Adapti, Inc 10-Q, filed Aug 14, 2025
Adapti, Inc. (ADTI)
About this 10-Q
Adapti, Inc filed this 10-Q on August 14, 2025, covering the quarter ended June 30, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-53336
Adapti, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 01-0884561 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
2278 Monitor St, Dallas, Texas |
85004 | |
| (Address of Principal Executive Offices) | (Zip Code) |
775-375-1500
Registrant’s telephone number
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Non-accelerated filer ☐ | Smaller reporting company ☒ | |
| Emerging Growth Company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of common stock ($0.001 par value) outstanding as of August 14, 2025 was 8,039,259.
Adapti, Inc.
Table of Contents
| Page | ||
| PART I | FINANCIAL STATEMENTS (unaudited) | 3 |
| Item 1. | Condensed Balance Sheets | 3 |
| Condensed Statements of Operations | 4 | |
| Statements of Changes in Stockholder Deficit | 5 | |
| Condensed Statements of Cash Flow | 6 | |
| Notes to Financial Statements | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 24 |
| Item 4. | Controls and Procedures | 24 |
| PART II | OTHER INFORMATION | |
| Item 1. | Legal Proceedings | 25 |
| Item 1A. | Risks Factors | 25 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 34 |
| Item 3. | Defaults Upon Senior Securities | 35 |
| Item 4. | Mine Safety Disclosures | 35 |
| Item 5. | Other Information | 35 |
| Item 6. | Exhibits | 36 |
| SIGNATURES | 37 | |
| 2 |
FINANCIAL INFORMATION
Adapti, Inc.
Condensed Balance Sheets
| June 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 89,863 | $ | 572 | ||||
| Accounts receivable | 696 | 640 | ||||||
| TOTAL ASSETS | $ | 90,559 | $ | 1,212 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 673,260 | $ | 525,618 | ||||
| Convertible notes payable, accrued interest | 277,967 | 52,745 | ||||||
| Related party convertible notes payable, accrued interest | 217,096 | 211,113 | ||||||
| Related party notes payable, accrued interest | 248,077 | 242,511 | ||||||
| Total Current Liabilities | 1,416,401 | 1,031,987 | ||||||
| EIDL Loans | 7,000 | 7,000 | ||||||
| Total Long - Term Liabilities | 7,000 | 7,000 | ||||||
| Total Liabilities | 1,423,401 | 1,038,987 | ||||||
| Stockholders’ Deficit: | ||||||||
| Preferred Stock, par value $0.001, authorized 20,000,000 issued zero at June 30, 2025 and March 31, 2025, respectively | - | - | ||||||
| Common stock, $0.001 par value, Authorized 200,000,000, 1,539,259 and 1,532,388 shares outstanding at June 30, 2025 and March 31, 2025, respectively | 1,539 | 1,532 | ||||||
| Additional paid-in capital | 8,473,080 | 8,473,086 | ||||||
| Accumulated deficit | (9,807,460 | ) | (9,512,394 | ) | ||||
| Total Stockholders’ Deficit | (1,332,842 | ) | (1,037,775 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 90,559 | $ | 1,212 | ||||
See accompanying notes to the condensed financial statements.
| 3 |
Adapti, Inc.
Condensed Statements of Operations
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | 664 | $ | 948 | ||||
| Cost of revenue | - | - | ||||||
| Gross Profit | 664 | 948 | ||||||
| Operating Expenses | ||||||||
| General and administrative | $ | 47,251 | $ | 46,090 | ||||
| Professional fees | 231,707 | 223,968 | ||||||
| Total Operating Expenses | 278,958 | 270,058 | ||||||
| Loss from operations | (278,294 | ) | (269,110 | ) | ||||
| Other Expense | ||||||||
| Interest expense | (16,771 | ) | (9,723 | ) | ||||
| Net Other Expense | (16,771 | ) | (9,723 | ) | ||||
| Net Loss | $ | (295,065 | ) | $ | (278,833 | ) | ||
| Net Loss Per Common Share: Basic and Diluted | $ | (0.192 | ) | $ | (0.189 | ) | ||
| Weighted Average Number of Common Shares Outstanding: Basic and Diluted | 1,539,259 | 1,472,722 | ||||||
See accompanying notes to the condensed financial statements.
| 4 |
Adapti, Inc.
Statements of Changes in Stockholders’ Deficit
For the Three Months ended June 30, 2025 and 2024
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Number of Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance - March 31, 2024 | 1,483,555 | $ | 1,484 | $ | 8,060,004 | $ | (8,552,249 | ) | $ | (490,760 | ) | |||||||||
| Common shares issued for stock compensation | 10,417 | 10 | 95,823 | - | 95,834 | |||||||||||||||
| Net loss | - | - | - | (278,833 | ) | (278,833 | ) | |||||||||||||
| Balance - June 30, 2024 | 1,493,972 | $ | 1,494 | $ | 8,155,827 | $ | (8,831,082 | ) | $ | (673,759 | ) | |||||||||
| Balance - March 31, 2025 | 1,532,388 | $ | 1,532 | $ | 8,473,086 | $ | (9,512,394 | ) | $ | (1,037,775 | ) | |||||||||
| Stock Split Reconciliation | 6,871 | 7 | (-7 | ) | - | - | ||||||||||||||
| Net loss | - | - | - | (295,066 | ) | (295,066 | ) | |||||||||||||
| Balance - June 30, 2025 | 1,539,259 | $ | 1,539 | $ | 8,473,079 | $ | (9,807,460 | ) | $ | (1,332,841 | ) | |||||||||
See accompanying notes to the condensed financial statements.
| 5 |
Adapti, Inc.
Condensed Statements of Cash Flows
| (unaudited) | ||||||||
| For the Period ended | ||||||||
| June | ||||||||
| 2025 | 2024 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (295,065 | ) | $ | (278,833 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Stock based compensation | - | 95,832 | ||||||
| Accounts receivable | (57 | ) | 1,100 | |||||
| Accrued interest | 16,771 | 9,723 | ||||||
| Accounts payable and accrued liabilities | 167,642 | 172,353 | ||||||
| Net Cash provided by (used in) operating activities | (110,709 | ) | 176 | |||||
| INVESTING ACTIVITIES: | ||||||||
| Net Cash Used in Investing Activities | - | - | ||||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from notes payable | 200,000 | - | ||||||
| Net Cash Provided by Financing Activities | 200,000 | - | ||||||
| Net decrease in cash | 89,291 | 176 | ||||||
| Cash, beginning of period | 572 | 702 | ||||||
| Cash, end of period | $ | 89,863 | 878 | |||||
| Non-cash transactions: | ||||||||
| Issuance of note payable | $ | 220,000 | $ | 70,418 | ||||
See accompanying notes to the condensed financial statements.
| 6 |
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS
Adapti, Inc. (the “Company”) was incorporated in the State of Nevada on January 11, 2007. The Company changed its name to Adapti, Inc. on April 15, 2025, to reflect a strategic shift in focus away from health and beauty product sales and toward a technology-driven company operating in the sports management, marketing, and representation industries.
In July 2025, the Company completed the acquisition of The Ballengee Group, a sports management agency representing approximately 200 professional athletes, 40 of which play Major League baseball. Ballengee primarily markets through a boots-on-ground model, with a team of five scouts covering the high school and collegiate athlete markets across the southern United States and Sunbelt region.
The Company is currently developing its technology platform, adapt.io. Adapti.io, is a proprietary AI-driven tool designed to identify optimal alignment between brands and social media influencers. The platform, when completed, will create a data fingerprint for each athlete or brand, enabling precise matching with influencers whose audience and engagement metrics are best suited for targeted marketing campaigns. Adapt.io is being designed to continually analyze proprietary data for each specific marketing campaign along with public data sources as additional feedback to inform ongoing promotion. This strategic alignment is intended to maximize exposure and sponsorship value for its influencer and athlete clients, while maximizing response rates for partner brands. The adapti.io tool is currently in the beta stage of development. We anticipate launching adapti.io by the end of March 31, 2026, subject to the Company securing sufficient funding.
With its with its recent acquisition of Ballengee Group, the Company is focused on integrating the operations of the Ballengee Group and its athletes.
While adapt.io currently being developed exclusively for brand and influencer matching, the Company plans to eventually expand Adapti.io’s capabilities to support automated content creation and enable end-to-end generative content workflows for social media publishing and campaign execution. The Company believes that these future capabilities will streamline the production and distribution of high-performing digital content across client campaigns.
The Company has ceased its efforts to market or sell health and beauty products, including the Dermacia brand, and will no longer be generating revenue from those lines. Future revenues are expected to be derived primarily from athlete representation fees, sponsorships, and platform-enabled brand integrations.
Reverse Stock Split
Effective May 28, 2025, the Company effected a 1-for-4,000 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, our stockholders received one share of our common stock for every 4,000 shares held immediately prior to the effective time of the Reverse Stock Split. Unless otherwise noted, all common stock shares, common stock per share data and shares of common stock underlying convertible instruments included in this Quarterly Report on Form 10-Q, including the exercise or conversion price of such convertible instruments, as applicable, have been retrospectively adjusted to reflect the Reverse Stock Split.
NOTE 2. GOING CONCERN
The Company accounts for going concern matters under the guidance of ASU 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (“ASU 2014-15”). The guidance in ASU 2014-15 sets forth management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management’s plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt.
These financial statements have been prepared on a going concern basis which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of June 30, 2025, the Company has incurred losses totaling $9,807,460 (March 31, 2025 - $9,512,394) since inception, has not yet generated significant revenue from its operations, and will require additional funds to maintain our operations. As of June 30, 2025, the Company had a working capital deficit of $1,325,841 (March 31, 2025 - $1,030,775) and incurred a loss for the period ended June 30, 2025 of $295,065 (March 31, 2025 - $278,833). The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and our ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. The Company intends to finance operating costs over the next twelve months through c the offer and sale of debt and equity securities and to a lesser extent, cash from operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.
All figures are in U.S. Dollars. The Company’s fiscal
year ends on March 31. Any reference to the period ended June 30, 2025 relates to the three months ended on such date. Any reference to a period ended March 31, 2025 relates to the fiscal year ended on such date.
| 7 |
Reclassifications
Certain amounts in the prior period have been reclassified to conform to the current period presentation. These reclassifications have no material effect on the reported financial results
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated
financial statements include, but are not limited to, stock-based compensation, derivate instruments, accounting for preferred stock, and the valuation of acquired assets and liabilities. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company had cash on hand of $89,863 as of June 30, 2025 and $572 as of March 31, 2025 . The Company had no cash equivalents as of June 30, 2025 or March 31, 2025.
Revenue Recognition
Under Financial Accounting Standards Board (“FASB”) Topic 606, “Revenue from Contacts with Customers” (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the products to be sold in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the products in the contract; and (v) recognize revenues when (or as) the Company delivers the contracted product to the customer.
The Company recognizes revenue (i) when they receive a purchase order from the Amazon online system (ii) each purchase order identifies the quantity and products to be purchased (iii) each purchase order has the price including discounts, (iv) there is no requirement for allocation as each sku has a separate price, and (v) the Company recognizes revenue when the customer receives the product from Amazon within a matter of days.
| 8 |
Accounts Receivable
The Company does not currently maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of June 30, 2025 and March 31, 2025, the Company did not have an allowance for doubtful accounts.
Convertible Debt
When the Company issues convertible debt, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity, and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations.
Stock-Based Compensation
ASC 718, “Compensation - Stock Compensation”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
| 9 |
Income Taxes
We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined, seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. We adopted the provisions of ASC 740 as of January 1, 2007 and have analyzed filing positions in each of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified the U.S. federal and California as our “major” tax jurisdictions. With limited exceptions, we remain subject to Internal Revenue Service (“IRS”) examination of our income tax returns filed within the last three (3) years, and to California Franchise Tax Board examination of our income tax returns filed within the last four (4) years. However, we have certain tax attribute carryforwards which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized.
For the periods ended June 30, 2025 and March 31, 2025, the Company recognized a full valuation allowance against the recorded deferred tax assets.
We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.
Net Loss per Share
The Company follows ASC 260, “Earnings per Share” (“EPS”), which requires presentation of basic EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings (loss) per share are computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflects the potential dilution that could occur if securities were exercised or converted into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in the Company’s earnings subject to anti-dilution limitations. In a period in which the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact.
For the periods ended June 30, 2025 and March 31, 2025, potentially dilutive common shares consist of common stock issuable upon the conversion of convertible notes payable. All potentially dilutive securities were excluded from the computation of diluted weighted average number of shares of common stock outstanding as they would have had an anti-dilutive impact.
On May 27, 2025, the Company received approval from FINRA for a number of corporate actions including a name change from Scepter Holdings, Inc. to Adapti, Inc., a 1-for-4,000 reverse stock split and a symbol change to ADTI. The name change was effective immediately, the reverse split took effect on May 28, 2025 and the symbol change took effect on June 25, 2025.
Contingencies
The Company follows ASC 450-20, “Loss Contingencies” to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no loss contingencies as of June 30, 2025 and March 31, 2025.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) which supersedes existing guidance on accounting for leases in “Leases (Topic 840).” The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company evaluated the effects of adopting ASU 2016-02 on its consolidated financial statements and determined that the Company currently has no leases for valuation.
| 10 |
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU enhances the disclosures related to segment reporting for public entities. It requires entities to disclose significant segment expenses for each reportable segment, providing greater transparency in segment performance. The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating how this ASU will impact its consolidated financial statements and disclosures. The Company has evaluated this ASU and there was no impact the financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU enhances the transparency and decision usefulness of income tax disclosures. It is designed to provide more detailed information about an entity’s income tax expenses, liabilities, and deferred tax items, potentially affecting how companies report and disclose their income tax-related information. The ASU is effective for public business entities for annual periods beginning after December 15, 2024, including interim periods within those fiscal years The Company is currently evaluating how this ASU will impact its consolidated financial statements and disclosures.
Management does not believe any other recently issued, but not yet effective accounting pronouncements would have a material effect on our present or future financial statements.
NOTE 4 – ACCOUNTS RECEIVABLE
Accounts Receivable at June 30, 2024 and March 31, 2025 consists of the following:
June 30, 2025 | March 31, 2025 | |||||||
| Accounts Receivable | $ | 696 | $ | 640 |
Accounts receivable balances are primarily made up of sales through the third party vendor and paid within thirty days.
| 11 |
NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at June 30, 2025 and March 31, 2025 consists of the following:
| June 30, 2025 | March 31, 2025 | |||||||
| Accounts payable | $ | 166,095 | $ | 99,952 | ||||
| Accrued liabilities | 507,166 | 425,666 | ||||||
| $ | 673,261 | $ | 525,618 | |||||
Accrued liabilities are made up of the following as June 30, 2025 and March 31, 2025:
| Accrued Liabilities | June 30. 2025 | March 31, 2025 | ||||||
| Management Fees | $ | 380,000 | $ | 293,500 | ||||
| Legal Counsel | 127,166 | 132,166 | ||||||
| $ | 507,166 | $ | 426,566 | |||||
The Company owes $380,000 in management fees.
The $127,166 owed to two of our attorneys that are no longer providing legal services to the Company are to be settled for common shares. The remaining legal fees will be paid in cash.
