What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-04-15 · 149 added, 360 removed, 5 unchanged (99% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operations.

References in this section to “we,”

“our,” “us,” and “Alpha Modus” generally refer to Alpha Modus, Corp.

prior to the Business Combination

and to Alpha Modus Holdings, Inc.

and its consolidated subsidiaries after giving effect to the Business Combination.

References to “Legacy

Alpha Modus” generally refer to Alpha Modus, Corp., and references to the “Company” generally refer to Alpha Modus

Holdings, Inc.

The following discussion and analysis of our results of operations and financial condition should be read in conjunction

with the sections entitled “Business,” “Unaudited Pro Forma Condensed Combined Financial Information and Other Data,”

and our financial statements and related notes and other information included elsewhere in this report.

This discussion contains forward-looking

statements based upon our current expectations, estimates and projections that involve risks and uncertainties.

Actual results could

differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed

under “Risk Fa ctors” and “Cautionary Note

Regarding Forward-Looking Statements.”

Company was a blank check company as “Insight Acquisition Corp.” On December 13, 2024, the Company completed a business combination

with Alpha Modus, Corp., a Florida corporation.

At closing of the business combination, the Company’s name was changed to “Alpha

Modus Holdings, Inc.,” and the Company’s operations are now those of Alpha Modus.

Alpha Modus offers technology

as a service.

Its core technologies have been deployed on IBM’s Bluemix platform and earned a Beacon Award by IBM 2016 for Best

New Application on IBM Cloud from an Entrepreneur.

Alpha Modus has been recognized by IBM Watson as a thought leader in technology.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

in this section to “we,” “our,” “us,” and “Alpha Modus” generally refer to Alpha Modus,

prior to the Business Combination and to Alpha Modus Holdings, Inc.

and its consolidated subsidiaries after giving effect to the

Business Combination.

References to “Legacy Alpha Modus” generally refer to Alpha Modus, Corp., and references to the “Company”

generally refer to Alpha Modus Holdings, Inc.

The following discussion and analysis of our results of operations and financial condition

should be read in conjunction with the sections entitled “Business,” “Unaudited Pro Forma Condensed Combined Financial

Information and Other Data,” and our financial statements and related notes and other information included elsewhere in this report.

This discussion contains forward-looking statements based upon our current expectations, estimates and projections that involve risks

and uncertainties.

Actual results could differ materially from those anticipated in these forward-looking statements due to, among other

considerations, the matters discussed under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

Modus engages in creating, developing and licensing data-driven technologies to enhance consumers’ in-store digital experience

at the point of decision.

The company was founded in 2014 and is headquartered in Cornelius, North Carolina.

technological innovation is at the core of the company, Alpha Modus has developed comprehensive end-to-end patented solutions for retailers

and consumer brands to bring innovation to consumers and enhance their experience at the point of sale.

On January 11, 2024, Alpha

Modus entered into a license agreement with GZ6G Technologies Corp.

(“ GZ6G ”), which gives GZ6G the right to use Alpha

Modus’ patented intellectual property, and pertains to GZ6G’s promotional, advertising, and operational functions, including

co-development arrangements with Alpha Modus for AI-driven advertising solutions for stadiums and event management.

Alpha Modus intends

to deploy services under the license by the end of 2024, expand event venue service offerings in late 2025, and expand service offerings

in additional industries in 2024.

On January 16, 2024, Alpha

Modus initiated a patent infringement action against The Kroger Company alleging patent infringement of several Alpha Modus patents encompassing

retail marketing and advertising data-driven technologies to enhance consumer’s in-store experience at the point of decision.

November 12, 2024, Alpha Modus initiated a patent infringement lawsuit against Brookshire Grocery Co.

alleging infringement of several

Alpha Modus patents pertaining to its ‘571 patent portfolio, ‘825 patent portfolio, ‘672 patent portfolio, ‘890

patent portfolio and ‘880 patent portfolio, which encompass retail marketing and advertising data-driven technologies to enhance

consumers’ in-store experience at the point of decision.

