Dominari Holdings Inc. 10-K

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide the information required by this item. 28 Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated financial statements and supplementary data required by this Item 8 follow. Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firms (PCAOB ID Number 688 ) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 F-4 Consolidated Statements of Changes in and Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6 Notes to the Consolidated Financial Statements F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Dominari Holdings Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Dominari Holdings Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of Long Term Equity Investments As of December 31, 2024, the Company had $12.3 million of long term equity investments in companies without readily determinable fair values. The Company typically measures these investments at cost less any impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. We identified the valuation of these investments as a critical audit matter because of the significant judgement management uses to estimate the carrying value of the investments. This is a challenging audit area due to the subjectivity used in assessing whether observable price changes have occurred for investments that are identical or similar to the investment the Company holds, and in assessing whether or not an investment is impaired. The following are the primary procedures we performed to address this critical audit matter. We obtained an understanding of management’s process for accounting for those investments which do not have readily determinable fair values. We considered the appropriateness of the Company’s application of accounting policy by obtaining and reviewing the Company’s analysis and confirming its compliance with accounting principles generally accepted in the United States. We tested the mathematical accuracy of the Company’s carrying value calculations. We evaluated the accounting conclusions reached by the Company as to whether or not any observable and orderly transactions had occurred for an identical or similar investment in the same issuer through reading the Company’s available financial and other information regarding the investee and through public searches for corroborating or contradictory information and indicators of impairment. Further, we evaluated the appropriateness of the Company’s impairment conclusions considering this internal and external information. For certain investments, we utilized our internal valuation group specialists to assess the appropriateness of the valuation methodologies. We also evaluated the adequacy of the Company’s disclosures in the notes to the consolidated financial statements in relation to this matter. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2022. New York, NY April 15, 2025 F- 2 DOMINARI HOLDINGS INC. Consolidated Balance Sheets ($ in thousands except share and per share amounts) December 31, December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $ 4,079 $ 2,833 Marketable securities 5,773 13,547 Receivable from clearing brokers 17,279 7,687 Prepaid expenses and other assets 1,019 898 Notes receivable, at fair value - current portion - 3,177 Total current assets 28,150 28,142 Property and equipment, net 239 344 Notes receivable, at fair value - non-current portion 902 1,129 Long term equity investments 12,282 24,150 Loans to employees 2,150 - Right-of-use assets 2,944 3,335 Security deposit 458 458 Total assets $ 47,125 $ 57,558 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 919 $ 1,036 Accrued commissions 2,057 128 Contract liabilities - current 240 - Lease liability - current 410 421 Other current liabilities 157 22 Total current liabilities 3,783 1,607 Contract liabilities, less current portion 860 - Lease liability, less current portion 2,629 3,028 Total liabilities 7,272 4,635 Stockholders’ equity Preferred stock, $.0001 par value, 50,000,000 authorized Convertible Preferred Series D: 5,000,000 shares designated; 3,825 shares issued and outstanding as of December 31, 2024 and 2023; liquidation value of $ 0.0001 per share - - Convertible Preferred Series D-1: 5,000,000 shares designated; 834 shares issued and outstanding as of December 31, 2024 and 2023; liquidation value of $ 0.0001 per share - - Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 7,037,022 and 5,995,065 shares issued as of December 31, 2024 and 2023, respectively; 6,976,874 and 5,934,917 shares outstanding as of December 31, 2024 and 2023, respectively - - Additional paid-in capital 263,820 262,187 Treasury stock, as of cost, 60,148 shares as of December 31, 2024 and 2023 ( 501 ) ( 501 ) Accumulated deficit ( 223,466 ) ( 208,763 ) Total stockholders’ equity 39,853 52,923 Total liabilities and stockholders’ equity $ 47,125 $ 57,558 See accompanying notes to consolidated financial statements. F- 3 DOMINARI HOLDINGS INC. Consolidated Statements of Operations ($ in thousands except share and per share amounts) Years Ended December 31, 2024 2023 Revenues $ 18,146 $ 2,039 Operating costs and expenses General and administrative 29,673 23,838 Research and development - 3 Research and development - license acquired - ( 6 ) Total operating expenses 29,673 23,835 Loss from operations ( 11,527 ) ( 21,796 ) Other income (expenses) Other income 86 36 Interest income 960 716 Gain on marketable securities, net 5,243 630 Realized and unrealized loss on note receivable, net ( 2,347 ) ( 3,248 ) Change in carrying value of investments ( 7,118 ) 780 Total other expenses ( 3,176 ) ( 1,086 ) Net loss $ ( 14,703 ) $ ( 22,882 ) Net loss per share, basic and diluted Basic and Diluted $ ( 2.38 ) $ ( 4.38 ) Weighted average number of shares outstanding, basic and diluted Basic and Diluted 6,183,397 5,229,477 See accompanying notes to consolidated financial statements. F- 4 DOMINARI HOLDINGS INC. Consolidated Statements of Changes in Stockholders’ Equity ($ in thousands except share and per share amounts) Additional Total Preferred Stock Common Stock Paid-in Treasury Stock Accumulated Stockholders’ Shares Amount Shares Amount Capital Shares Amount Deficit Equity Balance at December 31, 2022 4,659 $ - 5,485,096 $ - $ 262,970 468,017 $ ( 3,322 ) $ ( 185,881 ) $ 73,767 Stock-based compensation - - 1,179,468 - 2,977 - - - 2,977 Cancellation of common stock - - ( 25,000 ) - - - - - - Purchase of treasury stock - - - - - 236,630 ( 939 ) - ( 939 ) Retirement of treasury stock - - ( 644,499 ) - ( 3,760 ) ( 644,499 ) 3,760 - - Net loss - - - - - - - ( 22,882 ) ( 22,882 ) Balance at December 31, 2023 4,659 $ - 5,995,065 $ - $ 262,187 60,148 $ ( 501 ) $ ( 208,763 ) $ 52,923 Stock-based compensation - - 1,041,957 - 1,633 - - - 1,633 Net loss - - - - - - - ( 14,703 ) ( 14,703 ) Balance at December 31, 2024 4,659 $ - 7,037,022 $ - $ 263,820 60,148 $ ( 501 ) $ ( 223,466 ) $ 39,853 See accompanying notes to consolidated financial statements. F- 5 DOMINARI HOLDINGS INC. Consolidated Statements of Cash Flows ($ in thousands) Years Ended December 31, 2024 2023 Cash flows from operating activities Net loss $ ( 14,703 ) $ ( 22,882 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of right-of-use assets 391 359 Depreciation 105 83 Change in fair value of short-term investment - 13 Change in carrying value of long-term investment 7,118 ( 793 ) Non-cash warrant revenue ( 176 ) - Stock-based compensation 1,633 2,977 Realized (gain) loss on marketable securities ( 6,489 ) 1,180 Unrealized (gain) loss on marketable securities 1,676 ( 1,049 ) Realized and unrealized loss on note receivable 2,347 3,248 Realized gain on receiving shares in exchange of note receivable extension - ( 36 ) Changes in operating assets and liabilities: Prepaid expenses and other assets ( 122 ) ( 406 ) Prepaid acquisition cost - 301 Receivable from clearing brokers ( 9,592 ) ( 4,137 ) Accounts payable and accrued expenses ( 117 ) 376 Accrued commissions 1,929 ( 1,157 ) Contract liabilities 1,100 - Lease liabilities ( 410 ) ( 88 ) Other current liabilities 135 ( 99 ) Notes receivable, at fair value – net interest accrued 57 ( 122 ) Net cash used in operating activities ( 15,118 ) ( 22,232 ) Cash flows from investing activities Purchase of marketable securities ( 7,826 ) ( 34,125 ) Sale of marketable securities 21,174 27,574 Purchase of fixed assets - ( 427 ) Acquisition of FPS, net of cash acquired and receivable owed from FPS - ( 1,112 ) Collection of principal on note receivable 1,000 1,102 Loans to employees ( 2,390 ) ( 107 ) Purchase of long-term investments ( 150 ) ( 75 ) Redemption of long-term investments 4,316 - Collection of loans to employees 240 - Net cash provided by (used in) investing activities 16,364 ( 7,170 ) Cash flows from financing activities Purchase of treasury stock - ( 939 ) Net cash used in financing activities - ( 939 ) Net increase (decrease) in cash and cash equivalents 1,246 ( 30,341 ) Cash and cash equivalents, beginning of period 2,833 33,174 Cash and cash equivalents, end of period $ 4,079 $ 2,833 Cash paid for interest and taxes $ 9 $ 686 Non-cash investing and financing activities Receiving shares in exchange of note receivable extension $ - $ 179 Note receivable principal and interest receivable reduced due to receiving shares $ - $ 143 Transfer from long-term investment to marketable securities $ 1,033 $ - On March 27, 2023, the Company acquired all assets and liabilities of FPS: Net assets acquired, net of cash acquired and receivable owed from FPS $ - $ 3,112 Less - Deposit previously transferred in October 2022 to FPS $ - $ ( 2,000 ) Net cash paid $ - $ 1,112 See accompanying notes to consolidated financial statements. F- 6 DOMINARI HOLDINGS INC. Notes to Consolidated Financial Statements Note 1. 