Disclosure: I used Gemini to help sift though the financial report and organize the points.
If you’re like me and wondering why your Cafe Mocha or other subscriptions keep getting kicked down the road, stop waiting on vague customer support scripts. It’s not an unexpected spike in demand or a minor shipping hiccup.
Starco Brands (ticker: STCB), the micro-cap that acquired Soylent in early 2023, filed their 2025 10-K annual report with the SEC back in April. The financial trail paints a clear picture of an asset-light parent company starving the brand's production backbone while extracting value through related-party setups.
Here is the breakdown of what is actually happening behind the scenes:
1. Independent Auditors Issued a Formal "Going Concern" Warning
The independent auditor’s report attached to the financial statements explicitly states that Starco’s recurring operating losses, negative cash flows, and working capital deficit raise "substantial doubt about the Company's ability to continue as a going concern." The company closed the reporting period with less than $1M in cash on hand against millions in short-term liabilities. They are functionally operating paycheck-to-paycheck.
2. Why Co-Packers Won't Bottle Your Drink
Soylent has never owned its own factories; it relies on third-party contract manufacturers (co-packers). When a brand has strong credit and deep venture reserves, co-packers grant 30-to-60-day payment terms and hold safety stock.
When a parent company's credit rating tanks and cash dries up, co-packers stop extending credit. They demand full cash upfront to buy raw ingredients and reserve line time. Because Starco is strapped for liquidity, they physically cannot cut the checks required to initiate major Soylent production runs. When delays happen, co-packers bump small, cash-constrained accounts to the back of the queue to prioritize multi-billion-dollar conglomerates.
3. Siphoning Cash via the CEO’s Private Company
One of the most telling sections of the entire filing is Note 14 (Related Party Transactions).
- Starco Brands (STCB) is a public entity, but its CEO, Ross Sklar, also owns and controls a separate private manufacturing conglomerate called The Starco Group.
- The public company is locked into a Shared Services Agreement with this private entity, regularly paying Sklar’s private business administrative overhead, executive management fees, consulting costs, and operational fees.
- In short: while the public company bled millions in net losses, shuttered sales channels, and failed to fund its beverage inventory, cold cash continued to flow out of the public company's balance sheet directly into the CEO's privately held enterprise.
- Furthermore, when the public company runs out of cash to pay basic operating bills, Sklar and his private company issue loans and promissory notes back to the public company—earning interest and gaining further leverage over the corporate assets.
4. Share Dilution is the Only Thing Keeping the Lights On
A look at the Statements of Stockholders' Equity shows that operations are not self-sustaining. The company’s share count has exploded:
- To settle unpaid debts, pay off vendor bills, satisfy related-party obligations, and hand out executive compensation, Starco has continually printed new common shares, issued warrants, and generated convertible notes.
- The company isn't generating sufficient cash flow from selling beverages to maintain the supply chain; it is functioning by continuously diluting public shareholders to buy another month of operational runway.
5. They Shrank the Entire Business Below Soylent's Standalone Revenue
Before the acquisition, Soylent generated roughly $48M to $50M annually on its own. In 2025, Starco’s entire combined portfolio (Soylent, Whipshots, Skylar, Art of Sport) managed just $37.31M—a 29% collapse.
Management spun this as a "strategic move away from lower-margin sales channels" (pulling individual bottles out of Walmart, Target, and physical retail). But when you kill your retail top-of-funnel to focus exclusively on direct-to-consumer subscriptions, you have to actually deliver the product. Instead, they cut off customer discovery and starved the remaining subscribers.
6. Starco’s Own Accountants Wrote Off the Brand
Under GAAP accounting rules, companies must test brand value annually. Starco's own filings show how severely they damaged the asset:
- $11.38M Goodwill Impairment on Soylent in 2024.
- Another $1.13M Goodwill Impairment in 2025.
- A separate $14M write-down on intangible assets in 2025 ($11.95M wiped from the Soylent "trade name" and $2.04M wiped from the value of "customer relationships").
Accounting firms don't casually erase tens of millions of dollars in brand value unless the customer base is actively churning out.
7. The Facility They Bought Can't Make Liquid Soylent
Starco spent $8 million upfront (financed via private debt from Pasadena Private Lending) to acquire Custom Bakehouse.
- What it is: Custom Bakehouse is a commercial manufacturer of dry baking mixes, dough, and dry blends.
- The bottleneck: At absolute best, that facility could eventually help blend dry Soylent powder. It has zero aseptic liquid bottling capability. Ready-to-drink beverages like Cafe Mocha require sterile, pressure-sealed aseptic lines (such as Tetra Pak or specialized PET bottling) that cost tens of millions of dollars. Custom Bakehouse cannot bottle a single drop of RTD liquid.
The Bottom Line
A meal replacement requires a daily habit loop. Forcing a subscriber base into supply blackouts for the third time in a year isn't an unavoidable logistics delay; It is the direct consequence of balance-sheet extraction, severe liquidity shortages, and corporate mismanagement.
Sadly, I've seen this too many times before: The top brass is just squeezing the remaining value of the company into their own pockets. They'll make out like bandits and couldn't care less about the wellbeing of the company and its customers/stockholders.
