Executive Summary / Key Takeaways

• A Tale of Two Businesses: CleanCore operates two entirely distinct segments—a high-growth aqueous ozone cleaning business with 147% quarterly revenue growth and 59% gross margins, and a Dogecoin treasury segment that holds over 710 million DOGE but has already generated $32.4 million in unrealized losses since September 2025, creating a Jekyll-and-Hyde investment profile.

• Going Concern Crisis Meets Crypto Conviction: Despite operational momentum in cleaning, management explicitly states available resources are insufficient for the next 12 months, raising substantial doubt about viability—yet the company has allocated nearly all its $175 million PIPE proceeds to acquiring Dogecoin rather than shoring up its core business, a capital allocation decision that defines the risk/reward equation.

• Treasury Strategy as Corporate Identity: ZONE is no longer a cleaning company with a crypto side bet; it is a publicly-traded Dogecoin proxy, with 92% of total assets ($171.7M of $185.7M) concentrated in digital assets, making the stock's trajectory inseparable from DOGE price movements and exposing investors to extreme volatility without the cash flow generation of traditional businesses.

• Competitive Moat vs. Scale Deficit: The patented nanobubble technology delivers genuine cost advantages (30-50% labor savings) and margin expansion, but the company's $2.1 million annual revenue scale remains a rounding error compared to Tennant Company 's $1.2 billion, limiting pricing power and leaving it vulnerable to larger competitors' R&D spending and distribution networks.

• Critical Variables to Monitor: The investment thesis hinges entirely on whether Dogecoin appreciation can outpace operating cash burn ($3.8M quarterly) and whether the cleaning business can scale quickly enough to reduce going concern risk—if either fails, the equity value could approach zero, while success in both creates asymmetric upside.

Setting the Scene: A Company at War With Its Own Identity

CleanCore Solutions, Inc. began its operational life on October 17, 2022, when a newly formed acquisition vehicle purchased the assets of three aqueous ozone technology companies. For its first two-and-a-half years, the company pursued a straightforward mission: commercialize patented nanobubble technology that generates pure aqueous ozone for chemical-free cleaning across janitorial, laundry, and industrial applications. This was a classic industrial technology story—niche market, green tailwinds, patent protection, and the promise of disrupting traditional chemical cleaning methods.

That narrative shattered on September 5, 2025. In a single day, CleanCore announced a digital asset treasury strategy focused exclusively on Dogecoin, closed a $175 million PIPE financing, and appointed the CEO of House of Doge as Chief Investment Officer. The company now operates two reportable segments that share nothing but a corporate shell: the CleanCore Segment, which sells physical cleaning equipment, and the Treasury Segment, which holds speculative cryptocurrency. This isn't a side project or a modest diversification—it's a complete strategic transformation that redefines what ZONE represents to investors.

The aqueous ozone market itself presents a compelling growth opportunity. Industry reports size the market at $450-500 million in 2025, growing at 10-12% annually, driven by sustainability mandates and post-pandemic disinfection standards. CleanCore's technology competes against established players like Tennant Company , which generates $1.2 billion in annual revenue from floor care equipment, and smaller specialists like Tersano and Enozo Technologies. The key differentiation lies in CleanCore's on-demand nanobubble generation, which eliminates stabilizers and delivers ozone purity that management believes is "highly effective" for surface sanitization while reducing labor costs by 30-50%—a tangible economic benefit that chemical alternatives cannot match.

However, this operational story now plays second fiddle to the Treasury Segment, which holds 92% of the company's assets and has already consumed $142.5 million in cash during Q1 FY2026. The strategic rationale, articulated by management, extends beyond simple speculation: they aim to establish Dogecoin as a "premier reserve asset" while supporting ecosystem development through professional treasury governance. Yet this vision collides with immediate reality—the company burned $3.8 million in operating cash last quarter and admits it cannot fund the next 12 months of operations without additional capital.

Technology, Products, and Strategic Differentiation: Two Moats, One Crumbling Foundation

The CleanCore Segment: Real Technology, Real Margins, Real Problems

CleanCore's patented nanobubble technology represents a genuine innovation in aqueous ozone generation. Unlike competitors such as Tersano's stabilized aqueous ozone (SAO) systems that require chemical additives for longevity, or Enozo's portable spray bottles that face safety recalls, CleanCore's approach generates pure ozone on-demand without stabilizers. It eliminates ongoing chemical costs for customers while delivering the rapid sanitization times required in commercial settings like restaurants, airports, and healthcare facilities.

The technology's economic impact appears in the financials. For Q1 FY2026, CleanCore Segment revenue jumped 147.9% to $904,699, driven primarily by a $354,351 contribution from Kellermeyer Bergensons Services (KBS), a global logistics leader deploying Power Caddies and Fill Stations across over 1,000 U.S. facilities. More impressively, gross margins expanded from 50.8% to 59.3% year-over-year, which management attributes to "better efficiencies driven by scale, cost optimization, and technological improvements." This 850-basis-point margin expansion demonstrates genuine operating leverage and validates the value proposition—customers are willing to pay premium prices for demonstrable cost savings.

The product portfolio's breadth creates additional differentiation. While O3 Waterworks focuses narrowly on compact laundry systems and Enozo targets consumer spray bottles, CleanCore offers solutions spanning janitorial, ice machine cleaning, and industrial laundry applications. This diversification reduces customer concentration risk and enables cross-selling, though the absolute scale remains minuscule—Tennant Company 's $303 million quarterly revenue dwarfs CleanCore's sub-$1 million run rate, limiting purchasing power with suppliers and constraining R&D investment.

The strategic vulnerability lies in technological gaps. CleanCore's on-demand generation, while pure, lacks the extended stability of Tersano's SAO systems, which maintain efficacy for up to six months. This limits addressable markets requiring long-lasting residual sanitization. Additionally, the company faces safety perception risks following Enozo's 2025 lithium-ion battery recalls, even though CleanCore's systems use different power architectures. These gaps necessitate ongoing R&D spending that the company cannot afford while burning cash and accumulating Dogecoin.

The Treasury Segment: A Moonshot Masquerading as Strategy

The Treasury Segment represents one of the most radical strategic pivots in recent public market history. On September 5, 2025, CleanCore committed to acquiring up to 5% of Dogecoin's circulating supply, immediately deploying $142.5 million to accumulate 710 million DOGE by October 6. By September 30, the segment held $163.9 million in digital assets at fair value against a cost basis of $168.9 million, already showing a $5 million unrealized loss. By November 12, that loss had ballooned to $32.4 million as DOGE prices declined.

It transforms ZONE from an operating company into a leveraged crypto proxy. The Treasury Segment holds 92% of total corporate assets but generates zero revenue and zero gross profit. Its $4.9 million operating loss in Q1 FY2026 stems entirely from a $5 million fair value adjustment, meaning the segment's P&L is purely a function of Dogecoin price movements. Investors buying ZONE are no longer purchasing exposure to aqueous ozone adoption—they are purchasing regulated, transparent exposure to DOGE with a small, loss-making cleaning business attached.

Management's commentary reveals the strategic intent beyond speculation. CEO Clayton Adams frames the approach as "beyond a simple NAV play," emphasizing partnership with House of Doge to "advance the Dogecoin ecosystem through professional treasury governance" and support "long-term stability and utility of DOGE." CIO Marco Margiotta, who simultaneously serves as House of Doge CEO, positions the strategy as establishing Dogecoin as a "premier reserve asset" for payments, tokenization, and remittances. This narrative aims to differentiate ZONE from passive crypto holders by creating utility-driven demand.

The implications are profound and binary. If Dogecoin appreciates significantly, the Treasury Segment could generate gains that dwarf the cleaning business's entire addressable market, creating asymmetric returns for equity holders. However, the strategy introduces existential risks: concentration (nearly all assets in one volatile token), custody risks (loss of private keys could destroy value), regulatory uncertainty (SEC classification remains ambiguous), and opportunity cost (capital diverted from core operations while going concern issues persist). The $32.4 million unrealized loss in just six weeks demonstrates how quickly value can evaporate, consuming more capital than the cleaning business generated in its entire operating history.

Financial Performance & Segment Dynamics: Evidence of Strategy or Warning Signs?

CleanCore Segment: Growth Masking Underlying Fragility

The CleanCore Segment's Q1 FY2026 results provide compelling evidence of product-market fit. Revenue growth of 147.9% significantly outpaces the industry's 10-12% CAGR, suggesting market share gains. The KBS contract alone contributed $354,351, representing 39% of quarterly revenue, validating the ability to land large enterprise customers. Gross margin expansion to 59.3% indicates pricing power and operational efficiency, while the 189% gross profit growth demonstrates operating leverage that should eventually flow through to operating income.

