What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-09-28 compared with 2025-08-22 · 425 added, 284 removed, 26 unchanged (96% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and

6 unchanged sentences

could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those

discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “ Special

Note Regarding Forward-Looking Statements.

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.

Principal Factors Affecting Our Financial Performance

Our operating results 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;

discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “Special Note Regarding

Forward-Looking Statements.”

Frontier Inc., formerly CleanCore Solutions, Inc.

(“the Company”, “we”, or “Zone”) is helping to build

the critical infrastructure that powers the AI economy.

We aim to meet the increasing demand for compute capacity, power, and digital

infrastructure required by the world’s leading AI companies.

We specialize in providing powered land and facilities,

in conjunction with our development partners, to support over one gigawatt of computer power by 2030.

With campuses being developed across

rural and industrial Minnesota and Texas, we expect to bring approximately 55 MW of utility power capacity and 40 MW of critical IT load

online and revenue generating during the first calendar quarter of 2027.

June 8, 2026, the Company announced a new focus on building critical AI infrastructure across the United States, led by newly hired CEO

Tyler Hassen, and plans to move away from its cleaning products business and Dogecoin treasury strategy.

July 9, 2026, the Company announced its first data center project.

Located in West Texas, and with development platform provider HST Technologies,

Inc., it is projected to supply an initial 200-megawatts of utility power by 2029, with potential to expand to more than 500-megawatts

July 20, 2026, substantially all Dogecoin assets were sold.

The proceeds will be used to fund the Company’s AI strategy.

July 29, 2026, the Company announced its second data center project, its flagship campus located in Minnesota.

The site is already powered

and under exclusive pre-leased occupancy with Cerebras Systems, a leading AI compute company.

It is expected to generate revenue beginning

in the first calendar quarter of 2027, offering 55-megawatts of utility power and 40-megawatts of critical load, once fully built out.

On June 8, 2026, the Company announced plans

to sell or dispose substantially all assets of the cleaning products business, including the wholly owned Irish subsidiary, CleanCore

The Company is in the process of selling this business unit but is not under binding contract with any party as of September

The segment did not meet the criteria as Held for Sale as of June 30, 2026 and is included in this Report.

On August 31, 2026,

the Company changed its name from CleanCore Solutions Inc.

to Zone Frontier Inc.

the twelve months ended June 30, 2026, the Company operated three Segments:

CleanCore, which specializes in the development

and production of cleaning products that produce pure aqueous ozone using patented nanobubble technology that is highly effective in cleaning,

sanitizing, and deodorizing surfaces and high-touch areas

Treasury, established on September 5, 2025 when

the Company adopted a Digital Asset Trading strategy focused on Dogecoin as part of a $175 million private placement offering.

Critical AI Infrastructure, announced on June 8,

2026, focused on building data centers to meet the increasing compute needs of AI companies

Treasury segment included 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.

AI Critical Infrastructure segment includes costs related to the development of data centers.

This segment has not generated any revenue

as of June 30, 2026.

Factors Affecting the Financial Performance of our AI Critical Infrastructure Business, which was announced on June 8, 2026

operating results for our AI Critical Infrastructure operations are primarily affected by the following factors:

our ability to secure suitable land and power for

development of future data centers

our ability to attract tenants to lease our facilities

our ability to raise funding with investors to

meet the capital demands of our data campus projects

Factors Affecting the Financial Performance of our Cleaning Solutions Business

operating results 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;

market conditions and our market position.

Emerging Growth Company

We qualify as an “emerging growth company”

under the JOBS Act.

As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.

as we are an emerging growth company, we will not be required to:

● have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of

the Sarbanes-Oxley Act;

● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding

mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial

statements (i.e., an auditor discussion and analysis);

● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay”

and “say-on-frequency;” and

● disclose certain executive compensation related items such as the correlation between executive compensation

and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

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 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 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.

Results of Operations

The following table sets forth key components

of our results of operations for the years ended June 30, 2025 and 2024, both in dollars and as a percentage of revenue.

