CleanCore Solutions, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS. CLEANCORE SOLUTIONS, INC. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and June 30, 2024 2 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2025 and 2024 (Unaudited) 3 Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2025 and 2024 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2025 and 2024 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 1 CLEANCORE SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2025 June 30, 2024 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents $ 796,843 $ 2,016,611 Accounts receivable, net 576,147 467,286 Inventory, net 734,527 672,326 Prepaid expenses and other current assets 206,348 55,365 Total current assets 2,313,865 3,211,588 Property and equipment, net 25,248 10,572 Right of use assets 427,830 524,818 Intangibles, net 1,371,426 1,486,923 Goodwill 2,237,910 2,237,910 Other assets 9440 9,440 Total assets $ 6,385,719 $ 7,481,251 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 678,717 $ 573,956 Deferred revenue - 10,395 Lease liability - current 141,627 131,887 Subscription advance 1,000,000 - Note payable - current 566,965 698,149 Note payable - related party 363,220 - Due to related parties 43,025 91,119 Total current liabilities 2,793,554 1,505,506 Lease liability – non-current 310,937 418,104 Note payable – non-current 1,635,448 1,821,184 Total liabilities 4,739,939 3,744,794 Commitments and contingencies (Note 14) Stockholders’ Equity Class A Common Stock; $ 0.0001 par value, 50,000,000 shares authorized; 0 and 270,000 shares issued and outstanding as of March 31, 2025 and June 30, 2024, respectively - 27 Class B Common Stock; $ 0.0001 par value, 250,000,000 shares authorized; 8,378,081 and 7,960,919 shares issued and outstanding as of March 31, 2025 and June 30, 2024, respectively 838 796 Additional paid-in capital 11,620,357 11,040,583 Accumulated deficit ( 9,975,415 ) ( 7,304,949 ) Total stockholders’ equity 1,645,780 3,736,457 Total liabilities and stockholders’ equity $ 6,385,719 $ 7,481,251 The accompanying notes are an integral part of these condensed consolidated unaudited financial statements. 2 CLEANCORE SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 2025 2024 Revenue, net $ 557,915 $ 313,920 $ 1,180,083 $ 898,010 Cost of sales (exclusive of depreciation shown separately below) 246,783 173,184 621,441 457,495 Gross profit 311,132 140,736 558,642 440,515 Operating expenses: General and administrative 968,264 520,899 2,863,998 1,351,097 Advertising expense 19,743 17,737 72,515 43,191 Depreciation and amortization expense 39,928 38,677 119,678 115,885 Loss from operations ( 716,803 ) ( 436,577 ) ( 2,497,549 ) ( 1,069,658 ) Interest expense, net 92,551 84,093 172,920 233,105 Net loss $ ( 809,354 ) $ ( 520,670 ) $ ( 2,670,469 ) $ ( 1,302,763 ) Net loss per share of Class A and Class B stock, basic and diluted $ ( 0.10 ) $ ( 0.11 ) $ ( 0.33 ) $ ( 0.34 ) Weighted average shares used in computing net loss per Class A share, basic and diluted - 231,319 - 341,788 Weighted average shares used in computing net loss per Class B share, basic and diluted 8,370,273 4,405,940 8,164,342 3,451,743 The accompanying notes are an integral part of these condensed consolidated unaudited financial statements. 3 CLEANCORE SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) For the Three and Nine Months Ended March 31, 2025 Class A Common Stock Class B Common Stock Additional Paid in Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance at June 30, 2024 270,000 $ 27 7,960,919 $ 796 $ 11,040,583 $ ( 7,304,949 ) $ 3,736,457 Issuance of class B common stock upon vesting of restricted stock units – 2022 Equity Incentive Plan - - 9,166 1 21,514 - 21,515 Stock based compensation – 2022 Equity Incentive Plan - - - - 160,885 - 160,885 Net loss for the period - - - - - ( 856,082 ) ( 856,082 ) Balance at September 30, 2024 270,000 $ 27 7,970,085 $ 797 $ 11,222,982 $ ( 8,161,031 ) $ 3,062,775 Conversion of class A common stock into class B common stock ( 270,000 ) ( 27 ) 270,000 27 - - - Issuance of class B common stock upon vesting of restricted stock units – 2022 Equity Incentive Plan - - 30,498 3 68,164 - 68,167 Stock based compensation – 2022 Equity Incentive Plan - - - - 81,236 - 81,236 Net loss for the period - - - - - ( 1,005,030 ) ( 1,005,030 ) Balance at December 31, 2024 - $ - 8,270,583 $ 827 $ 11,372,382 $ ( 9,166,061 ) $ 2,207,148 Issuance of class B common stock under separation agreement - - 20,000 2 55,313 - 55,315 Issuance of class B common stock upon vesting of restricted stock units – 2022 Equity Incentive Plan - - 87,498 9 127,076 - 127,085 Stock based compensation – 2022 Equity Incentive Plan - - - - 47,564 - 47,564 Modification of related party debt - - - - 18,022 - 18,022 Net loss for the