Starco Brands, Inc.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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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.
Jun 30, 2026 · Filed Aug 14, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-20.
0001493152-26-024612
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001493152-26-037882
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 134 previous paragraphs and 155 current paragraphs.
84 unchanged; 44 reworded; 23 added; 6 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 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 (23)
Current report
AOS. AOS revenues were ($75) for the three months ended June 30, 2026, compared to $359,883 for the three months ended June 30, 2025. The decrease was primarily attributable to sales associated with a product launch in 2025 that did not recur in 2026. Results were further affected by changes to AOS’s go-to-market strategy during the current period, including its transition on Amazon from a consignment model to a wholesale model, as well as deductions recorded during the period relating to sales in prior periods.
Current report
For the three months ended June 30, 2026 and 2025, there was no fair value share adjustment gain or loss. The $3,692,529 fair value share adjustment gain related to the Soylent sellers’ rights was recognized during the six months ended June 30, 2025 (in the first quarter of 2025); see the six-month discussion below.
Current report
For the three months ended June 30, 2026, we reported a net loss of $1,461,634, compared to a net loss of $1,850,201 for the same period in 2025. The year-over-year improvement was primarily driven by lower operating expenses, including reduced marketing and professional fees, partially offset by lower revenue.
Current report
Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025
Current report
Revenues
Current report
Revenues, related parties
Current report
Segment Revenue Results
Current report
Soylent. Soylent revenues were $7,375,202 for the six months ended June 30, 2026, compared to $14,009,080 for the six months ended June 30, 2025. The change was primarily attributable to an inability to receive product from its primary supplier.
Current report
Skylar. Skylar revenues were $7,157,670 for the six months ended June 30, 2026, compared to $3,859,067 for the six months ended June 30, 2025. The increase was primarily due to the success of our marketing initiatives and new product rollouts.
Current report
Whipshots. Whipshots related-party revenues were $512,911 for the six months ended June 30, 2026, compared to $1,471,691 for the six months ended June 30, 2025. The decrease was primarily due to continuing softening in the spirits market.
Current report
Winona. Winona revenues were $2,227,682 for the six months ended June 30, 2026, compared to $1,991,194 for the six months ended June 30, 2025.
Current report
AOS. AOS revenues were $54,755 for the six months ended June 30, 2026, compared to $545,537 for the six months ended June 30, 2025. The decrease was primarily attributable to sales associated with a product launch in 2025 that did not recur in 2026 and changes to AOS’s go-to-market strategy during the current period.
Current report
Operating Expenses
Current report
For the six months ended June 30, 2026, our compensation expense amounted to $3,579,437, reflecting an increase of $181,278 or 5%, compared to $3,398,159 for the six months ended June 30, 2025.
Current report
For the six months ended June 30, 2026, our professional fees totaled $1,269,958, representing a decrease of $422,193 or 25%, compared to $1,692,151 in the prior period. The decrease is primarily due to a reduction in outsourced accounting fees as we transitioned the function to internal employees in the second half of last year and decreased legal and audit and valuation fees in the current year.
Current report
For the six months ended June 30, 2026, our marketing, general and administrative expenses were $4,581,744, reflecting a decrease of $1,996,563 or 30%, compared to $6,578,307 for the six months ended June 30, 2025. The decrease primarily reflects lower amortization expense following the write-offs of intangible assets at our Soylent subsidiary at December 31, 2025, reduced broker commissions and marketing support costs at Soylent and AOS, and reduced borrower fees due to our year end refinancing, partially offset by increased marketing spend at Skylar.
Current report
Other Expense
Current report
Net (Loss) Income
Current report
Working Capital
Current report
Net cash used in operating activities was $768,074 for the six months ended June 30, 2026, compared to net cash used of $859,889 for the six months ended June 30, 2025, an decrease in cash used of $91,815. The decrease was primarily attributable to a net loss of $2,291,354 in the current period, compared to net income of $125,904 in the prior-year period, which in the prior year included a $3,692,529 non-cash gain on the stock payable share adjustment that reduced prior-year operating cash flows.
