Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the consolidated results of operations and financial condition of Starco Brands, Inc. and subsidiaries as of December 31, 2025 and 2024 and for the years ended December 31, 2025 and 2024 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Annual Report following Item 16 ("Form 10-K Summary"). References in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "us," "we," "our," and similar terms refer to Starco Brands, Inc. This Annual Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Annual Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions that may be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words "may," "will," "expect," "believe," "anticipate," "project," "plan," "intend," "estimate," and "continue," and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that could cause our actual results of operations and financial condition to differ materially are set forth in Item 1A, "Risk Factors" section of this Annual Report on Form 10-K.

We caution that these factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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 Distilling Company ("Temperance"), where Sklar is a majority shareholder.

Whipshots® and Whipshotz® Trademarks

On September 8, 2021, Whipshots LLC, a Wyoming limited liability company ("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 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 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 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: Starco Brands and Starco Manufacturing.

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, www.whipshots.com, www.spraywinona.com, www.artofsport.com, www.skylar.com and www.soylent.com.

Results of Operations

Comparison of the year ended December 31, 2025 to the year ended December 31, 2024

		December 31,				December 31,
		2025				2024				Change
Revenues, net		$	37,314,827			$	52,527,130			$	(15,212,303	)
Revenues, related parties, net			3,164,581				6,140,172				(2,975,591	)
Cost of goods sold			21,577,400				33,907,301				(12,329,901	)
Cost of goods sold, related parties			3,249,562				3,896,551				(646,989	)
Gross profit			15,652,446				20,863,450				(5,211,004	)
Operating expenses:
Compensation expense			7,188,607				9,037,123				(1,848,516	)
Professional fees			2,662,177				3,533,052				(870,875	)
Marketing, general and administrative			13,150,677				18,890,738				(5,740,061	)
Fair value share adjustment			(3,692,529	)			(10,544,263	)			6,851,734
Goodwill impairment			1,127,208				14,327,871				(13,200,663	)
Intangibles impairment			14,000,000				13,304				13,986,696
Total operating expense			34,436,140				35,257,825				(821,685	)
Loss from operations			(18,783,694	)			(14,394,375	)			(4,389,319	)
Other expense:
Interest expense			1,082,104				961,588				120,516
Other expense			807,260				1,978,586				(1,171,326	)
Total other expense			1,889,364				2,940,174				(1,050,810	)
Loss before provision for income taxes			(20,673,058	)			(17,334,549	)			(3,338,509	)
Provision for income taxes			-				-				-
Net loss			(20,673,058	)			(17,334,549	)			(3,338,509	)
Net loss attributable to non-controlling interest			254,163				316,339				(62,176	)
Net loss attributable to Starco Brands		$	(20,927,221	)		$	(17,650,888	)		$	(3,276,333	)

Revenues

For the year ended December 31, 2025, we recorded revenues of $37,314,827, compared to $52,527,130 for the year ended December 31, 2024 for a decrease of $15,212,303 or 29%. The decrease was primarily driven by reduced product sales of Soylent due to an intentional focus on de-emphasizing lower margin sales channels, and some impact from inventory constraints which limited our capacity to accept and fulfill customer orders.

Revenues, related parties

For the year ended December 31, 2025, the Company recorded related party revenues of $3,164,581 compared to $6,140,172 for the year ended December 31, 2024, resulting in a decrease of $2,975,591 or 48%. This decline was primarily attributable to a reduction in royalties received during the current period.

Cost of Goods Sold

For the year ended December 31, 2025, we recorded cost of goods sold of $21,577,400, compared to $33,907,301 for the year ended December 13, 2024, a decrease of $12,329,901 or 36%. The decrease is primarily a result of the reduction in sales volumes.

Cost of Goods Sold, Related Parties

For the year ended December 31, 2025, our cost of goods sold, related parties amounted to $3,249,562, reflecting a decrease of $646,989 or 17%, compared to $3,896,551 for the year ended December 13, 2024. The decrease can be attributed to a reduction in sales volumes of Winona.

