SNTL 10-Q
Sentinel Holdings Ltd. (SNTL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
FOR THE QUARTERLY PERIOD ENDED
OR
COMMISSION FILE NUMBER
(Exact name of registrant as specified in its charter)
(State of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Not Applicable | Not Applicable | Not Applicable |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions 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 | ☐ |
☒ | 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
As of August 13, 2026, there were
SENTINEL HOLDINGS LTD
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026
TABLE OF CONTENTS
| Page 2 of 46 |
| Table of Contents |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
FINANCIAL STATEMENTS OF
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
AS OF AND FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 2026
INDEX
Page |
| ||
| |||
Condensed Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025 | 4 |
| |
| |||
5 |
| ||
| |||
6 |
| ||
| |||
7 |
| ||
| |||
Notes to Condensed Consolidated Financial Statements as of June 30. 2026 (Unaudited) | 8 |
|
| Page 3 of 46 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| As Of |
|
| As Of |
| |||
|
| June 30, |
|
| December 31, |
| |||
|
| 2026 |
|
| 2025 |
| |||
|
| (Unaudited) |
|
|
|
| |||
Assets |
| ||||||||
|
|
|
|
|
|
| |||
Current Assets |
|
|
|
|
|
| |||
Cash |
| $ |
|
| $ |
| |||
Accounts receivable (net) |
|
|
|
|
|
| |||
Prepaid expenses and other |
|
|
|
|
|
| |||
Assets of discontinued operations |
|
|
|
|
|
| |||
Total current assets |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |
Property and Equipment (Net) |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |
Intangible Assets (Net) |
|
|
|
|
|
|
|
| |
Contracts |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |
Total Assets |
| $ |
|
| $ |
| |||
|
|
|
|
|
|
|
|
| |
Liabilities and Stockholders' Deficit | |||||||||
|
|
|
|
|
|
|
|
| |
Current Liabilities |
|
|
|
|
|
|
|
| |
Accounts payable and accrued expenses |
| $ |
|
| $ |
| |||
Notes payable |
|
|
|
|
|
| |||
Notes payable - Related party |
|
|
|
|
|
| |||
Convertible notes payable |
|
|
|
|
|
| |||
Loans payable |
|
|
|
|
|
| |||
Derivative liabilities |
|
|
|
|
|
| |||
Liabilities of discontinued operations |
|
|
|
|
|
| |||
Total current liabilities |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |
Long Term Liabilities |
|
|
|
|
|
|
|
| |
Loans payable |
|
|
|
|
|
| |||
Other |
|
|
|
|
|
| |||
Total long term liabilities |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |
Total Liabilities |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |
Commitments and Contingencies |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |
Stockholders' Equity (Deficit) |
|
|
|
|
|
|
|
| |
Series A Preferred Stock ($ |
|
|
|
|
|
| |||
Series B Preferred Stock ($ |
|
|
|
|
|
| |||
Common Stock ($ |
|
|
|
|
|
| |||
Additional paid-in capital |
|
|
|
|
|
| |||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) | |
Stockholders' equity (deficit) excluding non-controlling interest |
|
| ( | ) |
|
| ( | ) | |
Non-controlling interest |
|
| ( | ) |
|
| ( | ) | |
Total stockholders' equity (deficit) |
|
| ( | ) |
|
| ( | ) | |
|
|
|
|
|
|
|
|
| |
Total Liabilities and Stockholders' Deficit |
| $ |
|
| $ |
| |||
The accompanying footnotes are an integral part of these consolidated financial statements.
| Page 4 of 46 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| For the Three Months |
|
| For the Six Months |
| ||||||||||
|
| Ended June 30, |
|
| Ended June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Continuing Operations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss From Operations |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on acquisition |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Change in fair value of derivative liabilities |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Other income (expense) |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Other income (expense) (net) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) From Continuing Operations Including Non-Controlling Interest |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) From Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Including Non-Controlling Interest |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Controlling Interest |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Available to Common Shareholders |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations including non-controlling interest |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Net income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) including non-controlling interest |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Non-controlling interest |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Net income (loss) available to common shareholders |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying footnotes are an integral part of these consolidated financial statements.
| Page 5 of 46 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity (Deficit) |
|
|
|
|
|
| ||||||||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
|
|
|
|
| Additional |
|
|
|
|
|
| Attributable |
|
| Non- |
|
|
|
| ||||||||||||||||||||||
|
| Series A |
|
| Series B |
|
| Common Stock |
|
| Paid-In |
|
| Subscription |
|
| Accumulated |
|
| To The |
|
| Controlling |
|
|
|
| |||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Receivable |
|
| Deficit |
|
| Company |
|
| Interest |
|
| Total |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
January 1, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||||
Shares issued for cash |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Shares issued for services |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||||
Warrants issued for cash |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| Page 6 of 46 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
| ||
Cash Flows From Operating Activities |
|
|
|
|
|
| ||
Net income (loss) (Including non-controlling interest) |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net income (loss) to net cash flow from operating activities: |
|
|
|
|
|
|
|
|
Gain on sale of subsidiary |
|
| ( | ) |
|
|
| |
Bad debt expense |
|
| |
|
|
| |
|
Depreciation |
|
|
|
|
|
| ||
Amortization |
|
|
|
|
|
| ||
Change in operating lease liability |
|
|
|
|
| ( | ) | |
Change in derivative liability |
|
| ( | ) |
|
| ( | ) |
Warrants issued for services rendered |
|
|
|
|
|
| ||
Non-cash charitable contribution |
|
|
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| ( | ) |
|
| ( | ) |
Prepaid expenses and other |
|
| ( | ) |
|
| ( | ) |
Accounts payable and accrued expenses |
|
|
|
|
|
| ||
Deferred Revenue |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
Purchase of fixed assets |
|
| ( | ) |
|
| ( | ) |
Net cash provided by (used in) investing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
Common stock issued for cash |
|
|
|
|
|
| ||
Warrants issued for cash |
|
|
|
|
|
| ||
Notes payable - Related party - Borrowings |
|
|
|
|
|
| ||
Notes payable - Repayments |
|
| ( | ) |
|
| ( | ) |
Loans payable - Borrowings |
|
|
|
|
|
| ||
Loans payable - Repayments |
|
|
|
|
| ( | ) | |
Cash overdraft |
|
|
|
|
|
| ||
Net cash provided by (used in) financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash - Beginning of Period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash - End of Period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for income taxes |
| $ | |
|
| $ | |
|
The accompanying footnotes are an integral part of these consolidated financial statements.
| Page 7 of 46 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(Unaudited)
NOTE 1 – ORGANIZATION, NATURE OF OPERATIONS, AND RISKS AND UNCERTAINTIES
Organization
The accompanying consolidated financial statements include the accounts of Sentinel Holdings, Ltd. (“Sentinel”) and its majority-owned subsidiaries, Centinela Security, Inc. (“Centinela” and formerly known as Sentry Protective Services, Inc. or “Sentry” prior to January 20, 2026), United Security Specialists, Inc. (“USS”), and Gladiator Solutions, Inc. (“Gladiator”), (collectively “Sentinel” or the “Company”). Sentinel Holdings, Ltd. was incorporated in the State of Nevada on January 23, 2015.
Nature of Operations
The Company provides professional security services through its operating subsidiaries. It offers armed and unarmed security personnel and services, including on-site protection, mobile patrol, and event security, enhanced by smartphone-based security applications. It operates primarily in California and serves a diverse clientele, including businesses, individuals, residential communities, and event organizers.
Risks and Uncertainties
The Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic fluctuations. The Company’s operations are exposed to significant financial, operational, and strategic risks, including potential business disruptions and liquidity challenges.
The Company evaluates and discloses risks and uncertainties that could materially affect its financial condition, results of operations, and business outlook. Key factors contributing to variability in revenues and earnings include:
| · | Industry cyclicality - The Company's financial performance is affected by industry trends, seasonality, and shifts in market demand; |
| · | Macroeconomic conditions - Economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer purchasing behavior and the Company’s revenue streams; and |
| · | Pricing volatility - Competitive pricing pressures can lead to fluctuations in gross margins and profitability. |
Given such uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures to mitigate their potential impact.
NOTE 2 – GOING CONCERN
The Company reported a net loss available to common shareholders of $
The Company has incurred significant losses since inception, has not yet attained consistently profitable operations, and remains dependent upon obtaining financing to support operations and pursue its business plans.
Such business plans include expansion within existing markets and penetration into new markets, acquisition of other businesses to enhance or complement the current business model while accelerating growth, collaboration with other businesses to pursue strategic opportunities when appropriate, and securing debt and/or equity financing to support such initiatives.
| Page 8 of 46 |
| Table of Contents |
There can be no assurances that financing will be available on terms which are acceptable to the Company, or available at all. If the Company is unable to raise additional funding to meet its working capital needs and pursue such business plans, it may be forced to delay, reduce, or cease its operations.
Such factors create substantial doubt about the Company’s ability to continue as a going concern during the twelve-month period immediately subsequent to the issuance of these financial statements.
These consolidated condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, these financial statements have been prepared on a basis that assumes the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
NOTE 3 – ACQUISITIONS AND DISPOSITIONS
The Acquisition Of The Opsec Business
Effective October 15, 2025, the Company, through its Centinela subsidiary, acquired the operating assets of Opsec Specialized Protection, Inc. (“Opsec”) consisting of Opsec’s contractual relationships with its clients, rights to all licenses and/or permits required to operate the business, and other miscellaneous assets associated with the business.
The Company performed an assessment under ASC 805 to determine whether the contracts acquired should be accounted for as a business combination or an asset acquisition. Management applied the relevant screen tests and guidance to evaluate whether the acquired set includes an input and a substantive process that together significantly contribute to the ability to create outputs.
First, the Company noted that the acquired contracts are not limited to a simple portfolio of customer arrangements; they are accompanied by operational processes that are currently in use to deliver the underlying services and generate revenue. These processes include the methods, systems, and workflows necessary to fulfill the contracts and continue generating revenue without significant modification or further development by the Company.
Second, the acquired contracts are already generating revenue from customers and are expected to continue to do so as part of the Company’s ongoing operations. The presence of both inputs (the customer contracts and related customer relationships) and substantive processes (the operational know-how and procedures that are integral to managing and fulfilling those contracts) indicates that the acquired set is capable of producing outputs on a stand‑alone basis.
Therefore, based on this analysis, management concluded that the acquired asset meets the definition of a business under ASC 805 and therefore should be accounted for as a business acquisition.
Consideration for this acquisition totaled $
Additionally and as more fully described in Note 16, Commitments and Contingencies, the Company entered into an agreement with the owner of the Opsec business for a six-month period at the rate of $
The Disposition of USS
On February 28, 2026, the Company sold
| Page 9 of 46 |
| Table of Contents |
Total consideration received by the Company consisted of $
As USS had a net deficit of $
NOTE 4 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as promulgated by the Financial Accounting Standards Board through its Accounting Standards Codification (ASC).
Discontinued Operations
On February 28, 2026 and as described in Note 3, Acquisitions and Dispositions, the Company sold 100% of its equity interest in USS. Prior to the sale, USS operated as a legally and operationally distinct subsidiary of the Company with separately identifiable revenues and direct costs. The Company determined that the sale of USS represented a strategic shift that had, and will continue to have, a major effect on the Company's operations and financial results. Accordingly, the results of USS operations for all periods presented have been reclassified and reported as discontinued operations.
