Starco Brands, Inc.
For the period ended Sep 30, 2025. Filed Nov 14, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 14, 2025
STCBStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001641172-25-023891
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001493152-25-023339
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 152 current paragraphs.
104 unchanged; 41 reworded; 6 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
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.
Current report
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.
Current report
Ross Sklar, CEO - Notes
Current report
Following the 2024 Consolidated Note Amendment, on August 13, 2025, STCB and Mr. Sklar entered into a Second Amendment to the Amended Consolidated Secured Promissory Note (the “Second Amendment”). Pursuant to the Second Amendment, the note was revised to consolidate two additional loans made by Mr. Sklar to the Company in the aggregate principal amount of $1,000,000, consisting of a $500,000 loan funded on July 15, 2025, and a second $500,000 loan funded on August 15, 2025. As a result of these transactions and prior repayments, the principal balance under the Second Amendment was adjusted to $3,472,500. The Second Amendment also reaffirmed that the note remains subject to the Subordination Agreement dated May 24, 2024, between Mr. Sklar and Gibraltar Business Capital, LLC, the Company’s senior lender. Except as expressly modified by the Second Amendment, all other terms, including interest rates, repayment provisions, and maturity dates under the Amended Consolidated Secured Promissory Note, remain unchanged and in full force and effect.
Current report
Net cash used in operating activities was $1,176,857 for the nine months ended September 30, 2025. The cash outflows were primarily driven by a net loss of $1,261,907 and a non-cash gain of $3,692,529 related to stock payable. These impacts were partially offset by non-cash expenses, including $1,711,255 of stock-based compensation and $2,142,669 of amortization of intangible assets.
Current report
Net cash provided by operating activities was $517,879 for the nine months ended September 30, 2024. Operating cash inflows were primarily attributable to a non-cash loss of $15,703,049 related to stock payable share adjustments and an increase of $7,262,562 in accounts payable, related party payables, and other accrued liabilities. These inflows were partially offset by a net loss for the period and an increase in prepaid expenses and other assets totaling $1,458,391.
Removed paragraphs (4)
Previous report
Loan and Security Agreement – Related Party
Previous report
(1)Note that $1,527,500 of this total was repaid to Mr. Sklar in 2024 from proceeds under the Loan and Security Agreement (seeLoan and Security Agreement – Related Partybelow).
Previous report
Net cash used in operating activities was $859,889 for the six months ended June 30, 2025 and was primarily due to the impact of the net loss for the six month period, a gain on stock payable share adjustment of $3,692,529 and a decrease in accounts payable of $1,117,059, offset by a decrease in accounts receivable of $2,321,089, an increase in other payables and accrued liabilities of $835,130 and amortization of intangible assets of $1,423,588.
Previous report
Net cash provided by operating activities was $101,258 for the six months ended June 30, 2024 and was primarily due to the impact of the net loss for the six month period, offset by loss on stock payable share adjustment of $10,597,514, an increase in accounts payable and other payables/accrued liabilities of $4,931,205 and a decrease in accounts receivable of $580,189.
Reworded paragraphs (41)
Previous wording
ITEM 2. MANAGEMENT**’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current wording
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous wording
For more information and to view our products, you may visit our websites at www.starcobrands.com, www.whipshots.com, www.winonapure.com, www.artofsport.com, www.skylar.com and www.soylent.com.
Current wording
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.
Previous wording
Our principal executive offices are located at 706 N Citrus Avenue, Los Angeles, California, 90038, and our telephone number is (323) 266-7111. Our website is www.starcobrands.com and the Company makes its SEC reports available on the website. Our internet website and the information contained therein or connected thereto are not intended to be incorporated by reference into this Quarterly Report.
Current wording
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 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.
Previous wording
STCB and its subsidiaries had 29 full-time employees as of June 30, 2025 and used independent contractors, consultants and contributed services from related parties on an as needed basis.
Current wording
STCB and its subsidiaries had 29 full-time employees as of September 30, 2025 and used independent contractors and consultants on an as needed basis.