Operating Expenses

For the year ended December 31, 2025, our compensation expense amounted to $7,188,607, reflecting a decrease of $1,848,516 or 20%, compared to $9,037,123 for the year ended December 31, 2024. The decline primarily reflects workforce reductions implemented by the Company, as well as the absence of bonus accruals in fiscal year 2025.

For the year ended December 31, 2025, our professional fees totaled $2,662,177, representing a decrease of $870,875 or 25%, compared to $3,533,052 in the prior year. 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 decline was mainly driven by a reduction in consulting and contractor services during the current period. Additionally, the prior-year period reflects the impact of a transition to a new accounting system that occurred during Q3 2024. As part of this implementation, certain expense accounts-specifically contractor and consultant costs-were reclassified from professional fees to marketing and advertising. As a result, professional fees in the prior-year period may not be directly comparable

For the year ended December 31, 2025, our marketing, general and administrative expenses amounted to $13,150,677, reflecting a decrease of $5,740,061 or 30%, compared to $18,890,738 for the year ended December 31, 2024. The year-over-year reduction was primarily driven by lower royalty costs and the termination of several vendor services, implemented as part of a broader cost-savings initiative.

For the year ended December 31, 2025, we incurred a fair value share adjustment gain of $3,692,529 compared to a fair value share adjustment gain of $10,544,263 in the prior year; this was due to a decrease in the fair value of the Soylent sellers' rights to potentially receive additional Starco shares and included the final settlement of the liability in May 2025.

For the year ended December 31, 2025, we incurred a goodwill impairment loss of $1,127,208 related to the Soylent segment, reducing it to zero. As of December 31, 2024, the Starco Brands segment and the Soylent segment were impaired by $2,944,871 and $11,383,000, respectively, and had remaining goodwill balances of $0 and $1,127,208, respectively.

For the year ended December 31, 2025, we incurred an intangibles impairment loss related to the Soylent segment of $14,000,000; as of December 31, 2024, we incurred an intangibles impairment loss of $13,304 to the AOS component of the Starco Brands segment.

Other Expense

Total other expense for the year ended December 31, 2025, was $1,889,364, compared to $2,940,174 in the same period of 2024. The year-over-year decrease was primarily driven by a rise in interest expense, which increased to $1,082,104 from $961,588 in the prior-year period, and a lower level of other expense, totaling $807,260 in 2025 compared to $1,978,586 in 2024.

Net Loss

For the year ended December 31, 2025, we reported a net loss of $20,673,058 compared to a net loss of $17,334,549 for the same period in 2024. The increase in net loss was primarily driven by a $14.0 million non-cash impairment charge related to the write-down of certain definite-lived intangibles associated with the Soylent reporting unit. Excluding this impairment charge, our underlying operating performance improved year-over-year, reflecting a reduction in goodwill impairment of $13,200,663 and decreases in compensation expense and marketing, general and administrative expenses of $1,848,516 and $5,740,061, respectively. These improvements were more than offset by the intangible asset impairment recorded in 2025, resulting in the higher reported net loss for the period.

Liquidity and Capital Resources

As reflected in the accompanying consolidated financial statements, we had an accumulated deficit of $102,347,578 as of December 31, 2025. Net cash provided by financing activities for the year ended December 31, 2025 was $1,644,720. Financing activities during the period included net payments of $3,917,955 on our revolving loan, net proceeds of $62,675 from notes payable, receipts of $1,000,000 from related parties, and $4,500,000 in borrowings under a new line of credit.

For the year ended December 31, 2024, net cash used in financing activities was $2,329,940. Financing activities for that period included net proceeds of $3,541,543 from our revolving loan, net payments of $36,236 on notes payable, payments of $2,000,000 to related parties, and payments of $3,835,247 on a line of credit.

We used $900,770 of net cash in operating activities for the year ended December 31, 2025. Operating cash outflows were primarily driven by our net loss of $20,673,058 and a non-cash gain of $3,692,529 related to a stock-payable share adjustment. These impacts were partially offset by non-cash expenses, including $2,039,315 of stock-based compensation, $2,861,749 of amortization of intangible assets, goodwill impairment of $1,127,208 and intangibles impairment of $14,000,000.