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 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 industries. Through Dominari Financial, the Company acquired Dominari Securities LLC (“Dominari Securities”), an introducing broker-dealer, a member of the Financial Industry Regulatory Authority (“FINRA”) and an investment adviser registered with the Securities and Exchange Commission (“SEC”). Dominari Securities is also licensed to provide 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, a member of 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 Interests”). The registered broker-dealer and investment adviser businesses will be operated as a wholly owned subsidiary of Dominari Financial. The FPS Purchase Agreement provided for Dominari Financial’s acquisition of FPS’ 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 Interests. Following the Initial Closing, FPS filed a continuing membership application requesting approval for a change of ownership, control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”). The Rule 1017 Application was approved by FINRA on March 20, 2023. 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. On October 13, 2023, the Company entered into two separate Limited Liability Agreements with Dominari Manager LLC (“Manager”) and Dominari IM LLC (“Investment Manager”) which are both wholly owned subsidiaries and whose operations are included within the consolidated financial statements of Dominari Holdings Inc. Manager was named as the manager of Dominari Master SPV LLC (the “Master SPV”), a limited liability company formed by the Company in 2022, and is responsible for the day-to-day operations of the Master SPV. Investment Manager was named the investment manager of Master SPV and is responsible for providing investment advice and decisions on behalf of the Master SPV. Beginning in March 2024, the Manager established various series of funds (the “Series”) of the Master SPV for the purpose of making investments in companies identified by the Investment Manager with proceeds generated by the sale of non-voting interests in such Series by the Master SPV to investors, in which the Company may, from time to time as it deems appropriate, also invest in such series alongside third-party investors. On May 21, 2024, Dominari Financial and Heritage Strategies LLC (“HS”) entered into a Limited Liability Company Operating Agreement (the “JV Agreement”) of Dominari Financial Heritage Strategies LLC (“DFHS”). The JV Agreement governs the operation of DFHS, including the distributions to the members of DFHS upon the offer, sale and renewal of various insurance products and services, including life insurance, private placement insurance, group medical plans, qualified plans, business insurance, and family office and estate planning services. Pursuant to the terms of the JV Agreement, Dominari Financial and HS are the co-managing members (the “Co-Managing Members”), each with fifty percent ( 50 %) ownership interests in DFHS. Revenues from the sale of the various insurance products and services after deducting general and administrative costs are distributed to the Co-Managing Members as set forth in the JV Agreement. Note 2. 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. As of December 31, 2024, the Company has approximately $ 4 million of cash and cash equivalents and $ 5.8 million of marketable securities. Additionally, the Company had approximately $ 17 million in receivable from clearing brokers. As disclosed in Note 18, subsequent to December 31, 2024, the Company raised approximately $ 13.5 million. All of such funds are available to fund the Company’s operations. Based upon projected cash flow requirements, the Company has adequate cash and cash equivalents and marketable securities, together with the anticipated cash flow from operations to fund its operations for at least the next twelve months from the date of the issuance of these consolidated financial statements. F- 7 Note 3. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), and in conformity with the rules and regulations of the SEC. 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 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. Joint Ventures On May 21, 2024, the Company entered into a limited liability company operating agreement to form Dominari Financial Heritage Strategies LLC (“DFHS”). The Company has a 50 % interest in DFHS. The purpose of DFHS is to sell various insurance products and services, including life insurance, private placement insurance, group medical plans, qualified plans, business insurance, and family office and estate planning services. The Company has determined it is not the primary beneficiary of DFH and thus will not consolidate the activities in its consolidated financial statements. The Company will account for its interest in DFHS under the equity method accounting in accordance with ASC 323. As of December 31, 2024, there has been no material activity in DFHS. Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP. 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 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. Concentration of Cash The Company maintains cash balances at four financial institutions in checking accounts. From time to time, the Company’s cash account balances exceed the balances as covered by the Federal Deposit Insurance System. The Company has never suffered a loss due to such excess balances. As of December 31, 2024 and 2023, the Company had no cash equivalents. Marketable Securities Marketable securities are classified as trading and are carried at fair value. The Company’s marketable securities consist of highly liquid mutual funds, exchange-traded & closed-end funds which are valued at quoted market prices, as well as warrants of publicly listed companies received as consideration for underwriting services provided. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years . Property and equipment held under finance leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. F- 8 Research and Development Research and development costs, including acquired in-process research and development expenses for which there is no alternative future use, are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Accounting for Warrants The Company accounts for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). Stock-based Compensation The Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. These options generally vest over a one- to five-year period. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company recognizes stock-based compensation expense on a graded-vesting basis over the requisite service period for each separately vesting tranche of each award. Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term. Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices. Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U. S. Treasury zero-coupon issues with an equivalent remaining term. Expected Dividend - Through December 31, 2024, the Company has never declared or paid any cash dividends on its common shares and did not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in its valuation models. Subsequent to December 31, 2024, on February 11, 2025, the Company declared a special cash dividend. The Company accounts for forfeitures as they occur. Fair Value Option - Short-term Note and Convertible Note The guidance in ASC 825, Financial Instruments , provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. The Company has elected to measure the purchases of its notes using the fair value option at each reporting date. Under the fair value option, bifurcation of an embedded derivative is not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value will be reflected in interest income and other, net in the consolidated statements of operations. Interest accrues on the unpaid principal balance on a quarterly basis and is recognized in interest income in the consolidated statements of operations. F- 9 The decision to elect the fair value option is determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected. Pursuant to this guidance, assets and liabilities are measured at fair value based, in part, on general economic and stock market conditions and those characteristics specific to the underlying investments. The carrying value is adjusted to estimated fair value at the end of each quarter, required to be reported separately in our consolidated balance sheets from those instruments using another accounting method. Receivable from Clearing Brokers Receivable from Dominari Securities’ clearing brokers consisted of approximately $ 