Elite Express nine-month loss widens to $3.4M
All revenue came from FedEx, while operating activities used $4,741,858 of cash in the nine months ended August 31, 2026.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Elite Express Holding Inc. reported revenue of $766,422 for the three months ended August 31, 2026, up 20.9% from a year earlier, and $2,298,549 for the nine months, up 17.5%. Nine-month gross profit was $334,161, compared with a $7,588 gross loss a year earlier; net loss was $3,403,184, compared with $498,484. Quarterly net loss was $760,138 versus $185,881.
FedEx remained the sole customer, accounting for 100% of revenue. Operating cash use was $4,741,858 for the nine months, and cash was $3,003,589 as of August 31, 2026. Loans receivable were $11,549,811 at that date. A private placement closed June 4, 2026, issuing 32,000,000 Class A shares at $0.25 each for $8,000,000 in gross proceeds. The company’s unallocated shelf would permit, following effectiveness, offerings with an aggregate offering price of up to $300,000,000; it had not been declared effective and no securities had been sold under it.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointRevenue rose 20.9% quarterly and 17.5% for nine months.
Negative
- Moderate pointNine-month net loss widened to $3,403,184 from $498,484.
Filing Explained
As of August 31, $11,549,811 remained in third-party loans receivable, with earlier loan agreements extended to November 30, 2026.
Elite Express reports
The company says it lent
It also reports
The loans were secured by personal guarantees, and by the report’s issuance the company said it had received
Key Figures
Key Terms
current expected credit loss (“CECL”) financial
performance obligations financial
purchase price allocation financial
gross basis financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did ETS report?
What was ETS’s net loss for the nine months?
What are the terms of ETS’s loans receivable?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
| (I.R.S. Employer |
(Address of principal executive offices) (Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class | | Trading Symbol(s) | | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 13, 2026, there were
Elite Express Holding Inc.
Form 10-Q
For the Quarterly Period Ended August 31, 2026
Contents
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Part I | Financial Information | 1 |
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Item 1 | Financial Statements (Unaudited) | 1 |
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Condensed Consolidated Balance Sheets (Unaudited) | 1 | |
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Condensed Consolidated Statements of Operations (Unaudited) | 2 | |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) | 3 | |
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Condensed Consolidated Statements of Cash Flows (Unaudited) | 4 | |
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Notes to Unaudited Condensed Consolidated Financial Statements | 5 | |
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Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
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Item 3 | Quantitative and Qualitative Disclosures about Market Risk | 32 |
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Item 4 | Controls and Procedures | 32 |
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Part II | Other Information | 34 |
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Item 1 | Legal Proceedings | 34 |
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Item 1A | Risk Factors | 34 |
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Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 34 |
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Item 3 | Defaults Upon Senior Securities | 36 |
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Item 4 | Mine Safety Disclosures | 36 |
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Item 5 | Other Information | 36 |
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Item 6 | Exhibits | 36 |
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Signatures | 39 |
i
Elite Express Holding Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ELITE EXPRESS HOLDING INC. & ITS SUBSIDIARY
(Unaudited) CONDENSED CONSOLIDATED BALANCE SHEETS
| | As of August 31, | | As of November 30, | ||
| | 2026 | | 2025 | ||
| | (UNAUDITED) | | (AUDITED) | ||
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents | | $ | | | $ | |
Accounts receivable | |
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Loans receivable | | | | | | |
Deferred offering cost | | | | | | — |
Prepaid D&O insurance | | | | | | |
Prepaid expenses and other current assets | |
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TOTAL CURRENT ASSETS | |
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NON-CURRENT ASSETS: | |
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Plant and equipment | |
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Intangible assets | |
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Goodwill | |
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TOTAL ASSETS | | $ | | | $ | |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | |
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CURRENT LIABILITIES: | |
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Accounts payable | | $ | | | $ | |
Insurance premium financing payable | | | | | | |
Tax payable | |
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Other payables and other current liabilities | |
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TOTAL CURRENT LIABILITIES | |
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NONCURRENT LIABILITY: | |
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TOTAL LIABILITIES | |
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COMMITMENTS AND CONTINGENCIES | |
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STOCKHOLDERS’ EQUITY | |
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Common stock, $ | |
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Class A common stock, $ | |
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Class B common stock, $ | |
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Additional paid-in capital | |
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Accumulated deficit | |
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TOTAL STOCKHOLDERS’ EQUITY | |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | | | $ | |
*
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
ELITE EXPRESS HOLDING INC. & ITS SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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| | For the Three Months Ended | | | For the Nine Months Ended | ||||||||
| | August 31, | | | August 31, | ||||||||
| | 2026 | | 2025 | | | 2026 | | 2025 | ||||
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REVENUE | | $ | | | $ | | | | $ | | | $ | |
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COST OF REVENUE | |
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Cost of service | |
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Cost of labor | |
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Depreciation and amortization | |
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Fuel | |
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Maintenance and repairs | |
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Total cost of revenue | |
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GROSS PROFIT (LOSS) | |