Net cash provided by operating activities was $2,215,446 for the year ended December 31, 2024. Operating cash inflows for that period were primarily attributable to a goodwill impairment charge of $14,327,871, a net decrease of $6,324,556 in operating assets, and a net decrease of $4,738,571 in payables and other liabilities.

Notes Payable - Ross Sklar (Chief Executive Officer)

On August 11, 2023, we issued a Consolidated Secured Promissory Note to Ross Sklar in the principal amount of $4,000,000, consolidating several prior notes. The note bears interest at the Wall Street Journal Prime Rate plus 2 percent, reassessed monthly, and is secured by substantially all of our assets pursuant to an Amended and Restated Consolidated Security Agreement. On May 31, 2024, we and Mr. Sklar entered into an amendment extending the maturity date 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 using proceeds from the Gibraltar Loan. As of December 31, 2024, the outstanding principal balance under the Amended Consolidated Secured Promissory 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 Amended Consolidated Secured Promissory 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 note was adjusted to $3,472,500. The Second Amendment reaffirmed that the note remains 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 Amended Consolidated Secured Promissory Note, including interest rate, repayment provisions, and maturity, remained unchanged.

As of December 31, 2025, the outstanding principal balance owed to Mr. Sklar under the amended note was $3,472,500. Interest expense related to notes held by Mr. Sklar was $286,144 and $328,207 for the years ended December 31, 2025 and 2024, respectively.

We previously issued an unsecured note to Mr. Sklar on February 14, 2022 in the principal amount of $472,500. The note was amended on May 10, 2024 to extend its maturity to December 31, 2024 and was fully repaid during 2024 using proceeds from the Gibraltar Loan. No amounts were outstanding under this note as of December 31, 2025 or December 31, 2024.

Gibraltar Loan and Security Agreement - Revolving Loan

On May 24, 2024, we and our subsidiaries entered into a Loan and Security Agreement (the "Loan and Security Agreement") with Gibraltar Business Capital, LLC ("Gibraltar"), providing a senior secured revolving line of credit of up to $12.5 million (the "Gibraltar Loan"). The facility included a $1.5 million Permitted Overadvance Amount, which decreased by $125,000 per month beginning June 1, 2024. Borrowings under the facility were secured by a first-priority security interest in substantially all of the assets of us and our subsidiaries. The revolving line of credit was scheduled to mature on May 24, 2026, with a one-year automatic extension subject to the satisfaction of certain conditions.

Revolving loans accrued interest at One Month Term SOFR plus an applicable margin, with an additional 2.00% per annum applied to any portion of the loan classified as a Permitted Overadvance. Interest was payable monthly. As of December 31, 2024, the interest rate on the Gibraltar Loan was 10.00%. As of September 30, 2025, the interest rate was 12.28%.

The Loan and Security Agreement contained customary affirmative and negative covenants, including limitations on indebtedness, liens, asset sales, investments, dividends, stock repurchases, and other restricted payments. The agreement also included financial covenants, including a minimum EBITDA covenant and a maximum Unfinanced Capital Expenditures covenant. The Loan and Security Agreement further contained customary events of default, including nonpayment, covenant violations, breaches of representations and warranties, insolvency events, and cross-defaults.

As of December 31, 2024, we were in default under the Loan and Security Agreement due to reporting deficiencies and failure to maintain the minimum EBITDA financial covenant. We were not in payment default. We engaged in discussions with Gibraltar regarding a waiver and amendment of the financial covenants.

During 2025, we continued to experience covenant violations, including failure to satisfy minimum EBITDA requirements and certain reporting obligations. On July 18, 2025, we and Gibraltar entered into a Forbearance Agreement, under which Gibraltar agreed, subject to specified conditions, to forbear from exercising remedies related to existing events of default through September 16, 2025. The forbearance period could be extended to October 16, 2025 and November 15, 2025 if we achieved minimum EBITDA thresholds for the periods ended July 31, 2025 and August 31, 2025, respectively.

