Cleancore Solutions Inc.

Company Overview

Business Model: CleanCore Solutions, Inc. specializes in the development and production of cleaning products that generate pure aqueous ozone for professional, industrial, and home use. The company leverages a patented nanobubble technology to infuse ozone into tap water, creating a solution effective for cleaning, sanitizing, and deodorizing surfaces and high-touch areas. Its mission is to lead in creating safe, chemical-residue-free spaces. Revenue is primarily generated from the sale of these cleaning products across various sectors.

Market Position: CleanCore Solutions, Inc. positions itself as a leader in aqueous ozone technology, asserting it is the only company with an aqueous ozone solution produced in nanobubble form. This patented technology is supported by 15 patents (10 in the United States, 1 in Mexico, and 4 in Canada). The company's products are cited as effective in eliminating germs, viruses, bacteria, allergens, and molds, performing better than bleach according to research. Key competitive advantages include the elimination of harsh chemicals, reduction in labor costs for janitorial services, absence of chemical residue, and environmental benefits such as reduced packaging waste and water consumption. The company operates in a highly competitive janitorial services industry, competing with traditional chemical cleaning companies like Proctor and Gamble and Unilever (which lack aqueous ozone technology), and other aqueous ozone providers such as Tennant Company, Tersano Inc., Enozo Technologies Inc, and O3 Waterworks.

Recent Strategic Developments: In the past twelve months, CleanCore Solutions, Inc. has strategically shifted its focus from selling primarily through geographic and strategic distributors to a direct sales model targeting end users. Key initiatives include expanding its distributor network, improving production processes, and demonstrating product effectiveness in sectors like restaurants, airports, and hotels. A significant development in the fourth quarter of fiscal year 2025 was the acquisition of substantially all assets of Sanzonate Europe Ltd., an Irish incorporated company, and the subsequent formation of CleanCore Global Limited in Ireland, aimed at expanding distribution across the European Union. On January 10, 2025, the company signed a three-year memorandum of understanding with Kellermeyer Bergensons Services, LLC, a national building service management company, which led to initial purchase orders totaling $1.63 million in May and June 2025.

Geographic Footprint: CleanCore Solutions, Inc.'s corporate headquarters, warehouse, and assembly functions are located in Omaha, NE, United States. The company also maintains a small warehouse in Dublin, Ireland, for its wholly owned subsidiary, CleanCore Global Limited. Historically, products have been sold in the United States and Europe. The recent acquisition of Sanzonate Europe Ltd. assets is intended to further expand the company's distribution network throughout the European Union. The company holds patents in the United States, Mexico, and Canada, and has received a letter of no-objection from Health Canada for its solution as a sanitizer in Canada.

Financial Performance

Revenue Analysis

Profitability Metrics (FY2025):

• Gross Margin: 47.59%
• Operating Margin: -308.10%
• Net Margin: -325.27%

Investment in Growth (FY2025):

• R&D Expenditure: Not explicitly quantified, but R&D is an indirect cost within cost of sales and the company is continuing research and development into specific product applications and consumer-focused products.
• Capital Expenditures: $32,389
• Strategic Investments: Acquisition of Sanzonate Europe Ltd. assets for a total cost of $1,563,267, consisting of $425,000 in cash, an $800,000 promissory note, a $181,475 warrant, and $156,792 in direct acquisition-related costs. Additionally, up to $1,250,000 in earn-out payments are contingent on Net Sales milestones over five years.

Product Category Analysis

Janitorial and Sanitation

Financial Performance (FY2025):

• Revenue: $1,811,870 (+19.35% YoY)
• Key Growth Drivers: Shift to direct sales model, memorandum of understanding with Kellermeyer Bergensons Services, LLC, and initial purchase orders from this new customer. Product Portfolio:
• Fill Stations: Wall-mounted units (1.0 Fill Station for smaller needs, 3.0 Fill Station for commercial/industrial needs) producing on-demand aqueous ozone.
• POWER CADDY: 12-gallon tank generating on-site aqueous ozone, equipped with spray gun and vacuum hose for intense cleaning.
• POWER MINI CADDY: 6-gallon version of POWER CADDY, popular in smaller areas like restaurants.
• GreenKlean: Chlorinated tablets that kill 99.9% of viruses and bacteria, used on hard non-porous surfaces, easy to use, fast dissolving, no-rinse sanitizer (NSF D2 classification). Market Dynamics:
• Competitive positioning within segment: Products eliminate harsh chemicals, reduce labor costs, leave no chemical residue, and are environmentally conscious.
• Key customer types and market trends: Used in retail, distribution centers, factories, warehouses, restaurants, schools and universities, airports, healthcare, food service, and commercial buildings.

