidance while advising those on the team managing all facets related to financial services categories
with senior level insights within an organizing whose growth strategies, he actively contributes towards cultivating. Mr. Wool is also
active in various philanthropic endeavors both domestically and abroad. He currently serves as a board member of LifeLine NY, a board
member of the CIRSD (Center for International Relations and Sustainable Development), a board member of Project Rousseau and also a board
member of Lang Lang International Music Foundation. Mr. Wool holds Series 7, 63, & 24 Securities licenses. The Board of Directors
believes that Mr. Wool’s extensive experience in banking and wealth management qualifies him to serve as a director of the Company.
Soo Yu
Ms. Soo Yu, who joined as a member of our Board
of Directors in 2022, is the managing Director of International Private Client Services for Dominari Securities where she leads the top
performing Wool Group. With more than a decade of experience working in financial services, she focuses on international business development
and the cultivation of overseas client banking relationships. A naturalized U.S. citizen originally from South Korea, Ms. Yu brings significant
expertise in Asian markets and expansive global reach through her connectivity with international contacts. Before joining Dominari, Ms.
Yu was Managing Director of Revere Securities. Ms. Yu earned her B.A. in Fine Arts from the Fashion Institute of Technology and studied
at the University of Nottingham and the Paris Fashion Institute. She holds Series 7, 66, 24 Securities licenses, New York Life, Accident
and Health Insurance Agent/Broker, New York Property and Casualty Insurance Agent/Broker and Real Estate License. Previously, she maintained
her Series 79 Securities license. Ms. Yu actively supports several nonprofit organizations, including philanthropies committed to improving
the lives of children and the elderly as well as sustainability. She is currently a board member of The Korean Community Services of Metropolitan
New York, Inc. The Board of Directors believes that Ms. Yu’s wealth management experience qualifies her to serve as a director of
the Company.
Gregory James Blattner
Mr. Gregory James Blattner, who joined as a member
of our Board of Directors in 2018, has nearly ten years of experience in the technology industry specializing in financial services. Since
January 2022, he has served as the Vice President of AHEAD’s Managed Services business. AHEAD is technology services integrator
that helps its clients architect, deploy and manage all multiplatform hybrid technology solutions. Prior to AHEAD, Mr. Blattner spent
7 years at Agio, a progressive managed information technology and cybersecurity services provider, where he was responsible for sales
and account management of enterprise accounts. Prior to Agio, from May 2013 to December 2013, Mr. Blattner was a business development
manager for the Eikon platform at Thomson Reuters. From 2010 to 2013, Mr. Blattner was a sales manager at American Express for its foreign
exchange business. From 2005 to 2009, Mr. Blattner held various positions at JPMorgan, first in the operational risk management arm of
the investment bank and later in Foreign Exchange product sales for its treasury services business. From 2000 to 2004, Mr. Blattner was
an associate at Morgan Stanley’s corporate treasury funding desk. He earned a bachelor’s degree from Iona College. The Board
of Directors believes Mr. Blattner’s extensive experience in technology and operations solutions qualifies him to serve as a director
of the Company.
Kyle Haug
Mr. Kyle Haug, a member of the Board of Directors
since 2023, currently serves as the Chief Operating Officer, Chief Technology Officer and Chief Marketing Officer for Haug Partners LLP.
Haug Partners is an intellectual property law firm with offices in New York, Washington D.C. and West Palm Beach. The firm specializes
in protecting innovator portfolios in the life science, automobile and technology sectors. Mr. Haug graduated with a B.S. in Administration
of Justice from Penn State University where he was a collegiate swimmer. Mr. Haug served on the Junior Council for the American Museum
of Natural History for over a decade and is a current committee member at the Metropolitan Club, Plandome Country Club and Haug Family
Foundation. The Board of Directors believes Mr. Haug’s extensive experience and skill in aiding the growth of company operations
qualifies him to serve as a director of the Company.
29
George Way
Mr. George Way has served as the Chief Financial
Officer of the Company since April 3, 2023. Mr. Way has had a distinguished career as a senior executive with expertise in financial leadership,
operations management, and acquisition due diligence. He has been a trusted business advisor to members of senior management with experience
in solving complex business challenges, improving productivity, and reducing expenses. Prior to joining Dominari, Mr. Way served as the
first Chief Financial Officer of Steward Partners, a wealth advisory firm responsible for financial reporting and analysis, tax strategy
and reporting. Mr. Way also served as Chief Operating Officer of Ridgeworth Capital Management, a multi-boutique asset management firm
with a broad range of responsibility encompassing operations, technology and infrastructure while leading the effort to consolidate of
all central service platforms. He was also a Vice President of Equities Controlling & Head of Americas Equities Management Reporting
Business at Deutsche Bank Securities Inc. Mr. Way started his career at Deloitte LLP and was an audit manager in their asset management
practice. Mr. Way holds series 7 & 24 securities licenses. He received his Bachelor of Business Administration from Pace University
and is a Certified Public Accountant in the State of New York. Mr. Way has no family relationship with any of the executive officers or
directors of the Company. There are no arrangements or understandings between Mr. Way and any other person pursuant to which he was appointed
as an officer of the Company. The Board of Directors believes that Mr. Way’s prior financial background qualifies him to serve as
the Chief Financial Officer of the Company.
Christopher Devall
Mr. Christopher Devall has served as the Chief
Operating Officer of the Company since January 1, 2023. Prior to that he was the Company’s Vice President of Operations from July
1, 2022 to January 1, 2023 and was a member of its advisory board from April 2022 to June 2022. Mr. Devall served as senior operations
department head in the Department of Defense from February 2019 to June 2022, and as a senior operations department manager from April
2016 to January 2019. Mr. Devall is a retired military veteran and received his Masters of Business Administration from the University
of Virginia Darden School of Business and holds a B.S. in Strategic Studies and Defense Analysis from Norwich University. Mr. Devall has
no family relationship with any of the executive officers or directors of the Company. There are no arrangements or understandings between
Mr. Devall and any other person pursuant to which he was appointed as an officer of the Company. The Board of Directors believes that
Mr. Devall’s prior operations background qualifies him to serve as the Chief Operating Officer of the Company.
