What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-11-08 · 73 added, 72 removed, 109 unchanged (57% of the section changed)

49 unchanged sentences

and is a wholly-owned subsidiary of Dominari Financial.

On October 13, 2023, the Company entered into

two separate Limited Liability Company Agreements with Dominari Manager LLC (“Manager”) and Dominari IMLLC (“Investment

Manager”) which are both wholly owned subsidiaries and whose operations are included within the consolidated condensed financial

statements of Dominari.

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.

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

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Our actual results could differ significantly from these estimates under different assumptions and conditions.

There have been no material changes to our critical

accounting estimates as compared to the critical accounting estimates discussed in the Form 10-K.

Refer to Note 3 of the Annual Report for a discussion

of our significant accounting policies.

There have been no material changes to our critical accounting estimates

as compared to the critical accounting estimates discussed in the Form 10-K.

Refer to Note 3 of the Annual Report for a discussion of our significant

accounting policies.

Recently Issued Accounting Pronouncements

See Note 3 to the unaudited condensed consolidated

financial statements for a discussion of recent accounting standards.

See Note 3 to the unaudited condensed consolidated financial statements

for a discussion of recent accounting standards.

Results of Operations

Three months ended September 30, 2024, compared

to the three months ended September 30, 2023

During the three months ended September 30, 2024

and 2023, we recognized approximately $4.0 million and $1.0 million in revenue from operations, respectively, primarily driven by the

commissions and underwriting revenue earned by Dominari Securities and Dominari Manager LLC (“Manager”).

During the three

months ended September 30, 2024 and 2023, we incurred a loss from operations of approximately $3.2 million and $3.1 million, respectively.

During the three months ended September 30, 2024

and 2023, other expenses was approximately $1.0 million and $0.4 million, respectively.

The activity described above for the three months

ended September 30, 2024 and 2023, is primarily a result of the Company’s entrance into the financial services industry, overall

volatility in investment valuations due to macroeconomic uncertainty impacting marketable securities and the change in carrying value

of long-term equity investments.

Specifically:

Marketable securities - we recognized a realized gain of approximately $0.4 million for the three months ended September 30, 2024.

We also recognized an unrealized loss of approximately $0.4 million and dividend income of $78,000 for the three months ended September 30, 2024.The increase of approximately $1.2 million in realized gains over the three months ended September 30, 2023, was driven by both market improvement and an increase in sale activity resulting in more realized gains.

Notes receivable - we recognized $0.4 million realized and unrealized loss over the three months ended September 30, 2024, versus no gain or loss during the three months ended September 30, 2023 on notes receivable.

Long-term equity investments - changes over the three months ended September 30, 2024 and 2023 are a function of observable market transactions which resulted in a decrease of approximately $1.0 million on the adjusted carrying value of the investments for the three months ended September 30, 2024, which is an increase of approximately $0.5 million from the three months ended September 30, 2023.

Nine months ended September 30, 2024, compared

to the nine months ended September 30, 2023

During the nine months ended September 30, 2024,

Three months ended March 31, 2025, compared to the three months

ended March 31, 2024

During the three months ended March 31, 2025 and

2024, we recognized approximately $8.1 million and $1.4 million in revenue from operations, respectively, primarily driven by the commissions

and underwriting revenue earned by Dominari Securities and Manager.

During the nine months ended September 30, 2024 and 2023, we incurred

a loss from operations of approximately $8.7 million and $16.0 million, respectively.

During the nine months ended September 30, 2024

and 2023, other expenses was approximately $7.0 million and $17,000, respectively.

The activity described above for the nine months

ended September 30, 2024 and 2023, is primarily a result of the Company’s entrance into the financial services industry, overall

volatility in investment valuations due to macroeconomic uncertainty impacting marketable securities and the change in carrying value

of long-term equity investments.

and underwriting revenue earned by Dominari Securities and Dominari Manager LLC (“Manager”).

During the three months ended

March 31, 2025 and 2024, we incurred a loss from operations of approximately $32.0 million and $2.8 million, respectively.

in losses from operations was primarily driven by increases in general and administrative costs and expenses, specifically increases in

stock based compensation expense of $7.7 million of restricted stock and $20.9 million of advisory agreement shares issued compared to

$187k during the same quarter in the prior year.

During the three months ended March 31, 2025 and 2024, other expenses

was approximately $0.5 million and $2.6 million, respectively.

The activity described above for the three months

ended March 31, 2025 and 2024, is primarily a result of the Company’s continued increase in activities related to the financial

services industry, overall volatility in investment valuations due to macroeconomic uncertainty impacting marketable securities and the

change in carrying value of long-term equity investments.

Specifically:

Marketable securities - we recognized a realized gain of approximately $3.8 million for the nine months ended September 30, 2024.

We recognized an unrealized loss of $3.4 million and dividend income of $0.4 million for the nine months ended September 30, 2024.

The increase of approximately $5.0 million in realized gains over the nine months ended September 2023 was driven by both market improvement and an increase in sale activity resulting in more realized gains.

Notes receivable - the changes over the nine months ended September 30, 2024 and 2023 which resulted in an increase in net realized and unrealized loss of approximately $1.9 million on the adjusted fair value of our notes receivable during the nine months ended September 30, 2024.

This was largely driven by the adjustment to the fair value from the direct write off of the note receivable from Raefan Industries LLC.

Long-term equity investments -the changes over the nine months ended September 30, 2024 and 2023 are a function of observable market transactions which resulted in a decrease of approximately $6.4 million on the adjusted carrying value of the investments for the nine months ended September 30, 2024 and approximately $6.0 million greater than that of the nine months ended September 30, 2023.

