Filing Analysis
Starco Brands, Inc. acquired Custom Foods, LLC for $8 million in cash plus up to $2.5 million in earnouts. To fund the acquisition and working capital, the company entered into a new $11 million term loan with Pasadena Private Lending Inc., which includes significant personal guarantees from the CEO.
🚩 Red Flags
- Personal guarantees required from the CEO (Ross Sklar) and his family trusts for corporate debt.
- Related-party transaction: The CEO's existing 'Consolidated Note' was subordinated to the new lender and converted into an 'Amended and Restated Secured Convertible Promissory Note'.
- High cost of capital: 2.0% non-refundable closing fee on the initial term loan ($220,000).
- Cross-default and cross-collateralization clauses across all new and existing debt facilities.
- Restrictive financial covenants including a Maximum Senior Debt to EBITDA Ratio $\le$ 3.00x.
📋 Key Facts
- Acquisition of Custom Foods, LLC for $8,000,000 cash and up to $2,500,000 in earnout consideration based on 2027 Net Revenue metrics.
- Secured a $11.0 million Initial Term Loan from Pasadena Private Lending Inc. (PPL) to fund the acquisition and repay existing bridge debt.
- The loan includes an accordion feature for up to $4.0 million in additional term loans and a $3.0 million revolving line of credit.
- Loan is secured by substantially all personal property, collateral of borrowers, and equity interests.
- The CEO, Ross Sklar, has personally guaranteed the loans along with various family trusts.
Starco Brands entered into a $5,000,000 bridge term loan agreement with The Starco Group, Inc., an entity owned solely by the company's CEO, Ross Sklar. The funds are primarily intended to pay off existing debt from Gibraltar Business Capital, LLC.
🚩 Red Flags
- Related-party transaction: The loan is provided by an entity owned 100% by the CEO.
- Debt refinancing: The primary use of funds is to pay off existing indebtedness (Gibraltar Loan).
- High default penalties: Late charges are set at $0.05 per $1 overdue (5%).
📋 Key Facts
- Entered into a Bridge Term Loan Promissory Note on December 22, 2025.
- Total principal amount: up to $5,000,000; initial disbursement of $4,500,000.
- Lender is The Starco Group, Inc., which is solely owned by CEO Ross Sklar.
- Interest rate: Lesser of Highest Lawful Rate or Prime + 4.25% (minimum 6.00% per annum).
- Repayment schedule includes monthly interest starting Jan 1, 2026, and principal payments starting Jan 1, 2027.
- Default interest rate: Lesser of Highest Lawful Rate or Prime + 8.00%.
- Proceeds to be used to pay off/down debt with Gibraltar Business Capital, LLC.
Starco Brands, Inc. has entered into an amendment to its existing Forbearance Agreement with Gibraltar Business Capital, LLC. The amendment extends the period during which the lender will refrain from exercising remedies for ongoing defaults through December 31, 2025.
🚩 Red Flags
- Ongoing events of default acknowledged by both company and lender.
- Short-term extension (only until Dec 31, 2025) suggests immediate liquidity or compliance pressure.
- Lender has not waived any defaults and reserves all rights to exercise remedies.
📋 Key Facts
- Amendment No. 1 to Forbearance Agreement effective November 24, 2025.
- Lender: Gibraltar Business Capital, LLC.
- The amendment acknowledges continuing events of default.
- Forbearance period extended through December 31, 2025.
- The lender reserves all rights and remedies under the original Loan Documents.
Starco Brands, Inc. announced the immediate departure of Chief Marketing Officer David Dreyer on August 18, 2025. The company is eliminating the CMO position entirely as part of a strategic initiative to streamline organizational structure and enhance operational efficiency.
🚩 Red Flags
- Elimination of a C-suite position can sometimes signal internal restructuring or cost-cutting measures due to liquidity constraints, though not explicitly stated here.
📋 Key Facts
- Effective date of departure: August 18, 2025
- Officer departing: David Dreyer (Chief Marketing Officer)
- The CMO position has been eliminated; no replacement will be appointed
- Responsibilities from the departed role will be integrated into existing leadership teams
- Reason cited: Strategic initiative to streamline organizational structure and optimize resource allocation
Starco Brands, Inc. has entered into a non-binding Letter of Intent (LOI) to acquire The Starco Group, a contract manufacturer. This move is intended to transform the company into a vertically integrated consumer products platform.
🚩 Red Flags
- The LOI is non-binding, meaning the transaction is not guaranteed and may fail to close.
- Acquisitions in the micro-cap space often involve significant debt or equity dilution that is not yet quantified in this filing.
📋 Key Facts
- Executed a non-binding Letter of Intent (LOI) to acquire The Starco Group.
- The acquisition target is a contract manufacturer.
- Strategic goal: To create a vertically integrated consumer products platform.
- Report date: July 29, 2025; Event date: July 24, 2025.
Starco Brands, Inc. filed an 8-K to announce its third quarter 2024 financial results and the associated earnings call held on November 14, 2024.
📋 Key Facts
- Reported financial results for the quarter ended September 30, 2024.
- Earnings call was conducted on November 14, 2024, at 1:30 pm (PT).
- The filing includes a press release (Exhibit 99.1) and an earnings call transcript (Exhibit 99.2).
Starco Brands, Inc. announced the resignation of Interim-CFO Kevin Zaccardi effective November 8, 2024. The current CEO and President, Ross Sklar, will assume the role of acting Interim-CFO and Treasurer.
🚩 Red Flags
- Concentration of executive power: The CEO is now doubling as the Interim-CFO and Treasurer, which can weaken internal controls and oversight in micro-cap companies.
- Frequent turnover in interim financial leadership (implied by 'Interim' status).
📋 Key Facts
- Kevin Zaccardi resigned as Interim-CFO on November 8, 2024, to pursue another opportunity.
- Ross Sklar (current CEO and President) appointed as acting Interim-CFO and Treasurer effective November 8, 2024.
- The resignation was not due to any dispute with the Company, Board, or auditors.
- Zaccardi will provide limited consulting services for a mutually agreed period.
Starco Brands, Inc. announced the appointment of Joe Schimmelpfennig to its Board of Directors. This move is part of a broader restructuring of the Board size from three to seven directors following an amendment to a Voting Agreement.
🚩 Red Flags
- None identified in this filing.
📋 Key Facts
- On July 12, 2024, Joe Schimmelpfennig was appointed to the Board of Directors.
- The appointment brings the current number of Board members to four.
- Three vacancies remain on the Board following a decision to increase total Board size from three to seven directors.
- The expansion is pursuant to a Voting Agreement Amendment involving Ross Sklar, GV 2016, L.P., The Production Board, LLC, and Andreessen Horowitz Fund IV, L.P. (among others).
- Joe Schimmelpfennig is currently the Head of Consumer Investment Banking at D.A. Davidson.
Starco Brands entered into a $12.5 million revolving credit facility with Gibraltar Business Capital, LLC which required the subordination of existing promissory notes held by the company's CEO, Ross Sklar. The transaction involved using loan proceeds to repay a convertible note held by the CEO and extending the maturity of another note held by him.
🚩 Red Flags
- Related-party transactions: The company used debt proceeds to repay promissory notes held by the CEO.
- CEO subordination: The lender required the CEO to subordinate his personal claims against the company to secure the new financing.
- Debt restructuring involving insiders: Significant modification of terms for CEO's existing debt (extension of maturity to August 31, 2026).
📋 Key Facts
- Entered into a Loan and Security Agreement with Gibraltar Business Capital, LLC on May 24, 2024.
- Revolving line of credit up to $12.5 million plus a $1.5 million Permitted Overadvance Amount.
- Maturity date is May 24, 2026, with a potential one-year extension.
- Interest rate is One Month Term SOFR plus an Applicable Margin (with a 2% premium on overadvances).
- CEO Ross Sklar's existing promissory notes were subordinated to the new lender's rights.
- Proceeds from the loan were used to repay the CEO's Convertible Note in full and pay down principal/interest on his 2023 Note.
Starco Brands, Inc. filed an 8-K to announce its financial results for the quarter and full year ended December 31, 2023. The filing serves as a formal announcement of the earnings release issued on April 3, 2024.
📋 Key Facts
- Reported date: April 3, 2024
- Filing date: April 4, 2024
- Covers financial results for the quarter and year ended December 31, 2023
- Includes a press release titled 'Starco Brands Announces Fourth Quarter and Full Year 2023 Results and Business Update' as Exhibit 99.1
Starco Brands, Inc. announced a major board overhaul following a majority stockholder resolution to remove Demir Vangelov and appoint a new three-member Board consisting of Ross Sklar, Darin Brown, and Bharat Vasan. Additionally, the company entered into a Stockholder Agreement with former Soylent Nutrition stockholders that includes potential share issuance triggers based on VWAP price thresholds.
🚩 Red Flags
- Significant board turnover via stockholder resolution (potential proxy fight or loss of control).
- Anti-dilution mechanism: The company is contractually obligated to issue additional shares if the stock price falls below $0.35, creating significant dilution risk for existing shareholders.
- The share adjustment triggers are tied to specific dates in 2024 and 2025, creating potential volatility/selling pressure near those windows.
📋 Key Facts
- On March 18, 2024, a majority of stockholders removed Demir Vangelov from the Board and all committees.
- A new Board was appointed consisting of Ross Sklar, Darin Brown, and Bharat Vasan.
- The company filed a Preliminary Schedule 14C on March 19, 2024; a Definitive 14C is expected around March 29, 2024.
- A Stockholder Agreement was entered into on March 15, 2024, with YL Management LLC (successor to Soylent Nutrition stockholders).
- The agreement includes two share adjustment triggers based on a 30-day VWAP: one ending Feb 14, 2024, and another ending May 15, 2025.
- If the stock price is below $0.35 per share at these dates, additional shares must be issued to Consenting Stockholders at no cost to the company.
Starco Brands, Inc. issued a press release regarding preliminary full-year 2023 results and an initial outlook for 2024. The filing serves as a vehicle to incorporate the press release via Item 7.01 (Regulation FD Disclosure).
📋 Key Facts
- Company released preliminary full year 2023 financial results.
- Company provided an initial outlook for the fiscal year 2024.
- The filing is categorized under Item 7.01, meaning the information is non-binding and not considered 'filed' for purposes of Section 18 liability.
Starco Brands, Inc. issued a press release regarding the explosive growth and nationwide expansion of its 'Whipshots®' product line. This is a non-material disclosure under Item 7.01 intended for public information rather than a formal corporate action.
📋 Key Facts
- Company issued a press release on January 16, 2024.
- The announcement focuses on the 'Whipshots®' brand performance and expansion.
- Filing is made under Item 7.01 (Regulation FD Disclosure).
- The information is not considered 'filed' for purposes of Section 18 of the Exchange Act.