Business Context and Reporting Period
Company: Alpha Modus Holdings, Inc. (AMOD)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: Alpha Modus is a technology and intellectual property company focused on data-driven systems for consumer engagement in physical retail. The company operates primarily through a "patent-first" strategy, licensing its portfolio of patents covering real-time monitoring, analysis, and response to consumer behavior. It also operates a subsidiary, Alpha Modus Financial Services (AMFS), developing the "Alpha Cash" platform for financial services in retail environments.
Corporate Status: The company is an Emerging Growth Company and a Smaller Reporting Company. It is classified as a "controlled company" due to CEO William Alessi's significant ownership stake.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Revenue (Royalty Income) | $7,138 | $0 |
| Operating Expenses | $5,251,326 | $834,895 |
| Operating Loss | $(5,244,188) | $(834,895) |
| Net Income (Loss) | $(8,021,235) | $4,103,067 |
| Cash and Cash Equivalents (End of Period) | $68,000 | $735,814 |
| Net Cash Used in Operating Activities | $(3,210,182) | $(1,676,499) |
| Total Liabilities | $8,595,481 | $10,493,853 |
| Stockholders' Deficit | $(48,950,162) | $(80,600,359) |
Note: The 2024 net income was driven primarily by a non-cash gain of $18.7 million from the change in fair value of earnout shares liability. The 2025 net loss reflects increased operating expenses and interest costs, partially offset by non-cash gains on derivative liabilities.
Material Changes vs. Prior Period
- Revenue Generation: The company recorded nominal royalty revenue of $7,138 in 2025, compared to zero in 2024, marking the beginning of commercialization efforts.
- Expense Surge: Operating expenses increased by approximately 530% to $5.25 million, driven by higher professional fees, consulting costs, insurance, and public company compliance expenses.
- Profitability Shift: The company swung from a net income of $4.1 million in 2024 to a net loss of $8.0 million in 2025. The 2024 income was largely artificial, derived from the revaluation of earnout liabilities, whereas 2025 reflects actual operational burn.
- Liquidity Deterioration: Cash reserves dropped from $735,814 to $68,000. The company reported a working capital deficit of $7.8 million as of December 31, 2025.
- Debt Restructuring: The company satisfied a $2.89 million convertible note to Streeterville Capital, LLC in July 2025 through a combination of cash and stock conversions. However, it incurred significant new related-party debt and convertible notes throughout the year.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Guidance
Management does not provide specific financial guidance. The company estimates it requires a minimum of an additional $2.5 million to fund operations for the next 12 months. Future revenue is expected to come from patent licensing, enforcement settlements, and the rollout of the Alpha Cash financial services platform.
Material Risks and Contingencies
- Going Concern: The independent auditor has issued a "Going Concern" qualification, expressing substantial doubt about the company's ability to continue operations due to recurring losses, negative cash flows, and a net capital deficiency.
- Internal Controls: The company identified material weaknesses in internal control over financial reporting, citing a lack of qualified accounting staff and inadequate segregation of duties.
- Legal Proceedings: The company is actively engaged in numerous patent infringement lawsuits against major retailers and technology providers (e.g., Kroger, Walgreens, Lowe's, 7-Eleven). While some cases have settled, many remain in early stages. Outcomes are uncertain and litigation is costly.
- Related Party Transactions: A significant portion of the company's debt and equity is held by the CEO, William Alessi, and his related entities (Janbella Group, LLC, Alessi Trusts). This concentration creates potential conflicts of interest and governance risks.
- Nasdaq Compliance: The company received notice in January 2026 of non-compliance with the $1.00 minimum bid price requirement and has a 180-day period to regain compliance.
Unusual Items
- Excise Tax Reversal: The company reversed a $2.35 million excise tax liability in 2025 based on new IRS regulations regarding stock redemptions from pre-2022 IPOs.
- Derivative Gains/Losses: Significant non-cash fluctuations in the fair value of warrant and earnout share liabilities heavily impacted the bottom line in both years.
Investor Verification Checklist
- Cash Runway: Verify the company's ability to raise the estimated $2.5 million needed for operations given the current cash balance of $68,000.
- Related Party Debt Terms: Review the terms of the convertible notes held by the CEO's trusts and Janbella Group, specifically regarding conversion prices and maturity dates.
- Patent Litigation Status: Monitor the status of pending lawsuits against major retailers, as settlements or judgments could be a primary revenue source or a significant liability.
- Internal Control Remediation: Assess the progress of remediation plans for the identified material weaknesses in financial reporting.
- Nasdaq Compliance: Track the stock price to ensure it meets the $1.00 minimum bid price requirement to avoid delisting.