On November 24, 2025, we and Gibraltar entered into Amendment No. 1 to the Forbearance Agreement, extending the forbearance period through December 31, 2025, subject to the satisfaction of certain conditions. The amendment did not constitute a waiver of any defaults, and Gibraltar expressly reserved all rights and remedies under the Loan and Security Agreement.

As of December 31, 2024, the outstanding principal balance under the Gibraltar Loan was $3,917,956, with a debt discount of $266,626, resulting in a net carrying amount of $3,651,330. Interest expense related to the Gibraltar Loan was $395,184 for the year ended December 31, 2024.

As of September 30, 2025, the outstanding principal balance was $4,282,214, with a net carrying amount of $4,156,743 after discounts. Interest expense was $155,243 and $432,651 for the three and nine months ended September 30, 2025, respectively.

In December 2025, we fully repaid all outstanding obligations under the Gibraltar Loan and Security Agreement. Upon repayment, all liens and security interests held by Gibraltar were released, and the Loan and Security Agreement, including the Forbearance Agreement and related amendments, was terminated. As of December 31, 2025, no amounts were outstanding under the Gibraltar Loan, and we had no remaining obligations to Gibraltar.

Related Party Bridge Loan - The Starco Group, Inc.

On December 22, 2025, we entered into a Bridge Term Loan Promissory Note with The Starco Group, Inc. ("TSGI"), a company wholly owned by Ross Sklar, the Company's Chief Executive Officer. The Promissory Note 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 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 loan at any time without penalty. The loan matures on the earlier of (i) five years from issuance, (ii) acceleration upon default, or (iii) full repayment.

As of December 31, 2025, the outstanding principal balance under the Bridge Loan was $4,500,000.

Going Concern

The audited consolidated financial statements included in this Annual Report on Form 10-K have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. We have concluded that substantial doubt exists about our ability to continue as a going concern within one year after the date the 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 December 31, 2025, we had an accumulated deficit of $102,347,578, including a net loss of $20,673,058 for the year then ended, and a working capital deficit of approximately $1.4 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 December 31, 2025, our total debt was $8,085,658, consisting of $3,472,500 of notes payable to our CEO, Ross Sklar; $4,500,000 outstanding under a new bridge loan; and $113,158 on a note payable related to directors' and officers' insurance. Mr. Sklar holds a significant minority ownership interest, 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 consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Working Capital Deficit

		December 31,				December 31,
		2025				2024
Current assets		$	11,899,737			$	17,818,439
Current liabilities			(13,285,278	)			(32,011,304	)
Working capital deficiency		$	(1,385,541	)		$	(14,192,865	)

The decrease in current assets is primarily due to decreases in accounts receivable and inventory of $4,431,698 and $3,743,423, respectively, offset by an increase in prepaid expenses of $1,645,419. The decrease in current liabilities is primarily a result of a decrease in fair value of share adjustment of $9,299,703, the repayment of a revolving loan from the prior year of $3,651,330 and a decrease in accounts payable of $3,921,436.

Cash Flows

		Year Ended December 31,
		2025				2024
Net cash (used in) provided by operating activities		$	(900,770	)		$	2,215,446
Net cash used in investing activities			(132,950	)			(439,325	)
Net cash provided by (used in) financing activities			1,644,720				(2,329,940	)
Increase (decrease) in cash		$	611,000			$	(553,819	)

Operating Activities

Net cash used in operating activities was $900,770 for the year ended December 31, 2025 and was primarily due to an increase in prepaid expenses and other assets of $1,645,419 as well as net decreases in accounts payable, other payables and accrued liabilities of $3,379,404. The net loss for the year of $20,673,058 was impacted by non-cash amortization of intangible assets, goodwill impairment, intangibles impairment and stock-based compensation of $2,861,749, $1,127,208, $14,000,000 and $2,039,315, respectively, as well as a fair value share adjustment gain in the amount of $3,692,529.

