Quarterly Report for Quarter Ending SEPTEMBER 30, 2024 (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-54892

STARCO BRANDS, INC.

(Exact name of registrant as specified in its charter)

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

706 N Citrus Ave, Los Angeles, CA		90038
(Address of principal executive offices)		(Zip Code)

(323) 266-7111

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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. Yes☒ No ☐

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

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 ☐
Non-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 in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date: As of November 14, 2024, there were 647,431,696shares of the registrant's Class A common stock and zeroshares of the registrant's Class B common stock outstanding. On February 9, 2023, the registrant's "common stock" was renamed "Class A common stock" and a new class of common stock was created which was referred to as "Class B common stock". Throughout this report, any reference to common stock prior to February 9, 2023, shall represent the same number of Class A common stock following February 9, 2023.

STARCO BRANDS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION	3
ITEM 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	3
	Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023	4
	Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2024 and 2023	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	38
ITEM 4.	Controls and Procedures	38
PART II. OTHER INFORMATION	39
ITEM 1.	Legal Proceedings	39
ITEM 1A.	Risk Factors	39
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
ITEM 3.	Defaults Upon Senior Securities	39
ITEM 4.	Mine Safety Disclosures	40
ITEM 5.	Other Information	40
ITEM 6.	Exhibits	40
SIGNATURES	43

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STARCO BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

		September 30, 2024			December 31, 2023
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	1,615,676			$	1,761,225
Accounts receivable, net of allowance for credit losses of $53,479and $350,112, respectively			6,482,520				7,034,950
Accounts receivable, related parties			3,106,669				2,625,713
Prepaid expenses and other assets			4,596,553				3,138,162
Inventory			13,169,267				10,675,540
Total Current Assets			28,970,685				25,235,590
Property and equipment, net			267,080				58,159
Operating lease right-of-use asset			557,530				-
Intangibles, net			29,302,030				31,362,388
Goodwill			26,689,391				26,689,391
Total Assets		$	85,786,716			$	83,345,528
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	15,287,287			$	9,630,170
Accounts payable, related parties			803,848				168,870
Other payables and accrued liabilities			3,446,654				2,476,186
Accrued interest, related parties			-				5,681
Fair value of Share Adjustment			35,547,015				36,931,330
Treasury stock payable, current			-				65,700
Notes payable, $2,472,500and $4,472,500from related parties, respectively			2,609,396				4,559,219
Line of Credit			-				3,835,247
Lease liability, current portion			64,003				-
Total Current Liabilities			57,758,203				57,672,403
Lease liability, net of current portion			500,210				-
Revolving loan, net of discounts			5,470,705				-
Total Liabilities			63,729,118				57,672,403
Commitments and Contingencies (Note 7)
Stockholders' Equity:
Preferred stock, $.001par value; 230,000,000shares authorized; noshares issued and outstanding, at September 30, 2024 and December 31, 2023, respectively			-				-
Class A common stock, $.001par value; 1,700,000,000shares authorized; 647,431,696and 488,926,717shares issued and outstanding, at September 30, 2024 and December 31, 2023, respectively			647,432				488,926
Class B common stock, $.001par value; 300,000,000shares authorized noshares issued and outstanding, at September 30, 2024 and December 31, 2023, respectively			-				-
Additional paid in capital			99,087,928				75,130,223
Treasury stock at cost			(328,500	)			(394,200	)
Equity consideration payable			-				5,707,261
Accumulated deficit			(86,136,555	)			(63,769,469	)
Total Starco Brands' Stockholders' Equity			13,270,305				17,162,741
Non-controlling interest			8,787,293				8,510,384
Total Stockholders' Equity			22,057,598				25,673,125
Total Liabilities and Stockholders' Equity		$	85,786,716			$	83,345,528

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STARCO BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		For the Three Months Ended			For the Nine Months Ended
		September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Revenue		$	14,006,349			$	15,209,504			$	41,816,348			$	38,124,740
Revenue, related parties			1,480,007				2,463,542				4,731,430				8,201,377
Cost of goods sold			8,131,015				9,178,845				24,563,628				24,348,693
Cost of goods sold, related parties			968,934				752,424				2,879,614				1,663,124
Gross profit		$	6,386,407			$	7,741,777			$	19,104,536			$	20,314,300
Operating Expenses:
Compensation expense		$	2,185,256			$	1,811,832			$	7,195,932			$	5,285,421
Professional fees			434,698				1,380,680				2,771,608				4,177,424
Marketing, general and administrative			4,236,433				4,955,578				14,073,064				12,947,350
Fair value share adjustment loss (income)			5,105,535				(3,144,411	)			15,703,049				2,751,360
Total operating expenses, net			11,961,922				5,003,679				39,743,653				25,161,555
(Loss) income from operations			(5,575,515	)			2,738,098				(20,639,117	)			(4,847,255	)
Other Expense (Income):
Interest expense			303,155				255,775				711,304				617,289
Other expense (income)			378,418				121,072				739,756				(211,802	)
Total other expense, net			681,573				376,847				1,451,060				405,487
(Loss) income before provision for income taxes		$	(6,257,088	)		$	2,361,251			$	(22,090,177	)		$	(5,252,742	)
Provision for income taxes			-				-				-				-
Net (loss) income		$	(6,257,088	)		$	2,361,251			$	(22,090,177	)		$	(5,252,742	)
Net income attributable to non-controlling interest		$	87,838			$	34,221			$	276,909			$	160,014
Net (loss) income attributable to Starco Brands		$	(6,344,926	)		$	2,327,030			$	(22,367,086	)		$	(5,412,756	)
(Loss) income per share, basic		$	(0.01	)		$	0.00			$	(0.04	)		$	(0.01	)
(Loss) income per share, diluted		$	(0.01	)		$	0.00			$	(0.04	)		$	(0.01	)
Weighted Average Shares Outstanding - Basic			647,431,696				469,550,215				617,637,335				439,484,590
Weighted Average Shares Outstanding - Diluted			647,431,696				873,264,758				617,637,335				439,484,590

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STARCO BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Unaudited)

		Class A Common Stock			Class B Common Stock			Additional Paid-in			Treasury			Accumulated			Non-controlling			Equity Consideration			Stockholders'
		Shares			Amount			Shares			Amount			Capital			Stock Payable			Deficit			Interest			Payable			Equity (Deficit)
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
Estimated fair value of contributed services and stock-based compensation			81,249				81				-				-				480,718				-				-				-				-				480,799
Issuance of shares from Soylent acquisition			177,954,287				177,955				-				-				26,515,189				-				-				-				-				26,693,144
Equity payable from Soylent acquisition			-				-				-				-				-				-				-				-				2,785,714				2,785,714
Skylar purchase price acquisition adjustments			-				-				-				-				-				-				-				-				(482,380	)			(482,380	)
Net income			-				-				-				-				-				-				(1,721,546	)			58,416				-				(1,663,130	)
Balance at March 31, 2023			469,468,966			$	469,469				-			$	-			$	70,328,793			$	-			$	(19,299,765	)		$	152,398			$	9,417,847			$	60,674,542
Estimated fair value of contributed services and stock-based compensation			81,249				81				-				-				538,957				-				-				-				-				539,038
Soylent acquisition measurement period adjustment			-				-				-				-				(38,041	)			-				-				-				-				(38,041	)
Net income			-				-				-				-				-				-				(6,018,240	)			67,377				-				(5,950,863	)
Balance at June 30, 2023			469,550,215			$	469,550				-			$	-			$	70,829,709			$	(394,200	)		$	(25,318,005	)		$	219,775			$	9,417,847			$	55,224,676
Estimated fair value of contributed services and stock-based compensation			81,249				81				-				-				477,319				-				-				-				-				477,400
Soylent acquisition measurement period adjustment			-				-				-				-				1,463,348				-				-				-				-				1,463,348
Net income			-				-				-				-				-				-				2,327,030				34,221				-				2,361,251
Balance at September 30, 2023			469,631,464			$	469,631				-			$	-			$	72,770,376			$	(394,200	)		$	(22,990,975	)		$	253,996			$	9,417,847			$	59,526,675
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
Stock-based compensation			-				-				-				-				483,466				-				-				-				-				483,466
Soylent Share Adjustment			133,087,875				133,088				-				-				17,966,863				-				-				-				-				18,099,951
Equity payable related to Soylent acquisition			16,309,203				16,309				-				-				2,430,071				-				-				-				(2,446,380	)			-
Equity payable related to AOS acquisition			4,979,731				4,980				-				-				941,169				-				-				-				(946,149	)			-
Share repurchase											-				-				-				65,700				-				-				-				65,700
Net loss			-				-				-				-				-				-				(4,462,678	)			192,122				-				(4,270,556	)
Balance at March 31, 2024			643,303,526			$	643,303				-			$	-			$	96,951,792			$	(328,500	)		$	(68,232,147	)		$	8,702,506			$	2,314,732			$	40,051,686
Stock-based compensation			-				-												416,821				-				-				-				-				416,821
Soylent Share Adjustment			(7,445,490	)			(7,445	)										(1,005,142	)			-				-				-				-				(1,012,587	)
Equity payable related to Skylar acquisition			11,573,660				11,574											2,303,158				-				-				-				(2,314,732	)			-
Net loss			-				-				-				-				-				-				(11,559,482	)			(3,051	)			-				(11,562,533	)
Balance at June 30, 2024			647,431,696			$	647,432				-			$	-			$	98,666,629			$	(328,500	)		$	(79,791,629	)		$	8,699,455			$	0			$	27,893,387
Stock-based compensation			-				-				-				-				421,299				-				-				-				-				421,299
Net (loss) income			-				-				-				-				-				-				(6,344,926	)			87,838				-				(6,257,088	)
Balance at September 30, 2024			647,431,696			$	647,432				-			$	-			$	99,087,928			$	(328,500	)		$	(86,136,555	)		$	8,787,293			$	0			$	22,057,598

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STARCO BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Unaudited)

		For the Nine Months Ended
		September 30, 2024			September 30, 2023
Cash Flows From Operating Activities:
Net loss		$	(22,090,177	)		$	(5,252,742	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Contributed services			-				45,450
Stock-based compensation			1,321,586				1,440,175
Depreciation			10,729				12,718
Amortization of intangible assets			2,127,035				1,728,995
Amortization of debt discount			62,736				70,751
Loss on stock payable share adjustment			15,703,049				2,751,360
Changes in operating assets and liabilities:
Accounts receivable			552,430				(2,327,559	)
Accounts receivable, related parties			(480,956	)			(70,188	)
Prepaid expenses and other assets			(1,458,391	)			98,634
Inventory			(2,493,727	)			(1,630,204	)
Operating lease right-of-use asset			(557,530	)			61,353
Accounts payable			5,657,117				2,512,173
Accounts payable, related parties			634,978				-
Other payables and accrued liabilities			970,468				335,148
Accrued interest, related parties			(5,681	)			(1,279	)
Operating lease liability			564,213				(61,605	)
Net Cash Provided By/(Used In) Operating Activities			517,879				(286,820	)
Cash Flows From Investing Activities:
Cash acquired in Acquisition of Business, net of cash paid			-				68,062
Purchases of intangibles			(66,677	)			(233,108	)
Purchases of property & equipment			(219,650	)			(18,600	)
Net Cash Used In Investing Activities			(286,327	)			(183,646	)
Cash Flows From Financing Activities:
Payments to/receipts from related parties			(2,000,000	)			800,000
Proceeds from notes receivable			-				95,640
Proceeds from notes payable			282,317				115,340
Payments to notes payable			(232,140	)			(62,002	)
Issuance of common stock for business acquisition			-				(177,954	)
Proceeds from Line of Credit			-				1,220,000
Payments to Line of Credit			(3,835,247	)			(1,356,500	)
Proceeds from Revolving Loan			22,875,601				-
Payments for Revolving Loan			(17,467,632	)			-
Repurchase of common stock			-				(98,550	)
Net Cash (Used In)/Provided By Financing Activities			(377,101	)			535,974
Net (Decrease)/ Increase In Cash			(145,549	)			65,508
Cash - Beginning of Period			1,761,225				1,480,371
Cash - End of Period		$	1,615,676			$	1,545,879
Supplemental Cash Flow Information:
Cash paid for:
Interest paid		$	648,558			$	460,029
Income taxes		$	-			$	-
Noncash investing and financing activities:
Settlement of Soylent share adjustment		$	18,099,951			$	-
Estimated fair value of shares issued in acquisitions		$	-			$	28,118,450
Estimated fair value of shares payable to be issued for acquisitions		$	-			$	39,929,075
Debt discount on notes payable issued with warrants		$	-			$	18,282

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STARCO BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Starco Brands, Inc. (STCB) was incorporated in the State of Nevada on January 26, 2010, under the name Insynergy, Inc. On September 7, 2017, STCB filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc. The Board of Directors (the "Board") determined the change of STCB's name was in the best interests of the Company due to changes in its current and anticipated business operations. In July 2017, STCB entered into a licensing agreement with The Starco Group ("TSG"), located in Los Angeles, California. The companies pivoted to commercializing novel consumer products manufactured by TSG. TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine.

During the third quarter of 2021, STCB formed two subsidiaries, Whipshots, LLC, a Wyoming limited liability company ("Whipshots LLC") and Whipshots, LLC, a Delaware limited liability company that was subsequently renamed Whipshots Holdings, LLC ("Whipshots Holdings"). Whipshots LLC was a wholly-owned subsidiary of STCB at formation which was subsequently contributed to Whipshots Holdings. Whipshots Holdings is a majority-owned subsidiary of STCB in which STCB owns 85% of the vested voting interests. There are vested interests not owned by the Company for an additional 15% of the equity which has been issued.

On September 12, 2022, STCB, through its wholly-owned subsidiary Starco Merger Sub Inc. ("Merger Sub"), completed its acquisition (the "AOS Acquisition") of The AOS Group Inc., a Delaware corporation ("AOS"). The AOS Acquisition consisted of Merger Sub merging with and into AOS, with AOS being the surviving corporation. AOS is a wholly-owned subsidiary of STCB.