NOTE 6 – CONVERTIBLE NOTES PAYABLE
Convertible Notes payable at June 30, 2025 and March 31, 2025 consist of the following:
| June 30, 2025 | March 31, 2025 | |||||||
| Note 1 Convertible notes payable | $ | 50,000 | $ | 50,000 | ||||
| Note 2 Convertible note payable | $ | 220,000 | $ | - | ||||
| Total convertible notes payable | 270,000 | 50,000 | ||||||
| Add: accrued interest | 7,967 | 2,745 | ||||||
| Total convertible notes payable | $ | 277,967 | $ | 52,745 | ||||
Convertible Notes Payable balances was $270,000 as of June 30, 2025 (including a $20,000 financing fee) and $50,000 as of March 31, 2025 plus accrued interest of $7,967 and $2,745 for a total convertible note payable balance of $277,961 and $52,745 as of June 30, 2025 and March 31, 2025, respectively.
On October 15, 2024, the Company entered into a convertible note payable with a vendor for cash advanced to the Company and bears a 10% interest rate. This convertible note payable represents a balance of $50,000 for a total principal balance of $50,000 and $4,241 of accrued interest for a total note payable of $54,241 as of June 30, 2025 and $52,745 as of March 31, 2025 respectively. This note is not convertible into common shares of the Company. Please note the maturity date of this note was extended until October 15, 2025.
On April 23, 2025, the Company entered into a convertible note payable with a vendor for cash advanced to the Company and bears a 10% interest rate and a 10% financing fee of the principal amount of the note. This convertible note payable represents a balance of $200,000 plus a 10% financing fee of $20,000 for a total principal balance of $220,000 and $3,726 of accrued interest for a total note payable of $223,726 as of June 30, 2025 and zero as of March 31, 2025 respectively. This note is not convertible into common shares of the Company. Please note the maturity date of this note was extended until April 23, 2026.
The notes convert into shares of the Company’s common stock as holders at maturity or after the occurrence of an event of default. The conversion prices of the notes include the conversion price shall be the 60% multiplied by the lowest trading price during the 30 trading days period ending, in holder’s sole discretion on each conversion, on either (i) the last complete trading day prior to the conversion date or (ii) the conversion date. All terms of the notes, including but not limited to interest rate, prepayment terms, conversion discount or look-back period will be adjusted downward if the Company offers more favorable terms to another party, while this note is in effect. The notes may be redeemed by the Company at rates ranging from 105% to 130% depending on the redemption date provided that no redemption is allowed after the 180th day.
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NOTE 7 – RELATED PARTY CONVERTIBLE NOTES PAYABLE
Related party convertible Notes payable at June 30, 2025 and March 31, 2025 consist of the following:
| June 30, 2025 | March 31, 2025 | |||||||
| Campbell Trust | $ | 100,000 | $ | 100,000 | ||||
| Stuff International | 100,000 | 100,000 | ||||||
| Total related party convertible notes payable | 200,000 | 200,000 | ||||||
| Add: accrued interest | 17,096 | 11,113 | ||||||
| Total related convertible notes payable, accrued interest | $ | 217,096 | $ | 211,113 | ||||
As of June 30, 2025 and March 31, 2025, two notes, Stuff International and Campbell made up the related note payable balance of $217,096 and $211,113, respectively. One note is to Stuff International for $100,000 and the other from Campbell Trust for $100,000. Both notes payable bear an interest of 10% and as such have accrued interest as of June 30, 2025 and March 31, 2025 was calculated to be approximately $17,096 and $11,113, respectively. The CEO of Stuff International is also the CEO of Adapti, Inc. Please see company risk factors for further details.
NOTE 8 – RELATED PARTY NOTES PAYABLE
Related party notes payable at June 30, 2025 and March 31, 2025 consists of the following
| June 30, 2025 | March 31, 2025 | |||||||
| Stuff International | 223,246 | 223,246 | ||||||
| Total Related Party Notes Payable | 223,246 | 223,246 | ||||||
| Accrued Interest | 24,832 | 19,267 | ||||||
| Related Party Notes Payable | $ | 248,077 | $ | 242,511 | ||||
There is one remaining related party note payable as of June 30, 2025 and March 31, 2025. The note is from Stuff International and totals $223,246 plus accrued interest of $24,832 (as of June 30, 2025) and $19,267 (as of March 31, 2025) for a total balance of $248,077 and $242,511 as of June 30, 2025 and March 31, 2025, respectively.
There was another note to MGI which was settled as of March 31, 2025. Per the terms of this note, it was fully settled for common stock. The MGI note was full converted for 29,6666 common stock in total settlement of note payable balance of $252,003 plus accrued interest of 32,795 for a total balance of $284,797 on March 31, 2025. This represented a 20% discounted share price at that time of $9.60 per share.
On March 31, 2025, the balance related to Market Group International is $252,003 plus accrued interest of $32,795 for a total balance of $284,797. This entire balance was converted per the terms of the note payable agreement to common stock at a 20% discount to market. The market price at that time was $12.00 so the conversion price was $9.60 for 29,6666 common shares. As a result there was zero balance remaining owed to Market Group International as of March 31, 2025.
This note was convertible to common stock with the following terms: if the Filing of the Form 10 occurred prior to the Maturity Date, any part of the outstanding balance of the Note into fully paid and non-assessable shares of Common Stock at the Qualified Filing conversion Price, provided that in no event shall this Note be converted in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this provision would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock.
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The conversion price upon a Filing Conversion shall equal the lower of (i) 80% of the opening price of the Borrower’s shares of Common Stock, as listed on the Senior Exchange, on the first day on which the/ Borrower’s shares are traded thereon (representing a 20% discount), or (ii) 80% of the offering price of shares of Common Stock, (representing a 20% discount) (the “Filing Conversion Price”); (B) the conversion price upon a Non-Filing Conversion shall equal 80% of the Market Price.
Market Group International is owned by Robert Van Boreum our ex – Chief Executive Officer and it holds 259,412 of our outstanding common stock as of June 30, 2025 and March 31, 2025, respectively.
The second note payable is to Stuff International for funds advanced to the Company and bears a 10% interest rate.
The Stuff international Note payable represents a balance of $232,246 of principal and $24,832 accrued interest for a total note payable of $248,077 as of June 30, 2025. The Stuff international Note payable represents a balance of $223,246 of principal and $19,267 accrued interest for a total note payable of $245,511 as of March 31, 2025. This note is not convertible into common shares of the Company. Adam Nicosia our current Chief Executive Officer owns Stuff International. He also owns Ecoscientific Labs that owns 475,000 of common stock as of June 30, 2025 and March 31, 2025, respectively. Please note the maturity date of this note was extended until December 31, 2025.
NOTE 9 – EIDL LOAN
EIDL Loan at June 30, 2025 and March 31, 2025 consists of the following:
June 30, 2025 | March 31, 2025 | |||||||
| EIDL Loan | $ | 7,000 | $ | 7,000 | ||||
| Total EIDL Loan | $ | 7,000 | $ | 7,000 | ||||
On April 21, 2020 the Company received an EIDL Advance of $7,000, which the Company has recorded as a loan in the event the grant is not forgiven. As of June 30, 2025 and March 31, 2025 the balance of EIDL loans is $7,000 respectively.
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NOTE 10: STOCKHOLDERS’ DEFICIT
Authorized Capital Stock
The Company’s authorized capital stock consists of (a) 40,00,000,000 shares of Common Stock, $0.001 par value per share (“Common Stock”), (b) 20,000,000 shares of Preferred Stock, $0.001 par value per share (“Preferred Stock”).
As of June 30, 2025 and March 31, 2025, the Company had 1,539,259 shares and 1,532,388 shares of Common Stock and zero shares of Preferred Stock issued and outstanding. All outstanding shares of Common Stock are fully paid and nonassessable.
Common Stock
The Nevada Revised Statues provides that the holders of the Common Stock shall have one vote per share. In addition, except as otherwise required by law, as provided in this Articles of Incorporation, and as otherwise provided in the resolution or resolutions, if any, adopted by the Board with respect to any series of the Preferred Stock, on any matter presented to the holders of Common Stock and Preferred Stock for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), the holders thereof shall vote together as a single class.
Holders of the Common Stock will have no preemptive or conversion rights or other subscription rights. The Bylaws of the Company provide that the holders of Common Stock shall not have a right to cumulative voting. The rights, preferences, and privileges of the holders of the Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate and issue in the future. Additionally, the Bylaws may be amended by the Company’s stockholders or the Board of Directors.
On May 27, 2025, the Company received approval from FINRA for a number of corporate actions including a name change from Scepter Holdings, Inc. to Adapti, Inc., a 1-for-4,000 reverse stock split and a symbol change to ADTI. The name change was effective immediately, the reverse split took effect on May 28, 2025 and the symbol change took effect on June 25, 2025.
Preferred Stock
There are no shares of Preferred Stock outstanding as of June 30, 2025 and March 31, 2025. The Company’s Articles of Incorporation, as amended authorizes the issuance of up to 20,000,000 shares of Preferred Stock
Common Stock
No dividends, if dividends were issued holders would have a pro-rata right, 1 share 1 vote, no preemption rights.
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Preferred Stock
No outstanding Preferred shares.
Issuances of Common Stock from the Conversion of Notes
During the quarter ended March 31, 2025, the Company issued 29,500 restricted shares of common stock to MGI after reverse stock split, in full settlement of MGI note payable balance of $284,797 of which principal balance of $252,003 and $32,795 of accrued interest at 20% discount to market conversion price of $9.60.
During the quarter ended December 31, 2024, the Company issued 1,250 restricted shares of common stock to Vasil Papov, in exchange for professional services for a total value $11,500.
During the quarter ended December 31, 2024, the Company issued 7,500 restricted shares of common stock to Steven Davis in exchange for his professional services at a price of $2.80 per share for a total value of $21,000.
During the quarter ended June 30, 2024, the Company issued 10,417 restricted shares of common stock to EcoScientific Labs, in exchange for Adam Nicosia’s Management services at a price of $9.20 per share for total compensation costs of $95,833.
During the quarter ended March 31, 2024, the Company issued 625 restricted shares of common stock to Vasil Popov in exchange for his professional services.
During the quarter ended March 31, 2024, the Company issued 15,625 restricted shares of common stock to EcoScientific Labs, in exchange for Adam Nicosia’s Management services at a price of $9.20 per share for total compensation costs of $143,750.
During the quarter ended December 31, 2023, the Company issued 625 restricted shares of common stock to Vasil Popov in exchange for his professional services at a price of $9.20 per share for total compensation costs of $5,750.
During the quarter ended December 31, 2023, the Company issued 15,625restricted shares of common stock to EcoScientific Labs, in exchange for Adam Nicosia’s Management services at a price of $9.20 per share for total compensation costs of $143,750.
During the quarter ended December 31, 2023, the Company issued 625 restricted shares of common stock to Johannesen Consulting, Inc., in exchange for Thomas Johannesen’s professional services at a price of $9.20 per share for total compensation costs of $11,500.
During the quarter ended December 31, 2023, the Company issued 71,857 restricted shares of common stock to Johannesen Consulting, Inc., for the conversion of $287,430 of debt.
During the quarter ended December 31, 2023, the Company issued 15,625 restricted shares of common stock to Market Group International in exchange for Robert Van Boerum’s Management services at a price of $9.20 per share for total compensation costs of $143,750.
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During the quarter ended September 30, 2023, the Company issued 625 restricted shares of common stock to Vasil Popov in exchange for his professional services at a price of $9.20 per share for total compensation costs of $5,750.
During the quarter ended September 30, 2023, the Company issued 15,625 restricted shares of common stock to EcoScientific Labs, in exchange for Adam Nicosia’s Management services at a price of $9.20 per share for total compensation costs of $143,750.
During the quarter ended September 30, 2023, the Company issued 625 restricted shares of common stock to Johannesen Consulting, Inc., in exchange for Thomas Johannesen’s professional services at a price of $9.20 per share for total compensation costs of $11,500.
During the quarter ended September 30, 2023, the Company issued 71,857 restricted shares of common stock to Johannesen Consulting, Inc., for the conversion of $287,430 of debt.
During the quarter ended September 30, 2023, the Company issued 15,625 restricted shares of common stock to Market Group International in exchange for Robert Van Boerum’s Management services.
During the quarter ended June 30, 2023, the Company issued 3,514 shares of common stock to Paul Kison for the conversion of $15,000 of debt.
During the quarter ended June 30, 2023, the Company issued 625 restricted shares of common stock to Vasil Popov in exchange for his professional services at a price of $9.20 per share for total compensation costs of $5,750.
During the quarter ended June 30, 2023, the Company issued 15,625 restricted shares of common stock to EcoScientific Labs, in exchange for Adam Nicosia’s Management services at a price of $9.20 per share for total compensation costs of $143,750.
During the quarter ended June 30, 2023, the Company issued 625 restricted shares of common stock to Johannesen Consulting, Inc., in exchange for Thomas Johannesen’s professional services at a price of $9,20 per share for total compensation costs of $11,500.
During the quarter ended June 30, 2023, the Company issued 15,625 restricted shares of common stock to Market Group International in exchange for Robert Van Boerum’s Management services at a price of $9.20 per share for total compensation costs of $143,750.
