Item 1.01 Entry into a Material Definitive Agreement

On December 29, 2022, Starco Brands, Inc. (the "Company") entered into a financing transaction with Ross Sklar, its Chief Executive Officer ("Sklar"), consisting of a secured promissory note (the "Promissory Note"), warrants (the "Warrants") to purchase common stock of the Company (the "Common Stock"), and a security agreement (the "Security Agreement") to secure the obligations under the Promissory Note (the foregoing agreements and transactions contemplated thereby, collectively, the "Financing"). The entry into the Financing was approved by the disinterested directors of the Company and was entered into to provide the Company with short-term liquidity to fund non-ordinary course business transactions and acquisitions.

Promissory Note The Promissory Note was issued to Sklar on December 29, 2022, in the principal sum of $2,000,000, and provides for the funding of $2,000,000 by Sklar to the Company (the "Loaned Funds"). The Promissory Note carries a floating interest rate comprised of the Wall Street Journal Prime Rate (re-assessed on the first day of each month) plus 4% (for a current floating interest rate of 11.5%) (the "Interest Rate"). The Promissory Note matures on August 1, 2023 (the "Maturity Date"), and has a default interest rate equal to the then current Interest Rate plus 5%. The Company, at its option, may prepay the Promissory Note, in whole or in part, without prepayment penalty of any kind. In connection with the Promissory Note, the Company entered into the Security Agreement to secure the Promissory Note obligations, and issued Warrants as a funding fee to obtain the Loaned Funds.

The foregoing summary of the terms of the Promissory Note does not purport to be complete and is qualified in its entirety by reference to the Promissory Note, a copy of which is filed as Exhibit 10.1 to this Report and is incorporated herein by reference.

Security Agreement In connection with the Promissory Note, the Company entered into the Security Agreement, by and between the Company and Sklar to provide security interests to Sklar to secure the obligations underlying the Promissory Note. A security interest in the Collateral (as defined in the Security Agreement) has been granted to Sklar to secure the repayment of all principal, interest, costs, expenses and other amounts now or hereafter due under the Promissory Note by the Maturity Date. Sklar is authorized to file financing statements to perfect the security interest in the Collateral without authentication by the Company.

The foregoing summary of the terms of the Security Agreement does not purport to be complete and is qualified in its entirety by reference to the Security Agreement, a copy of which is filed as Exhibit 10.2 to this Report and is incorporated herein by reference.

Warrant

In connection with the Promissory Note, on December 29, 2022, the Company and Sklar entered into an agreement for Warrants. Pursuant to the Warrants, the Company issued warrants to purchase 285,714 shares of Common Stock at an exercise price of $0.01 per share. The number of shares of Common Stock for which the Warrants are exercisable and the exercise price may be adjusted upon any event involving subdivisions, combinations, distributions, recapitalizations and like transactions. Pursuant to the Warrant, the Warrant and the right to purchase securities upon the exercise of the Warrant will terminate on December 29, 2027. The Warrants are fully vested as of the date of grant and may be exercised through cash or cashless exercise.

The foregoing summary of the terms of the Warrant does not purport to be complete and is qualified in its entirety by reference to the Warrant, a copy of which is filed as Exhibit 10.3 to this Report and is incorporated herein by reference.

Capitalized terms used in this Item 1.01 but not otherwise defined shall have the meaning given to such terms in the Promissory Note, Security Agreement or Warrant, as applicable.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosures set forth in Item 1.01 with respect to the Promissory Note and Security Agreement are hereby incorporated into this Item 2.03 by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

The following exhibits are filed with this Current Report on Form 8-K:



Exhibit Number    Description
10.1                Secured Promissory Note issued in favor of Ross Sklar, dated
                  December 29, 2022.
10.2                Security Agreement, by and between Starco Brands, Inc. and
                  Ross Sklar, dated December 29, 2022.
10.3                Warrant to Purchase Common Stock, issued to Ross Sklar, dated
                  December 29, 2022.
104               Cover Page Interactive Data File - the cover page XBRL tags are
                  embedded within the Inline XBRL document

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