Dominari Holdings Inc. 10-Q

Item 1. Financial Statements DOMINARI HOLDINGS INC. Condensed Consolidated Balance Sheets ($ in thousands except share and per share amounts) March 31, December 31, 2026 2025 (Unaudited) ASSETS Cash and cash equivalents $ 27,477 $ 34,005 Marketable securities 6,901 46,516 Securities owned 11,118 9,756 Receivable from clearing brokers 21,883 3,995 Long-term equity investments 11,846 11,744 Loans to employees 1,669 1,767 Right-of-use assets 2,586 2,721 Prepaid expenses and other assets 1,840 2,403 Total assets $ 85,320 $ 112,907 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued expenses $ 777 $ 611 Accrued compensation and commissions 25,005 17,754 Accrued dividends payable 364 10,335 Contract liabilities 4,679 4,504 Lease liability 2,744 2,841 Income taxes payable 20,174 7,318 Other liabilities - 173 Total liabilities 53,743 43,536 Stockholders’ equity Preferred stock, $ .0001 par value, 50,000,000 authorized Convertible Preferred Series D: 5,000,000 shares designated; 3,825 shares issued and outstanding as of March 31, 2026 and December 31, 2025; liquidation value of $ 0.0001 per share - - Convertible Preferred Series D-1: 5,000,000 shares designated; 834 shares issued and outstanding as of March 31, 2026 and December 31, 2025; liquidation value of $ 0.0001 per share - - Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 22,613,781 and 16,067,435 shares issued as of March 31, 2026, and December 31, 2025, respectively; 22,613,781 and 16,067,435 shares outstanding as of March 31, 2026 and December 31, 2025, respectively 2 - Additional paid-in capital 357,099 337,505 Accumulated deficit ( 325,492 ) ( 268,134 ) Total Dominari stockholders’ equity 31,609 69,371 Non-controlling interests ( 32 ) - Total stockholders’ equity 31,577 69,371 Total liabilities and stockholders’ equity $ 85,320 $ 112,907 See accompanying notes to unaudited condensed consolidated financial statements. 1 DOMINARI HOLDINGS INC. Condensed Consolidated Statements of Operations ($ in thousands except share and per share amounts) (Unaudited) Three Months Ended March 31, 2026 2025 Revenues Underwriting services $ 32,949 $ 5,606 Carried interest 1,096 - Commissions 2,490 2,190 Interest income 308 39 Principal transactions ( 1,532 ) ( 910 ) Other revenue 494 315 Total revenue 35,805 7,240 Operating costs and expenses Compensation and benefits 68,159 15,457 Advisory fees 36 20,944 Legal fees 1,485 704 Professional and consulting fees 876 829 Other expenses 2,871 2,188 Total operating expenses 73,427 40,122 Loss from operations ( 37,622 ) ( 32,882 ) Other income (expenses) Other income 108 - Interest income 61 21 Gain (loss) on marketable securities, net ( 7,014 ) ( 168 ) Realized and unrealized gain loss on notes receivable, net - 221 Change in carrying value of investments - 320 Total other income (expenses) ( 6,845 ) 394 Net loss before income tax expense $ ( 44,467 ) $ ( 32,488 ) Provision for income taxes 12,868 - Net loss ( 57,335 ) ( 32,488 ) Less: Net income attributable to non-controlling interests 23 - Net loss attributable to common stockholders of Dominari Holdings Inc. $ ( 57,358 ) $ ( 32,488 ) Net loss per share, basic and diluted Basic and Diluted $ ( 3.17 ) $ ( 3.02 ) Weighted average number of shares outstanding, basic and diluted Basic and Diluted 18,068,269 10,775,219 See accompanying notes to unaudited condensed consolidated financial statements. 2 DOMINARI HOLDINGS INC. Condensed Consolidated Statements of Changes in Stockholders’ Equity ($ in thousands except share and per share amounts) (Unaudited) Preferred Stock Common Stock Additional Paid-in Accumulated Dominari Holding Stockholders’ Non- Controlling Total Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Interests Equity Balance at December 31, 2025 4,659 $             - 16,067,435 $          - $ 337,505 $ ( 268,134 ) $       69,371 $               - $         69,371 Stock-based compensation - employees - - 6,471,346 2 19,241 - 19,243 - 19,243 Issuance of common stock from warrants exercised - - 75,000 - 317 - 317 - 317 Stock-based compensation- advisors - - - - 36 - 36 36 Distributions to non-controlling interest - - - - - - - ( 55 ) ( 55 ) Net loss - - - - - ( 57,358 ) ( 57,358 ) 23 ( 57,335 ) Balance at March 31, 2026 4,659 $ - 22,613,781 $ 2 $ 357,099 $ ( 325,492 ) $ 31,609 $ ( 32 ) $ 31,577 Preferred Stock Common Stock Additional Paid-in Treasury Stock Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Shares Amount Deficit Equity Balance at December 31, 2024 4,659 $          - 7,037,022 $          - $ 263,820 60,148 $ ( 501 ) $ ( 223,466 ) $        39,853 Stock-based compensation - - 1,240,969 - 7,682 - - - 7,682 Issuance of common stock - - 3,876,054 - 13,517 - - - 13,517 Advisory shares issued - - 2,550,000 - 20,944 - - - 20,944 Dividends issued - - - - - - - ( 7,080 ) ( 7,080 ) Net loss - - - - - - - ( 32,488 ) ( 32,488 ) Balance at March 31, 2025 4,659 $ - 14,704,045 $ - $ 305,963 60,148 $ ( 501 ) $ ( 263,034 ) $ 42,428 See accompanying notes to unaudited condensed consolidated financial statements. 3 DOMINARI HOLDINGS INC. Condensed Consolidated Statements of Cash Flows ($ in thousands) (Unaudited) Three Months Ended March 31, 2026 2025 Cash flows from operating activities Net loss $ ( 57,335 ) $ ( 32,488 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of right-of-use assets 135 52 Depreciation 26 26 Change in carrying value of long-term investment - ( 320 ) Non-cash underwriting revenues ( 10,080 ) ( 697 ) Non-cash commission expense 7,610 - Stock-based compensation – employees 19,243 28,626 Stock-based compensation – advisors 36 - Realized (gain) loss on securities owned ( 590 ) 714 Unrealized loss on securities owned 2,122 259 Realized loss on marketable securities 6,949 670 Unrealized (gain) loss on marketable securities 115 ( 468 ) Realized and unrealized (gain) loss on note receivable - ( 221 ) Changes in operating assets and liabilities: Prepaid expenses and other assets 537 ( 2,401 ) Receivable from clearing brokers ( 17,888 ) 4,848 Accounts payable and accrued expenses 165 520 Accrued compensation and commissions 7,251 1,210 Right of use asset and liability, net ( 97 ) ( 122 ) Contract liabilities 175 632 Income taxes payable 12,856 - Other liabilities ( 173 ) 395 Net cash (used in) provided by operating activities ( 28,942 ) 1,235 Cash flows from investing activities Purchase of marketable securities ( 9,185 ) ( 9,035 ) Sale of marketable securities 41,736 1,776 Purchase of securities owned ( 1,666 ) Sale of securities owned 1,242 - Purchase of long-term investments ( 102 ) - Redemption of long-term investments - 538 Collection of principal on note receivable 1,143 Collection of loans to employees 98 142 Net cash provided by (used in) investing activities 32,123 ( 5,436 ) Cash flows from financing activities Cash paid for dividends ( 9,971 ) ( 7,080 ) Distributions to non-controlling interest ( 55 ) - Cash from issuance common stock, net of offering cost - 13,517 Cash from issuance common stock for exercised warrants 317 - Net cash (used in) provided by financing activities ( 9,709 ) 6,437 Net increase in cash and cash equivalents ( 6,528 ) 2,236 Cash and cash equivalents, beginning of period 34,005 4,079 Cash and cash equivalents, end of period $ 27,477 $ 6,315 Cash paid for interest and taxes $ 17 $ - See accompanying notes to unaudited condensed consolidated financial statements. 