CleanCore Solutions, Inc.
For the period ended Jun 30, 2025. Filed Aug 22, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Aug 22, 2025
ZONE$3.08-14.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-06-30; filed 2024-09-20.
0001213900-24-080420
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-06-30; filed 2025-08-22.
0001213900-25-079975
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 46 current paragraphs.
22 unchanged; 19 reworded; 5 added; 22 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Revenue. 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.
Current report
Debt
Current report
Please see Notes 11 and 12 to the accompanying consolidated financial statements for a description of the terms of our outstanding debt.
Current report
Asset 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.
Current report
Impairment of Long-Lived Assets. Long-lived assets consist primarily of property and equipment and intangible assets. Long-lived assets are tested for impairment when events and circumstances indicate the assets might be impaired by first comparing the estimated future undiscounted cash flows of the asset or asset group to the carrying value. If the carrying value exceeds the estimated future undiscounted cash flows, an impairment loss is recognized based on the amount that the carrying value exceeds the fair value of the asset or asset group. 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 and 2024. Subsequent evaluations will be performed annually on June 30, per our policy.
Removed paragraphs (22)
Previous report
All periods presented on or prior to October 16, 2022 represent the operations of CleanCore, TetraClean and Food Safety, our predecessors companies, and all references to “predecessor” refer to the combined financial position and results of operations of CleanCore, TetraClean and Food Safety on and before such date. References to “successor” refer to the financial position and results of operations of our company subsequent to October 16, 2022.
Previous report
Recent Developments
Previous report
Product Development Proposal
Previous report
On August 20, 2024, we entered into a product development proposal with E-Business International Incorporation, pursuant to which Business International Incorporation, an engineering company, will look for more efficient ways to assemble some of our units, and will then take over assembly of certain products using overseas facilities.
Previous report
Distributor Agreement
Previous report
On September 10, 2024, we entered into a sole distributorship agreement with Consensus B.V., pursuant to which Consensus B.V. will act as sole distributor of our products in the European Union, United Kingdom, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. The agreement is for a term of five years and may be terminated by either party upon not less than four months’ notice; provided that either party may terminate the agreement immediately upon a substantial breach of the agreement, as more particularly described in the agreement.
Previous report
We believe that reviewing our operating results for the year ended June 30, 2023, by combining the results of the successor period (October 17, 2022 to June 30, 2023) and the predecessor period (July 1, 2022 to October 16, 2022) is more useful in discussing our overall operating performance compared to the results of the year ended June 30, 2024 (successor). We do not see any potential risks associated with utilizing this combined presentation.
Previous report
Revenue. We generate revenue from sales of our cleaning products. Our revenue decreased by $836,383, or 34.26%, to $1,604,973 for the year ended June 30, 2024 from $2,441,356 for the year ended June 30, 2023. This reduction in revenue was primarily due to the fact that our previous largest customer decided to make its own units instead of ordering from us commencing at the start of calendar year 2023. Revenue to this customer declined by 96% during the fiscal year, which represented over 80% of total revenue decline. The remaining decline is the result of management’s strategy of shifting focus to selling at higher margins direct to end users instead of selling through regional distribution groups at lower margins.
Previous report
Initial Public Offering
Previous report
On April 25, 2024, we entered into an underwriting agreement with Boustead Securities, LLC, as the representative of the several underwriters named on Schedule 1 thereto, relating to our initial public offering of class B common stock. Under the underwriting agreement, we agreed to sell 1,250,000 shares of class B common stock to the underwriters, at a purchase price per share of $3.72 (the offering price to the public of $4.00 per share of class B common stock minus the underwriters’ discount), and also agreed to grant to the underwriters a 45-day option to purchase up to 187,500 additional shares of class B common stock, at a purchase price of $3.72, pursuant to our registration statement on Form S-1 (File No. 333-274928) under the Securities Act.
Previous report
On April 30, 2024, the closing of the initial public offering was completed. We sold 1,250,000 shares of class B common stock for total gross proceeds of $5,000,000. After deducting the underwriting commission and expenses, we received net proceeds of approximately $4,239,500.
Previous report
On April 30, 2024, we also issued a class B common stock purchase warrant to the representative for the purchase of 87,500 shares of class B common stock at an exercise price of $5.00, subject to adjustments. The warrant will be exercisable at any time and from time to time, in whole or in part, during the period commencing on April 30, 2024 and ending on April 25, 2029 and may be exercised on a cashless basis under certain circumstances.