On December 29, 2022, STCB, through its wholly-owned subsidiary Starco Merger Sub II. Inc. ("First Merger Sub") completed its acquisition (the "Skylar Acquisition") of Skylar Body, Inc. ("Skylar Inc."). The Skylar Acquisition consisted of First Merger Sub merging with and into Skylar Inc. ("First Merger") with Skylar Inc. being the surviving corporation, and immediately following the First Merger, and as part of the same overall transaction as the First Merger, Skylar Inc. merged with and into Second Merger Sub (the "Second Merger") with the Second Merger Sub being the surviving entity Skylar Body, LLC ("Skylar"). Skylar is a wholly-owned subsidiary of STCB.

On February 15, 2023, the Company, through its wholly-owned subsidiary Starco Merger Sub I, Inc. ("Starco Merger Sub I"), completed its acquisition (the "Soylent Acquisition") of Soylent Nutrition, Inc., a Delaware corporation ("Soylent"). The Soylent Acquisition consisted of Starco Merger Sub I merging with and into Soylent, with Soylent being the surviving corporation. Soylent is a wholly-owned subsidiary of STCB.

The accompanying consolidated financial statements are of STCB and its subsidiaries AOS, Skylar, Soylent, Whipshots Holdings and its wholly owned subsidiary Whipshots LLC (collectively, the "Company").

On January 3, 2023, the Board of the Company approved the Amended and Restated Articles of Incorporation of Starco Brands, Inc. (the "Amended and Restated Articles). On January 6, 2023, the stockholders of the Company representing 53.47% of the Company's outstanding common stock adopted the Amended and Restated Articles. On February 9, 2023, the Company filed the Amended and Restated Articles, which, among other things, (i) increased the authorized shares of common stock, par value $0.001per share, from 300,000,000shares (the "Old Common Stock") to 2,000,000,000shares, (ii) established two classes of Common Stock, consisting of (y) 1,700,000,000shares of Class A common stock, par value $0.001per share ("Class A common stock"), and (z) 300,000,000shares of Class B common stock, par value $0.001per share and (iii) reclassified all issued, outstanding or authorized Old Common Stock of the Company into Class A common stock on a one-for-one basis. As a result, following the filing of the Amended and Restated Articles with the Nevada Secretary of State, the Company's prior "common stock" was renamed Class A common stock on its trading symbol.

NOTE 2 - GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company identified that a substantial doubt exists related to the Company's ability to meet its obligations as they become due within one year of the date of the financial statements being issued. Principal conditions that gave rise to this substantial doubt include historical net losses as indicated by the Company's accumulated deficit of approximately $86,100,000at September 30, 2024, which includes the impact of its net losses of $6,257,088and $22,090,177 for the three and nine months ended September 30, 2024, and total debt on the balance sheet of $8,080,101as of September 30, 2024, with a small portion of the debt coming due within one year of the date of the financial statements being issued. Management evaluated the principal conditions that initially give rise to the substantial doubt and note that the historical net losses and accumulated deficit impact are justified as they are primarily made up of non-cash expenses or one-time non-recurring expenses, such as goodwill impairment, stock-based compensation expense, fair value share adjustment loss and acquisition transaction expenses. Total debt of $8,080,101on the balance sheet as of September 30, 2024 includes $2,472,500of notes payable to Ross Sklar ("Sklar"), who has a large minority ownership of the Company that provides incentive for Mr. Sklar to extend or refinance the notes before the notes become due, as seen historically (see Note 8). Management plans include (i) continuing to increase net cash provided by operating activities, which was $517,879for the nine months ended September 30, 2024, while decreasing net cash provided by financing activities, and (ii) obtaining an alternative financing source to pay off all current debt outstanding and to provide additional working capital, if needed. To achieve these objectives, management has proposed and approved plans to increase top line revenue for each segment while decreasing overall expenses as a percentage of revenue, as a result of realizing synergies from the acquisitions of AOS, Skylar and Soylent, and utilizing the Company's back-end shared service model to reduce expenses. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the aforementioned uncertainties.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The condensed consolidated financial statements of Starco Brands, Inc. include the accounts of STCB, our wholly owned subsidiary AOS, our wholly owned subsidiary Skylar, our wholly owned subsidiary Soylent, and our 85% owned subsidiary Whipshots Holdings and its wholly owned subsidiary, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with Accounting Standards Codification ("ASC") 810, Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the condensed consolidated financial statements.

Our consolidated subsidiaries at September 30, 2024 include: AOS, Skylar, Soylent, Whipshots Holdings and its wholly owned subsidiary Whipshots LLC. Intercompany accounts and transactions have been eliminated upon consolidation.

Basis of Presentation

The condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and do not contain certain information included in the Company's Annual Report and Form 10-K for the year ended December 31, 2023. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-K.

Reclassification

During the first quarter of 2024, the Company discovered a misclassification of expenses related to outbound shipping, product fulfilment, and warehouse costs; such had been grouped under Marketing, general and administrative expenses (which are part of operating expenses) during the year ended December 31, 2023. Management determined that these expenses should have been classified as Cost of goods sold and the current period financials reflect the appropriate classification. To allow for the conformity of presentation of the prior period financial statements to the current period financial statements, and to maintain comparability among the periods presented in compliance with U.S. GAAP, the Company has reclassified the prior year expenses as presented below:

		Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Account		Previously Recorded Balance			Corrected Balance			Reclassification Made			Previously Recorded Balance			Corrected Balance			Reclassification Made
Statement of Operations
Cost of goods sold			9,364,322	(1)			9,931,269	(1)			(566,947	)			24,710,535				26,011,817				(1,301,282	)
Marketing, general and administrative			5,522,525				4,955,578				566,947				14,248,632				12,947,350				1,301,282

(1)	Note that the balance referenced is the sum of the cost of goods sold and the cost of goods sold, related parties accounts.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and equity-based transactions at the date of the financial statements and the revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the condensed consolidated financial statements. Significant estimates include the timing for revenue recognition, testing goodwill for impairment, recoverability of long-lived assets, income taxes and related valuation allowances, fair value of contributed services, and assumptions used in the Black-Scholes valuation methods, such as expected volatility, risk-free interest rate and expected dividend rate.

Concentrations of Credit Risk

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were nocash equivalents as of September 30, 2024 or December 31, 2023.

Accounts Receivable

We measure accounts receivable at net realizable value. This value includes an appropriate allowance for credit losses to present the net amount expected to be collected on the financial asset. We calculate the allowance for credit losses based on available relevant information, in addition to historical loss information, the level of past-due accounts based on the contractual terms of the receivables, reasonable and supportable forecasts, and our relationships with, and the economic status of, our partners and customers. The allowance for credit losses is evaluated quarterly, which is $53,479and $350,112as of September 30, 2024 and December 31, 2023.

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph 820-10-35-37") to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

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.

The carrying amount of the Company's condensed consolidated financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable, prepaid expenses, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company's notes payable approximate the fair value of such instruments based upon management's best estimate of interest rates that would be available to the Company for similar financial arrangements at September 30, 2024 and December 31, 2023.

The following table summarizes the financial instruments of the Company at fair value based on the valuation approach applied to each class of security as of September 30, 2024:

					Fair Value Measurement at Reporting Date Using
		Carrying Value at September 30, 2024			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 potential Share Adjustment		$	35,547,015			$	-			$	-			$	35,547,015
Total Liabilities		$	35,547,015			$	-			$	-			$	35,547,015

Pursuant to the Soylent Acquisition, the Company may be required to issue the Share Adjustment (as defined in Note 5) to the former owners of Soylent based upon the stock price of the Company on the Adjustment Date (as defined in Note 5). The Company engaged a third-party valuation firm to estimate the fair value of this contingent liability by performing a Monte Carlo simulation to forecast the value of the Company's stock and the implied value of the Share Adjustment. See NOTE 5 - ACQUISITIONS for further discussion. The fair value of the share adjustment on the Soylent Acquisition date was $36,715,800. The inputs to estimate the fair value of the share adjustment were the market price of the Company's common stock, the option expected term, the volatility of the Company's common stock price and the risk-free interest rate. Significant changes to any unobservable input may result in a significant change in the fair value measurement.

The following table presents a reconciliation of the opening and closing balances of the Fair Value of Share Adjustment for the nine months ended September 30, 2024:

		Fair Value of Share Adjustment
Balance at December 31, 2023		$	36,931,330
Fair Value of Shares Issued			(17,087,364	)
Loss on Fair Value of Share Adjustment			15,703,049
Balance at September 30, 2024		$	35,547,015

Property and Equipment, net

Property and equipment are recorded at historical cost, net of depreciation. All property and equipment with a cost of $2,000or greater are capitalized. Depreciation is computed using straight-line over the estimated useful lives of the related assets. Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Maintenance and repairs are expensed as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.

Revenue Recognition

STCB, excluding its subsidiaries, earns a majority of its revenues through the sale of food products, primarily through Winona. Revenue from retail sales is recognized at shipment to the retailer.

AOS, one of STCB's wholly owned subsidiaries, earns its revenues through the sale of premium body and skincare products. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, including Amazon Fulfilment by Amazon ("Amazon FBA"), is recognized upon shipment of merchandise.

Skylar, one of STCB's wholly owned subsidiaries, earns its revenues through the sale of fragrances. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, including Amazon FBA, is recognized upon shipment of merchandise.

Soylent, one of STCB's wholly owned subsidiaries, earns its revenues through the sale of nutritional drinks. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, is recognized upon shipment of merchandise.

Whipshots Holdings, an 85% owned subsidiary, earns its revenues as royalties from the licensing agreements it has with Temperance, a related entity. STCB licenses the right for Temperance to manufacture and sell vodka infused whipped cream. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is based on contractual terms. The Company recognizes its revenue under these licensing agreements only when sales are made by Temperance to a third party.

The Company applies the requirements of ASC 606, Revenue from Contracts with Customers, which includes the following five-step model in order to determine the recognition of revenue: (i) Identify the contract with a customer; (ii) Identify the performance obligation in the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25") with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the condensed consolidated financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Stock-based Compensation

The Company accounts for stock-based compensation per the provisions of ASC 718, Share-based Compensation ("ASC 718"), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatilities are based on the volatility of comparable companies' common stock. The expected term of awards granted is derived using estimates based on the specific terms of each award. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.

Net Income (Loss) Per Common Share

Net income (loss) per share of common stock is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the year. All outstanding options are considered potential common stock. The dilutive effect, if any, of stock payable and warrants are calculated using the treasury stock method. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, outstanding warrants have been excluded from the Company's computation of net loss per share of common stock for the three and nine months ended September 30, 2024 and 2023.

The following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company's net loss position even though the exercise price could be less than the average market price of the common stock:

		Nine Months Ended September 30,
		2024			2023
Warrants			39,350,000				39,350,000
Stock options			4,760,000				-
Acquisition Stock Consideration Payable			366,464,075				325,785,637
Total			410,574,075				365,135,637

Intangible Assets

Definite-lived intangible assets consist of certain domain names. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets' estimated useful lives, which approximate 10-16years.

Indefinite-lived intangible assets consist of certain trademarks and formula lists. These intangible assets are not amortized but are tested for impairment annually or whenever impairment indicators exist.

The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group's carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic 820, Fair Value Measurements. During the nine months ended September 30, 2024 and 2023, the Company did not record asset impairment charges related to its intangible assets.

Royalties and Licenses

Royalty-based obligations with content licensors are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made are generally made in connection with the development of a particular product, and therefore, we are generally subject to risk during the product phase. Payments earned after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract.

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through future revenue. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If an impairment exists, then the related assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

Our minimum contractual royalty-based obligations remaining as of September 30, 2024 are approximately $412,500, and are $20,000for each of the years ending December 31, 2024, 2025, and 2026.

Leases

With the adoption of ASC 842, operating lease agreements are required to be recognized on the balance sheet as Right-of-Use ("ROU") assets and corresponding lease liabilities. ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

AOS, the Company's wholly owned subsidiary leased its corporate office ("AOS Lease"). The AOS Lease was classified as an operating lease and had a term of 2years, for approximately 1,372square feet of office space located in West Hollywood, California. The lease expired in September 2023 and had a monthly base rental of $7,564which increased 4% each year. At the end of the lease term in September 2023, the Company did not renew the lease. In March 2022, AOS entered into a sublease, whereby, the sublessor took over the entire AOS Lease office space and the lease payment until the completion of the original AOS Lease term.

On May 1, 2024, the Company entered into a three-year lease agreement (the "Citrus Lease") with a lessor who is a related party (see Note 8 for additional information) for the rental of the second and third floors of a premise containing approximately 3,000square feet located at 706 N. Citrus Ave, Los Angeles, CA 90038. The lease was classified as an operating lease and has a monthly base rent of $10,000per month, with a base rent increase of 5% each year. There is an option for the Company to renew for an additional three years with notice given within 90 days before the end of the term.

In accordance with ASC 842, Leases, the Company recognized an ROU asset and corresponding lease liability on the condensed consolidated balance sheet for long-term office leases. See Note 11 - Leases for further discussion, including the impact on the condensed consolidated financial statements and related disclosures.

Inventory

Inventory consists of premium body and skincare products, fragrances and nutritional products. Inventory is measured using the first-in, first-out method and stated at average cost as of September 30, 2024. The value of inventories is reduced for excess and obsolete inventories. We monitor inventory to identify events that would require impairment due to obsolete inventory and adjust the value of inventory when required. We did not record any inventory impairment losses for the nine months ended September 30, 2024 and 2023.

Acquisitions, Intangible Assets and Goodwill

The condensed consolidated financial statements reflect the operations of an acquired business beginning as of the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values at the date of acquisition; goodwill is recorded for any excess of the purchase price over the fair values of the net assets acquired. Significant judgment is required to determine the fair value of certain tangible and intangible assets and in assigning their respective useful lives. Accordingly, we typically obtain the assistance of third-party valuation specialists for significant tangible and intangible assets. The fair values are based on available historical information and on future expectations and assumptions deemed reasonable by management but are inherently uncertain. The Company typically employs an income method to measure the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability), the underlying product or technology life cycles, economic barriers to entry and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances could affect the accuracy or validity of the estimates and assumptions. Determining the useful life of an intangible asset also requires judgment. Intangible assets are amortized over their estimated lives. Any intangible assets associated with acquired in-process research and development activities ("IPR&D") are not amortized until a product is available for sale.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.

