Sentient Brands flags $4.01M working-capital deficit
A $4,010,119 working-capital deficit and ineffective disclosure controls accompany positive nine-month operating cash flow.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Sentient Brands Holdings Inc. (SNBH) reported revenue of $1,088,668 for the nine months ended September 30, 2026, versus $484,723 in restated 2025 results, and a net loss of $202,617 versus $899,293. For the third quarter, revenue was $395,496 and net loss was $62,705; the restated 2025 quarter had $373,822 in revenue and $46,052 in net income. Nine-month gross margin was 34.3%, compared with 47.6%.
Cash was $335,617 as of September 30, 2026, and operating activities provided net cash of $194,686 during the nine months ended that date. Related parties funded $111,920 of expenses, vendor balances and advances directly on SNBH’s behalf. The working-capital deficit was $4,010,119; management said its plans had not alleviated substantial doubt about SNBH’s ability to continue as a going concern.
SNBH is prioritizing emergency preparedness and disaster recovery while phasing out consumer packaged goods business lines outside that focus and deferring new integrations. Disclosure controls were not effective because weaknesses in documentation, segregation of accounting duties and the control environment remained unremediated. After September 30, 598,200 shares were canceled on October 28; common shares outstanding were 3,977,265 as of November 9, compared with 4,575,465 as of September 30.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue was $1,088,668, versus $484,723 in restated 2025 results.
- Moderate pointNine-month net loss narrowed to $202,617 from $899,293.
- Moderate pointOperating cash flow was $194,686, versus $32,087 used in restated 2025 results.
Negative
- Major pointDisclosure controls remained ineffective as of September 30, 2026.
- Major pointGoing-concern substantial doubt persists alongside a $4,010,119 working-capital deficit.
- Moderate pointThird-quarter results shifted from $46,052 income to a $62,705 net loss.
Filing Explained
Share issuances settled accrued costs, but left the convertible-note principal unchanged.
This unaudited quarterly report says SNBH completed two share issuances: 222,242 common shares to GA3 for accrued interest and issuance costs, and 650,000 employee-plan shares to settle previously accrued expenses.
Issuing additional shares increases the total share count and reduces existing holders’ percentage ownership, absent offsetting changes.
The GA3 shares were issued on
The plan shares settled
Key Figures
Key Terms
going concern financial
working capital deficit financial
constructive financing receipts financial
embedded derivative financial
material weakness financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was SNBH’s revenue for the first nine months of 2026?
Why does SNBH report substantial doubt about its ability to continue as a going concern?
How much cash did SNBH generate from operations in the first nine months of 2026?
How many SNBH shares were outstanding after the October 2026 cancellation?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For
the quarterly period ended
For the transition period from _________________ to _________________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (zip code)
Registrant’s
telephone number:
Securities registered pursuant to Section 12(b) of the Act: None.
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 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 by Rule 12b-2 of the Exchange Act). Yes ☐ No
As
of November 9, 2026, there were
SENTIENT BRANDS HOLDINGS INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | ||
| Item 1. Condensed Consolidated Interim Financial Statements (Unaudited) | 3 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 21 | |
| Item 4. Controls and Procedures | 21 | |
| PART II – OTHER INFORMATION | ||
| Item 1. Legal Proceedings | 22 | |
| Item 1A. Risk Factors | 23 | |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 23 | |
| Item 3. Defaults Upon Senior Securities | 24 | |
| Item 4. Mine Safety Disclosures | 24 | |
| Item 5. Other Information | 24 | |
| Item 6. Exhibits | 24 | |
| Signatures | 25 | |
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
The accompanying unaudited condensed consolidated interim financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to SEC rules for smaller reporting companies. They do not include all information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of full-year results. These statements should be read with the audited annual consolidated financial statements and notes in the Company’s Form 10-K for the year ended December 31, 2025.
SENTIENT BRANDS HOLDINGS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Prepaid fulfilment fees | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Fixed Assets (net) | ||||||||
| Intangible Assets (net) | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Short-term loans payable | ||||||||
| Notes payable | ||||||||
| Convertible notes payable | ||||||||
| Accrued interest | ||||||||
| Derivative liability (at fair value) | ||||||||
| Acquisition credits | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies (Note 12) | - | - | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred Stock — $ | ||||||||
| Common Stock — $ | ||||||||
| Additional paid-in capital | ||||||||
| Common stock subscription | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 3 |
SENTIENT BRANDS HOLDINGS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Unaudited | Restated | Unaudited | Restated | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Advertising and marketing | – | – | ||||||||||||||
| General and administrative | ||||||||||||||||
| Legal and professional | ||||||||||||||||
| Management fees | ||||||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ||||||||||||||
| Other Income (Expenses) | ||||||||||||||||
| Derivative gain | ||||||||||||||||
| Settlement of legal claims | – | – | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expenses) | ( | ) | ( | ) | ( | ) | ||||||||||
| NET INCOME (LOSS) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| EARNINGS (LOSS) PER COMMON SHARE — BASIC AND DILUTED | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 4 |
SENTIENT BRANDS HOLDINGS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
UNAUDITED
| September 30, 2026 | Shares | Amount | Shares | Amount | be issued | Capital | Deficit | Total | ||||||||||||||||||||||||
| Common Stock | Preferred Stock | Common Stock to | Paid in | Accumulated | ||||||||||||||||||||||||||||
| September 30, 2026 | Shares | Amount | Shares | Amount | be issued | Capital | Deficit | Total | ||||||||||||||||||||||||
| Balance - December 31, 2025 (audited) | $ | $ | $ | | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued from 2026 Employee Stock Plan | – | – | – | – | ||||||||||||||||||||||||||||
| Subscribed common shares issued | – | – | ( | ) | – | – | ||||||||||||||||||||||||||
| Common stock issued in settlement of accrued interest | – | – | – | – | ||||||||||||||||||||||||||||
