What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-06 · 487 added, 634 removed, 165 unchanged (87% of the section changed)

Financial Statements

DOMINARI HOLDINGS

Condensed Consolidated

Balance Sheets

($ in thousands

except share and per share amounts)

September 30,

DOMINARI HOLDINGS INC.

Condensed Consolidated Balance Sheets

($ in thousands except share and per share amounts)

Current assets

3 unchanged sentences

Prepaid expenses and other assets

Prepaid acquisition cost

Short-term investments at fair value

Notes receivable, at fair value - current portion

Investment in Fieldpoint Securities

Total current assets

1 unchanged sentence

Notes receivable, at fair value - non-current portion

Employee forgivable loan receivable

Long-term equity investments

Right-of-use assets

8 unchanged sentences

Total current liabilities

Lease liability

Lease liability, less current portion

Total liabilities

2 unchanged sentences

5,000,000 shares designated;

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

3,825 shares issued and outstanding

as of March 31, 2024 and December 31, 2023;

liquidation value of $ 0.0001 per share

5,000,000 shares designated;

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

834 shares issued and outstanding

as of March 31, 2024 and December 31, 2023;

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 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

5,995,065 shares issued as of March 31, 2024 and December 31, 2023;

5,934,917 shares outstanding as of March 31, 2024 and December 31, 2023

Additional paid-in capital

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

Treasury stock, as of cost, 60,148 shares as of March 31, 2024 and December 31, 2023

Accumulated deficit

1 unchanged sentence

Total liabilities and stockholders’ equity

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Condensed Consolidated

Statements of Operations

($ in thousands

except share and per share amounts)

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)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating costs and expenses

General and administrative

Research and development

Research and development - license acquired

Total operating expenses

2 unchanged sentences

Interest income

(Loss) gain on marketable securities

Unrealized loss on note receivable

Change in fair value of investments

Total other (expenses) income

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

Net Loss Attributable to Common Shareholders

Gain (loss) on marketable securities, net

Realized and unrealized gain and loss on notes receivable, net

Change in fair value of long-term equity investments

Total other income (expenses)

Net loss per share, basic and diluted

2 unchanged sentences

Basic and Diluted

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Condensed Consolidated

Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity

($ in thousands

except share and per share amounts)

For the Three

Months Ended September 30, 2023 and 2022

Preferred Stock

Treasury Stock

Total Stockholders’

Balance at June 30, 2023

$ ( 198,306 )

Stock-based compensation

Balance at September 30, 2023

$ ( 201,847 )

See accompanying notes to unaudited condensed consolidated

financial statements.

DOMINARI HOLDINGS INC.

Condensed Consolidated Statements of Changes

in Redeemable Convertible Preferred Stock and Stockholders’ Equity

($ in thousands except share and per share amounts)

For the Three Months Ended March 31, 2024 and

Preferred Stock

Treasury Stock

Total Stockholders’

Balance at June 30, 2022

Stockholders'

Balance at December 31, 2023

$ ( 208,763 )

Purchase of treasury stock

Stock-based compensation

Balance at September 30, 2022

Balance at March 31, 2024

$ ( 214,204 )

For the Nine Months Ended

September 30, 2023 and 2022

Preferred Stock

Treasury Stock

Total Stockholders’

Stockholders’

Balance at December 31, 2022

4 unchanged sentences

Retirement of treasury stock

Balance at September 30, 2023

$ ( 201,847 )

Redeemable Convertible Preferred Stock

Preferred Stock

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

Purchase of treasury stock

Stock-based compensation

Cancellation of common stock related to investment in CBM

Fractional shares adjusted for reverse split

Balance at September 30, 2022

Balance at March 31, 2023

$ ( 189,643 )

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Condensed Consolidated

Statements of Cash Flows

See accompanying notes to unaudited condensed

consolidated financial statements.

DOMINARI HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

($ in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

1 unchanged sentence

Amortization of right-of-use assets

Change in fair value of short-term investment

Change in fair value of long-term investment

Research and development-acquired license, expensed

Change in fair value of long-term equity investments

Stock-based compensation

1 unchanged sentence

Unrealized (gain) loss on marketable securities

Unrealized loss on note receivable

Realized and unrealized gain and loss on notes receivable, net

Changes in operating assets and liabilities:

12 unchanged sentences

Sale of marketable securities

Proceeds from sale of digital currencies

Purchase of fixed assets

Acquisition of FPS, net of cash acquired and receivable owed from FPS

Collection of principal on note receivable

Funds to employee forgivable loan

Purchase of research and development licenses

Purchase of short-term and long-term investments

Purchase of short-term and long-term promissory notes

Net cash used in investing activities

Collection of principal on notes receivable

Loans to employees

Collection of loans to employees

Net cash provided by (used in) investing activities

Cash flows from financing activities

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

Payment for fractional shares

Redemption of Series O and Series P Redeemable Convertible Preferred Stock

Purchase of treasury stock

3 unchanged sentences

Cash and cash equivalents, end of period

Non-cash investing and financing activities

Transfer from short-term investment to marketable securities

Reclassify from convertible note receivable to notes receivable at fair value

Promissory convertible note receivable conversion into common shares

On March 27, 2023, the Company acquired all assets and liabilities of FPS as disclosed in Note 4:

Net assets acquired, net of cash acquired and receivable owed from FPS

Less - Deposit previously transferred in October 2022 to FPS

Net cash paid

See accompanying

notes to unaudited condensed consolidated financial statements.

DOMINARI HOLDINGS

Notes to Condensed

Consolidated Financial Statements

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.

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.

See accompanying notes to unaudited 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.

The Company is in

the process of winding down its historical pipeline of biotechnology assets held by Aikido Labs, LLC.

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

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.

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 the Financial

Industry Regulatory Authority (“FINRA”) and an investment adviser registered with the SEC.

Pursuant to the terms

of the FPS Purchase Agreement, Dominari Financial purchased from the Seller 100 % of the membership interests in FPS (the “Membership

FPS’s registered broker-dealer and investment adviser businesses will be operated as 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 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”).

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

The second closing occurred on March 27, 2023.

Dominari Financial paid

to the Seller an additional $ 1.4 million in consideration for a transfer by the Seller to Dominari Financial of the remaining 80 % of the

Membership Interests.

As a result of the ownership change, FPS was renamed Dominari Securities LLC.

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 2023 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 (“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.

condensed consolidated balance sheet as of March 31, 2024, condensed consolidated statements of operations for the three months ended

March 31, 2024 and 2023, condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and

2023, and the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 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 months ended March 31, 2024

are not necessarily indicative of results to be expected for the year ending December 31, 2024 or for any future interim period.

The condensed

consolidated balance sheet as of December 31, 2023 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.

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, 2023.

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.

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

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

advisory fees are earned in connection with investment advisory services.

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 $ 14.1 million held in money market funds and liquid insured deposits maintained by the Company with

its clearing broker as of March 31, 2024.

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

8 - Leases ).

The Company recognizes revenue under ASC

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

Revenue is 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 revenue 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 revenue 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.

● Commissions are earned by executing

transactions for clients primarily in equity, equity-related, and debt products.

Commission revenue associated with trade execution are

recognized at a point in time on trade-date.

Commissions revenue are generally paid on settlement date and the Company records receivables

to account for timing between trade-date and payment on settlement date.

● Account 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 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.

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.

● Other revenue includes placement

agent services in the equity capital markets for privately held companies distributing private equity.

Placement agent revenue are recognized

at a point in time on trade-date, as the client obtains the control and benefit of the membership interest offering at that point.

Long-term equity investments

The Company accounts for long-term equity investments

under Accounting Standards Codification (“ASC”) 321 “Investments—Equity Securities” (“ASC 321”).

In accordance with ASC 321, equity securities with readily determinable fair values are accounted for at fair value based on quoted market

Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement alternative.

Under the measurement alternative, the equity investments are measured at cost, less any impairment, if any, plus or minus changes resulting

from observable price changes in orderly transactions for the identical or a similar investment of the Company.

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

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 adopted ASU

2 unchanged sentences

from the implementation of ASU 2022-03.

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

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

and other current assets

assets acquired

Accrued expenses

Accrued commissions

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):

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 adopted ASU 2023-01 on January 1, 2024.

There was no material impact to the Company’s

unaudited condensed consolidated financial statements from the implementation of 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.

Marketable Securities

The realized gain or loss, unrealized gain or

loss, and dividend income related to marketable securities for the three months ended March 31, 2024 and 2023, 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

September 30,

Nine Months Ended

September 30,

Realized loss

1 unchanged sentence

Dividend income

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

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,

Long-Term Equity Investments

The Company holds interests in several privately held and publicly

traded companies as long-term investments.

The following table presents the Company’s long-term investments as of March 31,

2024, and December 31, 2023 ($ in thousands):

and December 31,

Investment in Kerna Health Inc

14 unchanged sentences

Investment in Anduril*

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.

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):

* Investments made in these companies

are through a Special Purpose Vehicle (“SPV”).

The SPV is the holder of the actual stock.

The Company does not hold these

stock certificates directly.

** Investments made in these companies are through both an SPV

and direct investments.

Investment in SpaceX

The Company redeemed its entire investment in

the portfolio company during April 2024 in exchange for return of cost basis of $ 3.5 million.

Investment in Unusual Machines

Unusual Machines, Inc, an emerging leader in first-person

view (FPV) drone technology, closed its initial public offering of common stock on February 14, 2024 at a public offering price of $ 4

per share and the shares began trading on the NYSE American under the ticker symbol “UMAC”.

As of March 31, 2024 the Company

valued its investment in Unusual Machines based on UMAC’s market price.

Notes Receivable

The following table presents the Company’s

notes receivable as of March 31, 2024 and December 31, 2023 ($ in thousands):

March 31, 2024

Maturity Date

3 unchanged sentences

Notes receivable, at fair value

Convergent convertible note - current

Convergent convertible note - non-current

Raefan Industries LLC Investment

American Innovative Robotics Investment

Convergent convertible note

Raefan Industries LLC

American Innovative Robotics

Notes receivable, at fair value - current portion

Notes receivable, at fair value - non-current portion

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

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,

December 31, 2023

Maturity Date

Stated Interest Rate

Principal Amount

Interest Receivable

Notes receivable, at fair value

Convergent convertible note

Raefan Industries LLC

American Innovative Robotics

Notes receivable, at fair value - current portion

Notes receivable, at fair value - non-current portion

Convergent Therapeutics, Inc.

The Company recorded principal repayment of

approximately $ 0.3 million, interest income of approximately $ 63,000 and an unrealized gain on the note of approximately $ 60,000 on

the Convergent Convertible Note for the three months ended March 31, 2024.

Raefan Industries LLC

The Company recorded a realized loss as a result

of directly writing off approximately $ 1.0 million of principal, which the Company deemed uncollectible during the three months ended

March 31, 2024.

American Innovative Robotics, LLC

The Company recorded interest income of approximately

$ 22,000 , and an unrealized loss on the note of approximately $ 1,000 on the Robotics Promissory Note for the three months ended March 31,

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 March 31, 2024, and December 31, 2023 ($ in thousands):

Fair value measured as of March 31, 2024

Total at December 31,

Quoted prices in active markets

3 unchanged sentences

Total marketable securities

Short-term investment

Notes receivable at fair value, current portion

Notes receivable at fair value, non-current portion

value measured as of December 31, 2022

observable inputs

Marketable securities:

Fair value measured as of December 31, 2023

Total at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Marketable securities:

receivable at fair value, current portion

receivable at fair value, non-current portion

Total marketable securities

Notes receivable at fair value, current portion

Notes 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):

Short-term investment at December 31, 2022

Change in fair value of investment

Short-term investment at September 30, 2023

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):

Notes receivable at fair value, current portion at December 31, 2023

Collection of principal outstanding

Note receivable, Convergent Therapeutics, non-current portion

Unrealized loss on note receivable

Accrued interest receivable

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

Realized and unrealized gain and loss on note receivable, net

Change in interest receivable

Notes receivable at fair value, current portion at March 31, 2024

Notes receivable at fair value, non-current portion at December 31, 2023

Note receivable, Convergent Therapeutics, non-current portion

Accrued interest receivable

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).

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”).

Unrealized loss on notes receivable

Notes receivable at fair value, non-current portion at March 31, 2024

Notes Receivable at fair value

As of March 31, 2024, the fair value of the

notes receivable was measured taking into consideration cost basis, 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 March 31, 2024.

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 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”).

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 .

