What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-03-31 compared with 2025-04-15 · 1209 added, 842 removed, 596 unchanged (77% of the section changed)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firms (PCAOB ID Number 688 ) F-2

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 199 ) F-2

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688) F-4

Consolidated Balance Sheets as of December 31, 2025 and 2024 F-5

Consolidated Statements of Operations for the Years ended December 31, 2025 and 2024 F-6

Consolidated Statements of Changes in and Stockholders’ Equity

for the Years Ended December 31, 2024 and 2023 F-5

Consolidated Statements of Changes in and Stockholders’ Equity for the Years Ended December 31, 2025 and 2024 F-7

Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 F-8

Notes to the Consolidated Financial Statements F-9

Report of Independent Registered Public Accounting Firm

the Shareholders and Board of Directors of

Holdings Inc.

on the Financial Statements

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.

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.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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.

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.

Report of Independent Registered Public Accounting

To the Stockholders and Board of Directors of

Dominari Holdings Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Dominari Holdings, Inc.

(the “Company”) as of December 31, 2025, the related consolidated statements of operations,

changes in stockholders’ equity and cash flows for the year ended December 31, 2025, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December

31, 2025, 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

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 audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit 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 audit 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.

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.

Audit Matters

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.

of Long Term Equity Investments

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.

Our audit 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 audit 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 audit provide s 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 Marketable Securities and Securities Owned

As discussed within Notes 2 and 7, as of

December 31, 2025, the Company had approximately $46.5 million of marketable securities as well as $9.8 million of securities owned.

The Company's accounting policies for such instruments are discussed within Note 3.

Certain of these investments are subject to

restrictions and were classified as Level 2 or Level 3 in the fair value hierarchy as of December 31, 2025 as the fair value of such

investments was measured using significant other observable inputs or using significant unobservable inputs.

We determined the

valuation of these Level 2 and Level 3 investments subject to restrictions to be a critical audit matter because the assumptions

used to measure fair value involved subjective auditor judgment and changes in these assumptions could have had a significant impact

on the investments’ estimated fair values.

Specifically, subjective auditor judgment was required to assess assumptions

related to the discounts for lack of marketability.

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.

have served as the Company’s auditor since 2022.

DOMINARI HOLDINGS

(1) Reviewed the Company’s accounting policy and evaluated its consistency and compliance

generally accepted accounting principles by obtaining and reviewing management’s analyses,

(2) Tested the mathematical accuracy of management’s valuations,

(3) Independently priced marketable securities against reliable third party sources, compared such

prices against those used by the Company,

(4) Involved internal valuation professionals with specialized skills and knowledge to assist in

evaluating the Company’s methodologies applied, estimates used, and fair values concluded, and

(5) Reviewed managements application (or lack thereof) for any discount for lack of marketability

against applicable authoritative guidance.

Valuation of Employee and Non-Employee Stock-Based Compensation

As discussed within Note 11, during the

year ended December 31, 2025, the Company recorded approximately $33.9 million of employee stock-based compensation expense and

$21.0 million of non-employee stock-based compensation expense.

The Company's accounting policy for stock-based compensation is

discussed within Note 3.

Auditing the Company’s accounting for stock-based compensation required auditor judgment due to the

subjectivity used to estimate the fair value of the awards granted.

The following are the primary procedures we performed

to address this critical audit matter:

(1) Tested the mathematical accuracy of management’s valuations,

(2) Involved valuation professionals with specialized skills and knowledge to assist in evaluating the

Company’s fair value estimates for a selection of awards and evaluate the methodologies applied and fair values

(3) Evaluated the significant assumptions used by management to calculate the fair value,

(4) Developed independent estimates of fair value and compared to fair

values determined by management, for those grants selected for testing.

/s/ CBIZ CPAs P.C.

We have served as the Company’s auditor

since 2022 (such date takes into account the acquisition of the attest business of Marcum llp

by CBIZ CPAs P.C.

effective November 1, 2024).

New York, New York

March 31, 2026

Report of Independent Registered Public Accounting

To the Shareholders and Board of Directors of

Dominari Holdings Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Dominari Holdings Inc.

(the “Company”) as of December 31, 2024, the related consolidated statements of operations,

changes in stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year 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

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 audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.

/s/ Marcum llp

We have served as the Company’s auditor from 2022 to 2025.

April 15, 2025

DOMINARI HOLDINGS INC.

Consolidated Balance Sheets

($ in thousands except share and per share amounts)

Current assets

Cash and cash equivalents

Marketable securities

Securities owned

Receivable from clearing brokers

Prepaid expenses and other assets

Notes receivable, at fair value - current portion

Total current assets

Property and equipment, net

Notes receivable, at fair value - non-current portion

Long-term equity investments

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Right-of-use assets

Security deposit

Notes receivable

Prepaid expenses and other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable and accrued expenses

Accrued commissions

Contract liabilities - current

Lease liability - current

Other current liabilities

Total current liabilities

Contract liabilities, less current portion

Lease liability, less current portion

Accrued compensation and commissions

Accrued dividends payable

Contract liabilities

Lease liability

Income taxes payable

Other liabilities

Total liabilities

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5,000,000 shares designated;

issued and outstanding as of December 31, 2024 and 2023;

3,825 shares issued and outstanding as of December 31, 2025 and 2024;

liquidation value of $ 0.0001 per share

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5,000,000 shares designated;

issued and outstanding as of December 31, 2024 and 2023;

834 shares issued and outstanding as of December 31, 2025 and 2024;

liquidation value of $ 0.0001 per share

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Additional paid-in capital

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

Treasury stock, as of cost, 0 shares and 60,148 shares as of December 31, 2025 and 2024, respectively

Accumulated deficit

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Consolidated Statements of Operations

($ in thousands except share and per share amounts)

($ in thousands except share and per share

Years Ended December 31,

Underwriting services

Carried interest

Interest income

Principal transactions

Other revenue

Total revenue

Operating costs and expenses

General and administrative

Research and development

Research and development - license acquired

Compensation and benefits

Advisory fees

Professional and consulting fees

Other expenses

Total operating expenses

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Gain on marketable securities, net

Realized and unrealized loss on note receivable, net

Realized and unrealized gain (loss) on notes receivable, net

Change in carrying value of investments

Total other expenses

Total other income (expenses)

Net loss before income tax expense

Provision for income taxes

Net income attributable to non-controlling interests

Net loss attributable to common stockholders of Dominari Holdings Inc.

Net loss per share, basic and diluted

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Basic and Diluted

See accompanying notes to consolidated financial

See accompanying notes to consolidated financial statements.

DOMINARI HOLDINGS INC.