The financial results of the discontinued operations for the three and six months ended June 30, 2026 and 2025 were as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income from discontinued operations, net of tax |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Assets and liabilities of the discontinued operations as of June 30, 2026 and December 31, 2025 were as follows:
|
| 2026 |
|
| 2025 |
| ||
Assets: |
|
|
|
|
|
| ||
Accounts receivable |
| $ |
|
| $ |
| ||
Right of use asset |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ |
|
| $ |
| ||
Notes payable |
|
|
|
|
|
| ||
Operating lease liability |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
| Page 10 of 46 |
| Table of Contents |
The Company’s consolidated revenue, loss from operations, and net loss available to common shareholders for the three and six months ended June 30, 2026 and 2025 were comprised of continuing and discontinued operations and were presented in the statement of operations as follows:
|
| Continuing Operations |
|
| Discontinued Operations |
|
| Total Operations |
| |||
Three months ended June 30, 2026 |
|
|
|
|
|
|
|
|
| |||
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
Income (loss) from operations |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net income (loss) available to common shareholders |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
Income (loss) from operations |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net income (loss) available to common shareholders |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
Income (loss) from operations |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net income (loss) available to common shareholders |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
Income (loss) from operations |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net income (loss) available to common shareholders |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the recognition of revenues and expenses during the reporting period. Actual results may differ from these estimates, and such differences could be material.
Principles of Consolidation and Non-Controlling Interest
The Company consolidates entities where it has a controlling financial interest, as defined by ASC 810, Consolidation, and continuously evaluates its investments and business relationships to assess consolidation requirements. All intercompany balances and transactions are eliminated in consolidation.
In accordance with ASC 810-10, consolidation is required for:
| · | Entities wherein the Company has more than a 50% voting interest, unless control is not with the Company; and |
| · | Variable Interest Entities where the Company is the primary beneficiary, possessing both (i) power over significant activities, and (ii) the obligation to absorb losses or receive benefits. |
For entities that are consolidated, but not 100% owned by the Company, a portion of the income or loss as well as the corresponding equity is allocated to the other owners of such entities. The aggregate of the income or loss and the corresponding equity that is not owned by the Company is included in Non-Controlling Interests in the consolidated financial statements.
| Page 11 of 46 |
| Table of Contents |
Related Parties
The Company defines related parties in accordance with ASC 850, Related Party Disclosures, and applicable SEC Regulations and discloses such relationships and transactions in its financial statements.
That definition includes entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.
Related parties include, but are not limited to:
| · | Principal owners of the Company; |
| · | Any shareholder owning more than 5% of any class of the Company’s voting securities; |
| · | Members of management (including directors, executive officers, and key employees); |
| · | Immediate family members of principal owners and members of management; |
| · | Entities affiliated with principal owners or management through direct or indirect ownership; and |
| · | Entities with which the Company has significant transactions, where one party has the ability to exercise control or significant influence over the management or operating policies of the other. |
A party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company in a manner that could prevent either party from fully pursuing its own separate economic interests.
Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance with ASC 820, Fair Value Measurements, which establishes a framework for measuring fair value and requires related disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the Company’s principal market or, if none exists, the most advantageous market for the asset or liability.
ASC 820 requires the use of observable inputs whenever available and establishes a three-tier hierarchy for measuring fair value:
| · | Level 1 - Quoted market prices (unadjusted) for identical assets or liabilities in active market; |
| · | Level 2 - Observable inputs other than quoted prices in active markets, such as quoted prices for similar assets and liabilities or inputs that are directly or indirectly observable; and |
| · | Level 3 - Unobservable inputs that require significant judgment, often involving a combination of cost, market, or income approaches, as well as Management’s assumptions about market conditions, pricing, and other factors. |
The measurement of the fair value of the Company’s derivative liabilities are discussed in Note 15, Derivative Liabilities. The carrying amounts of the Company’s other financial instruments, such as cash, accounts receivable, accrued expenses, and notes payable, et cetera, approximate their fair values due to the short-term nature of those instruments.
Credit Risks and Concentrations
The Company evaluates and discloses significant concentrations of risk in accordance with ASC 275, Risks and Uncertainties, whereby it specifically considers risks that may arise from concentrations with clients in revenues and/or accounts receivable, reliance upon certain vendors, or general economic factors that could materially impact the Company’s financial position, results of operations, or cash flows.
| Page 12 of 46 |
| Table of Contents |
In summary, financial instruments that subject the Company to credit risk consist principally of cash and accounts receivable as follows:
| · | The Company maintains cash deposits with financial institutions, which, from time to time, may exceed federally insured limits. The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash; and |
| · | The Company does not require collateral for financial instruments subject to credit risk such as accounts receivable. The Company believes that credit risk is limited because the Company is familiar with the nature of operations of its customers. However, if appropriate and based upon the credit risk of its customers, the Company's policy is to establish an allowance for uncollectible accounts and periodically reassess the need for such allowances. |
The Company deems a concentration of risk to exist when a single customer, supplier, or market accounts for a significant portion (typically greater than 10%) of the Company’s total revenues, accounts receivable, or vendor purchases. Such concentrations of risk, if any, are disclosed in the related areas of these footnotes.
Cash and Cash Equivalents
The Company considers all money market accounts and highly liquid instruments with a maturity of three months or less as of the purchase date to be cash equivalents.
Accounts Receivable
The Company accounts for accounts receivable in accordance with ASC 310, Receivables, whereby:
| · | The collectability of accounts receivable are periodically assessed; |
| · | An allowance for doubtful accounts is established as circumstances warrant; and |
| · | Accounts are written off against the allowance for doubtful accounts when they are determined to be uncollectible. |
Prepaid Expenses
The Company accounts for prepaid expenses in accordance with ASC 340, Other Assets and Deferred Costs, whereby cash disbursements and economic assets which benefit future periods are recorded as prepaid expenses as of each balance sheet date. Such items are then expensed as the economic benefits are realized.
Property and Equipment
The Company accounts for property and equipment in accordance with ASC 360, Property, Plant, and Equipment, whereby such assets are stated at cost, less accumulated depreciation. Such depreciation is provided on the straight-line basis over the estimated useful lives of such assets which ranges from eighteen to twenty-four months.
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.
Management periodically reviews the carrying value of its property and equipment as well as whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable in accordance with the provisions of ASC-360-10, Impairment or Disposal of Long-Lived Assets.
| Page 13 of 46 |
| Table of Contents |
Intangible Assets
The Company accounts for intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, whereby such assets are stated at cost, less accumulated amortization. Such amortization is provided on the straight-line basis over the estimated useful lives of such assets.
When intangible assets are sold or otherwise disposed of, the cost and related accumulated amortization are removed from the respective accounts with the resulting gain or loss reflected in operations.
Management periodically reviews the carrying value of its intangible assets as well as whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable in accordance with the provisions of ASC-360-10, Impairment or Disposal of Long-Lived Assets.
Operating Lease Right-of-Use Asset
The Company accounts for right-of-use (ROU) assets and lease liabilities for all leases with terms exceeding twelve months in accordance with FASB ASC 842, Leases. The amount of the right-of-use asset is determined by the present value of the estimated future minimum lease payments over the lease term discounted using a collateralized incremental borrowing rate. Such right-of-use asset is then amortized to expense on a straight-line basis over the expected term of the lease.
Accounts Payable and Accrued Expenses
The Company accounts for accounts payable and accrued expenses in accordance with the provisions of ASC 405, Liabilities, whereby debts and other obligations due to external parties requiring future outflows of cash or the transfer of monetary assets are estimated, recorded, and reported.
Notes and Loans Payable
The Company accounts for notes and loans payable in accordance with the provisions of ASC 470, Debt, whereby notes and loans payable due to external parties requiring future outflows of cash or the transfer of monetary assets are estimated, recorded, and reported.
Derivative Liabilities
The Company accounts for eligible financial instruments in accordance with the provisions of ASC 815, Derivatives and Hedging, whereby financial contracts whose value is derived from an underlying asset with obligations due to external parties requiring settlement at a future date with outflows of cash or the transfer of monetary assets are estimated, recorded, and reported at fair value.
The fair value of such derivative liabilities is remeasured at the end of each reporting period utilizing the Black-Scholes option pricing model. The change in such value is recognized in the results of operations as a gain or loss on the change in the fair value of derivative liabilities.
Operating Lease Liabilities
The Company accounts for operating lease liabilities in accordance with the provisions of ASC 842, Leases, and, when appropriate, employes the ROU model as described above. Lease classification determines the pattern of expense recognition in the consolidated statement of operations. Specifically, expenses for:
| · | Operating leases are recognized on a straight-line basis over the lease term; and |
| · | Finance leases are recognized via the amortization of the ROU asset plus interest expense on the lease liability. |
| Page 14 of 46 |
| Table of Contents |
Contingencies
The Company is subject to litigation claims arising in the ordinary course of business. The Company records litigation accruals for legal matters which are both probable and estimable plus related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.
Revenue Recognition
The Company recognizes revenue and related costs in accordance with the provisions of ASC 606, Revenue From Contracts With Customers, whereby revenue is recognized when it is able to:
| · | Identify a contract with a client; |
| · | Identify the performance obligation specified within the contract; |
| · | Determine the transaction price specified within the contract; |
| · | Allocate the transaction price to the performance obligation specified within the contract; and |
| · | Satisfy the performance obligation specified within the contract. |
Marketing and Advertising Costs
The Company accounts for marketing and advertising costs in accordance with the provisions of ASC 720, Advertising Costs, whereby all such costs are expensed as incurred. Such costs are classified within general and administrative expenses in the statement of operations.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation - Stock Compensation, whereby it utilizes the fair value-based method. Under this method, cost is measured as of the grant date based on the fair value of the award determined by using the Black-Scholes option pricing model and such cost is recognized over the requisite service period, typically the vesting period. This method is utilized for awards granted to employees and issuances of equity instruments such as stock and/or warrants to vendors and other parties for services.
Income Taxes
The Company records income tax expense utilizing the asset and liability method in accordance with the provisions of ASC 740, Income Taxes, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between 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 those temporary differences are expected to reverse. The effect of changes in such tax rates on deferred tax assets and liabilities is recognized as income or expense in the period that the change is effective.
Income tax benefits are recognized when it is probable that the related deductions will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit or that future deductibility is uncertain. The Company recognizes uncertain tax positions only if it is more likely than not (greater than 50% likelihood) to be sustained upon examination by tax authorities. Any interest and penalties incurred related to uncertain tax positions are reported in other expense in the consolidated statement of operations.