| Common shares cancelled and retired | ( | ) | ( | ) | – | – | – | – | – | |||||||||||||||||||||||
| Net loss for the nine months | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances September 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| September 30, 2025 | Common Stock | Preferred Stock | Common Stock to | Paid in | Accumulated | |||||||||||||||||||||||||||
| (Restated) | Shares | Amount | Shares | Amount | be issued | Capital | Deficit | Total | ||||||||||||||||||||||||
| Balance - December 31, 2024 (audited) | $ | $ | $ | | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued in settlement of accounts payable | – | – | – | – | ||||||||||||||||||||||||||||
| Subscribed common shares issued | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued for converted debt and accrued interest | – | – | ( | ) | – | |||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | – | ||||||||||||||||||||||||||||
| Conversion of debt and accrued interest into common stock | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock sold to investors not issued | – | – | – | – | – | – | ||||||||||||||||||||||||||
| Conversion of debt and accrued interest into common stock not issued | – | – | – | – | – | – | ||||||||||||||||||||||||||
| Preferred shares retired | – | – | ( | ) | ( | ) | – | – | – | |||||||||||||||||||||||
| Issuance of preferred stock for services | – | – | – | – | – | |||||||||||||||||||||||||||
| Net loss for the nine months | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 5 |
SENTIENT BRANDS HOLDINGS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Nine months ended September 30, 2026 | Nine months ended September 30, 2025 | |||||||
| Unaudited | Restated | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation & amortization expenses | ||||||||
| Issuance of common stock for interest | – | |||||||
| Other noncash operating expenses | – | |||||||
| Interest expense | ||||||||
| Derivative (gain) | ( | ) | ( | ) | ||||
| Share-based compensation/shares issued for services | – | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Prepaid fulfilment costs | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net proceeds from sale of common stock | – | |||||||
| Proceeds from short-term loans | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| INCREASE IN CASH | ||||||||
| CASH-BEGINNING OF PERIOD | ||||||||
| CASH-END OF PERIOD | $ | $ | ||||||
| Supplemental schedule of non-cash financing activity: | ||||||||
| Shares issued for converted debt and interest | $ | $ | ||||||
| Shares issued for consulting services | $ | $ | ||||||
| Shares issued for previously purchased common stock | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 6 |
SENTIENT BRANDS HOLDINGS INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025 (UNAUDITED)
NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS
Business Description
SENTIENT BRANDS HOLDINGS INC. (“SNBH” or the “Company”) is focused on emergency preparedness and disaster recovery. Management has decided to phase out existing consumer packaged goods (“CPG”) business lines and integrations outside this focus and to defer new CPG integrations, brands and business lines.
Nature of Operations and Principal Products/Channels
The Company conducts its operations through its consolidated subsidiaries: AIG-F&B, Inc. (AIGFB), a wholly-owned Nevada subsidiary that has served as a manufacturing and distribution platform for food, beverage, and wellness CPG products, including the Original New York Seltzer® and Arctic Frost® brands; and Aqua Emergency, Inc. (AE NV), a specialized manufacturer and distributor of emergency water and meals, ready-to-eat (MREs) holding the exclusive license for American Red Cross® licensed products in our categories. Management is prioritizing Aqua Emergency’s operations within the Company’s emergency preparedness and disaster recovery focus.
Effective January 1, 2026, the Company was scheduled to acquire all outstanding shares of Wyoming Bears, Inc. (WYB), a California-based distributor of consumer packaged goods, to 100% ownership pursuant to an amendment to the Share Exchange Agreement approved December 31, 2025. The parties subsequently deferred the acquisition and change of control. The acquisition remains deferred in light of pending legal disputes and management’s decision to postpone additional CPG integrations, subject to reassessment by the respective boards and management. No acquisition of control occurred by September 30, 2026, and no results for WYB are included in these condensed consolidated interim financial statements.
Basis of Presentation
The unaudited condensed consolidated interim financial statements have been prepared in conformity with the U.S. Securities and Exchange Commission (“SEC”) requirements for smaller reporting companies on Form 10-Q. All material intercompany balances and transactions have been eliminated in consolidation.
Effective
January 2, 2026, the Company executed a
These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.
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 $
| 7 |
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. | |
| ● | Operating Focus: We are prioritizing emergency preparedness and disaster recovery, including Aqua Emergency’s emergency water and MRE products. We plan to phase out existing CPG activities outside this focus and defer additional CPG integrations, brands and business lines. | |
| ● | 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.
Management continues to implement cost-control measures, including the suspension of Board fees, prioritize resources for emergency preparedness and disaster recovery, and obtain related-party operating-capital funding, including funding from GA3.
Although the Company generated positive operating cash flow during the nine months ended September 30, 2026, the available evidence does not establish that management’s plans will provide sufficient liquidity to meet the Company’s obligations over the period extending one year after issuance of these condensed consolidated financial statements. Accordingly, management’s plans have not alleviated substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.
NOTE 2. RESTATEMENTS AND PRIOR INTERIM PRESENTATION
The comparative condensed consolidated interim financial statements for the three and nine months ended September 30, 2025 have been restated to reflect corrections to previously reported amounts. These corrections include the accounting for management fees and settlements of accrued obligations, interest on convertible notes, embedded derivative instruments, and the classification of cash and noncash transactions.
After
giving effect to these corrections, consolidated net income for the three months ended September 30, 2025 was $
The effects of these corrections on the previously reported amounts are presented in the accompanying reconciliation tables. The historical corrections described above do not result in additional charges to the Company’s 2026 results of operations.