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OPERATING EXPENSES | |
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R&D expenses | | | — | | | — | | | | | | | — |
General and administrative expenses | |
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Total operating expenses | |
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LOSS FROM OPERATIONS | |
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OTHER INCOME (EXPENSE) | |
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Interest income, net | |
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Other income, net | |
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Total other income, net | |
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LOSS BEFORE INCOME TAX BENEFIT | |
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Income tax expense (benefit) | |
| — | |
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NET LOSS | | $ | ( | | $ | ( | | | $ | ( | | $ | ( |
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Loss per common share - basic and diluted | | $ | ( | | $ | ( | | | $ | ( | | $ | ( |
Weighted average shares - basic and diluted* | |
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*
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
ELITE EXPRESS HOLDING INC. & ITS SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED AUGUST 31, 2026 AND 2025
| | Common Stock* | | | | | | | | | | ||||||||
| | Class A | | | | | Class B | | | | | Additional | | | | | Total | ||
| | Common | | | | | Common | | | | | paid-in | | Accumulated | | Stockholders’ | |||
| | stock | | Amount | | stock | | Amount | | capital | | Deficit | | Equity | |||||
Balance, November 30, 2024 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
Capital Contributions from a stockholder |
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Net loss for the period |
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Balance, February 28, 2025 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
Capital Contributions from a stockholder |
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Net loss for the period |
| — | | | — |
| — | | | — | | | — | | | ( | | | ( |
Balance, May 31, 2025 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
Stock Issuance | | | | | | | — | | | — | | | — | | | — | | | |
Net Proceeds from IPO | | — | | | — | | — | | | — | | | | | | — | | | |
Capital Contributions from a shareholder |
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Offset with Deferred listing cost | | — | | | — | | — | | | — | | | ( | | | — | | | ( |
Net loss for the period |
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Balance, August 31, 2025 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
*Retrospectively adjusted for the reverse split of the Company’s common stock at a ratio of 1-for-6, which took effect on December 23, 2024 (the “Reverse Stock Split”). See Note 12.
| | Common Stock | | | | | | | | | | ||||||||
| | Class A | | | | | Class B | | | | | Additional | | | | | Total | ||
| | Common | | | | | Common | | | | | paid-in | | Accumulated | | Stockholders’ | |||
| | stock | | Amount | | stock | | Amount | | capital | | Deficit | | Equity | |||||
Balance, November 30, 2025 |
| | $ | |
| | | $ | | | $ | | $ | ( | | $ | | ||
Net loss for the period |
| — | |
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Balance, February 28, 2026 |
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| | | $ | | | $ | | | | ( | | | |
Advances from Stock Issuance |
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Net loss for the period |
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Balance, May 31, 2026 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
Stock issuance through PIPE | | | | | | | — | | | — | | | ( | | | — | | | — |
Net loss for the period |
| — | |
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| ( | |
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Balance, August 31, 2026 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
ELITE EXPRESS HOLDING INC. & ITS SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| | For the Nine Months Ended | ||||
| | August 31, | ||||
| | 2026 | | 2025 | ||
Cash flows from operating activities: |
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Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | |
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Amortization of intangible assets | |
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Depreciation of plant and equipment | |
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Plant and equipment written off | | | | | | — |
Accrued interest income | | | ( | | | — |
Deferred tax (benefit) | |
| — | |
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Changes in operating assets and liabilities: | |
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(Decrease) increase in accounts receivable | |
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Increase in prepaid D&O insurance | |
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(Decrease) increase in prepaid expenses and other current assets | |
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(Decrease) increase in accounts payable | |
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Decrease in other payables and other current liabilities | | | ( | | | ( |
Decrease in taxes payable | | | ( | | | — |
Net cash used in operating activities | |
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Cash flows from investing activities: | |
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Purchase of property and equipment | |
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Repayments of loan to unrelated third parties | | | | | | — |
Loans made to unrelated third parties | | | ( | | | — |
Net cash used in investing activities | |
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Cash flows from financing activities: | |
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Net Proceeds from offerings | |
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Repayment for D&O insurance premium financing | |
| — | |
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Premium financed | |
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Payment for deferred offering cost | | | ( | | | ( |
Repayments made to a related party | |
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Capital contributions from a shareholder | |
| — | |
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Repayment of insurance premium financing obligations | |
| ( | |
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Net cash provided by financing activities | |
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Net increase in cash | |
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Cash, beginning of period | |
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Cash, end of period | | $ | | | $ | |
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Supplemental cash flow information | |
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Cash paid for interest | | $ | | | $ | — |
Cash paid for income tax | | $ | | | $ | — |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
ELITE EXPRESS HOLDING INC. (SUCCESSOR) AND JAR TRANSPORTATION INC (PREDECESSOR)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Elite Express Holding Inc. (“ETS” or the “Company”) was incorporated on April 3, 2024, under the laws of the State of Delaware. The Company is a holding entity that was formed for the purpose of acquiring JAR Transportation Inc. (“JAR”).
