CleanCore Solutions, Inc. (ZONE) Signs Definitive Agreement to Acquire Sanzonate Europe, the Largest Aqueous Ozone Product Distributor in Europe, Strengthening Financial Performance and Unlocking a Multi-Million Dollar Sales Pipeline

Rhea-AI Summary

CleanCore Solutions (NYSE: ZONE) has signed a definitive agreement to acquire Sanzonate Europe, Europe's largest aqueous ozone product distributor. The acquisition, expected to close by March 7, 2025, will be financed through a seller-financed carryback note and earnout, avoiding dilutive equity raising.

The deal structure includes a $600,000 cash payment, $625,000 promissory note, and potential earnout payments up to $1.25M over 5 years. CleanCore will acquire $500,000 in inventory and $450,000 in accounts receivable, assuming no liabilities.

Key benefits include:

• Access to 30+ distribution partners with $10M net backlog
• $20M+ potential sales pipeline
• Enhanced gross margins and EBITDA through eliminated intermediaries
• Control of Europe's largest aqueous ozone distribution network
• Platform for expansion into Asia and South America

Positive

• Immediate access to $10M order backlog
• $20M+ sales pipeline potential
• Acquisition of $950K in assets (inventory + receivables)
• No assumption of liabilities
• Non-dilutive financing structure
• Enhanced gross margins through eliminated intermediaries
• Expansion into Europe's largest aqueous ozone distribution network

Negative

• Total acquisition cost up to $2.475M over 5 years
• Additional debt burden with $625K promissory note at 10% interest
• Acquisition completion subject to conditions

Insights

Financial Analyst

CleanCore Solutions' acquisition of Sanzonate Europe represents a potentially transformative deal that could dramatically alter ZONE's growth trajectory and financial profile. The $2.475 million total consideration (structured as $600K cash, $625K note, and up to $1.25M in earnouts) appears strategically priced when compared to the immediate assets being acquired ($950,000 in inventory and receivables) plus the substantial revenue pipeline.

The financial implications are particularly noteworthy given ZONE's current $8.23 million market capitalization. The acquisition unlocks access to a $10+ million backlog and $20+ million sales pipeline – potentially tripling or quadrupling ZONE's addressable revenue opportunities in the near term. This revenue-to-market-cap dynamic suggests significant upside potential if the company can successfully execute on this pipeline.

The transaction structure deserves investor attention for three key reasons:

• The earnout component (approximately 10% payment for every $2 million in sales) aligns Sanzonate's leadership incentives with ZONE's growth objectives
• The deal avoids equity dilution at current share price levels, preserving ownership value
• By eliminating distribution intermediaries, gross margin expansion should occur immediately upon integration

Beyond the immediate European opportunity, the acquisition provides ZONE with infrastructure for expansion into Asia and South America, potentially accelerating global market penetration by years. This is particularly valuable as sustainability initiatives gain momentum worldwide.

However, execution risks remain. Integration challenges, potential cultural differences in European markets, and the earnout structure itself (which suggests some uncertainty about future performance) warrant monitoring. The next 6-12 months will be critical in determining whether ZONE can effectively capitalize on Sanzonate's distribution network and convert the backlog into recognized revenue.

This transaction effectively transforms ZONE from a primarily North American player into a global competitor in the sustainable cleaning solutions market, with particular strength in Europe where environmental regulations and corporate sustainability initiatives create favorable tailwinds. The ROI potential appears compelling if management can successfully integrate operations and leverage the expanded distribution network to accelerate revenue growth while improving margins.

Sustainability and ESG Analyst

CleanCore's acquisition of Sanzonate Europe strategically positions the company at the epicenter of Europe's €2.7 billion green cleaning market, which is growing at 6.8% annually due to stringent regulatory frameworks. The EU's REACH regulation and the European Green Deal have created a regulatory environment that increasingly restricts traditional cleaning chemicals, creating structural demand for alternatives like aqueous ozone technology.

This acquisition directly addresses three UN Sustainable Development Goals: Clean Water and Sanitation (SDG 6), Responsible Consumption and Production (SDG 12), and Climate Action (SDG 13). For corporate customers, this translates to measurable sustainability metrics that can be integrated into ESG reporting – a critical consideration as the EU's Corporate Sustainability Reporting Directive (CSRD) expands mandatory disclosure requirements.

The technology's environmental profile is compelling:

• Eliminates chemical manufacturing, packaging, and transportation carbon footprint
• Reduces water pollution from chemical runoff
• Minimizes plastic waste from traditional cleaning product containers
• Provides safer working environments by eliminating chemical exposure risks

Beyond environmental benefits, the economic case for European customers is strengthening. Chemical cleaning costs have increased 12-18% in the past two years due to supply chain disruptions and raw material price increases. Aqueous ozone systems offer operational savings through eliminated chemical purchases, reduced storage requirements, simplified training, and lower disposal costs.

The acquisition timing is particularly strategic as Europe implements the Single-Use Plastics Directive, which increases costs for chemical cleaning products packaged in plastic. Additionally, the EU's Chemicals Strategy for Sustainability is accelerating the phase-out of hazardous substances, creating regulatory tailwinds for alternative technologies.

