Item 1. Business
ITEM 1. BUSINESS.
Overview
We
specialize in the development and production of cleaning products that produce pure aqueous ozone for professional, industrial, or home
use. We have a patented nanobubble technology using aqueous ozone that we believe is highly effective in cleaning, sanitizing, and deodorizing
surfaces and high-touch areas.
Our
mission is to become a leader in creating safe, clean spaces that are free from any chemical residue or skin irritants. We are currently
expanding our distributor network, improving our production processes, and proving the effectiveness of our products in restaurants,
airports, and hotels.
As
noted by the U.S. Environmental Protection Agency, or the EPA (“Wastewater Technology Fact Sheet: Ozone Disinfection,” September
1999), ozone has been used in water treatment facilities to remove pathogens from water for decades. However, ozone was not safe for
traditional cleaning because the gas alone can be harmful when inhaled. In recent years, ozone has been found to become a powerful cleaning
solution if infused into tap water, which then creates a solution called aqueous ozone. Once the ozone is added into the water, the resulting
solution is safe to handle, yet continues to hold the effective cleaning and oxidizing components of ozone.
Our
product offerings utilize a patented technology that we believe produces an enhanced aqueous ozone solution that requires no additives,
filters, or advanced chemicals. We believe that we are the only company that has an aqueous ozone solution that is produced in the form
of nanobubbles. In a critical review from Environmental Science Nano (“Disinfection applications of ozone micro- and nanobubbles,”
November 2, 2021) authors Petroula Seridou and Nicolas Kalogerakis explain that since its discovery in the 1990’s, nanobubbles
have been used to remove pollutants in many industries, including biopharma and food processing. Nanobubbles are nanometer-sized (one
billionth of a meter) gaseous cavities in a liquid solution. The common micro sized bubbles have larger diameters which causes them to
rise quickly to the surface of an aqueous solution as compared to the smaller bubbles.
Since
nanobubbles have no natural buoyancy, they remain underwater, where each tiny, negatively charged bubble is attracted to positively charged
pollutants and harmful toxins. In the article, Seridou and Kalogerakis write about how this union causes the nanobubbles to release ozone
which extinguishes pathogens and slowly breaks down the cell walls of mold, germs, and other residues. 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.
The use of this ozone solution has been proven effective in eliminating germs, viruses, bacteria, allergens, and molds; and it performs
better than bleach according to a research report published by PLoS One (“The microbial killing capacity of aqueous and gaseous
ozone on different surfaces contaminated with dairy cattle manure,” May 14, 2018). Aqueous ozone technology has been tested and
previously destroyed pathogens including E. Coli, Staphylococcus, Listeria, and Salmonella as described in Catalyst journal (“Ozone
and Photocatalytic Processes for Pathogens Removal from Water: A Review,” January 5, 2019). The solution cleans hard surfaces,
floors, carpets, upholstery, and food contact surfaces.
In
addition, in an independent case study at Cape Coral Hospital in Florida, the aqueous ozone solution worked to significantly deodorize
smells. The same internal case study notes that the aqueous ozone does not mask smells, but instead destroys the bacterium causing the
smell.
1
Our
aqueous ozone solution is referred to as “pure” because of its ability to keep high concentration of ozone in the solution
without needing to use a stabilizer or additive. Depending on the product, the pure aqueous ozone solution contains between 0.5 to 1.5
parts per million, or ppm, of ozone for professional cleaning and up to 20 ppm of ozone for industrial cleaning. At these levels, we
believe the concentration of ozone within the solution is strong enough to effectively clean and deodorize better than bleach.
Corporate
History and Structure
We
were incorporated in the State of Nevada on August 23, 2022 under the name CC Acquisition Corp. for the sole purpose of acquiring substantially
all of the assets of CleanCore Solutions, LLC, a Delaware limited liability company, or CleanCore LLC, TetraClean Systems, LLC, a Delaware
limited liability company, or TetraClean, and Food Safety Technology L.L.C., a Delaware limited liability company, or Food Safety. On
November 21, 2022, we changed our name from CC Acquisition Corp. to CleanCore Solutions, Inc.
