8-K
SENTIENT BRANDS HOLDINGS INC. (SNBH)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January
5, 2025
SENTIENT
BRANDS HOLDINGS INC.
(Exact name of registrant as specified in its charter)
(Former Name of Registrant)
| Nevada | 001-34861 | 86-3765910 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
110 East 59th Str. 22nd Floor
New York, New York 10022
(Address of principal executive offices) (zip code)
646-202-2897
(Registrant’s telephone number, includingarea code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Explanatory Note
This Form 8-K reports
(i) the Changes in Registrant’s Certifying Accountant;
(ii) execution of the Addenda to the Share Exchange Agreements for AIG-F&B, Inc.(NV), Aqua Emergency, Inc. (NV), and Wyoming Bears, Inc. (NV) for the acquisition of the non-controlling minority interests and the migration to the drop-ship model with the purpose of cost and logistics optimization, and streamlining of the audit process and strengthening assets and liability protections and consolidation for the taxation purposes;
(iii) migration to project-based Compensatory Arrangements of Certain Officers and Vendors to cut costs and further align with the interests of the shareholders;
(iv) preparation for a potential equity credit line with an initial capacity of $250,000, expandable up to $1,500,000;
(v) authorization to prepare for a potential uplisting to the OTCQB Venture Market;
(vi) approval to migrate the Company’s principal office to the State of Wyoming and to reincorporate certain subsidiaries in Wyoming;
(vii) authorization to open new operating and escrow bank accounts with designated authorized signatories; and
(viii) approval to engage an independent special advisor to assess audit processes and corporate governance.
Item 1.02 Entry Into A Material Definitive Agreement
On December 31, 2025, the Company approved and authorized the execution of addenda to existing Share Exchange Agreements and related Drop-Ship Manufacturing Agreements for certain subsidiaries, including Aqua Emergency, Inc., AIG-F&B, Inc., and Wyoming Bears, Inc. These agreements are intended to transition the Company and its subsidiaries to wholly-owned subsidiaries and to the drop-ship manufacturing and fulfillment model, eliminate physical inventory from subsidiary balance sheets, reduce audit complexity, and improve operating efficiency.
The agreements provide for the transfer of inventory at book value to affiliated manufacturing entities, with such value recorded as prepaid manufacturing and fulfillment deposits to be applied against future services. The Company believes this structure is consistent with GAAP and PCAOB audit requirements.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the agreements, copies of which will be filed as exhibits to a subsequent periodic report.
Item 4.01 Changes in Registrant’s CertifyingAccountant.
On December 31, 2025, the Board of Directorsof Sentient Brands Holdings, Inc. (the “Company”) approved the engagement of Cathedral CPAs & Advisors LLP (“Cathedral”) as the Company’s new independent registered public accounting firm. Cathedral was engaged on January6th, 2026 to audit the Company’s consolidated financial statements for the fiscal year ending December 31, 2025 and to perform quarterly reviews for fiscal year 2026 in accordance with the standards of the Public Company Accounting Oversight Board (United States).
The engagement was approved by the Company’s Board of Directors. The Company, at the same time, dismissed its former independent registered public accounting firm Victor Mokuolu,CPA PLLC. The former auditor did not resign due to any disagreement with the Company on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
During the Company’s two most recent fiscal years and through the date of dismissal, there were no disagreements with the former auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure that, if not resolved to the former auditor’s satisfaction, would have caused it to make reference to the subject matter of the disagreements in its reports.
The Company has requested the former auditor’s letter as per item 305(a)(3) of Regulation S-K and authorized the former auditor to respond fully to the inquiries of the successor auditor.
Item 5.02 Departure of Directors or Certain Officers;Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 31, 2025, the Board of Directors approved a revised executive and consultant compensation framework under which compensation is structured exclusively on a project-based and performance-based model. Under this framework, no executive, director, or consultant is entitled to a fixed salary or monthly draw. All compensation arrangements require prior Board approval and must be supported by documented deliverables and performance criteria.
Item 8.01 Other Events.
On December 31, 2025, the Board of Directors approved additional corporate actions, including: (i) preparation for a potential equity credit line with an initial capacity of $250,000, expandable up to $1,500,000; (ii) authorization to prepare for a potential uplisting to the OTCQB Venture Market, subject to satisfaction of applicable requirements; (iii) approval to migrate the Company’s principal office to the State of Wyoming and to reincorporate certain subsidiaries in Wyoming; (iv) authorization to open new operating and escrow bank accounts with designated authorized signatories; and (v) approval to engage an independent special advisor to assess audit processes and corporate governance. (v) set effective date for the Wyoming Bears, Inc. (NV) Share Exchange Agreement as January 1st, 2026.
These actions are intended to strengthen corporate governance, maintain regulatory compliance, improve audit efficiency, and support the Company’s strategic financing objectives.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of federal securities laws. These statements involve risks and uncertainties and are based on current expectations, estimates, and projections about the Company’s business and industry, management’s beliefs, and certain assumptions made by management. Forward-looking statements are not guarantees of future performance, and actual results may differ materially. Factors that could cause or contribute to such differences include, without limitation, risks associated with the integration of acquired assets, market acceptance of products, supply chain challenges, and general business conditions. Readers are cautioned not to place undue reliance upon these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances.
