NOTE 4 – SEGMENTS

Effective January 1, 2026, the Company changed the composition of its reportable segments by discontinuing the elective aggregation of operating segments previously combined within the Starco Brands reportable segment. Aggregation under ASC 280 is permitted but not required, and the Company has determined to discontinue the previously applied aggregation because the operating margins of the previously aggregated operating segments are no longer expected to converge over time as previously anticipated.

As a result, the Company now presents five reportable operating segments: AOS, Skylar, Soylent, Whipshots, and Winona. Parent-level corporate activities are presented as “Corporate” and reconcile reportable segment results to consolidated results. Previously, the Company reported three reportable segments: Starco Brands (which included the activities of the parent platform, AOS, Whipshots, and Winona), Skylar, and Soylent. Segment information for the three and six months ended June 30, 2025 has been recast to conform to the current-period segment presentation.

The Company’s reportable segments are described below:

Skylar. The Skylar segment generates revenue through the sale of hypoallergenic fragrance products under the Skylar brand.

Soylent. The Soylent segment generates revenue through the sale of plant-based nutritional products, including ready-to-drink shakes, powders, and bars, under the Soylent brand.

AOS. The AOS segment generates revenue through the sale of premium body and skincare products designed for athletes under the Art of Sport brand.

Whipshots. The Whipshots segment earns its revenues as royalties from licensing arrangements with Temperance, a related party, under which Temperance manufactures and sells vodka-infused whipped cream products under the Whipshots® brand. The Whipshots segment includes Whipshots Holdings and Whipshots LLC.

Winona. The Winona segment generates revenue through the sale of popcorn spray and sauce spray products under the Winona Pure® brand. Winona operates as a division of STCB, which is the marketer of record under a licensing arrangement with the brand owner. The Company is the principal in arrangements with end customers. Winona products are sold through retail partners including Walmart, H-E-B, Meijer, and Food Lion, and on Amazon through the Company’s strategic partner Pattern (formerly iServe), which is a stockholder of the Company.

Corporate. Corporate consists of the activities of Starco Brands, Inc., the publicly traded parent legal entity, including executive management, public-company costs, professional services, platform-level marketing and administration, and other expenses incurred at the parent level that are not allocated to the reportable segments. Corporate is not an operating segment.

The Company’s Chief Executive Officer, Ross Sklar, is the Chief Operating Decision Maker (“CODM”). The CODM reviews balance sheet data on a consolidated basis; therefore, disaggregated balance sheet data are not presented.

The measures the CODM uses to evaluate segment performance and allocate resources among the Company’s product lines - revenues, revenues from related parties, gross profit, and income (loss) from operations – are consistent with the measures disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Company’s revised segment presentation reflects an increased level of disaggregation of these measures, consistent with the change in management approach described above.

Profit or Loss Measures

The CODM uses these measures, together with the underlying components of cost of revenues and operating expenses (including marketing and sales spend), to assess the effectiveness of resource allocation decisions among the Company’s segments. For example, the CODM evaluates the effectiveness of marketing and sales spend initiatives by reference to corresponding changes in segment revenue and gross profit contribution in order to determine whether to direct additional marketing investment to a given segment or to redirect investment elsewhere. The disaggregated presentation of segment results also enables the CODM to assess each segment’s contribution to the consolidated enterprise.

The following expense categories are regularly provided to the CODM, included in the reported measures of segment profit or loss, and are significant quantitatively or qualitatively. These categories are consistent with those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025:

Significant Expense Categories

The following tables present gross profit (loss) and significant expenses by reportable segment. Corporate is presented as a reconciling column and is not a reportable segment:

SCHEDULE OF GROSS PROFIT OR LOSS REPORTING SEGMENT

Geographic Information. The Company’s external customer revenues and long-lived assets are substantially all attributable to operations and locations within the United States for the three and six months ended June 30, 2026 and 2025.

Major Customers. For the three months ended June 30, 2026, the Company had two customers that each represented 10% or more of consolidated revenues: Customer A at approximately 12%, contributing approximately $1,001,000 of revenue reported within the Soylent and AOS segments, and Customer C at approximately 15%, contributing approximately $1,201,000 of revenue reported within the Skylar segment. For the six months ended June 30, 2026, the Company had two customers that each represented 10% or more of consolidated revenues: Customer A at approximately 21%, contributing approximately $3,724,000 of revenue reported within the Soylent and AOS segments, and Customer C at approximately 16%, contributing approximately $2,846,000 of revenue reported within the Skylar segment.

For the three months ended June 30, 2025, the Company had one customer that represented 10% or more of consolidated revenues: Customer A at approximately 29%, contributing approximately $3,142,000 of revenue reported within the Soylent segment. For the six months ended June 30, 2025, the Company also had two customers that each represented 10% or more of consolidated revenues: Customer A at approximately 30%, contributing approximately $6,626,000 of revenue reported within the Soylent segment, and Customer B at approximately 10%, contributing approximately $2,216,000 of revenue reported within the Winona and Soylent segments.

Products and Services. The Company’s reportable segments are organized by brand, and each segment represents a discrete product line. Accordingly, the segment revenue information presented above also reflects the disaggregation of revenues by product group, and no separate product-level revenue disclosure is required.