SNTL 10-Q
Sentinel Holdings Ltd. (SNTL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
COMMISSION FILE NUMBER
F/K/A JAMES MARITIME HOLDINGS, INC | |
(Exact name of registrant as specified in its charter) |
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(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 |
N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
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 May 15, 2025, there were
SENTINEL HOLDINGS LTD
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2025
TABLE OF CONTENTS
| 2 |
| Table of Contents |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
TABLE OF CONTENTS |
SENTINEL HOLDINGS, LLC AND SUBSIDIARIES |
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(F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES) |
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7 |
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Notes to Unaudited Condensed Consolidated Financial Statements | 8 - 56 |
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| Table of Contents |
Sentinel Holdings Ltd and Subsidiaries
F/K/A James Maritime Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
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| March 31, 2025 |
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| December 31, 2024 |
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Assets |
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Current Assets |
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Cash |
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Accounts receivable - net |
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Prepaids and other |
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Total Current Assets |
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Property and equipment - net |
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Operating lease - right-of-use asset |
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Total Assets |
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Liabilities and Stockholders' Deficit | ||||||||
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Current Liabilities |
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Accounts payable and accrued expenses |
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Cash overdraft |
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Deferred revenue |
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Notes payable - net |
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Convertible notes payable |
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Loans payable |
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Derivative liabilities |
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Operating lease liability |
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Total Current Liabilities |
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Long Term Liabilities |
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Loans payable - net |
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Operating lease liability |
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Total Long Term Liabilities |
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Total Liabilities |
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Commitments and Contingencies |
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Stockholders' Deficit |
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Series A Preferred stock - $ |
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Series B Convertible Preferred stock - $ |
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Common stock - $ |
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Additional paid-in capital |
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Accumulated deficit |
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Stockholders' Deficit |
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Non-controlling interest |
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Total Stockholders' Deficit |
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Total Liabilities and Stockholders' Deficit |
| $ |
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| 4 |
| Table of Contents |
Sentinel Holdings Ltd and Subsidiaries
F/K/A James Maritime Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
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| For the Three Months Ended March 31, |
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| 2025 |
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| 2024 |
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Sales - net |
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Cost of goods sold |
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Gross profit |
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General and administrative expenses |
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Loss from operations |
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Other income (expense) |
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Interest expense |
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Change in fair value of derivative liabilities |
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Other income |
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PPP loan forgiveness |
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Total other income (expense) - net |
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Net income (loss) including non-controlling interest |
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Non-controlling interest |
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Net income (loss) available to common stockholders |
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Income (loss) per share - basic and diluted |
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Weighted average number of shares - basic and diluted |
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| 5 |
| Table of Contents |
Sentinel Holdings Ltd and Subsidiaries
F/K/A James Maritime Holdings, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Deficit
For the Three Months Ended March 31, 2025
(Unaudited)
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| Preferred Stock - Series A |
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| Preferred Stock - Series B |
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| Common Stock |
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| Additional Paid-in |
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| Accumulated |
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| Total Deficit Attributable to the |
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Non- Controlling |
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Total Stockholders' |
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| Capital |
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| Interest |
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December 31, 2024 |
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Net loss |
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March 31, 2025 |
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Sentinel Holdings Ltd and Subsidiaries
F/K/A James Maritime Holdings, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Deficit
For the Three Months Ended March 31, 2024
(Unaudited)
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| Preferred Stock - Series A |
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| Preferred Stock - Series B |
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| Common Stock |
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| Additional Paid-in |
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| Accumulated |
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Total Deficit Attributable to the |
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Non- Controlling |
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Total Stockholders' |
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| Interest |
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December 31, 2023 |
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Shares cancelled |
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Shares issued |
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Net loss |
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March 31, 2024 |
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| 6 |
| Table of Contents |
Sentinel Holdings Ltd and Subsidiaries
F/K/A/ James Maritime Holdings, LTD and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
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| For the Three Months Ended March 31, |
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| 2025 |
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| 2024 |
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Operating activities |
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Net income (loss) - including non-controlling interest |
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Adjustments to reconcile net income (loss) to net cash provided by operations |
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Depreciation and amortization |
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Amortization of operating lease - right-of-use asset |
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Amortization of debt discount |
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Change in fair value of derivative liabilities |
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Non-cash charitable contribution |
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Accounts Receivable |
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Prepaids and other |
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Due to related party |
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Increase (decrease) in |
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Accounts payable and accrued expenses |
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Accrued payroll |
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Deferred revenue |
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Operating lease liability |
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Net cash provided by (used in) operating activities |
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Investing activities |
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Purchase of fixed assets |
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Net cash used in investing activities |
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Financing activities |
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Repayment of lease liabilities |
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Repayment of notes payable |
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Proceeds from loans |
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Repayment of loans |
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Cash overdraft |
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Net cash used in financing activities |
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Net increase (decrease) in cash |
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Cash - beginning of period |
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Cash - end of period |
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Supplemental disclosure of cash flow information |
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Cash paid for interest |
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Cash paid for income tax |
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Supplemental disclosure of non-cash investing and financing activities |
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Shares issued for common stock payable |
| $ |
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Lease modification |
| $ |
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| $ |
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| 7 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 1 - Organization and Nature of Operations
Organization
The accompanying consolidated financial statements include the accounts of Sentinel Holdings Ltd. (“Sentinel Holdings”) and its majority-owned subsidiaries, United Security Specialists Inc. (“USS”) and Gladiator Solutions Inc. (“Gladiator”) (collectively the “we,” “us,” “our”, or the “Company”). We were incorporated in the State of Nevada on January 23, 2015.
Effective April 2, 2025. the Company effectuated a name change from James Maritime Holdings, Inc. to Sentinel Holdings Ltd. The name change was conducted in order to better reflect the current business activities of the Company and provide better transparency to the markets and our shareholders. The company is currently awaiting approval from FINRA regarding this name change.
Nature of Operations
Our lines of business consist of the following:
USS
Provides professional security personnel enhanced by smartphone-based security applications.
Gladiator
Produced revenues through the distribution of personal protective products, primarily through mail-in orders to customers or via e-commerce sales generated through their website. These sales ceased after the year ended December 31, 2023.
| 8 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2025 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the United States Securities and Exchange Commission on April 28, 2025.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
| 9 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 2 - Summary of Significant Accounting Policies
Liquidity and Going Concern
As reflected in the accompanying consolidated financial statements, for the three months ended March 31, 2025, the Company had:
· | Net loss of $ |
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· | Net cash used in operations was $ |
Additionally, at March 31, 2025, the Company had:
· | Accumulated deficit of $ |
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· | Stockholders’ deficit of $ |
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· | Working capital deficit of $ |
The Company anticipates that it will need to raise additional capital immediately in order to continue to fund its operations. The Company has relied on related parties for debt-based funding of its operations. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully expand to new markets, competition, and the need to enter into collaborations with other companies or acquire other companies to enhance or complement its product and service offerings.
| 10 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
There can be no assurances that financing will be available on terms which are favorable, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay, reduce, or cease its operations.
We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company had cash on hand of $0 at March 31, 2025.
The Company has historically incurred significant losses since inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2025, and our current capital structure including equity-based instruments and our obligations and debts.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a 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.
Management’s strategic plans include the following:
| · | Expand into new and existing markets, |
| · | Obtain additional debt and/or equity-based financing, |
| · | Collaborations with other operating businesses for strategic opportunities; and |
| · | Acquire other businesses to enhance or complement our current business model while accelerating our growth. |
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Principles of Consolidation and Non-Controlling Interest
The consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. The Company consolidates entities where it has a controlling financial interest, as defined by ASC 810, "Consolidation".
In accordance with ASC 810-10, consolidation applies to:
| · | Entities with more than 50% voting interest, unless control is not with the Company; and |
| · | Variable Interest Entities (VIEs), where the Company is the primary beneficiary, possessing both (i) power over significant activities and (ii) the obligation to absorb losses or receive benefits. |
All intercompany transactions and balances are eliminated in consolidation per ASC 810-10-45. The Company continuously evaluates its investments and relationships to assess consolidation requirements.
For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other than the Company. The aggregate of the income or loss and corresponding equity that is not owned by us is included in Non-Controlling Interests in the consolidated financial statements.
For the three months ended March 31, 2025 and the year ended December 31, 2024, the Company’s allocation to the non-controlling interest represents ownership of 87% of Gladiator Solutions, Inc. The following table sets for the changes in non-controlling interest for the three months ended March 31, 2025 and December 31, 2024:
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| Non-Controlling |
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| Interest |
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Balance at December 31, 2024 |
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| ( | ) |
Net loss attributable to non-controlling interest |
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| ( | ) |
Balance at March 31, 2025 |
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| ( | ) |
Business Segments and Expense Disclosure
The Company follows ASC 280, Segment Reporting, which requires public entities to report financial and descriptive information about their reportable operating segments.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
ASC 280-10-50-1 states that an operating segment is a component of a public entity that:
| · | Engages in business activities from which it may earn revenues and incur expenses; |
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| · | Has operating results that are regularly reviewed by the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, to make decisions about resource allocation and performance assessment; and |
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| · | Has discrete financial information available. |
Under ASC 280-10-50-5, a public entity is required to report separately only those operating segments that meet certain quantitative thresholds. However, as specified in ASC 280-10-50-11, if a company’s business activities are managed as a single operating segment and reviewed on a basis, the company may report as a single segment. The Company has determined that it operates as one reportable segment, as its CODM reviews the business as a whole rather than by distinct business components.
