8-K: Alpha Modus Secures $250K Convertible Note, Warrants

Alpha Modus Holdings, Inc. has entered into a securities purchase agreement with AIFirst Ventures LLC for $250,000, issuing a convertible promissory note and common stock warrants.

Summary

• Alpha Modus Holdings, Inc. (the "Company") entered into a Securities Purchase Agreement with AIFirst Ventures LLC (the "Investor") effective December 2, 2025.
• The Company issued a convertible promissory note (the "Note") with an original principal amount of $250,000 to the Investor.
• The Company also issued a common stock purchase warrant (the "Warrant") to the Investor to purchase 1,000,000 shares of Class A common stock.
• The aggregate purchase price for the Note and Warrant was $250,000, paid by the Investor on December 2, 2025.
• The Note does not accrue interest and matures on October 30, 2026.
• The Note is convertible into Class A common stock at the holder's election, starting 6 months after issuance, at a fixed conversion price equal to 80% of the 5-day volume-weighted average price (VWAP) on the first trading day following issuance (calculated as $0.617 per share based on a $0.771 VWAP on December 3, 2025).
• The Warrant is exercisable for 1,000,000 shares of Class A common stock at an exercise price of $1.00 per share, with an exercise period from October 31, 2025, to October 30, 2030.
• The Company granted the Investor an option to fund an additional $750,000 under a convertible promissory note with the same terms as the initial Note, except the conversion price would be fixed at the initial Note's conversion price.
• Both the Note and Warrant are subject to a 4.99% beneficial ownership limitation and an initial Exchange Cap of 7,972,000 shares under Nasdaq Listing Rule 5635(d), requiring shareholder approval for issuance beyond this cap.
• The Company committed to seeking shareholder approval for exceeding the Exchange Cap within 120 days of October 31, 2025, and every three months thereafter until obtained.
• The Company will use commercially reasonable best efforts to register the shares for resale with the SEC within 90 days of October 31, 2025, provided other lenders do not object.

Sentiment

Score: 6

Explanation: The capital raise provides necessary funding without immediate interest burden and includes an option for further capital, which is positive for the company's operational stability. However, the potential for significant dilution from the convertible note and warrants, especially with a discounted conversion price, introduces a degree of caution. The requirement for shareholder approval for full conversion/exercise also presents a regulatory hurdle and near-term uncertainty.

Positives

• Secured $250,000 in capital infusion for the Company's operations.
• The convertible promissory note does not accrue interest, reducing immediate debt servicing costs.
• An option for an additional $750,000 in funding provides a clear path for future capital if needed.
• The investor (AIFirst Ventures LLC) is an accredited investor, indicating a sophisticated funding source.

Negatives

• Potential for significant dilution to existing shareholders upon conversion of the note and exercise of warrants, especially given the note's conversion price is at 80% of VWAP.
• The Company is required to obtain shareholder approval for the issuance of shares exceeding the Nasdaq Exchange Cap (initially 7,972,000 shares), which introduces a potential hurdle and uncertainty.
• Failure to obtain shareholder approval for the Exchange Cap will require the Company to continue seeking it every three months.
• The Company is subject to a high late fee rate of 18% per annum on overdue principal and interest in the event of default.

Risks

• Significant potential dilution to existing shareholders if the convertible note and warrants are fully converted/exercised, particularly if the stock price is below the warrant exercise price or the note's conversion price is significantly below market at the time of conversion.
• Failure to obtain shareholder approval for the issuance of shares exceeding the Nasdaq Exchange Cap could limit the investor's ability to convert/exercise fully, potentially impacting future financing relationships or requiring alternative arrangements.
• The Company faces various events of default, including payment defaults, breaches of covenants, bankruptcy events, and defaults under other material agreements, which could lead to immediate acceleration of the note's principal and other amounts.
• The securities issued are not registered under the Securities Act of 1933 and are subject to restrictions on transfer, including Rule 144, which could affect liquidity for the investor.
• The Company's obligation to register shares for resale is subject to other lenders not objecting, which could delay or prevent liquidity for the investor.

Future Outlook

The Company plans to seek shareholder approval for the issuance of common stock exceeding the Nasdaq Exchange Cap within 120 days and will continue to do so every three months until approval is obtained. It also intends to use commercially reasonable best efforts to register the shares for resale within 90 days, subject to no objections from other lenders. The Company has an option for an additional $750,000 in funding from the investor.

Management Comments

• William Alessi, President and Chief Executive Officer, signed the report on behalf of Alpha Modus Holdings, Inc.

Industry Context

This financing transaction, involving a convertible note and warrants, is a common method for smaller public companies, particularly those in growth or development stages, to raise capital. It allows the company to secure funding without immediate equity dilution at market prices, while offering investors a potential upside through conversion and exercise rights. The terms, including a discounted conversion price and beneficial ownership limitations, are typical for such private placements with institutional or accredited investors.

Comparison to Industry Standards

• The use of a convertible promissory note combined with warrants is a standard financing instrument for companies seeking growth capital, especially when direct equity issuance might be less favorable or accessible.
• The conversion price set at a discount (80% of VWAP) is a common incentive offered to investors in such private placement deals, reflecting the risk taken by the investor.
• The 4.99% beneficial ownership limitation is a standard provision to prevent the investor from triggering certain SEC reporting requirements (e.g., Schedule 13D) that apply to holders of 5% or more of a company's stock.
• The requirement for shareholder approval for share issuances exceeding 20% of outstanding shares (the 'Exchange Cap') is a direct compliance measure with Nasdaq Listing Rule 5635(d), a common regulatory hurdle for significant dilutive transactions.
• The 18% annual late fee rate on overdue amounts is relatively high, which is often seen in financing arrangements with companies that may have higher perceived risk or limited access to traditional credit.

Corporate Governance

Stakeholder Impact

• Shareholders: Face potential dilution from the conversion of the note and exercise of warrants, particularly due to the discounted conversion price. Their approval is required for significant share issuances.
• Company (Operations): Receives $250,000 in capital, with an option for an additional $750,000, which can support ongoing operations and strategic initiatives.
• Investor (AIFirst Ventures LLC): Gains a convertible note with a discounted conversion price and warrants, offering potential upside in the Company's stock, subject to beneficial ownership and Exchange Cap limitations.
• Creditors: The convertible note is a direct financial obligation, but it is non-interest bearing, which may be favorable compared to traditional debt in the short term.

Next Steps

• The Company will use commercially reasonable best efforts to register the shares of Common Stock issuable upon conversion of the Note and exercise of the Warrants for resale with the SEC within 90 days of October 31, 2025, provided other lenders do not object.
• The Company will seek shareholder approval for the issuance of Common Stock upon conversion of the Note and exercise of the Warrants in excess of the Nasdaq Listing Rule 5635(d) Exchange Cap within 120 days of October 31, 2025.
• If shareholder approval is not obtained at the initial meeting, the Company will continue seeking the Approval every three months thereafter until it is obtained.

Key Dates

Recommendation

The capital infusion provides necessary liquidity and an option for further funding, which is positive for the company's operations. However, the potential for significant dilution from the convertible note and warrants, especially with a discounted conversion price, warrants caution. The requirement for shareholder approval for full conversion/exercise introduces a near-term uncertainty. Investors should hold and monitor the company's use of funds, progress towards shareholder approval, and the impact of potential dilution on per-share metrics.

Keywords

Alpha Modus Holdings, AMOD, AIFirst Ventures, Convertible Note, Promissory Note, Warrants, Securities Purchase Agreement, Capital Raise, Nasdaq, SEC Filing, 8-K, Equity Financing, Investment, AI, Financial Technology