10-K: Alpha Modus Faces Going Concern Amidst Deep Losses

Alpha Modus Holdings, Inc. reported significant operating losses and a going concern qualification for 2025, despite expanding its patent portfolio and forging new strategic partnerships.

Summary

• Alpha Modus Holdings, Inc. is a technology and intellectual property company focused on data-driven systems for consumer engagement and decision-making in physical retail environments.
• The company's core strategy involves developing, protecting, licensing, and enforcing a proprietary patent portfolio related to real-time consumer behavior monitoring and analytics.
• In 2025, Alpha Modus reported a net loss of $8,021,235, a significant increase from the net income of $4,103,067 in 2024.
• Operating expenses surged to $5,251,326 in 2025, up from $834,895 in 2024, primarily due to increased professional fees, consulting, insurance, payroll, and public company expenses.
• Revenue from royalty income was minimal at $7,138 in 2025, compared to $0 in 2024.
• The company's cash balance as of December 31, 2025, was $68,000, down from $735,814 in 2024.
• Alpha Modus Financial Services, LLC (AMFS), a wholly-owned subsidiary, is launching the Alpha Cash platform for financial services to underbanked consumers through mobile and in-store kiosks, with pilot programs expected in 2026.
• The company has entered into strategic partnerships with Dollar General (pilot), DXC Technology, Genmega Inc., Uptiq, Mastercard, TransPecos Bank, Synctera, ACI Worldwide, DolFinTech, Prepay Nation, and Tickets For Less.
• Alpha Modus is actively enforcing its intellectual property rights through litigation, with several patent infringement lawsuits filed and some settled in 2025.
• The company's independent registered public accounting firm issued a going concern qualification, citing recurring losses and a net capital deficiency.
• Alpha Modus is classified as an emerging growth company and a smaller reporting company, allowing for certain exemptions from disclosure requirements.
• The company received notices from Nasdaq regarding non-compliance with minimum market value of publicly held shares (MVPHS) and minimum market value of listed securities (MVLS) in early 2025, which were resolved by transferring to the Nasdaq Capital Market.
• In January 2026, Alpha Modus received a notice of non-compliance with Nasdaq's $1.00 minimum bid price requirement, with a compliance period until July 13, 2026.
• The CEO, William Alessi, beneficially owns or controls over 50% of common stock and 90% of preferred stock, making Alpha Modus a controlled company under Nasdaq rules.
• The company has identified material weaknesses in its internal control over financial reporting due to a lack of sufficient in-house qualified accounting staff and inadequate controls/segregation of duties.
• The company expects to incur significant expenses in 2026 and needs to raise a minimum of an additional $2,500,000 to maintain its growth plan and continue as a going concern.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing with a very negative sentiment due to significant recurring losses, critically low cash reserves, a going concern qualification from auditors, and Nasdaq compliance issues, despite some strategic partnerships and patent activity.

Positives

• Expanded patent portfolio to eleven granted U.S. patents and additional pending applications, strengthening intellectual property position.
• Secured strategic partnerships with major players like Dollar General (pilot program), DXC Technology, Genmega Inc., Mastercard, TransPecos Bank, and ACI Worldwide for its Alpha Cash platform and retail technologies.
• Successfully settled several patent infringement lawsuits in 2024 and 2025, including against The Kroger Company, Wakefern Food Corporation, Shelf Nine LLC, Walgreen Co., Mood Media LLC, and Optisigns, Inc., indicating successful IP enforcement.
• Launched the Alpha Cash platform, a proprietary mobile and kiosk-based financial services system targeting underbanked consumers, creating new commercialization pathways.
• Entered into a non-binding letter of intent with SurgePays, Inc. for potential collaboration on financial and telecommunications services distribution.
• The 571 patent has a patent term extension until May 25, 2037, providing significant remaining patent life.

Negatives

• Reported a substantial net loss of $8,021,235 for the year ended December 31, 2025, a significant deterioration from the net income of $4,103,067 in 2024.
• Operating expenses increased dramatically to $5,251,326 in 2025 from $834,895 in 2024, indicating a rapid increase in costs without corresponding revenue growth.
• Cash balance is critically low at $68,000 as of December 31, 2025, raising immediate liquidity concerns.
• The company's independent registered public accounting firm issued a going concern qualification, highlighting substantial doubt about its ability to continue operations.
• Minimal royalty revenue of $7,138 in 2025, indicating that the patent monetization strategy has not yet generated significant income.
• Received a Nasdaq notice of non-compliance with the $1.00 minimum bid price requirement in January 2026, risking delisting.
• Identified material weaknesses in internal control over financial reporting due to insufficient qualified accounting staff and inadequate segregation of duties.
• Incurred significant interest expense of $3,981,641 in 2025, reflecting high costs of financing.
• The Series C Preferred Stock has a liquidation preference of $75,000,000 over common stockholders, and its conversion terms could lead to substantial dilution if the stock price is low or a Trigger Event occurs.
• The company needs to raise a minimum of $2,500,000 to maintain its growth plan, with no assurance of availability or reasonable terms for additional financing.

Risks

• Inability to achieve or sustain profitability due to past operating losses and negative cash flows.
• Failure to obtain additional financing, which could lead to the exhaustion of resources and inability to continue operations, resulting in shareholders losing most or all of their investment.
• Highly competitive artificial intelligence (AI) technology market with larger, more established competitors.
• Failure to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and customer needs.
• Reputational harm or liability due to issues arising from the use of AI, such as flawed algorithms, biased datasets, or controversial data practices.
• Failure to obtain, maintain, and protect intellectual property rights and proprietary information, or prevent unauthorized use by third parties.
• Exposure to costly intellectual property disputes and litigation, which can divert resources and result in significant liabilities or required changes to technologies.
• Adverse effects on patent rights due to evolving legislation, regulations, and rules associated with patent law, including potential invalidation or narrowing of patent scope.
• Delays in successful prosecution, enforcement, and licensing of the patent portfolio, leading to missed revenue opportunities and increased expenses.
• Expiration of current patents in 2034-2037, requiring the company to obtain additional patents with later expiration dates for continued operations.
• Limited experience in patent enforcement and intellectual property licensing, which could impair effectiveness.
• Inability to protect intellectual property rights globally due to prohibitive costs and varying legal protections in foreign jurisdictions.
• Increased costs and management time devoted to compliance with public company responsibilities and corporate governance practices.
• Limited experience of the management team in managing a Nasdaq-listed public company.
• Potential delisting from Nasdaq due to failure to meet continued listing standards, such as the minimum bid price requirement.
• Dilution of existing stockholders' interests from the issuance of additional shares of common or preferred stock for financing or other reasons.
• Adverse effects on the market price of common stock due to future sales or the perception of future sales by the company or its stockholders.
• The Series C Preferred Stock's conversion terms could result in substantial dilution if the common stock trading price is low or a Trigger Event occurs.
• The company's status as a controlled company under Nasdaq rules allows it to rely on exemptions from certain corporate governance requirements, potentially reducing shareholder protections.
• The Amended and Restated Charter's exclusive forum provisions may limit stockholders' ability to bring certain lawsuits in preferred judicial forums.
• Anti-takeover provisions in the charter and bylaws, as well as Delaware law, could impair a takeover attempt, limiting opportunities for stockholders to receive a premium.
• Indemnification rights for directors, officers, and employees may result in substantial expenditures and discourage lawsuits against them.
• Material weaknesses in internal control over financial reporting could adversely affect the ability to report financial results accurately and timely, leading to regulatory action or loss of investor confidence.

Future Outlook

Alpha Modus intends to continue evolving with the industry and developing new concepts to support increasing revenue streams, expanding the use of its patent family as a lever to develop a sales team for potential partnerships. The company anticipates deployment opportunities for its Alpha Cash platform through additional retail and institutional channels following initial pilot programs in 2026. It expects to incur significant expenses in 2026 and believes it will need to raise a minimum of an additional $2,500,000 to maintain its growth plan.

Management Comments

• Management believes its current virtual facility is adequate and suitable for its current needs, but plans to secure a suitable alternative space to accommodate expanded operations for licensing the 571 family of patents through a small internal sales team.
• Management acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control, and preventing and detecting fraud.
• Management expects to continue to incur significant expenses in 2026 and that its continued operations and ability to continue as a going concern may be dependent on its ability to obtain additional financing.
• Management believes that its intellectual property addresses structural challenges facing brick-and-mortar retailers, including the need to compete with digital commerce platforms.
• Management believes the 571 patent and several family members are being infringed by many major retailers, service providers, and consumer brands, and that the adoption of the 571 patent (and family) technology is occurring at an exponential pace in the retail marketplace.
• Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements, except for ASU 2023-09 and ASU 2025-11.

Industry Context

StockSavvy.ai notes that Alpha Modus operates within the rapidly transforming retail, retail media, and alternative financial services sectors, which are heavily influenced by AI, digital engagement, and data-driven personalization. Industry forecasts project significant growth in U.S. retail media advertising spend, expected to exceed $109 billion by 2027, and digitally influenced U.S. retail sales reaching $4.2 trillion in 2025. The adoption of AI technologies in brick-and-mortar retail is expanding, with 52% of retailers deploying AI-powered signage, kiosks, and in-store targeting. Financial service kiosks for underbanked consumers are also projected to grow at an 18.7% CAGR through 2028. Alpha Modus's patent-first strategy and Alpha Cash platform aim to capitalize on these trends, positioning its IP as foundational infrastructure for real-time, data-driven consumer engagement. However, the company's minimal revenue and significant losses suggest it is struggling to convert its IP and partnerships into substantial commercial success within this competitive and evolving landscape, lagging behind the broader market's growth and adoption rates.

Comparison to Industry Standards

• Alpha Modus's reported royalty income of $7,138 in 2025 is negligible compared to the projected $60.6 billion U.S. retail media advertising spend in 2024, indicating a significant underperformance in monetizing its intellectual property relative to the market opportunity.
• The company's substantial net loss of $8,021,235 in 2025, coupled with a going concern qualification, stands in stark contrast to the growth and profitability seen by established players and successful startups in the AI and retail tech sectors, such as those deploying AI-powered signage or consumer analytics solutions.
• While Alpha Modus has secured partnerships with companies like Mastercard and TransPecos Bank for its Alpha Cash platform, its current financial state and lack of significant revenue from these initiatives suggest it is far from achieving the scale or market penetration of leading fintech providers or established financial service kiosk operators.
• The company's reliance on patent enforcement litigation as a primary revenue strategy, while common for IP-centric firms, has not yet translated into substantial, consistent income, unlike companies that have successfully integrated their patented technologies into widely adopted commercial products or services.
• The Nasdaq minimum bid price non-compliance and material weaknesses in internal controls indicate operational and governance challenges that are not typical for well-performing public companies in the technology sector, which generally maintain robust compliance and financial health to support their market listings.

Management Changes

Corporate Governance

Legal Proceedings

• Patent infringement lawsuit against The Kroger Company filed on January 16, 2024, alleging infringement of several Alpha Modus patents (settled).
• Patent infringement lawsuit against Brookshire Grocery Co. filed on November 12, 2024, alleging infringement of several Alpha Modus patents (stayed pending settlement discussions).
• Patent infringement lawsuit against Wakefern Food Corporation and Shelf Nine LLC filed on December 17, 2024, alleging infringement of several Alpha Modus patents (settled).
• Patent infringement lawsuit against Walgreen Co. filed on February 3, 2025, alleging infringement of several Alpha Modus patents (settled).
• Patent infringement lawsuit against Optisigns, Inc. filed on April 15, 2025, alleging infringement of several Alpha Modus patents (settled).
• Patent infringement lawsuit against Cooler Screens, Inc. filed on August 21, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against A2Z Cust2Mate Solutions Corp. filed on August 25, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against The Kroger Company filed on August 29, 2025, alleging infringement of several Alpha Modus patents (in claim construction and discovery stages).
• Patent infringement lawsuit against Creative Realities, Inc. filed on September 4, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against MNTN, Inc. filed on September 10, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Allerin Tech Pvt. Ltd. filed on September 12, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Mood Media LLC filed on September 18, 2025, alleging infringement of several Alpha Modus patents (resolved and dismissed with prejudice in January 2026).
• Patent infringement lawsuit against RetailNext Inc. filed on September 24, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Navori SA and meldCX Pty Ltd. filed on October 2, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Sensormatic Electronics, LLC and Johnson Controls International, PLC filed on October 3, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Lowes Companies, Inc. and Lowes Home Centers, LLC filed on October 8, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against 7-Eleven, Inc. filed on October 22, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Adroit Worldwide Media, Inc. filed on November 3, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Atliq Technologies Pvt. Ltd. filed on November 12, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Industria De Diseo Textil, S.A., and Zara USA, Inc. filed on November 14, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against V-Count Global Holding Ltd. filed on November 21, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against Stratacache, Inc. filed on November 21, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).
• Patent infringement lawsuit against H&M Fashion USA, Inc. filed on December 1, 2025, alleging infringement of several Alpha Modus patents (in initial pleading stage).

Related Party Transactions

• Multiple secured convertible promissory notes and senior secured promissory notes with Janbella Group, LLC (controlled by CEO William Alessi) totaling $2,747,038 (as of August 18, 2025, after renegotiation of defaulted notes).
• Issuance of 1,400,000 shares of common stock to Janbella Group, LLC on March 29, 2024, as part of a note extension, valued at $35,000.
• Issuance of 1,392,308 shares of Class A common stock to Janbella Group, LLC as a forbearance fee in connection with the Business Combination, valued at $13,226,926.
• Unsecured Promissory Note for $2,142,857 with The Alessi 2023 Irrevocable Trust (a family trust of CEO William Alessi) entered into on July 10, 2025, with an 8.00% interest rate and $5.00 conversion price.
• Unsecured Promissory Note for $714,286 with The Alessi 2023 Irrevocable Trust entered into on September 16, 2025, with an 8.00% interest rate and $5.00 conversion price.
• CEO William Alessi paid various company expenses on his credit cards, resulting in a balance due to Mr. Alessi of $252,830 as of December 31, 2025.
• Unsecured convertible promissory note for $35,000 issued to Jeffrey J. Gary (a related party) on July 25, 2024.
• Exchange Agreement on May 27, 2025, with four family trusts of CEO William Alessi, exchanging 3,200,000 shares of Series C Preferred Stock for 26,079,868 shares of Class A common stock.
• Patent Monetization Agreement and Option Agreement entered into on April 28, 2025, with Alpha Modus Ventures, LLC (controlled by CEO William Alessi) and its owners (Janbella Group, LLC and Chris Chumas, CSO). The company has not funded litigation or exercised the option to acquire AMV.
• Gregory Richter, a director, is the brother-in-law of CEO William Alessi.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from the conversion of Series C Preferred Stock and various convertible notes, especially given the low stock price. The going concern qualification and recurring losses pose a high risk of investment loss. Nasdaq delisting risk could further reduce liquidity and share price. The CEO's control as a 'controlled company' limits certain corporate governance protections for other shareholders.
• **Employees**: The company has 9 employees and utilizes consultants. The financial instability and need for capital raise could impact job security and future compensation, although executive officers and non-employee directors receive equity-based compensation.
• **Customers/Partners**: Existing and potential customers/partners for Alpha Modus's IP licensing and Alpha Cash platform may face uncertainty regarding the company's long-term viability due to its financial distress and going concern status. However, the strategic partnerships indicate continued interest in the company's technology.
• **Creditors**: Holders of convertible notes and other debt face repayment risk given the company's low cash balance and recurring losses. The subordination agreements with related parties prioritize other investors over the Capital Parties (Alessi and Janbella Group, LLC).
• **Regulatory Bodies**: The company is subject to SEC and Nasdaq reporting requirements and scrutiny. Material weaknesses in internal controls and Nasdaq compliance issues could lead to further regulatory actions or penalties.

Next Steps

• Alpha Modus intends to continue evolving with the industry and developing new concepts that support increasing revenue streams.
• Alpha Modus intends to expand the use of its patent family as a lever to develop a sales team to drive potential partnerships.
• The Alpha Cash platform is being deployed pursuant to strategic banking, technology, and service-provider partnerships, with pilot programs and phased retail deployments beginning in 2026.
• Broader rollouts of the Alpha Cash platform may follow in subsequent phases, subject to performance and partner agreements.
• The company anticipates deployment opportunities through additional retail and institutional channels for Alpha Cash.
• The company intends to continue enforcing and licensing its intellectual property portfolio where it believes its patented technologies are being practiced without authorization.
• The company plans to secure a suitable alternative space to accommodate its operations as it expands licensing the 571 family of patents through a small internal sales team.
• The company expects to increase the number of employees to implement adequate segregation of duties within the internal control framework as it grows.
• The company is currently negotiating extensions for the renegotiated JanBella notes.
• The company will continue to seek shareholder approval every three months for the issuance of shares in excess of the Exchange Cap related to the Streeterville Capital, LLC Note, if not obtained within 120 days of the Purchase Price Date.

Key Dates

Recommendation

Alpha Modus Holdings, Inc. presents an extremely high-risk investment profile. The company is operating under a 'going concern' qualification from its auditors, indicating substantial doubt about its ability to continue operations. It reported a significant net loss of over $8 million in 2025, with minimal revenue and critically low cash reserves of $68,000. The company is actively seeking to raise a minimum of $2.5 million, with no assurance of success. Furthermore, it faces potential delisting from Nasdaq due to non-compliance with the minimum bid price requirement. Material weaknesses in internal controls and significant related-party transactions add to governance concerns. While the company possesses a patent portfolio and has secured strategic partnerships, these have not translated into meaningful revenue or profitability. The substantial dilution risk from preferred stock and convertible notes, coupled with the overall financial instability, makes the stock a strong sell for any investor.

Keywords

AI, Artificial Intelligence, Retail Technology, Intellectual Property, Patent Licensing, Consumer Analytics, Fintech, Alpha Cash, SEC Filing, 10-K, Nasdaq, Going Concern, Patent Infringement, Digital Engagement, In-store Marketing, Inventory Management, Smart Planograms, Financial Services, Underbanked, Convertible Notes, Warrants, Corporate Governance