Dominari Holdings Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter income statement. The filing was signed March 31, 2023.
Business context
Dominari, formerly AIkido Pharma, shifted its primary focus in 2022 from biotechnology toward financial services and fintech, with a stated strategy of acquiring financial businesses. It reported no operating revenue for 2022 and was still building its new business. The historical biotech portfolio was being wound down, although the filing also describes continued development of an antiviral platform. At year-end, the company had seven full-time and one part-time employee.
Dominari paid $2.0 million for a 20% interest in Fieldpoint Private Securities (FPS) in October 2022. Following FINRA approval, it acquired the remaining 80% on March 27, 2023, for $1. The acquired broker-dealer and investment-adviser business was expected to begin operating under the Dominari Securities name in 2023.
Key financial metrics
Amounts below are in millions of dollars except per-share data. Margins are not meaningful because the company reported no operating revenue.
| Metric | FY2022 / Dec. 31, 2022 | FY2021 / Dec. 31, 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating loss | $14.3 | $9.4 |
| Net loss | $22.1 | $7.2 |
| Net loss attributable to common shareholders | $26.2 | $7.2 |
| Basic and diluted loss per share | $4.91 | $1.48 |
| Cash and cash equivalents | $33.2 | $65.6 |
| Net cash used in operating activities | $10.6 | $6.6 |
| Net cash used in investing activities | $14.6 | $8.9 |
| Net cash from / (used in) financing activities | $(7.2) | $78.3 |
| Total assets | $76.2 | $102.7 |
| Total liabilities | $2.5 | $1.1 |
| Stockholders’ equity | $73.8 | $101.6 |
Working capital was approximately $48.9 million. Current assets included $33.2 million cash, $7.1 million marketable securities, $7.5 million short-term notes receivable, and a $2.0 million FPS investment. Long-term investments were $23.1 million and long-term notes receivable were $1.1 million. The filing reports no conventional borrowings; lease liabilities totaled $0.8 million ($0.1 million current and $0.7 million long-term). Future operating-lease payments totaled $1.1 million before discounting.
Changes versus FY2021 and unusual items
- Operating loss increased by about $5.0 million, principally from higher general and administrative expense, including board stock awards, employee bonuses, and transition-related legal and accounting fees.
- Other expense was $7.8 million in 2022, compared with $2.3 million of other income in 2021. Marketable securities generated a $6.0 million loss; changes in investment fair values generated a $2.6 million loss. The company cited market volatility and recorded impairments related to Kaya and Nano investments and notes.
- Net loss attributable to common shareholders included $4.1 million of deemed dividends associated with Series O and Series P redeemable convertible preferred stock. The preferred shares were issued in 2022 and redeemed during the second quarter; the filing reports a total redemption amount of $23.1 million.
- Operating cash use increased to $10.6 million. Cash fell by $32.4 million during the year, after investment activity, preferred-stock redemption, and $3.1 million spent repurchasing 468,017 shares.
- Private and other investments rose to $23.1 million from $9.5 million, but their valuation involves significant judgment. The auditor identified valuation of investments and notes receivable as a critical audit matter; the 2022 statements received an unqualified audit opinion.
Outlook, risks, and contingencies
Management stated that cash was expected to fund operations for at least 12 months from issuance of the financial statements. The company also said it may seek additional equity or debt financing; no specific revenue, earnings, or financial-services growth guidance was provided. It cautioned that profitability depends on executing the transition, attracting clients, and generating revenue, and cannot be assured.
Key risks include the limited operating history in financial services, continued losses and cash burn, acquisition and integration execution, market-sensitive investment values, the need to attract and retain financial professionals, extensive securities regulation, and cybersecurity and operational risks. The company reported no material active or pending legal proceedings. No contractual obligations were listed in MD&A, though the financial-statement notes disclose operating leases.
Control disclosure to reconcile: the risk-factor discussion says internal controls over financial reporting were not effective at December 31, 2022, citing segregation-of-duties and transaction-capture deficiencies. Item 9A, however, says prior material weaknesses had been remediated and management concluded both internal controls and disclosure controls were effective. The auditor did not express an opinion on internal controls.
Most important facts for investors to verify
- Reconcile the conflicting internal-control conclusions in the filing and assess whether remediation is sustained.
- Confirm the post-year-end FPS acquisition’s closing, regulatory status, operating launch, and contribution to revenue and expenses.
- Review cash runway against actual cash burn, planned financial-services investment, and any financing needs.
- Examine valuation support, collectability, and subsequent outcomes for private investments and notes receivable, especially previously impaired exposures.
- Assess dilution and capital allocation, including outstanding warrants and options, repurchases, and executive equity commitments.