0001437749-22-015091.txt : 20220615 0001437749-22-015091.hdr.sgml : 20220615 20220615172243 ACCESSION NUMBER: 0001437749-22-015091 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 46 CONFORMED PERIOD OF REPORT: 20220331 FILED AS OF DATE: 20220615 DATE AS OF CHANGE: 20220615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Starco Brands, Inc. CENTRAL INDEX KEY: 0001539850 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 271781753 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54892 FILM NUMBER: 221018603 BUSINESS ADDRESS: STREET 1: 250 26TH STREET STREET 2: SUITE 200 CITY: SANTA MONICA STATE: CA ZIP: 90402 BUSINESS PHONE: 818-760-1644 MAIL ADDRESS: STREET 1: 250 26TH STREET STREET 2: SUITE 200 CITY: SANTA MONICA STATE: CA ZIP: 90402 FORMER COMPANY: FORMER CONFORMED NAME: Insynergy Products, Inc DATE OF NAME CHANGE: 20120118 10-Q 1 stcb20220331_10q.htm FORM 10-Q stcb20210930_10q.htm
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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number:  0-54892

 

STARCO BRANDS, INC

(Exact name of registrant as specified in its charter)

   

Nevada

 

27-1781753

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

   

250 26th Street, Suite 200, Santa Monica, CA

(Address of principal executive offices)

 

90402

(Zip Code)

 

Registrant’s telephone number, including area code: (888) 484-1908

 


 

Securities Registered under Section 12(b) of the Exchange Act: 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock

 

STCB

 OTC Pink Open Market Group

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒        No ☐ 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes ☒        No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐

Accelerated filer  ☐

Non-accelerated filer  ☒

Smaller reporting company  

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:  As of June 13, 2022, the issuer had 159,140,665 shares of its common stock issued and outstanding.

 

1

 

 

 

STARCO BRANDS, INC.

and SUBSIDIARIES 

 

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED MARCH 31, 2022

TABLE OF CONTENTS

 

PART I - Financial Information

  Page

 

Item 1. Condensed Consolidated Financial Statements (unaudited)

3

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

13
 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

18

 

Item 4. Controls and Procedures

18

     

PART II - Other Information

 

 

 

Item 1. Legal Proceedings

19

 

Item 1A. Risk Factors         

19

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

19

 

Item 3. Defaults Upon Senior Securities

19

 

Item 4. Mining Safety Disclosures

19

 

Item 5. Other Information

19

 

Item 6. Exhibits

20

Exhibit Index    
Signatures

 

21

 

2

 
 

 

PART I FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

STARCO BRANDS, INC.

and SUBSIDIARIES

 

INDEX TO FINANCIAL STATEMENTS

 

 

  Page  

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (unaudited)

4  

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (unaudited)

5  

Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended March 31, 2022 and 2021 (unaudited)

6  

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (unaudited)

7  

Notes to the Condensed Consolidated Financial Statements (unaudited)

8  

 

 

3

 

 

 

STARCO BRANDS, INC.

and SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

  

March 31, 2022

  

December 31, 2021

 

ASSETS

        

Current Assets:

        

Cash

 $185,658  $338,863 

Accounts receivable, related party

  560,372   174,059 

Prepaid and other assets

  602,593   733,020 

Total Current Assets

 $1,348,623  $1,245,942 

Intangibles, net

  20,000   20,000 

Note receivable, related party

  95,640   95,640 

Total Assets

 $1,464,263  $1,361,582 
         

LIABILITIES AND STOCKHOLDERS' DEFICIT

        

Current Liabilities:

        

Accounts payable

 $694,940  $592,665 

Other payable and accruals

  273,306   800,775 

Accrued liabilities, related party

  74,347   202,023 

Stock Payable

  735,415   654,166 

Treasury stock payable, current

  131,400   131,400 

Loans and advances payable, related party

  376,382   376,382 

Notes payable

  27,060   53,822 

Total Current Liabilities

 $2,312,850  $2,811,233 

Treasury stock payable, net of current portion

  164,250   197,100 

Loans payable, net of current portion, related party

  1,572,500   1,100,000 

Total Liabilities

 $4,049,600  $4,108,333 

Stockholders' Deficit:

        

Preferred Stock, par value $0.001 40,000,000 shares authorized, no shares issued and outstanding

  -   - 

Common Stock, par value $0.001 300,000,000 shares authorized, 159,140,665 and 159,140,665 shares issued and outstanding, respectively

  159,141   159,141 

Additional paid in capital

  16,059,006   15,950,403 

Treasury Stock at cost

  (394,200

)

  (394,200

)

Accumulated deficit

  (18,347,237

)

  (18,388,186

)

Total Starco Brands' Deficit

 $(2,523,290

)

 $(2,672,842

)

Non-controlling interest

  (62,047

)

  (73,909

)

Total Stockholders' Deficit

 $(2,585,337

)

 $(2,746,751

)

Total Liabilities and Stockholders' Deficit

 $1,464,263  $1,361,582 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4

 

 

 

STARCO BRANDS, INC.

and SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

  

For the 3 Months Ended

 
  

March 31, 2022

  

March 31, 2021

 

Income Statement

        

Revenues, net, related party

 $923,274  $132,514 
         

Operating Expenses:

        

Compensation expense

  126,877   44,233 

Professional fees

  58,506   10,555 

Marketing, General and administrative

  583,181   77,823 

Marketing, related party

  87,044   104,920 

Total operating expenses

 $855,608  $237,531 
         

Income (loss) from operations

 $67,666  $(105,017)
         

Other Income (Expense):

        

Interest expense

  (14,855)  (7,392)

Other income (expense)

  -   (3,500)

Total other expense, net

 $(14,855) $(10,892)
         

Income (loss) before provision for income taxes

  52,811   (115,909)

Provision for income taxes

  -   - 
         

Net Income (Loss)

 $52,811  $(115,909)

Net income (loss) attributable to Non-controlling interest

  (11,862) z- 
         

Net Income (Loss) attributable to Starco Brands

 $40,949  $(115,909)
         
Income (Loss) per share, basic $-  $- 

Income (Loss) per share, diluted

 $-  $- 

Weighted Average Shares Outstanding, basic

  159,140,665   159,140,665 
Weighted Average Shares Outstanding, diluted  163,069,235   159,140,665 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5

 

 

 

STARCO BRANDS, INC.

and SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

 

  

Common Stock

                     
  

Shares

  

Amount

  

Additional Paid-In Capital

  

Treasury

Stock

  

Accumulated

Deficit

  

Non-controlling

Interest

  

Total

 

Balance at December 31, 2020

  159,140,665  $159,141  $15,723,705  $-  $(16,137,020

)

 $-  $(254,174

)

Estimated fair value of contributed services

          11,700               11,700 

Net Loss

               (115,909

)

     (115,909

)

Balance at March 31, 2021

  159,140,665  $159,141  $15,735,405  $-  $(16,252,931

)

 $-  $(358,385

)

 


 

  

Common Stock

                     
  

Shares

  

Amount

  

Additional Paid-In Capital

  

Treasury

Stock

  

Accumulated

Deficit

  

Non-controlling

Interest

  

Total

 

Balance at December 31, 2021

  159,140,665  $159,141  $15,950,403  $(394,200) $(18,388,186) $(73,909) $(2,746,751)

Estimated fair value of contributed services

          54,862               54,862 

Estimated fair value of warrants vested

         53,741            53,741 

Net Income (Loss)

               40,949   11,862   52,811 

Balance at March 31, 2022

  159,140,665  $159,141  $16,059,006  $(394,200) $(18,347,237) $(62,047) $(2,585,337)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6

 

 

 

STARCO BRANDS, INC.

and SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

  

For the 3 Months Ended

 
  

March 31, 2022

  

March 31, 2021

 

CASH FLOW FROM OPERATING ACTIVITES:

        

Net Income (loss)

 $52,811  $(115,909)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

        

Common stock payable for services

  81,249   - 

Warrants for services

  53,741   - 

Contributed services

  54,862   11,700 

Non-cash asset writeoff

  -   3,500 

Changes in Operating Assets and Liabilities:

        

Accounts receivable, related party

  (386,313)  (5,213)

Prepaids & other assets

  130,427   12,417 

Accounts payable

  102,275   (50,331)

Accrued expenses, related party

  (127,676)  (1,048)

Accrued liabilities

  (527,469)  (23,050)

Net Cash Provided by (Used in) Operating Activities

 $(566,093) $(167,934)

CASH FLOWS FROM FINANCING ACTIVITIES:

        

Advances / loans from related parties

 $472,500  $56,895 

Repayment of advances from related parties

  -   (56,895)

Borrowings on notes payable

  -   - 

Payments on notes payable

  (26,762)  - 

Repurchases of common stock

  (32,850)  - 

Net Cash Provided by Financing Activities

 $412,888  $- 

Net Increase (decrease) in Cash

 $(153,205) $(167,934)
         

Cash at Beginning of Period

 $338,863  $773,322 

Cash at End of Period

 $185,658  $605,388 
         

Cash paid during the year for:

        

Interest

  16,975   471 

Income taxes

  -   - 

Supplemental non-cash disclosure:

        
Treasury stock payable  295,650   - 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7

 

 

STARCO BRANDS, INC.

and SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

 

 

NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Starco Brands, Inc. (STCB) was incorporated in the State of Nevada on  January 26, 2010 under the name Insynergy, Inc. On  September 7, 2017, STCB filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc. The Board determined the change of STCB's name was in the best interests of the Company due to changes in its current and anticipated business operations. In  July 2017, STCB entered into a licensing agreement with The Starco Group (“TSG”), located in Los Angeles, California. The companies pivoted to commercializing novel consumer products manufactured by TSG. TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine.

 

During the third quarter of 2021, STCB formed two subsidiaries, Whipshots, LLC, a Wyoming limited liability company ("Whipshots LLC") and Whipshots, LLC, a Delaware limited liability company which was subsequently renamed Whipshots Holdings, LLC ("Whipshots Holdings"). Whipshots- LLC was a wholly-owned subsidiary of STCB at formation which was subsequently contributed to Whipshots Holdings. Whipshots Holdings is a majority owned subsidiary of STCB in which STCB owns 96% of the vested voting interests. There are unvested interests not owned by the Company for an additional 3% of the of the equity which have been issued subject to vesting requirements. The accompanying condensed consolidated financial statements are of STCB and its subsidiaries Whipshots Holdings and Whipshots LLC (collectively, the "Company").

 

In our opinion, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of unaudited consolidated financial position and the unaudited consolidated results of operations for interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation 
The consolidated financial statements of Starco Brands, Inc. include the accounts of STCB and our 96% owned subsidiary and its wholly owned subsidiary, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with ASC 810, Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the condensed consolidated financial statements.
 
Our consolidated subsidiaries at March 31, 2022 include:
Whipshots Holdings and its wholly owned subsidiary Whipshots LLC

 

Basis of presentation

The condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and do not contain certain information included in the Company’s Annual Report and Form 10-K for the year ended December 31, 2021. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-K.

 
Use of estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.

 
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

 

Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2022 or December 31, 2021.

 

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. All of our receivables are from related parties. The allowance for uncollectible amounts is evaluated quarterly and was zero as of March 31, 2022 and December 31, 2021.

 

 

8

 

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

The carrying amount of the Company’s consolidated financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2022.

 

Property and equipment

Property and equipment are carried at the lower of cost or net realizable value. All Property and equipment with a cost of $2,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations. At March 31, 2022 and December 31, 2021, the Company had no net property and equipment.

 

Revenue recognition

STCB and its subsidiaries earn their revenue as royalties from the licensing agreements it has with TSG, a related entity, and other related parties. STCB licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is determined beforehand in each agreement. The Company recognizes its revenue only when sales are made by TSG or other related parties to a third party.

 

The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.

 

Income taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

 

Stock-based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 Share-based Compensation (“ASC 718”), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of awards granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.

 

Net income (loss) per common share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of March 31, 2022, the Company had 728,570 shares of stock payable that have been sold to investors, 650,000 shares of stock payable to advisors and subject to vesting, and 2,550,000 potentially dilutive shares from outstanding warrants.

 

 

Intangible Assets

Definite-lived intangible assets consist of certain trademarks and customer lists. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets’ estimated useful lives, which approximate 10 years.  There was no significant amortization during the quarter ended March 31, 2022 or the year ended December 31, 2021.

 

The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic 820, Fair Value Measurements. The Company did not record asset impairment charges related to its intangible assets during the quarter ended March 31, 2022.

 

Royalties and Licenses

Royalty-based obligations with content licensors are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made are generally made in connection with the development of a particular product, and therefore, we are generally subject to risk during the product phase. Payments earned after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

 

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract.

 

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through future revenue. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If an impairment exists, then the related assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

 

Our minimum contractual obligations as of December 31, 2021 approximate $550,000, $1,100,000 and $1,650,000 for the years ending December 31, 2022, 2023 and 2024, respectively.

 

Recently issued accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

 

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NOTE 3 GOING CONCERN

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $18,347,237 at March 31, 2022 including the impact of its income of $40,949 for the quarter ended March 31, 2022.  Net cash used in operating activities was $566,093 for the quarter ended March 31, 2022. The Company’s ability to continue with this trend is unknown. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown although the Company is actively raising capital via a Regulation A offering which was qualified in December 2021. The obtainment of additional financing and the successful development of the Company’s contemplated plan of operations, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

 

NOTE 4 NOTES PAYABLE

 

The Company has a financing loan for its Directors and Officers Insurance (“D&O”) that was incurred in September 2021. The loan bears interest at 4.4% and requires monthly payments through June 2022. As of March 31, 2022 and December 31, 2021, the Company had D&O loan balances of $27,060 and $53,822, respectively.

 

See Note 7 - Related Party Transactions for loans to STCB from the Company's CEO. 

 

 

NOTE 5 – OPERATING LEASE

 

The Company previously occupied office space in Burbank, California. The Company signed a three-year lease starting January 1, 2016. The lease was then extended for an additional three-year term. Upon adoption of ASU 2016-02 Leases (Topic 842), the Company recorded an initial Right of Use of Asset and Lease Obligation of $122,825.

 

On November 1, 2020, the lease was amended to reduce the monthly lease payment to $1,750. In addition, the lessor agreed to forgive all past due accrued rent. As a result, the Company recognized a gain on the forgiveness of debt of $34,280.