| 17 |
| Date of Transaction | Transaction type (e.g., new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Were the shares issued at a discount to market price at the time of issuance? (Yes/No) | Individual/ Entity Shares were issued to. *You must disclose the control person(s) for any entities listed. | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing. | ||||||||||||
| 3/31/23 | New Issuance | 15,625 | Common | $ | 8.00 | No | EcoScientific Labs (Adam Nicosia) | Professional Services | Restricted | |||||||||||
| 3/31/23 | New Issuance | 15,625 | Common | $ | 8.00 | No | Market Group International (Robert Van Boerum) | Professional Services | Restricted | |||||||||||
| 3/31/23 | New Issuance | 625 | Common | $ | 8.00 | No | Vasil Popov | Professional Services | Restricted | |||||||||||
| 3/31/23 | New Issuance | 625 | Common | $ | 8.00 | No | Johannesen Consulting, Inc. (Thomas Johannesen) | Professional Services | Restricted | |||||||||||
| 4/5/23 | New Issuance | 13,514 | Common | $ | 4.48 | Yes | Paul Kison | Debt Conversion | Restricted | |||||||||||
| 6/30/23 | New Issuance | 15,625 | Common | $ | 8.00 | No | EcoScientific Labs (Adam Nicosia) | Professional Services | Restricted | |||||||||||
| 6/30/23 | New Issuance | 15,625 | Common | $ | 8.00 | No | Market Group International (Robert Van Boerum) | Professional Services | Restricted | |||||||||||
| 6/30/23 | New Issuance | 625 | Common | $ | 8.00 | No | Vasil Popov | Professional Services | Restricted | |||||||||||
| 6/30/23 | New Issuance | 1,250 | Common | $ | 8.00 | No | Johannesen Consulting, Inc. (Thomas Johannesen) | Professional Services | Restricted | |||||||||||
| 8/29/23 | New Issuance | 71,857 | Common | $ | 4.00 | No | Johannesen Consulting, Inc. (Thomas Johannesen) | Debt Conversion | Restricted | |||||||||||
| 9/30/23 | New Issuance | 15,625 | Common | $ | 8.00 | No | EcoScientific Labs (Adam Nicosia) | Professional Services | Restricted | |||||||||||
| 9/30/23 | New Issuance | 15,625 | Common | $ | 8.00 | No | Market Group International (Robert Van Boerum) | Professional Services | Restricted | |||||||||||
| 9/30/23 | New Issuance | 625 | Common | $ | 8.00 | No | Vasil Popov | Professional Services | Restricted | |||||||||||
| 9/30/23 | New Issuance | 1,250 | Common | $ | 8.00 | No | Johannesen Consulting, Inc. (Thomas Johannesen) | Professional Services | Restricted | |||||||||||
| 10/27/23 | New Issuance | 3,715 | Common | $ | 8.32 | Yes | OC Sparkle | Debt Conversion | Restricted | |||||||||||
| 10/27/23 | New Issuance | 2,754 | Common | $ | 8.32 | Yes | OC Sparkle | Debt Conversion | Restricted | |||||||||||
| 10/27/23 | New Issuance | 3,509 | Common | $ | 8.32 | Yes | OC Sparkle | Debt Conversion | Restricted | |||||||||||
| 10/27/23 | New Issuance | 7,643 | Common | $ | 8.32 | Yes | CZA, Inc. | Debt Conversion | Restricted | |||||||||||
| 12/31/23 | New Issuance | 15,625 | Common | $ | 8.32 | No | EcoScientific Labs (Adam Nicosia) | Professional Services | Restricted | |||||||||||
| 12/31/23 | New Issuance | 15,625 | Common | $ | 8.00 | No | Market Group International (Robert Van Boerum) | Professional Services | Restricted | |||||||||||
| 12/31/23 | New Issuance | 625 | Common | $ | 8.00 | No | Vasil Popov | Professional Services | Restricted | |||||||||||
| 12/31/23 | New Issuance | 1,250 | Common | $ | 8.00 | No | Johannesen Consulting, Inc. (Thomas Johannesen) | Professional Services | Restricted | |||||||||||
| 3/31/24 | New Issuance | 15,625 | Common | $ | 8.00 | No | EcoScientific Labs (Adam Nicosia) | Professional Services | Restricted | |||||||||||
| 3/31/24 | New Issuance | 625 | Common | $ | 8.00 | No | Vasil Popov | Professional Services | Restricted | |||||||||||
| 6/30/24 | New Issuance | 10,417 | Common | $ | 8.00 | No | EcoScientific Labs (Adam Nicosia) | Professional Services | Restricted | |||||||||||
| 12/31/24 | New Issuance | 7,500 | Common | $ | 28.00 | No | SD Law Group | Professional Services | Restricted | |||||||||||
| 12/31/24 | New Issuance | 1,250 | Common | $ | 9.20 | No | Vasil Popov | Professional Services | Restricted | |||||||||||
| 3/31/25 | New Issuance | 29,666 | Common | $ | 9.60 | No | Market Group International (Robert Van Boerum) | Note Payable | Restricted | |||||||||||
| 6/30/25 | Rounding Adjustment from reverse split | 6,871 | Common | $ | 0 | No | N/A | N/A | Restricted | |||||||||||
| Shares Outstanding on Date of This Report: | ||||||||||||||||||||
| Date 6/30/2025 | Ending Balance Common: 1,539,259 | |||||||||||||||||||
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NOTE 11 – COMMITMENTS
Lease Commitments
The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.
Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.
The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.
Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.
Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s income statement in the same line item as expense arising from fixed lease payments. As of June 30, 2025 and March 31, 2025, management determined that there were no variable lease costs.
Litigation
There is no pending, threatened or actual legal proceedings in which the Company is a party.
NOTE 12: SUBSEQUENT EVENTS
Acquisition of Ballengee Group
On July 14, 2025, we closed the acquisition of 100% of the membership interests of The Ballengee Group, LLC, (“Ballengee”) a Dallas-based baseball sports management agency which represents approximately 200 professional athletes. Pursuant to the acquisition, the security holders of Ballengee received: (i) 6,500,000 shares of our Common Stock, (ii) a participating promissory note in the aggregate principal amount of $7,500,000, and (iii) the right to contingent earnout consideration of up to $20,000,000, payable in shares of Adapti Common Stock. The Company disclosed the completion of the acquisition on a Current Report on Form 8-K on July 18, 2025 (see Form 8-K filing for more information).
Contemporaneously with the acquisition of Ballengee, Jeff Campbell was appointed to the position of Executive Chairman of our Board of Directors.
Employment Agreement and Related Contracts with Marilu Brassington
On August 14, 2025, we entered into an employment agreement with Marilu Brassington, our current Chief Financial Officer (the “Brassington Employment Agreement”). Pursuant to the Brassington Employment Agreement, Ms. Brassington will serve as the Company’s chief accounting officer and continue to serve as interim chief financial officer.
Pursuant to the Brassington Employment Agreement, Ms. Brassington receives an annual base salary of $180,000. On each monthly anniversary of the Brassington Employment Agreement, the Company will pay half of her monthly base salary in Common Stock, valued at the closing price of the Comon Stock on such applicable date.
We also issued Ms. Brassington a non-qualified stock option grant to purchase up to 120,000 shares of Common Stock at a price per share of $3.08 (the “Option”). The Option was issued on August 14, 2025, has a term of 10 years from issuance, and vests in four (4) equal annual installments over a four (4) year period, with such first vesting event occurring on the one (1) year anniversary of the grant date.
Subordinated Convertible Promissory Notes Issued to Marilu Brassington, Jeff Campbell and Adam Nicosia
On August 14, 2025, we issued subordinated convertible promissory notes to Marilu Brassington, our interim CFO, in the principal amount of $184,800 (“Brassington Note”), Jeff Campbell, our executive chairman, in the principal amount of $492,800 (“Campell Note”) and Adam Nicosia, our CEO, in the principal amount of $1,478,400 (the “Nicosia Note”). The Brassington Note, Campbell Note and Nicosia Note (collectively, the “Notes”) have a maturity date of three (3) years from issuance, accrue interest at the rate of 5% per annum, and are payable by the Company in full at maturity. The Notes are also convertible into Common Stock of the Company at the holder’s election at any time at a conversion price of $3.08 per share. Additionally, at maturity, the Company has the right to require holder to convert the Note(s) into shares of Common Stock at a conversion price of $3.08 per share.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included elsewhere herein. Our historical results do not necessarily reflect what our historical financial position and results of operations would have been had we been a stand-alone public company during the years presented. In addition, our historical results are not necessarily indicative of the results to be expected for any future period, and results for any interim period are not necessarily indicative of the results to be expected for the full year. We recommend investors read this entire Quarterly Report on Form 10-Q, including the “Risk Factors” Section, the consolidated financial statements, and related notes thereto. As used in this offering, unless the context otherwise requires or indicates, “Adapti,” “Company,” “we,” “us,” and “our” or similar designations refer to Adapti, Inc., a Nevada corporation. Any reference to Ballengee or Ballengee Group refers to Ballengee Group, LLC, our recently acquired subsidiary, which closed on July 14, 2025.
Statements in this Quarterly Report on Form 10-Q that are not strictly historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. You can identify these forward-looking statements because they involve our expectations, intentions, beliefs, plans, projections, anticipations, or other characterizations of future events or circumstances. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements as a result of any number of factors. Some of these factors are more fully discussed in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors” and elsewhere herein. We do not undertake to update any of these forward-looking statements or announce the results of any revisions to these forward-looking statements except as required by law.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided, in addition to the accompanying condensed consolidated financial statements and notes, to assist you in understanding our results of operations, financial condition and cash flows. The MD&A is organized as follows:
● Overview — Discussion of our business and overall analysis of financial and other items affecting our Company in order to provide context for the remainder of MD&A.
● Results of Operations — Analysis of our financial results comparing the three months ended June 30, 2025 and 2024.
● Liquidity and Capital Resources — An analysis of cash flows and discussion of our financial condition and future liquidity needs.
Overview
Adapti, Inc (fka Scepter Holdings, Inc.). (the “Company”) was incorporated under the laws of the State of Nevada on January 11, 2007. The Company previously managed sales and brand development of health and beauty products through a product line called Dermacia. For the period ended June 30, 2025 and June 30, 2024, the Company only generated revenues of $4,894 and $13,672, respectively.
The Company changed its name to Adapti, Inc. on April 15, 2025, to reflect a strategic shift in focus away from health and beauty product sales and toward a technology-driven acquisition strategy consisting of companies operating in the sports management and sports marketing industries.
The Company is now focused on: (i) acquiring and operating agencies that manage athletes, brands, and sports-related talent and (ii) completing the development of adapt.io, the Company’s proprietary AI-driven influencer and brand optimization platform.
In July 2025, the Company completed the acquisition of The Ballengee Group, a Texas-based Major League Baseball agency with approximately 200 professional clients, and more than 40 in the Major League. Ballengee primarily markets through a boots-on-ground model, with a team of five scouts covering the high school and collegiate athlete markets across the southern United States and Sunbelt region. The acquisition represents a material step in the Company’s strategy to consolidate and scale athlete representation and social monetization services.
The Company’s technology platform, adapt.io, is a proprietary AI-driven tool designed to identify optimal alignment between brands and social media influencers. The platform creates a data fingerprint for each athlete or brand, enabling precise matching with influencers whose audience and engagement metrics are best suited for targeted marketing campaigns. Adapt.io is designed to continually analyze proprietary data for each specific campaign along with public data sources as additional feedback to inform ongoing promotions and to further refine its algorithm and attempt to monetize accumulated data. This strategic alignment is intended to maximize exposure and sponsorship value for its influencer and athlete clients, while maximizing response rates for partner brands.
While adapt.io currently focuses exclusively on brand and influencer matching, the Company plans to enhance its service offering by integrating generative AI capabilities. These enhancements will support automated content creation and enable end-to-end generative content workflows for social media publishing and campaign execution. These future capabilities are expected to streamline the production and distribution of high-performing digital content across client campaigns.
The Company has ceased its efforts to market or sell health and beauty products, including the Dermacia brand, and will no longer generating revenue from those lines. Future revenues are expected to be derived primarily from athlete representation fees, sponsorships, and platform-enabled brand integrations.
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Reverse Stock Split
Effective May 28, 2025, we effected a 1-for-4,000 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, our stockholders received one share of our common stock for every 4,000 shares each stockholder held immediately prior to the effective time of the Reverse Stock Split. Unless otherwise noted, all references to common stock shares, common stock per share data and shares of common stock underlying convertible instruments included in this Quarterly Report on Form 10-Q, including the exercise or conversion price of such equity instruments, as applicable, have been retrospectively adjusted to reflect the Reverse Stock Split.
Three Months Ended June 30, 2025 and 2024
Results of Operations
Revenues
Merchandise revenues include payments received for products shipped and sold through our vendors. Revenues for the three months ended June 30, 2025 decreased $284, or 30%, as compared to the three months ended June 30, 2024, primarily due decreased marketing efforts in 2025. Although our efforts in 2024 were nominal as well.
Cost of Revenues
Cost of revenues primarily include the costs of products. Cost of revenues for the three months ended June 30, 2025 were consistently zero compared to the three months ended June 30, 2024, due to the write off of inventory to zero during the 2024 fiscal year.
General and administrative expenses
General and administrative expense include the costs associated with personnel. General and administrative expenses increased for the three months ended June 30, 2025 by $1,161, or 3%, as compared to the three months ended June 30, 2024, primarily due to the increase in personnel during 2025 fiscal year.
Professional fees
Professional fees include the costs associated with outside consultants to help manage the public entity as well as other professional consultants. Professional fees increased for the three months ended June 30, 2025 by 7,739, or 3%, as compared to the three months ended June 30, 2024, primarily due increased consultants during 2025 fiscal year.
Other expense
Other expense includes interest expense on note payables. Other expense increased for the three months ended June 30, 2025 by $7,048, or 72%, as compared to the three months ended June 30, 2024, primarily due the fact that the Company issued promissory notes bearing interest in 2025 compared to 2024.
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Liquidity and Capital Resources
Our cash flow activities were as follows for the periods presented:
Three Months Ended June 30, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Net cash flows used for operating activities | $ | (110,709 | ) | $ | 176 | $ | 110,885 | |||||
| Net cash flows used for investing activities | - | - | - | |||||||||
| Net cash flows provided by financing activities | 200,000 | - | (200,000 | ) | ||||||||
Operating activities
Net cash flows used for operating activities was ($110,709) and $176 for the three months ended June 30, 2025 and 2025, respectively. The decrease of net cash flows used for operating activities of $110,885 was primarily due to the Company had increased accrued expenses related to management fees related to Officers and consultants.
Investing activities
There were no investing activities for the three months ended June 30, 2025 and 2024, respectively.
Financing activities
The Company raised $200,000 from the issuance of a promissory note during the three months ended June 30, 2025 compared to zero for the three months ended June 30, 2024.
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June 30, 2025 | March 31, 2025 | Change | ||||||||||
| Cash | $ | 89,863 | $ | 572 | $ | 89,291 | ||||||
| Current liabilities | 1,416,400 | 1,031,987 | 384,413 | |||||||||
The Company’s primary sources of liquidity are from financing activities and to a lesser extent cash flows generated from operations. As of June 30, 2025 and March 31, 2025, the Company had cash of $89,863 and $572, respectively. As of June 30, 2025 and March 31, 2025, the Company had current liabilities of $1,416,400 and $1,031,987, respectively.
The Company believes its existing cash and expected cash flows from operations will not be sufficient to meet our working capital, capital expenditures, and expected cash requirements from known contractual obligations for the next twelve months and beyond. It will need to raise additional capital to continue operations.
Net Loss
As a result of the foregoing, for the three months ended June 30, 2025, we incurred of a net loss of $295,065 compared to a comprehensive net loss of $278,833 for the three months ended June 30, 2024. The increase in net loss is primarily the result of increased professional fees.
The Company is expending working capital to further their business plan.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. Based on this definition, the Company has identified the critical accounting policies and judgments addressed below. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Recently Issued Accounting Standards
The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position, or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its consolidated financial statements. See Note 3 to the consolidated statements in this Annual Report for a complete discussion of our significant accounting policies and estimates
Other Estimates
See Note 1 to the accompanying condensed consolidated financial statements included herein and starting on page F-1 for further discussion.
Off-Balance Sheet Arrangements
As of June 30, 2025 and March 31, 2025, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Recently Issued and Adopted Accounting Pronouncements
See Note 1 to the accompanying audited financial statements included herein and starting on page F-1 for further discussion.
Future Liquidity Needs
The Company has met its current capital requirements primarily through the issuance of its debt securities. Management views the working capital that is raised in its promissory notes as being equivalent to raising working capital via common equity subscriptions. Certain of our promissory notes / debt securities have conversion features whereby the holder can convert the principal and accrued interest into shares of our common stock. Any conversion of debt into equity could occur at a higher equity valuation than the Company currently has.
Going Concern
The Company’s financial statements are prepared using GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Since the Company has not generated significant revenue or gross profits adequate to cover operating costs, has negative cash flows from operations, and negative working capital, the Company has included a reference to the substantial doubt about our ability to continue as a going concern in connection with our condensed financial statements for the period ended June 30, 2025. Our total accumulated deficit as of June 30, 2025 was approximately $10 million.