SCHEDULE OF EFFECTS OF THESE CORRECTIONS ON PREVIOUSLY REPORTED AMOUNTS
Three months ended September 30, 2025
Previously reported | Adjustments | Restated | ||||||||||
| Revenue | $ | $ | – | $ | ||||||||
| Cost of revenue | – | |||||||||||
| Gross profit | – | |||||||||||
| Advertising and marketing | – | |||||||||||
| General and administrative | ( | ) | ||||||||||
| Legal and professional | – | |||||||||||
| Management fees | ||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ||||||||||
| Derivative gain | – | |||||||||||
| Settlement of legal claims | – | |||||||||||
| Interest adjustment on converted loan | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||
| Total Other Income (Expenses) | ( | ) | ||||||||||
| NET INCOME (LOSS) | $ | ( | ) | $ | $ | |||||||
| 8 |
Nine months ended September 30, 2025
Previously reported | Adjustments | Restated | ||||||||||
| Revenue | $ | $ | – | $ | ||||||||
| Cost of revenue | – | |||||||||||
| Gross profit | – | |||||||||||
| Advertising and marketing | – | |||||||||||
| General and administrative | – | |||||||||||
| Legal and professional | ( | ) | ||||||||||
| Management fees | ( | ) | ||||||||||
| TOTAL OPERATING EXPENSES | ( | ) | ||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ( | ) | ||||||||
| Derivative gain | – | |||||||||||
| Settlement of legal claims | – | |||||||||||
| Interest adjustment on converted loan | ( | ) | – | |||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||
| Total Other Income (Expenses) | ( | ) | ( | ) | ( | ) | ||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Cash flows and equity reconciliation
| 2025 measure | Previously reported | Adjustments | Restated | |||||||||
| Nine-month operating cash flow | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Nine-month investing cash flow | ( | ) | – | |||||||||
| Nine-month financing cash flow | ||||||||||||
| Nine-month increase in cash | – | |||||||||||
| September 30 cash | – | |||||||||||
| September 30 stockholders’ deficit | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Cash
proceeds from common-stock subscriptions were $
| 9 |
During
the three months ended September 30, 2026, the Company reversed a $
The
Company also recorded a $
Clarification of previously recorded historical restatement components
The
Company’s 2025 Form 10-K described a $
SCHEDULE OF PREVIOUSLY RECORDED HISTORICAL RESTATEMENT COMPONENTS
| Component | Through 2023 | 2024 effect | Total through 2024 | |||||||||
| Management fees | $ | $ | $ | |||||||||
| Interest | ||||||||||||
| Derivative adjustments | ( | ) | ||||||||||
| Legal fees | – | |||||||||||
| Increase (decrease) in accumulated deficit | $ | $ | ( | ) | $ | |||||||
The recorded increase in accumulated deficit is $
| 10 |
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of condensed consolidated interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates.
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. The Company had no cash equivalents for the periods presented. Cash is maintained at financial institutions insured by the Federal Deposit Insurance Corporation (FDIC). The standard
deposit insurance limit is $
Revenue Recognition
Revenue is recognized under ASC Topic 606, Revenues from Contracts with Customers, when control of goods is transferred to customers. The Company’s revenues are generated through its consolidated subsidiaries AIG-F&B, Inc. (wholesale distribution) and Aqua Emergency, Inc. (product sales, shipping, and subscription-based programs). Revenues are presented net of intercompany eliminations.
Net Earnings (Loss) Per Common Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings per share gives effect to dilutive potential common shares outstanding during the period. For periods in which the Company reports a net loss, potentially dilutive securities are excluded because their effect would be anti-dilutive.
For
the three and nine months ended September 30, 2026, basic and diluted net loss per common share was $
Potential
common shares were excluded from diluted loss per share because their effect would have been antidilutive. Weighted-average common
shares used to calculate basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2025 were
Stock-Based Compensation
In
accordance with ASC Topic 718, Compensation – Stock Compensation, the Company measures compensation cost for share-based awards
at fair value on the grant date and recognizes expenses over the vesting period. During the nine months ended September 30, 2026, the
Company issued
Depreciation and Amortization
Property,
plant and equipment is depreciated on a straight-line basis over estimated useful lives of
| 11 |
Derivative Financial Instruments
The
Company evaluates all financial instruments for bifurcation of embedded derivatives under ASC Topic 815, Derivatives and Hedging. For
the three months ended September 30, 2026, a gain of $
Fair Value of Financial Instruments
The
Company measures derivative liabilities at fair value using Level 3 unobservable inputs (Black-Scholes model). The derivative liability
was $
The unobservable inputs used for the Black-Scholes model are as follows:
SCHEDULE OF UNOBSERVABLE INPUTS USED IN BLACK-SCHOLES MODEL
| Input | September 30, 2026 | December 31, 2025 (audited) | ||||||
| Valuation technique | Black-Scholes Option Pricing Model | Black-Scholes Option Pricing Model | ||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (years) | ||||||||
| Dividend yield | % | % | ||||||
| Underlying share price (legacy model basis) | $ | $ | ||||||
The derivative liabilities for the three and nine months ended September 30, 2026:
SCHEDULE OF DERIVATIVE LIABILITIES
| Derivative Liabilities | Three months ended September 30, 2026 | Nine months ended September 30, 2026 | ||||||
| Beginning Balance | $ | $ | ||||||
| Remeasurement loss (gain) | ( | ) | ( | ) | ||||
| Ending Balance | $ | $ | ||||||
Income Taxes
Income
taxes are accounted for under ASC Topic 740, Income Taxes. Deferred tax assets arising from net operating loss carryforwards are fully
offset by a valuation allowance because management has determined that realization is not more likely than not.