 

On November 13, 2020, the Company and lessor assigned the lease for the office space in Burbank to two of its then Directors, Sanford Lang and Martin Goldrod, relieving the Company of any further obligation under the lease.

 

The lease expense for year ended December 31, 2020 was $34,691 and cash paid under this operating lease was $25,918 during the same period.

 

During the three months ended March 31, 2021, the Company determined that it was unlikely to collect the lease deposit and recognized an asset writeoff expense of $3,500. There were no other lease expenses or payments during the period. There was no lease expense for the period ended March 31, 2022.

 

10

 
 

 

 

NOTE 6 – COMMITMENTS & CONTINGENCIES

 

On February 18, 2020, STCB received a demand letter from a law firm representing certain individuals who purchased the Breathe brand home cleaning products. The demand letter alleged that STCB had unlawfully, falsely and misleadingly labeled and marketed the Breathe brand of products to consumers in violation of the Consumer Products Safety Act, the Federal Hazardous Substance Act and the FTC Act as well as various California and New York laws. While STCB denied any wrongdoing, a settlement was reached and paid in full, with no further obligation required by STCB.

 

On September 8, 2021, Whipshots LLC, a Wyoming limited liability company (“Whipshots”), a wholly-owned subsidiary of Starco Brands, Inc., entered into an Intellectual Property Purchase Agreement (the “Agreement”) effective August 24, 2021, with Penguins Fly, LLC, a Pennsylvania limited liability company (“Seller”). The Agreement provides that Seller will sell to Buyer the trademarks “Whipshotz” and “Whipshots”, accompanying domain and social media handles of the same nomenclature, and certain intellectual property, documents, digital assets, customer data and other transferable rights under non-disclosure, non-compete, non-solicitation and confidentiality contracts benefiting the purchased intellectual property and documents (collectively, the “Acquired Assets”). The purchase price (“Purchase Price Payment”) for the Acquired Assets will be payable to Seller, over the course of seven years, based on a sliding scale percentage of gross revenues actually received by Buyer solely from Buyer’s sale of Whipshots/Whipshotz Products. The Purchase Price Payment shall be subject to a minimum amount in each contract year and a maximum aggregate amount between $140,000 and $2,000,000 based on revenues generated by the products. As of March 31, 2022 and December 31, 2021, the Company had paid $20,000 of Purchase Price Payment, which has been recorded as an intangible asset.

 

On September 14, 2021, the Company entered into a License Agreement with Washpoppin Inc., a New York corporation. Pursuant to the License Agreement, Licensor shall license to the Company certain Licensed Property of the recording artist professionally known as “Cardi B”. As part of the Agreement, in exchange for royalty rates based on Net Sales (as defined in the Agreement) during each applicable contract period, the Licensor warrants to cause the Artist to attend certain in person events, media interviews, participate in the development of the Licensed Products (as defined in the Agreement), and promote the Licensed Products through social media posts on the Artist’s social media platforms. The Company has committed to a minimum royalty payment under the Agreement of $3,300,000 in aggregate through 2024, subject to Licensor’s satisfaction of its obligations. In the quarter ended March 31, 2022, the Company incurred expense of approximately $127,000 and had a capitalized balance of approximately $381,000 related to this royalty.

 

Accrued Liability

 

On July 9, 2014, the Board of Directors approved an investment arrangement with an individual. Per the terms of the agreement, the investor transferred $150,000 to STCB to be used for the development of a specific product. The product for which the investment was intended was never produced and this agreement is being renegotiated. The $150,000 investment was never returned by the Company and the amount is included in other payables and accruals on the balance sheet.

 

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

During the year ended December 31, 2017, Sanford Lang, the Company’s former Chairman and CEO, advanced STCB $289,821 to pay for general operating expenses. The advance required a monthly interest payment of $2,545 and was due on demand. In June 2021, Mr. Lang and Mr. Goldrod executed agreements with STCB whereby the advance from Mr. Lang and all other amounts owed to each were repaid and both Mr. Lang and Mr. Goldrod resigned from the Board of Directors. Further, for a period of 36 months beginning in July 2021, STCB will repurchase an aggregate of $10,950 worth of shares each month from Mr. Lang and Mr. Goldrod, with the share price for each purchase to be set according to the volume weighted average trading price of the common stock over the last 10 days of the month. In the three months ended March 31, 2022 STCB paid an aggregate of $32,850 to Mr. Lang and Mr. Goldrod per the agreements and anticipates that the corresponding share transfers will be settled in 2022.

 

As of March 31, 2022, the Company owed TSG $72,843 for expenses paid by TSG on behalf of STCB for expenses to launch licensed brands. As royalties have exceeded $250,000 in the aggregate, once the Company has an adequate cash reserve, TSG may deduct the incurred expenses from the subsequent royalty payments until TSG is paid in full. In addition, STCB owes TSG and its subsidiaries an additional $203,539 for expenses paid on behalf of STCB or funds advanced to the Company to pay for other operating expenses. TSG is owned by STCB's CEO, Ross Sklar.

 

On January 24, 2020, STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The note bears interest at 4% per annum, compounds monthly, is unsecured, and matures two years from the original date of issuance. On June 28, 2021, STCB executed an additional promissory note with Ross Sklar in the principal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note in favor of Ross Sklar, CEO, in the principal sum of $472,500, in exchange for a cash advance in the amount of $300,000 and payment of Company costs in the amount of $172,500. As with the other notes between the Company and our CEO, the note bears interest at 4% per annum, is unsecured, and matures two years from the original date of issuance. This note may also convert into shares of Company common stock at the 10-day volume weighted average trading price of the Company common stock for the 10-day period prior to the issuance of the Note, which was calculated as $0.29 per share. As of March 31, 2022, there was $6,086 of accrued interest due on these notes.

 

During the quarter ended March 31, 2022, the Company incurred $87,044 of marketing expense from The Woo. David Dryer, STCB's EVP of Marketing was a Managing Director at The Woo until February 2022.

 

During the quarters ended March 31, 2022 and 2021, the Company recognized revenue of $923,274 and $132,514, respectively. There were $560,372 and $174,059 of accounts receivable and accrued accounts receivable from TSG and Temperance as of March 31, 2022 and December 31, 2021, respectively. All revenue received is from related parties. 

 

During the year ended December 31, 2021, the Company advanced $95,640 to Temperance as a note and related to its initial production of Whipshots. The note carries no interest and is payable on demand.    

 

 

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NOTE 8 – STOCK WARRANTS

 

A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:

 

  

Shares available

to purchase with

warrants

  

Weighted

Average

Price

  

Weighted

Average

Fair Value

 

Outstanding, December 31, 2020

  2,000,000  $1.05  $0.003 

Issued

  550,000  $0.95  $0.023 

Exercised

  -  $-  $- 

Cancelled

  -  $-  $- 

Expired

  -  $-  $- 

Outstanding, December 31, 2021

  2,550,000  $1.03  $0.007 

Issued

  -  $-  $- 

Exercised

  -  $-  $- 

Cancelled

  -  $-  $- 

Expired

  -  $-  $- 

Outstanding, March 31, 2022

  2,550,000  $1.03   0.007 
             

Exercisable, March 31, 2022

  2,112,500  $1.04  $0.004 

 

 

NOTE 9 – STOCKHOLDERS' EQUITY (DEFICIT)

 

On July 23, 2020, the Company granted 49,751 shares of common stock for services. The shares were valued at $2.01, (the average 14-day closing price), for total non-cash expense of $100,000.  In October 2021, the Company agreed to grant 650,000 shares of common stock for services of advisory board members. The shares vest over a 24 month period and were valued at $1.00 each, consistent with the price of shares issued in the Reg A offering, for a total non-cash expense of $650,000 to be recognized consistent with the shares' vesting schedule. During the quarter ended March 31, 2022 the Company expensed $81,249 related to these shares.

 

Stock Payable

In the quarter ended March 31, 2022, STCB recorded $81,249 of stock payable for services provided and related to common stock to be issued.  The following summarizes the stock payable activity during the periods ended  March 31, 2022 and March 31, 2021:

 

  

Amount

  

Shares

 

Ending balance - December 31, 2020

 $-   - 

Additions, net

  -   - 

Issuances, net

  -   - 

Ending balance – March 31, 2021

 $-   - 

 

  

Amount

  

Shares

 

Ending balance - December 31, 2021

 $654,166   782,736 

Additions, net

  81,249   81,249 

Issuances, net

  -   - 

Ending balance – March 31, 2022

 $735,415   863,985 

 

 

NOTE 10 - SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were issued, and has determined that no material subsequent events exist.

 

 

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ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

 

THIS QUARTERLY REPORT ON FORM 10-Q INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND OTHER FEDERAL SECURITIES LAWS, PARTICULARLY THOSE ANTICIPATING FUTURE FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, GROWTH, OPERATING STRATEGIES AND SIMILAR MATTERS, INCLUDING WITHOUT LIMITATION, STATEMENTS CONCERNING THE IMPACTS OF THE COVID-19 PANDEMIC ON OUR BUSINESS, OPERATIONS, RESULTS OF OPERATIONS, LIQUIDITY, INVESTMENTS AND FINANCIAL CONDITION. WE HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON OUR CURRENT INTENT, EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS, AND THESE FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND ASSUMPTIONS ABOUT US THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “COULD,” “WOULD,” “INTEND,” “PROJECT,” “CONTEMPLATE,” “POTENTIAL,” “EXPECT,” “PLAN,” “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “CONTINUE,” OR THE NEGATIVE OF SUCH TERMS OR OTHER SIMILAR EXPRESSIONS. THESE STATEMENTS ARE ONLY PREDICTIONS. FACTORS THAT MIGHT CAUSE OR CONTRIBUTE TO SUCH A DISCREPANCY INCLUDE, BUT ARE NOT LIMITED TO, THOSE DESCRIBED IN OUR OTHER SECURITIES AND EXCHANGE COMMISSION FILINGS. 

 

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. ANY OF THE FORWARD-LOOKING STATEMENTS THAT WE MAKE IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OTHER PUBLIC REPORTS AND STATEMENTS WE MAKE MAY TURN OUT TO BE INACCURATE AS A RESULT OF OUR BELIEFS AND ASSUMPTIONS WE MAKE IN CONNECTION WITH THE FACTORS SET FORTH ABOVE OR BECAUSE OF OTHER UNIDENTIFIED AND UNPREDICTABLE FACTORS. IN ADDITION, OUR BUSINESS AND FUTURE RESULTS ARE SUBJECT TO A NUMBER OF OTHER FACTORS, INCLUDING THOSE FACTORS SET FORTH IN THE “RISK FACTORS” SECTION OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") ON MAY 20, 2022. BECAUSE OF THESE AND OTHER UNCERTAINTIES, OUR ACTUAL FUTURE RESULTS MAY BE MATERIALLY DIFFERENT FROM THE RESULTS INDICATED BY THESE FORWARD-LOOKING STATEMENTS AND YOU SHOULD NOT RELY ON SUCH STATEMENTS. WE UNDERTAKE NO OBLIGATION TO PUBLISH REVISED FORWARD-LOOKING STATEMENTS TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF. THESE RISKS COULD CAUSE OUR ACTUAL RESULTS FOR 2022 AND BEYOND TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS BY OR ON BEHALF OF US, AND COULD NEGATIVELY AFFECT OUR FINANCIAL CONDITION, LIQUIDITY AND OPERATING AND STOCK PRICE PERFORMANCE.

 

Our Business

 

Starco Brands, Inc. (formerly Insynergy Products, Inc.), which we refer to as "the Company," "our Company," "STCB", "we," "us" or "our," was incorporated in the State of Nevada on January 26, 2010. On September 7, 2017, the Company filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc.  The Board determined the change of the Company’s name was in the best interests of the Company due to changes in our current and anticipated business operations at that time.  In July 2017, the Company entered into a licensing agreement with The Starco Group ("TSG"), located in Los Angeles, California.  TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine. Upon entering into the licensing agreement with TSG, the Company pivoted to commercializing novel consumer products manufactured by TSG.

 

Executive Overview

 

In July 2017, our Board of Directors entered into a licensing agreement with TSG to pursue a new strategic marketing plan involving commercializing leading edge products with the intent to sell them through brick and mortar and online retailers.  We are a company whose mission is to create behavior-changing products and brands. Our core competency is inventing brands, marketing, building trends, pushing awareness and social marketing. The licensing agreement with TSG provided STCB with certain products on an exclusive and royalty-free basis and other products on a non-exclusive and royalty basis, in the categories of food, household cleaning, air care, spirits and personal care. 

 

The current CEO and owner of TSG, Ross Sklar, was named the CEO of STCB in August of 2017.  Mr. Sklar has a long track record of commercializing technology in industrial and consumer markets. Mr. Sklar has built teams of manufacturing personnel, research and development, and sales and marketing professionals over the last 20 years and has grown TSG into a successful and diversified manufacturer supplying a wide range of products to some of the largest retailers in the United States.

 

STCB conducted extensive research and has identified specific channels to penetrate with its portfolio of novel technologies. STCB is now executing on this vision and since its inception has launched four product lines. The Breathe® Household cleaning aerosol line is an environmentally friendly line of household cleaning aerosol products. It is the world’s first aerosol household cleaning line to be approved by the EPA’s Safer Choice program. This line is biodegradable and is propelled by nitrogen, which makes up approximately 80% of the earth’s breathable air. Breathe was named Partner of the Year by the EPA’s Safer Choice Program and also achieved the Good Housekeeping Seal of approval.

 

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STCB also launched the Breathe® Hand Sanitizer Spray in April 2020. This invention was created and patents were filed by Alim Enterprises, LLC, (“AE”) an entity owned by Mr. Sklar. Originally the technology was developed for Blue Cross Laboratories, LLC, (“BCL”) a personal care consumer products manufacturer owned by Mr. Sklar’s TSG. The product was developed as a result of supply chain collapse during the Covid-19 outbreak and increased demand for hand sanitizers. The traditional packaging components used in manufacturing hand sanitizer became very difficult to procure. BCL, located in Santa Clarita, California, is an at scale manufacturer that started approximately 50 years ago with personal care products, including hand sanitizer. Due to the outbreak of Covid-19, many traditional component supply chains became overly stressed and BCL could not source enough bottles and caps. Through Mr. Sklar’s AE, the concept of a spray hand sanitizer was invented. AE filed patents on what it believes to be the first ever aerosol spray hand sanitizer with a 75% alcohol solution that utilizes only compressed air and nitrogen as the product’s propellant. AE and its intellectual property counsel believe the product is novel and warrants a utility patent. In February 2021, AE assigned the patent application to STCB as contemplated by a 2020 memorandum of understanding among AE, STCB and TSG.

