Starco Brands reported its financial results for the second quarter ended June 30, 2025, on August 14, 2025. Net revenue for Q2 2025 was $11.0 million, a decrease from $15.0 million in Q2 2024. This decline was attributed to intentional portfolio optimization, including the strategic exit of unprofitable SKUs and specific retail channels.
Despite the revenue decline, the company reported a net loss of $1.8 million for Q2 2025, a substantial improvement from an $11.6 million net loss in Q2 2024. This improvement was primarily due to the absence of an $8.7 million fair value share adjustment loss present in the prior year. Adjusted EBITDA also improved to a loss of $221,000 from a loss of $1.3 million year-over-year.
For the first six months of 2025, net revenue was $21.9 million, down from $30.2 million in the comparable 2024 period. However, the company achieved a net income of $28,839 for H1 2025, a significant turnaround from a $16.0 million net loss in H1 2024, largely due to a $3.7 million fair value gain related to share-based adjustments.
Operating expenses were significantly reduced across the board, with marketing, general, and administrative expenses decreasing by 29% in Q2 2025 and 33% in H1 2025. Compensation expense and professional fees also saw reductions, reflecting headcount adjustments and operational improvements. These cost-cutting measures contributed to the improved bottom-line figures.
As of June 30, 2025, Starco Brands faced significant liquidity challenges, including an accumulated deficit of $81.39 million and a working capital deficit of approximately $6.30 million. The company was in "several Events of Default" on its $12.5 million revolving line of credit with Gibraltar Business Capital, LLC, due to reporting deficiencies and failure to maintain minimum EBITDA financial covenants.
A forbearance agreement was enacted on July 18, 2025, providing temporary relief through September 16, 2025. As a condition of this forbearance, CEO Ross Sklar contributed $1.00 million in capital in August 2025. These actions highlight the critical need for ongoing financial support and the precarious nature of the company's liquidity position.
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