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The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. Management’s plans to continue as a going concern include raising additional capital through sales notes payable. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be required to delay, reduce the scope of or eliminate one or more of the Company’s research and development activities or commercialization efforts or perhaps even cease the operation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying condensed financial statements. The accompanying condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, and expenses and the disclosure of contingent assets and liabilities. We use assumptions that we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. We believe there have been no significant changes in accounting policies for the period ended June 30, 2025. See Note 3 to the statements in this Quarterly Report for a complete discussion of our significant accounting policies and estimates.
Recently Issued Accounting Standards
The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its condensed results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its consolidated financial statements. See Note 3 to the statements in our 2025 Annual Report for a complete discussion of our significant accounting policies and estimates.
Off-Balance Sheet Transactions
At June 30, 2025, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are not required to provide the information required by this item as we are considered a smaller reporting company, as defined by Rule 229.10(f)(1).
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Management, with the participation of our Chief Executive Officer and interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of June 30, 2025 were not effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A control system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Quarterly Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
None.
Investing in our securities involves a high degree of risk. Before investing in our securities, you should carefully consider the risks and uncertainties discussed under “Risk Factors” in our latest annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. Before making an investment decision, you should carefully consider each of the following risks described below, together with all other information set forth in or incorporated in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and the related notes. The risks described in this Quarterly Report on Form 10-Q are not the only ones we face, but those that we consider to be material. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations and could result in a complete loss of your investment. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of the following risks actually occur, our business, financial condition, results of operations or cash flow could be seriously harmed. This could cause the market price of our common stock to decline, and you could lose all or part of your investment.
Risks Related to our Operating History; Integration of Acquired Businesses; and Business Plan
We have a limited operating history and recently changed our business plan, which makes it difficult to evaluate our future prospects and increases the risk of your investment.
We are an early-stage company with a limited operating history, and our historical financial results provide little basis to evaluate our current or future business prospects. Until recently, our primary focus was on consumer products, but we have shifted our strategy to operate Ballengee Group, our recently acquired baseball agency, and to continue to develop our Adapti.io artificial intelligence platform. Our ability to successfully implement this new business plan is unproven and involves substantial risks and uncertainties, including:
| ● | Successfully integrating and growing Ballengee Group, in a competitive and regulated industry; |
| ● | Developing and commercializing Adapti.io, which is intended to match social media influencers with Ballengee athletes and other products and services; and |
| ● | Demonstrating that these two different lines of business can operate synergistically to produce meaningful revenue growth. |
If we are unable to successfully operate our new business plan, develop and achieve market adoption for Adapti.io, or realize synergies with Ballengee Group, we may fail to generate meaningful revenue or achieve profitability. Investors in our securities may lose some or all of their investment.
Our business depends on the success of new and unproven initiatives, including the development of our Adapti.io AI platform, and our ability to generate revenues is highly uncertain.
Our revenue model is unproven and difficult to predict. We intend to generate revenue primarily through:
| ● | Athlete representation and related fees from Ballengee Group; |
| ● | Commissions or fees earned through social media promotions and influencer marketing, which we have yet to achieve; and |
| ● | If and when developed, the commercialization of our AI-driven Adapti.io platform. |
Each of these strategies involves significant uncertainty. If developed, the success of our Adapti.io platform will depend on a number of factors outside our control, including:
| ● | The willingness of influencers and athletes to adopt the platform; |
| ● | The effectiveness of social media promotions in generating consumer engagement and sales; and |
| ● | Rapidly changing public tastes and technology trends in both sports representation and influencer marketing. |
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There is no guarantee that we will be able to successfully operate Ballengee Group or that the assumed synergies will be successful.
We recently completed the acquisition of Ballengee Group, which we believe has the potential to be transformative for our Company. Management anticipates that Ballengee Group could contribute significantly to our revenues and help us achieve profitability. However, there can be no assurance that we will be able to maintain or grow Ballengee Group’s historical business operations, revenues, or profitability.
Successfully realizing the anticipated synergies from this acquisition depends on our ability to:
| ● | Integrate Ballengee Group’s operations into our Company without significant disruption; |
| ● | Retain key athlete clients and personnel critical to Ballengee Group’s business; and |
| ● | Successfully develop and leverage our Adapti.io AI software to generate social media promotional opportunities for Ballengee Group’s athletes. |
Because Adapti.io is still in development and unproven in the market, there is no guarantee that it will generate the expected incremental revenues or competitive advantages. If we fail to integrate Ballengee Group effectively or achieve the assumed synergies, our business, financial condition, and results of operations could be materially adversely affected, and investors could lose part or all of their investment.
As a result, the Company believes that its results of operations may fluctuate significantly, and it is possible that the Company’s operating results could be below the expectations of investors.
Our AI based Social Media Software, Adapti, is critical for the marketing and growth of our products
We have spent the past 3 years developing our adapti.io technology platform to assist in locating and negotiating promotional arrangements with social media influencers. Although the adapti.io platform has successfully completed beta testing, there is no guarantee that the software will operate as expected in a production environment or be able to provide us with assistance in obtaining the correct influencer to successfully market our services and clients. Further, there can be no assurance that the adapti.io will be as valuable to the Ballengee Group business as we anticipate. If the software does not work as expected, the ability to sell our products and promote our clients will be negatively impacted.
In addition, if adapti.io does not work as expected, we might be required to spend additional capital in software development. There are no guarantees that we will have the capital to spend in development or be able to get the software to work as desired even if we do spend additional capital. We also expect that we will need to spend additional capital in the future to further improve and maintain our software. There are no guarantees that we will have this capital to spend nor be able to successfully make the improvement as desired even if we do spend such capital.
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Risks Related to Our Business
We depend on the relationships of our agents, managers, and other key personnel with clients in professional sports and sponsorships and brands related thereto.
We depend upon relationships that our agents, managers, and other key personnel have developed with clients across the baseball industry. The relationships that our agents, managers, and other key personnel have developed with studios, brands, and other key business contacts help us to secure access to sponsorships, endorsements, professional contracts, and other opportunities for our clients. Due to the importance of those industry contacts to us, a substantial deterioration in these relationships, or substantial loss of agents, managers, or other key personnel who maintain these relationships, could adversely affect our business. In particular, our client management business is dependent upon the highly personalized relationships between our agents and respective clients. A substantial deterioration in the Ballengee Group’s management of a client may result in a deterioration in our relationship with, or the loss of, the clients represented by that agent or manager. The substantial loss of multiple agents or managers and their associated clients could have an adverse effect on our business, financial condition, and results of operations. Most of our agents, managers, and other key personnel are not party to long-term contracts and, in any event, can leave our employment with little or no notice. We can give no assurance that all or any of these individuals will remain with us or will retain their associations with key business contacts.
Because our success depends substantially on our ability to maintain a professional reputation, adverse publicity concerning us, one of our businesses, our clients, or our key personnel could adversely affect our business.
Our professional reputation is essential to our continued success and any decrease in the quality of our reputation could impair our ability to, among other things, recruit and retain qualified and experienced agents, managers, and other key personnel, retain or attract agency clients or customers, or enter into multimedia, licensing, and sponsorship engagements for the benefit of our clients. Our overall reputation may be negatively impacted by a number of factors, including negative publicity concerning us, members of our management or our agents, managers, and other key personnel. In addition, we are dependent for revenue, on the relationships between clients that we represent and key brands, such as sports leagues and other consumer facing brands. Certain of our clients are public personalities with social media followings whose actions generate publicity and public interest. Any adverse publicity relating to such individuals, or to our company, including from reported or actual incidents or allegations of illegal or improper conduct, such as harassment, discrimination, or other misconduct, could result in significant media attention, even if not directly relating to or involving Ballengee Group or Adapti, and could have a negative impact on our professional reputation. This could result in termination of licensing or other contractual relationships, or our employees’ ability to attract new customer or client relationships, or the loss certain clients, all of which could adversely affect our business, financial condition, and results of operations.
Our success depends, in part, on our continuing ability to identify, recruit, and retain qualified and experienced agents and managers.
If we fail to recruit and retain suitable agents or if our relationships with our agents change or deteriorate, it could adversely affect our business. Our success depends, in part, upon our continuing ability to identify, recruit, and retain qualified and experienced agents and managers. There is great competition for qualified and experienced agents and managers in the sports industry, and we cannot assure you that we will be able to continue to hire or retain a sufficient number of qualified persons to meet our requirements, or that we will be able to do so under terms that are economically attractive to us. Any failure to retain certain agents and managers could lead to the loss of our baseball clients, their sponsorships, and potential licensing agreements, and other engagements and have an adverse effect on our business, financial condition, and results of operations.
Our failure to identify, sign, and retain clients could adversely affect our business.
We derive substantial revenue from the engagements, sponsorships, licensing rights, and distribution agreements entered into by the baseball clients with whom we represent. We depend on identifying, signing, and retaining as clients those athletes whose identities are in high demand by the public and, as a result, are deemed to be favorable candidates for engagements. Our competitive position is dependent on our continuing ability to attract, develop, and retain clients whose work is likely to achieve a high degree of value and recognition by sponsors as well as our ability to provide such clients with sponsorships, endorsements, professional contracts, and other opportunities. Our failure to attract and retain these clients, an increase in the costs required to attract and retain such clients, or an untimely loss or retirement of these clients could adversely affect our financial results and growth prospects. These clients may decide to discontinue their relationship with us at any time and without notice. In addition, the clients with whom we have entered into written contracts may choose not to renew their contracts with us on reasonable terms or at all or they may breach or seek to terminate these contracts. If any of our clients decide to discontinue their relationships with us, whether they are under a contract or not, we may be unable to recoup costs expended to develop and promote them and our financial results may be adversely affected. Further, the loss of such clients could lead other of our clients to terminate their relationships with us.
Our professional athlete clients are also members of certain unions that are signatories to collective bargaining agreements. Any expiration, termination, revocation or non-renewal of these franchises, collective bargaining agreements, or licenses and any work stoppages or labor disturbances could adversely affect our business.
Our professional athlete clients are subject to collective bargaining and/or franchise agreements. These collective bargaining and/or franchise agreements regularly expire and require negotiation in the ordinary course of business. Upon the expiration of any of these collective bargaining and/or franchise agreements, with no assurance that the unions will be able to negotiate new collective bargaining and/or franchise agreements on satisfactory terms or at all. Our operations may be interrupted as a result of labor disputes or difficulties and delays in the process of renegotiating. Certain of such unions have in the past gone on strike, and in the future may do so again. We cannot predict the effect that a potential work stoppage would have on our business. The Ballengee Group business is a signatory to certain agreements with the unions that represent certain of its clients (for example, with the Major League Baseball Players association).
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Unauthorized disclosure of sensitive or confidential client or customer information could harm our business and standing with our clients and customers.
We seek to protect trade secrets, confidential information, personal information and other proprietary information, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to such information, such as our employees, collaborators, contractors, consultants, advisors and other third parties. However, we cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary technology, information and processes. Further, despite these efforts, no assurance can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information as any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
Prosecuting a claim that a party illegally disclosed or misappropriated a trade secret or confidential information is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts within and outside of the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position could be materially and adversely harmed.
Changes in public and consumer tastes and preferences and industry trends could reduce demand for our services and content offerings and adversely affect our business.
Our ability to generate revenues is highly sensitive to rapidly changing consumer preferences and industry trends, as well as the popularity of the talent, brands, and owners of intellectual property we represent, and the assets we own. Our success depends on our ability to offer premium content through popular channels of distribution that meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content. Our operations and revenues are affected by consumer tastes and entertainment trends. Changes in consumers’ tastes or a change in the perceptions of our brands and business partners, whether as a result of the social and political climate or otherwise, could adversely affect our operating results. Our failure to avoid a negative perception among consumers or anticipate and respond to changes in consumer preferences, including in the form of content creation or distribution, could result in reduced demand for our services and content offerings or those of our clients and owned assets across our platform, which could have an adverse effect on our business, financial condition and results of operations.
We may not be able to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies.
We must successfully adapt to and manage technological advances in our industry, including the emergence of alternative distribution platforms and artificial intelligence. Our ability to effectively generate revenue from new distribution platforms and viewing technologies will affect our ability to maintain and grow our business. Emerging forms of content distribution may provide different economic models and compete with current distribution methods in ways that are not entirely predictable, which could reduce consumer demand for our product offerings. We must also adapt to changing consumer behavior driven by advances in content delivery and mobile devices. If we fail to adapt our distribution methods and content to emerging technologies and new distribution platforms, it could result in an adverse effect on our business, financial condition, and results of operations.
We, including our subsidiaries, may be unsuccessful in our strategic acquisitions, investments and commercial agreements, and we may pursue acquisitions, investments or commercial agreements for their strategic value in spite of the risk of lack of profitability.
We, including our subsidiaries, face significant uncertainty in connection with acquisitions, investments, and commercial agreements. To the extent we choose to pursue certain commercial, investment, or acquisition strategies, we may be unable to identify suitable targets for these deals, or to make these deals on favorable terms. If we identify suitable acquisition candidates, investments, or commercial partners, our ability to realize a return on the resources expended pursuing such deals, and to successfully implement or enter into them will depend on a variety of factors, including our ability to obtain financing on acceptable terms, requisite governmental approvals, as well as the factors discussed below. Additionally, we may decide to make or enter into acquisitions, investments, or commercial agreements with the understanding that such acquisitions, investments, or commercial agreements will not be profitable, but may be of strategic value to us. Our current and future acquisitions, investments, including existing investments accounted for under the equity method, or commercial agreements may also require that we make additional capital investments in the future, which would divert resources from other areas of our business. We cannot provide assurances that the anticipated strategic benefits of these deals will be realized in the long-term or at all.
We may fail to identify or assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring a company, making an investment or entering into a commercial agreement and, as such, may not obtain sufficient warranties, indemnities, insurance, or other protections. This could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes, a loss of anticipated tax benefits, or other adverse effects on our business, operating results, or financial condition. Additionally, some warranties and indemnities may give rise to unexpected and significant liabilities. Future acquisitions and commercial arrangements that we may pursue could result in dilutive issuances of equity securities and the incurrence of further debt.
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Risks Related to Competition; Personnel; and Financial Condition
We face competition from substantially larger and better-financed competitors in both our baseball agency and technology businesses.
We operate in two highly competitive industries: sports representation and technology/software development. In the baseball agency sector, numerous established sports agencies represent athletes, many with significantly greater resources, broader client rosters, and stronger relationships with teams and sponsors. In the technology sector, numerous companies market software and digital solutions for social media influencer management, including large, well-capitalized enterprises. The size, number, and resources of these competitors make it challenging for us to achieve and maintain market share in either business segment.
We depend on our management team to succeed, and the loss of their services could harm our business.
To achieve our objectives, we require a management team with expertise in software development, product development, sports representation, and sales and marketing. Although we recently appointed Jeff Campbell as our executive chairman, who has experience in sports agencies, the fitness industry, marketing and technology, we still have a limited management team. Although we have agreements with certain executive officers and outsourced programming consultants, these agreements may be terminated at any time. We do not maintain “key person” insurance for any of our executives or other employees, and competition for qualified personnel in our industries is intense. If we cannot attract and retain qualified personnel on acceptable terms, our growth and operations could be adversely affected.