Customers in the United States accounted for 100% of our revenues. We do not have any property or equipment outside of the United States.
Application of ASU 2023-07 – Segment Expense Disclosure Requirements
In October 2023, the FASB issued ASU 2023-07, which enhances segment reporting by requiring public entities to disclose significant segment expenses that are regularly reviewed by the CODM. However, under ASC 280-10-50-31, these requirements apply only to entities with multiple reportable segments. Since the Company operates as a single reportable segment, it is not required to disclose segment expenses separately.
Although ASC 280-10-50-32 allows entities to voluntarily disclose additional segment-related information, including a breakdown of expenses, the Company is not required to present individual expense categories, and has not done so, because its operations are reviewed and managed as a single segment.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (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.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
In accordance with ASC 250-10-50-4, changes in estimates are recorded in the period in which they become known and are accounted for prospectively. The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative and qualitative assessments that it believes are reasonable under the circumstances.
Significant estimates for the three months ended March 31, 2025 and 2024 include:
| · | Allowance for doubtful accounts and other receivables |
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| · | Valuation of loss contingencies |
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| · | Valuation of stock-based compensation |
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| · | Estimated useful lives of property and equipment |
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| · | Impairment of intangible assets |
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| · | Implicit interest rate in right-of-use operating leases |
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| · | Uncertain tax positions |
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| · | Valuation allowance on deferred tax assets |
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, supply chain constraints, and liquidity challenges.
In accordance with ASC 275, "Risks and Uncertainties," the Company evaluates and discloses risks that could materially affect its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include:
| 1. | Industry Cyclicality (ASC 275-10-50-6) – The Company's financial performance is affected by industry trends, seasonality, and shifts in market demand. |
| 2. | Macroeconomic Conditions (ASC 275-10-50-8) – Economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer purchasing behavior and the Company’s revenue streams. |
| 3. | Pricing Volatility (ASC 275-10-50-4) – The cost and availability of raw materials, supply chain disruptions, and competitive pricing pressures can lead to fluctuations in gross margins and profitability. |
Given these 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.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance with Financial Accounting Standards Board (FASB) 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.
Fair Value Hierarchy
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 markets. |
| · | 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. |
| · | Level 3 – Unobservable inputs that require significant judgment, including management assumptions and estimates based on available market data. |
The classification of an asset or liability within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Level 3 valuations generally require more judgment and complexity, often involving a combination of cost, market, or income approaches, as well as assumptions about market conditions, pricing, and other factors.
Fair Value Determination and Use of External Advisors
The Company assesses the fair value of its financial instruments and, where appropriate, may engage external valuation specialists to assist in determining fair value. While management believes that recorded fair values are reasonable, they may not necessarily reflect net realizable values or future fair values.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Financial Instruments Carried at Historical Cost
The Company’s financial instruments—including cash, accounts receivable, accounts payable, and accrued expenses (including related party balances)—are recorded at historical cost. As of December 31, 2024 and 2023, respectively, the carrying amounts of these instruments approximated their fair values due to their short-term maturities.
Fair Value Option Under ASC 825
ASC 825-10, Financial Instruments, permits entities to elect the fair value option for certain financial assets and liabilities. This election is made on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If elected, unrealized gains and losses are recognized in earnings at each reporting date. The Company has not elected the fair value option for any of its outstanding financial instruments.
Cash and Cash Equivalents and Concentration of Credit Risk
For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
At March 31, 2025 and 2024, respectively, the Company did not have any cash equivalents.
The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $
At March 31, 2025 and 2024, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits.
Accounts Receivable
The Company accounts for accounts receivable in accordance with FASB ASC 310, Receivables. Receivables are recorded at their net realizable value, which represents the amount management expects to collect from outstanding customer balances (ASC 310-10-35-7).
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The Company extends credit to customers based on an evaluation of their financial condition and other factors. The Company does not require collateral, and interest is not accrued on overdue accounts receivable (ASC 310-10-45-4).
Allowance for Doubtful Accounts
Management periodically assesses the collectability of accounts receivable and establishes an allowance for doubtful accounts as needed. The allowance is determined based on:
| · | A review of outstanding accounts, |
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| · | Historical collection experience, and |
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| · | Current economic conditions (ASC 310-10-35-9). |
Accounts deemed uncollectible are written off against the allowance when determined to be uncollectible (ASC 310-10-35-10).
Allowance for doubtful accounts was $
The following is a summary of the Company’s accounts receivable at March 31, 2024 and December 31, 2024:
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Less: allowance for doubtful accounts |
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Accounts receivable - net |
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Applicability of ASC 326 (“CECL”)
The Company has assessed the applicability of ASC 326, Financial Instruments—Credit Losses (CECL), which requires an expected credit loss model for financial assets measured at amortized cost. However, ASC 326 primarily applies to financial institutions and entities with long-term financing receivables.
Since the Company’s accounts receivable are short-term trade receivables that do not meet the scope requirements of ASC 326-20-15-2, it continues to apply the incurred loss model under ASC 310 for estimating credit losses.
For the three months ended March 31, 2025 and 2024, no such losses were recorded.
Concentrations
The Company evaluates and discloses significant concentrations of risk in accordance with FASB ASC 275-10, Risks and Uncertainties. These risks may arise from customer concentrations, vendor reliance, geographic dependence, or other economic factors that could materially impact the Company’s financial position, results of operations, and cash flows.
A concentration exists 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 (ASC 275-10-50-16).
Customer and Sales Concentrations
The Company’s revenue stream may be dependent on a limited number of key customers. A loss of any significant customer, a decline in demand from such customers, or a deterioration in their financial condition could negatively impact the Company’s future revenues and profitability.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Accounts Receivable Concentrations
The Company extends credit to customers based on their financial strength, payment history, and other relevant factors. A significant concentration of accounts receivable from a limited number of customers could expose the Company to credit risk and potential collection issues. The Company regularly evaluates the creditworthiness of its customers and may require advance payments, letters of credit, or other credit enhancements to mitigate risks.
The Company has the following concentrations related to its accounts receivable greater than 10% of their respective totals:
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The company has the following concentrations related to its sales greater than 10% of their respective totals:
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Management’s Risk Mitigation Strategies
To address these risks, the Company implements the following strategies:
| · | Diversification of Customer Base – Actively seeking new customers to reduce reliance on a small number of key accounts. |
| · | Credit Risk Management – Regularly reviewing customer creditworthiness and adjusting credit terms as necessary. |
The Company continuously monitors these risks and adjusts its business strategies to reduce its exposure to customer, credit, and supplier risks, ensuring financial stability and operational continuity.
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy.
In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
There were no impairment losses for the three months ended March 31, 2025 and 2024, respectively.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets.
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 reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
There were no impairment losses for the three months ended March 31, 2025 and 2024, respectively.
Derivative Liabilities
The Company evaluates financial instruments containing characteristics of both liabilities and equity in accordance with FASB ASC 480, Distinguishing Liabilities from Equity, and FASB ASC 815, Derivatives and Hedging.
Accounting for Derivative Liabilities
Derivative liabilities are revalued at fair value at each reporting period, with changes in fair value recognized in the results of operations as a gain or loss on derivative remeasurement (ASC 815-40-35-4). The Company uses a binomial pricing model to determine the fair value of these instruments.
Conversion and Extinguishment of Derivative Liabilities
When a debt instrument with an embedded conversion option (e.g., convertible debt or warrants) is converted into shares of common stock or repaid, the Company:
| · | Records the newly issued shares at fair value; |
| · | Derecognizes all related debt, derivative liabilities, and unamortized debt discounts; and |
| · | Recognizes a gain or loss on debt extinguishment, if applicable (ASC 470-50-40-2). |
For equity-based derivative liabilities (e.g., warrants) that are extinguished, any remaining liability balance is reclassified to additional paid-in capital (ASC 815-40-35-9).
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Reclassification of Equity Instruments to Liabilities
Equity instruments initially classified as equity may be reclassified as liabilities if they no longer meet equity classification criteria under ASC 815-40-25. In such cases, they are remeasured at fair value on the date of reclassification, with changes recognized in earnings (ASC 815-40-35-8).
Derivative Liability Balances
As of March 31, 2025 and December 31, 2024, the Company’s derivative liabilities were $
Original Issue Discounts and Other Debt Discounts
The Company accounts for original issue discounts (OID) and other debt discounts in accordance with FASB ASC 835-30, Interest—Imputation of Interest. These discounts are recorded as a reduction of the carrying amount of the related debt and are amortized to interest expense over the term of the debt using the effective interest method, unless the straight-line method is materially similar (ASC 835-30-35-2).
Original Issue Discounts (OID)
For certain notes issued, the Company may provide the debt holder with an original issue discount (OID), which is recorded as a debt discount, reducing the face value of the note. The discount is amortized to interest expense over the term of the debt in the Consolidated Statements of Operations.
Stock and Other Equity Issued with Debt
The Company may issue common stock or other equity instruments in connection with debt issuance. When stock is issued, it is recorded at fair value and treated as a debt discount, reducing the carrying amount of the note. These discounts are amortized to interest expense over the life of the debt (ASC 470-20-25-2).
The combined debt discounts, including OID and stock-related discounts, cannot exceed the face amount of the debt (ASU 2020-06).
Debt Issuance Costs
Debt issuance costs, including fees paid to lenders or third parties, are capitalized as a debt discount and amortized to interest expense over the life of the debt in accordance with ASC 835-30-45-1. These costs are presented as a direct deduction from the carrying amount of the debt liability rather than as a separate asset (ASC 835-30-45-3).