We review goodwill for impairment at least annually or more frequently if indicators of impairment exist. Our goodwill impairment test may require the use of qualitative judgements and fair-value techniques, which are inherently subjective. Impairment loss, if any, is recorded when the fair value of a reporting unit's goodwill is less than its carrying value.

Noimpairment losses related to goodwill were recognized for the nine months ended September 30, 2024 and 2023. As of September 30, 2024 and December 31, 2023 goodwill was $26,689,391and $26,689,391, respectively.

Segments

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company's Chief Executive Officer ("CEO") is the Company's chief operating decision maker ("CODM") and views the Company's operations and manages its business in three reportable operating segments: (i) Starco Brands, which includes AOS, Whipshots Holdings and Whipshots LLC, (ii) Skylar, and (iii) Soylent. The CODM assesses performance of operating segments and determines the allocation of resources based primarily on gross profit as a whole.

Recently Issued Accounting Pronouncements

All newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

NOTE 4 - SEGMENTS

The Company has the following reportable segments:

Starco Brands. The Starco Brands segments generate revenue through the development and sales of consumer good products. The Starco Brands segment includes STCB, AOS, Whipshots Holdings and Whipshots LLC.

Skylar. The Skylar segment generates revenue through the sale of fragrances.

Soylent. The Soylent segment generates revenue through the sale of nutritional products, mainly drinks.

Balance sheet data are reviewed by the CODM on a consolidated basis; therefore, disaggregated balance sheet data are not presented.

The following tables present gross profit by reporting segment:

		Nine Months Ended September 30, 2024
		Starco Brands			Skylar			Soylent			Total
Gross revenues		$	4,288,376			$	7,160,264			$	30,367,708			$	41,816,348
Gross revenues, related parties			4,731,430				-				-				4,731,430
Cost of revenues			569,540				2,750,835				21,243,253				24,563,628
Cost of revenues, related parties			2,879,614				-				-				2,879,614
Gross profit		$	5,570,652			$	4,409,429			$	9,124,455			$	19,104,536

		Nine Months Ended September 30, 2023
		Starco Brands			Skylar			Soylent1			Total
Gross revenues		$	3,124,878			$	7,438,654			$	27,561,208			$	38,124,740
Gross revenues, related parties			8,201,377				-				-				8,201,377
Cost of revenues			898,223				3,138,661				20,311,809				24,348,693
Cost of revenues, related parties			1,663,124				-				-				1,663,124
Gross profit		$	8,764,908			$	4,299,993			$	7,249,399			$	20,314,300

1	The Company does not report results for Soylent prior to the date of acquisition, February 15, 2023, as Soylent was not yet a subsidiary of the Company.

NOTE 5 - ACQUISITIONS

Soylent Acquisition

On February 15, 2023, the Company, through its wholly-owned subsidiary Starco Merger Sub I completed the Soylent Acquisition. The Soylent Acquisition consisted of Starco Merger Sub I merging with and into Soylent, with Soylent being the surviving corporation. Soylent is the maker of a wide range of plant-based "complete nutrition" and "functional food" products with a lineup of plant-based convenience shakes, powders and bars that contain proteins, healthy fats, functional amino acids and essential nutrients. Through its relationship with TSG and other strong partners, the Company has access to intellectual property that will allow Soylent to vertically integrate manufacturing and expand, positioning Soylent to be the future of nutritional products. The Soylent Acquisition was completed through a cash and stock deal, where the Company paid $200,000in cash as reimbursement of Soylent's closing expenses and the Company's shares were issued at $0.15per share, which amount was equal to the fair value of the stock on the acquisition date. As consideration for the Soylent Acquisition, the Company reserved an (a) aggregate of up to 165,336,430restricted shares of Class A common stock to Soylent shareholders, (b) 12,617,857restricted shares of Class A common to satisfy existing Soylent change in control obligations, (c) up to 18,571,429additional restricted shares of Class A common stock based on final determination of calculations of Soylent's working capital, cash at closing, indebtedness at closing and certain unpaid transaction expenses in excess of the amount reimbursed by the Company (the "Opening Balance Holdback"), and (d) an adjustment to the shares of Class A common stock received by the Company Holders (as defined in the agreement) in the event that the trading price for STCB's Class A common stock price per share on the first anniversary of the closing date (February 14, 2024, or the "Adjustment Date") is below $0.35per share of Class A common stock. If, on the Adjustment Date, STCB's Class A common stock is trading below $0.35per share of Class A common stock, STCB shall issue additional shares of Class A common stock based on the Closing Merger Consideration (as defined in the Soylent Acquisition merger agreement (the "Soylent Merger Agreement") after adjustments divided by the trading price (which must be below $0.35per share for any additional shares to be issued) minus the total share issuance after adjustments (such additional shares, the "Share Adjustment").

On March 15, 2024, the Company and certain former stockholders of Soylent and current stockholders of the Company's Class A common stock (the "Consenting Stockholders"), entered into a stockholder agreement ("Stockholder Agreement") with the Company, which modified the treatment of certain terms of the Soylent Merger Agreement with respect to the Consenting Stockholders. The Stockholder Agreement (i) revises the calculation for the Consenting Stockholders' respective pro rata share of the Share Adjustment (as defined in the Soylent Merger Agreement) to utilize a customary 30-day moving volume-weighted average price ("VWAP") in calculating the price per share of the Class A common stock at each adjustment date, and (ii) bifurcates the calculation for Consenting Stockholders' respective pro rata share of the Share Adjustment into two adjustments, the first adjustment calculable based on the VWAP ending February 14, 2024 ("First Adjustment Date"), and the second adjustment calculable based on the VWAP ending May 15, 2025 ("Second Adjustment Date"). Generally, if the trading price of the Acquiror Common Stock (as defined in the Soylent Merger Agreement) based on the VWAP, is below $0.35per share on each of February 14, 2024 and May 15, 2025, then, at no additional cost to the Consenting Stockholders, additional shares of Acquiror Common Stock are issuable based on the calculation methodology set forth in the Stockholder Agreement. As of the date of this filing, and including joinders to the Stockholder Agreement signed subsequent to March 15, 2024, the Consenting Stockholders represent approximately 92.7% of the total shares held by all former stockholders of Soylent issued pursuant to the Soylent Merger Agreement. Certain other former stockholders of Soylent may sign joinders to the Stockholder Agreement following the date of this filing.

The fair value of the rights to receive these shares was estimated by a third-party valuation firm to be $0.189per share on the acquisition date or an approximate share adjustment value of $36,715,800. At the time of filing the Company's Form 10-K for the year ended December 31, 2023, the Consenting Shareholders were assumed to represent approximately 85.3% of the total shares held by all former stockholders of Soylent issued pursuant to the Soylent Merger Agreement. As such, for the former Soylent shareholders (the "Soylent Shareholders") that were not expected to join the Stockholder Agreement, the fair value of the rights to receive these shares were $0.136per share on December 31, 2023, or the Company's stock price as of February 14, 2024, the "Adjustment Date", or a share adjustment value of $6,101,455. For the assumed Consenting Stockholders, the fair value of the rights to receive these shares was estimated by a third-party valuation firm to be $0.186per share on December 31, 2023 or an approximate share adjustment value of $30,829,876. Included in the Consenting Stockholders approximate share adjustment value of $30,829,876as of the same date, were the fair value rights to receive shares on the First Adjustment Date in the Stockholder Agreement of $15,506,101, or $0.16per share, the VWAP of the Company's stock price as of February 14, 2024.

Effective February 14, 2024, the First Adjustment Date, the Company settled $18,099,951of the $36,931,330fair value liability outstanding on December 31, 2023 by issuing 133,087,875shares of Class A common stock to the Soylent Shareholders as outlined in the Soylent Merger Agreement and Stockholder Agreement, as applicable. The total share adjustment value as of March 31, 2024 was $20,753,328. The settlement amount of $18,099,951included an adjustment for additional shareholders that agreed to amend their Stockholders Agreement subsequent to the filing of the December 31, 2023 financials. As a result of the additional signers, approximately 7.0million fewer shares were issued by the Company than were expected as of the filing date of the Form 10-K for the year ended December 31, 2023.

Effective May 20, 2024, it was determined, in accordance with the Soylent Merger Agreement, that 7,445,490shares of the 18,571,429shares of Class A common stock held back from the Soylent Shareholders were not due, the effect of which resulted in an adjustment to the liability of $1,012,587; in conjunction with an increase in the fair value of the derivative liability at period end, the total share adjustment value on the balance sheet as of June 30, 2024 was $30,441,480. The Company recorded an additional increase in the fair value of the derivative liability for the period ended September 30, 2024 to arrive at a total share adjustment value on the balance sheet of $35,547,015.

Effective February 14, 2024, the Company settled the Soylent Opening Balance Holdback by issuing 16,309,203shares of Class A common stock to the Soylent Shareholders as outlined in the Soylent Merger Agreement. The Soylent Opening Balance Holdback was recorded as equity consideration payable on the December 31, 2023 balance sheet in the amount of $2,446,380.

The Soylent Acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations.

Sklyar Acquisition

On December 29, 2022, STCB, through its wholly-owned subsidiaries First Merger Sub and Second Merger Sub, completed the "Skylar Acquisition." In a two-step process, during the First Merger, First Merger Sub merged with and into Skylar Inc. and as part of the same overall transaction, during the Second Merger, Skylar Inc. merged with and into Second Merger Sub to result in Skylar as the surviving entity. Skylar is a wholly-owned subsidiary of STCB. On December 31, 2023, 19,286,162shares were issued to the former shareholders of Skylar (the "Skylar Shareholders") as Skylar reached all earnout sales metrics outlined in the merger agreement (the "Skylar Merger Agreement").

Following the 18-month holdback period from the date of the Skylar Acquisition on December 29, 2022, the Company issued Skylar Shareholders an aggregate amount of 11,573,660shares of Class A common stock, for which it recorded an equity consideration payable on the balance sheet, which totaled $2,314,732as of June 30, 2024. Effective June 30, 2024, the Company settled the equity payable by issuing 11,573,660shares of Class A common stock to the Skylar Shareholders.

NOTE 6 - NOTES PAYABLE

Insurance Loans

The Company has several financing loans for general liability, directors and officers insurance and other insurance liabilities, which bear interest at varying percentages and require monthly payments. As of September 30, 2024, the remaining balance of these loans was $136,896. For the three months ended September 30, 2024 and 2023, these insurance loans incurred approximately $982 and $0, respectively, of interest expense, and for the nine months ended September 30, 2024 and 2023, these insurance loans incurred approximately $5,754 and $1,057, respectively, of interest expense.

Soylent Revolver

On February 10, 2023, the Company's subsidiary Soylent entered into a line of credit with a revolving credit commitment of $5,000,000. The revolving credit commitment bore interest at a rate per annum equal to the greater of (a) two and half percent (2.5%) and (b) prime rate plus one percent (1%) (the "Soylent Revolver"). The Soylent Revolver had a maturity date of February 10, 2024. If the Company defaults on the revolving credit commitment, the default interest rate will bear an additional interest at a fluctuating rate equal to five percent (5%) per annum higher than the applicable interest rate.

The Soylent Revolver matured on February 10, 2024 and was in default under the loan documents for failing to pay off the balance at maturity. The Company entered into an agreement with the bank to forbear the bank's rights to exercise its rights and remedies under the loan documents until June 10, 2024, for a forbearance fee of $57,590and payment of accrued interest of $10,009.

During April and May 2024, the Company made two principal payments totaling $3,063,995 to pay off the loan and as of June 30, 2024, the outstanding balance on the Soylent Revolver and the related accrued interest account are closed and are zero. During 2024, the Soylent Revolver incurred $125,578 of interest expense.

Gibraltar Loan and Security Agreement

On May 24, 2024, (i) Starco Brands, Inc., a Nevada corporation ("Starco" or the "Company"), (ii) and each of Starco's subsidiaries, Whipshots Holdings, LLC, a Delaware limited liability company ("Whipshots Holdings"), Whipshots, LLC, a Wyoming limited liability company ("Whipshots"), The AOS Group Inc., a Delaware corporation ("AOS Group"), Skylar Body, LLC, a Delaware limited liability company ("Skylar"), Soylent Nutrition, Inc., a Delaware corporation ("Soylent"; and together with Starco, Whipshots Holdings, Whipshots, AOS Group, Skylar, each individually, a "Borrower" and collectively, the "Borrowers"), and (iii) Gibraltar Business Capital, LLC, a Delaware limited liability company (the "Lender") entered into a Loan and Security Agreement (the "Loan and Security Agreement"), allowing Starco Brands to reduce a portion of its long term debt (including retiring the Soylent Revolver) and expand its access to working capital. Capitalized terms not otherwise defined will have the meanings set forth in the Loan and Security Agreement.

The Loan and Security Agreement provides for a revolving line of credit in the amount not to exceed $12.5million at any one time, or the Revolving Loan Commitment Amount in return for a first priority security interest in the Collateral. The Revolving Commitment Amount is supplemented by a Permitted Overadvance Amount of $1.5million. The first $1.5million in Revolving Loans drawn on this line will be considered permitted overadvances, and the Permitted Overadvance Amount shall be reduced by $125,000beginning on June 1, 2024, and the first day of each month thereafter. The aggregate principal balance of all Revolving Loans outstanding at any time shall not exceed the Revolving Loan Availability, which is equal to the lesser of the Revolving Loan Commitment Amount or the Borrowing Base Amount; if the aggregate principal balance does exceed the availability, the Company shall immediately make a repayment to eliminate such excess. The Revolving Line matures on May 24, 2026, and such Maturity Date will be automatically extended for one (1) year, subject to the satisfaction of certain terms and conditions described in the Loan and Security Agreement.

Each Revolving Loan advanced under the Revolving Loan Commitment bears interest at a rate per annum equal to One Month Term SOFR plus the Applicable Margin. If a Revolving Loan or any portion thereof is considered a part of the Permitted Overadvance Amount under the Loan and Security Agreement, the Applicable Margin for such loan shall be increased by an additional two percent (2.00%) per annum. Revolving Loans may be repaid at any time and reborrowed up to, but not including the Maturity Date. On the Maturity Date, the outstanding aggregate principal balance of all Revolving Loans shall be due and payable. The interest rate for the revolving loan was 10.00% as of September 30, 2024.

