10-Q: CleanCore Q1 Loss Widens Amid Dogecoin Strategy Shift

CleanCore Solutions, Inc. reported a significantly widened net loss in Q1 2026, driven by increased operating expenses and an unrealized loss on its new Dogecoin treasury strategy, despite strong revenue growth in its cleaning solutions segment.

Summary

• Net loss significantly increased to $(13,367,699) for the three months ended September 30, 2025, compared to $(856,082) for the same period in 2024.
• Revenue grew by 147.93% to $904,699 for the three months ended September 30, 2025, primarily due to sales from a new customer, Kellermeyer Bergensons Services, LLC (KBS).
• Gross profit increased by 189.20% to $536,470, with the gross profit margin improving to 59.3% from 50.84% year-over-year.
• General and administrative expenses surged by 841.39% to $8,625,133, mainly driven by increases in professional and consulting fees, stock compensation expense, and payroll.
• Adopted a digital asset treasury strategy focused on Dogecoin on September 5, 2025, resulting in a $4,997,173 change in fair value of digital assets (unrealized loss) for the quarter.
• Cash and cash equivalents increased to $12,914,595 as of September 30, 2025, from $1,460,997 at June 30, 2025, largely due to significant financing activities.
• Management expresses substantial doubt about the company's ability to continue as a going concern for the next 12 months without additional capital.
• Completed an offering of pre-funded warrants for aggregate gross proceeds of $175,000,420 ($164,257,145 net proceeds), with a significant portion used to acquire Dogecoin.
• Issued 6,533,723 shares of Class B common stock under an at-the-market (ATM) offering for net proceeds of approximately $21,357,562.
• Acquired specified assets of Sanzonate Europe Ltd. on April 15, 2025, to expand presence in the European Union.
• Converted various promissory notes and accrued interest totaling $4,089,692 into 1,871,681 shares of Class B common stock during the quarter.
• Subsequent to quarter-end, purchased an additional 29,443,153 units of Dogecoin for $6,106,986 and reported an unrealized loss of $32,400,235 on digital assets as of November 12, 2025.

Sentiment

Score: 2

Explanation: While the core cleaning business shows positive operational improvements (revenue growth, gross margin), the overall financial performance is severely negative due to massive increases in G&A expenses and significant unrealized losses from the highly speculative digital asset treasury strategy. The explicit 'going concern' doubt and reliance on future capital raises underscore a precarious financial position.

Positives

• Strong revenue growth of 147.93% in the CleanCore segment, driven by a new major customer (KBS), indicating market acceptance and expansion of cleaning solutions.
• Improved gross profit margin from 50.84% to 59.3% in the CleanCore segment, reflecting better efficiencies, cost optimization, and technological improvements.
• Successful capital raises through pre-funded warrants ($164.26 million net) and an at-the-market offering ($21.36 million net), significantly bolstering the cash position to $12.91 million.
• Strategic acquisition of Sanzonate Europe Ltd. assets, including an EOTA license and distribution agreements, to expand the company's presence in the European Union market.
• Possession of patented nanobubble technology for aqueous ozone cleaning products, which is believed to be highly effective.

Negatives

• Net loss widened dramatically by 1,461.50% to $(13,367,699) for the quarter, indicating a significant deterioration in overall profitability.
• General and administrative expenses surged by 841.39% to $8,625,133, largely due to increased professional fees, stock compensation, and headcount, significantly outpacing revenue growth.
• Incurred a substantial unrealized loss of $4,997,173 on digital assets (Dogecoin) during the quarter, with further significant losses of $32,400,235 reported post-quarter, highlighting the volatility and risk of the new treasury strategy.
• Management explicitly states substantial doubt about the company's ability to continue as a going concern for the next 12 months without securing additional capital.
• Heavy reliance on future capital raises through equity and/or debt financing to fund operations and implement the business plan, which could lead to significant stockholder dilution or restrictive debt covenants.
• High concentration of assets in Dogecoin, a novel asset class subject to significant legal, commercial, regulatory, and technical uncertainty, and historical price volatility.
• Identified material weaknesses in internal control over financial reporting, which could adversely affect financial reporting accuracy and timing.

Risks

• Substantial doubt about the company's ability to continue as a going concern for the next 12 months due to incurred losses and negative cash flows from operations.
• Dependence on raising additional capital through equity and/or debt financing, with no assurance of success, which could lead to significant stockholder dilution or restrictive debt covenants.
• High volatility and speculative nature of Dogecoin market value, which directly impacts the financial performance of the Treasury segment.
• Exposure to counterparty risks with respect to the custody of digital assets and cybersecurity risks inherent to holding digital assets.
• Risk of losing digital assets if private keys are lost or destroyed, or due to other similar circumstances or events.
• General risks similar to other early-stage companies, including profitability challenges, the need for additional financing, ability to obtain regulatory approval, significant competition, and dependence on key individuals.
• Material weaknesses in internal control over financial reporting, which could adversely affect the accuracy and timing of financial reporting and potentially lead to restatements.

Future Outlook

Management believes that currently available resources will not be sufficient to fund planned expenditures over the next 12 months, necessitating additional capital through equity and/or debt financing. The company aims to expand its cleaning solutions distributor network, improve production processes, and prove product effectiveness in various commercial environments. The multiyear digital asset treasury strategy focused on Dogecoin will continue, with its performance subject to market value and trading volume fluctuations.

Management Comments

• "Management believes that currently available resources will not be sufficient to fund the Company's planned expenditures over the next 12 months."
• "These factors, individually and collectively, indicate that a material uncertainty exists that raises substantial doubt about the Company's ability to continue as a going concern for 12 months from the date of issuance of these financial statements."
• "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."

Industry Context

CleanCore Solutions operates in two distinct and largely unrelated segments: the development and production of aqueous ozone cleaning products and a digital asset treasury focused on Dogecoin. The cleaning solutions segment shows positive operational momentum with significant revenue growth and improved gross margins, indicating potential for its patented nanobubble technology in the janitorial, sanitation, and industrial cleaning markets. This aligns with a broader industry trend towards more sustainable and chemical-free cleaning solutions. However, the company's recent pivot to a substantial digital asset treasury strategy is highly unusual for a manufacturing firm and introduces significant exposure to the volatile and speculative cryptocurrency market, a novel asset class with inherent legal, commercial, regulatory, and technical uncertainties. This dual strategy creates a unique risk-reward profile, diverging significantly from typical industry trends for cleaning product manufacturers.

Comparison to Industry Standards

• The 147.93% revenue growth in the CleanCore segment is robust and suggests strong market penetration or demand for its cleaning products, potentially outperforming many traditional cleaning solution providers.
• The improvement in gross profit margin to 59.3% indicates enhanced operational efficiency and cost management within the cleaning solutions business, which is a positive sign compared to industry averages that can vary widely but often fall in the 30-60% range for specialized products.
• The adoption of a digital asset treasury strategy, with a significant portion of assets concentrated in Dogecoin, is highly atypical for a company primarily engaged in manufacturing cleaning products. This strategy introduces a level of market volatility and speculative risk not commonly found in comparable industrial or consumer goods companies.
• The substantial net loss and explicit 'going concern' warning are significantly worse than industry standards for established companies and indicate severe financial instability, despite the operational improvements in the core business.

Management Changes

Corporate Governance

Legal Proceedings

• Currently not aware of any legal proceedings or claims that are believed to have a material adverse effect on the business, financial condition, or operating results.

Related Party Transactions

• Amount due to Clayton Adams (CEO) for operational expenses was $29,071 as of September 30, 2025.
• Paid Birddog Capital, LLC (owned by Clayton Adams) $175,000 during the quarter pursuant to an amendment to a consulting agreement, in addition to a monthly fee of $22,000.
• An outstanding payable balance of $105,000 to Nebraska C. Ozone, LLC (a related party) for inventory, with an accrued interest balance of $11,686.
• A revolving credit note with Clayton Adams for up to $500,000, with no advances made as of September 30, 2025.
• An option agreement with Clayton Adams grants him the irrevocable option to direct a spin-off or acquire the 'Legacy Business' (cleaning operations excluding digital assets) at a fair price.
• A promissory note to Gary Hollst (Chief Revenue Officer) was converted into 307,701 shares of Class B common stock on June 2, 2025.
• Promissory notes to Clayton Adams ($304,295 outstanding principal and accrued interest) and Travis Buchanan (President) ($131,053 outstanding principal and accrued interest) were paid in full on September 5, 2025.
• ACME People Company (owned and controlled by Travis Buchanan) participated in a private placement, and its note ($10,217 outstanding principal and accrued interest) was paid in full on September 5, 2025.
• CleanCore Global issued a 7% unsecured promissory note in the principal amount of $475,000 to CleanCore US, which is eliminated in consolidation.

Stakeholder Impact

• Shareholders: Face significant dilution from recent and planned equity raises. Exposed to high volatility and risk due to the Dogecoin treasury strategy. The 'going concern' doubt poses a fundamental risk to their investment.
• Employees: Benefit from increased headcount and stock-based compensation as part of remuneration, but the company's financial instability could create uncertainty.
• Customers (CleanCore Segment): May benefit from continued expansion of product offerings and improved production processes, potentially leading to better product availability and quality.
• Creditors: Some debt has been converted to equity or paid off, but the overall precarious financial health and reliance on future capital raises present ongoing credit risk.
• Management: Key executives have received significant stock awards and new employment agreements, and the CEO has an option agreement regarding the future of the 'Legacy Business', aligning their incentives with company performance and strategic direction.

Next Steps

• Remediate identified material weaknesses in internal control over financial reporting by formalizing processes, strengthening supervisory reviews, hiring additional qualified accounting and finance personnel, and segregating duties.
• Raise additional capital through equity and/or debt financing to fund the business plan and generate sufficient revenue in excess of costs.
• Expand the distributor network for cleaning solutions.
• Improve production processes for cleaning products.
• Continue efforts to prove the effectiveness of products in restaurants, airports, and hotels.
• Manage the multiyear digital asset treasury program focused on Dogecoin.

Key Dates

Recommendation

The company's financial position is highly precarious, marked by a dramatically widened net loss, unsustainable operating expenses, and an explicit 'going concern' warning from management. While the core cleaning business shows promising revenue growth and margin improvement, it is severely overshadowed by the highly speculative and volatile Dogecoin treasury strategy, which has already incurred significant unrealized losses and introduces substantial market risk. The heavy reliance on continuous capital raises, coupled with material weaknesses in internal controls and the potential for massive shareholder dilution, presents an extremely high-risk profile. A seasoned investor would likely view the current financial state and strategic direction as unsustainable and highly unfavorable, warranting an immediate exit.

Keywords

CleanCore Solutions, Dogecoin, digital assets, cryptocurrency treasury, aqueous ozone, nanobubble technology, cleaning products, SEC filing, 10-Q, financial results, net loss, revenue growth, going concern, capital raise, stock compensation, corporate governance, risk factors, sanitation, industrial cleaning, European Union expansion