Business Context and Reporting Period
Company: Alpha Modus Holdings, Inc. (formerly Insight Acquisition Corp.)
Reporting Date: December 13, 2024
Event: Consummation of a business combination (merger) with Legacy Alpha Modus, Corp. The registrant changed its name from Insight Acquisition Corp. to Alpha Modus Holdings, Inc. and ceased to be a shell company.
Trading Symbols: Class A Common Stock (AMOD) and Redeemable Warrants (AMODW) on Nasdaq.
Key Financial Metrics
Revenue: Legacy Alpha Modus reported $0 revenue for the three and nine months ended September 30, 2024.
Net Loss:
- Three months ended Sept 30, 2024: $315,746
- Nine months ended Sept 30, 2024: $725,479
Debt and Financing:
- Secured Convertible Note: Issued to Streeterville Capital, LLC with an original principal of $2,890,000 (net proceeds $2,600,000). Interest rate is 10% per annum, maturing 18 months post-closing. The note is secured by all assets, including intellectual property.
- Loeb Note: A $325,000 promissory note issued to counsel (Loeb & Loeb LLP) to settle payables exceeding $1,100,000 (with $425,000 paid in cash). This note bears no interest and is convertible.
Material Changes vs. Prior Period
Operating Expenses: Increased significantly for the nine months ended September 30, 2024 ($597,595) compared to the prior year ($177,519). This increase is primarily attributed to the reclassification of $208,433 in related party expenses (previously charged to equity) and a $164,979 increase in professional fees.
Capital Structure:
- Post-merger outstanding shares: 12,455,252 Class A Common Stock and 7,500,000 Series C Preferred Stock.
- Public share redemptions: Approximately 426,136 shares redeemed for an aggregate of $4.8 million.
- Share Forfeiture: Investor Polar Multi-Strategy Master Fund forfeited 850,000 shares prior to closing.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Strategy: The company plans to deploy technology services under new license agreements with GZ6G Technologies Corp. and CashXAI Inc. by the end of 2024. It intends to continue intellectual property licensing and enforcement efforts throughout 2025.
Earnout Provisions: Up to 2,200,000 contingent "Earnout Shares" are payable to Legacy Alpha Modus shareholders if the stock price hits $13.00, $15.00, and $18.00 VWAP milestones within 5 years. The Sponsor also deposited 750,000 shares into escrow subject to the same milestones.
Risks and Contingencies:
- Going Concern: Substantial doubt exists regarding the company's ability to continue as a going concern due to lack of revenue and insufficient cash resources without raising additional capital.
- Legal Proceedings: Active patent infringement lawsuits filed against The Kroger Company (Jan 2024) and Brookshire Grocery Co. (Nov 2024).
- Debt Covenants: If the stock price falls below $4.00 for ten consecutive trading days, the company must commence repayment of the Streeterville Note 90 days after the purchase date.
Investor Verification Checklist
- Capital Adequacy: Verify the company's ability to raise the estimated $2.5 million needed for operations, given the current cash balance of ~$66k (as of Sept 2024) and lack of revenue.
- Debt Terms: Review the specific conversion mechanics and security interests of the $2.89M Streeterville Note, particularly the $4.00 price floor trigger for mandatory repayment.
- Legal Exposure: Monitor the status of patent infringement lawsuits against major retailers (Kroger, Brookshire) as a potential revenue source or litigation risk.
- Earnout Viability: Assess the likelihood of the stock price reaching the $13.00, $15.00, and $18.00 milestones required to unlock the 2.2M earnout shares.
- Accounting Transition: Confirm the impact of the change in auditors and the reclassification of prior period expenses on future financial reporting.