What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-10 · 169 added, 163 removed, 101 unchanged (77% of the section changed)

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

You should read this discussion together with

the Financial Statements, related Notes and other financial information included elsewhere in this Form 10-Q.

All references to “we,”

“us,” “our” and the “Company” refer to Dominari Holdings Inc., a Delaware corporation and its consolidated

subsidiaries unless the context requires otherwise.

Management’s Discussion and analysis of Financial

Condition and Results of Operations

You should read this discussion together with the Financial Statements,

related Notes and other financial information included elsewhere in this Form 10-Q.

All references to “we,”“us,”

“our” and the “Company” refer to Dominari Holdings Inc., a Delaware corporation and its consolidated subsidiaries

unless the context requires otherwise.

Cautionary Note Regarding Forward-Looking Statements

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Dominari Holdings Inc.

is a holding company that, through its various subsidiaries, is engaged in wealth management, investment banking, sales and trading, asset

(“Dominari”)is

a holding company that, through its various subsidiaries, is engaged in wealth management, investment banking, sales and trading, asset

management and insurance.

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Dominari Financial Inc.

(“Dominari Financial”),

a wholly owned subsidiary of Dominari Holdings Inc., executes the Company’s growth strategy in the financial services industry.

In addition to organic growth, Dominari Financial seeks partnership opportunities and acquisitions of third-party financial assets such

as registered investment advisors and businesses, broker dealers, asset management and fintech firms, and insurance brokers.

transaction in furtherance of our growth in the financial services industry, the acquisition of 100% of a dually registered broker dealer

and investment advisor from Fieldpoint Private Bank & Trust (“Fieldpoint”), was consummated on March 27, 2023.

acquired dually registered broker-dealer and investment adviser was renamed Dominari Securities LLC (“Dominari Securities”)

and is a wholly owned subsidiary of Dominari Financial.

(“Dominari Financial”),a

wholly owned subsidiary of Dominari Holdings Inc., executes the Company’s growth strategy in the financial services industry.

addition to organic growth, Dominari Financial seeks partnership opportunities and acquisitions of third-party financial assets such as

registered investment advisors and businesses, broker dealers, asset management and fintech firms, and insurance brokers.

Our first transaction

in furtherance of our growth in the financial services industry, the acquisition of 100% of a dually registered broker dealer and investment

advisor from Fieldpoint Private Bank & Trust (“Fieldpoint”), was consummated on March 27, 2023.

The newly acquired dually

registered broker-dealer and investment adviser was renamed Dominari Securities LLC (“Dominari Securities”) and is a wholly

owned subsidiary of Dominari Financial.

On October 13, 2023, the Company entered into

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alongside third-party investors.

On May 21, 2024, Dominari Financial and Heritage

Strategies LLC (“HS”) entered into a Limited Liability Company Operating Agreement (the “JV Agreement”) of Dominari

Financial Heritage Strategies LLC (“DFHS”).

The JV Agreement governs the operation of DFHS, including the distributions to

the members of DFHS upon the offer, sale and renewal of various insurance products and services, including life insurance, private placement

insurance, group medical plans, qualified plans, business insurance, and family office and estate planning services.

Pursuant to the

terms of the JV Agreement, Dominari Financial and HS are the co-managing members (the “Co-Managing Members”), each with fifty

percent (50%) ownership interests in DFHS.

Revenues from the sale of the various insurance products and services after deducting general

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

On June 17, 2025, the Company entered into two

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

In addition to our critical accounting estimates

as compared to the critical accounting estimates discussed in the Company’s Annual Report on Form 10- K, the Company considers the

valuation of its warrants as a critical accounting estimate included in the September 30,

2025 unaudited condensed consolidated financial statements as follows:

Warrant Investments

Warrant fair values are primarily determined using

a Black Scholes option pricing model, which include 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.

● The underlying stock price is equal to the closing price

of the underlying stock as of the measurement date.

● 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 price.

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

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).

These 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.

Refer to Note 3 of the Company’s Annual Report on Form 10-K for

a discussion of our significant accounting policies.

