Starco Brands Reports First Quarter 2018 Financial Results

SANTA MONICA, Calif., May 18, 2018 (GLOBE NEWSWIRE) — Starco Brands (OTC:STCB), a creator of innovative and disruptive consumer products, reported financial results for the first quarter ended March 31, 2018.

First Quarter 2018 Highlights:

  • Formally introduced the Brand Advisory Board consisting of veteral sales, marketing and media professionals to guide the Company’s strategy of introducing a diverse range of innovative, behavior-changing products and brands;
  • Executed a 1-for-30 reverse split to give the Company greater flexibility to take advantage of corporate opportunities and/or potential financings, should the opportunities arise;
  • BreatheTM, the Company’s debut product, a line of aerosol household cleaning line received multiple prestigious industry awards from organizations and outlets that promote family- and environmentally-friendly products;
  • Continued to expand the distribution of Breathe to additional retailers;
  • Issuance of 117.3 million shares to officers and directors, and 30.3 million shares to various service providers for services rendered.              

Management Commentary
“During the first quarter of 2018, we continued to take steps to build a world-class platform for the design, development and distribution of truly innovative and disruptive consumer products,” said Starco Brands’ CEO Ross Sklar.

First Quarter 2018 Financial Results
Net revenues were $763, bringing total net revenues booked since the Company’s strategic pivot in mid-2017 to $8,948. (Comparisons to 2016 results are not relevant, as the Company was inactive and restructuring prior to mid- 2017. Revenues under the new business model did not begin until the second half of 2017.) Net revenues consisted of royalties from The Starco Group’s sales of Breathe products.

Starco Brands’ revenues are derived from royalties received from its production partner The Starco Group (TSG) on products whose brands are owned by Starco Brands. Starco Brands books the revenue upon receipt of the royalties related to such sales, typically within 60-90 days after the products are shipped to retailers. During the first quarter of 2018, the aggregate wholesale shipments of such products was approximately $29,000. During the first quarter of 2018, these sales were exclusively in the Breathe product line, and more than doubled sequentially each month of the quarter. Because this business model was not adopted until the third quarter of 2017, there were no such revenues booked in the first half of 2017.

Operating expenses totaled $243,840. The net loss was $248,028, or $0.00 per diluted share. Adjusted EBITDA was negative $203,230. See note below on “Use of Non-GAAP Financial Information.”

Mr. Sklar continued, “In the weeks since the end of the first quarter, we have made several important announcements setting the stage for growth, including our distribution relationship with United Natural Foods, Inc. (a leading distributor of natural foods and other products), our global partnership with Deutsch, one of the world’s top advertising firms (which has been instrumental in the design and development of Breathe and several of our future products), and the availability of Breathe in Walmart stores across the United States. The year is off to a good start, and we look forward to sharing these results in the coming months and quarters.”

Outlook
The Company continues to expect revenues to grow significantly in 2018, driven by expanded distribution of Breathe products, new product and brand launches and the addition of product licenses to be acquired during the coming year. Operating expenses are expected to grow as the Company expands its marketing team and activities.

Use of Non-GAAP Financial Information 
In addition to the preliminary results reported in accordance with U.S. GAAP included in this release, the Company has provided certain non-GAAP financial information including adjusted EBITDA which is a non-GAAP metric that excludes various items that are detailed in the financial tables and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. Management believes that the presentation of these non-GAAP financial measures provides useful information to investors because the information may allow investors to better evaluate ongoing business performance and certain components of the Company’s results. In addition, the Company believes that the presentation of these financial measures enhances an investor’s ability to make period-to-period comparisons of the Company’s operating results. This information should be considered in addition to the results presented in accordance with GAAP, and should not be considered a substitute for the GAAP results. The Company has reconciled the non-GAAP financial information included in this release to the nearest GAAP measures. See the attached “Reconciliation of Non-GAAP Financial Information.” 

About Starco Brands 
Starco Brands, born out of The Starco Group, is an innovative consumer packaged goods company focused on technological innovation that changes the current landscape.  Starco Brands invents cutting edge products that change our behavior. Starco Brands develops products across 10 different categories including: Household Cleaning, Personal Care, Food, Beverage & Spirits, DIY Hardware and Arts & Crafts.  For more information about the Breathe product line, please visit www.breathecleaning.com. For more information about Starco Brands, please visit www.starcobrands.com. 

About The Starco Group 
The Starco Group was founded in 2010 by Ross Sklar and today is a large-scale and highly diversified manufacturer of a wide range of consumer products, including household cleaning, air care, DIY/hardware, arts & crafts, personal care, OTC’s, food, beverage and spirits. For more information, visit www.thestarcogroup.com.

Cautionary Note on Forward-Looking Statements
This press release may include forward-looking information and statements within the meaning of federal securities laws. Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding assumptions, projections, expectations, targets, intentions or beliefs about future events. Statements containing the words “may”, “could”, “would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”, “project”, “intend” and similar expressions constitute forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Forward-looking statements are based on management’s current belief, as well as assumptions made by, and information currently available to, management.

While the Company believes that its expectations are based upon reasonable assumptions, there can be no assurances that its goals and strategy will be realized. Numerous factors, including risks and uncertainties, may affect actual results and may cause results to differ materially from those expressed in forward-looking statements made by the Company or on its behalf. Some of these factors include, but are not limited to, risks related to the Company’s liquidity, the substantial uncertainties inherent in the acceptance of existing and future products, the difficulty of commercializing and protecting new technology, the impact of competitive products and pricing, general business and economic conditions, risks associated with the expansion of our business including the implementation of any businesses we acquire, factors discussed in our public filings, including the risk factors included in  the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and other periodic reports. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission, the Company is under no obligation to publicly update or revise any forward-looking statement after the date of this release whether as a result of new information, future developments or otherwise.


STARCO BRANDS, INC.
(FORMERLY INSYNERGY PRODUCTS, INC.)
CONDENSED BALANCE SHEETS
(Unaudited)
   
    March 31, 2018     December 31, 2017
ASSETS          
Current Assets:          
Cash   $ 158,472       $ 314,181  
Accounts receivable, related party   599       4,692  
Prepaid and other assets   28,445       43,218  
Total Current Assets   187,516       362,091  
           
Deposit   3,500       3,500  
Total Assets   $ 191,016       $ 365,591  
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT              
Current Liabilities:          
Accounts payable   $ 222,576       $ 194,462  
Other payables and accruals   276,382       276,149  
Accrued compensation   30,550       30,050  
Due to an officer   1,190        
Loans payable – related party   362,664       362,664  
Notes payable   13,327       33,158  
Total Current Liabilities   906,689       896,483  
Total Liabilities   906,689       896,483  
Stockholders’ Deficit:          
Common Stock par value $0.001 300,000,000 shares authorized, 150,000,004 and 2,417,569 shares issued, respectively 150,000       2,418  
Additional paid in capital   14,880,746       14,965,081  
Common stock to be issued   600,000       600,000  
Accumulated deficit   (16,346,419 )     (16,098,391 )
Total Stockholders’ Deficit   (715,673 )     (530,892 )
Total Liabilities and Stockholders’ Equity   $ 191,016       $ 365,591  

STARCO BRANDS, INC.
(FORMERLY INSYNERGY PRODUCTS, INC.)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
           
    For the Three Months Ended March 31,
    2018       2017  
Revenues, net, related party   $ 763       $  
           
Operating Expenses:          
Compensation expense   86,466       66,250  
Advertising and promotion   1,352        
Professional fees   75,890       21,384  
General and administrative   80,132       37,412  
Total operating expenses   243,840       125,046  
           
Loss from operations   (243,077 )     (125,046 )
           
Other Income (Expense):          
Interest expense   (7,981 )     (864 )
Interest income   30        
Other income   3,000        
Total other expense   (4,951 )     (864 )
           
Loss before provision for income taxes   (248,028 )     (125,910 )
Provision for income taxes          
           
Net Loss   $ (248,028 )     $ (125,910 )
           
Loss per share, basic & diluted   $ (0.00 )     $ (0.14 )
Weighted average shares outstanding, basic & diluted   56,531,124       920,185  

STARCO BRANDS, INC.
(FORMERLY INSYNERGY PRODUCTS, INC.)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
    For the Three Months Ended
March 31,
    2018       2017  
CASH FLOW FROM OPERATING ACTIVITIES:          
Net loss   $ (248,028 )     $ (125,910 )
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock based compensation   8,181        
Stock based compensation – related party   31,666        
Contributed services   23,400        
Changes in Operating Assets and Liabilities:          
Accounts receivable, related party   4,093        
Prepaids & other assets   14,773       (35 )
Accounts payable   22,420       (1,485 )
Accrued expenses   7,617       65,938  
Net Cash Used in Operating Activities   (135,878 )     (61,492 )
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Advances from a related party   2,000       92,988  
Repayment of advances from a related party   (2,000 )     (27,282 )
Payments on notes payable   (19,831 )      
Net Cash Used by Financing Activities   (19,831 )     (65,706 )
           
Net Increase (Decrease) in Cash   (155,709 )     4,214  
Cash at Beginning of Period   314,181        
Cash at End of Period   $ 158,472       $ 4,214  

Reconciliation of Net Income to Adjusted EBITDA

    Three Months Ended
March 31,
    2018     2017  
Net loss   $ (248,028 )   $ (125,910 )
Other income   (3,000 )    
Interest expense   7,981     864  
Interest income   (30 )    
Stock based compensation   8,181      
Stock based compensation, related party   31,666      
Adjusted EBITDA   $ (203,230 )   $ (125,046 )

CONTACT: 
CONSUMER/TRADE PRESS
Starco Brands
Lisa Becker
888.816.1161
lisa@starcobrands.com

INVESTORS/FINANCIAL PRESS
Liolios
Sean McGowan
949.574.3860
smcgowan@liolios.com 

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