Consolidated Statements of Changes in Stockholders’ Equity

($ in thousands except share and per share amounts)

Preferred Stock

Treasury Stock

Consolidated Statements of Changes in Stockholders’

($ in thousands except share and per share

Stockholders’

Balance at December

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Stock-based compensation

Cancellation of common stock

Purchase of treasury stock

Retirement of treasury stock

Balance at December 31, 2023

at December 31, 2024

$ ( 223,466 )

Stock-based compensation

Balance at December 31, 2024

compensation - employees

Issuance of common stock

Issuance of common stock from

warrants exercised

Stock-based compensation – advisors

Retirement of treasury stock

Dividends issued

Distributions to non-controlling

at December 31, 2025

$ ( 268,134 )

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Amortization of right-of-use assets

Change in fair value of short-term investment

Change in carrying value of long-term investment

Non-cash warrant revenue

Stock-based compensation

Realized (gain) loss on marketable securities

Non-cash underwriting revenues

Non-cash commission expense

Stock-based compensation – employees

Stock-based compensation – advisors

Realized gain on marketable securities

Unrealized (gain) loss on marketable securities

Realized and unrealized loss on note receivable

Realized gain on receiving shares in exchange of note receivable extension

Unrealized (gain) loss on securities owned

Realized and unrealized (gain) loss on note receivable

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Prepaid acquisition cost

Receivable from clearing brokers

Accounts payable and accrued expenses

Accrued commissions

Accrued compensation and commissions

Contract liabilities

Lease liabilities

Other current liabilities

Right of use asset and liability, net

Income taxes payable

Securities owned

Other liabilities

Notes receivable, at fair value - net interest accrued

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

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Sale of marketable securities

Purchase of fixed assets

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

Collection of principal on note receivable

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Collection of loans to employees

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities

Purchase of treasury stock

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Cash paid for Dividends

Distributions to non-controlling interest

Cash from issuance common stock, net of offering cost

Cash from issuance common stock for exercised warrants

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

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Cash paid for interest and taxes

Non-cash investing and financing activities

Receiving shares in exchange of note receivable extension

Note receivable principal and interest receivable reduced due to receiving shares

Supplemental cash flow disclosures including non-cash activities:

Transfer from long-term investment to marketable securities

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

Less - Deposit previously transferred in October 2022 to FPS

Net cash paid

Right-to-use assets established

Operating lease liabilities established

See accompanying notes to consolidated financial

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The Company is in

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

In an effort to enhance shareholder

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

(“Dominari Financial”),

with the intent of shifting the Company’s primary operating focus away from biotechnology to the fintech and financial services

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

broker-dealer, 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.

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

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

(“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

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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”).

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 FPS Purchase Agreement provided for Dominari

Financials’ 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.

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.

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

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costs are distributed to the Co-Managing Members as set forth in the JV Agreement.

On June 17, 2025, the Company entered into two

Limited Liability Agreements with American Ventures Management LLC (“AV Manager”) and American Ventures IM LLC (“AV

Investment Manager”).

The Company holds a ninety percent ( 90 %) Membership Interest in each, and their operations are included within

the consolidated financial statements of Dominari Holdings Inc.

AV Manager was named as the manager of American Ventures LLC (the “AV

Master SPV”), a series limited liability company formed by AV Manager and owned by the investors of each fund series, and is responsible

for the day-to-day operations of the AV Master SPV.

AV Investment Manager was named the investment manager of the AV Master SPV and is

responsible for providing investment advice and decisions on behalf of the AV Master SPV.

AV Manager and AV Investment Manager are the

managing members of AV Master SPV and may not be removed without their respective consent.

The other members of AV Master SPV are the

passive investing members of each series of funds (the “AV Series”) established under the AV Master SPV.

The AV Manager established

various AV Series of the AV Master SPV for the purpose of making investments in companies identified by the AV Investment Manager with

proceeds generated by the sale of non-voting interests in such AV Series by the AV 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.

Liquidity and Capital Resources

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As of December 31, 2025, 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

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.

$ 34.0 million of cash and cash equivalents and $ 46.5 million of marketable securities as well as $ 9.8 million of securities owned.

Additionally,

the Company had approximately $ 4.0 million in receivable from clearing brokers.

As disclosed in Note 18, subsequent to December 31, 2025,

the Company sold it shares of American Bitcoin Corp (“ABTC”) common stock of $ 39.4 million included in marketable securities

at December 31, 2025 (please see Note 5 for further information about ABTC).

Unless otherwise noted, all 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.

Summary of Significant Accounting Policies

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The accompanying consolidated

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

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

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.

Company has determined it is not the primary beneficiary of DFH and thus will not consolidate the activities in its consolidated financial

The Company will account for its interest in DFHS under the equity method accounting in accordance with ASC 323.

of December 31, 2024, there has been no material activity in DFHS.

financial statements include the accounts of the Company and its wholly owned subsidiaries, Dominari Labs LLC (formerly, Aikido Labs LLC),

Dominari Financial Inc., Dominari IM LLC, Dominari Manager LLC and Dominari Securities along with American Ventures IM LLC and American

Ventures Manager LLC, both of which are owned 90 % by the Company.

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

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.

will account for its interest in DFHS under the equity method accounting in accordance with ASC 323.

As of December 31, 2025, there has

been no material activity in DFHS.

Use of Estimates

The accompanying consolidated financial statements

have been prepared in conformity with U.S.

This requires management to make estimates and assumptions that affect certain reported

amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the 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.

The accompanying consolidated financial statements have been prepared

in conformity with U.S.

This requires management to make estimates and assumptions that affect certain reported amounts of assets

and liabilities and disclosures of contingent assets and liabilities at the date of the 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,

, marketable securities, securities owned, the valuation of long-term equity 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

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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.

As of December 31, 2025, the Company

had $ 1.8 million in cash and $ 32.2 in cash equivalents and no cash equivalents as of December 31, 2024.

Marketable Securities

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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.

closed-end funds which are valued at quoted market prices, as well as common stock and warrants of publicly listed companies.

Property and Equipment

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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.

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.

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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.

the period that the Company’s stock-based awards are expected to be outstanding based on either the simplified method, if applicable,

which is the half-life from vesting to the end of its contractual term or when applicable, probability estimates of expected exercises

of such options.

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

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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

Financial instruments, including cash and cash

equivalents, accounts payable and accrued expenses and accrued compensation and commissions are carried at cost, which management believes

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

The Company measures the fair value of financial assets and

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

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

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

The Company uses three levels of inputs that may

be used to measure fair value:

Level 1 - quoted prices in active markets for

identical assets or liabilities

Level 2 - quoted prices for similar assets and

liabilities in active markets or inputs that are observable

Level 3 - inputs that are unobservable (for example,

cash flow modeling inputs based on assumptions)

Observable inputs are based on market data obtained

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

Unobservable inputs require significant

management judgment or estimation.

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

fair value hierarchy.

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

is significant to the fair value measurement.

Such determination requires significant management judgment.

Securities owned

Securities owned consist of equity securities

including, common stock and warrants of publicly traded companies which are held by Dominari Securities.

Securities owned and securities

sold, but not yet purchased are recorded in the balance sheet at fair value, with the change in fair value and any realized gains or losses

upon purchase or sale recorded within the statement of operations as principal transactions.

Dominari Securities may receive securities, including

common or preferred stock and stock purchase warrants, from companies as part of its compensation for underwriting services.

These instruments

are stated at fair value in accordance with GAAP, and recorded within the balance sheet as securities owned.

Such securities that the

Company receives may be subject to contractual or instrument specific restrictions which prevent Dominari Securities from reselling the

securities within the open market.

Under ASC 820 only those restrictions which are an attribute of the instrument, and do not arise from

any contractual agreement, are considered when determining fair value.

A portion of the Company’s equity securities,

which are held by Dominari Securities, are subject to restrictions as disclosed in Note 7.

Equities that have periods of contractual trading

restrictions, discounts were considered in determining fair value The Company’s significant unobservable inputs, included the implied

probability of 15 % of certain marketplace transactions and events occurring which would permit the sale of equities held.

These equities

are included in securities owned.

Warrant Investments

Warrant fair values are primarily determined using

a Black Scholes option pricing model, which includes the underlying stock price, warrant strike price, expected remaining term, volatility,

and risk-free rate as the primary inputs to the model.

Increases or decreases in any of these inputs could result in a material change

in fair value.

Additionally, for warrants that have periods of contractual trading restrictions, marketability discounts were considered

in determining fair value.

Warrants held by Dominari Securities are included in securities at fair value owned and other warrants are

included in marketable securities.

The following inputs are considered for determining

the fair values of warrants:

● The underlying stock price is equal to the closing price of the underlying stock as of the measurement

● The expected remaining term is equal to the time to expiration of the warrant investment.

● Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant investment

● The risk-free interest rates are derived from the U.S.

Treasury yield curve.

The risk-free interest rates

are calculated based on a weighted average of the risk-free interest rates that correspond closest to the expected remaining term of the

warrant investment.

● Marketability discounts are applied for warrants that have sales restrictions (or lock-up periods).

discounts are calculated using a combination of the Finnerty Model and the Asian Put Model using a term equal to the period of such restriction.

Fair Value Option - Short-term Note and Convertible

The guidance in ASC 825, Financial Instruments ,

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quarter, required to be reported separately in our consolidated balance sheets from those instruments using another accounting method.

Long-term Equity Investments and marketable

The Company holds certain strategic investments

that are not part of its broker-dealer trading activities.

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.

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.

These investments

are accounted for under ASC 321 using the measurement alternative.

Equity method investments and other long-term investments that are

not part of our broker-dealer trading activities are included in “long term equity investment” on the consolidated balance

These investments are generally strategic in nature and are not actively traded.

Unrealized gains and losses on these investments

are recognized in earnings when impairment is identified or when observable price changes occur and are classified in other income (loss)

in the consolidated statement of operations.

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.

brokers consisted of approximately $ 1.4 million of liquid insured deposits and $ 2.1 million of commissions receivable , and $ 0.5 million

of good faith deposits maintained by the Company with its clearing brokers as of December 31, 2025.

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

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

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.

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.

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, 2025 and 2024 an allowance

for credit losses was not deemed necessary.

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.

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

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

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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.

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

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

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.

● 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

The Company records such Non-Cash Consideration on the date at which

its performance obligation is fulfilled using the date of contract inception as the fair value measurement date, as required by FASB ASC

606-10-32-21 and recorded as underwriting revenues.

Any changes resulting from the form of the consideration after contract inception

fair value) are not included in the transaction price and, therefore, are included in principal transactions.

To the extent changes

in the noncash consideration occur for reasons other than the form of the consideration (e.g., notional quantity of instruments provided

is based upon the Company’s performance), the Company applies relevant guidance on variable consideration, constraining such amounts

until the associated uncertainty is resolved.

Similarly, any commissions or compensation expense from providing non-cash consideration

provided to employees and is recognized at fair value in accordance with ASC 820 on the same date.

● 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.

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.

● Carried interest fees are earned based on performance of the vehicle during the period, subject to the

achievement of minimum return levels, or high-water marks, in accordance with the respective terms set out in each vehicle’s governing

Carried interest is a form of variable consideration in the Company’s contracts with investment management customers

and is fully constrained at contract inception.

Carried interest fees are not recognized as revenue until (a) it is probable that a significant

reversal in the amount of cumulative revenue recognized will not occur, or (b) the uncertainty associated with the variable consideration

is subsequently resolved.

Carried Interest Fees are typically recognized as revenue when realized at the end of the measurement period.

Once realized, such fees are not subject to claw back or reversal.

During the year ended December 31, 2025, the Company recognized carried

interest of $ 22.7 million.

● 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.

fees represent asset-based fees received in exchange for providing management services to certain related party pooled investment vehicles

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.

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.

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

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

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.

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

Principal transactions are recorded on a trade-date basis (as if they

had settled).

Realized and unrealized gains and losses arising from all securities transactions entered into for the account and risk

of the Company are recorded in principal transactions in the accompanying statement of operations.

These gains and losses are not in scope

for ASC 606 as they are not generated from contracts with customers.

Contract liabilities relate to payments received

in advance of performance under the contract and are the result of remaining performance obligations for management services.

liabilities are recognized as revenues when the Company provides ongoing investment management services.

During the year ending December

31, 2025, Manager received approximately $ 3.6 million of cash which will be recognized over time.

As of December 31, 2025, $ 4.5 million

of such revenue has been deferred and is included in contract liabilities on the accompanying consolidated balance sheet.

Approximately

$ 1.0 million is expected to be recognized during the year ending December 31, 2026.The remaining balance is expected to be recognized

● Other revenue includes amounts recognized over time and at a point in time.

Amounts recognized over time

are recognized ratably over the period that such services are provided which are distinct from the services provided in other periods.

Types of other revenue include trailing fees for mutual funds 12b-1, variable annuity, fixed annuities, and insurance products.

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.

As the value of the eligible assets

in an advisory account is susceptible to changes due to customer activity, this revenue includes variable consideration and is constrained

until the date that the fees are determinable.

Compensation and benefits

Compensation and benefits includes fixed salaries,

commissions (paid in either cash or in securities), related benefits and stock-based compensation incurred on an accrual basis.

has a defined contribution 401(k) plan that covers all employees and allows an employer contribution of up to 50 % of the first 3 % of

each participating employee’s eligible compensation contributed to the plan and 50 % of the next two percent of each participating

employee’s eligible compensation.

Participants are 100 % vested in these matching contributions when they are made.

Eligible employees

may elect to defer pre-tax contributions regulated under Section 401(k) of the Internal Revenue Code.

The Company’s matching contributions

are included in compensation and benefits in the consolidated statements of operations.

Please see “ Stock based compensation”

section above for additional information on stock-based compensation accounting policies.

The Company uses the asset and liability

method of accounting for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”).

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.

A change to the tax rates used to measure the Company’s deferred taxes is recognized

in income during the period in which the new rate(s) were enacted

The Company recognizes deferred tax assets to

the extent the Company’s assets are more likely than not to be realized.

In making such a determination, the Company considers

all available positive and negative evidence, including the future reversals of existing taxable temporary differences, projected future

taxable income exclusive of reversing temporary differences and carryforwards, tax-planning strategies, taxable income in prior carryback

years if permitted under tax law, and the results from prior years.

If the Company determines it is more likely than not that all or

a portion of a deferred tax asset will not be realized, a valuation allowance is recorded with a charge to income tax expense.

Alternatively,

if the Company determines that all or a portion of a deferred tax asset previously not meeting the more likely than not threshold will

be realized, the Company reduces its valuation allowance and recognizes a benefit in income tax expense.

The Company recognizes and measures uncertain

tax benefits in accordance with ASC 740 based on a two-step process in which (1) the Company determines whether it is more likely than

not that the tax position will be sustained based on the technical merits of the position, and (2) for those tax positions that meet the

more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than fifty percent likely

to be realized upon ultimate settlement with the related tax authority.

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.

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.

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 December 2023, the FASB issued Accounting Standards

Update (“ASU”) 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” which enhances the

transparency and decision usefulness of income tax disclosures.

Adjustments to the annual disclosure of income taxes include:

(1) A tabular

rate reconciliation comprised of eight specific categories, (2) Incomes taxes paid, disaggregated between significant national, state,

and foreign jurisdictions, (3) Eliminates requirements to disclose the nature and estimate of reasonably possible changes to unrecognized

tax benefits in the next 12 months or that an estimated range cannot be made, and (4) Adds a requirement to disclose income (or loss)

from continuing operations before income tax expense (or benefit) by national and foreign, and income tax expense (or benefit) from continuing

operations disaggregated between national, state and foreign.

The ASU is effective for public business entities for fiscal years beginning

on or after December 15, 2024 with early adoption permitted.

The amendments in ASU 2023-09 were adopted by the Company as of January 1,

2025 on a prospective basis.

There was no material impact to the Company’s financial statements as a result of adopting ASU 2023-09.