Segment Reporting
The Company applies ASC Topic 280, Segment Reporting, in determining reportable segments for its financial statement disclosure. Operating segments are components of an entity for which separate financial information is available and regularly reviewed by the Chief Operating Decision Maker (“CODM”) in allocating resources and assessing performance. The Company’s CODM is its Interim Chief Executive Officer. The Company operates as a single operating segment and has one reportable segment.
The CODM uses consolidated net income (loss) and income (loss) from operations to assess the Company’s performance and allocate resources. These measures are calculated consistently with the amounts presented in the condensed consolidated statements of operations.
| 12 |
The significant expense categories included in the measures reviewed by the CODM are cost of revenue, advertising and marketing, general and administrative expenses, legal and professional fees, management fees and, for consolidated net income (loss), interest expense. The amounts for the three and nine months ended September 30, 2026 and 2025 are presented in the condensed consolidated statements of operations. General and administrative expenses include depreciation and amortization, which are separately disclosed above. Other segment items in the net income (loss) measure consist of derivative gains or losses and settlements of legal claims, as separately presented in the condensed consolidated statements of operations. These items reconcile income (loss) from operations to the consolidated net income (loss); income tax expense is zero for the periods presented. The single segment’s revenue, profit or loss and assets are the consolidated amounts presented in these financial statements.
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 Accounting Standards
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) 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 condensed consolidated interim financial position, results of operations, and cash flows when implemented, except as follows:
Effective January 1, 2026, the Company applies ASU 2024-04, Induced Conversions of Convertible Debt Instruments, using prospective transition. The amendments clarify how to determine whether a convertible-debt settlement qualifies as an induced conversion and apply to settlements from that date forward.
The Company continues to evaluate embedded conversion features under ASC Topic 815, Derivatives and Hedging, and accounts separately for features that require bifurcation.
NOTE 4. PREPAID FULFILLMENT COSTS
Prepaid
fulfillment costs represent advance payments to co-manufacturers for inventory and drop-shipment fulfillment services. Prepaid fulfillment
costs were $
NOTE 5. FIXED ASSETS
Fixed assets consist of the following:
SCHEDULE OF FIXED ASSETS
| September 30, 2026 (Unaudited) | December 31, 2025 (Audited) | |||||||
| Machinery and equipment | $ | $ | ||||||
| Product artwork | ||||||||
| Machinery and equipment – SNBH | ||||||||
| Computers and equipment – SNBH | ||||||||
| Total fixed assets, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | $ | $ | ||||||
The
SNBH fixed assets were fully depreciated as of the year ended December 31, 2025. Depreciation expense on the remaining machinery and
equipment and product artwork was $
| 13 |
NOTE 6. INTANGIBLE ASSETS AND GOODWILL
Intangible assets and goodwill consist of the following:
SCHEDULE OF INTANGIBLE ASSETS
| September 30, 2026 (Unaudited) | December 31, 2025 (Audited) | |||||||
| Licenses – Aqua Emergency, Inc. | $ | $ | ||||||
| Goodwill | ||||||||
| Website development | ||||||||
| Total intangible assets, gross | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets and Goodwill, net | $ | $ | ||||||
Goodwill
of $
These
estimates depend on projected revenue, operating costs, working-capital requirements, discount rates and assumptions concerning continuation
of American Red Cross licensed operations. The estimates are sensitive to changes in these assumptions. The modeled nonrenewal scenario
and an increase in the reporting-unit discount rate from
Amortization
expense for Website Development was $
NOTE 7. SHORT-TERM LOANS PAYABLE
Short-term
loans payable consist of advances from related parties for operating expenses. The balance of $
NOTE 8. NOTES PAYABLE
On
August 19, 2025, the Company issued a note payable to Stephen Spanos in exchange for an account payable related to certain services rendered
to the Company. The $
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NOTE 9. CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY
Convertible
notes payable consist entirely of the GA3 Consortium convertible notes with a principal balance of $
On
September 22, 2026, the transfer agent issued
For
the three months ended September 30, 2026, a gain of $
The
Company’s convertible notes payable to GA3 Consortium, LLC had an aggregate principal balance of $
As of October 16, 2026, no additional maturity amendment had been executed, and no new waiver or forbearance had been received since June 30, 2026. Discussions with the holder regarding amended terms continue.
NOTE 10. ACQUISITION CREDITS PAYABLE
Acquisition
credits payable of $
NOTE 11. STOCKHOLDERS’ DEFICIT
Preferred Stock
The
Company has
Common Stock
The
Company has
As
of September 30, 2026, the Company had
During
January 2026, the Company issued
On
April 23, 2026, the Company issued
On
June 25, 2026, the Company issued
During
the three months ended September 30, 2026, the Company issued
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On
September 22, 2026, the transfer agent issued
Completed
retirements comprised
At
September 30, 2026, the
Employee Benefit Plan – 2026
On
February 2, 2026, the Company filed a registration statement on Form S-8 covering
NOTE 12. COMMITMENTS AND CONTINGENCIES
Templeton Arbitration
An
order dated September 17, 2026 and entered September 25, 2026 in New York Supreme Court compelled arbitration before the American Arbitration
Association (AAA) in New York under its Commercial Arbitration Rules. On September 28, 2026, Gregg Templeton filed a new claim seeking
$
In a notice dated September 30, 2026, AAA provisionally determined that the proceeding would be administered under its Employment/Workplace Arbitration Rules and related fee schedule, differing from the Commercial Arbitration Rules specified in the court’s order. AAA characterized its administrative determination as preliminary and subject to review by the arbitrator.
