CleanCore Solutions, Inc. Commitments Disclosure

16. Commitments and Contingencies

 

Legal Proceedings

 

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is currently not aware of any such legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating results.

 

Retirement Plans

 

The Company does not maintain a defined contribution plan or any other type of retirement plan for its employees.

 

Leases

 

The Company has a non-cancellable operating lease commitment for its office facility expiring in 2028. Rent expense totaled $161,664 and $130,723 for the years ended June 30, 2025 and 2024, respectively.

The following table discloses the lease cost, discount rate, and remaining lease term for operating leases as of June 30, 2025 and 2024:

 

		June 30, 2025				June 30, 2024
Operating lease cost		$	161,664			$	130,723
Remaining lease term			2.7 years				3.7 years
Discount rate			6.56	%			6.56	%

 

The discount rate was determined using the Company’s external debt and was adjusted for collateralization, term and lease amount.

 

The following table discloses the undiscounted cash flows on an annual basis and a reconciliation of the undiscounted cash flows of operating lease liabilities recognized in the balance sheet as of June 30, 2025:

 

Year Ended June 30,
2026		$	167,226
2027			171,407
2028			116,160
2029			-
2030			-
Total undiscounted cash flows			454,793
Less amount representing interest			(36,689	)
Present value of lease liabilities			418,104
Less current portion			(145,005	)
Noncurrent lease liabilities		$	273,099

 

Settlement Agreement

 

On June 5, 2025, the Company entered into a settlement agreement with Boustead relating to certain compensation that Boustead asserted was owed to it under an engagement letter between the parties, dated September 21, 2022 and an underwriting agreement between the parties, dated April 25, 2024. Pursuant to the settlement agreement, the Company agreed, among other things, to pay Boustead $100,000 in cash within 45 days of signing of the settlement agreement and $1,050,000 in cash upon the closing of a financing, offering or other transaction to raise capital (such a transaction, a “Financing Transaction”) in an amount of at least $50 million; provided that if the Company consummates one or more Financing Transactions in an amount of less than $50 million, then the Company must pay Boustead no less than two percent (2%) of the total amount of funds disbursed to the Company pursuant to each such Financing Transaction until Boustead receives a total of $1,050,000 in cash. In addition, upon closing of a Financing Transaction, the Company agreed to issue to Boustead a warrant for the purchase of 160,824 shares of class B common stock at an exercise price equal to the lower of (i) the price per share paid in such Financing Transaction or (ii) the exercise price of any warrants issued to the placement agent or financial advisor in connection with such Financing Transaction. The Company was also required to pay $100,000 in cash to Boustead within 45 days from the date of the agreement.