What changed in CleanCore Solutions, Inc.'s 10-K — 2024 vs 2025
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Paragraph-level year-over-year comparison of CleanCore Solutions, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.
+218 added−241 removedSource: 10-K (2025-08-22) vs 10-K (2024-09-20)
Top changes in CleanCore Solutions, Inc.'s 2025 10-K
218 paragraphs added · 241 removed · 151 edited across 7 sections
- Item 1A. Risk Factors+101 / −107 · 72 edited
- Item 7. Management's Discussion & Analysis+53 / −71 · 38 edited
- Item 1. Business+41 / −43 · 27 edited
- Item 1C. Cybersecurity+9 / −9 · 8 edited
- Item 3. Legal Proceedings+5 / −7 · 2 edited
Item 1. Business
Business — how the company describes what it does
27 edited+14 added−16 removed63 unchanged
Item 1. Business
Business — how the company describes what it does
27 edited+14 added−16 removed63 unchanged
2024 filing
2025 filing
Biggest changeProducts We offer products and solutions that are marketed for janitorial and sanitation, ice machine cleaning, laundry, and industrial industries. Our products are used in many types of environments including retail establishments, distribution centers, factories, warehouses, restaurants, schools and universities, airports, healthcare, food service, and commercial buildings such as offices, malls, and stores.
Biggest changeAs of the date of this report, CleanCore Global is our only subsidiary. Products We offer products and solutions that are marketed for janitorial and sanitation, ice machine cleaning, laundry, and industrial industries.
The FDA and the Center for Food Safety and Applied Nutrition announced on June 26, 2001 that ozone may be safely used in the treatment, storage, and processing of foods, including meat and poultry, when used in accordance with the specified conditions; and that ozone is approved as a secondary food additive permitted for human consumption. Additionally, the U.S.
The FDA and the Center for Food Safety and Applied Nutrition announced on June 26, 2001 that ozone may be safely used in the treatment, storage, and processing of foods, including meat and poultry, when used in accordance with the specified conditions; and that ozone is approved as a secondary food additive permitted for human consumption. 7 Additionally, the U.S.
Aqueous ozone proactively prevents the growth of Listeria, Salmonella, E. Coli, Norwalk Virus, and Shigella in the ice and keeps the ice pure while preventing respiratory and gastrointestinal illnesses. 3 Commercial and Residential Laundry We believe that the laundry unit effectively oxidizes and deodorizes to extend the life of your laundry.
Aqueous ozone proactively prevents the growth of Listeria, Salmonella, E. Coli, Norwalk Virus, and Shigella in the ice and keeps the ice pure while preventing respiratory and gastrointestinal illnesses. Commercial and Residential Laundry We believe that the laundry unit effectively oxidizes and deodorizes to extend the life of your laundry.
Each of these companies also produces devices to make aqueous ozone, and Tersano Inc. and Enozo Technologies Inc. produce aqueous ozone products for both personal and professional use. 5 We also compete with a multitude of foreign, regional, and local competitors that vary by market.
Each of these companies also produces devices to make aqueous ozone, and Tersano Inc. and Enozo Technologies Inc. produce aqueous ozone products for both personal and professional use. We also compete with a multitude of foreign, regional, and local competitors that vary by market.
If we fail to secure a sufficient supply of key raw materials in a timely fashion, it would result in a significant delay in delivering our products. Furthermore, failure to obtain a sufficient supply of these raw materials at a reasonable cost could also harm our revenue and gross profit margins.
If we fail to secure a sufficient supply of key raw materials in a timely fashion, it will result in a significant delay in delivering our products. Furthermore, failure to obtain a sufficient supply of these raw materials at a reasonable cost could also harm our revenue and gross profit margins.
There is no commitment from any of these customers to purchase from us, or from us to sell to them, any minimum amount of products. The loss of any major customer could have a material adverse effect on our results of operations.
There is no commitment from any of these customers to purchase from us, or from us to sell to them, any minimum number of products. The loss of any major customer could have a material adverse effect on our results of operations.
As such, we continue to explore partnership or supplier opportunities to optimize our costs. 4 We have historically purchased certain key raw materials from a limited number of suppliers. We purchase raw materials on the basis of purchase orders.
As such, we continue to explore partnership or supplier opportunities to optimize our costs. As noted above, we have historically purchased certain key raw materials from a limited number of suppliers. We purchase raw materials on the basis of purchase orders.
Further, a smaller size of nanobubbles is also more effective as it has a higher density of ozone and is able to provide a more thorough surface coverage, which destroys a higher number of contaminants. Our pure aqueous ozone product is a natural cleaner, sanitizer, and deodorizer produced through the infusion of ozone into water using electricity.
Further, a smaller size of nanobubbles is also more effective as they have a higher density of ozone and are able to provide a more thorough surface coverage, which destroys a higher number of contaminants. Our pure aqueous ozone product is a natural cleaner, sanitizer, and deodorizer produced through the infusion of ozone into water using electricity.
Our focus target groups include hospitality, education, venue, and education. ● Deploy marketing strategies that raise awareness for our cleaning products . We plan to expand our marketing efforts to increase awareness of our products.
Our focus target groups include building service management companies, hospitality, education, venue, and education. ● Deploy marketing strategies that raise awareness for our cleaning products . We plan to expand our marketing efforts to increase awareness of our products.
For the year ended June 30, 2024, one customer, Pro-Link, Inc., accounted for 14% of revenue, and we had two customers, Consensus Group and Tharaldson Hospitality, that accounted for 28% each of all accounts receivable at June 30, 2024.
For the year ended June 30, 2024, one customer, Pro-Link, Inc., accounted for 14% of revenue, and two customers, Consensus Group and Tharaldson Hospitality, each accounted for 28% of all accounts receivable as of June 30, 2024.
These patents cover the functions of our products that allow our machines to produce ozone in the form of nanobubbles. ● We have experience in the cleaning industry .
We currently have 15 patents for our technology. These patents cover the functions of our products that allow our machines to produce ozone in the form of nanobubbles. ● We have experience in the cleaning industry .
We are in the process of transferring each of the patents to our current name, “CleanCore Solutions, Inc.” Patent Title Patent Number Jurisdiction Expiration Year Ozone Cleaning System 2680331 Canada 2028 Ozone Cleaning System 320909 Mexico 2028 Ozonated Liquid Dispensing Unit 10479683 United States 2028 Reaction Vessel for an Ozone Cleaning System 8075705 United States 2029 Aqueous Ozone Solution for Ozone Cleaning System 8071526 United States 2029 Aqueous Ozone Solution for Ozone Cleaning System 8735337 United States 2029 Ozonated Liquid Dispensing Unit 9174845 United States 2029 Ozone Cleaning System 9068149 United States 2030 Ozonated Liquid Dispensing Unit 9522348 United States 2030 System for Producing and Distributing an Ozonated Fluid 2802307 Canada 2031 Ozonated Liquid Dispensing Unit 2802311 Canada 2031 Ozonated Liquid Dispensing Unit 2896332 Canada 2034 Method and Systems for Controlling Microorganisms 9670081 United States 2035 Apparatus for Generating Aqueous Ozone 11033647 United States 2039 To protect our intellectual property, we rely on a combination of laws and regulations, as well as contractual restrictions.
Patent Title Patent Number Jurisdiction Expiration Year Ozone Cleaning System 2680331 Canada 2028 Ozone Cleaning System 320909 Mexico 2028 Ozonated Liquid Dispensing Unit 10479683 United States 2028 Reaction Vessel for an Ozone Cleaning System 8075705 United States 2029 Aqueous Ozone Solution for Ozone Cleaning System 8071526 United States 2029 Aqueous Ozone Solution for Ozone Cleaning System 8735337 United States 2029 Ozonated Liquid Dispensing Unit 9174845 United States 2029 Ozone Cleaning System 9068149 United States 2030 Ozonated Liquid Dispensing Unit 9522348 United States 2030 System for Producing and Distributing an Ozonated Fluid 2802307 Canada 2031 Ozonated Liquid Dispensing Unit 2802311 Canada 2031 Ozonated Liquid Dispensing Unit 2896332 Canada 2034 Method and Systems for Controlling Microorganisms 9670081 United States 2035 Apparatus for Generating Aqueous Ozone 11033647 United States 2039 Apparatus for Generating Aqueous Ozone 11660364 United States 2039 To protect our intellectual property, we rely on a combination of laws and regulations, as well as contractual restrictions.
The concentration levels of our aqueous ozone solutions can be adjusted to suit our client’s distinctive needs. Multiple units can be placed in tandem for large volume projects. Concentration levels of ozone can be established at up to 20 ppm of ozone.
The concentration levels of our aqueous ozone solutions can be adjusted to suit our client’s distinctive needs. Multiple units can be placed in tandem for large volume projects.
FIFRA mandates that the EPA regulates the use and sale of pesticides and pesticide generating devices to protect human health and preserve the environment. Under FIFRA’s definition, ozone is considered a pesticide and manufacturers of ozone generating devices are required to register with the EPA.
FIFRA mandates that the EPA regulates the use and sale of pesticides and pesticide generating devices to protect human health and preserve the environment. Under FIFRA’s definition, ozone is considered a pesticide and manufacturers of ozone generating devices are required to register with the EPA. Our EPA registration establishment number is 090379-NE-001.
As of June 30, 2024, we had seven (7) full time employees, all of whom were in the United States. None of our employees are represented by labor unions, and we believe that we have an excellent relationship with our employees.
As of June 30, 2025, we had 15 full time employees, 13 of whom were in the United States and 2 of whom were in Ireland. None of our employees are represented by labor unions, and we believe that we have an excellent relationship with our employees.
Our EPA registration establishment number is 090379-NE-001. 7 We are also subject to regulation by the U.S. Food and Drug Administration, or the FDA, for the use of ozone for water treatment as well as its use as an antimicrobial agent for the treatment, storage, and processing of foods.
We are also subject to regulation by the U.S. Food and Drug Administration, or the FDA, for the use of ozone for water treatment as well as its use as an antimicrobial agent for the treatment, storage, and processing of foods.
Janitorial and Sanitation Within the janitorial and sanitation sector, we currently manufacture the following products: ● Fill Stations : Wall-mounted units that produce on demand aqueous ozone and can fill up spray bottles or buckets for general cleaning, including our 1.0 Fill Station, which can produce one gallon per minute of aqueous ozone for users with smaller cleaning needs, and our 3.0 Fill Station, which can produce three gallons per minute and is designed for commercial and industrial cleaning requirements. ● POWER CADDY : A 12-gallon tank that generates aqueous ozone within it, so users are able to generate on-site, on-demand aqueous ozone as they clean.
Our products are used in many types of environments including retail establishments, distribution centers, factories, warehouses, restaurants, schools and universities, airports, healthcare, food service, and commercial buildings such as offices, malls, and stores. 2 Janitorial and Sanitation Within the janitorial and sanitation sector, we currently manufacture the following products: ● Fill Stations : Wall-mounted units that produce on demand aqueous ozone and can fill up spray bottles or buckets for general cleaning, including our 1.0 Fill Station, which can produce one gallon per minute of aqueous ozone for users with smaller cleaning needs, and our 3.0 Fill Station, which can produce three gallons per minute and is designed for commercial and industrial cleaning requirements. ● POWER CADDY : A 12-gallon tank that generates aqueous ozone within it, so users are able to generate on-site, on-demand aqueous ozone as they clean.