4 DOMINARI HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Organization and Description of Business and Recent Developments Organization and Description of Business Dominari Holdings Inc. (the “Company”), formerly Aikido Pharma, Inc., was founded in 1967 as Spherix Incorporated. Since 2017, the Company operated as a biotechnology company with a diverse portfolio of small-molecule anticancer and antiviral therapeutics and their related patent technology. The Company is in the process of winding down its historical pipeline of biotechnology assets held by Dominari Labs, LLC (formerly Aikido Labs, LLC). In an effort to enhance shareholder value, in June of 2022, the Company formed a wholly owned financial services subsidiary, Dominari Financial Inc. (“Dominari Financial”), with the intent of shifting the Company’s primary operating focus away from biotechnology to the fintech and financial services industries. Through Dominari Financial, the Company acquired Dominari Securities LLC (“Dominari Securities”), an introducing broker- dealer, a member of the Financial Industry Regulatory Authority (“FINRA”) and an investment adviser registered with the Securities and Exchange Commission (“SEC”). Dominari Securities is also licensed to provide investment advisory services and annuity and insurance products of certain insurance carriers as an insurance agency through independent and affiliated brokers. On September 9, 2022, Dominari Financial entered into a membership interest purchase agreement, as amended and restated on March 27, 2023 (the “FPS Purchase Agreement”) with Fieldpoint Private Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint Private Securities, LLC, a Connecticut limited liability company (“FPS”), that is a broker-dealer, a member of FINRA and an investment adviser registered with the SEC. Pursuant to the terms of the FPS Purchase Agreement, Dominari Financial purchased from the Seller 100 % of the membership interests in FPS (the “Membership Interests”). The registered broker-dealer and investment adviser businesses will be operated as a wholly owned subsidiary of Dominari Financial. The FPS Purchase Agreement provided for Dominari 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. The second closing occurred on March 27, 2023. Dominari Financial paid to the Seller an additional $ 1.4 million in consideration for a transfer by the Seller to Dominari Financial of the remaining 80 % of the Membership Interests. As a result of the ownership change, FPS was renamed Dominari Securities LLC. On October 13, 2023, the Company entered into two separate Limited Liability Agreements with Dominari Manager LLC (“Manager”) and Dominari IM LLC (“Investment Manager”), which are both wholly owned subsidiaries and whose operations are included within the unaudited condensed consolidated financial statements of Dominari Holdings Inc. Manager was named as the manager of Dominari Master SPV LLC (the “Master SPV”), a limited liability company formed by the Company in 2022, and is responsible for the day-to-day operations of the Master SPV. Investment Manager was named the investment manager of Master SPV and is responsible for providing investment advice and decisions on behalf of the Master SPV. Beginning in March 2024, the Manager established various series of funds (the “Series”) of the Master SPV for the purpose of making investments in companies identified by the Investment Manager with proceeds generated by the sale of non-voting interests in such Series by the Master SPV to investors, in which the Company may, from time to time as it deems appropriate, also invest in such series alongside third-party investors. On 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 condensed 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. Note 2. Liquidity and Capital Resources The Company monitors its liquidity position on a regular basis The Company continues to incur ongoing administrative and other expenses, including public company expenses, in excess of corresponding (non-financing related) revenue. While the Company continues to implement its business strategy, it intends to fund its activities through managing current cash on hand from the Company’s past equity offerings. As of March 31, 2026, the Company has approximately $ 27.5 million of cash and cash equivalents and $ 6.9 million of marketable securities as well as $ 11.1 million of securities owned. Additionally, the Company had approximately $ 21.9 million in receivable from clearing brokers. Additionally, the Company’s working capital balance at March 31, 2026, totaled $ 21.9 million. 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 to fund its operations for at least the next twelve months from the date of the issuance of these unaudited condensed consolidated financial statements. 5 Note 3. Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies from those previously disclosed in the 2025 Annual Report. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), and in conformity with the rules and regulations of the SEC. In the opinion of management, these financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The condensed consolidated balance sheets as of March 31, 2026, condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025, condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2026 and 2025, and the condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026 or for any future interim period. The condensed consolidated balance sheets as of December 31, 2025 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2025. The Company’s policy is to consolidate all entities that it controls by ownership of a majority of the membership interest or outstanding voting stock. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 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 in DFHS. The purpose of DFHS is to sell various insurance products and services, including life insurance, private placement insurance, group medical plans, qualified plans, business insurance, and family office and estate planning services. The Company has determined it is not the primary beneficiary of DFH and thus will not consolidate the activities in its unaudited condensed consolidated financial statements. The Company will account for its interest in DFHS under the equity method accounting in accordance with ASC 323. As of March 31, 2026, there has been no material activity in DFHS. Use of Estimates The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include stock-based compensation, 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. 