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,

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 March 31, 2024:

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 three months ended March 31, 2024

and 2023, the Company recorded approximately $ 0.2 million, respectively, of lease expense to current period operations.

Operating leases

Operating lease cost

Operating lease expense

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

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 March 31, 2024, future minimum payments

during the next five years and thereafter are as follows:

Remaining Period Ended December 31, 2024

Year Ended December 31, 2025

2 unchanged sentences

Year Ended December 31, 2028

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,

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

outstanding for the period.

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

as of the first day of the period.

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 three months ended March 31, 2024, and 2023 are as follows:

As of March 31,

Convertible preferred stock

2 unchanged sentences

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 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.

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 nine months ended September 30, 2023, is presented below:

Stockholders’ Equity and Convertible

Preferred Stock

As of March 31, 2024, there are 5,995,065 shares of common stock issued

and 5,934,917 shares outstanding.

Treasury Stock

There are 60,148 shares of treasury stock as of

March 31, 2024.

A summary of warrant activity for the three months

ended March 31, 2024, is presented below:

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual Life

Outstanding as of December 31, 2023

Outstanding as of September 30, 2023

A summary of restricted

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

Outstanding as of March 31, 2024

Restricted Stock Awards

A summary of restricted stock awards activity

for the three months ended March 31, 2024, is presented below:

Number of Restricted Stock Awards

1 unchanged sentence

Nonvested at December 31, 2023

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.

Nonvested at March 31, 2024

Stock-based compensation associated with the amortization

of restricted stock awards expense was approximately $ 75,000 and $ 257 for the three months ended March 31, 2024, and 2023, 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.

As of March 31, 2024, 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 nine months ended September 30, 2023, is presented below:

A summary of option activity under the Company’s

stock option plan for the three months ended March 31, 2024, is presented below:

Number of Shares

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2023

Employee options granted

Employee options forfeited

Employee options expired

Outstanding as of September 30, 2023

Outstanding as of March 31, 2024

Options vested and exercisable

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):

Stock-based compensation associated with the amortization

of stock option expense was approximately $ 0.1 million and $ 5,000 for the three months ended March 31, 2024, and 2023, respectively.

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 $ 0.4 million.

The following table presents our total revenue

disaggregated by revenue type for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Advisory fees

and Contingencies

Commitments 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 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,

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:

In March 2024, the Company received a notice of

petition of a filed action seeking relief related to the hiring in March 2024 of new registered representatives from the representatives’

former employer.

This notice was filed against the Company’s subsidiary, Dominari Securities.

The Company does not agree with the

plaintiff’s claims.

While the Company intends to defend itself vigorously from this claim, it is unable to predict the outcome of

such legal proceeding.

Any potential loss as a result of this legal proceeding cannot be reasonably estimated.

As a result, the Company

has not recorded a loss contingency for the aforementioned claim.

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 March 31, 2024, Dominari Securities had net capital of approximately $ 13.4 million, which was approximately $ 13.3

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,

was previously a member of the board of directors of Revere.

The Company incurred fees of approximately $ 0 and $ 80,000 during the three

months ending March 31, 2024 and 2023, respectively.

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

condensed consolidated statements of operations.

Segment Reporting

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.

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.

Prior 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 revenue and net loss, as presented within the table below and reconciled to the statement of operations.

Three Months Ended

September 30, 2023

Operating Costs

General and administrative

Research and development

Loss from operations

Other (expenses) income

Interest income

Loss on marketable securities

Unrealized loss on note receivable

Change in fair value of investments

Total other (expenses) income

Nine Months Ended

September 30, 2023

March 31, 2024

Operating Costs

General and administrative

Research and development

Loss from operations

Other (expenses) income

Other income (expenses)

Interest income

Gain on marketable securities

Unrealized loss on note receivable

Change in fair value of investments

Total other (expenses) income

Realized and unrealized gain and loss on notes receivable, net

Change in fair value of long-term equity investments

Total other income (expenses)

The Company recorded no income tax expense for the three months ended

March 31, 2024 and 2023 because the estimated annual effective tax rate was zero.

In determining the estimated annual effective income

tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions

in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating

loss carry forwards, and available tax planning alternatives.

As of March 31, 2024, and December 31, 2023, the Company provided a

full valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax

assets will not be realized.

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