UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from __________ to __________
Commission File Number:
(Exact name of Registrant as specified in its charter)
|
|
|
|
| (State of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (zip code)
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
|
|
☐ | Smaller reporting company |
|
| Emerging growth company |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
As of August 19, 2025, shares of common stock, par value $0.001 per share, were issued and outstanding.
SENTIENT BRANDS HOLDINGS INC.
FORM 10-Q
June 30, 2025
TABLE OF CONTENTS
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.
Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and information contained in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Unless otherwise indicated, references in this report to “we,” “us” or the “Company” refer to Sentient Brands Holdings Inc. and its subsidiaries.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| June 30, 2025 | December 31, 2024 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ |
|
$ |
|
||||
| Accounts receivable |
|
|||||||
| Inventory |
|
|||||||
| Prepaid expenses |
|
|||||||
| TOTAL CURRENT ASSETS |
|
|
||||||
| Fixed Assets (net of Depreciation) |
|
|
||||||
| Other assets |
|
|||||||
| TOTAL ASSETS | $ |
|
$ |
|
||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ |
|
$ |
|
||||
| Notes payable |
|
|||||||
| Convertible Notes Payable |
|
|
||||||
| Acquisition Credits |
|
|||||||
| TOTAL CURRENT LIABILITIES |
|
|
||||||
| TOTAL LIABILITIES | $ |
|
$ |
|
||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred Stock – Par Value of $ ; shares authorized; and shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively |
|
|||||||
| Common Stock - Par Value of $ ; shares authorized; and shares issued and outstanding as of June 30, 2025 and December 31, 2024 |
|
|
||||||
| Common stock to be issued |
|
|
||||||
| Additional paid-in capital |
|
|
||||||
| Accumulated deficit |
(
|
) |
(
|
) | ||||
| TOTAL STOCKHOLDERS’ DEFICIENCY |
(
|
) |
(
|
) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIENCY | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1
SENTIENT BRANDS HOLDINGS INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales — Related Party | $ |
|
$ | $ |
|
$ | ||||||||||
| Cost of sales |
|
|
||||||||||||||
| Gross profit (loss) |
(
|
) |
(
|
) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Advertising and marketing | ||||||||||||||||
| General and administrative |
|
|
|
|
||||||||||||
| Legal and professional |
|
|
|
|
||||||||||||
| Management fees |
|
|
|
|
||||||||||||
| TOTAL OPERATING EXPENSES |
|
|
|
|
||||||||||||
| LOSS FROM OPERATIONS |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Other Income (Expenses) | ||||||||||||||||
| Interest expense |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Other income |
|
|||||||||||||||
| NET LOSS | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| NET LOSS PER COMMON SHARE – BASIC AND DILUTED | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
| March 31, 2025 (Unaudited) | Common Stock | Preferred Stock | Common Stock to be | Paid in | Accumulated | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | issued | Capital | Deficit | Total | |||||||||||||||||||||||||
| Balance - December 31, 2024 |
|
|
|
|
|
|
(
|
) |
(
|
) | ||||||||||||||||||||||
| Common stock issued in lieu of accounts payable |
|
|
|
|
||||||||||||||||||||||||||||
| Previously purchased common shares issued |
|
|
(
|
) |
|
|||||||||||||||||||||||||||
| Common stock issued for previously converted debt and accrued interest |
|
|
(
|
) |
|
|||||||||||||||||||||||||||
| Common stock issued for services |
|
|
|
|
||||||||||||||||||||||||||||
| Conversion of debt and accrued interest into common stock |
|
|
|
|
||||||||||||||||||||||||||||
| Conversion of debt and accrued interest into common stock not yet issued |
|
|
||||||||||||||||||||||||||||||
| Common stock sold to investor |
|
|
||||||||||||||||||||||||||||||
| Return expired preferred shares to Treasury |
(
|
) |
(
|
) |
|
|||||||||||||||||||||||||||
| Net loss for the three months |
(
|
) |
(
|
) | ||||||||||||||||||||||||||||
| Balances March 31, 2025 |
|
$ |
|
|
$ |
|
$ |
(
|
) | $ |
(
|
) | ||||||||||||||||||||
| Conversion of debt and interest into Common Stock |
|
|
(
|
) |
|
|||||||||||||||||||||||||||
| Common stock issued for services |
|
|
|
|
||||||||||||||||||||||||||||
| Common stock sold to investors shares not issued | — |
|
|
|||||||||||||||||||||||||||||
| Net loss for the three months | - |
(
|
) |
(
|
) | |||||||||||||||||||||||||||
| Balances June 30, 2025 |
|
|
|
|
(
|
) |
(
|
) | ||||||||||||||||||||||||
| March 31, 2024 | Common Stock | Preferred Stock | Common Stock to be | Paid in | Accumulated | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | issued | Capital | Deficit | Total | |||||||||||||||||||||||||
| Balance - December 31, 2023 |
|
|
|
|
|
(
|
) |
(
|
) | |||||||||||||||||||||||
| Common stock issued for services |
|
|
|
|
||||||||||||||||||||||||||||
| Net loss for the three months | - |
(
|
) |
(
|
) | |||||||||||||||||||||||||||
| Balances March 31, 2024 |
|
$ |
|
|
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||||||||||||
| Common stock issued in payment of past services |
|
|
|
|
||||||||||||||||||||||||||||
| Common stock issued for services |
|
|
|
|
||||||||||||||||||||||||||||
| Common stock sold to investors |
|
|
|
|
||||||||||||||||||||||||||||
| Conversion of note payable and accrued interest into Common Stock to be issued |
|
|
||||||||||||||||||||||||||||||
| Net loss for the three months | - |
(
|
) |
(
|
) | |||||||||||||||||||||||||||
| Balances June 30, 2024 |
|
|
|
|
|
|
(
|
) |
(
|
) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the six months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation Expenses |
|
|
||||||
| Common stock issued in payment of past services |
|
|||||||
| Common stock issued for services |
|
|
||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | ||||||||
| Prepaid expenses |
(
|
) |
|
|||||
| Accounts payable and accrued expenses |
|
|
||||||
| Stock subscription |
|
|||||||
| NET CASH USED IN OPERATING ACTIVITIES |
|
(
|
) | |||||
| INVESTMENT ACTIVITIES: | ||||||||
| Purchase of office equipment | ||||||||
| NET CASH USED IN INVESTMENT ACTIVITIES | ||||||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of stock |
|
|||||||
| Proceeds from short term loan |
|
|||||||
| Net proceeds from sale of common stock not yet issued |
|
|||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
|
||||||
| INCREASE (DECREASE) IN CASH |
|
|
||||||
| CASH-BEGINNING OF PERIOD |
|
|
||||||
| CASH-END OF PERIOD | $ |
|
$ |
|
||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ |
|
|||||
| Taxes | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Issuance of previously purchased common stock | $ |
|
$ | |||||
| Stock issued for previously converted debt and interest | $ | $ |
|
|||||
| Stock issued for accounts payable | $ |
|
$ | |||||
| Stock issued for converted debt and interest | $ |
|
$ | |||||
| Conversion of debt and interest into stock not yet issued | $ |
|
$ | |||||
| Return expired preferred shares to treasury | $ |
|
$ | |||||
| Assets acquired through acquisition credits | $ |
|
$ | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS
Business description
The financial statements presented are those of Sentient Brands Holdings Inc. (“the Company” or “SNBH”). The Company was incorporated under the laws of the State of California on March 22, 2004, and reincorporated in Nevada in 2021. Historically, the Company was engaged in media and IT equipment resales. The Company has since transitioned into a brand management and consumer product development business.