The Company’s deferred tax assets include certain future tax benefits, such as net operating losses (NOLs), tax credits, and deductible temporary differences. The Company reviews the realizability of such deferred tax assets on a quarterly basis, or more frequently if circumstances warrant, and records a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
| Page 15 of 46 |
| Table of Contents |
Earnings (Loss) Per Share
The Company calculates net earnings (loss) per common share in accordance with ASC 260, Earnings Per Share, whereby:
| · | In net income situations: | |
|
| · | “Basic” net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period; and |
|
| · | “Diluted” net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period plus the number of common shares that would result from the exercise of outstanding stock options, warrants, and conversion of eligible debt and/or preferred stock. |
| · | In net loss situations, “Basic and Diluted” net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. No exercise of outstanding stock options, warrants, or conversion of eligible debt and/or preferred stock is assumed as the effect of including such common share amounts would be anti-dilutive. | |
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure of the nature of expenses included in the income statement. The standard requires disaggregation of certain costs in a separate note to the financial statements, such as the amounts of employee compensation, depreciation, and intangible asset amortization, included in each relevant expense caption in annual and interim consolidated financial statements. This standard, as subsequently clarified in ASU 2025-01, will be effective for the Company’s annual reporting period for the year ending December 31, 2027 and interim periods beginning with the first quarter of 2028, with early adoption permitted.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to software development stages (referred to as “project stages”) throughout Subtopic 350-40. The standard requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. This standard is effective for the Company for the annual and interim periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impacts of ASU 2025-06 on its consolidated financial statements as well as the impacts to its financial reporting process and related internal controls.
In November 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which makes targeted improvements to the hedge accounting model. The amendments address five specific areas, including expanding the hedged risks permitted to be aggregated in groups of forecasted transactions, introducing an optional model for hedging choose-your-rate debt instruments, expanding hedge accounting for forecasted purchases and sales of nonfinancial assets, eliminating the net written option test in certain instances, and eliminating recognition and presentation mismatches for dual hedge strategies. The standard is effective for the Company for annual periods beginning January 1, 2027, and interim periods within those annual periods, with early adoption permitted. The Company does not expect this guidance to have a material impact on its consolidated financial statements.
| Page 16 of 46 |
| Table of Contents |
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The new standard was effective for the Company for the annual period beginning January 1, 2025 on a prospective basis, with a retrospective option, and early adoption is permitted. The Company adopted this standard beginning in 2025 on a prospective basis. There was no impact to its consolidated financial statements upon adoption.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions under Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date would not change for the remaining life of the asset when evaluating expected credit losses. This standard was effective for the Company for the annual and interim periods beginning January 1, 2026, with early adoption permitted, and should be applied prospectively. The Company adopted this standard beginning in 2025. There was no impact to its consolidated financial statements upon adoption.
NOTE 5 – CASH AND CASH EQUIVALENTS
The Company had no cash equivalents as of June 30, 2026 and December 31, 2025.
The Company is exposed to credit risk on its deposits with banking institutions to the extent that such account balances exceed the Federal Deposit Insurance Corporation insurance limit of $
NOTE 6 – ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following as of June 30, 2026 and December 31, 2025:
|
| 2026 |
|
| 2025 |
| ||
Accounts receivable |
| $ |
|
| $ |
| ||
Less allowance for doubtful accounts |
|
| ( | ) |
|
|
| |
Subtotal |
|
|
|
|
|
| ||
As described in Note 4, Basis of Presentation and Summary of Significant Accounting Policies - Discontinued Operations, the receivables associated with USS are reported in the Assets of Discontinued Operations caption on the balance sheet. |
|
|
|
|
| ( | ) | |
Accounts receivable, net |
| $ |
|
| $ |
| ||
Two clients represented
Bad debt expense was $
| Page 17 of 46 |
| Table of Contents |
NOTE 7 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of June 30, 2026 and December 31, 2025:
|
| 2026 |
|
| 2025 |
| ||
Vehicles |
| $ |
|
| $ |
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Property and equipment, net |
| $ |
|
| $ |
| ||
Depreciation expense totaled $
NOTE 8 – INTANGIBLE ASSETS
Intangible assets consisted of the following as of June 30, 2026 and December 31, 2025:
|
| 2026 |
|
| 2025 |
| ||
Customer contracts and relationships |
| $ |
|
| $ |
| ||
Accumulated amortization |
|
| ( | ) |
|
| ( | ) |
Intangible assets, net |
| $ |
|
| $ |
| ||
Amortization expense totaled $
Effective October 15, 2025 and as further described in Note 3, Acquisitions and Dispositions, the Company acquired a business wherein an intangible asset of $
NOTE 9 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following as of June 30, 2026 and December 31, 2025:
|
| 2026 |
|
| 2025 |
| ||
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Payroll tax liabilities |
|
|
|
|
|
| ||
Accrued interest liabilities |
|
|
|
|
|
| ||
Subtotal |
|
|
|
|
|
| ||
As described in Note 4, Basis of Presentation and Summary of Significant Accounting Policies - Discontinued Operations, the liabilities associated with USS are reported in the Liabilities of Discontinued Operations caption on the balance sheet. |
|
|
|
|
| ( | ) | |
Accounts payable and accrued liabilities, net |
| $ |
|
| $ |
| ||
| Page 18 of 46 |
| Table of Contents |
NOTE 10 – NOTES PAYABLE
Notes payable consisted of the following as of June 30, 2026 and December 31, 2025:
|
|
| 2026 |
|
| 2025 |
| ||
a) | On October 31, 2025 and as further described in Note 3, Acquisition and Dispositions, Centinela issued a note in the amount of $140,000 in connection with the purchase of several vehicles for that same amount. The note is collateralized by the vehicles, has no stated interest rate, and requires eighteen monthly payments of $7,778. |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
b) | On September 15, 2022, Gladiator issued a note in the amount of $150,000 to Kapitus Servicing, Inc. wherein Gladiator agreed to repay the note in weekly installments of $3,003 consisting of principal and interest over a 15-month period resulting in an effective interest rate of 24% per annum. The Company fell behind in payments and presently the parties are in litigation with Kapitus in connection with this note and other business matters. |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
c) | On September 23, 2021, USS issued a note in the amount of $637,500 to an individual named Henry Sierra in connection with his separation from USS and the repurchase of certain equity interests held by him. Ultimately the principal amount was reduced to $231,955 and in connection with the acquisition of USS in 2021 this note was assigned a value of $148,946. On February 28, 2026 and as described in Note 3, Acquisitions and Dispositions, the Company sold 100% of its equity interest in USS. |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
As described in Note 4, Basis of Presentation and Summary of Significant Accounting Policies - Discontinued Operations, the liabilities associated with the USS note payable described in “c” above is reported in the Liabilities of Discontinued Operations caption on the balance sheet. |
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
Notes payable, net |
| $ |
|
| $ |
| |||
NOTE 11 – NOTES PAYABLE DUE TO A RELATED PARTY
Notes payable due to a related party consisted of the following as of June, 2026 and December 31, 2025:
|
|
| 2026 |
|
| 2025 |
| ||
a) | On April 13, 2026, Sentinel issued a promissory note in the principal amount of $60,000 to a related party, the Company’s President and CEO, which matured on June 12, 2026 and accrues interest at 6% per annum. As this note was not repaid upon maturity, effective that date it began to accrue a penalty at the rate of $15,000 per month. The Company has accrued interest and penalty totaling $919 and zero in connection with this note as of June 30, 2026 and December 31, 2025, respectively, and classified such amounts in the Accounts Payable and Accrued Expenses. |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
b) | On April 30, 2026, Sentinel issued a promissory note in the principal amount of $15,000 to a related party, the Company’s President and CEO which matured on June 29, 2026 and accrues interest at 6% per annum. As this note was not repaid upon maturity, effective that date it began to accrue a penalty at the rate of $15,000 per month. The Company has accrued interest and penalty totaling $781 and zero in connection with this note as of June 30, 2026 and December 31, 2025, respectively, and classified such amounts in Accounts Payable and Accrued Expenses. |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
Notes payable due to a related party |
| $ |
|
| $ |
| |||
| Page 19 of 46 |
| Table of Contents |
NOTE 12 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted of the following as of June, 2026 and December 31, 2025:
|
| 2026 |
|
| 2025 |
| ||
On February 8 and 26, 2021, Gladiator issued two promissory notes in the total principal amount of $35,000 to Pink Holdings which accrued interest at 6% per annum and matured one year after issuance. The Company has accrued interest totaling $11,265 and $10,224 in connection with these notes as of June 30, 2026 and December 31, 2025, respectively, and classified such amounts in Accounts Payable and Accrued Expenses. |
| $ |
|
| $ |
| ||
These notes contain terms which provide the holder with the option to convert any portion of the outstanding principal and accrued interest amounts into fully paid and non-assessable shares of common stock of the Company at 10% of the lowest trading price during the five trading days period immediately prior to the conversion date. Since these notes contain an embedded conversion feature with a conversion price that could result in the issuance of an indeterminate amount of shares of common stock in the future, such feature has been bifurcated from the notes and accounted for as a derivative liability as described in Note 15, Derivative Liabilities.
NOTE 13 – LOANS PAYABLE
Loans payable consisted of the following as of June 30, 2026 and December 31, 2025:
| 2026 | 2025 | |||||||
a) | On March 3, 2021, Gladiator entered into a loan agreement with the Small Business Administration in the amount of $67,800. This loan accrues interest at the annual rate of 3.75% and matures on March 3, 2051. The Company has accrued interest of $13,541 and $ 12,289 in connection with this loan as of June 30, 2026 and December 31, 2025, respectively. Such principal and accrued interest has been classified in Long Term Liabilities. | $ | $ | ||||||
|
|
|
|
|
|
|
|
|
|
b) | On September 16, 2022, Gladiator entered into a loan agreement with Pinnacle Business Funding, LLC wherein it borrowed $145,500 and agreed to repay the loan in weekly payments of $6,328. The Company has not fully complied with the terms of this agreement and payments totaling $24,000 remain outstanding as of June 30, 2026 and December 31, 2025. | ||||||||
|
|
|
|
|
|
|
|
|
|
c) | On December 9, 2022, Gladiator entered into a loan agreement with Quattro Capital in the amount of $250,000 in connection with the financing of inventory purchases. The note was collateralized by such inventory, accrued interest at the rate of 150% per annum, and required repayment within sixty days. When not repaid upon maturity, the interest rate increased to $1,200 per day resulting in an effective interest rate of approximately 175% per annum. The Company has accrued interest of $1,493,617 and $1,276,417 in connection with this note as of June 30, 2026 and December 31, 2025, respectively, and classified such amounts in the Accounts Payable and Accrued Expenses. | ||||||||
|
|
|
|
|
|
|
|
|
|
| Total | $ | $ | ||||||
Consistent with the terms and circumstances described above, these loans payable principle amounts have been classified on the Company’s balance sheet as follows:
| Current liabilities |
| $ |
|
| $ |
| ||
| Long term liabilities |
|
|
|
|
|
| ||
| Total |
| $ |
|
|
|
| Page 20 of 46 |
| Table of Contents |
NOTE 14 – FACTORING AGREEMENT
On March 26, 2026, Centinela entered into a factoring agreement with the United Capital Funding Group, LLC (“United”) under which it may factor client invoices and obtain advances up to $
| a) | Eligible client invoices are determined at the discretion of United and transferred/factored by Centinela to United with full recourse; |
|
|
|
| b) | Centinela receives advances from United at the rate of |
|
|
|
| c) | Payments made by Centinela clients related to such factored invoices are remitted by such clients directly to United; |
|
|
|
| d) | Interest accrues on the outstanding advances at the Prime Rate as published in the Wall Street Journal plus |
|
|
|
| e) | Factoring fees accrue on the face amount of factored invoices at the annual rate of |
|
|
|
| f) | Such interest and factoring fees continue to accrue until the subject invoice is paid in full. At that time, United takes the difference between the amount received from the client and the amount originally advanced by United to Centinela, adjusts that difference for any earned but unpaid interest and factoring fees, remits the adjusted difference to Centinela, and then closes the transaction. |
Amounts outstanding under this agreement are guaranteed by Sentinel, Centinela’s parent corporation. This agreement expires on March 26, 2027 and automatically renews for successive one-year terms unless Centinela provides United with written notice of termination at least sixty days prior to the end of then then existing term.