We are exploring the development of our products for expanded usage in key market segments such as health care, food service, and commercial cleaning industries. Intellectual Property Currently, we hold 14 patents and have two patents pending, with one pending in the United States and another pending in Canada.
We are exploring the development of our products for expanded usage in key market segments such as health care, food service, and commercial cleaning industries. 6 Intellectual Property Currently, we hold 15 patents, including 10 in the United States, 1 in Mexico and 4 in Canada.
Similarly, if customers or potential customers perceive the products or services offered by our existing or future competitors to be of higher quality than ours or part of a broader product mix, our revenues may decline, which would adversely affect our operating results.
Similarly, if customers or potential customers perceive the products or services offered by our existing or future competitors to be of higher quality than ours or part of a broader product mix, our revenues may decline, which would adversely affect our operating results. 5 Competitive Strengths We believe that the following competitive strengths contribute to our success and differentiate us from our competitors: ● We have numerous patents for our technology .
Our goal is also to create partnerships with some of the largest sports and entertainment arenas in the world, providing end-to-end sales and service. 6 Research and Development We are continuing our research and development into specific product applications across our core janitorial and sanitation product line, specifically aligning our new direct sales and support strategy by evolving the existing product lines to capture new “real time” testing evaluations.
Research and Development We are continuing our research and development into specific product applications across our core janitorial and sanitation product line, specifically aligning our new direct sales and support strategy by evolving the existing product lines to capture new “real time” testing evaluations.
Generally, there is no need to rinse off the product after cleaning, the surface just needs to fully air dry, with no remaining residue left nor harm to the surfaces’ finish.
Each tablet is effective for up to three days in a closed container and should be prepared daily when used in open containers. Generally, there is no need to rinse off the product after cleaning, the surface just needs to fully air dry, with no remaining residue left nor harm to the surfaces’ finish.
We will also use these marketing tactics to grow awareness for our products that we deploy in various cleaning applications. Finally, we will distribute press releases, attend industry conferences, and leverage our relationships with existing customers to grow our client base.
We will also use these marketing tactics to grow awareness for our products that we deploy in various cleaning applications.
Sanitizing and Disinfectant Tablets Branded “ GreenKlean,” these chlorinated tablets kill 99.9% of viruses and bacteria on a surface. These tablets eliminate odors while disinfecting and can be used on a variety of hard non-porous surfaces. We believe each tablet is easy to use, fast dissolving in water, and each tablet provides a single, standardized cleaning dose.
Concentration levels of ozone can be established at up to 20 ppm of ozone. 3 Sanitizing and Disinfectant Tablets Branded “ GreenKlean,” these chlorinated tablets kill 99.9% of viruses and bacteria on a surface. These tablets eliminate odors while disinfecting and can be used on a variety of hard non-porous surfaces.
We own 9 patents in the United States, 1 patent in Mexico, and 4 patents in Canada. These patents cover the functions of our products that allow our machines to produce the ozone in the form of nanobubbles.
These patents cover the functions of our products that allow our machines to produce the ozone in the form of nanobubbles. Each of our United States patents are utility patents, and are owned by us. We currently do not license any patents.
The solution created from the tablet when mixed with water may be applied with a spray device, cloth, wipe, sponge, brush, or mop. Each tablet is effective for up to three days in a closed container and should be prepared daily when used in open containers.
We believe each tablet is easy to use, fast dissolving in water, and each tablet provides a single, standardized cleaning dose. The solution created from the tablet when mixed with water may be applied with a spray device, cloth, wipe, sponge, brush, or mop.
We primarily sell products to customers under individual purchase orders placed by them under their standard terms and conditions of sale.
We do not have a long-term contract with any of these customers mentioned (the memorandum of understanding with KBS is not binding and does not require the purchase of specific quantities of products). We primarily sell products to customers under individual purchase orders placed by them under their standard terms and conditions of sale.
The cost of these raw materials is a key factor in pricing our products. We source raw materials from multiple regional, national and foreign suppliers. Certain of our materials come from Asian-based suppliers. Raw materials from Asian-based suppliers may be subjected to import duties, depending on various foreign policies of the US government.
The cost of these raw materials is a key factor in pricing our products. We source raw materials from multiple regional, national and foreign suppliers; however, we have a single vendor for a major component of two of our main products.
Removed
Prior to the acquisition, we had no operations other than operations relating to our incorporation and organization. We do not have any subsidiaries. Industry Our market encompasses the global household cleaning market, the global food service market, the global commercial and residential laundry market, and the global health care market.
Added
Prior to the acquisition, we had no operations other than operations relating to our incorporation and organization. On January 29, 2025, we established CleanCore Global as a wholly owned subsidiary in Ireland in anticipation of the acquisition described below.
Removed
According to Report Linker, the global service cleaning market is expected to reach $92.69 billion by 2027, rising at a 7.80% CAGR during the forecast period. The global household cleaners market size was valued at $33.8 billion in 2021 and is expected to expand at a CAGR of 4.9% from 2022 to 2028.
Added
On February 21, 2025, CleanCore Global entered into an asset purchase agreement, which was amended on April 15, 2025, with Sanzonate Europe Ltd., an Irish incorporated company, or Sanzonate, and Sanzonate Global Inc., the majority stockholder of Sanzonate, pursuant to which on April 15, 2025 CleanCore Global acquired substantially all of the assets of Sanzonate used in the manufacturer and distribution of aqueous ozone products for an aggregate purchase price of $2,475,000, consisting of: (i) $425,000 in cash; (ii) the issuance of a promissory note in the principal amount of $800,000; and (iii) up to $1,250,000 in Earn-Out Payments (as defined below).
Removed
We believe this can be credited to the increasing awareness regarding hygiene among consumers. The constant developments in the household cleaner sector are also likely to boost industry demand. There is a growing demand for green cleaning and eco-friendly products that are effective, safe, and sanitary.
Added
As additional consideration, we issued to Sanzonate Global Inc. a five-year warrant to purchase 425,000 shares of our class B common stock at an exercise price of $1.25 per share.
Removed
According to a report published by Allied Market Research, the global industrial cleaning equipment market amassed revenue of $9.12 billion in 2021, and is expected to hit $14.14 billion by 2031, registering a CAGR of 4.3% from 2022 to 2031.
Added
Sanzonate is also entitled to receive the following payments (which we refer to as the Earn-Out Payments) to the extent that Net Sales (as defined in the asset purchase agreement) achieve the following milestones during the five-year period beginning on the closing date and ending on the fifth anniversary of the closing date.
Removed
A market report from Research and Markets noted that the global household green cleaning products market is expected to grow to $27.83 billion at a CAGR of 6.50% from 2017 to 2024. There is also a high demand in the food and beverage cleaning industry for effective and eco-friendly cleaning suppliers and cleaning solutions.
Added
If Net Sales are at least (i) €2,000,000, CleanCore Global shall pay $200,000 to Sanzonate; (ii) €4,000,000, CleanCore Global shall pay an additional $200,000 to Sanzonate; (iii) €6,000,000, CleanCore Global shall pay an additional $200,000 to Sanzonate; (iv) €8,000,000, CleanCore Global shall pay an additional $200,000 to Sanzonate; (v) €10,000,000, CleanCore Global shall pay an additional $200,000 to Sanzonate; and (vi) €12,000,000, CleanCore Global shall pay an additional $250,000 to Sanzonate.
Removed
According to an article by Arizton Advisory and Intelligence (“US Food and Beverage Industry Cleaning Services Market Size to Reach Revenues USD 2.4 Billion by 2026,” March 24, 2021), the U.S. food and beverage industry cleaning services market is expected to grow at a CAGR of approximately 7% from 2020 to 2026.
Added
For the years ended June 30, 2025 and 2024, this vendor accounted for approximately 11% and 30%, respectively, of our total purchases. Certain of our materials come from Asian-based suppliers. Raw materials from Asian-based suppliers may be subjected to import duties, depending on various foreign policies of the US government.
Removed
We believe the rising awareness in the food and beverage cleaning industry is also encouraging vendors to rely on green cleaning services, which is expected to generate incremental income.
Added
Finally, we will distribute press releases, attend industry conferences, and leverage our relationships with existing customers to grow our client base. 4 During the fourth quarter of fiscal 2025, we acquired the assets of Sanzonate and formed CleanCore Global in Ireland.
Removed
Further, driven by the COVID-19 pandemic and its impact on customer and provider expectations of cleanliness, the demand for disinfection services in the food and beverage industry is expected to grow at a CAGR of over 6% through 2022.
Added
We will work to expand the distribution base the former Sanzonate operation had by selling units in Europe through CleanCore Global. We believe the work we are doing with KBS (as described below) will allow us to expand sales opportunities with other building service management companies located in North America and the European Union through CleanCore Global.
Removed
The cleaning, healthcare and sanitation market is also receiving interest from government agencies, such as British Columbia’s GreenCare Sustainability Strategic Framework, to develop and retain better, environmentally sustainable, and innovative cleaning solutions. Government initiatives have led some transitions into different and alternative cleaning technologies, and environmentally conscious institutions are expected to increase their demand for alternative cleaning products.
Added
Customers Historically, we previously sold most of our products through distributors. Over the past two years, we have started to sell an increasing number of products directly to end customers. On January 10, 2025, we signed a three-year memorandum of understanding with Kellermeyer Bergensons Services, LLC, or KBS.
Removed
While traditional disinfectants will continue to be routinely used in hospitals to sterilize and remove viruses and pathogens, we believe there is a place for aqueous ozone technology to be introduced in clinical settings.
Added
KBS is a national building service management company that provides janitorial services to over 100,000 buildings in the United States. The memorandum of understanding covers pricing, accounts payable terms, and other key items to establish an opportunity for both companies to grow together.
Removed
For instance, Cape Coral Hospital in Florida, along with two other hospitals, integrated aqueous ozone as room deodorizes as part of their environmental services program effort. 2 Based on the above, the demand for alternative environmentally conscious cleaning solutions is increasing, and we believe our aqueous ozone patented technology effectively cleans and reduces environmental impact, and as a result, that the demand for our products and services will continue to grow.
Added
KBS issued its first purchase order on May 28, 2025 for $1.369 million, of which $863,000 was invoiced in June 2025 and the remaining balance is scheduled to be shipped and invoiced between July and September of 2025.
Removed
On September 10, 2024, we entered into a sole distributorship agreement for the distribution of our products in the European Union, United Kingdom, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. Please see Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments ” for a description of this agreement.
Added
A second purchase order from KBS was received on June 4, 2025 for $261,000 with shipment scheduled between July and September of 2025. For the year ended June 30, 2025, two customers, KBS and Prolink, Inc., accounted for 42% and 17% of revenue, respectively, and one customer, KBS, accounted for 47% of all accounts receivable as of June 30, 2025.
Removed
Customers The most significant sales and distribution channels for our products are currently through distributors who then sell to the janitorial services industries relating to food services, health care, education, and commercial buildings. These distributors provide sales, marketing, product training, service and maintenance for their respective end customers.
Added
Our goal is also to create partnerships with some of the largest sports and entertainment arenas in the world, providing end-to-end sales and service. ● Expand distribution to the European Union .
Removed
For the year ended June 30, 2023, Pro-Link, Inc. and Sanzonate accounted for 39% and 36% of revenue, respectively, and we had two customers, Sanzonate and Pro-Link, Inc., that accounted for 43% and 12%, respectively, of all accounts receivable at June 30, 2023. We do not have a long-term contract with any of the customers mentioned.
Added
With the acquisition of the assets of Sanzonate and the formation of CleanCore Global, we anticipate expanding the distribution network that Sanzonate had to cover the entire European Union. We believe that Sanzonate was a market leader in providing Aqueous Ozone cleaning devises in the European Union and we plan to capitalize on this opportunity.
Removed
Competitive Strengths We believe that the following competitive strengths contribute to our success and differentiate us from our competitors: ● We have numerous patents for our technology . We currently have 14 patents for our technology.
Removed
Each of our United States patents are utility patents, and are owned by us, either under the name “CC Acquisition Corp,” our previous name, or “CleanCore Solutions, Inc.” We do not currently license any patents.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
72 edited+29 added−35 removed151 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
72 edited+29 added−35 removed151 unchanged
2024 filing
2025 filing
Biggest changeIn the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our class B common stock could be negatively affected. 18 Future issuances of our class B common stock or securities convertible into, or exercisable or exchangeable for, our class B common stock, or the expiration of lock-up agreements that restrict the issuance of new class B common stock or the trading of outstanding class B common stock, could cause the market price of our class B common stock to decline and would result in the dilution of your holdings.
Biggest changeIn the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our class B common stock could be negatively affected.
Among other things, certain applicable laws and regulations require or may in the future require the submission of annual reports to the certain governmental agencies certifying that such products comply with applicable performance standards, the maintenance of manufacturing, testing, and distribution records, and the reporting of certain product defects to such regulatory agency or consumers.
Among other things, certain applicable laws and regulations require or may in the future require the submission of annual reports to certain governmental agencies certifying that such products comply with applicable performance standards, the maintenance of manufacturing, testing, and distribution records, and the reporting of certain product defects to such regulatory agency or consumers.
Under NYSE American rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including, without limitation, (i) the requirement to have a board of directors comprised of a majority of independent directors, (ii) requirement that director nominees be selected either by the independent directors or a nomination committee comprised solely of independent directors and (iii) the requirement that the compensation of officers be determined, or recommended to the board for determination, either by the independent directors or a compensation committee comprised solely of independent directors.
Under NYSE American rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including, without limitation, (i) the requirement to have a board of directors comprised of a majority of independent directors, (ii) the requirement that director nominees be selected either by the independent directors or a nomination committee comprised solely of independent directors and (iii) the requirement that the compensation of officers be determined, or recommended to the board for determination, either by the independent directors or a compensation committee comprised solely of independent directors.
Increased prices could adversely affect our profitability or revenues. We do not have long-term supply contracts for the raw materials. Significant increases in the prices of raw materials could adversely affect our profit margins, especially if we are not able to recover these costs by increasing the prices we charge our customers for our products.
Increased prices could adversely affect our profitability or revenues. We do not have long-term supply contracts for raw materials. Significant increases in the prices of raw materials could adversely affect our profit margins, especially if we are not able to recover these costs by increasing the prices we charge our customers for our products.
The market price of our class B common stock could also be subject to wide fluctuations in response to a broad and diverse range of factors, including the following: ● actual or anticipated variations in our periodic operating results; ● increases in market interest rates that lead investors of our class B common stock to demand a higher investment return; ● changes in earnings estimates; ● changes in market valuations of similar companies; ● actions or announcements by our competitors; ● adverse market reaction to any increased indebtedness we may incur in the future; ● additions or departures of key personnel; ● actions by stockholders; ● speculation in the media, online forums, or investment community; and ● our ability to maintain the listing of our class B common stock on NYSE American.
The market price of our class B common stock could also be subject to wide fluctuations in response to a broad and diverse range of factors, including the following: ● actual or anticipated variations in our periodic operating results; ● increases in market interest rates that lead investors of our class B common stock to demand a higher investment return; ● changes in earnings estimates; ● changes in market valuations of similar companies; ● actions or announcements by our competitors; ● adverse market reaction to any increased indebtedness we may incur in the future; ● additions or departures of key personnel; 19 ● actions by stockholders; ● speculation in the media, online forums, or investment community; and ● our ability to maintain the listing of our class B common stock on NYSE American.
Our international operations are subject to a number of risks inherent to operating in foreign countries, and any expansion of our international operations will amplify the effects of these risks, which include, among others: ● differences in culture, economic and labor conditions and practices; ● the policies of the U.S. and foreign governments; ● disruptions in trade relations and economic instability; ● differences in enforcement of contract and intellectual property rights; 14 ● social and political unrest; ● natural disasters, terrorist attacks, pandemics or other catastrophic events; ● complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax regulations, price protection, competition practices, export control regulations and restrictions, customs and tax requirements, immigration, anti-boycott regulations, data privacy, intellectual property, anti-corruption and environmental compliance, including the Foreign Corrupt Practices Act; ● greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; and ● greater difficulty in accounts receivable collections and longer collection periods.
International operations are subject to a number of risks inherent to operating in foreign countries, and any expansion of our international operations will amplify the effects of these risks, which include, among others: ● differences in culture, economic and labor conditions and practices; ● the policies of the U.S. and foreign governments; ● disruptions in trade relations and economic instability; ● differences in enforcement of contract and intellectual property rights; ● social and political unrest; ● natural disasters, terrorist attacks, pandemics or other catastrophic events; ● complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax regulations, price protection, competition practices, export control regulations and restrictions, customs and tax requirements, immigration, anti-boycott regulations, data privacy, intellectual property, anti-corruption and environmental compliance, including the Foreign Corrupt Practices Act; 16 ● greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; and ● greater difficulty in accounts receivable collections and longer collection periods.
The accompanying financial statements have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business and do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.
The accompanying consolidated financial statements have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business and do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.
The results of this data represent various methodologies, assumptions, research, analysis, projections, estimates, composition of respondent pool, presentation of data and adjustments, each of which may ultimately prove to be incorrect or inaccurate and may cause actual results and market viability information to differ materially from that presented in any such reports or other materials that we may prepare. 23
The results of this data represent various methodologies, assumptions, research, analysis, projections, estimates, composition of respondent pool, presentation of data and adjustments, each of which may ultimately prove to be incorrect or inaccurate and may cause actual results and market viability information to differ materially from that presented in any such reports or other materials that we may prepare.
You should consider the frequency with which early-stage businesses encounter unforeseen expenses, difficulties, complications, delays and other adverse factors. These risks are described in more detail below. 8 We have incurred losses since our inception, and we may not be able to manage our business on a profitable basis.
You should consider the frequency with which early-stage businesses encounter unforeseen expenses, difficulties, complications, delays and other adverse factors. These risks are described in more detail below. We have incurred losses since our inception, and we may not be able to manage our business on a profitable basis.
If we do not successfully expand our fulfillment capabilities in response to increases in demand, our sales could decline. In addition, our distribution centers are susceptible to damage or interruption from human error, pandemics, fire, flood, power loss, telecommunications failures, terrorist attacks, acts of war, break-ins, earthquakes and similar events.
If we do not successfully expand our fulfillment capabilities in response to increases in demand, our sales could decline. 12 In addition, our distribution centers are susceptible to damage or interruption from human error, pandemics, fire, flood, power loss, telecommunications failures, terrorist attacks, acts of war, break-ins, earthquakes and similar events.
If we fail to attract new personnel or if we suffer increases in costs or business operations interruptions as a result of a labor dispute, or fail to retain and motivate our current personnel, we might not be able to operate our businesses effectively or efficiently, serve our users properly or maintain the quality of our content and services.
If we fail to attract new personnel or if we suffer increases in costs or business operations interruptions as a result of a labor dispute, or fail to retain and motivate our current personnel, we might not be able to operate our business effectively or efficiently, serve our users properly or maintain the quality of our content and services.
Shipping costs have increased from time to time, and may continue to increase, and we may not be able to pass these costs directly to our customers. 11 Any increased shipping costs could harm our business, prospects, financial condition and results of operations by increasing our costs of doing business and reducing gross margins which could negatively affect our operating results.
Shipping costs have increased from time to time, and may continue to increase, and we may not be able to pass these costs directly to our customers. Any increased shipping costs could harm our business, prospects, financial condition and results of operations by increasing our costs of doing business and reducing gross margins which could negatively affect our operating results.
Although we have not experienced any supply chain disruptions in the past, we cannot guarantee that we will not experience any disruptions in the future. If we fail to secure a sufficient supply of key raw materials in a timely fashion, it would result in a significant delay in our delivery of products.
Although we have not experienced any supply chain disruptions in the past, we cannot guarantee that we will not experience any disruptions in the future. If we fail to secure a sufficient supply of key raw materials in a timely fashion, it will result in a significant delay in our delivery of products.
In particular, a material adverse event involving one of our products could result in reduced market acceptance and demand for all products offered under our brand and could harm our reputation and ability to market products in the future. 12 High quality products are critical to the success of our business.
In particular, a material adverse event involving one of our products could result in reduced market acceptance and demand for all products offered under our brand and could harm our reputation and ability to market products in the future. High quality products are critical to the success of our business.
If product returns or warranty claims are significant or exceed our expectations, we could incur unanticipated expenditures for parts and services, which could have a material adverse effect on our operating results. We could be subject to litigation. Product liability claims are common.
If product returns or warranty claims are significant or exceed our expectations, we could incur unanticipated expenditures on parts and services, which could have a material adverse effect on our operating results. We could be subject to litigation. Product liability claims are common.
Such a disruption in revenue could potentially have a negative impact on our results of operations, financial condition and cash flows. 22 We rely extensively on our computer systems to manage inventory, process transactions and timely provide products to our customers.
Such a disruption in revenue could potentially have a negative impact on our results of operations, financial condition and cash flows. We rely extensively on our computer systems to manage inventory, process transactions and timely provide products to our customers.
Our status as a controlled company could cause our class B common stock to look less attractive to certain investors or otherwise harm our trading price. Anti-takeover provisions in our charter documents and under Nevada law could make an acquisition of our company more difficult, and limit attempts by our stockholders to replace or remove our current management.
Our status as a controlled company and a smaller reporting company could cause our class B common stock to look less attractive to certain investors or otherwise harm our trading price. 22 Anti-takeover provisions in our charter documents and under Nevada law could make an acquisition of our company more difficult, and limit attempts by our stockholders to replace or remove our current management.
The report of our independent registered public accounting firm that accompanies our financial statements for the year ended June 30, 2024 contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue as a going concern, based on the financial statements at that time.
The report of our independent registered public accounting firm that accompanies our consolidated financial statements for the year ended June 30, 2025 contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue as a going concern, based on the financial statements at that time.
In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to stop shopping on our sites altogether. Such events could lead to lost sales and adversely affect our results of operations. We also could be exposed to government enforcement actions and private litigation.
In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to stop shopping on our sites altogether. Such events could lead to lost sales and adversely affect our results of operations. We also could be exposed to government enforcement actions and private litigation. 13 We face significant competition.
We report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act) under the reporting rules set forth under the Securities Exchange Act of 1934, as amended, or the Exchange Act.
We report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act) under the reporting rules set forth under the Exchange Act.
General Risk Factors We face significant competition. We believe that our success will depend heavily upon achieving market acceptance of our products before our competitors introduce more advanced competing products. Current and new competitors, however, may be able to develop and introduce better or more desirable products in advance of us or at a lower cost.
We believe that our success will depend heavily upon achieving market acceptance of our products before our competitors introduce more advanced competing products. Current and new competitors, however, may be able to develop and introduce better or more desirable products in advance of us or at a lower cost.
If we fail to properly manage our anticipated growth, our business could suffer. The planned growth of our commercial operations may place a significant strain on our management and on our operational and financial resources and systems.
This would cause our business and operating results to suffer. If we fail to properly manage our anticipated growth, our business could suffer. The planned growth of our commercial operations may place a significant strain on our management and on our operational and financial resources and systems.
For the year ended June 30, 2024, one customer, Pro-Link, Inc., accounted for 14% of revenue, and we had two customers, Consensus Group and Tharaldson Hospitality, that accounted for 28% each of all accounts receivable at June 30, 2024.
For the year ended June 30, 2024, one customer, Pro-Link, Inc., accounted for 14% of revenue, and two customers, Consensus Group and Tharaldson Hospitality, each accounted for 28% of all accounts receivable as of June 30, 2024.
Interruptions in deliveries of raw materials could adversely affect our revenue or profitability. Our dependency upon regular deliveries from particular suppliers means that interruptions or stoppages in such deliveries could adversely affect our operations until arrangements with alternate suppliers could be made.
Our dependency upon regular deliveries from particular suppliers means that interruptions or stoppages in such deliveries could adversely affect our operations until arrangements with alternate suppliers could be made.
There can be no assurances that we will be able to develop products or services on a timely and cost effective basis, that will be able to generate any increase in revenues, that we will have adequate financing or resources to continue operating our business and to provide products to customers, that we will earn a profit, that we can raise sufficient capital to support operations by attaining profitability, or that we can satisfy future liabilities.
There can be no assurances that we will be able to develop products or services on a timely and cost effective basis, that will be able to generate any increase in revenues, that we will have adequate financing or resources to continue operating our business and to provide products to customers, that we will earn a profit, that we can raise sufficient capital to support operations by attaining profitability, or that we can satisfy future liabilities. 8 Our auditors have issued a going concern opinion on our audited consolidated financial statements.
If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us. We will require additional financing to accomplish our business strategy. We require substantial working capital to fund our business development plans, and we expect to experience significant negative cash flow from operations.
If we are unable to continue as a going concern, our stockholders could potentially lose most or all of their investment in our company. We will require additional financing to accomplish our business strategy. We require substantial working capital to fund our business development plans, and we expect to experience significant negative cash flow from operations.
To the extent we are unsuccessful in increasing revenues, we may be required to appropriately adjust spending to compensate for any unexpected revenue shortfall, or to reduce our operating expenses, causing us to forego potential revenue generating activities, either of which could have a material adverse effect on our business, results of operations and financial condition. 9 We may face significant challenges in obtaining market acceptance of our products, which could adversely affect our potential sales and revenues.
To the extent we are unsuccessful in increasing revenues, we may be required to appropriately adjust spending to compensate for any unexpected revenue shortfall, or to reduce our operating expenses, causing us to forego potential revenue generating activities, either of which could have a material adverse effect on our business, results of operations and financial condition.
We have generated losses since inception and have relied on cash on-hand, sales of securities, proceeds from our initial public offering, external bank lines of credit, and issuance of third-party and related party debt to support our operations. For the year ended June 30, 2024, we generated an operating loss of $1,946,734 and a net loss of $2,281,742.
We have generated losses since inception and have relied on cash on-hand, sales of securities, proceeds from our initial public offering, external bank lines of credit, and issuance of third-party and related party debt to support our operations. For the year ended June 30, 2025, we generated an operating loss of $6,386,341 and a net loss of $6,742,275.
Additionally, we may be unable to maintain our existing product liability insurance in the future at satisfactory rates or at adequate amounts. If we are unable to protect our intellectual property rights, our reputation and brand could be impaired, and we could lose customers. We regard our patents, trademarks, trade secrets and similar intellectual property as important to our success.
Additionally, we may be unable to maintain our existing product liability insurance in the future at satisfactory rates or at adequate amounts. 14 If we are unable to protect our intellectual property rights, our reputation and brand could be impaired, and we could lose customers.
These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about our company’s ability to continue as a going concern for 12 months from the date of issuance of the accompanying financial statements.
These factors, individually and collectively, indicate that a material uncertainty exists that raises substantial doubt about our company’s ability to continue as a going concern for 12 months from the balance sheet date as of June 30, 2025.
We rely on patent, trademark and copyright law, and trade secret protection, and confidentiality and/or license agreements with employees, customers, partners and others to protect our proprietary rights. We maintain 14 patents in the United States, Canada, and Mexico.
We regard our patents, trademarks, trade secrets and similar intellectual property as important to our success. We rely on patent, trademark and copyright law, and trade secret protection, and confidentiality and/or license agreements with employees, customers, partners and others to protect our proprietary rights. We maintain 15 patents in the United States, Canada and Mexico.
Nanobubble technology and aqueous ozone are subject to considerable regulatory uncertainty as the law evolves to catch up with the rapidly evolving nature of the technology itself, all of which are beyond our control.
Legislation or government regulations may be adopted which may affect our products and liability. Nanobubble technology and aqueous ozone are subject to considerable regulatory uncertainty as the law evolves to catch up with the rapidly evolving nature of the technology itself, all of which are beyond our control.
Factors that may affect our ability to achieve acceptance of our products in the marketplace include, but are not limited, to whether: ● such products will work effectively; ● the products are cost-effective for our customers; ● we are able to demonstrate product safety, efficacy, and cost-effectiveness of the products; and ● we are able to maintain customer relationships and acceptance.
Product orders may be cancelled or customers that are beginning to use our products may cease their use of our products and customers expected to begin using our products may not do so. 9 Factors that may affect our ability to achieve acceptance of our products in the marketplace include, but are not limited, to whether: ● such products will work effectively; ● the products are cost-effective for our customers; ● we are able to demonstrate product safety, efficacy, and cost-effectiveness of the products; and ● we are able to maintain customer relationships and acceptance.
We may also experience such volatility, which may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our class B common stock. 17 The market price of our class B common stock is likely to be volatile due to a number of factors.
The stock market in general has recently been highly volatile. We may also experience such volatility, which may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our class B common stock.
In consequence, the market price and liquidity of our class B common stock could be adversely affected. We may not be able to maintain a listing of our class B common stock on NYSE American. We must meet certain financial and liquidity criteria to maintain the listing of our class B common stock on NYSE American.
Risks Related to Ownership of Our Common Stock We may not be able to maintain a listing of our class B common stock on NYSE American. We must meet certain financial and liquidity criteria to maintain the listing of our class B common stock on NYSE American.
Further, failure or perceived failure to comply with our policies or applicable requirements related to the collection, use or security of personal information or other privacy-related matters could damage our reputation and result in a loss of customers. The regulatory framework for privacy issues is currently evolving and is likely to remain uncertain for the foreseeable future.
Further, failure or perceived failure to comply with our policies or applicable requirements related to the collection, use or security of personal information or other privacy-related matters could damage our reputation and result in a loss of customers.
Although our bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of our company. 21 These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
Although our bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of our company.
We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our class B common stock could be negatively affected.
If no securities industry analysts commence coverage of us, the market price and market trading volume of our class B common stock could be negatively affected.
Industry and other market data that may be used in our periodic reports that we may file with the SEC and our other materials, including those undertaken by us or our engaged consultants, may not prove to be representative of current and future market conditions or future results.
Each of the foregoing results could cause investors to lose confidence in our reported financial information and lead to a decline in our stock price. 18 Industry and other market data that may be used in our periodic reports that we may file with the SEC and our other materials, including those undertaken by us or our engaged consultants, may not prove to be representative of current and future market conditions or future results.
Since our company’s inception, we have historically purchased certain key raw materials, such as chassis, generators, vacuum switches, and head sockets and other components from a limited number of suppliers. We purchased raw materials on the basis of purchase orders.
Since our company’s inception, we have historically purchased certain key raw materials and components, such as chassis, generators, vacuum switches, and head sockets and other components from a limited number of suppliers, and we have a single vendor for a major component of two of our main products.
Furthermore, failure to obtain a sufficient supply of these raw materials at a reasonable cost could also harm our revenue and gross profit margins.
Furthermore, failure to obtain a sufficient supply of these raw materials at a reasonable cost could also harm our revenue and gross profit margins. Increased prices for raw materials could increase our cost of sales and decrease demand for our products, which could adversely affect our revenue or profitability.
Our failure to comply with applicable governmental laws and regulations, or to maintain necessary permits or licenses, could result in liability that could have a material negative effect on our business and results of operations. Legislation or government regulations may be adopted which may affect our products and liability.
Any changes to the legal and regulatory framework applicable to our business could have an adverse impact on our business and results of operations. Our failure to comply with applicable governmental laws and regulations, or to maintain necessary permits or licenses, could result in liability that could have a material negative effect on our business and results of operations.
First, as noted above, our class B common stock is likely to be more sporadically and thinly traded compared to the shares of such larger, more established companies. The price for our class B common stock could, for example, decline precipitously in the event that a large number of shares are sold on the market without commensurate demand.
The market price of our class B common stock is likely to be volatile due to a number of factors. First, as noted above, our class B common stock is likely to be more sporadically and thinly traded compared to the shares of such larger, more established companies.
Holders of our class B common stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our class B common stock.
Holders of our class B common stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our class B common stock. 20 If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our class B common stock could be negatively affected.
If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our class B common stock could be negatively affected. Any trading market for our class B common stock may be influenced in part by any research reports that securities industry analysts publish about us.
The trading market for our class B common stock may be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts.
As of June 30, 2024, we had cash of $2,016,611, a net loss of $2,281,742, working capital of $1,706,082, and cash used in operating activities of $1,547,880. Despite the initial public offering described below, management believes that currently available resources will not be sufficient to fund our planned expenditures over the next 12 months.
As of June 30, 2025, we had cash of $1,460,997, a net loss of $6,742,275, working capital of $970,461, and cash used in operating activities of $2,337,659. Management believes that currently available resources may not be sufficient to fund our planned expenditures over the next 12 months.
Any of these events could result in increases in operating expenses, limit our product offerings or result in a loss of business.
These actions, if required, may be costly or unavailable on terms acceptable to us. Any of these events could result in increases in operating expenses, limit our product offerings or result in a loss of business.
As a result of any such dispute, we may have to develop non-infringing technology, pay damages, enter into royalty or licensing agreements, cease providing our product or take other actions to resolve the claims. These actions, if required, may be costly or unavailable on terms acceptable to us.
Any infringement, misappropriation or related claims, whether or not meritorious, is time-consuming, diverts technical and management personnel and is costly to resolve. As a result of any such dispute, we may have to develop non-infringing technology, pay damages, enter into royalty or licensing agreements, cease providing our product or take other actions to resolve the claims.
We are also a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We cannot predict if investors will find our class B common stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our class B common stock. 21 We are also a smaller reporting company, and if we take advantage of certain exemptions from SEC disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We also have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our class B common stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares. 20 We are a “controlled company” under the rules of NYSE American and as a result, we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public stockholders.
