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Starco Brands Reports Third Quarter 2018 Financial Results

November 9, 2018

SANTA MONICA, Calif., Nov. 09, 2018 (GLOBE NEWSWIRE) -- Starco Brands (OTC: STCB), a creator of innovative and disruptive consumer products, reported financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights:

-- Significantly increased net revenue compared to the third quarter of 2017; -- Reduced the net loss compared to both the first and second quarters of 2018; -- Further expanded the distribution of BreatheTM through more than 25 additional outlets in the UNFI distribution network, including Piggly Wiggly stores in Wisconsin.

Management Commentary“During Q3 of 2018, we saw continued expansion of our product lines through our distribution network, and continued to lay the groundwork for adding more product lines in early 2019,” said Starco Brands’ CEO Ross Sklar. “For the balance of 2018, we will continue to take steps to solidify our balance sheet and improve trading liquidity.”

Third Quarter 2018 Financial ResultsNet revenues were $36,582, up more than tenfold compared to the third quarter of 2017. Total net revenues booked since the Company’s strategic pivot began in mid-2017 have been $85,246. (Revenues under the new business model did not begin until the second half of 2017.) Net revenues in the third quarter consisted of royalties from The Starco Group’s sales of Breathe, KleenOut and Winona Pure products. The company’s strategic pivot began in the third quarter of 2017 with the renaming of the company to Starco Brands, and the launch of the first Starco Brands product line, Breathe. The strategic repositioning continued with the execution of a 1-for-30 reverse stock split effective midway through the first quarter of 2018, and with the launch of new product lines during the second quarter of 2018. Thus, the third quarter of 2018 represents the first full quarter where Starco Brands operated under its new name, with new capital structure and supported by its new product lines.

Starco Brands’ revenues are derived from royalties received from its production partner The Starco Group (TSG) on products whose brands are owned by Starco Brands. Starco Brands books the revenue upon receipt of the royalties related to such sales, typically within 60-90 days after the products are shipped to retailers. During the third quarter and first nine months of 2018, the aggregate wholesale shipments of such products were approximately $148,542 and $764,860, respectively, which consisted of The Starco Group’s sales of Breathe, Winona Pure, Kleen-Out and Parent’s Choice. Because this business model was not adopted until the third quarter of 2017, there were no such revenues booked in the first half of 2017, and only $3,027 was booked in the third quarter of 2017.

Operating expenses for the third quarter of 2018 totaled $127,893, down from $141,426 in the second quarter of 2018. The net loss was $93,919, or $0.00 per diluted share. Adjusted EBITDA was negative $91,311. See note below on “Use of Non-GAAP Financial Information.”

OutlookThe Company continues to expect revenues to grow significantly in 2018 compared to 2017 and expects to continue to narrow its operating loss. This will be primarily driven by expanded distribution of its Breathe, Winona Pure, Kleen-Out line, Honu Sunscreen lines, as well as Parents Choice cobranded with Walmart. Other sources of revenue expansion will include new product and brand launches and the addition of product licenses to be acquired during the coming year. Operating expenses are expected to grow as the Company expands its marketing team and activities.

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

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

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

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

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

STARCO BRANDS, INC. CONDENSED BALANCE SHEETS (Unaudited) ----------------------------------------------------------------------------------------------------------- September 30, December 31, 2018 2017 --------------- --------------- ASSETS Current Assets: Cash $ 9,671 $ 314,181 Accounts receivable, related party 22,914 4,692 Prepaid and other assets 37,555 43,218 - ----------- - - ----------- - Total Current Assets 70,140 362,091 Deposit 3,500 3,500 Total Assets $ 73,640 $ 365,591 - ----------- - - ----------- - LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities: Accounts payable $ 228,266 $ 194,462 Other payables and accruals 281,090 276,149 Accrued compensation 35,850 30,050 Loans payable – related party 364,664 362,664 Notes payable 33,186 33,158 Total Current Liabilities 943,056 896,483 - - Total Liabilities 943,056 896,483 - ----------- - - ----------- - Stockholders’ Deficit: Common Stock, par value $0.001 300,000,000 shares authorized, 159,090,914 159,091 2,418 and 2,417,569 shares issued and outstanding, respectively Additional paid in capital 15,518,455 14,965,081 Common stock to be issued - 600,000 Accumulated deficit (16,546,962 ) (16,098,391 ) - ----------- - - ----------- - Total Stockholders’ Deficit (869,416 ) (530,892 ) - ----------- - - ----------- - Total Liabilities and Stockholders’ Deficit $ 73,640 $ 365,591 - ----------- - - ----------- -