Centinela has not factored any invoices under this agreement and, therefore, there is no balance outstanding in connection with this facility as of June 30, 2026.
NOTE 15 – DERIVATIVE LIABILITIES
The notes described in Note 12, Convertible Notes Payable, contained embedded conversion options with a conversion price that could result in the issuance of an indeterminate amount of shares of common stock in the future to settle the host contract. Accordingly, the embedded conversion options were bifurcated from the convertible notes and treated as separate liabilities. The fair value of such liability amounts was calculated using “Level 3” type inputs (as described in Note 4, Summary Of Significant Accounting Policies - Fair Value Of Financial Instruments) and marked to market at the end of each reporting period.
The Company estimated the fair value of its embedded conversion option liabilities as of June 30, 2026 and 2025 utilizing the following inputs:
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
|
|
|
Expected term (in years) |
|
|
|
|
|
| ||
Volatility |
|
|
|
| ||||
Dividends |
| None |
|
| None |
| ||
Risk-free interest rate |
|
|
|
| ||||
The Company recorded derivative liabilities as of June 30, 2026 and December 31, 2025 as follows:
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
|
|
|
Derivative liabilities |
| $ |
|
| $ |
| ||
The changes in derivative liabilities during the six months ended June 30, 2026 and 2025 were as follows:
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
|
|
|
Beginning of period |
| $ |
|
| $ |
| ||
Mark-to-market adjustment |
|
| ( | ) |
|
| ( | ) |
End of period |
| $ |
|
| $ |
| ||
| Page 21 of 46 |
| Table of Contents |
NOTE 16 – COMMITMENTS AND CONTINGENCIES
Operating Lease Liabilities
The tables below present information regarding the Company’s operating lease and liability as of June 30, 2026 and December 31, 2025:
|
| 2026 |
|
| 2025 |
| ||
Assets and liabilities: |
|
|
|
|
|
| ||
Operating lease right-of-use asset |
| $ |
|
| $ |
| ||
Operating lease liability |
| $ |
|
| $ |
| ||
Weighted average remaining lease term (in years) |
|
| - |
|
|
|
| |
Weighted average discount rate |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
Components of lease expense: |
|
|
|
|
|
|
|
|
Amortization of right-of-use operating lease asset |
| $ |
|
| $ |
| ||
Lease liability in connection with obligation payment |
|
|
|
|
|
| ||
Total operating lease cost |
| $ |
|
| $ |
| ||
Consulting Agreements
Effective October 15, 2025 and in connection with the acquisition discussed in Note 3, Acquisitions and Dispositions, Centinela entered into a consulting agreement with the seller of that business through April 15, 2026 wherein it is obligated to compensate that individual $
Effective October 28, 2025, Sentinel entered into a consulting agreement with Padang Padang, Ltd (“Padang”), a related party, through October 2026 wherein Sentinel is obligated to compensate Padang $
Legal Matters
The Company, as previously indicated, is subject to litigation claims arising in the ordinary course of business. In that regard, the Company has assessed each matter individually and has recorded aggregated estimated liabilities for litigation claims of $
| Page 22 of 46 |
| Table of Contents |
NOTE 17 – STOCKHOLDERS’ EQUITY (DEFICIT)
a) | Preferred and Common Stock |
|
|
| The Company had two classes of stock authorized (Preferred Stock and Common Stock) and three classes of stock issued and outstanding (Preferred Stock Series A, Preferred Stock Series B, and Common Stock) as of June 30, 2026 and December 31, 2025. The rights and preferences of each are summarized as follows: |
| i) | Preferred Stock |
Number of shares authorized |
|
|
| |
Par value |
| $ |
| |
Voting rights |
| None |
| |
Dividend rights |
| None |
| |
Redemption rights |
| None |
| |
Conversion rights |
| None |
| |
Liquidation preference |
| None |
| |
| ii) | Preferred Stock Series A | ||||
Number of shares authorized |
|
|
| |
Number of shares issued and outstanding as of: |
|
|
|
|
June 30, 2026 |
|
|
| |
December 31, 2025 |
|
|
| |
Par value |
| $ |
| |
Voting rights |
|
| ||
Dividend rights |
| None |
| |
Redemption rights |
| None |
| |
Conversion rights |
| None |
| |
Liquidation preference |
| None |
| |
| iii) | Preferred Stock Series B | |||||||||
Number of shares authorized |
|
|
| |
Number of shares issued and outstanding as of: |
|
|
|
|
June 30, 2026 |
|
|
| |
December 31, 2025 |
|
|
| |
Par value |
| $ |
| |
Voting rights |
|
| ||
Dividend rights |
| None |
| |
Redemption rights |
| None |
| |
Conversion rights |
|
| ||
Liquidation preference |
| None |
| |
| iv) | Common Stock | ||||
Number of shares authorized |
|
|
| |
Number of shares issued and outstanding as of: |
|
|
|
|
June 30, 2026 |
|
|
| |
December 31, 2025 |
|
|
| |
Par value |
| $ |
| |
Voting rights |
|
| ||
Dividend rights |
| None |
| |
Redemption rights |
| None |
| |
| Page 23 of 46 |
| Table of Contents |
b) | Financing Activities | |
|
|
|
| The Company issued shares of preferred stock, common stock, and warrants in connection with financing activities during the six months ended June 30, 2026 and the years ended December 31, 2025 and 2024. Such activities are summarized as follows: | |
|
|
|
| During the six months ended June 30, 2026: | |
|
|
|
|
| On February 3, 2026, the Company sold |
|
|
|
| During the year ended December 31, 2025: | |
| i) | On June 24, 2025, the Company issued |
|
|
|
| ii) | On June 24, 2025, the Company issued |
|
|
|
|
| The Company’s Preferred Stock Series B is not traded on a public exchange and therefore lacks an observable market price. As a result, the Company estimated the fair value of such shares in accordance with the provisions of ASC 718, Compensation - Stock Compensation. Specifically, each share of Preferred Stock Series B was deemed to have a value of $50 per share as each such share is convertible into |
Quantity of Preferred Stock Series B shares issued |
|
|
| |
Conversion ratio of Preferred Stock Series B into Common Stock |
|
|
| |
Equivalent quantity of common shares |
|
|
| |
Cash offering price of common shares |
| $ |
| |
Value of Preferred Stock Series B issued |
| $ |
|
| iii) | On June 24, 2025, the Company extended the expiration date of certain outstanding warrants held by a private investor for the purchase of up to |
|
|
|
| iv) | On various dates from July 23, 2025 through September 23, 2025, the Company sold a total of |
|
|
|
|
| Each Unit consists of one Series A Warrant to purchase one share of Common Stock at $ |
|
|
|
|
| Such Units, and specifically the Pre-Funded Warrants contained within, were accounted for as equity instruments in accordance with the provisions of ASC 815-40-25 because: |
| · | The warrants are indexed to the Company’s common stock; |
| · | The Company is not required to settle the warrants with cash; |
| · | The Company has sufficient authorized and unissued common shares available to settle the warrants; and |
| · | The warrants contain an explicit limit on the number of common shares to be issued upon settlement. |
| Page 24 of 46 |
| Table of Contents |
| v) | On October 28, 2025, the Company issued |
|
|
|
|
| Shares of Preferred Stock Series A have voting rights, but they do not accrue dividends nor do they have any redemption rights, conversion rights, or liquidation preferences. Therefore, consistent with previous accounting for such issuances, such shares were valued at their par value of $ |
|
|
|
| vi) | On October 30, 2025, the Company issued |
|
|
|
|
| The Company’s Preferred Stock Series B is not traded on a public exchange and therefore lacks an observable market price. As a result, the Company estimated the fair value of such shares in accordance with the provisions of ASC 718, Compensation - Stock Compensation. Specifically, each share of Preferred Stock Series B was deemed to have a value of $ |
Quantity of Preferred Stock Series B shares issued |
|
|
| |
Conversion ratio of Preferred Stock Series B into Common Stock |
|
|
| |
Equivalent quantity of common shares |
|
|
| |
Cash offering price of common shares |
| $ |
| |
Value of Preferred Stock Series B issued |
| $ |
|
| vii) | On December 12, 2025, the Company adopted the 2025 Sentinel Equity Incentive Plan and approved the issuance of |
|
|
|
|
| Each share of Common Stock was deemed by Management to have a value of $ |
|
|
|
| During the year ended December 31, 2024: | |
|
|
|
| i) | On March 6, 2024, the Company cancelled |
|
|
|
| ii) | On April 8, 2024 and as more fully described in Note 22, Related Party Ownership and Related Party Transactions, the Company issued |
| Page 25 of 46 |
| Table of Contents |
The Company estimated the fair value of such warrants with the following inputs:
Expected term (in years) |
|
|
| |
Volatility |
|
| ||
Dividends |
| None |
| |
Risk-free interest rate |
|
| ||
| iii) | On June 8, 2024 and June 28, 2024, the Company sold a total of |
|
|
|
|
| Each Unit consisted of one share of Common Stock and one warrant to purchase one share of Common Stock at $ |
|
|
|
| iv) | On various dates from July 25, 2024 through August 12, 2024, the Company sold a total of |
|
|
|
|
| Each Unit consisted of one share of Common Stock and one warrant to purchase one share of Common Stock at $ |
|
|
|
| v) | On August 26, 2024, the Company issued |
|
|
|
| vi) | On September 6, 2024, the Company issued |
|
|
|
|
| The Company’s Preferred Stock Series B is not traded on a public exchange and therefore lacks an observable market price. As a result, the Company estimated the fair value of such shares in accordance with the provisions of ASC 718, Compensation - Stock Compensation. Specifically, each share of Preferred Stock Series B was deemed to have a value of $ |
Quantity of Preferred Stock Series B shares issued |
|
|
| |
Conversion ratio of Preferred Stock Series B into Common Stock |
|
|
| |
Equivalent quantity of common shares |
|
|
| |
Cash offering price of common shares |
| $ |
| |
Value of Preferred Stock Series B issued |
| $ |
|
| vii) | On October 30, 2024, the Company sold a total of |
|
|
|
|
| Each Unit consisted of one share of Common Stock and one warrant to purchase one share of Common Stock at $ |
|
|
|
| viii) | On November 4, 2024, the Company sold a total of |
|
|
|
|
| Each Unit consisted of one share of Common Stock and one warrant to purchase one share of Common Stock at $ |
| Page 26 of 46 |
| Table of Contents |
| ix) | On December 9, 2024, the Company issued |
|
|
|
c) | Warrant Activities | |
|
|
|
| Warrant activities described in detail in the preceding section for the six months ended June 30, 2026 and for the years ended December 31, 2025 and 2024 are summarized as follows: | |
|
|
|
|
|
| Weighted |
|
|
| |||||||
|
|
|
|
|
| Average |
|
|
| |||||||
|
|
|
| Weighted |
|
| Remaining |
|
|
| ||||||
|
| Number |
|
| Average |
|
| Contractual |
|
| Aggregate |
| ||||
|
| Of |
|
| Exercise |
|
| Term |
|
| Intrinsic |
| ||||
|
| Warrants |
|
| Price |
|
| (In Years) |
|
| Value |
| ||||
Outstanding and exercisable as of January 1, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Issued during 2024 |
|
|
|
| $ |
|
|
|
|
|
| n/a |
| |||
Outstanding and exercisable as of December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Issued during 2025 |
|
|
|
| $ |
|
|
|
|
|
| n/a |
| |||
Outstanding and exercisable as of December 31, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Issued during 2026 |
|
|
|
| $ |
|
|
| - |
|
|
| n/a |
| ||
Expired during 2026 |
|
| ( | ) |
| $ |
|
|
| - |
|
|
| n/a |
| |
Outstanding and exercisable as of June 30, 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
The aggregate intrinsic value was calculated using $
NOTE 18 – REVENUE
The Company derived revenue exclusively from services during the six months ended June 30, 2026 and 2025.
