Starco Brands, Inc.: Form 10-Q for the period ended Jun 30, 2026

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, 2025, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) ON APRIL 14, 2026. 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 2026 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 TSG, a related party entity, 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.

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 Pure®

STCB is the marketer of record, but not the owner of record for the Winona Pure® line of products. This line originated with Winona Butter Flavor Popcorn Spray and has since expanded with additional flavors of popcorn spray (Caramel, Garlic Butter and Hot Sauce). Additionally, the brand has launched a Sauce Spray line of products (Hot Sauce, Garlic Butter and Butter). STCB provides marketing services for Winona pursuant to a licensing agreement. The Winona line of products is sold in Walmart, H-E-B, Meijer and Food Lion grocery stores, among other retailers. STCB also offers the Winona Popcorn Spray line on Amazon through our strategic partner Pattern (formally iServe), who is a stockholder in STCB.

Whipshots®

In December 2021, the Company launched a new product line consisting of vodka-infused, whipped-cream aerosols, under the brand name “Whipshots” at Art Basel in Miami and garnered over 1 billion impressions world-wide, and sold-out of its limited quantity can launches on whipshots.com each day of the month of the December launch month. The Company launched brick and mortar retail distribution in the first quarter of 2022, signed a distribution agreement with Republic National Distributing Company (“RNDC”), one of the largest spirits distributors in the nation, and signed distribution agreements with others. Whipshots® is currently distributed in 47 of 50 states. The base flavors of Whipshots®– Vanilla, Mocha, Caramel and Chocolate – are accompanied by new and Limited Time flavors such as Peppermint, Lime, Pumpkin Spice, Strawberry and King Cake. We plan to continue to offer various additional Limited Time flavors over time. Whipshots® is produced by Temperance, where Sklar is a majority shareholder.

Whipshots® and Whipshotz® Trademarks

On September 8, 2021, Whipshots LLC, an indirect subsidiary of the Company, entered into an Intellectual Property Purchase Agreement, effective August 24, 2021, with Penguins Fly, LLC, a Pennsylvania limited liability company (“Seller”). The agreement provided that the Seller 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 is payable to Seller, 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 payments are subject to a minimum amount in each contract year and a maximum aggregate amount.

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 Brands Holdco, which is in turn 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 Brands Holdco, which is in turn 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 Brands Holdco, which is in turn 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 47 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 B for 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.

To support this strategy, the Company continues to pursue strategic partnerships and acquisitions. In July 2025, our indirect subsidiary Skylar entered into a license agreement with BlueUTA-I LLC, granting rights to the likeness and trademarks of artist Leah Kateb for use in commercial products. This agreement includes base and royalty compensation, equity grants, and stock options, and is expected to enhance brand visibility and drive product innovation across multiple categories.

Additionally, on July 29, 2025, the Company executed a non-binding exclusive Letter of Intent to acquire its contract manufacturers, collectively referred to as The Starco Group. This proposed transaction is expected to provide greater scale and margin efficiency through vertical integration and would result in the Company being renamed “STARCO,” with two primary operating subsidiaries. We have not acquired the contract manufacturers as of this Report, however, on July 2, 2026 the Company formed Starco Manufacturing, LLC, a Nevada limited liability company (“Manufacturing Holdco”), and on July 6, 2026, the Company formed Starco Brands, LLC, a Nevada limited liability company (“Brands Holdco” and together with Manufacturing Holdco, the “Holdcos”).

We will need to rely on sales of our Class A common stock and other sources of financing to raise additional capital. The purchases 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 remain committed to establishing ourselves as a premier brand owner and third-party marketer of innovative, cutting-edge technologies within the consumer products marketplace, with the ultimate goal of driving success and enhancing stockholder value. The Company will continue to evaluate its opportunities to further set the strategy for 2026 and beyond.

For more information and to view our products, you may visit our websites at www.starcobrands.com (http://www.starcobrands.com), www.whipshots.com (http://www.whipshots.com), www.spraywinona.com (http://www.spraywinona.com), www.artofsport.com (http://www.artofsport.com), www.skylar.com (http://www.skylar.com) and www.soylent.com (http://www.soylent.com).

Offices

Our principal executive offices are located at 706 N Citrus Avenue, Los Angeles, California 90038, and our telephone number is (844) 478-2726. Our website is www.starcobrands.com (http://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.