 

The product is being manufactured by BOV Solutions, a division of TSG that is an at scale FDA, CFR210/211 manufacturer of aerosol and OTC products. The Breathe Hand Sanitizer Spray can only be made in an FDA facility that has at scale aerosol capabilities. The product is being sold through BOV Solutions and TSG’s existing distribution footprints in the United States. STCB launched the product in April 2020 via a press release in partnership with Dollar General, announcing its distribution in each of their 15,000+ stores. STCB has also partnered with Wegmans, HLA and J Winkler. Since then, the product is in distribution through The Home Depot, Lowes, American Pharmacy, AutoZone, The Farm Shop, Harris Teeter, UNFI, Kehe, Macy’s, Smart & Final, Weeks and others. The product comes in three sizes, 1oz., 5oz., and 9.5oz. sprays and is available directly on STCB’s website www.breathesanitizer.com and on Amazon.com and Walmart.com.         

 

STCB is also the marketer of record, but not the owner of record of, Betterbilt Chemical’s Kleen Out® branded drain opener and for the Winona® Butter Flavor Popcorn Spray. STCB provides marketing services for these brands pursuant to the terms of agreements governing STCB's marketing. Both products are available in Walmart stores.  

 

Through STCB’s relationship with TSG and their marketing partner Deutsch Marketing, STCB launched a new label in June 2019 for Winona Popcorn Spray throughout all Walmart stores. STCB also launched the Winona Popcorn Spray on Amazon through our strategic partner Pattern (formally iServe), who is a shareholder in STCB. Winona Popcorn Spray is also sold in H-E-B grocery stores. The Company also launched a new caramel flavor which is also distributed through Walmart and H-E-B. Sales grew significantly in 2021 and the Company expects sales to continue to grow in this space as management plans to increase the Company's sales personnel in 2022 for this product line.

 

On September 8, 2021, STCB (via its Wyoming subsidiary, Whipshots, LLC “Whipshots LLC”) entered into an Intellectual Property Purchase Agreement effective August 24, 2021, with Penguins Fly, LLC, pursuant to which the Company purchased the trademarks “Whipshotz” and “Whipshots”. The purchase price for these trademarks is payable to Penguins Fly, LLC over the course of seven years, based on a sliding scale percentage between 2% and 5% of gross revenues actually received by the Company solely from the Company’s sale of Whipshots/Whipshotz products.

 

On September 14, 2021, STCB (via newly formed Delaware subsidiary Whipshots LLC (DE), which was subsequently renamed to Whipshots Holdings LLC “Whipshots Holdings”), entered into a License Agreement with Washpoppin Inc., a New York corporation (“Washpoppin”) pursuant to which Washpoppin licensed certain intellectual property of the recording artist professionally known as “Cardi B” to the Company for use associated with the Company’s new product line consisting of vodka-infused, whipped-cream aerosols, under the brand name “Whipshots.” The Company launched these products under the Whipshots™ brand in the fourth quarter of 2021 and first quarter of 2022. In addition, STCB entered into Distribution Agreements with various distributors pursuant to which such distributors will act as the exclusive distributors of Whipshots™ in various geographic locations.

 

On December 2, 2021, the Company launched Whipshots at Art Basel in Miami.  This launch event garnered over 1 billion impressions world-wide.  The Company launched the product on whipshots.com with a limited quantity of cans to be sold each day for the month of December 2021.  The Company sold out every single day of the month.  The Company launched brick and mortar retail distribution in the first quarter of 2022 and signed a distribution agreement with RNDC, one of the largest spirits distributors in the nation.  The Company also announced a distribution deal with GoPuff and BevMo.  The Company expects to register Whipshots in all states but starting in select markets with plans to grow cautiously.

 

As long as the Company can raise capital, the Company plans to launch other products in spray foods and condiments, air care, sun care, hair care, personal care, spirits and beverages over the next 48 months. Although the initial market reception to our new lines has been encouraging, the Company may encounter a number of hurdles that could prevent this and future product launches from achieving sustained commercial success. Financing growth and launching of new products is key and the Company’s ability to raise further capital is critical. In 2021, the Company pursued financing via a Regulation A offering which was qualified on December 9, 2021. The Company engaged The Dalmore Group to assist as the broker dealer of record in this process, in which up to 56,818,181 shares of common stock may be sold to the public at a per share price of $1.00.

 

We will need to rely on sales of our common stock and other sources of financing to raise additional capital. The purchasers and manner of any share issuance will be determined according to our financial needs and the available exemptions to the registration requirements of the Securities Act. The Company is planning to utilize, as best as possible with limited financing, the services of Deutsch Marketing in order to help support the Company’s plan. The Company will also utilize the marketing capabilities of Hearst Media with its co-branding arrangement on some of its products. This provides significant support for its current retail and online distribution. 

 

The Company’s ultimate goal is to become a leading brand owner and third-party marketer of cutting edge technologies in the consumer products marketplace whose success is expected to increase shareholder value. The Company will continue to evaluate this and other opportunities to further set its strategy for 2022 and beyond. 

 

For more information, please visit our websites at www.starcobrands.com, www.breathecleaning.com, www.breathesanitizer.com, and www.whipshots.com.

 

Employees

 

The Company currently has no full-time employees but uses independent contractors and contributed services from related parties on an as needed basis.

 

 

14

 

Results of Operation for the Three Months Ended March 31, 2022 and 2021

 

Revenues

For the three months ended March 31, 2022, the Company recorded royalty revenues of $923,274 compared to $132,514 for the three months ended March 31, 2021, an increase of $790,760 and a percentage increase of 597%. The royalty rate that the Company is paid varies on a per product basis of wholesale sales of our branded and non-corporate owned licensed products. Revenues are from our marketing licensing agreements with TSG and other affiliated companies for various products mentioned above.

 

The increase in the current period is primarily due to initial volume sales of our Whipshots™, partially offset by declines in sales of Breathe cleaning and sanitizer products. For the three months ended March 31, 2022, Breathe cleaning and sanitizer products accounted for approximately 2% of total royalty revenue, compared to the three months ended March 31, 2021 where Breathe cleaning and sanitizer products accounted for approximately 26% of total royalty revenue.

 

Operating Expenses

For the three months ended March 31, 2022, compensation expense increased $82,644, or 187%, to $126,877 compared to $44,233 for the three months ended March 31, 2021. The increase is a result of increases in independent contractors and contributed services to support the launch and growth of Whipshots™. 

 

For the three months ended March 31, 2022, the Company incurred $58,506 in professional fees compared to $10,555 for the three months ended March 31, 2021, an increase of $47,951, or 454%. Professional fees are mainly for accounting, auditing and legal services associated with our quarterly filings as a public company and advisory and valuation services. The increase is primarily due to an increase in corporate legal and audit fees.

 

For the three months ended March 31, 2022, the Company incurred $670,225 in marketing, general and administrative expense as compared to $182,743 for the three months ended March 31, 2021, an increase of $487,482, or 267%. The increase can be attributed to an increase in spending on marketing including initial license payments related to the promotional launch for Whipshots™.

 

15

 

Other income and expense

For the three months ended March 31, 2022, we had total other expense of $14,855 compared to other expense of $10,892 for the three months ended March 31, 2021. The increase in total other expense was primarily due to growth in interest expense.

 

Net income

For the three months ended March 31, 2022, the Company recorded net income of $40,949 as compared to a net loss of $115,909 in the prior year. Our increase in net income is primarily the result of the increase in revenue partially offset by increased marketing, compensation, and professional spending. 

 

 

16

 

 

Liquidity and Capital Resources

 

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company had an accumulated deficit of $18,347,237 at March 31, 2022, primarily due to the issuance of stock for services when the Company reorganized in 2017 and 2018, had net income of $40,949 and used net cash for operating activities of $566,093 for the three months ended March 31, 2022.

 

We generated $412,888 from financing activities during the three months ended March 31, 2022 and had no net cash provided by financing activities during the three months ended March 31, 2021.

 

On January 24, 2020, STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The note bears interest at 4% per annum, compounds monthly, is unsecured, and matures two years from the original date of issuance. On June 28, 2021, STCB executed an additional promissory note with Ross Sklar in the principal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note in favor of Ross Sklar, CEO, in the principal sum of $472,500, in exchange for a cash advance in the amount of $300,000 and payment of Company costs in the amount of $172,500. As with the other notes between the Company and our CEO, the note bears interest at 4% per annum, is unsecured, and matures two years from the original date of issuance. This note may also convert into shares of Company common stock at the 10-day volume weighted average trading price of the Company common stock for the 10-day period prior to the issuance of the Note, which was calculated as $0.29 per share. 

 

Critical Accounting Estimates and Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Note 2 to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes.  Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

 

We are subject to various loss contingencies arising in the ordinary course of business.  We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies.  An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.  We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

 

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.  The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.  Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

 

Revenue recognition

The Company and its subsidiaries earn their revenue as royalties from the licensing agreements it has with TSG, a related entity, and other related parties. The Company licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the licensing revenue received varies depending upon the product and is determined beforehand in each agreement. The Company recognizes its revenue only when sales are made by TSG or other related parties to a third party.

 

The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

17

 

Off-Balance Sheet Arrangements 

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable as we are a "smaller reporting company."

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including the Chief Executive Officer and Interim Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Interim Chief Financial Officer concluded that, as of March 31, 2022, these disclosure controls and procedures were not effective.

 

 

Changes in Internal Controls over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

18

 

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. For a list of risk factors, please refer to our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on May 20, 2022.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Issuer Purchase of Securities.

 

 

On June 13, 2021, the Company entered into Separation Agreements (the "Separation Agreements") with Sanford Lang ("Mr. Lang") and Martin Goldrod ("Mr. Goldrod") whereas, effective as of June 16, 2021, Mr. Lang and Mr. Goldrod each resigned from their positions as members of the Board of Directors in exchange for certain separation benefits (the "Separation Benefits"). As consideration for the Separation Benefits, and not in addition to same, the Company agreed to purchase an amount of the shares of the Company per month from Mr. Lang and Mr. Goldrod at a price per share that when aggregated with all shares purchased in each month would equal monthly Separation Benefit payments of $7,950 to Mr. Lang and monthly Separation Benefit payments of $3,000 to Mr. Goldrod (the "Repurchases"). The Repurchases made during the first quarter of fiscal year 2022 are set forth below.

 

Period

 

Total Number of Shares Purchased

   

Average Price Paid Per Share

   

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

   

Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs

 

1/1/2022 - 1/31/2022

    29,706     $ 0.37       158,531     $ 317,550  

2/1/2022 - 2/28/2022

    31,449     $ 0.35       189,980     $ 306,600  

3/1/2022 - 3/31/2022

    37,486     $ 0.29       227,466     $ 295,650  

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINING SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None

 

19

 

ITEM 6. EXHIBITS

 

EXHIBIT INDEX

 

Exhibit No.

 

Exhibit Description

3.1 (*)   Articles of Incorporation of the Company, filed as Exhibit 3(i) to the Company's Annual Report on Form 10-K filed with the Commission on March 30, 2018.
3.2 (*)   Certificate of Amendment to the Articles of Incorporation of the Company, filed as Exhibit 3(i).2 to the Company's Quarterly Report on Form 10-Q filed with the Commission on November 13, 2017.
3.3 (*)   Certificate of Amendment to the Articles of Incorporation of the Company, filed as Exhibit 2.2 to the Company's Regulation A+ offering statement filed with the Commission on August 31, 2021.
3.3 (*)   Bylaws of the Company, as amended August 13, 2015, filed as Exhibit 3(ii) to the Company's annual report on Form 10-K filed with the Commission on March 30, 2018.
10.1 (*)   Promissory Note issued in favor of Ross Sklar, dated January 24 2020, filed as Exhibit 6.3 to the Company's Regulation A+ offering statement filed with the Commission on August 31, 2021.
10.2 (*)   Promissory Note issued in favor of Ross Sklar, dated June 28, 2021, filed as Exhibit 6.12 to the Company's Regulation A+ offering statement filed with the Commission on October 20, 2021.
10.3 (*)   Promissory Note issued in favor of Ross Sklar, dated September 17, 2021, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on September 23, 2021.
10.4 (*)   Promissory Note issued in favor of Ross Sklar, dated December 13, 2021, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on December 15, 2021.
10.5 (*)   Promissory Note issued in favor of Ross Sklar, dated February 14, 2021, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on February 22, 2022.
10.6 (*)   Memorandum of Understanding Regarding the Launch of Breathe Hand Sanitizer, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on June 12, 2020.
10.7 (*)   Form of Distribution Agreement, by and between the Company and "Distributor", filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on November 10, 2021.  
10.8 (*)   Form of Broker Agreement, by and between the Company and "Broker", filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on November 10, 2021.
10.9 (*)(+)   License Agreement, by and between Whipshots LLC, Washpoppin Inc., and "Cardi B," dated as of September 14, 2021.
10.11 (*)(+)   Intellectual Property Purchase Agreement, by and between Whipshots LLC and PENGUINS FLY, LLC, dated as of August 24, 2021, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on September 14, 2021.
10.12 (*)   Broker-Dealer Agreement, by and between the Company and Dalmore Group, LLC, effective as of August 4, 2020, filed as Exhibit 6.1 to the Company's Regulation A+ offering statement filed with the Commission on August 31, 2021.
10.13 (*)   Brand License Agreement, by and between the Company and The Starco Group, effective as of July 12, 2017, filed as Exhibit 6.2 to the Company's Regulation A+ offering statement filed with the Commission on August 31, 2021.
10.14 (*)   Separation Agreement dated June 13, 2021 between the Company and Sanford Lang, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K/A filed with the Commission on July 22, 2021.
10.15 (*)   Separation Agreement dated June 13, 2021 between the Company and Martin Goldrod, filed as Exhibit 10.2 to the Company's Current Report on Form 8-K/A filed with the Commission on July 22, 2021.
10.16 (*)(+)   License Agreement by and between Hearst Magazine Media, Inc. and the Company executed April 24, 2020, filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Commission on November 20, 2020.
10.17 (*)(+)   License Agreement by and between Hearst Magazine Media, Inc. and the Company executed October 15, 2020, filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Commission on November 20, 2020.