Sentient Brands is currently a next-generation brand platform focused on the acquisition, development, and commercialization of premium and functional consumer packaged goods (CPG) with an emphasis on wellness, sustainability, and emergency preparedness. The Company has implemented a product innovation and acquisition-driven growth strategy through its operating subsidiaries, focusing on consumer categories that offer long-term secular growth potential.
The Company’s flagship subsidiaries include:
| 1. | AIG F&B, Inc. , a wholly owned Nevada subsidiary, which operates as a manufacturing and distribution platform for food, beverage, and wellness products, including shelf-stable and functional nutrition items. AIG F&B sources and produces consumer goods for the Company’s brand portfolio and strategic partners, including Original New York Seltzer, Arctic Frost, and Burlone. |
| 2. | Aqua Emergency, Inc. (AENV) , a 51%-owned subsidiary, is a Florida-based specialized manufacturer and distributor of emergency water and meals-ready-to-eat (MREs). Aqua Emergency holds the exclusive license for American Red Cross® branded emergency water and MREs and supplies federal, state, and municipal emergency agencies, NGOs, and commercial distributors. Products are engineered for extended shelf life, regulatory compliance, and rapid deployment. |
These entities serve as the operational and commercial backbone of SNBH’s business model, allowing the Company to scale through strategic asset acquisition and production partnerships. The Company intends to leverage its operating subsidiaries, brand equity, and licensing relationships to enter additional product categories aligned with health, safety, and sustainability.
Strategic Developments
On April 10, 2025, the Company, through AIG F&B, closed a share exchange agreement with American Industrial Group (“AIG”), pursuant to which AIG transferred select rights, assets, and business lines to AIG F&B in exchange for Acquisition Credits convertible into shares of SNBH common stock under a performance-based earnout structure. These assets include proprietary beverage and first-aid product formulations, manufacturing infrastructure, distribution relationships, and brand rights relevant to the Company’s future roadmap.
The consideration structure is performance-contingent and subject to regulatory holding periods, lock-up agreements, and earnout milestones tied to revenue, EBITDA, and appraised asset value. The Acquisition Credits may be converted to equity upon the achievement of defined benchmarks over a multi-year horizon.
This transaction significantly enhances the Company’s balance sheet and operating capacity, supporting its ability to develop new revenue-generating products and pursue future acquisitions aligned with its mission.
The Company’s leadership team brings experience from global consumer brands and retailers, including Original New York Seltzer, Disney, Hugo Boss, Victoria’s Secret, Versace, Bath & Body Works, and Walmart. Leveraging this expertise, through its partnership with American Industrial Group, SNBH is positioned to capitalize on strategic sourcing, the ability to manufacture locally with a global footprint, and global distribution networks across omnichannel platforms for high-growth, high-margin brands, while maintaining cash-flow positive operations at all subsidiaries. The Company continues to execute its 24-month acquisition pipeline and to seek growth through synergistic acquisitions, innovation in consumer packaged goods, in food, beverage, pet-care, healthcare, and emergency markets, as well as strategic brand partnerships. Management believes these initiatives, supported by scalable operations and established institutional relationships, will enable sustainable value creation for shareholders.
5
On December 9, 2020, the Company filed a Certificate of Amendment of Articles of Incorporation (the “Certificate”) with the State of California to (i) effect a forward stock split of its outstanding shares of common stock at a ratio of 7 for 1 (7:1) (the “Forward Stock Split”), (ii) increase the number of authorized shares of common stock from shares to shares, and (iii) effectuate a name change (the “Name Change”). Fractional shares that resulted from the Forward Stock Split will be rounded up to the next highest number. As a result of the Name Change, the Company’s name changed from “Intelligent Buying, Inc.” to “Sentient Brands Holdings Inc.”. The Certificate was approved by the majority of the Company’s shareholders and by the Board of Directors of the Company. The effective date of the Forward Stock Split and the Name Change was March 2, 2021.
In connection with the above, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority. The Forward Stock Split and the Name Change was implemented by FINRA on March 2, 2021. Our symbol on OTC Markets was INTBD for 20 business days from March 2, 2021 (the “Notification Period”). Our new CUSIP number is 81728V 102. As a result of the name change, our symbol was changed to “SNBH” following the Notification Period. All share and per share information has been retroactively adjusted to reflect this forward stock split.
In addition, on January 29, 2021, the Company, merged with and into its wholly owned subsidiary, Sentient Brands Holdings Inc., a Nevada corporation, pursuant to an Agreement and Plan of Merger between Sentient Brands Holdings Inc., a California corporation, and Sentient Brands Holdings Inc., a Nevada corporation. Sentient Brands Holdings Inc., a Nevada corporation, continued as the surviving entity of the migratory merger. Pursuant to the migratory merger, the Company changed its state of incorporation from California to Nevada and each share of its common stock converted into one share of common stock of the surviving entity in the migratory merger. No dissenters’ rights were exercised by any of the Company’s stockholders in connection with the migratory merger.
