Filing Analysis
Adapti, Inc. has determined that its previously issued financial statements for the quarters ended September 30, 2025, and December 31, 2025, should no longer be relied upon due to material errors in accounting for a prior acquisition. The transaction must be restated from a standard acquisition to a reverse recapitalization.
🚩 Red Flags
- Material restatement of previously issued financial statements (Item 4.02).
- Significant change in control: James Ballengee holds ~81% of the company following a transaction that was mischaracterized.
- Complexity in accounting treatment involving reverse recapitalization, which often indicates significant structural shifts or potential issues with previous valuations.
📋 Key Facts
- The Board concluded that unaudited condensed consolidated financial statements filed on Nov 19, 2025, and Feb 17, 2026, contain material errors.
- The error stems from incorrect accounting treatment of the July 14, 2025, acquisition of Ballengee Group, LLC.
- The transaction was incorrectly recorded as Adapti, Inc. being the legal and accounting acquiror; it should have been a reverse recapitalization.
- James Ballengee acquired approximately 81.0% of the Company's issued and outstanding shares via the Transaction.
- The Board discussed these matters with independent registered public accounting firm Victor Mokuolu, CPA PLLC.
Adapti, Inc. appointed Omar Karim as Chief Revenue Officer on November 18, 2025. The appointment includes a compensatory structure where base salary accrues but is not payable until the company reaches a $1 million funding threshold.
🚩 Red Flags
- Deferred compensation structure suggests immediate liquidity constraints; salary is not payable until a $1M funding threshold is met.
- Significant equity incentive via warrant (240,000 shares) to a new officer may lead to future dilution.
- Potential for 'catch-up' cash outflow once the company reaches its funding milestone.
📋 Key Facts
- Omar Karim appointed as Chief Revenue Officer effective November 18, 2025.
- Base salary of $180,000 per annum, which accrues but is not payable until the company raises $1,000,000 in net equity proceeds or the Board determines sufficient capitalization.
- Upon reaching the funding threshold, base salary increases to $300,000 per annum and all accrued unpaid salary becomes due.
- Issuance of a warrant to purchase up to 240,000 shares of common stock at an exercise price of $3.08 per share.
- Warrant vests over four years (48,000 shares annually) with accelerated vesting upon a change of control or certain terminations.
Adapti, Inc.'s wholly-owned subsidiary, Ballengee Group, LLC, entered into a $3,000,000 revolving loan agreement with Texas Security Bank. The transaction involves significant related-party complexities, including personal guarantees from the former owner/manager and cross-collateralization of assets linked to an entity owned by that same individual.
🚩 Red Flags
- Related-party transaction: The loan is tied to the former owner/manager (James Ballengee) via personal guarantees and cross-collateralization.
- Complex debt structure: Cross-default provisions link the subsidiary's debt to a separate $2M loan held by an entity owned by James Ballengee.
- Asset encumbrance: The lender has a first priority interest in substantially all of the Borrower's assets, including IP and receivables.
- Guaranty risk: The Company (Adapti, Inc.) is not a guarantor of the $3M loan, but its subsidiary (Borrower) has guaranteed a separate $2M loan held by an affiliate.
📋 Key Facts
- Ballengee Group, LLC (subsidiary) entered a $3M revolving loan agreement on Nov 3, 2025.
- Loan maturity date is February 28, 2027.
- Interest rate is Prime Rate + 0.50% (with a 5% penalty upon default).
- Borrowing base is limited to the lesser of $3M or 80% of receivables from guaranteed contracts.
- The loan requires a personal guarantee from James Ballengee and/or his affiliated entities.
- Cross-default/cross-collateralization agreement exists between the Borrower's loan and a $2,000,000 'Monitor Loan' held by 2278 Monitor, LLC (owned by James Ballengee).
- The Borrower has guaranteed the payment of the Monitor Loan.
This is an amendment to a previously filed 8-K regarding the acquisition of Ballengee Group, LLC. The filing serves to provide the required financial statements and pro forma information related to the business combination completed on July 14, 2025.
📋 Key Facts
- The filing is an Amendment No. 1 to a report originally filed on July 18, 2025.
- Adapti, Inc. completed the acquisition of Ballengee Group, LLC (a Texas-based sports agency) on July 14, 2025.
- The amendment includes audited financial statements for Ballengee Group, LLC for years ended Dec 31, 2024 and 2023.
- The amendment includes unaudited financial statements for Ballengee Group, LLC for the six months ended June 30, 2025 and 2024.
- Includes unaudited pro forma condensed combined financial statements for Adapti, Inc. for years ended March 31, 2025/2024 and three months ended June 30, 2025.
Matthew Balk has resigned from the Board of Directors of Adapti, Inc., effective October 25, 2025. The company stated that the resignation was not due to any disagreements regarding operations, policies, or practices.
📋 Key Facts
- Effective date of resignation: October 25, 2025
- Resigning individual: Matthew Balk
- Capacity: Member of the Board of Directors
- Stated reason for departure: No disagreement with Company operations, policies, or practices
Adapti, Inc. issued a $181,818 convertible senior promissory note to its Executive Chairman, Jeff Campbell, in exchange for $150,000 in cash. The note features high interest rates and significant dilution potential via a conversion price set at the lesser of $3.08 or 70% of the market price.
🚩 Red Flags
- Related-party transaction involving the Executive Chairman
- Short-term debt maturity (December 2025) creating immediate liquidity pressure
- Highly dilutive conversion feature (70% of market price)
- High interest rate penalty for late payment/conversion
- Original Issue Discount (OID) structure indicates high cost of capital
📋 Key Facts
- Issue Date: September 15, 2025
- Principal Amount: $181,818
- Cash Received: $150,000 (OID structure)
- Maturity Date: December 14, 2025
- Interest Rate: 17.5% (standard); increases to 20% every 90 days if unpaid after maturity
- Conversion Price: Lesser of $3.08 or 70% of the current market price
- Beneficial Ownership Limit: 4.99% (expandable to 9.99%)
- Counterparty: Jeff Campbell, Executive Chairman
Adapti, Inc. has completed the acquisition of 100% of Ballengee Group, LLC, a Texas-based sports agency, resulting in a significant change in control where James Ballengee now controls approximately 68.63% of the company's outstanding shares.
🚩 Red Flags
- Change in Control: James Ballengee now holds majority voting/dispositive control (68.63%).
- Related-Party Transactions: The target's landlord is an entity controlled by the new majority owner, and rent can be paid in company stock.
- Significant Debt/Obligations: $7.5M promissory note with mandatory repayment triggers upon any security offering of at least $250k.
- Potential Dilution: Massive issuance of 6.5M shares plus potential earnouts and lease-based share issuances.
- Insider Debt: Executive Chairman Jeff Campbell holds a convertible $100,000 note with a high 12% interest rate and a significant conversion premium/floor.
📋 Key Facts
- Acquisition closed on July 14, 2025.
- Total consideration includes $20M in stock (6.5M shares), a $7.5M participating promissory note (5% interest, due June 30, 2030), and up to $20M in EBITDA-based earnouts over 4 years.
- James Ballengee/Sellers acquired ~68.63% of the company's issued and outstanding shares on a post-issuance basis.
- The Sellers are subject to an 18-month lock-up agreement on stock consideration.
- A lease amendment allows for rent payments to be made in Common Stock instead of cash.
- Jeff Campbell appointed as Executive Chairman; he has existing $155,000 in accrued consulting fees and a $100,000 convertible promissory note due Sept 25, 2025.
Adapti, Inc. (formerly Scepter Holdings, Inc.) is finalizing a massive 1-for-4,000 reverse stock split and has announced its new trading symbol 'ADTI' effective June 26, 2025.
🚩 Red Flags
- Extremely high ratio reverse stock split (1-for-4,000), which often indicates a desperate attempt to maintain minimum bid price requirements for exchange listing.
- History of multiple amendments/filings regarding the same corporate restructuring events.
📋 Key Facts
- Implementation of a 1-for-4,000 reverse stock split of common stock.
- Corporate name changed from Scepter Holdings, Inc. to Adapti, Inc.
- New trading symbol 'ADTI' will commence trading on June 26, 2025.
- CUSIP remains unchanged (813924107).
- The filing is an Amendment No. 2 to previous 8-K filings.
Scepter Holdings, Inc. (trading as Adapti, Inc.) has announced a massive 1-for-4,000 reverse stock split and a name change to Adapti, Inc., effective May 28, 2025.
🚩 Red Flags
- Extremely aggressive reverse stock split ratio (1-for-4,000), which often indicates a desperate attempt to boost share price to meet exchange listing requirements or avoid delisting.