Current report
For the six months ended June 30, 2026, net loss of $2,291,354 was adjusted for non-cash items, including amortization of intangible assets of $708,628, stock-based compensation of $463,880, and depreciation of $3,262. Amortization expense decreased approximately $715,000 compared to the prior-year period, primarily due to the impairment of certain Soylent intangible assets recognized in 2025, which reduced the remaining amortizable basis of those assets.
Current report
Changes in operating assets and liabilities used net cash of approximately $22,959 during the six months ended June 30, 2026. This was primarily driven by a decrease in accounts receivable of $529,791 and increases in other payables and accrued liabilities (including related-party amounts) of $563,361 and in related-party accounts payable of $146,216, offset by an increase in inventory of $414,285, a decrease in accounts payable of $784,290, and an increase in prepaid expenses and other assets of $67,721.
Current report
For the six months ended June 30, 2026, net cash used in financing activities was $149,202, consisting of payments on notes payable.
Removed paragraphs (6)
Previous report
AOS. AOS revenues were $54,830 for the three months ended March 31, 2026, compared to $185,654 for the three months ended March 31, 2025, a decrease of $130,824 or 70%.
Previous report
Working Capital Surplus Deficit
Previous report
Net cash used in operating activities was $707,412 for the three months ended March 31, 2026, compared to net cash provided of $839,143 in the prior-year period. The shift to net cash outflows was primarily driven by the absence of the $3.7 million non-cash gain recognized in the first quarter of 2025 related to the stock payable share adjustment, which significantly increased operating cash flows in the prior year.
Previous report
Excluding that non-recurring item, operating cash flows for the 2026 period were further impacted by:
Previous report
Overall, the combination of higher working capital outflows, lower non-cash adjustments, and the absence of the prior-year fair value gain resulted in net cash used in operating activities for the 2026 period.
Previous report
For the three months ended March 31, 2026, net cash used in financing activities was $113,158, which includes payments of $113,158 on notes payable.
Reworded paragraphs (44)
Previous wording
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current wording
ITEM 2. MANAGEMENT**’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous wording
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.
Current wording
In December 2021, the Company launched a new product line consisting of vodka-infused, whipped-cream aerosols, under the brand name “Whipshots” at Art Basel in Miami and garnered over 1 billion impressions world-wide, and sold-out of its limited quantity can launches on whipshots.com each day of the month of the December launch month. The Company launched brick and mortar retail distribution in the first quarter of 2022, signed a distribution agreement with Republic National Distributing Company (“RNDC”), one of the largest spirits distributors in the nation, and signed distribution agreements with others. Whipshots® is currently distributed in 47 of 50 states. The base flavors of Whipshots®– Vanilla, Mocha, Caramel and Chocolate – are accompanied by new and Limited Time flavors such as Peppermint, Lime, Pumpkin Spice, Strawberry and King Cake. We plan to continue to offer various additional Limited Time flavors over time. Whipshots® is produced by Temperance, where Sklar is a majority shareholder.
Previous wording
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.
Current wording
On September 8, 2021, Whipshots LLC, an indirect subsidiary of the Company, entered into an Intellectual Property Purchase Agreement, effective August 24, 2021, with Penguins Fly, LLC, a Pennsylvania limited liability company (“Seller”). The agreement provided that the Seller would sell the trademarks “Whipshotz” and “Whipshots”, the accompanying domain and social media handles of the same nomenclature, and certain intellectual property, documents, digital assets, customer data and other transferable rights under non-disclosure, non-compete, non-solicitation and confidentiality contracts benefiting the purchased intellectual property and documents (collectively, the “Acquired Assets”) to Whipshots LLC. The purchase price for the Acquired Assets is payable to Seller, over the course of seven years, based on a sliding scale percentage of gross revenues actually received by us solely from our sale of Whipshots/Whipshotz Products. The payments are subject to a minimum amount in each contract year and a maximum aggregate amount.
Previous wording
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.
Current wording
On September 12, 2022, STCB, through its wholly-owned subsidiary Starco Merger Sub Inc. (“Merger Sub”), completed its acquisition (the “AOS Acquisition”) of The AOS Group Inc., a Delaware corporation (“AOS”). The AOS Acquisition consisted of Merger Sub merging with and into AOS, with AOS being the surviving corporation. AOS® is a wholly-owned subsidiary of Brands Holdco, which is in turn a wholly-owned subsidiary of STCB. AOS® is the maker of Art of Sport® premium body and skincare products engineered to power and protect athletes and brings over the counter respiratory, sun care, women and children, pain management, performance supplements, food, beverage and apparel product lines under STCB auspices.