Years Ended June 30,

Factors Affecting the Financial Performance of our Cryptocurrency Treasury Operations, which the Company exited on July 20, 2026 by selling

all remaining digital assets

operating results for our Treasury operations were primarily affected by the following factors:

the market value of Dogecoin tokens;

the trading volume of Dogecoin tokens;

investor understanding and willingness to purchase

and use Dogecoin.

Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer, Tyler Hassen, who

was appointed on March 16, 2026, who managed the Company as three discrete segments as well as on a consolidated basis, in conjunction

with the Company’s General Manager, Clayton Adams, who was the former Chief Executive Officer.

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 focused

on revenue, gross profit, and operating profit (loss) of the CleanCore Segment.

The CODM assessed the Treasury Segment using the value

of the Dogecoin and number of tokens held.

The CODM assesses the AI Critical segment using actual vs.

budgeted expenses and progress towards

construction completion.

All 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.

Growth Company

qualify as an “emerging growth company” under 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;

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.

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 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.

will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our

initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more,

(iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur

if the market value of our 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.

of Operations

following table sets forth key components of our results of operations for the years ended June 30, 2026 and 2025, both in dollars and

as a percentage of our revenue.

Ended June 30,

Cost of sales

2 unchanged sentences

Advertising expense

Depreciation and amortization expense

Depreciation and amortization

operating expenses

Loss from operations

Interest expense, net

Foreign exchange gain

$ (6,742,275 )

$ (2,281,742 )

We generate revenue from

sales of our cleaning products.

Our revenue increased by $467,861, or 29.15%, to $2,072,834 for the year ended June 30, 2025 from $1,604,973

for the year ended June 30, 2024.

The increase is primarily driven by sales to a new customer, KBS, as described above.

As of June 30,

2025, we recognized $876,568 in revenue from KBS under an approximately $1.4 million purchase order issued by KBS.

Cost of sales .

Our cost of sales

consists of raw materials, components, labor, demo expenses and warranty reserves.

Our cost of sales increased by $277,208, or 34.26%,

to $1,086,369 for the year ended June 30, 2025 from $809,161 for the year ended June 30, 2024.

As a percentage of revenue, cost of sales

increased from 50.42% for the year ended June 30, 2024 to 52.41% for the year ended June 30, 2025.

The increase is the result of higher

year-over-year revenue and an increase in indirect costs such as demo expense, R&D, and warranty reserve.

Gross profit .

As a result of the

foregoing, our gross profit increased by $190,653, or 23.96%, to $986,465 for the year ended June 30, 2025 from $795,812 for the year

ended June 30, 2024.

As a percentage of revenue, gross profit decreased from 49.58% for the year ended June 30, 2024 to 47.59% for the

Other income (expense)

Interest income (expense),

Change in fair value of digital

exchange gain

Total other income (expense)

All of our revenue is generated by the CleanCore segment, which generates revenue from sales of our cleaning products.

Our revenue increased

by $1,333,600, or 64.34%, to $3,406,434 for the year ended June 30, 2026 from $2,072,834 for the year ended June 30, 2025.

increase is from an increase in revenue from the Ireland location of approximately $817,000 due to a full-year of sales from Ireland.

Our cost of sales consists of raw materials, components, labor, demo expenses and warranty reserves.

sales increased by $1,032,118, or 95.01%, to $2,118,487 for the year ended June 30, 2026 from $1,086,369 for the year ended June 30, 2025.

As a percentage of revenue, cost of sales increased from 52.41% for the year ended June 30, 2025 to 62.19% for the year ended June 30,

The increase is the result of higher year-over-year revenue, and an increase in indirect sales costs, primarily inventory reserve.

Inventory reserve expense increased by approximately $414,000 as the company has shifted some unit production overseas resulting in a

one-time increase in the reserve.

As a result of the foregoing, our gross profit increased by $301,482, or 30.56%, to $1,287,947 for the year ended June

30, 2026 from $986,465 for the year ended June 30, 2025.

As a percentage of revenue, gross profit decreased from 47.59% for the year ended

June 30, 2025 to 37.81% for the year ended June 30, 2026.

The decrease is primarily attributed to the increased indirect inventory reserve

expense of $414,000.

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, impairment expense, rent expense, insurance and other expenses incurred in connection with general operations.

In the Treasury

segment, our general and administrative expenses consist primarily of professional advisor fees, stock-based compensation expense, insurance

expense, and employee salaries and bonuses plus related payroll taxes.

In the AI Critical Infrastructure segment, our costs primary consists

of legal fees.

Our general and administrative expenses increased by $49,411,629, or 697.78%, to $56,492,928 for the year ended June 30,

2026 from $7,081,299 for the year ended June 30, 2025.

As a percentage of revenue, our general and administrative expenses increased from

341.62% for the year ended June 30, 2025 to 1,658.42% for the year ended June 30, 2026.

The year-over-year increase is primarily due to

a full year of Treasury segment expenses, a full year of Ireland operations, impairment of intangibles, and increased payroll related

to the new data-center focus.

The most significant increases were $23,252,313 of non-cash professional fees from the Treasury segment,

$14,539,737 of Treasury management related expenses, $6,023,783 in non-cash stock option expense and $1,748,969 of intangibles impairment.

In the CleanCore segment, advertising expenses consist of vendor trade shows and various trade publications.

advertising expenses increased by $183,633, or 198.31%, to $276,231 for the year ended June 30, 2026 from $92,598 for the year ended June

As a percentage of revenue, our advertising expenses increased from 4.47% for the year ended June 30, 2025 to 8.11% for the

year ended June 30, 2026.

General and administrative expenses .

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.

Our general and administrative expenses increased by $4,609,819, or 186.52%, to $7,081,299 for the

year ended June 30, 2025 from $2,471,480 for the year ended June 30, 2024.

As a percentage of revenue, our general and administrative

expenses increased from 153.99% for the year ended June 30, 2024 to 341.62% for the year ended June 30, 2025.

This increase was primarily

due to increases of $2,532,272 in non-cash stock compensation expense, $351,071 in payroll and benefits related to an increase in headcount,

$1,022,152 in professional and consulting fees, $261,250 of intangibles impairment, and $223,376 in director and officer insurance.

increase in professional fees and director and officer insurance is directly related to our listing on NYSE American in April 2024, as

fiscal 2025 includes a full year of such fees.

Advertising expenses .

Our advertising

expenses consist of vendor trade shows and various trade publications.

Our advertising expenses decreased by $23,409, or 20.18%,

to $92,598 for the year ended June 30, 2025 from $116,007 for the year ended June 30, 2024.

As a percentage of revenue, our advertising

expenses decreased from 7.23% for the year ended June 30, 2024 to 4.47% for the year ended June 30, 2025.

Such a decrease was primarily

due to a decrease in trade shows attended in fiscal 2025.

Depreciation and amortization expense .

incurred depreciation and amortization expense of $198,909, or 9.60% of revenue, for the year ended June 30, 2025, as compared to $155,059,

or 9.66% of revenue, for the year ended June 30, 2024.

The increase is due to amortization expense associated with additional intangibles

acquired with the asset acquisition of Sanzonate in April 2025.

Interest expense, net .

incurred interest expense, net, of $356,054, or 17.18% of revenue, for the year ended June 30, 2025, as compared to $335,008, or 20.87%

of revenue, for the year ended June 30, 2024.

The increase is primarily due to an increase in note payables.

of the cumulative effect of the factors described above, we had a net loss of $6,742,275 for the year ended June 30, 2025, as compared

to $2,281,742 for the year ended June 30, 2024, an increase of $4,460,533, or 195.49%.

Liquidity and Capital Resources

Our company has incurred losses and negative cash

flows from operations.

From October 17, 2022 (the date of the acquisition) through June 30, 2025, we have financed our operations primarily

through private investor funding and an initial public offering.

As of June 30, 2025, we had cash and cash equivalents of $1,460,997.

Such an increase was primarily due to increased expenses related to crypto marketing, offset by lower marketing

expenses for the CleanCore segment.

and amortization expense .

Depreciation and amortization expense, all of which is generated by the CleanCore segment,

was $259,598, or 7.62% of revenue, for the year ended June 30, 2026, as compared to $198,909, or 9.60% of revenue, for the year ended

June 30, 2025.

The increase is due to amortization expense associated with additional intangibles acquired with the asset acquisition

of Sanzonate in April 2025.

In connection with the proposed sale of the CleanCore segment, the Company obtained a third party valuation of

the business and performed a quantitative impairment test.

The test indicated that the fair value of the reporting unit was less than

the carrying amount.

As a result, the Company fully impaired its goodwill balance as of June 30, 2026.

Other income (expense), net .

We had $116,182,144 in Total other expense, net, or (3,410.67)% of revenue, for the

year ended June 30, 2026, as compared to $355,934 Other expense, net, or 17.17% of revenue, for the year ended June 30, 2025.

expense, net, for the year ended June 30, 2026 consisted of a change in fair value of digital assets held of $(116,318,363), interest

income, net, of $140,365, and a foreign exchange loss of $4,146, while other expense, net, for the year ended June 30, 2025, consisted

entirely of interest expense.

The increase in change in fair value of digital assets is driven by the adoption of our digital asset treasury

and a decrease in fair value of Dogecoin, and the increase in interest income is driven by cash from pre-funded warrants and issuance

of ATM in the bank earning interest.

As a result of the cumulative effect of the factors described above, we had a net loss of $174,160,864 for

the year ended June 30, 2026, as compared to $6,742,275 for the year ended June 30, 2025, an increase in loss of $167,418,589, or 2,483.12%.

and Capital Resources

company has incurred losses and negative cash flows from operations.

From October 17, 2022 (the date of the acquisition) through June

30, 2026, we have financed our operations primarily through private investor funding.

As of June 30, 2026, we had cash and cash equivalents

of $15,435,213.

For the year ended June 30, 2026, we had a net loss of $174,160,864 and cash used in operating activities of $18,157,390.

Management believes that currently available resources

will not be sufficient to fund our planned expenditures over the next 12 months, which raises substantial doubt about our company’s

ability to continue as a going concern for 12 months from the balance sheet date as of June 30, 2025.

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 our class B common stock.

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 consolidated financial statements do not include any adjustments

to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.

The accompanying consolidated financial statements

have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities

in the normal course of business.

Summary of Cash Flow

The following table provides detailed information

about our net cash flow for the years ended June 30, 2025 and 2024.

Years Ended June 30,

our recent offerings described below, management believes that currently available resources will not be sufficient to fund our planned

capital 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 consolidated financial statements.

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 our 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 consolidated financial

statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should

we be unable to continue as a going concern.

accompanying consolidated financial statements have been prepared on a going concern basis under which our company is expected to be able

to realize its assets and satisfy its liabilities in the normal course of business.

following table provides detailed information about our net cash flow for the years ended June 30, 2026 and 2025.

Ended June 30,

Net cash used in operating activities

$ (2,337,659 )

$ (1,547,880 )

Net cash used in investing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net cash provided by financing

Effect of exchange rate changes

on cash and cash equivalents

Net increase (decrease) in cash

1 unchanged sentence

Cash at end of year

Net cash used in operating activities was $2,337,659

for the year ended June 30, 2025, as compared to $1,547,880 for the year ended June 30, 2024.

For the year ended June 30, 2025, our net

loss of $6,742,275, offset by non-cash stock based compensation of $3,203,230, were the primary drivers of net cash used in operating

For the year ended June 30, 2024, our net loss of $2,281,741, offset by non-cash stock based compensation of $670,958, were

the primary drivers of net cash used in operating activities.

Net cash used in investing activities was $614,181

for the year ended June 30, 2025, as compared to $10,438 for the year ended June 30, 2024.

The net cash used in investing activities for

the year ended June 30, 2025 consisted of $581,792 cash used in the acquisition of the assets of Sanzonate and purchases of property and

equipment of $32,389, while the net cash used investing activities for the year ended June 30, 2024 consisted entirely of purchases of

property and equipment.

Net cash provided by financing activities was

$2,374,967 for the year ended June 30, 2025, as compared to $3,181,735 for the year ended June 30, 2024.

Net cash provided by financing

activities for the year ended June 30, 2025 consisted of proceeds from the issuance of promissory notes and warrants of $1,510,000, proceeds

from the issuance of original issue discount notes of $500,000, proceeds from the exercise of warrants of $403,171 and proceeds from related

party loans of $332,193, offset by payments of notes payable of $316,920 and payments for deferred offering costs of $53,477, while net

cash provided by financing activities for the year ended June 30, 2024 consisted of proceeds from the issuance of class B common stock

pursuant to the initial public offering of $4,233,875 (net of offering costs) and proceeds from the issuance of convertible notes of $225,000,

offset by payments for deferred offering costs of $587,573, repayments of notes of $480,667 and repayments of related party loans of $208,900.

Please see Notes 11 and 12 to the accompanying

consolidated financial statements for a description of the terms of our outstanding debt.

Contractual Obligations

Our principal commitments consist mostly of obligations

under the loans described in Notes 11 and 12 to the accompanying consolidated financial statements.

We also have a non-cancellable operating

lease commitment for our office facility expiring in 2028 as described in Note 16 to the accompanying consolidated financial statements.

Other than the foregoing, as of June 30, 2025, we did not have other long-term debt obligations, capital (finance) lease obligations,

operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position.

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.

Critical Accounting Policies

The following discussion relates to critical accounting

policies for our company.

The preparation of financial statements in conformity with United States generally accepted accounting principles,

or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto,

and related disclosures of commitments and contingencies, if any.

We have identified certain accounting policies that are significant

to the preparation of our financial statements.

These accounting policies are important for an understanding of our financial condition

and results of operation.

Critical accounting policies are those that are most important to the portrayal of our financial condition and

results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make

estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

Certain accounting estimates

are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting

the estimate may differ significantly from management’s current judgments.

We believe the following critical accounting policies

involve the most significant estimates and judgments used in the preparation of our financial statements:

Revenue Recognition .

revenues from sales of our products and recognize revenue as control of the products is transferred to customers, which is generally at

the time of shipment based on the contractual terms with our customers.

We provide customer programs and incentive offerings, including

growth incentives and volume-based incentives.

These customer programs and incentives are considered variable consideration.

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 our volume-based incentives.

This determination

is updated every reporting period.

For the years ended June 30, 2025 and 2024, customer growth and volume-based incentives were minimal.

Certain product sales include a 2-year manufacturer’s warranty that provides the customer with assurance that the product performs

Such warranties are assurance-type warranties and are accounted for as contingencies under ASC 460-10.

Asset Acquisitions .

of assets that do not meet the definition of a business are accounted for using the cost accumulation and allocation model.

The cost accumulation

and allocation model requires us to measure the assets acquired based on their cost, which is then allocated to the assets on a relative

fair value basis.

The cost of the assets includes direct acquisition-related costs such as fees paid to external advisors, attorneys,

and accountants.

When the cost of the acquired assets is greater than the fair value of the group, the excess cost is allocated to the

nonfinancial assets acquired.

Contingent consideration included in an asset acquisition is first assessed as to whether it qualifies as

a derivative instrument.

If it does, we would measure the contingent consideration at fair value with changes in fair value reported in

If the contingent consideration is not a derivative instrument, we will recognize the contingent consideration when it is probable

and estimable and subsequent changes are recorded as adjustments to the carrying amount of the assets acquired.

Determining the fair value

of assets acquired, for purposes of allocating cost based on their relative fair values, requires management to use significant judgment

and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection

of comparable companies.

Estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and

unpredictable and, as a result, actual results may differ from those estimates.

Intangible Assets .

Intangible assets

primarily consist of existing technology, distribution agreements, licenses, and trademarks obtained as a result of the acquisitions on

October 17, 2022 and April 15, 2025.

Intangible assets with definite lives are amortized based on their pattern of economic benefit over

their estimated useful lives and reviewed periodically for impairment.

cash used in operating activities was $18,157,390 for the year ended June 30, 2026, as compared to $2,337,659 for the year ended June

For the year ended June 30, 2026, our net loss of $174,160,864, offset by a change in fair value of digital assets of $116,318,363,

non-cash professional fees of $26,482,428, stock-based compensation of $9,227,013, goodwill impairment of $2,237,910 and intangibles impairment

of $1,748,969, were the primary drivers of net cash used in operating activities.

For the year ended June 30, 2025, our net loss of $6,742,275,

offset by non-cash stock-based compensation of $3,203,230, were the primary drivers of net cash used in operating activities.

cash used in investing activities was $130,274,845 for the year ended June 30, 2026, as compared to $614,181 for the year ended June 30,

The net cash used in investing activities for the year ended June 30, 2026 consisted of net purchases of digital assets of $148,605,650

and purchases of property and equipment of $37,555, offset by the sale of digital assets of $18,368,360, while the net cash used investing

activities for the year ended June 30, 2025 consisted of $581,792 cash used in the acquisition of the assets of Sanzonate and purchases

of property and equipment of $32,389.

cash provided by financing activities was $162,383,965 for the year ended June 30, 2026, as compared to $2,374,967 for the year ended

June 30, 2025.

Net cash provided by financing activities for the year ended June 30, 2026 consisted of proceeds from the private placement

described below of $137,907,255, proceeds from the Sales Agreement described below of $27,270,267, 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 $1,078,967, funds provided for

a note receivable of $1,000,000 and repayments of related party loans of $425,241, while net cash provided by financing activities for

the year ended June 30, 2025 consisted of proceeds from the issuance of promissory notes and warrants of $1,510,000, proceeds from the

issuance of original issue discount notes of $500,000, proceeds from the exercise of warrants of $403,171 and proceeds from related party

loans of $332,193, offset by payments of notes payable of $316,920 and payments for deferred offering costs of $53,477.

August 29, 2025, we entered into an amended and restated sales agreement, or the Prior Sales Agreement, with Maxim Group LLC and Curvature

Securities LLC, or the Prior Sales Agents, pursuant to which we could, 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 Prior

Sales Agents up to a maximum aggregate amount of $1,150,000,000 of shares of common stock.

During the year ended June 30, 2026,

we issued an aggregate of 10,915,474 shares of common stock under the Prior Sales Agreement for gross proceeds of $28,111,924 and net

proceeds of approximately $27,270,267.

In May 2026, the Prior Sales Agreement was terminated, and the Company entered into a new sales

agreement with Cantor Fitzgerald & Co., and Curvature Securities LLC, or the Sales Agents, pursuant to which we may offer and sell

shares of common stock from time to time through the Sales Agents, acting as agent for up to $750,000,000 of shares of common stock.

September 5, 2025, we completed an offering of pre-funded warrants to purchase an aggregate of 175,000,420 shares of 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 was to be used for working capital and general corporate purposes, with the balance of the net proceeds used

to acquire Dogecoin.

The Company sold its Dogecoin holdings on July 20, 2026 and allocated the cash proceeds to the AI Critical Infrastructure.

As of June 30, 2026, none of our cash is classified as restricted.

see Notes 14 and 15 to the accompanying consolidated financial statements for a description of the terms of our outstanding debt.

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 common stock, cash, or Dogecoin and shall be pro-rated for

partial periods.

These agreements were terminated on February 27, 2026.

November 17, 2025, we entered into a strategic advisor agreement with Dogecoin Ventures LLC (which, for the avoidance of doubt, is not

related to the Asset Manager), pursuant to which we engaged Dogecoin Ventures LLC to provide certain advisory services relating to our

digital asset treasury business in exchange for, among other things, a monthly advisory fee of $83,333.

This agreement was terminated

on February 27, 2026.

other principal commitments consist mostly of obligations under the loans described in Note 20 to our audited consolidated financial statements.

We also had a non-cancellable operating lease commitment for our office facility expiring in 2028 as described in Note 20 to the audited

consolidated financial statements.

than the foregoing, at June 30, 2026, 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.

Sheet Arrangements

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.

Accounting Policies

following discussion relates to critical accounting policies for our company.

The preparation of financial statements in conformity with

United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments

that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any.

identified certain accounting policies that are significant to the preparation of our financial statements.

These accounting policies

are important for an understanding of our financial condition and results of operation.

Critical accounting policies are those that are

most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective,

or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may

change in subsequent periods.

Certain accounting estimates are particularly sensitive because of their significance to financial statements

and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of

our financial statements:

Recognition .

We generate revenues from sales of our products and recognize revenue as control of the products is transferred

to customers, which is generally at the time of shipment based on the contractual terms with our customers.

We provide customer programs

and incentive offerings, including growth incentives and volume-based incentives.

These customer programs and incentives are considered

variable consideration.

We include 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 our

volume-based incentives.

This determination is updated every reporting period.

For the years ended June 30, 2026 and 2025, 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.

Acquisitions .

Acquisitions of assets that do not meet the definition of a business are accounted for using the cost accumulation

and allocation model.

The cost accumulation and allocation model requires us to measure the assets acquired based on their cost, which

is then allocated to the assets on a relative fair value basis.

The cost of the assets includes direct acquisition-related costs such

as fees paid to external advisors, attorneys, and accountants.

When the cost of the acquired assets is greater than the fair value of

the group, the excess cost is allocated to the nonfinancial assets acquired.

Contingent consideration included in an asset acquisition

is first assessed as to whether it qualifies as a derivative instrument.

If it does, we would measure the contingent consideration at

fair value with changes in fair value reported in earnings.

If the contingent consideration is not a derivative instrument, we will recognize

the contingent consideration when it is probable and estimable and subsequent changes are recorded as adjustments to the carrying amount

of the assets acquired.

Determining the fair value of assets acquired, for purposes of allocating cost based on their relative fair values,

requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future

revenue and cash flows, discount rates, and selection of comparable companies.

Estimates of fair value are based on assumptions believed

to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from those estimates.

Intangible assets primarily consisted of existing technology, customer relationships, and trademarks obtained as a

result of the acquisition on October 17, 2022.

Intangible assets with definite lives are amortized based on their pattern of economic

benefit over their estimated useful lives and reviewed periodically for impairment.

Our trademarks are deemed to have an indefinite life.

The estimated

useful life of the acquired technology is 15 years while the estimated useful lives of the distribution agreements and licenses is 5 years.

Impairment of Long-Lived Assets .

The estimated useful life of the acquired technology is 15 years while the estimated useful life of the customer relationships is 5 years.

In connection with the proposed sale of the CleanCore segment, we have fully impaired our intangible assets as of June 30, 2026.

12 for additional details.

During the year ended June 30, 2025, as a result of the analysis, we recognized an impairment loss of $261,250

on our customer relationship intangible asset.

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.

As a result of the

analysis, we recognized an impairment loss of $261,250 in general and administrative expenses on our customer relationship intangible

asset during the year ended June 30, 2025.

No other long-lived assets were determined to be impaired for the years ended June 30, 2025

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

connection with the proposed sale of the CleanCore segment, we fully impaired our intangible assets during the year ended June 30, 2026.

We compared the estimated future undiscounted cash flows of property and equipment noting that the undiscounted future cash flows were

greater than the carrying amount.

Therefore, we concluded that property and equipment is not impaired for the years ended June 30, 2026

See Note 12 for additional details.

Subsequent evaluations will be performed annually on June 30, per our policy.

Impairment of Goodwill .

goodwill for impairment annually, as of June 30, or more frequently when indicators of impairment exist.

We consider 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 we conclude that

it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative impairment

In performing the quantitative impairment test, we compare 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, we will

recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value.

We performed our

annual evaluation of goodwill on June 30, 2025.

Based on the analysis, we did not recognize an impairment loss during the year ended June

of Goodwill .

We evaluate goodwill for impairment annually, as of June 30, or more frequently when indicators of impairment

We consider 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 we conclude that it is more likely than not that the fair value of the reporting unit is less than its carrying

amount, we perform a quantitative impairment test.

In performing the quantitative impairment test, we compare 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, we will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s

connection with the proposed sale of the CleanCore segment, we obtained a third party valuation of the business and performed a quantitative

impairment test.

The test indicated that the fair value of the reporting unit was less than the carrying amount.

As a result, we fully

impaired our goodwill balance as of June 30, 2026.

Subsequent evaluations will be performed annually on June 30, per our policy.

Stock-based Compensation .

expense is recognized for all share-based payments to employees and non-employees, including stock options, restricted stock awards, and

warrants, in the statements of operation based on the fair value of the awards that are granted.

As necessary, our stock price at the

date of grant was estimated using an acceptable valuation technique such as the probability-weighted expected return model.

The 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 our 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.

We account for forfeitures

of stock-based awards as they occur.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The full text of our audited consolidated financial statements begins

on page F-1 of this annual report.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets

(“ASU 2023-08”).

ASU 2023-08 requires in-scope crypto assets (including the Company’s dogecoin holdings) to be measured

at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized

in the statement of operations each reporting period.

ASU 2023-08 also requires certain interim and annual disclosures for crypto assets

within the scope of the standard.

The Company adopted this guidance effective September 2025.

Company accounts for its digital assets, which were comprised solely of Dogecoin, as indefinite-lived intangible assets in accordance

with ASC 350-60 (Intangibles – Goodwill and Other – Crypto Assets).

The Company had ownership and control over its digital

assets and uses well-known crypto custodians to secure it.

Company’s digital assets were initially recorded at cost, with the cost basis determined using the weighted average cost (“WAC”)

Upon disposal, the cost basis of the digital assets sold is determined using the WAC method.

assets were measured at fair value at each reporting period.

The Company determined the fair value of Dogecoin in accordance with ASC

820 (Fair Value Measurement), based on the period-end quoted (unadjusted) prices in the Company’s principal market.

Changes in fair

value are recognized at each reporting date within the change in fair value of digital assets line item in the statement of operations.

Upon disposal, the net cash received was subtracted from the cost basis of assets sold to determine the change in fair value of digital

assets for the disposed assets.

vast majority of the Company’s assets were concentrated in its Dogecoin holdings until all Dogecoin tokens were sold on July 20,

Dogecoin is a digital asset, which is a novel asset class that is subject to significant legal, commercial, regulatory and technical

Holding Dogecoin did not generate any cash flows and involves custodial fees and other costs.

Additionally, the price of

Dogecoin has historically experienced significant price volatility, and a significant decrease in the price of Dogecoin adversely affected

the Company’s financial condition and results of operations.

The Company’s strategy of acquiring and holding Dogecoin also

exposed it to counterparty risks with respect to the custody of its Dogecoin, cybersecurity risks, and other risks inherent to holding

a digital asset.

In particular, the Company was subject to the risk that, if its private keys with respect to its digital assets were

lost or destroyed or other similar circumstances or events occur, the Company may have lost some or all of its digital assets, which could

materially adversely affect the Company’s financial condition and results of operations.

Compensation .

Compensation expense is recognized for all share-based payments to employees and non-employees, including stock

options, restricted stock awards, and warrants, in the statements of operation based on the fair value of the awards that are granted.

As necessary, our stock price at the date of grant was estimated using an acceptable valuation technique such as the probability-weighted

expected return model.

The fair value of stock options and warrants are estimated at the date of grant using the Black-Scholes option-pricing

The fair value of restricted stock awards is based on the fair market value of our common stock on the date of grant.

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

We account for forfeitures of stock-based awards as they occur.

QUANTITATIVE AND

QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA.

full text of our audited consolidated financial statements begins on page F-1 of this annual report.

CHANGES IN AND

DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis