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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STARCO BRANDS, INC.

(FORMERLY INSYNERGY PRODUCTS, INC.)and SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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STARCO BRANDS, INC.

(FORMERLY INSYNERGY PRODUCTS, INC.)and SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

NOTE 1– ORGANIZATION AND DESCRIPTION OF BUSINESS

Starco Brands, Inc. (formerly Insynergy Products, Inc.) (the "Company")(STCB) was incorporated in the State of Nevada on January 26, 2010 under the name Insynergy, Inc. On September 7, 2017, STCB filed an Amendment to engagethe Articles of Incorporation to change the corporate name to Starco Brands, Inc. The Board determined the change of STCB's name was in Direct Response marketingthe best interests of the Company due to changes in its current and anticipated business operations. In July 2017, STCB entered into a licensing agreement with The Starco Group (“TSG”), located in Los Angeles, California. The companies pivoted to commercializing novel consumer products manufactured by TSG. TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the goal of producing sales through television and/or retail.following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine.

During the third quarter of 2021, STCB formed two subsidiaries, Whipshots, LLC, a Wyoming limited liability company ("Whipshots LLC") and Whipshots, LLC, a Delaware limited liability company which was subsequently renamed Whipshots Holdings, LLC ("Whipshots Holdings"). Whipshots- LLC was a wholly-owned subsidiary of STCB at formation which was subsequently contributed to Whipshots Holdings. Whipshots Holdings is a majority owned subsidiary of STCB in which STCB owns 96% of the vested voting interests. There are unvested interests not owned by the Company for an additional 3% of the of the equity which have been issued subject to vesting requirements. The accompanying condensed consolidated financial statements are of STCB and its subsidiaries Whipshots Holdings and Whipshots LLC (collectively, the "Company").

In our opinion, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of unaudited consolidated financial position and the unaudited consolidated results of operations for interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation
The consolidated financial statements of Starco Brands, Inc. include the accounts of STCB and our 96% owned subsidiary and its wholly owned subsidiary, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with ASC 810, Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the condensed consolidated financial statements.
 
Our consolidated subsidiaries at March 31, 2022 include:
Whipshots Holdings and its wholly owned subsidiary Whipshots LLC
 

Basis of presentation

The Company’s unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted and do not contain certain information included in the United States of America requires management to make estimatesCompany’s Annual Report and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operationsForm 10-K for the periods shown and are not necessarily indicative of the results to be expected for the full year ending ended December 31, 2017. These unaudited2021. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’sthat Annual Report on Form 10-K for the year ended December 31, 2016.10-K.

Use of estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
 
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

Revenue RecognitionCash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were 0 cash equivalents as of March 31, 2022 or December 31, 2021.

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. All of our receivables are from related parties. The allowance for uncollectible amounts is evaluated quarterly and was 0 as of March 31, 2022 and December 31, 2021.

Fair value of financial instruments

The Company follows ASC 605-10-S99-1,Revenue Recognition,paragraph 825-10-50-10of 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:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

The carrying amount of the Company’s consolidated financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates 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 March 31, 2022.

Property and equipment

Property and equipment are carried at the lower of cost or net realizable value. All Property and equipment with a cost of $2,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. 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. At March 31, 2022 and December 31, 2021, the Company had no net property and equipment.

Revenue recognition

STCB and its subsidiaries earn their revenue recognition, whichas royalties from the licensing agreements it has four basic criteria that must be met beforewith TSG, a related entity, and other related parties. STCB licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is recognized: 1) existencedetermined beforehand in each agreement. The Company recognizes its revenue only when sales are made by TSG or other related parties to a third party.

The Company applies the following five-step model in order to determine this amount: (i) identification of persuasive evidence that an arrangement exists; 2) delivery has occurred or services have been rendered; 3) the seller’spromised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the buyer is fixedperformance obligations; and determinable; and 4) collection is reasonably assured.(v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.

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 Statements of Income 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.

Stock-based Compensation

The Company follows the guidance of the accounting 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 options-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 volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of awards granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. 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.

Net income (loss) per common share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of March 31, 2022, the Company had 728,570 shares of stock payable that have been sold to investors, 650,000 shares of stock payable to advisors and subject to vesting, and 2,550,000 potentially dilutive shares from outstanding warrants.

Intangible Assets

Definite-lived intangible assets consist of certain trademarks and customer lists. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets’ estimated useful lives, which approximate 10 years.  There was 0 significant amortization during the quarter ended March 31, 2022 or the year ended December 31, 2021.

The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic 820, Fair Value Measurements. The Company did not record asset impairment charges related to its intangible assets during the quarter ended March 31, 2022.

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 generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made are generally made in connection with the development of a particular product, and therefore, we are generally subject to risk during the product phase. Payments earned after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract.

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through future revenue. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If an impairment exists, then the related assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

Our minimum contractual obligations as of December 31, 2021 approximate $550,000, $1,100,000 and $1,650,000 for the years ending December 31, 2022, 2023 and 2024, respectively.

Recently issued accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3– GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $19,369,109$18,347,237 at September 30, 2017, had a net lossMarch 31, 2022 including the impact of $3,999,121 and netits income of $40,949 for the quarter ended March 31, 2022.  Net cash used in operating activities of $350,411was $566,093 for the nine monthsquarter ended September 30, 2017.March 31, 2022. The Company’s ability to continue with this trend is unknown. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown. unknown although the Company is actively raising capital via a Regulation A offering which was qualified in December 2021. The obtainment of additional financing and the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

The Company has started to embark on a new strategy to ensure the Company can operate as a going concern; although there are no assurances that any of these measures will be successful. The Company has raised $400,000 in seed financing to embark

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on its new strategy. Management is analyzing and beginning to execute new potential growth paths and has the potential for a restructuring. The Company is currently performing its due diligence for a corporate reorganization. This due diligence phase, involving counsel and other qualified professionals necessary in order to cautiously explore appropriate steps to restructure the Company for the purposes of executing a new business model within the Company’s core competencies.  