31.1 (#)

 

Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).

31.2 (#)

  Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1 (#)(##)   Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2 (#)(##)   Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

101.INS

 

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

 

Inline XBRL Taxonomy Presentation Linkbase Document.

104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

(*) Incorporated by reference to the filing indicated.
   
(+)

In accordance with Item 601(a)(5) of Regulation S-K, certain schedules (or similar attachments) to this exhibit have been omitted from this filing.  Such omitted schedules (or similar attachments) include information relating to the Purchase Price Payment. The registrant will provide a copy of any omitted schedule to the SEC or its staff upon request.

In accordance with Item 601(b)(10)(iv) of Regulation S-K, certain provisions or terms of the Agreement have been redacted.  Such redacted information includes information about the Purchase Price Payment.  The registrant will provide an unredacted copy of the exhibit on a supplemental basis to the SEC or its staff upon request.

   
(#) Filed herewith.
   
(##) The certifications attached as Exhibits 32.1 and 32.2 that accompany this report, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Starco Brands, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this report irrespective of any general incorporation language contained in such filing.

 

20

 

 

SIGNATURES

 

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 STARCO BRANDS, INC

 

  (Registrant)  

 

 

 

 

 

 

 

 

 

By:

/s/ Ross Sklar

 

 

 

 Ross Sklar

 

 

 

Chief Executive Officer (Principal Executive Officer)

Interim Chief Financial Officer (Principal Financial and Accounting Officer)

 

    June 15, 2022  

 

21
EX-31.1 2 ex_375679.htm EXHIBIT 31.1 HTML Editor

 

Exhibit 31.1

 

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Ross Sklar, hereby certify that:

 

(1) I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2022 (the “report”) of Starco Brands, Inc.;

 

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

(3) Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: June 15, 2022

 

       
 

By:

/s/ Ross Sklar

 
   

Ross Sklar, Chief Executive Officer

 
   

(Principal Executive Officer)

 

 

 
EX-31.2 3 ex_375680.htm EXHIBIT 31.2 HTML Editor

 

Exhibit 31.2

 

CHIEF FINANCIAL OFFICER CERTIFICATION

 

I, Ross Sklar, hereby certify that:

 

(1) I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2022 (the “report”) of Starco Brands, Inc.;

 

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

(3) Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Dated: June 15, 2022

 

       
 

By:

/s/ Ross Sklar

 
   

Ross Sklar, Interim Chief Financial Officer

 
   

(Principal Financial Officer)

 

 

 
EX-32.1 4 ex_375681.htm EXHIBIT 32.1 HTML Editor

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Starco Brands, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission on or about the date hereof (the "report"), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

(1)  The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)  The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: June 15, 2022

 

 

 

 

 

By:

/s/ Ross Sklar

 

 

 

Ross Sklar, Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 

 

 
EX-32.2 5 ex_375682.htm EXHIBIT 32.2 HTML Editor

 

Exhibit 32.2

 

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Starco Brands, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission on or about the date hereof (the "report"), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

(1)  The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)  The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: June 15, 2022

 

       
 

By:

/s/ Ross Sklar

 
   

Ross Sklar, Interim Chief Financial Officer

 
   

(Principal Financial Officer)

 

 

 

 

 

 
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3 Months Ended
Mar. 31, 2022
Jun. 13, 2022
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Entity Incorporation, State or Country Code NV  
Entity Tax Identification Number 27-1781753  
Entity Address, Address Line One 250 26th Street, Suite 200  
Entity Address, City or Town Santa Monica  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 90402  
City Area Code 888  
Local Phone Number 484-1908  
Title of 12(b) Security Common stock  
Trading Symbol STCB  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
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Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
Mar. 31, 2022
Dec. 31, 2021
Current Assets:    
Cash $ 185,658 $ 338,863
Accounts receivable, related party 560,372 174,059
Prepaid and other assets 602,593 733,020
Total Current Assets 1,348,623 1,245,942
Intangibles, net 20,000 20,000
Note receivable, related party 95,640 95,640
Total Assets 1,464,263 1,361,582
Current Liabilities:    
Accounts payable 694,940 592,665
Other payable and accruals 273,306 800,775
Accrued liabilities, related party 74,347 202,023
Stock Payable 735,415 654,166
Treasury stock payable, current 131,400 131,400
Loans and advances payable, related party 376,382 376,382
Notes payable 27,060 53,822
Total Current Liabilities 2,312,850 2,811,233
Treasury stock payable, net of current portion 164,250 197,100
Loans payable, net of current portion, related party 1,572,500 1,100,000
Total Liabilities 4,049,600 4,108,333
Stockholders' Deficit:    
Preferred Stock, par value $0.001 40,000,000 shares authorized, no shares issued and outstanding 0 0
Common Stock, par value $0.001 300,000,000 shares authorized, 159,140,665 and 159,140,665 shares issued and outstanding, respectively 159,141 159,141
Additional paid in capital 16,059,006 15,950,403
Treasury Stock at cost (394,200) (394,200)
Accumulated deficit (18,347,237) (18,388,186)
Total Starco Brands' Deficit (2,523,290) (2,672,842)
Non-controlling interest (62,047) (73,909)
Total Stockholders' Deficit (2,585,337) (2,746,751)
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Mar. 31, 2022
Dec. 31, 2021
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Preferred stock, shares authorized (in shares) 40,000,000 40,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
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Common stock, shares authorized (in shares) 300,000,000 300,000,000
Common stock, shares issued (in shares) 159,140,665 159,140,665
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Revenues, net, related party $ 923,274 $ 132,514
Operating Expenses:    
Compensation expense 126,877 44,233
Professional fees 58,506 10,555
Marketing, General and administrative 583,181 77,823
Marketing, related party 87,044 104,920
Total operating expenses 855,608 237,531
Income (loss) from operations 67,666 (105,017)
Other Income (Expense):    
Interest expense (14,855) (7,392)
Other income (expense) 0 (3,500)
Total other expense, net (14,855) (10,892)
Income (loss) before provision for income taxes 52,811 (115,909)
Provision for income taxes 0 0
Net Income (Loss) 52,811 (115,909)
Net income (loss) attributable to Non-controlling interest (11,862) 0
Net Income (Loss) attributable to Starco Brands $ 40,949 $ (115,909)
Income (Loss) per share, basic (in dollars per share) $ 0 $ 0
Income (Loss) per share, diluted (in dollars per share) $ 0 $ 0
Weighted Average Shares Outstanding, basic (in shares) 159,140,665 159,140,665
Weighted Average Shares Outstanding, diluted (in shares) 163,069,235 159,140,665
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Treasury Stock [Member]
Retained Earnings [Member]
Noncontrolling Interest [Member]
Total
Balance (in shares) at Dec. 31, 2020 159,140,665          
Balance at Dec. 31, 2020 $ 159,141 $ 15,723,705 $ 0 $ (16,137,020) $ 0 $ (254,174)
Estimated fair value of contributed services   11,700       11,700
Net Income (Loss) (115,909) (115,909)
Balance (in shares) at Mar. 31, 2021 159,140,665          
Balance at Mar. 31, 2021 $ 159,141 15,735,405 0 (16,252,931) 0 (358,385)
Balance (in shares) at Dec. 31, 2021 159,140,665          
Balance at Dec. 31, 2021 $ 159,141 15,950,403 (394,200) (18,388,186) (73,909) (2,746,751)
Estimated fair value of contributed services   54,862       54,862
Net Income (Loss) 40,949 11,862 52,811
Estimated fair value of warrants vested 53,741 53,741
Balance (in shares) at Mar. 31, 2022 159,140,665          
Balance at Mar. 31, 2022 $ 159,141 $ 16,059,006 $ (394,200) $ (18,347,237) $ (62,047) $ (2,585,337)
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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
CASH FLOW FROM OPERATING ACTIVITES:    
Net Income (loss) $ 52,811 $ (115,909)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Common stock payable for services 81,249 0
Warrants for services 53,741  
Contributed services 54,862 11,700
Non-cash asset writeoff 0 3,500
Changes in Operating Assets and Liabilities:    
Accounts receivable, related party (386,313) (5,213)
Prepaids & other assets 130,427 12,417
Accounts payable 102,275 (50,331)
Accrued expenses, related party (127,676) (1,048)
Accrued liabilities (527,469) (23,050)
Net Cash Provided by (Used in) Operating Activities (566,093) (167,934)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Advances / loans from related parties 472,500 56,895
Repayment of advances from related parties 0 (56,895)
Borrowings on notes payable 0 0
Payments on notes payable (26,762) 0
Repurchases of common stock (32,850) 0
Net Cash Provided by Financing Activities 412,888 0
Net Increase (decrease) in Cash (153,205) (167,934)
Cash at Beginning of Period 338,863 773,322
Cash at End of Period 185,658 605,388
Cash paid during the year for:    
Interest 16,975 471
Income taxes 0 0
Supplemental non-cash disclosure:    
Treasury stock payable $ 295,650 $ 0
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Note 1 - Organization and Description of Business
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Business Description and Basis of Presentation [Text Block]

NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Starco Brands, Inc. (STCB) was incorporated in the State of Nevada on  January 26, 2010 under the name Insynergy, Inc. On  September 7, 2017, STCB filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc. The Board determined the change of STCB's name was in the best interests of the Company due to changes in its current and anticipated business operations. In  July 2017, STCB entered into a licensing agreement with The Starco Group (“TSG”), located in Los Angeles, California. The companies pivoted to commercializing novel consumer products manufactured by TSG. TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts & crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine.

 

During the third quarter of 2021, STCB formed two subsidiaries, Whipshots, LLC, a Wyoming limited liability company ("Whipshots LLC") and Whipshots, LLC, a Delaware limited liability company which was subsequently renamed Whipshots Holdings, LLC ("Whipshots Holdings"). Whipshots- LLC was a wholly-owned subsidiary of STCB at formation which was subsequently contributed to Whipshots Holdings. Whipshots Holdings is a majority owned subsidiary of STCB in which STCB owns 96% of the vested voting interests. There are unvested interests not owned by the Company for an additional 3% of the of the equity which have been issued subject to vesting requirements. The accompanying condensed consolidated financial statements are of STCB and its subsidiaries Whipshots Holdings and Whipshots LLC (collectively, the "Company").

 

In our opinion, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of unaudited consolidated financial position and the unaudited consolidated results of operations for interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

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Note 2 - Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Significant Accounting Policies [Text Block]

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation 
The consolidated financial statements of Starco Brands, Inc. include the accounts of STCB and our 96% owned subsidiary and its wholly owned subsidiary, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with ASC 810, Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the condensed consolidated financial statements.
 
Our consolidated subsidiaries at March 31, 2022 include:
Whipshots Holdings and its wholly owned subsidiary Whipshots LLC
 

Basis of presentation

The condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and do not contain certain information included in the Company’s Annual Report and Form 10-K for the year ended December 31, 2021. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-K.

 
Use of estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
 
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

 

Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2022 or December 31, 2021.

 

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. All of our receivables are from related parties. The allowance for uncollectible amounts is evaluated quarterly and was zero as of March 31, 2022 and December 31, 2021.

 

 

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

The carrying amount of the Company’s consolidated financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2022.

 

Property and equipment

Property and equipment are carried at the lower of cost or net realizable value. All Property and equipment with a cost of $2,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations. At March 31, 2022 and December 31, 2021, the Company had no net property and equipment.

 

Revenue recognition

STCB and its subsidiaries earn their revenue as royalties from the licensing agreements it has with TSG, a related entity, and other related parties. STCB licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is determined beforehand in each agreement. The Company recognizes its revenue only when sales are made by TSG or other related parties to a third party.

 

The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.

 

Income taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

 

Stock-based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 Share-based Compensation (“ASC 718”), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of awards granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.

 

Net income (loss) per common share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of March 31, 2022, the Company had 728,570 shares of stock payable that have been sold to investors, 650,000 shares of stock payable to advisors and subject to vesting, and 2,550,000 potentially dilutive shares from outstanding warrants.

 

Intangible Assets

Definite-lived intangible assets consist of certain trademarks and customer lists. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets’ estimated useful lives, which approximate 10 years.  There was no significant amortization during the quarter ended March 31, 2022 or the year ended December 31, 2021.

 

The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic 820, Fair Value Measurements. The Company did not record asset impairment charges related to its intangible assets during the quarter ended March 31, 2022.

 

Royalties and Licenses

Royalty-based obligations with content licensors are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made are generally made in connection with the development of a particular product, and therefore, we are generally subject to risk during the product phase. Payments earned after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

 

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract.

 

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through future revenue. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If an impairment exists, then the related assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

 

Our minimum contractual obligations as of December 31, 2021 approximate $550,000, $1,100,000 and $1,650,000 for the years ending December 31, 2022, 2023 and 2024, respectively.

 

Recently issued accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

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Note 3 - Going Concern
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Substantial Doubt about Going Concern [Text Block]

NOTE 3 GOING CONCERN

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $18,347,237 at March 31, 2022 including the impact of its income of $40,949 for the quarter ended March 31, 2022.  Net cash used in operating activities was $566,093 for the quarter ended March 31, 2022. The Company’s ability to continue with this trend is unknown. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown although the Company is actively raising capital via a Regulation A offering which was qualified in December 2021. The obtainment of additional financing and the successful development of the Company’s contemplated plan of operations, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

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Note 4 - Notes Payable
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 4 NOTES PAYABLE

 

The Company has a financing loan for its Directors and Officers Insurance (“D&O”) that was incurred in September 2021. The loan bears interest at 4.4% and requires monthly payments through June 2022. As of March 31, 2022 and December 31, 2021, the Company had D&O loan balances of $27,060 and $53,822, respectively.

 

See Note 7 - Related Party Transactions for loans to STCB from the Company's CEO. 

 

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Note 5 - Operating Lease
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

NOTE 5 – OPERATING LEASE

 

The Company previously occupied office space in Burbank, California. The Company signed a three-year lease starting January 1, 2016. The lease was then extended for an additional three-year term. Upon adoption of ASU 2016-02 Leases (Topic 842), the Company recorded an initial Right of Use of Asset and Lease Obligation of $122,825.

