10-K: Alpha Modus Holdings Reports 2024 Results, Highlights Business Combination and Patent Monetization Strategy

Alpha Modus Holdings, Inc. reports its 2024 financial results, marking the completion of its business combination and outlining its strategy for patent licensing and enforcement.

Summary

• Alpha Modus Holdings, Inc., formerly Insight Acquisition Corp., completed a business combination with Alpha Modus, Corp. on December 13, 2024.
• The company's name changed to Alpha Modus Holdings, Inc., and it now operates as a technology-as-a-service provider.
• The Business Combination was accounted for as a reverse recapitalization, with INAQ treated as the acquired company for financial statement reporting purposes.
• In connection with the Business Combination, approximately 426,136 shares of common stock were redeemed, resulting in approximately $1.16 million of cash from the INAQ trust account becoming available to Alpha Modus.
• The company issued 5,295,000 shares of common stock and 7,500,000 shares of Series C Preferred Stock to Legacy Alpha Modus shareholders as merger consideration.
• Alpha Modus is focusing on licensing its 571 patent family, initiating patent infringement lawsuits against major retailers, and developing an internal sales and marketing staff.
• The company had an operating loss of $834,895 in 2024, compared to $391,949 in 2023.
• Net income for 2024 was $4,103,067, primarily due to a gain in change in fair value of earnout shares liability of $18,731,514.
• As of December 31, 2024, Alpha Modus had cash of $735,814 and a working capital deficit of $5,856,791.
• The company has a secured convertible promissory note with Streeterville Capital, LLC for $2,890,000.
• Alpha Modus has identified material weaknesses in its internal control over financial reporting.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While the business combination is a positive step, the company's operating losses, working capital deficit, and material weaknesses in internal control raise concerns. The potential for patent monetization offers some optimism, but it is subject to execution risk.

Positives

• The company completed its business combination, marking a significant milestone.
• Alpha Modus is actively pursuing a patent monetization strategy, which could generate revenue.
• The company reported a net income for 2024, although primarily due to non-cash gains.
• Alpha Modus has net operating loss carry forwards that may reduce future tax liabilities.

Negatives

• The company had an operating loss of $834,895 in 2024.
• Alpha Modus has a significant working capital deficit of $5,856,791 as of December 31, 2024.
• The company identified material weaknesses in its internal control over financial reporting.
• The company has a secured convertible promissory note with Streeterville Capital, LLC for $2,890,000.

Risks

• The company has a significant working capital deficit and may need to raise additional capital.
• Alpha Modus identified material weaknesses in its internal control over financial reporting, which could affect its ability to report financial results accurately.
• The company's success depends on its ability to monetize its patent portfolio, which is subject to litigation and market adoption risks.
• The company's ability to continue as a going concern is dependent on its ability to obtain additional financing.

Future Outlook

Alpha Modus intends to continue its intellectual property licensing and enforcement efforts throughout 2025 and intends to begin generating licensing revenue in 2024 with a steady growth rate in parallel to the current projected industry growth rate cited by Insider Intelligence.

Industry Context

The company operates in the rapidly evolving retail advertising market, where retailers are increasingly adopting in-store digital marketing and inventory management technologies.

Management Changes

Legal Proceedings

• On January 16, 2024, Alpha Modus filed a patent infringement lawsuit against The Kroger Company.
• On November 12, 2024, Alpha Modus filed a patent infringement lawsuit against Brookshire Grocery Co.
• On December 17, 2024, Alpha Modus filed a patent infringement lawsuit against Wakefern Food Corporation and Shelf Nine LLC (which has since been settled).
• On February 3, 2025, Alpha Modus filed a patent infringement lawsuit against Walgreen Co.

Related Party Transactions

• The company issued various notes payable to related parties.
• The company entered into an unsecured promissory note with a related party, Jeffrey J. Gary.
• The company entered into director agreements with its non-employee members of the Board of Directors.

Stakeholder Impact

• Shareholders face risks related to the company's financial condition, internal control weaknesses, and potential dilution.
• Employees face uncertainty related to the company's ability to continue as a going concern.
• Customers and suppliers may be affected by the company's ability to execute its business strategy and monetize its patents.
• Creditors face risks related to the company's ability to repay its debts.

Next Steps

• The company intends to continue its intellectual property licensing and enforcement efforts throughout 2025.
• The company intends to begin generating licensing revenue in 2024.
• The company will need to address the material weaknesses in its internal control over financial reporting.
• The company will need to raise additional capital to fund its operations.

Key Dates

Keywords

Alpha Modus, Business Combination, Patent Licensing, Financial Results, Internal Control, Convertible Note, Operating Loss, Net Income, Streeterville Capital, 571 Patent