Following the consummation of the migratory merger, the articles of incorporation and bylaws of the Nevada corporation that was newly-created as a wholly owned subsidiary of the Company became the articles of incorporation and bylaws for the surviving entity in the migratory merger.
In addition, on January 29, 2021, the Company, merged with and into its wholly owned subsidiary, Sentient Brands Holdings Inc., a Nevada corporation, pursuant to an Agreement and Plan of Merger between Sentient Brands Holdings Inc., a California corporation, and Sentient Brands Holdings Inc., a Nevada corporation. Sentient Brands Holdings Inc., a Nevada corporation, continued as the surviving entity of the migratory merger. Pursuant to the migratory merger, the Company changed its state of incorporation from California to Nevada and each share of its common stock converted into one share of common stock of the surviving entity in the migratory merger. No dissenters’ rights were exercised by any of the Company’s stockholders in connection with the migratory merger.
Following the consummation of the migratory merger, the articles of incorporation and bylaws of the Nevada corporation that was newly-created as a wholly owned subsidiary of the Company became the articles of incorporation and bylaws for the surviving entity in the migratory merger.
On May 12, 2025, the Company, through its wholly owned
subsidiary AIG F&B, acquired Assets totaling $
Basis of Presentation
Our financial statements are presented in conformity with accounting principles generally accepted in the United States of America, as reported on our fiscal years ending on December 31, 2025 and 2024. We have summarized our most significant accounting policies.
Going concern
The Company currently has limited operations. These unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business.
As reflected in the accompanying unaudited consolidated
financial statements, the Company had an accumulated deficit of $
6
The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Uses of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally accepted accounting principles accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. Actual results could differ from those estimates.
As noted above, On May 12, 2025, the Company, through
its wholly owned subsidiary AIG F&B, acquired Assets totaling $
In accordance with the guidance applicable to asset acquisitions:
| ● | Transaction costs directly attributable to the acquisition have been capitalized as part of the cost of the acquired assets. | |
| ● | No goodwill has been recognized, as the transaction did not qualify as a business combination under ASC 805-10. | |
| ● | The asset values presented reflect the relative fair value allocation of the total purchase price among the identifiable assets acquired. | |
| ● | The financial statements do not include the results of operations or cash flows of the acquired assets prior to the acquisition date. |
These financial statements are intended to provide users with historical information on the assets acquired and should be read in conjunction with the accompanying notes and the full financial statements of the Company.
Cash
The Company considers all short-term highly liquid investments with an original maturity date of purchase of three months or less to be cash equivalents.
Revenue Recognition
During the three and six months ended June 30, 2025 and the year ended December 31, 2024, our revenue recognition policy was in accordance with ASC 606, “Revenue from Contracts with Customers”, which requires the recognition of sales following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
Authoritative guidance on Earnings per Share requires dual presentation of basic and diluted earnings or loss per share (“EPS”) for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution; diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Basic loss per share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect is to reduce a loss or increase earnings per share.
In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), the Company measures the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services.
During the six months ended June 30, 2025, and 2024, there were no stock based awards issued or outstanding.
7
Fair value of financial instruments
We value our financial assets and liabilities on a recurring basis using the fair value hierarchy established in Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures.
ASC 820 describes three levels of inputs that may be used to measure fair value, as follows:
Level 1 input, which include quoted prices in active markets for identical assets or liabilities.
Level 2 inputs, which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and
Level 3 inputs, which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
Related Party Transactions
The Company engages in transactions with related parties in the normal course of business. Related parties include the Company's executive officers, directors, principal shareholders, and affiliates. All related party transactions are conducted on terms equivalent to those prevailing in arm’s length transactions.
During the three and six months ended June 30, 2025, the Company entered into the following related party transactions:
| ● |
The
Company recorded sales from Aqua Emergency totaling $
|
|
| ● |
The
Company recorded sales from Wyoming Bears totaling $
|
As of June 30, 2025, the following balances were outstanding with related parties:
| ● |
Accounts
receivable from Wyoming Bears totaling $
|
During the six months ended June 30, 2025, the Company issued shares to George Furlan, its CEO, for management services including a bonus of related to the closing of share exchange agreement with AIGF&B. Aqua Emergency and Wyoming Bears are related parties through common ownership by AIG.
8
These balances are unsecured, non-interest bearing, and are expected to be settled in the normal course of business.
The Company recorded fees of $
Management believes all related party transactions were made on terms equivalent to those that prevail in arm’s length transactions and were approved by the Company’s Board of Directors or an authorized committee.
Income Taxes
The Company’s income tax benefit differs from the expected income tax benefit by applying the U.S. Federal statutory rate of 21% to net income (loss) as follows:
The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of June 30, 2025 and December 31, 2024 are as follows:
|
June
30,
2025 |
December
31,
2024 |
|||||||
| Deferred Tax Assets | ||||||||
| Net Operating Losses | $ |
|
$ |
|
||||
| Less: Valuation Allowance |
(
|
) |
(
|
) | ||||
| Deferred Tax Assets - Net | $ | $ | ||||||
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate is 21%.
Segment Reporting
The Company applies ASC 280, Segment Reporting, in determining reportable segments for its financial statement disclosure. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer (“CEO”). The Company has determined that it operates as a single operating segment and has one reportable segment.
Impairment of Long-Lived Assets
Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold, and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Recently Issued and Adopted Accounting Standards
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.
9
NOTE 3. INVENTORIES
Inventories are stated at the lower of cost and
net realizable value. Cost is determined using the moving average method and net realizable value is the estimated selling price
less costs of disposal in the ordinary course of business. The cost of inventories includes direct costs plus shipping and packaging
materials. At December 31, 2023 based on a sale quote received in April 2024 for its remaining inventory, the Company recorded a
charge of $
As discussed in Note 1, On May 12, 2025, the Company, through its
wholly owned subsidiary AIG F&B, acquired Assets raw materials of $
NOTE 4. CONVERTIBLE NOTES PAYABLE
Since the change of control of the Company in May
2018, the Company received advances from Pure Energy 714 LLC, an unaffiliated entity, totaling $
On December 2, 2020, we issued a promissory note to
an accredited investor in consideration for $
On December 3, 2020, the Company issued a convertible
debenture to an accredited investor in consideration for $
On June 25, 2024, the investor submitted paperwork
that was approved by the Company to convert the entire Note and all of the related accrued interest totaling $
On April 27, 2021 (the “Issuance Date”),
the Company entered into a Securities Purchase Agreement with an accredited investor (the “April 2021 Investor”) providing
for the sale by the Company to the April 2021 Investor of a
10
to the April 2021 Note, the April 2021 Investor also received
shares of common stock of the Company (the
“Commitment Shares”), and a common share purchase warrant (the “April 2021 Warrant”, and together with the April
2021 Note and the Commitment Shares, the “Securities”) to acquire
shares of common stock of the Company.