There have been no material changes to our critical

accounting estimates as compared to the critical accounting estimates discussed in the Company’s Annual Report on Form 10-K for

the year ended December 31, 2025.

Refer to Note 3 of the Company’s Annual

Report on Form 10-K for the year ended December 31, 2025, for a discussion of our significant accounting policies.

Recently Issued Accounting Pronouncements

See Note 3 to the unaudited condensed consolidated financial statements

for a discussion of recent accounting standards.

See Note 3 to the unaudited condensed consolidated

financial statements for a discussion of recent accounting standards.

Results of Operations

Three months ended September 30, 2025, compared to the three months

ended September 30, 2024

During the three months ended September 30, 2025

and 2024, we recognized approximately $50.8 million and $4.0 million in revenue from operations, respectively.

The increase in 2025 was

primarily driven by the increase in commissions of $7.7 million and underwriting revenue of $30.8 million earned by Dominari Securities

and Dominari Manager LLC (“Manager”) along with $8.7 million earned in carried interest for the three months ended September

During the three months ended September 30, 2025, we recorded net income of approximately $126.1 million and during the three

months ended September 30, 2024, we incurred a net loss of approximately $4.2 million.

The change in net income from operations was primarily

driven by increases in revenue and other income (see discussion below on marketable securities and long-term equity investments), and

was offset by increases in general and administrative costs and expenses, specifically increases in commissions expense and stock-based

compensation expense.

During the three months ended September 30, 2025,

other income was approximately $127.7 million and the Company recorded an other expense of $1.0 million, for the comparable period in

The activity described above for the three months

ended September 30, 2025 and 2024, is primarily a result of the Company’s continued increase in activities related to the financial

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

change in carrying value of long-term equity investments.

Specifically:

Marketable securities - We recognized net gains of approximately $159.1 on marketable securities during the quarter primarily driven by an unrealized gain of $156.4 million from the investment in American Bitcoin Corp.

(“ABTC”) along with gains recorded on investments in Skyline Builders Group Holdings Ltd.

and JFB Construction Holdings.

In September 2025, ABTC became publicly listed on the Nasdaq (Ticker:

ABTC) and accordingly, the ABTC investment was reclassified from long term equity investments to marketable securities.

Long-term equity investments – During the three months ended September 30, 2025, we recognized a reduction of $32.0 million in our long-term equity investments reflecting the reclassification of the American Bitcoin Corp investment to marketable securities which was valued at $32.0 million at June 30, 2025.

Nine months ended September 30, 2025, compared

to the nine months ended September 30, 2024

During the nine months ended September 30, 2025,

and 2024, we recognized approximately $93.0 million and $ 11.6 million in revenue from operations, respectively.

The increase was primarily

driven by the increase in commission revenues of $11.3 million and underwriting revenue of $51.5 million earned by Dominari Securities

and Dominari Manager LLC (“Manager”) along with $19.2 million earned in carried interest for the nine months ended September

During the nine months ended September 30, 2025, and 2024, we recorded net income of $111.2 million and a net loss of approximately

$15.8 million respectively.

The change in net income was primarily driven by increases in revenues of $81.4 million and other income of

$164.8 million offset by an increase in stock-based compensation expense of $53.7 million, and commission expenses of $60.4 million as

compared to the comparable period in 2024.

During the nine months ended September 30, 2025 and 2024, other income (expenses) were approximately

$164.8 million and ($7.0 million), respectively (see discussion below on marketable securities and long-term equity investments).

The activity described above for the nine months

ended September 30, 2025 and 2024, is primarily a result of the Company’s continued increase in activities related to the financial

services industry, along with macroeconomic uncertainty and volatility impacting marketable securities.

Specifically:

Marketable securities - We recognized gains of approximately $163.1 million on marketable securities, which includes $156.4 million gain from the Company’s investment in ABTC (see discussion above) for the nine months ended September 30, 2025.

This represents an increase of approximately $162.3 million over the nine months ended September 30, 2024.

Notes receivable - We recognized $0.2 million unrealized gain over the nine months ended September 30, 2025, versus $2.0 million loss during the nine months ended September 30, 2024, on notes receivable.