NOTE 4 – ACCOUNTS PAYABLE

A portion of the Company’s accounts payable is the result of chargebacks for product that was not sold by a former customer. The Company also has other payables that are several years old for which management is in discussion with the vendors to settle those liabilities for a lesser amount.

NOTE 5 4– NOTES PAYABLE

The Company has a financing loan for its Directors and Officers Insurance (“D&O”) that was incurred in September 2021. The loan bears interest at 4.4% and requires monthly payments through June 2022. As of September 30, 2017, March 31, 2022 and December 31, 2021, the Company owes $21,400 on ahad D&O loan payable. The loan is uncollateralized, non-interest bearingbalances of $27,060 and is due on demand. The Company expects that they will be able$53,822, respectively.

See Note 7 - Related Party Transactions for loans to have this liability dismissed bySTCB from the payee in the near future.Company's CEO. 

NOTE 5 – OPERATING LEASE

The Company also has two financing loans for its Director and Officer Insurance. As of September 30, 2017 and December 31, 2016 the loan has a balance of $52,799 and $0, respectively, it bears interest at 3.7% and is due within one year.

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NOTE 6 – COMMITMENTS & CONTIGENCIES

The Company currently occupiespreviously occupied office space in Burbank, California. The Company signed a three-yearthree-year lease starting January 1, 2016. Current monthly lease payments are $3,527 with yearly increases.  The lease required a depositwas then extended for an additional three-year term. Upon adoption of $3,500 which was paid on December 10, 2015. As of September 30, 2017,ASU 2016-02 Leases (Topic 842), the Company has accrued rent duerecorded an initial Right of $10,006. Minimum lease payments over the next two years are as follows: 

Investment AgreementUse of Asset and Lease Obligation of $122,825.

On November 1, 2020, the lease was amended to reduce the monthly lease payment to $1,750. In addition, the lessor agreed to forgive all past due accrued rent. As a result, the Company recognized a gain on the forgiveness of debt of $34,280.

On November 13, 2020, the Company and lessor assigned the lease for the office space in Burbank to two of its then Directors, Sanford Lang and Martin Goldrod, relieving the Company of any further obligation under the lease.

The lease expense for year ended December 31, 2020 was $34,691 and cash paid under this operating lease was $25,918 during the same period.

During the three months ended March 31, 2021, the Company determined that it was unlikely to collect the lease deposit and recognized an asset writeoff expense of $3,500. There were no other lease expenses or payments during the period. There was 0 lease expense for the period ended March 31, 2022.

NOTE 6 – COMMITMENTS & CONTINGENCIES

On February 18, 2020, STCB received a demand letter from a law firm representing certain individuals who purchased the Breathe brand home cleaning products. The demand letter alleged that STCB had unlawfully, falsely and misleadingly labeled and marketed the Breathe brand of products to consumers in violation of the Consumer Products Safety Act, the Federal Hazardous Substance Act and the FTC Act as well as various California and New York laws. While STCB denied any wrongdoing, a settlement was reached and paid in full, with no further obligation required by STCB.

On September 8, 2021, Whipshots LLC, a Wyoming limited liability company (“Whipshots”), a wholly-owned subsidiary of Starco Brands, Inc., entered into an Intellectual Property Purchase Agreement (the “Agreement”) effective August 24, 2021, with Penguins Fly, LLC, a Pennsylvania limited liability company (“Seller”). The Agreement provides that Seller will sell to Buyer the trademarks “Whipshotz” and “Whipshots”, 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”). The purchase price (“Purchase Price Payment”) for the Acquired Assets will be payable to Seller, over the course of seven years, based on a sliding scale percentage of gross revenues actually received by Buyer solely from Buyer’s sale of Whipshots/Whipshotz Products. The Purchase Price Payment shall be subject to a minimum amount in each contract year and a maximum aggregate amount between $140,000 and $2,000,000 based on revenues generated by the products. As of March 31, 2022 and December 31, 2021, the Company had paid $20,000 of Purchase Price Payment, which has been recorded as an intangible asset.

On September 14, 2021, the Company entered into a License Agreement with Washpoppin Inc., a New York corporation. Pursuant to the License Agreement, Licensor shall license to the Company certain Licensed Property of the recording artist professionally known as “Cardi B”. As part of the Agreement, in exchange for royalty rates based on Net Sales (as defined in the Agreement) during each applicable contract period, the Licensor warrants to cause the Artist to attend certain in person events, media interviews, participate in the development of the Licensed Products (as defined in the Agreement), and promote the Licensed Products through social media posts on the Artist’s social media platforms. The Company has committed to a minimum royalty payment under the Agreement of $3,300,000 in aggregate through 2024, subject to Licensor’s satisfaction of its obligations. In the quarter ended March 31, 2022, the Company incurred expense of approximately $127,000 and had a capitalized balance of approximately $381,000 related to this royalty.

Accrued Liability

On July 9, 2014, the Board of Directors approved an investment arrangement with an individual. Per the terms of the agreement, the investor transferred $150,000 to STCB to be used for the Company for which he was entitled to the following: $1 per unit solddevelopment of a fitness product through all retail outlets including online and retail shopping shows until the investment was paid back in full. Once the original investment was recouped the investor shall then receive a 2% royalty in perpetuity on all future retail sales of the fitnessspecific product. The investment remains with the Company and is disclosed as an accrued liability on the balance sheet. Since the product for which the investment was intended was never produced and this agreement is being renegotiated. The $150,000 investment was never returned by the Company and the amount is included in other payables and accruals on the balance sheet.

Stock Warrants

On August 4, 2017, the Company executed a settlement and general release agreement with Carwash, LLC. Per the terms of that agreement the Company will issue warrants to purchase up to 2,000,000 shares of common stock. The number of warrants to be issued is contingent on the final restructuring of the Company. The warrants have an exercise price of $0.35 and a term of five years.  The aggregate fair value of the warrants totaled $5,468 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.35, 1.82% risk free rate, 27.47% volatility and expected life of the options of five years.

NOTE 7 – RELATED PARTY TRANSACTIONS

During the nine monthsyear ended September 30,December 31, 2017, Sanford Lang, the Company’s former Chairman and former CEO, advanced the Company $198,816STCB $289,821 to pay for general operating expenses. The advances are uncollateralized, non-interest bearingadvance required a monthly interest payment of $2,545 and was due on demand.

In June 2021, Mr. Lang and Mr. Goldrod executed agreements with STCB whereby the advance from Mr. Lang and all other amounts owed to each were repaid and both Mr. Lang and Mr. Goldrod resigned from the Board of Directors. Further, for a period of 36 months beginning in July 2021, STCB will repurchase an aggregate of $10,950 worth of shares each month from Mr. Lang and Mr. Goldrod, with the share price for each purchase to be set according to the volume weighted average trading price of the common stock over the last 10 days of the month. In the three months ended March 31, 2022 STCB paid an aggregate of $32,850 to Mr. Lang and Mr. Goldrod per the agreements and anticipates that the corresponding share transfers will be settled in 2022.

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NOTE 8 – COMMON STOCKAs of March 31, 2022, the Company owed TSG $72,843 for expenses paid by TSG on behalf of STCB for expenses to launch licensed brands. As royalties have exceeded $250,000 in the aggregate, once the Company has an adequate cash reserve, TSG may deduct the incurred expenses from the subsequent royalty payments until TSG is paid in full. In addition, STCB owes TSG and its subsidiaries an additional $203,539 for expenses paid on behalf of STCB or funds advanced to the Company to pay for other operating expenses. TSG is owned by STCB's CEO, Ross Sklar.

On April 4, 2017,January 24, 2020, STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The note bears interest at 4% per annum, compounds monthly, is unsecured, and matures two years from the Company’s Boardoriginal date of Directors determined it wasissuance. On June 28, 2021, STCB executed an additional promissory note with Ross Sklar in the bestprincipal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note in favor of Ross Sklar, CEO, in the principal sum of $472,500, in exchange for a cash advance in the amount of $300,000 and payment of Company costs in the amount of $172,500. As with the other notes between the Company and our CEO, the note bears interest at 4% per annum, is unsecured, and matures two years from the original date of issuance. This note may also convert into shares of Company common stock at the 10-day volume weighted average trading price of the Company to issue additional shares to Paul Bershin and Alan Diamante in considerationcommon stock for funds previously loanedthe 10-day period prior to the Company. Accordingly,issuance of the Company issued 3,811,594 shares of common stock to Paul Bershin at $0.03 per share and issued 4,846,376 shares of common stock to Alan Diamante at $0.03Note, which was calculated as $0.29 per share. As of March 31, 2022, there was $6,086 of accrued interest due on these notes.

During the notes have been previously convertedquarter ended March 31, 2022, the Company incurred $87,044 of marketing expense from The Woo. David Dryer, STCB's EVP of Marketing was a Managing Director at The Woo until February 2022.

During the quarters ended March 31, 2022 and 2021, the Company recognized revenue of $923,274 and $132,514, respectively. There were $560,372 and $174,059 of accounts receivable and accrued accounts receivable from TSG and Temperance as of March 31, 2022 and December 31, 2021, respectively. All revenue received is from related parties. 

During the year ended December 31, 2021, the Company advanced $95,640 to equity in a prior period, the stock issuance, which was valued at $259,739, was expensed and recordedTemperance as a lossnote and related to its initial production of Whipshots. The note carries no interest and is payable on conversion of debt in the accompanying statement of operations.demand.    

On April 4, 2017, the Company received $250,000 from two of its investors for the purchase of common stock. The number of shares to be issued is still to be determined as it will be based upon a future valuation of the Company at which time the proper allocation will be determined. The $250,000 has been credited to a stock payable account as of September 30, 2017.

On August 18, 2017, the Company received $150,000 from an investor for the purchase of common stock. The number of shares to be issued is still to be determined as it will be based upon a future valuation of the Company at which time the proper allocation will be determined. The $150,000 has been credited to a stock payable account as of September 30, 2017.

On August 25, 2017, the Company authorized the issuance of 36,263,534 shares of common stock to our President, Ross Sklar, in consideration for his forfeiture of warrants to purchase 35,000,000 shares of the Company’s common stock at an exercise price of $0.23. Per ASC 718-20-35-8, the Company accounted for the stock issuance based on the incremental cost of the fair value over the fair value of the cancelled warrants on the date of cancellation. The aggregate fair value of the warrants cancelled totaled $855,814 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.23, 2.00% risk free rate, 31.91% volatility and expected life of the options of 8.06 years. The fair value of the shares issued was $4,351,624 based on the closing price of the stock of $0.12 on August 25, 2017, resulting in a net increase in fair value of $3,495,810.

NOTE 98 – STOCK WARRANTS

A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:

NOTE 9 – STOCKHOLDERS' EQUITY (DEFICIT)

On July 23, 2020, the Company granted 49,751 shares of common stock for services. The shares were valued at $2.01, (the average 14-day closing price), for total non-cash expense of $100,000.  In October 2021, the Company agreed to grant 650,000 shares of common stock for services of advisory board members. The shares vest over a 24 month period and were valued at $1.00 each, consistent with the price of shares issued in the Reg A offering, for a total non-cash expense of $650,000 to be recognized consistent with the shares' vesting schedule. During the quarter ended March 31, 2022 the Company expensed $81,249 related to these shares.

Stock Payable

In the quarter ended March 31, 2022, STCB recorded $81,249 of stock payable for services provided and related to common stock to be issued.  The following summarizes the stock payable activity during the periods ended March 31, 2022 and March 31, 2021:

NOTE 10 – - SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were issued, and has determined that no material subsequent events exist other than the following.exist.

Subsequent to September 30, 2017, the Company received $200,000 from investors for the purchase of common stock. The number of shares to be issued is still to be determined as it will be based upon a future valuation of the Company at which time the proper allocation will be determined.

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ITEM 2.   MANAGEMENT’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above. We also urge you to review and consider our disclosures describing various risks that may affect our business, which are set forth under the heading "Risk Factors," below.CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

Forward Looking StatementsTHIS QUARTERLY REPORT ON FORM 10-Q INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND OTHER FEDERAL SECURITIES LAWS, PARTICULARLY THOSE ANTICIPATING FUTURE FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, GROWTH, OPERATING STRATEGIES AND SIMILAR MATTERS, INCLUDING WITHOUT LIMITATION, STATEMENTS CONCERNING THE IMPACTS OF THE COVID-19 PANDEMIC ON OUR BUSINESS, OPERATIONS, RESULTS OF OPERATIONS, LIQUIDITY, INVESTMENTS AND FINANCIAL CONDITION. WE HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON OUR CURRENT INTENT, EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS, AND THESE FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND ASSUMPTIONS ABOUT US THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “COULD,” “WOULD,” “INTEND,” “PROJECT,” “CONTEMPLATE,” “POTENTIAL,” “EXPECT,” “PLAN,” “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “CONTINUE,” OR THE NEGATIVE OF SUCH TERMS OR OTHER SIMILAR EXPRESSIONS. THESE STATEMENTS ARE ONLY PREDICTIONS. FACTORS THAT MIGHT CAUSE OR CONTRIBUTE TO SUCH A DISCREPANCY INCLUDE, BUT ARE NOT LIMITED TO, THOSE DESCRIBED IN OUR OTHER SECURITIES AND EXCHANGE COMMISSION FILINGS. 

Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this FormTHE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. ANY OF THE FORWARD-LOOKING STATEMENTS THAT WE MAKE IN THIS QUARTERLY REPORT ON FORM 10-Q involve risks and uncertainties, including statements as to:

        ·our future strategic plans

        ·our future operating results;

        ·our business prospects;

        ·our contractual arrangements and relationships with third parties;

        ·the dependence of our future success on the general economy;

        ·our possible future financings; and

        ·the adequacy of our cash resources and working capital.AND IN OTHER PUBLIC REPORTS AND STATEMENTS WE MAKE MAY TURN OUT TO BE INACCURATE AS A RESULT OF OUR BELIEFS AND ASSUMPTIONS WE MAKE IN CONNECTION WITH THE FACTORS SET FORTH ABOVE OR BECAUSE OF OTHER UNIDENTIFIED AND UNPREDICTABLE FACTORS. IN ADDITION, OUR BUSINESS AND FUTURE RESULTS ARE SUBJECT TO A NUMBER OF OTHER FACTORS, INCLUDING THOSE FACTORS SET FORTH IN THE “RISK FACTORS” SECTION OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") ON MAY 20, 2022. BECAUSE OF THESE AND OTHER UNCERTAINTIES, OUR ACTUAL FUTURE RESULTS MAY BE MATERIALLY DIFFERENT FROM THE RESULTS INDICATED BY THESE FORWARD-LOOKING STATEMENTS AND YOU SHOULD NOT RELY ON SUCH STATEMENTS. WE UNDERTAKE NO OBLIGATION TO PUBLISH REVISED FORWARD-LOOKING STATEMENTS TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF. THESE RISKS COULD CAUSE OUR ACTUAL RESULTS FOR 2022 AND BEYOND TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS BY OR ON BEHALF OF US, AND COULD NEGATIVELY AFFECT OUR FINANCIAL CONDITION, LIQUIDITY AND OPERATING AND STOCK PRICE PERFORMANCE.

These forward-looking statements can generally be identifiedOur Business

Starco Brands, Inc. (formerly Insynergy Products, Inc.), which we refer to as such because"the Company," "our Company," "STCB", "we," "us" or "our," was incorporated in the contextState of Nevada on January 26, 2010. On September 7, 2017, the Company filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc.  The Board determined the change of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are describedCompany’s name was in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made asbest interests of the date of this Form 10-Q,Company due to changes in our current and we undertake no obligationanticipated business operations at that time.  In July 2017, the Company entered into a licensing agreement with The Starco Group ("TSG"), located in Los Angeles, California.  TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine. Upon entering into the licensing agreement with TSG, the Company pivoted to publicly update such forward-looking statements to reflect subsequent events or circumstances.commercializing novel consumer products manufactured by TSG.

Executive Overview

In 2016, Insynergy Products, Inc. (now Starco Brands, Inc.) (“the Company”) abandoned the business plan of marketing consumer products through television distributed infomercials.  In July 2017, our Board of Directors entered into a licensing agreement with The Starco Group, located in Los Angeles, California,TSG to pursue a new strategic marketing plan involving commercializing leading edge products with the intent to sell them through brick and mortar retailers as well as throughand online retailers.  Management believes the Company will realize modest earnings from royalties in the short term with a stronger positive outlook over the next 36 months.  

Starco Brands, Inc. is nowWe are a company whose mission is to create behavior-changing brandsproducts and products.brands. Our core competency is inventing brands, marketing, building trends, pushing awareness and social marketing. The licensing agreement with The Starco GroupTSG provided Starco BrandsSTCB with certain products on an exclusive and royalty-free rights tobasis and other products on a body of productsnon-exclusive and royalty basis, in the following categories:categories of food, household cleaning, air care, spirits and personal care. The Starco Group is predominantly an aerosol and liquid fill private label manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, air care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverage and spirits and wine.

The current CEO and owner of The Starco Group,TSG, Ross Sklar, was named the CEO of Starco BrandsSTCB in August of 2017.  Mr. Sklar has a long track record of commercializing technology in the industrial and consumer arenas.markets. Mr. Sklar has built teams of manufacturing R&Dpersonnel, research and development, and sales and marketing professionals over the last 20 years and has grown The Starco GroupTSG into a successful and diversified private label manufacturer supplying a wide range of products to some of the largest retailers in the United States.

The Company hasSTCB conducted extensive research and has identified specific channels to penetrate with its new portfolio of novel technologies. The Company has begun to executeSTCB is now executing on this vision and since its inception has launched the firstfour product line called ‘Breathe ™’, through our manufacturing partner,lines. The Starco Group. The Company has applied for a registered trademark for Breathe with the United States Patent and Trade Office. BreatheBreathe® Household cleaning aerosol line is an environmentally-friendlyenvironmentally friendly line of household cleaning aerosol products. It is the world’s first aerosol household cleaning line to be approved by the EPA’s Safer Choice program. This product line is biodegradable and is propelled by nitrogen, which makes up approximately 80% of the earth’s breathable air. Breathe was named Partner of the Year by the EPA’s Safer Choice Program and also achieved the Good Housekeeping Seal of approval.

STCB also launched the Breathe® Hand Sanitizer Spray in April 2020. This invention was created and patents were filed by Alim Enterprises, LLC, (“AE”) an entity owned by Mr. Sklar. Originally the technology was developed for Blue Cross Laboratories, LLC, (“BCL”) a personal care consumer products manufacturer owned by Mr. Sklar’s TSG. The product was developed as a result of supply chain collapse during the Covid-19 outbreak and increased demand for hand sanitizers. The traditional packaging components used in manufacturing hand sanitizer became very difficult to procure. BCL, located in Santa Clarita, California, is an at scale manufacturer that started approximately 50 years ago with personal care products, including hand sanitizer. Due to the outbreak of Covid-19, many traditional component supply chains became overly stressed and BCL could not source enough bottles and caps. Through Mr. Sklar’s AE, the concept of a spray hand sanitizer was invented. AE filed patents on what it believes to be the first ever aerosol spray hand sanitizer with a 75% alcohol solution that utilizes only compressed air and nitrogen as the product’s propellant. AE and its intellectual property counsel believe the product is novel and warrants a utility patent. In February 2021, AE assigned the patent application to STCB as contemplated by a 2020 memorandum of understanding among AE, STCB and TSG.

The product is being manufactured by BOV Solutions, a division of TSG that is an at scale FDA, CFR210/211 manufacturer of aerosol and OTC products. The Breathe Hand Sanitizer Spray can only be made in an FDA facility that has at scale aerosol capabilities. The product is being sold through BOV Solutions and TSG’s existing distribution footprints in the United States. STCB launched the product in April 2020 via a press release in partnership with Dollar General, announcing its distribution in each of their 15,000+ stores. STCB has also partnered with Wegmans, HLA and J Winkler. Since then, the product is in distribution through The Home Depot, Lowes, American Pharmacy, AutoZone, The Farm Shop, Harris Teeter, UNFI, Kehe, Macy’s, Smart & Final, Weeks and others. The product comes in three sizes, 1oz., 5oz., and 9.5oz. sprays and is available directly on STCB’s website www.breathesanitizer.com and on Amazon.com and Walmart.com.         

STCB is also the marketer of record, but not the owner of record of, Betterbilt Chemical’s Kleen Out® branded drain opener and for the Winona® Butter Flavor Popcorn Spray. STCB provides marketing services for these brands pursuant to the terms of agreements governing STCB's marketing. Both products are available in Walmart stores.  

Through STCB’s relationship with TSG and their marketing partner Deutsch Marketing, STCB launched a new label in June 2019 for Winona Popcorn Spray throughout all Walmart stores. STCB also launched the Winona Popcorn Spray on Amazon through our strategic partner Pattern (formally iServe), who is a shareholder in STCB. Winona Popcorn Spray is also sold in H-E-B grocery stores. The Company also launched a new caramel flavor which is also distributed through Walmart and H-E-B. Sales grew significantly in 2021 and the Company expects sales to continue to grow in this space as management plans to increase the Company's sales personnel in 2022 for this product line.

On September 8, 2021, STCB (via its Wyoming subsidiary, Whipshots, LLC “Whipshots LLC”) entered into an Intellectual Property Purchase Agreement effective August 24, 2021, with Penguins Fly, LLC, pursuant to which the Company purchased the trademarks “Whipshotz” and “Whipshots”. The purchase price for these trademarks is payable to Penguins Fly, LLC over the course of seven years, based on a sliding scale percentage between 2% and 5% of gross revenues actually received by the Company solely from the Company’s sale of Whipshots/Whipshotz products.

On September 14, 2021, STCB (via newly formed Delaware subsidiary Whipshots LLC (DE), which was subsequently renamed to Whipshots Holdings LLC “Whipshots Holdings”), entered into a License Agreement with Washpoppin Inc., a New York corporation (“Washpoppin”) pursuant to which Washpoppin licensed certain intellectual property of the recording artist professionally known as “Cardi B” to the Company for use associated with the Company’s new product line consisting of vodka-infused, whipped-cream aerosols, under the brand name “Whipshots.” The Company launched these products under the Whipshots™ brand in the fourth quarter of 2021 and first quarter of 2022. In addition, STCB entered into Distribution Agreements with various distributors pursuant to which such distributors will act as the exclusive distributors of Whipshots™ in various geographic locations.

On December 2, 2021, the Company launched Whipshots at Art Basel in Miami.  This launch event garnered over 1 billion impressions world-wide.  The Company launched the lineproduct on whipshots.com with Wegmans, a $7 billion grocery retailer recognized as an innovative leader among retailers.limited quantity of cans to be sold each day for the month of December 2021.  The Breathe line is currently on shelvesCompany sold out every single day of the month.  The Company launched brick and mortar retail distribution in the first quarter of 2022 and signed a distribution agreement with RNDC, one of the largest spirits distributors in the nation.  The Company also announced a distribution deal with GoPuff and BevMo.  The Company expects to register Whipshots in all Wegmans stores.  The Company has begunstates but starting in select markets with plans to implement an online sales strategy and Breathe is now available on Amazon. The Company is now executing a national sales program and Breathe is currently being presented to many national retailers in the United States.  grow cautiously.