The April 2021 Warrant is exercisable for five years at an exercise price of $
0.60
. The lender agreed to not exercise any of the warrant
and conversion feature from their inception through August 15, 2025. The lender has retained its right to exercise the warrants and conversion
feature from August 16, 2025 through their expiration. The Original Issue discount was being amortized over the term of the loan of 18
months and was fully amortized during the year ended December 31, 2022. Accrued interest for this note as of June 30, 2025 was $
176,516
including default interest of $
113,737
. Accrued interest for this note as of December 31, 2024 was $
141,779
including default interest
of $
94,789
.
On November 18, 2021 (the “Issuance Date”),
the Company entered into a Securities Purchase Agreement with an accredited investor (the “November 2021 Investor”) providing
for the sale by the Company to the November 2021 Investor of a
NOTE 5. NOTES PAYABLE
On January 3, 2020, specific terms were reached between
the Company and Pure Energy 714 LLC on the remaining $
During 2022 and 2023, the Company received proceeds
from various loans from Adriatic Advisors LLC. At December 31, 2023 and 2022, the Company had $
During May 2024, the Company received proceeds of
$
11
NOTE 6. ACQUISITION CREDITS
On May 12, 2025, the Company, through its wholly owned
subsidiary AIG F&B, acquired Assets totaling $
NOTE 7. STOCKHOLDERS’ (DEFICIT)
Preferred stock
The Company is authorized to issue shares of Preferred Stock, par value $ per share. During the first quarter of 2020, the Company issued shares of its newly designated Series B Preferred Stock to one investor.
For five years from the date of issuance, the Series B Preferred Stock shall have the number of votes equal to fifty-one percent (51%) of the cumulative total vote of all classes of stock of the Corporation, common or preferred, whether such other class of stock is voting as a single class or the other classes of stock are voting together as a single group, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, or any other class of preferred stock, and shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation, and shall be entitled to vote, together with holders of Common Stock and any class of preferred stock entitled to vote, with respect to any question upon which holders of Common Stock or any class of preferred stock have the right to vote. After five years, the Series B Preferred Stock shall automatically, and without further action by the Corporation, be cancelled and void, and may not be reissued.
As of June 30, 2025 and December 31, 2024, and shares of Series B Preferred Stock were issued and outstanding.
Common stock
On January 29, 2021, the Company, merged with and into its wholly owned subsidiary, Sentient Brands Holdings Inc., a Nevada corporation, pursuant to an Agreement and Plan of Merger between Sentient Brands Holdings Inc., a California corporation, and Sentient Brands Holdings Inc., a Nevada corporation. Sentient Brands Holdings Inc., a Nevada corporation, continued as the surviving entity of the migratory merger. Pursuant to the migratory merger, the Company changed its state of incorporation from California to Nevada and each share of its common stock converted into one share of common stock of the surviving entity in the migratory merger. No dissenters’ rights were exercised by any of the Company’s stockholders in connection with the migratory merger.
On February 6, 2025, the Company issued shares of its common stock to an individual for consulting services.
On February 11, 2025, the Company issued shares of its common stock to George Furlan as a bonus related to the merger.
On February 11, 2025, the Company issued shares of its common stock to James Mansour in full settlement of his amount due for past services. See Note 8.
On February 20, 2025, the Company issued shares of its common stock to satisfy the previous conversion of debt. See Note 5.
12
On February 26, 2025, the Company issued shares of its common stock to Pure Energy in exchange for the cancellation of all debt and related accrued interest. See Note 5.
On February 27, 2025, the Company issued shares of its common stock to Grace Court Advisors as a bonus related to the merger.
On March 11, 2025, the Company issued shares of its common stock to George Furlan as a bonus related to merger services.
On March 11, 2025, the Company issued shares of its common stock to a service provider for services.
On March 11, 2025, the Company issued shares of its common stock to Adriatic Advisors in exchange for the cancellation of all debt and related accrued interest. See Note 5.
On March 20, 2025, the Company issued to an investor who had purchased stock in May 2024, but was not issued at year end.
On April 2, 2025, the Company issued shares of its common stock to an individual in exchange for the cancellation of all debt and related accrued interest. See Note 5.
On April 3, 2025, the Company issued shares of its common stock to an individual in exchange for the cancellation of all debt and related accrued interest. See Note 5.
On April 15, 2025, the Company issued shares to a consultant for management services.
On April 16, 2025, the Company issued shares to a service provider for services provided related to the merger with AIG.
On April 17, 2025, the Company issued shares to a consultant for management services.
On April 28, 2025 the Company sold
shares
of its common stock to an investor for $
There were no other issuances of common stock during the six months ended June 30, 2025.
On January 23, 2024, the Company sold
shares
of its common stock to an investor for $
On February 15, 2024, the Company issued
shares
of its common stock to an investor for $
On February 22, 2024, the Company issued
shares of its common stock to an investor for $
On February 22, 2024, the Company issued
shares
of its common stock to an investor for $
On February 22, 2024, the Company issued
shares of its common stock to an investor for $
13
On March 14, 2024, the Company issued a total of shares of its common stock to a consultant for services rendered.
On March 28, 2024, the Company entered into a Settlement
and Release Agreement with a vendor pursuant to which the vendor agreed to forgive $
During April 2024, the Company issued shares of its common stock to the CEO, Dante Jones in lieu of cash payment for services.
On April 10, 2024 the Company issued shares of its common stock in lieu of cash payment for consulting services.
On September 20, 2024, the Company issued
shares of its common stock to a vendor in settlement of a trade payable of $
On December 17, 2024, the Company issued a total of shares of its common stock to a consultant for services rendered.