However, the segment remains deeply unprofitable. The $3.34 million operating loss reflects an 841% increase in general and administrative expenses to $8.63 million, driven by $5.83 million in professional and consulting fees, $985,675 in stock compensation, and $715,487 in payroll from increased headcount. It reveals the true cost of scaling: every dollar of incremental revenue requires massive overhead investment, a common pattern in early-stage industrial companies but concerning when cash is finite.

The segment's $13.99 million in total assets includes $301,315 in inventory reserves—a significant increase from $37,420 in June 2025—suggesting either aggressive production scaling or quality concerns requiring write-downs. With only $12.91 million in corporate cash against $3.8 million quarterly burn, the CleanCore Segment cannot fund its own growth, let alone support corporate overhead. The KBS contract provides revenue visibility but also concentration risk; losing this single customer would cut revenue by nearly 40%.

Treasury Segment: Volatility as a Business Model

The Treasury Segment's financials are stark. Zero revenue, zero gross profit, $4.9 million operating loss, and $171.74 million in assets—99% of which is Dogecoin. The $5 million fair value loss in Q1 FY2026 represents 3% of the digital asset value, a modest decline that management frames as routine volatility. Yet the subsequent $32.4 million loss through November 12 represents a 20% drawdown in under six weeks, demonstrating the segment's capacity to destroy value faster than the operating business can create it.

This dynamic creates a perverse capital allocation incentive. The company raised $157.76 million in financing during Q1, of which $142.5 million immediately flowed into Dogecoin purchases. Meanwhile, the operating business burned $3.8 million, and management warns of insufficient resources for the next 12 months. Management prioritizes crypto accumulation over operational sustainability, betting that DOGE appreciation will fund future operations—a strategy that works only in bull markets and fails catastrophically in downturns.

The accounting treatment under ASU 2023-8 requires fair value measurement with changes flowing through the income statement, meaning every DOGE price fluctuation hits reported earnings directly. This creates earnings volatility that obscures operational performance and could trigger debt covenant violations or delisting requirements if equity falls below NYSE American thresholds. The segment's $5 million custodial and security costs (implied by operating losses) represent a permanent drag on returns, unlike passive buy-and-hold strategies.

Consolidated View: A House Divided Cannot Stand

Consolidated results tell a story of strategic incoherence. The $13.37 million net loss represents a 1,461% increase year-over-year, driven by $5 million in crypto losses and $7.71 million in overhead increases. The company generated negative $3.8 million in operating cash flow while investing negative $142.5 million in "investing activities" (crypto purchases), funding this through $157.8 million in financing. This is not a sustainable business model; it's a speculative financing loop dependent on continuous capital raises and crypto appreciation.

The balance sheet reveals the fragility. Total assets of $185.7 million include $163.9 million in Dogecoin and only $12.9 million in cash. With quarterly burn of $3.8 million and management's admission of insufficient resources, the company has roughly three quarters of runway before facing liquidity crisis—unless it can sell more stock through its $1.15 billion ATM facility or Dogecoin appreciates significantly. The $1.15 billion shelf registration provides theoretical capacity but requires market appetite for a company with negative operating margins and existential going concern warnings.

Outlook, Management Guidance, and Execution Risk

Management's commentary reveals ambitious plans for both segments. On the cleaning side, CEO Clayton Adams highlights "building momentum heading into fiscal 2026," citing large purchase orders that "provide visibility into continued growth." The KBS rollout across 1,000 facilities suggests potential for recurring revenue from consumables and service, while the Sanzonate acquisition provides EU market access through an EOTA license. The company is "expanding its distributor network, improving production processes, and proving product effectiveness" in high-value verticals like airports and hotels.

The implied guidance is for continued 50%+ growth in the CleanCore Segment, driven by enterprise rollouts and international expansion. It suggests the technology has crossed the chasm from early adopters to mainstream commercial deployment. If achieved, this trajectory could generate $5-7 million in annual revenue by FY2026, potentially reaching break-even on a segment basis by FY2027. However, this assumes no major customer churn, successful EU market penetration, and continued margin expansion—all uncertain for a company with limited track record.

