Dominari Holdings Inc. Fair Value Disclosure
Note 7. Fair Value of Financial Assets and Liabilities
Financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.
The Company uses three levels of inputs that may be used to measure fair value:
Level 1 - quoted prices in active markets for identical assets or liabilities
Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.
The following table presents the Company’s assets and liabilities that are measured at fair value as of December 31, 2024 and 2024 ($ in thousands):
| Fair value measured as of December 31, 2024 | ||||||||||||||||
| Total at December 31, | Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | |||||||||||||
| 2024 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | ||||||||||||||||
| Marketable securities: | ||||||||||||||||
| Equities | $ | 5,773 | $ | 4,156 | $ | 1,617 | $ | |||||||||
| Total marketable securities | $ | 5,773 | $ | 4,156 | $ | 1,617 | $ | |||||||||
| Notes receivable at fair value, non-current portion | $ | 902 | $ | $ | $ | 902 | ||||||||||
| Fair value measured as of December 31, 2023 | ||||||||||||||||
| Total at December 31, | Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | |||||||||||||
| 2023 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | ||||||||||||||||
| Marketable securities: | ||||||||||||||||
| Equities | $ | 13,547 | $ | 13,547 | $ | $ | ||||||||||
| Total marketable securities | $ | 13,547 | $ | 13,547 | $ | $ | ||||||||||
| Notes receivable at fair value, current portion | $ | 3,177 | $ | $ | $ | 3,177 | ||||||||||
| Notes receivable at fair value, non-current portion | $ | 1,129 | $ | $ | $ | 1,129 | ||||||||||
Level 3 Measurement
The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis ($ in thousands):
December 31, 2024
| Notes receivable at fair value, current portion at December 31, 2023 | $ | 3,177 | ||
| Collection of principal outstanding | (1,000 | ) | ||
| Realized and unrealized loss on note receivable | (2,121 | ) | ||
| Change in interest receivable | (56 | ) | ||
| Notes receivable at fair value, current portion at December 31, 2024 | $ | |||
| Notes receivable at fair value, non-current portion at December 31, 2023 | $ | 1,129 | ||
| Unrealized gain (loss) on notes receivable | (227 | ) | ||
| Notes receivable at fair value, non-current portion at December 31, 2024 | $ | 902 |
December 31, 2023
| Notes receivable at fair value, current portion at December 31, 2022 | $ | 7,474 | ||
| Collection of principal outstanding | (1,000 | ) | ||
| Unrealized loss on note receivable | (3,254 | ) | ||
| Principal reduced due to receiving shares | (143 | ) | ||
| Accrued interest receivable | 100 | |||
| Notes receivable at fair value, current portion at December 31, 2023 | $ | 3,177 | ||
| Notes receivable at fair value, non-current portion at December 31, 2022 | $ | 1,100 | ||
| Unrealized gain on note receivable | 6 | |||
| Accrued interest receivable | 23 | |||
| Notes receivable at fair value, non-current portion at December 31, 2023 | $ | 1,129 |
Notes Receivable at fair value
As of December 31, 2024, the fair value of the notes receivable was measured taking into consideration cost basis, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. For the year ended December 31, 2024 the Company had realized and unrealized losses on notes receivable of $2.3 million.
The following table provides quantitative information regarding the Company’s Level 3 fair value measurements at December 31, 2024 and 2023:
| 2024 | 2023 | |||||||
| Valuation technique | Discounted cash flow | Discounted cash flow | ||||||
| Unobservable input and range: | ||||||||
| Probability of default | 20 | % | 0-40% | |||||
| Discount rate | 8 | % | 8-50% | |||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Apr 15, 2025 | Showing above |
| 2020 | Mar 25, 2021 | |
| 2019 | Feb 3, 2020 | |
| 2018 | Mar 12, 2019 | |
| 2016 | Mar 31, 2017 | |
| 2015 | Mar 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.