DEF 14C: Alpha Modus Converts Preferred Stock, CEO Affiliate Boosts Common Stake

Alpha Modus Holdings, Inc. announced the exchange of 4.3 million Series C Preferred Shares held by a CEO affiliate for over 40 million Class A Common Shares, aiming to simplify its capital structure.

Summary

• Alpha Modus Holdings, Inc. (the "Company") is informing stockholders of an action taken by written consent of Majority Stockholders, representing approximately 75.1% of the outstanding voting stock.
• The Company's Board of Directors approved the exchange of 4,300,000 shares of Series C Preferred Stock for 40,111,940 shares of Class A Common Stock.
• The Series C Preferred Shares were held by an affiliate of CEO William Alessi (The Alessi 2023 Irrevocable Trust).
• The effective conversion price for the Common Shares is approximately $1.072 per share, calculated based on the $10.00 face value of the Preferred Shares and the average of the five lowest closing prices of Common Stock during the ten trading days prior to August 14, 2025.
• The issuance of 40,111,940 Common Shares constitutes more than 20% of the Company's outstanding Common Stock (which was 41,959,958 shares as of August 14, 2025) and is at a price ($1.072) less than the NASDAQ Minimum Price ($1.10).
• This action required and received stockholder approval under NASDAQ Listing Rule 5635(d) to maintain the Company's NASDAQ listing.
• The Common Shares issued in the exchange are subject to a lock-up agreement, preventing sale or transfer (other than to an affiliate) until June 13, 2026.
• The action will become effective 20 calendar days after the Information Statement is first mailed, which is on or about August 26, 2025.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the immediate issuance of a large number of common shares is dilutive to existing common stockholders, the action eliminates complex preferred stock features like liquidation preferences and redemption rights. It also fixes the potential for greater future dilution if the common stock price were to decline further, and simplifies the balance sheet by removing mezzanine equity. This is a structural clean-up rather than a performance indicator.

Positives

• Eliminates liquidation preferences and redemption rights associated with the Series C Preferred Stock, simplifying the Company's capital structure.
• Fixes the number of Common Stock shares to be issued upon conversion, preventing greater dilution from potential future decreases in the Company's common stock trading prices.
• Removes mezzanine equity from the Company's balance sheet, improving financial clarity.
• Reduces the stockholders' deficit.

Negatives

• Significant dilution for existing common stockholders, as 40,111,940 new common shares are being issued compared to 41,959,958 shares outstanding prior to the exchange.
• The issuance price of approximately $1.072 per common share is below the NASDAQ Minimum Price of $1.10 per share, which could be perceived negatively by the market.
• Increases the beneficial ownership concentration of the CEO's affiliate in common stock.

Risks

• Potential negative market perception and downward pressure on common stock price due to the substantial dilution of existing common shares.
• While the NASDAQ listing risk was mitigated by obtaining stockholder approval, the transaction itself triggered NASDAQ Listing Rule 5635(d) due to the size and pricing of the issuance.

Future Outlook

The Company has fixed the number of common shares to be issued from the conversion of Series C Preferred Stock, preventing further dilution from potential future decreases in common stock trading prices. The newly issued common shares are subject to a lock-up until June 13, 2026, which is when the preferred shares would have originally become convertible.

Management Comments

• The Company agreed to the Exchange as issuing the Common Shares in exchange for and cancellation of the Preferred Shares will (i) eliminate the liquidation preferences and redemption rights with respect to the Preferred Shares, (ii) fix the number of shares Common Stock to be issued upon conversion of the Preferred Shares (which would have generally been generally convertible in the future based on the closing price of the Common Stock as described above), and ensure that future decreases in the trading prices of the Companys common stock would not result in more shares of Common Stock being issued upon conversion, and (iii) eliminate mezzanine equity on the Companys balance sheet and reduce stockholders deficit.

Industry Context

This filing primarily addresses an internal capital structure adjustment, specifically the conversion of preferred stock to common stock. It does not provide sufficient information to analyze broader industry trends or competitive positioning.

Comparison to Industry Standards

• The filing does not contain specific comparable companies, projects, or results to assess against global benchmarks. The action is an internal capital restructuring event.

Corporate Governance

Related Party Transactions

• The exchange of 4,300,000 Series C Preferred Stock for 40,111,940 Class A Common Stock involves an affiliate of the Company's CEO, William Alessi (The Alessi 2023 Irrevocable Trust), making it a related party transaction.

Stakeholder Impact

• Shareholders: Existing common stockholders will experience significant dilution due to the issuance of 40,111,940 new common shares.
• CEO/Affiliate: William Alessi's beneficial ownership of common stock will substantially increase, though the newly issued shares are subject to a lock-up period until June 13, 2026.
• Company: Simplifies the capital structure, eliminates preferred stock obligations, and reduces the stockholders' deficit.

Next Steps

• The Information Statement will be mailed to stockholders on or about August 26, 2025.
• The corporate action (issuance of Common Shares) will become effective 20 calendar days after the first mailing of the Information Statement.

Key Dates

Recommendation

While the immediate dilution from the issuance of over 40 million new common shares is substantial, the action addresses a structural issue by eliminating complex preferred stock features, including liquidation preferences and redemption rights. It also fixes the potential for greater future dilution tied to fluctuating common stock prices and cleans up the balance sheet. This move, while dilutive in the short term, provides long-term clarity and stability to the capital structure, which could be viewed as a necessary and ultimately positive step for the company's financial health. Investors should hold to observe the long-term impact of this capital restructuring.

Keywords

Alpha Modus Holdings, Series C Preferred Stock, Class A Common Stock, Stock Exchange, NASDAQ Listing Rule 5635(d), Share Dilution, Capital Structure, William Alessi, Corporate Governance