FPS Acquisition

3 Months Ended

Mar. 31, 2023

FPS Acquisition [Abstract]

FPS Acquisition

Note 4. FPS Acquisition

On September 9, 2022, Dominari entered into a membership interest purchase agreement, as amended and restated on March 27, 2023 (the “FPS Purchase Agreement”) with Fieldpoint Private Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint Private Securities, LLC, a Connecticut limited liability company (“FPS”), that is a broker-dealer registered with FINRA and an investment adviser registered with the SEC (the “FPS Acquisition”). Pursuant to the terms of the FPS Purchase Agreement, Dominari purchased from the Seller 100% of the membership interests in FPS (the “Membership Interests”). FPS’s registered broker-dealer and investment adviser businesses was renamed and will operate as Dominari Securities, a wholly owned subsidiary of Dominari. The FPS Purchase Agreement provides for Dominari’s acquisition of FPS’s Membership Interests in two closings, the first of which occurred on October 4, 2022 (the “Initial Closing”), at which Dominari paid to the Seller $2.0 million in consideration for a transfer by the Seller to Dominari of 20% of the FPS Membership Interests.  Following the Initial Closing, FPS filed a continuing membership application requesting approval for a change of ownership, control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”).  The Rule 1017 Application was approved by FINRA on March 20, 2023. The second closing (the “Second Closing”) occurred on March 27, 2023. Dominari paid to the Seller an additional approximate $1.6 million consideration for a transfer by the Seller to Dominari of the remaining 80% of the Membership Interests. 

Consideration Transferred

The FPS Acquisition was accounted for a business combination under ASC 805.

Under the terms of the FPS Purchase Agreement and subsequent Amendments and Side Letters, 100% of the membership interest was acquired for cash consideration of approximately $3.4 million, which reflected the fair value of net assets acquired, plus a $1 purchase price. At March 31, 2023, Dominari had not finalized the purchase accounting related to the fair value of assets acquired in the FPS Acquisition. Pursuant to the Initial Closing and Second Closing, Dominari had wired a total of approximately $3.6 million in cash to the Seller. The purchase price allocation identified net assets of approximately $3.4 million, resulting in a receivable due from the Seller for approximately $0.2 million. The receivable is not included within the consideration transferred as part of the FPS Acquisition but is included within prepaid expenses and other assets within the unaudited condensed consolidated balance sheet as of March 31, 2023.

Under the acquisition method of accounting, the assets acquired, and liabilities assumed of FPS were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. Acquisition-related costs are not included as a component of consideration transferred but are expensed in the periods in which costs are incurred. The Company incurred approximately $0.3 million of transaction costs associated with the FPS Acquisition. The transaction costs are included in general and administrative expenses in the unaudited condensed consolidated statement of operations.

Fair Value of Net Assets Acquired

The Company is in the process of finalizing the purchase price allocation as of March 31, 2023. The following table summarizes the fair values of the assets acquired and liabilities assumed of FPS at the date of acquisition:

	March 27,
	2023
	(Unaudited)
ASSETS
Cash and cash equivalents	$	92
Deposits with Clearing Broker-Dealer		3,550
Other receivables		53
Prepaid and other current assets		89
Total assets acquired		3,784
Liabilities
Accrued expenses	$	273
Accrued commissions		25
Wealth management liabilities		62
Total liabilities assumed		360
Total net assets of FPS Acquisition		3,424

Dominari Securities reported a net loss of approximately $0.7 million for the period ended March 31, 2023. Revenue for the period ended March 31, 2023, was not material. The net loss was a result of professional service costs incurred of approximately $0.6 million, which included transaction costs of approximately $0.3 million. The approximate $0.6 million of professional service costs is included in the general and administrative expenses in the unaudited condensed consolidated statement of operations.

Proforma disclosures were omitted for this acquisition as it does not have a significant impact on the Company’s financial results.