Item 9.01 Financial Statements and Exhibits
| Exhibit Number | Description |
|---|---|
| 10.20 | Board of Directors Resolution dated December 31, 2025 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SENTIENT BRANDS HOLDINGS INC. | ||
|---|---|---|
| Date: January 09, 2026 | By: | /s/ George Furlan |
| George Furlan | ||
| Chief Executive Officer |
EXHIBIT 10.20
BOARD OF DIRECTORS RESOLUTION
SENTIENT BRANDS HOLDINGS, INC. (“SNBH”)
Date: Dec 31, 2025
WHEREAS, the Board of Directors (the “Board”) of Sentient Brands Holdings, Inc. (“SNBH”) has reviewed and considered proposals regarding corporate structure, operations, finance, and governance; and
WHEREAS, the Board deems it necessary and in the best interest of SNBH and its shareholders to optimize the audit process, reduce operating and overhead costs, and maintain profitability, compliance, and qualification for future financing.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby approves the following actions, effective immediately unless otherwise specified:
Corporate Structure and Agreement Approvals
| 1. | Approval of Addendums to Share Exchange Agreements andMigration to Drop-Ship Manufacturing Agreements: The Board approves the Addendums to the existing Share Exchange Agreements and the<br>migration to Drop-Ship Manufacturing Agreements for the following subsidiary entities: |
|---|---|
| ● | Aqua<br> Emergency, Inc. (NV) |
| --- | --- |
| ● | AIG-F&B,<br> Inc. (NV) |
| --- | --- |
| ● | Wyoming<br> Bears, Inc. (NV) |
| --- | --- |
| 2. | Approval of Principal Office Migration and Reincorporationin Wyoming: The Board approves the migration of SNBH’s principal office to a new location in the State of Wyoming and further<br>approves the reincorporation of the following subsidiary entities into the State of Wyoming: |
| --- | --- |
| ● | Aqua Emergency, Inc. (NV) |
| --- | --- |
| ● | AIG-F&B, Inc. (NV) |
| --- | --- |
| ● | Wyoming Bears, Inc. (NV) |
| --- | --- |
| 3. | Amendment to Wyoming Bears, Inc. Share Exchange Agreement:<br>The Board approves the amendment to the Share Exchange Agreement with Wyoming Bears, Inc., to formally establish the effective date of<br>that agreement as January 1st, 2026. |
| --- | --- |
Financial and Audit Approvals
| 1. | Approval of Equity Credit Line Preparation: The Board<br>approves the preparation of all necessary legal documents to establish an equity credit line, with an initial capacity of $250,000,<br>expandable to a maximum of $1,500,000. |
|---|---|
| 2. | Approval of Engagement of New Auditor: The Board<br>approves the engagement of Cathedral CPAs & Advisors LLP as the new independent auditor for Sentient Brands Holdings, Inc. |
| --- | --- |
| 3. | Approval of Uplisting to OTCQB: The Board approves<br>the intent and preparation for uplisting SNBH to the OTCQB Venture Market, with the commencement of the uplisting process to be<br>executed as a recapitalization if finalized and effective. |
| --- | --- |
| 4. | Approval of Special Advisor Engagement: The Board<br>approves the engagement of Stacy Manuel as an independent advisor with the objective of assessing the auditing process, corporate<br>governance, and general effectiveness, and to make recommendations on optimization and improvement. The scope of engagement and respective<br>agreement are to be negotiated and approved by the Board of Directors. |
| --- | --- |
| 5. | Approval of Competitive Quotes and ContractRenegotiation: The Board approves the solicitation of competitive quotes and the renegotiation of contracts for all service providers,<br>as part of the overall cost optimization and accountability strategy. |
| --- | --- |
| 6. | Approval of New Bank Accounts and Authorized****Signatories: |
| --- | --- |
| ● | Operating Accounts: Financial<br>Controller Jeanene Morgan and/or Board Chairman Eric Bruns are authorized to open a new operating account at Bank of America, with both<br>to serve as signatories, and to close all existing operating accounts. |
|---|---|
| ● | Escrow Accounts: Independent<br>Director Dionne Pendleton and/or Board Chairman Eric Bruns are authorized to open a new investor escrow account and to serve as signatories. |
| --- | --- |
Compensation and Cost Optimization
| 1. | Approval of Executive and Consultant Compensation ModelChange: The Board approves the immediate migration to a new compensation model structured entirely on a “per project”<br>and/or “delivery and performance-based” system, in order to further align company’s compensation structure, overhead,<br>and costs with the interests of the shareholders as well as increase the transparency and accountability. For clarity purposes, no executives,<br>directors, or consultants are entitled to monthly draws or salaries. Any compensation has to be pre-approved by the Board Of Directors,<br>Compensation Committee, and be based on clearly documented tangible contribution and deliverables, and consideration after the work has<br>been completed and delivered. |
|---|
BE IT FURTHER RESOLVED, that the officers of Sentient Brand Holdings, Inc. (the “Company”), acting collectively and in coordination with one another, and subject at all times to the oversight, approval, and direction of the Board of Directors, are hereby authorized and directed to take such actions, execute such documents, and incur such expenses only as jointly necessary or advisable to carry out the intent of these resolutions and to fulfill the objectives of streamlining the audit process, optimizing operating and overhead costs, and maintaining profitability, regulatory compliance, and eligibility for the Company’s equity credit line.
