8-K: Alpha Modus Holdings Enters Patent Monetization Agreement and Amends Convertible Note

Alpha Modus Holdings, Inc. has entered into a patent monetization agreement with Alpha Modus Ventures, LLC, and amended its secured convertible promissory note with Streeterville Capital, LLC.

Summary

• Alpha Modus Holdings, Inc. (AMOD) entered into a Patent Monetization Agreement with Alpha Modus Ventures, LLC (AMV) on April 28, 2025.
• Under the agreement, AMOD will provide litigation funding to AMV for a patent litigation suit against Broadcom Inc.
• The gross proceeds from the litigation will be distributed to AMOD first to recover the funded amounts, then according to a tiered percentage split.
• AMOD also entered into an Option Agreement with AMV's owners to acquire AMV, contingent on shareholder approval and other conditions.
• The company amended its secured convertible promissory note with Streeterville Capital, LLC, increasing the outstanding balance to $3,597,501.71 and reducing the floor price to $1.25.
• The amendment also eliminates the prepayment penalty and allows for extensions of the monthly payment start date.
• AMOD will sell 1,250,000 shares of common stock to the Investor for $125 as pre-delivery shares.
• A stockholder meeting will be held within 60 days to approve issuances to the Investor.

Sentiment

Score: 4

Explanation: The announcement contains both positive and negative elements. The patent monetization agreement could lead to future revenue, but the terms of the convertible note amendment are unfavorable and dilutive to shareholders. The overall sentiment is slightly negative due to the increased debt and potential dilution.

Positives

• AMOD gains potential revenue streams from patent litigation through the Patent Monetization Agreement.
• The option to acquire AMV provides AMOD with control over the patent assets and litigation strategy.
• Eliminating the prepayment penalty on the convertible note provides AMOD with financial flexibility.
• Reducing the floor price of the convertible note to $1.25 may facilitate conversion and reduce debt.

Negatives

• The outstanding balance of the convertible note increased significantly to $3,597,501.71.
• The company is selling 1,250,000 shares at a very low price ($0.0001 per share) which will dilute existing shareholders.
• The requirement to hold a stockholder meeting within 60 days adds administrative burden and potential uncertainty.
• The company is taking on subordinated debt at fixed or variable conversion prices (not to exceed five (5) different subordinated lenders) over the next three (3) months following the Amendment Date, so long as each such lender agrees to sign an intercreditor agreement with Investor that is satisfactory to Investor in its sole discretion.

Risks

• The success of the patent litigation is uncertain and depends on various factors, including the strength of the patents and the outcome of legal proceedings.
• The acquisition of AMV is contingent on shareholder approval, which may not be obtained.
• The company's ability to repay the convertible note and other debt obligations is subject to its financial performance and access to capital.
• The potential issuance of a significant number of shares upon conversion of the note could dilute existing shareholders.
• The company is taking on subordinated debt at fixed or variable conversion prices (not to exceed five (5) different subordinated lenders) over the next three (3) months following the Amendment Date, so long as each such lender agrees to sign an intercreditor agreement with Investor that is satisfactory to Investor in its sole discretion.

Future Outlook

The company will hold a special stockholder meeting within 60 days to approve issuances of Common Shares under the Note and under an equity line of credit agreement to be entered into between Company and Investor (the Equity Line) in excess of the Exchange Cap. Within ten (10) days of the Amendment Date, Company will file a Form S-1 Registration Statement to register the resale by Investor of all Pre-Delivery Shares and Conversion Shares.

Management Comments

• There are no direct management comments included in the document, but the CEO William Alessi signed the document.

Industry Context

Patent monetization is a common strategy for companies to generate revenue from their intellectual property assets. Litigation funding is also becoming increasingly prevalent, allowing companies to pursue patent infringement claims without bearing the full financial burden. Convertible notes are a common form of financing for small cap companies, but can be risky due to potential dilution.

Comparison to Industry Standards

• Patent monetization strategies vary widely, but typically involve licensing, sale, or litigation of patents.
• Litigation funding agreements often involve a percentage of the proceeds being shared with the funder, as seen in this agreement.
• Convertible notes typically have a floor price to protect investors from excessive dilution, but the reduction of the floor price to $1.25 indicates a higher risk tolerance by the investor.
• Comparable companies that engage in patent monetization include Acacia Research and WiLAN, which have faced scrutiny for their aggressive litigation tactics.
• The terms of the convertible note amendment, including the increased balance and reduced floor price, are less favorable to the company compared to standard market terms.

Related Party Transactions

• The Patent Monetization Agreement is with Alpha Modus Ventures, LLC, which is controlled by the company's CEO, William Alessi.
• The Option Agreement is with AMV's owners, Janbella Group, LLC (controlled by Mr. Alessi) and Chris Chumas (the company's Chief Sales Officer).

Stakeholder Impact

• Shareholders may experience dilution due to the potential issuance of shares upon conversion of the note.
• Employees may benefit from the potential revenue generated by the patent litigation.
• The company's creditors are impacted by the increased debt and amended terms of the convertible note.

Next Steps

• The company needs to initiate the patent litigation against Broadcom.
• The company must hold a stockholder meeting within 60 days to approve the issuances to the Investor.
• The company needs to file a Form S-1 Registration Statement to register the resale by Investor of all Pre-Delivery Shares and Conversion Shares.

Key Dates

Keywords

patent monetization, litigation funding, convertible note, securities purchase agreement, patent litigation, Alpha Modus Holdings, Streeterville Capital, Alpha Modus Ventures, option agreement, Broadcom, financing