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. 6 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 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 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. 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). 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. Receivable from Clearing Brokers Receivable from Dominari Securities’ clearing brokers totaling $ 21.9 million consisted of approximately $ 0.5 million of liquid insured deposits $ 3.7 million of commission receivable and $ 17.7 million of liquid deposits maintained by the Company with its clearing brokers as of March 31, 2026. Receivable from Dominari Securities’ clearing brokers consisted of approximately $ 1.4 million of liquid insured deposits, $ 2.1 million of commissions receivable and $ 0.5 million of liquid deposits maintained by the Company with its clearing brokers as of December 31, 2025. 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 March 31, 2026 and December 31, 2025 an allowance for credit losses was deemed not necessary. Long-term Equity Investments and marketable securities 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 unaudited condensed consolidated balance sheet. Equity securities without readily determinable fair values are accounted for either at net asset value or using the measurement alternative. Under the measurement alternative, the equity investments are measured at cost, less any impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. 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 unaudited condensed consolidated balance sheet. 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 unaudited condensed consolidated statement of operations. 7 Leases The Company accounts for its leases under ASC 842, Leases (“ASC 842”). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the condensed consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred (see Note 9 - Leases ). Revenue The Company recognizes revenue under ASC 606 - Revenue from Contracts with Customers (“ASC 606”) . Revenue is recognized when control of the promised goods or performance obligations for services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. The following provides detailed information on the recognition of the Company’s revenue from contracts with customers: ● Underwriting services include underwriting and private placement agent services in both the public and private equity and debt capital markets, including private equity placements, initial public offerings, follow-on offerings, and underwriting and distributing public and private debt. Underwriting and placement agent revenue are recognized at a point in time on trade-date, as the client obtains the control and benefit of the underwriting offering at that point. The Company expenses any costs associated with underwriting transactions and they are recorded on a gross basis within the general and administrative line item in the condensed consolidated statements of operations as the Company is acting as a principal in the arrangement. The Company applies the practical expedient under ASC 606, as any such costs would by amortized in one year or less. The Company also provides investment banking services. Investment banking services typically include fees earned for acting as a financial advisor for mergers and acquisitions or similar transactions. These services provided by the Company are not distinct from the potential transaction that may occur. Due to this, the Company believes the performance obligation for providing investment banking services is satisfied when the earliest occurs (i) termination of the engagement letter, (ii) expiration of engagement letter or (iii) successful transaction has occurred. Any non-cash consideration earned by the Company in providing the aforementioned services is recorded at fair value in accordance with ASC 820, on the date that revenue is recognized. 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 (e.g. 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 unaudited condensed consolidated balance sheet. 8 ● 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 agreements. 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. ● Account advisory and management fees are two revenue streams which are both recognized over time. Please see further description below: o The Company earns revenue for performing account advisory and investment advisory services for customers based on contractually fixed rates applied, as a percentage, to the market value of assets in a customer’s account. The performance obligation for investment advisory services is considered a series of distinct services that are substantially the same and are satisfied each day of the contract and are recognized as revenue over time. Investment advisory fees are payable in arrears on a quarterly basis. o Management fees represent asset-based fees received in exchange for providing management services to certain related party pooled investment vehicles (funds). These fees are charged based upon contractually fixed rates applied, as a percentage, to the total assets of those pooled investment vehicles managed by the Company at the date upon which an investor subscribes into the fund, subsequently deferred. The Company recognizes these revenues over time as the Company has determined that the customer simultaneously receives and consumes the benefits of the management services as they are provided. Revenues are typically recognized over a period of five years, which the Company has estimated to be a reasonable estimate of the period during which the Company shall provide management services. 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. Contract liabilities are recognized as revenues when the Company provides ongoing investment management As of March 31, 2026, the Company recognized $ 4.7 million of contract liabilities of which $ 1.1 million is expected to be recognized within a year. The remaining balance is expected to be recognized through 2031. During the three months ended March 31, 2026, the Company recognized revenue of $ 0.3 million that was included in contract liabilities as of March 31, 2026. ● 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. 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. 