Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated interim financial statements and related notes included in Item 1 of this report, and with the audited financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025.

Forward-Looking Statements

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Form 10-Q, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of a number of factors, including those set forth under the risk factors and business sections in this Form 10-Q

Overview

Sentient Brands is 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.

Going Concern

The accompanying condensed consolidated interim financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since inception and has an accumulated deficit of $6,472,806 as of June 30, 2026, a total stockholders' deficit of $2,212,931, and a working capital deficit of $4,001,813. Included in the working capital deficit for the three and six months ended June30, 2026 and the year ended December 31, 2025 is $2,640,712 in Acquisition Credits as a contingent liability which is solely settleable in equity to be issued for acquiring the subsidiaries AIGFB & AE NV, in the amount of $2,500,712, with an additional issuance of $140,000 to a vendor in settlement of an accounts payable. Although the Company generated income from operations of $42,322 for the three months ended June 30, 2026, it incurred net losses of $46,836 and $139,912 for the three and six months then ended. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

To address these challenges, management is executing a strategic plan focused on the following areas:

	●	Operational Efficiency: The Company has implemented strict cost-control measures, including a policy requiring detailed activity reporting on all professional service invoices and the suspension of board fees, to reduce general and administrative (G&A) overhead.
	●	Revenue Scaling: We are prioritizing the growth of our existing CPG subsidiaries, AIG-F&B, Inc. and Aqua Emergency, Inc., by leveraging product innovation and expanding distribution channels within our core wellness and emergency preparedness markets.
	●	Liquidity and Capital Access: We are actively pursuing additional working capital through potential strategic partnerships and equity financing opportunities.
	●	Balance Sheet Restructuring: We are in discussions with the convertible note holder to restructure terms and conditions including conversion pricing, equity conversion and interest rate reductions.

There can be no assurance that these initiatives will be successful or that the Company will achieve sustainable profitability. If we are unable to secure additional financing on satisfactory terms, our business and financial condition could be materially and adversely affected.

Results of Operations - Three and Six Months Ended June 30, 2026 vs. June 30, 2025

Revenue

Total condensed consolidated revenues were $462,461 for the three months ended June 30, 2026, compared to $110,600 for the comparable 2025 period, an increase of $351,861, and for the six months ended June 30, 2026 and 2025, respectively, were $693,172 and $110,600, reflecting the ramp-up of revenue-generating operations across both operating subsidiaries.

Cost of Revenues and Gross Profit

Cost of revenues was $289,147 for the three months ended June 30, 2026, compared to $115,712 for the three months ended June 30, 2025. Cost of revenues for the six months ended June 30, 2026 was $455,648 compared to $116,312 for the six months ended June 30, 2025.

Gross profit was $173,314 compared to a gross loss of ($5,112) for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 gross profit was $237,524 compared to a gross loss of ($5,712) for the six months ended June 30, 2025.

Operating Expenses

For the three and six months ended June 30, 2026 and 2025, operating expenses consisted of the following:

		For the three months ended June 30,								For the six months ended June 30,
		2026				2025				2026				2025
		Unaudited				Restated				Unaudited				Restated
General and Administrative		$	7,513			$	4,564			$	12,806			$	7,685
Legal and Professional			54,479				255,548				120,566				467,832
Management Fees			69,000				99,545				116,500				250,645
TOTAL OPERATING EXPENSES		$	130,992			$	359,657			$	249,872			$	726,162

Total operating expenses were $130,992 and $359,657 for the three months ended June 30, 2026 and 2025, respectively and $249,872 and $726,162 for the six months ended June 30, 2026 and 2025, respectively. The decrease in operating expenses was due to legal and professional and management fees expenses.

The Company instituted a policy requiring all officers and directors to present detailed activity on an approved invoice basis rather than through fixed consulting agreements. In addition, the board of directors agreed to suspend their board fees until further notice. Both of these initiatives resulted in a significant reduction in management fees. During the six months ended June 30, 2026, there was a reduction of $134,145 in management fees compared to the six months ended June 30, 2025. There were 118,007 shares of common stock issued for bonuses related to the acquisitions of subsidiaries valued at $141,600 for the six months ended June 30, 2025. No such bonuses were awarded in 2026. The recipient of 66,667 of these bonus shares has agreed to surrender those shares to the Company as part of the Settlement Agreements (see Note 14).

Legal and Professional fees include legal fees, auditing and accounting services, investor relations and other professional fees. There was a reduction of legal fees costs of $212,253 compared to the six months ended June 30, 2025. There were 66,667 shares of common stock issued for bonuses for legal services related to the acquisitions of subsidiaries valued at $176,000 for the three and six months ended June 30, 2025. There were no such bonuses awarded in 2026.

Other advisory services decreased $101,088 due to reduced Investor Relations expenses incurred and required between June 2026 and 2025. Investor relations expenses were settled through the issuance of 100,000 shares of common stock in the six months ended June 30, 2025.

Accounting and Auditing fees for the three and six months ended June 30, 2025 included a bonus of 33,334 shares of common stock valued at $40,000 at the time of issuance paid to the former contracted accountant. There were no such bonuses rendered in 2026.

Income (Loss) from Operations

The Company's income (loss) from operations during the three months ended June 30, 2026 and 2025 was $42,322 and ($364,769), respectively. The loss from operations during the six months ended June 30, 2026 and 2025, respectively, was ($12,348) and ($731,874).

Other Income (Expense)

Net other expenses were ($89,158) and ($108,351) for the three months ended June 30, 2026 and 2025 and for the six months ended for June 30, 2026 and 2025, respectively, was ($127,564) and ($213,471).

The loss on the embedded derivatives for the three months ended June 30, 2026 and 2025 was ($4,251) and ($35,863) and the gain for the six months ended June 30, 2026 was $38,141 and loss for the six months ended June 30, 2025 was ($72,329).

Interest expense for the three and six months ended June 30, 2026 was $84,907 and $165,705. For the three and six months ended June 30, 2025, interest expense was $72,488 and $151,142.

Net Loss

Net loss was ($46,836) for the three months ended June 30, 2026, compared to a net loss of ($473,120) for the three months ended June 30, 2025. The improvement of $426,284 reflects the commencement of substantial revenue-generating operations across both subsidiaries, reduced holding company costs and the gain on embedded derivative calculations. Net loss for the six months ended June 30, 2026 and 2025, respectively, was ($139,912) and ($945,345), resulting in an improvement of $805,433.

Liquidity and Capital Resources

Cash was $143,799 on June 30, 2026 compared to $29,011 on December 31, 2025. The net increase of $114,788 reflects net cash provided by operating activities of $45,917 and net proceeds from short-term related-party loans of $68,871.

Net cash provided by operating activities for the six months ended June 30, 2026, reflecting net loss of ($139,912) adjusted for non-cash items of depreciation and amortization of $8,569, embedded derivative calculation loss of ($38,141), and interest expense of $165,705 plus working capital changes including collections of accounts receivable of $9,368, a decrease in prepaid fulfilment fees of $122,737 and an increase in accounts payable of $167,017.

Financing activities provided $68,871 and $0 from net short-term loan proceeds from related parties for the six months ended June 30, 2026 and 2025, respectively. Management is actively pursuing additional working capital financing through equity raises, strategic partnerships, and operating cash flow improvements.

The Company's working capital deficit was $4,001,813 on June 30, 2026, and $3,902,970 on December 31, 2025. Included in the working capital deficit for the six months ended June 30, 2026 and year ended December 31, 2025 is $2,640,712 in Acquisition Credits as a contingent liability which is solely settleable in equity to be issued for acquiring the subsidiaries AIGFB & AE NV, in the amount of $2,500,712, with an additional issuance of $140,000 for a reduction in accounts payable.

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.