On December 17, 2024, Alpha Modus filed a similar patent infringement lawsuit

against Wakefern Food Corporation and Shelf Nine LLC (which has since been settled), and on February 3, 2025, Alpha Modus filed a patent

infringement lawsuit against Walgreen Co.

On April 10, 2024, Alpha Modus

entered into a license agreement with Xalles Holdings Inc.

and its subsidiary, CashXAI Inc.

(“ CashX ”), which gives

CashX the exclusive right to use all of Alpha Modus’ patented intellectual property in connection with CashX’s promotional,

advertising, and operational functions, including co-development arrangements with Alpha Modus, within the Exclusive Industry.

The “Exclusive

Industry” means the industry relating to self-service kiosks located in retail food, drug and convenience stores for the purpose

of serving Unbanked and Underbanked consumers, by offering banking, phone and insurance solutions to the consumer.

An “Unbanked”

consumer means a person that does not have a checking or savings account with an FDIC-insured institution, and an “Underbanked”

consumer means a person that has or had a checking or savings account with an FDIC-insured institution, but regularly uses non-traditional

banks such as Venmo or the Cash App, or lenders such as a check cashing company or payday lender.

Alpha Modus intends to deploy services

under the license by the end of 2024.

Alpha Modus intends to continue

its intellectual property licensing and enforcement efforts throughout 2025.

No assurances can be given that any of these plans will come

to fruition or that, if implemented, they will necessarily yield positive results.

Business Combination Agreements

The Company was originally

incorporated in Delaware on April 20, 2021, as a special purpose acquisition company under the name “Insight Acquisition Corp.”

On October 13, 2023, the Company

and Alpha Modus, Corp.

entered into the Business Combination Agreement, which was subsequently amended on June 21, 2024.

Pursuant to the

Business Combination Agreement, as amended, Alpha Modus, Corp., and the Company agreed that (i) each share of Alpha Modus, Corp.

stock (other than those properly exercising any applicable appraisal rights under applicable law) would be converted into (A) one share

of Company common stock, and (B) the contingent right to receive a pro rata portion of the Earnout Shares (as defined below) (which may

and (iii) each share of Alpha Modus, Corp.

preferred stock (other than those properly exercising any applicable appraisal rights

under applicable law) would be converted into (A) one share of Company Series C Preferred Stock, and (B) the contingent right to receive

a pro rata portion of the Earnout Shares (as defined below) (which may be zero) (collectively the “Merger Consideration”).

The stockholders of Alpha

may be issued up to 2,200,000 additional shares of Company common stock (the “Earnout Shares”).

The Earnout Shares

will be earned and issued in one-third (1/3) increments (of approximately 733,333 shares) if, for any twenty (20) trading days within

any thirty (30)-consecutive trading day period beginning at least 180 days after the Closing and on or prior to the 5-year anniversary

of the Closing, the VWAP of the Company’s common stock equals or exceeds $13.00 per share, $15.00 per share and $18.00 per share

(as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the Closing), respectively,

with all remaining Earnout Shares earned and issued upon certain changes of control of IAC at or prior to the 5-year anniversary of the

Additionally, at the Closing,

the Company’s sponsor, Insight Acquisition Sponsor LLC (the “Sponsor”) was required to deposit 750,000 shares of Company

common stock into escrow (the “Sponsor Earnout Shares”), and the Sponsor Earnout Shares will be released to the Sponsor according

to the same milestones and timelines applicable to the Earnout Shares described above.

Additionally, the Company and the Sponsor agreed

that the Sponsor will forfeit and cancel 750,000 shares of Company common stock at Closing.

Finally, at the Closing, (i) the Company will

to use its best efforts to pay off the Company’s loan(s) from Polar Multi-Strategy Master Fund (“Polar”) (expected to

be approximately $975,000 at Closing), (ii) the Company will use its best efforts to pay Alpha Modus, Corp.’s loans from Janbella

Group, LLC (“Janbella”) (expected to be approximately $1,400,000 at Closing), (iii) the Company will issue to Janbella 1,392,308

shares of Company common stock, (iv) the Company will issue to Michael Singer 125,000 shares of Company common stock, (v) the Company

will issue to Cantor Fitzgerald & Co.

(“Cantor”) 210,000 shares of Company common stock, and (vi) the Company will issue

to Odeon Capital Group, LLC (“Odeon”) 90,000 shares of Company common stock.

Cantor, the representative

of the underwriters in the Company’s original IPO in September 2021, was entitled to a deferred underwriting commission upon the

closing of the Business Combination of $6,600,000, which amount was not subject to change based on redemption levels.

On June 20, 2024,

Cantor and Odeon entered into fee modification agreements with the Company pursuant to which (i) Cantor would be issued 210,000 shares

of Company common stock and Odeon would be issued 90,000 shares of Company common stock at the closing of the Business Combination, and

(ii) Cantor and Odeon would waive the right to any further underwriting commissions or other payments by the Company under its Underwriting

Agreement with them, subject to the other terms of those fee modification agreements.

On October 29, 2024, Company

stockholders approved the Business Combination and other transactions and proposal presented within the proxy statement/prospectus in

connection with Business Combination transactions.

Financing in Connection with Business Combination

On October 23, 2024, Alpha

Modus Holdings, Inc.

(the “Company”) entered into a securities purchase agreement (the “SPA”) with Streeterville

Capital, LLC (the “Investor”), pursuant to which the Company would sell, and the Investor would purchase, a secured convertible

promissory note in the original principal amount of $2,890,000 (the “Note”) for a net purchase price of $2,600,000 (after

deducting an original issue discount of $260,000, and payment of $30,000 for the Investor’s legal, accounting, due diligence, asset

monitoring, and other transaction expenses).

The SPA includes customary

representations, warranties and covenants by the Company and customary closing conditions.

The SPA grants the Investor (i) the right to

fund up to an additional $5,000,000 to the Company, with the Company’s consent, through the date that is six months following repayment

of the Note in full (the “Reinvestment Right”), and (ii) the exclusive right, on customary market terms, to enter into an

equity line of credit or other similar financing arrangement with the Company for at least $20,000,000, through the date that is one year

following the Purchase Price Date (defined below).

Pursuant the SPA, Alpha Modus, Corp.

is required to guarantee all of the Company’s

obligations under the Note and related transaction documents pursuant to a guaranty agreement (the “Guaranty”), and the Note

will also be secured by security agreements (the “Security Agreements”) by and between the Investor and both the Company and

Alpha Modus, Corp., granting the Investor first priority security interests in all assets of the Company, as well as all assets of Alpha

Modus, Corp., including all of Alpha Modus’ intellectual property (and including Alpha Modus’ patent portfolio) pursuant to

a separate intellectual property security agreement (the “IP Security Agreement”).

Additionally, the Company and Alpha Modus

(collectively the “Borrowers”), and William Alessi, his entity, Janbella Group, LLC, and the trusts deemed to be beneficially

Alessi (each a “Capital Party” and collectively the “Capital Parties”), are required to execute at

closing a subordination and voting agreement (the “Subordination Agreement”) pursuant to which (i) all of the Borrowers’

indebtedness and obligations to each Capital Party will be subordinated to Investor, (ii) all security interests of any Capital Party

will be subordinate to Investor’s security interests, (iii) the Borrowers will not make any payments to any Capital Party, (iv)

none of the Capital Parties will accelerate any subordinated debt or equity, (v) and no Capital Party will convert or exchange their preferred

stock of the Company into Common Stock, until such time as the Investor has been fully paid and all financing agreements between the Investor

and the Borrowers are terminated.

The Note will mature 18 months

following the date the purchase price is delivered to the Company (the “Purchase Price Date”), will accrue interest of 10%

per annum, will be prepayable (after providing five trading days’ notice) at a 20% premium to the then-outstanding balance of the

Note, and will be convertible into Class A common stock (“Common Stock”) of the Company as described below.

Within 30 days

of the Purchase Price Date, the Company will be obligated to file a registration statement on Form S-1 with the SEC registering a number

of shares of Common Stock issuable upon conversion of the Note.

If the registration statement is not declared effective by the SEC within

120 days of the Purchase Price Date, the outstanding balance under the Note will automatically increase by one percent and will continue

increasing by one percent every 30 days thereafter until the registration statement is declared effective or the Investor is able to sell

shares of Common Stock issuable upon conversion of the Note pursuant to Rule 144 under the Securities Act of 1933, as amended.

date that 50% of the shares registered under the registration statement have been issued to Investor (such date, the “Trigger Date”)

the Note has not yet been repaid in full, the Company will be obligated to file an additional registration statement registering additional

shares of Common Stock issuable upon conversion of the Note within 30 days of the Trigger Date.

If that additional registration statement

is not declared effective by the SEC within 120 days of the Trigger Date, the outstanding balance under the Note will automatically increase

by one percent and will continue increasing by one percent every 30 days thereafter until the additional registration statement is declared

The Note will be convertible

at the election of the Investor into shares of Common Stock at any time following the earlier of the effective date of the registration

statement described above or one year following the Purchase Price Date, at a conversion price equal to 90% multiplied by the lowest daily

volume-weighted average price during the five trading days preceding conversion, and provided that (i) the Investor may not convert the

Note into shares of Common Stock to the extent that such conversion would result in the Investor’s beneficial ownership of Common

Stock being in excess of 4.99% (or 9.99% if the Company’s market capitalization is less than $10 million), and provided that (ii)

the Note is not convertible into a total cumulative number of shares of Common Stock in excess of the number of shares of Common Stock

permitted by Nasdaq Listing Rule 5635 (the “Exchange Cap”).

Pursuant to the terms of the Note, the Company will, within 120

days of the Purchase Price Date, seek shareholder approval of the Note and the issuance of shares of Common Stock, issuable upon conversion

of the Note and pursuant to the Reinvestment Right, in excess of the Exchange Cap (the “Shareholder Approvals”).

If such shareholder

approval is not obtained within 120 days, the Company will continue to seek shareholder approval every three months thereafter until shareholder

approval is obtained.

Pursuant to the Subordination Agreement, each Capital Party is required to vote all of their shares of Company stock

in favor of the Shareholder Approvals.

Under the SPA, the Company is required to initially reserve 7,500,000 shares of its Common Stock

for issuance to the Investor under the Note, and the Company is required to add additional shares to the reserve in increments of 100,000

shares when requested by the Investor if at the time of the request the number of shares being held in reserve is less than three times

the number of shares of Common Stock equal to the outstanding balance under the Note divided by the applicable conversion price at that

On December 12, 2024, the

Company amended the SPA (the “Amended SPA”) to revise the terms of the Note.

Pursuant to the Amended SPA, the Note is not

convertible below a floor price of $4.00/share, but if the closing bid price of the Company’s common stock is less than the floor

price for ten consecutive trading days, the Company is required to begin making monthly payments under the Note on the date that is 90

days following the original funding date.

On or about December 13, 2024,

the Company issued the Note to the Investor, the Note was funded on or about December 16, 2024, and since that time, the closing bid price

of the Company’s common stock has been less than the $4.00 floor price for more than ten consecutive trading days, which, under

the terms of the Amended SPA, would have required the Company to begin making monthly payments under the Note, with those monthly payments

commencing on March 16, 2025, and with those monthly payments being equal to 120% multiplied by the outstanding balance divided by the

lesser of 6 or the number of months remaining until the Note’s maturity date.

On January 27, 2025, the Company

and the Investor entered into an amendment to the Note providing that (i) the Company is not required to begin making monthly payments

under the Note until May 16, 2025, (ii) the monthly payments will equal $485,000.00 plus all accrued but unpaid interest, multiplied by

120%, and (iii) the Company will pay to the Investor 50% of all proceeds received by the Company from any equity line of credit or similar

arrangement within one trading day of receipt by the Company.

Business Combination Closing

On December 13, 2024, the

parties to the Business Combination Agreement consummated the Business Combination, and in connection with closing issued the Note to

the Investor, and entered into the Guaranty, Security Agreements, IP Security Agreement, and Subordination Agreement.

Immediately upon

the consummation of the Business Combination, Alpha Modus, Corp.

became a wholly owned subsidiary of the Company, the Company changed

its name to “Alpha Modus Holdings, Inc.,” and the Company is now listed on Nasdaq under the symbol “AMOD”.

Business Combination was accounted for as a reverse recapitalization.

Under this method of accounting, INAQ is treated as the acquired

company for financial statement reporting purposes.

See “ Unaudited Pro Forma Condensed Combined Financial Information and Other

Data .” Legacy Alpha Modus’s financial statements for previous periods will be disclosed in the Company’s future

periodic reports filed with the SEC.

In connection with the Business

Combination, approximately 426,136 shares of common stock were redeemed, which represented a significant portion of the publicly traded

shares outstanding immediately prior to the Business Combination and resulted in only approximately $1.16 million of cash from the INAQ

trust account becoming available to Alpha Modus in connection with the closing of the Business Combination.

In the Business Combination,

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 in the Business Combination, and the Company issued 1,817,308 shares of common stock to various parties as required

by the Business Combination Agreement.

Immediately following the Business Combination, including the redemption of shares described above,

there were 12,455,252 shares of the Company’s common stock (all Class A common stock) issued and outstanding, and 7,500,000 shares

of the Company’s Series C Preferred Stock issued and outstanding.

As a result of becoming a

publicly traded company, we will need to hire additional personnel and implement procedures and processes to address public company regulatory

requirements and customary practices.

We expect to incur additional annual expenses as a public company for, among other things, directors’

and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources,

including increased audit and legal fees.

Critical Accounting Policies and Estimates

Basis of Presentation

The accompanying consolidated financial statements

are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant

to the rules and regulations of the SEC and has a year-end of December 31 st .

Critical accounting policies are those that,

in management’s view, are most important to the portrayal of a company’s financial condition and results of operations and

most demanding on their calls on judgment, often as a result of the need to make estimates about the effect of matters that are inherently

uncertain and may change in subsequent periods.

While our significant accounting policies are described in more detail in Note 2 to our

financial statements appearing elsewhere in this annual report, we believe that the following accounting policies are those most critical

to the judgments and estimates used in the preparation of our financial statements.

Derivative Liabilities

The Company does not use derivative instruments

to hedge exposures to cash flow, market, or foreign currency risks.

The Company evaluates all of its financial instruments, including

issued stock purchase warrants and the forward purchase agreement, to determine if such instruments are derivatives or contain features

that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed

at the end of each reporting period.

The company earnout shares and sponsor earnout

shares (“earnout shares”) as defined in the business combination agreement are recognized as derivative liabilities in accordance

with ASC 815.

In accordance with FASB ASC Topic 820, “Fair Value of Financial Instruments” (“ASC 820”), the Company

recognizes the earnout shares instruments as liabilities at fair value and adjusts the carrying value of the instruments to fair value

at each reporting period for so long as they are outstanding.

At the date of the merger, the initial fair value of the earnout shares

have been estimated using a Monte Carlo simulation model.

Subsequently, the fair value of the earnout shares have been estimated using

this same Monte Carlo simulation model.

Derivative earnout shares liabilities are classified as current liabilities (See note 7 for more

details on earnout shares).

Series C Preferred Stock

During the year ended December 31, 2024, the Company

amended and restated its charter to include the designation of a Series C Preferred Stock.

The Amended and Restated Charter authorizes

the issuance of 8,500,000 shares of preferred stock, 7,500,000 shares of which have been designated as Series C Redeemable Convertible

Preferred Stock (“Series C Preferred Stock”), and 1,000,000 shares of which will be undesignated.

Based on the characteristics

and rights of the Series C Preferred Stock, the Company is reporting it as Mezzanine Equity (Temporary Equity) on its consolidated balance

These shares were valued at the date of issuance using a Monte Carlo Simulation model.

The Company determined that subsequent

changes to the carrying value of the series C preferred shares will not be recognized until Redemption becomes probable of occurring.

Some examples that the ‘571

patent family could potentially include use in the following:

marketing campaigns;

insights on consumer product packaging;

heatmapping of consumer traffic;

needs based on foot traffic in a retail location.

primary focus of Alpha Modus’ technology is to analyze consumer behavior and their interactions with retail products in real-time

with the objective to provide brands and retailers the ability to achieve the following:

the Consumer’s In-Store Experience

consumers with interactive output displays throughout brick-and-mortar retail stores to capture critical decision-making at the point

to specific and immediate needs of the consumer.

MAC address tracking data, user eye tracking, object identification of goods throughout the store.

Inventory and Create Smart Planograms

the consumers product engagement and product tracking in real time.

in inventory management and product placement throughout a store by creating smart planograms.

Digital Insights

tailored in-store marketing solutions.

sales via engaging customers with digital experiences at the point of sale.

Accounting Policies and Estimates

accounting policies are those that, in management’s view, are most important to the portrayal of a company’s financial condition

and results of operations and most demanding on their calls on judgment, often as a result of the need to make estimates about the effect

of matters that are inherently uncertain and may change in subsequent periods.

While our significant accounting policies are described

in more detail in Note 2 to our financial statements appearing elsewhere in this annual report, we believe that the following accounting

policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

The Company evaluates

all of its financial instruments, including issued stock purchase warrants and the forward purchase agreement, to determine if such instruments

are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives

and Hedging” (“ASC 815”).

The classification of derivative instruments, including whether such instruments should be

recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

company earnout shares and sponsor earnout shares (“earnout shares”) as defined in the business combination agreement are

recognized as derivative liabilities in accordance with ASC 815.

In accordance with FASB ASC Topic 820, “Fair Value of Financial

Instruments” (“ASC 820”), the Company recognizes the earnout shares instruments as liabilities at fair value and adjusts

the carrying value of the instruments to fair value at each reporting period for so long as they are outstanding.

At the date of the

merger, the initial fair value of the earnout shares have been estimated using a Monte Carlo simulation model.

Subsequently, the fair

value of the earnout shares have been estimated using this same Monte Carlo simulation model.

Derivative earnout shares liabilities are

classified as current liabilities (See note 7 for more details on earnout shares).

C Preferred Stock

the year ended December 31, 2024, the Company amended and restated its charter to include the designation of a Series C Preferred Stock.

The Amended and Restated Charter authorizes the issuance of 8,500,000 shares of preferred stock, 7,500,000 shares of which have been

designated as Series C Redeemable Convertible Preferred Stock (“Series C Preferred Stock”), and 1,000,000 shares of which

will be undesignated.

Based on the characteristics and rights of the Series C Preferred Stock, the Company is reporting it as Mezzanine

Equity (Temporary Equity) on its consolidated balance sheets.

These shares were valued at the date of issuance using a Monte Carlo Simulation

The Company determined that subsequent changes to the carrying value of the series C preferred shares will not be recognized until

Redemption becomes probable of occurring.

See Note 9 – Mezzanine Equity for further details.

Off-balance Sheet Arrangements

We do not have any off-balance

sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Results of Operations

For the year ended December 31, 2024, compared

to the year ended December 31, 2023

Alpha Modus had no revenue

during the years ended December 31, 2024 and 2023.

Operating Expenses

Alpha Modus had operating

expenses of $834,895 for the year ended December 31, 2024, compared to $391,949 for the year ended December 31, 2023.

The increase was

primarily due to an increase in professional fees related to the pending merger and increased accounting and legal fees.

Other Income/Expenses

Alpha Modus had total other

income of $4,938,162 for the year ended December 31, 2024, $168,886 of which was interest expense, $13,226,926 of which was a forbearance

fee expense, $397,553 of which was a loss in change in fair value of warrants liability and $18,731,514 of which was a gain of change

in fair value of earnout shares liability, as compared to total other expense of $109,346, $109,353 of which was interest expense during

the year ended December 31, 2023.

Alpha Modus had a net income

of $4,103,067 for the year ended December 31, 2024, compared to a net loss of $501,295 for the year ended December 31, 2023.

in net income during the year ended December 31, 2024, as compared to the net loss during the year ended December 31, 2023, was primarily

due to the gain in change in fair value of earnout shares of $18,731,514, loss in change in fair value of warrants liability of $397,553

and forbearance fee expense of $13,226,926 during the year ended December 31, 2024, described above.

Liquidity and Capital Resources

As of December 31, 2024, Alpha

Modus had cash of $735,814.

Sheet Arrangements

do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial

condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources

that are material to investors.

of Operations

the year ended December 31, 2025, compared to the year ended December 31, 2024

Modus had $7,138 and $0 in royalty revenue during the years ended December 31, 2025 and 2024, respectively.

Modus had operating expenses of $5,251,326 for the year ended December 31, 2025, compared to $834,895 for the year ended December 31,

The increase was primarily due to an increase in professional fees and increased consulting, insurance, payroll and public company

Income/Expenses

Modus had total other expense of $2,777,047 for the year ended December 31, 2025, $3,981,641 of which was interest expense, $803,680

of which was a gain in change in fair value of warrants liability, $1,053,084 of which was a gain of change in fair value of earnout

shares liability and $760,302 of which was loss on settlement of debt, as compared to total other income of $4,938,162, $168,886 of which

was interest expense, $13,226,926 of which was a forbearance fee expense, $397,553 of which was a loss in change in fair value of warrants

liability and $18,731,514 of which was a gain of change in fair value of earnout shares liability during the year ended December 31,

Modus had a net loss of $8,021,235 for the year ended December 31, 2025, compared to a net income of $4,103,067 for the year ended December

The net loss during the year ended December 31, 2025 was primarily due to increase in operating expenses and the increase in

interest expenses together with the gain in change in fair value of earnout shares of $1,053,084, gain in change in fair value of warrants

liability of $803,680 and loss on settlement of debt of $760,302 as compared to the net income during the year ended December 31, 2024

comprised of the gain in change in fair value of earnout shares of $18,731,514, loss in change in fair value of warrants liability of

$397,553 and forbearance fee expense of $13,226,926 as described above.

and Capital Resources

of December 31, 2025, Alpha Modus had cash of $68,000.

We do not have sufficient resources to effectuate our business.

We expect to incur significant expenses during

the next twelve months of operations, including as a result of becoming a public company.

We estimate that these expenses will be comprised

primarily of general expenses including overhead, legal and accounting fees.

To maintain our plan of growth, we believe we will need to

raise a minimum of an additional $2,500,000.

These factors, along with the lack of current Company revenues, raise substantial doubts

about Alpha Modus’ ability to continue as a going concern.

Operations used cash of $1,676,499

for the year ended December 31, 2024, compared to $515,181 for the year ended December 31, 2023.

We acquired $2,537 in cash

with the business combination but incurred $361,643 in acquisition costs.

We had net cash provided by

financing activities for the year ended December 31, 2024, of $2,664,610, compared to $618,984 for the year ended December 31, 2023.

We will have to raise funds

to pay for our expenses.

We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with

a third party.

We expect to incur

significant expenses during the next twelve months of operations, including as a result of becoming a public company.

We estimate that

these expenses will be comprised primarily of general expenses including overhead, legal and accounting fees.

To maintain our plan of

growth, we believe we will need to raise a minimum of an additional $2,500,000.

These factors, along with the lack of current Company

revenues, raise substantial doubts about Alpha Modus’ ability to continue as a going concern.

used cash of $3,210,182 for the year ended December 31, 2025, compared to $1,676,499 used for the year ended December 31, 2024.

used $8,050 to acquire equipment in the year ended December 31, 2025 compared to $2,537 in cash acquired with the business combination

but incurred $361,643 in acquisition costs in the year ended December 31, 2024.

had net cash provided by financing activities for the year ended December 31, 2025, of $2,550,418, compared to $2,664,610 for the year

ended December 31, 2024.

will have to raise funds to pay for our expenses.

We may have to borrow money from shareholders or issue debt or equity or enter into

a strategic arrangement with a third party.

There can be no assurance that additional capital will be available to us.

We currently have no arrangements or understandings

with any person to obtain funds through bank loans, lines of credit or any other sources.

Since we have no such arrangements or plans

currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable

Emerging Growth Company Status

Section 102(b)(1) of the JOBS

Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies

are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can choose not to

take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any

such election to not take advantage of the extended transition period is irrevocable.

IAC is an “emerging

growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended

transition period for new or revised financial accounting standards.

Following the consummation of the Business Combination, Alpha Modus

expects to remain an emerging growth company at least through the end of the 2023 fiscal year and to continue to take advantage of the

benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent

permitted by such standards.

This may make it difficult or impossible to compare Alpha Modus’ financial results with the financial

results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to

take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Subject to certain conditions

set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not required to, among other

(i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section

404(b) of the Sarbanes-Oxley Act;

(ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies

under the Dodd-Frank Wall Street Reform and Consumer Protection Act;

(iii) comply with any requirement that may be adopted by the Public

Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional

information about the audit and the financial statements (auditor discussion and analysis);

and (iv) disclose certain executive compensation-related

items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation

to median employee compensation.

We will remain an emerging

growth company under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the fifth anniversary of the

IAC IPO, (ii) the last date of our fiscal year in which we have total annual gross revenue of at least $1.07 billion, (iii) the date on

we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding common

equity held by non-affiliates, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during

the previous three years.

Quantitative and Qualitative Disclosures

about Market Risk.

We are a smaller reporting

company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

We currently have

no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact

on our ability to remain a viable company.

Growth Company Status

102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards

until private companies are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company

can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth

companies, and any such election to not take advantage of the extended transition period is irrevocable.

is an “emerging growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the

benefits of the extended transition period for new or revised financial accounting standards.

Following the consummation of the Business

Combination, Alpha Modus expects to remain an emerging growth company at least through the end of the 2023 fiscal year and to continue

to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting

standards to the extent permitted by such standards.

This may make it difficult or impossible to compare Alpha Modus’ financial

results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company

that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting

standards used.

to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not

required to, among other things:

(i) provide an auditor’s attestation report on our system of internal controls over financial

reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

(ii) provide all of the compensation disclosure that may be required

of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act;

(iii) comply with any requirement

that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s

report providing additional information about the audit and the financial statements (auditor discussion and analysis);

and (iv) disclose

certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of

the Chief Executive Officer’s compensation to median employee compensation.

will remain an emerging growth company under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the

fifth anniversary of the IAC IPO, (ii) the last date of our fiscal year in which we have total annual gross revenue of at least $1.07

billion, (iii) the date on we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0

million of outstanding common equity held by non-affiliates, or (iv) the date on which we have issued more than $1.0 billion in non-convertible

debt securities during the previous three years.

Quantitative and Qualitative Disclosures about Market Risk.

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information

under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis