CleanCore Solutions, Inc. (ZONE) - 10-K Summary
Business Context and Reporting Period
Company: CleanCore Solutions, Inc.
Reporting Period: Fiscal Year Ended June 30, 2025
Business Overview: CleanCore specializes in developing and producing cleaning products utilizing patented nanobubble technology to create pure aqueous ozone. The company targets janitorial, sanitation, ice machine cleaning, laundry, and industrial sectors. Products are designed to sanitize and deodorize without chemical residue.
Recent Developments: In Q4 2025, the company established a wholly-owned Irish subsidiary, CleanCore Global, and acquired the assets of Sanzonate Europe Ltd. to expand distribution in the European Union.
Key Financial Metrics
| Metric | Year Ended June 30, 2025 | Year Ended June 30, 2024 |
|---|---|---|
| Revenue | $2,072,834 | $1,604,973 |
| Gross Profit | $986,465 | $795,812 |
| Gross Margin | 47.59% | 49.58% |
| Net Loss | $(6,742,275) | $(2,281,742) |
| Operating Loss | $(6,386,341) | $(1,946,734) |
| Cash and Cash Equivalents (End of Period) | $1,460,997 | $2,016,611 |
| Net Cash Used in Operating Activities | $(2,337,659) | $(1,547,880) |
| Total Debt (Notes Payable) | $4,570,314 | $2,519,333 |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 29.15% year-over-year, primarily driven by a new major customer, Kellermeyer Bergensons Services (KBS), which accounted for 42% of total revenue in FY2025.
- Expense Surge: General and Administrative (G&A) expenses increased 186.52% to $7.08 million. This was driven by a $2.53 million increase in non-cash stock-based compensation, higher professional fees related to NYSE American listing compliance, and a $261,250 impairment loss on customer relationship intangibles.
- Widening Losses: Net loss increased 195.49% to $6.74 million due to the significant rise in operating expenses outpacing revenue growth.
- Acquisition Activity: The company spent $581,792 in cash to acquire Sanzonate assets, adding European distribution capabilities and intangible assets (licenses, trade names).
Guidance, Outlook, Risks, and Contingencies
- Going Concern Warning: The company's independent auditors have issued a "going concern" opinion. Management states that current resources ($1.46M cash) are insufficient to fund planned expenditures for the next 12 months. Additional equity or debt financing is required to continue operations.
- Internal Control Weaknesses: Management identified material weaknesses in internal controls over financial reporting, citing a lack of sufficient trained professionals to design and execute formal risk assessment processes and accounting policies.
- Customer Concentration: The company is highly dependent on major customers. KBS and Prolink Inc. accounted for 59% of revenue in FY2025. KBS alone represented 47% of accounts receivable. There are no long-term binding contracts guaranteeing future purchases.
- Legal Settlements: A lawsuit with former CEO Matthew Atkinson was settled in June 2025, involving the issuance of 200,000 shares of Class B common stock. A settlement with underwriter Boustead Securities requires future payments contingent on raising at least $50 million in capital.
- Outlook: The company plans to expand direct sales to end-users in healthcare, education, and food service sectors and leverage the Sanzonate acquisition for EU growth.
Investor Verification Checklist
- Liquidity Runway: Verify the timeline and terms of any new financing arrangements, as the company explicitly states it cannot fund operations for the next 12 months with current cash.
- Customer Retention: Confirm the status of the non-binding Memorandum of Understanding with KBS and whether subsequent purchase orders have been fulfilled or renewed.
- Stock-Based Compensation: Review the dilution impact of the $3.2 million in stock-based compensation expense and the significant number of warrants and options outstanding.
- Internal Controls: Assess the progress of remediation plans for the identified material weaknesses in financial reporting controls.
- Debt Covenants: Review the terms of the various promissory notes (including OID notes and related party debt) for potential default triggers or conversion requirements.