JAR was incorporated in the State of California on May 27, 2020 under Subchapter S of the Internal Revenue Code. JAR operated as an Independent Service Provider (“ISP”) for Federal Ground Package System, Inc. (“FXG”), providing last-mile package delivery services. As part of FedEx Corporation’s “One FedEx” consolidation, effective June 1, 2024, FXG merged into Federal Express Corporation (“FedEx”). JAR’s ISP contract with FXG remained in place until October 12, 2024, after which the subsequent agreement was signed with FedEx. Unless otherwise specified, references to “FedEx” in this document include FXG for periods before October 12, 2024, and Federal Express Corporation thereafter.
On October 25, 2024, the Company acquired all issued and outstanding shares of JAR for a total consideration of $
References to “Successor” or “Successor Company” relate to the financial position and results of operations of the Company after the JAR Acquisition. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of JAR.
The Company operates exclusively within the State of California. As an ISP, the Company is granted relative exclusivity in certain service areas by FedEx, which minimizes direct competition within those regions and enables the Company to focus on operational efficiency and service quality.
Details of the subsidiaries of the Company as of the reporting date are set out below:
| | Date of | | State of | | % of | | |
Name of Entity | | Incorporation | | Incorporation | | Ownership | | Principal Activities |
Elite Express Holding Inc. |
| April 3, 2024 |
| Delaware |
| Parent | | Holding company |
Subsidiary of the parent: |
| |
| |
| |
| |
JAR Transportation Inc |
| May 27, 2020 |
| California |
| | % | Route business operator and provider of last-mile delivery services |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the U.S. (the “U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary. All intercompany balances and transactions are eliminated upon consolidation.
Principles of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the California-registered entities directly owned by the Company. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. The results of subsidiaries acquired or disposed of are recorded in the consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate.
5
A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.
Uses of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. In accordance with ASC 250, the changes in estimates will be recognized in the same period of changes in facts and circumstances. The Company bases its estimates on past experiences and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, the allowance for credit losses of accounts receivable and loans receivable, useful lives of plant and equipment, the recoverability of long-lived assets, impairment of goodwill, and revenue recognition.
Risks and Uncertainties
The operations of the Company are located in the U.S., with its business activities primarily focused on route delivery services as an ISP for FedEx. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by economic, regulatory, and operational environments in the U.S., as well as the general state of the U.S. economy. The Company’s results may be subject to the following risks and uncertainties:
| ● | The Company generates |
| ● | The route delivery industry is competitive, and the Company faces competition from both large national service providers and smaller regional operators. Changes in competitive dynamics may impact pricing, service demand, and profitability. |
| ● | Seasonal demand fluctuations, particularly during peak periods such as holidays, may create challenges in resource allocation and operational scalability, potentially affecting the Company’s performance. |
| ● | The Company is subject to various local, state, and federal transportation regulations. Changes in these regulations, or non-compliance with them, may result in increased costs or disruptions to operations. |
| ● | The Company’s operations may also be affected by external events such as natural disasters, extreme weather conditions, and other events beyond its control, which could disrupt delivery schedules and operations. |
Cash and cash equivalents
Cash includes cash at banks that can be added to or withdrawn without limitation and time deposits with banks or other financial institutions with maturity periods of 90 days (three months) or less.
