CleanCore Solutions reshuffles debt with executive notes

CleanCore Solutions, Inc. (NYSE American: ZONE), a specialty cleaning company with a market capitalization of $8.87 million, has entered into a financial arrangement involving the company’s top executives, according to a recent SEC filing.

InvestingPro analysis reveals the company maintains impressive gross profit margins of 49%, though it faces some financial challenges with 13 key insights available to subscribers. On January 27, 2025, Clayton Adams, CleanCore’s CEO, sold a portion of a promissory note to President Travis Buchanan, resulting in new debt instruments within the company.

The original promissory note, issued on December 24, 2024, with a principal amount of $415,241.25 and a 20% original issue discount, was partially assigned from Adams to Buchanan. Buchanan purchased $125,000 of the note for $100,000. Subsequently, CleanCore issued two new original issue discount promissory notes: one to Buchanan for $125,000 and another to Adams for the remaining $290,241.25.

These new notes, collectively known as the New OID Notes, are due on June 30, 2025, and carry an 8% annual interest rate, which could increase to 15% in an event of default. They can be prepaid at any time without penalty, are unsecured, and include standard default provisions for this type of loan.

The transaction was formalized in a note sale assignment and cancellation agreement, which outlines the terms of the sale and assignment of the original note’s portion and the issuance of the New OID Notes. According to InvestingPro data, the company operates with a moderate level of debt and maintains a current ratio of 1.62, indicating sufficient liquidity to meet short-term obligations.

With the company’s next earnings announcement scheduled for February 12, 2025, investors seeking deeper insights into CleanCore’s financial health can access comprehensive analysis through InvestingPro, which includes detailed metrics and expert commentary.

In other recent news, CleanCore Solutions has made significant changes in its executive leadership and financial structure. The company recently appointed Travis Buchanan as its new President, succeeding Clayton Adams who remains the Chief Executive Officer. Buchanan brings a strong background in acquisitions, scaling businesses, technology design, and manufacturing operations from his previous roles at Poplar Homes and American Homes (NYSE:AMH) 4 Rent. As part of his employment agreement, Buchanan will receive an annual base salary of $165,000 with the potential for a $5,000 quarterly bonus.

Simultaneously, CleanCore Solutions revised the compensation package for Gary Hollst, the Chief Revenue Officer. Hollst’s new terms include an annual salary of $125,000, a quarterly performance-based bonus of $7,500, and additional bonuses tied to sales metrics.

In terms of financial restructuring, CleanCore Solutions has canceled a previous promissory note worth $633,840 and reassigned it to two individuals. The note has been divided into the "Hollst Note" and the "Rohwer Note", valued at $316,920 and $332,633.95 respectively. The company also issued an original issue discount promissory note to its CEO, Clayton Adams, for $415,241.25.

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