Previous wording
Revenue for the three months ended June 30, 2025, was $10,586,121, representing a 24% decrease, or $3,423,586, compared to $14,009,707 in the same period of 2024. The decrease was primarily due to lower product sales of Soylent, driven by inventory constraints that limited our ability to accept and fulfill orders.
Current wording
Revenue for the three months ended September 30, 2025, was $10,912,920, representing an 18% decrease, or $2,453,214, compared to $13,366,134 in the same period of 2024. The decrease was primarily due to lower product sales of Soylent, driven by an intentional focus on de-emphasizing lower margin sales channels, and some impact from inventory constraints which limited our ability to accept and fulfill orders.
Previous wording
Related party revenue totaled $421,379 for the three months ended June 30, 2025, reflecting a 55% decrease, or $519,848, compared to $941,227 in the prior-year period. The decline was primarily driven by lower royalty income received during the current quarter.
Current wording
Related party revenue totaled $726,407 for the three months ended September 30, 2025, reflecting a 51% decrease, or $753,600, compared to $1,480,007 in the prior-year period. The decline was primarily driven by lower royalty income received during the current quarter.
Previous wording
Compensation expense was $1,661,971 for the three months ended June 30, 2025, representing a 32% decrease, or $773,977, compared to $2,435,948 in the same period of 2024. The reduction was primarily due to workforce reductions undertaken by the Company during the second half of 2024.
Current wording
Compensation expense was $2,107,413 for the three months ended September 30, 2025, representing a 4% decrease, or $77,843, compared to $2,185,256 in the same period of 2024. The reduction was primarily due to workforce reductions undertaken by the Company, partially offset by an increase in non-cash, stock based compensation expense.
Previous wording
Professional fees totaled $911,927 for the three months ended June 30, 2025, representing a 20% decrease, or $228,865, from $1,140,792 in the prior-year period. These fees primarily reflect costs related to contractors, consultants, accounting, auditing, legal, advisory, and valuation services, which support business operations, merger activity, and quarterly public company reporting. The reduction in expense was primarily driven by lower consulting and contractor service costs during the current period.
Current wording
Professional fees totaled $500,931 for the three months ended September 30, 2025, representing a 15% increase, or $66,233, from $434,698 in the prior-year period. These fees primarily reflect costs related to contractors, consultants, accounting, auditing, legal, advisory, and valuation services, which support business operations, merger activity, and quarterly public company reporting. The increase in expenses was primarily driven by higher consulting and contractor service costs 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.
Previous wording
Marketing, general and administrative expenses totaled $3,193,889 for the three months ended June 30, 2025, a 29% decrease, or $1,326,789, compared to $4,520,678 in the same period of 2024. The reduction primarily reflects lower royalty costs and the elimination of several vendor services as part of a broader cost-reduction initiative implemented during the current period.
Current wording
Marketing, general and administrative expenses totaled $3,121,427 for the three months ended September 30, 2025, a 26% decrease, or $1,115,006, compared to $4,236,433 in the same period of 2024. The reduction primarily reflects lower royalty costs and the elimination of several vendor services as part of a broader cost-reduction initiative implemented during the current period.
Previous wording
No fair value share adjustment was recorded for the three months ended June 30, 2025, compared to a loss of $8,675,565 in the same period of 2024. The absence of an adjustment reflects the full settlement of the outstanding liability to Soylent shareholders in May 2025.
Current wording
No fair value share adjustment was recorded for the three months ended September 30, 2025, compared to a loss of $5,105,535 in the same period of 2024. The absence of an adjustment reflects the full settlement of the outstanding liability to Soylent shareholders in May 2025.
Previous wording
Total other expense for the three months ended June 30, 2025, was $494,694, compared to $493,535 in the same period of 2024. The increase was driven by higher interest expense, which rose to $257,538 from $208,976, and decreased other expense, which totaled $237,156, down from $284,559 in the prior-year quarter.
Current wording
Total other expense for the three months ended September 30, 2025, was $289,452, compared to $681,573 in the same period of 2024. The decrease was driven by lower interest expense, which fell to $283,066 from $303,155, and decreased other expense, which totaled $6,386, down from $378,418 in the prior-year quarter.
Previous wording
For the three months ended June 30, 2025, we reported a net loss of $1,850,017, representing a substantial improvement compared to the net loss of $11,559,482 recorded in the same period of 2024. The year-over-year reduction was primarily attributable to non-recurring prior-period impacts, including an $8,675,565 loss from changes in the fair value of stock payable to Soylent stockholders as well as the changes described above.
Current wording
For the three months ended September 30, 2025, we reported a net loss of $1,387,811, representing a substantial improvement compared to the net loss of $6,257,088 recorded in the same period of 2024. The year-over-year reduction was primarily attributable to non-recurring prior-period impacts, including a $5,105,535 loss from changes in the fair value of stock payable to Soylent stockholders as well as the changes described above.
Previous wording
Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024
Current wording
Comparison of the nine months ended September 30, 2025 to the nine months ended September 30, 2024
Previous wording
Revenue for the six months ended June 30, 2025, was $20,404,878, representing a 24% decrease, or $6,534,020, compared to $26,938,898 in the same period of 2024. The year-over-year decline was primarily driven by reduced product sales of Soylent, resulting from inventory constraints that limited our capacity to accept and fulfill customer orders.
Current wording
Revenue for the nine months ended September 30, 2025, was $31,317,398, representing a 22% decrease, or $8,987,234, compared to $40,305,032 in the same period of 2024. The year-over-year decline 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.
Previous wording
For the six months ended June 30, 2025, we generated related party revenues of $1,471,691, reflecting a 55% decrease, or $1,779,732, from $3,251,423 in the same period of 2024. This decline was primarily attributable to a reduction in royalties received during the current period.
Current wording
For the nine months ended September 30, 2025, we generated related party revenues of $2,198,098, reflecting a 54% decrease, or $2,533,332, from $4,731,430 in the same period of 2024. This decline was primarily attributable to a reduction in royalties received during the current period.
Previous wording
Compensation expense totaled $3,398,159 for the six months ended June 30, 2025, representing a 32% decrease, or $1,612,517, compared to $5,010,676 in the prior-year period. The decline primarily reflects workforce reductions implemented by the Company during the second half of 2024, as well as the absence of bonus awards in the first quarter of fiscal year 2025.
Current wording
Compensation expense totaled $5,505,572 for the nine months ended September 30, 2025, representing a 23% decrease, or $1,690,360, compared to $7,195,932 in the prior-year period. The decline primarily reflects workforce reductions implemented by the Company, as well as the absence of bonus accruals in fiscal year 2025.
Previous wording
Professional fees totaled $1,692,151 for the six months ended June 30, 2025, a 28% decrease, or $644,759, from $2,336,910 in the same period of 2024. These fees primarily relate to contractor services, as well as accounting, auditing, legal, advisory, consulting and valuation services supporting ongoing operations, merger activities, and quarterly reporting requirements as a public company. The decline was mainly driven by a reduction in consulting and contractor services during the current period.
Current wording
Professional fees totaled $2,193,082 for the nine months ended September 30, 2025, a 21% decrease, or $578,526, from $2,771,608 in the same period of 2024. These fees primarily relate to contractor services, as well as accounting, auditing, legal, advisory, consulting and valuation services supporting ongoing operations, merger activities, and quarterly reporting requirements as a public company. 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.
Previous wording
For the six months ended June 30, 2025, marketing, general and administrative expenses totaled $6,578,307, a decrease of $3,258,324, or 33%, compared to $9,836,631 for the same period in 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.
Current wording
For the nine months ended September 30, 2025, marketing, general and administrative expenses totaled $9,699,734, a decrease of $4,373,330, or 31%, compared to $14,073,064 for the same period in 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.
Previous wording
For the six months ended June 30, 2025, there was a gain on fair value share adjustment of $3,692,529, compared to a loss of $10,597,514 for the six months ended June 30, 2024. This was due to a decrease in the fair value of the Soylent sellers’ rights to potentially receive additional Starco shares.
Current wording
For the nine months ended September 30, 2025, there was a gain on fair value share adjustment of $3,692,529, compared to a loss of $15,703,049 for the nine months ended September 30, 2024. 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.
Previous wording
Total other expense for the six months ended June 30, 2025, was $1,053,526, compared to $769,487 in the same period of 2024. The year-over-year increase was primarily driven by a rise in interest expense, which increased to $494,174 from $408,149 in the prior-year period, and a higher level of other expense, totaling $559,352 in 2025 compared to $361,338 in 2024.
Current wording
Total other expense for the nine months ended September 30, 2025, was $1,342,978, compared to $1,451,060 in the same period of 2024. The year-over-year decrease was primarily driven by a slight rise in interest expense, which increased to $777,240 from $711,304 in the prior-year period, and a lower level of other expense, totaling $565,738 in 2025 compared to $739,756 in 2024.
Previous wording
For the six months ended June 30, 2025, we reported a net income of $28,839, representing a significant improvement compared to the net loss of $16,022,160 for the same period in 2024. The year-over-year reduction was primarily driven by a fair value gain of $3,692,529 related to share-based adjustments recognized in the current period. The prior-year results were negatively impacted by a loss of $10,597,514, associated with changes in the fair value of stock payable to Soylent stockholders, as well as the changes described above.
Current wording
For the nine months ended September 30, 2025, we reported a net loss of $1,261,907, representing a significant improvement compared to the net loss of $22,090,177 for the same period in 2024. The year-over-year reduction was primarily driven by a fair value gain of $3,692,529 related to share-based adjustments recognized in the current period. The prior-year results were negatively impacted by a loss of $15,703,049, associated with changes in the fair value of stock payable to Soylent stockholders, as well as the changes described above.
Previous wording
As reflected in the accompanying condensed consolidated financial statements, we have an accumulated deficit of $81,391,518 at June 30, 2025. We generated $693,062 in cash from financing activities for the six months ended June 30, 2025, primarily due to $362,194 of net proceeds from the revolving loan and $330,868 in net proceeds from notes payable. Our net cash provided by financing activities was $206,614 for the six months ended June 30, 2024, due primarily to proceeds from the Gibraltar revolving loan and insurance notes payable of approximately $6,200,000, offset by the payoff of the prior line of credit and payments toward the Sklar notes, the revolving loan and notes payable of approximately $5,800,000.
Current wording
As reflected in the accompanying condensed consolidated financial statements, we have an accumulated deficit of $82,838,219 at September 30, 2025. We generated $1,568,395 in cash from financing activities for the nine months ended September 30, 2025, primarily due to $364,258 of net proceeds from the revolving loan, $204,137 in net proceeds from notes payable and $1,000,000 in receipts from related parties. Our net cash used in financing activities was $377,101 for the nine months ended September 30, 2024, due primarily to payments toward i) lines of credit, ii) a revolving loan, iii) loans from related parties and iv) notes payable of approximately $23.5 million, offset by proceeds from a revolving loan and a note payable of approximately $23.2 million.
Previous wording
Our net cash used in operating activities was $859,889 for the six months ended June 30, 2025 compared to net cash provided of $124,729 for the six months ended June 30, 2024. Operating expenses for the six months ended June 30, 2025 were $7,976,088, including items such as marketing, advertising and administrative costs, consultant compensation, gain on share fair value adjustment, insurance, legal and other professional fees, stock based compensation, compliance, website maintenance and investor relations. Operating expenses for the six months ended June 30, 2024 were $27,781,731, including items such as marketing and administrative costs, consultant compensation, loss on share fair value adjustment, insurance, legal and other professional fees, compliance and website maintenance.
Current wording
Our net cash used in operating activities was $1,176,857 for the nine months ended September 30, 2025 compared to net cash provided of $517,879 for the nine months ended September 30, 2024. Operating expenses for the nine months ended September 30, 2025 were $13,705,859, including items such as marketing, advertising and administrative costs, consultant compensation, gain on share fair value adjustment, insurance, legal and other professional fees, stock based compensation, compliance, website maintenance and investor relations. Operating expenses for the nine months ended September 30, 2024 totaling $39,743,653 include items such as marketing and administrative costs, consultant compensation, insurance, legal and other professional fees, compliance, website maintenance and loss on share fair value adjustment.
Previous wording
On January 24, 2020, STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The note bore interest at 4% per annum, compounded monthly, was unsecured, and matured two years from the original date of issuance. This loan was subsequently amended to mature on July 19, 2023. On June 28, 2021, STCB executed an additional promissory note with Ross Sklar in the principal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note with Ross Sklar in the principal amount of $472,500 with the same terms as the prior notes and a maturity date of February 14, 2024. This note is also convertible into the Class A common stock at the lender’s option and a conversion price of $0.29 per share. On December 29, 2022, STCB executed a sixth promissory note with Ross Sklar in the principal amount of $2,000,000. This note bears interest at Prime + 4% per annum, compounds monthly, is secured, matures on August 1, 2023, and included warrants to purchase 285,714 shares of our Class A common stock at a price of $0.01 per share. On March 3, 2023, STCB executed a seventh promissory note with Ross Sklar in the principal amount of $800,000. This note bears interest at Prime + 4% per annum, compounds monthly, is secured, matures on July 1, 2023, and included warrants to purchase 114,286 shares of our Class A common stock at a price of $0.01 per share.
Current wording
On January 24, 2020, STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The note bore interest at 4% per annum, compounded monthly, was unsecured, and matured two years from the original date of issuance. This loan was subsequently amended to mature on July 19, 2023. On June 28, 2021, STCB executed an additional promissory note with Ross Sklar in the principal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note with Ross Sklar (not included in the listing below) in the principal amount of $472,500 with the same terms as the prior notes and a maturity date of February 14, 2024. This note was also convertible into the Class A common stock at the lender’s option and a conversion price of $0.29 per share. On December 29, 2022, STCB executed a sixth promissory note with Ross Sklar in the principal amount of $2,000,000. This note bore interest at Prime + 4% per annum, compounded monthly, was secured, matured on August 1, 2023, and included warrants to purchase 285,714 shares of our Class A common stock at a price of $0.01 per share. On March 3, 2023, STCB executed a seventh promissory note with Ross Sklar in the principal amount of $800,000. This note bore interest at Prime + 4% per annum, compounded monthly, was secured, matured on July 1, 2023, and included warrants to purchase 114,286 shares of our Class A common stock at a price of $0.01 per share.
Previous wording
On August 11, 2023, we issued to Sklar a consolidated secured promissory note (the “Consolidated Secured Promissory Note”) in the principal sum of $4,000,000, with a maturity date of December 31, 2024. The Consolidated Secured Promissory Note carries a floating interest rate comprised of the Wall Street Journal Prime Rate (re-assessed on the first date of each month (plus 2%), and is secured by an amended and restated consolidated security agreement (the “Amended and Restated Consolidated Security Agreement”), by and between the Company and Sklar, dated August 11, 2023, The Consolidated Secured Promissory Note consolidated the outstanding loan obligations of the Company to Sklar evidenced pursuant to the (i) Amended Note, (ii) the June 28, 2021 Note, (iii) the September 17, 2021 Note, (iv) the December 13, 2021 Note, (v) the December 29, 2022 Note, and (vi) the March 3, 2023 Note. The Amended and Restated Consolidated Security Agreement merged and integrated the December 29, 2022 Security Agreement and the March 3, 2023 Security Agreement, and provides a security interest in the Collateral (as defined in the Amended and Restated Consolidated Security Agreement) to secure the repayment of all principal, interest, costs, expenses and other amounts then or thereafter due under the Consolidated Secured Promissory Note until by the maturity date. Sklar was authorized to file financing statements to perfect the security interest in the Collateral without authentication by the Company. The following table represents Prior Notes that were part of the restructuring and related prior and updated terms (under the Consolidated Secured Promissory Note):
Current wording
On August 11, 2023, we issued to Sklar a consolidated secured promissory note (the “Consolidated Secured Promissory Note”) in the principal sum of $4,000,000, with a maturity date of December 31, 2024. The Consolidated Secured Promissory Note carries a floating interest rate comprised of the Wall Street Journal Prime Rate (re-assessed on the first date of each month (plus 2%), and is secured by an amended and restated consolidated security agreement (the “Amended and Restated Consolidated Security Agreement”), by and between the Company and Sklar, dated August 11, 2023, The Consolidated Secured Promissory Note consolidated the outstanding loan obligations of the Company to Sklar evidenced pursuant to the (i) January 24, 2020 Amended Note, (ii) the June 28, 2021 Note, (iii) the September 17, 2021 Note, (iv) the December 13, 2021 Note, (v) the December 29, 2022 Note, and (vi) the March 3, 2023 Note. The Amended and Restated Consolidated Security Agreement merged and integrated the December 29, 2022 Security Agreement and the March 3, 2023 Security Agreement, and provides a security interest in the Collateral (as defined in the Amended and Restated Consolidated Security Agreement) to secure the repayment of all principal, interest, costs, expenses and other amounts then or thereafter due under the Consolidated Secured Promissory Note until by the maturity date. Sklar was authorized to file financing statements to perfect the security interest in the Collateral without authentication by the Company.
Previous wording
The restructuring is accounted for as a debt modification. On May 31, 2024, the Consolidated Secured Promissory Note was amended by that certain Amendment to Consolidated Secure Promissory Note, by and between STCB and Mr. Sklar, dated May 31, 2024 (the “2024 Consolidated Note Amendment” and together with the Consolidated Secured Promissory Note, the “Amended Consolidated Secured Promissory Note”). The 2024 Consolidated Note Amendment, among other things, extended the maturity date to August 31, 2026, provided that to the extent amounts remain due and payable on the maturity date, it will be extended until August 31, 2027.
Current wording
The restructuring was accounted for as a debt modification. On May 31, 2024, the Consolidated Secured Promissory Note was amended by that certain Amendment to Consolidated Secure Promissory Note, by and between STCB and Mr. Sklar, dated May 31, 2024 (the “2024 Consolidated Note Amendment” and together with the Consolidated Secured Promissory Note, the “Amended Consolidated Secured Promissory Note”). The 2024 Consolidated Note Amendment, among other things, extended the maturity date to August 31, 2026, provided that to the extent amounts remain due and payable on the maturity date, it will be extended until August 31, 2027.
Previous wording
On February 14, 2022, the Company issued an unsecured note to Sklar with a principal amount of $472,500, which was excluded from the note consolidation. The note carried an annual interest rate of 4% and was set to mature two years from its issuance. It was convertible into shares of Company Class A common stock at a conversion price of $0.29 per share, based on the 10-day volume-weighted average trading price prior to issuance. On May 10, 2024, the Company and Sklar amended the note, extending its maturity date to December 31, 2024. The note was fully repaid in 2024 using proceeds from the Loan and Security Agreement, and the Company no longer has any obligations for this note.
Current wording
The February 14, 2022 Note mentioned above, which was excluded from the note consolidation, was amended on May 10, 2024, extending its maturity date to December 31, 2024. The note was fully repaid in 2024 using proceeds from the Gibraltar Loan and Security Agreement, and the Company no longer has any obligations for this note.
Previous wording
As of June 30, 2025 and December 31, 2024, the outstanding principal owed to Mr. Sklar under the referenced notes amounted to $2,472,500 and $4,472,500, respectively.
Current wording
As of September 30, 2025 and December 31, 2024, the outstanding principal owed to Mr. Sklar under the referenced notes amounted to $3,472,500 and $2,472,500, respectively.
Previous wording
Each Revolving Loan advanced under the Revolving Loan Commitment bears interest at a rate per annum equal to One Month Term SOFR plus the Applicable Margin. If a Revolving Loan or any portion thereof is considered a part of the Permitted Overadvance Amount under the Loan and Security Agreement, the Applicable Margin for such loan shall be increased by an additional two percent (2.00%) per annum. Revolving Loans may be repaid at any time and reborrowed up to but not including the Maturity Date. On the Maturity Date, the outstanding aggregate principal balance of all Revolving Loans shall be due and payable. The interest rate for the revolving loan was 10.00% as of December 31, 2024.
Current wording
Each Revolving Loan advanced under the Revolving Loan Commitment bears interest at a rate per annum equal to One Month Term SOFR plus the Applicable Margin. If a Revolving Loan or any portion thereof is considered a part of the Permitted Overadvance Amount under the Loan and Security Agreement, the Applicable Margin for such loan shall be increased by an additional two percent (2.00%) per annum. Revolving Loans may be repaid at any time and reborrowed up to but not including the Maturity Date. On the Maturity Date, the outstanding aggregate principal balance of all Revolving Loans shall be due and payable.
Previous wording
As of June 30, 2025, the Company had several Events of Default under the Loan and Security Agreement, due to reporting deficiencies and failure to maintain the minimum EBITDA financial covenant. The Company and its lender entered into an amendment and waiver to the Loan and Security Agreement, waiving (i) specified defaults therein, (ii) allowing additional permitted liens relating to the Company’s credit cards and credit card processing services as set forth therein, and (iii) adjusting certain financial and reporting covenants. Additionally, the Company and its lender entered into a forbearance agreement, effective July 18, 2025, with its lender related to its revolving loan facility (the “Forbearance Agreement”). The Forbearance Agreement acknowledges the existence of certain continuing Events of Default and provides that, subject to specified conditions, the lender will forbear from exercising remedies related to those defaults through September 16, 2025. The forbearance period may be extended to October 16, 2025 and November 15, 2025, respectively, if the Company meets minimum EBITDA thresholds of $300,000 for the periods ending July 31, 2025 and August 31, 2025. The Forbearance Agreement does not constitute a waiver of any defaults, and the lender reserves all rights and remedies under the loan documents.
Current wording
As of September 30, 2025, the Company had several Events of Default under the Loan and Security Agreement, due to reporting deficiencies and failure to maintain the minimum EBITDA financial covenant. The Company and its lender entered into an amendment and waiver to the Loan and Security Agreement, waiving (i) specified defaults therein, (ii) allowing additional permitted liens relating to the Company’s credit cards and credit card processing services as set forth therein, and (iii) adjusting certain financial and reporting covenants. Additionally, the Company and its lender entered into the Forbearance Agreement, effective July 18, 2025, related to its revolving loan facility. The Forbearance Agreement acknowledges the existence of certain continuing Events of Default and provides that, subject to specified conditions, the lender will forbear from exercising remedies related to those defaults through September 16, 2025. The forbearance period may be extended to October 16, 2025 and November 15, 2025, respectively, if the Company meets minimum EBITDA thresholds of $300,000 for the periods ending July 31, 2025 and August 31, 2025. The Forbearance Agreement does not constitute a waiver of any defaults, and the lender reserves all rights and remedies under the loan documents. The Company is in discussions with its lender to resolve these defaults, but the Forbearance Agreement has not been extended as of the date of this filing.
Previous wording
As of June 30, 2025, the balance of the revolving loan was $4,280,150 with a debt discount of $172,523, for a net balance of $4,107,627, with interest expense on the loan for the six months ended June 30, 2025 of $277,408.
Current wording
As of September 30, 2025, the balance of the revolving loan was $4,282,214 with a debt discount of $125,471, for a net balance of $4,156,743, with interest expense on the loan for the nine months ended September 30, 2025 of $432,651.
Previous wording
The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company identified that a substantial doubt exists if the Company is able to meet its obligations as they become due within one year of the date of the financial statements being issued. Principal conditions contributing to substantial doubt regarding the Company’s ability to continue as a going concern include its history of recurring net losses and continued working capital deficiencies. As of June 30, 2025, the Company reported an accumulated deficit of $81,391,518, which includes net loss of $1,850,201 and net income of $125,904 for the three and six months ended June 30, 2025, respectively. Additionally, the Company had a working capital deficit of approximately $6.3 million at June 30, 2025.
