Starco Brands, Inc. 2024 10-K Review: Can This Growing CPG Platform Find Its Footing?

Is Starco Brands (OTC: STCB) a hidden gem in the consumer products space… or a cautionary tale of acquisition‑driven losses? In this deep dive, we sift through six years of strategic pivots, three major 2022–23 acquisitions, and the latest financials from the FY 2024 10‑K to bring you:

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• A concise executive summary of the companys expanded portfolio • Revenue breakdown by segment, profit drivers… and red flags • Balance sheet highlights & deep cash‑flow analysis • The going‑concern challenge and key liquidity risks • Managements plan, competitive landscape, and where STCB can go next • An investability thesis & final score (4.3/10)

Key Takeaways

1. Three‑Pronged CPG Growth Strategy
Starco Brands has evolved from an Insynergy startup to a multi‑brand holding company via licensing deals and add‑on acquisitions:

• Starco Brands Segment: Winona® popcorn spray, Whipshots™ whipped‑cream vodka aerosols (with Cardi B tie‑in), and Art of Sport® skincare (AOS).
• Skylar® Fragrance: Hypoallergenic, premium scents acquired Dec 2022.
• Soylent® Nutrition: Meal‑replacement shakes and bars acquired Feb 2023.

Exclusive manufacturing partnerships with TSG and Temperance Distilling power rapid product launches—but they also create single‑vendor dependencies in a competitive landscape dominated by P&G and Unilever.

2. FY 2024 Financials Unpack
• Revenues: $52.53 M (+1% vs. 2023) led by full‑year Soylent sales.
• Related‑Party Sales: $6.14 M (–48%), hit by softer Whipshots orders. • COGS: $33.91 M (–3%), aided by a prior‑year inventory fair‑value adjustment. • Gross Profit: $20.86 M vs. $25.97 M in 2023.
• Net Loss: $(17.33 M) vs. $(46.40 M) in 2023—improved by lower goodwill impairments ($14.3 M vs. $29.6 M) and a $10.5 M share‑adjustment gain.

3. Asset Impairment & Going Concern
• Goodwill Impairments: $14.3 M in 2024 (AOS & Soylent), leaving $12.36 M on the books.
• Intangibles: $28.65 M net in trademarks & customer relationships, with a $13K impairment on AOS. • Working Capital: $(14.2 M) deficit. Cash just $1.21 M.
• Debt: $6.17 M including CEO notes ($2.47 M) and a related‑party revolving loan ($3.65 M).

These metrics trigger a “going concern” warning. Recurring losses, negative cash flow, and high leverage signal that STCB will need to raise fresh equity or refinance to survive.

4. Managements Path Forward
CEO Ross Sklars five-year vision: transform STCB into a CPG platform powering healthy-⁠lifestyle consumer brands. Key pillars:

1. Cross‑brand distribution synergies: leverage AOS, Skylar & Soylent to bundle retail and e‑commerce channels.
2. Back‑end shared services: unite marketing, finance & supply chain under one hub to reduce G&A % of sales.
3. New lines & partnerships: expand beyond skincare & nutrition into air care, OTC, perfumery, and personal care FDA sectors.
4. Debt restructuring: refinance related‑party debt and revolving facility with a portfolio lender.
5. Capital raise: issue strategic equity to fund marketing & inventory, or seek a backstop investment into STCBs shell.

5. Investing Verdict: 4.3/10
Why a “4.3”?
✔ A diversified consumer portfolio built via acquisitions and licensing.
✔ Recent improvement in net loss thanks to one‑time fair‑value gains and reduced stock‑comp expenses.

✘ Chronic unprofitability, massive impairments & going‑concern risk.
✘ Heavy reliance on related parties (TSG manufacturing; executive control).
✘ High working‑capital and debt burdens with no clear path to sustainable cash flows.

Bottom Line
Starco Brands has locked up attractive consumer verticals (nutrition, skincare, fragrance) through rapid acquisitions and licensing, but it has yet to demonstrate a credible path to profitability. The Company stands at a strategic crossroads: refocus on organic growth to right‑size the balance sheet, or double down and further dilute investors on big acquisitions. Until we see consistent operational improvements, STCB remains high‑risk.

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