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. The Company 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 unaudited condensed consolidated statements of operations. Please see “Stock based compensation” section below for additional information on stock-based compensation accounting policies. Stock-based Compensation The Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. These options generally vest over a one- to five-year period. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company recognizes stock-based compensation expense on a graded-vesting basis over the requisite service period for each separately vesting tranche of each award. Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on 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. 9 Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices. Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U. S. Treasury zero-coupon issues with an equivalent remaining term. The Company accounts for forfeitures as they occur. Income Taxes Income tax expense for interim periods is calculated in accordance with ASC 740, Income Taxes, and ASC 740 270, Interim Reporting. Interim periods are treated as integral parts of the annual reporting period, and income tax expense is recognized using estimates that reflect management’s best assessment of the expected annual tax position, including discrete items recognized in the period incurred. Effect of new accounting pronouncements to be adopted in future periods In November 2024, the FASB issued ASU No. 2024-03, “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 permitted. Management is currently evaluating the effects this guidance will have on its financial statements. The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on these unaudited condensed consolidated financial statements. 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. Note 4. Marketable Securities The realized gain or loss, unrealized gain or loss, and dividend income related to marketable securities for the three months ended March 31, 2026 and 2025, which are recorded as a component of gains and (losses) on marketable securities on the unaudited condensed consolidated statements of operations, are as follows ($ in thousands): Three Months Ended March 31, 2026 2025 Realized gain / (loss) $ ( 6,949 ) $ ( 732 ) Unrealized gain / (loss) ( 115 ) 468 Interest and dividend income 50 96 Total $ ( 7,014 ) $ ( 168 ) 10 Note 5. Long-Term Equity Investments The Company holds interests in several privately held companies as long-term investments. The following table presents the Company’s long-term investments as of March 31, 2026, and December 31, 2025 ($ in thousands): March 31, 2026 December 31, 2025 Carrying Carrying Cost Basis Value Cost Basis Value Investment in Kerna Health $ 2,140 $ 4,940 $ 2,140 $ 4,940 Investment in Revere Master SPV Series 1 (Qxpress Pte Ltd)* 1,000 1,000 1,000 1,000 Investment in MW LSV MasterClass, LLC (Yanka Industries, Inc. d.b.a. Masterclass)* 170 170 170 170 Investment in Payward, Inc. and MWSI VC Kraken-II, LLC (Payward, Inc. d.b.a.Kraken)* * 597 364 597 364 Investment in Aeon Partners Fund Series EG (Epic Games, Inc.)* 3,500 2,248 3,500 2,248 Investment in Tesspay, Inc. and Revere Master SPV Series VI (TessPay, Inc.)** 1,240 1,240 1,240 1,240 Investment in Discord Inc. 476 476 476 476 Investment in Automation Anywhere, Inc. 476 397 476 397 Investment in Dominari Master SPV LLC Series VI (X.AI Corp. d.b.a. xAI)* 100 109 100 109 Investment in Dominari Master SPV LLC Series XI (Cerebras Systems Inc.)* 25 25 25 25 Investment in Dominari Master SPV LLC Series XII (Groq, Inc.)* 25 25 25 25 Investment in AdvEn Inc. 750 750 750 750 Investment in American Ventures LLC Series XX (TracX Logis Pte Ltd..) 102 102 - - Total $ 10,601 $ 11,846 $ 10,499 $ 11,744 * 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. ** Investment made in these companies are through both an SPV and direct investments. The Company had no changes to the carrying values for the three months ended March 31, 2026, and recorded an increase in the carrying values of approximately $ 0.3 million for the three months ended March 31, 2025. Please see below details of the changes in carrying value by investment. Investment in Dominari Master SPV LLC Series XII (Groq, Inc.) On July 25, 2024, the Company entered into an agreement (the “Groq Agreement”) with Dominari Master SPV LLC whereby the Company agreed to purchase 25,000 Series XII Groq Units for $ 25 thousand. As of March 31, 2026, there was no change to the carrying value. On April 6, 2026, the Company received a payment of $ 58 thousand as a payment related to the Company’s investment. Investment in TracX. On January 13, 2026, the Company entered into an agreement (the “TracX Agreement”) with American Ventures LLC whereby the Company agreed to purchase Series XX TracX Logis units for $ 102 thousand. Note 6. Notes Receivable As of March 31, 2026, and December 31, 2025, the Company had no notes receivable. 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 in the 31, 2025. The note was fully paid off as of March 24, 2025, with proceeds totaling $ 1.1 million, resulting in an ending value of $ 0 . 11 Note 7. Fair Value of Financial Assets and Liabilities 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. The following table presents the Company’s assets and liabilities that are measured at fair value as of March 31, 2026 and December 31, 2025 ($ in thousands): Fair value measured as of March 31, 2026 Quoted Significant Total at prices in Active other observable Significant unobservable March 31, Markets inputs inputs 2026 (Level 1) (Level 2) (Level 3) Assets Securities owned $ 11,118 $ — $ 9,467 $ 1,651 Marketable securities $ 6,901 $ 5,494 $ 1,407 $ — Fair value measured as of December 31, 2025 Quoted Significant Total at prices in active other observable Significant unobservable December 31, markets inputs inputs 2025 (Level 1) (Level 2) (Level 3) Assets Securities owned $ 9,756 $ — $ 8,014 $ 1,742 Marketable securities $ 46,516 $ 45,049 $ 1,467 $ — The fair value of level 3 securities owned totaling $ 1.7 million shown above at March 31, 2026 are subject to an initial lock-up period until approximately June 30, 2026, and further restrictions to which the Company cannot liquidate its investment until such restrictions are met. Additionally, approximately $ 1.1 million of fair value of level 2 securities owned shown above at March 31, 2026 represents warrants that are subject to lock-up periods that will end by June 30, 2026 and another $ 4.3 million of fair value of warrant securities with lock-up periods that will end by September 30, 2026 as well. 12 Level 3 Measurement The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis ($ in thousands): Securities owned at fair value as of December 