Revenue is recognized in accordance with accounting policy previously discussed and most clients are invoiced on a weekly basis. There are no right-of-return considerations and uncollectable receivables are minimal to non-existent.
NOTE 19 – BUSINESS REASSESSMENT AND REPOSITIONING ADJUSTMENTS
In conjunction with the preparation of the Company’s consolidated financial statements as of and for the year ended December 31, 2025, Management considered the following recent events and initiatives:
a) | The September 2025 removal of an individual for the alleged improper issuance of the Company’s securities. This individual was then serving as Treasurer, Secretary, and a member of the Board of Directors and had previously served as President and Chief Executive Officer for almost a decade; |
|
|
b) | The October 2025 acquisition of the Opsec business; |
|
|
c) | The February 2026 sale of USS; and |
|
|
d) | Initiatives discussed elsewhere in this Quarterly Report and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (SEC) on June 5, 2026 consisting of: |
| · | The establishment of a new Management Team; |
| · | The launch of a growth strategy; |
| · | The ongoing pursuit of additional acquisitions; and |
| · | The ongoing pursuit of additional financing to fund such growth strategies and acquisitions. |
| Page 27 of 46 |
| Table of Contents |
In light of the above, Management reassessed the propriety of certain assets and liabilities carried on its balance sheet and elected to make repositioning adjustments related thereto effective as of December 31, 2025 to more accurately reflect the prospective obligations of the Company. This resulted in a net benefit of $
The Company accounted for such adjustments in accordance with the provisions of ASC 250, Accounting Changes and Error Corrections, whereby changes in estimates are recorded in the period in which they become known and are accounted for prospectively. The Company based such adjustments on the facts and circumstances described above, historical experience, industry trends, and other relevant factors, incorporating both quantitative and qualitative assessments that it believed were reasonable under the circumstances.
Those adjustments recorded during the quarter ended December 31, 2025 consisted of the following:
Certain payroll and payroll tax liabilities which had accumulated over time, whose origins are uncertain, and Management has deemed to be unnecessary |
| $ |
| |
Miscellaneous operational related items |
|
|
| |
Total |
| $ |
|
Management continues to assess the propriety of certain other assets and liabilities carried on its balance sheet as of June 30, 2026 in light of the circumstances described above and may elect to make further adjustments related thereto in the future.
NOTE 20 – INCOME TAXES
The components of deferred tax assets and liabilities as of June 30, 2026 and December 31, 2025 were approximately as follows:
|
| 2026 |
|
| 2025 |
| ||
Bad debt |
| $ |
|
| $ |
| ||
Amortization of ROU lease |
|
|
|
|
|
| ||
Amortization of debt discount |
|
|
|
|
|
| ||
Share based payments |
|
|
|
|
|
| ||
Impairment expense |
|
|
|
|
|
| ||
Change in the fair value of derivative liability |
|
|
|
|
|
| ||
Net operating loss carryforward |
|
|
|
|
|
| ||
Other |
|
|
|
|
|
| ||
Total deferred tax assets |
|
|
|
|
|
| ||
Less valuation allowance |
|
| ( | ) |
|
| ( | ) |
Net deferred tax asset recorded |
| $ |
|
| $ |
| ||
The components of the income tax benefit and related valuation allowance for the six months ended June 30, 2026 and 2025 was approximately as follows:
|
| 2026 |
|
| 2025 |
| ||
Current |
| $ |
|
| $ |
| ||
Deferred |
|
| ( | ) |
|
| ( | ) |
Total income tax provision (benefit) |
|
| ( | ) |
|
| ( | ) |
Less valuation allowance |
|
|
|
|
| |||
Income tax provision (benefit) |
| $ |
|
| $ |
| ||
| Page 28 of 46 |
| Table of Contents |
A reconciliation of the provision for income taxes for the six months ended June 30, 2026 and 2025 as compared to statutory rates was approximately as follows:
|
| 2026 |
|
| 2025 |
| ||
Federal income tax benefit - 21.4% |
| $ | ( | ) |
|
| ( | ) |
State income tax benefit - 9.9% |
|
| ( | ) |
|
| ( | ) |
Subtotal |
|
| ( | ) |
|
| ( | ) |
Change in valuation allowance |
|
|
|
|
| |||
Income tax provision (benefit) |
| $ |
|
| $ |
| ||
Federal net operating loss carryforwards at June 30, 2026 and December 31, 2025 were approximately $
Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carry forwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse. As a result of historic losses, the Company has recorded a full valuation allowance as of June 30, 2026 and December 31, 2025.
During the six months ended June 30, 2026 and 2025, the valuation allowance increased (decreased) by approximately $
The Company has determined that it had a change of control issue for the year ended December 31, 2021, that will limit the future use of the NOL carryforwards of approximately $
The Company follows the provisions of ASC 740, which require the computations of current and deferred income tax assets and liabilities only consider tax positions that are more likely than not (defined as greater than 50% chance) to be sustained if the taxing authorities examined the positions. There are no significant differences between the tax provisions represented in the accompanying financial statements and those reported in the Company's income tax returns.
The Company files corporate income tax returns in the United States and California. Due to the Company's net operating loss posture, all tax years are open and subject to income tax examination by tax authorities. The Company's policy is to recognize interest expense and penalties related to income tax matters as tax expense. As of June 30, 2026 and December 31, 2025, there are no unrecognized tax benefits and there are no accruals for interest related to unrecognized tax benefits or tax penalties.
NOTE 21 – EARNINGS PER SHARE
Basic and diluted net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. No exercise of outstanding stock options, warrants, or conversion of eligible debt and/or preferred stock is assumed as the effect of including such common share amounts would be anti-dilutive.
| Page 29 of 46 |
| Table of Contents |
The following table summarizes the common share equivalents outstanding which have been excluded from the number of shares used in the calculation of basic and diluted loss per share for the three- and six-month periods ended June 30, 2026 and 2025:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Preferred stock - Series B |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Warrants |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income from discontinued operations, net of tax |
|
|
|
|
|
|
|
|
|
|
|
| ||||
NOTE 22 – RELATED PARTY OWNERSHIP AND RELATED PARTY TRANSACTIONS
a) | Related Party Ownership |
|
|
As of June 30, 2026, Padang Padang, Ltd (Padang) owned
Accordingly, Padang has the ability to significantly influence or determine the outcome of matters submitted to a vote of the Company’s stockholders, including the election of directors and significant corporate transactions. |
b) | Related Party Transactions |
| i) | On September 6, 2024 and as more fully described in Note 17(b), Shareholder Equity (Deficit) - Financing Activities - During the year ended December 31, 2024 (vi), the Company entered into a consulting agreement with Padang, the Company’s majority shareholder a related party, for a one-year period wherein the Company agreed to provide compensation to Padang in the form of the issuance of |
|
|
|
| ii) | On October 28, 2025 and as more fully described in Note 16, Commitments and Contingencies, and Note 17(b), Shareholder Equity (Deficit) - Financing Transactions, the Company entered into a consulting agreement with Padang for a one-year period wherein the Company agreed to compensate Padang $ |
|
|
|
| iii) | On October 30, 2025 and as more fully described in Note 3, Acquisitions and Dispositions, and Note 17(b), Shareholder Equity (Deficit) - Financing Transactions, the Company issued |
|
|
|
| iv) | On April 13 and 30, 2026 and as more fully described in Note 11, Notes Payable Due To Related Party, Sentinel issued two promissory notes in the total principal amount of $ |
NOTE 23 – SUBSEQUENT EVENT
On July 24, 2026, Sentinel issued a promissory note in the principal amount of $
| Page 30 of 46 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this prospectus regarding our strategy, future events, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, among others, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “would,” “will,” “should,” “could,” “objective,” “target,” “ongoing,” “contemplate,” “potential”, or “continue” or the negative of these terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, without limitation, statements about:
| · | Our ability to generate or secure sufficient funding to support our growth strategy; |
| · | Future sales of our common stock that could depress the trading price of our common stock on the OTC, lower our value and make it more difficult for us to raise capital; |
| · | Our ability to compete effectively; |
| · | Our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, and our ability to achieve and maintain future profitability; |
| · | Our expectations regarding outstanding litigation; |
| · | Our expectations and management of future growth; |
| · | Our ability to maintain, protect and enhance our intellectual property; |
| · | Our expectations regarding the effects of existing and developing laws and regulations; |
| · | Our beliefs regarding our liquidity and sufficiency of cash to fund our operations; and |
| · | The other matters described in “Risk Factors” and “Business”. |
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.
You should read this Form 10-Q Quarterly Report, and other documents that we reference herein which we have filed with the SEC, with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
Our Business and Recent Developments
During the six months ended June 30, 2026 and the years ended December 31, 2025 and 2024, the Company’s primary business focused upon providing armed and unarmed security services through its Centinela and USS subsidiaries. They offer professional security personnel and services, including on-site protection, mobile patrol, and event security, enhanced by smartphone-based security applications. They operate primarily in California and serve a diverse clientele, including businesses, residential communities, and event organizers.
| Page 31 of 46 |
| Table of Contents |
The Company’s remaining subsidiary, Gladiator, previously focused on the production and sale of personal protective products, including body armor and ballistic plates. However, as of mid-2023, the Company ceased selling personal protective equipment under the Gladiator brand due to litigation wherein the Company is seeking damages from the prior Gladiator management. Presently, Gladiator’s operations are suspended, and the Company may relaunch the product line and expand its offerings once such litigation is resolved.
Effective October 16, 2025 and through its newly formed Centinela subsidiary, the Company acquired the client contracts for professional security services of an entity located in California for cash consideration of $650,000 plus additional cash of $150,000 which was due on April 16, 2026 as those contracts continued to perform through that date as warranted by seller. Effective on the closing date, the Company combined the day-to-day activities of USS with Centinela for logistical and operational purposes.
Effective December 31, 2025 and as more fully described in Note 19, Business Reassessment and Repositioning Adjustment, to the Company’s financial statements included elsewhere in this document, Management evaluated the propriety of certain assets and liabilities previously carried on its balance sheet and made adjustments thereto. Such adjustments had the net effect of recording a Business Reassessment and Repositioning Adjustment benefit of $2,205,292 in the Consolidated Statement of Operations for the year then ended. Management continues to assess the propriety of certain other liabilities carried on its balance sheet as of June 30, 2026 in light of the circumstances described in that footnote and may elect to make further adjustments related thereto in the future.