Previous wording
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.
Current wording
On December 29, 2022, STCB, through its wholly-owned subsidiary Starco Merger Sub II, Inc. (“Merger Sub II”), completed its acquisition (the “Skylar Acquisition”) of Skylar Body, Inc., a Delaware corporation (“Skylar Inc.”) through the merger of Merger Sub II with and into Skylar Inc. Immediately following the Skylar Acquisition Skylar Inc. merged with and into Skylar Body, LLC (“Skylar”) a wholly-owned subsidiary of STCB, with Skylar as the surviving entity. Skylar® is a wholly-owned subsidiary of Brands Holdco, which is in turn a wholly-owned subsidiary of STCB. Skylar® is the maker of fragrances that are hypoallergenic and safe for sensitive skin.
Previous wording
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.
Current wording
On February 15, 2023, STCB, through its wholly-owned subsidiary Starco Merger Sub I, Inc. (“Merger Sub I”), completed its acquisition (the “Soylent Acquisition”) of Soylent Nutrition, Inc., a Delaware corporation (“Soylent”). The Soylent Acquisition consisted of Merger Sub I merging with and into Soylent, with Soylent being the surviving corporation. Soylent® is a wholly-owned subsidiary of Brands Holdco, which is in turn a wholly-owned subsidiary of STCB. Soylent® is the maker of a wide range of plant-based “complete nutrition” and “functional food” products with a lineup of plant-based convenience shakes, powders and bars that contain proteins, healthy fats, functional amino acids and essential nutrients.
Previous wording
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 wording
To support this strategy, the Company continues to pursue strategic partnerships and acquisitions. In July 2025, our indirect subsidiary Skylar entered into a license agreement with BlueUTA-I LLC, granting rights to the likeness and trademarks of artist Leah Kateb for use in commercial products. This agreement includes base and royalty compensation, equity grants, and stock options, and is expected to enhance brand visibility and drive product innovation across multiple categories.
Previous wording
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 wording
Additionally, on July 29, 2025, the Company executed a non-binding exclusive Letter of Intent to acquire its contract manufacturers, collectively referred to as The Starco Group. This proposed transaction is expected to provide greater scale and margin efficiency through vertical integration and would result in the Company being renamed “STARCO,” with two primary operating subsidiaries. We have not acquired the contract manufacturers as of this Report, however, on July 2, 2026 the Company formed Starco Manufacturing, LLC, a Nevada limited liability company (“Manufacturing Holdco”), and on July 6, 2026, the Company formed Starco Brands, LLC, a Nevada limited liability company (“Brands Holdco” and together with Manufacturing Holdco, the “Holdcos”).
Previous wording
STCB and its subsidiaries had 29 full-time employees as of March 31, 2026 and used independent contractors and consultants on an as needed basis.
Current wording
STCB and its subsidiaries had 26 full-time employees as of June 30, 2026 and used independent contractors and consultants on an as needed basis.
Previous wording
For the three months ended March 31, 2026, we recorded revenues of $8,979,270 compared to $9,818,757 for the three months ended March 31, 2025 for a decrease of $839,487 or 9%. The decrease in the current period was primarily due to decreases in sales of Soylent stemming from an inability to receive product from our primary supplier, partially offset by increases in sales of Skylar.
Current wording
For the three months ended June 30, 2026, we recorded revenues of $7,836,040 compared to $10,586,121 for the three months ended June 30, 2025, a decrease of $2,750,081 or 26%. The decrease in the current period was primarily due to decreases in sales of Soylent stemming from an inability to receive product from its primary supplier, partially offset by increases in sales of Skylar.
Previous wording
For the three months ended March 31, 2026, we recorded related party revenues of $283,158 compared to $1,050,312 for the three months ended March 31, 2025 for a decrease of $767,154 or 73%. This decline was due to declines in sales of Whipshots due to continued softening in the spirits market.
Current wording
For the three months ended June 30, 2026, we recorded related party revenues of $229,752 compared to $421,379 for the three months ended June 30, 2025, a decrease of $191,627 or 45%. This decline was due to declines in sales of Whipshots due to continued softening in the spirits market.