On December 17, 2024, the Company issued
shares of its common stock to an investor for $
On December 17, 2024, the Company issued
shares
of its common stock to an investor for $
On December 17, 2024, the Company issued
shares of its common stock to an investor for $
On December 17, 2024, the Company issued
shares
of its common stock to an investor for $
On December 17, 2024, the Company issued
shares
of its common stock to an investor for $
On December 17, 2024, the Company issued a total of shares of its common stock to a consultant for services rendered.
On December 17, 2024, the Company issued
shares
of its common stock to an investor for $
On December 17, 2024, the Company issued
shares
of its common stock to a vendor in settlement of a trade payable of $
There were no other issuances of common stock during the year ended December 31, 2024.
NOTE 8. COMMITMENTS AND CONTINGENCIES
On December 26, 2019, the Company entered into an
Employment Agreement (the “Furlan Agreement”) with George Furlan pursuant to which Mr. Furlan was appointed as the Company’s
Chief Executive Officer. The Furlan Agreement provides for a base salary of $60,000 per year with such base salary being increased to
$
14
On January 8, 2020, the Company entered into an Executive
Consulting Agreement (the “Mansour Agreement”) with James Mansour pursuant to which Mr. Mansour was appointed as an Executive
Consultant. The Mansour Agreement provides for a base salary of $
The Company is currently involved in a wage dispute
with a former contractor dating back to the third quarter of 2020. On May 30, 2025, the Company received a demand letter from an attorney
representing the contractor in the amount of $
In the first quarter of 2024, As of March 31, 2025, the consultant had not yet received the third cash payment and stock issuance. The Company has not recorded any charge for the third payment as of March 31, 2025. Subsequent to March 31, 2025, on April 18, 2025, the consultant was issued shares of the Company’s common stock in full settlement of the agreement.
NOTE 9. SUBSEQUENT EVENTS
The Company has evaluated subsequent events for recognition and disclosure through August 18, 2025, which is the date the financial statements were available to be issued.
On July 5, 2025, the Company, through its 51%-owned subsidiary Aqua Emergency, a Nevada corporation (AENV) entered into the Exchange Agreement (the “Exchange Agreement”) with Aqua Emergency, a Florida corporation (“AEFL”), which is owned and controlled by its shareholders, and which owns and controls several assets and lines of business of interest to the Company, pursuant to which AENV will acquire many of those assets and rights of AEFL in exchange for Acquisition Credits See Note 5.
Aqua Emergency, Inc., the Florida-based Company, is a specialized manufacturer and distributor of long-shelf-life emergency drinking water and meals-ready-to-eat (MREs), designed for disaster relief, defense, and institutional use. The Company is the exclusive license holder of the American Red Cross® brand for emergency water and MREs. Aqua Emergency supplies products to federal, state, and municipal emergency response agencies, non-governmental humanitarian and healthcare organizations, and commercial preparedness distributors. Its product line is engineered for extended shelf-life stability, regulatory compliance, and rapid-deployment packaging.
The consideration structure includes an earnout formula based on annual revenue growth, EBITDA, and/or appraised asset value, calculated on a 70% performance basis and adjusted by SNBH’s 51% ownership interest in the Subsidiary. Acquisition Credits issued under this structure may be converted into shares of SNBH common stock following applicable holding periods and subject to Lock-Up Agreements.
No other matters were identified affecting the accompanying financial statements and related disclosures.
15
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and financial condition of Sentient Brands Holdings Inc. for the three and six months ended June 30, 2025 and 2024 should be read in conjunction with the Sentient Brands Holdings Inc. unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements and Business sections in our Form 10-K as filed with the Securities and Exchange Commission on April 16, 2025. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
Unless otherwise indicated, references to the “Company,” “us” or “we” refer to Sentient Brands Holdings Inc. and its subsidiaries.
Overview
Sentient Brands is currently a next-generation brand platform focused on the acquisition, development, and commercialization of premium and functional consumer packaged goods (CPG) with an emphasis on wellness, sustainability, and emergency preparedness. The Company has implemented a product innovation and acquisition-driven growth strategy through its operating subsidiaries, focusing on consumer categories that offer long-term secular growth potential.
The Company’s flagship subsidiaries include:
| 3. | AIG F&B, Inc. , a wholly owned Nevada subsidiary, which operates as a manufacturing and distribution platform for food, beverage, and wellness products, including shelf-stable and functional nutrition items. AIG F&B sources and produces consumer goods for the Company’s brand portfolio and strategic partners, including Original New York Seltzer, Arctic Frost, and Burlone. |
| 4. | Aqua Emergency, Inc. (AENV) , a 51%-owned subsidiary, is a Florida-based specialized manufacturer and distributor of emergency water and meals-ready-to-eat (MREs). Aqua Emergency holds the exclusive license for American Red Cross® branded emergency water and MREs and supplies federal, state, and municipal emergency agencies, NGOs, and commercial distributors. Products are engineered for extended shelf life, regulatory compliance, and rapid deployment. |
These entities serve as the operational and commercial backbone of SNBH’s business model, allowing the Company to scale through strategic asset acquisition and production partnerships. The Company intends to leverage its operating subsidiaries, brand equity, and licensing relationships to enter additional product categories aligned with health, safety, and sustainability.
Strategic Developments
On April 10, 2025, the Company, through AIG F&B, closed a share exchange agreement with American Industrial Group (“AIG”), pursuant to which AIG transferred select rights, assets, and business lines to AIG F&B in exchange for Acquisition Credits convertible into shares of SNBH common stock under a performance-based earnout structure. These assets include proprietary beverage and first-aid product formulations, manufacturing infrastructure, distribution relationships, and brand rights relevant to the Company’s future roadmap.
The consideration structure is performance-contingent and subject to regulatory holding periods, lock-up agreements, and earnout milestones tied to revenue, EBITDA, and appraised asset value. The Acquisition Credits may be converted to equity upon the achievement of defined benchmarks over a multi-year horizon.
16
This transaction significantly enhances the Company’s balance sheet and operating capacity, supporting its ability to develop new revenue-generating products and pursue future acquisitions aligned with its mission.