Right of Use Assets and Lease Obligations
The Company accounts for right-of-use (ROU) assets and lease liabilities in accordance with FASB ASC 842, Leases. These amounts reflect the present value of the Company’s estimated future minimum lease payments over the lease term, including any reasonably certain renewal options, discounted using a collateralized incremental borrowing rate (ASC 842-20-30-1).
The Company classifies its leases as either operating or finance leases based on the criteria outlined in ASC 842-10-25-2. The Company’s leases primarily consist of operating leases, which are included as Right-of-Use Assets and Operating Lease Liabilities on the consolidated balance sheet.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Short-Term Leases
The Company has elected the short-term lease exemption allowed under ASC 842-20-25-2, whereby leases with a term of 12 months or less are not recorded on the balance sheet. Instead, lease payments are expensed on a straight-line basis over the lease term.
Lease Term and Renewal Options
In determining the lease term, the Company evaluates whether renewal options are reasonably certain to be exercised, as required by ASC 842-10-30-1. Factors considered include:
| · | The useful life of leasehold improvements relative to the lease term, |
| · | The economic performance of the business at the leased location, |
| · | The comparative cost of renewal rates versus market rates, and |
| · | The presence of any significant economic penalties for non-renewal (ASC 842-10-55-26). |
If a renewal option is deemed reasonably certain to be exercised, the ROU asset and lease liability reflect those additional future lease payments. The Company's operating leases contain renewal options with no residual value guarantees. Currently, management does not expect to exercise any renewal options, which are therefore excluded in the measurement of lease obligations.
Discount Rate and Lease Liability Measurement
Since the implicit rate in the leases is not readily determinable, the Company applies an incremental borrowing rate that represents the rate it would incur to borrow on a collateralized basis over a similar term and currency environment (ASC 842-20-30-3).
Lease Impairment
In accordance with ASC 360-10-35, the Company evaluates ROU assets for impairment indicators whenever events or changes in circumstances suggest the carrying amount may not be recoverable. No impairments of ROU assets were recognized for the three months ended March 31, 2025, and 2024 (See Note 9).
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Revenue Recognition
Under Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives, discounts, rebates, and amounts collected on behalf of third parties.
A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account under Topic 606. The Company’s contracts with its customers do not include multiple performance obligations. The Company recognizes revenue when a performance obligation is satisfied by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for such products or services.
The following represents the analysis management has considered in determining its revenue recognition policy:
Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.
None of the Company’s contracts contain a significant financing component.
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately.
If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
The Company’s contracts have a distinct single performance obligation and there are no contracts with variable consideration.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Recognize revenue when or as the Company satisfies a performance obligation
Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
USS
Net revenues from USS primarily consist of security services provided to large residential, industrial, construction and government clients. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does offer discounts, but historically the discounts have been insignificant. The Company satisfies the performance obligation for the agreed-upon period of time and location and records revenues after completion. There are no services that would be considered fulfilled over an extended period of time and necessitate different accounting treatment.
Our typical services contract for the guard business is for one month at the start of the engagement of services and then goes month-to-month thereafter. Revenues are net 30 after the services are provided for any 30-day period. We often times use a factoring bank on receivables due to the requirement that we front the guard expenses for the initial 30 days. There is no required revenue recognition after the completion of the initial 30-day contract.
Gladiator
Net revenues from Gladiator primarily consisted of sales of personal protective products, including armor, plates, helmets, shields, and accessories shipped directly to customers. All revenue transactions for Gladiator comprise a single performance obligation, which consists of the sale of products to customers either through wholesale, intermediary, or direct-to-consumer channels. The company satisfies the performance obligation and records revenues when transfer of control has passed to the customer, based on the terms of sale. In all of the Companies revenue channels, transfer of control takes place at the point of sale upon shipment to customer.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Disaggregation of Revenues
The following represents the Company’s disaggregation of revenues for the three months ended March 31, 2025 and 2024:
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2025 |
|
| 2024 |
| ||||||||||
|
| Revenue |
|
| % of Revenues |
|
| Revenue |
|
| % of Revenues |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Personal security services |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
Total Sales |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
Cost of Goods Sold
Cost of sales is recognized in the same period as the related revenue in accordance with FASB ASC 705, Cost of Sales and Services. The Company regularly evaluates its cost structure to ensure efficient operational cost management.
Cost of sales primarily include automobile costs and wages/benefits paid to our employees.
Income Taxes
The Company accounts for income taxes using the asset and liability method prescribed by FASB ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial reporting and tax bases of assets and liabilities. These amounts are measured using enacted tax rates expected to apply in the periods when temporary differences reverse (ASC 740-10-30-8).
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The effect of a change in tax rates on deferred tax balances is recognized as income or expense in the period that includes the enactment date (ASC 740-10-45-4).
Uncertain Tax Positions
The Company evaluates uncertain tax positions in accordance with ASC 740-10-25, which requires that a tax position be recognized in the financial statements only if it is more likely than not (greater than 50% likelihood) to be sustained upon examination by tax authorities.
As of December 31, 2024 and 2023, respectively, the Company had no uncertain tax positions that qualified for recognition or disclosure in the financial statements (ASC 740-10-50-15).
The Company also recognizes interest and penalties related to uncertain tax positions in other expense in the consolidated statement of operations (ASC 740-10-45-25). No interest and penalties were recorded for the three months ended March 31, 2025 and 2024, respectively.
Valuation of Deferred Tax Assets
The Company’s deferred tax assets include certain future tax benefits, such as net operating losses (NOLs), tax credits, and deductible temporary differences. Under ASC 740-10-30-5, a valuation allowance is required if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
The Company reviews the realizability of deferred tax assets on a quarterly basis, or more frequently if circumstances warrant, considering both positive and negative evidence (ASC 740-10-30-16).
Factors Considered in Valuation Allowance Assessment
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The Company evaluates multiple factors in determining whether a valuation allowance is necessary, including:
| · | Historical earnings trends (cumulative pre-tax income or losses in the most recent three-year period) |
| · | Future financial projections, including expected taxable income based on long-term estimates of business performance and market conditions |
| · | Statutory carryforward periods for net operating losses and other deferred tax assets |
| · | Prudent and feasible tax planning strategies that could impact the realization of deferred tax assets |
| · | Nature and predictability of temporary differences and the timing of their reversal |
| · | Sensitivity of financial forecasts to external factors such as commodity prices, market demand, and operational risks |
While cumulative three-year losses are a strong indicator that a valuation allowance may be needed, ASC 740-10-30-23 states that a valuation allowance determination is not solely based on past losses—all available positive and negative evidence must be considered.
Valuation Allowance Determination
At March 31, 2025 and 2024, respectively, the Company recorded a full valuation allowance against its deferred tax assets, resulting in a net carrying amount of $0. This determination was based on cumulative losses in recent years and the lack of sufficient positive evidence to support the realization of deferred tax assets in the near term (ASC 740-10-30-24).
The Company will continue to evaluate its valuation allowance each reporting period and will recognize deferred tax assets in the future if sufficient positive evidence emerges to support their realization.
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Advertising Costs
Advertising costs are expensed as incurred, in accordance with ASC 720-35, "Advertising Costs." These costs are recognized as operating expenses in the period in which they are incurred and are classified within general and administrative expenses in the statements of operations.
The Company does not capitalize direct-response advertising costs, as they do not meet the criteria for deferral under ASC 720-35-25-1.
The Company recognized $
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation – Stock Compensation," using the fair value-based method. Under this guidance, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, typically the vesting period.
ASC 718 establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. It also applies to transactions where an entity incurs liabilities based on the fair value of its equity instruments or liabilities that may be settled using equity instruments.
In compliance with ASU 2018-07, the Company applies the fair value method for equity instruments granted to both employees and non-employees, aligning non-employee share-based payment accounting with that of employees. The fair value of stock-based compensation is determined as of the grant date or the measurement date (i.e., when the performance obligation is completed) and is recognized over the vesting period in accordance with ASC 718.
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The Company determines the fair value of stock options using the Black-Scholes option pricing model, considering the following key assumptions:
| · | Exercise price – The agreed-upon price at which the option can be exercised. |
| · | Expected dividends – The anticipated dividend yield over the expected life of the option. |
| · | Expected volatility – Based on historical stock price fluctuations. |
| · | Risk-free interest rate – Derived from U.S. Treasury securities with similar maturities. |
| · | Expected life of the option – Estimated based on historical exercise patterns and contractual terms. |
Additionally, the Company follows the guidance under ASU 2016-09, which introduced amendments to simplify certain accounting aspects of share-based compensation, including:
| · | The treatment of tax benefits and tax deficiencies in income tax reporting. |
| · | The option to recognize forfeitures as they occur rather than estimating them upfront. |
| · | Cash flow classification for certain tax-related transactions. |
The Company continues to evaluate and apply the latest Accounting Standards Updates (ASUs) and interpretive releases related to stock-based compensation to ensure compliance with evolving financial reporting requirements.
Stock Warrants
In connection with certain financing transactions (debt or equity), consulting arrangements, or strategic partnerships, the Company may issue warrants to purchase shares of its common stock. These standalone warrants are not puttable or mandatorily redeemable by the holder and are classified as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity.”
