Starco Brands, Inc 10-K for FY2023

Starco Brands, Inc. (STCB)

10-K 2024-04-03 For: 2023-12-31

Added on April 06, 2026

About this 10-K

Starco Brands, Inc filed this 10-K on April 3, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $65.21M; up 734.7% from $7.81M a year earlier
Net loss: $46.19M; compared with net income of $809.97K a year earlier

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Nevada		27-1781753
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

250 26^th Street, Suite 200, Santa Monica, CA		90402
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock		STCB		OTC Markets Group OTCQB Tier

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

Forward-Looking Statements		3
PART I		3
Item 1.	Business.	3
Item 1A.	Risk Factors.	7
Item 1B.	Unresolved Staff Comments.	15
Item 2.	Properties.	15
Item 3.	Legal Proceedings.	15
Item 4.	Mine Safety Disclosures.	15

PART II		16
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	16
Item 6.	[Reserved].	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	25
Item 8.	Financial Statements and Supplementary Data.	25
Item 9.	Controls and Procedures.	25
Item 9A.	Other Information.	26
Item 9B.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	26

PART III		27
Item 10.	Directors, Executive Officers and Corporate Governance.	27
Item 11.	Executive Compensation.	28
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	29
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	30
Item 14.	Principal Accountant Fees and Services.	34

PART IV		35
Item 15.	Exhibits and Financial Statement Schedules.	35
Item 16.	Form 10-K Summary.	37
Signatures		38

●	We face competition from large, established companies, including The Procter & Gamble Company, Unilever, Johnson & Johnson, Diageo and others, that have significantly greater financial, marketing, research and development and other resources and greater market share than we do, which provides them with greater scale and negotiating leverage with retailers;
●	Our competitors may have lower production, sales and distribution costs, and higher profit margins, which may enable them to offer aggressive retail discounts and other promotional incentives; and
●	Our competitors may be able to obtain exclusive distribution rights at particular retailers or favorable in-store placement.

●	The failure of third parties on which we rely, including but not limited to those that supply our raw materials and other necessary operating materials, manufacturers and independent contractors, to meet their obligations to us, or significant disruptions in their ability to do so;
●	New or escalated government or regulatory responses in markets where we manufacture, sell or distribute our products, or in the markets of third parties on which we rely, could prevent or disrupt our business operations;
●	Significant reductions or volatility in demand for one or more of our products, which may be caused by, among other things: the temporary inability of consumers to purchase our products due to illness, quarantine or other travel restrictions, or financial hardship; or other pandemic related restrictions impacting consumer behavior;
●	An inability to respond to or capitalize on increased demand, including challenges and increased costs associated with adding capacity with our manufacturers;
●	A change in demand for or availability of our products as a result of retailers, distributors or carriers modifying their inventory, fulfillment or shipping practices; and
●	The unknown duration and magnitude of a pandemic and all of its related impacts.

Date	Shares of Common Stock Issuable¹		Cash Proceeds / Value in Kind from Shares Issuable		Recipient(s) of Shares
February 15, 2023		177,954,287	$	26,693,143	21 entities 4 individuals
March 31, 2023		81,249	$	81,249	2 individuals
June 30, 2023		81,249	$	81,249	2 individuals
September 30, 2023		81,249	$	81,249	2 individuals
December 31, 2023		27,091	$	27,091	2 individuals
December 31, 2023		19,268,162	$	3,371,252	8 entities 18 individuals
February 14, 2024		140,051,492	$	21,607,556	21 entities 4 individuals
February 14, 2024		16,309,203	$	2,446,380	21 entities 4 individuals
March 12, 2024		4,979,731	$	946,149	3 entities 11 individuals