Family Relationships
There are no arrangements between our directors,
executive officers and any other person pursuant to which our directors were nominated or elected for their positions. Mr. Wool and Ms.
Yu have been married since December 2010.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act, requires our
directors and executive officers, and anyone who beneficially owns ten percent (10%) or more of our common stock, to file with the SEC
initial reports of beneficial ownership and reports of changes in beneficial ownership of common stock. Anyone required to file such reports
also needs to provide us with copies of all Section 16(a) forms they file.
30
Based solely upon a review of (i) copies of the
Section 16(a) filings received during or with respect to 2023 and (ii) certain written representations of our officers and directors,
we believe that all filings required to be made pursuant to Section 16(a) of the Exchange Act during and with respect to 2023 were filed
in a timely manner.
Audit Committee
The Audit Committee has been established in accordance
with Section 3(a)(58)(A) of the Exchange Act and is currently comprised of Mr. Tim Ledwick (Chairman), Mr. Robert Dudley and Mr.
Kyle Haug, each of whom the Board of Directors has determined satisfies the applicable SEC and Nasdaq independence requirements for audit
committee members. The Board of Directors has also determined that Mr. Ledwick is an “audit committee financial expert,”
as defined by the applicable rules of the SEC and Nasdaq.
The Audit Committee is
responsible for, among other things:
●
reviewing the independence, qualifications, services, fees and performance of our independent registered public accounting firm;
●
appointing, replacing and discharging our independent registered public accounting firm;
●
pre-approving the professional services provided by our independent registered public accounting firm;
●
reviewing the scope of the annual audit and reports and recommendations submitted by our independent registered public accounting firm; and
●
reviewing our financial reporting and accounting policies, including any significant changes, with our management and our independent registered public accounting firm.
Nominating Committee
The Nominating Committee
currently consists of Mr. Gregory James Blattner (Chairman) and Mr. Robert Dudley, each of whom the Board of Directors has determined
satisfies the applicable SEC and Nasdaq independence requirements.
The Nominating Committee
reviews, evaluates and proposes candidates for election to our Board of Directors, and considers any nominees properly recommended by
stockholders. The Nominating Committee promotes the proper constitution of our Board of Directors in order to meet its fiduciary obligations
to our stockholders, and oversees the establishment of, and compliance with, appropriate governance standards.
Compensation Committee
The Compensation Committee currently consists
of Mr. Robert Dudley (Chairman) and Mr. Kyle Haug, each of whom the Board of Directors has determined satisfies the applicable SEC and
Nasdaq independence requirements. In addition, each member of the Compensation Committee has been determined to be a non-employee director
under Rule 16b-3 as promulgated under the Exchange Act. The Compensation Committee reviews and recommends to the Board of Directors
the compensation for our executive officers and our non-employee directors for their services as members of the Board of Directors.
Compensation Committee
Interlocks and Insider Participation
None of the members of
our Compensation Committee is or has been an officer or employee of our company. None of our executive officers currently serves, or in
the past year has served, other than Mr. Wool who previously served on our Compensation Committee until his appointment as President,
as a member of the Compensation Committee of any entity that has one or more of its executive officers serving on our Board of Directors
or Compensation Committee.
Compensation Recovery
Under the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”), in the event of material noncompliance with the financial reporting requirements
that results in a financial restatement that would have reduced a previously paid incentive amount, we can recoup those improper payments
from our current and former executive officers. We have adopted a clawback policy to address this, which is attached as an exhibit
filed with this Annual Report.
Investment Committee
The Investment Committee
currently consists of Mr. Kyle Wool (Chairman), Mr. Anthony Hayes and Mr. Kyle Haug. The Investment Committee recommends and oversees
the Company’s investment transactions, management, policies, and guidelines, including reviews of investment manager selection,
establishment of investment benchmarks, review of investment performance and oversight of investment risk management exposure policies
and guidelines.
31
Code of Ethics and
Code of Conduct
We have adopted a written
code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is
available on our website, www.dominari.com. The information on or accessed through our website is deemed not to be incorporated in this
Annual Report or to be part of this Annual Report.
Item 11. EXECUTIVE COMPENSATION
Named Executive Officers
Our named executive officers (“NEOs”),
which consist of (i) all individuals serving as our principal executive officers during fiscal year 2023, (ii) two other of our most
highly compensated executive officers who were serving as executive officers at December 31, 2023, and (iii) up to two other of our most
highly compensated executive officers for whom disclosure would have been provided pursuant to clause (ii) but for the fact that the
individual was not serving as an executive officer at December 31 ,
2023, are:
● Anthony
Hayes, our Chief Executive Officer, Director, Principal Accounting Officer, and Principal
Financial Officer;
● Soo
Yu, our Special Projects Manager; and
● Kyle
Wool, our President.
The
following Su mmary of Compensation table sets forth the compensation paid by our Company during the two fiscal years ended December
31, 2023 and 2022, to our NEOs.
Summary of Compensation Table
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)(1)
Non-Equity
Incentive Plan
Compensation
($)(2)
All Other
Compensation
($)(3)
Total
($)
Anthony Hayes,
2023
500,000
500,000
-
-
-
1,000,000
Chief Executive Officer, Director,
2022
500,000
500,000
484,888
-
208,462
1,693,350
Principal Accounting Officer and
Principal Financial Officer
Soo Yu,
2023
106,875
-
5,266,666
2,916,124
16,250
8,305,915
Special Projects Manager
2022
-
-
-
-
-
-
Kyle Wool
2023
500,000
-
-
-
100,360
600,360
President
2022
-
-
-
-
-
-
(1) The
amount reported in this column represents the aggregate grant date fair value of stock granted to Ms. Yu during 2023, as calculated in
accordance with FASB ASC Topic 718. The stock was earned pursuant to the attainment of certain assets under management goals, as set
forth in Ms. Yu’s employment agreement (described below). The stock was fully vested on the grant date.