No officer shall act unilaterally or independently on behalf of the Company with respect to the foregoing matters, except as expressly authorized in writing by the Board or as required for ministerial execution of Board-approved actions.
CERTIFICATION
The undersigned hereby certifies that she is the duly elected and acting Secretary of Sentient Brands Holdings, Inc., a Nevada corporation, and that the foregoing is a true and correct copy of a resolution duly adopted by the Board of Directors of said corporation on the date set forth above, which resolution has not been repealed or modified.
IN WITNESS WHEREOF, the undersigned has executed this Certification on the 31st day of December, 2025
/s/ Dionne Pendleton
Corporate Secretary and Treasurer
Reviewed & vetted by:
| /s/ Chris Dieterich<br><br> <br>Legal<br> Counsel | /s/ Jeanene Morgan<br><br> <br>Financial<br> Controller & CAO | /s/<br> David Noyes<br><br> <br>Chief<br> Financial Advisor |
|---|---|---|
| /s/ Eric Bruns<br><br> <br>Board<br> Chairman | /s/ Dionne Pendleton<br><br> <br>Independent<br> Director | /s/<br> George Furlan<br><br> <br>Executive<br> Director, CEO |
ADDENDUM NO. 1
TO SHARE EXCHANGE AGREEMENT
This Addendum No. 1 (this “Addendum”) is entered into as of December 31, 2025 (the “Effective Date”), by and among:
| ● | Sentient Brands Holdings Inc., a Nevada corporation (“SNBH” or the “Purchaser”); |
|---|---|
| ● | Aqua Emergency, Inc., a Nevada corporation (the “Subsidiary”); |
| --- | --- |
| ● | Aqua Emergency, Inc., a Florida corporation (“AE-FL”); and |
| --- | --- |
| ● | The shareholders of Aqua Emergency, Inc. (Florida) holding the remaining forty-nine percent (49%) equity interest (collectively,<br>the “Minority Sellers”). |
| --- | --- |
This Addendum amends and supplements that certain Share Exchange Agreementdated June 3, 2025 (the “Agreement”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement.
RECITALS AND PROTECTIVE ACKNOWLEDGEMENTS
WHEREAS, the Parties acknowledge and recognize that SNBH has represented that it is diligently working toward achieving compliance with that certain Share Exchange Agreement dated March 31, 2025, with AmericanIndustrial Group, including, without limitation, the condition that SNBH be free of material debt and liabilities at the time ofdefinitive closing; and
WHEREAS, the Parties further acknowledge that, as of the date hereof,such conditions have not yet been fully satisfied, and that remediation efforts remain ongoing; and
WHEREAS, the Parties acknowledge that certain lapses in corporate governancewere identified, stemming from the business and corporate governance practices prior to the installation of a majority independent Board of Directors, which resulted in the issuance of a note without legal counsel and financial controller vetting and without theapproval of a majority of the Board of Directors, which issuance is asserted to have infringed upon the rights of senior debt holdersand investors and is the subject of ongoing dispute; and
WHEREAS, the Parties further acknowledge the existence of a pendingthreat of litigation asserted by a former SNBH contractor, G.Templeton, who was terminated by SNBH in January 2020 for alleged embezzlement of SNBH funds, and that no final adjudication of such threatened claims has occurred; and
WHEREAS, the Parties acknowledge that, prior to the effective date ofthe March 31, 2025 Share Exchange Agreement, a single-member board of SNBH authorized the issuance of in excess of sixty million(60,000,000) shares of common stock, which issuance occurred prior to the appointment of a majority independent Board of Directors, resulted in in excess of fifty percent (50%) dilution to legacy shareholders, and did not provide corresponding capital considerationor working capital to SNBH; and
WHEREAS, the Parties further acknowledge that SNBH requires additionaltime and a more streamlined operational and accounting process in order to integrate, audit, and consolidate newly acquired subsidiaries while remaining current in its periodic filings with the Securities and Exchange Commission; and
WHEREAS, the Parties acknowledge that auditing physical inventory locatedacross multiple countries and multiple U.S. states is cost-prohibitive and operationally impractical, materially increasing audit scope, timing, and expense; and
WHEREAS, the Parties further acknowledge that SNBH has received a fundingoffer for up to USD 1.5 million under an equity credit line structure, conditioned upon SNBH maintaining profitability, remaining current in SEC filings, and continuing to strengthen corporate governance and internal controls; and
WHEREAS, in light of the foregoing, the Parties acknowledge that SNBHmust transition to a drop-ship manufacturing and fulfillment model and eliminate exposure to physical inventory in order to reduce audit complexity, balance-sheet risk, and compliance burden; and
WHEREAS, the Parties desire to strengthen protections for the brands,assets, operations, and goodwill of Aqua Emergency, Inc. (NV), AIG-F&B, Inc., and Wyoming Bears, Inc. as subsidiaries of SNBH and American Industrial Group, Inc. and Aqua Emergency, Inc. (FL) as grantors and to affirmatively insulate such entitiesand their stakeholders from any actual or potential liabilities arising from or related to SNBH;
WHEREAS, the Parties acknowledge and recognize that while the Subsidiaryand its related entities are highly profitable, SNBH prior to March 31, 2025 has accumulated in excess of $5.3 million in deficitand related losses for tax purposes, and that the ability to offset such profit with SNBH’s accumulated loss for tax purposes requires SNBH to own at least eighty percent (80%) of such entities; and
WHEREAS, the Parties further acknowledge that the existence of a minorityinterest results in significant deductions of the recognized EBITA under PCAOB rules, which materially impacts the Company’s financial presentation and compliance requirements; and
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth below, the Parties agree as follows:
- Sale of Remaining Minority Interest
1.1 Transfer of Equity
The Minority Sellers hereby sell, assign, transfer, and convey to SNBH all of their remaining forty-nine percent (49%) equity interest in the Subsidiary, free and clear of all liens and encumbrances.
1.2 Resulting Ownership
Upon the Effective Date, SNBH shall own one hundred percent (100%) of the issued and outstanding equity of the Subsidiary.
- Consideration for Minority Interest
2.1 Form of Consideration
SNBH shall issue to the Minority Sellers AcquisitionCredits on the same legal, economic, and conversion terms set forth in the Agreement, as modified herein.
2.2 Valuation Basis
The Minority Interest shall be valued using the valuation framework set forth in the Agreement, without minority or right-of-first-refusal discounts.
- Earn-Out Adjustment for 100% Ownership
3.1 Ownership Multiplier Adjustment
All earn-out calculations shall be recalculated on a 100% ownership basis, replacing the prior 51% multiplier.
3.2 No Double Counting
Any consideration issued in connection with this Addendum shall be credited against the remaining unearned earn-out capacity.
- Termination of Minority Rights
All minority rights, including rights of first refusal, are hereby terminatedin their entirety.
- Full Indemnification; Assignment of Claims
SNBH shall fully, irrevocably, and unconditionally indemnify and holdharmless the Minority Sellers and AE-FL from any and all liabilities, claims, losses, or disputes arising from SNBH’s business, governance, financing, disclosures, or public-company status.
All related claims are automatically assigned to SNBH, which shall bear sole responsibility for their resolution.
- Protective License Suspension; Clawback Rights
AE-FL and/or any Minority Sellers shall have the right, on 24-hour writtennotice, to suspend or terminate any license or operational rights granted to SNBH and claw back all related assets and rights upon insolvency, substantial threatened or pending litigation, or any matter reasonably perceived as detrimental to the protected brands or stakeholders. Suspension shall remain in effect until fully cured to AE-FL’s satisfaction.
- Ratification
Except as expressly amended herein, the Agreement is ratified and confirmedin full force and effect.
- Governing Law
This Addendum shall be governed by the laws of the State of Nevada.
- Counterparts
This Addendum may be executed in counterparts and by electronic signature.
SIGNATURES PAGE TO FOLLOW
IN WITNESS WHEREOF, the Parties have executed this Addendum as of the Effective Date.
| SENTIENT BRANDS HOLDINGS INC. |
|---|
| By: /s/ George Furlan / CEO |
| AQUA EMERGENCY, INC. (NEVADA) |
| By: /s/ Brandon Jones / President |
| AQUA EMERGENCY, INC. (FLORIDA) / Minority Sellers |
| By: /s/ Jennifer Brooks / Managing Partner |
Reviewed and vetted by:
SNBH Board Of Directors
SNBH Legal Counsel | SNBH Financial Controller | SNBH Chief FinancialAdvisor
INVENTORY TRANSFER AND DROP-SHIP MANUFACTURING AGREEMENT
BetweenAqua Emergency, Inc. (FL)(“AEFL”)andAqua Emergency, Inc. (NV) (“AENV”)
Effective Date: December 31, 2025
- Parties
1.1 Aqua Emergency, Inc. (NV) (“AENV”) is a wholly-owned subsidiary of Sentient Brands Holdings Inc. (“SNBH”) engaged in branded food and beverage operations.
1.2 Aqua Emergency, Inc. (FL)(“AEFL”) or its assignee is the affiliated manufacturing and operational platform.
Together, the parties are referred to as the “Parties” and each a “Party.”
- Purpose
The purpose of this Agreement is to:
(a) eliminate all inventory from AENV’s balance sheet to simplify SNBH’s audit;
(b) transition AENV to a drop-ship manufacturing model fully serviced by AEFL;
(c) transfer title, possession, risks, and rewards of all inventory from AENV to AEFL at book value; and
(d) record such book value as a prepaid manufacturing and fulfillment deposit (“Prepaid Deposit”) held by AEFL for the benefit of AENV.
- Transfer of Inventory
3.1 Transfer of Title.
Effective as of the Effective Date, AENV hereby irrevocably transfers to AEFL all of its rights, title, and interest in and to all finished goods, work-in-process, raw materials, packaging, and any other inventory items recorded on AENV’s books as of such date (“Transferred Inventory”).
3.2 Valuation.
The Transferred Inventory shall be valued at the net book value recorded on AENV’s most recent accounting ledger, prepared in accordance with GAAP, as reviewed and approved by the Parties’ finance teams and auditors.
3.3 Consideration / Prepaid Deposit.
In exchange for the transfer of the inventory, AEFL shall record a liability to AENV equal to the book value of the Transferred Inventory (“Prepaid Deposit”). The Prepaid Deposit shall be nonrefundable and applied solely against future manufacturing, fulfillment, logistics, and drop-ship services provided by AEFL to AENV under this Agreement.
3.4 Risk of Loss.
Upon execution, all risks and rewards of ownership, including loss, damage, shrinkage, insurance, and obsolescence, shall transfer from AENV to AEFL.
3.5 Audit Confirmation.
The Parties acknowledge this Agreement is designed to achieve a cleaner audit presentation by removing all inventory from AENV’s balance sheet and consolidating manufacturing holdings under AEFL. The Parties shall cooperate with auditors to provide confirmations and documentation required under PCAOB/GAAP standards.
- Drop-Ship Manufacturing Model
4.1 Manufacturing and Procurement.
AEFL shall assume full responsibility for the procurement of raw materials, manufacturing, bottling, packaging, warehousing, and fulfillment of products previously manufactured or sourced by AENV.
4.2 Drop-Ship Fulfillment.
AEFL shall ship products directly to AENV customers on an as-ordered basis (“Drop-Ship Model”). AENV shall transmit customer orders to AEFL in the format and frequency agreed by the Parties.
4.3 Service Fees.
AEFL shall charge AENV unit-based service fees covering manufacturing, direct labor, materials, overhead, and logistics, based on the best available pricing at the time of the Purchase Order from AENV.
4.4 Application of Prepaid Deposit.
The Prepaid Deposit shall reduce the amount payable by AENV for services until fully exhausted. AEFL shall provide monthly statements showing beginning balance, applied credits, and remaining balance.
- Representations and Warranties
5.1 Authority. Each Party represents it has full corporate authority to execute and perform this Agreement.
5.2 Ownership of Inventory. AENV represents it has good and marketable title to the Transferred Inventory free of liens or encumbrances, except those disclosed to AEFL in writing.
5.3 Compliance. The Parties shall comply with all applicable laws, accounting standards, and auditor requirements.
- Term and Termination
6.1 Term. This Agreement shall remain in effect until terminated by mutual written consent.
6.2 Termination for Cause. Either Party may terminate for material breach if not cured within thirty (30) days of written notice.
6.3 Effect of Termination.
****(a) Any unused Prepaid Deposit shall be refunded or credited against any outstanding payables between the Parties.
(b) AENV acknowledges that manufacturing operations shall remain with AEFL unless otherwise mutually agreed.
- Accounting and Audit Provisions
7.1 GAAP Compliance. The inventory transfer and prepaid structure shall be recorded in accordance with GAAP and recognized by auditors as a bona fide transfer of assets.
7.2 Supporting Documentation. The Parties shall maintain supporting documentation including inventory ledgers, valuation reports, transfer records, and service logs.
7.3 Audit Cooperation. Each Party shall fully cooperate with SNBH’s auditors, including in providing confirmations, cutoff testing support, and sample records.
8. Indemnification and Claims Assignment
8.1 Full Indemnification of AEFL. Aqua Emergency, Inc. (NV) (“AENV”) and its parent company, Sentient Brands Holdings Inc. (“SNBH”), jointly and severally agree to fully indemnify, defend, and hold harmless Aqua Emergency, Inc. (FL)(“AEFL”) and its affiliates, directors, officers, and employees from and against any and all liabilities, claims, demands, losses, damages, costs, or expenses (including reasonable attorneys’ fees) that arise from or relate in any way to this Agreement or the business, operations, or corporate status of AENV or SNBH. This indemnity is intended to be a complete and total indemnification of AEFL for all matters contemplated herein.
8.2 Automatic Assignment of Claims to SNBH. All claims made or threatened against AEFL for which indemnification is provided under this Section 8 shall be automatically and irrevocably assigned to SNBH. SNBH shall assume the sole obligation and cost to defend, compromise, or settle such claims, using counsel of its choosing. AEFL shall reasonably cooperate with SNBH in the defense of any such claim.
- Miscellaneous
9.1 Governing Law. State of Nevada.
9.2 Confidentiality. Proprietary information shall remain confidential.
9.3 No Agency. The Parties act as independent contractors.
9.4 Entire Agreement. This Agreement constitutes the complete understanding between the Parties.
9.5 Amendments. Must be in writing and signed by both Parties.
9.6 Assignments. No assignments without prior written consent.
9.7 Counterparts. May be executed electronically and in counterparts.
10. Accounting Intent and Role of the Parties in Sales to End Customers
10.1 Role of the Parties in Sales to End Customers. The Parties agree and acknowledge that, in all transactions concerning the sale of AENV’s products to end customers (“End Customer Sales”), the roles and responsibilities shall be structured and accounted for as follows:
(a) AENV as Principal. AENV shall, at all times, be considered the Principal in the End Customer Sale. AENV maintains sole control over the brand, sets the pricing to the end customer, manages the customer relationship, and retains primary responsibility for fulfilling the promise to transfer the specified products to the End Customer. This includes, but is not limited to, responsibility for handling returns, warranties, and all post-sale customer inquiries related to the product or sale.
(b) AEFL as Service Provider/Fulfillment Agent. AEFL shall act solely as a contract manufacturer and fulfillment agent to AENV. AEFL’s obligation is to perform the services of manufacturing, warehousing, and shipping the products as directed by AENV, and not to sell the product to the end customer on its own behalf. The Service Fees and the application of the Prepaid Deposit reflect AEFL’s compensation for providing these services to AENV.
(c) Revenue Recognition Intent. The Parties intend that AENV shall recognize revenue from End Customer Sales on a gross basis (as Principal) in accordance with ASC 606, and AENV shall account for the amounts paid to AEFL as a cost of manufacturing and fulfillment services. The transfer of inventory risk and title to AEFL under Section 3.4 is intended solely to facilitate operational simplification and audit clarity as an intermediary risk-bearing party, and is not intended to confer upon AEFL the role of Principal in the sale to the End Customer.
Signatures
| Sentient Brands Holdings, Inc. |
|---|
| By: /s/ George Furlan |
| Title: CEO, Director |
| Aqua Emergency, Inc. (NV) |
| By: /s/ Brandon Jones |
| Title: President |
| Aqua Emergency, Inc. (FL) |
| By: /s/ Jennifer Brooks |
| Title: Managing Partner |
CC:
Tullus Miller, Auditor | Jeanene Morgan, Financial Controller | Chris Dieterich, Legal Counsel
GAAP JOURNAL-ENTRY MEMO FOR AUDITORS
Subject: Derecognition of Inventory; Recognition of Prepaid Deposit with AEFL
Entity: Aqua Emergency, Inc. (NV)
Effective Date: Dec 31, 2025
Transaction Overview
Aqua Emergency, Inc. (NV) (“AENV”) transferred all inventory to Aqua Emergency, Inc. (FL) (“AEFL”) as part of a shift to a drop-ship manufacturing model. AEFL assumed all risks and rewards of ownership. The inventory’s GAAP book value was exchanged for a prepaid manufacturing and fulfillment deposit (“Prepaid Deposit”).
This constitutes a bona fide transfer under ASC 330 (Inventory), ASC 606 (Contract Costs), and ASC 340 (Other Assets), eliminating inventory from AENV’s balance sheet and reclassifying the value as a service-related prepayment.
Journal Entry – Aqua Emergency, Inc. (NV)
To derecognize inventory and record the prepaid service deposit:
Dr. Prepaid Manufacturing Deposit (Asset) ............. $XXX,XXX
Cr. Inventory (Asset) ...................................................... $XXX,XXX
Narrative:
On the Effective Date, AENV transferred ownership of all inventory to AEFL at GAAP book value. Title, possession, and risk of loss transferred. The value transferred will be applied against future manufacturing and fulfillment services under the drop-ship agreement. No gain or loss recognized, as the transfer occurred at book value.
Supporting Evidence for Audit
| 1. | Executed Inventory Transfer and Drop-Ship Manufacturing Agreement. |
|---|---|
| 2. | Inventory valuation report as of the Effective Date. |
| --- | --- |
| 3. | Inventory ledger, detailed by SKU/category. |
| --- | --- |
| 4. | Schedule A inventory listing with management certification. |
| --- | --- |
| 5. | Board resolution authorizing the transaction. |
| --- | --- |
| 6. | Subsequent-period application schedules showing reductions of the prepaid balance. |
| --- | --- |
Relevant GAAP Considerations
| 1. | ASC 330 – Inventory: Inventory no longer controlled by AENV is derecognized. |
|---|---|
| 2. | ASC 340 – Other Assets: Prepaid deposits for manufacturing services are recognized as assets and amortized as services are consumed. |
| --- | --- |
| 3. | ASC 606 – Revenue / Contract Costs: Prepayments for fulfillment services are recognized as assets until service delivery occurs. The principal recognizes gross revenue. |
| --- | --- |
| 4. | Substance-over-form: Risk transfer, title transfer, and operational control have substantively moved to AEFL; therefore treatment as a prepaid contract<br>cost is appropriate. |
| --- | --- |
INVENTORY TRANSFER AND DROP-SHIP MANUFACTURING AGREEMENT
BetweenAmerican Industrial Group, Inc. (“AIG”)andAIG F&B, Inc. (“AIGFB”)
Effective Date: December 31st, 2025
- Parties
1.1 AIG F&B, Inc. (“AIGFB”) is a wholly-owned subsidiary of Sentient Brands Holdings Inc. (“SNBH”) engaged in branded food and beverage operations.
1.2 American Industrial Group, Inc. (“AIG”) is the affiliated manufacturing and operational platform.
Together, the parties are referred to as the “Parties” and each a “Party.”