The fair value of warrants issued for compensation purposes is measured using the Black-Scholes option pricing model, consistent with the guidance in ASC 718-10-30. However, if warrants meet the definition of derivative liabilities under ASC 815, “Derivatives and Hedging,” fair value is determined using a binomial pricing model or other appropriate valuation techniques, as required by ASC 815-40-15.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Accounting Treatment of Warrants
| · | Warrants issued in conjunction with common stock issuance are initially recorded at fair value as a reduction in Additional Paid-In Capital (APIC), in accordance with ASC 815-40-25. |
| · | Warrants issued for services are recorded at fair value and expensed over the requisite service period or immediately upon issuance if no service period exists, as per ASC 718-10-25. |
| · | Warrants classified as liabilities due to settlement features or pricing adjustments are remeasured at fair value each reporting period, with changes recognized in earnings, following ASC 815-40-35. |
Basic and Diluted Earnings (Loss) per Share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, "Earnings Per Share." The calculation of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding, including certain other shares committed to be issued.
Basic Earnings Per Share (EPS)
Basic EPS is calculated using the two-class method, as prescribed by ASC 260-10-45-60, and is computed as follows:
| · | Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings to participating securities. |
| · | Losses are not allocated to participating securities in accordance with ASC 260-10-45-61. |
| · | The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted stock units (“RSUs”), for which no future service is required. |
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Diluted Earnings Per Share (EPS)
Diluted EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported, as required by ASC 260-10-45-45.
| · | Diluted EPS is computed by taking the sum of: |
| ○ | Net earnings available to common shareholders |
| ○ | Dividends on preferred shares |
| ○ | Dividends on dilutive mandatorily redeemable convertible preferred shares |
| ○ | Divided by the weighted average number of common shares outstanding and certain other shares committed to be issued, plus all dilutive common stock equivalents during the period, such as: |
| ■ | Stock options |
| ■ | Warrants |
| ■ | Convertible preferred stock |
| ■ | Convertible debt |
| · | Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) qualify as participating securities under the two-class method, per ASC 260-10-45-62. |
Net Loss Per Share Considerations
In computing net loss per share, unvested shares of common stock are excluded from the denominator, as required by ASC 260-10-45-48.
Participating Securities & Share-Based Compensation
Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively. Therefore:
| · | Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating security under ASC 260-10-45-59. |
| · | RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend equivalents are forfeitable (ASC 718-10-25). |
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The following potentially dilutive equity securities outstanding as of March 31, 2025 and 2024 were as follows:
|
| March 31, 2025 |
|
| March 31, 2024 |
| ||
Warrants |
|
|
|
|
|
| ||
Warrants included as commons stock equivalents represent those that are fully vested and exercisable.
Based on the potential common stock equivalents noted above at March 31, 2025, the Company has sufficient authorized shares of common stock (
Subscription and Shareholder Receivables
The Company records stock issuances at the effective date. If the amounts are not funded upon issuance, the Company records a subscription receivable or shareholder receivable as an asset on the balance sheet. When subscription receivables or shareholder receivables are not received prior to the balance sheet date in satisfaction of the requirements under ASC 505, Equity, the subscription or shareholder receivable is reclassified as a contra account to stockholder’s equity (deficit) on the balance sheet.
Shareholder receivables represent amounts due from shareholders. If the shareholder does not fund the receivable prior to the balance sheet date, the Company records a receivable that is reclassified as a contra account to stockholder’s deficit on the balance sheet. At December 31, 2024, $
Related Parties
The Company defines related parties in accordance with ASC 850, "Related Party Disclosures," and SEC Regulation S-X, Rule 4-08(k). Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Related parties include, but are not limited to:
| · | Principal owners of the Company. |
|
|
|
| · | 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. |
|
|
|
| · | 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.
The Company discloses all material related party transactions, including:
| · | The nature of the relationship between the parties. |
| · | A description of the transaction(s), including terms and amounts involved. |
| · | Any amounts due to or from related parties as of the reporting date. |
| · | Any other elements necessary for a clear understanding of the transactions' effects on the financial statements. |
Disclosures are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose material related party transactions and their effects on the financial position and results of operations.
During 2024, the Company determined that the balance of $7,400, which was due from a former member of Gladiator management, was uncollectible. The Company has recorded this as bad debt expense – related party, which is a component of general and administrative expenses in the accompanying consolidated statements of operations.
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Recent Accounting Standards
ASU 2022-02 – Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the FASB issued ASU 2022-02, which:
| · | Eliminates the troubled debt restructuring (TDR) model for creditors under ASC 310, "Receivables." |
| · | Requires enhanced vintage disclosures related to credit losses, including gross write-offs by year of origination. |
| · | Updates the accounting guidance under ASC 326, "Financial Instruments – Credit Losses," to enhance disclosures regarding loan refinancings and restructurings for borrowers experiencing financial difficulty. |
The Company adopted ASU 2022-02 on January 1, 2023. The adoption did not have a material impact on the Company's consolidated financial statements.
ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, which enhances disclosure requirements for reportable segments by:
| · | Requiring enhanced disclosures of significant segment expenses. |
| · | Aligning segment reporting requirements with information regularly reviewed by management. |
The Company adopted ASU 2023-07 on January 1, 2024. The adoption did not have a material impact on the Company's consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, which enhances income tax disclosure requirements by:
| · | Standardizing and disaggregating rate reconciliation categories. |
| · | Requiring disclosure of income taxes paid by jurisdiction. |
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
This ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early adoption is permitted.
The Company is currently assessing the impact of ASU 2023-09 on its income tax disclosures and reporting requirements.
Other Accounting Standards Updates
The FASB has issued various technical corrections and industry-specific updates that are not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
Other Recent Updates
Various other ASUs have been issued that primarily contain technical corrections or industry-specific guidance. These updates are not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no material effect on the consolidated results of operations, stockholders’ deficit, or cash flows.
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 3 – Property and Equipment
Property and equipment consisted of the following:
|
|
|
|
|
|
|
| Estimated Useful |
| |||
|
| March 31, 2025 |
|
| December 31, 2024 |
|
| Lives (Years) |
| |||
|
|
|
|
|
|
|
|
|
| |||
Furniture and fixtures |
| $ |
|
| $ |
|
|
|
| |||
Vehicles |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
Total property and equipment - net |
| $ |
|
| $ |
|
|
|
|
| ||
Depreciation and amortization expense for the three months ended March 31, 2025 and 2024 was $
During the three months ended March 31, 2025, the Company donated several vehicles to charitable organizations with a fair value of $
These amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations.
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 4 – Intangible Assets
Intangible assets consisted of the following:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
|
|
|
|
|
| ||
Customer relationships |
| $ |
|
| $ |
| ||
Supplier relationship |
|
|
|
|
|
| ||
Employee expertise |
|
|
|
|
|
| ||
Software development costs |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Less: accumulated depreciation |
|
|
|
|
| ( | ) | |
Less: impairment loss |
|
|
|
|
| ( | ) | |
Total property and equipment - net |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
| Estimated Useful |
| |||
|
| March 31, 2025 |
|
| December 31, 2024 |
|
| Lives (Years) |
| |||
|
|
|
|
|
|
|
|
|
| |||
Furniture and fixtures |
| $ |
|
| $ |
|
|
|
| |||
Vehicles |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
Total property and equipment - net |
| $ |
|
| $ |
|
|
|
|
| ||
During the three months ended March 31, 2025 and 2024, the Company recognized no impairment losses.
As of December 31, 2023, management had not anticipated the significant decline in Gladiator’s future sales and, as a result, recorded only a partial impairment.
In 2024, the loss of key customers led to a significant decline in sales relative to 2023, resulting in revenue projections that could not support the current valuation of the intangible assets. In accordance with ASC 360—“Impairment or Disposal of Long-Lived Assets”—which requires that an impairment loss be recognized when an asset’s carrying amount exceeds its estimated fair value, management determined that the intangible assets used by USS were no longer expected to generate future economic benefits. Consequently, a full impairment loss equal to the carrying amount of these assets was recorded, reducing their balance to $
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 5 – Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at March 31, 2025 and December 31, 2024 were as follows:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Cash overdraft |
|
|
|
|
|
|
| |
Payroll tax liabilities |
|
|
|
|
|
| ||
Accrued interest payable |
|
|
|
|
|
| ||
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
As of March 31, 2025, the Company has accrued payroll and related payroll tax liabilities totaling $
In March 2025, the Company became aware of this error. In response, management has initiated a review of its payroll tax processes and is engaging external advisors to help address the non-compliance and communicate with the relevant tax authorities. The Company anticipates reaching an agreement on a repayment plan.
Because of this non-compliance, the Company may incur penalties and interest, which at this time, we are unable to estimate.
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 6 – Debt
The following represents a summary of the Company’s debt (third party debt for notes payable and loan payables (including those owed on vehicles), including key terms, and outstanding balances at March 31, 2025 and December 31, 2024, respectively.