We also owe accrued salary to our Chief Executive Officer and Chief Financial Officer, which may impact their continued service and create financial and reputational risks. As of June 30, 2025, our Chief Executive Officer, Adam Nicosia, is owed approximately $120,000 in accrued but unpaid salary, and our chief accounting officer and interim Chief Financial Officer, Marilu Brassington, is owed approximately $70,000 There is no assurance that either executive will continue to provide services to the Company if delays in paying their full compensation persist. As of the date of this Quarterly Report on form 10-Q, we do not have sufficient capital to pay these accrued amounts. If either officer were to resign or reduce his or her involvement due to nonpayment, our operations, strategic direction, and ability to attract investors or key partners could be materially and adversely affected. Moreover, failure to pay accrued compensation may raise legal, accounting, and reputational concerns and could expose us to claims or liabilities under employment laws. We expect to attempt to satisfy the unpaid balances once we achieve sufficient profitability or raise additional capital, but there can be no assurance as to when or whether we will be able to do so.
Our Chief Executive Officer and Chief Financial Officer hold executive positions with other companies and may have limited time to devote to our business.
Our Chief Executive Officer and Chief Financial Officer each work on a part-time basis for us and also serve as officers of other companies. As a result, they divide their professional time among multiple business interests. This arrangement may limit the time and attention they can devote to our operations, strategic initiatives, and day-to-day management. Their other professional obligations could create actual or potential conflicts of interest and may delay or hinder decision-making, responsiveness to business opportunities, or the execution of our growth strategies, any of which could materially and adversely affect our business and results of operations.
Obligations under the participating promissory notes issued in the Ballengee acquisition will reduce the proceeds available from future capital raises and may limit the use of our cash flows.
In connection with our acquisition of the Ballengee Group, we issued a participating promissory notes in the aggregate principal amount of $7,500,000 to the sellers. These notes require us to make mandatory repayments equal to (i) 10% of the gross proceeds from any offering of our equity securities that results in at least $250,000 in gross proceeds, and (ii) 50% of the free cash flows generated by Ballengee Group’s operations each calendar quarter, with the percentage reducing over time as principal is repaid.
As a result, if we complete any equity offering, or if Ballengee generates positive cash flow, a portion of those proceeds or cash flows will be required to be paid to the former Ballengee owners rather than being available to fund our operations, invest in growth initiatives, or pursue other strategic opportunities. This repayment obligation could materially and adversely affect our liquidity, limit our ability to reinvest in the business, and reduce our financial operations. In addition, because the amount and timing of these payments depend on our capital-raising activities and Ballengee’s performance, we may be required to make payments at times when we would otherwise use those funds for other purposes, which could further strain our working capital and operating resources.
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We may be required to pay certain earnout consideration payable to the former Ballengee Group owners could result in significant future stock issuances and dilution to our stockholders.
Under the terms of the acquisition of Ballengee Group, the former owners of Ballengee are entitled to receive up to $20,000,000 in additional earnout consideration over a four-year period beginning January 1, 2025 and ending December 31, 2028, payable in shares of our common stock if certain EBITDA targets are met by Ballengee Group’s operations as follows: for each earnout year, (i) no payment will be made if Ballengee’s EBITDA is below $2,000,000, (ii) a payment equal to actual EBITDA will be made if EBITDA is between $2,000,000 and $5,000,000, and (iii) a payment of $5,000,000 will be made if EBITDA is at least $5,000,000.
If Ballengee achieves the specified EBITDA metrics above, we will be required to issue a potentially substantial number of shares of our Common Stock, which would dilute the ownership interests of our existing stockholders. This dilution could be significant, particularly if our stock price declines, as more shares would be required to satisfy the earnout obligation. The possibility of future substantial issuances of our Common Stock in connection with the earnout may also create downward pressure on our stock price. In addition, the earnout obligation could incentivize management to focus on achieving the specific EBITDA targets at the expense of other strategic initiatives or long-term value creation.
We have expressed substantial doubt about our ability to continue as a going concern.
Management has determined that there is substantial doubt about our ability to continue as a going concern for a period of one year following the issuance of this report. This determination was based on conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued, including the probability that significant changes to our anticipated level of operations, due to factors that are within or outside of our control, would cause our available cash as of the date of this filing to not be sufficient to fund our anticipated level of operations for the next 12 months. Our future consolidated financial statements may include a similar qualification about our ability to continue as a going concern. Our year-end and interim consolidated financial statements were prepared assuming that it will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.
If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.
Our auditors have expressed substantial doubt about our ability to continue as a going concern.
Our auditors’ report on our consolidated financial statements for the year ended March 31, 2025 expressed an opinion that we had a working capital deficit of $1,030,775 as the year end and have incurred losses and not yet generated significant revenue from our operations and that we will require additional funds to maintain our operations. Our current cash level raises substantial doubt about our ability to continue as a going concern past the quarter ending on June 30, 2025. If we do not obtain additional funds by such time, we may no longer be able to continue as a going concern and may need to cease operations which means that our shareholders will lose their entire investment.
Our business requires a substantial investment of capital, and we have limited working capital and limited access to financing;
The promotion and marketing of our products and services, along with the continued development and enhancement of our adapti.io software platform, require significant capital. Following the closing of our acquisition of the Ballengee Group, we also require substantial additional capital to operate and grow the sports agency business. Our cash requirements are expected to exceed the level of cash generated by operations for the foreseeable future, and we may have limited working capital. Capital available for growth initiatives will be reduced to the extent we must use funds budgeted for investment to fund day-to-day operations. Sustained reductions in investment could materially and adversely affect future operating results and cash flows. In addition, a significant amount of time may elapse between our expenditure of funds and the receipt of revenues from our operations, particularly in the baseball agency business, where contract cycles and commission payments may occur months or years after player representation efforts begin. This timing gap requires us to fund a significant portion of our capital needs from operating cash flow and other financing sources.
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Our ability to obtain additional financing on satisfactory terms may be limited. For equity financing, our ability to raise capital depends on general market conditions and investor demand for our securities. We may be unable to raise capital through equity offerings, and any such financing could cause substantial dilution to our existing stockholders. If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights, preferences, or privileges senior to those of our common stock. If adequate financing is not available at all or is unavailable on acceptable terms, we may be unable to fund expansion, sustain operations, pursue acquisitions, develop or enhance products and services, or respond effectively to competitive pressures. Any of these outcomes could materially and adversely affect our business, financial condition, results of operations, liquidity, and prospects.
Risks Related to Technology
Use of Artificial Intelligence in adapti.io Presents Operational, Legal, Ethical, and Competitive Risks.
We are developing our adapti.io platform to incorporates artificial intelligence and machine learning technologies to provide certain features and functionality. The development, training, and operation of AI models depend on the quality, accuracy, and representativeness of the data used. Inaccurate, incomplete, or biased data sets may result in flawed outputs, which could reduce the effectiveness of our services, lead to incorrect conclusions or recommendations, and harm our reputation.
The use of AI presents emerging legal and regulatory risks. Governments in the United States, the European Union, and other jurisdictions are considering or have enacted legislation regulating the development and use of artificial intelligence. These evolving laws and regulations could impose additional compliance obligations, increase costs, restrict certain applications, or potentially subject us to fines, penalties, or other liabilities.
Artificial intelligence technologies are rapidly evolving, and competitors, including those with greater resources, may develop more advanced tools or features. Our ability to maintain a competitive advantage depends on our ongoing investment in research and development related to our Adapti.io tool, access to high-quality training data, and protection of our intellectual property. Additionally, some aspects of Adapti.io may not be eligible for copyright protection, and we may face claims from third parties alleging that our platform infringes on their rights.
Cybersecurity Breaches, Data Loss, or System Failures Could Disrupt adapti.io’s Operations, Compromise Sensitive Information, and Harm Our Reputation.
Our adapti.io platform relies on the secure collection, storage, processing, and transmission of proprietary, confidential, and personal data. We face cybersecurity risks, including malware, ransomware, denial-of-service attacks, phishing, supply chain attacks, and other unauthorized attempts to gain access to our systems or data. Cyberattacks are becoming increasingly sophisticated and may be conducted by well-funded state-sponsored actors, organized crime groups, or other threat actors.
A successful breach of our systems, or those of our third-party service providers, could result in the theft, destruction, loss, unauthorized disclosure, or alteration of proprietary or confidential information, including personal data of clients, users, and employees. Such an event could disrupt the operation of adapti.io, result in legal and regulatory liability, damage our reputation, lead to a loss of clients or business opportunities, and require significant resources to investigate and remediate.
We also rely on third-party hosting and cloud service providers to operate adapti.io. Outages, vulnerabilities, or security incidents at these providers could likewise result in downtime, data loss, or compromise. While we have implemented security measures designed to protect our systems and data, these measures may be inadequate or may become outdated as threats evolve. Our insurance coverage may be insufficient to compensate for any losses resulting from a cybersecurity incident. Any significant disruption or security breach could materially and adversely affect our business, financial condition, and results of operations.
Risk Related to Ownership of our Securities and Government Regulation
Concentration of Ownership Following the Ballengee Group Acquisition Gives Certain Stockholders the Ability to Control or Significantly Influence Corporate Decisions.
Following the completion of the Ballengee Group acquisition, the former principals of Ballengee Group own in excess of 80% of our outstanding Common Stock, giving them the ability to control or significantly influence the election of directors, approval of significant corporate transactions, and other matters requiring stockholder approval. This concentration of ownership may delay, deter, or prevent a change in control of our Company, even if such a change of control would benefit our other stockholders, and could limit your ability to influence corporate matters.
In addition, this level of ownership concentration could discourage potential acquirers from making an offer to purchase our Company, may result in the approval of actions that other stockholders do not view as beneficial, and could adversely affect the market price of our common stock if investors perceive the ownership concentration as limiting the value or liquidity of their shares.
Our authorized capital structure allows for the issuance of a substantial number of additional shares, which could result in significant dilution to existing stockholders.
Our articles of incorporation, as amended, authorizes the issuance of up to 40,000,000,000 shares of Common Stock and 20,000,000 shares of “blank check” preferred stock. The preferred stock may be issued in one or more series, with such rights, preferences, privileges, and restrictions (including voting, dividend, conversion, redemption, and liquidation rights) as may be determined by our board of directors without further stockholder approval. As of August 1, 2025, we had 8,039,259 shares of Common Stock outstanding and no preferred stock outstanding. In addition, we had approximately $277,967 in outstanding convertible promissory notes and $217,096 in outstanding related party notes payable, which are convertible, including accrued interest, into approximately 160,735 shares of Common Stock as of that date.
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In addition, pursuant to our acquisition of the Ballengee Group, we are obligated to issue shares of Common Stock up to a maximum of $20,000,000 in value as part of potential earnout consideration if certain EBITDA performance targets are achieved by the Ballengee Group. The number of shares to be issued will be based on the then-current volume weighted average trading price of our Common Stock for the ten (10) day period immediately preceding the end of each calendar year. A decline in our stock price during the earnout measurement periods could result in the issuance of a significantly greater number of shares, increasing dilution to our existing stockholders.
Because our board of directors has broad authority to issue additional common stock, preferred stock, or securities convertible into or exercisable for such shares without further stockholder action (except as may be required by applicable law or the rules of any securities exchange on which our securities may be listed), any such issuances could dilute the ownership interests of existing stockholders, adversely affect the trading price of our Common Stock, and, in the case of preferred stock, grant rights superior to those of the holders of our Common Stock.
It is likely that we will need to issue a large number of additional securities to raise capital in order to further our business plans. It is also likely that we will issue a large number of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services. These issuances would dilute the percentage ownership interest of our current shareholders, which would have the effect of reducing your influence on matters on which our stockholders vote, and might dilute the net tangible book value per share of our common stock.
The market for our common stock has historically been illiquid and our investors may be unable to sell their shares.
Our Common Stock has historically traded with limited volume on the pink tier of the OTC Markets. Accordingly, although there is a public market for our Common Stock, it still is, and has, historically been relatively illiquid compared to that of a seasoned issuer. Prior to making an investment in our securities, you should consider the historically limited market for our Common Stock. No assurances can be given that the trading volume of our Common Stock will increase or remain the same.
We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future.
We have never paid cash dividends on our Common Stock and do not anticipate paying cash dividends on our Common Stock in the foreseeable future. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if the market price of our Common Stock appreciates.
Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies, and procedures in the United States, which are subject to change at any time, governing matters such as our representation of professional baseball players, licensing laws for athlete agents, and compliance with cybersecurity laws.
Noncompliance with these laws could subject us to complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, reputational harm, and other collateral consequences. Multiple or repeated failures by us to comply with these laws and regulations could result in increased fines or proceedings against us, including suspension or revocation proceedings relating to licenses we are required to maintain to conduct the business of Ballengee Group. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, results of operations, and financial condition. There can be no assurance that a law or regulation will not be interpreted or enforced in a manner contrary to our current understanding. In addition, the promulgation of new laws, rules, and regulations could restrict or unfavorably impact our business, which could decrease demand for our services, reduce revenue, increase costs, or subject us to additional liabilities.
We may have direct and indirect interactions with government agencies and state affiliated entities in the ordinary course of operating the Ballengee Group business. In the event that we fail to comply with the regulations of a particular jurisdiction, whether through our acts or omissions or those of third parties, it may have an adverse effect on our business, financial condition, and results of operations.
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We may be unable to comply with our reporting and other requirements under federal securities laws.
The Sarbanes-Oxley Act of 2002, as well as related new rules and regulations implemented by the United States Securities and Exchange Commission, or SEC, and the Public Company Accounting Oversight Board, require changes in the corporate governance practices and financial reporting standards for public companies. These laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 relating to internal control over financial reporting, would be expected to materially increase the Company’s legal and financial compliance costs and make some activities more time-consuming and more burdensome. Presently we qualify as a non-accelerated filer. Accordingly, we are exempt from the requirements of Section 404(b) and our independent registered public accounting firm is not required to audit the design and operating effectiveness of our internal controls and management’s assessment of the design and the operating effectiveness of such internal controls. In the event that we become an accelerated filer, we will be required to expend substantial capital in connection with compliance.
We do not have effective internal controls over our financial reporting.
Because of our limited resources, management has concluded that our internal control over financial reporting may not be effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Effective internal controls over financial reporting and disclosure controls and procedures are necessary for us to provide reliable financial and other reports and effectively prevent fraud. If we cannot provide reliable financial or SEC reports or prevent fraud, investors may lose confidence in our SEC reports, our operating results and the trading price of our common stock could suffer materially, and we may become subject to litigation.
Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses and will divert time and attention away from revenue generating activities.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team invests significant time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from developing our business to compliance activities which could have an adverse effect on our business.
We are a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our securities less attractive to investors.
We are a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including “emerging growth companies” such as, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Our status as a smaller reporting company is determined on an annual basis. We cannot predict if investors will find our securities less attractive or our Company less comparable to certain other public companies because we will rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future financial results may not be as comparable to the financial results of certain other companies in our industry that adopted such standards.