The
Company disputes Templeton’s claims in their entirety and intends to defend itself vigorously. The Company is asserting counterclaims
challenging the validity of Templeton’s contract and alleging failure to perform contracted services, diversion of $
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NOTE 13. RELATED PARTY TRANSACTIONS
As
of September 30, 2026, $
On
August 19, 2025, the Company issued a $
At
September 30, 2026, $
GA3
Consortium is also the holder of the $
American Industrial Group, Inc. (“AIG”), a related party in which the Company’s Interim Chief Executive Officer holds
an investment interest, charges management fees to the Company’s wholly owned subsidiary, AIG-F&B, Inc. Management-fee expense
incurred with AIG totaled $
NOTE 14. SUBSEQUENT EVENTS
The Company is evaluating subsequent events through the date these financial statements are issued. The disclosures below reflect records reviewed through November 9, 2026.
The Wyoming Bears acquisition remained deferred as described in Note 1. No acquisition of control occurred by September 30, 2026, and Wyoming Bears is excluded from consolidation.
On
October 12, 2026, GA3 paid a $
Nevada Legal Proceeding
On
October 2, 2026, following Board authorization on September 27, 2026, the Company filed a verified complaint in the Eighth Judicial District
Court, Clark County, Nevada, captioned Sentient Brands Holdings, Inc. v. John Doukas, et al., Case A-26-958461-B. The action seeks declaratory,
equitable, restitution and related relief concerning historical corporate obligations and share transactions. The complaint concerns
historical positions totaling
On
October 28, 2026,
The Nevada action is the next step in the Compliance and Restitution initiative described in the Company’s June 23, July 10 and August 14, 2026 Current Reports on Form 8-K. The July and August share-surrender agreements and completed retirements are described in Note 11. No share cancellation, debt release or recovery is recorded solely because it is requested in the complaint.
On
October 28, 2026, the transfer agent cancelled and retired
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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 focused on emergency preparedness and disaster recovery, including Aqua Emergency’s emergency water and MRE products. Management has decided to phase out existing CPG business lines and integrations outside this focus and to defer new CPG integrations, brands and business lines. Management intends to maintain this deferral while it works to restore the Company’s capitalization table and resolve pending legal matters. Any resumption would be subject to management’s reassessment of strategic priorities and available resources.
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 $6,535,511 as of September 30, 2026, a total stockholders’ deficit of $2,225,522, and a working capital deficit of $4,010,119. Included in current liabilities is $2,640,712 in Acquisition Credits, consisting of $2,500,712 issued in connection with acquiring AIGFB and AE NV and $140,000 issued to a vendor in settlement of an account payable. Although the Company generated income from operations of $26,651 and $14,303 for the three and nine months ended September 30, 2026, it incurred net losses of $62,705 and $202,617 for those periods, respectively. 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. | |
| ● | Operating Focus: We are prioritizing emergency preparedness and disaster recovery, including Aqua Emergency’s emergency water and MRE products. We plan to phase out existing CPG activities outside this focus and defer additional CPG integrations, brands and business lines. | |
| ● | 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.
Management continues to implement cost-control measures, including the suspension of Board fees, prioritize resources for emergency preparedness and disaster recovery, and obtain related-party operating-capital funding, including funding from GA3.
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Although the Company generated positive operating cash flow during the nine months ended September 30, 2026, the available evidence does not establish that management’s plans will provide sufficient liquidity to meet the Company’s obligations over the period extending one year after issuance of these financial statements. Accordingly, management’s plans have not alleviated substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty.
Results of Operations – Three and Nine Months Ended September 30, 2026 vs. September 30, 2025
Revenue
Total condensed consolidated revenues were $395,496 for the three months ended September 30, 2026, compared to $373,822 for the comparable 2025 period, an increase of $21,674. For the nine months ended September 30, 2026 and 2025, respectively, revenues were $1,088,668 and $484,723, an increase of $603,945. The 2025 comparisons reflect the restatement described in Note 2. Current revenue reflects operating subsidiaries after elimination of internal billings; the first nine months of 2025 include operations for shorter periods following the acquisitions.
Cost of Revenues and Gross Profit
Cost of revenues was $259,535 for the three months ended September 30, 2026, compared to $137,505 for the comparable 2025 period. Cost of revenues for the nine months ended September 30, 2026 was $715,182 compared to $254,118 for the comparable 2025 period.
Gross profit was $135,961 and $236,317 for the three months ended September 30, 2026 and 2025, respectively. For the nine months ended September 30, 2026 and 2025, gross profit was $373,486 and $230,605, respectively. Gross margin declined to 34.4% from 63.2% for the quarter and was 34.3% compared with 47.6% for the nine months.
Current cost of revenues includes product costs, freight and royalties. Third-quarter costs also include a $2,079 write-off of defective prepaid cartons and the recorded $5,000 prior-period royalty correction.
Operating Expenses
For the three and nine months ended September 30, 2026 and 2025, operating expenses consisted of the following:
| Three months 2026 (Unaudited) | Three months 2025 (Restated) | Nine months 2026 (Unaudited) | Nine months 2025 (Restated) | |||||||||||||
| Advertising and marketing | $ | – | $ | 7,200 | $ | – | $ | 7,200 | ||||||||
| General and administrative | 4,829 | 27,807 | 17,635 | 35,492 | ||||||||||||
| Legal and professional | 45,981 | 83,176 | 166,548 | 551,008 | ||||||||||||
| Management fees | 58,500 | 101,700 | 175,000 | 352,345 | ||||||||||||
| TOTAL OPERATING EXPENSES | $ | 109,310 | $ | 219,883 | $ | 359,183 | $ | 946,045 | ||||||||
Total operating expenses were $109,310 and $219,883 for the three months ended September 30, 2026 and 2025, respectively, and $359,183 and $946,045 for the nine months ended September 30, 2026 and 2025, respectively. The decreases of $110,573 and $586,862 primarily reflect lower legal and professional and management-fee expenses on the restated comparative basis.
