Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

References to the "Company," "Alpha Modus Holdings, Inc.," "Alpha Modus," "our," "us" or "we" refer to Alpha Modus Holdings, Inc. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited interim consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements contained in this Quarterly Report on Form 10-Q may constitute "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "will," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Company Background

The Company was a blank check company known 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, Corp.

Alpha Modus engages in creating, developing and licensing data-driven technologies to enhance consumers' in-store digital experience at the point of decision. Alpha Modus, Corp., the Company's operational subsidiary, was founded in 2014 and is headquartered in Cornelius, North Carolina.

As 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. Some examples that the '571 patent family could potentially include use in the following:

	●	targeted marketing campaigns;
	●	actionable insights on consumer product packaging;
	●	inventory control;
	●	smart planograms;
	●	in-store heatmapping of consumer traffic;
	●	consumer behavior; and
	●	staffing needs based on foot traffic in a retail location.

The 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:

Enhance the Consumer's In-Store Experience

	●	Engage consumers with interactive output displays throughout brick-and-mortar retail stores to capture critical decision-making at the point of sale.
	●	Cater to specific and immediate needs of the consumer.
	●	Capture MAC address tracking data, user eye tracking, object identification of goods throughout the store.

Manage Inventory and Create Smart Planograms

	●	Assess the consumers product engagement and product tracking in real time.
	●	Aid in inventory management and product placement throughout a store by creating smart planograms.

Monetize Digital Insights

	●	Curate tailored in-store marketing solutions.
	●	Drive sales via engaging customers with digital experiences at the point of sale.

Critical Accounting Policies and Estimates

Basis of Presentation

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 9 for more details on earnout shares).

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 Three Months ended June 30, 2026, compared to the Three Months ended June 30, 2025

Revenue

Alpha Modus had $0 and $0 revenue during the three months ended June 30, 2026 and 2025, respectively.

Operating Expenses

Alpha Modus had operating expenses of $2,560,210 for the three months ended June 30, 2026, compared to $1,148,810 for the three months ended June 30, 2025. The increase was primarily due to an increase in professional fees and payroll expenses.

Other Income/Expenses

Alpha Modus had total other income of $411,150 for the three months ended June 30, 2026, compared to total other expense of $1,638,252 for the three months ended June 30, 2025. The increase was primarily due to a decrease of $81,396 in interest expense, no loss in loss on settlement of debt (for the three months ended June 30, 2026, as compared to a $598,324 loss on settlement of debt for the three months ended June 30, 2026), an increase of $1,506,043 in change in fair value of warrants liability and a decrease of $12,633 in change in fair value of business combination earnout shares liability.

Net Loss

Alpha Modus had a net loss of $2,149,060 for the three months ended June 30, 2026, compared to a net loss of $2,787,062 for the three months ended June 30, 2025. The decrease in net loss during the three months ended June 30, 2026, as compared to the net loss during the three months ended June 30, 2025, was primarily due to the increase in change in fair value of warrants and decrease in loss on settlement of debt partially offset by the increase in professional fees described above.

For the Six Months ended June 30, 2026, compared to the Six Months ended June 30, 2025

Revenue

Alpha Modus had $0 and $0 revenue during the six months ended June 30, 2026 and 2025, respectively.

Operating Expenses

Alpha Modus had operating expenses of $6,367,356 for the six months ended June 30, 2026, compared to $2,508,011 for the six months ended June 30, 2025. The increase was primarily due to an increase in professional fees, payroll expenses and increased costs of the kiosk system in development.

Other Income/Expenses

Alpha Modus had total other income of $197,465 for the six months ended June 30, 2026, compared to total other expense of $587,132 for the six months ended June 30, 2025. The increase was primarily due to patent infringement income of $325,000, an increase of $1,480,777 in change in fair value of warrants liability, the change in the loss on settlement of debt of $591,395 and the shareholder settlement expense of $150,000, partially offset by a decrease of $1,051,915 in change in fair value of business combination earnout shares liability, an increase of $286,926 in interest expense, and an increase of $110,632 in change in derivative liability for the six months ended June 30, 2026, as compared to the comparative period in 2025. The Company has generated income attributable to settlements of patent infringement and intellectual property enforcement matters. Under the current interpretation and application of GAAP, these proceeds are classified as "Other Income" rather than operating revenue within the consolidated statements of operations. Alpha Modus had $325,000 and $13,096 other income during the six months ended June 30, 2026 and 2025, respectively.

Net Loss

Alpha Modus had a net loss of $6,169,891 for the six months ended June 30, 2026, compared to a net loss of $3,095,143 for the six months ended June 30, 2025. The increase in net loss during the six months ended June 30, 2026, as compared to the net loss during the six months ended June 30, 2025, was primarily due to the increase in professional fees, payroll expenses and increased costs of the kiosk system in development, and interest expense described above.

Liquidity and Capital Resources

As of June 30, 2026, Alpha Modus had cash of $2,001,007. We do not have sufficient resources to execute all of our business plans. We expect to incur significant expenses during the next twelve months of operations, including expenses associated with being 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 doubt about Alpha Modus' ability to continue as a going concern.

Net cash used in operating activities was $2,402,992 for the six months ended June 30, 2026, compared to $1,115,337 for the six months ended June 30, 2025.

We had net cash used in investing activities for the six months ended June 30, 2026, of $119,797, compared to $7,500 for the six months ended June 30, 2025.

We had net cash provided by financing activities for the six months ended June 30, 2026, of $4,455,796, compared to $505,237 for the six months ended June 30, 2025.

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. 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, except that we have entered into a Security Purchase Agreement with Streeterville Capital, LLC, pursuant to which we may or may not be able to raise additional capital. Our inability to raise funds for our operations in the future will have a severe negative impact on our ability to remain a viable company.

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.

The Company 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 2026 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 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.

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.