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Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
| 1. | On July 14, 2025, the Company entered into an amended and restated membership interest purchase agreement (the “Purchase Agreement”) with BSG Holdings, LLC and JBAH Holdings, LLC (“Sellers”), pursuant to which the Company acquired, from the Sellers, 100% of the outstanding membership interests (“Membership Interests”) of Ballengee Group, LLC, a Texas-based sports agency. Pursuant to the Purchase Agreement, as consideration for the acquisition of the Membership Interests, the Sellers received: (i) an aggregate of 6,500,000 shares of the Company’s Common Stock valued at $20,000,000, based on the volume-weighted average price per share of the Common Stock for the ten trading days prior to July 14, 2025, (ii) a participating promissory note in the aggregate principal amount of $7,500,000 (the “Participating Note”), and (iii) the right to receive future earnout consideration of up to $20,000,000, to paid over a four (4) year period on the achievement of certain milestones by Ballengee as a stand-alone entity post-acquisition (the “Earnout Consideration”. The transaction closed on July 14, 2025. The Participating Note matures on June 30, 2030, has an interest rate of five percent (5%) per annum, and receives mandatory payments (i) in the event the Company completes an offering of securities resulting in gross proceeds of at least $250,000 and (ii) from free cash flow generated by Ballengee as a standalone entity. The Earnout Consideration is payable in shares of Common Stock of the Company based on Ballengee meeting certain EBITDA as a stand-alone entity. | |
| 2. | In connection with her new employment agreement, on August 14, 2025, we issued Ms. Brassington a non-qualified stock option grant to purchase up to 120,000 shares of Common Stock at a price per share of $3.08 . The option has a term of 10 years from issuance, and vests in four (4) equal annual installments over a four (4) year period, with such first vesting event occurring on the one (1) year anniversary of the grant date. | |
| 3. | On August 14, 2025, we issued Ms. Brassington, our principal accounting officer and interim chief financial officer, a subordinated convertible promissory note in principal of $184,800. The note has a maturity date of three (3) years from issuance, accrues interest at the rate of 5% per annum, and is payable in full at maturity The note is also convertible into Common Stock at the holder’s election at any time at a conversion price of $3.08 per share. Additionally, at maturity, the Company has the right to require holder to convert the note into shares of Common Stock at a conversion price of $3.08 per share. | |
| 4. | On August 14, 2025, we issued Jeff Campbell, our executive chairman, a subordinated convertible promissory note in principal of $492,800. The note has a maturity date of three (3) years from issuance, accrues interest at the rate of 5% per annum, and is payable in full at maturity. The note is also convertible into Common Stock at the holder’s election at any time at a conversion price of $3.08 per share. Additionally, at maturity, the Company has the right to require holder to convert the note into shares of Common Stock at a conversion price of $3.08 per share. | |
| 5. | On August 14, 2025, we issued Adam Nicosia, our chief executive officer, a subordinated convertible promissory note in principal of $1,478,400. The note has a maturity date of three (3) years from issuance, accrues interest at the rate of 5% per annum, and is payable in full at maturity. The note is also convertible into Common Stock at the holder’s election at any time at a conversion price of $3.08 per share. Additionally, at maturity, the Company has the right to require holder to convert the note into shares of Common Stock at a conversion price of $3.08 per share. | |
| 6. | On April 28, 2025, we issued a convertible promissory note to an investor in principal of $200,000 plus a 10% financing fee against payment therefore. The note matures 12 months from issuance and is payable at maturity. The note has an interest rate of 10% per annum and contains an additional bridge fee or exit fee of 10% of the initial principal at repayment or conversion. At any time prior to maturity, the note is convertible into Common Stock at the holder’s election at a conversion price per share of $3.08. |
The offers, sales and issuances of the securities described above were exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof and/or Rule 506 of Regulation D promulgated thereunder as transactions not involving a public offering. The recipients represented that they were acquiring the securities for investment purposes only and not with a view to or for resale in connection with any distribution thereof, and appropriate legends were affixed to the securities, where applicable. Each recipient was an “accredited investor” as defined in Rule 501(a) of Regulation D and had access to information about the Company necessary to evaluate the investment.
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Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not Applicable.
Employment Agreement and Related Contracts with Marilu Brassington
On August 14, 2025, we entered into a new employment agreement with Marilu Brassington, our current interim Chief Financial Officer (the “Brassington Employment Agreement”). Ms. Brassington was previously serving as our interim Chief Financial Officer without a written employment agreement. Pursuant to the Brassington Employment Agreement, Ms. Brassington will serve as the Company’s chief accounting officer and interim chief financial officer.
Pursuant to the Brassington Employment Agreement, Ms. Brassington receives an annual base salary of $180,000. On each monthly anniversary of the Brassington Employment Agreement, the Company will pay half of her monthly base salary in Common Stock, valued at the closing price of the Comon Stock on such applicable date.
We also agreed to issue Ms. Brassington a non-qualified stock option grant to purchase up to 120,000 shares of Common Stock at a price per share of $3.08 (the “Option”). The Option was issued on August 14, 2025, has a term of 10 years from issuance, and vests in four (4) equal annual installments over a four (4) year period, with such first vesting event occurring on the one (1) year anniversary of the grant date.
Ms. Brassington also entered into the Company’s standard confidential information and invention assignment agreement governing the ownership of any inventions and confidential information.
The foregoing summary of certain terms of the Brassington Employment Agreement and Option are qualified in their entirety by the terms of the Brassington Employment Agreement and Option, copies of which are attached to this Quarterly Report on Form 10-Q as Exhibits 10.7 and 10.8.
Subordinated Convertible Promissory Notes Issued to our CFO, Executive Chairman and CEO
On August 14, 2025, we issued subordinated convertible promissory notes to Marilu Brassington, our interim CFO, in the principal amount of $184,800 (“Brassington Note”), Jeff Campbell, our executive chairman, in the principal amount of $492,800 (“Campell Note”) and Adam Nicosia, our CEO, in the principal amount of $1,478,400 (the “Nicosia Note”). The Brassington Note, Campbell Note and Nicosia Note (collectively, the “Notes”) have a maturity date of three (3) years from issuance, accrue interest at the rate of 5% per annum, and are payable by the Company in full at maturity. The Notes are also convertible into Common Stock of the Company at the holder’s election at any time at a conversion price of $3.08 per share. Additionally, at maturity, the Company has the right to require holder to convert the Note(s) into shares of Common Stock at a conversion price of $3.08 per share.
The foregoing summaries of certain terms of the Notes are qualified in their entirety by the terms of the Notes, a copy of which is attached hereto to this Quarterly Report on Form 10Q as Exhibit 10.9.
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* Filed herewith
** Furnished herewith.
+ Indicates management contract or compensatory plan.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 14, 2025
Adapti, Inc.
| By: | /s/ Adam Nicosia | |
| Adam Nicosia | ||
| Title: | Chief Executive Officer |
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Exhibit 3.1
Exhibit 10.7
ADAPTI, Inc.
August 14, 2025 (the “Effective Date”)
Marilu Brassington
2278 Monitor St.
Dallas, Texas 85004
| Re: | EMPLOYMENT AGREEMENT |
Dear Marilu:
On behalf of Adapti, Inc., a Nevada corporation (the “Company”), I am pleased to offer you the position of interim Chief Financial Officer of the Company. Your employment by the Company shall be governed by the following terms and conditions (this “Agreement”):
| 1. | Duties and Scope of Employment. |
(a) Position. For the term of your employment under this Agreement (your “Employment”), the Company agrees to employ you in the position of Chief Accounting Officer and interim Chief Financial Officer. You will report to the Company’s Chief Executive Officer and / or Executive Chairman. You will be working virtually out of any place of your choosing. You will perform the duties and have the responsibilities set forth in Schedule A hereto and as otherwise may be assigned or delegated to you by the Chief Executive Officer, Executive Chairman or the Company’s Board of Directors (“Board”).
(b) Obligations to the Company. During your Employment, you shall devote whatever efforts and time is required to fulfill your duties to the Company. It is anticipated that such time requirements will generally not be full time but on occasion might require your full time and attention. During your Employment, without the prior written approval of the Company’s Chief Executive Officer or Executive Chairman, which approval shall not be unreasonably withheld, you shall not render services in any capacity to any other person or entity and shall not act as a sole proprietor or partner of any other person or entity or own more than five percent of the stock of any other corporation. Notwithstanding the foregoing, you may serve on corporate, civic or charitable boards or committees, deliver lectures, fulfill speaking engagements, teach at educational institutions, or manage personal investments without such advance written consent, provided that such activities do not individually or in the aggregate interfere with the performance of your duties under this Agreement. You shall comply with the Company’s policies and rules, as they may be in effect from time to time during your Employment.
(c) No Conflicting Obligations. You represent and warrant to the Company that you are under no obligations or commitments, whether contractual or otherwise, that are inconsistent with your obligations under this Agreement. In connection with your Employment, you shall not use or disclose any trade secrets or other proprietary information or intellectual property in which you or any other person has any right, title or interest and your Employment will not infringe or violate the rights of any other person. You represent and warrant to the Company that you have returned all property and confidential information belonging to any prior employer.
(d) Commencement Date. You shall commence Employment under this Agreement as of August 14, 2025.
| 2. | Cash and Incentive Compensation. |
(a) Salary. The Company shall pay you as compensation for your services an initial base salary at a gross annual rate of $180,000. Such salary shall be payable (i) 50% in cash in accordance with the Company’s standard payroll procedures and (ii) 50% in restricted common stock of the Company (“Stock Compensation”). All Stock Compensation will be issued by the Company’s transfer agent as soon as reasonably practicable at the end of each monthly anniversary of the Effective Date (each date a “Stock Compensation Date”) and will be valued at the closing price of the Company’s common stock on such applicable Stock Compensation Date . The annual compensation specified in this subsection (a), together with any modifications in such compensation that the Company may make from time to time, is referred to in this Agreement as “Base Salary.” The Board or any Compensation Committee of the Board shall review your Base Salary at least annually. Effective as of the date of any change to your Base Salary, the Base Salary as so changed shall be considered the new Base Salary for all purposes of this Agreement.
(b) Option Grant. On the Effective Date, the Company shall grant you a non-qualified option grant to purchase up to 120,000 shares of common stock of the Company (the “Option”), a copy of which is attached hereto as Exhibit A. The Option will have a term of ten (10) years, an exercise price of $3.08, will vest in four equal installments on a yearly basis beginning on the one (1) year anniversary of the Effective Date, and will otherwise be in the form of option agreement approved by the Board.
(c) Discretionary Bonus. The Board has the right to award You a discretionary bonus at any time that they see fit.
3. Vacation/PTO and Employee Benefits. During your Employment, you shall be eligible to accrue up to 15 days of paid vacation / paid time off, pro-rated for the remainder of this calendar year, in accordance with the Company’s vacation / paid time off policy, as it may be amended from time to time. During your Employment, you shall be eligible to participate in the employee benefit plans maintained by the Company and generally available to similarly situated employees of the Company, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan. It is anticipated that the Company will not be offering any health insurance coverage to its employees unless required to do so by law.
4. Business Expenses. The Company will reimburse you for your necessary and reasonable business expenses incurred in connection with your duties hereunder upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company’s generally applicable policies.
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| 5. | Termination. |
(a) Employment at Will. Your Employment shall be “at will,” meaning that either you or the Company shall be entitled to terminate your Employment at any time and for any reason, with or without Cause. Any contrary representations that may have been made to you shall be superseded by this Agreement. This Agreement shall constitute the full and complete agreement between you and the Company on the “at-will” nature of your Employment, which may only be changed in an express written agreement signed by you and a duly authorized officer of the Company.
(b) Rights Upon Termination. Upon the termination of your Employment for any reason, you shall only be entitled to the compensation and benefits earned and the reimbursements described in this Agreement for the period preceding the effective date of the termination, including any accrued but unused paid time off pursuant to Section 3.
| 6. | Reserved. |
7. Non-Solicitation. During the period commencing on the date of this Agreement and continuing until the first anniversary of the date when your Employment terminated for any reason, you shall not directly or indirectly, personally or through others, solicit or attempt to solicit (on your own behalf or on behalf of any other person or entity) either (i) any employee or any consultant of the Company or any of the Company’s affiliates or (ii) the business of any customer of the Company or any of the Company’s affiliates.
| 8. | Pre-Employment Conditions. |
(a) Confidentiality Agreement. Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to the counsel of the Company, of the Company’s Confidential Information and Invention Assignment Agreement, a copy of which is attached hereto as Exhibit B for your review and execution (the “Confidentiality Agreement”), prior to or on your Start Date.
(b) Right to Work. For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your Start Date, or our employment relationship with you may be terminated.
| 9. | Successors. |
(a) Company’s Successors. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business or assets that becomes bound by this Agreement.
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(b) Your Successors. This Agreement and all of your rights hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
10. Miscellaneous Provisions.
(a) Indemnification. The Company shall indemnify you to the maximum extent permitted by applicable law and the Company’s Bylaws with respect to your service and you shall also be covered under a directors and officers liability insurance policy paid for by the Company to the extent that the Company maintains such a liability insurance policy now or in the future.
(b) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In your case, mailed notices shall be addressed to you at the home address that you most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.
(c) Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by you and by an authorized officer of the Company (other than you). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
(d) Whole Agreement. No other agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof. This Agreement and the Confidentiality Agreement contain the entire understanding of the parties with respect to the subject matter hereof.
(e) Withholding Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law.
(f) Choice of Law and Severability. This Agreement shall be interpreted in accordance with the laws of the State of Nevada without giving effect to provisions governing the choice of law. If any provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any applicable jurisdiction by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the minimum extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially altering the intention of the parties, then such provision shall be stricken and the remainder of this Agreement shall continue in full force and effect. If any provision of this Agreement is rendered illegal by any present or future statute, law, ordinance or regulation (collectively, the “Law”) then that provision shall be curtailed or limited only to the minimum extent necessary to bring the provision into compliance with the Law. All the other terms and provisions of this Agreement shall continue in full force and effect without impairment or limitation.
(g) No Assignment. This Agreement and all of your rights and obligations hereunder are personal to you and may not be transferred or assigned by you at any time. The Company may assign its rights under this Agreement to any entity that assumes the Company’s obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company’s assets to such entity.
(h) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[Signature Page Follows]
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We are all delighted to be able to extend you this offer and look forward to working with you. To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below and return it to me, along with a signed and dated original copy of the Confidentiality Agreement, on or before August 14, 2025 Please indicate the date (either on or before the aforementioned date) on which you expect to begin work in the space provided below (the “Start Date”).
| Very truly yours, | |||
| ADAPTI, Inc | |||
| By: | |||
| (Signature) | |||
| Name: | Jeff Campbell | ||
| Title: | Executive Chairman | ||
ACCEPTED AND AGREED:
MARILU BRASSINGTON
______________________________________
(Signature)
______________________________________
Date
Anticipated Start Date: August 14, 2025______________
Schedule A: Duties and Responsibilities
Exhibit B: Form of Option Agreement
Exhibit C: Confidential Information and Invention Assignment Agreement
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SCHEDULE A
DUTIES AND RESPONSIBILITIES
EXHIBIT A
FORM OF OPTION AGREEMENT
| -2- |
EXHIBIT B
CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT
| -3- |
Exhibit 10.8
Non-Qualified Stock Option Agreement
This Stock Option Agreement (this “Agreement”) is made and entered into as of August 14, 2025 by and between Adapti, Inc., a Nevada corporation (the “Company”) and Marilu Brassington (the “Participant”).
Grant Date: August 14, 2025________________________
Exercise Price per Share: $3.08______________________
Number of Option Shares: 120,000___________________
Expiration Date: August 13, 2035_____________________
1. Grant of Option.
1.1 Grant; Type of Option. The Company hereby grants to the Participant an option (the “Option”) to purchase the total number of shares of Common Stock of the Company equal to the number of Option Shares set forth above, at the Exercise Price set forth above. The Option is intended to be a Non-qualified Stock Option and not an Incentive Stock Option within the meaning of Section 422 of the Internal Revenue Code.