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
1/1/2023 - 1/31/2023		63,206	$	0.17		1,030,326	$	186,150
2/1/2023 - 2/28/2023		73,236	$	0.15		1,103,562	$	175,200
3/1/2023 - 3/31/2023		56,721	$	0.19		1,160,283	$	164,250
4/1/2023 - 4/30/2023		73,693	$	0.14		1,233,976	$	153,300
5/1/2023 - 5/31/2023		78,934	$	0.14		1,312,910	$	142,350
6/1/2023 - 6/30/2023		75,861	$	0.14		1,388,771	$	131,400
7/1/2023 - 7/31/2023		90,070	$	0.12		1,478,841	$	120,450
8/1/2023 - 8/31/2023		84,187	$	0.13		1,563,028	$	109,500
9/1/2023 - 9/30/2023		65,426	$	0.17		1,628,454	$	98,550
10/1/2023 - 10/31/2023		73,397	$	0.15		1,701,851	$	87,600
11/1/2023 - 11/30/2023		81,473	$	0.13		1,783,324	$	76,650
12/1/2023 - 12/31/2023		78,830	$	0.14		1,862,154	$	65,700

	December 31,			December 31,
	2023			2022		Change
Revenues	$	65,211,238		$	7,812,728	$	57,398,510
Cost of goods sold		37,431,277			776,127		36,655,150
Gross profit		27,779,961			7,036,601		20,743,360
Operating expenses:
Compensation expense		15,899,492			1,175,267		14,724,225
Professional fees		5,861,649			1,822,927		4,038,722
Marketing, general and administrative		21,643,733			2,756,808		18,886,925
Marketing, related party		-			131,614		(131,614	)
Fair value share adjustment		215,531			-		215,531
Goodwill impairment		29,612,700			-		29,612,700
Total operating expense		73,233,105			5,886,616		67,346,489
Income (loss) from operations		(45,453,144	)		1,149,985		(46,603,489	)
Other expense:
Interest expense		850,105			68,721		781,384
Other expense		98,872			103,406		(4,534	)
Total other expense		948,977			172,127		776,850
Income (loss) before provisions for income taxes		(46,402,121	)		977,858		(47,379,979	)
Provision for income taxes		-			-		-
Net income (loss)		(46,402,121	)		977,858		(47,379,979	)
Net income (loss) attributable to non-controlling interest		(210,871	)		167,891		(378,762	)
Net income (loss) attributable to Starco Brands	$	(46,191,250	)	$	809,967	$	(47,001,217	)

	Outstanding Balance		Original maturity	Original rate			Revised maturity	Revised rate
January 24, 2020 Note	$	100,000	7/19/2023		4	%	12/31/2024	Prime + 2	%
June 28, 2021 Note		100,000	6/28/2023		4	%	12/31/2024	Prime + 2	%
September 17, 2021 Note		500,000	9/17/2023		4	%	12/31/2024	Prime + 2	%
December 13, 2022 Note		500,000	12/13/2023		4	%	12/31/2024	Prime + 2	%
December 29, 2022 Note		2,000,000	8/1/2023		Prime + 4	%	12/31/2024	Prime + 2	%
March 3, 2023 Note		800,000	7/1/2023		Prime + 4	%	12/31/2024	Prime + 2	%
	$	4,000,000

	Year Ended December 31,
	2023			2022
Net cash provided by operating activities	$	686,657		$	377,777
Net cash used in investing activities		(230,007	)		(1,459,661	)
Net cash (used in) provided by financing activities		(175,796	)		2,223,392
Increase in cash	$	280,854		$	1,141,508

	●	Lack of an audit committee
	●	Lack of corporate documentation

	●	Formal appointment of an interim Chief Financial Officer in the first half of 2023, who has been overseeing the financial reporting process and implementation of enhanced controls and governance,
	●	Engagement of separate external financial consulting firms to continue to enhance financial reporting, financial operations, internal controls including segregation of duties; as well as improve tax analysis, fair value estimates and reporting,
	●	Management plans to expand the Board of Directors in 2024 to include an independent member qualified as a financial expert to sit on an Audit Committee; and
	●	Management plans to develop formal policies and procedures over accounting and reporting.

