NOTE 11 – MEZZANINE EQUITY

Series C Preferred Stock

On December 13, 2024, as part of the business combination, the Company issued 7,500,000 shares of series C preferred stock to Legacy Alpha Modus shareholders in exchange for the same number of Legacy Alpha Modus’ common stock. Management reviewed ASC 480, ASC 805, ASC 815, ASC 820 and ASC 825 to determine the proper treatment of the series C preferred shares. Management concluded that the series C preferred shares qualify as temporary equity under ASC 815; therefore, the Company will recognize the series C preferred shares within mezzanine equity in its balance sheet. In accordance with ASC 480, the series C preferred shares will be initially recorded and measured at fair value; however, when estimating the fair value of the series C preferred shares, the Company has followed the guidance in ASC 820, “Fair Value Measurement”. Because Redemption is contingent upon the occurrence of certain events that have not been met, subsequent changes to the carrying value of the series C preferred shares will not be recognized until Redemption becomes probable of occurring.

In the consolidated financial statements, the series C preferred shares are being presented as being issued in 2023 when a Legacy Alpha Modus shareholder converted Legacy Alpha Modus series B preferred shares in preparation for the pending business combination. The consolidated financial statements reflect the 10 shares of series B preferred stock converting into 7,500,000 shares of series C preferred stock and 58,353 shares of class A common stock.

On June 30, 2025, the Company issued 651,997 shares of common stock for the conversion of 3,200,000 shares of preferred series C stock. These shares carrying value was $30,638,517, which was moved from mezzanine equity to shareholders’ equity.

On April 8, 2026, the Company entered into an exchange agreement (the “Exchange Agreement”) with the family trust of the Company’s CEO, William Alessi, pursuant to which the trust would exchange an aggregate of 3,870,000 shares of Series C Preferred Stock, which are deemed to be beneficially owned by Mr. Alessi as Mr. Alessi’s spouse is the trustee of the trust) for an aggregate of 2,739,707 shares of Class A common stock. In the Exchange Agreement, the trust agreed not to sell or otherwise transfer the shares of common stock to be received in the exchange until June 13, 2026 (except for permitted transfers to an affiliate). On or about June 5, 2026, the trust’s preferred shares were cancelled, and 2,739,707 shares of Class A common stock were issued to the trust. These shares carrying value was $37,053,457, which was moved from mezzanine equity to shareholders’ equity.

On April 8, 2026, the Company entered into an exchange agreement (the “Exchange Agreement”) with Chris Chumas, the Company’s Chief Sales Officer and Mainstar Trust, pursuant to which he and the trust would exchange an aggregate of 430,000 shares of Series C Preferred Stock, which are deemed to be beneficially owned by Mr. Chumas as Mr. Chumas is the trustee of the trust) for an aggregate of 304,412 shares of Class A common stock. In the Exchange Agreement, Mr. Chumas and the trust agreed not to sell or otherwise transfer the shares of common stock to be received in the exchange until June 13, 2026 (except for permitted transfers to an affiliate). On or about June 26, 2026, Mr. Chumas’ and the trust’s preferred shares were cancelled, and 304,412 shares of Class A common stock were issued to Mr. Chumas and the trust. These shares carrying value was $4,117,051, which was moved from mezzanine equity to shareholders’ equity.

As of June 30, 2026 and December 31, 2025, there were 0 and 4,300,000 shares of series C preferred stock issued and outstanding, respectively.