 

On November 1, 2020, the lease was amended to reduce the monthly lease payment to $1,750. In addition, the lessor agreed to forgive all past due accrued rent. As a result, the Company recognized a gain on the forgiveness of debt of $34,280.

 

On November 13, 2020, the Company and lessor assigned the lease for the office space in Burbank to two of its then Directors, Sanford Lang and Martin Goldrod, relieving the Company of any further obligation under the lease.

 

The lease expense for year ended December 31, 2020 was $34,691 and cash paid under this operating lease was $25,918 during the same period.

 

During the three months ended March 31, 2021, the Company determined that it was unlikely to collect the lease deposit and recognized an asset writeoff expense of $3,500. There were no other lease expenses or payments during the period. There was no lease expense for the period ended March 31, 2022.

 

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Note 6 - Commitments & Contingencies
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

NOTE 6 – COMMITMENTS & CONTINGENCIES

 

On February 18, 2020, STCB received a demand letter from a law firm representing certain individuals who purchased the Breathe brand home cleaning products. The demand letter alleged that STCB had unlawfully, falsely and misleadingly labeled and marketed the Breathe brand of products to consumers in violation of the Consumer Products Safety Act, the Federal Hazardous Substance Act and the FTC Act as well as various California and New York laws. While STCB denied any wrongdoing, a settlement was reached and paid in full, with no further obligation required by STCB.

 

On September 8, 2021, Whipshots LLC, a Wyoming limited liability company (“Whipshots”), a wholly-owned subsidiary of Starco Brands, Inc., entered into an Intellectual Property Purchase Agreement (the “Agreement”) effective August 24, 2021, with Penguins Fly, LLC, a Pennsylvania limited liability company (“Seller”). The Agreement provides that Seller will sell to Buyer the trademarks “Whipshotz” and “Whipshots”, accompanying domain and social media handles of the same nomenclature, and certain intellectual property, documents, digital assets, customer data and other transferable rights under non-disclosure, non-compete, non-solicitation and confidentiality contracts benefiting the purchased intellectual property and documents (collectively, the “Acquired Assets”). The purchase price (“Purchase Price Payment”) for the Acquired Assets will be payable to Seller, over the course of seven years, based on a sliding scale percentage of gross revenues actually received by Buyer solely from Buyer’s sale of Whipshots/Whipshotz Products. The Purchase Price Payment shall be subject to a minimum amount in each contract year and a maximum aggregate amount between $140,000 and $2,000,000 based on revenues generated by the products. As of March 31, 2022 and December 31, 2021, the Company had paid $20,000 of Purchase Price Payment, which has been recorded as an intangible asset.

 

On September 14, 2021, the Company entered into a License Agreement with Washpoppin Inc., a New York corporation. Pursuant to the License Agreement, Licensor shall license to the Company certain Licensed Property of the recording artist professionally known as “Cardi B”. As part of the Agreement, in exchange for royalty rates based on Net Sales (as defined in the Agreement) during each applicable contract period, the Licensor warrants to cause the Artist to attend certain in person events, media interviews, participate in the development of the Licensed Products (as defined in the Agreement), and promote the Licensed Products through social media posts on the Artist’s social media platforms. The Company has committed to a minimum royalty payment under the Agreement of $3,300,000 in aggregate through 2024, subject to Licensor’s satisfaction of its obligations. In the quarter ended March 31, 2022, the Company incurred expense of approximately $127,000 and had a capitalized balance of approximately $381,000 related to this royalty.

 

Accrued Liability

 

On July 9, 2014, the Board of Directors approved an investment arrangement with an individual. Per the terms of the agreement, the investor transferred $150,000 to STCB to be used for the development of a specific product. The product for which the investment was intended was never produced and this agreement is being renegotiated. The $150,000 investment was never returned by the Company and the amount is included in other payables and accruals on the balance sheet.

 

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Note 7 - Related Party Transactions
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]

NOTE 7 – RELATED PARTY TRANSACTIONS

 

During the year ended December 31, 2017, Sanford Lang, the Company’s former Chairman and CEO, advanced STCB $289,821 to pay for general operating expenses. The advance required a monthly interest payment of $2,545 and was due on demand. In June 2021, Mr. Lang and Mr. Goldrod executed agreements with STCB whereby the advance from Mr. Lang and all other amounts owed to each were repaid and both Mr. Lang and Mr. Goldrod resigned from the Board of Directors. Further, for a period of 36 months beginning in July 2021, STCB will repurchase an aggregate of $10,950 worth of shares each month from Mr. Lang and Mr. Goldrod, with the share price for each purchase to be set according to the volume weighted average trading price of the common stock over the last 10 days of the month. In the three months ended March 31, 2022 STCB paid an aggregate of $32,850 to Mr. Lang and Mr. Goldrod per the agreements and anticipates that the corresponding share transfers will be settled in 2022.

 

As of March 31, 2022, the Company owed TSG $72,843 for expenses paid by TSG on behalf of STCB for expenses to launch licensed brands. As royalties have exceeded $250,000 in the aggregate, once the Company has an adequate cash reserve, TSG may deduct the incurred expenses from the subsequent royalty payments until TSG is paid in full. In addition, STCB owes TSG and its subsidiaries an additional $203,539 for expenses paid on behalf of STCB or funds advanced to the Company to pay for other operating expenses. TSG is owned by STCB's CEO, Ross Sklar.

 

On January 24, 2020, STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The note bears interest at 4% per annum, compounds monthly, is unsecured, and matures two years from the original date of issuance. On June 28, 2021, STCB executed an additional promissory note with Ross Sklar in the principal amount of $100,000 with the same terms as the January 24, 2020 note and a maturity date of June 28, 2023. On September 17, 2021, STCB executed a third promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of September 17, 2023. On December 13, 2021, STCB executed a fourth promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of December 12, 2023. On February 14, 2022, STCB executed a fifth promissory note in favor of Ross Sklar, CEO, in the principal sum of $472,500, in exchange for a cash advance in the amount of $300,000 and payment of Company costs in the amount of $172,500. As with the other notes between the Company and our CEO, the note bears interest at 4% per annum, is unsecured, and matures two years from the original date of issuance. This note may also convert into shares of Company common stock at the 10-day volume weighted average trading price of the Company common stock for the 10-day period prior to the issuance of the Note, which was calculated as $0.29 per share. As of March 31, 2022, there was $6,086 of accrued interest due on these notes.

 

During the quarter ended March 31, 2022, the Company incurred $87,044 of marketing expense from The Woo. David Dryer, STCB's EVP of Marketing was a Managing Director at The Woo until February 2022.

 

During the quarters ended March 31, 2022 and 2021, the Company recognized revenue of $923,274 and $132,514, respectively. There were $560,372 and $174,059 of accounts receivable and accrued accounts receivable from TSG and Temperance as of March 31, 2022 and December 31, 2021, respectively. All revenue received is from related parties. 

 

During the year ended December 31, 2021, the Company advanced $95,640 to Temperance as a note and related to its initial production of Whipshots. The note carries no interest and is payable on demand.    

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Note 8 - Stock Warrants
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Stock Warrants [Text Block]

NOTE 8 – STOCK WARRANTS

 

A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:

 

  

Shares available

to purchase with

warrants

  

Weighted

Average

Price

  

Weighted

Average

Fair Value

 

Outstanding, December 31, 2020

  2,000,000  $1.05  $0.003 

Issued

  550,000  $0.95  $0.023 

Exercised

  -  $-  $- 

Cancelled

  -  $-  $- 

Expired

  -  $-  $- 

Outstanding, December 31, 2021

  2,550,000  $1.03  $0.007 

Issued

  -  $-  $- 

Exercised

  -  $-  $- 

Cancelled

  -  $-  $- 

Expired

  -  $-  $- 

Outstanding, March 31, 2022

  2,550,000  $1.03   0.007 
             

Exercisable, March 31, 2022

  2,112,500  $1.04  $0.004 

 

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Note 9 - Stockholders' Equity (Deficit)
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 9 – STOCKHOLDERS' EQUITY (DEFICIT)

 

On July 23, 2020, the Company granted 49,751 shares of common stock for services. The shares were valued at $2.01, (the average 14-day closing price), for total non-cash expense of $100,000.  In October 2021, the Company agreed to grant 650,000 shares of common stock for services of advisory board members. The shares vest over a 24 month period and were valued at $1.00 each, consistent with the price of shares issued in the Reg A offering, for a total non-cash expense of $650,000 to be recognized consistent with the shares' vesting schedule. During the quarter ended March 31, 2022 the Company expensed $81,249 related to these shares.

 

Stock Payable

In the quarter ended March 31, 2022, STCB recorded $81,249 of stock payable for services provided and related to common stock to be issued.  The following summarizes the stock payable activity during the periods ended  March 31, 2022 and March 31, 2021:

 

  

Amount

  

Shares

 

Ending balance - December 31, 2020

 $-   - 

Additions, net

  -   - 

Issuances, net

  -   - 

Ending balance – March 31, 2021

 $-   - 

 

  

Amount

  

Shares

 

Ending balance - December 31, 2021

 $654,166   782,736 

Additions, net

  81,249   81,249 

Issuances, net

  -   - 

Ending balance – March 31, 2022

 $735,415   863,985 
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Note 10 - Subsequent Events
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Subsequent Events [Text Block]

NOTE 10 - SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were issued, and has determined that no material subsequent events exist.

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Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2022
Accounting Policies [Abstract]  
Consolidation, Policy [Policy Text Block] Basis of Consolidation 
The consolidated financial statements of Starco Brands, Inc. include the accounts of STCB and our 96% owned subsidiary and its wholly owned subsidiary, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with ASC 810, Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the condensed consolidated financial statements.
 
Our consolidated subsidiaries at March 31, 2022 include:
Whipshots Holdings and its wholly owned subsidiary Whipshots LLC
Basis of Accounting, Policy [Policy Text Block]

Basis of presentation

The condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and do not contain certain information included in the Company’s Annual Report and Form 10-K for the year ended December 31, 2021. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-K.

Use of Estimates, Policy [Policy Text Block] Use of estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentration Risk, Credit Risk, Policy [Policy Text Block] Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Cash and Cash Equivalents, Policy [Policy Text Block]

Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2022 or December 31, 2021.

Accounts Receivable [Policy Text Block]

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. All of our receivables are from related parties. The allowance for uncollectible amounts is evaluated quarterly and was zero as of March 31, 2022 and December 31, 2021.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

The carrying amount of the Company’s consolidated financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2022.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and equipment

Property and equipment are carried at the lower of cost or net realizable value. All Property and equipment with a cost of $2,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations. At March 31, 2022 and December 31, 2021, the Company had no net property and equipment.

Revenue [Policy Text Block]

Revenue recognition

STCB and its subsidiaries earn their revenue as royalties from the licensing agreements it has with TSG, a related entity, and other related parties. STCB licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is determined beforehand in each agreement. The Company recognizes its revenue only when sales are made by TSG or other related parties to a third party.

 

The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.

Income Tax, Policy [Policy Text Block]

Income taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Share-Based Payment Arrangement [Policy Text Block]

Stock-based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 Share-based Compensation (“ASC 718”), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of awards granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.

Earnings Per Share, Policy [Policy Text Block]

Net income (loss) per common share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of March 31, 2022, the Company had 728,570 shares of stock payable that have been sold to investors, 650,000 shares of stock payable to advisors and subject to vesting, and 2,550,000 potentially dilutive shares from outstanding warrants.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Definite-lived intangible assets consist of certain trademarks and customer lists. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets’ estimated useful lives, which approximate 10 years.  There was no significant amortization during the quarter ended March 31, 2022 or the year ended December 31, 2021.

 

The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic 820, Fair Value Measurements. The Company did not record asset impairment charges related to its intangible assets during the quarter ended March 31, 2022.

Royalties and Licenses [Policy Text Block]

Royalties and Licenses

Royalty-based obligations with content licensors are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made are generally made in connection with the development of a particular product, and therefore, we are generally subject to risk during the product phase. Payments earned after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

 

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract.

 

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through future revenue. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If an impairment exists, then the related assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

 

Our minimum contractual obligations as of December 31, 2021 approximate $550,000, $1,100,000 and $1,650,000 for the years ending December 31, 2022, 2023 and 2024, respectively.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently issued accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.22.1
Note 8 - Stock Warrants (Tables)
3 Months Ended
Mar. 31, 2022
Notes Tables  
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]
  

Shares available

to purchase with

warrants

  

Weighted

Average

Price

  

Weighted

Average

Fair Value

 

Outstanding, December 31, 2020

  2,000,000  $1.05  $0.003 

Issued

  550,000  $0.95  $0.023 

Exercised

  -  $-  $- 

Cancelled

  -  $-  $- 

Expired

  -  $-  $- 

Outstanding, December 31, 2021

  2,550,000  $1.03  $0.007 

Issued

  -  $-  $- 

Exercised

  -  $-  $- 

Cancelled

  -  $-  $- 

Expired

  -  $-  $- 

Outstanding, March 31, 2022

  2,550,000  $1.03   0.007 
             

Exercisable, March 31, 2022

  2,112,500  $1.04  $0.004 
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.22.1
Note 9 - Stockholders' Equity (Deficit) (Tables)
3 Months Ended
Mar. 31, 2022
Notes Tables  
Schedule of Common Stock Payable [Table Text Block]
  

Amount

  

Shares

 

Ending balance - December 31, 2020

 $-   - 

Additions, net

  -   - 

Issuances, net

  -   - 

Ending balance – March 31, 2021

 $-   - 
  

Amount

  

Shares

 

