SCHEDULE 13G/A: Alphabet-Backed GV 2016 Increases Stake in Starco Brands to 18.8% Following Post-Merger Price Adjustment

GV 2016, L.P., an entity indirectly controlled by Alphabet Inc., has increased its beneficial ownership in Starco Brands, Inc. to 18.8% of Class A Common Stock, receiving an additional 47.98 million shares as a post-closing adjustment related to the Soylent acquisition due to the Issuer's stock price falling below $0.35.

Summary

• GV 2016, L.P., along with its affiliates including Alphabet Inc., now beneficially owns 147,490,961 shares of Starco Brands, Inc. Class A Common Stock.
• This represents an 18.8% stake in Starco Brands, Inc.
• The increase in ownership is due to the receipt of an additional 47,980,156 shares by GV 2016, L.P. on May 15, 2025, at no additional cost.
• These shares were issued as a "Second Post-Closing Adjustment" under the terms of the Merger Agreement dated February 14, 2023, for the acquisition of Soylent Nutrition, Inc.
• The adjustment was triggered because the volume weighted average trading price (VWAP) of Starco Brands' Class A Common Stock was less than $0.35 per share for the 30-trading day periods ending on February 14, 2024, and May 15, 2025.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the underlying reason for the share issuance: the company's stock price consistently traded below a low threshold ($0.35), indicating poor market performance and resulting in significant shareholder dilution. While the continued stake by a major investor (Alphabet-backed GV) could be seen as a positive, the circumstances of the increased stake are unfavorable for existing shareholders.

Positives

• A significant investor, GV 2016, L.P. (indirectly linked to Alphabet Inc.), maintains a substantial stake (18.8%) in Starco Brands, indicating continued strategic interest.
• The issuance of shares as a post-closing adjustment fulfills a contractual obligation, demonstrating adherence to prior agreements.

Negatives

• The issuance of 47,980,156 additional shares to GV 2016, L.P. indicates that Starco Brands' Class A Common Stock failed to maintain a volume weighted average trading price of $0.35 or higher for two specified 30-trading day periods.
• This share issuance likely results in significant dilution for existing shareholders, as 47.98 million new shares were issued for no additional consideration.
• The low stock price triggering the adjustment suggests underlying performance or market perception issues for Starco Brands.

Risks

• Share Dilution: The issuance of 47,980,156 shares for no additional consideration significantly dilutes the ownership percentage of existing shareholders.
• Low Stock Price Performance: The trigger for the share issuance (VWAP below $0.35) indicates persistent low valuation and potential market concerns regarding Starco Brands' performance or future prospects.
• Integration Challenges: The post-closing adjustment mechanism suggests that the Soylent acquisition, while completed, may not have met initial performance or valuation expectations, potentially indicating integration challenges or underperformance of the acquired asset.

Future Outlook

The document primarily reports a change in beneficial ownership due to a pre-existing contractual agreement. It does not provide explicit forward-looking statements or guidance from Starco Brands' management regarding future performance, revenue, or strategic initiatives, beyond the implication of past stock price performance.

Industry Context

This filing highlights the continued involvement of a major venture capital firm, GV (formerly Google Ventures), which is indirectly controlled by Alphabet Inc., in Starco Brands. While the share issuance is a result of a pre-defined merger adjustment, the significant stake held by an Alphabet-affiliated entity could be viewed as a long-term strategic interest in the consumer brands sector, particularly in the context of the Soylent acquisition. However, the trigger for the share issuance (low stock price) suggests that the acquired asset or Starco Brands' overall performance has not met initial expectations, which could reflect broader challenges in the consumer packaged goods or health/wellness beverage industry, or specific issues related to Starco Brands' execution.

Related Party Transactions

• The issuance of 47,980,156 shares to GV 2016, L.P. is a post-closing purchase price adjustment stemming from the February 14, 2023 Merger Agreement for the acquisition of Soylent Nutrition, Inc. GV 2016, L.P. was a stockholder of Soylent, making this a transaction with a significant pre-existing relationship.

Stakeholder Impact

• Shareholders: Existing shareholders face significant dilution due to the issuance of 47,980,156 new shares for no additional consideration, which could negatively impact per-share value. The low stock price triggering the adjustment also reflects poorly on shareholder returns.
• GV 2016, L.P. (and Alphabet Inc.): This entity increases its ownership stake at no additional cost, strengthening its position in Starco Brands, albeit due to the company's underperformance.

Key Dates

Recommendation

Keywords

Starco Brands, GV 2016, Alphabet Inc., SEC Filing, Schedule 13G, Beneficial Ownership, Soylent Nutrition, Merger Agreement, Post-Closing Adjustment, Share Dilution, Stock Price, Investment, Consumer Brands