STARCO BRANDS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, September 30, ------------------------------- ------------------------------- 2018 2017 2018 2017 ------------- - ------------ - ------------ - Revenues, net, related party $ 36,582 $ 3,027 $ 77,061 $ 3,027 Operating Expenses: Compensation expense 57,035 19,497 173,533 150,497 Officer stock compensation - 3,495,810 31,666 3,495,810 Advertising and promotion 2,972 6,987 22,522 6,987 Professional fees 6,161 25,940 95,290 57,236 General and administrative 61,725 158,795 190,148 224,234 - ----------- - - ---------- - - ----------- - - ---------- - Total operating expenses 127,893 3,707,029 513,159 3,934,764 - ----------- - - ---------- - - ----------- - - ---------- - Loss from operations (91,311 ) (3,704,002 ) (436,098 ) (3,931,737 ) - ----------- - - ---------- - - ----------- - - ---------- - Other Income (Expense): Interest expense (7,862 ) (33,641 ) (23,770 ) (35,439 ) Loss on conversion of debt - - - (259,739 ) Interest income 4 37 47 37 Other income 5,250 6,000 11,250 6,000 Gain on extinguishment of debt - 221,757 - 221,757 - Total other income (expense) (2,608 ) 194,153 (12,473 ) (67,384 ) - ----------- - - ---------- - - ----------- - - ---------- - Loss before provision for income taxes (93,919 ) (3,509,849 ) (448,571 ) (3,999,121 ) Provision for income taxes - - - - - ----------- - - ---------- - - ----------- - - ---------- - Net Loss $ (93,919 ) $ (3,509,849 ) $ (448,571 ) $ (3,999,121 ) - ----------- - - ---------- - - ----------- - - ---------- - Loss per share, basic and diluted $ (0.00 ) $ (0.08 ) $ (0.00 ) $ (0.11 ) - ----------- - - ---------- - - ----------- - - ---------- - Weighted average shares outstanding, basic 159,090,914 41,795,643 124,891,494 38,064,406 and diluted - ----------- - - ---------- - - ----------- - - ---------- -

STARCO BRANDS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) ---------------------------------------------------------------------------------------------------------- For the Nine Months Ended September 30, 2018 2017 ---------- - ------------ - CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ (448,571 ) $ (3,999,121 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 8,181 5,469 Stock based compensation – related party 31,666 3,495,810 Contributed services 70,200 - Gain on extinguishment of debt - (221,757 ) Additional shares issued for prior debt conversion - 259,739 Financing costs for related party note - 25,000 Changes in Operating Assets and Liabilities: Accounts receivable, related party (18,222 ) (3,027 ) Prepaids & other assets 5,663 (53,251 ) Accounts payable 30,956 (2,135 ) Accrued expenses 13,589 142,862 -------- - - ---------- - Net Cash Used in Operating Activities (306,538 ) (350,411 ) -------- - - ---------- - CASH FLOWS FROM INVESTING ACTIVITIES: - - - -------- - - ---------- - CASH FLOWS FROM FINANCING ACTIVITIES: Advances from a related party 4,000 178,070 Repayment of advances from a related party (2,000 ) (5,671 ) Proceeds from the sale of common stock - 400,000 Proceeds from notes payable 36,400 81,270 Payments on notes payable (36,372 ) (28,471 ) -------- - - ---------- - Net Cash Provided by Financing Activities 2,028 625,198 -------- - - ---------- - Net Increase (Decrease) in Cash (304,510 ) 274,787 Cash at Beginning of Period 314,181 - - -------- - - ---------- - Cash at End of Period $ 9,671 $ 274,787 - -------- - - ---------- -

Reconciliation of Net Income to Adjusted EBITDA

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 --------- - ------------ - ---------- - ------------ - Net loss $ (93,919 ) $ (3,509,849 ) $ (448,571 ) $ (3,999,121 ) Other income (5,250 ) (6,000 ) (11,250 ) (6,000 ) Interest expense 7,862 33,641 23,770 35,439 Interest income (4 ) (37 ) (47 ) (37 ) Loss on conversion of debt - - - 259,739 Stock based compensation - - 8,181 - Stock based compensation, related party - 3,495,810 31,666 3,495,810 Gain on extinguishment of debt - 221,757 - 221,757 --------- - ------------ - ---------- - ------------ - Adjusted EBITDA $ (91,311 ) $ 235,322 $ (396,251 ) $ 7,587 - ------- - - ---------- - - -------- - - ---------- -

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

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