ACQUISITIONS | NOTE 5 ACQUISITIONS AOS Acquisition On September 12, 2022, STCB, through its wholly-owned subsidiary Merger Sub, completed the AOS Acquisition. The AOS Acquisition consisted of Merger Sub merging with and into AOS, with AOS being the surviving corporation. AOS is a maker of premium body and skincare products engineered to power and protect athletes. Starco acquired AOS as STCB is always looking for technologies and brands that have the ability to scale and change behavior. In the world of sport, there are currently no brands that have successfully penetrated multiple categories of consumer products. AOS has historically been a personal care brand – offering products such as body wash, shampoo, deodorant and face wash. Starco Brands, through its relationship with TSG, has access to intellectual property that will allow AOS vertically integrate manufacturing and expand into multiple consumer product categories – OTC, sun care, air care, beverage, etc. The AOS Acquisition was completed through an all-stock deal, where the Company’s shares were issued at $ 0.19 61,400,000 5,000,000 5,000,000 5,000,000 Securities Act 0.0982 The 5,000,000 5,000,000 5,000,000 As of March 31, 2023, the Company has paid $ 1,821 6,137 62,499 1 2 The AOS Acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. The preliminary fair values of the acquired assets and liabilities as of the acquisition date were: SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES Consideration 1 $ 12,608,560 Assets acquired: Cash and cash equivalents 200,661 Accounts receivable 153,764 Prepaid and other assets 167,565 Inventory 656,447 PP&E, net 16,622 Intangibles 17,309 Right of use asset 85,502 Customer relationships - Trade names and trademarks - Total assets acquired 1,297,871 Liabilities assumed: Accrued liabilities 562,919 Accounts payable 128,724 Right of use liability 87,539 Note payable Total liabilities assumed 779,182 Net assets acquired 518,698 Goodwill $ 12,089,871 1 Consideration consists of the following: $ 1,821 11,654,452 4,147 1,990 946,149 The purchase price allocation is based on estimates of the fair values of the tangible and intangible assets acquired and liabilities assumed from a final valuation of the AOS Acquisition. The above purchase price allocation is preliminary and subject to change as the Company may further refine the determination of certain assets during the measurement period of one year. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented. The Company incurred approximately $ 845,000 Skylar Acquisition On December 29, 2022, STCB, through its wholly-owned subsidiaries First Merger Sub and Second Merger Sub, completed the Skylar Acquisition. In a two-step process, during the First Merger, First Merger Sub merged with and into Skylar Inc. and as part of the same overall transaction, during the Second Merger, Skylar Inc. merged with and into Second Merger Sub to result in Skylar as the surviving entity. Skylar is a wholly owned subsidiary of STCB. Skylar is a maker of fragrances that are hypoallergenic and safe for sensitive skin. Starco acquired AOS as STCB is always looking for technologies and brands that have the ability to scale and change behavior. In the world of fragrances, there are no other brands that have successfully built a clean, beautiful, premium incredibly well-scented and recyclable fragrance brands for consumers. Starco Brands, through its relationship with TSG and other strong partners, the Company has access to intellectual property that will allow Skylar to vertically integrate manufacturing and expand, positioning Skylar to be the future of fragrance. The Skylar Acquisition was completed through a cash and stock deal, where the Company paid $ 2,000,000 0.20 68,622,219 11,573,660 19,268,162 11,573,660 0.17 The 11,573,660 19,268,162 11,573,660 As of March 31, 2023, the Company has paid $ 27,273 The Skylar Acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. The preliminary fair values of the acquired assets and liabilities as of the acquisition date were: SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES Consideration 2 $ 21,417,681 Assets acquired: Cash and cash equivalents 339,679 Accounts receivable 381,762 Prepaid and other assets 701,566 Inventory 2,508,287 PP&E, net 25,942 Intangibles 161,693 Customer relationships 2,091,000 Trade names and trademarks 6,557,000 Total assets acquired 12,766,929 Liabilities assumed: Accrued liabilities 540,036 Accounts payable 2,425,524 Total liabilities assumed 2,965,560 Net assets acquired 9,801,369 Goodwill $ 11,616,312 2 Consideration consists of the following: $ 2,039,345 13,120,924 571,428 2,314,732 3,371,252 The purchase price allocation is based on estimates of the fair values of the tangible and intangible assets acquired and liabilities assumed from a final valuation of the Skylar Acquisition. The above purchase price allocation is preliminary and subject to change as the Company may further refine the determination of certain assets during the measurement period of one year. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented. The Company incurred approximately $ 1,770,000 Soylent Acquisition On February 15, 2023, the Company, through its wholly-owned subsidiary Starco Merger Sub I completed the Soylent Acquisition. The Soylent Acquisition consisted of Starco Merger Sub I merging with and into Soylent, with Soylent being the surviving corporation. Soylent is the maker of a wide range of plant-based “complete nutrition” and “functional food” products with a lineup of plant-based convenience shakes, powders and bars that contain proteins, healthy fats, functional amino acids and essential nutrients. Through its relationship with TSG and other strong partners, the Company has access to intellectual property that will allow Soylent to vertically integrate manufacturing and expand, positioning Soylent to be the future of nutritional products. The Soylent Acquisition was completed through a cash and stock deal, where the Company paid $ 200,000 0.15 an (a) aggregate of up to 165,336,430 restricted shares of Class A common stock to Soylent shareholders, (b) 12,617,857 18,571,429 additional restricted shares of Class A common stock based on final determination of calculations of Soylent’s working capital, cash at closing, indebtedness at closing and certain unpaid transaction expenses in excess of the amount reimbursed by Starco, and (d) an adjustment to the shares of Class A common stock received by the Company Holders (as defined in the agreement) in the event that the trading price for STCB’s Class A common stock price per share on the first anniversary of the closing date (the “Adjustment Date”) is below $ 0.35 per share of Class A common stock. If, on the Adjustment Date, STCB’s Class A common stock is trading below $ 0.35 per share of Class A common stock, STCB shall issue additional shares of Class A common stock based on the Closing Merger Consideration (as defined in the agreement) after adjustments divided by the trading price (which must be below $ 0.35 per share for any additional shares to be issued) minus the total share issuance after adjustments. The fair value rights 0.189 37,143,360 rights 0.195 38,322,515 The Soylent Acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. The preliminary fair values of the acquired assets and liabilities as of the acquisition date were: SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES Consideration 3 $ 66,822,218 Assets acquired: Cash and cash equivalents 372,423 Accounts receivable 5,617,270 Prepaid and other assets 854,506 Inventory 13,514,907 PP&E, net 8,568 Intangibles 120,261 Total assets acquired 20,127,935 Liabilities assumed: Accounts payable 6,560,420 Accrued liabilities 690,610 Note payable 4,800,000 Total liabilities assumed 12,051,031 Net assets acquired 8,076,904 Goodwill $ 58,745,313 3 Consideration consists of the following: $ 200,000 26,693,143 2,785,714 37,143,360 0.35 The preliminary purchase price allocation is based on estimates of the fair values of the tangible and intangible assets acquired and liabilities assumed. The Company will utilize recognized valuation techniques as part of its final valuation of the Soylent Acquisition, which is expected to be complete in Q2 2023. The above purchase price allocation is preliminary and subject to change as the Company may further refine the determination of certain assets during the measurement period of one year. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented. Subsequent to the Soylent Acquisition, during the period February 15, 2023 through March 31, 2023, Soylent earned $ 5,716,303 1,129,969 1,179,154 0.189 0.195 1,129,969 The Company incurred approximately $ 5.7 The following unaudited proforma condensed consolidated results of operations have been prepared, as if the Acquisition had occurred as of January 1, 2023 for the three months ended March 31, 2023: SCHEDULE OF PROFORMA INFORMATION For the Three Months Ended March 31, 2023 Starco Brands Inc. Soylent Nutrition, Proforma Starco Revenue $ 5,427,498 $ 11,193,358 $ 16,620,856 Net Income (Loss) $ (533,159 ) $ (9,821,470 ) $ (10,354,629 ) Net income attributable to non-controlling interest $ 58,416 $ - $ 58,416 Net Income (Loss) attributable to Starco Brands $ (591,575 ) $ (9,821,470 ) $ (10,413,045 ) A pro forma balance sheet was excluded from this disclosure as the transactions are already reflected in the March 31, 2023 condensed consolidated balance sheets, given there were minimal adjustments to the February 14, 2023 Soylent closing balance sheet and the March 31, 2023 Soylent closing balance sheet. |