Notes Payable
The following table summarizes the outstanding notes payable amount owed by the Company as of March 31, 2025 and December 31, 2024:
|
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
| Kapitus | (a) |
| $ |
|
| $ |
| ||
| Henry Sierra | (b) |
|
|
|
|
|
| ||
| Clearview | (d) |
|
|
|
|
|
| ||
Padang |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
| ||
Notes payable - current |
|
|
|
|
|
|
| ||
Notes payable - long-term |
|
| $ |
|
| $ |
| ||
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
(a)
On September 15, 2022, Gladiator received additional funding of $
(b)
On September 23, 2021, Mr. Sierra resigned from his position of employment with USS. As a result, USS agreed to repurchase 100 shares of common stock held by Mr. Sierra and in exchange, issued a promissory note with a repurchase amount of $
(c)
On October 6, 2023, USS entered into a promissory note agreement with Ashley Padilla for $
(d)
On August 4, 2023, USS entered into a promissory note agreement with Clearview Funding Solutions for $
(d)
On June 5, 2024, USS entered into a promissory note agreement with Clearview Funding Solutions for $
(e)
On October 31, 2023, SENTINEL HOLDINGS LTD entered into a promissory note agreement with Padang Padang, LTD for $
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Loans Payable
The following table summarizes the outstanding notes payable amount owed by the Company as of March 31, 2025 and December 31, 2024:
|
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
| Quattro Capital | (a) |
| $ |
|
| $ |
| ||
| Merchant cash advances | (b) |
|
|
|
|
|
| ||
| Vehicle loans | (c) |
|
|
|
|
|
| ||
| Bayview Funding | (d) |
|
|
|
|
|
| ||
| SBA Loan | (e) |
|
|
|
|
|
| ||
| Padilla | (f) |
|
|
|
|
|
| ||
Total |
|
|
|
|
|
|
| ||
Loans payable - current |
|
|
| ( | ) |
|
| ( | ) |
Loans payable - long-term |
|
| $ |
|
| $ |
| ||
(a)
On December 9, 2022, Gladiator entered into a collateralized loan of the Company’s inventory with Quattro Capital LLC, a third-party lender. The Company received $
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SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
(b)
On September 16, 2022, Gladiator entered into a collateralized loan of the Company’s future receipts of receivables with Pinnacle Business Funding LLC (“PBF”). The Company received net amount of $
(c)
Upon acquisition of USS at September 23, 2022, the Company assumed the liabilities for eleven vehicle loans from USS which together had an outstanding total amount of $
(d)
On April 13, 2023, USS entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Bay View Funding (the “Purchaser”). The Factoring Agreement allows the Company to access up to $
The Factoring Agreement has an initial term of 12 months and will be renewed annually, unless terminated in accordance with the Factoring Agreement. The Company may terminate the Factoring Agreement prior to the end of the initial term by providing a 60 days written notice. The Company can terminate the agreement at any time by providing a 60 days prior written notice and paying an early termination fee equal to 0.50% of the maximum credit amount.
As of March 31, 2025 and December 31, 2024, the principal balance was $
(e)
On March 3, 2021, the Company received a loan from the U.S. Small Business Administration (“SBA”) in the amount of $
(f)
In April 2024, USS entered into a promissory note agreement with Ashley Padilla for $
| 44 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Convertible Notes
On February 8, 2021, Gladiator entered into a note agreement with Pink Holdings LLC. The Company received $
On February 26, 2021, Gladiator entered into a note agreement with Pink Holdings LLC. The Company received $
As of December 31, 2024, these notes have not been converted and are in default.
Note 7 – Derivative Liabilities
The above convertible notes contained embedded conversion options with a conversion price that could result in issuing an indeterminate amount of future common stock to settle the host contract. Accordingly, the embedded conversion options are required to be bifurcated from the host instrument (convertible note) and treated as a liability, which is calculated at fair value, and marked to market at each reporting period.
| 45 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
During the three months ended March 31, 2025 and the year ended December 31, 2024, respectively, the Company used the Black-Scholes pricing model to estimate the fair value of its embedded conversion option liabilities on both the commitment date and the remeasurement date with the following inputs:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
Expected term (years) |
|
|
|
|
|
| ||
Expected volatility |
|
| % |
|
| % | ||
Expected dividends |
|
| % |
|
| % | ||
Risk free interest rate |
|
| % |
|
| % | ||
A reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows at March 31, 2025 and December 31, 2024:
| Derivative liabilities - December 31, 2024 |
| $ |
| |
| Fair value mark to market adjustment |
|
| ( | ) |
| Derivative liabilities - March 31, 2025 |
| $ |
| |
|
|
|
|
|
|
|
| 306,755 |
|
Changes in fair value of derivative liabilities are included in other income (expense) in the accompanying consolidated statements of operations.
During the three months ended March 31, 2025 and 2024, the Company recorded a change in fair of derivative liabilities – (losses)/gains of ($
In connection with bifurcating embedded conversion options and accounting for certain convertible notes payable, the Company computes a fair value on the commitment date, and upon the initial valuation of this instrument, determines that if the fair value of the liability exceeds the proceeds of the convertible debt host instrument; as a result, the Company records a debt discount at the maximum amount allowed (the face amount of the debt), which requires the excess to be recorded as a derivative expense.
For the three months ended March 31, 2025 and 2024, the Company recorded a derivative expense of $
| 46 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 8 – Fair Value of Financial Instruments
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.
Liabilities measured at fair value on a recurring basis consisted of the following at March 31, 2025 and December 31, 2024:
|
| March 31, 2025 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| December 31, 2024 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| 47 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 9 – Commitments and Contingencies
Operating Leases
The Company accounts for leases in accordance with ASC 842: Leases, which requires lessees to apply the right-of-use (ROU) model by recognizing a right-of-use asset and a lease liability for all leases with terms exceeding
| · | Operating leases: Recognized on a straight-line basis as lease expense over the lease term. |
| · | Finance leases: Recognized with amortization of the ROU asset and interest expense on the lease liability. |
Lessors classify leases as sales-type, direct financing, or operating leases based on whether they transfer risks, rewards, and control of the asset (ASC 842-10-25-2):
| · | If all risks, rewards, and control transfer, the lease is treated as a sale (sales-type lease). |
| · | If risks and rewards transfer but control does not, the lease is classified as financing. |
| · | If neither risks, rewards, nor control transfer, it is classified as an operating lease. |
Lease Recognition and Measurement
The Company evaluates whether an arrangement contains a lease at inception and recognizes the lease in the financial statements upon lease commencement (the date the underlying asset is available for use). ROU assets represent the Company’s right to use an asset over the lease term, while lease liabilities reflect the present value of future lease payments.
| 48 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
At lease commencement:
| · | ROU assets and lease liabilities are initially measured at the present value of lease payments. |
| · | The Company primarily uses its incremental borrowing rate (IBR) to determine the present value of lease payments, except when an implicit rate is readily determinable (ASC 842-20-30-3). |
| · | The IBR is based on market data, adjusted for credit risk and lease term. |
Practical Expedients and Lease Components
The Company applies certain practical expedients to simplify lease accounting:
| · | Lease and non-lease components are combined for classification and measurement, except for direct sales-type leases and production equipment embedded in supply agreements (ASC 842-10-15-37). |
| · | Short-term leases (12 months or less, without purchase or renewal options) are not recorded on the balance sheet (ASC 842-20-25-2). |
Lease Term and Expense Recognition
| · | Lease liabilities include options to extend or terminate when reasonably certain of exercise (ASC 842-10-55-26). |
| · | Operating lease expense is recognized on a straight-line basis over the lease term and reported under general and administrative expenses. |
| · | Variable lease payments based on an index/rate are initially measured using the rate at lease commencement, with differences expensed as incurred (ASC 842-10-30-5). |
Company Lease Commitments
As of March 31, 2024 and December 31, 2024, the Company had no finance leases under ASC 842.
The Company leases its headquarters office. During the year ended December 31, 2020, the
| 49 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
As of March 31, 2023, the Company was in default for the Saratoga Lease due to non-payment. Subsequent to March 31, 2023, the Company terminated the Saratoga Lease and entered into a settlement agreement with the landlord.
On January 30, 2023, the
The tables below present information regarding the Company's operating lease assets and liabilities at March 31, 2025 and December 31, 2024, respectively:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Operating lease - right-of-use asset - non-current |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease liability |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Weighted-average remaining lease term (years) |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Weighted-average discount rate |
|
| % |
|
| % | ||
The components of lease expense were as follows:
|
| March 31, 2025 |
|
| March 31, 2024 |
| ||
|
|
|
|
|
|
| ||
Operating lease costs |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Amortization of right-of-use operating lease asset |
| $ |
|
| $ |
| ||
Lease liability expense in connection with obligation repayment |
|
|
|
| $ |
| ||
Total operating lease costs |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental cash flow information related to operating leases was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash outflows from operating lease (obligation payment) |
| $ |
|
| $ |
| ||
Right-of-use asset obtained in exchange for new operating lease liability |
| $ |
|
| $ |
| ||
| 50 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Future minimum lease payments under non-cancellable leases for the three months ended March 31, 2025 were as follows:
2025 ( 9 Months) |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Total undiscounted cash flows |
|
|
| |
Less: amount representing interest |
|
| ( | ) |
Present value of operating lease liability |
|
|
| |
Less: current portion of operating lease liability |
|
|
| |
Long-term operating lease liability |
| $ |
|
Contingencies – Legal Matters
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 March 31, 2025 and December 31, 2024, respectively, the Company is not aware of any litigation, pending litigation, or other transactions that would require accrual or disclosure, except for the following:
Gladiator
Historically, the Gladiator brand has been an important part of the Company and an area of focus for future growth and development. Unfortunately, because the Company has been seeking damages from the prior management of Gladiator, the future of the brand has been uncertain. While the Company is confident that it will prevail in litigation, management remains hesitant to invest additional resources in developing the brand before the outcome of the litigation has been adjudicated. Accordingly, brand development efforts remain in a holding pattern, but management intends to reinvest and relaunch the brand once they have clarity about its future. We continue to believe that the strength of the brand is an asset to the Company based on the reputation and recognition that it commands in the market. The operations, while significantly pared back, are active but Gladiators future operations are uncertain.