Accrued and unpaid interest on the unpaid principal balance of the Revolving Loans shall be due and payable commencing on June 1, 2024 and on the first date of each calendar month thereafter. All accrued and unpaid interest shall be due and payable on the maturity date.

Subject to the satisfaction of certain terms and conditions described in the Loan and Security Agreement, the Borrowers may request to increase the Revolving Loan Commitment by an aggregate amount not less than $1million not exceeding $2.5million. Such request may be accepted by Lender in its sole and absolute discretion.

The Loan and Security Agreement contains customary limitations, including limitations on indebtedness, liens, fundamental changes to business or organizational structure, investments, loans, advances, guarantees, and acquisitions, asset sales, dividends, stock repurchases, stock redemptions, and the redemption, payment or prepayment of other debt, and transactions with affiliates. We are also subject to financial covenants, including a minimum EBITDA covenant and a maximum Unfinanced Capital Expenditures covenant.

The Loan and Security Agreement also contains customary events of default, including nonpayment of principal, interest, fees, or other amounts when due, violation of covenants, breaches of representations or warranties, cross defaults, change of control, insolvency, bankruptcy events, and material judgments. Some of these events of default allow for grace periods or are qualified by materiality concepts. Upon the occurrence of an event of default, the outstanding obligations under the Loan and Security Agreement may be accelerated and become due and payable immediately. As of September 30, 2024, the Company was in compliance with all loan covenants relating to the agreement and the available borrowing amount was approximately $5.8million.

CEO Notes

See Note 8 - Related Party Transactions for loans to STCB from the Company's CEO.

NOTE 7- COMMITMENTS & CONTINGENCIES

Whipshots

On September 8, 2021, Whipshots LLC, a Wyoming limited liability company ("Whipshots LLC") entered into an Intellectual Property Purchase Agreement, effective August 24, 2021, with Penguins Fly, LLC, a Pennsylvania limited liability company ("Penguins"). The agreement provided that Penguins would sell the trademarks "Whipshotz" and "Whipshots", the accompanying domain and social media handles of the same nomenclature, and certain intellectual property, documents, digital assets, customer data and other transferable rights under non-disclosure, non-compete, non-solicitation and confidentiality contracts benefiting the purchased intellectual property and documents (collectively, the "Acquired Assets") to Whipshots LLC. The purchase price for the Acquired Assets will be payable to Penguins, over the course of seven years, based on a sliding scale percentage of gross revenues actually received by the Company solely from the sale of Whipshots/Whipshotz Products. The payment are subject to a minimum amount in each contract year and a maximum aggregate amount. In connection with this agreement the Company paid $20,000during 2021, zeroin 2022, $38,620in 2023 and $135,000in 2024, and the Company has accrued $229,725to be paid pursuant to this agreement in 2024 and 2025, all of which has been recorded as an indefinite-lived intangible asset.

On September 14, 2021, Whipshots Holdings, LLC (formerly Whipshots, LLC) a Delaware limited liability company ("Whipshots Holdings"), entered into a License Agreement (the "Washpoppin License Agreement") with Washpoppin Inc., a New York corporation ("Washpoppin"). Pursuant to the Washpoppin License Agreement, Washpoppin licensed certain Licensed Property (as defined therein) of the recording artist professionally known as "Cardi B" (the "Artist") to us. Whipshots Holdings and Washpoppin entered into an amended and restated Washpoppin License Agreement ("A&R Washpoppin License Agreement"), with an effective date of November 27, 2023. As part of the A&R Washpoppin License Agreement, in exchange for royalty rates based on Net Sales (as defined therein) during each applicable contract period, the Washpoppin warrants to cause the Artist to attend certain in person events, media interviews, participate in the development of the Licensed Products (as defined therein), and promote the Licensed Products through social media posts on the Artist's social media platforms. We have committed to a minimum royalty payment under the A&R Washpoppin License Agreement of an aggregate of $3,300,000 subject to Washpoppin's satisfaction of its obligations. During the three and nine months ended September 30, 2024, the Company incurred expenses related to this agreement of approximately $412,500 and $1,237,500, respectively, and during the three and nine months ended September 30, 2023, the Company incurred expenses related to this agreement of approximately $275,000 and $825,000, respectively.

NOTE 8 - RELATED PARTY TRANSACTIONS

During the year ended December 31, 2017, Sanford Lang, the Company's former Chairman and CEO, advanced STCB $289,821to pay for general operating expenses. The advance required a monthly interest payment of $2,545and was due on demand. In June 2021, Mr. Lang and Mr. Goldrod executed agreements with STCB whereby the advance from Mr. Lang and all other amounts owed to each were repaid and both Mr. Lang and Mr. Goldrod resigned from the Board. Further, for a period of 36 months beginning in July 2021, STCB agreed to repurchase an aggregate of $10,950worth of shares each month from Mr. Lang and Mr. Goldrod, with the share price for each purchase to be set according to the volume weighted average trading price of the common stock over the last 10 days of the month. In the three months ended September 30, 2024 and 2023, STCB paid an aggregate of zeroand $32,850, respectively, to Mr. Lang and Mr. Goldrod. In the nine months ended September 30, 2024 and 2023, STCB paid an aggregate of zeroand $65,700, respectively, to Mr. Lang and Mr. Goldrod. As of March 31, 2024, the Company settled final repurchase transfers of 1,862,154shares in the amount of $328,500. The share repurchases were recorded as treasury stock payable on the balance sheet. The foregoing agreements have been terminated and are no longer in force or effect.

Ross Sklar, CEO Notes

On August 11, 2023, the Company issued to Sklar a consolidated secured promissory note (the "Consolidated Secured Promissory Note") in the principal sum of $4,000,000, with a maturity date of December 31, 2024. The Consolidated Secured Promissory Note carries a floating interest rate comprised of the Wall Street Journal Prime Rate (re-assessed on the first date of each month (plus 2%), and is secured by an amended and restated consolidated security agreement (the "Amended and Restated Consolidated Security Agreement"), by and between the Company and Sklar, dated August 11, 2023, The Consolidated Secured Promissory Note consolidated the outstanding loan obligations of the Company to Sklar evidenced pursuant to (i) the January 24, 2020 Amended Note, (ii) the June 28, 2021 Note, (iii) the September 17, 2021 Note, (iv) the December 13, 2021 Note, (v) the December 29, 2022 Note, and (vi) the March 3, 2023 Note, as summarized in the table below. The Amended and Restated Consolidated Security Agreement merged and integrated the December 29, 2022 Security Agreement and the March 3, 2023 Security Agreement, and provides a security interest in the Collateral (as defined in the Amended and Restated Consolidated Security Agreement) to secure the repayment of all principal, interest, costs, expenses and other amounts then or thereafter due under the Consolidated Secured Promissory Note until by the maturity date. Sklar was authorized to file financing statements to perfect the security interest in the Collateral without authentication by the Company. The following table represents Prior Notes that were part of the restructuring and related prior and updated terms (under the Consolidated Secured Promissory Note):

		Original			Original		Original			Revised		Revised
		Balance			maturity		rate			maturity		rate
January 24, 2020 Amended 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, 2021 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

(1)

(1)

Note that $1,527,500of this total was repaid to Mr. Sklar from proceeds under the Gibraltar Loan (see Loan Security Agreement - Related Party below).

The restructuring is accounted for as a debt modification. On May 31, 2024, the Consolidated Secured Promissory Note was amended by that certain Amendment to Consolidated Secure Promissory Note, by and between STCB and Mr. Sklar, dated May 31, 2024 (the "2024 Consolidated Note Amendment" and together with the Consolidated Secured Promissory Note, the "Amended Consolidated Secured Promissory Note"). The 2024 Consolidated Note Amendment, among other things, extended the maturity date to August 31, 2026, provided that to the extent amounts remain due and payable on the maturity date, it will be extended until August 31, 2027.

The Company also issued a February 14, 2022 Note to Sklar in the principal amount of $472,500that was not included in the note consolidation. On May 10, 2024, the Company and Sklar entered into an amendment to the February 14, 2022 Note to extend the maturity date of the February 14, 2022 Note to December 31, 2024.

The February 14, 2022 Note bore interest at 4% per annum, was unsecured, and was to mature two years from the original date of issuance. This note may also convert into shares of Company common stock at the 10-day volume weighted average trading price of the Company common stock for the 10-day period prior to the issuance of the Note, which was calculated as $0.29per share. The February 14, 2022 Note was repaid in full from proceeds under the Gibraltar Loan and the Company has no further obligations under such note.

Loan Security Agreement - Related Party

On May 24, 2024, the Company entered into the Loan and Security Agreement, which allowed the Company to reduce long-term debt and expand its access to working capital (see Note 6). In connection with the Loan and Security Agreement, the Lender required Mr. Sklar to enter into a subordination agreement pursuant to which Mr. Sklar's rights under (i) the February 14, 2022 Note, as amended and (ii) the Consolidated Secured Promissory Note would be subordinated to the lender's rights under the Loan and Security Agreement.

In exchange for the subordination of and the maturity extension reflected in the Amended Consolidated Secured Promissory Note, $2,000,000of the revolving loan available cash under the Loan and Security Agreement was used to repay the February 14, 2022 Note in its entirety and to pay down the interest and a portion of principal balance on the Amended Consolidated Secured Promissory Note. As of September 30, 2024 and December 31, 2023, the outstanding principal due to Mr. Sklar under outstanding notes was $2,472,500and $4,472,500, respectively. As of September 30, 2024 and December 31, 2023, there was noaccrued interest due on these notes.

For the three months ended September 30, 2024 and 2023, the outstanding notes held by Mr. Sklar incurred interest expense of $65,437and $105,105, respectively; for the nine months ended September 30, 2024 and 2023, the outstanding notes held by Mr. Sklar incurred interest expense of $266,261and $283,088, respectively.

Operating Lease - Related Party

On May 1, 2024, the Company entered into the Citrus Lease with a lessor who is a related party (see Note 3 and Note 11 for additional information) for the rental of the second and third floors of a premise containing approximately 3,000square feet located at 706 N. Citrus Ave, Los Angeles, CA 90038. The lease was classified as an operating lease and has a monthly base rent of $10,000per month, with a base rent increase of 5% each year. There is an option for the Company to renew for an additional three years with notice given within 90 days before the end of the term.

In accordance with ASC 842 - Leases, the Company recognized an ROU asset and corresponding lease liability for $587,914on the condensed consolidated balance sheet for long-term office leases, as well as lease expense of $34,010and $56,683for the three and nine months ended September 30, 2024, respectively. See Note 11 - Leases for further discussion, including the impact on the condensed consolidated financial statements and related disclosures.

Other Related Party Transactions

During the three months ended September 30, 2024 and 2023, the Company recognized revenue from related parties of $1,480,007and $2,463,542, respectively; during the nine months ended September 30, 2024 and 2023, the Company recognized revenue from related parties of $4,731,430and $8,201,377, respectively. There were $3,106,669and $2,625,713of accounts receivable and accrued accounts receivable from TSG and Temperance Distilling Company ("Temperance") as of September 30, 2024 and December 31, 2023, respectively. All revenues earned in relation to these accounts receivable is from related parties, TSG and Temperance. Sklar serves as the Chairman of Temperance.

During the three months ended September 30, 2024 and 2023, the Company received contributed services at a value of approximately zeroand $6,672, respectively; during the nine months ended September 30, 2024 and 2023, the Company received contributed services at a value of approximately zeroand $45,450, respectively. Such costs have been expensed and recorded as additional paid-in capital in the period the services were provided.

NOTE 9 - STOCK WARRANTS

On each of September 12, 2022, November 1, 2022, November 3, 2022, and June 1, 2023, the Company entered into agreements with members of the Board and consultants for services to be performed. As consideration therefore, the Company granted those individuals stock warrants to purchase an aggregate of 38,400,000shares of common stock. The warrants vest over various terms for periods from oneto five years. The warrants were valued using the Black-Scholes option pricing model under the assumptions as found in the table below.

On December 29, 2022 and March 3, 2023, the Company entered into agreements with Sklar, for warrants to purchase shares of common stock to be issued as a funding fee for an aggregate principal amount of $2,800,000in secured promissory notes (see Note 7). The warrants were valued using the Black-Scholes option pricing model under the following assumptions as found in the table below.

The table below summarizes the grants of stock warrants and includes the assumptions used for valuation under the Black-Scholes option pricing model.

		Number of																		Expected
		Stock			Stock			Strike			Expected			Interest			Dividend			Term			Fair
Date		Warrants			Price			Price			Volatility			Rate			Rate			(years)			Value
9/12/2022			33,150,000			$	0.19			$	0.19				103.09	%			3.47	%			0.00	%			3.0			$	4,088,769
11/1/2022			100,000			$	0.20			$	0.20				102.86	%			4.27	%			0.00	%			1.0			$	8,116
11/3/2022			5,000,000			$	0.19			$	0.19				102.84	%			4.36	%			0.00	%			3.0			$	618,176
12/29/2022			285,714			$	0.20			$	0.01				103.49	%			3.94	%			0.00	%			1.0			$	54,401
3/3/2023			114,286			$	0.17			$	0.01				137.62	%			4.26	%			0.00	%			1.0			$	18,710
6/1/2023			150,000			$	0.12			$	0.19				150.24	%			3.70	%			0.00	%			3.0			$	14,013

A summary of the status of the Company's outstanding stock warrants and changes during the periods is presented below:

		Shares available to purchase			Weighted Average			Weighted Average Remaining Contractual			Aggregate
		with warrants			Exercise Price			Term (in years)			Intrinsic Value
Outstanding, December 31, 2023			39,350,000			$	0.20				3.87			$	50,800
Issued			-				-				-				-
Exercised			-				-				-				-
Cancelled			-				-				-				-
Expired			-				-				-				-
Outstanding, September 30, 2024			39,350,000			$	0.20				3.12			$	31,040
Exercisable, September 30, 2024			26,656,923			$	0.20				3.11			$	31,040
Outstanding, December 31, 2022			41,085,714			$	0.24				4.64			$	45,714
Issued			264,286				0.11				5.13				14,857
Exercised			-				-				-				-
Cancelled			-				-				-				-
Expired			(2,000,000	)			1.05				-				-
Outstanding, September 30, 2023			39,350,000			$	0.20				4.12			$	52,000
Exercisable, September 30, 2023			14,316,664			$	0.20				4.12			$	52,000

The Company granted stock warrants to purchase zeroand an aggregate of 150,000shares of Class A common stock during the three months ended September 30, 2024 and 2023, respectively, with grant date fair values of zeroand $14,013, respectively; the Company granted stock warrants to purchase zeroand an aggregate of 264,286shares of Class A common stock during the nine months ended September 30, 2024 and 2023, respectively, with grant date fair values of $32,723, respectively.