The Company has developed a business plan which includes a growth strategy through the acquisition of established businesses in the United States servicing the private security industry and expansion of services to existing and future clients. Management is actively identifying acquisition candidates with technologies in unmanned systems, space and satellite communications, electronic warfare, and Command, Control, Communication, Computing, Combat, Intelligence Surveillance and Reconnaissance (“C5ISR”) systems. The Company believes that increasing compliance requirements, such as the Cyber Security Maturity Model Certification, will create opportunities for consolidation in the defense and security sectors. Further, the Company plans to expand its traditional security guard services and take advantage of advancements in technologies including smart drone technologies for patrol purposes, automated remote video monitoring for increased effectiveness and efficiency, and artificial intelligence wherever possible. The Company plans to pursue opportunities focused in major domestic cities and on private and governmental outsourcing initiatives where demand is greatest and profit margins are highest.
Industry Background
The security services industry consists of companies who provide private physical security services, such as guards and patrol vehicles, as well as additional ancillary services such as alarm systems, cyber security, background screening, investigation, risk analysis, and security consultancy services. As a significant portion of the US population has consistently valued safety and security as one of the most important aspects of domestic life, the US security services industry is as relevant as ever.
The size of and opportunity in the United States (US) private security market is massive. According to various sources, the total market value was approximately $250 billion in 2024 and it is expected to grow at a compounded rate of between 5% and 9% over the next decade with some projections reaching as high as $623 billion by 2034.
Such anticipated growth is driven by numerous factors including the increasing use of outsourced security services by businesses, private individuals, and governmental entities seeking enhanced efficiency and effectiveness. Additionally, with issues such as political instability and wealth inequality becoming more of a feature in US society, the likelihood for the continuing and increasing use of private and/or outsourced security services remains high. This has been backed by the increasing market size of the industry.
Our Approach to Servicing Our Clients
Our mission is to recruit right, train right, and respond proactively utilizing the latest industry technologies and techniques. Our clients expect day-to-day quality, consistency, and professionalism. We believe our security personnel are more experienced, better supervised, and more dedicated to the highest level of work than our competitors.
| Page 32 of 46 |
| Table of Contents |
Our team members are highly trained and committed professionals from law enforcement, military, and security veterans communities who are all specialize in providing one thing... the security needed by our clients. We take pride in delivering the highest level of service to our clients. Therefore, we have a robust qualifying process to ensure all our team members are not just qualified but also enthusiastic and professional.
Our business is built on ethics and integrity. Kyle Madej, our President and Chief Executive Officer, became engaged in the security services in 2017 when he discovered a number of industry practices that were neither ethical nor acceptable. His involvement with the Company has proven to be an exciting endeavor that had allowed him to apply years of experience with solid work ethics and integrity. We value every client that has partnered with us, and we work to establish a solid relationship with our team members. We believe it is those strong relationship bonds that help our Company continue to grow and to serve more valued partners.
We pride ourselves in providing the most reliable protection in the security guard industry. With over ten years of experience, we have proven to be unshakable and trustworthy. To enhance our service, we proactively implemented the latest technology into our process. For example, with our mobile application provided by SilverTrac, our guards are able to check in, make reports, and take photos in real time as they patrol. Presently and as mentioned in the preceding section, we are expanding and taking advantage of advancements in technologies and artificial intelligence for increased effectiveness and efficiency in the service of our clients.
Our Competitive Strengths
Our competitive edge in the security industry lies in our in-field support and quality control through responsiveness to customers, investment in technology, and our supervisors and our administrative support. For guard services, this allows us to minimize the number one strategic risk for our industry, which is litigation risk. Another competitive advantage that we have is our access to a pipeline of highly professional, military-trained and experienced personnel for our high-end clients facing significant threats such as schools, houses of worship, and public venues.
Our Growth and Marketing Strategy
The elements of our growth strategy start with our commitment to continuous capital reinvestment into our Company, its subsidiaries and our strategic industry partners. We lead by example and set the pace for our industry in order to attract the leading regional security companies and protective products companies to join us as stakeholders. The core of our business growth strategy is to engage directly with our community stakeholders in growing urban markets where the breakdown of cultural values and community investment has left a vacuum of need.
In summary, our growth and marketing strategy can be summarized in the following points:
| · | Expand the Company’s presence in existing markets and penetrate new ones; |
| · | Collaborate with other operating businesses for strategic opportunities; and |
| · | Acquire other businesses to enhance or complement our current business model while accelerating our growth |
We will need additional capital to pursue all aspects of our growth strategy. The availability, source, and terms for such capital is uncertain as of this date.
Risk Factors Relating to Our Business
In addition to conventional risks and uncertainties in the ordinary course of business that are common to all businesses, important factors that are specific to our industry and the Company could have a material and adverse impact on our business, financial condition, results of operations and cash flows.
Readers should carefully consider the risks factors described throughout this Quarterly Report and those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, (specifically Part I, Item 1A, Risk Factors), filed with the Securities and Exchange Commission on June 5, 2026.
| Page 33 of 46 |
| Table of Contents |
Liquidity
We manage liquidity risk by monitoring on an ongoing basis several key financial factors such as our operational forecasts, actual operating results, cash flows, and the resulting financial position.
The following table summarizes several selected key financial factors as of and for the six months ended June 30, 2026 and 2025:
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
|
|
|
Revenue |
| $ | 2,124,471 |
|
| $ | 1,724,272 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders |
| $ | (1,092,818 | ) |
| $ | (1,978,532 | ) |
|
|
|
|
|
|
|
|
|
Cash flows: |
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
| $ | (421,383 | ) |
| $ | (419,522 | ) |
Net cash provided by (used in) investing activities |
|
| (15,808 | ) |
|
| (8,500 | ) |
Net cash provided by/(used in) financing activities |
|
| 386,111 |
|
|
| 205,820 |
|
Net increase (decrease) in cash |
|
| (51,080 | ) |
|
| (222,202 | ) |
Cash balance - Beginning of period |
|
| 197,165 |
|
|
| 222,202 |
|
Cash balance - End of period |
| $ | 146,085 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Working capital surplus (deficit) |
| $ | (4,501,101 | ) |
| $ | (4,287,908 | ) |
Revenue And Net Income (Loss)
The improvement to revenue and the decrease in net loss available to common shareholders are generally attributable to the acquisition of the Opsec business in October 2025 and the gain on the sale of the USS subsidiary in February 2026. Such items and others are discussed in detail in the Results of Operations section appearing below.
Operating Activities
Cash used by operating activities of $421,383 during the six months ended June 30, 2026 was primarily attributable to a net loss of $1,115,489 which was adjusted upward by $1,324,397 for the net change in operating assets and liabilities and adjusted downward by $630,291 for the net amount of non-cash income and expense items which consisted primarily of the gain of $995,340 on the sale of the USS subsidiary.
Cash used by operating activities of $419,522 during the six months ended June 30, 2025 was primarily attributable to a net loss of $2,006,886 which was adjusted upward by $829,157 for the net change in operating assets and liabilities and further adjusted upward by $758,207 for the net amount of non-cash income and expense items which consisted primarily of the expense of $750,000 for consulting services which were paid for by the issuance of warrants.
Investing Activities
Cash used in investing activities of $15,808 and $8,500 during the six months ended June 30, 2026 and 2025, respectfully, related exclusively to the acquisition of property and equipment.
Financing Activities
Cash provided by financing activities of $350,000 during the six months ended June 30, 2026 was attributable to the sale of warrants to a private investor.
Cash provided by financing activities of $205,820 during the six months ended June 30, 2025 was primarily attributable to net borrowings in connection with several different notes and loans.
| Page 34 of 46 |
| Table of Contents |
Capital Resources
Additional capital resources will likely be required in 2026 to support the Company’s growth strategy, which includes the acquisition of complementary established businesses and the expansion of services, will vary depending upon several factors. Such factors include, but are not limited to, marketplace conditions which will affect our ability to identify and close acquisition opportunities, expand the range and profitability of security services we provide to our clients, and generate revenue and cash flow from operations to support those activities.
The sale of additional equity or debt securities to support the Company’s growth strategy may result in dilution to our shareholders. Any such additional capital resources may not be available on reasonable terms, if at all. If we were unable to obtain additional capital resources, we may be required to reduce the scope of, delay, or eliminate some or all of our planned activities and limit our operations which could have a material adverse effect on our business, financial condition and results of operations.
Going Concern
The Company’s condensed consolidated financial statements do not include any adjustments that might be necessary if it is unable to continue as a going concern. Accordingly, the financial statements have been prepared on the basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Results of Operations
The results of operations for the three and six months ended June 30, 2026 and 2025 are summarized in the table below and discussed in the following paragraphs. Such amounts have not been adjusted for the reclassification of discontinued operations in the interest of clarity and all amounts in the following table and the related commentary have been rounded to the nearest thousand. Any apparent addition or subtraction errors in the table below are the result of rounding.
|
| Three Months Ended June 30 |
|
| Six Months Ended June 30 |
| ||||||||||||||||||
|
| 2026 |
|
| 2025 |
|
| Change |
|
| 2026 |
|
| 2025 |
|
| Change |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Revenue |
| $ | 2,124 |
|
| $ | 878 |
|
|
| 142 | % |
| $ | 4,367 |
|
| $ | 1,724 |
|
|
| 153 | % |
Cost of revenues |
|
| 2,089 |
|
|
| 659 |
|
|
| 217 | % |
|
| 4,210. |
|
|
| 1,470 |
|
|
| 186 | % |
Gross profit |
|
| 35 |
|
|
| 219 |
|
|
| (84 | )% |
|
| 157 |
|
|
| 254 |
|
|
| (38 | )% |
General and administrative expenses |
|
| 1,096 |
|
|
| 1,465 |
|
|
| (27 | )% |
|
| 2,093 |
|
|
| 2,041 |
|
|
| 1 | % |
Income (loss) from operations |
|
| (1,061 | ) |
|
| (1,246 | ) |
|
| (17 | )% |
|
| (1,935 | ) |
|
| (1,787 | ) |
|
| 7 | % |
Other income (expense) |
|
| (98 | ) |
|
| (143 | ) |
|
| (31 | )% |
|
| 820 |
|
|
| (220 | ) |
| * |
| |
Income (loss) including non-controlling interest |
|
| (1,158 | ) |
|
| (1,389 | ) |
|
| (18 | )% |
|
| (1,115 | ) |
|
| (2,007 | ) |
|
| (46 | )% |
Non-controlling interest |
|
| (12 | ) |
|
| (17 | ) |
|
| (29 | )% |
|
| (23 | ) |
|
| (28 | ) |
|
| (18 | )% |
Net income (loss) available to common shareholders |
| $ | (1,147 | ) |
| $ | (1.371 | ) |
|
| (18 | )% |
| $ | (1,093 | ) |
| $ | (1,979 | ) |
|
| (46 | )% |
* - Not meaningful
Revenues
The $2,643,000 or 153% increase in revenues during the six-month period ended June 30, 2026 versus the comparable period in the prior year is attributable to the acquisition of the Opsec business in October 2025 and a 2026/2027 growth strategy consisting of the competitive pricing of services during 2026 to stimulate growth in top line revenue, establish a formidable presence in the California marketplace, and develop relationships with new key clients with the intent of selling additional services and higher margin services in the future. The $1,246,000 or 142% change in revenues during the three-month periods ending on those same dates is comparable in magnitude and is also attributable to the acquisition of the Opsec business and the 2026/2027 growth strategy.
| Page 35 of 46 |
| Table of Contents |
Cost of Revenues
The $2,740,000 or 186% increase in cost of revenues during the six-month period ended June 30, 2026 versus the comparable period in the prior year is attributable to the acquisition of the Opsec business in October 2025 and the 2026/2027 growth strategy discussed in the Revenue section above. The $1,439,000 or 217% change in cost of revenues during the three-month periods ending on those same dates is somewhat higher from a percentage perspective and is also attributable to the 2026/2027 growth strategy discussed in the Revenue section above.