| 51 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Note 10 – Stockholders’ Deficit
At March 31, 2025 and December 31, 2024, respectively, the Company had three (3) classes of stock:
Preferred Stock
| - | |
| - | Par value - $ |
| - | Voting – none |
| - | Dividends - none |
| - | Liquidation preference – none |
| - | Rights of redemption - none |
| - | Conversion rights - none |
Preferred Stock – Series A
| - | |
| - | |
| - | Par value - $ |
| - | Voting – |
| - | Dividends - none |
| - | Liquidation preference – none |
| - | Rights of redemption - none |
| - | Conversion rights - none |
Preferred Stock – Series B
| - | |
| - | |
| - | Par value - $ |
| - | Voting – |
| - | Dividends - none |
| - | Liquidation preference – none |
| - | Rights of redemption - none |
| - | Conversion rights – 50:1 into common |
| 52 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Common Stock
| - | |
| - | |
| - | Par value - $ |
| - | Voting - |
Equity Transactions for the Three Months Ended March 31, 2025
None
Equity Transactions for the Year Ended December 31, 2024
Stock and Warrants Issued for Cash
On December 9, 2024, the Company issued
On November 4, 2024, the Company issued
On October 30, 2024, the Company issued
On August 26, 2024, the Company issued
On August 26, 2024, the Company issued
On August 12, 2024, the Company issued
On July 26, 2024, the Company issued
On July 25, 2024, the Company issued
On June 28, 2024, the Company issued
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| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
On June 18, 2024, the Company issued
Stock Issued for Services – Related Party
The Company’s Class B, Preferred Stock is not traded in an observable public market and there were no other third-party cash offerings to establish a fair value for these preferred shares. However, in accordance with ASC 470 “Debt”, under its parity value (as-converted value), this represented the best evidence of fair value on the acquisition date as these preferred shares convert on a 50 for 1 basis (see above) into common stock.
On September 6, 2024, the Company issued
The Company determined the valuation of this transaction as follows:
Quantity of Series B, preferred stock issued majority shareholder |
|
|
| |
Conversion ratio of Series B, preferred stock into common stock |
|
|
| |
Equivalent Series A, common shares |
|
|
| |
Cash offering price for common shares |
| $ |
| |
Value of Series A, preferred stock issued |
| $ |
|
Stock Issuance and Related Cancellation – Gladiator Stock Purchase
Pursuant to the terms of the Gladiator Stock Purchase Agreement dated December 19, 2021, JMTM acquired
| 54 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Warrants Issued for Services
On April 8, 2024, the Company issued
Warrant Valuation Assumptions – 2024 Grants
The fair value of all warrants granted during the year ended December 31, 2024 were determined using a Black-Scholes option pricing model with the following inputs:
Expected term (years) |
|
|
| |
Expected volatility |
|
| % | |
Expected dividends |
|
| % | |
Risk free interest rate |
|
| % |
| 55 |
| Table of Contents |
SENTINEL HOLDINGS LTD AND SUBSIDIARIES
F/K/A JAMES MARITIME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Warrants
Warrant activity for the three months ended March 31, 2025, and the year ended December 31, 2024 are summarized as follows:
|
|
|
|
|
|
|
| Weighted |
|
|
|
| ||||
|
|
|
|
|
|
|
| Average |
|
|
|
| ||||
|
|
|
|
| Weighted |
|
| Remaining |
|
| Aggregate |
| ||||
|
| Number of |
|
| Average |
|
| Contractual |
|
| Intrinsic |
| ||||
Warrants |
| Warrants |
|
| Exercise Price |
|
| Term (Years) |
|
| Value |
| ||||
Outstanding - December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Vested and Exercisable - December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Granted |
|
|
|
| $ |
|
|
|
|
|
|
|
|
| ||
Exercised |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled/Forfeited |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding - December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Vested and Exercisable - December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Granted |
|
| - |
|
| $ |
|
|
|
|
|
|
|
|
| |
Exercised |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled/Forfeited |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding - March 31, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Vested and Exercisable - March 31, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
| 56 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This quarterly report contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words “believe,” “anticipate,” “expect,” “will,” “estimate,” “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. The terms “Sentinel”, “SNTL”, “we,” “us,” “our,” and the “Company” refer to Sentinel Holdings Ltd and Subsidiaries formerly known as James Maritime Holdings Inc. and Subsidiaries, a Nevada corporation.
Business Overview
Sentinel Holdings Ltd, a Nevada corporation (the “Company”), conducts its business through its wholly owned subsidiary, United Security Specialists Inc. (“USS”), and its majority-owned subsidiary, Gladiator Solutions Inc. (“Gladiator”). Effective April 2, 2025, the Company changed its name to Sentinel Holdings Ltd. USS provides professional security personnel and services, enhanced by smartphone-based security applications, while Gladiator’s operations, previously focused on personal protective products, are currently limited due to ongoing litigation. Both subsidiaries are based in California.
As of March 31, 2025, the Company’s primary business is providing armed and unarmed security services through its subsidiary, United Security Specialists Inc. (“USS”). USS offers professional security personnel and services, including on-site protection, mobile patrol, and event security, enhanced by smartphone-based security applications. USS operates primarily in California and serves a diverse clientele, including businesses, residential communities, and event organizers.
The Company’s other subsidiary, Gladiator Solutions Inc. (“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 ongoing litigation. Gladiator’s operations remain limited, and the Company plans to relaunch the product line and expand its offerings once the litigation is resolved.
The Company is pursuing an aggressive growth strategy through acquisitions in the private security, personal protective equipment, and defense industries. 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.
Industry Background
The U.S. national security budget continues to grow, with a 5.6% increase to $782 billion for Fiscal Year 2022 and an additional 4% increase to $813.3 billion for Fiscal Year 2023. In May 2022, the Additional Ukraine Supplemental Appropriations Act provided $40 billion in support for Ukraine. According to a study by The Insight Partners, the homeland security market is projected to grow from $188.99 billion in 2022 to $275.5 billion by 2028, at a compound annual growth rate of 6.5%. Management believes that strategic acquisitions are key to capturing this expanding market.
| 57 |
| Table of Contents |
About United Security Specialists Inc.
USS Mission
The mission of USS is to recruit, train right and respond early. Our clients should expect day-to-day quality, consistency, and professionalism. Our security personnel are more experienced, better supervised, and are dedicated to the highest level of work.
USS History
USS was built on ethics and integrity. Kyle Madej, as a co-founder of USS, engaged in the security services in 2017 when they discovered a number of industry practices that were neither ethical nor acceptable. Starting USS was an exciting endeavor that had allowed them to utilize and combine their years of experience with their solid work ethic and integrity. We value every client that has partnered with us, and we work to establish a solid relationship with our team. It is the strong relationship bonds that help our company continue to grow and to serve more valued partners.
Our Guards
We have highly trained and committed professionals from law enforcement, military, and security veterans’ communities who are all specializing in providing one thing: on site, visible protection. We take pride in delivering the highest level of trust 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 Services
We pride ourselves in providing the most reliable protection in the security guard industry. With over 10 years of experience, we have proven to be unshakable and trustworthy. To enhance our service, we implement the latest technology into our process. With our mobile app provided by SilverTrac, our guards are able to check in, make reports and take photos in real time as they patrol.
USS will also focus on adding services which customize real-time remote monitoring enhanced by artificial intelligence with timely in person security response.
USS services are grouped into three main categories: | ||
1) On Site Protection | 2) Mobile Patrol | 3) Event Security |
On Site Protection |
As a trusted provider of security specialists in the Bay Area, we understand the importance of reliable, professional and courteous security service, especially when it involves on-site protection at your establishment. Regardless of the scale of your need, from a single guard at the reception area to deploying multiple teams of officers for warehouse protection, USS will provide your organization with a solution that fits for you and your team.
| 58 |
| Table of Contents |
Starting with our risk assessment framework, our expertise is in efficiently and effectively developing solutions that match different combinations of business environments and their specific security needs.
Mobile Patrol |
Having security specialists check in on your property on a scheduled route is a prevalent approach for many businesses that do not require a constant on-site presence. Our risk assessment team will help determine the most appropriate time frame and frequency of the patrolling route. Our licensed security specialists will carry out all of the inspection procedures designed specifically for your site according to plan. All activities are updated through our proprietary real-time reporting and location-tracking technology. We pride ourselves in utilizing the latest technology to enhance our services. With our proprietary mobile app provided by SilverTrac, our guards are able to check in, file incident reports and take photos in real time as they patrol.
___________________________________________________________________________________
Event Security |
| 59 |
| Table of Contents |
USS has an outstanding track record as a top tier event security partner. We have solid experience with security and crowd control at major concerts, outdoors events and convention center programs. Our specialists are well-trained for large events so they can easily identify potential threats and mitigate them to avoid interruptions and disturbances. With USS as your partner, you can focus on the event agenda knowing that your employees and guests are safe, litigation risk is reduced, and your event will go off without a hitch.
___________________________________________________________________________________
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 field, our supervisors and our administrative support. For guard services, this allows us to minimize the #1 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 synagogues and schools.
In the protective products industry, our strength is the unsurpassed quality and value of our products. Not only are our products light weight and comfortable, but we are able to provide the maximum level of ballistic protection at affordable prices, and without compromising performance, durability or quality.
Our desire to drive innovation and create ever lighter, stronger, more practical and effective products and protection solutions is what drives us. As a lean, flexible and nimble company, we are constantly challenging the status quo within our organization, and we are never set in our ways. Through innovation we are able to deliver a lighter, thinner and more effective for ballistic protective plate for law enforcement, military and responsible civilians.
We are always working harder to strengthening the Gladiator community by raising our standards of customer service and overall customer satisfaction. Our team is an industry leader in customer service, and we achieve this by delivering products much faster that our competition, usually within 4-6 weeks while providing timely updates throughout the production process.
About Gladiator Solutions, Inc.
The Company is currently focused on building its operations in the armed and unarmed security business. As of mid-2023, we stopped selling personal protective equipment (PPE), and we currently do not sell any of these products under the Gladiator business. Looking forward, we intend to relaunch the Gladiator product line and hope to expand our offerings in the future to include some of the PPE products described herein. FOR THE AVOIDANCE OF ALL DOUBT AS OF MID-2023 WE STOPPED SELLING PPE AND WE ARE NOT CURRENTLY SELLING ANY GLADIATOR SOLUTIONS, INC. PRODUCTS.
It should be noted that there are aspects of the Gladiator Solutions, Inc. operations that have been tied up in litigation and disputes since roughly mid 2023 and therefore remain in a holding pattern subject to the outcome thereof. Once the litigation involving the Gladiator brands fully resolved, the Company plans to reinvest in the brand name, revamp the product line and relaunch the product line under the established Gladiator brand name, but until such time as these matters are resolved we will maintain the status quo and Gladiator operations will remain highly limited.
Gladiator Solutions Inc. was originally developed by Law Enforcement and Military Personnel with one simple idea…to ensure the highest level of safety and comfort, at an affordable price. Our key emphasis is to provide our customers with lighter, safer and more affordable solutions that have greater ballistic capability. Gladiator Solutions, Inc. developed a full line of hard armor plates, tactical ballistic plate carriers, soft armor inserts and vests, helmets, shields, and other ballistic products and accessories incorporate the latest materials and technology to ensure maximum protection and performance.
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Gladiator products are focused on ultimate protection, extreme comfort, minimal weight products at unsurpassed value.
Gladiator products are tested and certified in accordance with protocols developed by the National Institute of Justice, US Military Specification and European Ballistics Standards.
What Sets the Gladiator Brand Apart?
The Gladiator brand was built about offering top quality solutions for Federal, State and Local Law Enforcement agencies, First Responders, National Armed forces, and Independent Security Contractors. In the protective products industry, our strength is the quality and value of our products. Not only are our products light weight and comfortable, but we are able to provide the maximum level of ballistic protection at affordable prices, and without compromising performance, durability or quality.
Our desire to drive innovation and create ever lighter, stronger, more practical and effective products and protection solutions is what drives us. As a lean, flexible and nimble company, we are constantly challenging the status quo within our organization, and we are never set in our ways. Through innovation we are able to deliver a lighter, thinner and more effective for ballistic protective plate for law enforcement, military and responsible civilians.
We are always working harder to strengthening the Gladiator community by raising our standards of customer service and overall customer satisfaction. Our team is an industry leader in customer service, and we achieve this by delivering products much faster that our competition, usually within 4-6 weeks while providing timely updates throughout the production process.
Unsurpassed Quality & Value
Gladiator branded products provide extreme lightweight, incredible comfort, maximum strength solutions at affordable prices, without compromising performance, durability or quality.
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Round Dispersion Technology (RDT)
Gladiator ballistic plates absorb the round rather than deflecting/spalling like steel or fracturing like Ceramic. RDT spreads the kinetic energy delivered by the round from the point of impact to the surrounding area, diffusing the forces of impact over a larger area and dispersing the force of the round impact.
Testing Protocol
To ensure the highest quality solutions, we age, test and certify our NIJ & Special Threat plates to and beyond certification standards. This enables Gladiator to warranty our plates to 10 years vs. the industry standard 5 years. While most testing is conducted with the widest spread for impact points (to reduce the kinetic energy absorbed by the armor material), we target the smallest area possible with the highest concentration of kinetic energy in a localized area of impact, providing Gladiator with the confidence that we are providing the highest strength to weight ratio solution to our customers.
Materials & Composition
Gladiator products are manufactured from high strength, high durability materials. The performance of these materials enables Gladiator to provide a 10-year warranty. While other products tend to break down over time, our products are manufactured from Polyethylene and Ceramic materials, providing a long and unsurpassed service life.
Compliance
We conduct our sales in accordance with Department of Justice (DOJ) and International Traffic in Arms Regulations (ITAR).
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.
Risks Associated with Our Business
Our business is subject to numerous risks, which are more fully described in the section entitled “Risk Factor” beginning on page 14 of this document. We may be unable, for many reasons, including those that are beyond our control, to implement our business strategy.
As a result of these risks and other risks there is no guarantee that we will experience growth or profitability in the future.
There are several trends that provide opportunities and risks for USS:
Recent Developments
| o | The breakdown and underfunding of traditional law enforcement leading to passive response to riots, resulting break-ins, shoplifting, and property destruction on the large scale (See Portland 2020). |
| o | The rise of the lawless corollary on the small scale with burgeoning vagrancy, break-ins and theft (e.g., catalytic converters in automobiles, construction materials such as tools and copper conduit). |
| o | The refusal of cities to enforce vagrancy laws and suppress the crime associated with chronic criminal trespassing and its detrimental effect on business. This leads to a transfer of burden to business owners who turn to private security companies to mitigate. This applies to all sectors – residential, commercial and municipal. |
| o | Finally, the sense of personal physical risk has been heightened in culture leading to the need to provide protection to employees and residents. For example, employees want protection as they come and go to their vehicle in areas of high crime. |
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Our Corporate Information
Our principal executive offices, and the principal executive offices are located at 9160 South 300 West, #101 Sandy, UT 84070. USS is located at 1973 Lafayette St, Santa Clara, CA 95050.
Our Internet website addresses are: www.sentinelholdingsltd.net, www.usselite.com and www.gladiatorsolutions.com. The information contained on, or that can be accessed through our website is not a part of this document. We have included our website address in this document solely as an inactive textual reference.
Financial Condition
Liquidity and Going Concern
As reflected in the accompanying consolidated financial statements, for the three months ended March 31, 2025, the Company had:
· | Net loss including non-controlling interest of $618,163; and |
· | Net cash used in operations was $198,470 |
Additionally, at March 31, 2025, the Company had:
· | Accumulated deficit of $22,898,584 |
· | Stockholders’ deficit of $4,948,835; and |
· | Working capital deficit of $5,034,997 |
The Company anticipates that it will need to raise additional capital immediately in order to continue to fund its operations. The Company has relied on related parties for debt-based funding of its operations. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully expand to new markets, competition, and the need to enter into collaborations with other companies or acquire other companies to enhance or complement its product and service offerings.
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There can be no assurances that financing will be available on terms which are favorable, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay, reduce, or cease its operations.
We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company had cash on hand of $0 at March 31, 2025.
The Company has historically incurred significant losses since inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2025, and our current capital structure including equity-based instruments and our obligations and debts.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a 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.
Management’s strategic plans include the following:
| · | Expand into new and existing markets, |
| · | Obtain additional debt and/or equity-based financing, |
| · | Collaborations with other operating businesses for strategic opportunities; and |
| · | Acquire other businesses to enhance or complement our current business model while accelerating our growth. |
Results of Operations – Three Months Ended March 31, 2025 and 2024
Sales - net
We had net sales of $846,416 for the three months ended March 31, 2025, as compared to $1,952,553 for the three months ended March 31, 2024, a decrease of $1,106,137. This decrease in revenue was due to the loss of a material customer.
Cost of Goods Sold
Cost of Goods Sold for the three months ended March 31, 2025, was $810,783, as compared to $1,281,776 for the three months ended March 31, 2024 a decrease of $470,993. The primary reason for the decrease was due to a reduction in employee compensation and loss of a material customer.
General and Administrative
Our general and administrative expenses for the three months ended March 31, 2025, were $576,305 an increase of $374,897, or 186%, compared to $201,408 for the three months ended March 31, 2024. The primary reason for the increase was due to general and administrative expenses from operations primarily related due to compensation (unrelated to cost of goods sold) and professional fees..
Other Income (Expense) - Net
The Company had other expenses of $883,111 for the three months ended March 31, 2024. For the three months ended March 31, 2025, the Company reflected other loss of $77,491. The net decrease of $960,602 was primarily due to the prior year reflecting PPP loan forgiveness income of $1,091,374.
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In the current period interest expense was $122,058 which was a decrease of $86,673 from $208,731 in the prior period. The difference was due to less debt outstanding in the current period.
Net Loss including Non-Controlling Interest
Net loss including non-controlling interest was ($618,163) for the three months ended March 31, 2025 as compared to net income including non-controlling interest of $1,352,480 for the three months ended March 31, 2024. The net decrease was $1,970,643 or 146%. See above for additional discussion.
Liquidity and Capital Resources
At March 31, 2025, the Company had $0 in cash and reflected a cash overdraft of $34,516.