We also have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our class B common stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.
If we elected to rely on the “controlled company” exemption, a majority of the members of our board of directors might not be independent and our nominating and compensation committees might not consist entirely of independent directors.
If we elected to rely on the controlled company exemption, a majority of the members of our board of directors might not be independent and our nominating and compensation committees might not consist entirely of independent directors. In addition, certain exemptions to NYSE American’s corporate governance rules are available to smaller reporting companies.
We will face growing regulatory and compliance requirements in a variety of areas, which can be costly and time consuming. Our business is, and may in the future be, subject to a variety of laws and regulations, including working conditions, labor, immigration and employment laws, and health, safety and sanitation requirements.
Our business is, and may in the future be, subject to a variety of laws and regulations, including working conditions, labor, immigration and employment laws, and health, safety and sanitation requirements. We are unable to predict the outcome or effects of any potential legislative or regulatory proposals on our business.
If we are not able to protect our patents, trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty. 13 The loss of key personnel, an inability to attract and retain additional personnel or difficulties in the integration of new members of our management team into our company could affect our ability to successfully grow our business.
The loss of key personnel, an inability to attract and retain additional personnel or difficulties in the integration of new members of our management team into our company could affect our ability to successfully grow our business.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our class B common stock, and therefore stockholders may have difficulty selling their shares. 19 We are subject to ongoing public reporting requirements that are less rigorous than rules for companies that are not emerging growth companies, and our stockholders could receive less information than they might expect to receive from more mature public companies.
We are subject to ongoing public reporting requirements that are less rigorous than rules for companies that are not emerging growth companies, and our stockholders could receive less information than they might expect to receive from more mature public companies.
Risks Related to Ownership of Our Common Stock The structure of our common stock has the effect of concentrating voting control with a single stockholder, which will limit or preclude your ability to influence corporate matters.
The structure of our common stock has the effect of concentrating voting control with a single stockholder, which will limit or preclude your ability to influence corporate matters. It may also limit the price and liquidity of our class B common stock due to its ineligibility for inclusion in certain stock market indices.
Future issuances of our class B common stock or securities convertible into, or exercisable or exchangeable for, our class B common stock, or the expiration of lock-up agreements that restrict the issuance of new class B common stock or the trading of outstanding class B common stock, could cause the market price of our class B common stock to decline.
Future issuances of our class B common stock or securities convertible into, or exercisable or exchangeable for, our class B common stock could cause the market price of our class B common stock to decline and would result in the dilution of your holdings.
We may be unable to protect these domain names or acquire or maintain relevant domain names in the United States and in other countries.
We may be unable to protect these domain names or acquire or maintain relevant domain names in the United States and in other countries. If we are not able to protect our patents, trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty.
As noted above, Clayton Adams is able to exercise more than 50% of our total voting power if he exercises his stock options. As a result, we are a “controlled company” within the meaning of NYSE American rules.
As noted above, Clayton Adams is able to exercise more than 50% of our total voting power. As a result, we are a controlled company within the meaning of NYSE American rules. Although we currently do not intend to rely on the controlled company exemption, we could elect to rely on this exemption in the future.
Extended unavailability of a necessary raw material could cause us to cease producing or selling one or more of our products for a period of time. Assertions by third parties of infringement, misappropriation or other violation by us of their intellectual property rights could result in significant costs and substantially harm our business and operating results.
Assertions by third parties of infringement, misappropriation or other violation by us of their intellectual property rights could result in significant costs and substantially harm our business and operating results. In recent years, there has been significant litigation involving intellectual property rights.
Competitive pressures faced by us could have a material adverse effect on our business, operating results and financial condition. Increased prices for raw materials could increase our cost of sales and decrease demand for our products, which could adversely affect our revenue or profitability.
Competitive pressures faced by us could have a material adverse effect on our business, operating results and financial condition.
In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our class B common stock.
In all events, future issuances of our class B common stock would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur could adversely affect the market price of our class B common stock.
However, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely affect our reputation, business, financial condition and results of operations. 15 Our internal control over financial reporting currently may not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 could impair our ability to produce timely and accurate financial statements or comply with applicable regulations and have a material adverse effect on our business.
However, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely affect our reputation, business, financial condition and results of operations. The impact of geopolitical conflicts may adversely affect our business and results of operations.
This would cause our business and operating results to suffer. If we are unable to maintain, train and build an effective international sales and marketing infrastructure, we will not be able to commercialize and grow our brand successfully.
Any failure by us to manage our growth effectively could have a negative effect on our ability to achieve our development and commercialization goals and strategies. If we are unable to maintain, train and build an effective international sales and marketing infrastructure, we will not be able to commercialize and grow our brand successfully.
We do not yet have an established market or customer base for our products.
We may face significant challenges in obtaining market acceptance of our products, which could adversely affect our potential sales and revenues. We do not yet have an established market or customer base for our products.
We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our class B common stock. In all events, future issuances of our class B common stock would result in the dilution of your holdings.
Future issuances of our class B common stock or securities convertible into, or exercisable or exchangeable for, our class B common stock could cause the market price of our class B common stock to decline. We cannot predict the effect, if any, of future issuances of our securities on the price of our class B common stock.
Any failure by us to manage our growth effectively could have a negative effect on our ability to achieve our development and commercialization goals and strategies. Business interruptions in our facilities may affect the distribution of our products and/or the stability of our computer systems, which may affect our business.
Business interruptions in our facilities may affect the distribution of our products and/or the stability of our computer systems, which may affect our business.
We may not be able to build key relationships with physicians, education administrators, and government agencies. Product orders may be cancelled or customers that are beginning to use our products may cease their use of our products and customers expected to begin using our products may not do so.
We may not be able to build key relationships with physicians, education administrators, and government agencies.
Adams exercises his stock options, then he will own approximately 88% of our outstanding class A common stock and will be able to exercise approximately 67% of our total voting power.
Clayton Adams, our Chief Executive Officer, holds all of our outstanding shares of class A common stock and is able to exercise approximately 66% of our total voting power.
If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our operating results.
If we continue to experience material weaknesses in our internal controls or fail to maintain or implement required new or improved controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in material misstatements in our consolidated financial statements, or adversely affect the results of periodic management evaluations and, if required, annual auditor attestation reports.
Furthermore, we are a speculative or “risky” investment due to our lack of profits to date.
The price for our class B common stock could, for example, decline precipitously in the event that a large number of shares are sold on the market without commensurate demand. Furthermore, we are a speculative or “risky” investment due to our lack of profits to date.
The class A common stock is entitled to ten votes per share and the class B common stock is entitled to one vote. Clayton Adams, our Chief Executive Officer, holds stock options to purchase 2,000,000 shares of class A common stock, which are fully vested and may be exercised at any time. If Mr.
We are authorized to issue two classes of common stock – class A common stock and class B common stock. The class A common stock is entitled to ten votes per share and the class B common stock is entitled to one vote.
For the year ended June 30, 2023, Pro-Link, Inc. and Sanzonate accounted for 39% and 36% of revenue, respectively, and we had two customers, Sanzonate and Pro-Link, Inc., that accounted for 43% and 12%, respectively, of all accounts receivable at June 30, 2023. We do not have a long-term contract with any of the customers mentioned.
For the year ended June 30, 2025, two customers, KBS and Prolink, Inc., accounted for 42% and 17% of revenue, respectively, and one customer, KBS, accounted for 47% of all accounts receivable as of June 30, 2025.
Removed
Our auditors have issued a going concern opinion on our audited financial statements.
Added
We do not have a long-term contract with any of these customers mentioned (the memorandum of understanding with KBS is not binding and does not require the purchase of specific quantities of products) and primarily sell products to customers under individual purchase orders placed by them under their standard terms and conditions of sale.
Removed
We do not have a long-term contract with any of the customers mentioned . We experienced a 34.26% decrease in revenues for the year ended June 30, 2024, as compared to the year ended June 30, 2023. The decline in revenue was largely driven by the termination of a distribution agreement with Sanzonate.
Added
For the years ended June 30, 2025 and 2024, this vendor accounted for approximately 11% and 30%, respectively, of our total purchases. We purchased raw materials on the basis of purchase orders.
Removed
Revenue to Sanzonate decreased by 96% during this time period and accounted for 80% of total decrease in revenue during this time period.
Added
Changes to U.S. trade policy, tariff and import/export regulations may adversely affect our operating results. The United States has recently enacted and/or proposed to enact significant new tariffs on goods imported from numerous countries.
Removed
We are unable to predict the outcome or effects of any potential legislative or regulatory proposals on our business. Any changes to the legal and regulatory framework applicable to our business could have an adverse impact on our business and results of operations.
Added
Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
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2024 filing
2025 filing
Biggest changeOur collaboration with these third-parties is expected to include annual audits, ongoing threat assessments, and regular consultations on security enhancements. Overseeing Third-Party Risk Because we are aware of the risks associated with third-party service providers, we implement processes to oversee and manage these risks.
Biggest changeOverseeing Third-Party Risk Because we are aware of the risks associated with third-party service providers, we implement processes to oversee and manage these risks. We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards.
Management oversees and tests our compliance with standards, remediates known risks, and leads our employee training program. 24 Monitoring Cybersecurity Incidents Management is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques. Management implements and oversees processes for the regular monitoring of our information systems.
Management oversees and tests our compliance with standards, remediates known risks, and leads our employee training program. Monitoring Cybersecurity Incidents Management is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques. Management implements and oversees processes for the regular monitoring of our information systems.
Reporting to Board of Directors Significant cybersecurity matters, and strategic risk management decisions, will be escalated to the board of directors.
Reporting to Board of Directors Significant cybersecurity matters, and strategic risk management decisions, will be escalated to the board of directors. 24
Management’s Role Managing Risk Management is primarily responsible for assessing, monitoring and managing our cybersecurity risks. Management must ensure that all industry standard cybersecurity measures are functioning as required to prevent or detect cybersecurity threats and related risks.
Governance Board of Directors Oversight Our board of directors oversees the management of risks associated with cybersecurity threats. Management’s Role Managing Risk Management is primarily responsible for assessing, monitoring and managing our cybersecurity risks. Management must ensure that all industry standard cybersecurity measures are functioning as required to prevent or detect cybersecurity threats and related risks.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We have developed the following processes as part of our strategy for assessing, identifying, and managing material risks from cybersecurity threats.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
Managing Material Risks & Integrated Overall Risk Management We have integrated cybersecurity risk management into our risk management processes. This integration is intended to ensure that cybersecurity considerations are part of our decision-making processes. We continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.
We have developed the following processes as part of our strategy for assessing, identifying, and managing material risks from cybersecurity threats. 23 Managing Material Risks & Integrated Overall Risk Management We have integrated cybersecurity risk management into our risk management processes. This integration is intended to ensure that cybersecurity considerations are part of our decision-making processes.
Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. Governance Board of Directors Oversight Our board of directors oversees the management of risks associated with cybersecurity threats.
This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties. Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Engaging Third-parties on Risk Management Recognizing the complexity and evolving nature of cybersecurity threats, we plan to engage external experts, including consultants and auditors, in evaluating and testing our risk management systems. These services will enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices.
We continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs. Engaging Third-parties on Risk Management Recognizing the complexity and evolving nature of cybersecurity threats, we plan to engage external experts, including consultants and auditors, in evaluating and testing our risk management systems.
Removed
We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties.
Added
These services will enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices. Our collaboration with these third-parties is expected to include annual audits, ongoing threat assessments, and regular consultations on security enhancements.
Item 2. Properties
Properties — owned and leased real estate
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Item 2. Properties
Properties — owned and leased real estate
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2024 filing
2025 filing
Biggest changeWe lease the building, and we are currently on a contract until the end of February 2028. We anticipate continuing assembly and warehousing at this location. We believe that our property is adequately maintained, is in generally good condition, and adequate for our business.
Biggest changeWe lease the building, and we are currently on a contract until the end of February 2028. We anticipate continuing assembly and warehousing at this location. We also have a small warehouse in Dublin, Ireland for CleanCore Global. This location is on a month-to-month lease and is approximately 5,000 square feet.
Added
We believe that our property is adequately maintained, is in generally good condition, and adequate for our business.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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2024 filing
2025 filing
Biggest changeOn August 20, 2024, Matthew Atkinson, our former Chief Executive Officer and a significant stockholder, filed a complaint against our company in the District Court of Douglas County, Nebraska.
Biggest changeAs previously disclosed, on August 20, 2024, Matthew Atkinson, our former Chief Executive Officer, filed a complaint against our company in the District Court of Douglas County, Nebraska, which was amended on November 25, 2024 to add Clayton Adams, our Chief Executive Officer, and David Enholm, our Chief Financial Officer, as defendants, in which Mr.
Except as set forth below, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
Removed
In his complaint, he alleges that we failed to pay him compensation in the amount of $123,625.76, unreimbursed expenses of $1,815.25, and accrued and unpaid vacation in the amount of $6,153.84, or $131,594.85 in the aggregate.
Added
Atkinson alleged certain claims arising from his employment with, and separation of employment from, our company, and we alleged certain counterclaims against Mr. Atkinson for breach of contract. On June 6, 2025, we and Messrs. Adams and Enholm entered into a settlement and release agreement with Mr. Atkinson to settle this matter.
Removed
He alleges that we are obligated to pay him these amounts under an executive employment agreement between him and our company, and that he had become entitled to these amounts before he resigned his employment in February 2024. Based on these allegations, Mr.
Added
Pursuant to the settlement and release agreement, which became effective on June 21, 2025, we issued 200,000 shares of our class B common stock to James T. Coyle Legacy Trust in order to resolve an obligation that Mr. Atkinson had to transfer such shares that had not been met.
Removed
Atkinson asserts in his complaint causes of action for violation of the Nebraska Wage Payment and Collection Act, or the Act, breach of contract, and promissory estoppel.
Added
The settlement and release agreement also contains a release of claims by each party and standard confidentiality and non-disparagement provisions. On June 26, 2025, the lawsuit was dismissed with prejudice. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 25 PART II
Removed
His complaints asks for a judgment that: (a) awards him damages in amount to be proved at trial but no less than $131,594.85, (b) assesses a penalty against our company pursuant to the Act in the amount of $263,189.70, and (c) awards Mr.
Removed
Atkinson an amount for his reasonable costs and attorney’s fees incurred in litigating this matter and pre- and post-judgment interest.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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2024 filing
2025 filing
Biggest changeSee also Item 1A “ Risk Factors—Risks Related to Ownership of Our Common Stock— We do not expect to declare or pay dividends in the foreseeable future .” Securities Authorized for Issuance under Equity Compensation Plans See Item 12 “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .” Recent Sales of Unregistered Securities We have not sold any equity securities during the 2024 fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2024 fiscal year.
Biggest changeSee also Item 1A “ Risk Factors—Risks Related to Ownership of Our Common Stock— We do not expect to declare or pay dividends in the foreseeable future .” Securities Authorized for Issuance under Equity Compensation Plans See Item 12 “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .” Recent Sales of Unregistered Securities Except as set forth below, we have not sold any equity securities during the 2025 fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2025 fiscal year.
Purchases of Equity Securities No repurchases of our common stock were made during the fourth quarter of fiscal year 2024. ITEM 6. [RESERVED]
Purchases of Equity Securities No repurchases of our common stock were made during the fourth quarter of fiscal year 2025. 26 ITEM 6. [RESERVED]
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our class B common stock is listed on the NYSE American under the symbol “ZONE.” Number of Holders of our Common Shares As of September 19, 2024, there were approximately 29 stockholders of record of our class B common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our class B common stock is listed on the NYSE American under the symbol “ZONE.” Number of Holders of our Common Shares As of August 21, 2025, there were approximately 31 stockholders of record of our class B common stock.
Added
On June 6, 2025, we entered into a subscription agreement with an accredited investor for the purchase of (i) a promissory note in the principal amount of $500,000 and (ii) a five-year warrant to purchase 66,667 shares of class B common stock at an exercise price of $1.06 per share for a purchase price of $500,000.
Added
On June 30, 2025, we issued to an accredited investor (i) an original issue discount promissory note in the principal amount of $520,000 and (ii) a five-year warrant to purchase 25,000 shares of class B common stock at an exercise price of $2.00 per share for a purchase price of $500,000.
Added
Upon an event of default, we are required to issue 200,000 shares of class B common stock to the holder.
Added
On June 30, 2025, we issued 133,500 shares of class B common stock to Burlington upon the conversion of certain quarterly payments of $100,000 that were due on each of January 1, 2025, April 1, 2025 and July 1, 2025 pursuant to an amended and restated promissory note that we issued to Burlington on May 31, 2024.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
38 edited+15 added−33 removed18 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
38 edited+15 added−33 removed18 unchanged
2024 filing
2025 filing
Biggest changeYear Ended June 30, 2024 (Successor) Pro Forma Combined Year ended June 30, 2023 Period from October 17, 2022 to June 30, Period from July 1, 2022 to October 16, Amount % of Revenue Amount % of Revenue 2023 (Successor) 2022 (Predecessor) Revenue $ 1,604,973 100.00 % $ 2,441,356 100.00 % $ 1,938,366 $ 502,990 Cost of sales 809,161 50.42 % 1,711,141 70.09 % 1,359,401 351,740 Gross profit 795,812 49.58 % 730,215 29.91 % 578,965 151,250 Operating expenses: General and administrative 2,471,480 153.99 % 5,645,496 231.24 % 5,310,961 334,535 Advertising expense 116,007 7.23 % 19,565 0.80 % 14,944 4,621 Depreciation and amortization expense 155,059 9.66 % 115,564 4.73 % 109,144 6,420 Loss from operations (1,946,734 ) (121.29 )% (5,050,410 ) (206.87 )% (4,856,084 ) (194,326 ) Interest expense 335,008 20.87 % 292,861 12.00 % 167,123 125,738 Net loss $ (2,281,742 ) (142.17 )% $ (5,343,271 ) (218.86 )% $ (5,023,207 ) $ (320,064 ) Revenue .
Biggest changeYears Ended June 30, 2025 2024 Amount % of Revenue Amount % of Revenue Revenue $ 2,072,834 100.00 % $ 1,604,973 100.00 % Cost of sales 1,086,369 52.41 % 809,161 50.42 % Gross profit 986,465 47.59 % 795,812 49.58 % Operating expenses: General and administrative 7,081,299 341.62 % 2,471,480 153.99 % Advertising expense 92,598 4.47 % 116,007 7.23 % Depreciation and amortization expense 198,909 9.60 % 155,059 9.66 % Loss from operations (6,386,341 ) (308.10 )% (1,946,734 ) (121.29 )% Interest expense, net 356,054 17.18 % 335,008 20.87 % Foreign exchange gain 120 0.01 % - - Net loss $ (6,742,275 ) (325.27 )% $ (2,281,742 ) (142.17 )% Revenue .
For so long as we are an emerging growth company, we will not be required to: ● have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; ● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); ● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and ● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
For so long as we are an emerging growth company, we will not be required to: ● have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; ● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); ● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and 27 ● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
Compensation expense is recognized for all share-based payments to employees and nonemployees, including stock options, restricted stock awards, and warrants, in the statements of operation based on the fair value of the awards that are granted. As necessary, our stock price at the date of grant was estimated using an acceptable valuation technique such as the probability-weighted expected return model.
Compensation expense is recognized for all share-based payments to employees and non-employees, including stock options, restricted stock awards, and warrants, in the statements of operation based on the fair value of the awards that are granted. As necessary, our stock price at the date of grant was estimated using an acceptable valuation technique such as the probability-weighted expected return model.
The preparation of financial statements in conformity with United States generally accepted accounting principles, or U.S. GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements.
The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 31 Critical Accounting Policies The following discussion relates to critical accounting policies for our company.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 30 Critical Accounting Policies The following discussion relates to critical accounting policies for our company.
This determination is made based upon known customer program and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated every reporting period. For the years ended June 30, 2024 and 2023, customer growth and volume-based incentives were minimal.
This determination is made based upon known customer program and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated every reporting period. For the years ended June 30, 2025 and 2024, customer growth and volume-based incentives were minimal.
The accompanying financial statements have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. 29 Summary of Cash Flow The following table provides detailed information about our net cash flow for the years ended June 30, 2024 and 2023.
The accompanying consolidated financial statements have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. 29 Summary of Cash Flow The following table provides detailed information about our net cash flow for the years ended June 30, 2025 and 2024.
Thes accompanying financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.
The accompanying consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.
If the carrying value, including goodwill, exceeds the reporting unit’s fair value, we will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value. We performed our annual evaluation of goodwill on June 30, 2024.
If the carrying value, including goodwill, exceeds the reporting unit’s fair value, we will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value. We performed our annual evaluation of goodwill on June 30, 2025.
Our general and administrative expenses consist primarily of personnel expenses, including employee salaries and bonuses plus related payroll taxes, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations.
Our general and administrative expenses consist primarily of personnel expenses, including employee salaries and bonuses plus related payroll taxes, stock based compensation expense, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations.
If we raise additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock.
If we raise additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of our class B common stock.
Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements: Business Combinations .
Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements: Revenue Recognition .
Based on the analysis, we did not recognize an impairment loss during the year ended June 30, 2024. Subsequent evaluations will be performed annually on June 30, per our policy. Stock-based Compensation .
Based on the analysis, we did not recognize an impairment loss during the year ended June 30, 2025. Subsequent evaluations will be performed annually on June 30, per our policy. 31 Stock-based Compensation .
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more, (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our class B common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. 27 Results of Operations The following table sets forth key components of our results of operations for the period from July 1, 2022 to October 16, 2022 (Predecessor), from October 17, 2022 to June 30, 2023 (Successor), and for the year ended June 30, 2024 (Successor).
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more, (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our class B common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Net cash provided by financing activities was $3,181,735 for the year ended June 30, 2024, as compared to $2,506,102 for the year ended June 30, 2023.
Net cash provided by financing activities was $2,374,967 for the year ended June 30, 2025, as compared to $3,181,735 for the year ended June 30, 2024.
Other than indicated above, at June 30, 2024, we did not have other long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position.
Other than the foregoing, as of June 30, 2025, we did not have other long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position.
As a percentage of revenue, gross profit increased from 29.91% for the year ended June 30, 2023 to 49.58% for the year ended June 30, 2024. General and administrative expenses .
As a percentage of revenue, gross profit decreased from 49.58% for the year ended June 30, 2024 to 47.59% for the year ended June 30, 2025. General and administrative expenses .
Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies.
Determining the fair value of assets acquired, for purposes of allocating cost based on their relative fair values, requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies.
Generally, measured compensation cost, net of actual forfeitures, is recognized on a straight-line basis over the vesting period of the related share-based compensation award. We account for forfeitures of stock-based awards as they occur. Revenue Recognition .
Generally, measured compensation cost, net of actual forfeitures, is recognized on a straight-line basis over the vesting period of the related share-based compensation award. We account for forfeitures of stock-based awards as they occur. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.
Certain product sales include a 2-year manufacturer’s warranty that provides the customer with assurance that the product performs as intended. Such warranties are assurance-type warranties and are accounted for as contingencies under ASC 460-10. 32
Certain product sales include a 2-year manufacturer’s warranty that provides the customer with assurance that the product performs as intended. Such warranties are assurance-type warranties and are accounted for as contingencies under ASC 460-10. Asset Acquisitions . Acquisitions of assets that do not meet the definition of a business are accounted for using the cost accumulation and allocation model.
For the year ended June 30, 2024, our net loss of $2,281,741, offset by stock-based compensation of $670,958, were the primary drivers of net cash used in operating activities. For the year ended June 30, 2023, our net loss of $5,343,271, offset by stock-based compensation of $4,119,321, were the primary drivers of the net cash used in operating activities.
For the year ended June 30, 2024, our net loss of $2,281,741, offset by non-cash stock based compensation of $670,958, were the primary drivers of net cash used in operating activities. Net cash used in investing activities was $614,181 for the year ended June 30, 2025, as compared to $10,438 for the year ended June 30, 2024.
Intangible assets primarily consist of existing technology, customer relationships, and trademarks obtained as a result of the acquisition on October 17, 2022. Intangible assets with definite lives are amortized based on their pattern of economic benefit over their estimated useful lives and reviewed periodically for impairment. Our trademarks are deemed to have an indefinite life.
Intangible assets with definite lives are amortized based on their pattern of economic benefit over their estimated useful lives and reviewed periodically for impairment. Our trademarks are deemed to have an indefinite life. The estimated useful life of the acquired technology is 15 years while the estimated useful lives of the distribution agreements and licenses is 5 years.
Our cost of sales decreased by $901,980, or 52.71%, to $809,161 for the year ended June 30, 2024 from $1,711,141 for the year ended June 30, 2023. As a percentage of revenue, cost of sales decreased from 70.09% for the year ended June 30, 2023 to 50.42% for the year ended June 30, 2024.
Our cost of sales increased by $277,208, or 34.26%, to $1,086,369 for the year ended June 30, 2025 from $809,161 for the year ended June 30, 2024. As a percentage of revenue, cost of sales increased from 50.42% for the year ended June 30, 2024 to 52.41% for the year ended June 30, 2025.
Net cash provided by financing activities for the year ended June 30, 2024 consisted of proceeds from the issuance of class B common stock pursuant to the initial public offering of $4,233,875 (net of offering costs), proceeds from the issuance of convertible notes of $225,000, offset by payments for deferred offering costs of $587,573, repayment of notes of $480,667 and repayment of related party loans of $208,900, while net cash provided by financing activities for the year ended June 30, 2023 consisted of proceeds from the issuance of class B common stock of $1,650,000, proceeds from the issuance of series seed preferred stock of $1,000,000, proceeds from related party loans of $373,817 and proceeds from the issuance of class A common stock of $100, offset by repayments of related party loans of $288,861, payments for deferred operating costs of $227,676 and repayments of long term debt of $1,278.
Net cash provided by financing activities for the year ended June 30, 2025 consisted of proceeds from the issuance of promissory notes and warrants of $1,510,000, proceeds from the issuance of original issue discount notes of $500,000, proceeds from the exercise of warrants of $403,171 and proceeds from related party loans of $332,193, offset by payments of notes payable of $316,920 and payments for deferred offering costs of $53,477, while net cash provided by financing activities for the year ended June 30, 2024 consisted of proceeds from the issuance of class B common stock pursuant to the initial public offering of $4,233,875 (net of offering costs) and proceeds from the issuance of convertible notes of $225,000, offset by payments for deferred offering costs of $587,573, repayments of notes of $480,667 and repayments of related party loans of $208,900.
The net cash used in investing activities for the year ended June 30, 2024 consisted entirely of purchases of property and equipment, while the net cash used in investing activities for the year ended June 30, 2023 consisted of cash used in connection with the acquisition of the assets of CleanCore LLC, TetraClean and Food Safety of $2,007,882 and purchases of property and equipment of $1,260.
The net cash used in investing activities for the year ended June 30, 2025 consisted of $581,792 cash used in the acquisition of the assets of Sanzonate and purchases of property and equipment of $32,389, while the net cash used investing activities for the year ended June 30, 2024 consisted entirely of purchases of property and equipment.
We incurred depreciation and amortization expense of $155,059, or 9.66% of revenue, for the year ended June 30, 2024, as compared to $115,564, or 4.73% of revenue, for the year ended June 30, 2023. Interest expense .
Such a decrease was primarily due to a decrease in trade shows attended in fiscal 2025. Depreciation and amortization expense . We incurred depreciation and amortization expense of $198,909, or 9.60% of revenue, for the year ended June 30, 2025, as compared to $155,059, or 9.66% of revenue, for the year ended June 30, 2024.
Our general and administrative expenses decreased by $3,174,016, or 56.22%, to $2,471,480 for the year ended June 30, 2024 from $5,645,496 for the year ended June 30, 2023. As a percentage of revenue, our general and administrative expenses decreased from 231.24% for the year ended June 30, 2023 to 153.99% for the year ended June 30, 2024.
Our general and administrative expenses increased by $4,609,819, or 186.52%, to $7,081,299 for the year ended June 30, 2025 from $2,471,480 for the year ended June 30, 2024. As a percentage of revenue, our general and administrative expenses increased from 153.99% for the year ended June 30, 2024 to 341.62% for the year ended June 30, 2025.
We incurred interest expense of $335,008, or 20.87% of revenue, for the year ended June 30, 2024, as compared to $292,861, or 12.00% of revenue, for the year ended June 30, 2023. Net loss .
The increase is due to amortization expense associated with additional intangibles acquired with the asset acquisition of Sanzonate in April 2025. Interest expense, net . We incurred interest expense, net, of $356,054, or 17.18% of revenue, for the year ended June 30, 2025, as compared to $335,008, or 20.87% of revenue, for the year ended June 30, 2024.
We generate revenue from sales of our cleaning products. Our revenue decreased by $836,383, or 34.26%, to $1,604,973 for the year ended June 30, 2024 from $2,441,356 for the year ended June 30, 2023.
We generate revenue from sales of our cleaning products. Our revenue increased by $467,861, or 29.15%, to $2,072,834 for the year ended June 30, 2025 from $1,604,973 for the year ended June 30, 2024. The increase is primarily driven by sales to a new customer, KBS, as described above.
Combined Year Ended June 30, 2023 Year Ended June 30, 2024 2023 Total Period from October 17, 2022 to June 30, 2023 (Successor) Period from July 1, 2022 to October 16, 2022 (Predecessor) Net cash used in operating activities $ (1,547,880 ) $ (354,121 ) $ (236,870 ) $ (117,251 ) Net cash used in investing activities (10,438 ) (2,009,142 ) (2,001,260 ) (7,882 ) Net cash provided by (used in) financing activities 3,181,735 2,506,102 2,631,324 (125,222 ) Net increase (decrease) in cash 1,623,417 142,839 393,194 (250,355 ) Cash and cash equivalents at beginning of period 393,194 263,506 - 263,506 Cash and cash equivalents at end of period $ 2,016,611 $ 406,345 $ 393,194 $ 13,151 Net cash used in operating activities was $1,547,880 for the year ended June 30, 2024, as compared to $354,121 for the year ended June 30, 2023.
Years Ended June 30, 2025 2024 Net cash used in operating activities $ (2,337,659 ) $ (1,547,880 ) Net cash used in investing activities (614,181 ) (10,438 ) Net cash provided by financing activities 2,374,967 3,181,735 Effect of exchange rate changes on cash and cash equivalents 21,259 - Net increase (decrease) in cash (555,614 ) 1,623,417 Cash at beginning of year 2,016,611 393,194 Cash at end of year $ 1,460,997 $ 2,016,611 Net cash used in operating activities was $2,337,659 for the year ended June 30, 2025, as compared to $1,547,880 for the year ended June 30, 2024.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” All periods presented on or prior to October 16, 2022 represent the operations of CleanCore, TetraClean and Food Safety, our predecessors companies, and all references to “predecessor” refer to the combined financial position and results of operations of CleanCore, TetraClean and Food Safety on and before such date.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “ Special Note Regarding Forward-Looking Statements. ” Overview We specialize in the development and production of cleaning products that produce pure aqueous ozone for professional, industrial, or home use.
Estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from those estimates. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill.
Estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from those estimates. Intangible Assets . Intangible assets primarily consist of existing technology, distribution agreements, licenses, and trademarks obtained as a result of the acquisitions on October 17, 2022 and April 15, 2025.
From acquisition through June 30, 2024, we have financed our operations primarily through private investor funding and an initial public offering. As of June 30, 2024, we had cash and cash equivalents of $2,016,611, a net loss for the year ended June 30, 2024 of $2,281,742 and cash used in operating activities of $1,547,880.
Liquidity and Capital Resources Our company has incurred losses and negative cash flows from operations. From October 17, 2022 (the date of the acquisition) through June 30, 2025, we have financed our operations primarily through private investor funding and an initial public offering. As of June 30, 2025, we had cash and cash equivalents of $1,460,997.
We do not see any potential risks associated with utilizing this combined presentation. Following are the combined results for the years ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenues.
Results of Operations The following table sets forth key components of our results of operations for the years ended June 30, 2025 and 2024, both in dollars and as a percentage of revenue.
Despite the initial public offering described below, management believes that currently available resources will not be sufficient to fund our planned expenditures over the next 12 months.
Management believes that currently available resources will not be sufficient to fund our planned expenditures over the next 12 months, which raises substantial doubt about our company’s ability to continue as a going concern for 12 months from the balance sheet date as of June 30, 2025.
The estimated useful life of the acquired technology is 15 years while the estimated useful life of the customer relationships is 5 years. Impairment of Goodwill . We evaluate goodwill for impairment annually, as of June 30, or more frequently when indicators of impairment exist.
Subsequent evaluations will be performed annually on June 30, per our policy. Impairment of Goodwill . We evaluate goodwill for impairment annually, as of June 30, or more frequently when indicators of impairment exist.
As a result of the cumulative effect of the factors described above, we had a net loss of $2,281,742 for the year ended June 30, 2024, as compared to $5,343,271 for the year ended June 30, 2023, a decrease of $3,061,529, or 57.30%. Liquidity and Capital Resources Our company has incurred losses and negative cash flows from operations.
The increase is primarily due to an increase in note payables. Net loss . As a result of the cumulative effect of the factors described above, we had a net loss of $6,742,275 for the year ended June 30, 2025, as compared to $2,281,742 for the year ended June 30, 2024, an increase of $4,460,533, or 195.49%.
As a percentage of revenue, our advertising expenses increased from 0.80% for the year ended June 30, 2023 to 7.23% for the year ended June 30, 2024. Such an increase was primarily due to an increase in trade show sponsorship expenses. Depreciation and amortization expense .
Our advertising expenses decreased by $23,409, or 20.18%, to $92,598 for the year ended June 30, 2025 from $116,007 for the year ended June 30, 2024. As a percentage of revenue, our advertising expenses decreased from 7.23% for the year ended June 30, 2024 to 4.47% for the year ended June 30, 2025.
Removed
References to “successor” refer to the financial position and results of operations of our company subsequent to October 16, 2022. Overview We specialize in the development and production of cleaning products that produce pure aqueous ozone for professional, industrial, or home use.
Added
We are currently expanding our distributor network, improving our production processes, and proving the effectiveness of our products in restaurants, airports, and hotels.
Removed
We are currently expanding our distributor network, improving our production processes, and proving the effectiveness of our products in restaurants, airports, and hotels. 26 Recent Developments Product Development Proposal On August 20, 2024, we entered into a product development proposal with E-Business International Incorporation, pursuant to which Business International Incorporation, an engineering company, will look for more efficient ways to assemble some of our units, and will then take over assembly of certain products using overseas facilities.
Added
As of June 30, 2025, we recognized $876,568 in revenue from KBS under an approximately $1.4 million purchase order issued by KBS. Cost of sales . Our cost of sales consists of raw materials, components, labor, demo expenses and warranty reserves.
Removed
Distributor Agreement On September 10, 2024, we entered into a sole distributorship agreement with Consensus B.V., pursuant to which Consensus B.V. will act as sole distributor of our products in the European Union, United Kingdom, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.
Added
The increase is the result of higher year-over-year revenue and an increase in indirect costs such as demo expense, R&D, and warranty reserve. 28 Gross profit . As a result of the foregoing, our gross profit increased by $190,653, or 23.96%, to $986,465 for the year ended June 30, 2025 from $795,812 for the year ended June 30, 2024.
Removed
The agreement is for a term of five years and may be terminated by either party upon not less than four months’ notice; provided that either party may terminate the agreement immediately upon a substantial breach of the agreement, as more particularly described in the agreement.
Added
This increase was primarily due to increases of $2,532,272 in non-cash stock compensation expense, $351,071 in payroll and benefits related to an increase in headcount, $1,022,152 in professional and consulting fees, $261,250 of intangibles impairment, and $223,376 in director and officer insurance.
Removed
For the Year Ended June 30, 2024 (Successor) Period from October 17, 2022 to June 30, 2023 (Successor) Period from July 1, 2022 to October 16, 2022 (Predecessor) Revenue $ 1,604,973 $ 1,938,366 $ 502,990 Cost of sales 809,161 1,359,401 351,740 Gross profit 795,812 578,965 151,250 Operating expenses: General and administrative 2,471,480 5,310,961 334,535 Advertising expense 116,007 14,944 4,621 Depreciation and amortization expense 155,059 109,144 6,420 Loss from operations (1,946,734 ) (4,856,084 ) (194,326 ) Interest expense 335,008 167,123 125,738 Net loss $ (2,281,742 ) $ (5,023,207 ) $ (320,064 ) We believe that reviewing our operating results for the year ended June 30, 2023, by combining the results of the successor period (October 17, 2022 to June 30, 2023) and the predecessor period (July 1, 2022 to October 16, 2022) is more useful in discussing our overall operating performance compared to the results of the year ended June 30, 2024 (successor).
Added
The increase in professional fees and director and officer insurance is directly related to our listing on NYSE American in April 2024, as fiscal 2025 includes a full year of such fees. Advertising expenses . Our advertising expenses consist of vendor trade shows and various trade publications.
Removed
This reduction in revenue was primarily due to the fact that our previous largest customer decided to make its own units instead of ordering from us commencing at the start of calendar year 2023. Revenue to this customer declined by 96% during the fiscal year, which represented over 80% of total revenue decline.
Added
For the year ended June 30, 2025, we had a net loss of $6,742,275 and cash used in operating activities of $2,337,659.
Removed
The remaining decline is the result of management’s strategy of shifting focus to selling at higher margins direct to end users instead of selling through regional distribution groups at lower margins. 28 Cost of sales . Our cost of sales consists of raw materials, components and labor.
Added
For the year ended June 30, 2025, our net loss of $6,742,275, offset by non-cash stock based compensation of $3,203,230, were the primary drivers of net cash used in operating activities.
Removed
This decrease was primarily due to our strategy of selling direct to end users instead of selling via regional distribution groups. Gross profit . As a result of the foregoing, our gross profit increased by $65,597, or 8.98%, to $795,812 for the year ended June 30, 2024 from $730,215 for the year ended June 30, 2023.
Added
Debt Please see Notes 11 and 12 to the accompanying consolidated financial statements for a description of the terms of our outstanding debt. Contractual Obligations Our principal commitments consist mostly of obligations under the loans described in Notes 11 and 12 to the accompanying consolidated financial statements.
Removed
This decrease was primarily due to a reduction in stock option expense. Advertising expenses . Our advertising expenses consist of vendor trade shows and various trade publications. Our advertising expenses increased by $96,442, or 492.93%, to $116,007 for the year ended June 30, 2024 from $19,565 for the year ended June 30, 2023.
Added
We also have a non-cancellable operating lease commitment for our office facility expiring in 2028 as described in Note 16 to the accompanying consolidated financial statements.
Removed
These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about our company’s ability to continue as a going concern for 12 months from the date of issuance of the accompanying financial statements.
Added
The cost accumulation and allocation model requires us to measure the assets acquired based on their cost, which is then allocated to the assets on a relative fair value basis. The cost of the assets includes direct acquisition-related costs such as fees paid to external advisors, attorneys, and accountants.
Removed
Net cash used in investing activities was $10,438 for the year ended June 30, 2024, as compared to $2,009,142 for the year ended June 30, 2023.
Added
When the cost of the acquired assets is greater than the fair value of the group, the excess cost is allocated to the nonfinancial assets acquired. Contingent consideration included in an asset acquisition is first assessed as to whether it qualifies as a derivative instrument.
Removed
Initial Public Offering On April 25, 2024, we entered into an underwriting agreement with Boustead Securities, LLC, as the representative of the several underwriters named on Schedule 1 thereto, relating to our initial public offering of class B common stock.
Added
If it does, we would measure the contingent consideration at fair value with changes in fair value reported in earnings. If the contingent consideration is not a derivative instrument, we will recognize the contingent consideration when it is probable and estimable and subsequent changes are recorded as adjustments to the carrying amount of the assets acquired.
Removed
Under the underwriting agreement, we agreed to sell 1,250,000 shares of class B common stock to the underwriters, at a purchase price per share of $3.72 (the offering price to the public of $4.00 per share of class B common stock minus the underwriters’ discount), and also agreed to grant to the underwriters a 45-day option to purchase up to 187,500 additional shares of class B common stock, at a purchase price of $3.72, pursuant to our registration statement on Form S-1 (File No. 333-274928) under the Securities Act.
Added
Impairment of Long-Lived Assets . Long-lived assets consist primarily of property and equipment and intangible assets. Long-lived assets are tested for impairment when events and circumstances indicate the assets might be impaired by first comparing the estimated future undiscounted cash flows of the asset or asset group to the carrying value.
Removed
On April 30, 2024, the closing of the initial public offering was completed. We sold 1,250,000 shares of class B common stock for total gross proceeds of $5,000,000. After deducting the underwriting commission and expenses, we received net proceeds of approximately $4,239,500.
Added
If the carrying value exceeds the estimated future undiscounted cash flows, an impairment loss is recognized based on the amount that the carrying value exceeds the fair value of the asset or asset group.
Removed
On April 30, 2024, we also issued a class B common stock purchase warrant to the representative for the purchase of 87,500 shares of class B common stock at an exercise price of $5.00, subject to adjustments.
Added
As a result of the analysis, we recognized an impairment loss of $261,250 in general and administrative expenses on our customer relationship intangible asset during the year ended June 30, 2025. No other long-lived assets were determined to be impaired for the years ended June 30, 2025 and 2024.
Removed
The warrant will be exercisable at any time and from time to time, in whole or in part, during the period commencing on April 30, 2024 and ending on April 25, 2029 and may be exercised on a cashless basis under certain circumstances.
Removed
Private Placement Between October 14, 2022 and November 29, 2022, we issued an aggregate of 660,921 shares of class B common stock for total gross proceeds of $1,150,000 and net proceeds of approximately $1,035,000 in a private placement transaction. 30 Promissory Notes On October 17, 2022, we issued a promissory note in the principal amount of $3,000,000 to Burlington, which amended by an extension agreement dated September 13, 2023, a second extension agreement dated December 17, 2023, a third extension agreement dated April 30, 2024, and a fourth extension agreement dated May 20, 2024.
Removed
The note bore interest at a rate of 7% per annum; provided that such interest rate increased to 10% per annum on September 13, 2023. The note was due on the earlier of (a) the closing of a firm commitment initial public offering and concurrent listing on a national securities exchange or (b) April 4, 2024.
Removed
On May 31, 2024, Burlington and Walker Water LLC, or WW, entered into an allonge, assignment and agreement, or the Assignment Agreement, pursuant to which Burlington agreed to transfer $633,840 of the note to WW.
Removed
The Assignment Agreement also provided that we would make a payment of $900,000 to Burlington on May 31, 2024, of which $480,667 will reduce the principal amount of the note, and $419,333 will pay outstanding interest.
Removed
On May 31, 2024, we issued an amended and restated promissory note to Burlington to reduce the outstanding principal of the note due to Burlington’s assignment of a portion of the note to WW and due to the foregoing payment.
Removed
The note has a new principal amount of $2,366,160, accrues interest at 8.5% per annum from October 17, 2022 (the date of the original note), which shall increase to 10% upon an event of default, and requires quarterly payments in the amount of $100,000 over the course of the next two and a half years, with a final payment of $1,396,881 due on April 1, 2027.
Removed
The note may be prepaid at any time with no pre-payment penalty and contains customary events of default for a note of this type. As of June 30, 2024, the outstanding principal balance of this note is $1,885,493 and it has accrued interest of $13,673.
Removed
Pursuant to the Assignment Agreement, we also issued a new promissory note to WW in the principal amount of $633,840. The note accrues interest at 8.5% per annum from October 17, 2022 (the date of the original note), which shall increase to 10% upon an event of default and is due on December 31, 2024.
Removed
The note may be prepaid at any time with no pre-payment penalty and contains customary events of default for a note of this type. As of June 30, 2024, the outstanding principal balance of this note is $633,840 and it has accrued interest of $4,490.
Removed
Both notes are unsecured and are pari passu in right of payment to any other unsecured indebtedness incurred in favor of any third party.
Removed
Related Party Revolving Loan On March 26, 2024, we entered into a loan agreement with Clayton Adams, a significant stockholder at such time and our current Chief Executive Officer, pursuant to which we issued a revolving credit note to Mr. Adams in the principal amount of up to $500,000. Pursuant to the loan agreement and note, Mr.
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