In November 2024, the FASB issued ASU No.

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.

“Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures.” This ASU requires that each interim

and annual reporting period, an entity discloses more information about the components of certain expense captions that is currently disclosed

in the financial statements.

This update is effective for annual reporting periods beginning after December 15, 2026.

Early adoption is

Management is currently evaluating the effects this guidance will have on its financial statements.

Effect of new accounting pronouncements to

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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.

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.

financial statements.

Reclassification of prior year amounts

Certain reclassifications have been made to the

prior years’ financial statements to conform to the current year presentation.

These reclassifications had no effect on previously

reported results of operations or stockholders’ equity.

Marketable Securities

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December 31, 2024

Carrying Value

Investment in Kerna Health

Investment in Kaya Now, Inc.

Investment in Big Sky Opportunities Fund LLC (Tevva Motors Limited)*

Investment in Unusual Machines ***

Investment in Revere Master SPV Series 1 (Qxpress Pte Ltd)*

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and Revere Master SPV Series VI (TessPay, Inc.)**

Investment in Aeon Partners Fund Series G (SpaceX, Inc.)*

Investment in Aeon Partners Fund Series DB (Databricks, Inc.)*

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Investment in AdvEn Inc.

Investment in Forge Investments LLC Series Fund FG-MHM (Anduril Industries, Inc.)*

* Investments made in these companies are through a Special Purpose Vehicle (“SPV”).

* 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.

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 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 made in these companies are through both an SPV

and direct investments.

The Company had no changes to the carrying values

for the year ended December 31, 2025, and recorded a decrease in the carrying values of approximately $ 7.1 million for the year ended

December 31, 2024.

Please see below details of the changes in carrying value by investment.

The decrease in total carrying value of the

Company’s long-term equity investments in 2025 from $ 12.2 million to $ 11.7 million is as a result of the sale of the Company’s

Databricks investment for $ 0.5 million as detailed below.

Investment in Dominari Master SPV LLC Series

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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 .

(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 thousand with no change for the fiscal year ended December 31, 2025.

Investment in Dominari Master SPV LLC Series

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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 .

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

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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,

On March 23, 2022,

the Company entered into a securities purchase agreement (the “Tesspay Securities Purchase Agreement”) with Tesspay.

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.

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.

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.

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 years

2024 the Company 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, 2025 and 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

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.

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, 2025 and 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, 2025 and 2024, respectively.

Investment in Payward, Inc.

Kraken-II, LLC (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.

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 $ 0.4 million as of December 31, 2025 and 2024, respectively.

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.

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.

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

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The investment

was valued at $ 0.8 million as of December 31, 2024.

Investment in Aeon Partners Fund Series

DB (Databricks, Inc.)

was valued at $ 0.8 million as of December 31, 2025 and 2024, respectively.

Investment in Aeon Partners Fund Series DB

(Databricks, Inc.)

In the fourth quarter of 2024, the Company partially

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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.

The Company redeemed its interest in Databricks Inc.

in the first quarter of 2025 for $ 0.5 million, resulting in a gain of $ 28 thousand.

Investment in Automation Anywhere, Inc.

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purchase agreement (the “Automation Anywhere Securities Purchase Agreement”) with privately held company Automation Anywhere,

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.

During the fourth quarter 2024 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.

charge of approximately $ 80 thousand in 2024 and the investment in Automation Anywhere was valued at $ 0.4 million as of December 31, 2025and

2024 respectively.

Investment in American Bitcoin 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 (“Transactions”), wherein ADC, Hut 8 Corp., a Delaware corporation, and certain of its subsidiaries (“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.

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 entered into definitive

agreements for Hut 8 to provide exclusive management back-office operational and ASIC colocation services to American Bitcoin.

of the Transactions, American Bitcoin became a subsidiary of Hut 8 in which the Company held a 3.17 % minority interest in American Bitcoin

represented by 23,199,205 shares of common stock.

The Company also entered into a lock-up agreement (“Lock-Up Agreement) restricting

the Company’s sale of any shares owned, until a pre-determined amount of time after any merger or other go-public events of American

On June 27, 2025, American Bitcoin consummated

a private placement pursuant to which it raised gross proceeds of approximately $ 220 million from the sale of American Bitcoin’s

Class A common stock at a per share purchase price of $ 20 (the “Private Placement”) for which Dominari Securities acted as

placement agent.

The Class A and Class B common stock had the same rights, powers and privileges and were identical in all respects as

to all matters.

As a result of the Private Placement, the Company held an approximate 2.6 % minority interest in American Bitcoin and adjusted

the carrying value of its 1.6 million shares of American Bitcoin’s Class B common stock, which was exchangeable with the Class A

common stock on a one for one basis, to $ 32.0 million at June 30, 2025.

As of June 30, 2025, the carrying value of the American Bitcoin

investment was recorded within the long-term equity investments caption of the Company’s consolidated balance sheet.

On September 2, 2025, Gryphon Digital Mining,

(NASDAQ:GRYP), a bitcoin mining company that offers carbon-neutral bitcoin mining and digital mining operations, entered into a definitive

merger agreement with American Bitcoin Corp.

to form a combined company that would operate under the brand American Bitcoin and be led

by the board of directors of American Bitcoin and would be listed for trading on NASDAQ under the ticker symbol “ABTC”.

part of the Merger, a 14.4995-for-1 stock split was completed, resulting in the Company receiving 23,199,205 shares of ABTC common stock.

ABTC began trading on NASDAQ for $ 8.00 per share, on September 3, 2025.

As of December 31, 2025, the Company valued its

investment in ABTC using the quoted market price of $ 1.70 per share resulting in a fair value of approximately $ 39 .4million, recorded

within the marketable securities caption of the consolidated balance sheet.

The Company recorded the entire associated unrealized gain

of $ 39.4 million within the “gain (loss) on marketable securities” caption of the consolidated statement of operations for

the year ended December 31, 2025.

On December 30, 2025, the Company entered into an agreement to sell the entirety of its 23,199,205 shares

of ABTC common stock for proceeds totaling $ 32.4 million with a closing date of January 20, 2026, please see Note 18 for additional information

regarding the ABTC Sale.

Notes Receivable

The following table presents the Company’s notes receivable as

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

December 31, 2024

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

As of December 31, 2025, the Company had no notes

The following table presents the Company’s notes receivable as of December 31, 2024 ($ in thousands):

December 31, 2024

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Notes receivable, at fair value

Convergent convertible note 12/2/2024 8 % $ 1,006 $ 58 $ 1,064

Raefan Industries LLC 06/30/2025 8 % $ —

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income of approximately $ 223,000 and a realized loss of $ 6,000 .

American Innovative Robotics, LLC

The Company recorded interest income of approximately

$ 20,000 , and a realized gain on the note of approximately $ 221,000 on the American Innovative Robotics Promissory Note for the year ended

December 31, 2025.

The note was fully paid off as of March 24, 2025 with proceeds totaling $ 1.1 million , resulting in an ending value

Raefan Industries LLC

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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.

the note on Raefan Industries LLC, resulting in an ending value of $ 0 for the period ended December 31, 2025 and December 31, 2024.

June 30, 2025, the Company executed a Note Modification Agreement to extend the maturity date of the note to December 31, 2025 .

December 31, 2025, the Company maintained the note as uncollectible and fully written off.

Fair Value of Financial Assets and

Financial instruments, including cash and cash

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

short-term nature of these instruments.

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

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

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

The Company maximizes the use

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

The Company uses three levels of inputs that may

be used to measure fair value:

Level 1 - quoted prices in active markets

for identical assets or liabilities

Level 2 - quoted prices for similar

assets and liabilities in active markets or inputs that are observable

Level 3 - inputs that are unobservable

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

Observable inputs are based on market data obtained

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

Unobservable inputs require significant

management judgment or estimation.

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

fair value hierarchy.

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

is significant to the fair value measurement.

Such determination requires significant management judgment.

The following table presents the Company’s assets and liabilities

that are measured at fair value as of December 31, 2024 and 2024 ($ in thousands):

The following table presents the Company’s

assets and liabilities that are measured at fair value as of December 31, 2025 and 2024 ($ in thousands):

Fair value measured as of December 31, 2025

active markets

Significant other

Securities owned

Marketable securities

Total marketable securities

Notes receivable at fair value, non-current portion

Fair value measured as of December 31, 2024

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Significant other

Securities owned

Marketable securities

Total marketable securities

Notes receivable at fair value, current portion

Notes receivable at fair value, non-current portion

The fair value of level 3 securities owned totaling

$ 1.7 million shown above at December 31, 2025 are subject to an initial lock-up period until June 5, 2026, and further restrictions to

which the Company cannot liquidate its investment until such restrictions are met.

Additionally, approximately $ 6.6 million of fair value

of level 2 securities owned shown above at December 31, 2025 represents warrants that are subject to lock-up periods that will end by

March 31, 2026 and another $ 1.2 million of fair value of warrant securities with lock-up periods that will end by June 30, 2026 as well.

Level 3 Measurement

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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):

Securities owned at fair value as of December 31, 2024

Securities received included in underwriting services

Unrealized gain included in principal transactions

Securities owned at fair value as of December 31, 2025

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

Realized gain on note receivable

Change in interest receivable

Collection of principal and interest outstanding

Notes receivable at fair value, non-current portion at December 31, 2025

December 31, 2024

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

December 31, 2023

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

Collection of principal outstanding

Unrealized loss on note receivable

Principal reduced due to receiving shares

Accrued interest receivable

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

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

Unrealized gain on note receivable

Accrued interest receivable

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

The Company’s Level 3 fair value measurements

at December 31, 2025, were determined by the following quantitative inputs:

● The underlying stock price of $ 10.00 per share as of the measurement date.

● Success rates of similar type instruments from other comparable entities’ recent historical results

of 15 % of the underlying value of the stock price.

Notes Receivable at fair value

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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.

For the year ended December 31, 2025, the Company had realized gains on notes

receivable of $ 0.2 million.

The following table provides quantitative information

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Valuation technique

Discounted cash flow

Unobservable input and range:

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Discount rate

Property and Equipment

Prepaid expenses and other assets

Other assets consist of the following as of December

31, 2025, and 2024 ($ in thousands):

Prepaid expenses

Security deposits

Property and equipment, net

Property and equipment, net, consists of the following as of December

31, 2025 and 2024:

Estimated December 31, December 31,

Useful Lives 2024

December 31, December 31,

Estimated Useful Lives 2025 2024

Leasehold improvements Shorter of the remaining lease term or estimated useful life $ 50 $ 50

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Total property and equipment, net $ 135 $ 239

Depreciation expense was $ 105 ,000 and $ 83 ,000 during the years ended

December 31, 2024 and 2023, respectively.

Depreciation expense was $ 105 thousand and $ 105

thousand during the years ended December 31, 2025 and 2024, respectively.

On December 1, 2021, the Company entered into

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

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

the Company’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 .

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

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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 Company took possession of the Premises

in February 2023.

On September 2, 2025, the Company entered into

a Lease Agreement (the “Company’s Florida Lease”) with Blue Diamond Towers, LLC, a Delaware limited liability company.

Under the Company’s Florida Lease, the Company rents a portion of the first floor designated as Suite 103 of the North Building

at 3835 PGA Boulevard in Palm Beach Gardens, Florida, (the “Florida Premises”).

The Company will use the Florida Premises

as Executive Offices.

The initial term of the Company’s Florida Lease is two ( 2 ) years commencing on October 1, 2025.

Company’s Florida Lease, the Company is required to pay monthly rent, commencing on October 1, 2025, equal to $ 10,000 .

for the second year of the Company’s Florida Lease, the rent shall increase to $ 10,300 .

The Company took possession of Florida

Premises in October 2025.

The tables below represent the Company’s

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During the years ended December 31, 2025 and 2024,

the Company recorded approximately $ 0.8 million, both years, of lease expense to current period operations.

the Company recorded approximately $ 0.8 million and $0.8 million, respectively, of lease expense to current period operations.

Operating leases

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Operating cash flows - operating leases

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

As of December 31, 2025, future minimum payments

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Operating lease liabilities

The tables below represent the Company’s

lease assets and liabilities as of December 31, 2025 and 2024:

Net Loss per Share

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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:

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, 2025, and

2024 are as follows:

As of December 31,

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Preferred 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

As of December 31, 2025, there are 16,067,435

shares of common stock issued and outstanding.

This does not include 80,000 unvested shares issued that are subject to forfeiture through

December 11, 2026.

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, and the same amount of unregistered Series A warrants and unregistered Series B warrants were issued 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, and the same amount of unregistered Series A warrants and unregistered Series B warrants were issued 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 net proceeds to the Company from the February 2025 Financings were approximately $ 13.5 million.

On February 10, 2025, the Company entered into

advisory agreements with various individuals who were issued shares of common stock.

The agreements are for a term of two years but are

cancellable by either party.

As part of these agreements, 2,550,000 shares of common stock were issued on February 18, 2025.

An additional

850,000 shares may be issued under the terms of the agreements when certain provisions are met, which as of the date of grant is probable.

These shares are nonforfeitable and thus were fully expensed by the Company at the time of grant.

The Company used a Monte Carlo simulation

to calculate the grant date fair value of the common stock.

The fair value of issued shares amounted to $ 20.9 million and is presented

in advisory fees expense on the audited consolidated statement of operations.

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.

During the period January 1, 2025 to December 31, 2025 warrants were

exercised by various individuals resulting in additional common stock issuance of 1,418,538 shares generating cash proceeds of $ 5.6 million

which is included in additional paid-in capital on the consolidated statements of changes in stockholders’ equity.

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;

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, 2025, and 2024, 5,000,000

Series D Preferred Stock was designated;

3,825 and 3,825 shares remained issued and outstanding.

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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.

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, 2025 and 2024, 5,000,000 Series

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834 and 834 shares remained issued and outstanding.

On February 11, 2025, the board of directors approved

a special cash dividend of $ 0.32 per share payable on March 3, 2025, to holders of common stock and certain warrant holders as of close

of business on February 24, 2025.

On September 9, 2025, the board of directors approved a special cash dividend of $ 0.22 per share payable

on September 26, 2025, to holders of common stock and certain warrant holders as of close of business on September 3, 2025.

11, 2025, the board of directors approved a special cash dividend of $ 0.432 per share payable on January 26, 2026, to holders of common

stock and certain warrant holders as of close of business on January 5, 2026, Cash dividends declared in 2025 totaled $ 22.2 million and

have been charged to accumulated deficit.

Dividends paid for the three months ended March 31, 2025, totaled $ 7.0 million, and dividends

paid for the three months ended September 30, 2025, totaled $ 4.9 million and dividends payable totaled $ 10.3 million at December 31, 2025.

Treasury Stock

There were 60,148 shares of treasury stock on

December 31, 2024.

The Company retired such shares in July 2025 and there were no shares of treasury stock as of December 31, 2025.