15.4 million of liquid insured deposits, $ 1.3 million of commissions receivable and $ 0.6 million of good faith deposits maintained by the Company with its clearing brokers as of December 31, 2024. Receivable from Dominari Securities’ clearing brokers consisted of approximately $ 7.2 million of liquid insured deposits and $ 0.5 million of good faith deposits maintained by the Company with its clearing brokers as of December 31, 2023. Such amount is stated at the amount the Company expects to collect. The Company maintains allowances for credit losses for estimated losses resulting from the inability of its clearing brokers to make required payments. Management considers the following factors when determining the collectability of specific accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. As of December 31, 2024 and 2023 an allowance for credit losses was not deemed necessary. Leases 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 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 9 - Leases ). F- 10 Revenue 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 private placement agent services in both the public and private 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. The Company expenses any costs associated with underwriting transactions and they are recorded on a gross basis within the general and administrative line item in the consolidated statements of operations as the Company is acting as a principal in the arrangement. The Company applies the practical expedient under ASC 606, as any such costs would by amortized in one year or less. The Company also provides investment banking services. Investment banking services typically include fees earned for acting as a financial advisor for mergers and acquisitions or similar transactions. These services provided by the Company are not distinct from the potential transaction that may occur. Due to this, the Company believes the performance obligation for providing investment banking services is satisfied when the earliest occurs (i) termination of the engagement letter, (ii) expiration of engagement letter or (iii) successful transaction has occurred. Any non-cash consideration earned by the Company in providing the aforementioned services is recorded at fair value in accordance with ASC 820, on the date that revenue is recognized. ● 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 and are included in receivable from clearing brokers on the accompanying consolidated balance sheet. ● Account advisory and management fees are two revenue streams which are both recognized over time. Please see further description below: o The Company earns revenue for performing account advisory and investment advisory services for customers based on contractually fixed rates applied, as a percentage, to the market value of assets in a customer’s account. The performance obligation for investment advisory services is considered a series of distinct services that are substantially the same and are satisfied each day of the contract and are recognized as revenue over time. Investment advisory fees are payable in arrears on a quarterly basis. o Management fees represent asset-based fees received in exchange for providing management services to certain related party pooled investment vehicles (funds). These fees are charged based upon contractually fixed rates applied, as a percentage, to the total assets of those pooled investment vehicles managed by the Company at the date upon which an investor subscribes into the fund, subsequently deferred. The Company recognizes these revenues over time as the Company has determined that the customer simultaneously receives and consumes the benefits of the management services as they are provided. Revenues are typically recognized over a period of five years, which the Company has estimated to be a reasonable estimate of the period during which the Company shall provide management services. Contract liabilities relate to payments received in advance of performance under the contract and are the result of remaining performance obligations for management services. Contract liabilities are recognized as revenues when the Company provides ongoing investment management services. During the year ending December 31, 2024, Manager received approximately $ 1.2 million of cash which will be recognized over time. As of December 31, 2024, $ 1.1 million of such revenue has been deferred and is included in contract liabilities on the accompanying consolidated balance sheet. Approximately $ 0.2 million is expected to be recognized during the year ending December 31, 2025, and is recorded in current liabilities. The remaining balance is expected to be recognized through 2029. ● Other revenue includes revenues such as miscellaneous fees and reimbursed expenses. Other revenue is recognized as revenue ratably over the period that such services are provided which are distinct from the services provided in other periods. Type of other revenue include trailing fees for mutual funds 12b- 1, variable annuity, fixed annuities, and insurance products. These trailing fees are paid by product partners for ongoing services and/or advice provided to underlying investor accounts. Trailing fees are recognized as income when earned, usually monthly or quarterly as net asset value is determined. F- 11 Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary difference resulting from matters that have been recognized in the Company’s consolidated financial statement or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities measured at the enacted tax rates in effect for the year in which these items are expected to reverse. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. As required by the provisions of ASC 740, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740. If applicable, interest costs and penalties related to unrecognized tax benefits are required to be calculated and would be classified as interest and penalties in general and administrative expense in the statement of operations. 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 prices. Any equity securities with a readily determinable fair value are included within marketable securities on the accompanying consolidated balance sheet. Equity securities without readily determinable fair values are accounted for either at net asset 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 same issuer. Recently Adopted Accounting Standards In October 2021, the Financial Accountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). This update amends Topic 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity (acquirer) recognize and measure contract assets and contract liabilities in accordance with ASC 606. The Company adopted ASU 2021-08 on January 1, 2023. There was no material impact to the Company’s consolidated financial statements from the implementation of ASU 2021-08. 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 2022-03 on January 1, 2024. There was no material impact to the Company’s consolidated financial statements from the implementation of ASU 2022-03. F- 12 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 consolidated financial statements from the implementation of ASU 2023-01. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosures regarding significant segment expenses and other segment items for public entities on both an annual and interim basis. Specifically, the update required that entities provide, during interim periods, all disclosures related to a reportable segment’s profit or loss and assets that were previously required only on an annual basis. Additionally, this guidance necessitates the disclosure of the title and position of the Chief Operating Decision Maker (“CODM”). The new guidance does not modify how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years starting after December 15, 2024. This ASU must be applied retrospectively to all prior periods presented. The Company adopted this ASU during the year ended December 31, 2024. 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 consolidated financial statements, besides below. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its consolidated financial statements and disclosures. Note 4. Marketable Securities The realized gain or loss, unrealized gain or loss, and dividend income related to marketable securities for the years ended December 31, 2024 and 2023, which are recorded as a component of gains and (losses) on marketable securities on the consolidated statements of operations, are as follows ($ in thousands): Years Ended December 31, 2024 2023 Realized gain (loss) $ 6,489 $ ( 1,180 ) Unrealized gain (loss) ( 1,676 ) 1,049 Interest and dividend income 430 761 Total $ 5,243 $ 630 F- 13 Note 5. Long-Term Equity Investments The Company holds interests in several privately held companies as long-term investments. The following table presents the Company’s long-term investments as of December 31, 2024 and 2023 ($ in thousands): December 31, 2024 December 31, 2023 Cost Basis Carrying Value Cost Basis Carrying Value Investment in Kerna Health $ 2,140 $ 4,940 $ 2,140 $ 4,940 Investment in Kaya Now, Inc. - - 1,500 Investment in Big Sky Opportunities Fund LLC (Tevva Motors Limited)* - - 1,972 2,794 Investment in Unusual Machines *** - - 1,075 1,033 Investment in Revere Master SPV Series 1 (Qxpress Pte Ltd)* 1,000 1,000 1,000 1,000 Investment in MW LSV MasterClass, LLC (Yanka Industries, Inc. d.b.a. Masterclass)* 170 170 170 170 Investment in Payward, Inc. and MWSI VC Kraken-II, LLC (Payward, Inc. d.b.a.Kraken)* * 597 364 597 597 Investment in Aeon Partners Fund Series EG (Epic Games, Inc.)