Marketable securities - we recognized a realized loss of approximately

$1 million for the three months ended March 31, 2025.

We also recognized an unrealized gain of approximately $210,000 and dividend income

of $96,000 for the three months ended March 31, 2025.

The decrease of approximately $1.6 million in realized gains over the three months

ended March 31, 2024, was driven by both market volatility and an decrease in sale activity resulting in less realized gains.

Notes receivable - we recognized $0.2 million realized and unrealized gain over the three months ended March 31, 2025, versus $0.9

million loss during the three months ended March 31, 2024 on notes receivable.

Long-term equity investments - changes over the three months ended March 31, 2025 and 2024 are a function

of observable market transactions which resulted in a increase of approximately $0.3 million on the adjusted carrying value of the investments

for the three months ended March 31, 2025, which is an increase of approximately $2.8 million from the three months ended March 31, 2024.

Liquidity and Capital Resources

We continue to incur ongoing administrative and

other expenses, including public company expenses.

While we continue to implement our business strategy, we intend to finance our activities

We continue to incur ongoing administrative and other expenses, including

public company expenses.

While we continue to implement our business strategy, we intend to finance our activities through:

● managing current cash and cash equivalents on hand from our past debt and equity offerings;

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sustain operations that we need to execute our longer-term business plan to support our transition into the financial services industry.

Our working capital amounted to approximately $22.3 million as of September 30, 2024.

Our working capital amounted to approximately $28.5 million as of March 31, 2025.

We believe our cash and cash equivalents and marketable

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Cash Flows from Operating Activities

For the nine months ended September 30, 2024 and

2023, net cash used in operations was approximately $11.9 million and $17.5 million, respectively.

For the three months ended March 31, 2025 and

2024, net cash provided by/(used in) operations was approximately $1.2 million and $(8.6) million, respectively.

The cash provided by

operating activities for the three months ended March 31, 2025, is primarily attributable to decreases in receivable from clearing brokers

of $4.8 million, increase in accrued commissions of $1.2 million, increase in stock based comp of $28.6 million, changes in operating

assets and liabilities of approximately $1.7 million, realized loss on marketable securities of approximately $1.4 million, offset by

a net loss of approximately $32.4 million and increase in due from related party of $2.5 million.

The cash used in operating activities

for the nine months ended September 30, 2024, is primarily attributable to a net loss of approximately $15.8 million, $3.8 million realized

gain on marketable securities and changes in operating assets and liabilities of $5.7 million, of which $6.5 million is clearing broker

deposits, partially offset by approximately $6.4 million of change in carrying value of long-term equity investment, $3.4 million unrealized

loss on marketable securities and $2 million unrealized and realized loss on note receivable.

The cash used in operating activities for

the nine months ended September 30, 2023, is primarily attributable to a net loss of approximately $16 million, approximately $1.2 million

of realized loss on marketable securities and changes in operating assets and liabilities of $4.4 million, partially offset by $1.4 million

stock-based compensation expense and approximately $0.9 million in unrealized gain on marketable securities.

for the three months ended March 31, 2024, is primarily attributable to a net loss of approximately $5.4 million, approximately $0.5 million

of unrealized gain on marketable securities increase in clearing broker deposits of $6.4 million, partially offset by change in carrying

value of long term investments of approximately $2.5 million, and changes in operating assets and liabilities of $1.3 million.

Cash Flows from Investing Activities

For the nine months ended September 30, 2024 and

2023, net cash provided by (used in) investing activities was approximately $12.5 million and $(10.4) million, respectively.

provided by investing activities for the nine months ended September 30, 2024, primarily resulted from our sales of marketable securities

of approximately $14.8 million and the sale of a short-term investments of $3.5 million, partially offset by purchase of marketable securities

of $4.0 million and funds to employee loans of $2.4 million.

The cash used in investing activities for the nine months ended September

30, 2023, primarily resulted from our purchase of marketable securities of approximately $34.1 million and the acquisition of FPS of approximately

$1.1 million, partially offset by our sale of marketable securities approximately of $24.6 million.

The Company also collected approximately

$0.8 million in principal related to its short-term notes.

For the three months ended March 31, 2025 and

2024, net cash (used in) provided by investing activities was approximately $(5.4) million and $7.7 million, respectively.

The cash used

in investing activities for the three months ended March 31, 2025, primarily resulted from our purchases of marketable securities of approximately

$9.6 million, partially offset by sale of marketable securities of $1.0 million collection of principal on notes receivable of $1.1 million,

sale of long term investments $0.5 million and collection of principal from employee loans of $0.1 million.

The cash provided by investing

activities for the three months ended March 31, 2024, primarily resulted from our sale of marketable securities of approximately $8.8

million and collection of principal on notes receivable $0.2 million, partially offset by funds to employee loans $(1.3) million.

Cash Flows from Financing Activities

For the nine months ended September 30, 2024,

there are no cash flows from financing activities.

For the nine months ended September 30, 2023, cash used in financing activities was

approximately $0.9 million, which reflects the cost for purchase of treasury stock of approximately $0.9 million.

Quantitative and Qualitative Disclosures

About Market Risk.

For the three months ended March 31, 2025, cash

provided by financing activities was approximately $6.4 million, primarily driven by fund raising related to issuance of common stock

of $13.5 million, partially offset by payment of dividends $(7.1) million.

For the three months ended March 31, 2024, there are no cash

flows from financing activities.

Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis