Alpha Modus Holdings (AMOD) Risk Analysis

Alpha Modus' CEO, William Alessi, is deemed to beneficially own or control in excess of ___ % of Alpha Modus' common stock and 90% of Alpha Modus' preferred stock. As a result, Alpha Modus is deemed to be a "controlled company" as defined under the listing rules of Nasdaq. Under Nasdaq listing rules, controlled companies are companies of which more than 50% of the voting power for the election of directors is held by an individual, a group, or another company. For as long as Alpha Modus remains a controlled company, Alpha Modus will be permitted to elect to rely on certain exemptions from Nasdaq's corporate governance rules, including the following: - an exemption from the rule that a majority of its board of directors must be independent directors;         - an exemption from the rule that its compensation committee be composed entirely of independent directors;         - an exemption from the rule that its director nominees must be selected or recommended solely by independent directors or a nominating committee composed solely of independent directors; Although Alpha Modus does not currently intend for Alpha Modus to rely on the "controlled company" exemptions to Nasdaq's corporate governance rules, Alpha Modus could elect to rely on these exemptions in the future. If it elected to rely on those "controlled company" exemptions, a majority of the members of Alpha Modus' board of directors might not be independent directors, its nominating and corporate governance and compensation committees might not consist entirely of independent directors, and you would not have the same protection afforded to shareholders of companies that are subject to all of Nasdaq's corporate governance rules.

Alpha Modus may issue additional shares of common or preferred stock for financing or other reasons. The issuance of additional shares of common or preferred stock: - may significantly dilute the equity interest of existing investors;         - may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded to holders of common stock;         - could cause a change in control if a substantial number of common stock is issued, which may affect, among other things, Alpha Modus' ability to use its net operating loss carry forwards, if any, and could result in the resignation or removal of Alpha Modus' present officers and directors; and         - may adversely affect prevailing market prices for Alpha Modus' common stock and/or warrants.

Our warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority of the then-outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least a majority of the then-outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.

Alpha Modus will have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of Alpha Modus common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date Alpha Modus gives notice of redemption. If and when the Public Warrants become redeemable by Alpha Modus, Alpha Modus may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Public Warrants could force holders of the warrants (i) to exercise the Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so, (ii) to sell the Public Warrants at the then-current market price when they might otherwise wish to hold their Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of the Public Warrants. As of March 31, 2025, the sales price of the Class A common stock did not exceed the threshold that would allow Alpha Modus to redeem the Public Warrants.

The Amended and Restated Charter requires, to the fullest extent permitted by law, that derivative actions brought in Alpha Modus' name, as applicable, against their respective directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware or, if the Court of Chancery does not have subject matter jurisdiction, in the federal district court of the State of Delaware. This exclusive forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with Alpha Modus, or any of their respective directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although their respective stockholders will not be deemed to have waived their compliance with federal securities laws and the rules and regulations thereunder. However, there is no assurance that a court would enforce the choice of forum provision contained in the Amended and Restated Charter. If a court were to find such provision to be inapplicable or unenforceable in an action, Alpha Modus may incur additional costs associated with resolving such action in other jurisdictions, which could harm their business, operating results and financial condition. The Amended and Restated Charter provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. The Amended and Restated Charter also provides that to the fullest extent permitted by applicable law, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. The exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, federal courts will have exclusive jurisdiction over suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such claims. As noted above, the Amended and Restated Charter provides that the federal district courts of the United States will be, to the fullest extent permitted by applicable law, the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. Due to the concurrent jurisdiction for federal and state courts created by Section 22 of the Securities Act over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, there is uncertainty as to whether a court would enforce the exclusive form provision. Investors also cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

The Amended and Restated Charter and the Company's Bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include: - no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;         - the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director with or without cause by stockholders, which prevents stockholders from being able to fill vacancies on our board of directors;         - the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;         - a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;         - the requirement that a special meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;         - limiting the liability of, and providing indemnification to, our directors and officers;         - controlling the procedures for the conduct and scheduling of stockholder meetings;- providing for a staggered board, in which the members of the board of directors are divided into three classes to serve for a period of three years from the date of their respective appointment or election;         - granting the ability to remove directors with cause by the affirmative vote of 66 2/3% in voting power of the outstanding shares of Alpha Modus common stock entitled to vote thereon;         - requiring the affirmative vote of at least 66 2/3% of the voting power of the outstanding shares of capital stock of Alpha Modus entitled to vote generally in the election of directors, voting together as a single class, to amend the Proposed Bylaws or certain sections of the Amended and Restated Charter; and         - advance notice procedures that stockholders must comply with in order to nominate candidates to Alpha Modus Board or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of Alpha Modus. These provisions, alone or together, could delay hostile takeovers and changes in control of Alpha Modus or changes in Alpha Modus Board and Alpha Modus' management. As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of Alpha Modus common stock. Any provision of Amended and Restated Charter, the Proposed Bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of Alpha Modus common stock and could also affect the price that some investors are willing to pay for Alpha Modus common stock.