Employees

STCB and its subsidiaries had 26 full-time employees as of June 30, 2026 and used independent contractors and consultants on an as needed basis.

Results of Operations

Comparison of the three months ended June 30, 2026 to the three months ended June 30, 2025

30

Revenues

For the three months ended June 30, 2026, we recorded revenues of $7,836,040 compared to $10,586,121 for the three months ended June 30, 2025, a decrease of $2,750,081 or 26%. The decrease in the current period was primarily due to decreases in sales of Soylent stemming from an inability to receive product from its primary supplier, partially offset by increases in sales of Skylar.

Revenues, related parties

For the three months ended June 30, 2026, we recorded related party revenues of $229,752 compared to $421,379 for the three months ended June 30, 2025, a decrease of $191,627 or 45%. This decline was due to declines in sales of Whipshots due to continued softening in the spirits market.

Segment Revenue Results

The following discussion provides additional detail on segment-level revenue performance for the three months ended June 30, 2026 and 2025.

Soylent. Soylent revenues were $2,989,196 for the three months ended June 30, 2026, compared to $6,754,481 for the three months ended June 30, 2025. The change was primarily attributable to an inability to receive product from its primary supplier.

Skylar. Skylar revenues were $3,485,170 for the three months ended June 30, 2026, compared to $2,445,134 for the three months ended June 30, 2025. The increase was primarily due to the success of our marketing initiatives and new product rollouts.

Whipshots. Whipshots related-party revenues were $229,752 for the three months ended June 30, 2026, compared to $421,379 for the three months ended June 30, 2025. The change reflects continuing softening in the spirits market.

Winona. Winona revenues were $1,361,749 for the three months ended June 30, 2026, compared to $1,026,623 for the three months ended June 30, 2025.

AOS. AOS revenues were ($75) for the three months ended June 30, 2026, compared to $359,883 for the three months ended June 30, 2025. The decrease was primarily attributable to sales associated with a product launch in 2025 that did not recur in 2026. Results were further affected by changes to AOS’s go-to-market strategy during the current period, including its transition on Amazon from a consignment model to a wholesale model, as well as deductions recorded during the period relating to sales in prior periods.

Operating Expenses

For the three months ended June 30, 2026, our compensation expense amounted to $1,900,689, reflecting an increase of $238,718 or 14%, compared to $1,661,971 for the three months ended June 30, 2025. The increase is primarily attributable to the payment of employee bonuses in the quarter, partially offset by reduced headcount and stock-based compensation compared to the prior-year period.

For the three months ended June 30, 2026, our professional fees totaled $686,079, representing a decrease of $225,848 or 25%, compared to $911,927 in the prior period. 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 a reduction in outsourced accounting fees as we transitioned the function to internal employees in the second half of last year and decreased legal and audit and valuation fees in the current year.

For the three months ended June 30, 2026, our marketing, general and administrative expenses were $2,153,923, reflecting a decrease of $1,039,966 or 33%, compared to $3,193,889 for the three months ended June 30, 2025. The decrease primarily reflects lower amortization expense following the write-offs of intangible assets at our Soylent subsidiary at December 31, 2025, reduced broker commissions and marketing support costs at Soylent and AOS, and reduced borrower fees due to our year end refinancing, partially offset by increased marketing spend at Skylar.

For the three months ended June 30, 2026 and 2025, there was no fair value share adjustment gain or loss. The $3,692,529 fair value share adjustment gain related to the Soylent sellers’ rights was recognized during the six months ended June 30, 2025 (in the first quarter of 2025); see the six-month discussion below.

Other Expense

For the three months ended June 30, 2026, we had total other expense of $199,133 compared to total other expense of $494,694 for the three months ended June 30, 2025. For the three months ended June 30, 2026, the Company had interest expense of $193,048 compared to interest expense of $257,538 during the same period in 2025; the Company also had other expense of $6,085 for the three months ended June 30, 2026 as compared to other expense of $237,156 during the same period in 2025.

Net (Loss) Income

For the three months ended June 30, 2026, we reported a net loss of $1,461,634, compared to a net loss of $1,850,201 for the same period in 2025. The year-over-year improvement was primarily driven by lower operating expenses, including reduced marketing and professional fees, partially offset by lower revenue.

Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025

Revenues

For the six months ended June 30, 2026, we recorded revenues of $16,815,309 compared to $20,404,878 for the six months ended June 30, 2025, a decrease of $3,589,569 or 18%. The decrease was primarily due to decreases in sales of Soylent stemming from an inability to receive product from our primary supplier, partially offset by increases in sales of Skylar.

Revenues, related parties

For the six months ended June 30, 2026, we recorded related party revenues of $512,911 compared to $1,471,691 for the six months ended June 30, 2025, a decrease of $958,780 or 65%. This decline was due to declines in sales of Whipshots due to continued softening in the spirits market.

Segment Revenue Results

The following discussion provides additional details on segment-level revenue performance for the six months ended June 30, 2026 and 2025.

Soylent. Soylent revenues were $7,375,202 for the six months ended June 30, 2026, compared to $14,009,080 for the six months ended June 30, 2025. The change was primarily attributable to an inability to receive product from its primary supplier.

Skylar. Skylar revenues were $7,157,670 for the six months ended June 30, 2026, compared to $3,859,067 for the six months ended June 30, 2025. The increase was primarily due to the success of our marketing initiatives and new product rollouts.

Whipshots. Whipshots related-party revenues were $512,911 for the six months ended June 30, 2026, compared to $1,471,691 for the six months ended June 30, 2025. The decrease was primarily due to continuing softening in the spirits market.

Winona. Winona revenues were $2,227,682 for the six months ended June 30, 2026, compared to $1,991,194 for the six months ended June 30, 2025.

AOS. AOS revenues were $54,755 for the six months ended June 30, 2026, compared to $545,537 for the six months ended June 30, 2025. The decrease was primarily attributable to sales associated with a product launch in 2025 that did not recur in 2026 and changes to AOS’s go-to-market strategy during the current period.

Operating Expenses

For the six months ended June 30, 2026, our compensation expense amounted to $3,579,437, reflecting an increase of $181,278 or 5%, compared to $3,398,159 for the six months ended June 30, 2025.

For the six months ended June 30, 2026, our professional fees totaled $1,269,958, representing a decrease of $422,193 or 25%, compared to $1,692,151 in the prior period. The decrease is primarily due to a reduction in outsourced accounting fees as we transitioned the function to internal employees in the second half of last year and decreased legal and audit and valuation fees in the current year.

For the six months ended June 30, 2026, our marketing, general and administrative expenses were $4,581,744, reflecting a decrease of $1,996,563 or 30%, compared to $6,578,307 for the six months ended June 30, 2025. The decrease primarily reflects lower amortization expense following the write-offs of intangible assets at our Soylent subsidiary at December 31, 2025, reduced broker commissions and marketing support costs at Soylent and AOS, and reduced borrower fees due to our year end refinancing, partially offset by increased marketing spend at Skylar.

For the six months ended June 30, 2026, there was no fair value share adjustment gain. For the six months ended June 30, 2025, the Company recognized a change in fair value share adjustment gain of $3,692,529 due to a decrease in the fair value of the Soylent sellers’ rights to potentially receive additional Starco shares, the final settlement of which occurred in 2025.

Other Expense

For the six months ended June 30, 2026, we had total other expense of $452,635 compared to total other expense of $1,053,526 for the six months ended June 30, 2025. For the six months ended June 30, 2026, the Company had interest expense of $431,033 compared to interest expense of $494,174 during the same period in 2025; the Company also had other expense of $21,602 for the six months ended June 30, 2026 as compared to other expense of $559,352 during the same period in 2025.

Net (Loss) Income

For the six months ended June 30, 2026, we reported a net loss of $2,291,354, compared to net income of $125,904 for the same period in 2025. The year-over-year change was primarily driven by the $3,692,529 fair value share adjustment gain recognized in the prior-year period, which did not recur in 2026, and lower revenue, partially offset by reduced operating expenses.

Liquidity and Capital Resources

As reflected in the accompanying condensed consolidated financial statements, we had an accumulated deficit of $104,579,639 as of June 30, 2026. Net cash used in financing activities for the six months ended June 30, 2026 was $149,202, consisting of payments on notes payable. During the same period in 2025, we generated $693,062 in cash from financing activities, primarily due to $362,194 of net proceeds from the revolving loan and $330,868 in net proceeds from notes payable.

We used $768,074 of net cash in operating activities for the six months ended June 30, 2026. Operating cash outflows were primarily driven by our net loss of $2,291,354, partially offset by non-cash adjustments (including $708,628 of amortization and $463,880 of stock-based compensation) and by working-capital changes, including a decrease in accounts receivable of $529,791 offset by an increase in inventory of $414,285. During the same period in 2025, our net cash used in operating activities was $859,889 compared to net income of $125,904 for the period, negatively affected by the $3,692,529 non-cash gain recognized during the period.

Notes Payable - Ross Sklar (Chief Executive Officer)

On August 11, 2023, the Company issued the Consolidated Secured Note to Ross Sklar in the principal amount of $4,000,000, consolidating several prior notes. The Consolidated Secured Note bore interest at the Wall Street Journal Prime Rate plus 2 percent, reassessed monthly, and was secured by substantially all of our assets pursuant to an Amended and Restated Consolidated Security Agreement, dated August 11, 2023. On May 31, 2024, we and Mr. Sklar entered into an amendment extending the maturity date of the Consolidated Secured Note to August 31, 2026, with an automatic extension to August 31, 2027 if amounts remain outstanding at maturity. The restructuring was accounted for as a debt modification.

During 2024, we repaid $1,527,500 of principal under the Consolidated Secured Note using proceeds from the Gibraltar Loan. As of December 31, 2024, the outstanding principal balance under the Consolidated Secured Note was $2,472,500, with no accrued interest outstanding.

On August 13, 2025, we and Mr. Sklar entered into a Second Amendment to the Consolidated Secured Note. The Second Amendment consolidated two additional loans made by Mr. Sklar to us in the aggregate principal amount of $1,000,000, consisting of a $500,000 loan funded on July 15, 2025 and a $500,000 loan funded on August 15, 2025. After giving effect to these additional loans and prior repayments, the principal balance under the Consolidated Secured Note was adjusted to $3,472,500. The Second Amendment reaffirmed that the Consolidated Secured Note remained subject to the Subordination Agreement dated May 24, 2024 between Mr. Sklar and Gibraltar Business Capital, LLC. Except as modified by the Second Amendment, all other terms of the Consolidated Secured Note, including interest rate, repayment provisions, and maturity, remained unchanged.

As of June 30, 2026, the outstanding principal balance owed to Mr. Sklar under the Consolidated Secured Note was $3,472,500. Interest expense related to notes held by Mr. Sklar was $87,792 and $61,393 for the three months ended June 30, 2026 and 2025, respectively, and $172,713 and $120,705 for the six months ended June 30, 2026 and 2025, respectively.

Related Party Bridge Loan – The Starco Group, Inc.

On December 22, 2025, we entered into the Bridge Loan with TSGI, a company wholly-owned by Ross Sklar, the Company’s Chief Executive Officer. The Bridge Loan provides for a bridge term loan of up to $5,000,000, including an initial disbursement of $4,500,000 and additional delayed drawdowns of up to $500,000 through December 31, 2026. The initial proceeds were used to repay our outstanding obligations under the Gibraltar Loan and to support working capital needs.

The Bridge Loan bears interest at the lesser of (i) the Highest Lawful Rate or (ii) the Prime Rate (not less than 6.00 percent) plus 4.25 percent. Interest is payable monthly beginning January 1, 2026. Principal payments begin January 1, 2027 and continue through 2030, with scheduled monthly payments ranging from $28,000 to $66,000. We may prepay the Bridge Loan at any time without penalty. The Bridge Loan matures on the earlier of (i) five years from issuance, (ii) acceleration upon default, or (iii) full repayment.

As of June 30, 2026, the outstanding principal balance under the Bridge Loan was $4,500,000, and interest expense related to the loan was $83,875 and $0 for the three months ended June 30, 2026 and 2025, respectively, and $221,375 and $0 for the six months ended June 30, 2026 and 2025, respectively.

Going Concern

We have concluded that substantial doubt exists about our ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued. The principal conditions giving rise to substantial doubt include our history of recurring net losses and continued working capital deficiencies. As of June 30, 2026, we had an accumulated deficit of $104,579,639, including net losses of $1,461,634 and $2,291,354 for the three and six months then ended, and a working capital deficit of approximately $2.5 million.

Management has evaluated the factors contributing to these conditions. Our historical net losses and accumulated deficit are primarily attributable to non-cash or one-time, non-recurring expenses, including goodwill impairment, stock-based compensation, fair value share adjustment losses, and acquisition-related transaction costs.