The following table summarizes information about stock warrants to purchase shares of the Company's Class A common stock outstanding and exercisable as of September 30, 2024:

						Weighted-			Weighted-
						Average			Average
Range of			Outstanding			Remaining Life			Exercise			Number
exercise prices			Warrants			In Years			Price			Exercisable
$	1.00				250,000				0.00			$	1.00				250,000
$	0.90				300,000				1.00			$	0.90				300,000
$	0.19				38,300,000				3.15			$	0.19				25,606,923
$	0.20				100,000				3.09			$	0.20				100,000
$	0.01				400,000				3.30			$	0.01				400,000
					39,350,000				3.12			$	0.20				26,656,923

The compensation expense attributed to the issuance of the stock warrants is recognized as they are vested.

Total compensation expense related to the stock warrants was $390,006and $396,151for the three months ended September 30, 2024 and 2023, respectively; total compensation expense related to the stock warrants was $1,175,171and $1,196,430for the nine months ended September 30, 2024 and 2023, respectively, and was included in compensation expense on the statement of operations. As of September 30, 2024, there was $1,579,773in future compensation cost related to non-vested stock warrants.

The aggregate intrinsic value as of September 30, 2024 is $31,040for total outstanding and exercisable warrants, which was based on our estimated fair value of the common stock of $0.09, had all warrant holders exercised their warrants as of that date, net of the aggregate exercise price.

NOTE 10- STOCK OPTIONS

On November 27, 2023, the Company's Board of Directors approved the 2023 Equity Incentive Plan (the "Equity Plan"). The Equity Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock unit awards, and other stock-based awards, collectively, the "Stock Awards". Stock Awards may be granted under the Equity Plan to the Company's, and its subsidiaries', employees, officers, directors and consultants. The maximum number of shares of Class A common stock available for issuance under the Equity Plan is 100,000,000shares.

On January 1, 2024, the Company entered into agreements with employees and consultants for services to be performed. As consideration therefore, the Company granted stock options (the "Options") under the Company's Equity Plan to purchase up to 4,660,000shares of Class A common stock.

On May 16, 2024, the Company entered into agreements with three employees and a consultant for services to be performed pursuant to which the Company granted Options under the Company's Equity Plan to purchase up to an aggregate of 390,000shares of Class A common stock.

Options were valued using the Black-Scholes option pricing model under the following assumptions as found in the table below. There were no stock options issued or outstanding for the three and nine months ended September 30, 2023.

Date		Number of Stock Options			Stock Price1			Strike Price			Expected Volatility			Interest Rate			Dividend Rate			Expected Term (years)2			Fair Value
1/1/2024			4,660,000			$	0.16			$	0.17				134.97	%			4.00	%			0.00	%			4.0			$	731,548
05/16/2024			390,000			$	0.11			$	0.11				135.44	%			4.49	%			0.00	%			4.0			$	30,616

	1	Grant exercise price is based on the prior trading day's closing price of $0.164on December 29, 2024 and $0.11on May 15, 2024.
	2	Options granted vest over various time periods ranging from two to four years with the majority vesting over a four-year term.

A summary of the status of the Company's outstanding stock options and changes during the periods is presented below:

		Shares available to			Weighted Average			Weighted Average Remaining Contractual			Aggregate
		purchase with options			Exercise Price			Term (in years)			Intrinsic Value
Outstanding, December 31, 2023			-			$	-				-			$	-
Issued			5,050,000				0.17				8.75
Exercised			-				-				-				-
Cancelled/Forfeited			(290,000	)			0.17				-				-
Expired			-				-				-				-
Outstanding, September 30, 2024			4,760,000			$	0.17				9.26			$	-
Exercisable, September 30, 2024			876,036			$	0.17				9.26			$	-

The compensation expense attributed to the issuance of the stock options is recognized as they are vested. Total compensation expense related to the stock options was $31,293and zerofor the three months ended September 30, 2024 and 2023, respectively; total compensation expense related to the stock options was $146,415and zerofor the nine months ended September 30, 2024 and 2023, respectively, and was included in compensation expense on the statement of operations. As of September 30, 2024, there was $584,515in future compensation cost related to non-vested stock options.

The aggregate intrinsic value as of September 30, 2024 is zerofor total outstanding and exercisable options, which was based on our estimated fair value of the common stock of $0.09, had all option holders exercised their options as of that date, net of the aggregate exercise price.

NOTE 11 - LEASES

The following table presents net lease cost and other supplemental lease information:

		Nine Months Ended
		September 30, 2024
Lease cost
Operating lease cost (cost resulting from lease payments)		$	56,683
Net lease cost		$	56,683
Operating lease - operating cash flows (fixed payments)		$	56,683
Operating lease - operating cash flows (liability reduction)		$	23,702
Current leases - right of use assets		$	557,530
Current liabilities - operating lease liabilities		$	64,003
Non-current liabilities - operating lease liabilities		$	500,210
Operating lease ROU assets		$	557,530
Weighted-average remaining lease term (in years)			5.58
Weighted-average discount rate(1)			10.91	%

(1)	Note that rate is based on an average of One Month Term SOFR and the Prime Rate, plus applicable margins.

		Nine Months Ended
		September 30, 2023
Lease cost
Operating lease cost (cost resulting from lease payments)		$	66,864
Short term lease cost			-
Sublease income			(66,864	)
Net lease cost		$	-
Operating lease - operating cash flows (fixed payments)		$	66,864
Operating lease - operating cash flows (liability reduction)		$	61,605
Current leases - right of use assets		$	-
Current liabilities - operating lease liabilities		$	-
Non-current liabilities - operating lease liabilities		$	-
Operating lease ROU assets		$	-
Weighted-average remaining lease term (in years)			-
Weighted-average discount rate			2.1	%

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the nine months ended September 30, 2024:

Fiscal Year		Operating Leases
Remainder of 2024			30,000
2025			124,000
2026			130,200
2027			136,710
2028			143,546
2029			150,723
2030			51,051
Total future minimum lease payments			766,230
Less: Imputed Interest			(202,017	)
Present value of net future minimum lease payments		$	564,213

NOTE 12 - STOCKHOLDERS' EQUITY

Common Stock Issuances for the Nine Months Ended September 30, 2024

Effective February 14, 2024, the Company settled the Soylent Opening Balance Holdback and $2,446,380equity consideration payable by issuing 16,309,203shares of Class A common stock to the Soylent Shareholders as outlined in the Soylent merger agreement.

Effective February 14, 2024, the First Adjustment Date, the Company settled $18,099,951of the $36,931,330fair value liability outstanding on December 31, 2023 by issuing 133,087,875shares of Class A common stock to the Soylent Shareholders as outlined in the Soylent Merger Agreement and Stockholders' Agreement, as applicable. After giving effect to the shares issued during the quarter, and changes in the derivative liability at period end, the total share adjustment value as of March 31, 2024 was $20,753,328.

Effective May 20, 2024, it was determined, in accordance with the Soylent Merger Agreement, that 7,445,490shares of the 18,571,429shares of Class A common stock held back from the Soylent Shareholders were not due, the effect of which resulted in an adjustment to the liability of $1,012,587; in conjunction with an increase in the fair value of the derivative liability at period end, the total share adjustment value on the balance sheet as of September 30, 2024 was $30,441,480.

Following the 18-month holdback period from the date of the AOS Acquisition, during which the Company had no outstanding claims, effective March 12, 2024, the Company issued the former shareholders of AOS an aggregate of 4,979,731shares of Class A common stock and $6,137in cash that was being held back on the December 31, 2023 balance sheet.

Following the 18-month holdback period from the date of the Skylar Acquisition, during the second quarter of 2024, the Company issued the Skylar Shareholders an aggregate amount of 11,573,660shares of Class A common stock, which satisfied an equity consideration payable of $2,314,732on the balance sheet as of the issuance date.

NOTE 13 - PROPERTY AND EQUIPMENT

Property and equipment, net consist of the following:

		September 30, 2024			December 31, 2023
Computer equipment		$	144,045			$	127,497
Tools and equipment			147,903				147,903
Furniture and equipment			39,202				39,202
CIP			203,102				-
Property and equipment, gross			534,252				314,602
Less: Accumulated depreciation			(267,172	)			(256,443	)
Property and equipment, net		$	267,080			$	58,159

For the three and nine months ended September 30, 2024, the Company incurred $2,362and $10,729of depreciation expense, respectively, and for the three and nine months ended September 30, 2023, the Company incurred $4,776and $12,718of depreciation expense, respectively.

NOTE 14 - INTANGIBLE ASSETS

Intangible assets, net consists of the following:

		September 30, 2024
		Gross			Accumulated
		Carrying Amount			Amortization			Net
Trade names and trademarks			27,138,345				3,403,735				23,734,610
Customer relationships			6,915,000				1,361,313				5,553,687
Domain names			25,750				12,017				13,733
Intangible Assets		$	34,079,095			$	4,777,065			$	29,302,030

		December 31, 2023
		Gross			Accumulated
		Carrying Amount			Amortization			Net
Trade names and trademarks			26,937,670				1,885,389				25,052,281
Customer relationships			7,049,000				753,914				6,295,086
Domain names			25,750				10,729				15,021
Intangible Assets		$	34,012,420			$	2,650,032			$	31,362,388

For the three and nine months ended September 30, 2024, the Company incurred $704,937and $2,127,035of amortization expense, respectively, and for the three and nine months ended September 30, 2023, the Company incurred $1,010,139and $1,728,995of amortization expense, respectively.

As of September 30, 2024, future expected amortization expense of intangible assets was as follows:

Fiscal period:		September 30, 2024
Remainder of 2024		$	731,026
2025			2,824,750
2026			2,824,750
2027			2,824,750
2028			2,821,416
Thereafter			17,275,338
Total amortization remaining		$	29,302,030

NOTE 15 - INVENTORY

Inventory by major class are as follows:

		September 30, 2024			December 31, 2023
Raw materials		$	1,783,994			$	1,283,992
Finished goods			11,385,273				9,391,548
Total inventory		$	13,169,267			$	10,675,540

NOTE 16 - SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were issued and has determined that no subsequent events exist.

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

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND OTHER FEDERAL SECURITIES LAWS, PARTICULARLY THOSE ANTICIPATING FUTURE FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, GROWTH, OPERATING STRATEGIES AND SIMILAR MATTERS. WE HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON OUR CURRENT INTENT, EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS, AND THESE FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND ASSUMPTIONS ABOUT US THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD," "COULD," "WOULD," "INTEND," "PROJECT," "CONTEMPLATE," "POTENTIAL," "EXPECT," "PLAN," "ANTICIPATE," "BELIEVE," "ESTIMATE," "CONTINUE," OR THE NEGATIVE OF SUCH TERMS OR OTHER SIMILAR EXPRESSIONS. THESE STATEMENTS ARE ONLY PREDICTIONS. FACTORS THAT MIGHT CAUSE OR CONTRIBUTE TO SUCH A DISCREPANCY INCLUDE, BUT ARE NOT LIMITED TO, THOSE DESCRIBED IN OUR OTHER SECURITIES AND EXCHANGE COMMISSION FILINGS.

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. ANY OF THE FORWARD-LOOKING STATEMENTS THAT WE MAKE IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OTHER PUBLIC REPORTS AND STATEMENTS WE MAKE MAY TURN OUT TO BE INACCURATE AS A RESULT OF OUR BELIEFS AND ASSUMPTIONS WE MAKE IN CONNECTION WITH THE FACTORS SET FORTH ABOVE OR BECAUSE OF OTHER UNIDENTIFIED AND UNPREDICTABLE FACTORS. IN ADDITION, OUR BUSINESS AND FUTURE RESULTS ARE SUBJECT TO A NUMBER OF OTHER FACTORS, INCLUDING THOSE FACTORS SET FORTH IN THE "RISK FACTORS" SECTION OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") ON APRIL 3, 2024. BECAUSE OF THESE AND OTHER UNCERTAINTIES, OUR ACTUAL FUTURE RESULTS MAY BE MATERIALLY DIFFERENT FROM THE RESULTS INDICATED BY THESE FORWARD-LOOKING STATEMENTS, AND YOU SHOULD NOT RELY ON SUCH STATEMENTS. WE UNDERTAKE NO OBLIGATION TO PUBLISH REVISED FORWARD-LOOKING STATEMENTS TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF. THESE RISKS COULD CAUSE OUR ACTUAL RESULTS FOR 2024 AND BEYOND TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS BY OR ON BEHALF OF US, AND COULD NEGATIVELY AFFECT OUR FINANCIAL CONDITION, LIQUIDITY AND OPERATING AND STOCK PRICE PERFORMANCE.

Business Overview

Starco Brands, Inc. (formerly Insynergy Products, Inc.), which we refer to as "the Company," "our Company," "STCB", "we," "us" or "our," was incorporated in the State of Nevada on January 26, 2010 under the name Insynergy, Inc. On September 7, 2017, the Company filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc. The Board determined the change of the Company's name was in the best interests of the Company due to changes in our current and anticipated business operations at that time. In July 2017, the Company entered into a licensing agreement with The Starco Group ("TSG"), located in Los Angeles, California. TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine. Upon entering into the licensing agreement with TSG, the Company pivoted to commercializing novel consumer products manufactured by TSG.

In 2022, the Company embarked on a strategy to grow its consumer product line offerings through the acquisition of multiple subsidiaries with established behavior changing products and brands. With an increased product line and its existing partner relationships, the Company has continued expanding its vertical and consumer base through 2024.