* 3,500 2,248 3,500 3,500 Investment in Tesspay, Inc. and Revere Master SPV Series VI (TessPay, Inc.)** 1,240 1,240 1,240 2,679 Investment in Aeon Partners Fund Series G (SpaceX, Inc.)* - - 3,500 4,867 Investment in Aeon Partners Fund Series DB (Databricks, Inc.)* 716 538 1,200 842 Investment in Discord Inc. 476 476 476 476 Investment in Thrasio, Inc. 300 - 300 300 Investment in Automation Anywhere, Inc. 476 397 476 476 Investment in Dominari Master SPV LLC Series VI (X.AI Corp. d.b.a. xAI)* 100 109 - - Investment in Dominari Master SPV LLC Series XI (Cerebras Systems Inc.)* 25 25 - - Investment in Dominari Master SPV LLC Series XII (Groq, Inc.)* 25 25 - - Investment in AdvEn Inc. 750 750 - - Investment in Forge Investments LLC Series Fund FG-MHM (Anduril Industries, Inc.)* - - 476 476 Total $ 11,515 $ 12,282 $ 19,622 $ 24,150 * 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. *** Underlying company had an IPO transaction during 2024. The Company has included the underlying investment in marketable securities as of December 31, 2024. F- 14 The Company recorded a decrease in the carrying values of approximately $ 6.4 million for the year ended December 31, 2024. Please see below details of the changes in carrying value by investment. Investment in Aeon Partners Fund Series G (SpaceX, Inc.) The Company redeemed its holdings in SpaceX in April of 2024 totaling 36,842 shares of participating membership unites of SpaceX for $ 3.5 million. This resulted in the Company recording a decrease in the carrying value of the investment for the fiscal year ended December 31, 2024. Investment in Dominari Master SPV LLC Series VI (X.AI Corp. d.b.a. xAI) On May 2, 2024, the Company entered into an agreement (the “xAI Agreement”) with Dominari Master SPV LLC whereby the Company agreed to purchase 100,000 Series XI xAI Units for $ 0.1 million. During the Company’s fourth quarter 2024 review of the xAI investment, the Company noted a fourth quarter funding round that slightly increased the carrying value. As a result, as of December 31, 2024, the company recorded an increase in the carrying value of $ 9,113 . Investment in Dominari Master SPV LLC Series XI (Cerebras Systems Inc.) On June 17, 2024, the Company entered into an agreement (the “Cerebras Agreement”) with Dominari Master SPV LLC whereby the Company agreed to purchase 25,000 Series XI Cerebras Units for $ 25,000 . Investment in Dominari Master SPV LLC Series XII (Groq, Inc.) On July 25, 2024, the Company entered into an agreement (the “Groq Agreement”) with Dominari Master SPV LLC whereby the Company agreed to purchase 25,000 Series XII Groq Units for $ 25,000 . 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 December 31, 2024, the value of the Company’s holdings in UMAC are presented within the Marketable Securities line item of the financial statements, as the investment has a readily determinable fair value. Investment in Big Sky Opportunities Fund LLC (Tevva Motors Limited) On September 22, 2021, the Company entered into a securities purchase agreement (the “Tevva Motors Subscription Agreement”) with Big Sky Opportunities Fund, LLC, who handled the offering for Tevva Motors. As of December 31, 2023 the investment was valued at $ 2.8 million. During the second quarter of 2024, the Company identified indicators of impairment for the Tevva investment as a result of liquidity concerns. As a result, the Company recorded an impairment charge of approximately $ 2.8 million and the investment in Tevva was valued at $0 as of December 31, 2024. Investment in Tesspay, Inc. and Revere Master SPV Series VI (TessPay, Inc.) On March 23, 2022, the Company entered into a securities purchase agreement (the “Tesspay Securities Purchase Agreement”) with Tesspay. Under the Tesspay Securities Purchase Agreement, the Company agreed to purchase 1,000,000 shares of common stock of Tesspay for approximately $ 0.2 million. The Company also invested an additional $ 1.0 million for pre-IPO shares with Revere Master SPV LLC-Series VI, who handled the offering for Tesspay. As of December 31, 2023 the investment was valued at $ 2.7 million. Management noted that Tesspay filed an amendment to its SEC Form S-1 Registration Statement on April 30, 2024 wherein Tesspay disclosed its intent to IPO at between $ 5.0 and $ 6.0 price per share. However, given the uncertainty around the probability of the timing of an IPO, the Company has written its investment down to its cost basis. Through the fiscal year 2024 the Company has recorded a decrease in the carrying value of the investment of $ 1.4 million, with a carrying value of $ 1.2 million as of December 31, 2024. F- 15 Investment in Forge Investments LLC Series Fund FG-MHM (Anduril Industries, Inc.) The Company redeemed its holdings in Anduril in November of 2024 totaling 14,880 shares of participating membership unites of Fund FG-MHM for net proceeds of $ 0.5 million. This resulted in the Company recording a decrease in the carrying value of the investment for the fiscal year ended December 31, 2024. Investment in Thrasio, Inc. In April 2022, the Company entered into a securities purchase agreement (the “Thrasio Securities Purchase Agreement”) with privately-held company Thrasio, LLC, an aggregator of private brands of top Amazon businesses and direct-to-consumer brands. As of December 31, 2023 the investment was valued at $ 0.3 million. During our first quarter 2024 review of the Thrasio investment Dominari noted news activity related to Thrasio had filed for Chapter 11 bankruptcy protection. As a result, the Company recorded an impairment charge of approximately $ 0.3 million and the investment in Thrasio was valued at $0 as of December 31, 2024. Investment in Aeon Partner Funds Series EG (Epic Games, Inc.) On March 22, 2022, the Company entered into a securities purchase agreement (the “Epic Games Securities Purchase Agreement”) with Aeon Partners Fund, Series EG, who handled the offering of Epic Games shares. Under the Epic Games Securities Purchase Agreement, the Company agreed to purchase an aggregate of 901 shares of common stock of Epic Games for a total $ 1.5 million. In April 2022, the Company invested an additional $ 2 million for the purchase of additional shares of common stock of Epic Games through the Aeon Partners Fund, Series EG. As of December 31, 2023 the investment was valued at $ 3.5 million. During the Company’s first quarter of 2024 review of the investment Dominari noted a $ 1.5 billion funding round at a lower price per share than the Company’s initial investment in Epic Games resulting in a $ 1.3 million decrease in the carrying value of this investment during the fiscal year ended December 31, 2024. The investment was valued at $ 2.2 million as of December 31, 2024. Investment in Payward, Inc. and MWSI VC Kraken-II, LLC (Payward, Inc. d.b.a.Kraken) During the Company’s first quarter of 2024 review of the investment, Dominari recorded a $ 0.2 million decrease in the carrying value of this investment during the fiscal year ended December 31, 2024. The investment was valued at $ 0.3 million as of December 31, 2024. Investment in AdvEn Inc. On December 26, 2021, the Company entered into a securities purchase agreement (the “AdvEn Securities Purchase Agreement”) with AdvEn Inc. (“AdvEn’), formerly known as Nano Innovations Inc. Under the AdvEn Securities Purchase Agreement, the Company purchased a 10 % senior secured convertible promissory note (the “AdvEn Convertible Note”) in the principal amount of $ 750,000 and warrants (“AdvEn Warrants”, and together with the AdvEn Convertible Note, the “AdvEn Convertible Securities”) permitting the Company to purchase an amount of AdvEn’s common voting shares equal to 50 % of the number of common shares issuable upon the conversion of the AdvEn Convertible Note. The Company paid a purchase price of $ 750,000 for the AdvEn Convertible Note and the AdvEn Warrants. In the fourth quarter of 2022, the Company identified indicators of impairment and recorded an impairment loss on the total investment held. On September 11, 2024, the Company entered into a securities exchange agreement with AdvEn in which the Company agreed to cancel and retire the AdvEn Convertible Securities in exchange for a number of shares of Series D preferred stock of AdvEn equal to 110 % of the outstanding amount of the AdvEn Convertible Note that was cancelled multiplied by AdvEn’s initial public offering price, which is convertible into shares and warrants (the “Exchange”) and carries a liquidation preference of $ 1,000 per share. During the Company’s first quarter of 2024 review of the investment, Dominari recorded a $ 0.1 million decrease in the carrying value of this investment during the fiscal year ended December 31, 2024. The