A summary of warrant activity for the years ended

December 31, 2025, is presented below:

Warrants Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life

Warrants Weighted Average Exercise

Price Total Intrinsic Value ($000s) Weighted Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2023 444,796 $ 29.25 —

Outstanding as of December 31, 2024 444,796 $ 29.25 —

All current outstanding warrants were issued prior to 2023 in connection

with prior raises by the Company.

Issued 7,752,108 $ 3.97 5.0

Expired ( 87,598 ) $ 28.74 —

Exercised ( 1,418,538 ) $ 3.97

Outstanding as of December 31, 2025 6,690,768 $ 5.38 $ 6,186 3.9

Restricted Stock Awards and Stock Options

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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.

restricted stock awards began vesting annually in three increments beginning on April 13, 2024.

During the year ended December 31, 2024,

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$ 0.7 million.

A summary of restricted stock awards activity for the years ended December 31, 2024 and 2023, is presented below:

On February 10, 2025, the Company issued 50,000

shares of the Company’s common stock under the Company’s 2022 Equity Incentive Plan.

Upon issuance, the shares were fully-vested

and nonforfeitable with a total fair value $ 308,000 .

On February 10, 2025, the Company issued 351,851

shares of the Company’s common stock to Messrs.

Christopher Devall under the Company’s 2022 Equity Incentive Plan.

Upon issuance,

the shares were fully-vested and nonforfeitable with a total fair value $ 2.1 million.

On February 12, 2025 in connection with the closing

of the PIPE, the Committee determined that it is in the best interests of the Company and its stockholders to make a special equity grant

Anthony Hayes.

Pursuant to the Committee’s decision, he received 500,000 shares of the Company’s common stock.

Upon issuance, the shares were fully-vested and nonforfeitable with a total fair value of approximately $ 3.4 million.

On March 11, 2025, 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.

Upon issuance, the shares were fully-vested and nonforfeitable with a total fair value of approximately $ 1.7 million.

On December 10, 2025, the Company issued 316,346

shares of the Company’s common stock under the Company’s 2022 Equity Incentive Plan.

These shares will vest on September 30,

provided that in the event of a change in control prior to any such vesting date, the shares which have not yet vested shall vest

and become nonforfeitable upon the effective date of such change in control, with a total fair value of $ 1.3 million .

On December 11, 2025, the Company issued 80,000

shares of the Company’s common stock under the Company’s 2022 Equity Incentive Plan.

These shares will vest on the one-year

anniversary of the grant date;

provided that in the event of a change in control prior to any such vesting date, the shares which have

not yet vested shall vest and become nonforfeitable upon the effective date of such change in control, with a total fair value of $ 381

See Restricted Stock roll-forward below.

A summary of restricted stock awards activity

for the years ended December 31, 2025 and 2024, is presented below:

Number of Restricted Stock Awards

Weighted Average Grant Day Fair Value

Nonvested at December 31, 2023

( 1,187,536 )

Nonvested at December 31, 2024

( 1,260,969 )

Nonvested at December 31, 2025

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of restricted stock awards expense was approximately $ 7.8 million and $ 1.4 million for the years ended December 31, 2025, and 2024, respectively.

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

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

As of December 31, 2025, there is approximately

$ 50,000 unrecognized stock-based compensation expense related to restricted stock awards.

$ 1.6 million unrecognized stock-based compensation expense related to restricted stock awards.

Stock Options

A summary of option activity under the Company’s stock option

plan for year ended December 31, 2024 and 2023 is presented below:

Weighted Remaining

Average Total Contractual

Number of Exercise Intrinsic Life

Shares Price Value (in years)

On February 10, 2025, the Company granted an additional

5.0 million fully vested nonqualified stock options (each, a “Performance Award” and collectively, the “Performance

Awards”) each to Anthony Hayes and Kyle Wool conditioned upon either the Company’s shareholders approving the Performance

Awards or approving an increase in the share reserve of the Company’s 2022 Equity Incentive Plan (the “Plan”) such that

the full number of shares underlying the Performance Awards could be delivered under the Plan.

On April 1, 2025, following a special meeting

of shareholders, the Company’s shareholders voted to approve an increase in the Plan’s share reserve allowing the Performance

Awards to be delivered under the Plan.

As of December 31, 2025, the Company recorded an expense of $ 26.1 million for the Performance Awards.

On December 1, 2025, the Company entered into

an advisory agreement with a certain individual who was issued 50,000 nonqualified stock options (“Advisor Options”).

party reserves the right to terminate the agreement at any time, with or without cause, upon five (5) days prior written notice to the

One half of the Advisor Options shall vest and become exercisable during its term on December 1, 2025, and one half of the

Advisor Options shall vest and become exercisable during its term on June 1, 2026, in the manner and subject to the terms and conditions

of the Plan and the Stock Option Grant Agreement (the “Option Grant Agreement”).

The Company used a Black Scholes valuation

to calculate the grant date fair value of the Advisor Options.

The fair value of the Advisor Options amounted to $ 146 thousand and the

Company recorded an expense of $ 85 thousand in 2025 related to such options.

A summary of option activity under the Company’s

stock option plan for year ended December 31, 2025 and 2024 is presented below:

Number of Shares Weighted

Value Weighted Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2023 420,168 $ 5.80 $ —

Employee options granted 395,714 3.42 -

Employee options forfeited ( 43,334 ) $ 3.10 $ — —

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Outstanding as of December 31, 2024 376,654 $ 4.29 $ — 8.2

Employee options granted 10,050,000 $ 6.15 $ — —

Employee options exercised ( 35,000 ) $ 3.36 $ — —

Employee options forfeited ( 319,008 ) $ 3.50 $ — —

Employee options expired ( 180 ) $ 3,832.72 -

Outstanding as of December 31, 2025 10,072,646 $ 6.16 $ 26 9.1

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of stock option expense was approximately $ 26.2 million and $ 0.3 million for the years ended December 31, 2025, and 2024, 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.

The following table presents our total revenues disaggregated by revenue

type for the years ended December 31, 2024, and 2023 (in thousands):

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

The following were assumptions used in the Company’s

fair value analysis:

Risk-free interest rate 3.85 %

Estimated term 5.0 years

Underlying stock price $ 6.15

Expected volatility 94.5 %

Estimated future stock-based compensation

expense relating to unvested stock options is approximately $ 61 thousand.

Non-controlling Interest

As previously discussed, the Company owns 90 %

of AV Manager and AV Investment Manager, the remaining 10 % is owned by non-controlling parties.

As such, 10 % of any profits earned by

these entities are attributable to non-controlling interests and are presented in the consolidated statements of changes in stockholders’

As of December 31, 2025, the amount attributable to non-controlling interest was $ 2.0 million of which there is nothing payable

to non-controlling interests.

Disaggregation of Revenue

For the years ended December 31, 2025, and 2024

total revenue and revenue related to contracts with customers within the scope of Topic 606 were ($ in thousands):

Underwriting services

Account advisory and management

Carried interest

Interest income – customers

Other revenue

Account advisory

Management fees

Total revenue from contracts with customers

Principal transactions

Interest income – noncustomer

Total revenue

Revenue Recognized at a Point in Time

The Company recognizes revenue that is

transactional in nature and such revenue is earned at a point in time.

For the year ended December 31, 2025, revenue that was

recognized at a point in time includes underwriting services of $ 79.0 million, Carried interest of $ 22.7 million, commissions of

$ 19.5 million and principal transactions revenue of ($ 0.9 ) million.

For the year ended December 31, 2024, revenue that is recognized

at a point in time includes underwriting services of $ 11.4 million, commissions of $ 6.1 million and principal transactions revenue

of $ 2.2 million.

