SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2025

Uses of estimates in the preparation of financial statements

Uses of estimates in the preparation of financial statements

The preparation of financial statements in conformity with generally accepted accounting principles accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. Actual results could differ from those estimates.

As noted above, On May 12, 2025, the Company, through its wholly owned subsidiary AIG F&B, acquired Assets totaling $595,441 from American Industrial Group, Inc. (“AIG”). The Company acquired machinery and equipment of $77,044, Inventory for sale of $283,452 and accounts receivable and other assets of $234,945. The transaction has been accounted for as an asset acquisition pursuant to ASC 805-50, Business Combinations – Related Issues, as the acquired set of assets and activities did not meet the definition of a business. As such, the total consideration transferred, including direct transaction costs, has been allocated to the individual identifiable assets acquired and liabilities assumed on a relative fair value basis as of the acquisition date.

In accordance with the guidance applicable to asset acquisitions:

	●	Transaction costs directly attributable to the acquisition have been capitalized as part of the cost of the acquired assets.

	●	No goodwill has been recognized, as the transaction did not qualify as a business combination under ASC 805-10.

	●	The asset values presented reflect the relative fair value allocation of the total purchase price among the identifiable assets acquired.

	●	The financial statements do not include the results of operations or cash flows of the acquired assets prior to the acquisition date.

These financial statements are intended to provide users with historical information on the assets acquired and should be read in conjunction with the accompanying notes and the full financial statements of the Company.

Cash

Cash

The Company considers all short-term highly liquid investments with an original maturity date of purchase of three months or less to be cash equivalents.

Revenue Recognition

Revenue Recognition

During the three and six months ended June 30, 2025 and the year ended December 31, 2024, our revenue recognition policy was in accordance with ASC 606, “Revenue from Contracts with Customers”, which requires the recognition of sales following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

Net loss per common share – basic and diluted

Net loss per common share – basic and diluted

Authoritative guidance on Earnings per Share requires dual presentation of basic and diluted earnings or loss per share (“EPS”) for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution; diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic loss per share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect is to reduce a loss or increase earnings per share.

Stock-based compensation

Stock-based compensation

In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), the Company measures the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services.

During the six months ended June 30, 2025, and 2024, there were no stock based awards issued or outstanding.

Fair value of financial instruments

Fair value of financial instruments

We value our financial assets and liabilities on a recurring basis using the fair value hierarchy established in Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures.

ASC 820 describes three levels of inputs that may be used to measure fair value, as follows:

Level 1 input, which include quoted prices in active markets for identical assets or liabilities.

Level 2 inputs, which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

Level 3 inputs, which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

Related Party Transactions

Related Party Transactions

The Company engages in transactions with related parties in the normal course of business. Related parties include the Company's executive officers, directors, principal shareholders, and affiliates. All related party transactions are conducted on terms equivalent to those prevailing in arm’s length transactions.

During the three and six months ended June 30, 2025, the Company entered into the following related party transactions:

	●	The Company recorded sales from Aqua Emergency totaling $76,600

	●	The Company recorded sales from Wyoming Bears totaling $34,000

As of June 30, 2025, the following balances were outstanding with related parties:

●

Accounts receivable from Wyoming Bears totaling $61,000

During the six months ended June 30, 2025, the Company issued 6,110,000 shares to George Furlan, its CEO, for management services including a bonus of 3,680,000 related to the closing of share exchange agreement with AIGF&B. Aqua Emergency and Wyoming Bears are related parties through common ownership by AIG.

These balances are unsecured, non-interest bearing, and are expected to be settled in the normal course of business.

The Company recorded fees of $22,500 from AIG Group for consulting services related to the Company’s merger and ongoing operations. This balance is included in accounts payable and accrued expenses at June 30, 2025.

Management believes all related party transactions were made on terms equivalent to those that prevail in arm’s length transactions and were approved by the Company’s Board of Directors or an authorized committee.

Income Taxes

Income Taxes

The Company’s income tax benefit differs from the expected income tax benefit by applying the U.S. Federal statutory rate of 21% to net income (loss) as follows:

The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of June 30, 2025 and December 31, 2024 are as follows:

Schedule of net deferred tax liability
	June 30, 2025			December 31, 2024
Deferred Tax Assets

Net Operating Losses	$	1,167,025		$	980,663

Less: Valuation Allowance		(1,167,025	)		(980,663	)

Deferred Tax Assets - Net	$	—		$	—

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate is 21%.

Segment Reporting

Segment Reporting

The Company applies ASC 280, Segment Reporting, in determining reportable segments for its financial statement disclosure. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer (“CEO”). The Company has determined that it operates as a single operating segment and has one reportable segment.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold, and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Recently Issued and Adopted Accounting Standards

Recently Issued and Adopted Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

SENTIENT BRANDS HOLDINGS INC. 10-Q