Gross Profits
The $97,000 or 38% decrease in gross profits during the six-month period ended June 30, 2026 versus the comparable period in the prior year is attributable to the 2026/2027 growth strategy discussed in the Revenue section above. The $184,000 or 84% decrease in gross profits during the three-month periods ending on those same dates clearly demonstrates the Company’s investment in the 2026/2027 growth strategy discussed in the Revenue section above.
General and Administrative
The $52,000 or 1% increase in general and administrative expenses during the six-month period ended June 30, 2026 versus the comparable period in the prior year was minimal and is attributable to a reduction in the reliance upon external consultants for fundraising and other purposes as well as cost control and expense reduction initiatives. The $369,000 or 27% decrease in general and administrative expenses during the three-month periods ending on those same dates illustrates the effectiveness of those expense reduction initiatives.
Loss From Operations
The $148,000 or 7% increase in loss from operations during the six-month period ended June 30, 2026 versus the comparable period in the prior year is directly attributable to the $97,000 decrease in gross profits and the $52,000 increase in general and administrative expenses discussed in the sections immediately above. The $185,000 or 17% decrease in loss from operations during the three-month periods ending on those dates is directly attributable to the $184,000 decrease in gross profits offset by the $369,000 decrease in general and administrative expenses discussed in the sections immediately above.
Other Income (Expense)
The $1,040,000 swing to other income of $820,000 during the six-month period ended June 30, 2026 from other expense of $220,000 during the comparable period in the prior year is directly attributable to a gain of $997,000 on the sale of the USS subsidiary in February 2026. In the absence of that gain, the majority of the amount in this caption for all periods consists primarily of interest expense which remains relatively unchanged from each reporting period to the next.
Net Income (Loss) From Continuing Operations Including Non-Controlling Interest
The $892,000 or 46% decrease in this caption during the six-month period ended June 30, 2026 versus the comparable period in the prior year as well as the $231,000 or 18% decrease in this caption during the three-month period ended June 30, 2026 versus the comparable period in the prior year are directly attributable to the combined changes in the Loss From Operations and the Other Income (Expense) captions discussed immediately above.
Non-Controlling Interest
The $5,000 or 18% decrease in this caption during the six-month period ended June 30, 2026 versus the comparable period in the prior year as well as the $5,000 or 29% decrease in this caption during the three-month period ended June 30, 2026 versus the comparable period in the prior year are directly attributable to the reduced losses experienced by Gladiator, the Company’s subsidiary wherein there is a 13% non-controlling interest.
| Page 36 of 46 |
| Table of Contents |
Net Income (Loss) Available to Common Shareholders
The $886,000 or 46% decrease in this caption during the six-month period ended June 30, 2026 versus the comparable period in the prior year as well as the $224,000 or 18% decrease in this caption during the three-month period ended June 30, 2026 versus the comparable period in the prior year are directly attributable to the combined changes in the Net Income (Loss) From Continuing Operations Including Non-Controlling Interest and the Non-Controlling Interest captions discussed immediately above.
Critical Accounting Policies and Estimates
We prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures of contingent liabilities. We based our estimates on historical experience and other assumptions that we believe are reasonable in the circumstances. Actual results may differ from those estimates.
Critical accounting policies consist of the following and are described in Note 4, Basis of Presentation and Summary of Significant Accounting Policies, in the Company’s financial statements included elsewhere in this Quarterly Report.
| · | Basis of Presentation; |
| · | Use of Estimates and Assumptions; |
| · | Principles of Consolidation and Non-Controlling Interest; |
| · | Fair Value of Financial Instruments; |
| · | Revenue Recognition; and |
| · | Income Taxes |
Critical accounting estimates consist primarily of those described in Note 19, Business Reassessment and Repositioning Adjustment, and Note 20, Income Taxes, in the Company’s financial statements included elsewhere in this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a smaller reporting company, we are not required to provide the information described by Item 306 of Regulation S-K regarding interest rate, foreign currency, commodity price, and equity market risks.
Item 4. Controls and Procedures
Evaluation of Disclosure and Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our Management Team, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a - 15(c) and 15d - 15(e)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were not effective, (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our Chief Executive and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
The term disclosure controls and procedures mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a ,et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
| Page 37 of 46 |
| Table of Contents |
Our Management Team, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Because we are a small company with a limited number of employees, there is an inherent issue of segregation of duties as experienced by all small companies. Outside financial consultants assist us with our bookkeeping and regulatory reporting requirements and we closely supervise all such services.
Because of inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the registrant have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management's 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 in accordance with accounting principles generally accepted in the United States.
The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, 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 and includes those policies and procedures that:
| · | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
|
|
|
| · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and |
|
|
|
| · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements. |
Our Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2026. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-2013) in Internal Control-Integrated Framework. Management concluded that our internal control over financial reporting was not effective as of June 30, 2026.
| Page 38 of 46 |
| Table of Contents |
Material Weaknesses
Material weaknesses identified consist of the following:
| · | The Company recognizes that due to its limited number of personnel, there are inherent challenges in achieving adequate segregation of duties within the financial reporting process and the preparation of financial statements in a timely manner. Management continues to evaluate opportunities to enhance such internal controls and to improve the financial reporting process; |
|
|
|
| · | The Company's internal control processes during 2025 did not identify a number of journal entries and the reclassification of USS’ assets, liabilities, and operating results as discontinued operations which were brought to Management’s attention by the external auditor in connection with the audit of the 2025 financial statements and subsequently recorded in the Company’s financial records. Management is reviewing its processes to strengthen controls and ensure greater accuracy moving forward; and |
|
|
|
| · | The Company acknowledges that its accounting team would benefit from additional technical expertise with respect to certain US GAAP matters. Management is exploring options to address these technical requirements, including external support. |
Plan for Remediation of Material Weaknesses
We intend to take appropriate and reasonable steps to make the necessary improvements to remediate this deficiency as resources to do so become available. We intend to consider the results of our remediation efforts and related testing as part of our 2026 assessment of the effectiveness of our internal control over financial reporting by improving our segregation of duties and level of supervision.
Changes in Internal Control Over Financial Reporting
There have been no changes in the registrant's internal control over financial reporting through the date of this report that materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
Independent Registered Accountant's Internal Control Attestation
This report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit registrants to provide only Management's report in this Quarterly Report.
| Page 39 of 46 |
| Table of Contents |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject to litigation claims arising in the ordinary course of business. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.
As of June 30, 2026, the Company was engaged in litigation with several parties as described below:
1) | Strategic Funding Source, Inc. d/b/a Kapitus, a New York corporation as Plaintiff against Gladiator Solutions, Inc. an Arizona corporation, Sentinel Holdings Ltd, a Nevada corporation, and Matthew C. Materazo an individual (Case No. 24cv438754), with an unlimited Civil Cross Complaint Gladiator Solutions, Inc. an Arizona corporation, Sentinel Holdings Ltd, a Nevada corporation, Cross-Complainants vs. Matthew C. Materazo |
|
|
| This matter involves a dispute over financing that was procured without approval or knowledge of the Company by Matthew C. Materazo to the detriment of Gladiator Solutions, Inc. and its shareholders. This complaint was initially filed by Strategic Funding Source against Gladiator Solutions for breach of a loan agreement and against Matthew Materazo to enforce a personal guaranty on the subject loan. The plaintiff alleges Gladiator owes $100,098. The Plaintiff also added Sentinel Holdings Ltd as an “alter ego” defendant of Gladiator. The Company filed an Answer to the Complaint, asserting that Gladiator’s former President Matt Materazo obtained the loan without authority or consent from Gladiator or Sentinel Holdings Ltd, and the Company filed a Cross-Complaint against Matt Materazo for indemnity for this unauthorized loan. |
|
|
2) | James Martime Holdings, Inc. v. Matthew Materazo (Case No. C24-01956) |
|
|
| James Maritime Holdings, Inc. (now known as Sentinel Holdings Ltd.) filed this action against defendant Matthew Materazo. The Complaint asserts that Matthew Materazo breached his fiduciary duties owed to Gladiator Solutions, Inc. and violated related duties by procuring merchant cash advance loans from various third party lenders under the name of Gladiator Solutions, without the knowledge or consent of Gladiator Solutions or Sentinel Holdings. The Complaint also seeks a judicial declaration that Sentinel Holdings is entitled to rescind or “claw back” 500,000 shares of Sentinel Holdings that was issued to Matthew Materazo and certain other previous shareholders of Gladiator Solutions pursuant to a Share Exchange Agreement between the parties. |
|
|
| Matthew Materazo has filed a request with the Court seeking permission to file Cross-Complaints against Sentinel Holdings and certain other third parties asserting claims that he was allegedly induced to enter into the Share Exchange Agreement by certain representations that are not included in the fully integrated Share Exchange Agreement regarding potential future financings for the benefit of Gladiator Solutions. Sentinel Holdings and Gladiator Solutions opposed Matthew Materazo’s request to file the proposed Cross-Complaints. As of December 31, 2025, the Court had not ruled on Matthew Materazo’s request to file Cross-Complaints. |
|
|
3) | Redwood Fire & Casualty Ins. Co. v. United Security Specialists, Inc. |
|
|
| This matter is a case against USS and Sentinel Holdings Ltd for unpaid workers comp insurance premiums. The unpaid balance was $36,947. The Company negotiated a settlement for this claim in the amount of $4,000 per month for nine months. The payments have not been completed. |
|
|
4) | Vertol LLC v. Gladiator Solutions, Inc. |
|
|
| This case involves an arbitration claim by Vertol LLC against Gladiator Solutions filed by the Claimant with the American Arbitration Association. The Claimant alleges that Gladiator Solutions failed to deliver certain products as required by a contract between Claimant and Gladiator Solutions. Matthew Materazo (the former President of Gladiator Solutions) appeared at the arbitration hearing as the unauthorized representative of Gladiator Solutions without notifying Gladiator Solutions or Sentinel Holdings of the claim asserted by Vertol or the arbitration proceeding itself. On or about February 23, 2026, Gladiator Solutions and Sentinel Holdings was notified, for the first time, by the Claimant that an arbitration award had been rendered against Gladiator Solutions on June 17, 2025 in the total amount of $332,081. Gladiator Solutions and Sentinel Holdings are evaluating the arbitration award and assessing a potential challenge to the award. |
| Page 40 of 46 |
| Table of Contents |
5) | Mercy Falls LLC v. United Security Specialists, Inc. (Case No. 25CV468267) |
|
|
| Mercy Falls LLC filed this action alleging that United Security Specialists, Inc. (USS) breached a consulting agreement by failing to remit payments purportedly due under the agreement for consulting services. Plaintiff alleges that USS owes approximately $140,000 under the consulting agreement. USS filed its Answer to the Complaint, denying Plaintiff’s claims and filed a Cross-Complaint against Mercy Falls LLC asserting claims for fraudulent concealment and intentional misrepresentation, and breach of contract. |
|
|
6) | Eardley v. Sentinel Holdings Ltd |
|
|
| This matter is a case against Sentinel by its former CEO seeking a declaratory judgment claiming that shares issued to him while CEO were not authorized by the Company. The Company has counterclaimed for breach of Contract, for fraud, for breach of duty, for self-dealing and for violation of Section 10(b) and Rule 10(b)5 under the Securities and Exchange Act of 1934, and has also commenced a third-party claim against Michelle Turpin, as strawman, claiming that the two colluded to wrongfully have shares issued for the benefit of Eardley. The Company is vigorously pursuing its claims and defending the claims by Eardley. |
|
|
7) | Foxcroft and Sentinel v. Rajan, et al.; Court of Comon Please, Philadelphia County, First Judicial District of Pennsylvania, Trial Division – Civil (Case No. 26020185) |
|
|
| On or about February 11, 2026, the Company commenced a civil action against Mr. Rajan and his entities for damages arising from a calculated and malicious campaign of character assassination and economic sabotage orchestrated by Rajan. Specifically, Raja utilized a “Litigation Hold” electronic mail (“email”) notice as a tactical weapon. Under the guise of a formal legal preservation demand, Defendant Raja authored a scathing “hit piece” email containing false and inflammatory accusations that Plaintiff Foxcroft was engaged in a criminal “pump-and-dump” scheme and an “undeniable self-serving scheme” to defraud investors. Rajan counterclaimed under various theories of liability. |
Item 1A. Risk Factors
In addition to conventional risks and uncertainties in the ordinary course of business that are common to all businesses, important factors that are specific to our industry and the Company could have a material and adverse impact on our business, financial condition, results of operations and cash flows.
Readers should carefully consider the risks factors described throughout this Quarterly Report and those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, (specifically Part I, Item 1A, Risk Factors), filed with the Securities and Exchange Commission on June 5, 2026. There have been no material changes to the risk factors described in that Annual Report.
| Page 41 of 46 |
| Table of Contents |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the six months ended June 30, 2026 and the years ended December 31, 2025, and December 31, 2024, the Company conducted the following sales of unregistered securities pursuant to Regulation D and Section 4(2) of the Securities Act of 1933, as amended. The Company used all such amounts for working capital and operating purposes.
During the six months ended June 30, 2026:
| On February 3, 2026, the Company sold 350,000 Warrant Units at $1.00 per Unit and received cash proceeds of $350,000. Each Unit consists of one Pre-Funded Warrant to purchase one share of Common Stock at $0.001 per share. All warrants were fully vested upon issuance and the warrant agreement did not specify an expiration date. |
|
|
During the year ended December 31, 2025: | |
|
|
a) | On June 24, 2025, the Company issued 135,000 shares of restricted common stock at $1.00 per share and received cash proceeds of $135,000. |
|
|
b) | On June 24, 2025, the Company issued 15,000 shares of Restricted Preferred Stock Series B with an estimated fair value of $750,000 in consideration for consulting services. |
|
|
c) | On various dates from July 23, 2025 through September 23, 2025, the Company issued 1,685,000 Warrant Units at $1.00 per Unit for the purchase of up to 3,370,000 shares of Common Stock and received cash proceeds of $1,685,000. Each Unit consists of one Series A Warrant to purchase one share of Common Stock at $3.50 per share and one Pre-Funded Warrant to purchase one share of Common Stock at $0.001 per share. All warrants were fully vested upon issuance and expire on various dates over the next two years. |
|
|
d) | On September 24, 2025, the Company issued 1,600,000 shares of Preferred Stock Series A with an estimated fair value of $1,600 to Padang, a related party, in exchange for consulting services. Shares of Preferred Stock Series A have voting rights, but they do not accrue dividends nor do they have any liquidation preferences, redemption rights, or conversion rights. |
|
|
e) | On October 30, 2025, the Company issued 10,000 shares of Preferred Stock Series B with an estimated fair value of $500,000 to the Company’s President and CEO for services performed in connection with an acquisition in October 2025 described elsewhere in this document. |
|
|
f) | On December 9, 2025, the Company’s Board of Directors approved the issuance of 184,000 shares of Common Stock with an estimated fair value of $184,000 to 184 employees in recognition of services rendered. Such shares were issued during the following month. Such shares were previously registered with the SEC on Form S-8 and issued during the following month. |
During the year ended December 31, 2024:
a) | On March 6, 2024, the Company cancelled 866,667 shares of common stock that was previously issued and re-issued the same shareholders a total of 368,967 in accordance with stated agreements. |
|
|
b) | On June 5, 2024, USS entered into a promissory note agreement with Clearview Funding Solutions for $200,000, which matured in June 2025. An origination and finance fee of $15,000 are included in the principal and discounted against the note over the term. As of June 30, 2024, the note had an outstanding balance of $171,600. |
|
|
c) | On June 8, 2024, the Company issued 75,000 units consisting of one share of common stock and one warrant. The units were sold at $1/unit and received cash proceeds of $75,000. The warrants are exercisable immediately at $3.50/share and expire on December 31, 2025. |
|
|
d) | On June 28, 2024, the Company issued 100,000 units consisting of one share of common stock and one warrant. The units were sold at $1/unit for a subscription amount of $100,000. The warrants are exercisable immediately at $3.50/share and expire on December 31, 2026. The subscription was received in July 2024. |
| Page 42 of 46 |
| Table of Contents |
e) | In July 2024, the Company issued 225,000 units consisting of one share of common stock and one warrant. The units were sold at $1/unit and the Company received cash proceeds of $225,000. The warrants are exercisable immediately at $3.50/share and expire on December 31, 2026. |
|
|
f) | In August 2024, the Company issued 50,000 units consisting of one share of common stock and one warrant. The units were sold at $1/unit and the Company received cash proceeds of $50,000. The warrants are exercisable immediately at $3.50/share and expire on December 31, 2026. |
|
|
g) | On September 6, 2024, the Company issued 50,000 shares of Preferred Stock Series B with an estimated fair value of $2,500,000 ($50/share) as a consulting fee to Padang, a related party and its majority shareholder. |
|
|
h) | In October 2024, the Company issued 20,000 units consisting of one share of common stock and one warrant. The units were sold at $1/unit and the Company received cash proceeds of $20,000. The warrants are exercisable immediately at $3.50/share and expire on December 31, 2026. |
|
|
i) | In November 2024, the Company issued 250,000 units consisting of one share of common stock and one warrant. The units were sold at $1/unit and the Company received cash proceeds of $250,000. The warrants are exercisable immediately at $3.50/share and expire on December 31, 2026. |
|
|
j) | In December 2024, the Company issued 50,000 shares of common stock. The stock was sold at $1/share and the Company received cash proceeds of $50,000. |
We relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as amended and Regulation D. We made this offering based on the following facts: (1) the issuances were isolated private transaction which did not involve a public offering; (2) there were only limited offerees, (3) the offerees have agreed to the imposition of a restrictive legend on the face of the stock certificate representing the shares indicating the stock cannot be resold unless registered or an exemption from registration is available; (4) the offerees were sophisticated investors familiar with our company and stock-based transactions; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the sale of the stock took place directly between the offerees and our management.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
S-1 Registration Statement
On May 14, 2025, the Company went effective with a S-1 Registration Statement which registered under the Securities Act of 1933, a proposed resale by certain selling security holders named in incorporated prospectus, or their permitted assigns. of up to 3,185,000 shares of the Company’s common stock, $0.001 par value per share, which amount consists of (i) 2,135,000 shares of common stock outstanding as of May 14, 2025, and (ii) an aggregate of 1,050,000 shares of common stock issuable upon exercise of common stock purchase warrants outstanding on May 14, 2025, issued in connection with private placements of the Company’s common stock to certain of said selling security holders.
The Company is not selling any shares of common stock under this Registration and will not receive any proceeds from the sale of shares of common stock by the selling security holders. If and when there is a cash exercise of the Purchase Warrants, the Company will receive the exercise price of such warrants. If all warrants are exercised, the Company would receive for an aggregate of approximately $2,887,000. There is no assurance that any of said warrants will be exercised. The selling security holders bear all commissions and discounts, if any, attributable to their sale of the shares of common stock. The Company bears all costs, expenses and fees in connection with the registration of the shares of common stock.
| Page 43 of 46 |
| Table of Contents |
The selling security holders will offer and sell the shares at a fixed price of $3.50 per share until the Company’s common stock is listed on an established public trading market. There can be no assurance the Company’s common stock will ever be listed on an established public trading market. For additional information regarding this Registration of these Securities, contact the Company, or review the Registration Statement and Exhibits publicly available on the SEC’s EDGAR system.
Related Party Controlling Stockholder
As of June 30, 2026, Padang Padang, Ltd (Padang) owned:
1) | 2,000,000 shares of Preferred Stock Series A, each share of which entitles the holder to 30 votes per share resulting in 60,000,000 voting rights; and |
|
|
2) | 50,000 shares of Preferred Stock Series B, each share of which entitles the holder to 10 votes per share resulting in 50,000 voting rights. Additionally, each share is convertible at the option of the holder into common stock at a ratio of 50:1. Therefore, these shares, if converted into common stock, would instead provide the holder with 2,500,000 voting rights. |
Therefore, Padang controls, on a fully diluted and fully converted basis, an aggregate of 62,500,000 votes rights representing 80% of the Company’s total voting power. Accordingly, Padang has the ability to determine or significantly influence the outcome of matters submitted to a vote of the Company’s stockholders, including the election of directors and approval of significant corporate transactions. The Company is therefore considered to be under the control of Padang for financial reporting purposes.
There have been no transactions with this stockholder during the six months ended June 30, 2026 or the period thereafter through the date of this report.
Our Internet Website
Our Internet website address is sentinelholdingsltd.net. The information contained on our website, or through it, is not a part of this Quarterly Report. We have provided our website address here solely as an inactive textual reference.
| Page 44 of 46 |
Item 6. Exhibits
Exhibit No. |
| Description of Exhibit |
| Rule 13a14(a)/15d-14(a) Certification of Principal Financial Officer | |
| Section 1350 Certification of Principal Executive Officer | |
| Section 1350 Certification of Principal Financial Officer | |
101.INS** |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
101.SCH** |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL** |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB** |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE** |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF** |
| Inline XBRL Taxonomy Definition Linkbase Document |
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| Page 45 of 46 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Sentinel Holdings Ltd |
| |
|
| ||
Date: August 13, 2026 | By: | /s/ Kyle Madej |
|
|
| Kyle Madej |
|
|
| Principal Executive Officer |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the date indicated.
Signature |
| Title |
| Date |
|
|
|
|
|
|
| President, Chief Executive Officer, |
|
|
/s/ Kyle Madej |
| Treasurer, Secretary, and |
| August 13, 2026 |
Kyle Madej |
| Chairman of the Board |
|
|
| (Principal Executive Officer) |
|
|
| Page 46 of 46 |