- Purpose
The purpose of this Agreement is to:
(a) eliminate all inventory from AIGFB’s balance sheet to simplify SNBH’s audit;
(b) transition AIGFB to a drop-ship manufacturing model fully serviced by AIG;
(c) transfer title, possession, risks, and rewards of all inventory from AIGFB to AIG at book value; and
(d) record such book value as a prepaid manufacturing and fulfillment deposit (“Prepaid Deposit”) held by AIG for the benefit of AIGFB.
- Transfer of Inventory
3.1 Transfer of Title.
Effective as of the Effective Date, AIGFB hereby irrevocably transfers to AIG all of its rights, title, and interest in and to all finished goods, work-in-process, raw materials, packaging, and any other inventory items recorded on AIGFB’s books as of such date (“Transferred Inventory”).
3.2 Valuation.
****The Transferred Inventory shall be valued at the net book value recorded on AIGFB’s most recent accounting ledger, prepared in accordance with GAAP, as reviewed and approved by the Parties’ finance teams and auditors.
3.3 Consideration / Prepaid Deposit.
In exchange for the transfer of the inventory, AIG shall record a liability to AIGFB equal to the book value of the Transferred Inventory (“Prepaid Deposit”). The Prepaid Deposit shall be non-refundable and applied solely against future manufacturing, fulfillment, logistics, and drop-ship services provided by AIG to AIGFB under this Agreement.
3.4 Risk of Loss.
Upon execution, all risks and rewards of ownership, including loss, damage, shrinkage, insurance, and obsolescence, shall transfer from AIGFB to AIG.
3.5 Audit Confirmation.
The Parties acknowledge this Agreement is designed to achieve a cleaner audit presentation by removing all inventory from AIGFB’s balance sheet and consolidating manufacturing holdings under AIG. The Parties shall cooperate with auditors to provide confirmations and documentation required under PCAOB/GAAP standards.
- Drop-Ship Manufacturing Model
4.1 Manufacturing and Procurement.
****AIG shall assume full responsibility for procurement of raw materials, manufacturing, bottling, packaging, warehousing, and fulfillment of products previously manufactured or sourced by AIGFB.
4.2 Drop-Ship Fulfillment.
****AIG shall ship products directly to AIGFB customers on an as-ordered basis (“Drop-Ship Model”). AIGFB shall transmit customer orders to AIG in the format and frequency agreed by the Parties.
4.3 Service Fees.
****AIG shall charge AIGFB unit-based service fees covering manufacturing, direct labor, materials, overhead, and logistics, based on the best available pricing at a time of the Purchase Order from AIGFB.
4.4 Application of Prepaid Deposit.
The Prepaid Deposit shall reduce the amount payable by AIGFB for services until fully exhausted. AIG shall provide monthly statements showing beginning balance, applied credits, and remaining balance.
- Representations and Warranties
5.1 Authority. Each Party represents it has full corporate authority to execute and perform this Agreement.
5.2 Ownership of Inventory. AIGFB represents it has good and marketable title to the Transferred Inventory free of liens or encumbrances, except those disclosed to AIG in writing.
5.3 Compliance. The Parties shall comply with all applicable laws, accounting standards, and auditor requirements.
- Term and Termination
6.1 Term. This Agreement shall remain in effect until terminated by mutual written consent.
6.2 Termination for Cause. Either Party may terminate for material breach if not cured within thirty (30) days of written notice.
6.3 Effect of Termination.
****(a) Any unused Prepaid Deposit shall be refunded or credited against any outstanding payables between the Parties.
(b) AIGFB acknowledges that manufacturing operations shall remain with AIG unless otherwise mutually agreed.
- Accounting and Audit Provisions
7.1 GAAP Compliance. The inventory transfer and prepaid structure shall be recorded in accordance with GAAP and recognized by auditors as a bona fide transfer of assets.
7.2 Supporting Documentation. The Parties shall maintain supporting documentation including inventory ledgers, valuation reports, transfer records, and service logs.
7.3 Audit Cooperation. Each Party shall fully cooperate with SNBH’s auditors, including in providing confirmations, cutoff testing support, and sample records.
8. Indemnification and Claims Assignment
8.1 Full Indemnification of AIG. AIG F&B, Inc. (“AIGFB”) and its parent company, Sentient Brands Holdings Inc. (“SNBH”), jointly and severally agree to fully indemnify, defend, and hold harmless American Industrial Group, Inc. (“AIG”) and its affiliates, directors, officers, and employees from and against any and all liabilities, claims, demands, losses, damages, costs, or expenses (including reasonable attorneys’ fees) that arise from or relate in any way to this Agreement or the business, operations, or corporate status of AIGFB or SNBH. This indemnity is intended to be a complete and total indemnification of AIG for all matters contemplated herein.
8.2 Automatic Assignment of Claims to SNBH. All claims made or threatened against AIG for which indemnification is provided under this Section 8 shall be automatically and irrevocably assigned to SNBH. SNBH shall assume the sole obligation and cost to defend, compromise, or settle such claims, using counsel of its choosing. AIG shall reasonably cooperate with SNBH in the defense of any such claim.