Three months ended March 31, 2026, compared

to the three months ended March 31, 2025

Three Months Ended

Underwriting services

Carried interest

Interest income

Principal transactions

Other revenue

Total revenue

Operating costs and expenses

Compensation and benefits

Advisory fees

Professional and consulting fees

Other expenses

Total operating expenses

Loss from operations

Other income (expenses)

Interest income

Loss on marketable securities, net

Realized and unrealized gain loss on notes receivable, net

Change in carrying value of investments

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.

During the three months ended March 31, 2026, we recognized approximately

$35.8 million in revenue from operations, an increase of approximately $28.6 million or 395% as compared to the three months ended March

31, 2025, primarily driven by the increase in our activities of Dominari Securities.

The increase in revenue was primarily attributable

to the following:

Underwriting service revenue increased by $27.3 million or 488% from $5.6 million to $32.9 million in the three months ended March

31, 2026 as compared to the comparable period 2025, reflecting the impact of it increased efforts in both private placement and registered

offering underwriting activities and deal flow.

Carried interest revenue totaled $1.1 million in first quarter of 2026 as compared to no such revenue in the first quarter of 2025

as a result of receiving variable consideration from investment management customers.

Commission revenues increased by $0.3 million, or 14%

in the first three months of 2026 as compared to the same period in 2025, as a result of the increased customer trading activity.

During the three months ended March 31, 2026, we recognized $73.4 million

in operating costs and expenses representing an increase of $33.3 million or 83% as compared to the three months ended March 31, 2026.

The increase in operating costs and expenses is primarily a result of the following:

Compensation and benefits increased by $52.7 million or 341%for the

three months ended March 31, 2026 as compared to the same period in 2025 primarily as a result of increased commissions expenses of approximately

$17.1 million and increases in bonus expense of approximately $34.1 million (of which $18.2 million of stock based compensation is included).

Increases in compensation and benefits costs were primarily incurred to compensate employees for generation of the significantly increased

The Company recorded $36 thousand of advisory fees in three months

ending March 31, 2026, as compared to $20.9 million in the comparable period in 2025 primarily as a result of the issuance of approximately

2.55 million shares of common stock to certain advisors in February 2025.

During the three months ended March 31, 2026, , other expense was approximately

$(6.8) million as compared to other income of $394 thousand for the three months ended March 31, 2025.

The 2026 other expense primarily

is as a result of the loss on the sale of the Company’s ABTC stock for cash proceeds of approximately $32.5 million in January 2026

which was lower than the approximate December 31, 2025, book value of $39.4 million.

During the three months ending March 31, 2025, the

Company recorded a realized gain of approximately $0.2 million on a note that was satisfied during the period and an approximate $0.3

million increase in the carrying value of its long-term investments.

During the three months ended March 31, 2026, the Company recorded

income tax expense of $12.9 million as compared to $0 in comparable period in 2025 primarily as a result of the increased revenues, taxable

gain on the sale of the Company’s ABTC stock in January 2026, and certain income tax limitations under Internal Revenue Code Sections

162(m) and 382 the tax impact of certain expenses related to compensation that are not allowable which limit available deductions for

income tax purposes.

Net loss of $57.3 million in the three months ended March 31, 2026,

was $24.8 million or 76% higher than the $32.5 million loss reported in the comparable period of 2025.

In the first three months of 2026,

non-controlling interest of $23 thousand was recorded slightly increasing the net loss attributable to common stockholders’ of the

Non-GAAP Comparison of Results for the Three

Months Ended March 31, 2026, and March 31, 2025

To supplement its consolidated financial statements

presented in accordance with U.S.

generally accepted accounting principles (GAAP), the table below summarizes the additional non-GAAP

financial measures of loss from operations, net income (loss) applicable to common stockholders’ of Dominari Holdings and earnings

per share as adjusted from excluding non-cash stock-based compensation.

Such noncash stock-based compensation represents charges included

in compensation and benefits expense and advisory expense as reported on the Company’s consolidated statement of operations.

Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects

for future performance.

The non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of financial

performance prepared in accordance with U.S.