6
Accounts receivable, Other receivables, and Loans Receivable
The Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Accounting Standards Codification (“ASC”) 326). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposures such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. In addition, CECL made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not they will be required to sell. Other receivables and loans receivable arise from transactions with non-trade customers.
Accounts receivable represent amounts due to the Company upon the completion of performance obligations for last-mile delivery services. Revenue is recognized in accordance with the Company’s revenue recognition policy, as verified by the Weekly Independent Service Provider Charge Statement. Payments are typically received within two days of invoicing, and the Company does not extend credit or maintain significant outstanding receivables. The Company reviews the accounts receivable on a periodic basis and makes allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including historical losses, the age of the receivable balance, the customer’s historical payment patterns, its current credit-worthiness and financial condition, and current market conditions and economic trends. Accounts are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of August 31, 2026 and November 30, 2025,
Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and impairment charges, if any. Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Depreciation is calculated primarily based on the straight-line method over the estimated useful lives of the assets:
Categories | | Estimated useful life |
Vehicles | |
Impairment of Long-lived Assets
The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of the asset group. If the carrying amount exceeds the recoverable amount, an impairment loss is measured as the amount by which the carrying amount exceeds the fair value of the asset. The Company estimates fair value using the expected future cash flows discounted at a rate consistent with the risks associated with the recovery of the assets. Based on the above analysis,
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
7
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, loans receivable, and other current assets, accounts payable, due to a related party, other payables and other current liabilities, approximate the fair value of the respective assets and liabilities as of August 31, 2026 and November 30, 2025, based upon the short-term nature of the assets and liabilities.
Prepaid Insurance and Premium Financing
The Company obtains certain insurance coverage through premium financing arrangements. Under these arrangements, the financing company pays the insurance premiums directly to the insurance carrier on behalf of the Company, and the Company is obligated to repay the financing company in periodic installments, including interest.
At inception, the full amount of the insurance premium is recorded as prepaid insurance within prepaid expenses and other current assets on the consolidated balance sheets, with a corresponding premium financing payable recorded within current liabilities. Prepaid insurance is amortized to insurance expense on a straight-line basis over the coverage period of the related policies. Interest incurred on the financing arrangement is recognized separately as interest expense as incurred.
Business Combinations
Business combinations are accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. The accounting for business combinations requires estimates and judgment in determining the fair value of assets acquired, liabilities assumed, and contingent consideration transferred, if any, regarding expectations of future cash flows of the acquired business, and the allocation of those cash flows to the identifiable intangible assets. The determination of fair value is based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If actual results differ from these estimates, the amounts recorded in the financial statements could result in a possible impairment of intangible assets and goodwill. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. Acquisition-related expenses are expensed when incurred.
Goodwill and indefinite-lived intangible assets acquired in a business combination are not amortized but are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable, in accordance with ASC 350, Intangibles—Goodwill and Other.
Goodwill and Intangible Assets
The Company records goodwill as the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Goodwill was recognized in connection with the acquisition of JAR on October 25, 2024 (See Note 7, “Acquisition”). Goodwill is not amortized but is tested for impairment annually at the reporting unit level or more frequently if events or changes in circumstances indicate that it may be impaired. The Company has an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit which is described in more detail below, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed.
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The Company tests goodwill and intangible assets that are not subject to amortization for impairment annually on November 30, and the Company’s goodwill impairment review involves the following steps: 1) qualitative assessment – evaluate qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The factors the Company considers include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors, financial performance, and events specific to that reporting unit. If, or when, the Company determines it is more likely than not that the fair value of a reporting unit is less than the carrying amount, including goodwill, the Company would then change to the quantitative method; 2) quantitative method –the Company performs the quantitative fair value test by comparing the fair value of a reporting unit with its carrying amount and an impairment charge is measured as the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company has
The Company’s intangible asset consists of the customer relationship acquired as part of the JAR Acquisition. The asset is amortized on a straight-line basis over the estimated useful life, as outlined below:
Categories | | Estimated useful life |
Customer Relationship | |
Revenue recognition
ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration it expects to receive in exchange for those goods or services as performance obligations are satisfied. ASC 606 applies a five-step model for revenue recognition, which requires the Company to: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The Company is engaged in providing last-mile delivery services as an Independent Service Provider (ISP) for FedEx and provides logistics solutions primarily in the United States. The Company coordinates with FedEx for the transport of goods pursuant to FedEx’s instructions and the end-recipient’s designated destination (the end-recipient is FedEx’s customer, not the Company’s). Once the goods arrive at the end-recipient’s designated destination, the end-recipient acknowledges the delivery note—this confirmation serves as evidence of the Company’s completion of delivery services for FedEx, and the transfer of control of the service obligation to FedEx is deemed complete, marking the successful fulfillment of the logistics services for FedEx. The Company derives all revenue from both fixed service charges and activity-based charges under its ISP Agreement with FedEx. Performance obligations under the ISP Agreement include (i) weekly continuous service coverage for designated service areas (fixed weekly service charges), (ii) execution of delivery and pickup stops for FedEx (stop charges and e-commerce stop charges), (iii) handling and delivering packages for FedEx (package charges, including e-commerce and large package deliveries), and (iv) compliance with FedEx’s brand and branding requirements (apparel and vehicle branding fees).
