S-1/A: CleanCore Solutions Files Amendment No. 5 to Form S-1 for Initial Public Offering

CleanCore Solutions, Inc. has filed an amendment to its registration statement for an initial public offering of its Class B common stock, aiming to list on NYSE American under the symbol 'ZONE'.

Summary

• CleanCore Solutions, Inc. has filed Amendment No. 5 to its Form S-1 registration statement for an initial public offering (IPO).
• The company plans to offer 1,250,000 shares of Class B common stock to the public.
• The expected initial public offering price is estimated to be between $4.00 and $6.00 per share.
• CleanCore Solutions intends to list its Class B common stock on the NYSE American under the ticker symbol 'ZONE'.
• The closing of the offering is contingent upon the listing approval.
• The company has granted the underwriters an option to purchase up to 15% of the total number of shares offered to cover over-allotments.
• Boustead Securities, LLC is acting as the representative of the underwriters for the offering.
• The company anticipates net proceeds of approximately $3.76 million from the offering, after deducting underwriting discounts, commissions, and estimated offering expenses, with the intention to use the net proceeds from this offering for the repayment of certain debt, research and development/intellectual property, and for working capital and general corporate purposes.
• CleanCore Solutions is an emerging growth company and will comply with certain reduced public company reporting requirements.
• The company may be deemed a controlled company under NYSE American rules due to significant voting power held by its founders.
• The company specializes in the development and manufacturing of cleaning products that produce pure aqueous ozone for professional, industrial, or home use.
• For the year ended June 30, 2023, the company generated pro forma revenues of $2,441,356 and a net loss of $5,343,271.
• For the six months ended December 31, 2023, the company generated revenues of $584,090 and a net loss of $782,093.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company is pursuing an IPO and operates in a growing market, it has a history of losses and faces significant risks. The company's financial performance in the recent periods has been worse than the previous year.

Positives

• The company has a patented nanobubble technology using aqueous ozone.
• The company is expanding its distributor network.
• The company is improving its manufacturing processes.
• The company is proving the effectiveness of its products in restaurants, airports, and hotels.
• The company's products are environmentally conscious.
• The company's products eliminate the need for harsh chemicals and reduce costs of labor in janitorial services.
• The company's products cause less irritation compared to typical cleaning agents.

Negatives

• The company has incurred losses since its inception.
• The company may continue to experience losses in the future.
• The company will require additional financing to accomplish its business strategy.
• The company cannot accurately predict future revenues or profitability in the emerging market for aqueous ozone technology.
• The company may face significant challenges in obtaining market acceptance of its aqueous ozone cleaning products.
• The company faces significant competition.
• The company operates in new and rapidly changing markets, which makes it difficult to evaluate its future prospects.
• The company's major customers account for a significant portion of its revenue and the loss of any major customer could have a material adverse effect on its results of operations.