A reconciliation of the differences between these non-GAAP financial measures with

the most directly comparable financial measure calculated in accordance with GAAP is shown in the table below ($ thousands):

Loss from operations

Non-cash stock-based compensation

Adjusted loss from operations

Net loss attributable to common stockholders’ of Dominari Holdings

Non-cash stock-based compensation

Adjusted net loss before income tax expense

Adjustment to the provision for income taxes

Adjusted net loss to common stockholders’ of Dominari Holdings

Adjusted net loss per share, basic

Weighted average number of shares outstanding, basic

Liquidity and Capital Resources

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

● managing current cash and cash equivalents on hand from our

past debt and equity offerings;

● managing current marketable securities and other investments

● seeking additional funds raised

through the sale of additional securities in the future; and

● seeking additional liquidity

through credit facilities or other debt arrangements.

Our ultimate success is dependent on our ability

to generate sufficient cash flow to meet our obligations on a timely basis.

Our business may require significant amounts of capital to

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

Our working capital amounted to approximately $198.8 million as of September 30, 2025.

Included in working capital is $156.4 million

related to American Bitcoin shares that is subject to a lock-up period until March 1, 2026.

as well as another $1.2 million of warrants

for purchasing shares in publicly traded that are subject to lock-up periods that will end in November 2025 and an additional $4.0 million

of warrants for purchasing shares in publicly traded companies with lock-up periods that will end by March 1, 2026.

We believe our cash

and cash equivalents and marketable securities, together with the anticipated cash flow from operations will be sufficient to meet our

working capital and capital expenditure requirements for at least the next 12 months.

In the event that cash flow from operations is

not sufficient to fund our operations, as expected, or if our plans or assumptions change, including if inflation begins to have a greater

impact on our business or if we decide to move forward with any activities that require more outlays of cash than originally planned,

we may need to raise additional capital sooner than expected.

We may raise this additional capital by obtaining additional debt or equity

financing, especially if we experience downturns in our business that are more severe or longer than anticipated, or if we experience

significant increases in expense levels resulting from being a publicly traded company or from continuing operations.

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

● seeking additional funds raised through the sale of additional securities in the future;

● seeking additional liquidity through credit facilities or other debt arrangements.

Our ultimate success is dependent on our ability to generate sufficient

cash flow to meet our obligations on a timely basis.

Our business may require significant amounts of capital to sustain operations that

we need to execute our business plan to support our transition into the financial services industry.

Our working capital amounted to approximately

$21.9 million as of March 31, 2026.

As of March 31, 2026, we had approximately $27.5 million of cash and cash equivalents, $6.9 million

of marketable securities and $11.1 million of securities owned.

Additionally, we had approximately $21.9 million in receivable from clearing

All of such funds are available to fund our operations.

We believe our cash and cash equivalents and marketable securities, together

with the anticipated cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for

at least the next 12 months.

In the event that cash flow from operations is not sufficient to fund our operations, as expected, or if

our plans or assumptions change, including if inflation begins to have a greater impact on our business or if we decide to move forward

with any activities that require more outlays of cash than originally planned, we may need to raise additional capital sooner than expected.

We may raise this additional capital by obtaining additional debt or equity financing, especially if we experience downturns in our business

that are more severe or longer than anticipated, or if we experience significant increases in expense levels resulting from being a publicly

traded company or from continuing operations.

Our ability to obtain capital to implement our

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of additional equity securities could result in significant dilution to stockholders.

The following table summarizes our net cash flows

from operating, investing and financing activities for the periods indicated (in thousands):

As of September 30,

The following table summarizes our net cash flows from operating, investing

and financing activities for the periods indicated (in thousands):

As of March 31,

Cash provided by (used in)

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Financing activities

Net increase in cash

Net increase (decrease) in cash

Cash Flows from Operating Activities

For the nine months ended September 30, 2025

we used $4.0 million in operations as compared to cash flow use of $11.9 million for the nine months ended September 30, 2024.

provided by operating activities for the nine months ended September 30, 2025, is primarily attributable to increases in receivable from

clearing brokers of $11.6 million, increase in accrued commissions of $2.7 million , increase in stock based comp of $53.7 million, changes

in operating assets and liabilities of approximately $6.2 million, net realized and unrealized gain on marketable securities of approximately

