10-Q: Adapti Inc. Reports Q1 Loss, Acquires Ballengee Group

Adapti Inc. reports a net loss for Q1 2025 and completes the acquisition of The Ballengee Group, shifting focus to sports management and marketing.

Summary

• Adapti Inc. reports a net loss of $295,065 for the three months ended June 30, 2025, compared to a net loss of $278,833 for the same period in 2024.
• Revenue decreased by 30% to $664, primarily due to decreased marketing efforts.
• General and administrative expenses increased by 3% to $47,251, due to an increase in personnel.
• Professional fees increased by 3% to $231,707, primarily due to increased consultants.
• Other expenses increased by 72% to $16,771, due to the issuance of promissory notes bearing interest.
• The company completed the acquisition of The Ballengee Group in July 2025 for 6,500,000 shares of common stock, a $7,500,000 participating promissory note, and potential earnout consideration of up to $20,000,000 in shares.
• Adapti.io, the company's AI-driven influencer and brand optimization platform, is currently in the beta stage of development and is expected to launch by March 31, 2026, subject to funding.
• The company effected a 1-for-4,000 reverse stock split on May 28, 2025.
• There is substantial doubt about the company's ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The filing contains a mix of positive and negative information, but the negative aspects, such as the net loss, decreased revenue, and going concern uncertainty, outweigh the positive aspects, such as the acquisition of Ballengee Group and the development of adapti.io.

Positives

• Acquisition of The Ballengee Group, a sports management agency, which is expected to contribute significantly to revenues.
• Development of adapti.io, an AI-driven platform for influencer and brand optimization, which could provide a competitive advantage.
• Appointment of Jeff Campbell as Executive Chairman of the Board.
• New employment agreement with Marilu Brassington, providing stability in the CFO role.

Negatives

• Net loss of $295,065 for the three months ended June 30, 2025.
• Decreased revenue of 30% compared to the same period in 2024.
• Increased operating expenses, including general and administrative expenses and professional fees.
• Substantial doubt about the company's ability to continue as a going concern.
• Limited operating history and recent change in business plan, making it difficult to evaluate future prospects.
• Dependence on new and unproven initiatives, including the development of the Adapti.io AI platform.
• Accrued salary owed to the CEO and CFO, potentially impacting their continued service.

Risks

• Limited operating history and recent change in business plan.
• Dependence on the success of new and unproven initiatives, including the development of the Adapti.io AI platform.
• Uncertainty in generating revenues from athlete representation, social media promotions, and the Adapti.io platform.
• Failure to integrate Ballengee Group effectively or achieve the assumed synergies.
• Dependence on the relationships of agents, managers, and other key personnel with clients in professional sports and sponsorships.
• Potential for adverse publicity concerning the company, its clients, or key personnel.
• Competition from substantially larger and better-financed competitors in both the baseball agency and technology businesses.
• Dependence on the management team and the potential loss of their services.
• Limited working capital and limited access to financing.
• Use of Artificial Intelligence in adapti.io presents operational, legal, ethical, and competitive risks.
• Cybersecurity Breaches, Data Loss, or System Failures Could Disrupt adapti.ios Operations, Compromise Sensitive Information, and Harm Our Reputation.
• Concentration of Ownership Following the Ballengee Group Acquisition Gives Certain Stockholders the Ability to Control or Significantly Influence Corporate Decisions.
• Our authorized capital structure allows for the issuance of a substantial number of additional shares, which could result in significant dilution to existing stockholders.
• The market for our common stock has historically been illiquid and our investors may be unable to sell their shares.
• We may be unable to comply with our reporting and other requirements under federal securities laws.
• We do not have effective internal controls over our financial reporting.
• Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses and will divert time and attention away from revenue generating activities.
• We are a smaller reporting company and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our securities less attractive to investors.

Future Outlook

The company plans to launch adapti.io by March 31, 2026, subject to securing sufficient funding, and expects future revenues to be derived primarily from athlete representation fees, sponsorships, and platform-enabled brand integrations. The company also intends to enhance its service offering by integrating generative AI capabilities.

Management Comments

• Management anticipates that Ballengee Group could contribute significantly to our revenues and help us achieve profitability.
• Management views the working capital that is raised in its promissory notes as being equivalent to raising working capital via common equity subscriptions.
• Management has determined that there is substantial doubt about our ability to continue as a going concern for a period of one year following the issuance of this report.

Industry Context

The company is shifting its focus to the sports management and marketing industries, which are highly competitive and subject to rapidly changing consumer preferences and technology trends. The success of the company will depend on its ability to effectively compete with larger, more established players and to adapt to new technologies and distribution platforms.

Comparison to Industry Standards

• It is difficult to compare Adapti's results to industry standards due to its unique combination of sports management and AI-driven technology.
• Comparable sports management agencies include Creative Artists Agency (CAA) and Wasserman, which have significantly greater resources and broader client rosters.
• Comparable AI-driven marketing platforms include HubSpot and Adobe Marketing Cloud, which are larger, well-capitalized enterprises.
• Adapti's success will depend on its ability to differentiate itself from these competitors and to achieve market share in both business segments.

Management Changes

Related Party Transactions

• Related party convertible notes payable to Campbell Trust and Stuff International.
• Related party notes payable to Stuff International.
• Issuance of common stock to EcoScientific Labs in exchange for Adam Nicosia's management services.
• Issuance of subordinated convertible promissory notes to Marilu Brassington, Jeff Campbell, and Adam Nicosia.

Stakeholder Impact

• Shareholders: Dilution of ownership interests due to potential issuance of additional shares.
• Employees: Potential impact on job security due to the company's going concern uncertainty.
• Customers: Potential impact on service quality due to the company's financial challenges.
• Creditors: Increased risk of non-payment due to the company's financial challenges.

Next Steps

• Integrate the operations of The Ballengee Group.
• Complete the development of adapti.io.
• Secure sufficient funding to launch adapti.io.
• Raise additional capital through sales notes payable.
• Attempt to satisfy the unpaid balances owed to the CEO and CFO.

Key Dates

Recommendation

Given the company's net losses, decreased revenue, substantial doubt about its ability to continue as a going concern, and reliance on unproven initiatives, a seasoned investor or institution would likely recommend selling the stock to mitigate risk.

Keywords

Adapti Inc., Ballengee Group, sports management, AI platform, financial results, SEC filing, athlete representation, influencer marketing, reverse stock split, going concern