For investors focused on sustainability metrics, this acquisition significantly enhances ZONE's ESG profile by expanding its quantifiable environmental impact through broader deployment of chemical-free cleaning solutions. The company is now positioned to demonstrate measurable reductions in chemical usage, plastic waste, and transportation emissions – metrics increasingly valued by ESG-focused investment funds, which control over €4 trillion in assets across Europe.

While adoption rates vary across European markets (with Nordics leading and Southern Europe lagging), the acquisition provides ZONE with the established distribution infrastructure to navigate these regional differences and accelerate adoption in emerging sustainability markets.

M&A and Business Strategy Analyst

CleanCore's acquisition of Sanzonate Europe represents an exceptionally capital-efficient market entry strategy that could dramatically accelerate the company's growth trajectory. At a maximum consideration of $2.475 million against a $10+ million backlog and $20+ million pipeline, ZONE is potentially acquiring revenue streams at 0.25x forward sales – a fraction of typical industry acquisition multiples that range from 1.5-2.5x revenue.

The transaction structure reveals sophisticated deal-making designed to mitigate risk while preserving capital:

• Only 24% of the consideration ($600,000) requires immediate cash outlay
• The $625,000 promissory note provides seller financing at reasonable terms (10% interest, 2-year maturity)
• The earnout structure (10% payment per $2 million in sales) creates a self-funding mechanism where future payments are directly linked to realized revenue

This approach is particularly strategic for a company with ZONE's market capitalization ($8.23 million). The deal effectively enables ZONE to leverage its IPO capital for a transformative acquisition that could potentially triple its revenue base without diluting existing shareholders – a rare feat for microcap companies.

From a competitive positioning perspective, this acquisition fundamentally alters the European sustainable cleaning landscape. By vertically integrating distribution, ZONE can now implement a more aggressive pricing strategy while maintaining higher margins than previously possible through third-party distribution. This creates a significant competitive advantage against fragmented local competitors.

The integration risks, while real, appear manageable. The retention of Sanzonate's leadership team (evidenced by the earnout structure) provides continuity, and the clean transaction structure (acquiring assets without liabilities) minimizes hidden integration challenges. The earnout's structure – extending over five years rather than the more typical three – suggests a long-term integration timeline that reduces execution pressure.

Most compelling is how this acquisition serves as an infrastructure platform for ZONE's broader global ambitions. The company is acquiring not just European distribution but a springboard for expansion into Asia and South America. The Sanzonate team's existing relationships and expertise in navigating international markets provides ZONE with capabilities that would otherwise take years to develop organically.

For investors, this transaction represents a potential inflection point. If ZONE can successfully convert even half of the identified pipeline, it would transform the company's financial profile and likely trigger a significant valuation reassessment.

Acquisition Expected to Generate Immediate Value and Accelerate High-Margin Revenue Growth

Acquisition Expected to Strengthen CleanCore’s European Market Position and Overall Global Expansion

Acquisition to be Completed Without Requiring a Dilutive Equity Capital Raise, Preserving Shareholder Value

Omaha, NE, Feb. 25, 2025 (GLOBE NEWSWIRE) -- CleanCore Solutions, Inc. (NYSE American: ZONE) (“CleanCore” or the “Company”), developer of patented technology that works as a safe and low-cost replacement for traditional cleaning chemicals, today announced it has executed a definitive agreement to acquire Sanzonate Europe Ltd. (“Sanzonate”), the largest distributor of aqueous ozone cleaning technologies in Europe.

The Company believes this strategic acquisition will position CleanCore as a market leader in Europe, delivering immediate accretion, driving higher-margin revenue growth, and unlocking a substantial multi-million-dollar sales pipeline.

Key Highlights:

• Immediate Revenue Growth: Sanzonate currently has over 30 distribution partners as well as direct customers with a net backlog of over $10 million.
• Future Revenue Growth Potential: The acquisition is expected to unlock a sales pipeline of approximately $20+ million, providing future visibility into top-line growth.
• Enhanced Profitability: The transaction is expected to eliminate intermediaries, improving gross margins and EBITDA.
• Capital-Efficient Structure: The acquisition is intended to be financed primarily through a seller-financed carryback note and earnout, preserving shareholder value.
• Valuable Asset Acquisition: CleanCore expects to receive approximately $500,000 in inventory and $450,000 in accounts receivable as part of the acquisition; CleanCore will not assume any liabilities, ensuring a clean balance sheet post-transaction.
• Market Leadership in Europe: CleanCore expects to gain full control of Europe’s largest aqueous ozone distribution network.
• Strategic Global Expansion: The Company believes that the Sanzonate infrastructure and personnel to be acquired will position CleanCore for rapid scalability across Asia, South America, and other key international markets.
• Commitment to Sustainability: CleanCore believes the proposed acquisition will align with Europe’s strong focus on green cleaning solutions, with seven of the world’s eight most sustainable countries located in the EU.

With the full integration of Sanzonate’s established distribution network, a seasoned EU-based leadership team, and an untapped backlog of demand, CleanCore is expected to solidify its position as the global leader in sustainable cleaning solutions. The Company believes that the acquisition will provide the Company with direct control over Europe’s largest aqueous ozone distribution network, allowing it to capitalize on Europe’s accelerating corporate sustainability and green initiatives. Following integration, this move is anticipated to secure long-term recurring revenue streams and enhance operational efficiencies.

Clayton Adams, CEO of CleanCore Solutions, commented, “This proposed acquisition will mark a defining moment for our Company history. Since the IPO, our teams have been working diligently on this transaction, and this acquisition is expected to accelerate our global expansion by years. Additionally, by establishing CleanCore as a market leader in Europe and unlocking a multi-million-dollar recurring revenue pipeline—without requiring an equity capital raise—we expect to deliver greater revenues, higher margins, and significant long-term value for our investors. Furthermore, we intend to effectively leverage our IPO capital to forge agreements with major partners and build a strategic roadmap for long-term, sustainable success. Our vision of becoming the world leader in sustainable cleaning solutions is now closer than ever.”

Eric Quinn, President of Sanzonate Europe, added, “We are very pleased with this proposed acquisition as it will bring together two industry leaders allowing streamlined operations, reduced costs, and enhanced margins- enabling us to serve our global customers more efficiently and deliver market-leading service. Not only will this excite the business, but it will allow us to bring innovative products to an exciting and developing market sector. We are confident that we will continue as industry disruptors, innovators, and leaders across the globe while supporting our clients ESG and cost reduction missions.”

The acquisition is structured to maximize capital efficiency while preserving shareholder value. CleanCore has secured the deal primarily through a seller-financed carryback note and an earnout, minimizing upfront costs and aligning incentives for future growth. The financing terms include a cash payment of $600,000, a $625,000 promissory note, due in two years at 10% interest, and annual earnout payments for 5 years totaling up to $1,250,000 (approximately 10% payment for every $2 million in sales). CleanCore expects to gain approximately $500,000 in inventory and $450,000 in accounts receivable as part of the acquisition. Notably, CleanCore did not assume any liabilities, ensuring a clean financial position post-transaction.

Completion of the acquisition is subject to a number of conditions.  The acquisition is expected to close on or before March 7, 2025.

About Sanzonate Europe Ltd.
Sanzonate Europe Ltd. is the largest distributor of aqueous ozone cleaning technologies in Europe, providing eco-friendly, chemical-free solutions to major industries across the EU. By utilizing only air and water, Sanzonate’s innovative technologies help reduce waste, eliminate single-use plastics, and lower carbon emissions, offering a cost-effective and sustainable alternative to traditional cleaning methods.

About CleanCore Solutions
CleanCore Solutions, Inc. (NYSE American: ZONE) is dedicated to revolutionizing cleaning and disinfection practices by harnessing the power of its patented aqueous ozone technology. The Company’s mission is to empower its customers with cost-effective, sustainable solutions that surpass traditional cleaning methods. Through innovation and commitment to excellence, CleanCore strives to create a healthier, greener future for generations to come. For more information, please visit https://www.cleancoresol.com/.

Forward Looking Statements
This press release contains information about our views of future expectations, plans, and prospects with respect to CleanCore’s business, financial condition, and results of operations that constitute or may constitute forward-looking statements. Any and all forward-looking statements are based on the management’s beliefs, assumptions, and expectations of CleanCore’s future economic performance, taking into account the information currently available to it. These statements are not statements of historical fact. Although CleanCore believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. CleanCore does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law. Forward-looking statements are subject to a number of factors, risks, and uncertainties, some of which are not currently known to us, that may cause CleanCore’s actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Actual results may differ materially from the expectations discussed in forward-looking statements. Factors that could cause actual results to differ materially from expectations include general industry considerations, regulatory changes, changes in local or national economic conditions and other risks set forth in “Risk Factors” included in our filings with the SEC.

Investor Relations:
Crescendo Communications, LLC
Email: zone@crescendo-ir.com
Tel: (212) 671-1020

FAQ

What is the total acquisition cost for ZONE's purchase of Sanzonate Europe?

The total cost includes $600K cash, $625K promissory note, and up to $1.25M in earnout payments over 5 years, potentially totaling $2.475M.

How much immediate backlog will ZONE gain from the Sanzonate acquisition?

ZONE will gain access to over $10M in net backlog from Sanzonate's 30+ distribution partners and direct customers.

What assets will ZONE acquire in the Sanzonate Europe deal?

ZONE will acquire approximately $500,000 in inventory and $450,000 in accounts receivable, with no assumption of liabilities.

When is ZONE expected to close the Sanzonate Europe acquisition?

The acquisition is expected to close on or before March 7, 2025, subject to certain conditions.

How will ZONE finance the Sanzonate Europe acquisition?

The acquisition will be financed through a seller-financed carryback note and earnout structure, avoiding dilutive equity raising.