Revenue Recognized Over Time

The Company recognizes revenue over a period of

time, generally monthly on a straight-line basis, as services are performed, and performance obligations are satisfied.

For the year ended

December 31, 2025, revenue that is recognized over time includes account advisory fees of $ 246 thousand, other revenue of $ 590 thousand,

management fees of $ 606 thousand , interest income from customers of $ 368 thousand and interest income-noncustomers of $ 904 thousand.

For the year ended December 31, 2024, revenue that was recognized over time includes account advisory fees of $ 308 thousand, other revenue

of $ 309 thousand, management fees of $ 103 thousand interest income from customers of $ 133 thousand and interest income-noncustomers of

$ 533 thousand.

Commitments and Contingencies

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legal proceedings brought against it.

The income tax provision consists of the following ($ in thousands):

For the years ended

Increase (decrease) in valuation allowance

State and local

Increase (decrease) in valuation allowance

Income Tax Provision (Benefit)

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

The following table summarizes income (loss) before

income taxes ($ in thousands):

The Company’s income tax expense (benefit) is

as follows ($ in thousands):

Current income tax expense (benefit)

Deferred income tax expense (benefit)

Total income tax expense (benefit)

During the year ended December 31, 2024,

the Company did not record any income tax expense or benefit.

The Company’s effective tax rate for the

period ended December 31, 2025 was ( 55.6 )%.

The primary drivers of the variance from the statutory rate were state taxes, Sec.

162m disallowed

compensation, net operating loss and amortization adjustments, and valuation allowance.

The following is a reconciliation from the Company’s statutory rate

to the effective tax rate reported in the financial statements ($ in thousands):

Statutory Federal Income Tax Rate

State and local income taxes, net of federal benefit of state

Tax Credits (Federal)

Valuation Allowance

Non-Deductible or Non-Taxable Items:

Excess Employee Compensation under Sec.

Other Adjustments:

Net Operating Loss Adjustment

Amortization Adjustment

Effective income tax rate

The state and local income tax rate reconciliation

category primarily reflects the impact of New York State and New York City, which together constitute more than 50% of the total effect

of this category.

The Company’s effective tax rate for the period

ended December 31, 2024 was 0.0 %.

The primary drivers of the variance from the statutory rate were state taxes, Sec.

162m disallowed compensation,

and valuation allowance.

The following is a reconciliation from the Company’s statutory rate

to the effective tax rate reported in the financial statements:

Statutory Federal Rate

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Transaction costs

Research & development

Research & development, net

Operating lease liability

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Right of use asset

Total deferred tax liability

Investment portfolio and other

Total deferred tax assets (liabilities)

In assessing the realization of deferred tax assets,

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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 )

benefits of all deferred tax assets.

Accordingly, the Company has provided a full valuation allowance for the deferred tax assets of approximately

$ 38.3 million as of December 31, 2025 and approximately $ 48.4 million as of December 31, 2024.

As of December 31, 2025, the change in

valuation allowance is approximately $( 10.1 ) million.

The change in the valuation allowance reflected in the rate reconciliation relates

solely to federal deferred tax attributes, whereas the larger net decrease in the valuation allowance presented in the deferred tax table

primarily reflects a reduction in state valuation allowance balances, which are not included in the rate reconciliation.

As of December 31, 2025, the Company has federal,

state post-apportioned, and foreign net operating loss (“NOL”) carryforwards of approximately $ 76.7 million , $ 74.5 million,

and $ 0 , respectively.

Of the federal amount, $ 29.8 million have a limited carryforward period and will begin to expire in 2026, and $ 47.0

million will have an indefinite carryforward period.

Of the state post-apportioned amount, $ 74.5 million have a limited carryforward period

and will begin to expire in 2038.

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

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,

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.

NOL 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.

The Company completed a Section 382 study and

concluded that it underwent ownership changes as defined by the Code on September 10, 2013, March 31, 2014, May 24, 2016, December 5,

2019, March 31, 2020, March 31, 2021, and February 10, 2025.

The Company had a net unrealized built in loss (“NUBIL”) position

at each ownership change date.

As a result, the Company’s utilization of certain tax attributes, including amortization of acquired

intangible assets, is subject to the Section 382 limitation.

The Company has approximately $ 76 million of acquired intangible assets capitalized

between 2013 and 2023 that are subject to this limitation.

The original net operating loss (“NOL”) carryforwards of approximately

$ 122 million reflected approximately $ 38 million of tax amortization deductions previously claimed in excess of the amount allowable under

the Section 382 limitation.

Accordingly, these excess deductions are treated as recognized built in losses (“RBILs”) and are

subject to limitation under Section 382.

In addition, the Section 382 study identified approximately $ 17 million of future tax amortization

deductions related to intangible assets that are expected to be limited, which are treated as additional RBILs.

Accordingly, the $ 38 million

of excess amortization deductions previously claimed, together with $ 17 million of future amortization deductions expected to be limited,

are reflected as $ 55 million of RBIL carryforwards as of year end, rather than as net operating loss carryforwards.

The remaining NOL

carryforwards were adjusted to exclude $ 6 million generated prior to 2006 that expired unused and to reflect $ 2 million utilized during

the current period, resulting in $ 77 million of NOL carryforwards as of the end of the period.

Any future ownership changes that may occur after

December 31, 2025, 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

The One Big Beautiful Bill Act (“OBBBA”)

was enacted on July 4, 2025.

The Company has evaluated the provisions of OBBBA and concluded that its enactment did not have a material

impact on the Company’s 2025 consolidated financial statements.

The only provision of OBBBA that affects the Company’s income

tax accounting under ASC 740 is the enactment of new Internal Revenue Code (“IRC”) Section 174A, which permanently allows

taxpayers to deduct domestic research or experimental (“R&E”) expenditures paid or incurred in taxable years beginning

after December 31, 2024.

The requirement to capitalize and amortize foreign R&E expenditures over 15 years remains unchanged.

On August 28, 2025, the Internal Revenue Service

issued procedural guidance in Revenue Procedure 2025-28, which provides rules for implementing IRC Section 174A, including available elections

and transition rules.

Under the transition rules, taxpayers may elect how to treat unamortized domestic R&E expenditures that were

paid or incurred in taxable years beginning after December 31, 2021 and before January 1, 2025.

Specifically, taxpayers may (i) continue

to amortize such costs over the remaining five-year amortization period, (ii) deduct the remaining unamortized balance entirely in the

first taxable year beginning after December 31, 2024, or (iii) deduct the remaining unamortized balance ratably over two taxable years.

As of December 31, 2024, the Company had approximately

$ 90 thousand of remaining unamortized domestic R&E expenditures capitalized under IRC Section 174, which gave rise to a deferred tax

asset of approximately $ 26 thousand.

The Company has elected to continue amortizing these costs over the remaining statutory amortization

All such domestic R&E expenditures were incurred in 2022 and are expected to be fully amortized by 2027.

As of December 31,

2025, the Company had approximately $ 40 thousand of remaining unamortized domestic R&E expenditures, representing a deferred tax asset

of approximately $ 12 thousand.

The Company has made no income tax payments and

received no income tax refunds during the year.

All payments made to taxing authorities were for non-income based tax liabilities and

are outside the scope of ASC 740.

As of December 31, 2025 and 2024, no liability

8 unchanged sentences

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.

federal and state income tax returns (California, Florida, New

Jersey, New York, New York City, Virginia, and Texas).

As of December 31, 2025, the statute of limitations for assessment by the Internal

Revenue Service and state tax authorities remains open for the tax periods ended December 31, 2022, 2023, and 2024.

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 2025 and 2024.

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.

