{"url_path":"/sec/stcb/8-k/2026-07-21/item-2-03","section_key":"item-2-03","section_title":"Item 2.03 Creation of a Direct Financial Obligation.**","topic":"sec","document":{"doc_type":"8-K","doc_date":"2026-07-21","source_url":"https://www.sec.gov/Archives/edgar/data/1539850/0001493152-26-034038-index.html","accession_number":"0001493152-26-034038","cik":"0001539850","ticker":"STCB","issuer_name":"Starco Brands, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1539850/0001493152-26-034038-index.html","primary_entity_key":"0001539850","primary_entity_name":"Starco Brands, Inc."},"word_count":1479,"has_tables":true,"body_markdown":"**Item\n2.03 Creation of a Direct Financial Obligation.**\n\n \n\n**Loan\nAgreement**\n\n \n\nOn\nJuly 15, 2026, (i) Pasadena Private Lending Inc., a Delaware\ncorporation (“PPL” or “Lender”), (ii) Starco Brands, Inc., a Nevada corporation\n(“Starco” or the “Company”), (iii) and each of Starco’s subsidiaries: (a) Starco\nBrands, LLC, (b) Starco Manufacturing, LLC, (c) The AOS Group Inc., (d) Soylent Nutrition, Inc., (e) Skylar Body, LLC, (f)\nWhipshots, LLC, (g) Whipshots Holdings, LLC (the Company and subsidiaries listed in cluases (a) through (g) of this clause (iii),\nthe “Borrowers” and each a “Borrower”), (iv) Ross Sklar, and (v) such other Persons signatory thereto, entered\ninto a Loan Agreement (the “Loan Agreement”), allowing the Company to, among other things, (i) finance the Custom\nFoods Acquisition, and (ii) expand its access to working capital. Capitalized terms not otherwise defined in this Item 2.03 Loan\nAgreement will have the meanings set forth in the Loan Agreement.\n\n \n\nThe\nLoan Agreement provides for the following:\n\n \n\nA\nterm loan in the original principal amount of $11.0 million (“Initial Term Loan”) is being provided by Lender to the\nBorrowers. The proceeds of the Initial Term Loan were required to be used primarily to fund a portion of the purchase price of the Custom\nFoods Acquisition. Amounts repaid or prepaid under the Initial Term Loan may not be re-borrowed.\n\n \n\n \n\n \n\n \n\nSubject\nto satisfaction of specified conditions, the Borrowers may increase the term loan commitment through up to $4.0 million of additional\nterm loans under an accordion feature. Each increase must be in increments of $1.0 million, and no more than four increases may be requested\nduring the term of the Loan Agreement. Funding of any accordion increase is subject to Lender’s approval based on covenant compliance,\ncollateral review, business performance, delivery of an accordion note, and payment of fees and expenses.\n\n* *\n\nThe\nLoan Agreement also provides for a revolving line of credit of up to $3.0 million. Advances may be requested during the draw period,\nwhich runs until the earlier of the twenty-four-month anniversary of the agreement, any Lender-approved extension, or the occurrence\nof an event of default. The aggregate outstanding balance of advances may not exceed $3.0 million at any time. Advances that are repaid\nmay be re-borrowed during the draw period, subject to the maximum line amount.\n\n \n\nRequests\nfor line of credit advances must be submitted through a written draw request, and the lender is required to fund approved advances within\nfive business days. Borrowers are not entitled to advances if a default or event of default exists or would result from the borrowing,\nor if the representations and warranties under the agreement are not true in all material respects. The agreement also imposes a $1,000\nfee for each additional draw request or repayment made in a calendar month after the first such transaction.\n\n \n\nAll\nobligations under the term loan, accordion loans and line of credit are cross-defaulted and cross-collateralized. As a result, a default\nunder any note constitutes a default under all notes, and all collateral securing the loans may be used by the Lender to satisfy obligations\nunder any of the loan facilities.\n\n* *\n\nThe\nloans are guaranteed by Ross Sklar, Starco’s Chief Executive Officer, and various family trusts*.*The obligations are secured\nby pledges of equity interests, security interests in substantially all personal property, collateral of the borrowers, Uniform Commercial\nCode financing statements, collateral assignments related to the Custom Foods Acquisition documents and representations and warranties\ninsurance policy, and related security documents.\n\n \n\nThe\nLoan Agreement contains customary affirmative and negative covenants, including restrictions on additional indebtedness, liens, restricted\npayments, transfers of ownership interests, acquisitions or formation of subsidiaries without lender approval, amendments to acquisition\ndocuments, and the incurrence of merchant cash advance financing or similar prohibited financing programs.\n\n \n\nThe\nproceeds of the Initial Term Loan were used for the Custom Foods Acquisition, line of credit proceeds for working capital, working capital\nand certain accordion loan proceeds for repayment of portions of the Bridge Term Loan Promissory Note, dated as of December 22, 2025,\nissued by Starco Brands, Inc. in favor of the Starco Group, Inc., and filed as Exhibit 10.1 to the Company’s Current Report on\nForm 8-K filed with the Commission on December 23, 2025 (the “Bridge Loan Note”).\n\n \n\nThe\nBorrowers are also subject to ongoing financial covenants, including a requirement to maintain a Maximum Senior Debt to EBITDA Ratio\nof no greater than 3.00x and a Fixed Charge Coverage Ratio of at least 2.00x. Compliance is measured quarterly and supported by quarterly\ncompliance certificates and financial reporting obligations. The Loan Agreement includes a limited equity cure right permitting equity\ncontributions or qualifying junior debt contributions to cure certain covenant breaches, subject to specified limitations.\n\n* *\n\nThe\nBorrowers must provide quarterly and annual financial statements, SEC filings, accounts receivable and accounts payable aging reports,\ntax returns, insurance coverage, and other information requested by the Lender. Insurance coverage of at least $18 million must be maintained,\nwith the Lender named as lender loss payee and/or additional insured.\n\n \n\nThe\nLoan Agreement required payment of a non-refundable closing fee equal to 2.0% of the initial $11.0 million term loan amount ($220,000)\nand an additional 2.0% fee on each accordion increase. Borrowers are also responsible for legal fees, filing fees, perfection costs,\nadministration expenses, and enforcement costs incurred by the Lender.\n\n* *\n\n**\n\n \n\n \n\n* *\n\nThe\nLoan Agreement contains customary events of default, including those arising under the notes, failure to deliver required quarterly compliance\ncertificates, and failure to comply with financial covenants. Upon the occurrence of an event of default, the Lender may exercise all\navailable legal and equitable remedies, including acceleration of the obligations and enforcement of its collateral rights.\n\n \n\nThe\nforegoing summary of the terms of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to\nthe full text of the Loan Agreement, a copy of which is filed as Exhibit 10.1 to this Report filed with the Commission on July 21,\n2026, and is incorporated herein by reference.\n\n \n\n**Related\nParty Notes**\n\n** **\n\nIn\nconnection with the Loan Agreement, Lender required Mr. Sklar, Starco’s Chief Executive Officer, to enter into the Subordination\nAgreement (defined below) pursuant to which Mr. Sklar’s rights under the Consolidated Secured Promissory Note issued in favor of\nRoss Sklar, dated August 11, 2023 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission\non August 11, 2023), as amended by that Amendment Number One to Consolidated Secured Promissory\nNote, by and between Starco Brands, Inc. and Ross Sklar, dated May 31, 2024 (filed as Exhibit 10.2 to the Company’s Current\nReport on Form 8-K filed with the Commission on May 31, 2024), and as further amended by that Amendment Number Two to Consolidated\nSecured Promissory Note, by and between Starco Brands, Inc. and Ross Sklar, dated August 13, 2025 (filed as Exhibit 10.11 to the\nCompany’s Quarterly Report on Form 10-Q filed with the Commission on August 14, 2025) (together, the “Consolidated Note”),\nwould be subordinated to Lender’s rights under the Loan Agreement.\n\n \n\nIn\nconsideration of Mr. Sklar agreeing to subordinate the debt held pursuant to the Consolidated Note, Mr. Sklar, Starco Brands, and Lender\nagreed to amend and restate the Consolidated Note in its entirety to become that certain Amended and Restated Secured Convertible Promissory\nNote, dated July 15, 2026, issued from Starco Brands, Inc. to Ross Sklar, an individual (the “Restated Note”), which,\namong other things, (i) provides that the outstanding balance under the Restated Note may, at the option of the holder, convert into\nClass A common stock of Starco, and (ii) expressly subjects to the Restated Note to the terms of conditions of the Subordination Agreement.\n\n \n\nThe\nforegoing summary of the terms of the Restated Note does not purport to be complete and is qualified in its entirety by reference to\nthe full text of the Restated Note, a copy of which is filed as Exhibit 10.2 to this Report filed with the Commission on July 21, 2026,\nand is incorporated herein by reference.\n\n \n\n**Subordination\nAgreement**\n\n** **\n\nIn\nconnection with the Loan Agreement, Lender required (a) Mr. Sklar and (b) The Starco Group, Inc., lender under the Bridge Loan Note,\nto enter into that certain Subordination Agreement, by and among (i) Starco Brands, Inc., (ii) The Starco Group, Inc., (iii) Ross Sklar,\nand (iv) Pasadena Private Lending Inc., dated July 15, 2026 (the “Subordination Agreement”) pursuant to which Mr.\nSklar’s rights under the Restated Note and The Starco Group, Inc.’s rights under the Bridge Loan Note are subordinated to\nLender’s rights under the Loan Agreement.\n\n \n\nThe\nforegoing summary of the terms of the Subordination Agreement does not purport to be complete and is qualified in its entirety by reference\nto the full text of the Subordination Agreement, a copy of which is filed as Exhibit 10.3 to this Report filed with the Commission on\nJuly 21, 2026, and is incorporated herein by reference."}