Previous report
Private Placement
Previous report
Between October 14, 2022 and November 29, 2022, we issued an aggregate of 660,921 shares of class B common stock for total gross proceeds of $1,150,000 and net proceeds of approximately $1,035,000 in a private placement transaction.
Previous report
Promissory Notes
Previous report
On October 17, 2022, we issued a promissory note in the principal amount of $3,000,000 to Burlington, which amended by an extension agreement dated September 13, 2023, a second extension agreement dated December 17, 2023, a third extension agreement dated April 30, 2024, and a fourth extension agreement dated May 20, 2024. The note bore interest at a rate of 7% per annum; provided that such interest rate increased to 10% per annum on September 13, 2023. The note was due on 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.
Previous report
On May 31, 2024, Burlington and Walker Water LLC, or WW, entered into an allonge, assignment and agreement, or the Assignment Agreement, pursuant to which Burlington agreed to transfer $633,840 of the note to WW. The Assignment Agreement also provided that we would make a payment of $900,000 to Burlington on May 31, 2024, of which $480,667 will reduce the principal amount of the note, and $419,333 will pay outstanding interest. On May 31, 2024, we issued an amended and restated promissory note to Burlington to reduce the outstanding principal of the note due to Burlington’s assignment of a portion of the note to WW and due to the foregoing payment. The 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 note may be prepaid at any time with no pre-payment penalty and contains customary events of default for a note of this type. As of June 30, 2024, the outstanding principal balance of this note is $1,885,493 and it has accrued interest of $13,673.
Previous report
Pursuant to the Assignment Agreement, we also issued a new promissory note to WW in the principal amount of $633,840. The note accrues interest at 8.5% per annum from October 17, 2022 (the date of the original note), which shall increase to 10% upon an event of default and is due on December 31, 2024. The note may be prepaid at any time with no pre-payment penalty and contains customary events of default for a note of this type. As of June 30, 2024, the outstanding principal balance of this note is $633,840 and it has accrued interest of $4,490.
Previous report
Both notes are unsecured and arepari passu in right of payment to any other unsecured indebtedness incurred in favor of any third party.
Previous report
Related Party Revolving Loan
Previous report
On March 26, 2024, we entered into a loan agreement with Clayton Adams, a significant stockholder at such time and our current Chief Executive Officer, pursuant to which we 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 us upon request during the period commencing on the effective date of the registration statement relating to our initial public offering (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%. We may prepay the note at any time without penalty or premium. The note is unsecured and contains customary events of default for a loan of this type. As of June 30, 2024, no advances have been made and the principal amount of this note is $0.
Previous report
Business Combinations. Business combinations are accounted for using the acquisition method. The fair value of total purchase consideration is allocated to the fair values of identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount being classified as goodwill. All assets, liabilities and contingent liabilities acquired or assumed in a business combination are recorded at their fair values at the date of acquisition. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies. Estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from those estimates. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. At the conclusion of the measurement period, any subsequent adjustments are reflected in the statements of operations. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in our statements of operations.
Reworded paragraphs (19)
Previous wording
Following are the combined results for the years ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenues.
Current wording
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.
Previous wording
Cost of sales. Our cost of sales consists of raw materials, components and labor. Our cost of sales decreased by $901,980, or 52.71%, to $809,161 for the year ended June 30, 2024 from $1,711,141 for the year ended June 30, 2023. As a percentage of revenue, cost of sales decreased from 70.09% for the year ended June 30, 2023 to 50.42% for the year ended June 30, 2024. This decrease was primarily due to our strategy of selling direct to end users instead of selling via regional distribution groups.
Current wording
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.
Previous wording
Gross profit. As a result of the foregoing, our gross profit increased by $65,597, or 8.98%, to $795,812 for the year ended June 30, 2024 from $730,215 for the year ended June 30, 2023. As a percentage of revenue, gross profit increased from 29.91% for the year ended June 30, 2023 to 49.58% for the year ended June 30, 2024.
Current wording
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 year ended June 30, 2025.
Previous wording
General and administrative expenses.* *Our general and administrative expenses consist primarily of personnel expenses, including employee salaries and bonuses plus related payroll taxes, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our general and administrative expenses decreased by $3,174,016, or 56.22%, to $2,471,480 for the year ended June 30, 2024 from $5,645,496 for the year ended June 30, 2023. As a percentage of revenue, our general and administrative expenses decreased from 231.24% for the year ended June 30, 2023 to 153.99% for the year ended June 30, 2024. This decrease was primarily due to a reduction in stock option expense.
Current wording
General and administrative expenses.* *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. 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. The 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.
Previous wording
Advertising expenses.* *Our advertising expenses consist of vendor trade shows and various trade publications. Our advertising expenses increased by $96,442, or 492.93%, to $116,007 for the year ended June 30, 2024 from $19,565 for the year ended June 30, 2023. As a percentage of revenue, our advertising expenses increased from 0.80% for the year ended June 30, 2023 to 7.23% for the year ended June 30, 2024. Such an increase was primarily due to an increase in trade show sponsorship expenses.
Current wording
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.
Previous wording
Depreciation and amortization expense.* *We incurred depreciation and amortization expense of $155,059, or 9.66% of revenue, for the year ended June 30, 2024, as compared to $115,564, or 4.73% of revenue, for the year ended June 30, 2023.
Current wording
Depreciation and amortization expense.* *We 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.
Previous wording
Interest expense.* *We incurred interest expense of $335,008, or 20.87% of revenue, for the year ended June 30, 2024, as compared to $292,861, or 12.00% of revenue, for the year ended June 30, 2023.
Current wording
Interest expense, net.* *We 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.
Previous wording
Net loss.* *As a result of the cumulative effect of the factors described above, we had a net loss of $2,281,742 for the year ended June 30, 2024, as compared to $5,343,271 for the year ended June 30, 2023, a decrease of $3,061,529, or 57.30%.
Current wording
Net loss.* *As a result 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%.
Previous wording
Our company has incurred losses and negative cash flows from operations. From acquisition through June 30, 2024, we have financed our operations primarily through private investor funding and an initial public offering. As of June 30, 2024, we had cash and cash equivalents of $2,016,611, a net loss for the year ended June 30, 2024 of $2,281,742 and cash used in operating activities of $1,547,880.
Current wording
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. For the year ended June 30, 2025, we had a net loss of $6,742,275 and cash used in operating activities of $2,337,659.
Previous wording
Despite the initial public offering 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.
Current wording
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.
Previous wording
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. Thes 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.
Current wording
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. 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.
Previous wording
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.
Current wording
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.
Previous wording
Net cash used in operating activities was $1,547,880 for the year ended June 30, 2024, as compared to $354,121 for the year ended June 30, 2023. For the year ended June 30, 2024, our net loss of $2,281,741, offset by stock-based compensation of $670,958, were the primary drivers of net cash used in operating activities. For the year ended June 30, 2023, our net loss of $5,343,271, offset by stock-based compensation of $4,119,321, were the primary drivers of the net cash used in operating activities.
Current wording
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 activities. 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.
Previous wording
Net cash used in investing activities was $10,438 for the year ended June 30, 2024, as compared to $2,009,142 for the year ended June 30, 2023. The net cash used in investing activities for the year ended June 30, 2024 consisted entirely of purchases of property and equipment, while the net cash used in investing activities for the year ended June 30, 2023 consisted of cash used in connection with the acquisition of the assets of CleanCore LLC, TetraClean and Food Safety of $2,007,882 and purchases of property and equipment of $1,260.
Current wording
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.
Previous wording
Net cash provided by financing activities was $3,181,735 for the year ended June 30, 2024, as compared to $2,506,102 for the year ended June 30, 2023. 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), proceeds from the issuance of convertible notes of $225,000, offset by payments for deferred offering costs of $587,573, repayment of notes of $480,667 and repayment of related party loans of $208,900, while net cash provided by financing activities for the year ended June 30, 2023 consisted of proceeds from the issuance of class B common stock of $1,650,000, proceeds from the issuance of series seed preferred stock of $1,000,000, proceeds from related party loans of $373,817 and proceeds from the issuance of class A common stock of $100, offset by repayments of related party loans of $288,861, payments for deferred operating costs of $227,676 and repayments of long term debt of $1,278.
Current wording
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.
Previous wording
Our principal commitments consist mostly of obligations under the loans described above. Other than indicated above, at June 30, 2024, 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.
Current wording
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.
Previous wording
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 U.S. 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:
Current wording
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:
Previous wording
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. Our 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.
Current wording
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. 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.
Previous wording
Stock-based Compensation. Compensation expense is recognized for all share-based payments to employees and nonemployees, including stock options, restricted stock awards, and warrants, in the statements of operation based on the fair value of the awards that are granted. As necessary, 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.
Current wording
Stock-based 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 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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The following table sets forth key components of our results of operations for the period from July 1, 2022 to October 16, 2022 (Predecessor), from October 17, 2022 to June 30, 2023 (Successor), and for the year ended June 30, 2024 (Successor).