Dominari Securities is subject to the Securities

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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

34-70073 adopting amendments to 17 C.F.R.

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.”

On December 31, 2025, the Company

had net capital of $ 20.5 million, which was $ 19.6 million in excess of its required minimum net capital of $ 0.9 million.

Dominari Securities customers' securities transactions

are introduced on a fully-disclosed basis with its clearing broker/dealers.

The clearing broker/dealers are responsible for execution,

collection of and payment of funds and, receipt and delivery of securities relative to customer transactions.

Off-balance-sheet risk exists

with respect to these transactions due to the possibility that customers may be unable to fulfill their contractual commitments.

broker/dealers may charge any losses it incurs on customers to Dominari Securities .

The Company seeks to minimize this risk through procedures

designed at Dominari Securities to monitor the creditworthiness of its customers and to ensure that customer transactions are executed

properly by the clearing brokers, by monitoring all customer activity and reviewing information it receives from its clearing broker on

a daily basis.

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.

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.

In 2021, the Dominari Holdings engaged the services

of Revere Securities, LLC (“Revere”) to assist in the management and building of the Company’s investment processes.

Kyle Wool, Chief Executive Officer and one of the Company’s board members, was previously a member of the board of directors of

Revere until June 2023 and held approximately 30 % of Revere’s outstanding equity until May, 2025.

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.

such transactions, the Company earned $ 5.8 million during the year ended December 31, 2025 and $ 930,000 for the year ended December

Additionally, the Company incurred referral fees of approximately $ 50,000 for the year ended December 31, 2024.

As of May 20,

2025, Kyle Wool no longer holds an equity interest in Revere

During 2024 , the Company collected fees on

behalf of Series Funds, which were intended for future expenses of each Series entity.

As of December 31, 2024, such amount was $ 154

and is included in other current liabilities on the accompanying consolidated balance sheet.

During the year December 31, 2024, the Company

2 unchanged sentences

with an average annual interest rate of approximately 3.2 %.

The total interest received for the year ended December 31, 2024 was approximately

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.

The total interest received for the years ended December 31, 2025 and 2024

was approximately $ 51 thousand and $ 39 thousand, respectively .

As of December 31, 2025 and 2024, the total outstanding balance of the

employee loans was $ 1.8 million and $ 2.2 million, respectively and are included in loans to employees on the accompanying consolidated

balance sheet.

Certain of the Company’s investments are

5 unchanged sentences

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.

The Company’s investments in American Ventures

LLC Series XIX (Skyline Builders Group Holdings Ltd.), and American Ventures LLC Series XIV (JFB Construction Holdings) are classified

as marketable securities.

The Company owns 90 % of AV Manager and AV Investment

Manager, the remaining 10 % is owned by non-controlling parties.

As such, 10 % of any profits earned by these entities are attributable

to non-controlling interests and are presented in the unaudited consolidated statements of changes in stockholders’ equity.

December 31, 2025, the amount attributable to non-controlling interest was $ 2.0 million.

There are no outstanding amounts payable to non-controlling

interests as of December 31, 2025.

The Company earns revenues for managing certain

pooled investment vehicles which are related parties.

These include the entirety of the management fee revenues totaling $ 0.6 million

and $ 0.1 million for the years ended December 31, 2025 and 2024, respectively and are classified as management fees in Note 12 and included

in other revenue within the statement of operations.

The total amount of contract liabilities disclosed in Note 3 represented amounts

received in advance of revenue earned on managing such related party investment vehicles and are listed as contract liabilities in the

statement of financial condition totaling $ 4.5 million and $ 1.1 million as of December 31, 2025 and 2024, respectively.

In the normal course of business, Dominari Securities

provides underwriting and brokerage services to the Series Funds.

As a result of services provided, the Company recognized approximately

$ 15.7 million in underwriting revenue, $ 20.7 million in carried interest revenue, and $ 7.7 million of commission revenue during 2025.

Segment Reporting

6 unchanged sentences

are most relied upon by the CODM are gross revenues and net loss.

The Company operates in two reportable

business segments:

The Company operates in two reportable business

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

14 unchanged sentences

Dominari Financial

Legacy AIkido Pharma

Legacy Holding Co.

Operating Costs

1 unchanged sentence

Professional and consulting fees

Data processing

Other expenses

Loss from operations

Other operating expenses

Income / (loss) from operations

Other (expenses) income

1 unchanged sentence

Gain on marketable securities

Unrealized loss on note receivable

Change in carrying value of investments

Total other (expenses) income

Realized gain on note receivable

Total other income

Net income (/loss) before income taxes

Provision for income taxes

Net income (loss)

Non-controlling interests

Net loss attributable to stockholders

Year Ended December 31, 2024

Dominari Financial

Legacy AIkido Pharma

Legacy Holding Co

Operating Costs

1 unchanged sentence

Professional and consulting fees

Data processing

Other expenses

7 unchanged sentences

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.

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

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

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

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.

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.

On February 11, 2025, the Company declared a special

Dividend Paid

On December 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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

financings (on an as-exercised basis) of $ 0.432 per share, which was paid on January 26, 2026, to shareholders and certain warrant holders

of record as of the close of business on January 5, 2025.

Sale of ABTC Stock

On December 30, 2025, the Company entered into an agreement to sell

the entirety of its 23,199,205 shares of ABTC common stock for proceeds totaling $ 32.4 million.

The transaction closed on January 20,

2026 with the receipt of the totality of the $ 32.4 million.

Restricted Stock Awards

On January 7, 2026, in connection with the transaction

involving the Company’s investment in American Bitcoin, the Committee determined that it is in the best interests of the Company

and its stockholders, to make a special equity grant to Messrs.

Anthony Hayes and Kyle Wool, in accordance with the Company’s 2022

Equity Incentive Plan (the “2022 Plan”) and pursuant to stockholder approval to increase the number of shares of common stock

reserved for issuance under the 2022 Plan.

Pursuant to the Committee’s decision and upon stockholder approval, pursuant to which

each received 3,000,000 shares of the Company’s common stock.

On March 4, 2026, upon approval of the Company’s

stockholders to amend the 2022 Plan to increase the number of shares of common stock reserved for issuance under the 2022 Plan, the shares

were fully-vested and nonforfeitable with a total fair value of approximately $ 18.4 million.

Special Meeting of Stockholders

On March 4, 2026, at a special meeting of stockholders,

the Company’s stockholders approved amendments to (1) increase the number of shares of common stock reserved for issuance with respect

to awards granted under the 2022 Plan by 10,000,000 shares of common stock from 11,720,750 shares of common stock to 21,720,750 shares

of common stock and (2) Section 4(b) of the 2022 Plan to clarify the calculation of the annual increase in shares of common stock reserved

for issuance under the 2022 Plan to provide that commencing on January 1, 2027 and continuing until January 1, 2032, the number of shares

reserved for issuance under the 2022 Plan shall automatically increase each January 1 st , by a number of shares equal to the

lesser of (i) 20 % of the total number of shares of common stock issued and outstanding on the immediately preceding December 31 st

and (ii) such smaller number of shares of common stock as determined by the board of directors.

Amendments to Employment Agreements with Officers

On March 20, 2026, the Company entered into amendments

to the employment agreements of each of Anthony Hayes (the Company’s Chief Executive Officer), and Kyle Wool (the Company’s

President) (collectively, the “Employment Agreement Amendments”).

Pursuant to each of the Employment Agreement Amendments,

the executives agreed to replace the annual bonus provisions with a performance-based quarterly bonus in consideration for the issuance

of 3,000,000 shares of common stock from the Company, as approved by vote of the shareholders of the Company on March 4, 2026.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk