PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements The unaudited statements show a net loss of $308,081 and a working capital deficit, raising going concern doubts Consolidated Balance Sheets Total assets declined to $0.90 million while the stockholders' deficit remained substantial at $80.85 million Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $148,277 | $735,814 | | Total Current Assets | $903,419 | $1,702,519 | | Total Assets | $903,419 | $1,702,519 | | Liabilities & Equity | | | | Total Current Liabilities | $6,886,108 | $7,559,310 | | Total Liabilities | $9,944,709 | $10,493,853 | | Total Stockholders' Deficit | ($80,850,315) | ($80,600,359) | Consolidated Statements of Operations The company reported no revenue and a net loss of $308,081, partially offset by fair value gains on liabilities Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Operating Expenses | $1,359,201 | $190,911 | | Operating Loss | ($1,359,201) | ($190,911) | | Total Other Income (Expense) | $1,051,120 | ($31,785) | | Net Loss | ($308,081) | ($222,696) | | Loss Per Share (Basic & Diluted) | ($0.02) | ($0.06) | Consolidated Statements of Cash Flows Net cash used in operations increased significantly, resulting in a cash balance decrease of $587,537 Cash Flow Summary (Unaudited) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($594,147) | ($175,286) | | Net Cash Provided by Financing Activities | $6,610 | $100,000 | | Net Change in Cash | ($587,537) | ($75,286) | | Cash at End of Period | $148,277 | $31,523 | Notes to Consolidated Financial Statements Notes detail a business model shift to patent commercialization and a going concern warning due to recurring losses - The company has shifted its focus from being an AI software provider to developing and commercializing its patent portfolio, specifically the '571 Patent family, starting in 202426 - The December 2024 business combination was accounted for as a reverse recapitalization, with Alpha Modus Corp. identified as the accounting acquirer27 - There is substantial doubt about the company's ability to continue as a going concern due to recurring losses, a working capital deficit of $5,982,689, and low cash reserves of $148,277 as of March 31, 202535 - Subsequent to the quarter's end, on April 28, 2025, the company entered into a Patent Monetization Agreement and an Option Agreement with an entity controlled by its CEO to fund patent litigation and potentially acquire the entity131132 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the operational transition, increased expenses, and critical liquidity issues facing the company Overview The company's focus is on technology services and patent commercialization through licensing and litigation - The company's primary business strategy is intellectual property licensing and enforcement, which it intends to continue throughout 2025144 - Alpha Modus has initiated a series of patent infringement lawsuits against companies including The Kroger Company (settled), Brookshire Grocery Co., Wakefern Food Corporation (settled), Walgreen Co., and Optisigns, Inc142 Results of Operations The company recorded no revenue and a $308,081 net loss, driven by a substantial increase in operating expenses Comparison of Operations for the Three Months Ended March 31 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Operating Expenses | $1,359,201 | $190,911 | | Other Income (Net) | $1,051,120 | ($31,785) | | Net Loss | ($308,081) | ($222,696) | - The increase in operating expenses was primarily due to higher professional fees, insurance premiums, payroll, and investor relations expenses following the business combination176 - The net loss was partially offset by a gain of $1,039,282 from the change in fair value of the earnout shares liability and a gain of $234,195 from the change in fair value of the warrants liability177178 Liquidity and Capital Resources The company faces a severe liquidity crisis, requiring at least $2.5 million in additional capital to continue operations - As of March 31, 2025, the company had only $148,277 in cash179 - Management believes it needs to raise a minimum of an additional $2,500,000 to continue its growth plan, and its inability to do so would severely impact its viability179181 - Net cash used in operating activities increased to $594,147 in Q1 2025 from $175,286 in Q1 2024180 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - As a smaller reporting company, Alpha Modus Holdings is exempt from providing quantitative and qualitative disclosures about market risk187 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of the end of the quarter - The company's disclosure controls and procedures were concluded to be not effective as of the end of the reporting period, March 31, 2025189 - Management plans to remediate the material weakness by implementing a more timely reporting schedule and adding more reviews of financial statement support190 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is actively pursuing patent infringement lawsuits as a core business strategy, with two cases settled - The company has filed multiple patent infringement lawsuits related to its retail marketing and advertising data-driven technologies193194195 - Lawsuits against The Kroger Company and Wakefern Food Corporation have been settled193195 - Active litigation continues against Brookshire Grocery Co., Walgreen Co., and Optisigns, Inc., with these cases currently in their initial pleading stages194196197 Item 1A. Risk Factors This report references risk factors previously disclosed in the company's Form 10-K and Form S-1 filings - For a comprehensive understanding of the risks facing the company, investors are directed to the risk factors section of the Form 10-K filed on April 15, 2025, and the Form S-1 filed on May 9, 2025198 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company issued unregistered common stock for director compensation, services, and as part of a note amendment - In January and April 2025, shares were issued to non-employee directors as payment for their $25,000 quarterly fees200202 - On April 30, 2025, 39,266 shares were issued to the Chief Revenue Officer for his $62,500 quarterly fee203 - On April 30, 2025, the company issued 1,250,000 shares of common stock as "Pre-Delivery Shares" to an investor in connection with the Second Amendment to a convertible note204 Item 5. Other Information Entities controlled by the CEO established and later terminated Rule 10b5-1 trading plans during the period - On March 10, 2025, entities controlled by CEO William Alessi established Rule 10b5-1 trading plans to sell company stock under specific conditions208 - On April 30, 2025, several of these 10b5-1 plans were terminated, and no shares had been sold under the terminated plans208 Item 6. Exhibits This section lists key corporate and transactional documents filed as exhibits with the report - A comprehensive list of exhibits is provided, including foundational agreements related to the business combination, financing, and recent patent-related contracts210211
Insight Acquisition (INAQ) - 2025 Q1 - Quarterly Report