Name	Age	Position	Term of Director/Officer
Ross Sklar	48	President, CEO, Chairman of the Board and Director	Director: August 2015 until successor is duly elected and qualified Officer: August 2017 until successor is duly appointed and qualified
Darin Brown	47	Chief Operating Officer, Secretary, and Director	Officer: June 2023 until successor is duly appointed and qualified Director: June 2020 until successor is duly elected and qualified
Kevin Zaccardi	38	Interim-Chief Financial Officer	June 2023 until successor is duly appointed and qualified
Demir Vangelov*	50	Director	February 2022 until successor is duly appointed and qualified
David Dreyer	50	Chief Marketing Officer	June 2023 until successor is duly appointed and qualified
Bharat Vasan	48	Director	March 2024 until success is duly elected and qualified

(1)	Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
(2)	Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3)	Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
(4)	Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Name and principal position	Year		Salary ($)⁽¹⁾		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Ross Sklar, CEO, Director		2023	$	120,000	$	-	$	-	$	-	$	-	$	-	$	-	$	120,000
		2022	$	10,000	$	1,000	$	-	$	-	$	-	$	-	$	-	$	11,000
Darin Brown, VP, Director		2023	$	102,000	$	-	$	-	$	-	$	-	$	-	$	-	$	102,000
		2022	$	93,500	$	1,000	$	-	$	-	$	491,742	$	-	$	-	$	586,242
Kevin Zaccardi, CFO		2023	$	230,823	$	-	$	-	$	-	$	-	$	-	$	-	$	230,823
		2022		-		-		-		-		-		-		-		-
Demir Vangelov, Director		2023	$	119,429	$	-	$	-	$	-	$	-	$	-	$	-	$	119,429
		2022		-		-		-		-		-		-		-		-
David Dreyer, VP		2023	$	300,000	$	-	$	-	$	-	$	-	$	-	$	-	$	300,000
		2022	$	262,500	$	1,000	$	-	$	-	$	-	$	-	$	-	$	263,500

Title of Class	Name of Beneficial Owner	Amount of Beneficial Ownership		Percent of Class
Class A common stock	Ross Sklar	93,519,836		14.4	%
Class A common stock	David Dreyer	4,250 ,000		0.7	%
Class A common stock	Darin Brown	2,000,000		0.3	%
Class A common stock	Demir Vangelov	32,472,426	⁽¹⁾	5.0	%
Class A common stock	Kevin Zaccardi	-		-	%
Class A common stock	Bharat Vasan	-		-	%
Class A common stock	GV 2016 GP, L.L.C.	99,510,805	⁽²⁾	15.3	%
Class A common stock	Andreessen Horowitz Fund IV, L.P.	80,041,025	⁽³⁾	12.3	%
Class A common stock	The Production Board, LLC	61,696,700	⁽⁴⁾	9.5	%
	Directors and executive officers as a group (6 persons)	132,242,262		20.4	%

(1)	Mr. Vangelov holds theses shares indirectly through Hamilton Start, LLC. Mr. Vangelov’s shares are subject to that certain Voting Agreement, by and among Starco Brands, Inc., Ross Sklar, and the stockholders of the Company listed on Schedule A thereto, dated February 15, 2023, as may be amended from time to time.
(2)	GV 2016 GP, L.L.C. holds theses shares indirectly through GV 2016, L.P. GV 2016 GP, L.L.C.’s shares are subject to that certain Voting Agreement, by and among Starco Brands, Inc., Ross Sklar, and the stockholders of the Company listed on Schedule A thereto, dated February 15, 2023, as may be amended from time to time.
(3)	Andreessen Horowitz Fund IV, L.P.’s shares are subject to that certain Voting Agreement, by and among Starco Brands, Inc., Ross Sklar, and the stockholders of the Company listed on Schedule A thereto, dated February 15, 2023, as may be amended from time to time
(4)	The Production Board, LLC’s shares are subject to that certain Voting Agreement, by and among Starco Brands, Inc., Ross Sklar, and the stockholders of the Company listed on Schedule A thereto, dated February 15, 2023, as may be amended from time to time.

	MGO
	2023		2022
Audit fees (1)	$	470,000	$	300,000
Audit-related fees (2)		-		155,000
Tax fees (3)		-		-
All other fees (4)		-		-
	$	-	$	455,000

(1)	Audit Fees consist of fees billed and expected to be billed for services rendered for the audit of our consolidated financial statements for the years ended December 31, 2023 and 2022, and the review of our condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q.

(2)	Audit-related fees represent professional services rendered for assurance and related services by the accounting firm that are reasonably related to the performance of the audit or review of our consolidated financial statements that are not reported under “Audit Fees.”

(3)	Tax Fees consist of fees billed for professional services related to preparation of our U.S. federal and state income tax returns and tax advice.

(4)	All Other Fees consist of fees billed for products and services provided by our independent registered public accountants, other than those disclosed above.

Exhibit No.		Exhibit Description

2.1 (*)†		Agreement and Plan of Merger, by and among (i) Starco Brands, Inc., a Nevada corporation, (ii) Starco Merger Sub Inc., a Delaware corporation, (iii) The AOS Group Inc., a Delaware corporation, and (iv) Matthias Metternich, solely in his capacity as the Company Stockholder Representative of The AOS Group stockholders, dated September 12, 2022, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 15, 2022.

2.2 (*)†		Agreement and Plan of Merger, by and among (i) Starco Brands, Inc., a Nevada corporation, (ii) Starco Merger Sub II, Inc., a Delaware corporation, (iii) Skylar Body, LLC, a Delaware limited liability company, (iv) Skylar Body, Inc., a Delaware corporation, and (v) Shareholder Representative Services LLC, solely in its capacity as the representative of the Company Holders, dated December 29, 2022, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 4, 2023.

2.3 (*)†		Agreement and Plan of Merger, by and among Starco Brands, Inc., Starco Merger Sub I Inc., Soylent Nutrition, Inc., and Hamilton Start, LLC, solely in its capacity as stockholders’ representative and solely for purposes of Article IX, Article X, Section 2.08 and Section 6.11 therein, dated February 14, 2023, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 21, 2023.

3.1 (*)		Amended and Restated Articles of Incorporation of Starco Brands, Inc., filed as Exhibit 3.1 to the Company’s Current Report on Form 10-K filed with the Commission on April 18, 2023.

3.2 (*)		Amended and Restated Bylaws of Starco Brands, Inc., filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 1, 2022.

4.1 (*)†		Registration Rights Agreement, by and between Starco Brands, Inc., a Nevada corporation, and the Investors listed on Schedule A thereto, dated September 12, 2022, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 15, 2022.

4.2 (*)†		Voting Agreement, by and among Starco Brands, Inc., a Nevada corporation, and the stockholders listed on Schedule A thereto, dated September 12, 2022, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on September 15, 2022.

4.3 (*)†		Registration Rights Agreement, by and between Starco Brands, Inc., a Nevada corporation, and the Investors listed on Schedule A thereto, dated December 29, 2022, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 4, 2023.

4.4 (*)		Voting Agreement, by and among Starco Brands, Inc., a Nevada corporation, and the stockholders listed on Schedule A thereto, dated December 29, 2022, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on January 4, 2023.

4.5 (*)		Registration Rights Agreement, by and between Starco Brands, Inc., and Hamilton Start, LLC in its capacity as Stockholder Representative on behalf of the Investors (as defined therein) dated February 15, 2023, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on February 21, 2023.

10.1 (*)		Form of Indemnification Agreement by and between Starco Brands, Inc. and each of its current directors, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 21, 2023.

10.2 (*)(+)		Brand License Agreement, by and between Starco Brands, Inc. and The Starco Group, effective as of July 12, 2017, filed as Exhibit 6.2 to the Company’s Regulation A+ offering statement filed with the Commission on August 31, 2021.

10.3 (*)(+)		License Agreement by and between Sklar Holdings, Inc., and Starco Brands, Inc. executed April 1, 2018, filed as Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the Commission on February 19, 2021.

10.4 (*)(+)		License Agreement by and between Winona Pure, Inc. and Starco Brands, Inc. executed April 1, 2018, filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 19, 2021

10.5 (*)(+)		Amended and Restated License Agreement, by and between Whipshots Holdings LLC, Washpoppin Inc., and “Cardi B,” effective as of November 27, 2023, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 8, 20A

10.6 (*)(+)		Intellectual Property Purchase Agreement, by and between Whipshots LLC and PENGUINS FLY, LLC, dated as of August 24, 2021, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 14, 2021.

10.7 (*)		Form of Distribution Agreement, by and between Starco Brands, Inc. and “Distributor”, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 10, 2021.

10.8 (*)		Form of Broker Agreement, by and between Starco Brands, Inc. and “Broker”, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on November 10, 2021.

10.9 (*)		Convertible Promissory Note issued in favor of Ross Sklar, dated February 14, 2022, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 22, 2022.

10.10 (*)		Consolidated Secured Promissory Note of Starco Brands, Inc., issued in favor of Ross Sklar, dated August 11, 2023, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 11, 2023.

10.11 (*)		Amended and Restated Consolidated Security Agreement, by and between Starco Brands, Inc. and Ross Sklar, dated August 11, 2023, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on August 11, 2023.

10.12 (*)		Warrant to Purchase Common Stock, issued to Ross Sklar, dated December 29, 2022, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on January 5, 2023.

10.13 (*)		Warrant to Purchase Class A Common Stock, issued to Ross Sklar, dated March 3, 2023, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on March 9, 2023.

10.14 (*) (+)		License Agreement by and between Starco Brands, Inc. and Temperance Distilling Company, executed January 24, 2022, filed as Exhibit 10.25 to the Company’s Annual Report on Form 10-K filed with the Commission on April 18, 2023.

10.15 (*)		Starco Brands, Inc. – 2023 Equity Incentive Plan, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 29, 2023.

14.1 (*)		Code of Business Conduct and Ethics of Starco Brands, Inc., filed as Exhibit 14.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 28, 2023.

21.1 (#)		Subsidiaries of the Company.

31.1 (#)		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).

31.2 (#)		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).

32.1 (#)(##)		Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

32.2 (#)(##)		Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

101.INS		Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(#)	Filed herewith.

(*)	Incorporated by reference to the filing indicated.

(+)	In accordance with Item 601(a)(5) of Regulation S-K, certain schedules (or similar attachments) to this exhibit may have been omitted from this filing. The Registrant will provide a copy of any omitted schedule to the SEC or its staff upon request. In accordance with Item 601(b)(10)(iv) of Regulation S-K, certain provisions or terms of the Agreement may have been redacted. The Registrant will provide an unredacted copy of the exhibit on a supplemental basis to the SEC or its staff upon request.

†	Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

(##)	The certifications attached as Exhibits 32.1 and 32.2 that accompany this report, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Starco Brands, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this report irrespective of any general incorporation language contained in such filing.

	STARCO BRANDS, INC.