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To secure assistance with marketing and logistics for our products, The Starco Group, recently entered into a distribution and sales agreement with United Natural Foods, Inc. (“UNFI”), an $8 billion dollar distributor. UNFI is currently marketing our new Breathe household cleaning line. UNFI has access to over 15,000 retail stores thatAs long as the Company plans to access over the next 36 months. In addition,can raise capital, the Company plans to launch other products in spray foods and condiments, air care, food,sun care, hair care, personal care, spirits and beverages over the next 6048 months. Although the initial market reception to Breatheour new lines has been encouraging, the Company may encounter a number of hurdles that could prevent this and future product launches from achieving sustained commercial success. Financing growth and launching of new products is key and the Company’s ability to raise further capital is critical. In 2021, the Company pursued financing via a Regulation A offering which was qualified on December 9, 2021. The Company engaged The Dalmore Group to assist as the broker dealer of record in this process, in which up to 56,818,181 shares of common stock may be sold to the public at a per share price of $1.00.

Management has engaged a third partyWe will need to evaluate the Company’s new business planrely on sales of our common stock and to provide a valuation opinion based on the projected sales over the course of a 10-year period. Based on thispro forma third-party valuation, the Company established a seriesother sources of financing rounds to raise capital through the issuance and sale of the Company’s common stock. We currently have no plans for a public offering of our stock and such stock sales will likely be exempt from the registration requirements provided by federal and state securities laws.additional capital. The purchasers and manner of any share issuance will be determined according to our financial needs and the available exemptions to the registration requirements of the Securities Act of 1933.Act. The Company completed a Seedis planning to utilize, as best as possible with limited financing, roundthe services of $400,000 on August 18, 2017 and an A-Round of $200,000 fully funded on October 25, 2017.Deutsch Marketing in order to help support the Company’s plan. The Company may engage in subsequent funding rounds later in 2017will also utilize the marketing capabilities of Hearst Media with its co-branding arrangement on some of its products. This provides significant support for its current retail and in 2018. Our intent is to use most of the capital raised for sales and marketing and compliance.online distribution. 

The new strategic plan may include a reorganization and restructuring of the Company’s capital structure in the future. This reorganization may also include consummating new strategic relationships in manufacturing, marketing and sales and may also include licensing existing brands. Through these potential new partnerships, the Company intends to commercialize key products that we believe will have a competitive advantage in the consumer products marketplace. In the event of this potential reorganization, the Company is in discussions with new personnel that may become part of our senior management team to execute the new strategic plan. 

The Company’s ultimate goal is to become a leading supplierbrand owner and third-party marketer of cutting edge technologies in the consumer marketplace through the introduction of innovative and unique products and brandsmarketplace whose success is expected to increase shareholder value. The Company will continue to evaluate this and other opportunities to further set its strategy for 2018, 20192022 and 2020.beyond. 

For more information, please visit our websites at www.starcobrands.com, www.breathecleaning.com, www.breathesanitizer.com, and www.whipshots.com.

Employees

The Company currently has no full-time employees but uses independent contractors and contributed services from related parties on an as needed basis.

Results of Operation for the Three Months Ended September 30, 2017March 31, 2022 and 20162021

RevenueRevenues

For the three months ended March 31, 2022, the Company recorded royalty revenues of $923,274 compared to $132,514 for the three months ended March 31, 2021, an increase of $790,760 and a percentage increase of 597%. The royalty rate that the Company is paid varies on a per product basis of wholesale sales of our branded and non-corporate owned licensed products. Revenues are from our marketing licensing agreements with TSG and other affiliated companies for various products mentioned above.

The increase in the current period is primarily due to initial volume sales of our Whipshots™, partially offset by declines in sales of Breathe cleaning and sanitizer products. For the three months ended March 31, 2022, Breathe cleaning and sanitizer products accounted for approximately 2% of total royalty revenue, compared to the three months ended March 31, 2021 where Breathe cleaning and sanitizer products accounted for approximately 26% of total royalty revenue.

Operating Expenses

For the three months ended March 31, 2022, compensation expense increased $82,644, or 187%, to $126,877 compared to $44,233 for the three months ended March 31, 2021. The increase is a result of increases in independent contractors and contributed services to support the launch and growth of Whipshots™. 

For the three months ended September 30, 2017 the Company realized its first revenues of $3,027 from its licensing and royalty agreements with The Starco Group, Inc. In the 2016 third quarter period we had revenue net of sales returns from our prior business operations of $28,239. There was no cost of goods sold in either period.

Operating Expenses

For the three months ended September 30, 2017,March 31, 2022, the Company incurred compensation expense of $19,497$58,506 in professional fees compared to $65,750$10,555 for the three months ended September 30, 2016; a decrease of $46,253, or 70.3%. In the 2017 third quarter two of the Company’s executive officers agreed to defer further compensation until the Company has a positive cash flow. In addition, in the 2017 third quarter we incurred non-cash expense of $3,495,810 for the 36,263,534 shares issued to Mr. Ross Sklar.

For the three months ended September 30, 2017, the Company incurred $6,987 in advertising and promotional expense as compared to $0 for three months ended September 30, 2016. The increase is due to the start of our new strategic marketing plan.

For the three months ended September 30, 2017, the Company incurred $25,940 in professional fees compared to $11,020 for the same period in the prior year. Professional fees are mainly for accounting, auditing and legal services associated with our periodic reports and other filings as a public company. The increase is primarily due to the timing of billed audit fees and additional informational filings with the SEC.

For the three months ended September 30, 2017, the Company incurred $158,795 in general and administrative expense as compared to $30,608 for the same period in the prior year;March 31, 2021, an increase of $128,187,$47,951, or 419%454%. The increase is due to additional expenses related to our change in management, financing and our new business plan. We incurred $72,843 of license branding expense, additional director and officer liability insurance costs of approximately $28,000, and financing costs of $25,000.

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Other Income and Expense

For the three months ended September 30, 2017 we had total other income of $194,153 compared to $6,527 for the same period in the prior year. For the three months ended September 30, 2017, the Company recorded interest income of $37, other income from sub leasing its office space of $6,000 and a gain on extinguishment of debt of $221,757. This was offset by interest expense of $33,641. In the prior year we recorded a gain on extinguishment of debt of $8,242 offset by interest expense of $1,715.

Net Loss

For the three months ended September 30, 2017, we realized a net loss of $3,509,849 as compared to $72,612 for the same period in the prior year. The increase is mainly to the stock compensation expense and increased general and administrative expenses as discussed above.

Results of Operation for the Nine Months Ended September 30, 2017 and 2016

Revenue

For the nine months ended September 30, 2017 the Company realized its first revenues of $3,027 from its licensing and royalty agreements with The Starco Group, Inc. In the 2016 nine-month period we had revenue net of sales returns from our prior business operations of $202,841. Cost of goods sold was $0 compared to $503,946 of cost of goods sold in the 2016 nine-month period. In the 2016 nine-month period, $373,512 of the cost of goods was a result of the impairment of all remaining finished and work in process inventory of Plumber’s Hero.

Operating Expenses

For the nine months ended September 30, 2017, the Company incurred compensation expense of $150,497 compared to $197,750 for the nine months ended September 30, 2016; a decrease of $47,253, or 23.8%. In the 2017 third quarter, two of the Company’s Officers agreed to defer further compensation until the Company has a positive cash flow. In addition, in the 2017 nine-month period we incurred non-cash expense of $3,495,810 for the 36,263,534 shares issued to Mr. Ross Sklar.

For the nine months ended September 30, 2017, the Company incurred $6,987 in advertising and promotional expense as compared to $52,407 for nine months ended September 30, 2016. The decrease is due to our change in our business plan for marketing consumer products.

For the nine months ended September 30, 2017, the Company incurred $57,236 in professional fees compared to $53,520 for the same period in the prior year. Professional fees are mainly for accounting, auditing and legal services associated with our quarterly filings as a public company.company and advisory and valuation services. The increase is primarily due to an increase in corporate legal and audit fees.

For the ninethree months ended September 30, 2017,March 31, 2022, the Company incurred $224,234$670,225 in marketing, general and administrative expense as compared to $172,621$182,743 for the same period in the prior year;three months ended March 31, 2021, an increase of $51,613,$487,482, or 29.8%267%. The increase is duecan be attributed to additional expensesan increase in spending on marketing including initial license payments related to our change in management, financing and our new business plan. We incurred $72,843 of license branding expense, additional director and officer liability insurance costs of approximately $28,000, and financing costs of $25,000.the promotional launch for Whipshots™.

Other Incomeincome and Expense

expense

For the ninethree months ended September 30, 2017March 31, 2022, we had total other expense of $67,384$14,855 compared to $4,767other expense of $10,892 for the same periodthree months ended March 31, 2021. The increase in total other expense was primarily due to growth in interest expense.

Net income

For the three months ended March 31, 2022, the Company recorded net income of $40,949 as compared to a net loss of $115,909 in the prior year. For the nine months ended September 30, 2017, the Company recorded interest income of $37, other income from sub leasing its office space of $6,000 and a gain on extinguishment of debt of $221,757. This was offset by interest expense of $35,439 and a loss on conversion of debt of $259,739. In the 2016 nine-month period we recorded a gain on extinguishment of debt of $19,635 offset by interest expense of $3,941 and a loss on disposal of $20,461.

Net Loss

For the nine months ended September 30, 2017 we realized a net loss of $3,999,121 as compared to $782,170 for the same period in the prior year. TheOur increase in net lossincome is mainly due toprimarily the stockresult of the increase in revenue partially offset by increased marketing, compensation, expense and increased general and administrative expenses as discussed above.professional spending. 

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Liquidity and Capital Resources

TheAs reflected in the accompanying unaudited condensed consolidated financial statements, have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company hashad an accumulated deficit of $19,369,109$18,347,237 at September 30,March 31, 2022, primarily due to the issuance of stock for services when the Company reorganized in 2017 and 2018, had a net lossincome of $3,999,121$40,949 and used net cash used infor operating activities of $350,411$566,093 for the ninethree months ended September 30, 2017.March 31, 2022.

Net cash flowsWe generated $412,888 from financing activities forduring the ninethree months ended September 30, 2017 were $625,198 compared to $14,054 used forMarch 31, 2022 and had no net cash provided by financing activities during the ninethree months ended September 30, 2016.March 31, 2021.

On January 24, 2020, STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The Company currently has limited revenuenote bears interest at 4% per annum, compounds monthly, is unsecured, and matures two years from current operations,the original date of issuance. On June 28, 2021, STCB executed an additional promissory note with liabilities exceeding its assets. Management is analyzing new potential growth pathsRoss Sklar in the principal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Ross Sklar in the potentialprincipal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note in favor of Ross Sklar, CEO, in the principal sum of $472,500, in exchange for a restructuring; however, therecash advance in the amount of $300,000 and payment of Company costs in the amount of $172,500. As with the other notes between the Company and our CEO, the note bears interest at 4% per annum, is still substantial doubt aboutunsecured, and matures two years from the Company’s abilityoriginal date of issuance. This note may also convert into shares of Company common stock at the 10-day volume weighted average trading price of the Company common stock for the 10-day period prior to continuethe issuance of the Note, which was calculated as a going concern.$0.29 per share. 

Critical Accounting Estimates and Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Note 12 to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes.  Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

We are subject to various loss contingencies arising in the ordinary course of business.  We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies.  An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.  We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.  The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.  Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

Revenue recognition

The Company follows ASC 605-10-S99-1,Revenue Recognition,and its subsidiaries earn their revenue as royalties from the licensing agreements it has with TSG, a related entity, and other related parties. The Company licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the FASB Accounting Standards Codification forlicensing revenue recognition, which has four basic criteria that must be met beforereceived varies depending upon the product and is determined beforehand in each agreement. The Company recognizes its revenue is recognized: 1) existenceonly when sales are made by TSG or other related parties to a third party.

The Company applies the following five-step model in order to determine this amount: (i) identification of persuasive evidence that an arrangement exists; 2) delivery has occurred or services have been rendered; 3) the seller’spromised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the buyer is fixedperformance obligations; and determinable; and 4) collection is reasonably assured.(v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Off-Balance Sheet Arrangements 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied prospectively on or after the effective date. The Company is in the process of evaluating the impact of this accounting standard update.

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In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC 840,Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect this standard will have on our financial statements.

In June 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), a consensus of the FASB’s Emerging Issues Task Force.” The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on the Company’s consolidated cash flows.

In May 2014, the FASB issued ASU No. 2014-09: "Revenue from Contracts with Customers (Topic 606)" which supersedes the revenue recognition requirements in ASC Topic 605, "Revenue Recognition", and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2017

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smalleras we are a "smaller reporting companies.company."

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain

Under the supervision and with the participation of our management, including the Chief Executive Officer and Interim Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in RulesRule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange ActAct) as of 1934, as amended (the “Exchange Act”)the end of the period covered by this report. The disclosure controls and procedures ensure that are designed to be effective in providing reasonable assurance thatall information required to be disclosed by us in ourthe reports that we file or submit under the Exchange Act isis: (i) recorded, processed, summarized and reported, within the time periods specified in the rulesSEC’s rule and forms of the Securitiesforms; and Exchange Commission (the “SEC”), and that such information is(ii) accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. OurBased on that evaluation, the Chief Executive Officer and Interim Chief Financial Officer evaluated the effectiveness of our disclosure controls and proceduresconcluded that, as of the end of the period covered by this report.  Based on that evaluation, they concluded that ourMarch 31, 2022, these disclosure controls and procedures were not effective for the quarterly period ended September 30, 2017.  The following aspects of the Company were noted as potential material weaknesses:effective.

·

timely and accurate reconciliation of accounts

·

lack of segregation of duties

·

complex accounting transaction expertise

·

lack of corporate documentation

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Changes in Internal Controls over Financial Reporting

Based on that evaluation,There were no changes in our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controlscontrol over financial reporting that occurred during theour most recent fiscal quarter ended September 30, 2017, that hashave materially affected, or is reasonably likely to materially affect, the Company'sour internal controlscontrol over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.None.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. For a list of risk factors, please refer to our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on May 20, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchase of Securities.

On August 25, 2017,June 13, 2021, the Company authorizedentered into Separation Agreements (the "Separation Agreements") with Sanford Lang ("Mr. Lang") and Martin Goldrod ("Mr. Goldrod") whereas, effective as of June 16, 2021, Mr. Lang and Mr. Goldrod each resigned from their positions as members of the issuanceBoard of 36,263,534 shares of common stock to our Chief Executive Officer, Ross Sklar,Directors in exchange for certain separation benefits (the "Separation Benefits"). As consideration for his forfeiture of warrantsthe Separation Benefits, and not in addition to same, the Company agreed to purchase 35,000,000an amount of the shares of the Company’s common stockCompany per month from Mr. Lang and Mr. Goldrod at an exercisea price per share that when aggregated with all shares purchased in each month would equal monthly Separation Benefit payments of $0.23. All shares were privately issued with a restrictive legend in reliance on$7,950 to Mr. Lang and monthly Separation Benefit payments of $3,000 to Mr. Goldrod (the "Repurchases"). The Repurchases made during the exemption from registration provided by Section 4(a)(2)first quarter of the Securities Act of 1933.fiscal year 2022 are set forth below.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINING SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

On September 7, 2017 Insynergy Products, Inc. filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc. and on September 13, 2017 FINRA approved the trading symbol change from “ISYG” to “STCB” commencing with trading on September 14, 2017.None

On August 9, 2017, our Board of Directors accepted the resignation of Sanford Lang as Chief Executive Officer and President of the Company.  Mr. Lang will continue to serve as Chairman of the Board.  On that same date, the Board of Directors appointed Ross Sklar, our Director, to serve as Chief Executive Officer and President of the Company.  Mr. Sklar has served as a director on our Board since August 13, 2015.  He is the founder and current Chief Executive Officer of The Starco Group.

On October 31, 2017 the Company mailed an Information Statement to its shareholders related to an amendment to its Articles of Incorporation.  After November 20, 2017, the Board of Directors intends to file an Amendment to the Articles of Incorporation to establish a class of preferred stock in the aggregate amount of Forty Million (40,000,000) authorized shares, $0.001 par value.

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ITEM 6. EXHIBITS

Part I Exhibits

EXHIBIT INDEX

Part II Exhibits

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SIGNATURES

(*)	Incorporated by reference to the filing indicated.
(+)	In accordance with Item 601(a)(5) of Regulation S-K, certain schedules (or similar attachments) to this exhibit have been omitted from this filing.  Such omitted schedules (or similar attachments) include information relating to the Purchase Price Payment. The registrant will provide a copy of any omitted schedule to the SEC or its staff upon request. In accordance with Item 601(b)(10)(iv) of Regulation S-K, certain provisions or terms of the Agreement have been redacted.  Such redacted information includes information about the Purchase Price Payment.  The registrant will provide an unredacted copy of the exhibit on a supplemental basis to the SEC or its staff upon request.
(#)	Filed herewith.
(##)	The certifications attached as Exhibits 32.1 and 32.2 that accompany this report, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Starco Brands, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this report irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STARCO BRANDS, INC.

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