Revenue is recognized as follows:
| ● | Over Time: Fixed weekly service charges and branding-related revenue (e.g., apparel and vehicle branding) are recognized evenly over the contractual service period, as the Company satisfies the performance obligation of continuous service coverage and branding compliance over time for FedEx. |
| ● | Point-in-Time: Activity-based revenue, including stop charges, package charges, and fuel surcharges, is recognized upon completion of the respective performance obligation (e.g., completing a delivery or pickup stop for FedEx and obtaining the end-recipient’s delivery confirmation). Recognition of this revenue is further subject to verification and confirmation of the actual completed activity volume by FedEx via its proprietary systems, consistent with the terms of the ISP Agreement. |
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Each service task assigned by FedEx (including stop execution and package delivery) is a distinct component of the overall performance obligations under the ISP Agreement; the aggregate of these tasks constitutes the single ongoing performance obligation of providing last-mile delivery services to FedEx as an ISP. The transaction price under the ISP Agreement is determined based on mutually negotiated fixed and variable charges (Negotiated Charges) between the Company and FedEx, documented in the ISP Agreement’s Schedule C and related attachments. The fixed component (weekly service charges) is set at the inception of the rate term; the variable component (activity-based charges) is tied to the actual volume of services completed (e.g., number of stops, packages handled) and includes fuel surcharges that adjust weekly based on market fuel prices. There are no rebates, returns, or other material variable consideration provisions outside of the agreed activity-based charges. As FedEx is the Company’s sole counterparty, there is no prepayment requirement from customers; the Company and FedEx settle service fees based on FedEx’s official confirmation of the actual completed service volume for each settlement period. Since the fixed and activity-based charges under the ISP Agreement are explicitly tied to separate, distinct performance obligations (continuous service coverage vs. per-unit activity execution), no allocation of the transaction price is required under ASC 606. For activity-based revenue, it is recognized at a point in time when control of the service (for FedEx) is transferred and the delivery is completed to the end-recipient’s designated destination, as evidenced by the end-recipient’s signature on the delivery note and subsequent verification by FedEx. Transit periods for individual delivery tasks typically do not exceed one month, and the Company and FedEx settle all service fees on a regular contractual basis. The Company has a contractual credit term with FedEx for service fee settlement, with standard payment terms of one week.
Revenue is presented on a gross basis, as the Company acts as the principal in the transaction with FedEx. This conclusion is based on the following considerations: i) the Company manages all aspects of the last-mile delivery process for FedEx and exercises full control over the delivery service before transferring the completed service to FedEx; ii) the Company has the contractual right to negotiate all fixed and activity-based charges (Negotiated Charges) with FedEx and bears the operational and market risks associated with service delivery (e.g., fluctuations in labor, fuel, and equipment costs); iii) The Company is primarily responsible for fulfilling the promise to provide delivery services in meeting FedEx’s service requirements and FedEx’s customer (end-recipient) delivery expectations, including resolving delivery-related complaints and assuming liability for service failures.
Cost of revenue
Cost of revenue primarily includes direct expenses incurred to fulfill the Company’s obligations under the ISP Agreement with FedEx. These costs consist of (i) driver compensation and benefits; (ii) depreciation and amortization expenses; (iii) fuel expenses; (iv) vehicle maintenance and leasing expenses; (v) insurance premiums related to vehicle and liability coverage, and (vi) other operational expenses such as route management systems, uniforms, and branding compliance. All expenses are directly attributable to the Company’s delivery operations and are recognized in the same period as the corresponding revenue.