$4.8 million, offset by a change in prepaid expenses and other assets of approximately $0.2 million, and net income of approximately

For the three months ended March 31, 2026, net cash (used in) operations

was approximately $(28.9) million as compared to net cash provided by operations of $1.2 million for the three months ended March 31,

The cash used in operating activities for the three months ending March 31, 2026, is primarily attributable to net loss of approximately

$55.7 million, increases in receivable from clearing brokers of approximately $17.9 million and non-cash underwriting revenue of approximately

$10.1 million, offset primarily by non-cash commission expense of approximately $7.6 million, increases in income taxes payable of approximately

$12.9 million and stock-based compensation of approximately $19.3 million, and a realized gain on marketable securities of approximately

$6.9 million.

The cash used in operating activities for the nine months ended September 30, 2024, is primarily attributable to a net

loss of approximately $15.7 million, approximately $3.4 million of unrealized gain on marketable securities, increase in clearing broker

deposits of $6.5 million, partially offset by approximately $3.8 million of realized gain on marketable securities, the change in carrying

value of long term investments of approximately $6.4 million, and changes in operating assets and liabilities of $5.7 million.

The cash provided by operating activities for the three months ended March 31, 2025, was primarily attributable to decreases

in receivable from clearing brokers of $4.8 million, increase in accrued commissions of approximately $1.2 million, increase in stock

based compensation of approximately $28.6 million, changes in operating assets and liabilities of approximately $3.7 million, realized

loss on marketable securities of approximately $0.7 million, offset by a net loss of approximately $32.4 million.

Cash Flows from Investing Activities

For the nine months ended September 30, 2025

and 2024, net cash provided by investing activities was approximately $0.9 million and $12.5 million, respectively.

The cash provided

by investing activities for the nine months ended September 30, 2025, sales of marketable securities of $15.9 million, collection of

principal on notes receivable of $1.1 million, sales of long term investments $0.5 million and collection of principal from employee

loans of $0.3 million, and was partially offset by purchases of marketable securities of approximately $16.8 million.

The cash provided

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

$14.8 million and long term investments of approximately $ 3.5 million and collections of principal on notes receivable of $0.8 million,

and was partially offset by funds loaned to employees of $2.4 million and purchases of marketable securities of approximately $4.0 million.

For the three months ended March 31, 2026 and 2025, net cash provided

by (used in) investing activities was approximately $32.1 million and $(5.4) million, respectively.

The cash provided by investing activities

for the three months ended March 31, 2026, primarily resulted from our sale of marketable securities of approximately $41.7 that included

the sale of the Company’s ABTC shares for $32.4 million in net proceeds, partially offset by our purchase of marketable securities

of approximately $10.0 million.

The cash used in investing activities for the three months ended March 31, 2025, primarily resulted from

our purchases of marketable securities of approximately $9.0 million, partially offset by sale of marketable securities of approximately

$1.8 million and collection of principal on notes receivable of $1.1 million.

Cash Flows from Financing Activities

For the nine months ended September 30,

2025, cash provided by financing activities was approximately $4.4 million, primarily driven by fund raising related to issuance of common

stock of $13.5 million and issuance of common stock for warrants exercised of $4.6 million, partially offset by payment of dividends

of $11.9 million.

During the three months ended September 30, 2025, the Company distributed approximately $1.8 million to holders of

non-controlling interests.

For the nine months ended September 30, 2024, there are no cash flows from financing activities.

Quantitative and Qualitative Disclosures

About Market Risk.

For the three months ended March 31, 2026 and 2025, net cash (used

in) provided by financing activities was approximately $(9.7) million and $6.4 million, respectively.

The cash used in financing activities

for the three months ended March 31, 2026, was resulted from dividends paid of approximately $9.9 million and distributions to non-controlling

interest of approximately $55 thousand, offset by the issuance of common stock for warrants exercised of approximately $0.3 million.

cash provided by financing activities for the three months ended March 31, 2025, was primarily driven by fund raising related to issuance

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

Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis