CleanCore Solutions, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure information required to be disclosed in our reports that we file or furnish pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate to allow for timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were not effective at a reasonable assurance level due to material weaknesses identified related to (1) the lack of a sufficient number of trained professionals with the expertise to design, implement, and execute a formal risk assessment process and formal accounting policies, procedures, and controls over accounting and financial reporting to ensure the timely and accurate recording of financial transactions while maintaining a segregation of duties; and (2) the lack of a sufficient number of trained professionals with the appropriate U.S. GAAP technical expertise to identify, evaluate, and account for complex transactions, including identification of related party transactions, and review valuation reports prepared by external specialists. Management’s Annual Report on Internal Control over Financial Reporting This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Changes in Internal Controls over Financial Reporting In preparing our financial statements as of and for the year ended June 30, 2024, management identified material weaknesses in our internal control over financial reporting. The material weaknesses we identified related to (1) the lack of a sufficient number of trained professionals with the expertise to design, implement, and execute a formal risk assessment process and formal accounting policies, procedures, and controls over accounting and financial reporting to ensure the timely and accurate recording of financial transactions while maintaining a segregation of duties; and (2) the lack of a sufficient number of trained professionals with the appropriate U.S. GAAP technical expertise to identify, evaluate, and account for complex transactions and review valuation reports prepared by external specialists. We are planning on implementing measures designed to improve our internal control over financial reporting to remediate these material weaknesses, including formalizing our processes and internal control documentation and strengthening supervisory reviews by our financial management and hiring additional qualified accounting and finance personnel and engaging financial consultants to enable the implementation of internal control over financial reporting and segregating duties amongst accounting and finance personnel. While we are implementing these measures, we cannot assure you that these efforts will remediate our material weaknesses and significant deficiencies in a timely manner, or at all, or prevent restatements of our financial statements in the future. If we are unable to successfully remediate our material weaknesses, or identify any future significant deficiencies or material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, and the market price of our common stock may decline as a result. 33 In accordance with the provisions of the JOBS Act, we and our independent registered public accounting firm were not required to, and did not, perform an evaluation of our internal control over financial reporting as of June 30, 2024, nor any period subsequent in accordance with the provisions of the Sarbanes-Oxley Act. Accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses. Material weaknesses may still exist when we report on the effectiveness of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act. Inherent Limitations on Effectiveness of Controls Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. ITEM 9B. OTHER INFORMATION. None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 34 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Directors and Executive Officers Set forth below is information regarding our directors and executive officers as of the date of this report. Name Age Position Clayton Adams 35 Chairman, Chief Executive Officer and President David Enholm 60 Chief Financial Officer and Director Gary Hollst 39 Chief Revenue Officer Brent Cox 41 Director James M. Grisham 55 Director Larry Goldman 67 Director Clayton Adams . Mr. Adams has served as our Chairman, Chief Executive Officer and President since June 2024 and previously served as our President, Chief Financial Officer and as a member of our board of directors from September 2022 until July 2023. Since January 2020, Mr. Adams has served as Principal at Bird Dog Capital LLC, where he leads various investments. Mr. Adams gained experience developing the growth of small companies as Chief Executive Officer of Carson Enterprises, Inc., a company engaged in landscaping and construction, from March 2009 to February 2019. At Carson Enterprises, Inc., Mr. Adams expanded the company and successfully sold the company in February 2019. Mr. Adams is also a member of the board of directors and serves on the audit, compensation and nominating committees of Signing Day Sports, Inc. Mr. Adams graduated from Red Oak High School in 2007. We believe that Mr. Adams is qualified to serve on our board of directors due to his experience in small-cap companies, scaling operations, and financial background. David Enholm . Mr. Enholm has served as our Chief Financial Officer since March 2023 and was appointed to our board of directors in July 2023. Mr. Enholm is a senior executive with over 35 years of experience in finance, including budgeting, forecasting, treasury and cash flow operations, acquisitions and dispositions, and company restructuring. Mr. Enholm worked with Monroe Capital, a private equity firm located in Chicago, Illinois, to assist their portfolio companies with their financial reporting and accounting needs from October 2018 through September 2022. As a result, from March 2020 to September 2022, Mr. Enholm served as the Interim Chief Financial Officer, and subsequently Chief Financial Officer, at Nelbud Services, a service company specializing in fire protection located in Indianapolis, Indiana. From October 2019 to March 2020, Mr. Enholm was primarily engaged as a consultant for Nelbud Services. During his tenure as Chief Financial Officer, Mr. Enholm led two acquisitions and worked with a senior executive team to develop new revenue sources for the company. From October 2018 to August 2021, Mr. Enholm was the Chief Financial Officer at Complete Nutrition, a private company in Omaha, Nebraska, that specialized in the sale of health supplements. As Chief Financial Officer at Complete Nutrition, Mr. Enholm developed a restructuring plan to transition the company from a traditional physical store to an e-commerce retailer. Both Nelbud Services and Complete Nutrition were wholly owned by Monroe Capital. Prior to 2018, Mr. Enholm has also served as Chief Financial Officer at FRGC LLC, Corporate Controller at CoSentry LLC, and Vice President Corporate Controller at Pamida Operating Stores LLC. Mr. Enholm graduated from the University of Nebraska-Omaha with a Bachelor of Science in Business Administration, with a major in Accounting. We believe that Mr. Enholm is qualified to serve on our board of directors due to his extensive finance experience. Gary Hollst . Mr. Hollst has served as our Chief Revenue Officer since November 1, 2022 and previously served as President of CleanCore LLC from April 19, 2019 to October 17, 2023. Mr. Hollst has an extensive background in the janitorial, sanitation and refrigeration industry. From 2015 to April 19, 2021, Mr. Hollst served as the President of Walker Water, LLC d/b/a O-Z Tech, an ice machine and laundry cleaning company based out of Omaha, Nebraska, that also specializes in the usage of aqueous ozone water. Mr. Hollst also serves on the Yutan Board of Education in Yutan, NE. Mr. Hollst earned his high school degree in 2003 from Yutan High School. Brent Cox . Mr. Cox has served as a member of our board of directors since April 2024. Mr. Cox currently serves as the co-founder and managing partner of The Inception Companies, a private investment firm, a position he has held since 2016. From September 2008 to April 2016, Mr. Cox served as a principal investor of the Yucaipa Companies, a Los Angeles, California based private equity firm where he was responsible for sourcing, analyzing and executing investment opportunities, structuring financing for investments and monitoring the performance and strategic initiatives of its portfolio companies. From 2006 to 2008, Mr. Cox served as an investment banking analyst in the Leveraged Finance Group of Jefferies & Co., a multinational independent investment bank. Mr. Cox received a Bachelor of Science degree from the University of Southern California. We believe Mr. Cox is well-qualified to serve as a member of our board of directors due to his experience in investment banking and prior corporate governance experience having served on corporate boards of directors. James M. Grisham . Mr. Grisham has served as a member of our board of directors since April 2024 . Mr. Grisham has worked in the telecommunications industry for over 25 years and has almost a decade of experience as an executive officer. Since December 2013, Mr. Grisham has served as the President and Chief Executive Officer of Shawnee Communications Inc., an Illinois telecommunications company. Prior to his tenure as the President and Chief Executive Officer as Shawnee Communications, Mr. Grisham spent 15 years, from August 1998 to December 2013, as its Chief Financial Officer. Mr. Grisham holds a Bachelor of Science in Accounting from Southern Illinois University, Carbondale. Our board of directors believes Mr. Grisham is qualified to serve on the board due to his financial background and his extensive experience as an executive. 35 Larry Goldman . Mr. Goldman has served as a member of our board of directors since April 2024 . Since September 2018, Mr. Goldman has served as the Chief Financial Officer of Lightbridge Corporation, a Nasdaq-listed nuclear fuel technology company. Prior to that, he worked with Lightbridge Corporation as a consultant from 2006 until 2015, and from 2015 until September 2018 served as its Chief Accounting Officer. From 1985 to 2004, Mr. Goldman was an Audit Assurance Partner for Livingston Wachtell & Co., LLP, a New York City CPA firm, with over 20 years’ experience in assurance, tax and advisory services. Since September 2004, Mr. Goldman had also provided consulting services to numerous public companies on various financial projects and has government contracting accounting experience. Mr. Goldman has an M.S. degree in Taxation from Pace University. Mr. Goldman also holds a Bachelor’s degree in Business Administration with a concentration in Accounting from the State University College at Oswego, NY. Mr. Goldman is a member of the New York State Society of CPAs and serves on its CFO Committee. He has also served on the SEC Practice Committee and the Management Consulting Committee. He is a member of the American Institute of Certified Public Accountants. We believe that Mr. Goldman is qualified to serve on our board of directors due to his extensive accounting experience and his prior corporate governance experience with numerous public companies. Our directors currently have terms which will end at our next annual meeting of the stockholders or until their successors are elected and qualify, subject to their prior death, resignation or removal. Officers serve at the discretion of the board of directors. There is no arrangement or understanding between any director or executive officer and any other person pursuant to which he was or is to be selected as a director, nominee or officer. Family Relationships There are no family relationships among any of our officers or directors. Involvement in Certain Legal Proceedings To the best of our knowledge, except as described below, none of our directors or executive officers has, during the past ten years: ● been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); ● had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; ● been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; ● been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; ● been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or ● been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Corporate Governance Governance Structure Currently, our Chief Executive Officer is also our Chairman of the Board. Our board believes that, at this time, having a combined Chief Executive Officer and Chairman is the appropriate leadership structure for our company. In making this determination, the board considered, among other matters, Mr. Adams’ experience in small-cap companies, scaling operations, and financial background and believed that Mr. Adams is highly qualified to act as both Chairman and Chief Executive Officer due to his experience, knowledge, and personality. Among the benefits of a combined Chairman/Chief Executive Officer considered by the board is that such structure promotes clearer leadership and direction for our company and allows for a single, focused chain of command to execute our strategic initiatives and business plans. 36 The Board’s Role in Risk Oversight The board of directors oversees that the assets of our company are properly safeguarded, that the appropriate financial and other controls are maintained, and that our business is conducted wisely and in compliance with applicable laws and regulations and proper governance. Included in these responsibilities is the board’s oversight of the various risks facing our company. In this regard, our board seeks to understand and oversee critical business risks. Our board does not view risk in isolation. Risks are considered in virtually every business decision and as part of our business strategy. Our board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for our company to be competitive on a global basis and to achieve its objectives. While the board oversees risk management, company management is charged with managing risk. Management communicates routinely with the board and individual directors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do, communicate directly with senior management. Our board administers its risk oversight function as a whole by making risk oversight a matter of collective consideration; however, much of the work is delegated to committees, which will meet regularly and report back to the full board. We have established a standing audit committee, compensation committee and nominating and corporate governance committee of our board of directors. The audit committee will oversee risks related to our financial statements, the financial reporting process, accounting and legal matters, the compensation committee will evaluate the risks and rewards associated with our compensation philosophy and programs, and the nominating and corporate governance committee will evaluate risk associated with management decisions and strategic direction. Independent Directors Our board of directors has determined that all of our directors, other than Messrs. Adams and Enholm, qualify as “independent” directors in accordance with the rules and regulations of NYSE American. Messrs. Adams and Enholm are not considered independent because they are employees of our company. In making its independence determinations, the board considered, among other things, relevant transactions between our company and entities associated with the independent directors, as described under the heading Item 13 “ Certain Relationships and Related Party Transactions, and Director Independence ,” and determined that none have any relationship with our company or other relationships that would impair the directors’ independence. Committees of the Board of Directors Our board has established an audit committee, a compensation committee and a nominating and corporate governance committee, each with its own charter approved by the board. Each committee’s charter is available on our website at www.cleancoresol.com. In addition, our board of directors may, from time to time, designate one or more additional committees, which shall have the duties and powers granted to it by our board of directors. Audit Committee Brent Cox, James M. Grisham, and Larry Goldman, each of whom satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and NYSE American’s rules, serve on our audit committee, with Mr. Goldman serving as the chair. Mr. Goldman qualifies as “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things: (i) retaining and overseeing our independent accountants; (ii) assisting the board in its oversight of the integrity of our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal and regulatory requirements; (iii) reviewing and approving the plan and scope of the internal and external audit; (iv) pre-approving any audit and non-audit services provided by our independent auditors; (v) approving the fees to be paid to our independent auditors; (vi) reviewing with our chief executive officer and chief financial officer and independent auditors the adequacy and effectiveness of our internal controls; (vii) reviewing hedging transactions; and (viii) reviewing and approving related party transactions. 37 Compensation Committee Brent Cox, James M. Grisham, and Larry Goldman, each of whom satisfies the “independence” requirements of NYSE American’s rules, serve on our compensation committee, with Mr. Grisham serving as the chair. The members of the compensation committee are also “non-employee directors” within the meaning of Section 16 of the Exchange Act. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation relating to our directors and executive officers. The compensation committee is responsible for, among other things: (i) reviewing and approving the remuneration of our executive officers; (ii) determining the compensation of our independent directors; and (iii) making recommendations to the board regarding equity-based and incentive compensation plans, policies and programs. Nominating and Corporate Governance Committee Brent Cox, James M. Grisham, and Larry Goldman, each of whom satisfies the “independence” requirements of NYSE American’s rules, serve on our nominating and corporate governance committee, with Mr. Cox serving as the chair. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things: (i) recommending the number of directors to comprise our board; (ii) identifying and evaluating individuals qualified to become members of the board and soliciting recommendations for director nominees from our Chief Executive Officer and Board Chair; (iii) recommending to the board the director nominees for each annual stockholders’ meeting; (iv) recommending to the board the candidates for filling vacancies that may occur between annual stockholders’ meetings; (v) reviewing independent director compensation and board processes, self-evaluations and policies; (vi) overseeing compliance with our code of ethics; and (vii) monitoring developments in the law and practice of corporate governance. The nominating and corporate governance committee’s methods for identifying candidates for election to our board of directors (other than those proposed by our stockholders, as discussed below) will include the solicitation of ideas for possible candidates from a number of sources - members of our board of directors, our executives, individuals personally known to the members of our board of directors, and other research. The nominating and corporate governance committee may also, from time-to-time, retain one or more third-party search firms to identify suitable candidates. In making director recommendations, the nominating and corporate governance committee may consider some or all of the following factors: (i) the candidate’s judgment, skill, experience with other organizations of comparable purpose, complexity and size, and subject to similar legal restrictions and oversight; (ii) the interplay of the candidate’s experience with the experience of other board members; (iii) the extent to which the candidate would be a desirable addition to the board and any committee thereof; (iv) whether or not the person has any relationships that might impair his or her independence; and (v) the candidate’s ability to contribute to the effective management of our company, taking into account the needs of our company and such factors as the individual’s experience, perspective, skills and knowledge of the industry in which we operate. A stockholder may nominate one or more persons for election as a director at an annual meeting of stockholders if the stockholder complies with the notice and information provisions contained in our bylaws. Such notice must be in writing to our company not less than 120 days and not more than 150 days prior to the anniversary date of the preceding year’s annual meeting of stockholders or as otherwise required by the requirements of the Exchange Act. In addition, stockholders furnishing such notice must be a holder of record on both (i) the date of delivering such notice and (ii) the record date for the determination of stockholders entitled to vote at such meeting. Code of Ethics We have adopted a code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Such code of ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, and reporting of violations of the code. We are required to disclose any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions. We intend to use our website as a method of disseminating this disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to our website within four (4) business days following the date of any such amendment to, or waiver from, a provision of our code of ethics. 38 Insider Trading Policy We have adopted an insider trading policy which prohibits our directors, officers and employees from engaging in transactions in our common stock while in the possession of material non-public information; engaging in transactions in the stock of other companies while in possession of material non-public information that they become aware of in performing their duties; and disclosing material non-public information to unauthorized persons outside our company. Our insider trading policy restricts trading by directors, officers and certain key employees during blackout periods, which generally begin 15 calendar days before the end of each fiscal quarter and end two business days after the issuance of our earnings release for the quarter. Additional blackout periods may be imposed with or without notice, as the circumstances require. Our insider trading policy also prohibits our directors, officers and employees from purchasing financial instruments (such as prepaid variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of our common stock they hold, directly or indirectly. In addition, directors, officers and employees are expressly prohibited from pledging our common stock to secure personal loans or other obligations, including by holding their common stock in a margin account, unless such arrangement is specifically approved in advance by the administrator of our insider trading policy, or making short-sale transactions in our common stock. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the company. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. We believe, based solely on a review of the copies of such reports furnished to us and representations of these persons, that all reports were timely filed for the year ended June 30, 2024. ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table - Years Ended June 30, 2024 and 2023 The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) (1) Option Awards ($) (1) All Other Compensation ($) (2) Total ($) Clayton Adams, 2024 - - - - 110,000 110,000 Chief Executive Officer (3) 2023 - - - 1,540,000 110,000 1,650,000 David Enholm, 2024 191,555 - - - 12,480 204,035 Chief Financial Officer (4) 2023 42,692 - - 179,725 1,920 224,337 Gary Hollst, 2024 129,807 - - - - 129,807 Chief Revenue Officer 2023 118,654 - - 133,350 - 252,004 Douglas T. Moore, 2024 101,399 22,400 326,565 - - 348,965 former Chief Executive Officer (5) 2023 - - - - - - Matthew Atkinson, 2024 12,000 - - - - 12,000 former Chief Executive Officer (6) 2023 51,200 - - 1,540,000 48,000 1,639,200 (1) The amount is equal to the aggregate grant-date fair value with respect to the awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. (2) Other compensation includes the compensation received for consulting services, as described below. (3) Mr. Adams has served as our Chief Executive Officer since June 7, 2024 and served as our President from August 24, 2022 to July 13, 2023. (4) Mr. Enholm has served as our Chief Financial Officer since March 27, 2023. (5) Mr. Moore served as our Chief Executive Officer from February 5, 2024 to June 7, 2024. (6) Mr. Atkinson served as our Chief Executive Officer from August 24, 2022 to February 5, 2024, and as our President from July 13, 2023 to February 5, 2024. 39 Employment, Consulting and Separation Agreements On October 17, 2022, we entered into a consulting agreement with Birddog Capital, LLC, or Birddog, a limited liability company owned by Clayton Adams, pursuant to which we engaged Birddog to provide management services to our company. Pursuant to the consulting agreement, we agreed to pay Birddog a monthly fee of $6,000 commencing on October 17, 2022. We also agreed to reimburse Birddog for all pre-approved business expenses. The term of the consulting agreement was for one (1) year. On April 1, 2024, we entered into a new consulting agreement with Birddog which provides for a monthly fee of $22,000. In addition, we agreed to pay Birddog $175,000 upon completion of our initial public offering and grant Birddog 500,000 restricted stock units, with 250,000 shares vesting immediately and 250,000 shares vesting eighteen months after issuance. The consulting agreement expires on October 23, 2025. Birddog subsequently forfeited its right to receive the payment upon completion of our initial public offering and the restricted stock units. On March 27, 2023, we entered into an employment agreement with David Enholm, our Chief Financial Officer, setting forth the terms of Mr. Enholm’s employment. Pursuant to the terms of the employment agreement, as amended, we agreed to pay Mr. Enholm an annual base salary of $185,000 and he is eligible for an annual incentive bonus of up to $55,000, as determined by our board of directors and subject to certain criteria set forth in the employment agreement. Mr. Enholm will also receive 325,000 shares of class B common stock options, with vesting as follows: 10% of the total options granted becoming vested on June 25, 2023, (ii) another 10% of the total options granted vesting on September 23, 2023, and (iii) the remaining amount of the total unvested options vesting in equal amounts monthly over 36 months. The term of the employment agreement is indefinite and may be terminated by us at any time upon fourteen (14) days’ notice or by Mr. Enholm upon thirty (30) days’ written notice. We may also terminate the employment agreement immediately for just cause (as defined in the employment agreement). If we terminate the employment agreement without cause, then Mr. Enholm is entitled to severance in an amount equal to the base salary for three (3) months, payable in a lump sum on the termination date, and all previously earned, accrued, and unpaid benefits. The employment agreement contains customary confidentiality and invention assignment provisions and restrictive covenants prohibiting Mr. Enholm from (i) directly or indirectly, as employee, owner, sole proprietor, partner, director, member, consultant, agent, founder, co-venturer or otherwise, solely or jointly with others, engaging in, or giving advice or lending money to, any business that completes with our company or (ii) soliciting our employees, in each case for a period of twelve (12) months following termination of his employment. On November 1, 2022, we entered into an employment agreement with Gary Hollst, our Chief Revenue Officer, setting forth the terms of Mr. Hollst’s employment. Pursuant to the terms of the employment agreement, as amended, we agreed to pay Mr. Hollst an annual base salary of $120,000 and he is eligible to be considered for an annual incentive bonus, as determined by our board of directors and subject to certain criteria set forth in the employment agreement. The term of the employment agreement is indefinite and may be terminated by us at any time upon fourteen (14) days’ notice or by Mr. Hollst upon fourteen (14) days’ written notice. We may also terminate the employment agreement immediately for just cause (as defined in the employment agreement). The employment agreement contains customary confidentiality and invention assignment provisions and restrictive covenants prohibiting Mr. Hollst from (i) working as an employee, consultant, contractor or in any other capacity, for a business that competes with our company for a period of two (2) years, and from (ii) soliciting our employees, for period of twelve (12) months, in each case following termination of his employment. On February 5, 2024, we entered into an employment agreement with Douglas T. Moore, our former Chief Executive Officer, setting forth the terms of Mr. Moore’s employment. Pursuant to the terms of the employment agreement, we agreed to pay Mr. Moore an annual base salary of $250,000 and he was eligible for an annual incentive bonus of up to $125,000, as determined by our board of directors. On June 10, 2024, we entered into a separation agreement and release of claims with Mr. Moore providing for the separation of his employment with our company effective as of June 7, 2024. Under the separation agreement and release of claims, we agreed to pay Mr. Moore a severance payment in the amount of $80,000, payable in $10,000 installments every two weeks consistent with our existing payroll practices, and agreed to pay all previously earned, accrued, and unpaid benefits from our company and its employee benefit plans. We also agreed to issue 20,000 shares of class B common stock to Mr. Moore on January 2, 2025. 40 On July 18, 2023, we entered into an employment agreement with Matthew Atkinson, our former Chief Executive Officer, setting forth the terms of Mr. Atkinson’s employment. Pursuant to the terms of the employment agreement, we agreed to pay Mr. Atkinson an annual base salary of $200,000 and he is eligible for an annual incentive bonus of up to $200,000, as determined by our board of directors. The term of the employment agreement is indefinite and may be terminated by us at any time or by Mr. Atkinson upon 14 days’ written notice. If Mr. Atkinson’s employment is terminated by us without just cause (as defined in the employment agreement), then, subject to Mr. Atkinson’s execution of a release in favor of our company and his compliance with all obligations set forth in the employment agreement, he will be entitled to severance equal to his base salary for a period equal to six (6) months following the date of termination. The employment agreement contains customary confidentiality and invention assignment provisions and restrictive covenants prohibiting Mr. Atkinson from (i) providing services in any capacity (as an employee, consultant, independent contractor, partner, principal, agent or advisor), or having any financial interest in, any business that competes with our company for a period of one (1) year following termination of his employment or (ii) soliciting any person employed or engaged by our company and its affiliates, or any customers, clients or other business relationships of our company and its affiliates, for a period of twelve (12) months following the termination of his employment. Prior to entering into the employment agreement, Mr. Atkinson provided full-time consulting and management services through Elev8 Marketing, LLC, or Elev8. On February 5, 2024, pursuant to Mr. Atkinson’s resignation, we terminated Mr. Atkinson’s employment agreement and previous consulting agreement with Elev8. On October 17, 2022, we entered into a consulting agreement with Elev8, a business consulting company owned by Matthew Atkinson, pursuant to which we engaged Elev8 to provide management services to our company. Pursuant to the consulting agreement, we agreed to pay Elev8 a monthly fee of $6,000 commencing on October 17, 2022. We also agreed to reimburse Elev8 for all pre-approved business expenses. Retirement Benefits We have not maintained, and do not currently maintain, a defined benefit pension plan, nonqualified deferred compensation plan, defined contribution plan, or other retirement plan. Potential Payments Upon Termination or Change in Control As described under “— Employment and Consulting Agreements ” above, Mr. Enholm will be entitled to severance if his employment is terminated without cause. Outstanding Equity Awards at Fiscal Year-End The following table includes certain information with respect to the value of all unexercised options and unvested shares of restricted stock previously awarded to the executive officers named above at the fiscal year ended June 30, 2024. Option Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Clayton Adams 2,000,000 - - $ 0.25 09/16/2032 David Enholm 137,222 187,778 - $ 2.50 03/27/2028 Gary Hollst 101,111 73,889 - $ 1.74 02/21/2028 Director Compensation On April 30, 2024, each of our independent directors, Brent Cox, Larry Goldman and James M. Grisham, was granted a stock option for the purchase of 150,000 shares of class B common stock at an exercise price of $4.00 per share under our 2022 Equity Incentive Plan. The options are subject to vesting, with 10% of the option vesting immediately upon its grant and the remaining 90% of the option vesting in equal installments each month over the next twenty-four (24) months. Except for these stock option grants, no member of our board of directors received compensation for services as a director the fiscal year ended June 30, 2024. 41 2022 Equity Incentive Plan On September 16, 2022, our board of directors adopted our 2022 Equity Incentive Plan, or the Plan, which was adopted by stockholders on November 18, 2022, and our board of directors and our stockholders adopted an amendment to the Plan on January 3, 2024. The following is a summary of certain significant features of the Plan. The information which follows is subject to, and qualified in its entirety by reference to, the Plan document itself, which is filed as an exhibit to this report. Purposes of Plan : The purposes of the Plan are to advance our interests and the interests of our stockholders by providing an incentive to attract, retain and reward persons performing services for us and by motivating such persons to contribute to our growth and profitability. Types of Awards : Awards that may be granted include: (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) restricted awards, (e) performance share awards, and (f) performance compensation awards. These awards offer our officers, employees, consultants and directors the possibility of future value, depending on the long-term price appreciation of our common stock and the award holder’s continuing service with our company. Administration of the Plan : The Plan is currently administered by our board of directors and will be administered by our compensation committee upon its establishment. Among other things, the administrator has the authority to select persons who will receive awards, determine the types of awards and the number of shares to be covered by awards, and to establish the terms, conditions, performance criteria, restrictions and other provisions of awards. The administrator has authority to establish, amend and rescind rules and regulations relating to the Plan. Eligible Recipients : Persons eligible to receive awards under the Plan will be those employees, consultants, and directors of our company and its subsidiaries who are selected by the administrator. Shares Available Under the Plan : The maximum number of shares of our class B common stock that may be delivered to participants under the Plan is 3,240,000, subject to adjustment for certain corporate changes affecting the shares, such as stock splits. In addition, the number of shares of class B common stock available for issuance under the Plan will automatically increase on January 1 of each calendar year during the term of the Plan by an amount equal to five percent (5%) of the total number of shares of class B common stock issued and outstanding on December 31 of the immediately preceding calendar year. Shares subject to an award under the Plan for which the award is canceled, forfeited or expires again become available for grants under the Plan. Shares subject to an award that is settled in cash will not again be made available for grants under the Plan. Stock Options : General. Stock options give the option holder the right to acquire from us a designated number of shares at a purchase price that is fixed at the time of the grant of the option. Stock options granted may be tax-qualified stock options (so-called “incentive stock options”) or non-qualified stock options. Subject to the provisions of the Plan, the administrator has the authority to determine all grants of stock options. That determination will include: (i) the number of shares subject to any option; (ii) the exercise price per share; (iii) the expiration date of the option; (iv) the manner, time and date of permitted exercise; (v) other restrictions, if any, on the option or the shares underlying the option; and (vi) any other terms and conditions as the administrator may determine. Option Price. The exercise price for stock options will be determined at the time of grant. Normally, the exercise price will not be less than the fair market value on the date of the grant. As a matter of tax law, the exercise price for any incentive stock option awarded may not be less than the fair market value of the shares on the date of grant. However, incentive stock option grants to any person owning more than 10% of our voting stock must have an exercise price of not less than 110% of the fair market value on the grant date. Exercise of Options. An option may be exercised only in accordance with the terms and conditions for the option agreement as established by the administrator at the time of the grant. The option must be exercised by notice to us, accompanied by payment of the exercise price. Payments may be made in cash or, at the option of the administrator, by actual or constructive delivery of shares of common stock to the holder of the option based upon the fair market value of the shares on the date of exercise. Expiration or Termination. Options, if not previously exercised, will expire on the expiration date established by the administrator at the time of grant. In the case of incentive stock options, such term cannot exceed ten years provided that in the case of holders of more than 10% of our voting stock, such term cannot exceed five years. Options will terminate before their expiration date if the holder’s service with our company or a subsidiary terminates before the expiration date. The option may remain exercisable for specified periods after certain terminations of employment, including terminations as a result of death, disability or retirement, with the precise period during which the option may be exercised to be established by the administrator and reflected in the grant evidencing the award. 42 Incentive and Non-Qualified Options. An incentive stock option is an option that is intended to qualify under certain provisions of the Internal Revenue Code of 1986, as amended, or the Code, for more favorable tax treatment than applies to non-qualified stock options. Any option that does not qualify as an incentive stock option will be a non-qualified stock option. Under the Code, certain restrictions apply to incentive stock options. For example, the exercise price for incentive stock options may not be less than the fair market value of the shares on the grant date and the term of the option may not exceed ten years. In addition, an incentive stock option may not be transferred, other than by will or the laws of descent and distribution and is exercisable during the holder’s lifetime only by the holder. In addition, no incentive stock options may be granted to a holder that is first exercisable in a single year if that option, together with all incentive stock options previously granted to the holder that also first become exercisable in that year, relate to shares having an aggregate fair market value in excess of $100,000, measured at the grant date. Stock Appreciation Rights: Stock appreciation rights, or SARs, which may be granted alone or in tandem with options, have an economic value similar to that of options. When an SAR for a particular number of shares is exercised, the holder receives a payment equal to the difference between the market price of the shares on the date of exercise and the exercise price of the shares under the SAR. Again, the exercise price for SARs normally is the market price of the shares on the date the SAR is granted. Under the Plan, holders of SARs may receive this payment - the appreciation value - either in cash or shares valued at the fair market value on the date of exercise. The form of payment will be determined by us. Restricted Awards : Restricted awards are shares awarded to participants at no cost. Restricted awards can take the form of awards of restricted stock, which represent issued and outstanding shares subject to vesting criteria, or restricted stock units, which represent the right to receive shares subject to satisfaction of the vesting criteria. Restricted stock awards are forfeitable and non-transferable until the shares vest. The vesting date or dates and other conditions for vesting are established when the shares are awarded. These awards will be subject to such conditions, restrictions and contingencies as the administrator shall determine at the date of grant. Those may include requirements for continuous service and/or the achievement of specified performance goals. Performance Awards: A performance award is an award that may be in the form of cash or shares or a combination, based on the attainment of pre-established performance goals and other conditions, restrictions and contingencies identified by the administrator. Performance Criteria: Under the Plan, one or more performance criteria will be used by the administrator in establishing performance goals. Any one or more of the performance criteria may be used on an absolute or relative basis to measure the performance of our company, as the administrator may deem appropriate, or as compared to the performance of a group of comparable companies, or published or special index that the administrator deems appropriate. In determining the actual size of an individual performance compensation award, the administrator may reduce or eliminate the amount of the award through the use of negative discretion if, in its sole judgment, such reduction or elimination is appropriate. The administrator shall not have the discretion to (i) grant or provide payment in respect of performance compensation awards if the performance goals have not been attained or (ii) increase a performance compensation award above the maximum amount payable under the Plan. Other Material Provisions: Awards will be evidenced by a written agreement, in such form as may be approved by the administrator. In the event of various changes to the capitalization of our company, such as stock splits, stock dividends and similar re-capitalizations, an appropriate adjustment will be made by the administrator to the number of shares covered by outstanding awards or to the exercise price of such awards. The administrator is also permitted to include in the written agreement provisions that provide for certain changes in the award in the event of a change of control of our company, including acceleration of vesting. Except as otherwise determined by the administrator at the date of grant, awards will not be transferable, other than by will or the laws of descent and distribution. Prior to any award distribution, we are permitted to deduct or withhold amounts sufficient to satisfy any employee withholding tax requirements. Our board also has the authority, at any time, to discontinue the granting of awards. The board also has the authority to alter or amend the Plan or any outstanding award or may terminate the Plan as to further grants, provided that no amendment will, without the approval of our stockholders, to the extent that such approval is required by law or the rules of an applicable exchange, increase the number of shares available under the Plan, change the persons eligible for awards under the Plan, extend the time within which awards may be made, or amend the provisions of the Plan related to amendments. No amendment that would adversely affect any outstanding award made under the Plan can be made without the consent of the holder of such award. 43 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information with respect to the beneficial ownership of our common stock as of September 19, 2024 for (i) each of our named executive officers and directors; (ii) all of our named executive officers and directors as a group; and (iii) each other stockholder known by us to be the beneficial owner of more than 5% of our outstanding common stock. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o our company, 5920 S 118th Circle, Omaha, NE 68137. Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares that such person or any member of such group has the right to acquire within sixty (60) days. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named below, any shares that such person or persons has the right to acquire within sixty (60) days of September 19, 2024 are deemed to be outstanding for such person, but not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership by any person. Name and Address of Beneficial Owner Class A Common Stock Percent of Class A Common Stock (1) Class B Common Stock Percent of Class B Common Stock (1) Percent of Total Voting Power (2) Clayton Adams, Chairman & Chief Executive Officer (3) 2,000,000 88.11 % 481,000 6.04 % 66.79 % David Enholm, Chief Financial Officer (4) - - 166,111 2.04 % 1.53 % Gary Hollst, Chief Revenue Officer (5) - - 116,667 1.44 % 1.08 % Brent Cox, Director (6) - - 928,750 11.59 % 8.67 % Larry Goldman, Director (7) - - 48,750 * * James M. Grisham, Director (8) - - 348,750 4.35 % 3.25 % All directors and executive officers as a group (6 persons named above) 2,000,000 88.11 % 2,090,028 26.07 % 81.77 % Matthew Atkinson (9) 270,000 100.00 % - - 25.31 % Mohammad Ansari (10) - - 1,461,207 18.34 % 13.70 % Lisa Roskens (11) - - 792,146 9.94 % 7.43 % Chris Etherington (12) - - 649,879 8.16 % 6.09 % Mark Olivier (13) - - 464,868 5.84 % 4.36 % Benjamin Lee Adams (14) - - 470,000 5.90 % 4.41 % Michael K. Webb (15) - - 470,000 5.90 % 4.41 % * Less than 1% (1) Based on 270,000 shares of class A common stock and 7,965,919 shares of class B common stock issued and outstanding as of September 19, 2024. (2) Percentage of total voting power represents voting power with respect to all shares of our class A common stock and class B common stock, as a single class. The holders of our class A common stock are entitled to ten votes per share and holders of our class B common stock are entitled to one vote per share. (3) Consists of 481,000 shares of class B common stock and 2,000,000 shares of class A common stock which Mr. Adams has the right to acquire within 60 days through the exercise of vested stock options. The address of Mr. Adams is 1904 S. 183rd Circle, Omaha, NE 68130. (4) Consists of 166,111 shares of class B common stock which Mr. Enholm has the right to acquire within 60 days through the exercise of vested stock options. (5) Consists of 116,667 shares of class B common stock which Mr. Hollst has the right to acquire within 60 days through the exercise of vested stock options. 