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Stockholders’ Equity and Convertible Preferred Stock
 9 Months Ended
Sep. 30, 2025
Stockholders’ Equity and Convertible Preferred Stock [Abstract]  
Stockholders’ Equity and Convertible Preferred Stock

Note 10. Stockholders’ Equity and Convertible Preferred Stock

 

Common Stock

 

As of September 30, 2025, 15,817,323 shares of common stock were issued and outstanding.

 

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 general and administrative expenses 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.

 

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 April 1, 2025 to September 30, 2025 warrants were exercised by various individuals resulting in additional common stock issuance of 1,173,429 shares generating cash proceeds of $4.6 million which is included in additional paid-in capital on 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 September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024, 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. Cash dividends paid in 2025 totaled $12.0 million and have been charged to accumulated deficit. Dividends paid for the three months ended March 31, 2025, totaled $7.1 million, and dividends paid for the three months ended September 30, 2025 totaled $4.9 million.

Treasury Stock

 

There were 60,148 shares of treasury stock on December 31, 2024. The Company retired such shares in July 2025 and there were no shares of treasury stock as of September 30, 2025.

 

Warrants

 

A summary of warrant activity for the nine months ended September 30, 2025, is presented below:

  

       Weighted       Weighted
Average
Remaining		 
       Average
Exercise		   Total
Intrinsic		   Contractual
Life		 
   Warrants   Price   Value   (in years) 
Outstanding as of December 31, 2024   444,796   $29.25    
-
    1.20 
Granted   7,752,108    3.97    
 
      
Expired   (87,598)  $28.74    
-
    - 
Exercised   (1,173,426)   3.96    
 
      
Outstanding as of September 30, 2025   6,935,880   $5.33    
-
    4.1 

 

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 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.

 

See Restricted Stock roll-forward below.

 

A summary of restricted stock awards activity for the nine months ended September 30, 2025, is presented below: 

 

   Number of   Weighted 
   Restricted
Stock
Awards		   Average
Grant Day
Fair Value		 
Nonvested at December 31, 2024   50,000   $0.98 
Granted   1,210,969   $6.30 
Vested   (1,210,969)  $6.30 
Forfeited   
-
   $
-
 
Nonvested at September 30, 2025   50,000   $0.98 

Stock-based compensation associated with the amortization of restricted stock awards expense was approximately $7.7 million and $0.8 million for the nine months ended September 30, 2025, and 2024, respectively. Stock-based compensation associated with the amortization of restricted stock awards expense was approximately $12,000 and approximately $41,000 for the three months ended September 30, 2025, and 2024, respectively All stock compensation was recorded as a component of general and administrative expenses.

 

As of September 30, 2025, there is approximately $12,000 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. As of September 30, 2025, the Company recorded an expense of $26.1 million for the Performance Awards.

 

A summary of option activity under the Company’s stock option plan for the nine months ended September 30, 2025, is presented below:

 

               Weighted 
               Average 
       Weighted   Total   Remaining 
      Average   Intrinsic   Contractual 
   Number of
Shares		   Exercise
Price		   Value
($000s)		   Life
(in years)		 
Outstanding as of December 31, 2024   376,654   $4.29   $
-
    8.2 
Employee options granted   10,000,000   $3.85         9.8 
Employee options exercised   (30,000)   3.36           
Employee options expired   (128,652)  $3.68           
Employee options forfeited   (181,669)  $3.50   $4    - 
Outstanding as of September 30, 2025   10,036,333   $6.18   $9,336    9.4 
Options vested and exercisable   10,021,333   $6.18   $9,330    9.4 

 

Stock-based compensation associated with the amortization of stock option expense was $0.0 million and $0.1 million for the three months ended September 30, 2025, and 2024, respectively. Stock based compensation associated with the amortization of stock option expense was approximately $26.2 million and $0.3 million for the nine months ended September 30, 2025, and 2024 respectively. All stock compensation was recorded as a component of general and administrative expenses. 

 

The following were assumptions used in the Company’s fair value analysis:

 

Risk-free interest rate   4.14%
Estimated maturity date   10 years 
Underlying stock price   6.16 
Expected volatility   112.5%

 

Estimated future stock-based compensation expense relating to unvested stock options is approximately $52,000 

 

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 September 30, 2025, the amount attributable to non-controlling interest was $1.9 million out of which $0.1 million is still outstanding payable to non-controlling interests.