Executive Overview

In July 2017, our Board entered into a licensing agreement with TSG to pursue a new strategic marketing plan involving commercializing leading edge products with the intent to sell them through brick and mortar and online retailers. We are a company whose mission is to create behavior-changing products and brands. Our core competency is inventing brands, marketing, building trends, pushing awareness and social marketing. The licensing agreement with TSG provided STCB with certain products on an exclusive and royalty-free basis and other products on a non-exclusive and royalty basis, in the categories of food, household cleaning, air care, spirits and personal care.

The current CEO and owner of TSG, Ross Sklar, was named the CEO of STCB in August of 2017. Mr. Sklar has spent his career commercializing technology in industrial and consumer markets. Mr. Sklar has built teams of manufacturing personnel, research and development, and sales and marketing professionals over the last 20 years and has grown TSG into a successful and diversified manufacturer supplying a wide range of products to some of the largest retailers in the United States. As the Company continues to grow the number of products and brands under the STCB umbrella, it will continue to leverage its relationship with TSG to streamline its product manufacturing.

Product Development

We have conducted extensive research and have identified specific channels to penetrate with a portfolio of novel technologies. We are executing on this vision and, since our inception, have launched and /or served as the marketer of record for various product lines.

Winona®

STCB is the marketer of record, but not the owner of record of, the Winona® Butter Flavor Popcorn Spray. STCB provides marketing services for Winona pursuant to a licensing agreement. Winona Popcorn Spray is also sold in H-E-B grocery stores. STCB also launched the Winona Popcorn Spray on Amazon through our strategic partner Pattern (formally iServe), who is a stockholder in STCB. Sales grew significantly in 2022 and 2023, the Company expects sales to continue to grow in this space as management plans to increase the Company's sales personnel in 2024 for this product line.

Whipshots®

In December 2021, the Company launched a new product line consisting of vodka-infused, whipped-cream aerosols, under the brand name "Whipshots." The launch event was held at Art Basel in Miami and garnered over 1 billion impressions world-wide. The Company launched the product on whipshots.com with a limited quantity of cans to be sold each day for the month of December. Whipshots® sold out every single day of the month. The Company launched brick and mortar retail distribution in the first quarter of 2022, signed a distribution agreement with RNDC, one of the largest spirits distributors in the nation, as distribution agreements with others. Whipshots® is currently distributed in 41 of 50 states. The Company also signed distribution deals with GoPuff and BevMo. Initially the Company introduced three flavors of Whipshots® to the market - Vanilla, Mocha and Caramel. Since the initial launch, the Company has introduced new and Limited Time flavors such as Peppermint, Lime, Pumpkin Spice and Strawberry. We plan to continue to offer various additional Limited Time flavors in 2024. Whipshots® is produced by Temperance Distilling Company ("Temperance"), of which Sklar is the majority shareholder.

Whipshots® and Whipshotz® Trademarks

On September 8, 2021, Whipshots LLC, a Wyoming limited liability company ("Whipshots LLC") entered into an Intellectual Property Purchase Agreement, effective August 24, 2021, with Penguins Fly, LLC, a Pennsylvania limited liability company ("Penguins"). The agreement provided that Penguins would sell the trademarks "Whipshotz" and "Whipshots", the accompanying domain and social media handles of the same nomenclature, and certain intellectual property, documents, digital assets, customer data and other transferable rights under non-disclosure, non-compete, non-solicitation and confidentiality contracts benefiting the purchased intellectual property and documents (collectively, the "Acquired Assets") to Whipshots LLC. The purchase price for the Acquired Assets will be payable to Penguins, over the course of seven years, based on a sliding scale percentage of gross revenues actually received by us solely from our sale of Whipshots/Whipshotz Products. The payment are subject to a minimum amount in each contract year and a maximum aggregate amount.

Whipshots® Licensing/Marketing

On September 14, 2021, Whipshots Holdings, LLC (formerly Whipshots, LLC) a Delaware limited liability company ("Whipshots Holdings"), entered into a License Agreement (the "Washpoppin License Agreement") with Washpoppin Inc., a New York corporation ("Washpoppin"). Pursuant to the Washpoppin License Agreement, Washpoppin licensed certain Licensed Property (as defined therein) of the recording artist professionally known as "Cardi B" (the "Artist") to us. Whipshots Holdings and Washpoppin entered into an amended and restated Washpoppin License Agreement ("A&R Washpoppin License Agreement"), with an effective date of November 27, 2023.

As part of the A&R Washpoppin License Agreement, in exchange for royalty rates based on Net Sales (as defined therein) during each applicable contract period, the Company granted Whipshots Holdings shares to Washpoppin to cause the Artist to attend certain in person events, media interviews, participate in the development of the Licensed Products (as defined therein), and promote the Licensed Products through social media posts on the Artist's social media platforms. We have committed to a minimum royalty payment under the A&R Washpoppin License Agreement of an aggregate of $3,300,000 through 2025, subject to Washpoppin's satisfaction of its obligations.

The Art of Sport® and AOS®

On September 12, 2022, STCB, through its wholly-owned subsidiary Starco Merger Sub Inc. ("Merger Sub"), completed its acquisition (the "AOS Acquisition") of The AOS Group Inc., a Delaware corporation ("AOS"). The AOS Acquisition consisted of Merger Sub merging with and into AOS, with AOS being the surviving corporation. AOS® is a wholly-owned subsidiary of STCB. AOS® is the maker of Art of Sport® premium body and skincare products engineered to power and protect athletes and brings over the counter respiratory, sun care, women and children, pain management, performance supplements, food, beverage and apparel product lines under STCB auspices.

Skylar®

On December 29, 2022, STCB, through its wholly-owned subsidiary Starco Merger Sub II, Inc. ("Merger Sub II"), completed its acquisition (the "Skylar Acquisition") of Skylar Body, Inc., a Delaware corporation ("Skylar Inc.") through the merger of Merger Sub II with and into Skylar Inc. Immediately following the Skylar Acquisition Skylar Inc. merged with and into Skylar Body, LLC ("Skylar") a wholly-owned subsidiary of STCB, with Skylar as the surviving entity. Skylar® is a wholly-owned subsidiary of STCB. Skylar® is the maker of fragrances that are hypoallergenic and safe for sensitive skin.

Soylent®

On February 15, 2023, STCB, through its wholly-owned subsidiary Starco Merger Sub I, Inc. ("Merger Sub I"), completed its acquisition (the "Soylent Acquisition") of Soylent Nutrition, Inc., a Delaware corporation ("Soylent"). The Soylent Acquisition consisted of Merger Sub I merging with and into Soylent, with Soylent being the surviving corporation. Soylent® is a wholly-owned subsidiary of STCB. Soylent® is the maker of a wide range of plant-based "complete nutrition" and "functional food" products with a lineup of plant-based convenience shakes, powders and bars that contain proteins, healthy fats, functional amino acids and essential nutrients.

Distribution Agreements

In November of 2021, we entered into separate Distribution Agreements (each a "Distribution Agreement" and, collectively, the "Distribution Agreements") with each of (i) National Distributing Company, Inc., a Georgia corporation, (ii) Republic National Distributing Company, LLC, a Delaware limited liability company, and (iii) Young's Market Company, LLC, a Delaware limited liability company (each a "Distributor" and, collectively, the "Distributors") each with an effective date as of November 1, 2021. Pursuant to the Distribution Agreements, the Distributors will act as the exclusive distributor for STCB in the Territories set forth on Exhibit B for the Products set forth on Exhibit A, to each such Distribution Agreement, as amended from time to time. The Distribution Agreements cover 41 U.S. States and the District of Columbia.

Pursuant to the terms of the Distribution Agreements, the Distributors serve as the exclusive distributors in such Territories for Whipshots®. The Distribution Agreements provide the Distributors rights to expand the Territories and Products covered under each such Distribution Agreement as we expand our product lines and distribution channels. The expansion of Territories and Products may be exercised under various rights, including rights of first refusal to serve as an exclusive distributor of new Products in new Territories. The Company has also agreed to grant the Distributors "most favored nations" pricing providing for the lowest price available across the United States and its territories and possessions (the "US Territory"), and to grant Distributors any volume or other discounts that are offered to any other distributor in the US Territory by us, provided such action is not a violation of applicable law.

Broker Agreements

In November of 2021, we entered into separate Broker Agreements (each a "Broker Agreement" and, collectively, the "Broker Agreements") with both Republic National Distributing Company, LLC, a Delaware limited liability company, and Young's Market Company, LLC, a Delaware limited liability company (each a "Broker" and, collectively, the "Brokers") each with an effective date as of November 1, 2021. Pursuant to the Broker Agreements, the Broker acts as the exclusive broker for us in the Territories set forth on Exhibit Bfor the Products set forth on Exhibit A, to each such Broker Agreement, as amended from time to time. Each Broker will receive a commission rate of 10%. The foregoing Broker Agreements now cover 9 U.S. States.

Competition

The household, personal care and beverage consumer products market in the U.S. is mature and highly competitive. Our competitive set has grown with our recent acquisitions and consists of consumer products companies, including large and well-established multinational companies as well as smaller regional and local companies. These competitors include Johnson & Johnson, The Procter & Gamble Company, Unilever, Diageo, CytoSport, Inc., Abbott Nutrition, Nestlé, Owyn, Clean Reserve, The 7 Virtues and others. Within each product category, most of our products compete with other widely advertised brands and store brand products.

Competition in our product categories is based on a number of factors including price, quality and brand recognition. We benefit from the strength of our brands, a differentiated portfolio of quality branded and store brand products, as well as significant capital investment in our manufacturing facilities. We believe the strong recognition of the Whipshots® and Soylent® brands among U.S. consumers, along with the growing brand recognition of Skylar®, gives us a competitive advantage.

Growth Strategy

As long as the Company can raise capital, the Company plans to launch other products in spray foods and condiments, over the counter respiratory, air care, skin care, sun care, hair care, personal care, pain management, performance supplements, plant-based convenience shakes, powders and bars, apparel, fragrances, spirits and beverages over the next 36 months. Financing growth and launching of new products through our key subsidiaries is key to the Company's ability to raise further capital.

We will need to rely on sales of our Class A common stock and other sources of financing to raise additional capital. The purchasers and manner of any share issuance will be determined according to our financial needs and the available exemptions to the registration requirements of the Securities Act. This provides significant support for our current retail and online distribution. We also plan to raise capital in the future through a compliant offering.

We continue to strive towards becoming a leading brand owner and third-party marketer of cutting edge technologies in the consumer products marketplace whose success is expected to increase stockholder value. The Company will continue to evaluate this and other opportunities to further set its strategy for 2024 and beyond.

For more information and to view our products, you may visit our websites at www.starcobrands.com, www.whipshots.com, www.bingeworthyflavor.com, www.artofsport.com, www.skylar.com and www.soylent.com. Our internet website and the information contained therein or connected thereto are not intended to be incorporated by reference into this Quarterly Report.

Offices

Our principal executive offices are located at 706 N Citrus Ave, Los Angeles, California, 90038, and our telephone number is (323) 266-7111. Our website is www.starcobrands.com and the Company makes its SEC reports available on the website. Our internet website and the information contained therein or connected thereto are not intended to be incorporated by reference into this Quarterly Report.

Results of Operations

Comparison of the three months ended September 30, 2024 to the three months ended September 30, 2023

		September 30,			September 30,
		2024			2023			Change
Revenues		$	14,006,349			$	15,209,504			$	(1,203,155	)
Revenues, related parties			1,480,007				2,463,542				(983,535	)
Cost of goods sold			8,131,015				9,178,845				(1,047,830	)
Cost of goods sold, related parties			968,934				752,424				216,510
Gross profit			6,386,407				7,741,777				(1,355,370	)
Operating expenses:
Compensation expense			2,185,256				1,811,832				373,424
Professional fees			434,698				1,380,680				(945,982	)
Marketing, general and administrative			4,236,433				4,955,578				(719,145	)
Fair value share adjustment loss			5,105,535				(3,144,411	)			8,249,946
Total operating expense			11,961,922				5,003,679				6,958,243
(Loss) income from operations			(5,575,515	)			2,738,098				(8,313,613	)
Other expense:
Interest expense			303,155				255,775				47,380
Other expense			378,418				121,072				257,346
Total other expense, net			681,573				376,847				304,726
(Loss) income before provisions for income taxes			(6,257,088	)			2,361,251				(8,618,339	)
Provision for income taxes			-				-				-
Net (loss) income			(6,257,088	)			2,361,251				(8,618,339	)
Net income attributable to non-controlling interest			87,838				34,221				53,617
Net (loss) income attributable to Starco Brands		$	(6,344,926	)		$	2,327,030			$	(8,671,956	)

Revenues

For the three months ended September 30, 2024, the Company recorded revenues of $14,006,349 compared to $15,209,504 for the three months ended September 30, 2023, resulting in a decrease of $1,203,155 or 8%. The decrease in the current period was primarily due to a decrease in Soylent revenue driven by a product category realignment at a major retail customer. This reduction was partially offset by increases in sales for Winona and Art of Sport

Revenues, related parties

For the three months ended September 30, 2024, the Company recorded related party revenues of $1,480,007 compared to $2,463,542 for the three months ended September 30, 2023, resulting in a decrease of $983,535 or 40%. The decrease in the current period was largely driven by lower Whipshots sales due to industry destocking and lower levels of new retailer loading.

Operating Expenses

For the three months ended September 30, 2024, compensation expenses increased $373,424, or 21%, to $2,185,256 from $1,811,832 for the three months ended September 30, 2023; the increase is a result of converting a portion of independent contractors to full-time employees.

For the three months ended September 30, 2024, the Company incurred $434,698 in professional fees compared to $1,380,680 for the three months ended September 30, 2024, for a decrease of $945,982, or 69%. Professional fees are mainly for contractors, accounting, auditing and legal services associated with business operations, merger activity, and our quarterly filings as a public company, and advisory and valuation services. The decrease is primarily due to reduced legal and audit-related expenses in the current year period compared to expenses related to the acquisitions of Soylent, Skylar, and AOS in the prior year period.