Dated: April 3, 2024	By:	/s/ Ross Sklar
		Ross Sklar
		Chief Executive Officer

Signature	Capacity	Date

/s/ Ross Sklar	Chief Executive Officer and Director
Ross Sklar	(Principal Executive and Financial Officer)	April 3, 2024

/s/ Kevin Zaccardi	Interim-Chief Financial Officer
Kevin Zaccardi	(Principal Financial and Accounting Officer)	April 3, 2024

/s/ Darin Brown	Director	April 3, 2024
Darin Brown

	Director	April 3, 2024
Demir Vangelov

	Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB FIRM ID 324)	F-2

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022	F-4

Consolidated Statements of Operations for the Years Ended December 31, 2023 and December 31, 2022	F-5

Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2023 and December 31, 2022	F-6

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and December 31, 2022	F-7

Notes to Consolidated Financial Statements for the Years Ended December 31, 2023 and December 31, 2022	F-8

	●	We evaluated whether the purchase price allocation to the assets acquired, and liabilities assumed, including the residual amount allocated to goodwill, were recorded appropriately.
	●	We tested the Company’s identification of the assets acquired and liabilities assumed by reading the acquisition agreement, performing audit procedures on such acquired balances and comparing the categories of such assets and liabilities which were recorded in the purchase price allocation to the acquisition agreement.
	●	We evaluated the reasonableness of the key assumptions by comparing them to (1) internal communications to management and the Board of Directors and (2) information included in the Company’s external communications.
	●	We evaluated significant assumptions based on the Company’s intent and ability to carry out a particular course of action to determine the reasonableness of the assumption.
	●	We involved our valuation professionals to assist in our evaluation of the significant assumptions used to develop the fair value estimates.

	●	We obtained an understanding of the process over the Company’s goodwill impairment review, including review of the significant inputs and assumptions used in determining the reporting unit fair values.
	●	To test the estimated fair value of the Company’s reporting unit, we performed audit procedures that included, among others, assessing fair value estimation methodologies, testing the significant assumptions discussed above and the completeness and accuracy of the underlying data used by the Company in its analysis.
	●	We compared the significant assumptions used by management to historical financial results of the reporting unit and information generated by external parties.
	●	We evaluated significant assumptions based on the Company’s intent and ability to carry out a particular course of action to determine the reasonableness of the assumption.
	●	We involved our valuation professionals to assist in our evaluation of the significant assumptions used to develop the fair value estimates.
	●	We also evaluated the reconciliation of the estimated aggregate fair value of the reporting units to the market capitalization of the Company.

	December 31, 2023			December 31, 2022
	For the Year Ended
	December 31, 2023			December 31, 2022

Revenue, $11,696,722 and $6,786,051 from related parties, for the years ended December 31, 2023 and December 31, 2022, respectively, net	$	65,211,238		$	7,812,728

Cost of goods sold		37,431,277			776,127

Gross profit	$	27,779,961		$	7,036,601

Operating Expenses:
Compensation expense	$	15,899,492		$	1,175,267
Professional fees		5,861,649			1,822,927
Marketing, general and administrative		21,643,733			2,756,808
Marketing, related party		-			131,614
Fair value share adjustment loss (gain)		215,531			-
Goodwill impairment		29,612,700			-
Total operating expenses		73,233,105			5,886,616

(Loss) Income from operations		(45,453,144	)		1,149,985

Other Expense (Income):
Interest expense (income)		850,105			68,721
Other expense (income)		98,872			103,406
Total other expense (income)		948,977			172,127

(Loss) Income income before provision for income taxes	$	(46,402,121	)	$	977,858
Provision for income taxes		-			-

Net (loss) income	$	(46,402,121	)	$	977,858
Net income (loss) attributable to non-controlling interest		(210,871	)	$	167,891

Net (loss) income attributable to Starco Brands	$	(46,191,250	)	$	809,967

(Loss) income per share, basic	$	(0.10	)	$	0.00
(Loss) income per share, diluted				$	0.00

Weighted Average Shares Outstanding - Basic		447,083,254			178,679,069
Weighted Average Shares Outstanding - Diluted					192,927,018

	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Stock			Deficit			Interest			Payable			(Deficit)
	Preferred Stock				Class A Common Stock				Class B Common Stock				Additional Paid-in			Treasury			Accumulated			Non-controlling			Equity Consideration			Stockholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Stock			Deficit			Interest			Payable			(Deficit)
Balance at December 31, 2021		-	$	-		159,140,665	$	159,141		-	$	-	$	15,950,403		$	(394,200	)	$	(18,388,186	)	$	(73,909	)	$	-		$	(2,746,751	)