31, 2025 $ 1,741 Unrealized loss included in principal transactions $ ( 90 ) Securities owned at fair value as of March 31, 2026 $ 1,651 The Company’s Level 3 fair value measurements at March 31, 2026 were determined by the following quantitative inputs: ● The underlying stock price of $ 10.01 per share as of the measurement date. ● Implied success rates of similar type instruments from other comparable entities’ recent historical results of 15 % of the underlying value of the stock price. Note 8. Prepaid expenses and other assets Other assets consist of the following as of March 31, 2026, and December 31, 2025 ($ in thousands): March 31, 2026 December 31, 2025 Prepaid expenses $ 480 $ 805 Security deposits 483 483 Property and equipment, net 108 135 Other 769 980 Total $ 1,840 $ 2,403 Note 9. Leases On December 1, 2021, the Company entered into a Lease Agreement (the “Company’s Lease”) with Trump Tower Commercial LLC, a New York limited liability company. Under the Company’s Lease, the Company rents a portion of the twenty-second floor at 725 Fifth Avenue, New York, New York (the “22 nd Floor Premises”). The Company currently uses the 22 nd Floor Premises to run its day-to-day operations. The initial term of the Company’s Lease is seven ( 7 ) years commencing on July 11, 2022 (“Commencement Date). Under the Company’s Lease, the Company is required to pay monthly rent, commencing on January 11, 2023, equal to $ 12,874 . Effective for the sixth and seventh years of the Company’s Lease, the rent shall increase to $ 13,502 . The Company took possession of the 22 nd Floor Premises on the Commencement Date. On September 23, 2022, Dominari Financial entered into a Lease Agreement (“Dominari Financial’s Lease”) with Trump Tower Commercial LLC, a New York limited liability company. Under Dominari Financial’s Lease, Dominari Financial rents a portion of a floor at 725 Fifth Avenue, New York, New York (the “23 rd Floor Premises”). Dominari Financial currently uses the 23rd Floor Premises to run its day-to-day operations. The initial term of Dominari Financial’s Lease is seven (7) years commencing on the date that possession of the 23 rd Floor Premises is delivered to Dominari Financial. Under Dominari Financial’s Lease, Dominari Financial is required to pay monthly rent equal to $ 49,368 . Effective for the sixth and seventh years of Dominari Financial’s Lease, the rent shall increase to $ 51,868 per month. The Company took possession of the 23rd Floor Premises in February 2023. 13 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. Under the Company’s Florida Lease, the Company is required to pay monthly rent, commencing on October 1, 2025, equal to $ 10,000 . Effective 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 lease assets and liabilities as of March 31, 2026: March 31, 2026 Assets: Operating lease right-of-use-assets $ 2,586 Liabilities: Current Operating $ 568 Long-term Operating 2,176 $ 2,744 The following tables summarize quantitative information about the Company’s operating leases, under the adoption of ASC 842: March 31, 2026 Weighted-average remaining lease term - operating leases (in years) 4.0 Weighted-average discount rate - operating leases 10.0 % During the years ended March 31, 2026 and 2025, the Company recorded approximately $ 0.2 million and $ 0.2 million, respectively, of lease expense to current period operations. Three Months Ended March 31, 2026 2025 Operating leases Operating lease cost $ 205 $ 178 Short-term lease rent expense 3 22 Net rent expense $ 208 $ 200 As of March 31, 2026, future minimum payments during the next five years and thereafter are as follows: Operating Leases Remaining period Ended December 31, 2026 $ 638 Year Ended December 31, 2027 801 Year Ended December 31, 2028 766 Year Ended December 31, 2029 784 Year Ended December 31, 2030 377 Thereafter - Total 3,366 Less present value discount ( 622 ) Operating lease liabilities $ 2,744 14 Note 10. Net Loss per Share Basic loss per share of common stock is computed by dividing the net loss allocable to common stockholders by the weighted-average number of shares of common stock or common stock equivalents outstanding for the period. Diluted loss per common share is computed similar to basic loss per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock as of the first day of the period. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share for the years ended March 31, 2026, and 2025 are as follows: As of March 31, 2026 2025 Convertible preferred stock 34 34 Warrants to purchase common stock 6,362,098 8,175,188 Restricted stock awards 396,346 50,000 Options to purchase common stock 10,072,646 346,654 Total 16,831,124 8,571,876 Note 11. Stockholders’ Equity and Convertible Preferred Stock Common Stock As of March 31, 2026, there are 22,613,781 shares of common stock issued and outstanding This includes 316,346 unvested shares issued that are subject to forfeiture through September 30, 2026, and 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 unaudited condensed 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. 15 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, 2026 to March 31, 2026, various individuals exercised warrants, resulting in the additional issuance of 75,000 shares of common stock and cash proceeds of $ 0.3 million, which were recorded in additional paid-in capital and are reflected in the unaudited condensed 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 March 31, 2026, and December 31, 2025, 5,000,000 Series D Preferred Stock was designated; 3,825 and 3,825 shares remained issued and outstanding. Series D-1 Convertible Preferred Stock The Company’s Series D-1 Convertible Preferred Stock (“Series D-1 Preferred Stock”) was established on November 22, 2013. Each share of Series D-1 Preferred Stock has a stated value of $ 0.0001 per share and is convertible into 10 over 1,373 of a share of Common Stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder of Series D-1 Preferred Stock shall be entitled to receive, for each share of Series D-1 Preferred Stock held, a preferential amount in cash equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of Common Stock on an “as converted” basis. Each holder of Series D-1 Preferred Stock shall be entitled to vote on all matters submitted to the Company’s stockholders and shall be entitled to such number of votes equal to the number of shares of Common Stock such shares of Series D-1 Preferred Stock are convertible into at such time, taking into account the beneficial ownership limitations set forth in the governing Certificate of Designation. The conversion ratio of the Series D-1 Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company commenced an exchange with holders of Series D Convertible Preferred Stock pursuant to which the holders of the Company’s outstanding shares of Series D Preferred Stock acquired in the Merger could exchange such shares for shares of the Company’s Series D-1 Preferred Stock on a one-for-one basis. As of March 31, 2026 and December 31, 2025, 5,000,000 Series D-1 Preferred Stock was designated; 834 and 834 shares remained issued and outstanding. Dividends 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. On December 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. Dividends declared totaled $ 10.3 million during the three months ended December 31, 2025, of which $ 9.9 million were paid during the three months ended March 31, 2026, resulting in a dividend payable of $ 0.4 million as of March 31, 2026. 