The Company’s leadership team brings experience from global consumer brands and retailers, including Original New York Seltzer, Disney, Hugo Boss, Victoria’s Secret, Versace, Bath & Body Works, and Walmart. Leveraging this expertise, through its partnership with American Industrial Group, SNBH is positioned to capitalize on strategic sourcing, the ability to manufacture locally with a global footprint, and global distribution networks across omnichannel platforms for high-growth, high-margin brands, while maintaining cash-flow positive operations at all subsidiaries. The Company continues to execute its 24-month acquisition pipeline and to seek growth through synergistic acquisitions, innovation in consumer packaged goods, in food, beverage, pet-care, healthcare, and emergency markets, as well as strategic brand partnerships. Management believes these initiatives, supported by scalable operations and established institutional relationships, will enable sustainable value creation for shareholders.
Principal Products and Services
Sentient Brands’ product portfolio includes multiple high-growth, consumer-focused brands:
| ● | Original New York Seltzer – a heritage natural soda brand recognized for its nostalgic appeal and clean-label formulation. |
| ● | Arctic Frost – a premium vodka brand positioned for the mass market, with pricing and affordability. |
| ● | Burlone – a high-quality, yet affordable European wine, food, and beverage brand. |
| ● | Aqua Emergency – emergency water and meal-ready-to-eat (MRE) kits designed for disaster preparedness, government procurement, and institutional supply chains. |
| ● | American Red Cross® Licensed Products – long-shelf-life emergency rations and hydration supplies marketed under exclusive license. |
All of the Company’s proprietary products are formulated and packaged to meet standards of safety, shelf-life stability, consumer appeal, and regulatory compliance.
Suppliers
The Company utilizes a diversified network of co-manufacturers, ingredient suppliers, and packaging partners. SNBH is not dependent on any single supplier and maintains contingency arrangements to support uninterrupted operations.
Distribution
SNBH leverages both direct-to-consumer and B2B distribution channels:
| ● | E-commerce platforms |
| ● | Retail and wholesale distribution |
| ● | Government procurement contracts |
| ● | International export partnerships |
Marketing Strategy
The Company promotes its brands through targeted social media marketing, influencer campaigns, PR events, and traditional media. Marketing and brand positioning are executed internally and with third-party agencies for select initiatives.
17
Growth Strategies
To scale operations and enhance shareholder value, the Company is focused on:
| ● | Executing a 24-month acquisition and brand roll-up plan |
| ● | Expanding manufacturing and fulfillment capabilities |
| ● | Leveraging omnichannel distribution networks |
| ● | Scaling brands through licensing and global expansion |
M&A Strategy
SNBH targets synergistic acquisitions in high-margin, high-growth categories including food, beverage, pet care, health, and emergency products. The Company applies an earnout-based consideration model to align incentives and manage dilution. The April 2025 acquisition of assets from American Industrial Group is the first major transaction under this model.
Customers
The Company serves a broad customer base, including individual consumers, retailers, distributors, government agencies, and NGOs. Key segments include emergency preparedness, premium beverage, and wellness categories.
Intellectual Property
SNBH and its affiliates hold U.S. trademarks and exclusive licenses for Aqua Emergency, Arctic Frost, Original New York Seltzer, American Red Cross, Burlone, and other proprietary brands, with additional trademark applications pending internationally. The Company protects trade secrets through contractual and operational safeguards.
Competition
The CPG space is highly competitive, with participants ranging from multinational conglomerates to niche independents. The Company’s focus on brand authenticity, regulatory compliance, and premium positioning provides defensible differentiation.
Research and Development
Product development is continuous and collaborative across the Company’s brand platform. Expenditures are managed prudently and focus on commercialization of innovative formulations and packaging.
Employees
The Company employs a lean operating structure, combining a core management team with dedicated full-time employees, supported by strategic advisors and specialized contractors. Human capital plans prioritize scalability and operational excellence.
Compensation practices are designed to align performance with long-term value creation through a combination of base pay, performance incentives, and equity participation.
18
The primary mailing address for the Company is 590 Madison Avenue, 21 st Floor, New York, New York 10022. The Company’s telephone number is (646) 202-2897. The Company’s website is www.sentientbrands.com.
Going Concern
We have a limited operating history, and our continued growth is dependent upon the continuation of selling our products to our customers; hence generating revenues and obtaining additional financing to fund future obligations and pay liabilities arising from normal business operations. We had an accumulated deficit of $5,557,260 and $4,669,826 at June 30, 2025 and December 31, 2024, respectively and a working capital deficit of $1,583,758 and $2,206,318 at June 30, 2025 and December 31, 2024, respectively. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2024 contained an explanatory paragraph regarding our ability to continue as a going concern based upon cash used in operating activities and the current cash balance cannot be projected to cover the operating expenses for the next twelve months from the release date of this report. These factors, among others, raised substantial doubt about our ability to continue as a going concern. Our financial statements appearing elsewhere in this report do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate significant revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
Our ability to continue as a going concern is dependent upon our ability to carry out our business plan, achieve profitable operations, obtain additional working capital funds from our significant shareholders, and or through debt and equity financings. However, there can be no assurance that any additional financings will be available to us on satisfactory terms and conditions, if any.
The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, recovery of long-lived assets, income taxes and the valuation of equity transactions.
We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements.
19
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or products have been sold, the purchase price is fixed or determinable and collectability is reasonably assured.
Our customers place orders for our products pursuant to their purchase orders and we are paid by our customers pursuant to our invoices. Each invoice calls for a fixed payment in a fixed period of time. We recognize revenue by selling our products under our customers’ purchase orders and our related invoices to our customers. Revenue related to the sales of our products to our customers is recognized as the products are sold and amounts are paid, using the straight-line method over the term of the sales transaction. Prepayments, if any, received from customers prior to the products being delivered are recorded as advance from customers. In these cases, when the products are sold, the amount recorded as advance from customers is recognized as revenue.
Income Taxes
We are governed by the income tax laws of the United States. Income taxes are accounted for pursuant to ASC 740 “Accounting for Income Taxes,” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. The charge for taxes is based on the results for the period as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized.
Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is changed to equity. Deferred tax assets and liabilities are offset when they related to income taxes levied by the same taxation authority and we intend to settle its current tax assets and liabilities on a net basis.
Stock-based Compensation
Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of Accounting Standards Codification (“ASC”) 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award. The Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the period of services or the vesting period, whichever is applicable. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.