investment was valued at $ 0.8 million as of December 31, 2024. Investment in Aeon Partners Fund Series DB (Databricks, Inc.) In the fourth quarter of 2024, the Company partially redeemed a portion of its membership units in Aeon Partner Funds Series DB (Databricks, Inc.). In November of 2024, the Company redeemed 4,638.44 membership units and recognized a gain of approximately $ 31,000 from the carrying value of the investment from December 31, 2023. The Company adjusted the carrying value of the remaining investment based on its November 2024 transaction, resulting in an increase of $ 35,388 in the adjusted carrying value during the fiscal year ended December 31, 2024. The investment was valued at $ 0.5 million as of December 31, 2024. Investment in Automation Anywhere, Inc. In April 2022, the Company entered into a securities purchase agreement (the “Automation Anywhere Securities Purchase Agreement”) with privately held company Automation Anywhere, Inc. During our fourth quarter review of its investment, the Company noted recent secondary transactions indicating a decrease in the implied value of the investment per the Company’s independent third-party valuation. As a result, the Company recorded and impairment charge of approximately $ 80,000 and the investment in Automation Anywhere was valued at $ 0.4 million as of December 31, 2024. F- 16 Note 6. Notes Receivable The following table presents the Company’s notes receivable as of December 31, 2024 and 2023 ($ in thousands): December 31, 2024 Maturity Date Stated Interest Rate Principal Amount Interest Receivable Fair Value Notes receivable, at fair value Convergent convertible note 12/2/2024 8 % $ - $ - $ - Raefan Industries LLC 06/30/2025 8 % $ - $ - $ - American Innovative Robotics 04/01/2027 8 % $ 1,106 $ 23 $ 902 Notes receivable, at fair value - current portion $ - Notes receivable, at fair value - non-current portion $ 902 December 31, 2023 Maturity Date Stated Interest Rate Principal Amount Interest Receivable Fair Value Notes receivable, at fair value Convergent convertible note 12/2/2024 8 % $ 1,006 $ 58 $ 1,064 Raefan Industries LLC 12/31/2024 8 % $ 1,363 $ 751 $ 2,114 American Innovative Robotics 04/01/2027 8 % $ 1,106 $ 22 $ 1,128 Notes receivable, at fair value - current portion $ 3,177 Notes receivable, at fair value - non-current portion $ 1,129 Convergent Therapeutics, Inc. On December 2, 2024, the Convergent Convertible Note matured and for the year ended December 31, 2024, the Company received principal repayments of approximately $ 1 million and interest income of approximately $ 223,000 and a realized loss of $ 6,000 . Raefan Industries LLC During 2024, the Company deemed that the note for Raefan Industries LLC was uncollectible, and as a result, the Company recorded a realized loss as a result of directly writing off the note on Raefan Industries LLC. For the year ended December 31, 2024, a total of $ 2.1 million of principal and interest went uncollected. American Innovative Robotics, LLC During 2024, the Company recorded interest income of approximately $ 89,000 , and an unrealized loss on the note of approximately $ 227,000 on the Robotics Promissory Note for the year ended December 31, 2024. Subsequent to December 31, 2024, the Company received approximately $ 1.1 million for full payment of the outstanding principal amount and accrued interest. Note 7. Fair 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. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. F- 17 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 December 31, 2024 and 2024 ($ in thousands): Fair value measured as of December 31, 2024 Total at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2024 (Level 1) (Level 2) (Level 3) Assets Marketable securities: Equities $ 5,773 $ 4,156 $ 1,617 $ - Total marketable securities $ 5,773 $ 4,156 $ 1,617 $ - Notes receivable at fair value, non-current portion $ 902 $ - $ - $ 902 Fair value measured as of December 31, 2023 Total at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2023 (Level 1) (Level 2) (Level 3) Assets Marketable securities: Equities $ 13,547 $ 13,547 $ - $ - Total marketable securities $ 13,547 $ 13,547 $ - $ - Notes receivable at fair value, current portion $ 3,177 $ - $ - $ 3,177 Notes receivable at fair value, non-current portion $ 1,129 $ - $ - $ 1,129 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): December 31, 2024 Notes receivable at fair value, current portion at December 31, 2023 $ 3,177 Collection of principal outstanding ( 1,000 ) Realized and unrealized loss on note receivable ( 2,121 ) Change in interest receivable ( 56 ) Notes receivable at fair value, current portion at December 31, 2024 $ - Notes receivable at fair value, non-current portion at December 31, 2023 $ 1,129 Unrealized gain (loss) on notes receivable ( 227 ) Notes receivable at fair value, non-current portion at December 31, 2024 $ 902 F- 18 December 31, 2023 Notes receivable at fair value, current portion at December 31, 2022 $ 7,474 Collection of principal outstanding ( 1,000 ) Unrealized loss on note receivable ( 3,254 ) Principal reduced due to receiving shares ( 143 ) Accrued interest receivable 100 Notes receivable at fair value, current portion at December 31, 2023 $ 3,177 Notes receivable at fair value, non-current portion at December 31, 2022 $ 1,100 Unrealized gain on note receivable 6 Accrued interest receivable 23 Notes receivable at fair value, non-current portion at December 31, 2023 $ 1,129 Notes Receivable at fair value As of December 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. For the year ended December 31, 2024 the Company had realized and unrealized losses on notes receivable of $ 2.3 million. The following table provides quantitative information regarding the Company’s Level 3 fair value measurements at December 31, 2024 and 2023: 2024 2023 Valuation technique Discounted cash flow Discounted cash flow Unobservable input and range: Probability of default 20 % 0 - 40 % Discount rate 8 % 8 - 50 % Note 8. Property and Equipment Property and equipment, net, consists of the following as of December 31, 2024 and 2023: Estimated December 31, December 31, Useful Lives 2024 2023 Leasehold improvements Shorter of the remaining lease term or estimated useful life $ 50 $ 50 Machinery, equipment and computer software 1 to 15 years 169 169 Furniture and fixtures 3 to 5 years 208 208 Total $ 427 $ 427 Less: Accumulated depreciation and amortization ( 188 ) ( 83 ) Total property and equipment, net $ 239 $ 344 Depreciation expense was $ 105 ,000 and $ 83 ,000 during the years ended December 31, 2024 and 2023, respectively. F- 19 Note 9. Leases 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 . 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 company. Under Dominari Financial’s Lease, Dominari Financial rents a portion of a floor at 725 Fifth Avenue, New York, New York (the “Premises”). Dominari Financial currently uses the Premises to run its day-to-day operations. The initial term of Dominari Financial’s Lease is seven ( 7 ) years commencing on the date that possession of the Premises is delivered to Dominari Financial. Under Dominari Financial’s Lease, Dominari Financial is required to pay monthly rent equal to $ 49,368 . Effective for the sixth and seventh years of Dominari Financial’s Lease, the rent shall increase to $ 51,868 per month. The Company took possession of the Premises in February 2023. The tables below represent the Company’s lease assets and liabilities as of December 31, 2024 and 2023: December 31, December 31, 2024 2023 Assets: Operating lease right-of-use-assets $ 2,944 $ 3,335 Liabilities: Current Operating 410 421 Long-term Operating 2,629 3,028 $ 3,039 $ 3,449 The following tables summarize quantitative information about the Company’s operating leases, under the adoption of ASC 842: December 31, December 31, 2024 2023 Weighted-average remaining lease term – operating leases (in years) 5.5 6.5 Weighted-average discount rate – operating leases 10.0 % 10.0 % F- 20 During the years ended December 31, 2024 and 2023, the Company recorded approximately $ 0.8 million, both years, of lease expense to current period operations. Year Ended Year Ended December 31, 2024 December 31, 2023 Operating leases Operating lease cost $ 712 $ 668 Short-term lease rent expense 119 105 Net rent expense $ 831 $ 773 Supplemental cash flow information related to leases were as follows: Year Ended Year Ended December 31, December 31, 2024 2023 Operating cash flows - operating leases $ 391 $ 359 Right-of-use assets obtained in exchange for operating lease liabilities $ - $ 2,780 As of December 31, 2024, future minimum payments during the next five years and thereafter are as follows: Operating Leases Year Ended December 31, 2025 $ 698 Year Ended December 31, 2026 685 Year Ended December 31, 2027 685 Year Ended December 31, 2028 766 Year Ended December 31, 2029 784 Thereafter 376 Total 3,994 Less present value discount ( 955 ) Operating lease liabilities $ 3,039 F- 21 Note 10. 