For the three months ended March 31, 2025 and 2024, the Company reflected the following balances and changes:
Operating Activities:
|
| For the Three Months Ended March 31, |
| |||||||||||||
|
| 2025 |
|
| 2024 |
|
| $ Change |
|
| % Change |
| ||||
Operating activities |
|
|
|
|
|
|
|
|
|
| ||||||
Net income (loss) - including non-controlling interest |
| $ | (618,163 | ) |
| $ | 1,352,480 |
|
| $ | (1,970,643 | ) |
|
| (145.71 | )% |
Adjustments to reconcile net income (loss) to net cash provided by operations |
|
|
|
|
|
|
|
|
|
| - |
|
|
| 0.00 | % |
Depreciation and amortization |
|
| 9,242 |
|
|
| 23,421 |
|
|
| (14,179 | ) |
|
| (60.54 | )% |
Amortization of operating lease - right-of-use asset |
|
| 21,054 |
|
|
| - |
|
|
| 21,054 |
|
|
| 0.00 | % |
Amortization of debt discount |
|
| - |
|
|
| 36,534 |
|
|
| (36,534 | ) |
|
| (100.00 | )% |
Non-cash charitable contribution |
|
| 3,652 |
|
|
| - |
|
|
| 3,652 |
|
|
| 0.00 | % |
Accounts Receivable |
|
| (36,795 | ) |
|
| 348,277 |
|
|
| (385,072 | ) |
|
| (110.56 | )% |
Prepaids and other |
|
| (18,577 | ) |
|
| (592,584 | ) |
|
| 574,007 |
|
|
| (96.87 | )% |
Due to related party |
|
| - |
|
|
| 7,960 |
|
|
| (7,960 | ) |
|
| (100.00 | )% |
Increase (decrease) in |
|
|
|
|
|
|
|
|
|
| - |
|
|
| 0.00 | % |
Accounts payable and accrued expenses |
|
| 487,269 |
|
|
| (234,585 | ) |
|
| 721,854 |
|
|
| (307.72 | )% |
Accrued payroll |
|
| - |
|
|
| (65,636 | ) |
|
| 65,636 |
|
|
| 100.00 | )% |
Deferred revenue |
|
| 5,000 |
|
|
| - |
|
|
| 5,000 |
|
|
| 0.00 | % |
Operating lease liability |
|
| (19,846 | ) |
|
| - |
|
|
| (19,846 | ) |
|
| 0.00 | % |
Net cash used in operating activities |
|
| (198,470 | ) |
|
| 875,867 |
|
| $ | (1,074,337 | ) |
|
| (122.66 | )% |
Investing Activities:
|
| For the Three Months Ended March 31, |
| |||||||||||||
|
| 2025 |
|
| 2024 |
|
| $ Change |
|
| % Change |
| ||||
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Purchase of fixed assets |
|
| (8,500 | ) |
|
| - |
|
| $ | (8,500 | ) |
|
| 0.00 | % |
Net cash used provided by (used in) investing activities |
|
| (8,500 | ) |
|
| - |
|
| $ | (8,500 | ) |
|
| 0.00 | % |
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Financing Activities:
|
| For the Three Months Ended March 31, |
| |||||||||||||
|
| 2025 |
|
| 2024 |
|
| $ Change |
|
| % Change |
| ||||
Repayment of lease liabilities |
|
| - |
|
|
| (16,575 | ) |
|
| 16,575 |
|
|
| (100.00 | )% |
Repayment of notes payable |
|
| (30,150 | ) |
|
| (405,964 | ) |
|
| 375,814 |
|
|
| (92.57 | )% |
Proceeds from loans |
|
| 471,250 |
|
|
| - |
|
|
| 471,250 |
|
|
| 0.00 | % |
Repayment of loans |
|
| (490,848 | ) |
|
| (208,010 | ) |
|
| (282,838 | ) |
|
| 135.97 | % |
Cash overdraft |
|
| 34,516 |
|
|
| - |
|
|
| 34,516 |
|
|
| 0.00 | % |
Net cash used in financing activities |
|
| (15,232 | ) |
|
| (630,549 | ) |
|
| 615,317 |
|
|
| (97.58 | )% |
Critical Accounting Policies and Estimates
We prepare 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 base our estimates on historical experience and other assumptions that we believe are reasonable in the circumstances. Actual results may differ from these estimates.
The following critical accounting policies affect our more significant estimates and assumptions used in preparing our consolidated financial statements. Also, see Note 2 to the accompanying consolidated financial statements for a complete discussion of our accounting policies and estimates.
There were no changes in our accounting policies and estimates since the filing of our Form 10-K on April 28,2025.
Recent Accounting Pronouncements
ASU 2022-02 – Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the FASB issued ASU 2022-02, which:
| · | Eliminates the troubled debt restructuring (TDR) model for creditors under ASC 310, "Receivables." |
| · | Requires enhanced vintage disclosures related to credit losses, including gross write-offs by year of origination. |
| · | Updates the accounting guidance under ASC 326, "Financial Instruments – Credit Losses," to enhance disclosures regarding loan refinancings and restructurings for borrowers experiencing financial difficulty. |
The Company adopted ASU 2022-02 on January 1, 2023. The adoption did not have a material impact on the Company's consolidated financial statements.
ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, which enhances disclosure requirements for reportable segments by:
| · | Requiring enhanced disclosures of significant segment expenses. |
| · | Aligning segment reporting requirements with information regularly reviewed by management. |
The Company adopted ASU 2023-07 on January 1, 2024. The adoption did not have a material impact on the Company's consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, which enhances income tax disclosure requirements by:
| · | Standardizing and disaggregating rate reconciliation categories. |
| · | Requiring disclosure of income taxes paid by jurisdiction. |
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This ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early adoption is permitted.
The Company is currently assessing the impact of ASU 2023-09 on its income tax disclosures and reporting requirements.
Other Accounting Standards Updates
The FASB has issued various technical corrections and industry-specific updates that are not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
Other Recent Updates
Various other ASUs have been issued that primarily contain technical corrections or industry-specific guidance. These updates are not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
Off-Balance Sheet Transactions
At March 31, 2025, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item 3.
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, including our principal executive officer and principal 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, 2025, 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.
Our management, 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 error 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.
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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. Our outside financial consultants assist us with our bookkeeping and regulatory reporting requirements, though we supervise all outside consultants work.
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 Annual 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. |
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Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2025. 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 March 31, 2025.
Material weakness identified:
| · | The Company recognizes that due to its limited number of personnel, there are inherent challenges in achieving complete segregation of duties within the financial reporting process. Management continues to evaluate opportunities to enhance internal controls to mitigate these challenges. |
|
|
|
| · | The Company's internal control processes did not identify certain journal entries, which were subsequently brought to management’s attention by the external auditor. All proposed adjustments were recorded. Management is reviewing its processes to strengthen controls and ensure greater accuracy moving forward. |
|
|
|
| · | 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 year-end 2025 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 or during the quarter ended March 31, 2025, 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 registrant's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the registrant's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the registrant to provide only management's report in this report.
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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 March 31, 2025, the Company was engaged in litigation with 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 Cas 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 litigation 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. The plaintiff alleges Gladiator owes $100,098. The Plaintiff also added James Maritime Holdings as an “alter ego” defendant. 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 James Maritime, and the Company filed a Cross-Complaint against Matt Materazo for this unauthorized loan. We believe a settlement with the plaintiff can be reached, and we plan to pursue claims against Mr. Materazo for indemnity for any payments made by Gladiator to settle this case. Mr. Materazo has indicted that he will seek the Court’s permission to file various counterclaims against James Maritime Holdings, which will be challenged and contested by the Company.
Tim Running v. United Security Specialists, Inc. involves a wage and hour class action filed by USS employee Tim Running against USS. The Company filed a Motion to compel arbitration of these claims and the plaintiff agreed to move his claims into arbitration. The Company anticipates negotiating a settlement with this plaintiff.
Josue Ceballes v. United Security Specialists, Inc. is a wage and hour class action filed by USS employee Tim Running against USS. The Plaintiff agreed to submit this claim to arbitration and the class action was dropped. The Company anticipates negotiating a settlement with this plaintiff.
Redwood Fire & Casualty Ins. Co. v. United Security Specialists, Inc.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.
Saratoga Office Center Corp. v. United Security Specialists and James Maritime Holdings is a claim filed by the prior landlord against USS for unpaid office rent. The total amount allegedly owed was $124,358. The Company negotiated a settlement for $65,000, which is subject to a monthly payment plan.
The final payment was due in January 2025 but it was paid early and the settlement has been paid in full.
The Company is currently asserting claims against Mercy Falls & CN FL Corp. for breaching the terms of a consulting agreement with the Company. Mercy Falls has indicated that it will seek to assert counterclaims against the Company but no such counterclaims have yet been filed with the court.
Management is not aware of any other pending or threatened litigation, claims or assessments with respect to which we have advised the Company are probable of assertion and must be disclosed in accordance with FASB Accounting Standards Codification 450, Contingencies.
Item 1A. Risk Factors
Not required for smaller reporting companies.
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
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.
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.
None
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Item 6. Exhibits
Exhibit No. |
| Description of Exhibit |
| Rule 13a14(a)/15d-14(a) Certification of Principal Executive Officer | |
| Rule 13a14(a)/15d-14(a) Certification of Principal Financial Officer | |
| Section 1350 Certification of Principal Executive Officer/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) |
* Filed herewith
** Furnished herewith (not filed)
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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 |
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Date: May 15, 2025 | By: | /s/ Kip Eardley |
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| Kip Eardley |
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| President (Principal Executive Officer) |
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature |
| Title |
| Date |
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/s/ Kip Eardley |
| President |
| May 15, 2025 |
Kip Eardley |
| (Principal Executive Officer and Principal Financial Officer) |
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| 72 |