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 board fees until further notice. Management fees were $58,500 for the third quarter and $175,000 for the first nine months of 2026, compared with $101,700 and $352,345 in the same restated 2025 periods.
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Legal and professional fees include legal fees, auditing and accounting services, investor relations and other professional fees. These expenses were $45,981 and $166,548 for the three and nine months ended September 30, 2026, compared with $83,176 and $551,008 in the restated 2025 periods. The current nine-month total comprises $77,175 accounting and audit services, $68,540 legal fees and $20,833 other advisory services.
Other advisory services were $6,011 for the third quarter and $20,833 for the first nine months of 2026. Legal fees were $23,670 and $68,540 for those periods. The prior-year stock-service charges and historical corrections are reflected in the restated comparative information described in Note 2.
Accounting and Auditing fees were $16,300 and $77,175 for the three and nine months ended September 30, 2026, respectively. Shares issued to settle previously accrued fees did not result in additional compensation expense.
Income (Loss) from Operations
The Company’s income from operations during the three months ended September 30, 2026 and 2025 was $26,651 and $16,434, respectively. For the nine months ended September 30, 2026 and 2025, income (loss) from operations was $14,303 and ($715,440), respectively, on the restated comparative basis.
Other Income (Expenses)
Other income (expenses) was ($89,356) and $29,618 for the three months ended September 30, 2026 and 2025, respectively, and ($216,920) and ($183,853) for the nine-month periods.
The embedded derivative calculation resulted in a gain of $1,705 for the third quarter of 2026 and a gain of $39,846 for the first nine months. The restated 2025 comparisons include derivative gains of $103,056 for the quarter and $30,727 for the nine months, and legal-claim settlements of $5,000 and $15,000, respectively. The previously reported $42,351 converted-loan interest income is removed in the restated nine-month comparison.
Interest expense for the three and nine months ended September 30, 2026 was $91,061 and $256,766, respectively. Current-quarter expense includes $89,796 GA3 interest and $1,265 Spanos interest. The $2,250 of direct share-issuance costs was charged to additional paid-in capital. Restated interest expense for the three and nine months ended September 30, 2025 was $78,438 and $229,580, respectively.
Net Loss
Net loss was ($62,705) for the three months ended September 30, 2026, compared to consolidated net income of $46,052 in the restated 2025 quarter, a deterioration of $108,757. For the nine months, consolidated net loss was ($202,617) compared with ($899,293), an improvement of $696,676.
Liquidity and Capital Resources
Cash was $335,617 on September 30, 2026 compared to $29,011 on December 31, 2025. The net increase of $306,606 reflects net cash provided by operating activities of $194,686 and net cash provided by financing activities of $111,920. No investing cash flow is presented for the period. The increase includes reversal of an unprocessed $15,000 June payment, which is not a new bank receipt.
Net cash provided by operating activities for the nine months ended September 30, 2026 reflects the net loss of ($202,617), adjusted for depreciation and amortization of $12,854, shares issued for interest of $17,614, derivative gain of $39,846 and accrued interest of $239,152. Working-capital adjustments include a $110,085 decrease in receivables, $12,446 prepaid-expense adjustment, $88,575 increase in prepaid fulfilment costs and a $133,573 accounts-payable and accrued-expense adjustment. Positive operating cash flow is partly supported by deferred vendor payments and does not establish sufficient future liquidity.
Related parties funded $111,920 of Company expenses, vendor balances and advances directly during the first nine months of 2026. These transactions are presented as constructive financing receipts and corresponding operating disbursements as described in Note 7, consistent with the financing presentation of $68,871 of related-party funding in the Q2 filing. The nine-month funding comprises $68,871 through June 30 and $43,049 during the third quarter. Comparative 2025 cash flows are operating cash used of $32,087, no investing cash flow and financing cash provided of $50,375, including $36,000 of common-stock subscription proceeds and $14,375 of related-party loan proceeds. Comparative cash increased by $18,288 from $3,432 to $21,720. Management continues to pursue additional working capital financing and operating cash improvements.
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The Company’s working capital deficit was $4,010,119 on September 30, 2026 and $3,902,970 on December 31, 2025. Included in current liabilities is $2,640,712 of Acquisition Credits. Convertible notes of $715,789 and the Spanos note of $41,250 have matured; related-party operating advances of $235,018 are due on demand. Continued funding, collections and payment arrangements are necessary to meet obligations. Management’s plans have not alleviated substantial doubt about the Company’s ability to continue as a going concern.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
The Company’s contractual obligations include the debt and related-party advances described in Notes 7–9, acquisition credits described in Note 10, and operating, license, royalty and legal arrangements described in Notes 4, 6 and 12.
Off-balance Sheet Arrangements
As of September 30, 2026, we did not have any material 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
Under the supervision and with the participation of our principal executive officer and principal financial officer, management evaluated our disclosure controls and procedures as of September 30, 2026 and concluded that they were not effective at the reasonable assurance level because the material weaknesses previously disclosed in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 had not been fully remediated. These weaknesses relate to documentation of internal control policies and procedures, segregation of duties within accounting functions, and the control environment. Although written control and governance policies were adopted during the quarter, implementation and operating-effectiveness testing remain in progress.
Our principal executive officer and principal financial officer 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, 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.
