The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above. We also urge you to review and consider our disclosures describing various risks that may affect our business, which are set forth under the heading "Risk Factors," below.
Forward Looking Statements
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
·our future strategic plans ·our future operating results; ·our business prospects; ·our contractual arrangements and relationships with third parties; ·the dependence of our future success on the general economy; ·our possibility of not successfully raising future financings; and ·the adequacy of our cash resources and working capital.
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we "believe," "anticipate," "expect," "estimate" or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Executive Overview
In
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The current CEO of
The Company has conducted extensive research and has identified specific
channels to penetrate with its new portfolio of novel technologies. The Company
intends to raise capital to assist in launching and marketing these products
through debt and equity financing. The Company has begun to execute this vision
and has launched the first product line called 'Breathe ®', through our
manufacturing partner,
The Breathe line is predominantly in 300 to 400 stores serviced through UNFI as
well as in almost 500 Home Depots through a distributor called Central Garden
Excel ("Central"), one of the largest distributors to the DIY/Hardware retail
channel. Central will be handling all of the Company's distribution to Home
Depot and are currently presenting to others that are considered to be
competitive players to Home Depot. The Company has also begun to implement its
online sales strategy and Breathe is now available on Amazon. Breathe is
currently being presented to a few other national retailers in
The Company has also recently launched the Breathe Hand Sanitizer Spray in
The product is being manufactured by
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The Company is also the marketer of record and not the owner of both the
Betterbilt Chemical's Kleen Out® branded drain opener and the Winona® Butter
Flavor Popcorn Spray. The Company provides marketing services to these brands
when needed as per the terms of the agreement. Both products are available in
all Walmart stores. Through the Company's relationship with TSG and their
marketing partner Deutsch Marketing, the Company launched a new label in
In addition, as long as the Company can continue to raise capital the Company plans to launch other products in hair care, food, personal care, spirits and beverages over the next 60 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; as if the Company's ability to raise further capital is critical.
We will need to rely on sales of our common stock in order to raise additional capital. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions to the registration requirements of the Securities Act of 1933. 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 marketing plan and the Company intends to try and partner with a global media Company to assist with marketing products on a larger level across a variety of media platforms in order to support its current retail and online distribution. The Company is also planning on launching new products over the next year that are viewed as disruptive in their market and leading edge, again as long as their financing plans come to fruition. The Company has now engaged with but has not contracted with, a top investment bank due to the Company's future partnerships and outlook.
The Company's ultimate goal is to become a leading brand owner and third-party marketer of cutting edge technologies in the consumer 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 2020/21 and beyond.
For more information please visit our website at www.starcobrands.com, www.breathecleaning.com, and www.breathesanitizer.com.
Results of Operation for the Three Months Ended
Revenues
For the three months ended
-15- Operating Expenses
For the three months ended
For the three months ended
For the three months ended
Other income and expense
For the three months ended
Net loss
For the three months ended
Liquidity and Capital Resources
As reflected in the accompanying financial statements, the Company has an
accumulated deficit of
We netted
We currently require cash of about
We have an outstanding loan of approximately
On
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Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in
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 is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. 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.
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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 goods or services it transfers 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 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.
The Company earns its revenue from the licensing agreements it has with
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.
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