period - - - - - ( 809,354 ) ( 809,354 ) Balance at March 31, 2025 - $ - 8,378,081 $ 838 $ 11,620,357 $ ( 9,975,415 ) $ 1,645,780 For the Three and Nine Months Ended March 31, 2024 Series Seed Preferred Stock Class A Common Stock Class B Common Stock Additional Paid in Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital Deficit Equity 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 - - ( 1,310,000 ) ( 131 ) 1,310,000 131 - - - Conversion of series seed preferred stock into class A common stock ( 1,000,000 ) ( 100 ) 1,000,000 100 - - - - - Stock based compensation – 2022 Equity incentive plan - - - - - - 63,960 - 63,960 Net loss for the period - - - - - - - ( 437,294 ) ( 437,294 ) Balance at September 30, 2023 3,000,000 $ 300 350,000 $ 35 3,105,940 $ 311 $ 6,832,735 $ ( 5,460,501 ) $ 1,372,880 Stock based compensation – 2022 Equity incentive plan - - - - - - 44,012 - 44,012 Net loss for the period - - - - - - - ( 344,799 ) ( 344,799 ) Balance at December 31, 2023 3,000,000 $ 300 350,000 $ 35 3,105,940 $ 311 6,876,747 ( 5,805,300 ) 1,072,093 Conversion of class A common stock into class B common stock - - ( 2,200,000 ) ( 220 ) 2,200,000 220 - - - Conversion of series seed preferred stock into class A common stock ( 2,000,000 ) ( 200 ) 2,000,000 200 - - - - - Stock based compensation – 2022 Equity Incentive Plan - - - - - - 44,009 - 44,009 Net loss for the period - - - - - - - ( 520,670 ) ( 520,670 ) Balance at March 31, 2024 1,000,000 $ 100 150,000 $ 15 5,305,940 $ 531 $ 6,920,756 $ ( 6,325,970 ) $ 595,432 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 CLEANCORE SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended March 31, 2025 2024 Cash flows from operating activities Net loss $ ( 2,670,469 ) $ ( 1,302,763 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 119,678 115,885 Accretion of note payable discount 31,026 5,250 Non cash interest expense 195,380 223,783 Stock based compensation 561,767 151,981 Non cash lease expense ( 437 ) 5,342 Provision for bad debt and write-off of on uncollectable accounts 82,648 29,923 Changes in operating assets and liabilities: Accounts receivable ( 191,509 ) ( 92,417 ) Inventory ( 62,201 ) ( 103,569 ) Prepaid expenses ( 150,982 ) 94,776 Deferred revenue ( 10,395 ) - Due to related parties ( 48,094 ) - Accounts payable and accrued liabilities ( 90,618 ) 386,279 Net cash used in operating activities ( 2,234,206 ) ( 485,530 ) Investing activities Purchase of property and equipment ( 18,857 ) ( 2,138 ) Net cash used in investing activities ( 18,857 ) ( 2,138 ) Financing activities Payments for deferred offering costs - ( 124,458 ) Proceeds from issuance of convertible debt notes - 225,000 Proceeds from related party loans 332,193 50,014 Proceeds from subscription advance 1,000,000 - Payments of notes payable ( 316,920 ) - Net provided by financing activities 1,015,273 150,556 Net decrease in cash ( 1,237,790 ) ( 337,112 ) Cash and cash equivalents at beginning of period 2,016,611 393,194 Cash and cash equivalents at the end of period $ 778,821 $ 56,082 Supplementary cash flow disclosure Interest paid $ 7,257 $ 9,322 Unpaid deferred offering costs $ - $ 346,536 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 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. (“CleanCore US”). Since CleanCore US 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 CleanCore US. On January 29, 2025, CleanCore established CleanCore Global Limited (“CleanCore Global,” and together with CleanCore US, the “Company”) as a wholly owned subsidiary in Ireland. 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 class B common stock at a price to the public of $ 4.00 per share for gross offering proceeds of $ 5,000,000 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 October 17, 2022 (the date of the acquisition) through March 31, 2025, the Company has financed its operations primarily through investor funding. As of March 31, 2025, the Company had cash of $ 796,843 , a net loss of $ 2,670,469 for the nine months ended March 31, 2025, and cash used in operating activities of $ 2,234,206 . 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. 6 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 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. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim financial statements as of and for the three and nine months ended March 31, 2025 and 2024 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”) for interim financial information. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The interim financial statements are condensed and should be read in conjunction with the Company’s latest annual audited 2024 financial statements, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on September 20, 2024 (the “Form 10-K”). The results of operations for interim periods are not necessarily indicative of results to be expected for the fiscal year ending June 30, 2025 or for any other future annual or interim period. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates and assumptions are adequate, actual results could differ from the estimates and assumptions used. The fiscal 2024 year-end balance sheet data was derived from audited financial statements, and certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to SEC rules or regulations; however, the Company believes the disclosures made are adequate to make the information presented not misleading. A complete listing of the Company’s significant accounting policies is discussed in Note 2 – Summary of Significant Accounting Policies in the Notes to Financial Statements included in the Form 10-K. Principles of Consolidation The condensed consolidated financial statements are presented in US dollars and include the accounts of the Company and its majority-owned or controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 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. 7 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 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 March 31, 2025 and June 30, 2024, the Company had an allowance for inventory obsolescence of $ 58,213 and $ 14,790 , respectively. 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. Fair Value Measurements The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels: Level 1 – Quoted prices in active markets for identical assets and liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets. Level 3 – Unobservable inputs. 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 condensed consolidated balance sheets of these financial assets are a reasonable estimate of fair value due to their short-term nature or because their stated interest rates are indicative of market interest rates. 8 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 Stock-based Compensation Compensation expense is recognized for all stock-based payments to employees and non-employees, including stock options, restricted stock awards, and warrants, in the statements of operation based on the fair value of the awards that are granted. As necessary, 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 stock-based compensation award. The Company accounts for forfeitures of stock-based awards as they occur. 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, warrants and convertible debt are considered to be potentially dilutive securities. As of March 31, 2025 and June 30, 2024, there were 3,303,750 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 three and nine months ended March 31, 2025 and 2025, diluted net loss per common share is the same as basic net loss per common share for such periods. 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, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effects of this pronouncement on its financial statement disclosures. 3. Disaggregated Revenue The following table disaggregates revenue by product category for the following periods: Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 2025 2024 Janitorial and Sanitation $ 475,762 $ 245,495 $ 986,274 $ 727,762 Ice System 50,624 6,548 61,758 10,133 Commercial and Residential Laundry 1,440 6,991 15,595 22,221 Rental/Service Income 22,851 12,088 51,652 39,047 Other 7,238 42,798 64,804 99,847 Total Revenue $ 557,915 $ 313,920 $ 1,180,083 $ 898,010 9 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 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: March 31, 2025 June 30, 2024 Trade accounts receivable $ 660,949 $ 469,821 Allowance for doubtful accounts ( 84,802 ) ( 2,535 ) Total accounts receivable, net $ 576,147 $ 467,286 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consists of the following at: March 31, 2025 June 30, 2024 Prepaid inventory parts $ 15,218 $ 5,277 Prepaid insurance 28,406 32,943 Prepaid certification and fees 136,251 3,172 Prepaid other 26,473 13,973 Total prepaid expenses and other current assets $ 206,348 $ 55,365 6. Inventory Inventory consists of the following at: March 31, 2025 June 30, 2024 Parts $ 442,650 $ 503,004 Finished goods 350,090 184,112 Inventory reserve ( 58,213 ) ( 14,790 ) Total inventory, net $ 734,527 $ 672,326 The Company values inventory at the balance sheet date using the weighted average method. The Company adjusted the inventory reserve to $ 58,213 as of March 31, 2025 from $ 14,790 as of June 30, 2024. 7. Intangible Assets Intangible assets consist of the following at: March 31, 2025 June 30, 2024 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 ( 378,574 ) ( 263,077 ) Total intangible assets, net $ 1,371,426 $ 1,486,923 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 $ 38,499 for the three months ended March 31, 2025 and 2024, and $ 115,497 for the nine months ended March 31, 2025 and 2024, respectively. 10 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 8. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following at: March 31, 2025 June 30, 2024 Accounts payable $ 308,720 $ 176,077 Accrued interest 154,375 23,113 Accrued payroll and related expenses 46,214 59,943 Accrued pending litigation (Note 14) 108,242 108,242 Warranty reserve 42,779 96,636 Accrued severance - 70,000 Accrued legal 10,000 32,259 Other accrued expenses 8,387 7,686 Total accounts payable and other accrued expenses $ 678,717 $ 573,956 9. Subscription Advance In January 2025, the Company launched a unit offering pursuant to which the Company is offering to accredited investors, in a private placement transaction, up to 266,667 units, at a purchase price of $ 7.50 per unit, for gross proceeds of up to $ 2,000,000 ; provided that the Company may increase the offering to 533,333 units for gross proceeds of up to $ 4,000,000 if there are oversubscriptions. Each unit consists of a 12 % unsecured promissory note in the principal amount of $ 7.50 and a warrant to purchase one share of class B common stock at an exercise price equal to the last closing price prior to the closing date; provided that such exercise price shall not exceed $ 1.50 . The closing was to occur, at the Company’s discretion, on or before March 1, 2025, at which time the Company will issue the notes and the warrants. The closing was extended and completed on April 16, 2025 (see Note 15). As of March 31, 2025, the Company received an aggregate of $ 1,000,000 from seven investors. Since such funds were delivered prior to the Company’s execution of the subscription agreements, the Company recorded such funds as subscription advances. 10. Debt Promissory Notes In connection with the acquisition 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 . 11 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 On May 31, 2024, Burlington and Walker Water LLC (“WW”) entered into an allonge, assignment and agreement (the “Burlington Assignment Agreement”), pursuant to which Burlington agreed to transfer $ 633,840 of the note to WW. The Burlington 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 “Burlington Note”). The Burlington 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 Burlington Note may be prepaid at any time with no pre-payment penalty and contains customary events of default for a note of this type. Although the Company did not make certain payments as required under the Burlington Note, Burlington has agreed to waive any default caused by such lack of payment and has not accelerated payment under the Burlington Note. The Company and Burlington are in discussions to document an amendment to the Burlington Note. As of March 31, 2025, the outstanding principal balance of the Burlington Note is $ 1,855,493 and it has an accrued interest balance of $ 133,483 . Pursuant to the Burlington Assignment Agreement, the Company also issued a promissory note to WW in the principal amount of $ 633,840 (the “WW Note”). The WW Note accrued 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 was due on December 31, 2024 . On December 24, 2024, the Company entered into a note assignment and cancellation agreement (the “WW Assignment Agreement”) with WW, Gary Hollst, the Company’s Chief Revenue Officer, and Gary Rohwer, a third party, pursuant to which WW assigned half of its right, title and interest in and to the WW Note to Garry Hollst and the remaining half to Gary Rohwer. Accordingly, the WW Note was cancelled and the Company issued a promissory note in the principal amount of $ 316,920 to Gary Hollst (the “Hollst Note”) and a promissory note in the principal amount of $ 316,920 and accrued interest of $ 15,714 to Gary Rohwer (the “Rohwer Note”). The Hollst Note is due and payable on May 31, 2025 and does not accrue interest; provided that upon an event of default (as defined in the Hollst Note), interest shall accrue at a rate of 10 % per annum. The Hollst Note may be prepaid at any time with without premium or penalty, is unsecured, and contains customary events of default for a loan of this type. As of March 31, 2025, the outstanding principal balance of the Hollst Note is $ 316,920 . The Hollst Note was amended and restated on May 2, 2025 (see Note 15). The Rohwer Note was due and payable on December 31, 2024. On December 30, 2024, the Company repaid the Rohwer Note in full. 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. As of March 31, 2025, there was no outstanding principal on this line of credit, and no required accrued interest. 11. Related Party Transactions As of March 31, 2025 and June 30, 2024, the Company had a short-term amount due to Clayton Adams, its Chief Executive Officer and founder, in the amount of $ 45,025 and $ 91,119 , respectively, for operational expenses paid by a credit card in his name. 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. On May 29, 2024, the Company repaid these two promissory notes, including interest accrued of $ 8,506 each. 12 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 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 Company did not make such payment or issue such shares upon completion of the initial public offering and is in discussions with Birddog to amend the compensation terms. The consulting agreement expires on October 23, 2025 . 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 Company’s 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 March 31, 2025, the Company has purchased $ 13,765 of the inventory, with an outstanding payable balance of $ 10,679 , and has an accrued interest balance of $ 8,000 . 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 March 31, 2025, no advances have been made and the principal amount of this note is $ 0 . On December 24, 2024, the Company issued a 20 % original issue discount promissory note in the principal amount of $ 415,241 to Clayton Adams, the Company’s Chief Executive Officer. On January 27, 2025, Mr. Adams entered into a note sale assignment and cancellation agreement with Travis Buchanan, the Company’s President, pursuant to which Mr. Adams sold and assigned $ 125,000 of the note to Mr. Buchanan for a purchase price of $ 100,000 . Following such assignment, the Company issued a 20 % original issue discount promissory note in the principal amount of $ 290,241.25 to Mr. Adams. This note is due and payable on June 30, 2025 and accrues interest at a rate of 8 % per annum; provided that upon an event of default (as defined in the note), such interest rate shall increase to 15 % per annum. The note may be prepaid at any time without premium or penalty, is unsecured, and contains customary events of default for a loan of this type. As of March 31, 2025, the outstanding principal balance of this note is $ 253,897 and it has a discount balance of $ 36,344 and an accrued interest balance of $ 4,008 . This note was amended on May 2, 2025 (see Note 15). Following the assignment described above, the Company issued a 20 % original issue discount promissory note in the principal amount of $ 125,000 to Mr. Buchanan. This note is due and payable on June 30, 2025 and accrues interest at a rate of 8 % per annum; provided that upon an event of default (as defined in the note), such interest rate shall increase to 15 % per annum. The note may be prepaid at any time without premium or penalty, is unsecured, and contains customary events of default for a loan of this type. As of March 31, 2025, the outstanding principal balance of this note is $ 109,322 and it has a discount balance of $ 15,678 and an accrued interest balance of $ 1,726 . This note was amended on May 2, 2025 (see Note 15). Please also see the description of the Hollst Note under Note 10 above. 13 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 12. Stockholders’ Equity Series Seed Preferred Stock For the Nine Months Ended March 31, 2024 On July 16, 2023, 1,000,000 shares of series seed preferred stock were converted into 1,000,000 shares of class A common stock. On February 5, 2024, 750,000 shares of series seed preferred stock were converted into 750,000 shares of class A common stock. On February 7, 2024, 1,250,000 shares of series seed preferred stock were converted into 1,250,000 shares of class A common stock. As of March 31, 2024, 1,000,000 shares of series seed preferred stock were issued and outstanding. For the Nine Months Ended March 31, 2025 No shares of Series Seed Preferred Stock existed during the nine months ended March 31, 2025. Common Stock For the Nine Months Ended March 31, 2024 On July 16, 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. On July 17, 2023, the Company issued 940,000 shares of class B common stock upon the conversion of 940,000 shares of class A common stock. On July 24, 2023, the Company issued 370,000 shares of class B common stock upon the conversion of 370,000 shares of class A common stock. On February 5, 2024, the Company issued 750,000 shares of class A common stock upon the conversion of 750,000 shares of series seed preferred stock, which were immediately converted into 750,000 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 February 7, 2024, the Company issued 1,250,000 shares of class A common stock upon the conversion of 1,250,000 shares of series seed preferred stock, which were immediately converted into 1,250,000 shares of class B common stock upon issuance. As of March 31, 2024, there were 150,000 shares of class A common stock and 5,305,940 shares of class B common stock issued and outstanding. For the Nine Months Ended March 31, 2025 On July 12, 2024, the Company issued 5,000 shares of class B common stock upon vesting of a restricted stock unit award granted under the Company’s 2022 Equity Incentive Plan, as amended (the “Plan”). On September 19, 2024, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On October 19, 2024, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. 14 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 On October 30, 2024, 270,000 shares of class A common stock were converted into 270,000 shares of class B common stock. On November 19, 2024, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On December 18, 2024, the Company issued 18,000 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On December 19, 2024, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On January 2, 2025, the Company issued 20,000 shares of class B common stock pursuant to the terms of a separation agreement with the Company’s former Chief Executive Officer. On January 2, 2025, the Company issued 75,000 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On January 19, 2025, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On February 19, 2025, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On March 19, 2025, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. As of March 31, 2025, there were no shares of class A common stock and 8,378,081 shares of class B common stock issued and outstanding. Stock Options No options were issued during the nine months ended March 31, 2025. Warrants No warrants were issued during the nine months ended March 31, 2025. Restricted Stock Awards On September 19, 2024, the Company granted a restricted stock unit award under the 2022 Plan for 295,000 shares of class B common stock, of which 150,000 shares will vest in equal parts over the course of thirty-six (36) months, with 1/36th vesting each month commencing on the grant date and thereafter on the same day of the month as the grant date, and the remaining shares will vest as the Company achieves certain sales targets in a twelve-month period. On January 2, 2025, the Company granted a restricted stock unit award under the 2022 Plan for 200,000 shares of class B common stock, of which 75,000 shares vested immediately and the remaining shares will vest quarterly over three years . On March 20, 2025, the Company granted a restricted stock unit award under the 2022 Plan for 16,807 shares of class B common stock which will vest quarterly over one year commencing on April 1, 2025. Stock-based Compensation Total stock compensation expense for the three months ended March 31, 2025 and 2024 was $ 229,965 and $ 44,009 , respectively, and total stock compensation expense for the nine months ended March 31, 2025 and 2024 was $ 561,767 and $ 151,978 , respectively. As of March 31, 2025, total unrecognized stock compensation expense was $ 919,008 with the weighted average period over which it is expected to be recognized of 1.96 years. 15 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 13. Net loss per share The following tables set forth the computation of basic and dilutive net loss per share of common stock: Three Months Ended March 31, 2025 2024 Basic and Diluted Net Loss Per Share Class A Class B Class A Class B Numerator Allocation of undistributed loss $ - $ ( 809,354 ) $ ( 25,972 ) $ ( 494,698 ) Denominator Weighted average number of shares used in per share computation - 8,370,273 231,319 4,405,940 Basic and diluted net loss per share $ - $ ( 0.10 ) $ ( 0.11 ) $ ( 0.11 ) Nine Months Ended March 31, 2025 2024 Basic and Diluted Net Loss Per Share Class A Class B Class A Class B Numerator Allocation of undistributed loss $ - $ ( 2,670,469 ) $ ( 117,376 ) $ ( 1,185,387 ) Denominator Weighted average number of shares used in per share computation - 8,164,342 341,788 3,451,743 Basic and diluted net loss per share $ - $ ( 0.33 ) $ ( 0.34 ) $ ( 0.34 ) 14. 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. 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 is currently not aware of any other legal proceedings or claims that are expected to have a material adverse effect on its business, financial condition or operating results. Leases The Company has a non-cancellable operating lease commitment for its office facility expiring in 2028. Rent expense totaled $ 40,416 and $ 32,681 for the three months ended March 31, 2025 and 2024, respectively. For the nine months ended March 31, 2025 and 2024, rent expense totaled $ 121,248 and $ 90,307 , respectively. The following table discloses the lease cost, weighted average discount rate, and weighted average remaining lease term for operating leases as of March 31, 2025 and 2024: March 31, 2025 March 31, 2024 Operating lease cost $ 121,248 $ 90,307 Remaining lease term 2.9 years 3.9 years Discount rate 6.56 % 6.56 % 16 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 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 March 31, 2025: Year Ended June 30, 2025 (remainder) $ 41,461 2026 167,226 2027 171,407 2028 116,160 Total undiscounted cash flows 496,254 Less amount representing interest ( 43,690 ) Present value of lease liabilities 452,564 Less current portion ( 141,627 ) Noncurrent lease liabilities $ 310,937 On February 21, 2025, CleanCore Global entered into an Asset Purchase Agreement, which was amended on April 15, 2025 (as so amended, the “Purchase Agreement”) with Sanzonate Europe Ltd., an Irish incorporated company (the “Seller”), and Sanzonate Global Inc., the majority stockholder of the Seller (the “Stockholder”), pursuant to which CleanCore Global agreed to acquire substantially all of the assets of the Seller used in the manufacturer and distribution of aqueous ozone products (the “Business”). See Note 15 below for a description of the terms of the Purchase Agreement. 15. Subsequent Events Closing of Acquisition On April 15, 2025, the closing of the transactions contemplated by the Purchase Agreement was completed. Pursuant the Purchase Agreement, CleanCore Global acquired all of the assets of the Seller used in the Business for an aggregate purchase price of $ 2,475,000 , consisting of: (i) $ 425,000 in cash; (ii) the issuance of a promissory note in the principal amount of $ 800,000 ; and (iii) up to $ 1,250,000 in Earn-Out Payments (as defined below). As additional consideration, the Company issued to the Stockholder a five-year warrant to purchase 425,000 shares of the Company’s class B common stock at an exercise price of $ 1.25 per share. As noted above, a portion of the purchase price was paid by the issuance of a 10 % subordinated promissory note in the principal amount of $ 800,000 by CleanCore Global to the Seller. The note bears interest at a rate of ten percent ( 10 %) per annum, payable quarterly, and is due and payable on April 15, 2027. The note may be prepaid at any time without premium or penalty, is unsecured, and contains customary events of default for a loan of this type. The Seller is also entitled to receive the following payments (each, an “Earn-Out Payment”) to the extent that Net Sales (as defined in the Purchase Agreement) achieve the following milestones during the five-year period beginning on the closing date and ending on the fifth anniversary of the closing date (the “Earn-Out Period); provided that an Earn-Out Payment will be calculated for each year during the Earn-Out Period. If Net Sales: ● are equal to or greater than € 2,000,000 , CleanCore Global shall pay $ 200,000 to the Seller; ● are equal to or greater than € 4,000,000 , CleanCore Global shall pay an additional $ 200,000 to the Seller; ● are equal to or greater than € 6,000,000 , CleanCore Global shall pay an additional $ 200,000 to the Seller; ● are equal to or greater than € 8,000,000 , CleanCore Global shall pay an additional $ 200,000 to the Seller; ● are equal to or greater than € 10,000,000 , CleanCore Global shall pay an additional $ 200,000 to the Seller; and ● are equal to or greater than € 12,000,000 , CleanCore Global shall pay an additional $ 250,000 to the Seller. Calculation of the annual Earn-Out Payment will be based upon cumulative Net Sales, meaning that for each year of the Earn-Out Period, the beginning balance of Net Sales will be the ending balance of Net Sales from the prior year of the Earn-Out Period. 17 CLEANCORE SOLUTIONS, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 AND 2024 No later than forth-five (45) days following each anniversary of the closing date during the Earn-Out Period, CleanCore Global shall prepare and deliver to the Seller a written statement (an “Earn-Out Statement”) setting forth in reasonable detail its determination of unaudited Net Sales within the annual Earn-Out Period and its determination of whether there is a resulting Earn-Out Payment due. To the extent the Seller is entitled to an Earn-Out Payment, the applicable Earn-Out Payment(s) shall be paid on the date that is five (5) business days after the date on which the Earn-Out Statement becomes final and binding on the parties, following resolution of any objections to the Earn-Out Statement pursuant to the terms of the Purchase Agreement. The Purchase Agreement contains customary representations, warranties and covenants, including a covenant that the Seller and the Stockholder will not compete with the Business for a period of three (3) years following closing. The Purchase Agreement also contains mutual indemnification for breaches of representations or warranties and failure to perform covenants or obligations contained in the Purchase Agreement. The Seller and the Stockholder also indemnified CleanCore Global for (i) any Excluded Liability (as defined in the Purchase Agreement) and (ii) any liability of the Seller which is not an Assumed Liability (as defined in the Purchase Agreement) and which is imposed upon CleanCore Global under any bulk transfer law of any jurisdiction or under any common law doctrine of de facto merger or successor liability so long as such liability arises out of the ownership, use or operation of the assets of the Seller, or the operation or conduct of the Business prior to the closing. CleanCore Global also indemnified the Seller and the Stockholder for (i) any Assumed Liability and (ii) any liability (other than any Excluded Liability) asserted by a third party against any of the Seller or the Stockholder which arises out of the ownership of the Purchased Assets (as defined in the Purchase Agreement) after the closing or the operation by CleanCore Global of the business conducted with the Purchased Assets after the closing. In the case of the indemnification provided with respect to breaches of certain non-fundamental representations and warranties, the party will only become liable for indemnified losses if the amount exceeds an aggregate of $ 30,000 . Notwithstanding the foregoing, this threshold limitation shall not apply to claims by CleanCore Global for breaches by the Seller or the Stockholder of certain fundamental representations. In addition, CleanCore Global’s aggregate remedy with respect to any and all indemnifiable losses shall in no event exceed, (i) with respect to claims related to breach of the fundamental representations, the final purchase price, or (ii) with respect to all other claims, 50 % of the final purchase price. If, after providing the Seller with a written claim that specifically identifies the basis for indemnification and any relevant facts forming the basis for such claim, resolution of the claim between the parties and the Seller fails to indemnify CleanCore Global within thirty (30) days following the resolution of the claim, CleanCore Global shall have the right to recoup all or any part of any indemnifiable losses it may suffer by notifying the Stockholder that CleanCore Global is reducing the Earn-Out Payments by the amount of such indemnifiable losses. Private Placement On April 16, 2025, the Company entered into subscription agreements with several accredited investors for the purchase of (i) promissory notes in the aggregate principal amount of $ 1,010,000 and (ii) five-year warrants to purchase an aggregate of 134,666 shares of the Company’s class B common stock at an exercise price of $ 1.06 per share for an aggregate purchase price of $ 1,010,000 . The notes bear interest at a rate of twelve percent ( 12 %) per annum, payable quarterly, and are due and payable on April 16, 2027. The notes may be prepaid at any time without premium or penalty, are unsecured, and contain customary events of default for a loan of this type. Amendments to Promissory Notes On May 2, 2025, the Hollst Note (See Note 10) was amended and restated in its entirety and the Company issued to Mr. Hollst an amended and restated promissory note in the principal amount of $ 342,154.57 (the “Restated Note”). The Restated Note is due and payable on May 31, 2026 and accrues interest at a rate of 8.5 % per annum; provided that upon an event of default (as defined in the Restated Note), interest shall accrue at a rate of 10 % per annum. The Restated Note may be prepaid at any time without premium or penalty, is unsecured, and contains customary events of default for a loan of this type. The Restated Note may be converted at the holder’s option at any time into shares of the Company’s class B common stock at a conversion price of $ 1.12 (subject to standard adjustments for stock splits, stock dividends, reclassifications and similar transactions). On May 2, 2025, the Company and Clayton Adams entered into a note amendment agreement, pursuant to which the maturity date of the 20 % original issue discount promissory note issued to Mr. Adams on January 27, 2025 (See Note 11) was changed to require repayment with sixty (60) days of written demand from Mr. Adams. On May 2, 2025, the Company and Mr. Buchanan entered into a note amendment agreement, pursuant to which the maturity date the 20 % original issue discount promissory note issued to Mr. Buchanan on January 27, 2025 (See Note 11) was changed to require repayment with sixty (60) days of written demand from Mr. Buchanan. Stock Issuances On April 1, 2025, the Company issued 10,416 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On April 1, 2025, the Company issued 4,202 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. On April 19, 2025, the Company issued 4,166 shares of class B common stock upon vesting of a restricted stock unit award granted under the 2022 Plan. 18