(2)
The amount reported in this column represents the cash payment earned by Ms. Yu pursuant to her employment agreement for attaining certain assets under management goals, as more fully discussed below. The amount also includes performance compensation based on sales production paid at a rate of 60%.
(3) For
Ms. Yu, the amounts reported in this column consist of director fees. For
Mr. Wool, the amounts reported in this column consists of payments for reimbursement to support
health and wellness and client development used exclusively for business.
32
Narrative Disclosure to Summary of
Compensation Table
Employment Agreements
Anthony Hayes
On June 28, 2021, we entered into an employment
agreement with Anthony Hayes (the “Hayes Agreement”), pursuant to which Mr. Hayes serves as our Chief Executive Officer. Under
an amendment effective April 1, 2023, the term of the Hayes Agreement is for five years from the effective date of the amendment with
automatic one-year extensions unless either the Company or Mr. Hayes gives six months’ non-renewal notice.
Pursuant to an amendment effective December 6,
2023, the Hayes Agreement provides that Mr. Hayes shall receive an annual base salary of $500,000 and an annual bonus. The annual bonus
is paid in a combination of cash and shares of our common stock upon the Company’s achievement of certain annual revenue targets,
as stated in the table below.
Annual Revenue
Annual Bonus
$3,500,000 or more
$150,000, plus
154,559 shares
Between $7.5mm and $15mm
$250,000, plus
154,599 shares
$15mm or more
$500,000, plus
154,559 shares
Our Board of Directors may adopt different or
additional performance criteria for future years after consultation with Mr. Hayes, provided that such criteria must be reasonably attainable.
The bonus, to the extent earned, will be paid following the completion of our annual audit and public announcement of such results (and
in all cases by July 31 of the year following the performance year), provided that Mr. Hayes is actively employed on April 15 th
of the year following the performance year.
The Hayes Agreement also provides that Mr. Hayes
will be entitled to participate in pension, profit sharing, group insurance, hospitalization, group health and benefit plans, perquisites,
and all other benefits and plans the Company provides to its senior officers. If at any time during the term, the Company does not provide
its senior executives with health insurance, Mr. Hayes will be entitled to secure such insurance for himself and his immediate family
and the Company will reimburse him for the cost of such insurance.
The Hayes Agreement provides that upon Mr. Hayes’
termination due to (A) his death, (B) disability, (C) by the Company without cause (as defined in the Hayes Agreement), or (D) due to
the Company not renewing the Hayes Agreement term, he or his estate will be entitled to the following: (i) twelve months’ base salary
paid in a lump sum, (ii) continued group health coverage (if validly elected) for 12 months at the same cost as applied prior to his termination,
and (iii) the pro-rata portion of any earned annual bonus.
If Mr. Hayes’ employment is terminated (A)
by Mr. Hayes for good reason (as defined in the Hayes Agreement) or (B) within 30 days of a change in control (as defined in the Hayes
Agreement), then Mr. Hayes will be entitled to receive the following: (i) twelve months’ base salary paid in a lump sum, (ii) continued
group health coverage (if validly elected) for 12 months at the same cost as applied prior to his termination, (iii) the pro-rata portion
of any earned annual bonus, and (iv) full vesting of all outstanding and then unvested equity awards.
Soo Yu
On April 3, 2023, we entered into an employment
agreement with Soo Yu (the “Yu Agreement”), pursuant to which Ms. Yu serves as both the Special Projects Manager and a registered
representative of the Company performing broker services. The Yu Agreement has a one-year term, which the Company may extend at its discretion.
If the Company does not extend the term, Ms. Yu’s continued service with us will be limited to broker services, which will be provided
on an at-will basis.
The Yu Agreement provides that Ms. Yu shall receive
a base salary of $150,000 per annum, which must be paid through the end of the term or any extension of the term unless Ms. Yu is terminated
for cause (as defined in the Yu Agreement) or terminates voluntarily without Good Reason (as defined in the Yu Agreement). Additionally,
the Yu Agreement provides that Ms. Yu will be entitled to receive a performance bonus based on the gross revenue she generates over a
trailing twelve-month period in accordance with the formula below.
Trailing 12 month Gross Revenue ($)
Grid
1 to 999,999
50 %
1,000,000 to 1,999,999
55 %
2,000,000 and up
60 %
33
Any compensation earned by Ms. Yu pursuant to
the table will be paid to Ms. Yu on a monthly basis on or about the 15 th day following the end of each calendar month in which
the underlying Gross Revenue was generated by Ms. Yu, with compensation earned being limited by the proceeds actually paid to the Company
(rather than accrued). We agreed to commence Ms. Yu’s performance at the $2,000,000 level based on her most recent 12-month production
with her prior employer. This level ma y only be adjusted after
April 3, 2024.
In
addition to the gross revenue bonus, the Yu Agreement also provides for production payments (“Production Payments”) of up
to $8,000,000, to be paid in equal payments of $2,666,666, upon Ms. Yu’s attainment of the following production goals:
● Completing
all required registrations and providing binding commitments and opening accounts for clients
with assets under management or account value of at least $50,000,000;
● Providing
binding commitments and opening accounts for clients with assets under management or account
value of at least $150,000,000 in the aggregate; and
● Providing
binding commitments and opening accounts for clients with assets under management or account
value of at least $560,000,000 in the aggregate.