Ice System

Financial Performance (FY2025):

• Revenue: $66,691 (+242.10% YoY)
• Key Growth Drivers: Proactive ice machine cleaning program, effectively destroys bacteria (Listeria, Salmonella, E. Coli, Norwalk Virus, Shigella) by sending 0.50 ppm of aqueous ozone through the machine. Product Portfolio:
• Ice Treatment System: Designed to prevent the growth of bacteria and mold in ice machines. Market Dynamics:
• Addresses the need for frequent, labor-intensive cleaning of ice machines in indoor environments prone to bacteria and mold growth.

Other

Financial Performance (FY2025):

• Revenue: $194,273 (+188.22% YoY) Key Characteristics:
• Consists primarily of sales of parts, accessories, shipping and handling, and equipment rental income.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No repurchases of common stock were made during the fourth quarter of fiscal year 2025.
• Dividend Payments: CleanCore Solutions, Inc. has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, intending to reinvest future earnings into business development and growth.
• Future Capital Return Commitments: None disclosed.

Balance Sheet Position (as of June 30, 2025):

• Cash and Equivalents: $1,460,997
• Total Debt: $4,985,555 (comprising current and non-current notes payable, including related party debt)
• Net Cash Position: $(3,524,558) (Net Debt)
• Credit Rating: Not disclosed.
• Debt Maturity Profile:
  • Burlington Capital, LLC Note: $1,760,314 outstanding, with quarterly payments of $100,000 and a final payment of $1,396,881 due April 1, 2027.
  • Sanzonate Europe Ltd. Subordinated Promissory Note: $800,000 principal, due April 15, 2027, bearing 10% interest per annum.
  • Unsecured Promissory Notes (April 16, 2025): $1,010,000 aggregate principal, due April 16, 2027, bearing 12% interest per annum.
  • Unsecured Promissory Note (June 6, 2025): $500,000 principal, due June 6, 2027, bearing 12% interest per annum.
  • Original Issue Discount Promissory Note (June 30, 2025): $520,000 principal, due October 10, 2025, bearing 15% interest per annum.
  • Related party notes to Clayton Adams and Travis Buchanan: $290,241 and $125,000 respectively, due 60 days of written demand.

Cash Flow Generation (FY2025):

• Operating Cash Flow: $(2,337,659)
• Free Cash Flow: $(2,370,048) (Operating Cash Flow less Capital Expenditures)

Operational Excellence

Production & Service Model: CleanCore Solutions, Inc. sources components and raw materials both domestically and internationally, with assembly operations conducted at its Omaha, NE facility. The company maintains a strict quality control program overseen by its Director of Operations and Lead Production Supervisor. Inventory control systems track components from supply sources through manufacturing and shipment, with most products barcoded to facilitate tracking. The manufacturing operations are designed for low-cost production across a variety of products, quantities, and formats, emphasizing flexible production line changeover capabilities and reduced cycle times to respond to demand changes. The company believes its manufacturing facilities have sufficient capacity for current and anticipated sales.

Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials: Chassis, generators, various sockets, degas cylinders, and other components.
• Key Component Vendor: A single vendor supplies a major component for two of the company's main products, accounting for approximately 11% of total purchases in FY2025 (30% in FY2024).
• International Sourcing: Certain materials are sourced from Asian-based suppliers, which may be subject to import duties.
• Logistics: Relies on third-party delivery services for both inbound (trucking, ocean carriers) and outbound (Less-than-Truckload, parcel freight) shipping.

Facility Network:

• Manufacturing/Corporate: Omaha, NE - approximately 12,420 square feet, including office, manufacturing, shipping, and warehouse space. Leased until February 2028.
• Distribution: Dublin, Ireland - approximately 5,000 square feet warehouse for CleanCore Global Limited, on a month-to-month lease.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The company has shifted its focus over the past twelve months to selling directly to end users, particularly targeting building service management companies, hospitality, education, and venue sectors.
• Channel Partners: Historically, products were sold through geographic and strategic distributors across the United States and Europe. The company plans to evolve into a hybrid model, utilizing both traditional distributors and a direct sales force.
• Digital Platforms: Actively developing consumer-focused products for online sales and distribution through large box retail stores. Customer Portfolio: Enterprise Customers:
• Strategic Partnerships: On January 10, 2025, CleanCore Solutions, Inc. signed a three-year memorandum of understanding with Kellermeyer Bergensons Services, LLC (KBS), a national building service management company.
• Customer Concentration: For the year ended June 30, 2025, two customers, Kellermeyer Bergensons Services, LLC and Prolink, Inc., accounted for 42% and 17% of total revenue, respectively. As of June 30, 2025, Kellermeyer Bergensons Services, LLC accounted for 47% of all accounts receivable. The company primarily sells products under individual purchase orders, and the memorandum of understanding with Kellermeyer Bergensons Services, LLC is not binding for specific quantities.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The janitorial services industry is highly competitive and characterized by rapid changes in technology, intense price competition, the introduction of new products, evolving industry standards, and diverse regulatory environments.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Traditional Chemical Cleaning Companies: Proctor and Gamble, Unilever (do not possess aqueous ozone technology).
• Aqueous Ozone Cleaning Companies: Tennant Company, Tersano Inc., Enozo Technologies Inc, O3 Waterworks (also produce devices for aqueous ozone, with some offering products for personal and professional use).

Competitive Response Strategy: CleanCore Solutions, Inc. aims to maintain its competitive advantage by continually improving product design, enhancing its product offerings, and expanding its marketing and distribution channels.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The market for alternative green cleaning supplies is rapidly evolving, leading to high uncertainty regarding demand and market acceptance for newly introduced products. The company faces challenges in accurately forecasting future revenue and profitability due to the emerging nature of its markets. Technology Disruption: The company's business strategy is vulnerable to its inability to anticipate and adapt to rapid technological changes, evolving standards, and new product introductions by competitors. Customer Concentration: A significant portion of the company's revenue is derived from a limited number of major customers. For the year ended June 30, 2025, Kellermeyer Bergensons Services, LLC and Prolink, Inc. accounted for 42% and 17% of revenue, respectively. The loss of any major customer could have a material adverse effect on operations.

Operational & Execution Risks

Supply Chain Vulnerabilities: CleanCore Solutions, Inc. relies on a limited number of third-party suppliers for key raw materials and components, including a single vendor for a major component of two main products. This dependency, coupled with the absence of long-term supply contracts, poses a risk of supply disruptions, increased raw material costs, and delays in product delivery. The company also depends on third-party delivery services for both inbound and outbound logistics, exposing it to risks from increased shipping costs or service interruptions. Capacity Constraints: While current facilities are believed to have sufficient capacity, failure to successfully expand fulfillment capabilities in response to increased demand could lead to sales declines. Business Interruptions: Distribution centers are susceptible to damage or interruption from various events, including human error, pandemics, natural disasters, and power loss, which could harm reputation and operations.

Financial & Regulatory Risks

Market & Financial Risks: The company has incurred losses and negative cash flows from operations, leading its auditors to issue a going concern qualification. It requires additional financing to execute its business plan, and the inability to secure such funding could materially affect its financial condition. International operations expose the company to currency exchange rate fluctuations. Regulatory & Compliance Risks: CleanCore Solutions, Inc. is subject to extensive regulation by U.S. government agencies (EPA, FIFRA, FDA, OSHA, ACGIH) concerning the manufacturing, use, distribution, and sale of ozone devices and products. Regulatory uncertainty surrounding nanobubble technology and aqueous ozone, along with evolving international standards, could lead to substantial compliance costs, liabilities, or require product redesigns.

Geopolitical & External Risks

Geopolitical Exposure: International operations, including the newly formed CleanCore Global Limited in Ireland, expose the company to risks such as cultural differences, economic instability, trade disruptions, and varying legal and regulatory environments. Trade Relations: Changes in U.S. trade policy, tariffs, and import/export regulations, particularly concerning components sourced from Asian-based suppliers, could adversely affect operating results. Sanctions & Export Controls: Compliance with U.S. and foreign anti-corruption laws, such as the Foreign Corrupt Practices Act, is critical for international operations. Geopolitical conflicts globally could impact economic conditions, supply chains, and expose the company to cyberattacks.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: CleanCore Solutions, Inc.'s R&D efforts are centered on its patented nanobubble technology for aqueous ozone production. The company is continuing research into specific product applications within its core janitorial and sanitation product line, evolving existing products to incorporate "real time" testing evaluations. Innovation Pipeline: The company is actively developing consumer-focused products for online and large box retail distribution and exploring expanded usage of its products in key market segments such as healthcare, food service, and commercial cleaning industries.

Intellectual Property Portfolio:

• Patent Strategy: CleanCore Solutions, Inc. holds 15 patents, including 10 utility patents in the United States, 1 in Mexico, and 4 in Canada. These patents cover the functions of its machines that enable the production of ozone in nanobubble form. The company relies on federal patent laws, unregistered copyrights, and trade secret laws to protect its proprietary technology.
• Licensing Programs: The company currently does not license any of its patents.

Leadership & Governance

Executive Leadership Team

Board Composition: The board of directors consists of four directors, two of whom are independent. The audit committee is comprised of two independent directors. Clayton Adams, the Chief Executive Officer, holds all outstanding shares of Class A common stock, enabling him to exercise approximately 66% of the total voting power, making CleanCore Solutions, Inc. a "controlled company" under NYSE American rules.

Human Capital Strategy

Workforce Composition:

• Total Employees: As of June 30, 2025, CleanCore Solutions, Inc. had 15 full-time employees.
• Geographic Distribution: 13 employees are located in the United States, and 2 are in Ireland.
• Skill Mix: The company seeks to attract and retain quality employees in sales, marketing, and internal operations, with salespeople focused on client relationships and marketing staff on brand awareness.

Talent Management: Acquisition & Retention: The company's strategy involves attracting and retaining skilled personnel, particularly in sales and marketing, to effectively grow its client base and brand awareness. Culture & Engagement: None of the company's employees are represented by labor unions, and management believes it maintains an excellent relationship with its employees.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: CleanCore Solutions, Inc. emphasizes its product's environmentally conscious nature, aiming to reduce packaging waste by replacing traditional cleaners with aqueous ozone dispensers. The company also believes its products reduce water consumption during cleaning and may contribute to a reduced carbon footprint for janitorial services.

Social Impact Initiatives:

• Product Impact: The aqueous ozone solution cleans and deodorizes surfaces without harsh caustic chemicals, leaving only water and potentially reducing eye, skin, and respiratory irritation for users compared to typical cleaning agents.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: CleanCore Solutions, Inc. is subject to regulation by multiple U.S. government agencies, including the U.S. Environmental Protection Agency (EPA) under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) for ozone as a pesticide, and the U.S. Food and Drug Administration (FDA) for ozone's use in water treatment and as an antimicrobial agent for food. The company's EPA registration establishment number is 090379-NE-001. Additionally, the Occupational Safety and Health Administration (OSHA) and the American Conference of Governmental Industrial Hygienists (ACGIH) provide guidelines for ozone gas exposure. International Compliance: Health Canada has issued a letter of no-objection for the company's solution as a sanitizer in Canada for various uses.

Legal Proceedings: On June 6, 2025, CleanCore Solutions, Inc. settled a lawsuit with its former Chief Executive Officer, Matthew Atkinson, which involved the issuance of 200,000 shares of Class B common stock. No other material legal proceedings or claims are currently known that are believed to have a material adverse effect on the business.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The company's federal tax benefit at a statutory rate was 21.00% for both the years ended June 30, 2025, and 2024.
• Geographic Tax Planning: The formation of CleanCore Global Limited in Ireland did not have a material impact on the company's tax provision in the current tax year.
• Tax Reform Impact: The "One Big Beautiful Bill Act" was not enacted until after the fiscal year-end, and its effects are not included. Given the company's valuation allowance, management does not believe there will be a material impact.

Deferred Tax Assets/Liabilities: As of June 30, 2025, CleanCore Solutions, Inc. recognized a full valuation allowance on its net deferred tax asset, indicating that it is not more-likely-than-not that any portion of the asset will be realized.

• Federal NOL Carryovers: $14,216,453 as of June 30, 2025, with no expiration.
• State NOL Carryovers: $14,216,453 as of June 30, 2025, subject to expiration beginning in 2043.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: CleanCore Solutions, Inc. maintains product liability insurance, which is subject to deductibles and limitations. The company also has business interruption insurance, though it may be insufficient to cover all potential losses. Director and officer insurance expenses increased significantly in fiscal year 2025 due to the company's listing on NYSE American.