The trading market for Alpha Modus' securities will be influenced by the research and reports that industry or securities analysts may publish about Alpha Modus, its business, market or competitors. Securities and industry analysts do not currently, to the knowledge of management, and may never, publish research on Alpha Modus. If no securities or industry analysts commence coverage of Alpha Modus, Alpha Modus' share price and trading volume would likely be negatively impacted. If any of the analysts who may cover Alpha Modus change their recommendation regarding Alpha Modus common stock adversely, or provide more favorable relative recommendations about Alpha Modus' competitors, the price of shares of Alpha Modus common stock would likely decline. If any analyst who may cover Alpha Modus were to cease coverage of Alpha Modus or fail to regularly publish reports on it, Alpha Modus could lose visibility in the financial markets, which in turn could cause its share price or trading volume to decline.

We issued 7,500,000 shares of Series C Preferred Stock in the Business Combination. The Series C Preferred Stock will generally be convertible at any time 18 months following the Closing of the Business Combination and may convert in some circumstances into more than 7,500,000 shares of common stock. Conversion of the Series C Preferred Stock into common Stock will be dilutive to existing stockholders and may reduce the market price of common stock. For example, if there has never been a Trigger Event (as defined below), shares of Series C Preferred Stock, which have a deemed face value of $10.00 per share (the "Face Value") will convert into shares of common stock at the lesser of the Face Value or the average of the 5 lowest closing prices of common stock during the 10 trading days preceding conversion. However, following a following any Trigger Event, such conversion shall be at the lesser of the Face Value or 50.0% of the average of the lowest closing prices during the 10 trading days preceding conversion. "Trigger Event" generally means (i) the Company's failure to deliver conversion shares when required; (ii) violation of or failure to timely perform any covenant in the designation of the rights of the Series C Preferred Stock; (iii) suspension from trading or delisting from the Company's principal trading exchange or market; (iv) notification of an intention not to comply with a conversion notice; (v) bankruptcy, insolvency, reorganization, liquidation or similar proceedings; (vi) the appointment of a custodian, receiver or similar official for the Company; (vii) judgments in excess of $500,000 which are not stayed or satisfied within 30 days of entry; (viii) failure to comply with reporting requirements of Securities Exchange Act; (ix) any regulatory, administrative or enforcement proceeding is initiated against IAC; or (x) any material provision of the designation of the rights of the Series C Preferred Stock ceases to be valid or is contested. As a result, regardless of whether a Trigger Event occurs, if the trading price of the Company's common stock is less than $10.00/share at the time of conversion, the Series C Preferred Stock will generally convert into more than 7,500,000 shares, and if the trading price is substantially lower than $10.00/share or a Trigger Event occurs, into substantially more than 7,500,000 shares. Shares of Series C Preferred Stock will rank senior to the Company's common stock with respect to rights upon liquidation, winding up or dissolution. The Series C Preferred Stock has a liquidation preference of $10.00 per share or an aggregate liquidation preference of $75,000,000 over holders of common stock. This preference, and conversion rights associated with the Series C Preferred Stock, may adversely affect us and reduce returns for holders, or the market price, of the Company's common stock. Additionally, we have issued debt instruments that permit the holders to convert their Company debt into Company common stock, and any such shares of common stock issued upon conversion would be dilutive to existing stockholders and when sold into the public markets may adversely the market price of the Company's common stock. In the future, we may also incur debt or issue other equity ranking senior to the Company's common stock, like the Series C Preferred Stock. Those securities could generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of the Company's common stock. Because our decision to issue debt or equity in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. As a result, future capital-raising efforts may reduce the market price of the Company's common stock and be dilutive to existing stockholders.

There can be no assurance that the Company's common stock will continue to be listed on the Nasdaq, or that we will be able to comply with Nasdaq's continued listing standards. If Nasdaq delists Alpha Modus' shares from trading on its exchange for failure to meet Nasdaq's listing standards, Alpha Modus and its stockholders could face significant material adverse consequences including, but not limited to: - a limited availability of market quotations for Alpha Modus' securities;- reduced liquidity for Alpha Modus' securities;         - a determination that Alpha Modus common stock is a "penny stock" which will require brokers trading in Alpha Modus common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Alpha Modus common stock;         - a limited amount of analyst coverage; and         - a decreased ability to issue additional securities or obtain additional financing in the future. The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." Because Alpha Modus common stock and Public Warrants are listed on Nasdaq, they are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state, other than the State of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Alpha Modus was no longer listed on Nasdaq, Alpha Modus' securities would not be covered securities and Alpha Modus would be subject to regulation in each state in which Alpha Modus offers its securities.