44 (6) Consists of 880,000 shares of class B common stock and 48,750 shares of class B common stock which Mr. Cox has the right to acquire within 60 days through the exercise of vested stock options. (7) Consists of 48,750 shares of class B common stock which Mr. Goldman has the right to acquire within 60 days through the exercise of vested stock options. (8) Consists of 100,000 shares of class B common stock held directly, 100,000 shares of class B common stock held by Shawnee Communications Inc., 100,000 shares of class B common stock held by James T. Coyle Legacy Trust and 48,750 shares of class B common stock which Mr. Grisham has the right to acquire within 60 days through the exercise of vested stock options. Mr. Grisham is the Chief Executive Officer of Shawnee Communications Inc. and the Trustee of the James T. Coyle Legacy Trust and has voting and investment power over the shares held by them. Mr. Grisham disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any, in such shares. (9) The address of Mr. Atkinson is 255 Calamus Circle, Medina MN, 55340. (10) Consists of 1,250,000 shares of class B common stock held by Bethor Limited and 211,207 shares of class B common stock held by Basestones, Inc. Mohammad Ansari is the Director and President of Bethor Limited and the President of Basestones, Inc. and has voting and investment power over the shares held by them. Mr. Ansari disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any in such shares. The address of Bethor Limited is Nerine Chamber, P.O. Box 905, Road Town, Tortola, British Virgin Islands and the address of Basestones, Inc. is 1901 Avenue of the Stars, Los Angeles, CA 90067. (11) Consists of 14,368 shares of class B common stock held directly and 777,778 shares of class B common stock held by Burlington Capital, LLC. Lisa Roskens is the Chairman and Chief Executive Officer of Burlington Capital, LLC and has voting and investment power over the shares held by it. Ms. Roskens disclaims beneficial ownership of such shares except to the extent of her pecuniary interest, if any, in such shares. The address of Burlington Capital, LLC is 1004 Farnam Street, Suite 400, Omaha NE 68102. (12) Consists of 67,977 shares of class B common stock held directly and 581,902 shares of class B Common stock held by Oleta Investments, LLC. Chris Etherington is the Managing Director of Oleta Investments, LLC, and has sole voting and investment power over the shares held by it. Mr. Etherington disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any, in such shares. The address of Oleta Investments, LLC is 318 North Carson Street, Carson City, NV 89701. (13) The address of Mr. Olivier is 10882 Coronel Road, Santa Ana, CA 92705. (14) The address of Mr. Adams is 724 West 3rd, Maryville, MO 64468. (15) The address of Mr. Webb is 1900 Forest Ave., Red Oak, IA 50166. Changes in Control As noted elsewhere in this report, if Mr. Adams exercises his stock options to purchase 2,000,000 shares of class A common stock, then Mr. Adams will own more than 50% of our total voting power. Except for the foregoing, we do not currently have any arrangements which if consummated may result in a change of control of our company. Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth certain information about the securities authorized for issuance under our incentive plans as of June 30, 2024. Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 1,295,000 $ 2.93 1,504,500 Equity compensation plans not approved by security holders - - - Total 1,295,000 $ 2.93 1,504,500 45 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Transactions with Related Persons The following includes a summary of transactions since the beginning of our 2023 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under Item 11 “ Executive Compensation ” above). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions. Please see the descriptions of the related party loans from Burlington, Matthew Atkinson and Clayton Adams under Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources .” On July 27, 2023, we agreed to purchase approximately $105,607 worth of inventory from Nebraska C. Ozone, LLC, a related party business owned by Lisa Roskens, a significant stockholder and the principal officer of Burlington, due to an open purchase order that our predecessor had with an inventory vendor that was not included in the liabilities assumed from our predecessor per the terms of the acquisition purchase agreement. The inventory is to be purchased as needed, consistent with other inventory purchases. However, if the entire $105,000 amount is not purchased by March 31, 2024, the balance at that date begins accruing interest at a rate of seven percent (7%) per annum until it is paid in full. As of June 30, 2024, we have not purchased any of the inventory and as such, have accrued interest of $2,471. Director Independence Our board of directors has determined that Brent Cox, Larry Goldman and James M. Grisham are independent within the meaning of the rules of NYSE American. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Independent Auditors’ Fees The following is a summary of the fees billed to us for professional services rendered for the fiscal years ended June 30, 2024 and 2023: Years Ended June 30, 2024 2023 Audit Fees $ 158,399 $ 103,712 Audit-Related Fees - - Tax Fees - - All Other Fees 65,708 - TOTAL $ 224,107 $ 103,712 “Audit Fees” consisted of fees billed for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our registration statement or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. “Audit-Related Fees” consisted of fees billed for assurance and related services by the principal accountant that were reasonably related to the performance of the audit or review of our financial statements and are not reported under the paragraph captioned “Audit Fees” above. “Tax Fees” consisted of fees billed for professional services rendered by the principal accountant for tax returns preparation. “All Other Fees” consisted of fees billed for products and services provided by the principal accountant, other than the services reported above under other captions of this Item 14. Pre-Approval Policies and Procedures Under the Sarbanes-Oxley Act, all audit and non-audit services performed by our auditors must be approved in advance by our board of directors to assure that such services do not impair the auditors’ independence from us. In accordance with its policies and procedures, our board of directors pre-approved the audit service performed by TAAD LLP for our financial statements as of and for the year ended June 30, 2024. 46 PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES. (a) List of Documents Filed as a Part of This Report: (1) Index to Financial Statements: Report of Independent Registered Public Accounting Firm (PCAOB ID 05854) F-2 Balance Sheets as of June 30, 2024 and 2023 F-3 Statements of Operations for the Year Ended June 30, 2024, the Period from October 17, 2022 to June 30, 2023 (Successor) and the Period from July 1, 2022 to October 16, 2022 (Predecessor) F-4 Statements of Stockholders’ Equity (Deficit) for the Year Ended June 30, 2024, the Period from October 17, 2022 to June 30, 2023 (Successor) and the Period from July 1, 2022 to October 16, 2022 (Predecessor) F-5 Statement of Cash Flows for the Year Ended June 30, 2024, the Period from October 17, 2022 to June 30, 2023 (Successor) and the Period from June 30, 2022 to October 16, 2022 (Predecessor) F-6 Notes to Financial Statements F-7 (2) Index to Financial Statement Schedules: All schedules have been omitted because the required information is included in the financial statements or the notes thereto, or because it is not required. (3) Index to Exhibits: See exhibits listed under Part (b) below. 47 (b) Exhibits: Exhibit No. Description 3.1 Articles of Incorporation of CleanCore Solutions, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed on October 10, 2023) 3.2 Bylaws of CleanCore Solutions, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed on October 10, 2023) 4.1* Description of Securities of CleanCore Solutions, Inc. 4.2 Class B Common Stock Purchase Warrant issued by CleanCore Solutions, Inc. to Boustead Securities, LLC on April 30, 2024 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on May 1, 2024) 10.1* Sole Distributorship Contract, Dated September 10, 2024, between CleanCore Solutions, Inc. and Consensus B.V. 10.2* Product Development Proposal, dated August 20, 2024, between CleanCore Solutions, Inc. and Business International Incorporation 10.3 Distribution Agreement, dated September 7, 2023, between Quail Systems, LLC and CleanCore Solutions, Inc. (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.4 Amendment to the Distribution Agreement, dated September 18, 2023, between Quail Systems, LLC and CleanCore Solutions, Inc. (incorporated by reference to Exhibit 10.15 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.5 Agreement, dated July 27, 2023, between Nebraska C. Ozone, LLC and CleanCore Solutions, Inc. (incorporated by reference to Exhibit 10.16 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.6 Amended and Restated Promissory Note issued by CleanCore Solutions, Inc. to Burlington Capital, LLC on May 31, 2024 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on June 6, 2024) 10.7 Promissory Note issued by CleanCore Solutions, Inc. to Walker Water LLC on May 31, 2024 (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on June 6, 2024) 10.8 Loan Agreement, dated March 26, 2024, between CleanCore Solutions, Inc. and Clayton Adams (incorporated by reference to Exhibit 10.14 to Amendment No. 6 to the Registration Statement on Form S-1/A filed on March 27, 2024) 10.9 Revolving Credit Note issued by CleanCore Solutions, Inc. to Clayton Adams on March 26, 2024 (incorporated by reference to Exhibit 10.15 to Amendment No. 6 to the Registration Statement on Form S-1/A filed on March 27, 2024) 10.10 Form of 10% Original Issue Discount Convertible Promissory Note relating to the 2024 private placement (incorporated by reference to Exhibit 10.2 to Amendment No. 3 to the Registration Statement on Form S-1/A filed on February 23, 2024) 10.11 Business Property Lease, dated November 9, 2022, between RMR Mercury I-80, LLC and CleanCore Solutions, Inc. (incorporated by reference to Exhibit 10.13 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.12 Business Property Lease Amendment, dated October 3, 2023, between RMR Mercury I-80, LLC and CleanCore Solutions, Inc. (incorporated by reference to Exhibit 10.13 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.13 Business Property Lease Second Amendment, dated March 20, 2024, between RMR Mercury I-80, LLC and CleanCore Solutions, Inc. (incorporated by reference to Exhibit 10.18 to Amendment No. 6 to the Registration Statement on Form S-1/A filed on March 27, 2024) 10.14† Employment Agreement, dated February 5, 2024, between CleanCore Solutions, Inc. and Douglas T. Moore (incorporated by reference to Exhibit 10.19 to Amendment No. 3 to the Registration Statement on Form S-1/A filed on February 23, 2024) 10.15†* Separation Agreement and Release of Claims, dated June 10, 2024, between CleanCore Solutions, Inc. and Douglas T. Moore 10.16† Employment Agreement, dated March 27, 2023, between CleanCore Solutions, Inc. and David Enholm (incorporated by reference to Exhibit 10.18 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.17† Employment Agreement, dated November 1, 2022, between CleanCore Solutions, Inc. and Gary Hollst (incorporated by reference to Exhibit 10.19 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.18† Consulting Agreement, dated October 17, 2023, between CleanCore Solutions, Inc. and Elev8 Marketing, LLC (incorporated by reference to Exhibit 10.20 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.19† Consulting Agreement, dated October 17, 2023, between CleanCore Solutions, Inc. and Birddog Capital, LLC (incorporated by reference to Exhibit 10.21 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.20†* Consulting Agreement, dated April 1, 2024, between CleanCore Solutions, Inc. and Birddog Capital, LLC 48 10.21† CleanCore Solutions, Inc. Stock Option Agreement, dated September 16, 2022, between CleanCore Solutions, Inc. and Clayton Adams (incorporated by reference to Exhibit 10.23 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.22 Form of Independent Director Agreement between CleanCore Solutions, Inc. and each independent director and each director nominee (incorporated by reference to Exhibit 10.24 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.23 Form of Indemnification Agreement between CleanCore Solutions, Inc. and each independent director and each director nominee (incorporated by reference to Exhibit 10.25 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.24† CleanCore Solutions, Inc. 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.26 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.25† CleanCore Solutions, Inc. Amendment No. 1 to the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.28 to Amendment No. 2 to the Registration Statement on Form S-1/A filed on January 9, 2024) 10.26† Form of Stock Option Agreement (incorporated by reference to Exhibit 10.27 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.27† Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.28 to the Registration Statement on Form S-1 filed on October 10, 2023) 10.28† Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.29 to the Registration Statement on Form S-1 filed on October 10, 2023) 14.1* Code of Business Conduct and Ethics 19.1* Insider Trading Policy 31.1* Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1* Clawback Policy 101.INS XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed herewith † Executive compensation plan or arrangement ITEM 16. FORM 10-K SUMMARY. None. 49 FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 05854 ) F-2 Balance Sheets as of June 30, 2024 and 2023 F-3 Statements of Operations for the Year Ended June 30, 2024, the Period from October 17, 2022 to June 30, 2023 (Successor) and the Period from July 1, 2022 to October 16, 2022 (Predecessor) F-4 Statements of Stockholders’ Equity (Deficit) for the Year Ended June 30, 2024, the Period from October 17, 2022 to June 30, 2023 (Successor) and the Period from July 1, 2022 to October 16, 2022 (Predecessor) F-5 Statement of Cash Flows for the Year Ended June 30, 2024, the Period from October 17, 2022 to June 30, 2023 (Successor) and the Period from July 1, 2022 to October 16, 2022 (Predecessor) F-6 Notes to Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of CleanCore Solutions, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of CleanCore Solutions, Inc. (the Company) as of June 30, 2024 and 2023, and the related statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended June 30, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2024 in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has an accumulated deficit and negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2022 Diamond Bar, CA September 20, 2024 F- 2 CLEANCORE SOLUTIONS, INC. BALANCE SHEETS As of June 30, 2024 2023 Assets Current assets: Cash and cash equivalents $ 2,016,611 $ 393,194 Accounts receivable, net 467,286 233,560 Inventory, net 672,326 672,116 Deferred offering costs - 302,755 Prepaid expenses and other current assets 55,365 135,666 Total current assets 3,211,588 1,737,291 Property and equipment, net 10,572 1,197 Right of use assets 524,818 466,661 Intangibles, net 1,486,923 1,640,919 Goodwill 2,237,910 2,237,910 Other assets 9,440 9,440 Total assets $ 7,481,251 $ 6,093,418 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 573,956 $ 644,627 Deferred revenue 10,395 - Lease liability - current 131,887 87,985 Note payable - current 698,149 2,994,750 Due to related parties 91,119 221,302 Total current liabilities 1,505,506 3,948,664 Lease liability – non current 418,104 398,540 Note payable – non current 1,821,184 - Total liabilities 3,744,794 4,347,204 Commitments and contingencies (Note 16) Stockholders’ Equity Series Seed Preferred Stock, $ 0 .001 par value, 4,000,000 shares authorized; 0 and 4,000,000 shares issued and outstanding as of June 30, 2024 and 2023, respectively - 400 Class A Common Stock; $ 0.0001 par value, 50,000,000 shares authorized; 270,000 and 660,000 shares issued and outstanding as of June 30, 2024 and 2023, respectively 27 66 Class B Common Stock; $ 0.0001 par value, 250,000,000 shares authorized; 7,960,919 and 1,795,940 shares issued and outstanding as of June 30, 2024 and 2023, respectively 796 180 Additional paid-in capital 11,040,583 6,768,775 Accumulated deficit ( 7,304,949 ) ( 5,023,207 ) Total stockholders’ equity 3,736,457 1,746,214 Total liabilities and stockholders’ equity $ 7,481,251 $ 6,093,418 The accompanying notes are an integral part of these financial statements. F- 3 CLEANCORE SOLUTIONS, INC. STATEMENTS OF OPERATIONS Year Ended June 30, 2024 Period from October 17, 2022 to June 30, 2023 (Successor) Period from July 1, 2022 to October 16, 2022 (Predecessor) Revenue, net $ 1,604,973 $ 1,938,366 $ 502,990 Cost of sales (exclusive of depreciation shown separately below) 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 ) Net loss per share Class A and Class B stock, basic and diluted $ ( 0.49 ) $ ( 2.18 ) Weighted average shares used in computing net loss per Class A share, basic and diluted 350,192 967,987 Weighted average shares used in computing net loss per Class B share, basic and diluted 4,311,142 1,334,414 The accompanying notes are an integral part of these financial statements. F- 4 CLEANCORE SOLUTIONS, INC. STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) Series Seed Preferred Stock Class A Common Stock Class B Common Stock Additional Paid in Members’ Capital Accumulated Total Stockholders’ Equity Shares Amount Shares Amount Shares Amount Capital Amount Deficit (Deficit) Predecessor Balance at July 1, 2022 - - - - - - - 2,215,916 ( 8,224,933 ) ( 6,009,017 ) Imputed interest - - - - - - - 125,728 - 125,728 Net loss for the period - - - - - - - - ( 320,064 ) ( 320,064 ) Balance at October 16, 2022 - $ - - $ - - $ - $ - $ 2,341,644 $ ( 8,544,997 ) $ ( 6,203,353 ) Successor Balance at October 17, 2022 Issuance of series seed preferred stock 4,000,000 $ 400 - $ - - $ - $ 999,600 $ - $ - $ 1,000,000 Issuance of class A common stock - - 1,000,000 100 - - - - - 100 Issuance of class B common stock - - - - 660,921 66 1,152,156 - - 1,152,222 Conversion of class A common stock into class B common stock - - ( 340,000 ) ( 34 ) 340,000 34 - - - - Issuance of class B common stock upon exercise of warrants - - - - 777,778 78 497,700 - - 497,778 Warrants issued to consultants for services - - - - - - 857,889 - - 857,889 Stock based compensation – officers - - - - - - 3,082,000 - - 3,082,000 Stock based compensation – third party - - - - 17,241 2 29,997 - - 29,999 Sock based compensation - 2022 Equity Incentive Plan - - - - - - 149,433 - - 149,433 Net loss for the period - - - - - - - - ( 5,023,207 ) ( 5,023,207 ) Balance at June 30, 2023 4,000,000 $ 400 660,000 $ 66 1,795,940 $ 180 $ 6,768,775 $ - $ ( 5,023,207 ) $ 1,746,214 Conversion of class A common stock into class B common stock - - ( 4,390,000 ) ( 439 ) 4,390,000 439 - - - - Conversion of series seed preferred stock into class A common stock ( 4,000,000 ) ( 400 ) 4,000,000 400 - - - - Stock based compensation – 2022 Equity incentive plan 172,853 172,853 Issuance of class B common stock pursuant to initial public offering, net of issuance and deferred offering costs of $ 1,656,453 - - - - 1,250,000 125 3,343,422 - - 3,343,547 Issuance of common stock pursuant to convertible notes - - - - 257,479 25 257,455 - - 257,480 Issuance of Non-qualified stock options - - - - - - 126,975 - - 126,975 Issuance of restrictive stock units - - - - 92,500 9 320,017 - - 320,026 Issuance of restrictive stock awards - - - - 175,000 18 51,086 - - 51,104 Net loss for the period - - - - - - - - ( 2,281,742 ) ( 2,281,742 ) Balance at June 30, 2024 - $ - 270,000 $ 27 7,960,919 $ 796 $ 11,040,583 $ - $ ( 7,304,949 ) $ 3,736,457 The accompanying notes are an integral part of these financial statements. F- 5 CLEANCORE SOLUTIONS, INC. STATEMENT OF CASH FLOWS For the Year Ended June 30, 2024 October 17, 2022 to June 30, 2023 (Successor) June 30, 2022 to October 16, 2022 (Predecessor) Cash flows from operating activities Net loss $ ( 2,281,742 ) $ ( 5,023,207 ) $ ( 320,064 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 155,059 109,144 6,420 Accretion of note payable discount 5,250 12,750 - Non cash interest expense 85,593 152,684 - Stock based compensation 670,958 4,119,321 - Non cash lease expense 5,308 19,864 - Imputed interest - - 125,728 Provision for bad debt and write-off of on uncollectable accounts 37,498 8,641 9,772 Changes in operating assets and liabilities: Accounts receivable ( 271,224 ) ( 107,942 ) 101,423 Inventory ( 211 ) 475,009 ( 157,596 ) Due from related parties, net - - 4,686 Prepaid expenses 80,301 ( 139,563 ) 4,747 Deferred revenue 10,395 - 63,701 Accounts payable and accrued liabilities ( 45,065 ) 136,429 43,932 Net cash used in operating activities ( 1,547,880 ) ( 236,870 ) ( 117,251 ) Investing activities Purchase of property and equipment ( 10,438 ) ( 1,260 ) - Cash used in acquisition - ( 2,000,000 ) ( 7,882 ) Net cash used in investing activities ( 10,438 ) ( 2,001,260 ) ( 7,882 ) Financing activities Proceeds from issuance of series seed preferred stock - 1,000,000 - Proceeds from issuance of class A common stock - 100 - Proceeds from issuance of class B common stock - 1,650,000 - Proceeds from issuance of class B common stock pursuant to Initial Public Offering, net of issuance costs 4,233,875 - - Proceeds from issuance of convertible notes 225,000 - - Payments from issuance of loans from related parties - 208,900 164,917 Payments for deferred offering costs ( 587,573 ) ( 227,676 ) - Repayments of long term debt - - ( 1,278 ) Payment on note payable ( 480,667 ) - - Repayments of loans due to related parties ( 208,900 ) - ( 288,861 ) Net cash provided by (used in) financing activities 3,181,735 2,631,324 ( 125,222 ) Net increase (decrease) in cash 1,623,417 393,194 ( 250,355 ) Cash and cash equivalents at beginning of year 393,194 - 263,506 Cash and cash equivalents at the end of year $ 2,016,611 $ 393,194 $ 13,151 Supplementary cash flow disclosure Interest paid $ 436,346 $ 14,438 $ 10 Unpaid deferred offering costs $ - $ 75,079 $ - Shares issued for conversion from convertible note payable $ 257,480 $ - $ - The accompanying notes are an integral part of these financial statements. F- 6 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 1. Organization and Business CC Acquisition Corp. was incorporated in the State of Nevada on August 23, 2022 for the sole purpose of acquiring substantially all of the assets of CleanCore Solutions, LLC, TetraClean Systems, LLC, and Food Safety Technologies, LLC, pursuant to an asset purchase agreement entered into by CC Acquisition Corp. with these three entities and their owners on October 17, 2022. On November 21, 2022, CC Acquisition Corp. changed its name to CleanCore Solutions, Inc. (the Company” or “Successor”). Since the Company acquired substantially all of the assets of each of CleanCore Solutions, LLC, TetraClean Systems, LLC, and Food Safety Technologies, LLC, the business of these three entities is now operated by the Company, with no subsidiaries. The combined results of CleanCore Solutions, LLC, TetraClean Systems, LLC and Food Safety Technologies, LLC presented in these financial statements represent the predecessor entity of the Company (the “Predecessor”). The Company specializes in the development and production of cleaning products that produce pure aqueous ozone products for professional, industrial, or home use. The Company has a patented nanobubble technology using aqueous ozone that it believes is highly effective in cleaning, sanitizing, and deodorizing surfaces and high-touch areas. The Company offers products and solutions that are marketed for janitorial and sanitation, ice machine cleaning, laundry, and industrial industries. Its 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. The headquarters, principal address and records of the Company are located at 5920 South 118th Circle, Suite 2, Omaha, Nebraska. Initial Public Offering On April 30, 2024, the Company closed its initial public offering of 1,250,000 shares of common stock at a price to the public of $ 4.00 per share for gross offering proceeds of $ 5,000,0000 , before deducting underwriting discounts, commissions, and offering expenses payable by the Company. After deducting underwriting discounts, commissions and other offering costs, the Company received net proceeds of $ 3,343,547 . Liquidity The Company has incurred losses and negative cash flows from operations. From acquisition through June 30, 2024, the Company has financed its operations primarily through investor funding. As of June 30, 2024, the Company had cash of $ 2,016,611 , a net loss of $ 2,281,742 , and cash used in operating activities of $ 1,547,880 . In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern, management is required to perform a two-step analysis over the Company’s ability to continue as a going concern. Management must first evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months from the date the financial statements are issued. If management concludes that substantial doubt is raised, management is also required to consider whether its plans alleviate that doubt. Despite the initial public offering described above, management believes that currently available resources will not be sufficient to fund the Company’s planned expenditures over the next 12 months. These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about the Company’s ability to continue as a going concern for 12 months from the date of issuance of these financial statements. The Company will be dependent upon the raising of additional capital through equity and/or debt financing in order to implement its business plan and generate sufficient revenue in excess of costs. If the Company raises 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 the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. F- 7 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The financial statements of the Company (Successor) are presented since the date of acquisition (October 17, 2022) through the period ended June 30, 2023. The results of the Predecessor represent the combined financial statements of the accounts of CleanCore Solutions, LLC, TetraClean Systems, LLC and Food Safety Technologies, LLC. These combined financial statements include the accompanying combined statements of operation, combined statement of members’ equity and combined statement of cash flows for the period July 1, 2022 through October 16, 2022. All intercompany balances and transactions among the combined entities have been eliminated. In the opinion of predecessor management, all adjustments considered necessary for a fair presentation have been included. Use of Estimates The preparation of the Company’s and Predecessor’s financial statements require management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure in the Company’s combined financial statements and accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates. Significant estimates and assumptions made by the Company are allowance for bad debt, useful lives of fixed assets, warranty liabilities, accrued contingent liabilities, and allowance for inventory obsolescence. Risks and Uncertainties The Company is subject to a number of risks similar to other early-stage companies including, but not limited to, profitability, the need for additional financing to achieve its business strategy, ability to obtain regulatory approval, significant competition, and dependence on key individuals. Cash and Cash Equivalents Cash consists of cash in readily available checking and money market accounts. Cash is recorded at cost, which approximates fair value. As of June 30, 2024 and 2023, cash balances were deposited at a major financial institution. Cash balances are subject to minimal credit risk as the balances are with high credit quality financial institutions. Concentration of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist of cash. The Company maintains deposits in federally insured financial institutions in excess of respective insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. Major Customers The Company had one customer that accounted for of 14 % of its revenues for the year ended June 30, 2024 and two customers that accounted for a total 66 % of revenue for the year ended June 30, 2023. Collateral is not required for customer accounts receivable balances. The Company maintains an allowance for doubtful accounts as described in “Accounts Receivable” below. The Company had two customers that accounted for 28 % each of total accounts receivable at June 30, 2024, and two customers that accounted for 43 % and 12 %, respectively, of total accounts receivable at June 30, 2023. Major Vendors The Company has one vendor each that it exclusively purchases a major component of its two main products. The Company expects to maintain this relationship with the vendor; however, it does have a contingency plan in place to use other vendors if necessary, which would result in minor production delays. F- 8 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Accounts Receivable Accounts receivable is comprised of trade accounts receivables from the Company’s customers. Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company established an allowance for bad debt of accounts receivables based on a percentage assigned to aged days outstanding categories. The Predecessor established the allowance for bad debt based on various factors including credit profiles of the Company’s customers, historical payments, outstanding balances and current economic trends, and performed this analysis periodically. The Company recorded an allowance for doubtful accounts of $ 2,535 and $ 4,419 as of June 30, 2024 and 2023, respectively. Inventory Inventory consists of parts, work in progress and finished goods. The Company values parts and finished goods at the lower of the actual costs or net realizable value. The Company values work in progress at cost. The Company periodically reviews inventory for obsolete and potentially impaired items. As of June 30, 2024 and 2023, the Company had an allowance for inventory obsolescence of $ 14,791 and $ 14,940 , respectively. Leases The Company accounts for leases in accordance with ASC Topic 842 (Topic 842), Leases . Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The lease liability is measured as the present value of the unpaid lease payments, and the right-of-use asset value is derived from the calculation of the lease liability. Operating leases are included in right-of-use assets, current lease liabilities, and noncurrent lease liabilities in the balance sheet. Lease payments include fixed and in-substance fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and probable amounts the lessee will owe under a residual value guarantee. Variable lease payments are recognized as lease expenses as incurred, and generally relate to variable payments made based on the level of services provided by the landlords of our leases. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term within general and administrative expenses in the statement of operations. The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments because the Company does not have the information necessary to determine the rate implicit in the lease. The Company’s lease term includes any option to extend the lease when it is reasonably certain to be exercised based on consideration of all relevant factors. Leases with an initial term of 12 months or less are not recorded on the balance sheets and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Business Combinations Business combinations are accounted for using the acquisition method. The fair value of total purchase consideration is allocated to the fair values of identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount being classified as goodwill. All assets, liabilities and contingent liabilities acquired or assumed in a business combination are recorded at their fair values at the date of acquisition. 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. 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, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. At the conclusion of the measurement period, any subsequent adjustments are reflected in the statements of operations. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the Company’s statements of operations. F- 9 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Intangible Assets 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. The Company’s trademarks are deemed to have an indefinite life. 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 The Company evaluates goodwill for impairment annually, as of June 30, or more frequently when indicators of impairment exist. The Company considers qualitative factors including market conditions, legal factors, operating performance indicators, and competition, among others, to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If the Company concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative impairment test. In performing the quantitative impairment test, the Company compares the fair value of its reporting unit to the carrying amount including the goodwill of the reporting unit. If the carrying value, including goodwill, exceeds the reporting unit’s fair value, the Company will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company performed its annual evaluation of goodwill on June 30, 2024. Based on the analysis, the Company did not recognize an impairment loss during the year ended June 30, 2024. Subsequent evaluations will be performed annually on June 30, per the Company’s policy. 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. 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. The Company did not recognize impairment losses during the periods ended June 30, 2024 and 2023. Deferred Offering Costs In accordance with ASC 340-10-S99-1 and SEC Accounting Bulletin Topic 5A, specific incremental costs incurred by the Company directly attributable to a proposed offering of securities were deferred. As the initial public offering closed on April 30, 2024, a total of $ 890,453 deferred costs were charged against the gross proceeds of the offering for the year ended June 30, 2024. These offering costs included fees paid to underwriters, attorney, accountants as well as printers and other third parties directly related to the offering. Costs such as management salaries or other general administrative expenses that are not incremental to the offering are not included in the deferred costs. Patent Costs Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are included in general and administrative expenses. Advertising Costs The Company reports as expense the cost of advertising and promoting its services as incurred. Such amounts totaled $ 116,007 for the year ended June 30, 2024, and $ 4,621 and $ 14,944 for the period and year ended October 16, 2022 and June 30, 2023, respectively. F- 10 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Stock-based 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, the Company’s stock price at the date of grant was estimated using an acceptable valuation technique such as the probability-weighted expected return model. The fair value of stock options and warrants are estimated at the date of grant using the Black-Scholes option-pricing model. The fair value of restricted stock awards is based on the fair market value of the Company’s class B common stock on the date of grant. Compensation expense for restricted stock awards with performance-based vesting conditions is calculated based on the number of awards that are expected to vest during the performance period if it is probable that the performance metrics will be achieved. 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. The Company accounts for forfeitures of stock-based awards as they occur. Revenue Recognition The Company generates revenues from sales of its products and recognizes revenue as control of its products is transferred to its customers, which is generally at the time of shipment based on the contractual terms with the Company’s customers. The Company provides customer programs and incentive offerings, including growth incentives and volume-based incentives. These customer programs and incentives are considered variable consideration. The Company includes in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. 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 the Company’s 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. 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. Refer to Note 10 for warranty reserve. Income Taxes The Company accounts for income tax on the basis of the tax laws enacted at the balance sheet date in accordance with FASB ASC 740, Income Taxes . The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. Tax positions are recognized if it is more-likely-than-not, based on technical merits, that the tax position will be realized or sustained upon examination. The term “more-likely-than-not” means a likelihood of more than 50 %; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 % likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. F- 11 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Net Loss per Share of Common Stock Basic net loss per class A and class B common share is calculated by dividing the net loss distributed to class A and class B, respectively, by the weighted-average number of common shares of each respective class outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, stock options and warrants are considered to be potentially dilutive securities. As of June 30, 2024 and 2023, there were 3,382,500 and 2,816,263 , respectively, of potential common stock equivalents excluded from the diluted loss per share calculations as their effect is anti-dilutive. Because the Company has reported a net loss for the years ended June 30, 2024 and 2023, diluted net loss per common share is the same as basic net loss per common share for such years. New Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid and effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company is currently evaluating the effects of this pronouncement on its financial statements and disclosures. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance in this update is effective for all public entities for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the effects of this pronouncement on its financial statements and disclosures. 3. Disaggregated Revenue The following table disaggregates revenue by product category for the following periods ended: Year Ended June 30, 2024 (Successor) October 17, 2022 through June 30, 2023 (Successor) July 1, 2022 through October 16, 2022 (Predecessor) Janitorial & Sanitation $ 1,518,079 $ 1,732,611 $ 369,089 Ice System 19,495 30,195 16,744 Commercial and Residential Laundry 21,129 5,016 6,444 Sanitizing & Disinfecting Tablets - 3,140 160 Other 46,270 167,404 110,553 Total revenue $ 1,604,973 $ 1,938,366 $ 502,990 The “Other” category of revenue consists primarily of sales of parts, accessories, shipping and handling, and equipment rental income. 4. Accounts Receivable, net Accounts receivable, net consists of the following at: June 30, 2024 June 30, 2023 Trade accounts receivable $ 469,821 $ 237,979 Allowance for doubtful accounts ( 2,535 ) ( 4,419 ) Total accounts receivable, net $ 467,286 $ 233,560 F- 12 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 5. Business Combinations On October 17, 2022, the Company acquired substantially all of the assets of the Predecessor and accounted for this transaction as a business combination under ASC 805 as it falls under the definition. The purpose of the transaction was to acquire and further develop and manufacture patented cleaning products. Total consideration for the acquisition consisted of a $ 2,000,000 payment made at closing and a $ 3,000,000 note payable, bearing interest at 7 % per annum, to the seller. In addition, if the Company reaches certain metrics as defined in the purchase agreement, in the 12-month period following the closing date, the Company shall make a one-time payment of $ 500,000 as an adjustment to the purchase price. However, due to forecasted net income being negative, the contingent consideration was valued at $ 0 . The following table summarizes the fair value of the consideration paid and the fair value of assets acquired and liabilities assumed on October 17, 2022, the acquisition date. Consideration Total payments at closing $ 2,000,000 Note payable to seller at fair value 2,982,000 Contingent consideration at fair value - Fair value of total consideration $ 4,982,000 Recognized amounts of identifiable assets acquired and liabilities assumed Accounts receivable $ 134,259 Inventory 1,204,023 Prepaids assets 5,543 Existing technology 600,000 Customer relationships 570,000 Tradenames/trademarks 580,000 Accounts payable and current liabilities ( 349,735 ) Total identifiable net assets $ 2,744,090 Goodwill 2,237,910 $ 4,982,000 The acquired technology consisted of patented nanobubble technology that produces an aqueous ozone solution that requires no additives, filters, or advanced chemicals. The pure aqueous ozone product is a natural cleaner, sanitizer, and deodorizer produced through the infusion of ozone into water using electricity. The technology was valued using the multi-period excess earnings method. Under this method, the fair value of the asset reflects the present value of the projected stream of net cash flows that will be generated by the asset over the projection period. Key inputs and assumptions in determining the fair value include projected cash flows and the discount rate used to calculate the present value of such cash flows. The developed technology will be amortized over a useful life of 15 years. Customer relationships relate to contracts with distributors that were acquired while the trademarks refer to the predecessor’s trademarks that continue to be used. The trademarks are deemed to have an indefinite life. The goodwill of $ 2,237,910 arising from the acquisition consists largely of the synergies, cost savings, and economies of scale expected from combining the operations of the acquired assets and the Company and further developing its products. The goodwill is deductible over 15 years for tax purposes. The Company incurred $ 31,676 of acquisition-related costs which have been recorded within general and administrative expenses in the statement of operations for the period ended June 30, 2023. 6. Fair Value Measurements ASC Topic 820, Fair Value Measurement , establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. F- 13 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 ASC 820 identifies fair value as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following: Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs, other than quoted prices in active markets, that are observable for the asset or liability, either directly or indirectly. Level 3 – Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s financial assets are subject to fair value measurements on a recurring basis. The Company’s remaining carrying amounts reported in the combined balance sheets of these financial assets are a reasonable estimate of fair value due to their short-term nature. 7. Inventory Inventory consists of the following at: June 30, 2024 June 30, 2023 Parts $ 503,004 $ 551,264 Finished goods 184,112 135,792 Inventory reserve ( 14,790 ) ( 14,940 ) Total inventory, net $ 672,326 $ 672,116 The Company values inventory at the balance sheet date using the weighted average method. The Company recorded an inventory reserve of $ 14,790 and $ 14,940 for the years ended June 30, 2024 and 2023, respectively. 8. Property and Equipment, Net Property and equipment, net, consist of the following at: June 30, 2024 June 30, 2023 Equipment $ 8,217 $ - Vehicles - - Furniture and fixtures - - Leasehold improvements 3,481 1,260 Total 11,698 1,260 Less: accumulated depreciation ( 1,126 ) ( 63 ) Total property and equipment, net $ 10,572 $ 1,197 Depreciation expense related to property and equipment was $ 1,063 and $ 63 for the years ended June 30, 2024 and 2023, respectively. F- 14 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 9. Intangible Assets Intangible assets consist of the following at: June 30, 2024 June 30, 2023 Technology $ 600,000 $ 600,000 Customer relationships 570,000 570,000 Trademarks 580,000 580,000 Total 1,750,000 1,750,000 Less: accumulated amortization ( 263,077 ) ( 109,081 ) Total intangible assets, net $ 1,486,923 $ 1,640,919 The Company holds 14 patents, which are included in technology. These patents cover the functions of the Company’s products that allow its machines to produce the ozone in the form of nanobubbles. Amortization expense related to intangibles was $ 153,996 and $ 109,081 for the years ended June 30, 2024 and 2023, respectively. 10. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following at: June 30, 2024 June 30, 2023 Accounts payable $ 176,077 $ 266,511 Accrued interest 23,113 152,684 Accrued payroll and related expenses 59,943 68,026 Accrued pending litigation (Note 17) 108,242 - Warranty reserve 96,636 156,333 Accrued severance 70,000 - Other accrued expenses 39,945 1,073 Total accounts payable and other accrued expenses $ 573,956 $ 644,627 11. Debt Burlington Promissory Note In connection with the acquisition of the Predecessor on October 17, 2022, the Company issued a promissory note in the principal amount of $ 3,000,000 to the seller, Burlington Capital, LLC (“Burlington”), which bore interest at 7 % per annum and was to mature on October 17, 2023 . On September 13, 2023, the parties signed an extension agreement, pursuant to which the interest rate was increased to 10 % per annum and the maturity date was extended to the earlier of (a) the closing of a firm commitment initial public offering and concurrent listing on a national securities exchange or (b) December 17, 2023. On December 17, 2023, the parties signed a second extension agreement, pursuant to which the maturity date was extended to 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. On April 30, 2024, the Company and Burlington entered into an extension agreement which extended the maturity date to May 9, 2024 . On May 31, 2024, Burlington and Walker Water LLC (“WW”) entered into an allonge, assignment and agreement (the “Assignment Agreement”), pursuant to which Burlington agreed to transfer $ 633,840 of the note to WW. The Assignment Agreement also provided that the Company make a payment of $ 900,000 on May 31, 2024 to Burlington to reduce the principal amount of the note by $ 480,667 and pay the outstanding accrued interest of $ 419,333 in full. Also on May 31, 2024, the Company issued an amended and restated promissory note to Burlington (the “Amended Note”). The Amended 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 . The Amended 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 . F- 15 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Pursuant to the Assignment Agreement, the Company also issued a promissory note to WW in the principal amount of $ 633,840 (the “New Note”). The New 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 . The New 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 . Convertible Promissory Notes On January 30, 2024, the Company issued three 10 % original issue discount convertible promissory notes to three separate accredited investors in the principal amounts of $ 27,778 , $ 111,111 , and $ 111,111 . The purchase prices of the notes were $ 25,000 , $ 100,000 and $ 100,000 , respectively. These notes accrued simple interest on the outstanding principal amount at the rate of 12 % per annum. On May 2, 2024, the Company issued an aggregate of 257,479 shares of class B common stock upon the conversion of these notes, which included principal of $ 225,000 and accrued interest of $ 37,479 . Line of Credit On June 28, 2024, the Company entered into a loan agreement with Arbor Bank for a revolving line of credit in the amount of $ 100,000 with a variable interest rate tied to the U.S. Prime Rate. Monthly payments of accrued interest are due beginning July 28, 2024. The principal and any outstanding accrued interest are due in full on June 28, 2025. No interest was required to be accrued as of June 30, 2024. 12. Related Party Transactions The following due to related party balances were outstanding at: June 30, 2024 June 30, 2023 Due to founder – credit card $ 91,119 $ 12,402 Due to founders - 208,900 Total due to related parties $ 91,119 $ 221,302 At June 30, 2024, the Company had a short term amount due to Clayton Adams, its Chief Executive Officer and founder, in the amount of $ 91,119 for operational expenses paid by a credit card in his name. At June 30, 2023, that amount was $ 12,402 . The Company has a verbal agreement with Mr. Adams to pay the credit card charges directly to the issuing financial institution as they become due and is current on these payments. On October 4, 2022, the Company issued a promissory note to each of Matthew Atkinson, the Company’s Chief Executive Officer at such time, and Clayton Adams, the Company’s President at such time, in the principal amount of $ 104,450 each for a total of $ 208,900 . These notes bore interest at a rate of 5 % per annum beginning on the 30th day after issuance and were due on the 60th day following written demand from the holder. As of June 30, 2023, the Company recorded this as a short-term note payable on the balance sheet, due to the demand terms of the agreement, and recorded related accrued interest of $ 7,698 . On May 29, 2024, the Company repaid these two promissory notes, including interest accrued of $ 8,506 each. On October 17, 2022, the Company entered into a consulting agreement with Birddog Capital, LLC (“Birddog”), a limited liability company owned by Clayton Adams, a significant security holder at such time and the Company’s current Chief Executive Officer, pursuant to which the Company engaged Birddog to provide management services to the Company. Pursuant to the consulting agreement, the Company agreed to pay Birddog a monthly fee of $ 6,000 commencing on October 17, 2022. The Company also agreed to reimburse Birddog for all pre-approved business expenses. The term of the consulting agreement was for one (1) year. On April 1, 2024, the Company entered into a new consulting agreement with Birddog which provides for a monthly fee of $ 22,000 . In addition, the Company agreed to pay Birddog $ 175,000 upon completion of the initial public offering and grant Birddog 500,000 restricted stock units, with 250,000 shares vesting immediately and 250,000 shares vesting eighteen months after issuance. The consulting agreement expires on October 23, 2025. On October 17, 2022, the Company entered into a consulting agreement with Elev8, a business consulting company owned by Matthew Atkinson, the Company’s President and a significant security holder at such time, pursuant to which the Company engaged Elev8 to provide management services to the Company. Pursuant to the consulting agreement, the Company agreed to pay Elev8 a monthly fee of $ 6,000 commencing on October 17, 2022. The Company also agreed to reimburse Elev8 for all pre-approved business expenses. The Company has no outstanding balances related to this agreement as of June 30, 2024. F- 16 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 On July 27, 2023, the Company agreed to purchase approximately $ 105,000 worth of inventory from Nebraska C. Ozone, LLC, a related party business owned by Lisa Roskens, a significant stockholder and the principal officer of Burlington, due to an open purchase order that the Predecessor had with an inventory vendor that was not included in the liabilities assumed from the Predecessor per the terms of the acquisition purchase agreement. The inventory is to be purchased as needed, consistent with other inventory purchases. However, if the entire $ 105,000 amount is not purchased by March 31, 2024, the balance at that date begins accruing interest at a rate of seven percent ( 7 %) per annum until it is paid in full. As of June 30, 2024, the Company has not purchased any of the inventory and as such, has accrued interest of $ 2,471 . On March 26, 2024, the Company entered into a loan agreement with Clayton Adams, a significant stockholder, pursuant to which the Company 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. Adams agreed to provide advances to the Company upon request during the period commencing on April 25, 2024 and continuing until the second anniversary of such date, which is referred to as the maturity date. This note accrues simple interest on the outstanding principal amount at the rate of 8 % per annum, with all principal and interest due on the maturity date; provided that upon an event of default (as defined in the note), such rate shall increase to 13 %. The Company may prepay the note at any time without penalty or premium. The note is unsecured and contains customary events of default for a loan of this type. As of June 30, 2024, no advances have been made and the principal amount of this note is $ 0 . 13. Stockholders’ Equity The Company’s authorized capital stock as of June 30, 2024 consists of 350,000,000 shares, consisting of (i) 300,000,000 shares of common stock, par value $ 0.0001 per share, of which 50,000,000 shares are designated class A common stock and 250,000,000 shares are designated as class B common stock; and (ii) 50,000,000 shares of “blank check” preferred stock, par value $ 0.0001 per share, of which 4,000,000 are designated as series seed preferred stock. Series Seed Preferred Stock Below is a summary of the terms of the series seed preferred stock. Ranking . The series seed preferred stock ranks, as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, senior to the common stock. Liquidation Rights . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or any deemed liquidation event (as defined in the certificate of designation), before any payment shall be made to the holders of common stock by reason of their ownership thereof, the holders of shares of series seed preferred stock shall be entitled to be paid out of the funds and assets available for distribution to its stockholders, an amount per share equal to the greater of (a) $ 0.25 per share, plus any dividends declared but unpaid thereon, or (b) such amount per share as would have been payable had all shares of series seed preferred stock been converted into class A common stock immediately prior to such liquidation, dissolution or winding up or deemed liquidation event. Dividends . All dividends shall be declared pro rata on the common stock and series seed preferred stock on a pari passu basis according to the number of shares of common stock held by such holders. For this purpose, each holder of shares of series seed preferred stock is to be treated as holding the greatest whole number of shares of common stock then issuable upon conversion of all shares of series seed preferred stock held by such holder. Voting Rights . The holders of series seed preferred stock shall have the right to one vote for each share of class A common stock into which such series seed preferred stock could then be converted, and with respect to such vote, the holders shall have full voting rights and powers equal to the voting rights and powers of the holders of class A common stock, and shall be entitled to vote together with holders of class A common stock with respect to any question upon which holders of class A common stock have the right to vote. F- 17 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Conversion Rights . Each share of series seed preferred stock shall be convertible at the option of the holder thereof into such number of shares of class A common stock as is determined by dividing $ 0.25 per share by the conversion price in effect at the time of conversion. The conversion price is initially $ 0.25 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination, recapitalization, or merger or consolidation). In addition, all outstanding shares of series seed preferred stock shall automatically be converted into shares of common A common stock upon (a) the closing of the sale of shares of class A common stock to the public in a public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (or a qualified offering statement under Regulation A of the Securities Act, as amended), (b) the date that the Company or a successor to the Company becomes an issuer with a class of securities registered under Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and is subject to the periodic and current reporting requirements of Section 13 or 15(d) of the Exchange Act or is required to file reports under Regulation A of the Securities Act of 1933, as amended, or (c) the date and time, or the occurrence of an event, specified by vote or written consent of holders of at least a majority of the outstanding shares of series seed preferred stock at the time of such vote or consent, voting as a single class on an as-converted basis. For the Year Ended June 30, 2023 In September 2022, the Company issued an aggregate of 4,000,000 shares of series seed preferred stock at a purchase price of $ 0.25 per share. As of June 30, 2023, 4,000,000 shares of series seed preferred stock were issued and outstanding. For the Year Ended June 30, 2024 During the year ended June 30, 2024, a total of 4,000,000 shares of series seed preferred stock were converted into 4,000,000 shares of class A common stock. As of June 30, 2024, no shares of series seed preferred stock were issued and outstanding. Common Stock The Company has two classes of authorized common stock — class A common stock and class B common stock. The rights of the holders of the class A common stock and class B common stock are identical, except with respect to voting and conversion. Each share of class A common stock is entitled to ten votes per share and is convertible into one share of class B common stock. Each share of class B common stock is entitled to one vote per share. As of June 30, 2024, all of the outstanding class A common stock was held by one of the Company’s founders, which is also the current Chief Executive Officer. For the Year Ended June 30, 2023 On August 26, 2022, the Company issued an aggregate of 1,000,000 shares of class A common stock at a purchase price of $ 0.0001 per share. In October and November 2022, the Company issued an aggregate of 660,921 shares of class B common stock at a purchase price of $ 1.74 per share. On November 29, 2022, the Company issued 777,778 shares of class B common stock upon the exercise of a warrant for an aggregate exercise price of $ 500,000 . On April 1, 2023, the Company issued 17,241 shares of class B common stock to a professional firm in exchange for services at $ 1.74 per share. Accordingly, stock compensation expense in the amount of $ 29,999 was recorded by the Company. On June 1, 2023, an aggregate of 340,000 shares of class A common stock were converted into an aggregate of 340,000 shares of class B common stock. As of June 30, 2023, there were 660,000 shares of class A common stock and 1,795,940 shares of class B common stock issued and outstanding. F- 18 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 For the Year Ended June 30, 2024 In July 2023, the Company issued 1,000,000 shares of class A common stock upon the conversion of 1,000,000 shares of series seed preferred stock. In addition, the Company issued a total of 1,310,000 shares of class B common stock upon the conversion of 1,310,000 shares of class A common stock. In February 2024, the Company issued a total of 2,000,000 shares of class A common stock upon the conversion of 2,000,000 shares of series seed preferred stock, which were immediately converted into 2,000,000 shares of class B common stock upon issuance. On February 6, 2024, the Company issued 200,000 shares of class B common stock upon the conversion of 200,000 shares of class A common stock. On April 30, 2024, the Company issued 1,000,000 shares of class A common stock upon the conversion of 1,000,000 shares of series seed preferred stock. In addition, upon closing of the initial public offering, the Company sold 1,250,000 shares of class B common stock for proceeds of $ 3,343,547 , net of $ 1,656,453 of issuance and deferred offering costs. On April 30, 2024, the Company issued 175,000 shares of class B common stock pursuant to restricted stock award and 87,500 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan (as defined below). On May 2, 2024, the Company issued an aggregate of 257,479 shares of class B common stock upon the conversion of the 10 % original issue discount convertible promissory notes issued on January 30, 2024 (see Note 11), which included principal of $ 225,000 and accrued interest of $ 37,479 . On May 15, 2024, the Company issued 880,000 shares of class B common stock upon the conversion of 880,000 shares of class A common stock. On June 12, 2024, the Company issued 5,000 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. As of June 30, 2024, there were 270,000 shares of class A common stock and 7,960,919 shares of class B common stock issued and outstanding. 2022 Equity Incentive Plan On September 16, 2022, the Company’s board of directors adopted the Company’s 2022 Equity Incentive Plan (as amended, the “2022 Plan”), which was adopted by stockholders on November 18, 2022, which reserved a total of 1,736,819 share of the Company’s class B common stock for issuance. On January 3, 2024, the Company adopted an amendment to the 2022 Plan, which increased the total shares of class B common stock available for grant to 3,240,000 . Additionally, the number of shares of class B common stock available for issuance under the 2022 Plan will automatically increase on January 1 of each calendar year during the term of the 2022 Plan by an amount equal to 5 % of the total number of shares of class B common stock issued and outstanding on December 31 of the immediately preceding calendar year. Incentive awards authorized under the 2022 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and stock appreciation rights. If an incentive award granted under the 2022 Plan expires, terminates, is unexercised or forfeited, the surrendered shares will become available for future awards under the 2022 Plan. The Company’s employees and advisors were granted awards under the 2022 Plan. Therefore, an allocation of the share-based compensation was made to the Company. Stock Options During the year ended June 30, 2023, the Company had issued options to purchase an aggregate of 2,000,000 shares of class A common stock at an exercise price of $ 0.25 per share outside of the 2022 Plan and 770,000 shares of class B common stock at an average price of $ 2.21 per share under the 2022 Plan. During the year ended June 30, 2024, the Company issued additional options to purchase 525,000 shares of class B common stock at a weighted average exercise price of $ 3.31 per share under the 2022 Plan. All of the class A options and 75,000 of the class B options were fully vested as of the grant date. The remaining class B options have a graded vesting term based on continuous service during the vesting period. F- 19 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Warrants On October 14, 2022 and November 29, 2022, the Company issued warrants for the purchase of 42,241 and 4,022 shares of class B common stock, respectively, to a third party as part of their compensation earned. The warrants are exercisable for a period of five years at an exercise price of $ 1.74 (subject to adjustments for stock dividends, stock splits, mergers, consolidations and similar transactions). On March 5, 2024, the Company cancelled these warrants without issuing a replacement award. As the warrants were already vested, previously recognized compensation cost was not reversed. On October 17, 2022, the Company issued a warrant for the purchase of 777,778 shares of class B common stock for an aggregate exercise price of $ 500,000 to Burlington. On November 29, 2022, Burlington exercised this warrant in full. On April 30, 2024, the Company issued a warrant for the purchase of 87,500 shares of class B common stock at an exercise price of $ 5.00 , subject to adjustments, to the representative of the underwriters in the initial public offering. 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. Restricted Stock Awards On April 30, 2024, the Company granted a restricted stock award under the 2022 Plan for 175,000 shares of class B common stock, of which 15,000 shares vested on the date of grant, 10,625 shares will vest quarterly through June 30, 2026 and the remaining 75,000 shares will vest as the grantee reaches certain sales targets in a twelve month period. On April 30, 2024, the Company granted a restricted stock unit award under the 2022 Plan for 1,300,000 shares of class B common stock, of which 87,500 shares vested and were issued on the date of grant. In June 2024, the participant and the Company agreed to separate. As a result, the participant kept the 87,500 shares that were vested and forfeited all other shares available under the award. In addition to the 87,500 shares, the participant will also receive 20,000 shares of class B common stock on January 2, 2025. On June 12, 2024, the Company granted a restricted stock unit award under the 2022 Plan for 188,000 shares of class B common stock, of which 5,000 shares vested and were issued on the date of grant and, 5,000 will vest on July 12, 2024. In addition, 18,000 shares vest upon completion of tasks as outlined between the Company and grantee and an additional 160,000 shares will vest as the Company achieves certain sales targets in a twelve-month period. The information presented in the following table represents the restricted stock awards, including performance-based awards, granted and outstanding during the period: Performance- Based Restricted Shares Service-Based Restricted Shares Weighted Average Grant Date Fair Value Beginning balance - - $ - Granted - - - Forfeited - - - Vested - - - Outstanding, unvested grants at June 30, 2023 - - - Granted 235,000 - 3.10 Granted - 1,448,000 3.10 Forfeited - ( 1,212,500 ) 3.10 Vested - ( 107,500 ) 3.10 Outstanding, unvested grants at June 30, 2024 235,000 128,000 $ 3.09 Stock-based Compensation Stock options and warrants are granted at the fair market value of the underlying common stock on the date of grant. The Company recognizes compensation expense for these awards using the straight-line recognition method over the vesting period. F- 20 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 The fair value of stock options and warrants was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted average assumptions for the years ended June 30, 2024 and 2023: June 30, 2024 June 30, 2023 Risk-free interest rate 5.10 % 3.80 % Dividend yield 0.0 % 0.0 % Expected volatility 47.44 % 54.04 % Expected life of awards 3.3 years 3.9 years Fair value of awards granted during the year $ 0.90 $ 1.35 The risk-free interest rate is based on U.S. government issues with a remaining term equal to the expected life of the awards. The determination of expected volatility is based on historical volatility of an appropriate industry sector index. The weighted average expected term was estimated for options using the average of the vesting term and contractual term of the awards. The weighted-average fair value per share of total awards granted during the years ended June 30, 2024 and 2023 was $ 1.35 and $ 0.90 , respectively. Warrants Stock Options Weighted Average Remaining Life (years) Weighted Average Exercise Price Beginning balance - - - $ - Granted 824,041 - 0.44 0.69 Granted - 2,770,000 4.77 0.51 Cancelled - - - - Forfeited - - - - Exercised ( 777,778 ) - - 0.61 Outstanding, June 30, 2023 ( 2,125,152 shares exercisable) 46,263 2,770,000 5.01 $ 0.59 Granted - 525,000 2.44 3.31 Granted 87,500 0.86 0.86 Cancelled ( 46,263 ) - 0.08 Forfeited - - - - Exercised - - - - Outstanding, June 30, 2024 ( 2,738,472 shares exercisable) 87,500 3,295,000 3.30 $ 4.17 The aggregate intrinsic value of the 2,738,472 shares exercisable at June 30, 2024 was $3,668,019. The intrinsic value and total cash received of awards exercised for the period ending June 30, 2023 was $855,556 and $500,000, respectively. No cash awards were exercised during the year ended June 30, 2024. Total stock compensation expense for the year ended June 30, 2024 was $ 670,958 . In addition, $ 94,850 of warrants issued to representative of the underwriters in the initial public offering during the year ended June 30, 2024 were recorded as an offset to equity. Total stock compensation expense for the period ended June 30, 2023 consists of $ 3,231,443 related to stock options and $ 857,889 of warrants. In addition, $ 42,835 of warrants issued to representative of the underwriters in the initial public offering were recorded as an offset to equity as of June 30, 2024. As of June 30, 2024, total unrecognized stock compensation expense was $ 930,433 with the weighted average period over which it is expected to be recognized of 2.01 years. 14. Net Loss Per Share The following table sets forth the computation of basic and dilutive net income per share of class A and class B common stock: Year Ended June 30, 2024 Class A Class B Basic and diluted net loss per share: Numerator Allocation of undistributed loss $ ( 171,420 ) $ ( 2,110,322 ) Denominator Weighted average number of shares used in per share computation 350,192 4,311,142 Basic and diluted net loss per share $ ( 0.49 ) $ ( 0.49 ) F- 21 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Period Ended June 30, 2023 (Successor) Class A Class B Basic and diluted net loss per share: Numerator Allocation of undistributed loss $ ( 2,111,882 ) $ ( 2,911,325 ) Denominator Weighted average number of shares used in per share computation 967,987 1,334,414 Basic and diluted net loss per share $ ( 2.18 ) $ ( 2.18 ) 15. Income Taxes The Company files income tax returns in the U.S. federal and applicable state jurisdictions. Management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. The fiscal year ended June 30, 2023 was the entity’s initial year of existence, and is not subject to federal or state tax examinations prior to this period. The Company’s provision for income taxes is comprised of the following components for the year ended June 30, 2024: Years Ended 6/30/2024 6/30/2023 Current Tax Expense (Benefit) Federal - - State - - Current Tax Expense (Benefit) $ - $ - Deferred Tax Expense (Benefit) Federal - - State - - Deferred Tax Expense (Benefit) - - Total Income Tax Expense (Benefit) $ - $ - The Company’s income tax expense from continuing operations for the year ended June 30, 2024 differed from the statutory federal rate of 21 % as follows: Pre-Tax Book Income $ ( 2,281,742 ) Years Ended 6/30/2024 6/30/2023 Amount Percent Amount Percent Rate Reconciliation Federal tax (benefit) at a statutory rate $ ( 479,166 ) 21 % $ ( 1,054,873 ) 21.00 % State tax expense (benefit) ( 125,968 ) 5.52 % ( 277,654 ) 5.53 % Other Permanent Differences 804 ( 0.04 )% 490 ( 0.01 )% Increase (Decrease) in valuation allowance related to current period P&L activity 604,330 ( 26.49 )% 1,332,037 ( 26.52 )% Total tax expense $ - 0.00 % $ - 0.00 % F- 22 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 Deferred tax assets and liabilities consist of the following at June 30, 2024: Years Ended 6/30/2024 6/30/2023 Deferred Tax Assets Accrued Expenses $ 67,775 $ 55,680 Equity Compensation 1,186,561 1,092,856 Lease Liabilities 145,913 129,075 NOL Carryforwards 720,498 214,559 Valuation Allowance ( 1,936,367 ) ( 1,332,037 ) Total Deferred Tax Assets $ 184,379 $ 160,133 Deferred Tax Liabilities Property and equipment $ 24 $ ( 252 ) Intangible Assets ( 31,881 ) ( 561 ) Prepaid Expenses ( 13,288 ) ( 35,515 ) ASC 842 Right of Use Asset ( 139,234 ) ( 123,805 ) Valuation Allowance - - Total Deferred Tax Liabilities $ ( 184,379 ) $ ( 160,133 ) Net Deferred Tax Asset (Liability) $ - $ - In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of June 30, 2024, the Company recognized a full valuation allowance on its net deferred tax asset to reflect the fact it is not more-likely-than-not to realize any portion of the asset. Years Ended 6/30/2024 6/30/2023 Other Items – All Gross Federal NOL Carryovers $ 2,715,784 $ 808,741 State NOL Carryovers $ 2,715,784 $ 808,741 At June 30, 2024 and 2023, the Company had net operating loss carryforwards for Federal income tax purposes of $ 2,715,784 and $ 808,741 , respectively, which would be available to offset future federal taxable income, if any, and would not be subset to expiration. At June 30, 2024 and 2023, the Company has net operating loss carryforwards for state income tax purposes of $ 2,715,784 and $ 808,741 , which are available to offset future state taxable income, which is subject to expiration beginning in 2043. 16. Commitments and Contingencies Legal Proceedings From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is aware of one legal claim and has accrued approximately $ 108,000 for such claim (Note 17). The Company is currently not aware of any other such legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating results. Retirement Plans The Successor does not maintain a defined contribution plan or any other type of retirement plan for its employees. F- 23 CLEANCORE SOLUTIONS, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 For the period of July 1, 2022 through October 16, 2022, the Predecessor maintained a defined contribution 401(k) plan available to eligible employees. Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amount allowable under federal tax regulations. Matching contributions to the 401(k) plan are made for certain eligible employees to meet the non- discrimination provisions of the plan. During this period, the Predecessor made a contribution of $ 1,512 . Leases The Company has a non-cancellable operating lease commitment for its office facility expiring in 2028. Rent expense totaled $ 130,723 and $ 57,626 for the years ended June 30, 2024 and 2023, respectively. The following table discloses the lease cost, discount rate, and remaining lease term for operating leases as of June 30, 2024 and 2023: June 30, 2024 June 30, 2023 Operating lease cost $ 130,723 $ 57,626 Remaining lease term 3.7 years 4.7 years Discount rate 6.56 % 6.00 % The discount rate was determined using the Company’s external debt and was adjusted for collateralization, term and lease amount. The following table discloses the undiscounted cash flows on an annual basis and a reconciliation of the undiscounted cash flows of operating lease liabilities recognized in the balance sheet as of June 30, 2024: Year Ended June 30, 2025 $ 163,147 2026 167,226 2027 171,407 2028 116,160 2029 - Total undiscounted cash flows 617,940 Less amount representing interest ( 67,949 ) Present value of lease liabilities 549,991 Less current portion ( 131,887 ) Noncurrent lease liabilities $ 418,104 17. Subsequent Events The Company has evaluated events subsequent to June 30, 2024, to assess the need for potential recognition or disclosure. Such events were evaluated through September 20, 2024, the date the financial statements were available to be issued. The following were noted: Lawsuit On August 20, 2024, the Company’s former Chief Executive Officer, Matthew Atkinson, filed a lawsuit against the Company in the State of Nebraska claiming compensation, unreimbursed expenses and accrued and unpaid vacation owed to him prior to his resignation in February 2024. The Company has accrued approximately $ 108,000 for such claim (see Note 16). Product Development Proposal On August 20, 2024, the Company 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 the Company’s units, and will then take over assembly of certain products using overseas facilities. Distributor Agreement On September 10, 2024, the Company entered into a sole distributorship agreement with Consensus B.V., pursuant to which Consensus B.V. will act as sole distributor of the Company’s products in the European Union, United Kingdom, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. 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. F- 24 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: September 20, 2024 CLEANCORE SOLUTIONS, INC. /s/ Clayton Adams Name: Clayton Adams Title: Chief Executive Officer (Principal Executive Officer) /s/ David Enholm Name: David Enholm Title: Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Clayton Adams Chairman and Chief Executive Officer (principal executive officer) September 20, 2024 Clayton Adams /s/ David Enholm Chief Financial Officer (principal financial and accounting officer) September 20, 2024 David Enholm /s/ Brent Cox Director September 20, 2024 Brent Cox /s/ James M. Grisham Director September 20, 2024 James M. Grisham /s/ Larry Goldman Director September 20, 2024 Larry Goldman 50