10-Q: Alpha Modus Holdings Reports Q1 2025 Results, Citing Losses and Going Concern Uncertainty

Alpha Modus Holdings reports a net loss for Q1 2025 and expresses substantial doubt about its ability to continue as a going concern.

Summary

• Alpha Modus Holdings, Inc. reported its financial results for the quarter ended March 31, 2025.
• The company incurred a net loss of $308,081 for the quarter, compared to a net loss of $222,696 for the same period in 2024.
• Operating expenses increased significantly to $1,359,201, driven by higher professional fees and general and administrative costs.
• The company had no revenue during the quarter.
• As of March 31, 2025, Alpha Modus had $148,277 in cash and a working capital deficit of $5,982,689.
• Management expresses substantial doubt about the company's ability to continue as a going concern due to recurring losses and a lack of revenue.
• The company is pursuing additional funding through increased revenues and future financings.
• Alpha Modus is involved in several patent infringement lawsuits.
• The company completed a business combination with Alpha Modus, Corp. on December 13, 2024, which was accounted for as a reverse recapitalization.
• The company has a secured convertible promissory note with Streeterville Capital, LLC, which has been amended multiple times.
• The company entered into a Patent Monetization Agreement with Alpha Modus Ventures, LLC, an entity controlled by the company's CEO.
• The company's disclosure controls and procedures were deemed not effective as of March 31, 2025.

Sentiment

Score: 2

Explanation: The document paints a negative picture due to the company's losses, going concern uncertainty, and ineffective disclosure controls. While there are some gains in fair value of liabilities, they are overshadowed by the significant financial challenges.

Positives

• The company recognized a gain in change in fair value of earnout shares of $1,039,282.
• The company recognized a gain in change in fair value of warrants liability of $234,195.

Negatives

• The company reported a net loss of $308,081 for Q1 2025.
• Operating expenses significantly increased to $1,359,201.
• The company had no revenue during the quarter.
• The company's cash balance is low at $148,277.
• The company has a substantial working capital deficit of $5,982,689.
• Management expresses substantial doubt about the company's ability to continue as a going concern.
• The company's disclosure controls and procedures were deemed not effective as of March 31, 2025.

Risks

• The company's ability to continue as a going concern is uncertain due to recurring losses and a lack of revenue.
• The company's reliance on additional funding through increased revenues and future financings is a risk, as there is no assurance that such funding will be available.
• The company's involvement in patent infringement lawsuits could have a material adverse effect on its liquidity, financial condition, and cash flows.
• The company's secured convertible promissory note with Streeterville Capital, LLC, could negatively impact the trading price of the common stock.
• The company's disclosure controls and procedures were deemed not effective as of March 31, 2025.

Future Outlook

The company expects to seek additional funding through increased revenues and future financings, but there is no assurance that such financing will be available.

Management Comments

• Management expresses substantial doubt about the company's ability to continue as a going concern.

Industry Context

The company operates in the technology sector, specifically focusing on intellectual property licensing and enforcement. The company's financial performance and future prospects are heavily reliant on its ability to generate revenue from its patents and secure additional funding.

Comparison to Industry Standards

• It is difficult to compare Alpha Modus to industry standards due to its unique business model and lack of revenue.
• Many technology companies in the early stages of development rely on venture capital or other forms of financing to fund their operations until they can generate sufficient revenue.
• The company's success will depend on its ability to effectively monetize its intellectual property and secure additional funding to support its operations.

Legal Proceedings

• Alpha Modus is involved in several patent infringement lawsuits, including cases against Brookshire Grocery Co., Walgreen Co., and Optisigns, Inc.

Related Party Transactions

• The company issued an unsecured promissory note to a related party, Jeffrey J. Gary.
• The company has various notes payable to Janbella Group, LLC, which is controlled by William Alessi.
• The company entered into a Patent Monetization Agreement with Alpha Modus Ventures, LLC, which is controlled by William Alessi.

Stakeholder Impact

• Shareholders face significant risk due to the company's going concern uncertainty and potential dilution from future capital raises.
• Employees' job security is uncertain due to the company's financial challenges.
• Customers may be affected if the company is unable to continue providing its services.
• Suppliers and creditors face the risk of non-payment if the company's financial situation does not improve.

Next Steps

• The company will seek to obtain additional funding through increased revenues and future financings.
• The company will hold a stockholder meeting within 60 days to approve certain issuances to Streeterville Capital, LLC.
• The company will file a registration statement to register certain shares of common stock issuable to Streeterville Capital, LLC.

Key Dates

Keywords

financial results, going concern, patent infringement, convertible note, Alpha Modus, Q1 2025, loss, funding