Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

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.

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:

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Original New York Seltzer - a heritage natural soda brand recognized for its nostalgic appeal and clean-label formulation.

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Arctic Frost - a premium vodka brand positioned for the mass market, with pricing and affordability.

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Burlone - a high-quality, yet affordable European wine, food, and beverage brand.

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Aqua Emergency - emergency water and meal-ready-to-eat (MRE) kits designed for disaster preparedness, government procurement, and institutional supply chains.

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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:

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E-commerce platforms

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Retail and wholesale distribution

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Government procurement contracts

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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.

Growth Strategies

To scale operations and enhance shareholder value, the Company is focused on:

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Executing a 24-month acquisition and brand roll-up plan

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Expanding manufacturing and fulfillment capabilities

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Leveraging omnichannel distribution networks

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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.

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.

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.

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.

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

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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.

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.

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.

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.