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 years ended December 31, 2024, and 2023 are as follows: As of December 31, 2024 2023 Convertible preferred stock 34 34 Warrants to purchase common stock 444,796 444,796 Restricted stock awards 50,000 136,309 Options to purchase common stock 376,654 420,168 Total 871,484 1,001,307 Note 11. Stockholders’ Equity and Convertible Preferred Stock Common Stock As of December 31, 2024, there are 7,037,022 shares of common stock issued and 6,976,874 shares outstanding. Treasury Stock There are 60,148 shares of treasury stock as of December 31, 2024. Series D Convertible Preferred Stock In connection with the acquisition of North South’s patent portfolio in September 2013, the Company issued 1,379,685 shares of its Series D Convertible Preferred Stock (“Series D Preferred Stock”) to the stockholders of North South. Each share of Series D Preferred Stock has a stated value of $ 0.0001 per share and is convertible into 10 over 1,373 of a share of Common Stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder of Series D Preferred Stock shall be entitled to receive, for each share of Series D Preferred Stock held, a preferential amount in cash equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of Common Stock on an “as converted” basis. Each holder of Series D Preferred Stock shall be entitled to vote on all matters submitted to its stockholders and shall be entitled to such number of votes equal to the number of shares of Common Stock such shares of Series D Preferred Stock are convertible into at such time, taking into account the beneficial ownership limitations set forth in the governing Certificate of Designation and the conversion limitations described below. The conversion ratio of the Series D Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. As of December 31, 2024 and 2023, 5,000,000 Series D Preferred Stock was designated; 3,825 and 3,825 shares remained issued and outstanding. Series D-1 Convertible Preferred Stock The Company’s Series D-1 Convertible Preferred Stock (“Series D-1 Preferred Stock”) was established on November 22, 2013. Each share of Series D-1 Preferred Stock has a stated value of $ 0.0001 per share and is convertible into 10 over 1,373 of a share of Common Stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder of Series D-1 Preferred Stock shall be entitled to receive, for each share of Series D-1 Preferred Stock held, a preferential amount in cash equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of Common Stock on an “as converted” basis. Each holder of Series D-1 Preferred Stock shall be entitled to vote on all matters submitted to the Company’s stockholders and shall be entitled to such number of votes equal to the number of shares of Common Stock such shares of Series D-1 Preferred Stock are convertible into at such time, taking into account the beneficial ownership limitations set forth in the governing Certificate of Designation. The conversion ratio of the Series D-1 Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company commenced an exchange with holders of Series D Convertible Preferred Stock pursuant to which the holders of the Company’s outstanding shares of Series D Preferred Stock acquired in the Merger could exchange such shares for shares of the Company’s Series D-1 Preferred Stock on a one-for-one basis. As of December 31, 2024 and 2023, 5,000,000 Series D-1 Preferred Stock was designated; 834 and 834 shares remained issued and outstanding. F- 22 Warrants A summary of warrant activity for the years ended December 31, 2024, is presented below: Warrants Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2023 444,796 $ 29.25 - 2.20 Granted - $ - - - Outstanding as of December 31, 2024 444,796 $ 29.25 - 1.20 All current outstanding warrants were issued prior to 2023 in connection with prior raises by the Company. Restricted Stock Awards and Stock Options On October 7, 2022, the Company adopted the 2022 Equity Incentive Plan (“2022 Plan”). The 2022 Plan provided for the issuance of up to 1,100,000 shares in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. The 2022 Plan expires on January 1, 2032, and is administered by Dominari Holdings Board of Directors. In October 2023, the Company issued an aggregate of 96,311 shares of the Company’s common stock to a member of the Company’s Board of Directors for services rendered. These restricted stock awards began vesting annually in three increments beginning on April 13, 2024. During the year ended December 31, 2024, 32,103 shares were vested and the remaining shares forfeited. On June 11, 2024, the Company executed grant agreements with each of Messrs. Anthony Hayes and Kyle Wool pursuant to their employment agreements with the Company, and in accordance with the Company’s 2022 Equity Incentive Plan. Pursuant to the grant agreements, each received 154,559 shares of the Company’s common stock with a grant value of $ 2.18 . Upon issuance, the shares were fully-vested and nonforfeitable with a total fair value of approximately $ 0.7 million. On December 31, 2024, the Company executed grant agreements with each of Messrs. Anthony Hayes and Kyle Wool pursuant to their employment agreements with the Company, and in accordance with the Company’s 2022 Equity Incentive Plan. Pursuant to the grant agreements, each received 309,118 shares of the Company’s common stock with a grant value of $ 0.98 . Upon issuance, the shares were fully-vested and nonforfeitable with a total fair value of approximately $ 0.7 million. F- 23 A summary of restricted stock awards activity for the years ended December 31, 2024 and 2023, is presented below: Weighted Number of Average Restricted Grant Day Stock Awards Fair Value Nonvested at December 31, 2022 8,068 $ 5.90 Granted 1,315,777 $ 2.27 Vested ( 1,187,536 ) 2.30 Nonvested at December 31, 2023 136,309 $ 2.26 Granted 977,354 $ 1.36 Vested ( 991,957 ) 2.20 Forfeited ( 71,706 ) 2.31 Nonvested at December 31, 2024 50,000 $ 1.35 Stock-based compensation associated with the amortization of restricted stock awards expense was approximately $ 1.4 million and $ 2.7 million for the years ended December 31, 2024, and 2023, respectively. All stock compensation was recorded as a component of general and administrative expenses. As of December 31, 2024, there is approximately $ 50,000 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 year ended December 31, 2024 and 2023 is presented below: Weighted Average Weighted Remaining Average Total Contractual Number of Exercise Intrinsic Life Shares Price Value (in years) Outstanding as of December 31, 2022 31,193 $ 302.97 $ - 7.9 Employee options granted 395,714 3.42 - 9.4 Employee options forfeited ( 5,882 ) 5.95 - - Employee options expired ( 857 ) $ 9,719.07 - - Outstanding as of December 31, 2023 420,168 $ 5.80 $ - 9.3 Employee options forfeited ( 43,334 ) $ 3.10 - - Employee options expired ( 180 ) $ 3,832.72 - - Outstanding as of December 31, 2024 376,654 $ 4.29 $ - 8.2 Options vested and exercisable 194,985 $ 5.03 $ - 8.1 Stock-based compensation associated with the amortization of stock option expense was approximately $ 0.3 million and $ 0.2 million for the years ended December 31, 2024, and 2023, 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 $ 0.1 million. F- 24 Note 12. Revenue The following table presents our total revenues disaggregated by revenue type for the years ended December 31, 2024, and 2023 (in thousands): Years Ended December 31, 2024 2023 Underwriting services $ 11,362 $ 594 Commissions 6,065 1,096 Account advisory and management 411 209 Other revenue 308 140 Total $ 18,146 $ 2,039 Note 13. Commitments and Contingencies Legal Proceedings The Company may be subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries may be named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims may seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries may also be subject to other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. Due to the inherent difficulty of predicting the outcome of litigation and other claims the Company cannot state with certainty what the eventual outcome of potential litigation or other claims will be. Notwithstanding this uncertainty, the Company does not believe that the results of these potential claims are likely to have a material effect on its financial position or results of operations. 