Current wording
The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company identified that a substantial doubt exists if the Company is able to meet its obligations as they become due within one year of the date of the financial statements being issued. Principal conditions contributing to substantial doubt regarding the Company’s ability to continue as a going concern include its history of recurring net losses and continued working capital deficiencies. As of September 30, 2025, the Company reported an accumulated deficit of $82,838,219, which includes net losses of $1,387,811 and $1,261,907 for the three and nine months ended September 30, 2025, respectively. Additionally, the Company had a working capital deficit of approximately $6.1 million at September 30, 2025.
Previous wording
As of June 30, 2025, total debt on the balance sheet was approximately $7.0 million, which includes $2,472,500 in notes payable to Ross Sklar (“Sklar”), a significant minority shareholder. Mr. Sklar’s ownership interest provides an incentive to be supportive of the Company regarding repayment of the notes, as has occurred in prior periods (see Note 9). In addition, on July 18, 2025, the Company and its lender entered into a forbearance agreement (the “Forbearance Agreement”) related to its revolving loan facility. The Forbearance Agreement acknowledges the existence of certain continuing Events of Default and provides that, subject to specified conditions, the lender will forbear from exercising remedies related to those defaults through September 16, 2025.
Current wording
As of September 30, 2025, total debt on the balance sheet was approximately $7.9 million, which includes $3,472,500 in notes payable to Ross Sklar (“Sklar”), a significant minority shareholder. $1.0 million of the notes payable to Sklar were funded in July and August of 2025 in response to requests from the Company’s lender. Mr. Sklar’s ownership interest and operational role provide an incentive for him to be supportive of the Company regarding repayment of the notes due to him, as has occurred in prior periods (see Note 9). On July 18, 2025, the Company and its lender entered into the Forbearance Agreement related to its revolving loan facility. The Forbearance Agreement acknowledges the existence of certain continuing Events of Default and provides that, subject to specified conditions, the lender will forbear from exercising remedies related to those defaults through November 15, 2025. The Company is in discussions with its lender to resolve these defaults, but the Forbearance Agreement has not been extended as of the date of this filing.
Previous wording
The decrease in current assets is primarily due to a decrease in accounts receivable of $2,321,089, offset by an increase in prepaid expenses and other assets of $1,601,476. The decrease in current liabilities is primarily the result of a decrease in fair value of share adjustment of $9,299,703.
Current wording
The decrease in current assets is primarily due to an increase in cash of $258,588, offset by a net decrease in accounts receivable of $523,357. The decrease in current liabilities is primarily the result of a decrease in fair value of share adjustment of $9,299,703.
Previous wording
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.
Current wording
Net cash used in investing activities was $132,950 for the nine months ended September 30, 2025 and was due to the purchase of property and equipment and intangibles.
Previous wording
Net cash used in investing activities was $82,049 for the six months ended June 30, 2024 and was due to the purchase of property, equipment and intangibles.
Current wording
Net cash used in investing activities was $286,327 for the nine months ended September 30, 2024 and was due to the purchase of property and equipment and intangibles.
Previous wording
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 a notes payable.
Current wording
For the nine months ended September 30, 2025, net cash provided by financing activities was $1,568,395, which includes net proceeds of $364,258 on the revolving loan, net proceeds of $204,137 from notes payable and $1,000,000 in receipts from related parties.
Previous wording
For the six months ended June 30, 2024 net cash provided by financing activities was $206,614, which primarily includes payments of approximately $5.8 million on the line of credit and notes payable, offset by proceeds of approximately $6.2 million from the revolving loan and notes payable.
Current wording
For the nine months ended September 30, 2024, net cash used in financing activities was $377,101, which primarily includes payments toward (i) lines of credit, (ii) a revolving loan, (iii) notes payable and iv) loans from related parties of approximately $23.5 million, offset by proceeds from a revolving loan and a note payable of approximately $23.2 million.
Previous wording
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.
Current wording
We review goodwill for impairment annually each November 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.
Previous wording
No impairment losses related to goodwill were recognized for the six months ended June 30, 2025 and 2024.
Current wording
No impairment losses related to goodwill were recognized for the nine months ended September 30, 2025 and 2024.
Showing the first 40 of 41 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following table represents Prior Notes that were part of the restructuring and related prior and updated terms (under the Amended Consolidated Secured Promissory Note):