Dominari (DOMH) - 2025 Q2 - Quarterly Report

Part I Financial Statements (Unaudited) The unaudited condensed consolidated financial statements show a significant increase in total assets to $109.3 million, driven by growth in financial services activities, with a net income of $17.7 million for Q2 2025 and a net loss of $14.8 million for the six-month period, while cash flow from operations turned positive Condensed Consolidated Balance Sheets As of June 30, 2025, total assets more than doubled to $109.3 million from $47.1 million at year-end 2024, primarily fueled by increases in marketable securities, receivables from clearing brokers, and long-term equity investments, while total liabilities rose to $20.7 million and stockholders' equity significantly increased to $88.6 million Condensed Consolidated Balance Sheet Highlights ($ in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $109,338 | $47,125 | | Cash and cash equivalents | $9,469 | $4,079 | | Marketable securities | $18,772 | $5,773 | | Receivable from clearing brokers | $30,986 | $17,279 | | Long term equity investments | $43,744 | $12,282 | | Total Liabilities | $20,738 | $7,272 | | Accrued commissions | $13,005 | $2,057 | | Total Stockholders' Equity | $88,600 | $39,853 | Condensed Consolidated Statements of Operations For the second quarter of 2025, the company achieved a significant turnaround, posting a net income of $17.7 million compared to a $6.1 million net loss in Q2 2024, driven by a substantial revenue increase to $34.1 million and $37.1 million in other income, primarily from a $31.7 million change in fair value of investments, while the six-month period recorded a net loss of $14.8 million due to increased general and administrative expenses Consolidated Statement of Operations Summary ($ in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $34,095 | $6,174 | $42,206 | $7,541 | | General and administrative | $53,521 | $8,910 | $93,642 | $13,082 | | Loss from operations | $(19,426) | $(2,736) | $(51,436) | $(5,541) | | Total other income (expenses) | $37,086 | $(3,384) | $36,608 | $(6,020) | | Net income (loss) | $17,660 | $(6,120) | $(14,828) | $(11,561) | | Net income (loss) per share | $1.12 | $(1.01) | $(1.24) | $(1.92) | Condensed Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity grew from $39.9 million at the end of 2024 to $88.6 million by June 30, 2025, primarily driven by $33.9 million in stock-based compensation, $13.5 million from common stock issuance, $2.3 million from warrant exercises, and $20.9 million from shares issued under advisory agreements, partially offset by a net loss and $7.1 million in dividends paid[15] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $0.9 million, a significant improvement from a $7.2 million use of cash in the same period of 2024, while investing activities used $4.3 million and financing activities provided $8.8 million, resulting in a net increase in cash and cash equivalents of $5.4 million Summary of Cash Flows ($ in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $882 | $(7,185) | | Net cash (used in) provided by investing activities | $(4,268) | $10,154 | | Net cash provided by financing activities | $8,776 | $0 | | Net increase in cash and cash equivalents | $5,390 | $2,969 | Notes to the Condensed Consolidated Financial Statements The notes detail the company's strategic shift from biotechnology to financial services, including the acquisition of Dominari Securities and the formation of new investment and insurance ventures, with key disclosures on a significant increase in long-term investment value driven by a stake in American Bitcoin Corp., a $13.5 million equity financing, substantial stock-based compensation, and strong revenue growth from financial services, alongside a noted legal proceeding against a subsidiary - The company has shifted its primary operating focus from biotechnology to the fintech and financial services industries through its subsidiary Dominari Financial Inc., which acquired broker-dealer Dominari Securities LLC[19] - The company believes it has adequate cash, marketable securities, and anticipated cash flow to fund operations for at least the next twelve months[26] Long-Term Equity Investments ($ in thousands) | Investment | Carrying Value (June 30, 2025) | Carrying Value (Dec 31, 2024) | | :--- | :--- | :--- | | Investment in American Bitcoin Corp. | $32,000 | - | | Other Investments | $11,744 | $12,282 | | Total | $43,744 | $12,282 | - In February 2025, the company raised net proceeds of approximately $13.5 million through direct offerings and private placements of common stock and warrants[70] Revenue by Type ($ in thousands) | Revenue Type | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Underwriting | $14,954 | $4,057 | $20,560 | $4,723 | | Commissions | $8,021 | $1,775 | $10,212 | $2,085 | | Carried interest fees | $10,500 | - | $10,500 | - | | Total | $34,095 | $6,174 | $42,206 | $7,541 | - The company operates in two segments: Dominari Financial and Legacy AIkido, with Dominari Financial generating all $34.1 million of revenue and a net gain of $8.0 million in Q2 2025, while Legacy AIkido had no revenue but a net gain of $9.7 million primarily from investment value changes[104][107] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the significant improvement in Q2 2025 financial performance to the company's successful expansion in the financial services industry, with revenue surging to $34.1 million from $6.2 million year-over-year, leading to a net income of $16.6 million compared to a $6.1 million loss, driven by strong underwriting and commission revenues coupled with a $31.7 million unrealized gain on long-term investments, notably American Bitcoin Corp., offsetting a substantial increase in general and administrative costs, including $26 million in stock-based compensation, while confirming sufficient liquidity for the next 12 months Results of Operations Comparing Q2 2025 to Q2 2024, revenue increased by $27.9 million, and the company swung from a $6.1 million net loss to a $16.6 million net income, primarily driven by increased commissions and underwriting revenue from Dominari Securities and a significant markup in the value of the American Bitcoin Corp investment, despite a large increase in G&A expenses mainly from stock-based compensation and higher commission payouts, while for the six-month period, the net loss widened to $15.9 million from $11.6 million due to one-time stock-based compensation charges Q2 Performance Comparison (2025 vs 2024) | Metric ($ in millions) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $34.1 | $6.2 | +$27.9 | | Net Income (Loss) | $16.6 | $(6.1) | +$22.7 | - The positive change in net income was primarily driven by increased revenues and a $31.7 million increase in the carrying value of long-term investments, offset by a $26 million increase in stock-based compensation expense and a $15 million increase in commissions expense[121][124] Liquidity and Capital Resources The company's working capital stood at approximately $43.8 million as of June 30, 2025, with management asserting that current cash, marketable securities, and anticipated cash flow from operations are sufficient to meet capital requirements for at least the next 12 months, as cash from operations was a positive $0.9 million for the first six months of 2025, compared to a $7.2 million use of cash in the prior year period, while financing activities provided $8.8 million - The company had working capital of approximately $43.8 million as of June 30, 2025, and believes its liquidity is sufficient for at least the next 12 months[127] Net Cash Flow Summary for Six Months Ended June 30 ($ in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating activities | $882 | $(7,185) | | Investing activities | $(4,268) | $10,154 | | Financing activities | $8,776 | - | Quantitative and Qualitative Disclosures About Market Risk This section is not applicable to the company - As a smaller reporting company, this disclosure is not required[135] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, based on a previously identified material weakness in internal controls over financial reporting, stemming from staffing constraints, lack of timely and accurate book-closing procedures, insufficient review of fair value accounting, and inadequate segregation of duties - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness[137] - The material weakness is attributed to staffing constraints, leading to delays in closing books, lack of proper review over certain fair value accounting, inadequate segregation of duties, and IT control deficiencies[139] Part II Legal Proceedings The company's subsidiary, Dominari Securities, is involved in a legal action initiated in March 2024 concerning the hiring of new registered representatives from a former employer, with the company disputing the claims and intending to defend itself vigorously, but the outcome and any potential loss cannot be reasonably estimated at this time - In March 2024, a legal action was filed against the company's subsidiary, Dominari Securities, related to the hiring of new registered representatives, and the company cannot predict the outcome or estimate any potential loss[144] Risk Factors As a smaller reporting company, Dominari Holdings is not required to provide risk factor disclosures in its Form 10-Q, referring to the risk factors set forth in its Annual Report on Form 10-K filed on April 15, 2025 - The company is not required to provide this information as a "smaller reporting company" and refers to its most recent Form 10-K for a discussion of risk factors[145] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or specific uses of proceeds to report for the period - None[146] Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None[147] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[148] Other Information There is no other information to report for the period - None[149] Exhibits The report includes standard exhibits, such as the CEO and CFO certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL data files - Exhibits filed include: - Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 - Inline XBRL Instance Document and related taxonomy files[150]