For the three months ended September 30, 2024, the Company incurred $4,236,433 in marketing, general and administrative expense as compared to $4,955,578 for the three months ended September 30, 2023, for a decrease of $719,145 or 15%, which was largely driven by reduced marketing spend and a focus on operational efficiencies.

For the three months ended September 30, 2024, the Company incurred a fair value share adjustment loss of $5,105,535; such was due to an increase in the fair value of the Soylent Shareholders' rights to potentially receive additional Starco shares, increasing from $0.235 per share as of June 30, 2024 to $0.253 per share as of September 30, 2024.

Other Income and Expense

For the three months ended September 30, 2024, we had total other expense, of $681,573 compared to total other expense, netof $376,847 for the three months ended September 30, 2023. For the three months ended September 30, 2024, the Company had interest expense and other expense of $303,155 and $378,418, respectively, compared to interest expense and other expense of $255,775 and $121,072, respectively, for the three months ended September 30, 2023.

Net (Loss) Income

For the three months ended September 30, 2024, the Company recorded a net loss of $6,257,088 as compared to net income of $2,361,251 for the three months ended September 30, 2023. The increase in net loss is primarily due to a loss on the change in fair value of the stock payable for shares due to Soylent Stockholders, in addition to increases in expenses from the acquired businesses AOS, Skylar and Soylent.

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023

		September 30,			September 30,
		2024			2023			Change
Revenues		$	41,816,348			$	38,124,740			$	3,691,608
Revenues, related parties			4,731,430				8,201,377				(3,469,947	)
Cost of goods sold			24,563,628				24,348,693				214,935
Cost of goods sold, related parties			2,879,614				1,663,124				1,216,490
Gross profit			19,104,536				20,314,300				(1,209,764	)
Operating expenses:
Compensation expense			7,195,932				5,285,421				1,910,511
Professional fees			2,771,608				4,177,424				(1,405,816	)
Marketing, general and administrative			14,073,064				12,947,350				1,125,714
Fair value share adjustment loss			15,703,049				2,751,360				12,951,689
Total operating expense			39,743,653				25,161,555				14,582,098
Loss from operations			(20,639,117	)			(4,847,255	)			(15,791,862	)
Other expense (income):
Interest expense			711,304				617,289				94,015
Other expense (income)			739,756				(211,802	)			951,558
Total other expense, net			1,451,060				405,487				1,045,573
Loss before provisions for income taxes			(22,090,177	)			(5,252,742	)			(16,837,435	)
Provision for income taxes			-				-				-
Net loss			(22,090,177	)			(5,252,742	)			(16,837,435	)
Net income attributable to non-controlling interest			276,909				160,014				116,895
Net loss attributable to Starco Brands		$	(22,367,086	)		$	(5,412,756	)		$	(16,954,330	)

Revenues

For the nine months ended September 30, 2024, the Company recorded revenues of $41,816,348compared to $38,124,740 for the nine months ended September 30, 2023 for an increase of $3,691,608or 10%; the increase in the current period was largely due to recognition of a full nine months of revenue from Soylent in the current period versus only seven and a half months of sales from Soylent in the prior period, as the Company acquired Soylent in February 2023. This increase in Soylent revenue was augmented by growth in sales of Winona.

Revenues, related parties

For the nine months ended September 30, 2024, the Company recorded related party revenues of $4,731,430 compared to $8,201,377 for the nine months ended September 30, 2023, resulting in a decrease of $3,469,947 or 42%. The decrease in the current period was largely driven by reduced sales of Whipshots.

Operating Expenses

For the nine months ended September 30, 2024, compensation expense increased $1,910,511, or 36%, to $7,195,932 from $5,285,421 for the nine months ended September 30, 2023; the increase is a result of converting a portion of independent contractors to full-time employees in the current period.

For the nine months ended September 30, 2024, the Company incurred $2,771,608 in professional fees compared to $4,177,424 in the prior period for a decrease of $1,405,816, or 34%. Professional fees are mainly for contractors, accounting, auditing and legal services associated with business operations, merger activity, and our quarterly filings as a public company, and advisory and valuation services. The decrease in the nine months ended September 30, 2024 as compared to the same period in 2023 is primarily due to a decrease in expenses (contractor fees, legal, and audit fees) in the current year period compared to expenses related to the acquisitions of Soylent, Skylar, and AOS in the prior year period.

For the nine months ended September 30, 2024, the Company incurred $14,073,064 in marketing, general and administrative expense compared to $12,947,530 for the nine months ended September 30, 2023 for an increase of $1,125,714, or 9%. The increase can be attributed to the addition of the acquired businesses and an increase in spending on marketing and increased amortization expense.

For the nine months ended September 30, 2024, the Company incurred a fair value share adjustment loss of $15,703,049. This was due to an increase in the fair value of the Soylent sellers' rights to potentially receive additional Starco shares, increasing from $0.136 per share as of December 31, 2023 to $0.253 per share as of September 30, 2024.

Other Income and Expense

For the nine months ended September 30, 2024, we had total other expense, net of $1,451,060compared to total other expense, net of $405,487 for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, the Company had interest expense and other expense of $711,304 and $739,756, respectively, compared to interest expense and other income of $617,289 and $211,802, respectively, for the nine months ended September 30, 2023.

Net Income (Loss)

For the nine months ended September 30, 2024, the Company recorded a net loss of $22,090,177 compared to a net loss of $5,252,742 for the nine months ended September 30, 2023. The increase in net loss is primarily due to a loss on the change in fair value of the stock payable for shares due to Soylent Stockholders, in addition to increases in expenses from the acquired businesses AOS, Skylar and Soylent.

Liquidity and Capital Resources

As reflected in the accompanying condensed consolidated financial statements, the Company has an accumulated deficit of approximately $86.1 million at September 30, 2024. Our net cash used in financing activities was $377,101 for the nine months ended September 30, 2024, due primarily to payments toward i) lines of credit, ii) a revolving loan, iii) notes payable and iv) loans from related parties of approximately $23.5 million, offset by proceeds from a revolving loan and a note payable of approximately $23.2 million. This compared to $535,974 in cash provided by financing activities for the nine months ended September 30, 2023, due primarily to approximately $0.8 million of loan advances from Ross Sklar, which was partially offset by net payments on the line of credit and repurchases of common stock totaling approximately $250,000.

Our net cash provided by operating activities was $517,879for the nine months ended September 30, 2024. Operating expenses for the nine months ended September 30, 2024 totaling $39,743,653 include items such as marketing and administrative costs, consultant compensation, insurance, legal and other professional fees, compliance, website maintenance and loss on share fair value adjustment.

On January 24, 2020, STCB executed a promissory note for $100,000 with Sklar. The note bore interest at 4% per annum, compounded monthly, was unsecured, and matured two years from the original date of issuance. This loan was subsequently amended to mature on July 19, 2023. On June 28, 2021, STCB executed an additional promissory note with Sklar in the principal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note with Sklar in the principal amount of $472,500 with the same terms as the prior notes and a maturity date of February 14, 2024. This note is also convertible into the Class A common stock at Sklar's option with a conversion price of $0.29 per share. On May 10, 2024, the maturity date of this note was extended to December 31, 2024. On December 29, 2022, STCB executed a sixth promissory note with Sklar in the principal amount of $2,000,000. This note bore interest at Prime + 4% per annum, compounds monthly, is secured, matures on August 1, 2023, and included warrants to purchase 285,714 shares of our common stock at a price of $0.01 per share. On March 3, 2023, STCB executed a seventh promissory note with Sklar in the principal amount of $800,000. This note bore interest at Prime + 4% per annum, compounds monthly, is secured, matures on July 1, 2023, and included warrants to purchase 114,286 shares of our common stock at a price of $0.01 per share.

On August 11, 2023, the Company issued to Sklar a consolidated secured promissory note (the "Consolidated Secured Promissory Note") in the principal sum of $4,000,000, with a maturity date of December 31, 2024. The Consolidated Secured Promissory Note carries a floating interest rate comprised of the Wall Street Journal Prime Rate (re-assessed on the first date of each month (plus 2%), and is secured by an amended and restated consolidated security agreement (the "Amended and Restated Consolidated Security Agreement"), by and between the Company and Sklar, dated August 11, 2023, The Consolidated Secured Promissory Note consolidated the outstanding loan obligations of the Company to Sklar evidenced pursuant to (i) the January 24, 2020 Amended Note, (ii) the June 28, 2021 Note, (iii) the September 17, 2021 Note, (iv) the December 13, 2021 Note, (v) the December 29, 2022 Note, and (vi) the March 3, 2023 Note, as summarized in the table below. The Amended and Restated Consolidated Security Agreement merged and integrated the December 29, 2022 Security Agreement and the March 3, 2023 Security Agreement, and provides a security interest in the Collateral (as defined in the Amended and Restated Consolidated Security Agreement) to secure the repayment of all principal, interest, costs, expenses and other amounts then or thereafter due under the Consolidated Secured Promissory Note until by the maturity date. Sklar was authorized to file financing statements to perfect the security interest in the Collateral without authentication by the Company. The following table represents Prior Notes that were part of the restructuring and related prior and updated terms (under the Consolidated Secured Promissory Note):

		Original			Original		Original			Revised		Revised
		Balance			maturity		rate			maturity		rate
January 24, 2020 Amended 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, 2021 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	(1)

(1)	Note that $1,527,500 of this total was repaid to Mr. Sklar from proceeds under the Gibraltar Loan.

The restructuring is accounted for as a debt modification. On May 31, 2024, the Consolidated Secured Promissory Note was amended by that certain Amendment to Consolidated Secure Promissory Note, by and between STCB and Mr. Sklar, dated May 31, 2024 (the "2024 Consolidated Note Amendment" and together with the Consolidated Secured Promissory Note, the "Amended Consolidated Secured Promissory Note"). The 2024 Consolidated Note Amendment, among other things, extended the maturity date to August 31, 2026, provided that to the extent amounts remain due and payable on the maturity date, it will be extended until August 31, 2027.

The Company also issued a February 14, 2022 Note to Sklar in the principal amount of $472,500 that was not included in the note consolidation. On May 10, 2024, the Company and Sklar entered into an amendment to the February 14, 2022 Note to extend the maturity date of the February 14, 2022 Note to December 31, 2024. The February 14, 2022 Note bore interest at 4% per annum, was unsecured, and was to mature two years from the original date of issuance. This note may also convert into shares of Company common stock at the 10-day volume weighted average trading price of the Company common stock for the 10-day period prior to the issuance of the Note, which was calculated as $0.29 per share. The February 14, 2022 Note has been repaid in full and the Company has no further obligations under such note.

Additionally, on May 24, 2024, the Company entered into the Loan and Security Agreement, which allowed the Company to reduce long-term debt and expand its access to working capital (see Note 6). In connection with the Loan and Security Agreement, the Lender required Mr. Sklar to enter into a subordination agreement pursuant to which Mr. Sklar's rights under (i) the February 14, 2022 Note, as amended and (ii) the Consolidated Secured Promissory Note would be subordinated to the lender's rights under the Loan and Security Agreement.

In exchange for the subordination of and the maturity extension reflected in the Amended Consolidated Secured Promissory Note, $2,000,000 of the revolving loan available cash under the Loan and Security Agreement was used to repay the February 14, 2022 Note in its entirety and to pay down the interest and a portion of principal balance on the Amended Consolidated Secured Promissory Note. As of September 30, 2024 and December 31, 2023, the outstanding principal due to Mr. Sklar under outstanding notes was $2,472,500 and $4,472,500, respectively. As of September 30, 2024 and December 31, 2023, there was no accrued interest due on these notes.

On May 24, 2024, (i) Starco Brands, Inc., a Nevada corporation ("Starco" or the "Company"), (ii) and each of Starco's subsidiaries, Whipshots Holdings, LLC, a Delaware limited liability company ("Whipshots Holdings"), Whipshots, LLC, a Wyoming limited liability company ("Whipshots"), The AOS Group Inc., a Delaware corporation ("AOS Group"), Skylar Body, LLC, a Delaware limited liability company ("Skylar"), Soylent Nutrition, Inc., a Delaware corporation ("Soylent"; and together with Starco, Whipshots Holdings, Whipshots, AOS Group, Skylar, each individually, a "Borrower" and collectively, the "Borrowers"), and (iii) Gibraltar Business Capital, LLC, a Delaware limited liability company (the "Lender") entered into a Loan and Security Agreement (the "Loan and Security Agreement"), allowing Starco Brands to reduce a portion of its long term debt (including retiring the Soylent Revolver) and expand its access to working capital. Capitalized terms not otherwise defined will have the meanings set forth in the Loan and Security Agreement.

The Loan and Security Agreement provides for a revolving line of credit in the amount not to exceed $12.5 million at any one time, or the Revolving Loan Commitment Amount in return for a first priority security interest in the Collateral. The Revolving Commitment Amount is supplemented by a Permitted Overadvance Amount of $1.5 million. The first $1.5 million in Revolving Loans drawn on this line will be considered permitted overadvances, and the Permitted Overadvance Amount shall be reduced by $125,000 beginning on June 1, 2024, and the first day of each month thereafter. The aggregate principal balance of all Revolving Loans outstanding at any time shall not exceed the Revolving Loan Availability, which is equal to the lesser of the Revolving Loan Commitment Amount or the Borrowing Base Amount; if the aggregate principal balance does exceed the availability, the Company shall immediately make a repayment to eliminate such excess. The Revolving Line matures on May 24, 2026, and such Maturity Date will be automatically extended for one (1) year, subject to the satisfaction of certain terms and conditions described in the Loan and Security Agreement.

Each Revolving Loan advanced under the Revolving Loan Commitment bears interest at a rate per annum equal to One Month Term SOFR plus the Applicable Margin. If a Revolving Loan or any portion thereof is considered a part of the Permitted Overadvance Amount under the Loan and Security Agreement, the Applicable Margin for such loan shall be increased by an additional two percent (2.00%) per annum. Revolving Loans may be repaid at any time and reborrowed up to, but not including the Maturity Date. On the Maturity Date, the outstanding aggregate principal balance of all Revolving Loans shall be due and payable. The interest rate for the revolving loan was 10.00% as of September 30, 2024.

Accrued and unpaid interest on the unpaid principal balance of the Revolving Loans shall be due and payable commencing on June 1, 2024 and on the first date of each calendar month thereafter. All accrued and unpaid interest shall be due and payable on the maturity date.

Subject to the satisfaction of certain terms and conditions described in the Loan and Security Agreement, the Borrowers may request to increase the Revolving Loan Commitment by an aggregate amount not less than $1 million not exceeding $2.5 million. Such request may be accepted by Lender in its sole and absolute discretion.

The Loan and Security Agreement contains customary limitations, including limitations on indebtedness, liens, fundamental changes to business or organizational structure, investments, loans, advances, guarantees, and acquisitions, asset sales, dividends, stock repurchases, stock redemptions, and the redemption, payment or prepayment of other debt, and transactions with affiliates. We are also subject to financial covenants, including a minimum EBITDA covenant and a maximum Unfinanced Capital Expenditures.

The Loan and Security Agreement also contains customary events of default, including nonpayment of principal, interest, fees, or other amounts when due, violation of covenants, breaches of representations or warranties, cross defaults, change of control, insolvency, bankruptcy events, and material judgments. Some of these events of default allow for grace periods or are qualified by materiality concepts. Upon the occurrence of an event of default, the outstanding obligations under the Loan and Security Agreement may be accelerated and become due and payable immediately. As of September 30, 2024, the Company was in compliance with all loan covenants relating to the agreement and the available borrowing amount was approximately $5.8 million.

Going Concern

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company identified that a substantial doubt exists related to the Company's ability to meet its obligations as they become due within one year of the date of the financial statements being issued. Principal conditions that gave rise to this substantial doubt include historical net losses as indicated by the Company's accumulated deficit of approximately $86,100,000 at September 30, 2024, which includes the impact of its net losses of $6,527,088 and $22,090,177 for the three and nine months ended September 30, 2024, and total debt on the balance sheet of $8,808,010 as of September 30, 2024, with a small portion of the debt coming due within one year of the date of the financial statements being issued. Management evaluated the principal conditions that initially give rise to the substantial doubt and note that the historical net losses and accumulated deficit impact are justified as they are primarily made up of non-cash expenses or one-time non-recurring expenses, such as goodwill impairment, stock-based compensation expense, fair value share adjustment loss and acquisition transaction expenses. Total debt of $8,080,010 on the balance sheet as of September 30, 2024 includes $2,472,500 of notes payable to Ross Sklar ("Sklar"), who has a large minority ownership of the Company that provides incentive for Mr. Sklar to extend or refinance the notes before the notes become due, as seen historically (see Note 8). Management plans include (i) continuing to increase net cash provided by operating activities, which was $517,879 for the nine months ended September 30, 2024, while decreasing net cash provided by financing activities, and (ii) obtaining an alternative financing source to pay off all current debt outstanding and to provide additional working capital, if needed. To achieve these objectives, management has proposed and approved plans to increase top line revenue for each segment while decreasing overall expenses as a percentage of revenue, as a result of realizing synergies from the acquisitions of AOS, Skylar and Soylent, and utilizing the Company's back-end shared service model to reduce expenses. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the aforementioned uncertainties.

Working Capital Surplus Deficit

		September 30,			December 31,
		2024			2023
Current assets		$	28,970,685			$	25,235,590
Current liabilities			57,758,203				57,672,403
Working capital deficit		$	(28,787,518	)		$	(32,436,813	)

The increase in current assets is primarily due to increases in prepaid expenses and other current assets and inventory of approximately $1.5 million and $2.5 million, respectively, offset by a decrease in accounts receivable of approximately $0.6 million. Current liabilities stayed relatively constant, which is primarily a result of an increase in accounts payable and other payables and accrued liabilities of approximately $5.7 million and $1.0 million, respectively, offset by decreases in notes payables, lines of credit and the fair value of share adjustment account of approximately $2.0 million, $3.8 million and $1.4 million, respectively.

Cash Flows

		Nine Months Ended September 30,
		2024			2023
Net cash provided by (used in) operating activities		$	517,879			$	(286,820	)
Net cash (used in) investing activities			(286,327	)			(183,646	)
Net cash (used in) provided by financing activities			(377,101	)			535,974
(Decrease) increase in cash		$	(145,549	)		$	65,508

Operating Activities

Net cash provided by operating activities was $517,879for the nine months ended September 30, 2024 and was primarily due to the impact of the loss for the nine month period and an increase in prepaid expenses and other assets of $1,458,391, offset by loss on stock payable share adjustment of $15,703,049 andan increase in accounts payable, accounts payable-related parties and other payables/accrued liabilities of $7,262,562.

Net cash used in operating activities was $286,820 for the nine months ended September 30, 2023 and was primarily due to an increase in accounts receivable of $2,397,559 and inventory of $1,575,691, which was partially offset by an increase in of accounts payable of $2,512,173 and other accrued liabilities of 327,648.

Investing Activities

Net cash used in investing activities was $286,327for the nine months ended September 30, 2024 and was due to the purchase of property and equipment and intangibles.

Net cash used in investing activities was $183,646 for the nine months ended September 30, 2023 and was primarily due to the purchase of intangibles in the amount of approximately $233,108 and was partially offset by cash received in the acquisition of a business of $68,062.

Financing Activities

For the nine months ended September 30, 2024, net cash used in financing activities was $377,101, which primarily includes payments toward (i) lines of credit, (ii) a revolving loan, (iii) notes payable and iv) loans from related parties of approximately $23.5 million, offset by proceeds from a revolving loan and a note payable of approximately $23.2 million.

For the nine months ended September 30, 2023, net cash provided by financing activities was $535,974, which primarily includes $800,000 of loan advances from Ross Sklar, which was partially offset by net payments on the line of credit of $136,500 and $98,550 of repurchases of common stock.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Effects of Inflation

Inflationary factors such as increases in the costs to acquire goods and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of revenues if the selling prices of our services do not increase with these increased costs.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements have been prepared in conformity with US GAAP. The preparation of our Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and related disclosures. These estimates and assumptions are often based on historical experience and judgements that we believe to be reasonable under the circumstances at the time made. However, all such estimates and assumptions are inherently uncertain and unpredictable, and actual results may differ. It is possible that other professionals, applying their own judgement to the same facts and circumstances, could develop and support alternative estimates and assumptions that could result in material changes to our operating results and financial condition. We evaluate our estimates and assumptions on an ongoing basis.

We consider our critical accounting estimates to include the assumptions and estimates associated with timing for revenue recognition, testing goodwill for impairment, recoverability of long-lived assets, income taxes, fair value of contributed services, and assumptions used in the Black-Scholes valuation methods, such as expected volatility, risk-free interest rate and expected dividend rate. Our significant accounting policies are more fully described in the notes to our Condensed Consolidated Financial Statements. We believe that the following accounting policies and estimates are critical to our business operations and understanding our financial results.

Acquisition Accounting

We account for acquisitions in accordance with the acquisition method of accounting pursuant to ASC 805, Business Combinations. Accordingly, for each acquisition, we record the fair value of the assets acquired and liabilities assumed as of the acquisition date and recognize the excess of the consideration paid over the fair value of the net assets acquired as goodwill. For each acquisition, the fair value of assets acquired and liabilities assumed is determined based on assumptions that reasonable market participants would use to value the assets in the principal (or most advantageous) market.

In determining the fair value of the assets acquired and the liabilities assumed in connection with acquisitions, management engages third-party valuation experts. Management is responsible for these internal and third-party valuations and appraisals.

Revenue Recognition

STCB, excluding its subsidiaries, earns a majority of its revenues through the sale of food products, primarily through Winona. Revenue from retail sales is recognized at shipment to the retailer.

AOS, one of STCB's wholly owned subsidiaries, earns its revenues through the sale of premium body and skincare products. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, including Amazon Fulfillment by Amazon ("Amazon FBA"), is recognized upon shipment of merchandise or FOB destination.

Skylar, one of STCB's wholly owned subsidiaries, earns its revenues through the sale of fragrances. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, including Amazon FBA, is recognized either upon shipment of merchandise or FOB destination.

Soylent, one of STCB's wholly owned subsidiaries, earns its revenues through the sale of nutritional drinks. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, is recognized upon shipment of merchandise.

Whipshots Holdings, an 85% owned subsidiary, earns its revenues as royalties from the licensing agreements it has with Temperance, a related entity. STCB licenses the right for Temperance to manufacture and sell vodka infused whipped cream. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is based on contractual terms. The Company recognizes its revenue under these licensing agreements only when sales are made by Temperance to a third party.

The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.

Goodwill Impairment

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.

We review goodwill for impairment at least annually or more frequently if indicators of impairment exist. Our goodwill impairment test may require the use of qualitative judgements and fair-value techniques, which are inherently subjective. Impairment loss, if any, is recorded when the fair value of goodwill is less than its carrying value for each reporting unit.

No impairment losses related to goodwill were recognized for the nine months ended September 30, 2024 and 2023.

Recoverability of Long-Lived Assets

We review intangible assets, property, equipment and software with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to future undiscounted cash flows that the asset or asset group is expected to generate. If assets are determined to be impaired, the impairment loss to be recognized equals the amount by which the carrying value of the asset or group of assets exceeds its fair value. Significant estimates include but are not limited to future expected cash flows, replacement cost and discount rates. There were no impairment losses related to long-lived assets for the nine months ended September 30, 2024 and 2023.

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25") with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the condensed consolidated financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the condensed consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its condensed consolidated financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable as we are a "smaller reporting company."

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Interim Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) and through the COSO 2013 framework as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC's rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Interim Chief Financial Officer concluded that, as of September 30, 2024, these disclosure controls and procedures were not effective.

A material weakness, as defined in the standards established by the Sarbanes-Oxley, 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 condensed consolidated financial statements will not be prevented or detected on a timely basis.

The ineffectiveness of the Company's internal control over financial reporting was due to the following material weaknesses:

●	Lack of an audit committee
●	Lack of corporate documentation

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. For a list of risk factors, please refer to our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 3, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Sale of Securities.

On January 1, 2024, the Company entered into agreements with employees and consultants for services to be performed. As consideration therefore, the Company granted Options to purchase 4,660,000 shares of common stock. The Options expire ten years from the grant date and vest over various time periods ranging from two to four years, with the majority vesting over a four-year term.

Effective February 14, 2024, the Company settled the Soylent Opening Balance Holdback and $2,446,380 equity consideration payable by issuing 16,309,203 shares of Class A common stock to the Soylent Shareholders as outlined in the Soylent merger agreement.

Effective February 14, 2024, the Soylent Share Adjustment Date, the Company settled $18,099,951 of the $36,931,330 fair value liability outstanding on December 31, 2023 by issuing 133,087,875 shares of Class A common stock to the Soylent Shareholders as outlined in the Soylent Merger Agreement and Stockholders Agreement. After the effect of the shares issued during the quarter and changes in the derivative liability at period end, the total share adjustment value as of March 31, 2024 is $20,753,328.

On May 16, 2024, the Company entered into agreements with three employees and a consultant for services to be performed pursuant to which the Company granted Options under the Company's Equity Plan to purchase up to an aggregate of 390,000 shares of Class A common stock. The Options expire ten years from the grant date and vest over a four-year term.

Effective May 20, 2024, it was determined, in accordance with the Soylent Merger Agreement, that 7,445,490 shares of the 18,571,429 shares of Class A common stock held back from the former Soylent shareholders were not due, the effect of which resulted in an adjustment to the liability of $1,012,587; in conjunction with an increase in the fair value of the derivative liability at period end, the total share adjustment value on the balance sheet as of June 30, 2024 was $30,441,480.

On March 12, 2024, the 18-month holdback period from the date of the AOS Acquisition was completed, the Company had no outstanding claims and issued the former shareholders of AOS an aggregate 4,979,731 shares of Class A common stock and $6,137 in cash that was being held back on the December 31, 2023 balance sheet.

Following the 18-month holdback period from the date of the Skylar Acquisition on December 29, 2022, effective June 30, 2024, the Company issued former Skylar shareholders an aggregate amount of 11,573,660 shares of Class A common stock, which satisfied an equity consideration payable of $2,314,732 on the balance sheet as of June 30, 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINING SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS

EXHIBIT INDEX

Exhibit No.		Exhibit Description
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.
4.6 (*)		Amendment to Registration Rights Agreement, dated May 14, 2024, by and among Starco Brands, Inc. and YL Management LLC in its capacity as Stockholder Representative on behalf of the Investors (as defined in the Registration Rights Agreement, by and between Starco Brands, Inc. and Hamilton Start, LLC, dated February 15, 2023), filed as Exhibit 4.6 to the Company's Quarterly Report on Form 10-Q filed with the Commission on August 14, 2024.

4.7 (*)		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, filed as Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the Commission on February 21, 2023.
4.8 (*)		Amendment to Voting Agreement, dated May 14, 2024, by and among Starco Brands, Inc., Ross Sklar, and the stockholders of the Company listed on Schedule A to the Voting Agreement, by and between Starco Brands, Inc., Ross Sklar, and the stockholders of the Company listed on Schedule A thereto, dated February 15, 2023, filed as Exhibit 4.8 to the Company's Quarterly Report on Form 10-Q filed with the Commission on August 14, 2024.

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, 2023.
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 (*)		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.
10.10 (*)		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 (*)		Amendment to Consolidated Secured Promissory Note, by and between Starco Brands and Ross Sklar, dated May 31, 2024, filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on May 31, 2024.
10.12 (*)(+)		Loan and Security Agreement, dated as of May 24, 2024, by and among, Starco Brands, Inc., Whipshots Holdings, LLC, Whipshots, LLC, The AOS Group Inc., Skylar Body, LLC, Soylent Nutrition, Inc., Gibraltar Business Capital, LLC, and certain other persons from time to time that may become a party thereto, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on May 31, 2024.
10.13 (*)		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.
10.14 (*)		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.
10.15 (*) (+)		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.
10.16 (*)		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.

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.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STARCO BRANDS, INC
	(Registrant)
	By:	/s/ Ross Sklar
		Ross Sklar
		Interim Chief Financial Officer and duly authorized officer
		(Principal Financial and Accounting Officer)
		November 14, 2024