Net cash provided by operating activities was $2,215,446 for the year ended December 31, 2024 and was primarily due to a combined decrease in accounts receivable and accounts receivable-related parties of $2,240,241, a decrease in inventory in the amount of $2,425,895 and a combined increase in accounts payable and accounts payable-related parties of $2,344,959. The net loss for the year of $17,334,549 was mostly offset by non-cash expenses of goodwill impairment and amortization of intangible assets of $14,327,871 and $2,831,972, respectively.

Investing Activities

Net cash used in investing activities was $132,950 for the year ended December 31, 2025 and was primarily due to cash paid for purchase of property and equipment of $112,950.

Net cash used in investing activities was $439,325 for the year ended December 31, 2024 and was primarily due to cash paid for purchase of property and equipment of $310,590.

Financing Activities

For the year ended December 31, 2025, net cash provided by financing activities was $1,644,720, which primarily resulted from $4,500,000 in proceeds from a bridge loan and $1,000,000 in receipts from related parties, offset by net payments made on loans of $3,855,280.

For the year ended December 31, 2024, net cash used in financing activities was $2,329,940 which primarily resulted from $3,541,543 of net proceeds from the revolving loan, offset by payments made on loans from related parties and on the line of credit of $2,000,000 and $3,835,247, respectively.

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 Consolidated Financial Statements have been prepared in conformity with US GAAP. The preparation of our 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, 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 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, 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) 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.

The Company experienced a triggering event in 2025 due to lower than expected revenue for the Soylent segment, prompting the write-off of Soylent goodwill of $1,127,208 to a zero balance as of December 31, 2025.

The Company experienced triggering events in 2024 due to lower than expected revenue for each segment, prompting impairment assessments of goodwill as of November 31, 2024.

The Company engaged a third-party valuation firm to determine the fair value of the reporting units under ASC 350. The Company recorded total goodwill impairment losses in the amount of $14,327,871 for the year ended December 31, 2024. The goodwill impairment losses are allocated as follows: $2,944,871 to the Starco Brands segment and $11,383,000 to the Soylent segment.

As of December 31, 2025 and December 31, 2024, goodwill was $11,234,312 and $12,361,520, respectively.

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.

The Company experienced triggering events in 2025 due to lower-than-expected revenue for the Soylent segment, prompting a qualitative and quantitative impairment assessment of its definite-lived intangible assets as of November 30, 2025. The Company recorded a loss on impairment for the definite-lived intangible assets of its Soylent subsidiary in the amount of $14,000,000 for the year ended December 31, 2025.

The Company experienced triggering events in 2024 due to lower-than-expected revenue for the AOS component of its Starco Brands segment, prompting a qualitative impairment assessment of its definite-lived intangible assets as of November 30, 2024. The Company recorded a loss on impairment for the definite-lived intangible assets of its AOS subsidiary in the net amount of $13,304 for the year ended December 31, 2024.

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 December 31, 2025. 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:

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 our 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. 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 December 31, 2025 and December 31, 2024.

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 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 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 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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced disclosures related to the effective tax rate reconciliation and income taxes paid. The Company adopted this standard in the current year. The adoption did not affect the Company's financial position or results of operations, but it resulted in expanded income tax disclosures within the notes to the consolidated financial statements. Management does not expect the adoption of this standard to have a material impact on the Company's critical accounting estimates.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires public business entities to provide additional tabular disaggregation of specified natural expense categories for each relevant income statement caption. The Company has not yet adopted this standard. Management does not expect the adoption of this standard to have a material impact on the Company's financial position, results of operations, or cash flows, but the standard may require expanded disclosures and changes to internal reporting processes. Management does not expect the adoption to have a material impact on the Company's critical accounting estimates.

In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides an optional practical expedient and related policy election for estimating expected credit losses on certain current accounts receivable and current contract assets. The Company has not yet adopted this standard. Management is evaluating whether to elect the practical expedient and does not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows; management also does not expect a material effect on the Company's critical accounting estimates unless the Company elects the policy and the quantitative effect is material.