The price of Alpha Modus' securities may vary significantly due to factors specific to Alpha Modus as well as to general market or economic conditions. Furthermore, an active trading market for Alpha Modus' securities may never develop or, if developed, it may not be sustained. Holders of Alpha Modus' securities may be unable to sell their securities unless a market can be established and sustained.

Fluctuations in the price of the Company's securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been an active public market for the Company's common stock. If an active market for Alpha Modus' securities develops and continues, the trading price of Alpha Modus' securities in the future could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond Alpha Modus' control. Any of the factors listed below could have a material adverse effect on your investment in Alpha Modus' securities and Alpha Modus' securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of Alpha Modus' securities may not recover and may experience a further decline. The market price of Alpha Modus common stock may decline for a number of other reasons including if: - investors react negatively to the prospects of Alpha Modus' business operations, results, and prospects;         - actual or anticipated fluctuations in Alpha Modus' quarterly financial results or the quarterly financial results of companies perceived to be similar to it;         - changes in the market's expectations about Alpha Modus' operating results;         - success of competitors;         - changes in financial estimates and recommendations by securities analysts concerning Alpha Modus or the AI industry in general;         - operating and share price performance of other companies that investors deem comparable to Alpha Modus;         - Alpha Modus' ability to market new and enhanced products and technologies on a timely basis;         - changes in laws and regulations affecting Alpha Modus' business;         - Alpha Modus' ability to meet compliance requirements;- commencement of, or involvement in, litigation involving Alpha Modus;         - changes in Alpha Modus' capital structure, such as future issuances of securities or the incurrence of additional debt;         - the volume of Alpha Modus' shares of common stock available for public sale; or         - any major change in Alpha Modus' Board or management.

The sale of shares of Alpha Modus common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of Alpha Modus common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for Alpha Modus to sell equity securities in the future at a time and at a price that it deems appropriate. All shares currently held by public stockholders and all of the shares issued in the Business Combination to existing Alpha Modus stockholders are freely tradable without registration under the Securities Act, and without restriction by persons other than Alpha Modus' "affiliates" (as defined under Rule 144 of the Securities Act, "Rule 144"), including Alpha Modus' directors, executive officers and other affiliates. In the future, Alpha Modus may also issue its securities in connection with investments or acquisitions. The amount of shares of Alpha Modus common stock issued in connection with an investment or acquisition could constitute a material portion of the then-outstanding shares of Alpha Modus common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to Alpha Modus stockholders.

On January 6, 2025, Alpha Modus received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market ("Nasdaq") indicating that the Company no longer met the minimum market value of publicly held shares ("MVPHS") of $15,000,000 required by Nasdaq's listing rules to be listed on the Nasdaq Global Market. On February 5, 2025, Alpha Modus received another written notice from Nasdaq indicating that the Company no longer met the minimum market value of listed securities ("MVLS") of $50,000,000 required by Nasdaq's listing rules to be listed on the Nasdaq Global Market. On July 10, 2025, Nasdaq approved the Company's application to transfer its securities listings from the Nasdaq Global Market to the Nasdaq Capital Market, and the Company's securities listings were transferred to the Nasdaq Capital Market on July 14, 2025. The listing transfer resolved the MVPHS and MVLS deficiencies. On January 12, 2026, the Company received a written notice from the Listing Qualifications Department of Nasdaq indicating that the Company was not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market (the "Minimum Bid Price Requirement"). The Nasdaq listing rules require listed securities to maintain a minimum bid price of $1.00 per share, and, based upon the closing bid price of the Company's common stock for the prior 30 consecutive business days, the Company no longer met this requirement. The Nasdaq rules provide the Company a compliance period of 180 calendar days from the date of the notice (or until July 13, 2026) in which to regain compliance with the Minimum Bid Price Requirement. If Alpha Modus is unable to remain in compliance with the Nasdaq Capital Market's listing rules, Nasdaq may take steps to delist the Company's securities. Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, Alpha Modus can provide no assurance that any action taken by it to restore compliance with listing requirements would allow its securities to become listed again, stabilize the market price or improve the liquidity of its securities, prevent its securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq's listing requirements. Additionally, if Alpha Modus' securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.