Dominari Holdings Inc. — Filing summary
Important entity mismatch: The supplied filing is Aikido Pharma Inc.’s Form 10-Q for the quarter ended September 30, 2022, not a filing under Dominari Holdings Inc. The filing describes Dominari Financial Inc. as Aikido Pharma’s wholly owned subsidiary. This summary reflects the supplied filing.
Business context and reporting period
The unaudited Form 10-Q covers the three and nine months ended September 30, 2022. Aikido said it had shifted its primary focus from biotechnology toward fintech and financial services, while continuing to pursue biotech programs. It formed Dominari Financial in June 2022 to pursue strategic acquisitions and reported a portfolio of private-company investments through Aikido Labs. The company reported little or no revenue for the past two years.
Key financial metrics
Amounts below are in millions of dollars unless stated otherwise. No revenue or gross-margin figure is provided; the filing says revenue was little or none.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Operating expenses | $5.10 | $1.78 | $11.20 | $6.86 |
| Operating loss | $(5.10) | $(1.78) | $(11.20) | $(6.86) |
| Other income (expense), net | $(1.14) | $1.73 | $(3.65) | $1.50 |
| Net loss | $(6.24) | $(0.05) | $(14.85) | $(5.36) |
| Net loss attributable to common shareholders | $(6.24) | $(0.05) | $(18.96) | $(5.36) |
| Basic and diluted loss per share | $(1.17) | $(0.01) | $(3.59) | $(1.14) |
At September 30, 2022, cash and cash equivalents were $34.50 million, marketable securities $8.03 million, current assets $56.09 million, total assets $84.45 million, and stockholders’ equity $81.85 million. Current liabilities were $1.90 million; working capital was approximately $54.2 million. Total liabilities were $2.60 million, including $0.74 million of operating lease liabilities. The filing reports no other debt balance.
For the first nine months of 2022, operating cash use was $8.74 million, investing cash use $15.96 million, and financing cash use $6.37 million. Cash declined by $31.07 million from $65.56 million at year-end 2021. Long-term investments were $26.09 million and notes receivable totaled $9.75 million at quarter-end. Marketable securities recorded a $4.39 million loss for the nine-month period.
Material changes versus comparable periods
- Q3 operating loss increased by about $3.32 million year over year. General and administrative expense rose to $4.52 million from $1.68 million; management attributed the increase to restricted-stock compensation, bonuses, and legal and accounting advisory costs related to the financial-services transition.
- Nine-month operating loss increased by about $4.35 million. General and administrative expense rose to $8.56 million from $5.23 million, and research and development expense rose to $2.11 million from $0.50 million, partly offset by lower acquired-license expense.
- Net loss for the nine months widened to $14.85 million from $5.36 million, reflecting higher operating costs and a swing from $1.50 million of other income to $3.65 million of other expense. The 2022 common-shareholder loss also includes $4.11 million of deemed dividends related to preferred stock.
- Investment holdings increased: long-term investments rose to $26.09 million from $9.47 million at December 31, 2021. Cash fell to $34.50 million from $65.56 million.
- The company issued Series O and P preferred stock in early 2022, then redeemed both series during the second quarter. The filing reports $22.0 million of redemption payments in the cash-flow statement and a total redemption amount of $23.1 million in the note; it also reports $4.1 million in deemed dividends.
- The company repurchased 344,982 shares for approximately $2.24 million during the first nine months. A 17-for-1 reverse stock split took effect June 7, 2022; share and per-share figures were retrospectively adjusted.
Outlook, risks, contingencies, and unusual items
- Management said existing cash was adequate to fund operations for at least 12 months from issuance of the financial statements. It also described continued reliance on cash, investment monetization, potential securities offerings or debt, and future business revenue; additional financing may not be available on favorable terms or at all.
- After quarter-end, Dominari paid $2.0 million on October 4, 2022 for 20% of Fieldpoint Private Securities, a registered broker-dealer. The remaining 80% is subject to FINRA approval and other closing conditions, for stated consideration of $1. The filing also describes an October 17 services agreement for Kyle Wool to become Dominari’s CEO after ending his relationship with another broker-dealer.
- Dominari signed a seven-year office lease expected to commence upon delivery of possession in 2023, at monthly rent of $49,368, increasing to $51,868 in years six and seven.
- Management cited uncertainty from inflation, Federal Reserve actions, possible recession, Russia’s invasion of Ukraine, energy prices, and COVID-19, which could adversely affect financial markets, operations, and cash flows. It also noted that pandemic effects had slowed some drug-development and acquisition activity.
- Marketable securities and private investments are exposed to valuation volatility. Several notes receivable and investments use Level 3 fair-value estimates based on significant unobservable inputs. The filing reports no material active or pending litigation beyond routine matters.
- Disclosure controls were deemed ineffective at September 30, 2022 because of material weaknesses, including inadequate segregation of duties and insufficient controls to ensure material transactions and developments are reflected in the financial statements. Management said it was working to address the weaknesses.
Most important facts for investors to verify
- Confirm the issuer and filing identity: this is Aikido Pharma Inc.’s 10-Q, despite the request naming Dominari Holdings Inc.
- Review the carrying values, liquidity, and potential realization of the substantial private-company investments and Level 3 notes receivable.
- Check whether FINRA approved the Fieldpoint Private Securities ownership change and whether the second closing occurred.
- Assess cash burn against management’s 12-month runway statement, including the effects of the planned financial-services transition and lease commitments.
- Track remediation of the disclosed material weaknesses in internal controls and any subsequent changes in control effectiveness.