As of June 30, 2026, our total debt was $7,972,500, consisting of $3,472,500 of notes payable to our CEO, Ross Sklar and $4,500,000 outstanding under the Bridge Loan. Mr. Sklar holds a significant minority ownership interest, is the Company’s CEO and a member of the Board, and historically, certain notes payable to him have been extended or refinanced; however, there can be no assurance that such extensions or refinancings will continue in the future.

To address the conditions giving rise to substantial doubt, management intends to pursue additional financing sources to enhance liquidity, provide working capital, and support repayment of existing obligations, if necessary. Management also continues to implement strategic initiatives to increase revenue in our most profitable sales channels and reduce overall expenses as a percentage of revenue. Improvements to date have resulted, and are expected to continue to result, from operational synergies achieved through our shared services model and our focus on profitable sales channels.

Despite these plans, the conditions described above continue to raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Working Capital

The decrease in current assets is primarily due to a decrease in cash of $917,276 and a decrease in accounts receivable of $529,791, partially offset by increases in inventory of $414,285 and prepaid expenses of $67,721. The increase in current liabilities is primarily the result of an increase in other payables and accrued liabilities of $244,411, an increase in notes payable of $221,267 and an increase in related-party payables, partially offset by a decrease in accounts payable of $784,290.

Cash Flows

Operating Activities

Net cash used in operating activities was $768,074 for the six months ended June 30, 2026, compared to net cash used of $859,889 for the six months ended June 30, 2025, an decrease in cash used of $91,815. The decrease was primarily attributable to a net loss of $2,291,354 in the current period, compared to net income of $125,904 in the prior-year period, which in the prior year included a $3,692,529 non-cash gain on the stock payable share adjustment that reduced prior-year operating cash flows.

For the six months ended June 30, 2026, net loss of $2,291,354 was adjusted for non-cash items, including amortization of intangible assets of $708,628, stock-based compensation of $463,880, and depreciation of $3,262. Amortization expense decreased approximately $715,000 compared to the prior-year period, primarily due to the impairment of certain Soylent intangible assets recognized in 2025, which reduced the remaining amortizable basis of those assets.

Changes in operating assets and liabilities used net cash of approximately $22,959 during the six months ended June 30, 2026. This was primarily driven by a decrease in accounts receivable of $529,791 and increases in other payables and accrued liabilities (including related-party amounts) of $563,361 and in related-party accounts payable of $146,216, offset by an increase in inventory of $414,285, a decrease in accounts payable of $784,290, and an increase in prepaid expenses and other assets of $67,721.

Investing Activities

There were no investing activities during the six months ended June 30, 2026.

Net cash used in investing activities was $130,951 for the six months ended June 30, 2025 and was due to the purchase of property and equipment and intangibles.

Financing Activities

For the six months ended June 30, 2026, net cash used in financing activities was $149,202, consisting of payments on notes payable.

For the six months ended June 30, 2025, net cash provided by financing activities was $693,062, which includes net proceeds of $362,194 on the revolving loan and net proceeds of $330,868 on notes payable.

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, expense 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 of goodwill and intangibles for impairment, recoverability of long-lived assets, estimating the allowance for doubtful accounts, determining the net realizable value of inventory, assessing the value of certain share-based adjustments, 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 indirect 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 indirect 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 indirect 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 indirect 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) 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.

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 six months ended June 30, 2026 and 2025.

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 six months ended June 30, 2026 and 2025.

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, and our relationships with, and the economic status of, our partners and customers.

Inventory

Inventory consists of premium body and skincare products, fragrances and nutritional products. Inventory is measured and stated at average cost as of June 30, 2026. 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.

Fair Value of Financial Instruments

We follow 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:

The carrying amount of our consolidated financial assets and liabilities, such as cash, accounts receivable, accounts payable, prepaid expenses, and accrued expenses approximate their fair value because of the short maturity of those instruments. Our 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 June 30, 2026 and December 31, 2025.

We may be required to contemplate the fair value of certain share-based adjustments, which require assumptions about market conditions, volatility and other relevant factors which are often obtained from third-party valuation firms. Significant changes to any unobservable input may result in a significant change in the fair value measurement.

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.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal 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 Principal Executive Officer and Principal Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of June 30, 2026, 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 segregation of duties
• 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 June 30, 2026 that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.

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, 2025, as filed with the SEC on April 14, 2026.