1.2 Consideration. The grant of the Option is made in consideration of the services to be rendered by the Participant to the Company.
2. Exercise Period; Vesting.
2.1 Vesting Schedule. The Option will become vested and exercisable with respect to 30,000 of the shares on each one (1) year anniversary from the Grant Date until the Option is 100% vested. The unvested portion of the Option will not be exercisable on or after the Participant’s termination of Continuous Service. “Continuous Service” means the absence of any interruption or termination of service as an employee or consultant. Continuous Service as an employee or consultant shall not be considered interrupted or terminated in the case of: (i) Company approved sick leave; (ii) military leave; (iii) any other bona fide leave of absence approved by the Company. Also, Continuous Service as an employee or consultant shall not be considered interrupted or terminated in the case of a transfer between locations of the Company or between the Company, its parent company(ies), subsidiaries or affiliates, or their respective successors, or a change in status from an employee to a consultant or from a consultant to an employee.
2.2 Expiration. The Option will expire on the Expiration Date set forth above, or earlier as provided in this Agreement.
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3. Termination of Continuous Service.
3.1 Termination for Reasons Other Than Cause, Death, Disability. If the Participant’s Continuous Service is terminated for any reason other than Cause, death or Disability, the Participant may exercise the vested portion of the Option, but only within such period of time ending on the earlier of (a) the date three months following the termination of the Participant’s Continuous Service or (b) the Expiration Date.
3.2 Termination for Cause. If the Participant’s Continuous Service is terminated for Cause, the Option (whether vested or unvested) shall immediately terminate and cease to be exercisable.
3.3 Termination due to Disability. If the Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise the vested portion of the Option, but only within such period of time ending on the earlier of (a) the date 12 months following the Participant’s termination of Continuous Service or (b) the Expiration Date.
3.4 Termination due to Death. If the Participant’s Continuous Service terminates as a result of the Participant’s death, [or the Participant dies within a period following termination of the Participant’s Continuous Service during which the vested portion of the Option remains exercisable,] the vested portion of the Option may be exercised by the Participant’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by the person designated to exercise the Option upon the Participant’s death, but only within the time period ending on the earlier of (a) the date 12 months following the Participant’s death or (b) the Expiration Date.
“Cause” shall mean the Participant’s Continuous Service Status is terminated for any of the following reasons: (i) any material breach by Participant of any material written agreement between Participant and the Company and Participant’s failure to cure such breach within 10 days after receiving written notice thereof; (ii) any failure by Participant to comply with the Company’s material written policies or rules as they may be in effect from time to time; (iii) neglect or persistent unsatisfactory performance of Participant’s duties and Participant’s failure to cure such condition within 10 days after receiving written notice thereof; (iv) Participant’s repeated failure to follow reasonable and lawful instructions from the Board or Participant’s direct report and Participant’s failure to cure such condition within 10 days after receiving written notice thereof; (v) Participant’s conviction of, or plea of guilty or nolo contendere to, any crime that results in, or is reasonably expected to result in, material harm to the business or reputation of the Company; (vi) Participant’s commission of or participation in an act of fraud against the Company; (vii) Participant’s intentional material damage to the Company’s business, property or reputation; or (viii) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company. For purposes of clarity, a termination without “Cause” does not include any termination that occurs as a result of Participant’s death or Disability. The determination as to whether a Participant’s Continuous Service Status has been terminated for Cause shall be made in good faith at the sole discretion of the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time with or without Cause, and the term “Company” will be interpreted to include any subsidiary, parent, affiliate, or any successor thereto, if appropriate.
“Disability” shall mean “disability” within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
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4. Manner of Exercise.
4.1 Election to Exercise. To exercise the Option, the Participant (or in the case of exercise after the Participant’s death or incapacity, the Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company a notice of intent to exercise in the manner designated by the Board. If someone other than the Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option.
4.2 Payment of Exercise Price. The entire Exercise Price of the Option shall be payable in full at the time of exercise in a manner prescribed by the Board of Directors, including but not limited to wire or check.
4.3 Withholding. Prior to the issuance of shares upon the exercise of the Option, the Participant must make arrangements satisfactory to the Company to pay or provide for any applicable federal, state and local withholding obligations of the Company. The Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of the Option by tendering a cash payment. The Company has the right to withhold from any compensation paid to a Participant.
4.4 Issuance of Shares. Provided that the exercise notice and payment are in form and substance satisfactory to the Company, the Company shall issue the shares of Common Stock registered in the name of the Participant, the Participant’s authorized assignee, or the Participant’s legal representative, and shall deliver certificates or book entry (in lieu of certificate at discretion of Company) representing the shares with the appropriate legends affixed thereto.
5. No Right to Continued Employment; No Rights as Shareholder. This Agreement shall confer upon the Participant any right to be retained in any position, as an employee, consultant or director of the Company. Further, nothing in this Agreement shall be construed to limit the discretion of the Company to terminate the Participant’s Continuous Service at any time, with or without Cause. The Participant shall not have any rights as a shareholder with respect to any shares of Common Stock subject to the Option prior to the date of exercise of the Option.
6. Transferability. The Option is not transferable by the Participant other than to a designated beneficiary upon the Participant’s death or by will or the laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. No assignment or transfer of the Option, or the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary upon death by will or the laws of descent or distribution) will vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Option will terminate and become of no further effect.
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7. Change in Control.
7.1 Acceleration of Vesting. In the event of a Change in Control, notwithstanding any provision of this Agreement to the contrary, the Option shall become immediately vested and exercisable with respect to 100% of the shares subject to the Option. To the extent practicable, such acceleration of vesting and exercisability shall occur in a manner and at a time which allows the Participant the ability to participate in the Change in Control with respect to the shares of Common Stock received.
“Change in Control” means (i) a sale of all or substantially all of the Company’s assets other than to an Excluded Entity (as defined below), (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, limited liability company or other entity other than an Excluded Entity, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of all of the Company’s then outstanding voting securities. Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its primary purpose is to (A) change the jurisdiction of the Company’s incorporation, (B) create a holding company that will be owned in substantially the same proportions by the persons who hold the Company’s securities immediately before such transaction, or (C) obtain funding for the Company in a financing that is approved by the Company’s Board. An “Excluded Entity” means a corporation or other entity of which the holders of voting capital stock of the Company outstanding immediately prior to such transaction are the direct or indirect holders of voting securities representing at least a majority of the votes entitled to be cast by all of such corporation’s or other entity’s voting securities outstanding immediately after such transaction
7.2 Cash-out. In the event of a Change in Control, the Committee may, in its discretion and upon at least ten (10) days’ advance notice to the Participant, cancel the Option and pay to the Participant the value of the Option based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event. Notwithstanding the foregoing, if at the time of a Change in Control the Exercise Price of the Option equals or exceeds the price paid for a share of Common Stock in connection with the Change in Control, the Committee may cancel the Option without the payment of consideration therefor.
8. Adjustments. The shares of Common Stock subject to the Option may be adjusted or terminated in any manner as contemplated by:
Changes in Capitalization. Subject to any action required under applicable laws by the holders of capital stock of the Company, if: (i) the shares underlying this Option and the exercise price per share of this Option shall be automatically proportionately adjusted in the event of a stock split, reverse stock split, stock dividend, combination, consolidation, reclassification of the Common Stock or subdivision of the Common Stock. In the event of any increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company, a declaration of an extraordinary dividend with respect to the Common Stock payable in a form other than Common Stock in an amount that has a material effect on the fair market value, a recapitalization (including a recapitalization through a large nonrecurring cash dividend), a rights offering, a reorganization, merger, a spin-off, split-up, change in corporate structure or a similar occurrence, there shall be appropriate adjustments, at the Board of Director’s discretion, in one or more of the number of shares underlying the Option and the exercise price per share of the Option, and any such adjustment by the Board of Directors shall be made in the Board of Director’s sole and absolute discretion and shall be final, binding and conclusive.
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Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, the Option will terminate immediately prior to the consummation of such action, unless otherwise determined by the Board of Directors.
Corporate Transactions. In the event of (i) a transfer of all or substantially all of the Company’s assets, (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of the Company’s then outstanding capital stock (a “Corporate Transaction”), this Option (vested or unvested) will be treated as determined by the Board of Directors, which determination may be made without the consent of Participant. Such determination, without the consent of Participant, may provide (without limitation) for one or more of the following in the event of a Corporate Transaction: (A) the continuation of such outstanding Option by the Company (if the Company is the surviving corporation); (B) the assumption of such outstanding Option by the surviving corporation or its parent; (C) the substitution by the surviving corporation or its parent of new options or equity awards for such Awards; (D) the cancellation of such Option in exchange for a payment to the Participant equal to the excess of (1) the exercise price or purchase price paid or to be paid for the shares subject to the Option; or (E) the cancellation of the outstanding Option for no consideration.
9. Tax Liability and Withholding. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any shares acquired on exercise; and (b) does not commit to structure the Option to reduce or eliminate the Participant’s liability for Tax-Related Items.
10. Compliance with Law. The exercise of the Option and the issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued pursuant to this Option unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the shares of Common Stock with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.
11. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the CEO of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Participant under this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.
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12. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Nevada without regard to conflict of law principles.
13. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Participant or the Company to the Committee for review. The resolution of such dispute by the Board of Directors shall be final and binding on the Participant and the Company.
14. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the person(s) to whom the Option may be transferred by will or the laws of descent or distribution.
15. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each provision of this Agreement shall be severable and enforceable to the extent permitted by law.
16. No Impact on Other Benefits. The value of the Participant’s Option is not part of the Participant’s normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
23. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
24. Acceptance. The Participant hereby acknowledges receipt of a copy of this Agreement. The Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all of the terms and conditions of this Agreement. The Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the underlying shares and that the Participant should consult a tax advisor prior to such exercise or disposition.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| ADAPTI, INC. | ||
| By: | ||
| Name: | Jeff Campbell | |
| Title: | Executive Chairman | |
| MARILU BRASSINGTON | ||
| By: | ||
| Name: | ||
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Exhibit 10.9
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION OR EXCHANGE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Adapti, Inc.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE
| $[*] | August 14, 2025 |
FOR VALUE RECEIVED, Adapti, Inc., a Nevada corporation (the “Company”) promises to pay to [*] (“Holder”), or its assigns, in lawful money of the United States of America the principal sum of [___] dollars and no cents ($[*]), or such lesser amount as shall equal the outstanding principal amount hereof, together with interest from the date of this subordinated promissory note (the “Note”) on the unpaid principal balance at a rate equal to five percent (5%) per annum, computed on the basis of the actual number of days elapsed and a year consisting of 365 days. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on the earlier of (i) thirty-six (36) months from the date hereof (the “Maturity Date”), or (ii) upon or after the occurrence of an Event of Default (as defined below), such amounts are declared due and payable by Holder or made automatically due and payable in accordance with the terms hereof.
The following is a statement of the rights of Holder and the conditions to which this Note is subject, and to which Holder, by the acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have the following meanings:
(a) “Balance” means, at the applicable time, the sum of all then outstanding principal of this Note, all then accrued but unpaid interest and all other amounts then accrued but unpaid under this Note.
(b) “Common Stock” means the Company’s Common Stock, par value $0.001 per share.
(c) “Company” includes the corporation initially executing this Note and any Person which shall succeed to or assume the obligations of the Company under this Note.
(d) “Conversion Price” means $3.08. Such Conversion Price will be adjusted proportionately for any stock split, stock dividend, combination or other recapitalization of the Common Stock, rounded to the nearest cent.
(e) “Event of Default” has the meaning given in Section 5 hereof.
(f) “Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction.
(g) “Obligations” shall mean and include all loans, advances, debts, liabilities and obligations, arising under or pursuant to the terms of this Note, including, all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by the Company hereunder and thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.
(h) “Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.
(i) “Securities Act” shall mean the Securities Act of 1933, as amended.
(j) “Senior Indebtedness” shall mean, unless expressly subordinated to or made on a parity with the amounts due under this Note, the principal of (and premium, if any), unpaid interest on and amounts reimbursable, fees, expenses, costs of enforcement and other amounts due in connection with: (i) indebtedness of Company, to banks, commercial finance lenders or other lending institutions regularly engaged in the business of lending money (excluding (A) venture capital, investment banking or similar institutions which sometimes engage in lending activities but which are primarily engaged in investments in equity securities and (B) equipment lenders or equipment lessors that advance indebtedness to Company solely to be used for the purchase, finance or acquisition of equipment and where such indebtedness is secured solely by such equipment), which is for money borrowed whether or not secured, and (C) any such indebtedness or any debentures, notes or other evidence of indebtedness issued in exchange for such Senior Indebtedness, or any indebtedness arising from the satisfaction of such Senior Indebtedness by a guarantor.
2. Interest. Accrued interest on this Note shall be payable at maturity.
3. Subordination. The indebtedness evidenced by this Note is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all of Company’s Senior Indebtedness.
(a) Insolvency Proceedings. If there shall occur any receivership, insolvency, assignment for the benefit of creditors, bankruptcy, reorganization, or arrangements with creditors (whether or not pursuant to bankruptcy or other insolvency laws), sale of all or substantially all of the assets, dissolution, liquidation, or any other marshaling of the assets and liabilities of Company, (i) no amount shall be paid by Company in respect of the principal of, interest on or other amounts due with respect to this Note at the time outstanding, unless and until the principal of and interest on the Senior Indebtedness then outstanding shall be paid in full, and (ii) no claim or proof of claim shall be filed with Company by or on behalf of Holder which shall assert any right to receive any payments in respect of the principal of and interest on this Note except subject to the payment in full of the principal of and interest on all of the Senior Indebtedness then outstanding.
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(b) Default on Senior Indebtedness. If there shall occur an event of default which has been declared in writing with respect to any Senior Indebtedness, as defined therein, or in the instrument under which it is outstanding, permitting the holder to accelerate the maturity thereof and Holder shall have received written notice thereof from the holder of such Senior Indebtedness, then, unless and until such event of default shall have been cured or waived or shall have ceased to exist, or all Senior Indebtedness shall have been paid in full, no payment shall be made in respect of the principal of or interest on this Note, unless within one hundred eighty (180) days after the happening of such event of default, the maturity of such Senior Indebtedness shall not have been accelerated. Not more than one notice may be given to Holder pursuant to the terms of this Section 3(b) during any 360 day period.
(c) Further Assurances. By acceptance of this Note, Holder agrees to execute and deliver customary forms of subordination agreement requested from time to time by holders of Senior Indebtedness, and as a condition to Holder’s rights hereunder, Company may require that Holder execute such forms of subordination agreement; provided that such forms shall not impose on Holder terms less favorable than those provided herein.
(d) Other Indebtedness. No indebtedness which does not constitute Senior Indebtedness shall be senior in any respect to the indebtedness represented by this Note.
(e) Subrogation. Subject to the payment in full of all Senior Indebtedness, if any, Holder shall be subrogated to the rights of the holder(s) of such Senior Indebtedness (to the extent of the payments or distributions made to the holder(s) of such Senior Indebtedness pursuant to the provisions of this Section 3) to receive payments and distributions of assets of Company applicable to the Senior Indebtedness. No such payments or distributions applicable to the Senior Indebtedness shall, as between Company and its creditors, other than the holders of Senior Indebtedness and Holder, be deemed to be a payment by Company to or on account of this Note; and for purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness to which Holder would be entitled except for the provisions of this Section 3 shall, as between Company and its creditors, other than the holders of Senior Indebtedness and Holder, be deemed to be a payment by Company to or on account of the Senior Indebtedness.