On
October 17, 2022, we entered into an asset purchase agreement with CleanCore LLC, TetraClean, Food Safety and Burlington Capital, LLC,
or Burlington, the majority owner of these entities, pursuant to which we acquired substantially all of the assets of CleanCore LLC,
TetraClean and Food Safety for a total purchase price of $5,000,000, consisting of $2,000,000 in cash and the issuance of a promissory
note in the principal amount of $3,000,000.
The
predecessor of CleanCore LLC was CleanCore Technologies, LLC, which was formed in 2014 and was wholly owned by Center Ridge Holdings,
LLC. CleanCore LLC was formed in 2019 by Burlington and Walker Water, LLC d/b/a O-Z Tech. In 2019, prior to the formation of CleanCore
LLC, Center Ridge Holdings, LLC transferred substantially all of the assets of CleanCore Technologies, LLC to Burlington, which then
transferred such assets to CleanCore LLC. TetraClean and Food Safety were created to focus on industrial and food safety, respectively.
CleanCore LLC, TetraClean, and Food Safety were all under majority control by Burlington prior to the acquisition by CC Acquisition Corp.
All discussions in this report regarding our business prior to the acquisition reflect the combined business of CleanCore LLC, TetraClean,
and Food Safety, our predecessor companies. 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. 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. 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. 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. 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.
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. 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. 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.
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. 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. 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.
Products
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.
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. These units come equipped with
a spray gun and vacuum hose to properly clean all locations. The POWER CADDY includes a high-pressure
spray gun with a pressure per inch boost over 100 for more intense cleaning.
● POWER
MINI CADDY . A six-gallon tank that generates aqueous ozone within it, so users are
able to generate on-site, on-demand aqueous ozone as they clean. This product comes equipped
with a spray gun and vacuum hose to properly clean all locations. The MINI CADDY is a smaller
version of the POWER CADDY that is popular in smaller areas such as restaurants.
Ice
System
The
Ice Treatment System establishes a proactive ice machine cleaning program. Cleaning ice machines is a labor intensive and slow process
that needs to happen often to stop the buildup of bacteria and mold in the ice machine, the buildup of which could contaminate the ice
supply. Ice machines, like other water systems used within indoor environments, create ideal conditions for fostering the growth of bacteria
and mold. Pure aqueous ozone is highly effective in cleaning the inside of ice machines. Our Ice System destroys bacteria by sending
0.50 ppm of aqueous ozone through the ice machine each time it makes more ice. 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. When the laundry ozone unit is
connected to a washing machine, the aqueous ozone is used to clean towels and linens. As a result, by avoiding harsh chemicals, the aqueous
ozone may expand the life of the linens, reduce dry time, and eliminate skin irritation. The flow rate of the commercial product is five
GPM on each line.
Industrial
Cleaning Products
We
also plan to make aqueous ozone available for industrial applications, primarily for the purpose of keeping industrial plants and production
lines clean. We believe this industrial product is safe to be used on food-contact surfaces and has been used in meat packing plants
to eliminate the need to stop the packaging line for cleaning. Additional applications for this product may include pet food packaging
and manufacturing, canning operations, breweries, wineries, distilleries, and consumer health manufacturers.
We
build customized cleaning
systems to meet the required needs of our clients. Our system’s volume output ranges from 10-250 GPM of our patented solution.
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.
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. 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.
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. The tablets are made according to standards of the National Science Foundation, an independent
agency of the United States government that supports fundamental research and education in all the non-medical fields of science and
engineering, under the “D2” classification, which means these tablets may be used as an antimicrobial agent that would not
need to be rinsed or qualified as a “no rinse sanitizer.”
Manufacturing
We
currently source components and raw materials both domestically and overseas from vendors. The components and raw materials are shipped
to our facility in Omaha, NE and assembled. We have implemented a strict quality control program which is run by our Director of Operations
along with our Lead Production Supervisor. We have inventory control systems at our facilities
that track each manufacturing and packaging component as we receive it from our supply sources through manufacturing and shipment of
each product to customers. To facilitate this tracking, most products we sell are bar coded. We believe our distribution capabilities
increase our flexibility in responding to our customers’ delivery requirements.
Our
manufacturing operations are designed to allow low-cost production of a wide variety of products of different quantities, physical
sizes and packaging formats, while maintaining a high level of customer service and quality. Flexible production line changeover capabilities
and reduced cycle times allow us to respond quickly to changes in manufacturing schedules and customer demands.
We
believe that our manufacturing facilities generally have sufficient capacity to meet our current business requirements and our currently
anticipated sales.
Raw
Materials and Suppliers
The
primary raw materials used in the manufacture of our products are chassis, generators, various sockets, degas cylinders, and a variety
of other components. 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.
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. While we believe that there is an ample supply of most of the raw materials that
we need, in the absence of firm and long-term contracts, we may not be able to obtain a sufficient supply of these raw materials
from our existing suppliers or alternates in a timely fashion or at a reasonable cost. 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. Please see Item
1A “ Risk Factors—Risks Related to Our Business and Industry—We have historically depended on a limited number of
third parties to supply key raw materials to us and the failure to obtain a sufficient supply of these raw materials in a timely fashion
and at reasonable costs could significantly delay our delivery of products ” for a description of the risks related to our supplier
relationships.
Sales
and Marketing
We
will utilize media, websites, email lists, social media to reach industries and new potential clients. We actively participate in a variety
of trade shows in health care, food service, commercial real estate, and schools and universities where we demonstrate and market our
products to thousands of potential and existing customers. 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.
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.
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.
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, 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. We primarily sell products to customers under individual purchase orders placed by them under their
standard terms and conditions of sale. These terms and conditions generally include insurance requirements, representations by us with
respect to the quality of our products and our production process, our obligations to comply with law, and indemnifications by us if
we breach our representations or obligations. 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. See Item 1A “ Risk Factors—Risks
Related to Our Business and Industry—Our major customers account for a significant portion of our revenue and the loss of any major
customer could have a material adverse effect on our results of operations .”
Competition
The
janitorial services industry is highly competitive and has many established, large and small global competitors. We compete against a
wide range of cleaning-focused businesses. Some of our current competitors may be larger than we are, have larger customer bases, greater
brand recognition and operating histories, a dominant or more secure position, broader geographic scope, volume, scale, resources, and
more market share than we do, or offer products and services we do not offer. Other competitors are smaller, younger, companies that
may be more agile in responding quickly to new products or changes in the market.
Our
major competitors for our products are traditional cleaning companies such as Proctor and Gamble and Unilever, which are companies that
develop and manufacture traditional chemical cleaning products. However, to the best of our knowledge, none of them have an aqueous ozone
technology. We also compete with companies in the aqueous ozone cleaning market such as Tennant Company, Tersano Inc., and Enozo Technologies
Inc and O3 Waterworks. 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. If our existing or future competitors
seek to gain or retain market share by reducing prices, we may be required to lower our prices, 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.
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.
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 . Our acquisition and subsequent business
with aqueous ozone products have led us to maintain and uphold significant and meaningful
relationships throughout the service cleaning industry with various providers of cleaning
services.
● We
believe that our products eliminate the need for harsh chemicals and reduce costs of labor
in janitorial services . Various chemical solutions for cleaning are costly, but with
the aqueous ozone solution, we believe hospitals may reduce expenditures by switching to
the aqueous ozone technology. Our customers in janitorial services have reported a reduced
time in cleaning and sanitizing, which saves our customers on labor costs.
● There
is no chemical residue left after using our solution, and we believe it causes less irritation
compared to typical cleaning agents . When cleaning with the aqueous ozone solution,
it may remove and deodorize surfaces without using harsh caustic chemicals, and only water
remains on the surface after cleaning, not any chemical residue that may require additional
rinsing. As a result, our clients may report less eye, skin, and respiratory irritation after
switching to our cleaning products.
● Our
product is environmentally conscious . Our goal is to reduce packaging waste when
replacing traditional cleaners and their packaging with aqueous ozone dispensers. We believe
our product also reduces water consumption while cleaning. A two-year study at a major Vancouver
hospital found that clients use 90% less water since the aqueous ozone technology removes
the need to flush the cleaning dispensing system between various chemical cleaning agents.
Overall, our products may reduce the carbon footprint of a janitorial service business when
used in lieu of traditional cleaning methods.
Growth
Strategies
The
key elements of our strategy to grow our business include:
● Targeting
key industries . Historically, we sold our products primarily through geographic and
strategic distributors across the United States and Europe in the janitorial services sector.
In the past twelve months, we have shifted our focus to selling direct to end users. 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 strategy includes attending
industry conferences and working with salespeople to start the use of our product in new
areas.
● Create
partnerships through exclusive licensing for distributors and a direct sales model .
We anticipate evolving the business model into a hybrid of both traditional distributors
and a direct sales model with key salespeople penetrating the health care, education, food
service, and commercial buildings industries. 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.
Previously,
we had conducted an adenosine triphosphate study on the Clemson University Core buildings to determine the cleaning effect of aqueous
ozone and our products.
We
are also active in developing consumer-focused products that can be sold and marketed online and in large box retail stores across the
country. 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 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. 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. 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. We rely on
Federal patent laws to protect our intellectual property, including our patented technology. We also rely on the protection of laws regarding
unregistered copyrights for certain content we create and trade secret laws to protect our proprietary technology. To further protect
our intellectual property, we enter into confidentiality agreements with our executive officers and directors.
Employees
We
seek to attract and retain quality employees in the areas of sales, marketing, and internal operations. Our salespeople will be selected
to continue to identify and develop our client relationships. Our marketing staff will develop brand awareness of our products within
the janitorial services market.
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.
Government
Regulation
As
a manufacturer of ozone devices, we are subject to regulation by multiple U.S. government agencies, including the EPA. We must also comply
with the Federal Insecticide, Fungicide, and Rodenticide Act, or FIFRA, which establishes procedures for registering pesticides and pesticide
generating devices with the U.S. Department of Agriculture and following established labeling provisions. 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.
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. In 1982, the FDA granted “GRAS”
approval, meaning it is “generally recognized as safe” status for ozone treatment of bottled water. 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. Department of Agriculture and Food Safety and Inspection Service declared in December 2001 that ozone may be used on food labeled
as “organic,” and that there are no special labeling requirements for treated raw and ready-to-eat meat and poultry products
if treated with ozone just prior to packaging.
The
Occupational Safety and Health Administration, or OSHA, and the American Conference of Governmental Industrial Hygienists, or ACGIH,
have also issued guidelines and regulations for ozone gas exposure. OSHA regulates ozone gas exposure based on time-weighted averages,
and states that ozone levels in ambient air should not exceed 0.10 ppm for an eight-hour exposure period. Similarly, ACGIH guidelines
state provide for similar time weighted averages, distinguishing based on the level of exertion starting from 0.10 ppm of ozone exposure
for eight hours of light work to 0.05 ppm of ozone exposure for eight hours of during heavy work.
The
Hazard Communication Standard provides workers who are exposed to hazardous chemicals or alike with “the right to know” the
identities and protective measures to be taken to protect themselves from adverse effect of air contaminants. Government recommendations
include guidelines that if an employee is exposed to ambient ozone levels higher than permitted, to wear a respirator or other personal
protective equipment until such a time when air contaminate levels are in within compliance according to the OSHA standards.
In
Canada, Health Canada has issued our company a letter of no-objection to the use of our solution as a sanitizer in Canada for use as
a general use sanitizer, hand disinfectant, personal hygiene cleaner, as a drain cleaner, for food packaging materials, and in use with
food contacting hard surfaces. Our Health Canada reference numbers are: IS13041201/02, IS13041209 to IS13041216, and IP13101701.
The
application, interpretation, and enforcement of these U.S. and foreign laws and regulations are often uncertain, particularly in the
rapidly evolving industry in which we operate and may be interpreted and applied inconsistently from country to country and inconsistently
with our current policies and practices. Any existing or new legislation applicable to our operations could expose us to substantial
liability, including significant expenses necessary to comply with such laws and regulations, to respond to regulatory inquiries or investigations,
and to defend individual or class litigation. These events could dampen growth in the use of the internet in general and cause us to
divert significant resources and funds to addressing these issues, and possibly require us to change our business practices.