CleanCore Solutions, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report. Use of Terms Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our” and “our company” refer to CleanCore Solutions, Inc., a Nevada corporation, and its wholly owned subsidiary CleanCore Global Limited, an Irish company, or CleanCore Global. Special Note Regarding Forward Looking Statements This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about: ● our goals and strategies; ● our future business development, financial condition and results of operations; ● expected changes in our revenue, costs or expenditures; ● growth of and competition trends in our industry; ● our expectations regarding demand for, and market acceptance of, our products and services; ● our expectations regarding our relationships with investors, institutional funding partners and other parties we collaborate with; ● fluctuations in general economic and business conditions in the market in which we operate; and ● relevant government policies and regulations relating to our industry. In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, or the Form 10-K, as may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, or the SEC, in the future, and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. 22 The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. Overview We specialize in the development and production of cleaning products that produce pure aqueous ozone for professional, industrial, or home use. We have a patented nanobubble technology using aqueous ozone that we believe is highly effective in cleaning, sanitizing, and deodorizing surfaces and high-touch areas. We offer products and solutions that are marketed for janitorial and sanitation, ice machine cleaning, laundry, and industrial industries. Our products are used in many types of environments including retail establishments, distribution centers, factories, warehouses, restaurants, schools and universities, airports, healthcare, food service, and commercial buildings such as offices, malls, and stores. Our mission is to become a leader in creating safe, clean spaces that are free from any chemical residue or skin irritants. We are currently expanding our distributor network, improving our production processes, and proving the effectiveness of our products in restaurants, airports, and hotels. On September 5, 2025, we adopted a digital asset treasury strategy focused on Dogecoin. Pursuant to an asset management agreement that we entered into with Dogecoin Ventures, Inc., or the Asset Manager, and 21Shares US LLC, or 21Shares, on September 5, 2025, or the Asset Management Agreement, we established a multiyear advisory and asset-management program with the Asset Manager (which is a wholly-owned subsidiary of House of Doge Inc., the commercial arm of the Dogecoin Foundation) and 21Shares to manage our treasury assets, which include available cash or digital assets placed in our account to be utilized for such purpose, or the Treasury Account, as well as all investments thereof, proceeds of, income on and additions or accretions to the same, including all assets which are or were in the Treasury Account, but which are deployed in decentralized finance or similar blockchain transactions from time to time in accordance with the investment strategy described in the Asset Management Agreement (which we refer to as the Treasury Assets). Principal Factors Affecting the Financial Performance of our Cleaning Solutions Business The operating results for our cleaning solutions business are primarily affected by the following factors: ● our ability to acquire new customers or retain existing customers; ● our ability to stay ahead of our value-proposition to end consumers; ● our ability to continue innovating our technology to meet consumer demand; ● industry demand and competition; and ● market conditions and our market position. Principal Factors Affecting the Financial Performance of our Cryptocurrency Treasury Operations The operating results for our Treasury operations are primarily affected by the following factors: ● the market value of Dogecoin tokens; ● the trading volume of Dogecoin tokens; and ● investor understanding and willingness to purchase and use Dogecoin. 23 Segments Due to the establishment of our digital asset treasury strategy on September 5, 2025, we now have two reportable operating segments: (i) the CleanCore segment, which is engaged in the development and production of cleaning products and solutions that are marketed for professional, industrial, or home use; and (ii) the Treasury segment, which executes our digital asset treasury strategy focused on Dogecoin and includes the Treasury Assets. The Treasury segment also includes dedicated resources assigned to execute on our digital asset strategy, unrealized gain or loss on digital assets, and other third-party costs associated with our digital assets holdings, and income tax effects generated from our Dogecoin holdings to better align with their activities and utilization. Our chief operating decision maker, or CODM, is our Chief Executive Officer, who manages our company as two discrete segments as well as on a consolidated basis. The CODM uses net income (loss) to assess the profitability of the CleanCore segment by comparing actual to budgeted results on a quarterly basis. In doing so, he focuses on revenue, gross profit, and operating profit (loss) of the CleanCore segment. The CODM, in conjunction with our Chief Investment Officer, assesses the Treasury segment using the value of the Dogecoin and number of tokens held. Both segments allocate personnel and budget accordingly to maximize potential profitability. The CODM also uses net income (loss) to understand the impact from income taxes and financing costs for general tax and liquidity planning purposes. Emerging Growth Company We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to: ● have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act; ● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); ● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and ● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more, (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our class B common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. 24 Results of Operations Comparison of Three Months Ended September 30, 2025 and 2024 The following table sets forth key components of our results of operations for the three months ended September 30, 2025 and 2024, both in dollars and as a percentage of our revenue. Three Months Ended September 30, 2025 2024 Amount % of Revenue Amount % of Revenue Revenue, net $ 904,699 100.00 % $ 364,900 100.00 % Cost of sales 368,229 40.70 % 179,401 49.16 % Gross profit 536,470 59.30 % 185,499 50.84 % Operating expenses: General and administrative expense 8,625,133 953.37 % 916,214 251.09 % Advertising expense 71,529 7.91 % 46,210 12.66 % Depreciation and amortization expense 76,649 8.47 % 39,823 10.91 % Total operating expenses 8,773,311 969.75 % 1,002,247 274.66 % Loss from operations (8,236,841 ) (910.45 )% (816,748 ) (223.83 )% Other income (expense) Interest expense, net (133,133 ) (14.72 )% (39,334 ) (10.78 )% Change in fair value of digital assets (4,997,173 ) (552.36 )% - - Foreign exchange loss (552 ) (0.06 )% - - Total other income (expense) (5,130,858 ) (567.13 )% (39,334 ) (10.78 )% Net loss $ (13,367,699 ) (1,477.59 )% $ (856,082 ) (234.61 )% Revenue . All of our revenue is generated by the CleanCore segment, which generates revenue from sales of our cleaning products. Our revenue increased by $539,799, or 147.93%, to $904,699 for the three months ended September 30, 2025 from $364,900 for the three months ended September 30, 2024. The increase is primarily due to sales from a new customer, Kellermeyer Bergensons Services, LLC, or KBS, pursuant to a three-year memorandum of understanding that we entered into with KBS on January 10, 2025. For the three months ended September 30, 2025, we recognized $354,351 in revenue from KBS. Cost of sales . Our cost of sales consists of raw materials, components, labor, demo expenses and warranty reserves. Our cost of sales increased by $188,828, or 105.25%, to $368,229 for the three months ended September 30, 2025 from $179,401 for the three months ended September 30, 2024. As a percentage of revenue, cost of sales was 40.7% and 49.16% for the three months ended September 30, 2025 and 2024, respectively. The decrease is the result of better efficiencies driven by scale, cost optimization, and technological improvements. Gross profit . As a result of the foregoing, our gross profit increased by $350,971, or 189.20%, to $536,470 for the three months ended September 30, 2025 from $185,499 for the three months ended September 30, 2024. As a percentage of revenue, gross profit was 59.3% and 50.84% for the three months ended September 30, 2025 and 2024, respectively. General and administrative expenses . In the CleanCore segment, our general and administrative expenses consist primarily of personnel expenses, including employee salaries and bonuses plus related payroll taxes, stock based compensation expense, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. In the Treasury segment, our general and administrative expenses consist primary of professional advisor fees, stock based compensation expense, insurance expense, and employee salaries and bonuses plus related payroll taxes. Our general and administrative expenses increased by $7,708,919, or 841.39%, to $8,625,133 for the three months ended September 30, 2025 from $916,214 for the three months ended September 30, 2024. As a percentage of revenue, our general and administrative expenses were 953.37% and 251.09% for the three months ended September 30, 2025 and 2024, respectively. This increase was primarily due to increases of $5,826,062 in professional and consulting fees, $985,675 in stock compensation expense, $715,487 in payroll and benefits related to an increase in headcount, and $149,553 in director and officer insurance. On a segmented basis, general and administrative expenses for the CleanCore and Treasury segments for the three months ended September 30, 2025 were $5,392,103 and $3,233,030, respectively. Advertising expenses . In the CleanCore segment, advertising expenses consist of vendor trade shows and various trade publications. In the Treasury segment, advertising expense is driven by crypto marketing expenses. Our advertising expenses increased by $25,319, or 54.79%, to $71,529 for the three months ended September 30, 2025 from $46,210 for the three months ended September 30, 2024. Such an increase was primarily due to increased expenses related to crypto marketing. As a percentage of revenue, our advertising expenses were 7.91% and 12.66% for the three months ended September 30, 2025 and 2024, respectively. On a segmented basis, advertising expenses for the CleanCore and Treasury segments for the three months ended September 30, 2025 were $39,529 and $32,000, respectively. 25 Depreciation and amortization expense . Depreciation and amortization expense, all of which is generated by the CleanCore segment, increased by $36,826, or 92.47%, to $76,649 for the three months ended September 30, 2025 from $39,823 for the three months ended September 30, 2024. As a percentage of revenue, depreciation and amortization expense was 8.47% and 10.91% for the three months ended September 30, 2025 and 2024, respectively. The increase is due to amortization expense associated with additional intangibles acquired with the asset acquisition of Sanzonate in April 2025. Total other income (expense) . We had $5,130,858 in total other expense, net, for the three months ended September 30, 2025, as compared to $39,334 for the three months ended September 30, 2024. Other expense, net, for the three months ended September 30, 2025 consisted of interest expense of $133,133, a change in fair value of digital assets of $4,997,173 and a foreign exchange loss of $552, while other expense, net, for the three months ended September 30, 2024 consisted entirely of interest expense. The increase in interest expense was primarily due to an increase in the notes payable balance. Net loss . As a result of the cumulative effect of the factors described above, we had a net loss of $13,367,699 for the three months ended September 30, 2025, as compared to $856,082 for the three months ended September 30, 2024, an increase of $12,511,617, or 1,461.50%. Liquidity and Capital Resources Our company has incurred losses and negative cash flows from operations. From October 17, 2022 (the date of the acquisition) through September 30, 2025, we have financed our operations primarily through investor funding. As of September 30, 2025, we had cash and cash equivalents of $12,914,595, a net loss for the three months ended September 30, 2025 of $13,367,699 and cash used in operating activities of $3,796,652. Despite our recent offerings described below, management believes that currently available resources will not be sufficient to fund our planned expenditures over the next 12 months. These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about our company’s ability to continue as a going concern for 12 months from the date of issuance of the accompanying financial statements. We will be dependent upon the raising of additional capital through equity and/or debt financing in order to implement our business plan and generate sufficient revenue in excess of costs. If we raise additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock. If we raise additional funds by issuing debt, we may be subject to limitations on its operations, through debt covenants or other restrictions. There is no assurance that we will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on our financial condition. The accompanying financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Summary of Cash Flow The following table provides detailed information about our net cash flow for the three months ended September 30, 2025 and 2024. Three Months Ended September 30, 2025 2024 Net cash used in operating activities $ (3,796,652 ) $ (799,764 ) Net cash used in investing activities (142,511,738 ) (6,465 ) Net cash provided by financing activities 157,763,139 - Effect of exchange rate changes on cash and cash equivalents (1,151 ) - Net increase (decrease) in cash 11,453,598 (806,229 ) Cash at beginning of period 1,460,997 2,016,611 Cash at end of period $ 12,914,595 $ 1,210,382 Net cash used in operating activities was $3,796,652 for the three months ended September 30, 2025, as compared to $799,764 for the three months ended September 30, 2024. For the three months ended September 30, 2025, our net loss of $13,367,699 and an increase in prepaid expenses of $2,399,204, offset by a change in fair value of digital assets of $4,997,173, stock based compensation of $1,167,775, and non-cash professional fees of $4,894,750, were the primary drivers of net cash used in operating activities. For the three months ended September 30, 2024, our net loss of $856,082 and a decrease in prepaid expenses of $142,084, offset by stock based compensation of $182,400, were the primary drivers of net cash used in operating activities. 26 Net cash used in investing activities was $142,511,738 for the three months ended September 30, 2025, as compared to $6,465 for the three months ended September 30, 2024. The net cash used in investing activities for the three months ended September 30, 2025 consisted of purchases of digital assets of $142,500,000 and purchases of property and equipment of $11,738, while the net cash used in investing activities for the three months ended September 30, 2024 consisted entirely of purchases of property and equipment. Net cash provided by financing activities was $157,763,139 for the three months ended September 30, 2025, as compared to $0 for the three months ended September 30, 2024. Net cash provided by financing activities for the three months ended September 30, 2025 consisted of proceeds from the private placement described below of $137,907,255, proceeds from the Sales Agreement described below of $21,357,562 and proceeds from the exercise of warrants of $370,288, offset by repayments of notes payable of $660,000, payments for deferred offering costs of $786,725 and repayments of related party loans of $425,241. On August 29, 2025, we entered into an amended and restated sales agreement, or the Sales Agreement, with Maxim Group LLC and Curvature Securities LLC, or the Sales Agents, pursuant to which we may, from time to time, in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, issue and sell through or to the Sales Agents up to a maximum aggregate amount of $1,150,000,000 of shares of class B common stock. During the three months ended September 30, 2025, we issued an aggregate of 6,533,723 shares of class B common stock under the Sales Agreement for gross proceeds of $22,017,432 and net proceeds of approximately $21,357,562. On September 5, 2025, we completed an offering of pre-funded warrants to purchase an aggregate of 175,000,420 shares of class B common stock for aggregate gross proceeds of $175,000,420, of which $148,650,530 was paid in cash and $26,349,890 was paid in cryptocurrency. After deducting placement agent fees, reimbursed expenses, and other offering expenses from the total gross proceeds, including both cash and cryptocurrency gross proceeds, we received net proceeds of approximately $164,257,145. Of this amount, approximately $1,075,000 was used to pay off outstanding indebtedness and $4,400,000 will be used for working capital and general corporate purposes, with the balance of the net proceeds being used to acquire Dogecoin. Debt Please see Notes 12 and 13 to our unaudited condensed consolidated financial statements above for a description of the terms of our outstanding debt. Contractual Obligations Pursuant to the terms of the Asset Management Agreement, we agreed to pay the Asset Manager and 21Shares a monthly fee in arrears computed at an annual rate as follows: (i) 2% in the aggregate on amounts up to and including $1,000,000,000 in Treasury Account value, with 1.75% paid to the Asset Manager and 0.25% paid to 21Shares; (ii) 1.75% in the aggregate on amounts above $1,000,000,000 up to and including $1,500,000,000 in Treasury Account value, with 1.5% paid to the Asset Manager and 0.25% paid to 21Shares; and (iii) 1.5% in the aggregate on amounts above $1,500,000,000 in Treasury Account value, with 1.25% paid to the Asset Manager and 0.25% paid to 21Shares. Such payments may be made, in the sole discretion of the Asset Manager or 21Shares, in shares of class B common stock, cash, or Dogecoin and shall be pro-rated for partial periods. Our other principal commitments consist mostly of obligations under the loans described in Notes 10 and 11 to our unaudited condensed consolidated financial statements above. We also have a non-cancellable operating lease commitment for our office facility expiring in 2028 as described in Note 14 to the unaudited condensed consolidated financial statements above. Other than the foregoing, at September 30, 2025, we did not have other long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 27 Critical Accounting Policies and Estimates The preparation of our unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in the Form 10-K. In addition, we believe that the following new critical accounting policy involves significant estimates and judgments used in the preparation of our financial statements: Digital Assets We account for our digital assets, which are currently comprised solely of Dogecoin, as indefinite-lived intangible assets in accordance with ASC 350-60 (Intangibles – Goodwill and Other – Crypto Assets). We have ownership and control over our digital assets and use a well-known crypto custodian to secure them. Our digital assets are initially recorded at cost, with the cost basis determined using the weighted average cost, or WAC, method. Upon disposal, the cost basis of the digital assets sold is determined using the WAC method. Digital assets are measured at fair value at each reporting period. We determine the fair value of Dogecoin in accordance with ASC 820 (Fair Value Measurement), based on the period-end quoted (unadjusted) prices in our principal market. Changes in fair value are recognized at each reporting date in the statement of operations. The determination of fair value requires management judgment in evaluating the reliability and observability of market pricing data, particularly in digital asset markets that are subject to volatility, evolving trading venues, and liquidity considerations. In addition, our concentration in a single digital asset exposes us to market and regulatory risks that could have a significant impact on reported results. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.