16 Warrants A summary of warrant activity for the three months ended March 31, 2026, is presented below: Weighted Weighted Average Average Remaining Exercise Total Intrinsic Contractual Warrants Price Value ($ 000s) Life (in years) Outstanding as of December 31, 2025 6,690,768 $ 5.38 $ 6,186 3.9 Granted - - - - Expired ( 253,670 ) $ 34.00 - - Exercised ( 75,000 ) $ 4.22 - - Outstanding as of March 31, 2026 6,362,098 $ 4.25 $               - 3.8 Restricted Stock Awards and Stock Options On October 7, 2022, the Company adopted the 2022 Equity Incentive Plan (“2022 Plan”). The 2022 Plan provided for the issuance of up to 1,100,000 shares in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. The 2022 Plan expires on January 1, 2032, and is administered by the Dominari Holdings’ board of directors. 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 to Messrs. 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, 2026; 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 thousand. On January 9, 2026, the Company issued 75,000 shares of the Company’s common stock under the Company’s 2022 Equity Incentive Plan to members of the board of directors. Upon issuance, the shares were fully-vested and nonforfeitable with a total fair value of $ 320 thousand. On March 4, 2026, the Committee determined that it is in the best interests of the Company and its stockholders to make a special equity grant of 3.0 million shares of the Company’s common stock each to Messrs. Anthony Hayes and Kyle Wool, pursuant to shareholder approval to increase the shares of common stock reserved for issuance under the Company’s 2022 Equity Incentive Plan, which was approved on March 4, 2026 at a Special Meeting of Shareholders Upon issuance, the shares were fully-vested and nonforfeitable with a total fair value of approximately $ 18.4 million. 17 See Restricted Stock roll-forward below. A summary of restricted stock awards activity for the three months ended March 31, 2026, is presented below: Weighted Number of Average Restricted Grant Day Stock Awards Fair Value Nonvested at December 31, 2025 396,346 $ 4.29 Granted 6,075,000 $ 3.08 Vested ( 6,075,000 ) $ 3.08 Forfeited - $ - Nonvested at March 31, 2026 396,346 $ 4.29 Stock-based compensation associated with restricted stock awards was approximately $ 19.2 million and $ 7.6 million for the three months ended March 31, 2026, and 2025, respectively. All stock compensation was recorded as a component of compensation and benefits expenses. The 396,346 nonvested restricted stock units that were approved in December 2025 in the table above are reflected as being issued in the unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026. As of March 31, 2026, there is approximately $ 1.1 million unrecognized stock-based compensation expense related to restricted stock awards. Stock Options 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. The Company recorded an expense of $ 26.1 million for the Performance Awards during the second quarter of 2025. 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”). Each party reserves the right to terminate the agreement at any time, with or without cause, upon five (5) days prior written notice to the other party. 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 $ 36 thousand during the three months ended 2026 related to such options. A summary of option activity under the Company’s stock option plan for the three months ended March 31, 2026, is presented below:  Weighted Weighted  Average Average Total Remaining  Number of Shares Exercise Price Intrinsic Value Contractual Life (in years) Outstanding as of December 31, 2025 10,072,646 $ 6.16 $ 26 9.1 Employee options granted - $ - $ - - Employee options exercised - $ - $ - - Employee options forfeited - $ - $ - - Outstanding as of March 31, 2026 10,072,646 $ 6.16 $ - 8.8 Options vested and exercisable 10,064,313 $ 6.17 $ - 8.8 Stock-based compensation associated with stock options was approximately $ 36 thousand and $ 38 thousand for the three months ended March 31, 2026, and 2025, respectively. All stock compensation was recorded as a component of compensation and benefits expenses. 18 Estimated future stock-based compensation expense relating to unvested stock options is approximately $ 24 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 unaudited condensed consolidated statements of changes in stockholders’ equity. As of March 31, 2026, the revenue attributable to non-controlling interest was $ 23 thousand of which the Company owes $ 21 thousand at March 31, 2026. During the three months ended March 31, 2026, the Company distributed $ 55 thousand to non-controlling interests. Note 12. Revenue Disaggregation of Revenue For the three months ended March 31, 2026, and 2025 total revenue and revenue related to contracts with customers within the scope of Topic 606 were ($ in thousands): Three Months Ended March 31, Revenues 2026 2025 Underwriting services $ 32,949 $ 5,606 Carried interest 1,096 - Commissions 2,490 2,190 Interest income – customers 72 39 Other revenue 230 249 Management fees 265 66 Total revenue from contracts with customers 37,102 $ 8,150 Principal transactions ( 1,532 ) ( 910 ) Interest income – noncustomer 235 - Total revenue $ 35,805 $ 7,240 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 three months ended March 31, 2026, revenue that was recognized at a point in time includes underwriting services of $ 32.9 . million, carried interest of $ 1.1 million, commissions of $ 2.5 million and principal transactions losses of $ 1.5 million consisting of $ 0.6 million of realized gains and $ 2.1 million of unrealized losses. For the three months ended March 31, 2025, revenue that is recognized at a point in time includes underwriting services of $ 5.6 million, commissions of $ 2.2 million, and principal transactions losses of $ 0.9 million consisting of $ 0.3 million of realized gains and $ 1.2 million of unrealized losses. 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 three months ended March 31, 2026, revenue that is recognized over time includes other revenue of $ 230 thousand, management fees of $ 265 thousand, interest income from customers of $ 72 thousand, and interest income-noncustomers of $ 235 thousand. For the three months ended March 31, 2025, revenue that was recognized over time includes other revenue of $ 233 thousand, management fees of $ 66 thousand, and interest income from customers of $ 53 thousand. 19 Note 13. Commitments and Contingencies Legal Proceedings The Company may be subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries may be named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims may seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries may also be subject to other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. Due to the inherent difficulty of predicting the outcome of litigation and other claims the Company cannot state with certainty what the eventual outcome of potential litigation or other claims will be. Notwithstanding this uncertainty, the Company does not believe that the results of these potential claims are likely to have a material effect on its financial position or results of operations. In March 2024, the Company received a notice of petition of a filed action seeking relief related to the hiring in March 2024 of new registered representatives from the representatives’ former employer. This notice was filed against the Company’s subsidiary, Dominari Securities. The Company does not agree with the plaintiff’s claims. While the Company intends to defend itself vigorously from this claim, it is unable to predict the outcome of such legal proceeding. Any potential loss as a result of this legal proceeding cannot be reasonably estimated. As a result, the Company has not recorded a loss contingency for the aforementioned claim. In the past, in the ordinary course of business, the Company actively pursued legal remedies to enforce its intellectual property rights and to stop unauthorized use of the Company’s technology. Other than ordinary routine litigation incidental to the business, the Company is not aware of any material, active or pending legal proceedings brought against it. Note 14. Income Taxes The Company’s income tax expense (benefit) for the three months ended March 31, 2026 is as follows ($ in thousands): U.S. Federal $ 8,537 State 4,331 Foreign - Current income tax expense (benefit) $ 12,868 U.S. Federal - State - Foreign - Deferred income tax expense (benefit) - Total income tax expense (benefit) $ 12,868 The Company accounts for income taxes in accordance with ASC 740, Income Taxes. For interim periods, the Company applies the estimated annual effective tax rate (“AETR”) method in accordance with ASC 740-270. Under this method, income tax expense for interim periods is computed by applying the estimated annual effective tax rate to year-to-date ordinary pretax income (loss) and adjusting for the tax effects of discrete items recognized in the period. For the three months ended March 31, 2026, the Company recorded income tax expense despite reporting a pretax loss. This result is primarily attributable to a significant permanent difference related to the limitation on the deductibility of certain executive compensation under Internal Revenue Code Section 162(m). The Company currently expects that a substantial portion of executive compensation will not be deductible for income tax purposes for the full fiscal year. As a result, the Company’s estimated annual taxable income is forecasted to be positive, despite an expected pretax book loss. Accordingly, the Company’s estimated annual effective tax rate is negative, as the projected annual income tax expense is divided by an expected pretax book loss. The application of this negative AETR to year-to-date ordinary pretax loss results in the recognition of income tax expense in the interim period, rather than a tax benefit that would otherwise be expected based on the pretax loss. In addition, the Company recognized the tax effect of a discrete item during the three months ended March 31, 2026, which further impacted income tax expense in the period. Discrete items are excluded from the determination of the AETR and are recorded in the period in which they occur. During the period, the Company recognized a book loss of approximately $ 6.9 million related to the sale of the Company’s marketable securities in American Bitcoin Corp (“ABTC”) stock. For income tax purposes, the majority of the approximate $ 32.5 million of proceeds from the sale of the Company’s ABTC stock resulted in a $ 32.5 million were taxable ordinary income which is treated as a discrete item in the interim period. The income tax effect of this transaction increased current income tax expense by approximately $ 9.5 million. The Company’s effective tax rate for the three months ended March 31, 2026, was ( 9.0 %). The primary drivers of the variance from the statutory rate were state taxes, Sec. 162m disallowed compensation, and valuation allowance. The Company will continue to assess its estimated annual effective tax rate each reporting period. Changes in forecasted pretax income, the amount of non-deductible compensation under Section 162(m), or other factors could result in significant adjustments to the Company’s interim income tax provision in future periods. During the three months ended March 31, 2025, the Company did not record any income tax expense or benefit. 20 In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the Company’s history of cumulative net losses, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has determined that, based on objective positive and negative evidence currently available, it is more likely than not that the Company will not realize the benefits of all deferred tax assets. Accordingly, the Company has provided a full valuation allowance for the deferred tax assets of approximately $ 49.4 million as of March 31, 2026 and $ 38.3 million as of December 31, 2025. For the three-month period ended March 31, 2026, the change in valuation allowance is approximately $ 11.1 million. As of March 31, 2026, 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 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 through December 31, 2025, 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. 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 tax rate. Note 15. Regulatory Dominari Securities, the Company’s broker-dealer subsidiary, is registered with the SEC as an introducing broker-dealer and is a member of FINRA. The Company’s broker-dealer subsidiary is Dominari Securities is subject to SEC Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As such, the subsidiary is subject to the minimum net capital requirements promulgated by the SEC and has elected to calculate minimum capital requirements using the basic method permitted by Rule15c3-1. As of March 31, 2026, Dominari Securities had net capital of approximately $ 23.4 million in excess of minimum net capital requirement of $ 0.7 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. The clearing 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. Note 16. Related Party Transactions 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 also participates as an underwriter. For the three months ended March 31, 2026, there were no such transactions. The Company earned $ 368,000 in the three months ended March 31, 2025 in transactions, which Revere also participated as an underwriter. As of May 20, 2025, Kyle Wool no longer holds an equity interest in Revere. During the year December 31, 2024, the Company entered into employee loans with various employees totaling $ 2.4 million. The terms of the loan agreements range from 3 years to 7 years, with an average annual interest rate of approximately 3.2 %. The total interest received for the three months ended March 31, 2026 and 2025 was approximately $ 17 thousand and $ 21 thousand, respectively. As of March 31, 2026 and 2025, the total outstanding balance of the employee loans was $ 1.7 million and $ 2.0 million, respectively and are included in loans to employees on the accompanying unaudited condensed consolidated balance sheets. 21 Certain of the Company’s investments are made through related party special purpose vehicles (the “Series Funds”). Those Company investments in the Series Funds without readily determinable fair values are accounted for using the measurement alternative and are are classified as long-term equity investments. Approximate carrying values of such related party long-term equity investments was $ 261 thousand and $ 150 thousand as of March 31, 2026 and December 31, 2025 respectively. Those Company investments in the Series Funds which have readily determinable fair values are classified as marketable securities with an approximate fair value of $ 2.3 million as March 31, 2026 and December 31, 2025. 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 condensed consolidated statements of changes in stockholders’ equity. As of March 31, 2026, the amount attributable to non-controlling interest was $ 23 thousand. There is $ 21 thousand payable to non-controlling interests as of March 31, 2026. The Company earns revenues for managing certain pooled investment vehicles which are related parties. These include the entirety of the management fee revenues totaling $ 0.3 million and $ 0.1 million for the three months ended March 31, 2026 and 2025, 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 2 represented amounts received in advance of revenue earned on managing such related party investment vehicles and are listed as contract liabilities in the unaudited condensed statement of financial condition totaling $ 4.7 million as of March 31, 2026 and $ 4.5 million as of December 2025. 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 $ 0.4 million in underwriting revenue, $ 1.1 million in carried interest revenue, and $ 1.0 million of commission revenue during the three months ended 2026. Note 17. Segment Reporting Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is the Chief Executive Officer , in deciding how to allocate resources to an individual segment and in assessing performance. The CODM reviews financial information for the purposes of making operating decisions, allocating resources, and evaluating financial performance of the business of the reportable operating segments, based on discrete financial information. The measures of segment profitability that are most relied upon by the CODM are gross revenues and net loss. The Company operates in two reportable business segments: (1) Dominari Financial and (2) Legacy Aikido. The Dominari Financial reportable business segment represents the Company’s broker-dealer business, which is composed of mostly underwriting and transactional service activities. The Legacy Aikido reportable business segment includes Aikido Labs, which manages the investments holdings of the legacy entity. Prior to the FPS Acquisition, the Company operated as a single operating segment comprised of Legacy Aikido. The CODM has access to and regularly reviews internal financial reporting for each business and uses that information to make operational decisions and allocate resources. Accounting policies applied by the reportable segments are the same as those used by the Company and described in the “ Summary of Significant Accounting Policies ”. 22 The measures of segment profitability that are most relied upon by the CODM are gross revenue and net income (loss), as presented within the table below and reconciled to the unaudited condensed consolidated statement of operations. Additionally, the CODM views the expenses listed below to be significant in their analysis. Three Months Ended March 31, 2026 Dominari Financial Legacy Holding Co. Consolidated Revenue $ 35,805 $ - $ 35,805 Operating Costs Compensation and benefits 23,891 44,268 68,159 Professional and consulting fees 291 585 876 Other operating expenses 3,063 1,329 4,392 Income / (loss) from operations 8,560 ( 46,182 ) ( 37,622 ) Other (expenses) income Other income - 108 108 Interest income - 61 61 Loss on marketable securities - ( 7,014 ) ( 7,014 ) Total other income - ( 6,845 ) ( 6,845 ) Net income (/loss) before income taxes 8,560 ( 53,027 ) ( 44,467 ) Provision for income taxes - 12,868 12,868 Net income (loss) $ 8,560 $ ( 65,895 ) $ ( 57,335 ) Non-controlling interests - 23 23 Net loss attributable to stockholders $ 8,560 ( 65,918 ) $ ( 57,358 ) Total assets $ 25,104 $ 60,216 $ 85,320 Three Months Ended March 31, 2025 Dominari Financial Legacy Holding Co. Consolidated Revenue $           7,240 $ - $ 7,240 Operating Costs Compensation, benefits and advisory fees 7,595 28,806 36,401 Professional and consulting fees 54 775 829 Other expenses 1,544 1,348 2,892 Loss from operations ( 1,953 ) ( 30,929 ) ( 32,882 ) Other (expenses) income Interest income - 21 21 Gain on marketable securities - ( 168 ) ( 168 ) Unrealized loss on note receivable - 221 221 Change in carrying value of investments - 320 320 Total other (expenses) income - 394 394 Net loss $ ( 1,953 ) $ ( 30,535 ) $ ( 32,488 ) Total assets $ 19,202 $ 33,103 $ 52,335 Note 19. Subsequent Events Dividend On May 4, 2026, the Company’s board of directors authorized a special cash dividend of, in aggregate, approximately $ 9.0 million, or approximately $ 0.31 per share. The dividend is payable on or about May 29, 2026, to the Company’s common stock shareholders and certain warrant holders (on an as-exercised basis) of record as of the close of business on May 15, 2026.   23