The
account values are inclusive of prior account values. Each of the Production Payments will be paid as soon as administratively feasi ble
after the date on which the conditions for a given payment are met but no later than 30 days, provided that the Company is in full compliance
with its net capital and other regulatory requirements at that time. Production Payments will be made fifty percent (50%) in cash and
fifty percent (50%) in shares of the Company. The Production Payments are subject to pro rata clawback if Ms. Yu is terminated for cause
or resigns without good reason during the seven (7) years following the payment date of any Production Payment.
Pursuant to the Yu Agreement, Ms. Yu is subject
to a perpetual confidentiality covenant, and for the duration of Ms. Yu’s employment and for the twelve months immediately following
her termination of employment with the Company, a covenant not to solicit the Company’s clients and service providers.
Kyle Wool
On October 12, 2022, our subsidiary Dominari Financial
entered into an employment agreement with Kyle Wool (the “Wool Agreement”), pursuant to which Mr. Wool serves as the Chief
Executive Officer of Dominari Financial. The term of the Wool Agreement is five years with automatic one-year extensions unless either
Dominari Financial or Mr. Wool gives six months’ non-renewal notice.
The Wool Agreement provides that Mr. Wool shall
receive an annual base salary of $500,000 and an annual bonus. The annual bonus is paid in a combination of cash and shares of our common
stock upon Dominari Financial’s achievement of certain annual revenue targets, as stated in the table below.
Annual Revenue
Annual Bonus
$3,500,000 or more
$150,000, plus
154,559 shares
Between $7.5mm and $15mm
$250,000, plus
154,599 shares
$15mm or more
$500,000, plus
154,559 shares
Our Board of Directors may adopt different or
additional performance criteria for future years after consultation with Mr. Wool, provided that such criteria must be reasonably attainable.
The bonus, to the extent earned, will be paid following the completion of our annual audit and public announcement of such results (and
in all cases by July 31 of the year following the performance year), provided that Mr. Wool is actively employed on April 15 th
of the year following the performance year.
The Wool Agreement also provides that Mr. Wool
will be entitled to participate in pension, profit sharing, group insurance, hospitalization, group health and benefit plans, perquisites,
and all other benefits and plans Financial provides to its senior officers. If at any time during the term, Dominari Financial does not
provide its senior executives with health insurance, Mr. Wool will be entitled to secure such insurance for himself and his immediate
family and Dominari Financial will reimburse him for the cost of such insurance.
Pursuant to the Wool Agreement, Mr. Wool is entitled
to receive the following: (i) the support of an administrative assistant, (ii) reimbursement for his personal cell phone expenses, (iii)
a monthly expense account of up to $20,000 for his business use, (iv) up to $100,000 in reimbursement for health care and social club
memberships, and (v) subject to Dominari Financial’s consent, reimbursement for all other reasonable out-of-pocket expenses actually
incurred or paid by Mr. Wool in the course of his employment.
The Wool Agreement provides that upon Mr. Wool’s
termination due to (A) his death, (B) his disability, (C) within 40 days of the consummation of change in control transaction (as defined
in the Wool Agreement), or (D) due to Dominari Financial not renewing the Wool Agreement term, he or his estate will be entitled to the
following: (i) twelve months’ base salary paid in a lump sum, (ii) continued group health coverage (if validly elected) for 12 months
at the same cost as applied prior to his termination, and (iii) the pro-rata portion of any earned annual bonus.
If Mr. Wool’s employment is terminated (A)
by Mr. Wool for good reason (as defined in the Wool Agreement) or (B) by Dominari Financial without cause (as defined in the Wool Agreement),
then Mr. Wool will be entitled to receive the following: (i) twelve months’ base salary paid in a lump sum, (ii) continued group
health coverage (if validly elected) for 12 months at the same cost as applied prior to his termination, (iii) the pro-rata portion of
any earned annual bonus, and (iv) full vesting of all outstanding and then unvested equity awards.
34
Retirement Benefits
Our NEOs are eligible to participate in our 401(k)
plan, which is a defined contribution plan offered to all of our full-time employees. There are no other retirement benefit arrangements
covering our NEOs.
Termination and Change in Control Benefits
The material terms of the contracts with each
of our NEOs are summarized above, including the payments to NEOs at, following, or in connection with the resignation, change in control,
or other termination of an NEO.
Outstanding Equity Awards at December 31, 2023
Option Awards
Name
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable (1)
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise
Price ($)
Option
Expiration
Date
Anthony Hayes
2,941
-
$ 10.88
12/23/2030
Soo Yu
-
-
-
-
Kyle Wool
-
-
-
-
(1) These options are fully vested.
Pay versus Performance
Pursuant to Section 953(a) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information
regarding “compensation actually paid”, as defined in Item 402(v). In accordance with SEC rules, the “compensation
actually paid” amounts shown in the table below for each applicable year reflect certain adjustments to the values reported in the
Summary of Compensation Table as described in the footnotes to the following table.
In accordance with the transitional relief under
the SEC rules for smaller reporting companies, only three years of information is required as this is the Company’s first year
of disclosure under Item 402(v) of Regulation S-K.
Year
Summary
Compensation
Table
Total for
PEO (1)
Compensation
Actually Paid
to PEO (2)
Average
Summary
Compensation
Table Total for
Non-PEO
NEOs (3)
Average
Compensation
Actually Paid
to Non-PEO
NEOs (4)
Value of
Initial Fixed
$100
Investment
Based On
TSR (5)
Net Income
(Loss) (6)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
2023
$ 1,000,000
$ 1,000,000
$ 4,453,138
$ 4,453,138
$ (25.14 )
$ (22,882 )
2022
$ 1,693,350
$ 1,693,350
$ 406,499
$ 406,499
$ (66.73 )
$ (22,107 )
2021
$ 960,000
$ 962,663
$ 108,333
$ 108,333
$ (32.18 )
$ (7,171 )
(1) For each year shown, the PEO was the Chief Executive Officer,
Anthony Hayes. The values reflected in this column reflect the “Total Compensation” paid to Mr. Hayes, the Company’s
Principal Executive Officer, as set forth in the Summary of Compensation Table.