Ending balance - December 31, 2021

 $654,166   782,736 

Additions, net

  81,249   81,249 

Issuances, net

  -   - 

Ending balance – March 31, 2022

 $735,415   863,985 
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.22.1
Note 1 - Organization and Description of Business (Details Textual) - Whipshots-DE [Member]
Mar. 31, 2022
Noncontrolling Interest, Ownership Percentage by Parent 96.00%
Percentage of Equity Issued Subject to Vesting Requirements 3.00%
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.22.1
Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2022
Dec. 31, 2021
Mar. 31, 2021
Dec. 31, 2020
Cash Equivalents, at Carrying Value, Total $ 0 $ 0    
Accounts Receivable, Allowance for Credit Loss, Ending Balance 0 0    
Property, Plant and Equipment, Net, Total $ 0 $ 0    
Common Stock, Shares to be Issued (in shares) 863,985 782,736 0 0
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 2,550,000      
Finite-Lived Intangible Asset, Useful Life (Year)   10 years    
Amortization of Intangible Assets $ 0 $ 0    
Impairment of Intangible Assets (Excluding Goodwill), Total   0    
Contractual Obligation, to be Paid, Year One   550,000    
Contractual Obligation, to be Paid, Year Two   1,100,000    
Contractual Obligation, to be Paid, Year Three   $ 1,650,000    
Investors [Member]        
Common Stock, Shares to be Issued (in shares) 728,570      
Advisors [Member]        
Common Stock, Shares to be Issued (in shares) 650,000      
Minimum [Member]        
Property and Equipment, Capitalization Threshold $ 2,000      
Whipshots-DE [Member]        
Noncontrolling Interest, Ownership Percentage by Parent 96.00%      
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.22.1
Note 3 - Going Concern (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2021
Retained Earnings (Accumulated Deficit), Total $ (18,347,237)   $ (18,388,186)
Net Income (Loss) Attributable to Parent, Total 40,949 $ (115,909)  
Net Cash Provided by (Used in) Operating Activities, Total $ (566,093) $ (167,934)  
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.22.1
Note 4 - Notes Payable (Details Textual) - USD ($)
Mar. 31, 2022
Dec. 31, 2021
Short-Term Debt, Total $ 27,060 $ 53,822
Financing Loan for Director and Officer Insurance Policy [Member]    
Debt Instrument, Interest Rate, Stated Percentage 4.40%  
Short-Term Debt, Total $ 27,060 $ 53,822
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.22.1
Note 5 - Operating Lease (Details Textual) - USD ($)
3 Months Ended 12 Months Ended
Nov. 01, 2020
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2020
Jan. 01, 2019
Jan. 01, 2016
Lessee, Operating Lease, Term of Contract (Year)           3 years
Lessee, Operating Lease, Renewal Term (Year)         3 years  
Lessee, Operating Lease, Monthly Payment $ 1,750          
Gain (Loss) on Extinguishment of Debt, Total $ 34,280          
Operating Lease, Expense   $ 0   $ 34,691    
Operating Lease, Payments       $ 25,918    
Non-cash Asset Writeoff     $ 3,500      
Other Current Assets [Member]            
Operating Lease, Right-of-Use Asset           $ 122,825
Other Current Liabilities [Member]            
Operating Lease, Liability, Total           $ 122,825
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.22.1
Note 6 - Commitments & Contingencies (Details Textual) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 14, 2021
Sep. 08, 2021
Jul. 09, 2014
Accrued Liabilities, Total         $ 150,000
Penguins Fly, LLC [Member]          
Minimum Purchase Price, Aggregate Payment       $ 140,000  
Maximum Purchase Price Aggregate Payment       $ 2,000,000  
Payments to Acquire Intangible Assets $ 20,000 $ 20,000      
Washpoppin Inc. [Member]          
Minimum Royalty Payments     $ 3,300,000    
Royalty Expense 127,000        
Advance Royalties, Total $ 381,000        
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.22.1
Note 7 - Related Party Transactions (Details Textual) - USD ($)
3 Months Ended 12 Months Ended 36 Months Ended
Dec. 13, 2021
Sep. 17, 2021
Jun. 28, 2021
Feb. 14, 2020
Jan. 24, 2020
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2017
Jun. 30, 2024
Dec. 31, 2021
Due to Related Parties, Noncurrent, Total           $ 1,572,500       $ 1,100,000
Due to Related Parties, Current, Total           376,382       376,382
Proceeds from Related Party Debt           472,500 $ 56,895      
Share Price (in dollars per share)       $ 0.29            
Revenue from Related Parties           923,274 $ 132,514      
Accounts Receivable, Related Parties           560,372       174,059
Chairman and Former CEO [Member]                    
Due to Related Parties, Noncurrent, Total               $ 289,821    
Related-party Advance, Monthly Interest Payment               $ 2,545    
Sanford Lang and Martin Goldrod [Member]                    
Stock Repurchased During Period, Value           32,850        
Sanford Lang and Martin Goldrod [Member] | Forecast [Member]                    
Monthly Share Repurchases from Related Parties, Value                 $ 10,950  
The Starco Group [Member]                    
Due to Related Parties, Noncurrent, Total       $ 472,500            
Due to Related Parties, Current, Total           203,539        
Conditions for Related Party to Deduct Incurred Expenses from Subsequent Royalty Payments, Royalty Revenue Threshold           250,000        
Debt Instrument, Interest Rate During Period       4.00%            
The Starco Group [Member] | Due for Expenses to Launch Licensed Brands [Member]                    
Due to Related Parties, Current, Total           72,843        
The Starco Group [Member] | Cash Advance [Member]                    
Proceeds from Related Party Debt       $ 300,000            
The Starco Group [Member] | Company Costs [Member]                    
Proceeds from Related Party Debt       $ 172,500            
Chief Executive Officer [Member]                    
Notes Payable, Total         $ 100,000          
Debt Instrument, Interest Rate During Period         4.00%          
Debt Instrument, Term (Year)         2 years          
Proceeds from Related Party Debt $ 500,000 $ 500,000 $ 100,000              
Accrued Interest, Related Party           6,086        
The Woo [Member]                    
Marketing Expense, Related Party           $ 87,044        
Temperance [Member]                    
Notes Receivable, Related Parties                   $ 95,640
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.22.1
Note 8 - Stock Warrants - Summary of Stock Warrants (Details) - Warrants [Member] - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2022
Dec. 31, 2021
Balance, shares (in shares) 2,550,000 2,000,000
Balance, weighted average price (in dollars per share) $ 1.03 $ 1.05
Balance, weighted average fair value (in dollars per share) $ 0.007 $ 0.003
Issued, shares (in shares) 0 550,000
Issued, weighted average price (in dollars per share) $ 0 $ 0.95
Issued, weighted average fair value (in dollars per share) $ 0 $ 0.023
Exercised, shares (in shares) 0 0
Exercised, weighted average price (in dollars per share) $ 0 $ 0
Cancelled, shares (in shares) 0 0
Cancelled, weighted average price (in dollars per share) $ 0 $ 0
Expired, shares (in shares) 0 0
Expired, weighted average price (in dollars per share) $ 0 $ 0
Balance, shares (in shares) 2,550,000 2,550,000
Balance, weighted average price (in dollars per share) $ 1.03 $ 1.03
Balance, weighted average fair value (in dollars per share) $ 0.007 $ 0.007
Exercisable, shares (in shares) 2,112,500  
Exercisable, weighted average price (in dollars per share) $ 1.04  
Exercisable, weighted average fair value (in dollars per share) $ 0.004  
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.22.1
Note 9 - Stockholders' Equity (Deficit) (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Jul. 23, 2020
Oct. 31, 2021
Mar. 31, 2022
Stock Issued During Period, Shares, Issued for Services (in shares) 49,751 650,000  
Share Price, Average 14 Closing Day Price (in dollars per share) $ 2.01    
Stock Issued During Period, Value, Issued for Services $ 100,000 $ 650,000  
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Month)   24 months  
Shares Issued, Price Per Share (in dollars per share)   $ 1.00  
Share-Based Payment Arrangement, Expense     $ 81,249
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.22.1
Note 9 - Stockholders' Equity (Deficit) - Summary of Activity of Stock Payable (Details) - USD ($)
3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Ending balance $ 654,166 $ 0
Ending balance, shares (in shares) 782,736 0
Additions, net $ 81,249 $ 0
Additions, net, shares (in shares) 81,249 0
Issuances, net $ 0 $ 0
Issuances, net, shares (in shares) 0 0
Ending balance $ 735,415 $ 0
Ending balance, shares (in shares) 863,985 0
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-566093 -167934 472500 56895 -0 56895 0 0 26762 -0 32850 -0 412888 0 -153205 -167934 338863 773322 185658 605388 16975 471 0 0 295650 0 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"><b>NOTE <em style="font: inherit;">1</em> </b>–<b> ORGANIZATION AND DESCRIPTION OF BUSINESS</b></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Starco Brands, Inc. (STCB) was incorporated in the State of Nevada on <em style="font: inherit;"> January 26, 2010 </em>under the name Insynergy, Inc. On <em style="font: inherit;"> September 7, 2017, </em>STCB filed an Amendment to the Articles of Incorporation to change the corporate name to Starco Brands, Inc. The Board determined the change of STCB's name was in the best interests of the Company due to changes in its current and anticipated business operations. In <em style="font: inherit;"> July 2017, </em>STCB entered into a licensing agreement with The Starco Group (“TSG”), located in Los Angeles, California. The companies pivoted to commercializing novel consumer products manufactured by TSG. TSG is a private label and branded aerosol and liquid fill manufacturer with manufacturing assets in the following verticals: DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts &amp; crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">During the <em style="font: inherit;">third</em> quarter of <em style="font: inherit;">2021</em><i>,</i> STCB formed <em style="font: inherit;">two</em> subsidiaries, Whipshots, LLC, a Wyoming limited liability company ("Whipshots LLC") and Whipshots, LLC, a Delaware limited liability company which was subsequently renamed Whipshots Holdings, LLC ("Whipshots Holdings"). Whipshots- LLC was a wholly-owned subsidiary of STCB at formation which was subsequently contributed to Whipshots Holdings. Whipshots Holdings is a majority owned subsidiary of STCB in which STCB owns 96% of the vested voting interests. There are unvested interests <em style="font: inherit;">not</em> owned by the Company for an additional 3% of the of the equity which have been issued subject to vesting requirements. The accompanying condensed consolidated financial statements are of STCB and its subsidiaries Whipshots Holdings and Whipshots LLC (collectively, the "Company").</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">In our opinion, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of unaudited consolidated financial position and the unaudited consolidated results of operations for interim periods presented have been reflected herein. The results of operations for the interim periods are <em style="font: inherit;">not</em> necessarily indicative of the results to be expected for the full year.</p> 0.96 0.03 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"><b>NOTE <em style="font: inherit;">2</em> - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"><i/><i><span style="text-decoration: underline; ">Basis of Consolidation</span> </i><br/> The consolidated financial statements of Starco Brands, Inc. include the accounts of STCB and our 96% owned subsidiary and its wholly owned subsidiary, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with ASC <em style="font: inherit;">810,</em> Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the condensed consolidated financial statements.<br/>  <br/> Our consolidated subsidiaries at <em style="font: inherit;"> March 31, 2022 </em>include:<br/> Whipshots Holdings and its wholly owned subsidiary Whipshots LLC<br/>  <br/> <i/></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"><i><span style="text-decoration: underline; ">Basis of presentation</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">The condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form <em style="font: inherit;">10</em>-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and do <em style="font: inherit;">not</em> contain certain information included in the Company’s Annual Report and Form <em style="font: inherit;">10</em>-K for the year ended <em style="font: inherit;"> December 31, 2021. </em>Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form <em style="font: inherit;">10</em>-K.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"/> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"> <br/> <i/><i><span style="text-decoration: underline; ">Use of estimates</span></i><br/> The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.<br/>  <br/> <i/><i><span style="text-decoration: underline; ">Concentrations of Credit Risk</span></i><br/> We maintain our cash in bank deposit accounts, the balances of which at times <em style="font: inherit;"> may </em>exceed federally insured limits. We continually monitor our banking relationships and consequently have <em style="font: inherit;">not</em> experienced any losses in our accounts. We believe we are <em style="font: inherit;">not</em> exposed to any significant credit risk on cash.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i/></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Cash equivalents</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">The Company considers all highly liquid investments with a maturity of <em style="font: inherit;">three</em> months or less when purchased to be cash equivalents. There were no cash equivalents as of <em style="font: inherit;"> March 31, 2022 </em>or <em style="font: inherit;"> December 31, 2021.</em></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><em style="font: inherit;"/></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i/></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Accounts Receivable</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Revenues that have been recognized but <em style="font: inherit;">not</em> yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than <em style="font: inherit;">not</em> that a receivable will <em style="font: inherit;">not</em> be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. All of our receivables are from related parties. The allowance for uncollectible amounts is evaluated quarterly and was zero as of <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> December 31, 2021.</em></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><em style="font: inherit;"/></p> <p style="margin: 0pt;"> </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"><i/></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"><i><span style="text-decoration: underline; ">Fair value of financial instruments</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">The Company follows paragraph <em style="font: inherit;">825</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">50</em>-<em style="font: inherit;">10</em> of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> of the FASB Accounting Standards Codification (“Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37”</em>) to measure the fair value of its financial instruments. Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into <em style="font: inherit;">three</em> (<em style="font: inherit;">3</em>) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The <em style="font: inherit;">three</em> (<em style="font: inherit;">3</em>) levels of fair value hierarchy defined by Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> are described below:</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">Level <em style="font: inherit;">1:</em> Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Level <em style="font: inherit;">2:</em> Pricing inputs other than quoted prices in active markets included in Level <em style="font: inherit;">1,</em> which are either directly or indirectly observable as of the reporting date.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Level <em style="font: inherit;">3:</em> Pricing inputs that are generally unobservable inputs and <em style="font: inherit;">not</em> corroborated by market data.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">The carrying amount of the Company’s consolidated financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at <em style="font: inherit;"> March 31, 2022.</em></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><em style="font: inherit;"/></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i/></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Property and equipment</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Property and equipment are carried at the lower of cost or net realizable value. All Property and equipment with a cost of $2,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations. At <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> December 31, 2021, </em>the Company had <span style="-sec-ix-hidden:c84800159"><span style="-sec-ix-hidden:c84800160">no</span></span> net property and equipment.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"/> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"> </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"><i/></p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"><i><span style="text-decoration: underline; ">Revenue recognition</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">STCB and its subsidiaries earn their revenue as royalties from the licensing agreements it has with TSG, a related entity, and other related parties. STCB licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is determined beforehand in each agreement. The Company recognizes its revenue only when sales are made by TSG or other related parties to a <em style="font: inherit;">third</em> party.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">The Company applies the following <em style="font: inherit;">five</em>-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company only applies the <em style="font: inherit;">five</em>-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC <em style="font: inherit;">606</em> at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"/> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i/></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Income taxes</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company follows Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">30</em> of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than <em style="font: inherit;">not</em> that the assets will <em style="font: inherit;">not</em> be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company adopted section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25</em> of the FASB Accounting Standards Codification (“Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25”</em>) with regards to uncertainty income taxes. Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25</em> addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25,</em> the Company <em style="font: inherit;"> may </em>recognize the tax benefit from an uncertain tax position only if it is more likely than <em style="font: inherit;">not</em> that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than <em style="font: inherit;">fifty</em> percent (<em style="font: inherit;">50%</em>) likelihood of being realized upon ultimate settlement. Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25</em> also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had <em style="font: inherit;">no</em> material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><em style="font: inherit;"/></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i/></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Stock-based Compensation</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;">The Company follows the guidance of the accounting provisions of ASC <em style="font: inherit;">718</em> Share-based Compensation (“ASC <em style="font: inherit;">718”</em>), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has <em style="font: inherit;">not</em> paid dividends historically and does <em style="font: inherit;">not</em> expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of awards granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;"/> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i/></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Net income (loss) per common share</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Net income (loss) per common share is computed pursuant to section <em style="font: inherit;">260</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">45</em> of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the <em style="font: inherit;">first</em> period presented. As of <em style="font: inherit;"> March 31, 2022, </em>the Company had 728,570 shares of stock payable that have been sold to investors, 650,000 shares of stock payable to advisors and subject to vesting, and 2,550,000 potentially dilutive shares from outstanding warrants.