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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): September 15, 2022 (September 12, 2022)
 
STARCO BRANDS, INC.
(Exact name of Company as specified in its charter)
 
Nevada
000-54892
27-1781753
(State or other jurisdiction
(Commission File Number)
(IRS Employer
of Incorporation)
 
Identification Number)
 
250 26th Street, Suite 200
Santa Monica, CA 90402
(Address of principal executive offices)
888-484-1908
(Registrant’s Telephone Number)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock
 
STCB
 
OTC Markets Group OTCQB tier
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
 
 

 
 
Item 1.01 Entry into a Material Definitive Agreement
 
The disclosures set forth in Item 2.01 are hereby incorporated into this Item 1.01 by reference.
 
Item 2.01 Completion of Acquisition or Disposition of Assets.
 
Agreement and Plan of Merger
 
On September 12, 2022 (the "Closing Date"), Starco Brands, Inc. (the "Company"), through its wholly-owned subsidiary Starco Merger Sub Inc. ("Merger Sub"), completed its acquisition (the "Acquisition") of The AOS Group Inc. ("AOS"). On the Closing Date, the Company and Merger Sub entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among (i) the Company, (ii) Merger Sub, (iii) AOS, and (iv) Matthias Metternich, solely in his capacity as the Company Stockholder Representative of AOS stockholders (the individual stockholders of AOS, the "Stockholders"). Under the terms of the Merger Agreement, the Acquisition consisted of Merger Sub merging with and into AOS with AOS being the surviving corporation (which is referred to for the periods at and after the Closing Date as the “Surviving Corporation”) (the “Merger”), pursuant to which the Company will issue to the Stockholders (the “Stock Issuance”) an aggregate of 61,400,000 restricted shares of its common stock, 5,000,000 additional restricted shares of its common stock after an 18-month indemnification period, and offsetting against these additional shares will be the sole recourse for any indemnity claims by the Company against the Stockholders and 5,000,000 additional restricted shares of its common stock contingent upon the Surviving Corporation meeting certain sales metrics. Further, in the event that the Stockholders have any indemnity claims against the Company or Merger Sub, the Company shall satisfy any such indemnity claims solely by the issuance of additional shares of its common stock, up to 5,000,000 additional shares. Notwithstanding the foregoing, under the terms of the Merger Agreement, any Stockholder that is not an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), will receive cash in lieu of shares of Company common stock at a value equal to $0.10 per share.
 
The foregoing summary of the terms of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on September 15, 2022 and is incorporated herein by reference.
 
Registration Rights Agreement
 
On September 12, 2022, in connection with the closing of the Merger, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) by and among the Company and the Investors (as defined therein), pursuant to which certain stockholders who receive restricted shares of Company common stock in the Merger (the “Holders”) shall receive certain rights to have such restricted shares of Company common stock registered for resale to the public on the terms and subject to the conditions set forth therein. The Registration Rights Agreement provides that, among other things, the Company will, upon the date that is 120 calendar days after the later of (a) the date that the Company is eligible to register its common stock for resale on a Form S-3 and (b) the date that the Voting Agreement (as defined below) is terminated by its terms, file with the SEC a registration statement registering the resale of the restricted shares of Company common stock held by the Holders.
 
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K filed with the SEC on September 15, 2022 and is incorporated herein by reference.
 
Voting Agreement
 
On September 12, 2022, in connection with the closing of the Merger, the Company entered into a Voting Agreement (the “Voting Agreement”) with certain stockholders of the Company, which stockholders upon the closing of the Merger will collectively own approximately 23.0% percent of the Company’s issued and outstanding common stock (the “Voting Agreement Stockholders”). Through the Voting Agreement, Ross Sklar (“Sklar”), the Company’s chief executive officer and largest shareholder, effectively controls 64.2% of the total voting power of the Company. The Voting Agreement generally requires that the Voting Agreement Stockholders vote or cause to be voted their shares of Company common stock, and execute and deliver written consents and otherwise exercise all voting rights with respect to their shares of Company common stock in the same manner as Sklar votes or gives his consent, provided that such manner does not adversely affect such Voting Agreement Stockholder in a manner different from the effect on other holders of Company common stock. In addition, in connection with the Voting Agreement, the Voting Agreement Stockholders delivered irrevocable proxies to Sklar. The Voting Agreement terminates (a) automatically upon the listing of the Company’s common stock on the Nasdaq Stock Market or New York Stock Exchange, (b) with the written consent of each of the parties signatories thereto, (c) automatically in the event that Sklar owns less than 30% of the issued and outstanding common stock of the Company and is no longer the Company’s chief executive officer, or (d) automatically in the event the Company voluntarily commences any bankruptcy or similar proceedings or has commenced against it any bankruptcy or similar proceedings that are not dismissed within 60 days of such commencement.
 
The foregoing description of the Voting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Voting Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K filed with the SEC on September 15, 2022 and is incorporated herein by reference
 
Item 3.02 Unregistered Sales of Equity Securities.
 
The disclosure set forth under Item 2.01 regarding the Stock Issuance is incorporated by reference into this Item 3.02. The Stock Issuance did not involve a public offering and was exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D promulgated under Section 4(a)(2) of the Securities Act.
 
Item 7.01 Financial Statements and Exhibits
 
On September 15, 2022, the Company issued a press release announcing the Acquisition. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
 
The information under Item 7.01 and in Exhibit 99.1 of this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information under Item 7.01 and in Exhibit 99.1 of this Current Report on Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits.
 
The following exhibits are filed with this Current Report on Form 8-K:
 
Exhibit Number
 
Description
2.1†
 
Agreement and Plan of Merger, by and among (i) Starco Brands, Inc., a Nevada corporation, (ii) Starco Merger Sub Inc., a Delaware corporation, (iii) The AOS Group Inc., a Delaware corporation, and (iv) Matthias Metternich, solely in his capacity as the Company Stockholder Representative of The AOS Group stockholders, dated September 12, 2022.
10.1†
 
Registration Rights Agreement, by and between Starco Brands, Inc., a Nevada corporation, and the Investors listed on Schedule A thereto, dated September 12, 2022.
10.2†
 
Voting Agreement, by and among Starco Brands, Inc., a Nevada corporation, and the stockholders listed on Schedule A thereto, dated September 12, 2022.
99.1
 
Press Release, dated September 15, 2022, titled "Starco Brands Acquires The AOS Group Inc., Maker of Art of Sport® Body and Skincare Brand Co-founded by Kobe Bryant."
104
 
Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document
     
 
† Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
 
 

 
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
STARCO BRANDS, INC.
 
     
Dated: September 15, 2022
/s/ Ross Sklar
 
 
Ross Sklar
 
 
Chief Executive Officer