20
Recent Accounting Pronouncements
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our consolidated financial condition, results of operations, cash flows or disclosures.
RESULTS OF OPERATIONS
Comparison of Results of Operations for the three months ended June 30, 2025 and 2024
Revenue
We generated revenue of 110,600 during the three months ended June 30, 2025. The revenue was generated through our new subsidiary AIG F&B which we acquired in April 2025 and began operations in May 2025. The revenue consisted of shipments of bottled water to independent but related parties. We did not generate any revenue during the three months ending June 30, 2024.
Gross Margin
We had a negative gross margin of $4,512 for the three months ended June 30, 2025 due to shipping and other start up costs. There was no gross margin for the three months ended June 30, 2024.
Operating Expenses
For the three months ended June 30, 2025 and 2024, operating expenses consisted of the following:
| 2025 | 2024 | |||||||
| Advertising and Marketing | — | — | ||||||
| General and Administrative | 25,548 | 16,074 | ||||||
| Legal and Professional | 242,463 | 52,595 | ||||||
| Management Fees | 84,245 | 92,500 | ||||||
| TOTAL OPERATING EXPENSES | 352,256 | 161,169 | ||||||
| ● | General and administrative fees totaled $25,548 for the three months ended June 30, 2025 representing an increase of $9,474 compared to the total of $16,074 for the three months ended June 30, 2024. The increase is attributable to costs associated with the closing of the acquisition of AIG F&B in April and getting the new operation running. | |
| ● | Legal and professional fees primarily consisted of accounting fees, legal service fees, consulting fees, investor relations and other fees incurred for service related to being a public company. For the three months ended June 30, 2025, professional fees totaled $242,463 which is an increase of $189,868 compared to total expense of $52,595 for the three months ended June 30, 2024. Legal fees related to the closing of the AIG F&B acquisition were approximately $43,000. We also recorded a charge of $176,000 for 2 million shares of our common stock issued to a former contractor as a success fee for the closing of the acquisition. The majority of the expense in 2024 was attributed to fees involved with the beginning of the search for acquisition targets and fund raising activities. | |
| ● | Our management fees are comprised mainly of salaries paid to our management staff. For the three months ended June 30, 2025, we recorded an expense of $84,245 of management fees for work associated with negotiated and closing the merger deal in April 2025. Fees totaling 92,500 were recognized for the same period of 2024 for work associated with fund raising and merger activity. |
Loss from Operations
The Company’s operating loss for the three-month period ended June 30, 2025 and 2024 was $356,768 and $161,169, respectively. The increase in operating loss of $195,599 was primarily attributed to the non-cash expense related to stock issued for professional services and management fees.
21
Interest Expense
Interest Expense is related to our convertible and other notes payable. During the three months ended June 30, 2025, interest expense totaled $39,368 compared to $63,985 for the same period in 2024. The decrease in 2025 is a result of the several conversions of debt into equity during the first quarter of 2025.
Income Taxes
We did not have any income taxes expense for the three months ended June 30, 2025 and 2024.
Net Loss
Our net loss for the three months period ended June 30, 2025 and 2024 was $396,136 and $225,154, respectively.
Comparison of Results of Operations for the six months ended June 30, 2025 and 2024
Revenue
We generated revenue of 110,600 during the six months ended June 30, 2025. The revenue was generated through our new subsidiary AIG F&B which we acquired in April 2025 and began operations in May 2025. The revenue consisted of shipments of bottled water to independent but related parties. We did not generate any revenue during the six months ending June 30, 2024.
Gross Margin
We had a negative gross margin of $4,512 for the six months ended June 30, 2025 due to shipping and other start up costs. There was no gross margin for the six months ended June 30, 2024.
Operating Expenses
For the six months ended June 30, 2025 and 2024, operating expenses consisted of the following:
| 2025 | 2024 | |||||||
| General and Administrative | 33,201 | 23,960 | ||||||
| Legal and Professional | 459,501 | 368,878 | ||||||
| Management Fees | 353,105 | 121,100 | ||||||
| TOTAL OPERATING EXPENSES | 845,807 | 513,938 | ||||||
| ● | General and administrative fees totaled $33,201 for the six months ended June 30, 2025 representing a decrease of $9,241 compared to the total of $23,960 for the six months ended June 30, 2024. The increase is attributable to costs associated with the closing of the acquisition of AIG F&B in April and getting the new operation running. The current fees relate to office expenses, bank fees, fees associated with public company expenses and some travel costs. |
| ● | Legal and professional fees primarily consisted of accounting fees, legal service fees, consulting fees, investor relations and other fees incurred for service related to being a public company. For the six months ended June 30, 2025, professional fees totaled $459,501 which is an increase of $90,623 compared to total expense of $368,878 for the six months ended June 30, 2024. The increase is attributed to the increased legal fees required to finalize and close on the acquisition of AIG F&B and the assets acquired in May. Professional fees are mainly for legal, accounting and audit fees. | |
| ● | Our management fees are comprised mainly of salaries paid to our management staff. During the six month period ended June 30, 2025, management fees totaled $353,105 representing an increase of $232,005 compared to June 30, 2024, management fees of $121,100. The increased fees related to our efforts to finalize and close on the acquisition of AIG F&B and the assets acquired in May. |
22
Loss from Operations
The Company’s operating loss for the six-month period ended June 30, 2025, and 2024 was $850,319 and $513,938, respectively. The increased in operating loss of $336,381 was primarily attributed to the increased professional fees and management fees related to our efforts to finalize and close on the acquisition of AIG F&B and the assets acquired in May.
Interest Expense
Interest Expense is related to our convertible and other notes payable. During the six months ended June 30, 2025, interest expense totaled $89,466 compared to $127,970 for the same period in 2024. The decrease in 2025 is a result of the several conversions of debt into equity during the first quarter of 2025.
Income Taxes
We did not have any income taxes expense for the six months ended June 30, 2025 and 2024.
Net Loss
Our net loss for the six months period ended June 30, 2025 and 2024 was $887,434 and $641,908, respectively.
Liquidity and Capital Resources
The consolidated financial statements have been prepared using generally accepted accounting principles in the United States of America (“GAAP”) applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business.