- The company is currently trading on the OTC Pink market (BZRLD), indicating low liquidity and high risk.
📋 Key Facts
- A 1-for-4,000 reverse stock split of common stock will become effective at the market open on May 28, 2025.
- The company is changing its corporate name from Scepter Holdings, Inc. to Adapti, Inc.
- Trading under the post-split basis will use the symbol BRZLD and a new CUSIP (813924107).
- The ticker symbol is expected to change to ADPI approximately 20 business days after May 28, 2025.
- The filing is an amendment (Form 8-K/A) to a previous report filed on April 22, 2025.
Scepter Holdings, Inc. has executed a 1-for-4,000 reverse stock split and is changing its corporate name to Adapti, Inc. The company also increased its authorized share count from 20 billion to 40 billion shares.
🚩 Red Flags
- Extreme reverse stock split ratio (1-for-4,000), often indicative of an attempt to boost share price to meet exchange listing requirements or avoid delisting.
- Massive increase in authorized shares (doubled from 20B to 40B), which facilitates significant future dilution through equity offerings.
📋 Key Facts
- Reverse stock split ratio of 1-for-4,000 effective April 16, 2025.
- Corporate name change from Scepter Holdings, Inc. to Adapti, Inc.
- Authorized shares increased from 20,000,000,000 to 40,000,000,000.
- Outstanding shares reduced from 6,129,552,441 to approximately 1,532,388.
- New CUSIP (813924107) is pending FINRA approval.
- The name change and new trading basis are subject to pending FINRA approval.
Scepter Holdings, Inc. announced it has signed a non-binding Letter of Intent (LOI) to acquire Matchpoint Connection, LLC. The acquisition is subject to definitive agreement terms and carries no guarantee of completion.
🚩 Red Flags
- Non-binding nature of the transaction: The company explicitly states there are 'no assurances' the acquisition will be completed.
📋 Key Facts
- Signed a Letter of Intent (LOI) to acquire Matchpoint Connection, LLC on December 2, 2024.
- The LOI requires the parties to enter into a definitive purchase agreement within 90 days or it will terminate.
- The acquisition is subject to various terms and conditions set forth in the LOI.
Scepter Holdings, Inc. (OTC: BRZL) has entered into an exclusive Letter of Intent (LOI) to acquire Matchpoint Connection, LLC, a platform specializing in Name, Image, and Likeness (NIL) compliance and athlete-brand matchmaking. The acquisition aims to expand Scepter's sports management portfolio by integrating Matchpoint with its existing AdaptAI influencer software.
🚩 Red Flags
- The transaction is based on a Letter of Intent (LOI), which provides no guarantee that a definitive agreement will be reached or that the deal will close.
- No specific financial terms (purchase price, cash vs. stock, debt assumption) were disclosed in the filing.
📋 Key Facts
- Signed an exclusive Letter of Intent to purchase Matchpoint Connection, LLC in its entirety.
- Matchpoint will become a wholly owned subsidiary upon completion; current management to remain.
- Transaction expected to close by the end of 2024, pending definitive agreement and conditions.
- The LOI includes a 90-day window to execute a definitive purchase agreement.
- Acquisition targets the growing NIL (Name, Image, and Likeness) market following NCAA rule changes.
Scepter Holdings, Inc. has issued a formal going concern warning in its September 30, 2024, financial statements due to significant accumulated losses and a working capital deficit. The company reports only $36,163 in cash against total liabilities of $862,871.
🚩 Red Flags
- Explicit 'Going Concern' warning in Note 2 regarding ability to meet obligations.
- Severe liquidity crisis: Total liabilities ($862,871) vastly exceed total assets ($37,070).
- Negative stockholders' deficit of $825,801.
- High reliance on non-cash settlements (stock-based compensation/convertible debt) to manage liabilities.
- Significant increase in short-term convertible notes payable from $0 to $100,000.
📋 Key Facts
- As of September 30, 2024, the Company has incurred cumulative losses totaling $8,983,124 since inception.
- The company reported a working capital deficit of $818,802 as of September 30, 2024.
- Cash and cash equivalents stood at $36,163, compared to $702 on March 31, 2024.
- Total liabilities reached $862,871 against total assets of only $37,070.
- The company relies heavily on settling liabilities through share-based compensation and convertible debt due to lack of cash.