(f) No Impairment. Subject to the rights, if any, of the holders of Senior Indebtedness under this Section 3 to receive cash, securities or other properties otherwise payable or deliverable to Holder, nothing contained in this Section 3 shall impair, as between Company and Holder, the obligation of Company, subject to the terms and conditions hereof, to pay to Holder the principal hereof and interest hereon as and when the same become due and payable, or shall prevent Holder, upon default hereunder, from exercising all rights, powers and remedies otherwise provided herein or by applicable law.
(g) Lien Subordination. Any Lien of Holder, whether now or hereafter existing in connection with the amounts due under this Note, on any assets or property of Company or any proceeds or revenues therefrom which Holder may have at any time as security for any amounts due and obligations under this Note shall be subordinate to all Liens now or hereafter granted to a holder of Senior Indebtedness by Company or by law, notwithstanding the date, order or method of attachment or perfection of any such Lien or the provisions of any applicable law.
(h) Reliance of Holders of Senior Indebtedness. Holder, by its acceptance hereof, shall be deemed to acknowledge and agree that the foregoing subordination provisions are, and are intended to be, an inducement to and a consideration of each holder of Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the creation of the indebtedness evidenced by this Note, and each such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and holding, or in continuing to hold, such Senior Indebtedness.
| -3- |
4. Prepayment. Upon five days prior written notice to Holder, the Company may prepay this Note in whole or in part on five (5) business days’ notice, during which such period, Holder will have the right to voluntarily convert such Note pursuant to the applicable terms of Section 7 hereunder.
5. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note, upon the Holder providing Company with 5 days written of such default and Company failing to cure such default within such time period:
(a) Failure to Pay. The Company shall fail to pay (i) when due any principal or interest payment on the due date hereunder or (ii) any other payment required under the terms of this Note on the date due and such payment shall not have been made; or
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vii) take any action for the purpose of effecting any of the foregoing; or
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 30 days of commencement.
6. Rights of Holder upon Default. Upon the occurrence or existence of any Event of Default (other than an Event of Default described in Section 5(b) or 5(c)) and at any time thereafter during the continuance of such Event of Default, Holder may, by written notice to the Company, declare all outstanding Obligations payable by the Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, Holder may exercise any other right power or remedy granted to it by the Note or otherwise permitted to it by law, either by suit in equity or by action at law, or both.
| -4- |
7. Voluntary Conversion.
(a) Voluntary Conversion at Any Time. At any time after the date that this Note is issued until this Note is no longer outstanding, Holder may voluntarily convert an amount up to the outstanding Balance (including all accrued interest) of this Note, into such number of shares of Common Stock as is equal to the Balance divided by the Conversion Price.
(b) Mandatory Conversion. On the Maturity Date, the Company shall have the sole and absolute right, in its discretion, to elect to force the conversion of the Balance (including all accrued interest) into shares of Common Stock at the Conversion Price then in effect. If the Company elects such mandatory conversion pursuant to this Section 7(b), the Company shall deliver to the Holder, not less than five (5) days prior to the Maturity Date, written notice of such election (a “Mandatory Conversion Notice”), which shall state: (i) that the Company has elected to convert the Note pursuant to this Section 7(b), (ii) the Conversion Price in effect, and (iii) the anticipated number of shares to be issued. Upon receipt of the Mandatory Conversion Notice, the Holder shall surrender this Note to the Company (or provide an indemnity in lieu of physical surrender if lost, stolen, or destroyed), and the Company shall, on or as soon as reasonably practicable after the Maturity Date, deliver or cause to be delivered the applicable shares of Common Stock in.
(c) Delivery of Stock Certificates; No Fractional Shares. Subject to this Section 7, as promptly as practicable after any conversion into capital stock of the Company, the Company, at its expense:
(i) will issue and deliver to Holder, or such individual(s) as previously nominated by Holder, a certificate or certificates (either physical or book entry, at Company’s discretion) evidencing the number of equity securities issuable to Holder in connection with a conversion under this Section 7; and
(ii) No fractional shares of any of Company’s equity securities will be issued in connection with any conversion hereunder. In lieu of fractional shares, which would otherwise be issuable, the Company shall round up the total number of shares to the next whole number.
8. Reserved.
9. Successors and Assigns. Subject to the restrictions on transfer described in Sections 11 and 12 below, the rights and obligations of the Company and Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.
10. Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and Holder.
11. Reserved.
12. Assignment by the Company. This Note and any of the rights, interests, or obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the Holder; provided, however, that the Company may assign this Note in connection with a merger, consolidation, or sale of all or substantially all of its assets, so long as the successor entity expressly assumes all obligations under this Note.
| -5- |
13. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
Company:
2278 Monitor Street
Dallas TX, 85004
Attention: CEO
Email: [*]
Holder:
[*]
Email: [*]
14. Usury. In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.
15. Waivers. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.
16. Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of law provisions of the State of Nevada, or of any other state.
| -6- |
The Company has caused this Note to be issued as of the date first written above.
| Company: | ||
| Adapti, Inc. | ||
| a Nevada corporation | ||
| By: | ||
| Name: | ||
| Title: | ||
| Holder | ||
| [______] | ||
| By: | ||
[Signature Page to Subordinated Promissory Note]
Exhibit 10.10
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT NOR THE SECURITIES INTO WHICH THIS INSTRUMENT ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
| Principal Amount: $[*] | Date: [ ], 2025 |
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, SCEPTER HOLDINGS, INC., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of [____], or registered assigns (the “Holder”), the sum of [*] dollars ($[*]) together with any interest as set forth herein, on the date that is twelve (12) months from the date hereof (the “Maturity Date”);, and to pay interest on the unpaid principal balance hereof at the rate of ten percent (10%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise or upon conversion pursuant to the terms hereof. This Convertible Promissory Note (the “Note”) may be prepaid in whole or in part as set forth herein. Any amount of principal or interest on this Note which is not paid or converted when due shall bear interest at the rate of eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall be computed on the basis of a 365-day year. Interest shall commence accruing quarterly on the Issue Date and shall be payable on the Maturity Date.
This Note shall also contain a 10% bridge fee (the “Bridge Fee”). This fee shall be paid at maturity as a fixed fee equal to 10% of the face value of Note regardless on the date of repayment and/or conversion.
All payments due hereunder (to the extent not converted into Borrower’s common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).
This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the Holder thereof.
This Note is unsecured but senior to any outstanding debts of the Borrower or its subsidiaries of the Borrower on the date hereof except for other similar bridge notes which are pari passu to this note.
The following terms shall apply to this Note:
Article I. CONVERSION RIGHTS
1.1 Conversion. At any time prior to the Maturity Date, the Holder shall have the right to convert all or any part of the outstanding and unpaid balance of this Note into fully paid and non-assessable shares of Common Stock at a conversion price equal to $0.77 for every 1,000 shares, subject to any adjustments as provided in Section 1.8 below (the “Conversion Price”); provided, however, that in no event shall this Note be converted in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso; provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered by the Holder or the Borrower, as applicable, in accordance with Section 1.3 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Holder or the Borrower, as applicable, before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the option of the party entitled to deliver the Notice of Conversion, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the option of the party entitled to deliver the Notice of Conversion, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2).
1.2 Method of Conversion.
(a) Mechanics of Conversion. As set forth in Section 1.1 hereof, this Note may be converted by the Borrower by submitting a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time).
(b) Surrender of Note Upon a Discretionary or Conversion. Upon conversion of the entire outstanding balance of this this Note in accordance with the terms hereof, the Holder shall be required to physically surrender this Note to the Borrower. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.
(c) Delivery of Common Stock Upon Conversion. Upon delivery by the Borrower of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.2, the Borrower shall issue and deliver or cause to be issued and delivered to the Holder certificates for the Common Stock issuable upon such conversion within five (5) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement. Subject to any limitations contained in Section 1.1, upon receipt of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and all rights with respect to the portion of this Note being so converted shall terminate except the right to receive the Common Stock.
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(d) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions set forth herein, the Borrower shall use its commercially reasonable efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit and Withdrawal at Custodian (“DWAC”) system.
1.3 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 or a successor rule) (“Rule 144”). Subject to the Purchase Agreement, any restrictive legend on certificates representing shares of Common Stock issuable upon conversion of this Note shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if the Borrower or its transfer agent shall have received an opinion of counsel from Holder’s counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that (i) a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected; or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act; or otherwise may be sold pursuant to an exemption from registration. Notwithstanding anything contained herein to the contrary, the shares of Common Stock issuable upon conversion of this Note are subject to Section 2(e) of the Purchase Agreement and any certificates evidencing shares issuable upon conversion of this Note shall bear a restrictive legend until such time as any restrictions provided in Section 2(e) thereof have been satisfied.
1.4 Conversion or Repayment Upon the Maturity Date. On the Maturity Date, if not earlier converted by the Holder, the Borrower shall make payment to the Holder of an amount in cash equal to the sum of: (a) the then outstanding principal amount of this Note plus (b) accrued and unpaid interest on the unpaid principal amount of this Note as of the date of payment plus (c) accrued and unpaid bridge fees as of the date of payments plus (d) Default Interest, if any, on the amounts referred to in clauses (a) and (b).
1.5 Prepayment. The Borrower shall have the right, exercisable on not more than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal, accrued interest and accrued bridge fees), in full, in accordance with this Section 1.5. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to Holder(s), or upon the direction of the Holder as specified by the Holder in a writing to the Borrower (which direction shall to be sent to Borrower by the Holder at least one (1) business day prior to the Optional Prepayment Date). If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash equal to the sum of: (a) the then outstanding principal amount of this Note plus (b) accrued and unpaid interest on the unpaid principal amount of this Note as of the date of payment plus (c) accrued and unpaid bridge fees as of the date of payment plus (d) Default Interest, if any, on the amounts referred to in clauses (a) and (b) (the “Optional Prepayment Amount”). Upon receipt of such Optional Prepayment Notice, Holder may instead elect to convert its shares as per Section 1.1 above.
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1.6 Mandatory Conversion. The Borrower shall have the right to convert all outstanding principal and accrued interest into Common Stock as per Section 1.1 above in the event that (a) the closing price of the stock is equal to or greater than $0.005 (as adjusted) for ten (10) consecutive trading days, (b) average daily volume for those days exceeds 10 million shares, and (c) the shares underlying the mandatory conversion are free trading due to either (i) an effective registration statement or (ii) are exempt from registration through the use Rule 144 or other exemptions. In the event Borrower elects to exercise its rights under this Section 1.6, the ownership limitations contained in Section 1.1 will not apply.
1.7 Trading Restrictions. Upon a voluntary or mandatory conversion of any portion of this Note or accrued interest, the Holder agrees to limit the selling of the shares to a maximum of 20% of the average daily trading volume for the preceding 5 trading days. Holder also agrees to not short or hypothecate the shares.
1.8 Conversion Price Adjustments. In the event the Borrower should at any time after the date hereof effectuate a split or subdivision of the outstanding Common stock of the Borrower (a “Stock Adjustment”), then as of the effective date of the Stock Adjustment, the Conversion Price of this Note shall be appropriately adjusted so that the number of shares of Common Stock issuable upon conversion of this Note is adjusted in proportion to such change in the number of outstanding shares of Common Stock in order to insure such Stock Adjustment does not decrease or increase the conversion value of this Note.
Article II. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
2.1 Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
2.2 Conversion and the Shares. Provided all of Holder’s conditions to conversion are met, Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder or the Borrower of their conversion rights in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for two (2) business days after the Holder or the Borrower shall have delivered a Notice of Conversion. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty-eight (48) hours of a demand from the Holder.
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2.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of twenty (20) days after written notice thereof to the Borrower from the Holder.
2.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
2.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
2.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
2.7 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
Upon the occurrence and during the continuation of any Event of Default and upon delivery of a written notice detailing the alleged default (a “Notice of Default”) to the Borrower, and after providing a ten (10) business day opportunity to cure said Event of Default, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), and (y) shall collectively be known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, together with all costs, including, without limitation, legal fees and expenses, of collection.
Article III. MISCELLANEOUS
3.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
3.2 Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Borrower shall be delivered in accordance with the notice provisions of the Purchase Agreement.
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3.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.
3.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission).
3.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
3.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of Nevada or in the federal courts located in Nevada. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Note, any agreement or any other document delivered in connection with this Note by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
3.7 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement. In the event of any conflict between the terms of this Note and the Purchase Agreement, the terms of this Note shall prevail.
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IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name by its duly authorized officer.
| SCEPTER HOLDINGS, INC. | ||
| By: | ||
| Adam Nicosia | ||
| Chief Executive Officer | ||
| Date: | ||
| (Date funds cleared and accepted) | ||
| 7 |
| Accepted and Agreed: | ||
| HOLDER | ||
| By: | ||
| Name: | ||
| Date: | ||
EXHIBIT A — NOTICE OF CONVERSION
(To be sent in at time of conversion only)
The undersigned hereby elects to convert $_________________ principal amount of the Convertible Promissory Note (defined below by acceptance date) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of Scepter Holdings, Inc., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note with an acceptance date of __________________, (the “Note”). No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.
The Borrower shall issue a certificate or certificates for the number of shares of Common Stock set forth below in the name(s) specified immediately below (the “Holder”) or, if additional space is necessary, on an attachment hereto:
| HOLDER _______________________________ | Phone __________________________________ |
Address ________________________________
|
Email __________________________________
|
| _______________________________________ | SSN/TIN _______________________________ |
Signature ____________________________
Date ________________________________
Office Use Only:
Notice of Conversion Received: ______________
Principal amount of Note: ___________________
Interest on Note ___________________________
Total Amount ____________________________
Applicable Conversion Price: ________________
Number of shares of common stock to be issued
pursuant to conversion of the Note: ___________
EXHIBIT 31.1
SECTION 302
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
I, Adam Nicosia, certify that:
(1) I have reviewed this Quarterly Report on Form 10-Q of Adapti, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its unconsolidated investments, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 14, 2025 | By: | /s/ Adam Nicosia |
Adam Nicosia, Chief Executive Officer Principal Executive Officer |
EXHIBIT 31.2
SECTION 302
CERTIFICATION OF THE PRINCIPAL ACCOUNTING OFFICER
I, Marilu Brassington, certify that:
(1) I have reviewed this Quarterly Report on Form 10-Q of Adapti, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its unconsolidated investments, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 14, 2025 | By: | /s/ Marilu Brassington |
Marilu Brassington Chief
Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350 AND EXCHANGE ACT RULES 13a-14(b) AND 15d-14(b)
(Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Quarterly Report of Adapti, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Adam Nicosia, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company. |
Date: August 14, 2025
| /s/ Adam Nicosia | |
Chief Executive Officer Principal Executive Officer |
|
| Adapti, Inc. |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER PURSUANT TO
18 U.S.C. SECTION 1350 AND EXCHANGE ACT RULES 13a-14(b) AND 15d-14(b)
(Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Quarterly Report of Adapti, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marilu Brassington, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company. |
Date: August 14, 2025
| /s/ Marilu Brassington | |
Chief Financial Officer Principal Financial and Principal Accounting Officer |
|
| Adapti, Inc. |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.