Previous wording
Soylent. Soylent revenues were $4,386,006 for the three months ended March 31, 2026, compared to $7,254,599 for the three months ended March 31, 2025, a decrease of $2,868,593 or 40%. The decline was primarily attributable to supply constraints stemming from an inability to receive product from our primary supplier, which limited our ability to fulfill customer demand during the quarter.
Current wording
Soylent. Soylent revenues were $2,989,196 for the three months ended June 30, 2026, compared to $6,754,481 for the three months ended June 30, 2025. The change was primarily attributable to an inability to receive product from its primary supplier.
Previous wording
Skylar. Skylar revenues were $3,672,501 for the three months ended March 31, 2026, compared to $1,413,933 for the three months ended March 31, 2025, an increase of $2,258,568 or 160%. The increase was primarily due to a new product launch and increased unit sales from our monthly Scent Club subscription program.
Current wording
Skylar. Skylar revenues were $3,485,170 for the three months ended June 30, 2026, compared to $2,445,134 for the three months ended June 30, 2025. The increase was primarily due to the success of our marketing initiatives and new product rollouts.
Previous wording
Whipshots. Whipshots related-party revenues were $283,158 for the three months ended March 31, 2026, compared to $1,050,312 for the three months ended March 31, 2025, a decrease of $767,154 or 73%. The decrease reflects continued softening in the broader spirits and ready-to-drink category, which has reduced volumes under our licensing arrangement with Temperance.
Current wording
Whipshots. Whipshots related-party revenues were $229,752 for the three months ended June 30, 2026, compared to $421,379 for the three months ended June 30, 2025. The change reflects continuing softening in the spirits market.
Previous wording
Winona. Winona revenues were $865,933 for the three months ended March 31, 2026, compared to $964,571 for the three months ended March 31, 2025, a decrease of $98,638 or 10%.
Current wording
Winona. Winona revenues were $1,361,749 for the three months ended June 30, 2026, compared to $1,026,623 for the three months ended June 30, 2025.
Previous wording
For the three months ended March 31, 2026, our compensation expense amounted to $1,678,748, reflecting a decrease of $57,440 or 3%, compared to $1,736,188 for the three months ended March 31, 2025. This decline is primarily attributable to reductions in stock-based compensation expense and overall headcount compared to the prior-year period.
Current wording
For the three months ended June 30, 2026, our compensation expense amounted to $1,900,689, reflecting an increase of $238,718 or 14%, compared to $1,661,971 for the three months ended June 30, 2025. The increase is primarily attributable to the payment of employee bonuses in the quarter, partially offset by reduced headcount and stock-based compensation compared to the prior-year period.
Previous wording
For the three months ended March 31, 2026, our professional fees totaled $583,879, representing a decrease of $196,345 or 25%, compared to $780,224 in the prior period. Professional fees are mainly for contractors, accounting, auditing and legal services associated with business operations, merger activity, and our quarterly filings as a public company, and advisory and valuation services. The decrease is primarily due to a decrease in legal fees and accounting/audit fees in the current year period.
Current wording
For the three months ended June 30, 2026, our professional fees totaled $686,079, representing a decrease of $225,848 or 25%, compared to $911,927 in the prior period. Professional fees are mainly for contractors, accounting, auditing and legal services associated with business operations, merger activity, and our quarterly filings as a public company, and advisory and valuation services. The decrease is primarily due to a reduction in outsourced accounting fees as we transitioned the function to internal employees in the second half of last year and decreased legal and audit and valuation fees in the current year.
Previous wording
For the three months ended March 31, 2026, our marketing, general and administrative expenses were $2,427,821, reflecting a decrease of $956,597 or 28%, compared to $3,384,418 for the three months ended March 31, 2025. The decrease primarily reflects lower amortization expense of approximately $370,000 following the write-offs of intangible assets at our Soylent subsidiary at December 31, 2025, reduced broker commissions of approximately $200,000 at Soylent, and a $400,000 reduction in marketing and advertising spend at the STCB segment as part of a broader cost-saving initiative.
Current wording
For the three months ended June 30, 2026, our marketing, general and administrative expenses were $2,153,923, reflecting a decrease of $1,039,966 or 33%, compared to $3,193,889 for the three months ended June 30, 2025. The decrease primarily reflects lower amortization expense following the write-offs of intangible assets at our Soylent subsidiary at December 31, 2025, reduced broker commissions and marketing support costs at Soylent and AOS, and reduced borrower fees due to our year end refinancing, partially offset by increased marketing spend at Skylar.
Previous wording
For the three months ended March 31, 2026, we had total other expense of $253,502 compared to total other expense of $558,832 for the three months ended March 31, 2025. For the three months ended March 31, 2026, the Company had interest expense of $237,985 compared to interest expense of $236,636 during the same period in 2025; the Company also had other expense of $15,517 for the three months ended March 31, 2026 as compared to other expense of $322,196 during the same period in 2025.
Current wording
For the three months ended June 30, 2026, we had total other expense of $199,133 compared to total other expense of $494,694 for the three months ended June 30, 2025. For the three months ended June 30, 2026, the Company had interest expense of $193,048 compared to interest expense of $257,538 during the same period in 2025; the Company also had other expense of $6,085 for the three months ended June 30, 2026 as compared to other expense of $237,156 during the same period in 2025.
Previous wording
For the three months ended March 31, 2026, there was no fair value share adjustment gain, as the final settlement of the liability occurred in May 2025. For the three months ended March 31, 2025, the Company incurred a change in fair value share adjustment gain of $3,692,529 due to a decrease in the fair value of the Soylent sellers’ rights to potentially receive additional Starco shares.
Current wording
For the six months ended June 30, 2026, there was no fair value share adjustment gain. For the six months ended June 30, 2025, the Company recognized a change in fair value share adjustment gain of $3,692,529 due to a decrease in the fair value of the Soylent sellers’ rights to potentially receive additional Starco shares, the final settlement of which occurred in 2025.
Previous wording
For the three months ended March 31, 2026, we reported a net loss of $829,720, compared to net income of $1,976,105 for the same period in 2025. The year-over-year change was primarily driven by the $3,692,529 gain recognized in the prior-year period related to the change in fair value of our share adjustment, which did not recur in 2026, partially offset by improved performance in our Skylar segment.
Current wording
For the six months ended June 30, 2026, we reported a net loss of $2,291,354, compared to net income of $125,904 for the same period in 2025. The year-over-year change was primarily driven by the $3,692,529 fair value share adjustment gain recognized in the prior-year period, which did not recur in 2026, and lower revenue, partially offset by reduced operating expenses.
Previous wording
As reflected in the accompanying condensed consolidated financial statements, we had an accumulated deficit of $103,145,543 as of March 31, 2026. Net cash used in financing activities for the three months ended March 31, 2026 was $113,158, all of which related to payments on our notes payable. During the same period in 2025, we used $293,307 in cash from financing activities primarily due to $268,397 of net payments toward the revolving loan and $24,910 in payments on notes payable.
Current wording
As reflected in the accompanying condensed consolidated financial statements, we had an accumulated deficit of $104,579,639 as of June 30, 2026. Net cash used in financing activities for the six months ended June 30, 2026 was $149,202, consisting of payments on notes payable. During the same period in 2025, we generated $693,062 in cash from financing activities, primarily due to $362,194 of net proceeds from the revolving loan and $330,868 in net proceeds from notes payable.
Previous wording
We used $707,412 of net cash in operating activities for the three months ended March 31, 2026. Operating cash outflows were primarily driven by our net loss of $829,720 and higher working capital usage, including increases in accounts receivable of $622,316 and inventory of $349,501, resulting from purchase timing and higher inventory levels maintained during the period. During the same period in 2025, our net cash provided by operating activities was $839,143 and was driven by net income of $1,976,105 and a decrease in accounts receivable of $3,099,686.
Current wording
We used $768,074 of net cash in operating activities for the six months ended June 30, 2026. Operating cash outflows were primarily driven by our net loss of $2,291,354, partially offset by non-cash adjustments (including $708,628 of amortization and $463,880 of stock-based compensation) and by working-capital changes, including a decrease in accounts receivable of $529,791 offset by an increase in inventory of $414,285. During the same period in 2025, our net cash used in operating activities was $859,889 compared to net income of $125,904 for the period, negatively affected by the $3,692,529 non-cash gain recognized during the period.
Previous wording
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.
Current wording
On August 11, 2023, the Company issued the Consolidated Secured Note to Ross Sklar in the principal amount of $4,000,000, consolidating several prior notes. The Consolidated Secured Note bore interest at the Wall Street Journal Prime Rate plus 2 percent, reassessed monthly, and was secured by substantially all of our assets pursuant to an Amended and Restated Consolidated Security Agreement, dated August 11, 2023. On May 31, 2024, we and Mr. Sklar entered into an amendment extending the maturity date of the Consolidated Secured Note to August 31, 2026, with an automatic extension to August 31, 2027 if amounts remain outstanding at maturity. The restructuring was accounted for as a debt modification.
Previous wording
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.
Current wording
During 2024, we repaid $1,527,500 of principal under the Consolidated Secured Note using proceeds from the Gibraltar Loan. As of December 31, 2024, the outstanding principal balance under the Consolidated Secured Note was $2,472,500, with no accrued interest outstanding.
Previous wording
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.
Current wording
On August 13, 2025, we and Mr. Sklar entered into a Second Amendment to the Consolidated Secured Note. The Second Amendment consolidated two additional loans made by Mr. Sklar to us in the aggregate principal amount of $1,000,000, consisting of a $500,000 loan funded on July 15, 2025 and a $500,000 loan funded on August 15, 2025. After giving effect to these additional loans and prior repayments, the principal balance under the Consolidated Secured Note was adjusted to $3,472,500. The Second Amendment reaffirmed that the Consolidated Secured Note remained subject to the Subordination Agreement dated May 24, 2024 between Mr. Sklar and Gibraltar Business Capital, LLC. Except as modified by the Second Amendment, all other terms of the Consolidated Secured Note, including interest rate, repayment provisions, and maturity, remained unchanged.
Previous wording
As of March 31, 2026, 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 $84,921 and $59,312 for the three months ended March 31, 2026 and 2025, respectively.
Current wording
As of June 30, 2026, the outstanding principal balance owed to Mr. Sklar under the Consolidated Secured Note was $3,472,500. Interest expense related to notes held by Mr. Sklar was $87,792 and $61,393 for the three months ended June 30, 2026 and 2025, respectively, and $172,713 and $120,705 for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
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.
Current wording
On December 22, 2025, we entered into the Bridge Loan with TSGI, a company wholly-owned by Ross Sklar, the Company’s Chief Executive Officer. The Bridge Loan provides for a bridge term loan of up to $5,000,000, including an initial disbursement of $4,500,000 and additional delayed drawdowns of up to $500,000 through December 31, 2026. The initial proceeds were used to repay our outstanding obligations under the Gibraltar Loan and to support working capital needs.
Previous wording
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.
Current wording
The Bridge Loan bears interest at the lesser of (i) the Highest Lawful Rate or (ii) the Prime Rate (not less than 6.00 percent) plus 4.25 percent. Interest is payable monthly beginning January 1, 2026. Principal payments begin January 1, 2027 and continue through 2030, with scheduled monthly payments ranging from $28,000 to $66,000. We may prepay the Bridge Loan at any time without penalty. The Bridge Loan matures on the earlier of (i) five years from issuance, (ii) acceleration upon default, or (iii) full repayment.
Previous wording
As of March 31, 2026, the outstanding principal balance under the Bridge Loan was $4,500,000, and interest expense related to the loan was $137,500 and $0 for the three months ended March 31, 2026 and 2025, respectively.
Current wording
As of June 30, 2026, the outstanding principal balance under the Bridge Loan was $4,500,000, and interest expense related to the loan was $83,875 and $0 for the three months ended June 30, 2026 and 2025, respectively, and $221,375 and $0 for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q 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 March 31, 2026, we had an accumulated deficit of $103,145,543, including a net loss of $829,720 for the three months then ended, and a working capital deficit of approximately $1.6 million.
Current wording
We have concluded that substantial doubt exists about our ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued. The principal conditions giving rise to substantial doubt include our history of recurring net losses and continued working capital deficiencies. As of June 30, 2026, we had an accumulated deficit of $104,579,639, including net losses of $1,461,634 and $2,291,354 for the three and six months then ended, and a working capital deficit of approximately $2.5 million.
Previous wording
As of March 31, 2026, our total debt was $7,972,500, consisting of $3,472,500 of notes payable to our CEO, Ross Sklar and $4,500,000 outstanding under a new bridge loan. 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.
Current wording
As of June 30, 2026, our total debt was $7,972,500, consisting of $3,472,500 of notes payable to our CEO, Ross Sklar and $4,500,000 outstanding under the Bridge Loan. Mr. Sklar holds a significant minority ownership interest, is the Company’s CEO and a member of the Board, and historically, certain notes payable to him have been extended or refinanced; however, there can be no assurance that such extensions or refinancings will continue in the future.
Previous wording
The increase in current assets is primarily due to increases in accounts receivable and prepaid assets of $622,316 and $349,501, respectively, offset by a decrease in cash of $820,570. The increase in current liabilities is primarily the result of an increase in other payables and accrued liabilities of $577,897.
Current wording
The decrease in current assets is primarily due to a decrease in cash of $917,276 and a decrease in accounts receivable of $529,791, partially offset by increases in inventory of $414,285 and prepaid expenses of $67,721. The increase in current liabilities is primarily the result of an increase in other payables and accrued liabilities of $244,411, an increase in notes payable of $221,267 and an increase in related-party payables, partially offset by a decrease in accounts payable of $784,290.
Previous wording
There were no investing activities during the three months ended March 31, 2026.
Current wording
There were no investing activities during the six months ended June 30, 2026.
Previous wording
Net cash used in investing activities was $128,350 for the three months ended March 31, 2025, primarily reflecting capital expenditures for property and equipment and additions to intangible assets.
Current 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.
Previous wording
For the three months ended March 31, 2025 net cash used in financing activities was $293,307, which includes net payments of $268,397 on the revolving loan and payments of $24,910 on notes payable.
Current 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 notes payable.
Previous wording
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.
Current wording
AOS, one of STCB’s indirect wholly-owned subsidiaries, earns its revenues through the sale of premium body and skincare products. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, including Amazon Fulfillment by Amazon (“Amazon FBA”), is recognized upon shipment of merchandise or FOB destination.
Previous wording
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.
Current wording
Skylar, one of STCB’s indirect wholly-owned subsidiaries, earns its revenues through the sale of fragrances. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, including Amazon FBA, is recognized either upon shipment of merchandise or FOB destination.
Previous wording
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.
Current wording
Soylent, one of STCB’s indirect wholly-owned subsidiaries, earns its revenues through the sale of nutritional drinks. Revenue from retail sales is recognized at shipment to the retailer. Revenue from eCommerce sales, is recognized upon shipment of merchandise.
Previous wording
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.
Current wording
Whipshots Holdings, an indirect 85% owned subsidiary, earns its revenues as royalties from the licensing agreements it has with Temperance, a related entity. STCB licenses the right for Temperance to manufacture and sell vodka infused whipped cream. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is based on contractual terms. The Company recognizes its revenue under these licensing agreements only when sales are made by Temperance to a third party.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
For the six months ended June 30, 2026, we recorded revenues of $16,815,309 compared to $20,404,878 for the six months ended June 30, 2025, a decrease of $3,589,569 or 18%. The decrease was primarily due to decreases in sales of Soylent stemming from an inability to receive product from our primary supplier, partially offset by increases in sales of Skylar.
Current report — wording carried from elsewhere
For the six months ended June 30, 2026, we recorded related party revenues of $512,911 compared to $1,471,691 for the six months ended June 30, 2025, a decrease of $958,780 or 65%. This decline was due to declines in sales of Whipshots due to continued softening in the spirits market.
Current report — wording carried from elsewhere
The following discussion provides additional details on segment-level revenue performance for the six months ended June 30, 2026 and 2025.
Current report — wording carried from elsewhere
For the six months ended June 30, 2026, we had total other expense of $452,635 compared to total other expense of $1,053,526 for the six months ended June 30, 2025. For the six months ended June 30, 2026, the Company had interest expense of $431,033 compared to interest expense of $494,174 during the same period in 2025; the Company also had other expense of $21,602 for the six months ended June 30, 2026 as compared to other expense of $559,352 during the same period in 2025.