To the extent we are successful in growing our business both organically and through acquisition, we continue to plan our working capital and the proceeds of any financing to finance such acquisition costs.
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At June 30, 2025, we had a cash balance of $42,348. These funds are kept in financial institutions located in United States.
As of June 30, 2025, we had total current assets of $556,161, consisting of $42,348 in cash accounts receivable of $60,900, period expenses of $169,462 and inventory of $283,451. Our total current liabilities as of June 30, 2025 were $2,139,919 We had a working capital deficit of $1,583,758 as of June 30, 2025.
Our ability to continue as a going concern is dependent upon our ability to carry out our business plan, achieve profitable operations, obtain additional working capital funds from our significant shareholders, and or through debt and equity financings. However, there can be no assurance that any additional financings will be available to us on satisfactory terms and conditions, if any.
The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
23
Cash Flows from Operating Activities
Operating activities generated $2,916 in cash for the six months ended June 30, 2025, compared with cash used of $190,166 for the six months ended June 30, 2024. Our positive operating cash flow for the six months ended June 30, 2024, was largely the result of our net loss of $887,434 offset by non cash expense for consulting services of $656,186. Our payables for the quarter increased by $234,406. For the six months ended June 30, 2024, operating activities used $190,166. The primary causes of the cash usage was our net loss of $641,908. This was primarily offset by non cash expense for consulting services of $340,750 and a stock subscription of $85,000.
Cash Flows from Investing Activities
There were no cash flow from investment activities for the six months ended June 30, 2025 and 2024.
Cash Flows from Financing Activities
Net cash flows provided by financing activities during the six months ended June 30, 2025, amounted to $36,000 compared with cash flows provided by financing activities of $190,500 for the six months ended June 30, 2024. Our positive cash flows for the six months ended June 30, 2025 and 2024 consisted of proceeds from the sale of common stock and a short term loan.
Going Concern
As of June 30, 2025, we have an accumulated deficit of $5,557,260. Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations. While we are expanding our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.
We will need to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our available cash will be insufficient to satisfy our cash requirements under our present operating expectations. Other than working capital and advance received from related parties and funds received pursuant to securities purchase agreements, we presently have no other significant alternative source of working capital. We have used these funds to fund our operating expenses, pay our obligations and grow our company. We will need to raise significant additional capital to fund our operations and to provide working capital for our ongoing operations and obligations. Therefore, our future operation is dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will be required to cease our operations. To date, we have not considered this alternative, nor do we view it as a likely occurrence.
Contractual Obligations and Off-Balance Sheet Arrangements
None
Contractual Obligations
We presently do not have any contractual obligations.
24
Off-balance Sheet Arrangements
We presently do not have off-balance sheet arrangements.
Inflation
The effect of inflation on our revenue and operating results was not significant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of March 31, 2023, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described below.
Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following three material weaknesses that have caused management to conclude that, as of June 30, 2025, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:
25
| 1. | We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of the period ending March 31, 2025. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
| 2. | We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
| 3. | Effective controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. |
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once resources become available.
We intend to remedy our material weakness with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective internal controls once resources become available.
Changes in Internal Controls over Financial Reporting
There were no changes (including corrective actions with regard to material weakness) in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
26
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are subject to ordinary routine litigation incidental to our normal business operations. We are not currently a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows or financial condition.
ITEM 1A. RISK FACTORS
Risk factors describing the major risks to our business can be found under Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2024. There has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
On February 6, 2025, the Company issued 3,000,000 shares of its common stock to two individual for consulting services.
On February 11, 2025, the Company issued 3,680,000 shares of its common stock to George Furlan as a bonus related to the merger.
On February 11, 2025, the Company issued 1,700,000 shares of its common stock to James Mansour in full settlement of his amount due for past services. See Note 8.
On February 20, 2025, the Company issued 3,272,031 shares of its common stock to satisfy the previous conversion of debt. See Note 5.
On February 26, 2025, the Company issued 15,507,121 shares of its common stock to Pure Energy in exchange for the cancellation of all debt and related accrued interest. See Note 5.
On February 27, 2025, the Company issued 1,540,000 shares of its common stock to Grace Court Advisors as a bonus related to the merger.
On March 11, 2025, the Company issued 2,000,000 shares of its common stock to George Furlan as a bonus related to merger services.
On March 11, 2025, the Company issued 1,000,000 shares of its common stock to a service provider for services.
On March 11, 2025, the Company issued 10,467,460 shares of its common stock to Adriatic Advisors in exchange for the cancellation of all debt and related accrued interest. See Note 5.
On March 20, 2025, the Company issued 1,000,000 to an investor who had purchased stock in May 2024, but was not issued at year end.
On April 2, 2025, the Company issued 247,250 shares of its common stock to an individual in exchange for the cancellation of all debt and related accrued interest. See Note 5.
On April 3, 2025, the Company issued 1,032,465 shares of its common stock to an individual in exchange for the cancellation of all debt and related accrued interest. See Note 5. |
27
On April 15, 2025, the Company issued 300,000 shares to a consultant for management services.
On April 16, 2025, the Company issued 2,000,000 shares to a service provider for services provided related to the merger with AIG.
On April 17, 2025, the Company issued 430,000 shares to a consultant for management services.
On April 28, 2025 the Company sold 600,000 shares of its common stock to an investor for $30,000. As of the date of this filing, the shares have not yet been issued.
The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended and/or Rule 506 as promulgated under Regulation D as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.
The Company claims an exemption from the registration requirements of the Securities Act of 1933 (the “Securities Act”) for the issuances of the above securities pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. The investors in these securities are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act. As of the date hereof, the Company is obligated on the above notes issued to the investor. The above notes are a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company.
The foregoing information is a summary of each of the agreements involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of those agreements, each of which is attached an exhibit to this Quarterly Report on Form 10-Q. Readers should review those agreements for a complete understanding of the terms and conditions associated with this transaction.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During the quarter ended June 30, 2025, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.
28
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
* Filed herewith
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SENTIENT BRANDS HOLDINGS INC. | ||
| Date: August 19, 2025 | By: | /s/ George Furlan |
| George Furlan | ||
|
Chief Executive Officer
(Principal Executive Officer) |
||
| Date: August 19, 2025 | By: | /s/ George Furlan |
| George Furlan | ||
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |
||
30