On September 27, 2026, our Board of Directors adopted a material weakness remediation plan and related policies and procedures and established an Audit Committee comprising Derek Wyman, Chair, and Eric Bruns. The plan addresses financial reporting documentation, segregation of duties, accounting-system access, equity issuance authorization, related-party transactions, disclosure procedures and independent oversight. Implementation is proceeding in stages, subject to available resources. We will not conclude that a material weakness has been remediated until the relevant controls have operated effectively for a sufficient period and testing supports that conclusion.
Changes in Internal Controls
During the quarter ended September 30, 2026, the Company adopted the remediation plan and related policies and procedures and established the Audit Committee described above. These actions are reasonably likely to materially affect our internal control over financial reporting.
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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.
Templeton Arbitration
An order dated September 17, 2026 and entered September 25, 2026 in New York Supreme Court compelled arbitration before the American Arbitration Association in New York under its Commercial Arbitration Rules. On September 28, 2026, Gregg Templeton filed a new claim seeking $184,000 in wages, $4,000 in expenses, statutory interest and additional relief, including liquidated damages and attorneys’ fees. His filing expressly invokes the Commercial Arbitration Rules.
In a notice dated September 30, 2026, AAA provisionally determined that the proceeding would be administered under its Employment/Workplace Arbitration Rules and related fee schedule, differing from the Commercial Arbitration Rules specified in the court’s order. AAA characterized its administrative determination as preliminary and subject to review by the arbitrator.
The Company disputes Templeton’s claims in their entirety and intends to defend itself vigorously. The Company is asserting counterclaims challenging the validity of Templeton’s contract and alleging failure to perform contracted services, diversion of $40,000 of corporate funds into his personal account, and default on a $90,000 repayment undertaking originally extended by Louis Sorrentino in connection with Templeton’s engagement and subsequently assigned to the Company. The Company seeks $201,995.07 in connection with these counterclaims, before credits.
These amounts represent disputed claims for recovery and have not been awarded to the Company. The Company has maintained its existing accrual of $54,525 in legal and other fees related to the dispute.
Compliance and Restitution Initiative; Settlement Agreements
On July 1, 2026, Sentient Brands Holdings Inc. (the “Company”) entered into two separate confidential pre-filing settlement and cooperation agreements (collectively, the “Agreements”), each with a former member of the Company’s management, in furtherance of the “Compliance and Restitution” initiative described in the Company’s Current Report on Form 8-K filed June 23, 2026, under which the Board of Directors (the “Board”) authorized the Company to pursue, among other things, the recovery and cancellation of equity the Board has identified as having been improperly issued and the recovery of assets of the Company. The Company executed each of the Agreements solely through independent authority, acting through disinterested members of the Board and not through any person whose conduct is subject to the Board’s ongoing review of historical corporate actions. In each case, the Company is coordinating on a unified basis with a group of 25 investors and other parties (collectively, the “Plaintiff Parties”) under a previously disclosed Joint Representation and Confidentiality Agreement.
Under the Agreements, the former members of management have agreed to provide full, truthful and continuing cooperation to the Plaintiff Parties in connection with contemplated legal actions arising out of the historical transactions, billing records, debt and share issuances under the Board’s review — including by executing sworn declarations, preserving and producing documents, and providing truthful testimony — and to make restitution to the Company through the surrender and cancellation of shares. The Agreements and related cancellation instructions cover an aggregate of 458,496 restricted shares of the Company’s common stock, without any monetary payment by the Company for such shares. Of those shares, 434,548 were cancelled and retired during August 2026 and 23,948 remain pending cancellation. Retired shares are restored to authorized but unissued status in accordance with Nevada law and are not held as treasury shares. The Agreements characterize the surrender and cancellation as restitution and the rescission and disgorgement of improperly issued shares to the Company, and not as monetary settlement consideration; the surrenders are effective immediately upon execution, are irrevocable, and will remain effective even if the related releases are later revoked.
In consideration of that cooperation and restitution, the Plaintiff Parties have agreed to conditional releases and covenants not to sue (and, as applicable, forbearance from prosecuting and the dismissal or holding in abeyance of claims), in each case conditioned on the continued, complete and truthful cooperation of the applicable party and subject to revocation upon a material breach. The Agreements contain no monetary settlement consideration paid to the Plaintiff Parties, and no party will pay any fee, bonus or settlement payment in exchange for testimony or cooperation; reimbursement is limited to reasonable, documented out-of-pocket expenses. Each Agreement provides that the applicable party’s sole obligation is to provide complete and truthful information and testimony, that no party may request that the party adopt any particular version of facts, and that the party retains the right to communicate directly with the U.S. Securities and Exchange Commission and other governmental authorities without prior notice to or approval from any party. The Company believes the Agreements advance the objectives of its Compliance and Restitution initiative by securing the cooperation of two former members of management and the return and cancellation of a substantial number of shares to the Company.
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Each of the Agreements is governed by the laws of the State of New York, except matters of the Company’s corporate authority, the share surrender and cancellation, and related matters are governed by Nevada law. Each Agreement is a confidential settlement communication. The foregoing descriptions of the Agreements are summaries only, do not purport to be complete, and the Company has not filed either Agreement as an exhibit.
During August 2026, 434,548 shares were retired under the July surrender process. An additional 23,948 shares registered to Former Executive 2 await cancellation under the related instructions and remain included in outstanding shares. At September 30, 2026, the 598,200 shares covered by the separate August 14 settlement with Former Undisclosed Affiliate and Control Person remained outstanding pending completion of cancellation procedures. The transfer agent cancelled and retired those 598,200 shares on October 28, 2026. The October cancellation does not change the September 30 share balance or third-quarter weighted-average shares. The August agreement also contemplated cancellation of membership interests in the note holder; that membership action does not discharge the Company’s GA3 indebtedness pending finalization of the debt restructuring negotiations with the Company. See Notes 11 and 14.
On October 2, 2026, the Company filed the Nevada action described below, superseding Q2’s statement that contemplated legal actions had not been filed.
Nevada Legal Proceeding
On October 2, 2026, following Board authorization on September 27, 2026, the Company filed a verified complaint in the Eighth Judicial District Court, Clark County, Nevada, captioned Sentient Brands Holdings, Inc. v. John Doukas, et al., Case A-26-958461-B. The action seeks declaratory, equitable, restitution and related relief concerning historical corporate obligations and share transactions. The complaint concerns historical positions totaling 1,120,055 post-reverse-split shares. Empire Stock Transfer, Inc. is joined solely as a nominal defendant; no wrongdoing or damages are alleged against it.
On October 28, 2026, 598,200 shares of the Company’s common stock were canceled in connection with the Nevada action. This is the same cancellation effected under the August 14 settlement agreement described in Note 11, not an additional cancellation. Certain defendants and cooperating witnesses have entered into good-faith settlement negotiations with the Company. The Company has not recorded a recovery asset in connection with the action. Litigation is inherently uncertain, and the Company can give no assurance regarding the timing or outcome of the proceedings, the relief that may be granted, or any recovery.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide information required by this Item. Reference is made to the risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2025, which are incorporated herein by reference.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On September 22, 2026, the Company issued 222,242 shares of common stock to GA3 Consortium, LLC in connection with its July 19, 2026 conversion of $17,614 of accrued interest and $2,250 of related conversion costs. The Company received no cash proceeds from the issuance, and the outstanding principal balance of the convertible notes was unchanged. See Note 9.
The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, in an exchange with an existing security holder. No commission or other remuneration was paid for soliciting the exchange. The conversion costs related to Rule 144 legal opinion, administrative and transfer-agent services.
On September 2, 2026, the Company issued 325,000 shares under its 2026 Employee Benefit Plan in settlement of $32,500 of previously accrued expense. These employee-plan shares are described separately from the unregistered conversion issuance. Shares issued under the 2026 Employee Benefit Plan are registered with the SEC through filing a Form S-8 on February 2, 2026. The 2026 Employee Benefit Plan as filed authorizes 1,000,000 shares of common stock to be issued.
During August 2026, the Company’s transfer agent cancelled and retired 434,548 shares of common stock in connection with the July 1, 2026 settlement and cooperation agreements and related cancellation instructions, without monetary payment by the Company. These retirements comprised 74,824 shares registered to Former Executive 1 and 359,724 shares registered to Former Executive 2. An additional 23,948 shares registered to Former Executive 2 remained outstanding and awaiting cancellation as of September 30, 2026.
The August 14, 2026 settlement agreement with Former Undisclosed Affiliate and Control Person covered an additional 598,200 shares. Those shares remained included in the September 30, 2026 outstanding share count. The transfer agent completed their cancellation and retirement on October 28, 2026; they are excluded from the cover-page share count as of that date. See Notes 11 and 14.
The transfer-agent journal identifies no other new common-share issuances during the quarter. Registered employee-plan issuances are described separately above.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company’s convertible notes payable to GA3 Consortium, LLC had an aggregate principal balance of $715,789 and accrued interest of $960,088 at September 30, 2026. Pursuant to an extension agreement dated March 21, 2023, the maturity dates of both notes were extended to August 21, 2023. The notes remain in default. Under the note documents, no notice of default is required by the holder.
As of October 16, 2026, no additional maturity amendment had been executed, and no new waiver or forbearance had been received since June 30, 2026. Discussions with the holder regarding amended terms continue.
The $41,250 note payable to Stephen Spanos matured on October 19, 2025 and remained unpaid at September 30, 2026. The Company and the senior debt holder dispute the validity of the note. Stephen Spanos is a defendant in the Nevada action filed by the Company. Interest accrues at 12% per annum, with accrued interest of $5,564 at September 30, 2026. From June 30 through October 16, 2026, no principal or interest payments were made. No modification or settlement was agreed upon during that period. There is no contractual change in the interest rate upon default.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Serge Knazev continues to serve as President, Chief Operating Officer, Acting Principal Executive Officer (Interim Chief Executive Officer) and Corporate Secretary of the Company. Jeanene Morgan continues to serve as Chief Financial Officer and Chief Accounting Officer.
The Board of Directors consists of Eric Bruns, Chairman, Derek Wyman and Serge Knazev. Mr. Wyman also serves as Treasurer of the Company.
On September 27, 2026, the Board established an Audit Committee comprising Derek Wyman, Chair, and Eric Bruns. See Part I, Item 4, Controls and Procedures.
The Company disclosed the July 1 settlement agreements on July 10 and the separate voluntary share-surrender agreement with Former Undisclosed Affiliate and Control Person on August 14, 2026. On October 8 it reported the October 2 Nevada complaint. See Notes 11, 12 and 14 and Part II, Item 1.
The Compliance and Restitution initiative continues. Requested recoveries, challenged shares and proposed legal remedies do not constitute completed share retirements or recognized recovery assets.
During
the quarter ended September 30, 2026, no director or officer of the Company
ITEM 6. EXHIBITS
| Exhibit No. | Exhibit Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101 | Inline XBRL Document Set for the condensed consolidated interim financial statements and accompanying notes in Part I, Item 1 of this Quarterly Report on Form 10-Q. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant will cause this report to be signed on its behalf by the duly authorized officers below.
| SENTIENT BRANDS HOLDINGS INC. | |
| Dated: November 9, 2026 | /s/ Serge Knazev |
| Serge Knazev | |
| Interim Chief Executive Officer | |
| (Principal Executive Officer) |
| Dated: November 9, 2026 | /s/ Jeanene Morgan |
| Jeanene Morgan | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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