Estimated fair value of contributed services and stock-based compensation		-		-		1,611,960		1,611		-		-		736,179			-			-			-			-			737,790

Estimated fair value of warrants issued		-		-		-		-		-		-		582,360			-			-			-			-			582,360

Issuance of shares for cash		-		-		151,250		151		-		-		150,343			-			-			-			-			150,494

Recognition of deferred offering costs		-		-		-		-		-		-		(135,434	)		-			-			-			-			(135,434	)

Issuance of shares related to stock payable		-		-		728,570		729		-		-		600,000			-			-			-			-			600,729

Issuance of shares related to AOS acquisition		-		-		61,339,223		61,339		-		-		11,635,800			-			-			-			-			11,697,138

Equity payble related to AOS acquisition		-		-		-		-		-		-		-			-			-			-			946,149			946,149

Issuance of shares related to Skylar acquisition		-		-		68,461,762		68,462		-		-		13,663,235			-			-			-			-			13,731,697

Equity payble related to Skylar acquisition		-		-		-		-		-		-		-			-			-			-			6,168,364			6,168,364

Investment in Company		-		-		-		-		-		-		150,000			-			-			-			-			150,000

Net income		-		-		-		-		-		-		-			-			809,967			167,891						977,858

Balance at December 31, 2022		-	$	-		291,433,430	$	291,433		-	$	-	$	43,332,886		$	(394,200	)	$	(17,578,219	)	$	93,982		$	7,114,513		$	32,860,395
Balance		-	$	-		291,433,430	$	291,433		-	$	-	$	43,332,886		$	(394,200	)	$	(17,578,219	)	$	93,982		$	7,114,513		$	32,860,395

Estimated fair value of contributed services and stock-based compensation		-		-		270,838		270		-		-		1,923,492			-			-			-			-			1,923,762

Issuance of shares from Soylent acquisition		-		-		177,954,287		177,955		-		-		26,515,189			-			-			-			-			26,693,144

Equity payable from Soylent acquisition		-		-		-		-		-		-		-			-			-			-			2,446,380			2,446,380

Skylar purchase price acquistion adjustments		-		-		-		-		-		-		-			-			-			-			(482,380	)		(482,380	)

Soylent acquisition measurement period adjustment		-		-		-		-		-		-		6,672			-			-			-			-			6,672

Skylar Sephora Consideration		-		-		19,268,162		19,268		-		-		3,351,984			-			-			-			(3,371,252	)		-

Whipshots shares issued		-		-		-		-		-		-		-			-			-			8,627,273			-			8,627,273

Net loss		-		-		-		-		-		-		-			-			(46,191,250	)		(210,871	)		-			(46,402,121	)
Net income (loss)		-		-		-		-		-		-		-			-			(46,191,250	)		(210,871	)		-			(46,402,121	)

Balance at December 31, 2023		-		-		488,926,717		488,926		-		-		75,130,223			(394,200	)		(63,769,469	)		8,510,384			5,707,261			25,673,125
Balance		-	$	-		488,926,717	$	488,926		-	$	-	$	75,130,223		$	(394,200	)	$	(63,769,469	)	$	8,510,384		$	5,707,261		$	25,673,125

Level 1:	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2:	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3:	Pricing inputs that are generally unobservable inputs and not corroborated by market data.

	Carrying Value at December 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			Fair Value Measurement at Reporting Date Using
	Carrying Value at December 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Fair Value of Share Adjustment	$	36,931,330	$	-	$	-	$	36,931,330
Total Liabilities	$	36,931,330	$	-	$	-	$	36,931,330

	2023		2022
	Year Ended December 31,
	2023		2022

Warrants		39,350,000		-
Acquisition Stock Consideration Payable		232,850,684		-
Total		272,200,684		-