The Treasury Segment guidance is more explicit and concerning. Management states a "near-term goal of reaching 1 billion DOGE" and a "long-term objective for its treasury strategy is to secure up to 5% of Dogecoin's circulating supply." With 710 million DOGE already accumulated, the company must purchase another 290 million tokens, requiring approximately $60-80 million at current prices. This implies continued dilutive equity issuance through the ATM facility, pressuring the stock while concentrating risk further.

Execution risk is extreme on both fronts. For cleaning, the company must scale production, quality control, and customer support rapidly while conserving cash—a nearly impossible balancing act. For crypto, it must navigate custody risks, regulatory changes, and market volatility while justifying the strategy to investors who likely bought the stock for either cleaning tech OR crypto exposure, not both. The appointment of Alex Spiro as Chairman and Timothy Stebbing (Dogecoin Foundation Director) to the board signals crypto prioritization, potentially alienating traditional industrial investors.

Risks and Asymmetries: How the Thesis Breaks

Going Concern: The Existential Threat

Management's explicit statement that "currently available resources will not be sufficient to fund planned expenditures over the next 12 months" is not boilerplate—it's a direct warning of potential bankruptcy. The $3.8 million quarterly burn rate against $12.9 million cash provides three quarters of runway. While the $1.15 billion ATM facility offers lifeline potential, issuing stock with negative operating margins and a going concern warning typically requires deep discounts, creating a death spiral where dilution begets lower prices, which begets more dilution.

The asymmetry is severe: downside includes complete equity wipeout if operations don't turn cash flow positive before capital markets close. Upside requires both crypto appreciation AND operational turnaround—a dual hurdle that reduces probability of success. Traditional industrial investors cannot underwrite crypto risk, while crypto investors cannot underwrite industrial turnaround risk, leaving ZONE with a bifurcated and potentially non-existent shareholder base.

Dogecoin Concentration: Volatility as a Business Model

Holding 92% of assets in a single meme cryptocurrency is unprecedented for a public company. The $32.4 million unrealized loss since September 30 represents 13% of the Treasury Segment's value disappearing in six weeks—more than the entire CleanCore Segment's annual revenue. If DOGE prices fall another 50%, the company would need to take impairment charges that could wipe out its equity cushion, triggering covenant violations or delisting.

The risk mechanism is straightforward: DOGE's price is driven by social media sentiment, celebrity endorsements, and speculative flows, not cash flows or utility. While management touts "utility-driven demand" and "staking-like rewards," Dogecoin currently generates no yield for treasury holdings. The company pays custodial fees and bears cybersecurity risks while receiving nothing in return, creating a permanent negative carry position that only works if prices rise. A substantial decrease in DOGE price would "negatively affect the company's financial condition and results of operations," as management admits, potentially rendering the equity worthless regardless of cleaning business performance.

Operational Scale Deficit: The Tennant Problem

CleanCore's $2.1 million annual revenue compares to Tennant Company 's $1.2 billion, creating a scale disadvantage that impacts every operational dimension. Tennant Company 's 42.7% gross margins, while lower than CleanCore's 59.3%, generate $513 million in annual gross profit—funding R&D, distribution, and customer support that CleanCore cannot match. If Tennant Company decides to prioritize ozone technology, it could outspend CleanCore's entire market cap on R&D in a single quarter, eroding the patent moat through innovation or acquisition.

The vulnerability manifests in customer concentration. The KBS contract represents 39% of quarterly revenue; its loss would collapse growth and raise questions about product-market fit. Tennant Company 's diversified customer base across 100+ countries provides resilience that CleanCore lacks. Additionally, CleanCore's supply chain dependencies on ozone generator components create cost inflation risks that Tennant Company 's scale can absorb through supplier negotiations. CleanCore's margin advantage is fragile and could compress if larger competitors initiate price wars or if input costs rise.

Regulatory and Custody Risks: The Unknown Unknowns

The Treasury Segment faces regulatory uncertainty that could render the strategy uninvestable. The SEC has not classified Dogecoin as a security, but future guidance could impose securities law compliance costs that dwarf the segment's value. More immediately, custody risks threaten total loss—if private keys are lost or stolen, $163.9 million in assets could disappear overnight with no recourse. Management acknowledges exposure to "counterparty risks related to custody, cybersecurity risks, and other inherent digital asset risks," but provides no detail on custody arrangements, insurance, or security protocols.

Traditional corporate treasury management prioritizes capital preservation over returns. ZONE's strategy inverts this, pursuing maximum risk at the worst possible time—when the core business is cash-starved and facing existential threat. The asymmetry is entirely negative: regulatory crackdown or security breach could cause instantaneous 90%+ equity loss, while regulatory clarity provides only modest upside given the already-concentrated position.

Valuation Context: A Crypto Proxy at Industrial Prices

Trading at $0.31 per share with a $2.5 million market capitalization, ZONE presents a valuation paradox. The company holds $163.9 million in Dogecoin and $12.9 million in cash against minimal debt, resulting in a negative enterprise value of -$10.0 million. In theory, the market values the operating business at less than zero, implying investors believe the crypto holdings are impaired or that corporate overhead will consume all value.

It creates potential for extreme re-rating if the market begins to view ZONE as a legitimate crypto treasury play rather than a failing industrial company. However, the valuation metrics that matter here are not traditional multiples. The company is unprofitable with negative operating margins (-910%), rendering P/E meaningless. Revenue multiples are distorted by the crypto segment's zero revenue contribution.

What investors should focus on:

• Price-to-Book: At 0.34x, the stock trades below liquidation value if crypto holdings are marked to market, suggesting either deep value or imminent impairment.
• Cash Burn Runway: With $12.9 million cash and $3.8 million quarterly burn, the operating business has 3.4 quarters of survival without crypto sales or equity issuance.
• Crypto Exposure: Each $0.01 change in DOGE price impacts Treasury Segment value by approximately $7.1 million (710 million tokens), creating 284% upside/downside sensitivity to the current market cap.
• Dilution Risk: The $1.15 billion ATM facility, if utilized, could increase share count by 10-20x current levels, rendering existing equity nearly worthless regardless of crypto performance.

Comparable analysis is challenging. Tennant Company (TNC) trades at 1.23x EV/Revenue with positive margins and 1.66% dividend yield—representing the stable industrial alternative. No public company comparator exists for a Dogecoin treasury strategy, making ZONE a unique specimen. The closest analogs are MicroStrategy (MSTR)'s Bitcoin strategy (MSTR trades at premium to NAV) and Tesla (TSLA)'s small crypto holdings (immaterial to valuation). ZONE's 100% crypto concentration is unprecedented, suggesting it should trade at a discount to NAV due to execution risk, going concern issues, and lack of diversification.

Conclusion: A Binary Bet on Synchronistic Turnaround

CleanCore Solutions has engineered one of the most extreme risk/reward profiles in the public markets. The investment thesis is not about aqueous ozone market share or Dogecoin ecosystem development—it's about whether two entirely separate turnarounds can succeed simultaneously before capital runs out.

The bull case requires three improbable outcomes: (1) Dogecoin prices appreciate 50-100% to offset operating losses and validate the treasury strategy, (2) the CleanCore Segment scales to $5-10 million in revenue with positive cash flow within 12-18 months, and (3) capital markets remain open for dilutive but non-fatal equity raises. If all three occur, the stock could re-rate from $0.31 to $2-5 as investors price a viable crypto-proxy industrial hybrid.

The bear case is simpler and more probable: operational cash burn continues, crypto prices stagnate or decline, and the going concern warning becomes a Chapter 11 filing. The $32.4 million unrealized loss in six weeks demonstrates how quickly the Treasury Segment can destroy value, while the CleanCore Segment's $3.34 million operating loss shows the core business cannot self-fund. With no clear path to profitability and management prioritizing crypto accumulation over operational survival, equity holders face potential total loss.

What makes this story uniquely fragile is the strategic incoherence. Industrial investors cannot underwrite crypto volatility; crypto investors cannot underwrite industrial execution risk. This leaves ZONE with a bifurcated shareholder base that may abandon the stock when either segment disappoints. The critical variables to monitor are DOGE price action (daily), CleanCore Segment cash flow (quarterly), and ATM issuance activity (real-time). If any of these three signals deteriorate, the thesis breaks immediately.

For investors, ZONE is not a buy or sell—it's a watchlist curiosity that demonstrates what happens when desperation meets speculation. The company has genuine technology and a real market opportunity, but has chosen to bet its survival on a meme cryptocurrency. That decision, more than any operational metric, will determine whether this is a multi-bagger or a zero.