SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Consolidation |
Basis of Consolidation
The consolidated financial statements of Starco Brands, Inc. include the accounts of STCB, our wholly owned subsidiary AOS, our wholly owned subsidiary Skylar, our wholly owned subsidiary Soylent, and our 85% owned subsidiary Whipshots and its wholly owned subsidiaries, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the consolidated financial statements.
Our consolidated subsidiaries at December 31, 2025 and 2024 include: AOS, Skylar, Soylent, Whipshots Holdings and its wholly owned subsidiary Whipshots LLC. Intercompany accounts and transactions have been eliminated upon consolidation.
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| Basis of Presentation |
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to annual financial reporting. The consolidated financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. All such adjustments are of a normal, recurring nature unless otherwise disclosed.
The consolidated financial statements should be read in conjunction with the Company’s prior filings with the SEC. Certain prior-period amounts may have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net income, total assets, or stockholders’ equity. |
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| Use of Estimates |
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, equity-based transactions, and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities and the recognition of costs and expenses that are not readily apparent from other sources. Actual results may differ materially from those estimates, and such differences could affect future results of operations.
The Company believes the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the consolidated financial statements: the timing of revenue recognition; testing goodwill and intangible assets for impairment; evaluating the recoverability of long-lived assets; estimating the allowance for doubtful accounts; determining the net realizable value of inventory; assessing the value of certain share-based adjustments; accounting for income taxes; estimating the fair value of contributed services; and assumptions used in the Black-Scholes valuation model, including expected volatility, risk-free interest rate, and expected dividend rate.
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| Concentrations of Credit Risk |
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which may at times exceed federally insured limits. The Company monitors the creditworthiness of the financial institutions with which it maintains deposits and has not experienced any losses in such accounts. Management believes the Company is not exposed to significant credit risk with respect to its cash balances.
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| Cash and Cash Equivalents |
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2025 or December 31, 2024.
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| Accounts Receivable |
Accounts Receivable
Accounts receivable are stated at net realizable value, which includes an allowance for credit losses representing the amount expected to be uncollectible. The allowance for credit losses is estimated based on relevant available information, including historical loss experience, the aging of receivables, customer-specific information, and current and expected economic conditions. The allowance is evaluated quarterly. As of December 31, 2025, 2024 and 2023, accounts receivable, net were approximately $, $ and $, respectively. As of those dates, the allowance for credit losses was $223,867, $371,654 and $350,112, respectively.
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| Fair Value of Financial Instruments |
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
The carrying amount of the Company’s consolidated financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable, prepaid expenses, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2025 and December 31, 2024.
The following table summarized the financial instruments of the Company at fair value based on the valuation approach applied to each class of security as of December 31, 2024:
Pursuant to the Soylent Acquisition, the Company was required to issue Share Adjustments (as defined in Note 5) to the former owners of Soylent based upon the stock price of the Company on the Adjustment Date (as defined in Note 5). The Company engaged a third-party valuation firm to estimate the fair value of this contingent liability by performing a Monte Carlo simulation to forecast the value of the Company’s stock and the implied value of the Share Adjustment. See Note 5 for further discussion. The inputs to estimate the fair value of the Share Adjustment were the market price of the Company’s Class A common stock, the option expected term, the volatility of the Company’s Class A common stock price and the risk-free interest rate. Significant changes to any unobservable input may result in a significant change in the fair value measurement.
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| Property and Equipment, net |
Property and Equipment, net
Property and equipment are recorded at historical cost, net of depreciation; all property and equipment with a cost of $2,000 or greater are capitalized. Depreciation is computed using straight-line over the estimated useful lives of the related assets. Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Maintenance and repairs are expensed as incurred. Construction in progress (“CIP”) relates to costs for assets under construction or development that are not yet ready for their intended use; such will be transferred to their appropriate asset category upon completion. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations. |
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| Revenue Recognition |
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when control of the promised goods or services transfers to the customer, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
Product Sales (STCB, AOS, Skylar, Soylent)
STCB, excluding its subsidiaries, earns a majority of its revenues through the sale of food products, primarily through Winona. AOS, Skylar, and Soylent, each wholly owned subsidiaries of the Company, generate revenue through the sale of premium body and skincare products, fragrances, and nutritional drinks, respectively. For these businesses:
Licensing Revenue (Whipshots)
Whipshots, an 85%-owned subsidiary, earns revenue from royalty-based licensing agreements with Temperance, a related entity. Under these agreements, the Company licenses the right for Temperance to manufacture and sell vodka-infused whipped cream products. Royalty revenue varies based on contractual royalty rates and underlying product sales. Revenue is recognized when Temperance sells licensed products to third-party customers, as this is when the Company’s performance obligation is satisfied and the amount of consideration is determinable.
ASC 606 Framework
In applying ASC 606, the Company evaluates contracts using the following five-step model:
The Company applies the five-step model only when collection of consideration is probable. Performance obligations are generally satisfied at a point in time, typically upon shipment or delivery, depending on when control transfers to the customer.
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| Income Taxes |
Income Taxes
The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
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| Stock-based Compensation |
The Company accounts for stock-based compensation per the provisions of ASC 718, Share-based Compensation (“ASC 718”), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatility is based on the volatility of comparable companies’ common stock. The expected term of awards granted is derived using estimates based on the specific terms of each award. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.
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| Net Loss Per Common Share |
Net loss per share of common stock is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the year. All outstanding options are considered potential common stock. The dilutive effect, if any, of stock payable, options and warrants are calculated using the treasury stock method. Any outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Because the effect of common stock equivalents is anti-dilutive for the years ended December 31, 2025 and 2024, such equivalents have been excluded from the computation of diluted net loss per share.
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| Intangible Assets |
Intangible Assets
Definite-lived intangible assets consist of certain domain names, trademarks, and trade names. These assets are amortized using the straight-line method over their estimated useful lives, which range from approximately 10 to 16 years.
Indefinite-lived intangible assets consist of certain trade names and trademarks. These assets are not amortized but are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.
The Company evaluates its long-lived assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Indicators of impairment include, among other factors, current-period operating or cash flow losses combined with a history of such losses, forecasts demonstrating continuing losses or insufficient income, significant changes in the manner in which an asset is used, or adverse industry or economic trends. Recoverability is assessed by comparing the carrying amount of the asset or asset group to the estimated undiscounted future cash flows expected to result from its use. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized for the amount by which the carrying value exceeds the estimated fair value, determined using the best information available and consistent with ASC 820, Fair Value Measurements.
During the year ended December 31, 2025, the Company identified impairment indicators related to lower-than-expected revenue from its Soylent segment, prompting a qualitative and quantitative assessment of its definite-lived intangible assets as of November 30, 2025. As a result, the Company recorded an impairment charge of $14,000,000 related to the definite-lived intangible assets of the Soylent subsidiary for the year ended December 31, 2025.
In 2024, the Company identified impairment indicators related to lower-than-expected revenue for the AOS component of its Starco Brands segment, prompting a qualitative impairment assessment of its definite-lived intangible assets as of November 30, 2024. The assessment was performed based on the AOS reporting unit structure in place at that time, prior to the subsequent aggregation of AOS and Starco Brands products into a single segment. As a result, the Company recorded an impairment charge of $13,304 related to the definite-lived intangible assets of its AOS subsidiary for the year ended December 31, 2024. |
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| Royalties and Licenses |
Royalties and Licenses
Royalty-based obligations with content licensors are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue at the greater of the contractual royalty rate or an effective royalty rate based on total projected net revenue for contracts with guaranteed minimums. Prepayments are typically made in connection with the development of a particular product and therefore expose the Company to risk during the development phase. Royalty payments earned after completion of the product are expensed as cost of revenue.
Certain licensing agreements include minimum guaranteed royalty payments. When no further performance remains with the licensor, such minimum guarantees are recorded as an asset and a liability at the contractual amount upon execution of the agreement. When performance obligations remain with the licensor, minimum guarantees are recorded as an asset when paid and as a liability when incurred.
The Company evaluates the expected future realization of royalty-based assets each quarter, including any unrecognized minimum commitments, to identify amounts unlikely to be recovered through future revenue. Impairments or losses identified post-launch are charged to cost of revenue. Long-lived royalty-based assets are evaluated for impairment using undiscounted cash flows when impairment indicators exist. If impairment is indicated, the assets are written down to fair value. Unrecognized minimum royalty commitments are accounted for as executory contracts, and losses are recognized when the underlying intellectual property is abandoned or the contractual rights to use the intellectual property are terminated.
Minimum contractual royalty-based obligations outstanding as of December 31, 2025 were approximately $20,000 for each of the years ending December 31, 2026, 2027, and 2028.
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| Leases |
Leases
The Company accounts for leases in accordance with ASC 842, Leases. Operating leases are recognized on the consolidated balance sheet as Right-of-Use (“ROU”) assets and corresponding lease liabilities. ROU assets include prepaid lease payments and exclude lease incentives and initial direct costs. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.
On May 1, 2024, the Company entered into a three-year operating lease agreement (the “Citrus Lease”) with a related-party lessor (see Note 9). The lease covers approximately 3,000 square feet located at 706 N. Citrus Ave., Los Angeles, California, with monthly base rent of $10,000 and annual increases of 5%. The lease includes an option to renew for an additional three years with notice required 90 days prior to the end of the term.
In accordance with ASC 842, the Company recognized an ROU asset and corresponding lease liability for its long-term office leases. See Note 13 – Leases for additional information.
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| Inventory |
Inventory
Inventory consists of premium body and skincare products, fragrances, and nutritional products. Inventory is measured and stated at average cost as of December 31, 2025. The carrying value of inventory is reduced for excess or obsolete items. The Company monitors inventory levels and usage to identify indicators of obsolescence and adjusts inventory values when necessary. During the year ended December 31, 2025, the Company recorded inventory write downs of $661,154 to reduce certain items to their estimated net realizable value. No inventory impairment losses were recorded for the year ended December 31, 2024. |
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| Acquisitions, Intangible Assets and Goodwill |
Acquisitions, Intangible Assets and Goodwill
The consolidated financial statements reflect the operations of an acquired business beginning on the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values as of the acquisition date, and goodwill is recognized for any excess of the purchase price over the fair value of the net assets acquired. Significant judgment is required in determining the fair value of certain tangible and intangible assets and in assigning their respective useful lives. The Company typically engages third-party valuation specialists to assist in valuing significant tangible and intangible assets.
Fair value measurements are based on available historical information and on future expectations and assumptions deemed reasonable by management, although such estimates are inherently uncertain. The Company generally employs an income approach to measure the fair value of intangible assets, which relies on forecasts of expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in these valuations include the amount and timing of future cash flows (including expected growth rates and profitability), product or technology life cycles, economic barriers to entry, and the discount rate applied to the cash flows. Determining the useful life of an intangible asset also requires judgment. Definite-lived intangible assets are amortized over their estimated useful lives. Intangible assets associated with acquired in-process research and development (“IPR&D”) are not amortized until the related product is available for sale.
Goodwill is measured as the excess of consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed as of the acquisition date. Although management uses its best estimates and assumptions to value assets acquired and liabilities assumed, these estimates are inherently uncertain and subject to refinement.
The Company reviews goodwill for impairment at least annually, or more frequently if indicators of impairment exist. The goodwill impairment test may require the use of qualitative assessments and fair-value techniques, both of which involve significant judgment. An impairment loss is recognized when the fair value of a reporting unit is less than its carrying amount.
During the year ended December 31, 2025, the Company determined that lower than expected revenue for its Soylent segment constituted an indicator of impairment. As a result, the Company recorded an impairment charge of $1,127,208 to write off the remaining carrying amount of Soylent goodwill, reducing the balance for that segment to zero as of December 31, 2025.
In 2024, the Company identified triggering events due to lower-than-expected revenue across its segments, prompting goodwill impairment assessments as of November 30, 2024, the Company’s annual impairment testing date. A third-party valuation firm was engaged to assist in determining the fair value of the reporting units under ASC 350. The Company recorded total goodwill impairment losses of $14,327,871 for the year ended December 31, 2024, allocated as follows: $2,944,871 to the Starco Brands segment and $11,383,000 to the Soylent segment.
As of December 31, 2025 and 2024, goodwill was $11,234,312 and $12,361,520, respectively.
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| Segments |
Segments
Operating segments are defined as components of an enterprise for which separate financial information is available and that are evaluated regularly by the chief operating decision maker (“CODM”) in allocating resources and assessing performance. The Company’s Chief Executive Officer (“CEO”) serves as the CODM. The CEO reviews the Company’s operations and manages the business through three reportable operating segments: (i) Starco Brands, which includes AOS, Whipshots Holdings, and Whipshots LLC; (ii) Skylar; and (iii) Soylent. The CODM evaluates segment performance and allocates resources primarily based on gross profit. |
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| Recently Issued Accounting Pronouncements |
Recently Issued Accounting Pronouncements
The Company evaluates the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board. Management has reviewed all newly issued but not yet effective accounting pronouncements and determined that none are expected to have a material impact on the Company’s consolidated financial statements.
Recently Adopted Accounting Pronouncements
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision-usefulness of income tax disclosures by requiring greater disaggregation in the effective tax rate reconciliation and additional detail regarding income taxes paid. The amendments do not change the recognition or measurement requirements of ASC 740. For entities other than public business entities, including smaller reporting companies, the amendments are effective for annual periods beginning after December 15, 2025, with early adoption permitted. The Company elected to early adopt ASU 2023-09 for the year ended December 31, 2025. Adoption is permitted on either a prospective basis or a retrospective basis to all periods presented; the Company adopted the guidance on a prospective basis. The adoption of ASU 2023-09 resulted in expanded income tax disclosures, including enhanced tabular presentation of the effective tax rate reconciliation and additional disaggregation of income taxes paid by jurisdiction. The adoption did not have an impact on the Company’s consolidated financial position, results of operations, or cash flows, as the amendments relate solely to disclosure requirements.
ASU 2024-03, Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to provide additional tabular disaggregation of specified natural expense categories for each relevant income statement caption. The amendments do not change the recognition or measurement requirements of ASC 220. For public business entities, the standard is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027; early adoption is permitted. The Company has not yet adopted this standard. Management is evaluating the impact of ASU 2024-03 on the Company’s financial statement presentation and internal reporting systems. Management does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows, nor on the Company’s critical accounting estimates; however, the standard may require expanded disclosures and changes to internal reporting processes.
ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides an optional practical expedient for estimating expected credit losses on current accounts receivable and current contract assets and an associated policy election for certain entities regarding subsequent collections. The amendments do not change the recognition or measurement requirements of ASC 326 for entities that do not elect the practical expedient. The amendments are effective for annual reporting periods beginning after December 15, 2025 (and interim periods within those fiscal years); early adoption is permitted. The Company has not yet adopted this standard. Management is evaluating whether to elect the practical expedient and the related policy election and will disclose any election and its quantitative effect upon adoption. Management does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows, nor on the Company’s critical accounting estimates unless the Company elects the policy and the quantitative effect is material. |
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