35
(2) The dollar amounts reported in this column represent the
amount of “compensation actually paid” to Mr. Hayes, as computed in accordance with Item 402(v) of Regulation S-K. The
dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Hayes during the applicable year. In accordance
with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to determine the “compensation
actually paid” amounts reported above for Mr. Hayes:
Reconciliation
of Summary of Compensation Table Total to Compensation Actually Paid for CEO
2023
2022
2021
Summary of Compensation Table Total
$ 1,000,000
$ 1,693,350
$ 960,000
Less: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year
$ (484,888 )
Plus: Fair Value of Awards Granted during Applicable Fiscal Year that Remain Unvested as of Applicable Fiscal Year End, Determined as of Applicable Fiscal Year End
Plus: Fair Value of Awards Granted During the Applicable Fiscal Year that Vested During the Applicable Fiscal Year, Determined as of the Vesting Date
$ 484,888
Plus (Less): Adjustment for Awards Granted During a Prior Fiscal Year that were Outstanding and Unvested as of the Applicable Fiscal Year End, Determined Based on the Change in ASC 718 Fair Value from Prior Fiscal year End to the Applicable Fiscal Year End
$ 2,663
Plus (Less): Adjustment for Awards Granted During a Prior Fiscal Year that Vested During the Applicable Fiscal year, Determined based on the Change in ASC 718 Fair Value from the Prior Fiscal Year End to the Vesting Date
Less: ASC 718 Fair Value of Awards Granted During a Prior Fiscal Year that were Forfeited During the Applicable Fiscal Year, determined as of the Prior Fiscal Year End
Plus: Dividends or Other Earnings Paid During the Applicable Fiscal year Prior to the Vesting Date
Plus: Incremental Fair Value of Options/SARs Modified During the Applicable Fiscal Year
Compensation Actually Paid
$ 1,000,000
$ 1,693,350
$ 962,663
(3) For 2021 and 2022, the non-PEO NEOs were Darrell Dotson, Carlos Aldavero and Christopher Devall. For
2023, the non-PEO NEOs were Soo Yu and Kyle Wool. The values reflected in this column reflect the average “Total
Compensation” paid to each of the non-PEO NEOs in the applicable year, as set forth in the Summary of Compensation Table for
the applicable year.
36
(4) The dollar amounts reported in column (e) represent
the average amount of “compensation actually paid” to the non-PEO NEOs, as a group, as computed in accordance with Item 402(v) of
Regulation S-K. The dollar amounts do not necessarily reflect the actual average amount of compensation earned by or paid to
such persons during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following
adjustments were made to average total compensation for the non-PEO NEOs as a group for each year to determine the compensation actually
paid:
Reconciliation
of Average Summary of Compensation Table Totals for non-PEO NEOs to Average Compensation Actually Paid to non-PEO NEOs
2023
2022
2021
Average Summary of Compensation Table
Total
$ 4,453,138
$ 406,499
$ 108,333
Less: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year
$ (5,266,666 )
$ (193,851 )
Plus: Fair Value of Awards Granted during Applicable Fiscal Year that Remain Unvested as of Applicable Fiscal Year End, Determined as of Applicable Fiscal Year End
Plus: Fair Value of Awards Granted During the Applicable Fiscal Year that Vested During the Applicable Fiscal Year, Determined as of the Vesting Date
$ 5,266,666
$ 193,851
Plus (Less): Adjustment for Awards Granted During a Prior Fiscal Year that were Outstanding and Unvested as of the Applicable Fiscal Year End, Determined Based on the Change in ASC 718 Fair Value from Prior Fiscal year End to the Applicable Fiscal Year End
Plus (Less): Adjustment for Awards Granted During a Prior Fiscal Year that Vested During the Applicable Fiscal year, Determined based on the Change in ASC 718 Fair Value from the Prior Fiscal Year End to the Vesting Date
Less: ASC 718 Fair Value of Awards Granted During a Prior Fiscal Year that were Forfeited During the Applicable Fiscal Year, determined as of the Prior Fiscal Year End
Plus: Dividends or Other Earnings Paid During the Applicable Fiscal year Prior to the Vesting Date
Plus: Incremental Fair Value of Options/SARs Modified During the Applicable Fiscal Year
Average Compensation Actually Paid
$ 4,453,138
$ 406,499
$ 108,333
(5) Cumulative Total Share Return (“TSR”) is calculated
by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference
between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at
the beginning of the measurement period.
(6) The dollar amounts reported represent the amount of net income
reflected in the Company’s audited financial statements for the applicable year.
37
Analysis of the Information Presented in the
Pay versus Performance Table
The Company’s executive compensation program
reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation
with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally
seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation
that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance
with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information
presented in the Pay versus Performance table.
Compensation Actually Paid and Cumulative
TSR
The following graph illustrates the amount of
“compensation actually paid” (“CAP”) to Mr. Hayes and the average amount of CAP to the Company’s Named
Executive Officers as a group (excluding Mr. Hayes) relative to the Company’s cumulative TSR over the three years presented
in the table.
38
Compensation Actually Paid and Net Loss
As demonstrated by the following table, the amount
of CAP to Mr. Hayes and the average amount of CAP to the Company’s Named Executive officers as a group (excluding Mr. Hayes)
is not aligned with the Company’s net loss over the three years presented in the table. The Company has not used
net loss as a performance measure in the overall executive compensation program.
Director Compensation
Our non-employee directors received the following
annual compensation for service as a member of the Board of Directors for the fiscal year ended December 31, 2023:
Annual Retainer
$ 65,000
To be paid in cash in four equal quarterly installments.
Additional Retainer
$ 5,000
To be paid to the Chairman of the Board upon election annually.
The following table summarizes the compensation
paid to non-employee directors during the year ended December 31, 2023.
Fees earned or paid in cash ($)
Stock Awards ($)(1)(2)
Option Awards ($)
Non-Equity Incentive Plan Compensation ($)
Non-Qualified Deferred Compensation Earnings
($)
All Other Compensation
($)
Total
($)
Robert J. Vander Zanden (3)
65,000
-
-
-
-
-
65,000
Tim Ledwick (4)
65,000
-
-
-
-
-
65,000
Gregory Blattner (5)
65,000
-
-
-
-
-
65,000
Robert Dudley (6)
65,000
-
-
-
-
-
65,000
Kyle Haug (7)
10,833
-
-
-
-
-
10,833
(1) All
stock awards were granted in accordance with ASC Topic 718 – Compensation – Stock Compensation .
(2) As
of December 31, 2023, the aggregate number of stock and option awards held by each director was as follows:
● Robert
J. Vander Zander holds 2,941 option awards;
● Tim
Ledwick holds 2,941 option awards;
● Gregory
Blattner holds 2,941 option awards; and
● Robert
Dudley holds 2,941 option awards.
(3) Mr.
Vander Zanden was paid $65,000 in cash compensation for his service as a director in 2023.
(4) Mr.
Ledwick was paid $65,000 in cash compensation for his service as a director in 2023.
(5) Mr.
Blattner was paid $65,000 in cash compensation for his service as a director in 2023.
(6) Mr.
Dudley was paid $65,000 in cash compensation for his service as a director in 2023.
(7) Mr.
Haug was paid $10,833 in cash compensation for his service as a director in 2023.
39
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance under Equity
Compensation Plans
The following table provides information about
our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans
as of December 31, 2023.
Plan Category
Number of
securities
to be
issued upon
exercise of
outstanding options,
warrants
and rights
(1)
Weighted
average
exercise
price of
outstanding
options,
warrants and
rights
Number of
securities
remaining available for
future
issuance under
equity compensation
plans
(excluding
securities
reflected in column (1)) (2)
Equity compensation plans approved by security holder
556,477
$ 4.94
839,686
Equity compensation plans not approved by security holder
-
-
-
556,477
839,686
(1) Consists
of options to acquire 24,454 shares of common stock under the 2014 Equity Incentive Plan and 395,714 shares of common stock under the
2022 Equity Incentive Plan, and restricted stock awards to acquire 136,309 shares of common stock under the 2022 Equity Incentive Plan.
(2) Consists
of shares of common stock available for future issuance under our equity incentive plans.
40
Beneficial Ownership of our Capital Stock by
Certain Beneficial Owners and Management
The following tables set forth certain information
concerning the number of shares of our common stock, Series D Convertible Preferred Stock (the “Series D Preferred Stock”)
and Series D-1 Convertible Preferred Stock (the “Series D-1 Preferred Stock”) owned beneficially as of March 26, 2024 by (i)
our officers and directors as a group and (ii) each person (including any group) known to us to own more than 5% of our common stock,
Series D Preferred Stock and Series D-1 Preferred Stock. As of March 26, 2024 there were 5,934,917 shares of common stock outstanding,
3,825 shares of Series D Preferred Stock outstanding and 834 shares of Series D-1 Preferred Stock outstanding. Unless otherwise indicated,
it is our understanding and belief that the stockholders listed possess sole voting and investment power with respect to the shares shown.
Common Stock
Beneficially Owned
Series D
Preferred Stock
Series D-1
Preferred Stock
Name of Beneficial Owner(1)
Shares
Percentage
Shares
Percentage
Shares
Percentage
Anthony Hayes
317,310 (2)
5.35 %
—
—
—
—
Tim S. Ledwick
12,826 (3)
*
—
—
—
—
Robert Dudley
12,411 (4)
*
—
—
—
—
Gregory James Blattner
12,411 (5)
*
—
—
—
—
Kyle Wool
246,431 (6)
4.15 %
—
—
—
—
Soo Yu
1,243,466 (7)
20.95 %
—
—
—
—
Kyle Haug
—
*
—
—
—
—
George Way
32,103 (8)
*
—
—
—
—
Christopher Devall
77,651 (9)
1.31 %
—
—
—
—
All Directors and Officers as a Group (9 persons)
1,954,609
32.93 %
Stockholders
Daniel W. Armstrong
611 Loch Chalet Ct Arlington, TX 76012-3470
10 (10)
*
1,350
35.29 %
—
—
R. Douglas Armstrong 570 Ocean Dr. Apt 201 Juno Beach, FL 33408-1953
4 (11)
*
450
11.76 %
—
—
Francis Howard 376 Victoria Place London, SW1 V1AA United Kingdom
7 (12)
*
900
23.53 %
—
—
Charles Strogen 6 Winona Ln Sea Ranch Lakes, FL 33308-2913
9 (13)
*
1,125
29.42 %
—
—
Chai Lifeline Inc. 151 West 30th Street, Fl 3 New York, NY 10001-4027
7 (14)
*
—
—
834
100 %
* Less
than 1% of the outstanding shares of the Company’s common stock.
(1) Under
Rule 13d-3 of the Exchange Act a beneficial owner of a security includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares: (i) voting power, which includes the power to vote or to direct
the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares
may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose
of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares
(for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person
(and only such person) by reason of these acquisition rights.
(2) Includes
314,369 shares of common stock and 2,941 options for purchase of shares of common stock, which are exercisable within 60 days of March 26,
2024.
(3) Includes
9,885 shares of common stock and 2,941 options for purchase of shares of common stock, which are exercisable within 60 days of March 26,
2024.
(4) Includes 9,470 shares of common stock and 2,941 options for
purchase of shares of common stock, which are exercisable within 60 days of March 26, 2024.
(5) Includes 9,470 shares of common stock and 2,941 options for
purchase of shares of common stock, which are exercisable within 60 days of March 26, 2024.
(6) Includes 246,431 shares of common stock.
(7) Includes 1,243,466 shares of common stock.
41
(8) Includes 32,103 restricted stock awards for purchase of shares
of common stock, which are exercisable within 60 days of March 26, 2024.
(9) Includes 30,033 shares of common stock and 47,618 options
for purchase of shares of common stock, which are exercisable within 60 days of March 26, 2024.
(10) Represents 10 shares of common stock issuable upon conversion
of the Series D Preferred Stock, which are convertible within 60 days of March 26, 2024.
(11) Represents 4 shares of common stock issuable upon conversion
of the Series D Preferred Stock, which are convertible within 60 days of March 26, 2024.
(12) Represents 7 shares of common stock issuable upon conversion
of the Series D Preferred Stock, which are convertible within 60 days of March 26, 2024.
(13) Represents 9 shares of common stock issuable upon conversion
of the Series D Preferred Stock, which are convertible within 60 days of March 26, 2024.
(14) Represents 7 shares of common stock issuable upon conversion
of the Series D-1 Preferred Stock, which are convertible within 60 days of March 26, 2024.
Effective October 11, 2023, the Company and Continental
Stock Transfer & Trust Co. entered into a certain rights agreement (the “Rights Agreement”). The Rights Agreement provides
each stockholder of record a dividend distribution of one “right” for each outstanding share of common stock. Rights become
exercisable at the earlier of ten days following: (1) a public announcement that an acquirer has purchased or has the right to acquire
4.99% or more of our common stock, in connection with, (x) the Company consolidating, or merging into any other person, (y) any person
consolidates or merges with or into the Company or (z) the Company sells or otherwise transfers to any person or persons, in one or more
transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company or (2) the commencement of
a tender offer which would result in an offer or beneficially owning 10% or more of our outstanding common stock. All rights held by an
acquirer or offer or expire on the announced acquisition date, and all rights expire at the earliest of: (i) the close of business on
October 11, 2024, subject to extension; (ii) the time at which the Rights are redeemed; (iii) the time at which the rights are exchanged;
(iv) the closing of any merger or other acquisition transaction involving the Company pursuant to a specified agreement; (vi) the close
of business on the date the Board of Directors determines that the Rights Agreement is no longer necessary or desirable for the preservation
of tax benefits; and (vii) the close of business on the first day of a taxable year of the Company to which the Board of Directors determines
that no tax benefits are available to be carried forward. Each right entitles a stockholder to acquire, at a price of $5.00 per one one-thousandth
of a share of our Series Q Preferred Stock, subject to adjustments, which carries voting and dividend rights similar to one share of our
common stock. The purchase price of the preferred stock fractional amount is subject to adjustment for certain events as described in
the Rights Agreement. At the discretion of a majority of the Board of Directors and within a specified time period, we may redeem all
of the rights at a price of $0.0001 per right. The Board of Directors may also amend any provisions of the Rights Agreement prior to exercise.
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR INDEPENDENCE
The current Board of Directors consists of: Mr.
Anthony Hayes, Mr. Tim S. Ledwick, Mr. Robert Dudley, Mr. Kyle Wool, Mr. Gregory James Blattner, Ms. Soo Yu and Mr. Kyle Haug. The Board
of Directors has determined that Mr. Ledwick, Mr. Blattner, and Mr. Haug are independent directors within the meaning of the applicable
Nasdaq rules. Our Audit, Compensation, and Nominating Committees consist solely of independent directors.
There have been no transactions, since January
1, 2022, to which we have been a party, in which the amount involved exceeds or will exceed $120,000 and in which any of our directors,
executive officers, holders of more than 5% of our capital stock, or immediate family member thereof, had or will have a direct or indirect
material interest.
We have not adopted written policies and procedures
specifically for related person transactions. Our Board of Directors is responsible for the approval of all related party transactions.
42
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The following table sets forth the fees for professional
services rendered by Marcum for audit and other services provided for the fiscal years ended December 31, 2023 and December 31, 2022.
2023
2022
Audit Fees
$ 419,360
$ 60,517
Audit Related Fees
-
-
Tax Fees
-
-
All Other Fees
-
-
Total
$ 419,360
$ 60,517
Policy on Audit Committee Pre-Approval of Audit
and Permissible Non-Audit Services of Independent Auditors
Consistent with SEC policies and guidelines regarding
audit independence, the Audit Committee is responsible for the pre-approval of all audit and permissible non-audit services provided by
our principal accountants. Our Audit Committee has established a policy regarding approval of all audit and permissible non-audit services
provided by our principal accountants. No non-audit services were performed by our principal accountants during the fiscal years ended
December 31, 2023 and 2022. Our Audit Committee pre-approves these services by category and service. Our Audit Committee has pre-approved
all of the services provided by our principal accountants.
43
PART IV
Item 15. EXHIBIT AND CONSOLIDATED FINANCIAL
STATEMENT SCHEDULES
Consolidated Financial Statements
The following consolidated financial statements
are included in Item 8 herein:
2. Consolidated Financial Statement Schedules
None.
EXHIBITS
Exhibit No.
Description
3.1
Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated April 24, 2014 (incorporated by reference to Form 8-K filed April 25, 2014)
3.2
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated March 2, 2016 (incorporated by reference to Form 8-K filed March 18, 2016)
3.3
Amended and Restated Bylaws of Spherix Incorporated (incorporated by reference to Form 8-K filed October 15, 2013)
3.4
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Spherix Incorporated, effective March 4, 2016 (incorporated by reference to Form 10-K filed March 29, 2016)
3.5
Second Amended and Restated Bylaws of AIkido Pharma Inc. (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed October 5, 2020)
3.6
Amendment No. 1 to the Second Amended and Restated Bylaws of AIkido Pharma Inc. (incorporated by reference to Form 8-K filed on November 9, 2021)
3.7
Certificate of Amendment to Amended and Restated Articles of Incorporation of Aikido Inc., effective on June 7, 2022 (incorporated by reference to Form 8-K filed on June 10, 2022)
3.8
Certificate of Amendment to Amended and Restated Articles of Incorporation of Aikido Inc., effective on December 22, 2022 (incorporated by reference to Form 8-K filed on December 22, 2022)
3.9
Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (incorporated by reference to Form 8-K filed on April 4, 2013)
3.10
Certificate of Designation of Preferences, Rights and Limitations of Series D-1 Convertible Preferred Stock (incorporated by reference to Form 8-K filed on November 29, 2013)
3.11
Certificate of Designation of Preferences, Rights and Limitations of Series Q Preferred Stock (incorporated by reference to Form 8-K filed on October 17, 2023)
4.1
Specimen Certificate for common stock, par value $0.0001 per share, of Spherix Incorporated (incorporated by reference to Form S-3/A filed April 17, 2014)
4.2
Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Form 10-K filed on March 31, 2023)
4.3
Rights Agreement, dated as of October 11, 2023, by and between Dominari Holdings Inc., as the Company, and Continental Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to Form 8-K filed on October 17, 2023)
44
10.1
Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed December 20, 2013)
10.2
Amendment to Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed on March 28, 2014)
10.3
Form of Indemnification Agreement (incorporated by reference to the Form 8-K filed on September 10, 2013)
10.4
Employment Agreement, effective as of April 1, 2016, by and between Spherix Incorporated and Anthony Hayes (incorporated by reference to Form 8-K filed May 26, 2016)
10.5
Amendment to Employment Agreement, by and between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on October 25, 2017)
10.6
Technology Monetization Agreement, dated as of March 11, 2016, and amended as of April 22, 2016, April 27, 2016 and May 22, 2016, by and between Spherix Incorporated and Equitable IP Corporation (incorporated by reference to Form 8-K filed August 2, 2016)
10.7
At The Market Offering Agreement, dated as of August 9, 2019, by and between Spherix Incorporated and H.C. Wainwright & Co., LLC (incorporated by reference to Form 8-K filed August 9, 2019)
10.8
Amendment to Aikido Pharma Inc. 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed October 5, 2020)
10.9
Form of Securities Purchase Agreement Between AIKido Pharma Inc. and the Investors thereto, dated February 24, 2022 (incorporated by reference to Form 8-K filed on March 2, 2022)
10.10
Confirmation of Mutual Understanding Between Aikido Pharma Inc. and each of the Warrant Holders, dated as of March 24, 2022 (incorporated by reference from the Company’s Annual Report on Form 10-K filed on March 28, 2022)
10.11
Aikido Pharma Inc. 2022 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed October 21, 2022)
10.12
Employment Agreement, Made and Entered into as of July 1, 2022, By and Between Aikido Pharma Inc. and Christopher Devall (incorporated by reference to Form 8-K Filed on January 6, 2023)
10.13
Employment Agreement, Made and Entered into as of July 22, 2022, By and Between Aikido Pharma Inc. and Carlos Aldavero (incorporated by reference to Form 10-K filed on March 31, 2023)
10.14
Amendment to Employment Agreement, Dated as of January 1, 2023, By and Between Dominari Holdings Inc. and Christopher Devall (incorporated by reference to Form 8-K filed on January 6, 2023)
10.15
Amended
and Restated Membership Interest Purchase Agreement, Dated as of March 27, 2023, by and among Fieldpoint Private Securities, LLC,
Fieldpoint Private Bank & Trust, and Dominari Financial Inc. (incorporated by reference to Form 8-K filed on March 28,
2023)
10.16
Employment Agreement, Made and Entered into as of March 29, 2023, By and Between Dominari Holdings Inc. and George M. Way (incorporated by reference to Form 8-K filed on April 3, 2023)
10.17
Employment Agreement, Made and Entered into as of April 3, 2023, By and Between Dominari Securities LLC and Soo Yu (incorporated by reference to Form 10-Q filed on May 11, 2023)
45
10.18
Amendment to Employment Agreement, Made and Entered into as of April 19, 2023, By and Between Dominari Securities LLC and Soo Yu (incorporated by reference to Form 10-Q filed on May 11, 2023)
21.1*
List of Subsidiaries
23.1*
Consent of Marcum LLP
31.1*
Certification of Principal Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
32.2**
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1*
Clawback Policy
101.INS*
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
**
Filed herewith.
Furnished herewith.
Item 16. FORM 10-K SUMMARY
Not applicable.
46
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dominari Holdings Inc.
By:
/s/ Anthony Hayes
Anthony Hayes
Date: April 1, 2024
Chief Executive Officer and Chairman
By:
/s/ George Way
George Way
Date: April 1, 2024
Chief Financial Officer
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ Anthony Hayes
Chief Executive Officer and Chairman
April 1, 2024
Anthony Hayes
/s/ George Way
Chief Financial Officer
April 1, 2024
George Way
/s/ Kyle Wool
President and Director
April 1, 2024
Kyle Wool
/s/ Tim S. Ledwick
Director
April 1, 2024
Tim S. Ledwick
/s/ Robert Dudley
Director
April 1, 2024
Robert Dudley
/s/ Gregory James Blattner
Director
April 1, 2024
Gregory James Blattner
/s/ Soo Yu
Director
April 1, 2024
Soo Yu
/s/ Kyle Haug
Director
April 1, 2024
Kyle Haug
47