Risks

• The company is an early-stage company with a limited operating history.
• The company has incurred losses since its inception, and it may not be able to manage its business on a profitable basis.
• The company will require additional financing to accomplish its business strategy.
• The company cannot accurately predict future revenues or profitability in the emerging market for aqueous ozone technology.
• The company may face significant challenges in obtaining market acceptance of its aqueous ozone cleaning products.
• The company faces significant competition.
• The company operates in new and rapidly changing markets, which makes it difficult to evaluate its future prospects.
• The company's major customers account for a significant portion of its revenue and the loss of any major customer could have a material adverse effect on its results of operations.
• Increased prices for raw materials could increase the company's cost of sales and decrease demand for its products.
• Interruptions in deliveries of raw materials could adversely affect the company's revenue or profitability.
• The company depends on third-party delivery services, for both inbound and outbound shipping.
• If commodity prices such as fuel, plastic and steel increase, the company's margins may be negatively impacted.
• If the company's fulfillment operations are interrupted for any significant period of time or are not sufficient to accommodate increased demand, its sales could decline, and its reputation could be harmed.
• Business interruptions in the company's facilities may affect the distribution of its products and/or the stability of its computer systems.
• The company has historically depended on a limited number of third parties to supply key raw materials to it.
• Quality problems with, and product liability claims in connection with, the company's cleaning products could lead to recalls or safety alerts.
• The company may receive a significant number of warranty claims or its aqueous ozone products may require significant amounts of service after sale.
• The loss of key personnel, an inability to attract and retain additional personnel or difficulties in the integration of new members of the company's management team into the company could affect its ability to successfully grow its business.
• The company will face growing regulatory and compliance requirements in a variety of areas.
• The company is subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution and sale of its products.
• Once the company's class B common stock is listed on NYSE American, there can be no assurance that an active market in which investors can resell their shares of its class B common stock will develop.
• The market price of the company's stock may be highly volatile, and you could lose all or part of your investment.
• The company may not be able to maintain a listing of its class B common stock on NYSE American.
• The structure of the company's common stock has the effect of concentrating voting control with a single stockholder.
• Future issuances of the company's class B common stock or securities convertible into, or exercisable or exchangeable for, its class B common stock could cause the market price of its class B common stock to decline.
• Future issuances of debt securities, which would rank senior to the company's common stock upon its bankruptcy or liquidation, and future issuances of preferred stock, may adversely affect the level of return you may be able to achieve from an investment in its class B common stock.
• Anti-takeover provisions in the company's charter documents and under Nevada law could make an acquisition of the company more difficult.

Future Outlook

The company intends to use the net proceeds from this offering for the repayment of certain debt, research and development/intellectual property, and for working capital and general corporate purposes.

Industry Context

The company operates in the global household cleaning market, the global food service market, the global commercial and residential laundry market, and the global health care market. These markets are expected to grow in the coming years, driven by increasing awareness regarding hygiene among consumers and the growing demand for green cleaning and eco-friendly products.

Comparison to Industry Standards

• The global service cleaning market is expected to reach $92.69 billion by 2027, rising at a 7.80% compound annual growth rate, or CAGR, during the forecast period, according to Report Linker.
• The global household cleaners market size was valued at $33.8 billion in 2021 and is expected to expand at a CAGR of 4.9% from 2022 to 2028.
• The global industrial cleaning equipment market amassed revenue of $9.12 billion in 2021, and is expected to hit $14.14 billion by 2031, registering a CAGR of 4.3% from 2022 to 2031, according to a report published by Allied Market Research.
• The global household green cleaning products market is expected to grow to $27.83 at a CAGR of 6.50% from 2017 to 2024, according to a market report from Research and Markets.
• The U.S. food and beverage industry cleaning services market is expected to grow at a CAGR of approximately 7% from 2020 to 2026, according to an article by Arizton Advisory and Intelligence.

Related Party Transactions

• On October 4, 2022, the company issued promissory notes to Matthew Atkinson and Clayton Adams for $104,450 each.
• On July 27, 2023, the company agreed to purchase approximately $105,607 worth of inventory from Nebraska C. Ozone, LLC, a related party business owned by Lisa Roskens.
• On September 13, 2023, the company signed an extension agreement with Burlington Capital, LLC, a significant stockholder, for the promissory note.
• On December 17, 2023, the company signed a second extension agreement with Burlington Capital, LLC, for the promissory note.

Stakeholder Impact

• Shareholders: Potential dilution from the IPO and future issuances.
• Employees: Potential for growth and stability with successful IPO.
• Customers: Continued product development and service improvements.
• Creditors: Repayment of debt with IPO proceeds.

Next Steps

• Secure listing approval on NYSE American.
• Complete the initial public offering.
• Execute the planned use of proceeds, including debt repayment, R&D, and working capital initiatives.

Key Dates

Keywords

IPO, initial public offering, Class B common stock, aqueous ozone, cleaning products, Boustead Securities, NYSE American, emerging growth company, nanobubble technology, listing, ZONE