Workflow
Dominari (DOMH) - 2024 Q1 - Quarterly Report
DOMHDominari (DOMH)2024-05-09 20:30

Financial Performance - Total revenue for the three months ended March 31, 2024, was 1,367,000,comparedto1,367,000, compared to 0 for the same period in 2023[11] - Operating expenses increased to 4,172,000forQ12024,upfrom4,172,000 for Q1 2024, up from 3,834,000 in Q1 2023, representing a 9% increase[11] - Net loss for the three months ended March 31, 2024, was 5,441,000,comparedtoanetlossof5,441,000, compared to a net loss of 3,762,000 in Q1 2023, indicating a 44.7% increase in losses[11] - The company recorded a net rent expense of 200,000forthethreemonthsendedMarch31,2024,comparedto200,000 for the three months ended March 31, 2024, compared to 164,000 for the same period in 2023, indicating an increase of approximately 21.9%[55] - The company incurred a loss from operations of approximately 2.8millionforthethreemonthsendedMarch31,2024,comparedtoalossof2.8 million for the three months ended March 31, 2024, compared to a loss of 3.8 million for the same period in 2023, indicating a 1.0milliondecreaseinnetoperatingloss[85]−OtherexpensesforthethreemonthsendedMarch31,2024,wereapproximately1.0 million decrease in net operating loss[85] - Other expenses for the three months ended March 31, 2024, were approximately (2.6) million, primarily due to volatility in investment valuations[85] Cash and Assets - Cash and cash equivalents decreased to 1,956,000asofMarch31,2024,downfrom1,956,000 as of March 31, 2024, down from 2,833,000 at the end of 2023, a decline of 30.8%[9] - Total assets decreased to 52,194,000asofMarch31,2024,from52,194,000 as of March 31, 2024, from 57,558,000 at the end of 2023, a reduction of 9.4%[9] - Stockholders' equity decreased to 47,669,000asofMarch31,2024,downfrom47,669,000 as of March 31, 2024, down from 52,923,000 at the end of 2023, a decline of 10%[9] - As of March 31, 2024, the Company held approximately 14.1millionindepositswithitsclearingbroker[27]−AsofMarch31,2024,thecompany′sworkingcapitalamountedtoapproximately14.1 million in deposits with its clearing broker[27] - As of March 31, 2024, the company's working capital amounted to approximately 23.8 million, which is expected to be sufficient to meet its working capital and capital expenditure requirements for at least the next 12 months[87] Investments - The company reported a change in fair value of long-term equity investments resulting in a loss of 2,459,000forQ12024[11]−TheCompany’slong−termequityinvestmentstotaled2,459,000 for Q1 2024[11] - The Company’s long-term equity investments totaled 20.9 million as of March 31, 2024, down from 24.2millionasofDecember31,2023[36]−TheinvestmentinUnusualMachines,whichwentpubliconFebruary14,2024,wasvaluedbasedonitsmarketpriceasofMarch31,2024[39]−TheCompanyrecognizedrevenueunderASC606,withvariousrevenuestreamsincludingunderwritingservices,commissions,andaccountadvisoryfees[29]−TheunrealizedgainontheConvergentConvertibleNoteforthethreemonthsendedMarch31,2024,wasapproximately24.2 million as of December 31, 2023[36] - The investment in Unusual Machines, which went public on February 14, 2024, was valued based on its market price as of March 31, 2024[39] - The Company recognized revenue under ASC 606, with various revenue streams including underwriting services, commissions, and account advisory fees[29] - The unrealized gain on the Convergent Convertible Note for the three months ended March 31, 2024, was approximately 60,000[42] - The company reported a gain of approximately 0.6milliononmarketablesecuritiesforthethreemonthsendedMarch31,2024,drivenbymarketimprovementandincreasedsaleactivity[86]ShareholderInformation−Theweightedaveragenumberofsharesoutstandingincreasedto5,995,065forQ12024,comparedto5,305,513forQ12023,reflectinga130.6 million on marketable securities for the three months ended March 31, 2024, driven by market improvement and increased sale activity[86] Shareholder Information - The weighted average number of shares outstanding increased to 5,995,065 for Q1 2024, compared to 5,305,513 for Q1 2023, reflecting a 13% increase[11] - As of March 31, 2024, the company had 5,995,065 shares of common stock issued and 5,934,917 shares outstanding[57] - The company has approximately 0.2 million in unrecognized stock-based compensation expense related to restricted stock awards as of March 31, 2024[61] - The company has 444,796 warrants outstanding as of March 31, 2024, with a weighted average exercise price of 29.25andaremainingcontractuallifeof1.95years[59]LegalandCompliance−Thecompanyiscurrentlyinvolvedinalegalproceedingrelatedtothehiringofnewregisteredrepresentatives,butitcannotpredicttheoutcomeorestimateanypotentialloss[65]−Amaterialweaknesswasidentifiedintheaccountingforcertainnotesreceivableandlong−terminvestments,leadingtoincorrectinitialaccounting[95]−Managementplanstoenhancecontrolsbyconsultingexperiencedthird−partyprofessionalstoremediatetheidentifiedmaterialweakness[95]−Thecompany′sdisclosurecontrolsandprocedureswerefoundtobeineffectiveduetoamaterialweaknessininternalcontrols[93]−Thecompanyisinvolvedinlegalproceedingsrelatedtothehiringofnewregisteredrepresentatives,withpotentialexposurethatcannotbereasonablyestimated[101]StrategicInitiatives−DominariFinancialacquiredDominariSecuritiesLLCforatotalof29.25 and a remaining contractual life of 1.95 years[59] Legal and Compliance - The company is currently involved in a legal proceeding related to the hiring of new registered representatives, but it cannot predict the outcome or estimate any potential loss[65] - A material weakness was identified in the accounting for certain notes receivable and long-term investments, leading to incorrect initial accounting[95] - Management plans to enhance controls by consulting experienced third-party professionals to remediate the identified material weakness[95] - The company's disclosure controls and procedures were found to be ineffective due to a material weakness in internal controls[93] - The company is involved in legal proceedings related to the hiring of new registered representatives, with potential exposure that cannot be reasonably estimated[101] Strategic Initiatives - Dominari Financial acquired Dominari Securities LLC for a total of 3.4 million, enhancing its position in the financial services sector[20] - Dominari Financial seeks partnership opportunities and acquisitions of third-party financial assets to execute its growth strategy in the financial services industry[78] - The company is winding down its historical pipeline of biotechnology assets held by Aikido Labs, LLC, which includes patented technology for various treatments[79] Cash Flow - Net cash used in operations for the three months ended March 31, 2024, was approximately 8.6million,primarilyduetoanetlossofapproximately8.6 million, primarily due to a net loss of approximately 5.4 million[89] - Net cash provided by investing activities for the three months ended March 31, 2024, was approximately 7.7million,resultingfromsalesofmarketablesecurities[90]−ThecompanyhadnocashflowsfromfinancingactivitiesforthethreemonthsendedMarch31,2024,comparedtoapproximately7.7 million, resulting from sales of marketable securities[90] - The company had no cash flows from financing activities for the three months ended March 31, 2024, compared to approximately 0.9 million used in financing activities for the same period in 2023[91]