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 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. Note 14. Income Taxes The income tax provision consists of the following ($ in thousands): For the years ended December 31, 2024 2023 (Revised *) Federal Current $ - $ - Deferred ( 2,322 ) ( 1,141 ) Increase (decrease) in valuation allowance 2,322 1,141 State and local Current Deferred 1,897 2,277 Increase (decrease) in valuation allowance ( 1,897 ) ( 2,277 ) Income Tax Provision (Benefit) $ - $ - F- 25 The following is a reconciliation of the U.S. federal statutory rate to the effective income tax rates for the years ended December 31, 2024 and 2023: For the years ended December 31, 2024 2023 (Revised *) U.S. Statutory Federal Rate 21.00 % 21.00 % State Taxes, Net of Federal Tax Benefit 37.42 % ( 3.59 )% Sec. 162m disallowed compensation ( 7.65 )% - % Other permanent differences ( 0.23 )% ( 0.54 )% State rate change in effect ( 47.16 )% ( 4.27 )% Deferred tax adjustment for stock based compensation ( 0.67 )% ( 17.30 )% Decrease due to change in Federal NOL and other true ups 1.90 % ( 0.26 )% Change in Valuation Allowance ( 4.61 )% 4.96 % Income Tax Benefit 0.00 % 0.00 % As of December 31, 2024 and 2023, the Company’s deferred tax assets and liabilities consisted of the effects of temporary differences attributable to the following ($ in thousands): As of December 31, 2024 2023 (Revised *) Deferred tax assets: Net-operating loss carryforward $ 35,913 $ 34,467 Stock based compensation 289 443 Patents & licenses 5,339 8,061 Transaction costs 160 209 Research & development 1,412 1,937 Operating lease liability 870 1,202 Investment portfolio and other 5,305 2,880 Total deferred tax assets 49,288 49,199 Valuation allowance ( 48,403 ) ( 47,979 ) Deferred tax asset, net of allowance $ 885 $ 1,220 Deferred tax liability: Depreciation ( 42 ) ( 57 ) Right of use asset ( 843 ) ( 1,163 ) Total deferred tax liability $ - $ - In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the Company’s history of cumulative net losses, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has determined that, based on objective positive and negative evidence currently available, it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, the Company has provided a full valuation allowance for the deferred tax assets as of December 31, 2024 and 2023. As of December 31, 2024, the change in valuation allowance is approximately $ 0.4 million. As of December 31, 2024, the Company has approximately $ 42.1 million federal net operating loss carryovers (“NOLs”), which expire from 2033 through 2037, and $ 79.8 million of federal NOLs which will never expire. The Company has approximately $ 154.4 million of state and city NOLs, which expire from 2035 through 2044. As of December 31, 2024, the Company also had federal research and development tax credit carryforwards of $ 0.2 million which may be available to offset future income tax liabilities and begin to expire in 2042. (*) The Company revised certain balances in the deferred tax assets and liabilities schedule to correct immaterial errors. Deferred tax assets for net-operating losses carryforward were increased and stock based compensation was decreased for a reclassification of the benefits associated with vested RSU’s that should have increased NOLs in prior periods and stock based compensation were decreased for expired stock options benefits that were no longer available for tax deduction purpose. The decrease in total deferred tax assets was equally offset by the decrease in the valuation allowance with no effect to the deferred tax asset or the consolidated financial statements. The change in the total deferred tax assets had no effect on total assets, net loss, stockholders’ equity or cash flows. The amounts revised are presented below: Year Ended December 31, 2023 As Reported Correction As Adjusted Net operating losses $ 33,124 $ 1,343 $ 34,467 Stock based compensation $ 9,754 $ ( 9,311 ) $ 443 Total deferred tax assets $ 57,166 $ ( 7,967 ) $ 49,199 Valuation allowance $ ( 55,946 ) $ 7,967 $ ( 47,979 ) F- 26 Utilization of the U.S. NOL carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 % over a three-year period. If the Company experiences an ownership change, as defined by Section 382, at any time since inception, utilization of the NOL carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL carryforwards or research and development tax credit carryforwards before utilization. The Company determined an ownership change occurred on September 10, 2013, and any NOLs generated prior to this date are therefore limited by Section 382. Any carryforwards that will expire prior to utilization due to this limitation were removed from deferred tax assets, with a corresponding reduction of the valuation allowance. The Company has not yet determined if any additional ownership changes occurred after September 10, 2013. Any past or future ownership changes may limit the Company’s ability to utilize remaining tax attributes. Due to the existence of the valuation allowance, limitations created by the 2013 ownership change and any potential future ownership changes will not impact the Company’s effective tax rate. As of December 31, 2024 and 2023, no liability for unrecognized tax benefit was required to be reported. The Company’s policy is to record interest and penalties related to income taxes outside of its income tax provision and classify as interest and penalties in general and administrative expense in the statement of operations. As of December 31, 2024 or 2023, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the Company’s statement of operations. The Company does not expect any significant changes in its unrecognized tax benefits in the next year. The Company files U.S. federal and state income tax returns (New York, New York City, Virginia, and Texas). As of December 31, 2024, the statute of limitations for assessment by the Internal Revenue Service and state tax authorities remains open for all years since 2021. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state authorities to the extent utilized in a future period. There are no audits pending in any of the above-mentioned jurisdictions during 2024 and 2023. The Company believes that its income tax positions would be sustained upon an audit and does not anticipate any adjustments that would result in material changes to its consolidated financial position. Note 15. Regulatory Dominari Securities is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3- 1), which requires the maintenance of a minimum level of net capital, and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. Dominari Securities calculates net capital under Rule 15c3-1. Rule 15c3-1 also provides that equity capital may not be withdrawn if the resulting net capital ratio would exceed 10 to 1. On December 31, 2024, Dominari Securities had net capital (as defined) of $ 14,030,196 which was $ 13,659,041 in excess of its required minimum net capital of $ 371,155 . Dominari Securities is exempt from Rule 15c3-3 of the SEC under paragraph (k)(2)(ii). Dominari Securities’ other business activities; which consist of: private placements, direct mutual funds, direct variable annuities on a subscription way basis where the funds are payable to the issuer or its agent and not to Dominari Securities. Dominari Securities also provides investment advisory services, annuity, and insurance products of certain insurance carriers as an insurance agency through independent and affiliated brokers, are exempt as contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240. Dominari Securities is exempt from the Securities and Exchange Commission Rule 15c3-3 pursuant to the exemptive provisions of sub-paragraph (k)(2)(ii) thereof, and therefore, is not required to maintain a “Special Reserve Bank Account for the Exclusive Benefit of Customers.” F- 27 Note 16. Related Party Transactions In 2021, the Company engaged the services of Revere Securities, LLC (“Revere”) to assist in the management and building of the Company’s investment processes. Kyle Wool, one of the Company’s board members, was previously a member of the board of directors of Revere until June 2023 and currently holds approximately 30 % of Revere’s outstanding equity. From time to time, the Company participates in offerings of securities as an underwriter in transactions in which Revere is also participating as an underwriter. On such transactions, the Company earned $ 930,000 for the year ended December 31, 2024. Additionally, the Company incurred referral fees of approximately $ 50,000 and $ 80,000 for the year ended December 31, 2024 and 2023, respectively. The Company incurred fees on behalf of Series which were intended for future expenses of each Series entity. As of December 31, 2024, such amount was $ 157,000 and is included in other current liabilities on the accompanying consolidated balance sheet. During the year December 31, 2024, the Company entered into employee loans with various employees totaling $ 2.4 million. The terms of the loan agreements range from 3 years to 7 years, with an average annual interest rate of approximately 3.2 %. The total interest received for the year ended December 31, 2024 was approximately $ 39,000 . As of December 31, 2024, the total outstanding balance of the employee loans was $ 2.1 million included in loans to employees on the accompanying consolidated balance sheet. Certain of the Company’s investments are made through related party special purpose vehicles. These are included within Note 5 of the consolidated financial statements and include the following investments: investment in Revere Master SPV Series 1 (Qxpress Pte Ltd), investment in Dominari Master SPV LLC Series VI (X.AI Corp. d.b.a. xAI), investment in Dominari Master SPV LLC Series XI (Cerebras Systems Inc.), and investment in Dominari Master SPV LLC Series XII (Groq, Inc.). The Company earns revenues for managing certain pooled investment vehicles which are related parties. These include the entirety of the management fee revenues ($ 0.1 million) included within the advisory and management fees caption within the statement of operations. As of December 31, 2024, the total amount of contract liabilities disclosed in Note 2 represented amounts received in advance of revenue earned on managing such related party investment vehicles. Note 17. Segment Reporting Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is the Chief Executive Officer, in deciding how to allocate resources to an individual segment and in assessing performance. The CODM reviews financial information for the purposes of making operating decisions, allocating resources, and evaluating financial performance of the business of the reportable operating segments, based on discrete financial information. The measures of segment profitability that are most relied upon by the CODM are gross revenues and net loss. 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. Prior to the FPS Acquisition, the Company operated as a single operating segment comprised of Legacy AIkido. The 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. ” F- 28 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. Additionally, the CODM views the expenses listed below to be significant in their analysis. Year Ended December 31, 2024 Dominari Financial Legacy AIkido Pharma Consolidated Revenue $ 18,146 $ - $ 18,146 Operating Costs Compensation and benefits 17,422 4,558 21,980 Professional and consulting fees 1,358 1,358 2,716 Data processing 1,007 78 1,085 Other expenses 2,032 1,860 3,892 Loss from operations ( 3,673 ) ( 7,854 ) ( 11,527 ) Other (expenses) income Other income - 86 86 Interest income 667 293 960 Gain on marketable securities 2,158 3,085 5,243 Unrealized loss on note receivable - ( 2,347 ) ( 2,347 ) Change in carrying value of investments - ( 7,118 ) ( 7,118 ) Total other (expenses) income 2,825 ( 6,001 ) ( 3,176 ) Net loss $ ( 848 ) $ ( 13,855 ) $ ( 14,703 ) Total assets $ 20,204 $ 26,921 $ 47,125 Year Ended December 31, 2023 Dominari Financial Legacy AIkido Pharma Consolidated Revenue $ 2,039 $ - $ 2,039 Operating Costs Compensation and benefits 10,548 3,415 13,963 Professional and consulting fees 1,869 3,259 5,128 Data processing 806 126 932 Other expenses 1,266 2,546 3,812 Loss from operations ( 12,450 ) ( 9,346 ) ( 21,796 ) Other (expenses) income Other income - 36 36 Interest income 229 487 716 Gain on marketable securities - 630 630 Unrealized loss on note receivable - ( 3,248 ) ( 3,248 ) Change in carrying value of investments - 780 780 Total other (expenses) income 229 ( 1,315 ) ( 1,086 ) Net loss $ ( 12,221 ) $ ( 10,661 ) $ ( 22,882 ) Total assets $ 8,561 $ 48,997 $ 57,558 F- 29 Note 18. Subsequent Events February 2025 Registered Direct Offering and Private Placement On February 10, 2025, the Company entered into securities purchase agreements with certain accredited investors for the sale by the Company of 1,439,467 registered shares of its common stock, unregistered Series A warrants to purchase up to 1,439,467 shares of common stock and unregistered Series B warrants to purchase up to 1,439,467 shares of common stock at a combined purchase price of $ 3.47 per share and accompanying warrants in a direct offering. In a concurrent private placement, the Company entered into securities purchase agreements with certain accredited investors for the sale of 2,436,587 unregistered shares of common stock, unregistered Series A warrants to purchase up to 2,436,587 shares of common stock and unregistered Series B warrants to purchase up to 2,436,587 shares of common stock at a combined purchase price of $ 3.47 per share and accompanying warrants (the “February 2025 Financings”). The Series A warrants are exercisable immediately upon issuance at an exercise price of $ 3.72 per share and will expire five years from the date of issuance. The Series B warrants are exercisable immediately upon issuance at an exercise price of $ 4.22 per share and will expire five years from the date of issuance. The gross proceeds to the Company from the February 2025 Financings were approximately $ 13.5 million, before deducting fees and other offering expenses, and excluding the proceeds, if any, from the cash exercise of the warrants. The securities in the concurrent private placement were offered under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder and, along with the shares of common stock underlying such warrants, have not been registered under the Securities Act or applicable state securities laws. Accordingly, the unregistered shares, the warrants, and the shares of common stock underlying the warrants may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements. Certain officers, directors, employees and members of the Company’s advisory board participated in the February 2025 Financings on the same terms as the other investors. Advisory Agreements On February 10, 2025, the Company entered into certain advisory agreements (the “Advisory Agreements”) with five newly appointed members of its advisory board for initial appointments of two years. The Company has issued an aggregate of 2,550,000 unregistered shares (the “Advisory Shares”) to the newly appointed members with an additional issuance of an aggregate of 850,000 Advisory Shares to be issued upon certain Company milestones being met. The Advisory Shares were offered in a private placement under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder and have not been registered under the Securities Act or applicable state securities laws. Accordingly, the Advisory Shares may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements. The Company has agreed to file one or more registration statements with the SEC covering the resale of the unregistered shares of Common Stock issued pursuant to the Advisory Agreements. Bitcoin ETF Investment Strategy In February 2025, the Company implemented a bitcoin investment strategy through investments in bitcoin Exchange-Traded Funds (“ETFs”) as a treasury reserve asset on an ongoing basis, subject to market conditions and the Company’s anticipated cash needs. The Company views bitcoin ETFs as a reliable store of value, and believes bitcoin has compelling characteristics as a scarce and finite asset that can serve as a reasonable inflation hedge and safe haven amid global instability. While a highly volatile asset, bitcoin’s price has also appreciated significantly since bitcoin’s inception. The Company believes that a substantial portion of bitcoin’s appreciation is attributable to the view that bitcoin is or will become a reliable store of value. F- 30 As of March 31, 2025, the Company (via Dominari Holdings Inc.) had approximately $ 2,000,000 in its bitcoin treasury through holdings of Blackrock’s iShares Bitcoin Trust ETF. The Company expects to continue to invest a portion of its excess cash and earnings in bitcoin in furtherance of its bitcoin treasury strategy. Strategic Initiative with Hut 8 Corp. On February 18, 2025, the Company announced the creation of American Data Centers Inc. (“ADC”), a strategic venture focused on acquiring, building out and transforming data center campuses across the United States to meet the accelerated demand for advanced computing. On March 31, 2025, ADC completed a series of transactions providing for the launch of American Bitcoin Corp., a strategic initiative focused on industrial-scale Bitcoin mining and strategic Bitcoin reserve development and monetization (the “Transactions”). To effectuate the Transactions, ADC, Hut 8 Corp., a Delaware corporation, and certain of its subsidiaries (“Hut 8”), and the stockholders of ADC entered into a Contribution and Stock Purchase Agreement, pursuant to which Hut 8 contributed to ADC substantially all of Hut 8’s wholly owned ASIC bitcoin miners in exchange for newly issued stock representing 80 % of the issued and outstanding equity interests of ADC after giving effect to the issuance. At the closing of the Transactions, ADC changed its name to American Bitcoin Corp. (“American Bitcoin”). In connection with the Transactions, American Bitcoin and Hut 8 also entered into definitive agreements providing for Hut 8 and its personnel to provide day-to-day commercial and operational management services and ASIC colocation services to American Bitcoin, in each case on an exclusive basis for so long as such agreements remain in effect. Hut 8 and its personnel will also provide back-office support services to American Bitcoin pursuant to a shared services agreement with American Bitcoin. As a result of the Transactions, American Bitcoin has become a subsidiary of Hut 8 in which the Company holds a 3.17 % minority interest in American Bitcoin. Dividend On February 11, 2025, the Company declared a special cash dividend on our common stock and pursuant to the terms of certain common stock purchase warrants issued in our recently completed financings (on an as-exercised basis) of $ 0.32 per share, which was paid on March 3, 2025, to shareholders and certain warrant holders of record as of the close of business on February 24, 2025. American Innovative Robotics, LLC On March 24, 2025, the Company received approximately $ 1.1 million for full payment of the outstanding principal amount and accrued interest of its note receivable from American Innovative Robotics, LLC. F- 31 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable.