Market Overview

Starco Brands Reports Second Quarter 2018 Financial Results

Share:

SANTA MONICA, Calif., Aug. 15, 2018 (GLOBE NEWSWIRE) -- Starco Brands (OTC:STCB), a creator of innovative and disruptive consumer products, reported financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights:

  • Significantly increased net revenue and reduced the net loss by more than 50% compared to the first quarter of 2018;
  • Further expanded the distribution of BreatheTM through UNFI distribution network;
  • Entered into a strategic partnership with Deutsch, a creative agency owned by Interpublic Group, whereby Deutsch serves as Starco Brands' marketing agency of record and became a significant shareholder in Starco Brands;
  • Secured distribution at Walmart of Breathe Multi Purpose Cleaner across the United States;
  • Signed a ten-year national licensing agreement with Betterbilt Chemicals to market their full line of plumbing and other consumer products;
  • Launched HonuTM Sunscreen, the Company's first personal care product that is Reef Friendly and contains a patented spray wand, at Walmart locations nationwide;
  • Partnered with Walmart to launch a cobranded Parents Choice Nursey cleanerTM utilizing the Company's BreatheSafeTM Technology.

Management Commentary
"During Q2 of 2018, we delivered on the plans established in late 2017 and early 2018 by expanding the overall distribution of our Breathe line. We also successfully launched several new unique and behavior changing consumer products in personal care and food," said Starco Brands' CEO Ross Sklar. "We broadened the reach of Breathe, our flagship product line, and added Betterbilt Chemicals and Winona Pure Cooking sprays to our range. In addition, we began shipments of Honu Sunscreen and Parent's Choice Nursery cleaner, in partnership with Walmart. We continue to evaluate new product opportunities and expect to launch new products through our internal development, licensing partnerships and acquisitions. As our product assortment grows and our revenues increase we continue to consistently approach corporate profitability."

Second Quarter 2018 Financial Results
Net revenues were $39,716, bringing total net revenues booked since the Company's strategic pivot in mid-2017 to $48,664. (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 second quarter of 2018, the aggregate wholesale shipments of such products were approximately $616,318, which consisted of The Starco Group's sales of Breathe, Winona Pure, Kleen-Out and Parent's Choice.  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 $141,426. The net loss was $106,624, or $0.00 per diluted share. Adjusted EBITDA was negative $101,710. See note below on "Use of Non-GAAP Financial Information."

Outlook
The Company continues to expect revenues to grow significantly in 2018 and expects to continue to narrow its operating loss. This will be primarily driven by expanded distribution of its Breathe, Winona Pure, Kleen-Out line, Honu Sunscreen lines, as well as Parents Choice cobranded with Walmart.  Other sources of revenue expansion will include 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)
   
    June 30, 2018     December 31, 2017
ASSETS          
Current Assets:          
Cash   $ 46,300       $ 314,181  
Accounts receivable, related party   39,717       4,692  
Prepaid and other assets   11,991       43,218  
Total Current Assets   98,008       362,091  
           
Deposit   3,500       3,500  
Total Assets   $ 101,508       $ 365,591  
           
LIABILITIES AND STOCKHOLERS' DEFICIT              
Current Liabilities:          
Accounts payable   $ 229,844       $ 194,462  
Other payables and accruals   250,214       276,149  
Accrued compensation   57,683       30,050  
Due to an officer   289,821       -  
Loans payable – related party   72,843       362,664  
Notes payable   -       33,158  
Total Current Liabilities   900,405       896,483  
Total Liabilities   900,405       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   159,091       2,418  
Additional paid in capital   15,495,055       14,965,081  
Common stock to be issued   -       600,000  
Accumulated deficit   (16,453,043 )     (16,098,391 )
Total Stockholders' Deficit   (798,897 )     (530,892 )
Total Liabilities and Stockholders' Equity   $ 101,508       $ 365,591  
                   


 
STARCO BRANDS, INC.
(FORMERLY INSYNERGY PRODUCTS, INC.)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
                   
    For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2018     2017   2018   2017
Revenues, net, related party   $ 39,716       $ -     $ 40,479     $ -  
                   
Operating Expenses:                  
Compensation expense   61,698       64,750     148,164     131,000  
Advertising and promotion   18,198       -     19,550     -  
Professional fees   13,239       9,912     89,129     31,296  
General and administrative   48,291       28,027     128,423     65,439  
Total operating expenses   141,426       102,689     385,266     227,735  
                   
Loss from operations   (101,710 )     (102,689 )   (344,787 )   (227,735 )
                   
Other Income (Expense):                  
Interest expense   (7,927 )     (934 )   (15,908 )   (1,798 )
Interest income   13       -     43     -  
Other income   3,000       -     6,000     -  
Loss on conversion of debt   -       (259,739 )   -     (259,739 )
Total other expense   (4,914 )     (260,673 )   (9,865 )   (261,537 )
                   
Loss before provision for income taxes   (106,624 )     (363,362 )   (354,652 )   (489,272 )
Provision for income taxes   -       -     -     -  
                   
Net Loss   $ (106,624 )     $ (363,362 )   $ (354,652 )   $ (489,272 )
                   
Loss per share, basic and diluted   $ (0.00 )     $ (0.30 )   $ (0.00 )   $ (0.46 )
Weighted average shares outstanding, basic and diluted   157,925,413       1,196,099     107,508,363     1,058,904  
                           


 
STARCO BRANDS, INC.
(FORMERLY INSYNERGY PRODUCTS, INC.)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
    For the Six Months Ended
June 30,
    2018     2017
CASH FLOW FROM OPERATING ACTIVITIES:          
Net loss   $ (354,652 )     $ (489,272 )
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   46,800       -  
Additional shares issued for prior debt conversion   -       259,739  
Changes in Operating Assets and Liabilities:          
Accounts receivable, related party   (35,025 )     -  
Prepaids & other assets   31,227       (15,690 )
Accounts payable   32,535       4,057  
Accrued expenses   4,545       128,754  
Net Cash Used in Operating Activities   (234,723 )     (112,412 )
           
CASH FLOWS FROM INVESTING ACTIVITIES:   -       -  
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Advances from a related party   2,000       154,248  
Repayment of advances from a related party   (2,000 )     (42,537 )
Proceeds from the sale of common stock   -       250,000  
Proceeds from notes payable   -       21,966  
Payments on notes payable   (33,158 )     (1,966 )
Net Cash Provided (Used) by Financing Activities   (33,158 )     381,711  
           
Net Increase (Decrease) in Cash   (267,881 )     269,299  
Cash at Beginning of Period   314,181       -  
Cash at End of Period   $ 46,300       $ 269,299  
       
Cash paid during the period for:          
Interest   $ -       $ -  
Income taxes   $ -       $ -  
                   

Reconciliation of Net Income to Adjusted EBITDA

    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018
  2017
  2018
  2017
Net loss   $ (106,624 )   $ (363,362 )   $ (354,652 )   $ (489,272 )
Other income   (3,000 )   -     (6,000 )   -  
Interest expense   7,927     934     15,980     1,798  
Interest income   (13 )   -     (43 )   -  
Loss on conversion of debt   -     259,739     -     259,739  
Stock based compensation   -     -     8,181     -  
Stock based compensation, related party   -     -     31,666     -  
Adjusted EBITDA   $ (101,710 )   $ (102,689 )   $ (304,868 )   $ (227,735 )
                                 


CONTACT:             
CONSUMER/TRADE PRESS         INVESTORS/FINANCIAL PRESS  
Starco Brands         Liolios  
Lisa Becker         Sean McGowan  
888.816.1161         949.574.3860  
lisa@starcobrands.com         smcgowan@liolios.com  

Primary Logo

View Comments and Join the Discussion!