- Miscellaneous
9.1 Governing Law. State of Nevada.
9.2 Confidentiality. Proprietary information shall remain confidential.
9.3 No Agency. The Parties act as independent contractors.
9.4 Entire Agreement. This Agreement constitutes the complete understanding between the Parties.
9.5 Amendments. Must be in writing and signed by both Parties.
9.6 Assignments. No assignments without prior written consent.
9.7 Counterparts. May be executed electronically and in counterparts.
10. Accounting Intent and Role of the Parties in Sales to End Customers
10.1 Role of the Parties in Sales to End Customers. The Parties agree and acknowledge that, in all transactions concerning the sale of AIGFB’s branded products to end customers (“End Customer Sales”), the roles and responsibilities shall be structured and accounted for as follows:
(a) AIGFB as Principal. AIGFB shall, at all times, be considered the Principal in the End Customer Sale. AIGFB maintains sole control over the brand, sets the pricing to the end customer, manages the customer relationship, and retains primary responsibility for fulfilling the promise to transfer the specified products to the End Customer. This includes, but is not limited to, responsibility for handling returns, warranties, and all post-sale customer inquiries related to the product or sale.
(b) AIG as Service Provider/Fulfillment Agent. AIG shall act solely as a contract manufacturer and fulfillment agent to AIGFB. AIG’s obligation is to perform the services of manufacturing, warehousing, and shipping the products as directed by AIGFB, and not to sell the product to the end customer on its own behalf. The Service Fees and the application of the Prepaid Deposit reflect AIG’s compensation for providing these services to AIGFB.
(c) Revenue Recognition Intent. The Parties intend that AIGFB shall recognize revenue from End Customer Sales on a gross basis (as Principal) in accordance with ASC 606, and AIGFB shall account for the amounts paid to AIG as a cost of manufacturing and fulfillment services. The transfer of inventory risk and title to AIG under Section 3.4 is intended solely to facilitate operational simplification and audit clarity as an intermediary risk-bearing party, and is not intended to confer upon AIG the role of Principal in the sale to the End Customer.
Signatures
| Sentient Brands Holdings, Inc. |
|---|
| By: /s/ George Furlan |
| Title: CEO, Director |
| AIG F&B, Inc. |
| By: /s/ Vitalii Artemenko |
| Title: Manager |
| American Industrial Group, Inc. |
| By: /s/ Yan Aronov |
| Title: Managing Partner |
CC:
Tullus Miller, Auditor | Jeanene Morgan, Financial Controller | Chris Dieterich, Legal Counsel
GAAP JOURNAL-ENTRY MEMO FOR AUDITORS
Subject: Derecognition of Inventory; Recognition of Prepaid Deposit with AIG
Entity: AIG F&B, Inc.
Effective Date: December 31st, 2025
Transaction Overview
AIG F&B, Inc. (“AIGFB”) transferred all inventory to American Industrial Group (“AIG”) as part of a shift to a drop-ship manufacturing model. AIG assumed all risks and rewards of ownership. The inventory’s GAAP book value was exchanged for a prepaid manufacturing and fulfillment deposit (“Prepaid Deposit”).
This constitutes a bona fide transfer under ASC 330 (Inventory), ASC 606 (Contract Costs), and ASC 340 (Other Assets), eliminating inventory from AIGFB’s balance sheet and reclassifying the value as a service-related prepayment.
Journal Entry – AIG F&B, Inc.
To derecognize inventory and record the prepaid service deposit:
Dr. Prepaid Manufacturing Deposit (Asset) ............. $XXX,XXX
Cr. Inventory (Asset) ...................................................... $XXX,XXX
Narrative:
On the Effective Date, AIGFB transferred ownership of all inventory to AIG at GAAP book value. Title, possession, and risk of loss transferred. The value transferred will be applied against future manufacturing and fulfillment services under the drop-ship agreement. No gain or loss recognized, as transfer occurred at book value.
Supporting Evidence for Audit
| 1. | Executed Inventory Transfer and Drop-Ship Manufacturing Agreement. |
|---|---|
| 2. | Inventory valuation report as of the Effective Date. |
| --- | --- |
| 3. | Inventory ledger, detailed by SKU/category. |
| --- | --- |
| 4. | Schedule A inventory listing with management certification. |
| --- | --- |
| 5. | Board resolution authorizing the transaction. |
| --- | --- |
| 6. | Subsequent-period application schedules showing reductions of the prepaid balance. |
| --- | --- |
Relevant GAAP Considerations
| 1. | ASC 330 – Inventory: Inventory no longer controlled by AIGFB is derecognized. |
|---|---|
| 2. | ASC 340 – Other Assets: Prepaid deposits for manufacturing services are recognized as assets and amortized as services are consumed. |
| --- | --- |
| 3. | ASC 606 – Revenue / Contract Costs: Prepayments for fulfillment services are recognized as assets until service delivery occurs. Gross revenue is recognized by the Principal. |
| --- | --- |
| 4. | Substance-over-form: Risk transfer, title transfer, and operational control have substantively moved to AIG; therefore treatment as a prepaid contract<br>cost is appropriate. |
| --- | --- |