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"/> <p style="margin: 0pt;"> </p> <p style="margin: 0pt;"><i/></p> <p style="margin: 0pt;"><i><span style="text-decoration: underline; ">Intangible Assets</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Definite-lived intangible assets consist of certain trademarks and customer lists. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets’ estimated useful lives, which approximate 10 years.  There was no significant amortization during the quarter ended <em style="font: inherit;"> March 31, 2022 </em>or the year ended <em style="font: inherit;"> December 31, 2021.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group’s carrying value <em style="font: inherit;"> may </em><em style="font: inherit;">not</em> be recoverable. Factors that are considered important that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic <em style="font: inherit;">820,</em> Fair Value Measurements. The Company did <span style="-sec-ix-hidden:c84800209">not</span> record asset impairment charges related to its intangible assets during the quarter ended <em style="font: inherit;"> March 31, 2022.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><em style="font: inherit;"/></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i/></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Royalties and Licenses</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Royalty-based obligations with content licensors are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made are generally made in connection with the development of a particular product, and therefore, we are generally subject to risk during the product phase. Payments earned after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when <em style="font: inherit;">no</em> performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments <em style="font: inherit;">not</em> yet paid to determine amounts we deem unlikely to be realized through future revenue. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If an impairment exists, then the related assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Our minimum contractual obligations as of <em style="font: inherit;"> December 31, 2021 </em>approximate $550,000, $1,100,000 and $1,650,000 for the years ending <em style="font: inherit;"> December 31, 2022, </em><em style="font: inherit;">2023</em> and <em style="font: inherit;">2024,</em> respectively.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"/> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i/></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Recently issued accounting pronouncements</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did <em style="font: inherit;">not</em> have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does <em style="font: inherit;">not</em> believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"/> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"> </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"/> <i><span style="text-decoration: underline; ">Basis of Consolidation</span> </i><br/> The consolidated financial statements of Starco Brands, Inc. include the accounts of STCB and our 96% owned subsidiary and its wholly owned subsidiary, which are comprised of voting interest entities in which we have a controlling financial interest in accordance with ASC <em style="font: inherit;">810,</em> Consolidation. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation in the condensed consolidated financial statements.<br/>  <br/> Our consolidated subsidiaries at <em style="font: inherit;"> March 31, 2022 </em>include:<br/> Whipshots Holdings and its wholly owned subsidiary Whipshots LLC 0.96 <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"><i><span style="text-decoration: underline; ">Basis of presentation</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">The condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form <em style="font: inherit;">10</em>-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and do <em style="font: inherit;">not</em> contain certain information included in the Company’s Annual Report and Form <em style="font: inherit;">10</em>-K for the year ended <em style="font: inherit;"> December 31, 2021. </em>Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form <em style="font: inherit;">10</em>-K.</p> <i><span style="text-decoration: underline; ">Use of estimates</span></i><br/> The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates. <i><span style="text-decoration: underline; ">Concentrations of Credit Risk</span></i><br/> We maintain our cash in bank deposit accounts, the balances of which at times <em style="font: inherit;"> may </em>exceed federally insured limits. We continually monitor our banking relationships and consequently have <em style="font: inherit;">not</em> experienced any losses in our accounts. We believe we are <em style="font: inherit;">not</em> exposed to any significant credit risk on cash. <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Cash equivalents</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">The Company considers all highly liquid investments with a maturity of <em style="font: inherit;">three</em> months or less when purchased to be cash equivalents. There were no cash equivalents as of <em style="font: inherit;"> March 31, 2022 </em>or <em style="font: inherit;"> December 31, 2021.</em></p> 0 <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Accounts Receivable</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Revenues that have been recognized but <em style="font: inherit;">not</em> yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than <em style="font: inherit;">not</em> that a receivable will <em style="font: inherit;">not</em> be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. All of our receivables are from related parties. The allowance for uncollectible amounts is evaluated quarterly and was zero as of <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> December 31, 2021.</em></p> 0 <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;"><i><span style="text-decoration: underline; ">Fair value of financial instruments</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">The Company follows paragraph <em style="font: inherit;">825</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">50</em>-<em style="font: inherit;">10</em> of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> of the FASB Accounting Standards Codification (“Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37”</em>) to measure the fair value of its financial instruments. Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into <em style="font: inherit;">three</em> (<em style="font: inherit;">3</em>) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The <em style="font: inherit;">three</em> (<em style="font: inherit;">3</em>) levels of fair value hierarchy defined by Paragraph <em style="font: inherit;">820</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">35</em>-<em style="font: inherit;">37</em> are described below:</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">Level <em style="font: inherit;">1:</em> Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Level <em style="font: inherit;">2:</em> Pricing inputs other than quoted prices in active markets included in Level <em style="font: inherit;">1,</em> which are either directly or indirectly observable as of the reporting date.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Level <em style="font: inherit;">3:</em> Pricing inputs that are generally unobservable inputs and <em style="font: inherit;">not</em> corroborated by market data.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">The carrying amount of the Company’s consolidated financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at <em style="font: inherit;"> March 31, 2022.</em></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Property and equipment</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Property and equipment are carried at the lower of cost or net realizable value. All Property and equipment with a cost of $2,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations. At <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> December 31, 2021, </em>the Company had <span style="-sec-ix-hidden:c84800159"><span style="-sec-ix-hidden:c84800160">no</span></span> net property and equipment.</p> 2000 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"><i><span style="text-decoration: underline; ">Revenue recognition</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">STCB and its subsidiaries earn their revenue as royalties from the licensing agreements it has with TSG, a related entity, and other related parties. STCB licenses the right for TSG to manufacture and sell certain Starco Brands products. The amount of the licensing revenue received varies depending upon the product and the royalty percentage is determined beforehand in each agreement. The Company recognizes its revenue only when sales are made by TSG or other related parties to a <em style="font: inherit;">third</em> party.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">The Company applies the following <em style="font: inherit;">five</em>-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company only applies the <em style="font: inherit;">five</em>-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the licensee transferring goods or services to the customer. Once a contract is determined to be within the scope of ASC <em style="font: inherit;">606</em> at contract inception, the Company reviews the contract to determine which performance obligations the Company's licensee must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's licensee's performance obligations are transferred to customers at a point in time, typically upon delivery.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Income taxes</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company follows Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">30</em> of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than <em style="font: inherit;">not</em> that the assets will <em style="font: inherit;">not</em> be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company adopted section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25</em> of the FASB Accounting Standards Codification (“Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25”</em>) with regards to uncertainty income taxes. Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25</em> addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25,</em> the Company <em style="font: inherit;"> may </em>recognize the tax benefit from an uncertain tax position only if it is more likely than <em style="font: inherit;">not</em> that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than <em style="font: inherit;">fifty</em> percent (<em style="font: inherit;">50%</em>) likelihood of being realized upon ultimate settlement. Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25</em> also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had <em style="font: inherit;">no</em> material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section <em style="font: inherit;">740</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">25.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Stock-based Compensation</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;">The Company follows the guidance of the accounting provisions of ASC <em style="font: inherit;">718</em> Share-based Compensation (“ASC <em style="font: inherit;">718”</em>), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has <em style="font: inherit;">not</em> paid dividends historically and does <em style="font: inherit;">not</em> expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of awards granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><i><span style="text-decoration: underline; ">Net income (loss) per common share</span></i></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">Net income (loss) per common share is computed pursuant to section <em style="font: inherit;">260</em>-<em style="font: inherit;">10</em>-<em style="font: inherit;">45</em> of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the <em style="font: inherit;">first</em> period presented. As of <em style="font: inherit;"> March 31, 2022, </em>the Company had 728,570 shares of stock payable that have been sold to investors, 650,000 shares of stock payable to advisors and subject to vesting, and 2,550,000 potentially dilutive shares from outstanding warrants.</p> 728570 650000 2550000 <p style="margin: 0pt;"><i><span style="text-decoration: underline; ">Intangible Assets</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Definite-lived intangible assets consist of certain trademarks and customer lists. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets’ estimated useful lives, which approximate 10 years.  There was no significant amortization during the quarter ended <em style="font: inherit;"> March 31, 2022 </em>or the year ended <em style="font: inherit;"> December 31, 2021.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group’s carrying value <em style="font: inherit;"> may </em><em style="font: inherit;">not</em> be recoverable. Factors that are considered important that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic <em style="font: inherit;">820,</em> Fair Value Measurements. The Company did <span style="-sec-ix-hidden:c84800209">not</span> record asset impairment charges related to its intangible assets during the quarter ended <em style="font: inherit;"> March 31, 2022.</em></p> P10Y 0 <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Royalties and Licenses</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Royalty-based obligations with content licensors are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made are generally made in connection with the development of a particular product, and therefore, we are generally subject to risk during the product phase. Payments earned after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when <em style="font: inherit;">no</em> performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments <em style="font: inherit;">not</em> yet paid to determine amounts we deem unlikely to be realized through future revenue. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If an impairment exists, then the related assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Our minimum contractual obligations as of <em style="font: inherit;"> December 31, 2021 </em>approximate $550,000, $1,100,000 and $1,650,000 for the years ending <em style="font: inherit;"> December 31, 2022, </em><em style="font: inherit;">2023</em> and <em style="font: inherit;">2024,</em> respectively.</p> 550000 1100000 1650000 <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"><i><span style="text-decoration: underline; ">Recently issued accounting pronouncements</span></i></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did <em style="font: inherit;">not</em> have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does <em style="font: inherit;">not</em> believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.</p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"><b>NOTE <em style="font: inherit;">3</em> </b>–<b> GOING CONCERN</b></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $18,347,237 at <em style="font: inherit;"> March 31, 2022 </em>including the impact of its income of $40,949 for the quarter ended <em style="font: inherit;"> March 31, 2022.  </em>Net cash used in operating activities was $566,093 for the quarter ended <em style="font: inherit;"> March 31, 2022. </em>The Company’s ability to continue with this trend is unknown. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown although the Company is actively raising capital via a Regulation A offering which was qualified in <em style="font: inherit;"> December 2021. </em>The obtainment of additional financing and the successful development of the Company’s contemplated plan of operations, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do <em style="font: inherit;">not</em> include any adjustments that <em style="font: inherit;"> may </em>result from the outcome of these aforementioned uncertainties.</p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> -18347237 40949 -566093 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"><b>NOTE <em style="font: inherit;">4</em> </b>–<b> NOTES PAYABLE</b></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;">The Company has a financing loan for its Directors and Officers Insurance (“D&amp;O”) that was incurred in <em style="font: inherit;"> September </em><em style="font: inherit;">2021.</em> The loan bears interest at 4.4% and requires monthly payments through <em style="font: inherit;"> June 2022. </em>As of <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> December 31, 2021, </em>the Company had D&amp;O loan balances of $27,060 and $53,822, respectively.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">See Note <em style="font: inherit;">7</em> - <i>Related Party Transactions</i> for loans to STCB from the Company's CEO. </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> 0.044 27060 53822 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"><b>NOTE <em style="font: inherit;">5</em></b> –<b> OPERATING LEASE</b></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">The Company previously occupied office space in Burbank, California. The Company signed a <span style="-sec-ix-hidden:c84800234">three</span>-year lease starting <em style="font: inherit;"> January 1, 2016. </em>The lease was then extended for an additional <span style="-sec-ix-hidden:c84800235">three</span>-year term. Upon adoption of ASU <em style="font: inherit;">2016</em>-<em style="font: inherit;">02</em> Leases (Topic <em style="font: inherit;">842</em>), the Company recorded an initial Right of Use of Asset and Lease Obligation of <span style="-sec-ix-hidden:c84800239">$<span style="-sec-ix-hidden:c84800250">122,825</span>.</span></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt 0pt 0pt -1pt;">On <em style="font: inherit;"> November 1, 2020, </em>the lease was amended to reduce the monthly lease payment to <span style="-sec-ix-hidden:c84800240">$1,750.</span> In addition, the lessor agreed to forgive all past due accrued rent. As a result, the Company recognized a gain on the forgiveness of debt of $34,280.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">On <em style="font: inherit;"> November 13, 2020, </em>the Company and lessor assigned the lease for the office space in Burbank to <em style="font: inherit;">two</em> of its then Directors, Sanford Lang and Martin Goldrod, relieving the Company of any further obligation under the lease.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">The lease expense for year ended <em style="font: inherit;"> December 31, 2020 </em>was $34,691 and cash paid under this operating lease was $25,918 during the same period.</p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;"> </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;">During the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> March 31, 2021, </em>the Company determined that it was unlikely to collect the lease deposit and recognized an asset writeoff expense of $3,500. There were <em style="font: inherit;">no</em> other lease expenses or payments during the period. There was no lease expense for the period ended <em style="font: inherit;"> March 31, 2022.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> 34280 34691 25918 3500 0 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;"><b>NOTE <em style="font: inherit;">6</em></b> –<b> COMMITMENTS &amp; CONTINGENCIES</b></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;">On <em style="font: inherit;"> February 18, 2020, </em>STCB received a demand letter from a law firm representing certain individuals who purchased the Breathe brand home cleaning products. The demand letter alleged that STCB had unlawfully, falsely and misleadingly labeled and marketed the Breathe brand of products to consumers in violation of the Consumer Products Safety Act, the Federal Hazardous Substance Act and the FTC Act as well as various California and New York laws. While STCB denied any wrongdoing, a settlement was reached and paid in full, with <em style="font: inherit;">no</em> further obligation required by STCB.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">On <em style="font: inherit;"> September 8, 2021, </em>Whipshots LLC, a Wyoming limited liability company (“Whipshots”), a wholly-owned subsidiary of Starco Brands, Inc., entered into an Intellectual Property Purchase Agreement (the “Agreement”) effective <em style="font: inherit;"> August 24, 2021, </em>with Penguins Fly, LLC, a Pennsylvania limited liability company (“Seller”). The Agreement provides that Seller will sell to Buyer the trademarks “Whipshotz” and “Whipshots”, accompanying domain and social media handles of the same nomenclature, and certain intellectual property, documents, digital assets, customer data and other transferable rights under non-disclosure, non-compete, non-solicitation and confidentiality contracts benefiting the purchased intellectual property and documents (collectively, the “Acquired Assets”). The purchase price (“Purchase Price Payment”) for the Acquired Assets will be payable to Seller, over the course of <em style="font: inherit;">seven</em> years, based on a sliding scale percentage of gross revenues actually received by Buyer solely from Buyer’s sale of Whipshots/Whipshotz Products. The Purchase Price Payment shall be subject to a minimum amount in each contract year and a maximum aggregate amount between $140,000 and $2,000,000 based on revenues generated by the products. As of <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> December 31, 2021, </em>the Company had paid $20,000 of Purchase Price Payment, which has been recorded as an intangible asset.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">On <em style="font: inherit;"> September 14, 2021, </em>the Company entered into a License Agreement with Washpoppin Inc., a New York corporation. Pursuant to the License Agreement, Licensor shall license to the Company certain Licensed Property of the recording artist professionally known as “Cardi B”. As part of the Agreement, in exchange for royalty rates based on Net Sales (as defined in the Agreement) during each applicable contract period, the Licensor warrants to cause the Artist to attend certain in person events, media interviews, participate in the development of the Licensed Products (as defined in the Agreement), and promote the Licensed Products through social media posts on the Artist’s social media platforms. The Company has committed to a minimum royalty payment under the Agreement of $3,300,000 in aggregate through <em style="font: inherit;">2024,</em> subject to Licensor’s satisfaction of its obligations. In the quarter ended <em style="font: inherit;"> March 31, 2022, </em>the Company incurred expense of approximately $127,000 and had a capitalized balance of approximately $381,000 related to this royalty.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><b>Accrued Liability</b></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;">On <em style="font: inherit;"> July 9, 2014, </em>the Board of Directors approved an investment arrangement with an individual. Per the terms of the agreement, the investor transferred $150,000 to STCB to be used for the development of a specific product. The product for which the investment was intended was never produced and this agreement is being renegotiated. The $150,000 investment was never returned by the Company and the amount is included in other payables and accruals on the balance sheet.</p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;"> </p> 140000 2000000 20000 3300000 127000 381000 150000 150000 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;"><b>NOTE <em style="font: inherit;">7</em></b> –<b> RELATED PARTY TRANSACTIONS</b></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">During the year ended <em style="font: inherit;"> December 31, 2017, </em>Sanford Lang, the Company’s former Chairman and CEO, advanced STCB $289,821 to pay for general operating expenses. The advance required a monthly interest payment of $2,545 and was due on demand. In <em style="font: inherit;"> June 2021, </em>Mr. Lang and Mr. Goldrod executed agreements with STCB whereby the advance from Mr. Lang and all other amounts owed to each were repaid and both Mr. Lang and Mr. Goldrod resigned from the Board of Directors. Further, for a period of <em style="font: inherit;">36</em> months beginning in <em style="font: inherit;"> July 2021, </em>STCB will repurchase an aggregate of $10,950 worth of shares each month from Mr. Lang and Mr. Goldrod, with the share price for each purchase to be set according to the volume weighted average trading price of the common stock over the last <em style="font: inherit;">10</em> days of the month. In the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> March 31, 2022 </em>STCB paid an aggregate of $32,850 to Mr. Lang and Mr. Goldrod per the agreements and anticipates that the corresponding share transfers will be settled in <em style="font: inherit;">2022.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">As of <em style="font: inherit;"> March 31, 2022, </em>the Company owed TSG $72,843 for expenses paid by TSG on behalf of STCB for expenses to launch licensed brands. As royalties have exceeded $250,000 in the aggregate, once the Company has an adequate cash reserve, TSG <em style="font: inherit;"> may </em>deduct the incurred expenses from the subsequent royalty payments until TSG is paid in full. In addition, STCB owes TSG and its subsidiaries an additional $203,539 for expenses paid on behalf of STCB or funds advanced to the Company to pay for other operating expenses. TSG is owned by STCB's CEO, Ross Sklar.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">On <em style="font: inherit;"> January 24, 2020, </em>STCB executed a promissory note for $100,000 with Ross Sklar, CEO. The note bears interest at 4% per annum, compounds monthly, is unsecured, and matures <span style="-sec-ix-hidden:c84800280">two</span> years from the original date of issuance. On <em style="font: inherit;"> June 28, 2021, </em>STCB executed an additional promissory note with Ross Sklar in the principal amount of $100,000 with the same terms as the <em style="font: inherit;"> January 24, 2020 </em>note and a maturity date of <em style="font: inherit;"> June 28, 2023. </em>On <em style="font: inherit;"> September 17, 2021, </em>STCB executed a <em style="font: inherit;">third</em> promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of <em style="font: inherit;"> September 17, 2023. </em>On <em style="font: inherit;"> December 13, 2021, </em>STCB executed a <em style="font: inherit;">fourth</em> promissory note with Ross Sklar in the principal amount of $500,000 with the same terms as the prior notes and a maturity date of <em style="font: inherit;"> December 12, 2023. </em>On <em style="font: inherit;"> February 14, 2022, </em>STCB executed a <em style="font: inherit;">fifth</em> promissory note in favor of Ross Sklar, CEO, in the principal sum of $472,500, in exchange for a cash advance in the amount of $300,000 and payment of Company costs in the amount of $172,500. As with the other notes between the Company and our CEO, the note bears interest at 4% per annum, is unsecured, and matures <em style="font: inherit;">two</em> years from the original date of issuance. This note <em style="font: inherit;"> may </em>also convert into shares of Company common stock at the <em style="font: inherit;">10</em>-day volume weighted average trading price of the Company common stock for the <em style="font: inherit;">10</em>-day period prior to the issuance of the Note, which was calculated as $0.29 per share. As of <em style="font: inherit;"> March 31, 2022, </em>there was $6,086 of accrued interest due on these notes.</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">During the quarter ended <em style="font: inherit;"> March 31, 2022, </em>the Company incurred $87,044 of marketing expense from The Woo. David Dryer, STCB's EVP of Marketing was a Managing Director at The Woo until <em style="font: inherit;"> February </em><em style="font: inherit;">2022.</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">During the quarters ended <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;">2021,</em> the Company recognized revenue of $923,274 and $132,514, respectively. There were $560,372 and $174,059 of accounts receivable and accrued accounts receivable from TSG and Temperance as of <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> December 31, 2021, </em>respectively. All revenue received is from related parties. </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; text-align: justify; margin: 0pt;">During the year ended <em style="font: inherit;"> December 31, 2021, </em>the Company advanced $95,640 to Temperance as a note and related to its initial production of Whipshots. The note carries <em style="font: inherit;">no</em> interest and is payable on demand.    </p> <p style="margin: 0pt;"/><p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"/> 289821 2545 10950 32850 72843 250000 203539 100000 0.04 100000 500000 500000 472500 300000 172500 0.04 0.29 6086 87044 923274 132514 560372 174059 95640 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"><b>NOTE <em style="font: inherit;">8</em></b> –<b> STOCK WARRANTS</b></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt; text-align: justify;">A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:</p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 36pt; width: 90%; font-size: 10pt; font-family: Times New Roman; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Shares available</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">to purchase with</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">warrants</p> </td><td style="font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Weighted</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Average</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Price</p> </td><td style="font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Weighted</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Average</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Fair Value</p> </td><td style="font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt; width: 49%;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Outstanding, December 31, 2020</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">2,000,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">1.05</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.003</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issued</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">550,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.95</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.023</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Exercised</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Cancelled</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Expired</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Outstanding, December 31, 2021</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">2,550,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">1.03</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.007</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issued</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Exercised</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Cancelled</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Expired</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Outstanding, March 31, 2022</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2,550,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1.03</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.007</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Exercisable, March 31, 2022</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2,112,500</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1.04</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.004</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr> </tbody></table> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 36pt; width: 90%; font-size: 10pt; font-family: Times New Roman; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Shares available</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">to purchase with</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">warrants</p> </td><td style="font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Weighted</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Average</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Price</p> </td><td style="font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: Times New Roman; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Weighted</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Average</p> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Fair Value</p> </td><td style="font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt; width: 49%;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Outstanding, December 31, 2020</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">2,000,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">1.05</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.003</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issued</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">550,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.95</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.023</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Exercised</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Cancelled</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Expired</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Outstanding, December 31, 2021</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">2,550,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">1.03</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">0.007</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issued</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Exercised</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Cancelled</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Expired</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><em style="font: inherit;">-</em></td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Outstanding, March 31, 2022</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2,550,000</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1.03</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.007</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: Times New Roman; font-size: 10pt;"> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Exercisable, March 31, 2022</p> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2,112,500</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1.04</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt;"> </td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 14%; text-align: right; font-family: Times New Roman; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.004</td><td style="width: 1%; font-family: Times New Roman; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr> </tbody></table> 2000000 1.05 0.003 550000 0.95 0.023 0 0 0 0 0 0 2550000 1.03 0.007 0 0 0 0 0 0 0 0 0 2550000 1.03 0.007 2112500 1.04 0.004 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"><b>NOTE <em style="font: inherit;">9</em></b> – <b>STOCKHOLDERS' EQUITY (DEFICIT)</b></p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"> </p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;">On <em style="font: inherit;"> July 23, 2020, </em>the Company granted 49,751 shares of common stock for services. The shares were valued at $2.01, (the average <em style="font: inherit;">14</em>-day closing price), for total non-cash expense of $100,000.  In <em style="font: inherit;"> October 2021, </em>the Company agreed to grant 650,000 shares of common stock for services of advisory board members. The shares vest over a 24 month period and were valued at $1.00 each, consistent with the price of shares issued in the Reg A offering, for a total non-cash expense of $650,000 to be recognized consistent with the shares' vesting schedule. During the quarter ended <em style="font: inherit;"> March 31, 2022 </em>the Company expensed $81,249 related to these shares.</p> <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"> </p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;"><span style="text-decoration: underline; ">Stock Payable</span></p> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin: 0pt;">In the quarter ended <em style="font: inherit;"> March 31, 2022, </em>STCB recorded $81,249 of stock payable for services provided and related to common stock to be issued.  The following summarizes the stock payable activity during the periods ended <em style="font: inherit;"> March 31, 2022 </em>and <em style="font: inherit;"> March 31, 2021:</em></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 5%; width: 95%; font-size: 10pt; font-family: &quot;Times New Roman&quot;; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Amount</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Shares</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; width: 68%;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance - December 31, 2020</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Additions, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issuances, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance – March 31, 2021</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> </tbody></table> <p style="margin: 0pt;"> </p> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 5%; width: 95%; font-size: 10pt; font-family: &quot;Times New Roman&quot;; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Amount</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Shares</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance - December 31, 2021</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">654,166</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">782,736</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Additions, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">81,249</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">81,249</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issuances, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); text-align: right;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance – March 31, 2022</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">735,415</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">863,985</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr> </tbody></table> 49751 2.01 100000 650000 P24M 1.00 650000 81249 81249 <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 5%; width: 95%; font-size: 10pt; font-family: &quot;Times New Roman&quot;; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Amount</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Shares</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; width: 68%;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance - December 31, 2020</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Additions, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issuances, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance – March 31, 2021</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> </tbody></table> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 5%; width: 95%; font-size: 10pt; font-family: &quot;Times New Roman&quot;; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Amount</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:Times New Roman;font-size:10pt;font-variant:normal;text-align:center;margin:0pt;">Shares</p> </td><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance - December 31, 2021</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">654,166</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">782,736</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Additions, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">81,249</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;">81,249</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Issuances, net</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); text-align: right;">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;; font-size: 10pt; font-variant: normal; margin-top: 0pt; margin-bottom: 0pt;">Ending balance – March 31, 2022</p> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">735,415</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt;"> </td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">863,985</td><td style="width: 1%; font-family: &quot;Times New Roman&quot;; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr> </tbody></table> 0 0 0 0 -0 -0 0 0 654166 782736 81249 81249 -0 -0 735415 863985 <p style="font-family: Times New Roman; font-size: 10pt; font-variant: normal; margin: 0pt;"><b>NOTE <em style="font: inherit;">10</em> - SUBSEQUENT EVENTS</b></p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;"> </p> <p style="font-family:'Times New Roman';font-size:10pt;font-variant:normal;margin:0pt;">Management has evaluated subsequent events pursuant to the requirements of ASC Topic <em style="font: inherit;">855,</em> from the balance sheet date through the date the financial statements were issued, and has determined that <em style="font: inherit;">no</em> material subsequent events exist.</p> EXCEL 41 Financial_Report.xlsx IDEA: XBRL DOCUMENT begin 644 Financial_Report.xlsx M4$L#!!0 ( -.*SU0'04UB@0 +$ 0 9&]C4')O<',O87!P+GAM M;$V./0L",1!$_\IQO;=!P4)B0-!2L+(/>QLOD&1#LD)^OCG!CVX>;QA&WPIG M*N*I#BV&5(_C(I(/ !47BK9.7:=N')=HI6-Y #OGDK7A.YNJQ<&4GPZ4A!0W_J=0U[R;UEA_6\#MI7E!+ P04 M " #3BL]43C<.Z^X K @ $0 &1O8U!R;W!S+V-O&ULS9+! 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