Concentration of Credit Risk
The Company is exposed to a concentration of credit risk due to its reliance on a single customer, FedEx, which accounted for
Research and development
Research and development costs are expensed as incurred in accordance with ASC 730, Research and Development. We do not capitalize internal or external software development costs. We may engage third-party service providers to develop, upgrade and adapt our proprietary ROUTE X application, and payments made in advance of the receipt of such services are recorded within prepaid items and other current assets and are expensed when the related services are rendered.
Income Taxes
Income taxes are accounted for using the asset and liability method, as prescribed under ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.
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Prior to its acquisition by the Company, JAR (the Predecessor), as an S-Corporation, was not subject to federal corporate income tax, and its taxable income, deductions, and credits were passed through to its stockholders. The Predecessor was subject to the California corporate franchise tax under RTC § 23802, which requires S-Corporations to pay the greater of a minimum tax of $800 or 1.5% of net taxable income derived from California sources. In accordance with ASC 740-10-15-4, deferred tax assets and liabilities were recognized for state-level temporary differences and net operating loss (“NOL”) carryforwards. Following the JAR Acquisition, the Predecessor became a wholly owned subsidiary of the Company, a C-Corporation, and is subject to corporate income tax under the Internal Revenue Code and applicable state tax laws.
ASC 740 requires a tax position to meet a recognition threshold before it is recognized in the financial statements. The Company assesses uncertain tax positions based on management’s evaluation of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. This assessment includes consideration of any potential appeals or litigation processes based on the technical merits of the tax position. Because significant assumptions and judgments are involved in determining whether a tax benefit is more likely than not to be sustained, actual results may differ from estimates under different assumptions or conditions. The Company recognizes interest and penalties related to unrecognized tax benefits as part of the income tax provision in the consolidated statements of operations.
Loss per share
The Company computes loss per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the three months and nine months ended August 31, 2026 and 2025, there were
Related parties and transactions
The Company identifies related parties, and accounts for and discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactions between related parties are considered to be related party transactions even though they may not be given accounting recognition.
Segment reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment.
In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company’s revenue segments have similar economic characteristics, and they are managed as a single business unit. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s CODM has been identified as the chief executive officer (the “CEO”), who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. The Company has determined that there is only
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Recent Accounting Pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendment provides (1) all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets and (2) entities other than public business entities with an accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This guidance is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the above new accounting pronouncements or guidance on the consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-use Software: Targeted Improvements to the Accounting for Internal-use Software which amends the guidance in ASC 350-40: Targeted Improvements to the Accounting for Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), to establish guidance on the recognition, measurement, and presentation of government grants received by business entities. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028 for public business entities, and for annual reporting periods beginning after December 15, 2029 for entities other than public business entities. As an emerging growth company that has elected the extended transition period, the Company will adopt ASU 2025-10 for annual reporting periods beginning after December 15, 2029. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2025-10 on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11—Interim Reporting (Topic 270): Narrow Scope Improvements, which clarifies the current requirements under Topic 270. The ASU provides a comprehensive list of required interim disclosures and requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities, and for interim reporting periods within annual reporting periods beginning after December 15, 2028 for entities other than public business entities. As an emerging growth company that has elected the extended transition period, the Company will adopt ASU 2025-11 for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements and related disclosures.
The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.
NOTE 3 — ACCOUNTS RECEIVABLE
Accounts receivable consists of the following:
| | As of August 31, | | As of November 30, | ||
| | 2026 | | 2025 | ||
| | (Unaudited) | | (Audited) | ||
Accounts receivable | | $ | | | $ | |
As of the issuance date of this report, the August 31, 2026 and November 30, 2025 accounts receivable balances have been fully collected.
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NOTE 4 — LOANS RECEIVABLE
Loans receivable consists of the following:
| | As of August 31, | | As of November 30, | ||
| | 2026 | | 2025 | ||
| | (Unaudited) | | | (Audited) | |
Working funds to third party companies-principal | | $ | | | $ | |
Loans receivable | | $ | | | $ | |
During fiscal year 2025, the Company entered into short-term loan agreements with
During the three months ended August 31, 2026, the Company entered into short-term loan agreements with
During the nine months ended August 31, 2026, the Company received principal repayments totaling $
NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
| | As of August 31, | | As of November 30, | ||
| | 2026 | | 2025 | ||
| | (Unaudited) | | (Audited) | ||
Other prepaid insurance | | $ | | | $ | |
Professional services | |
| | |
| |
Prepayment for R&D service | | | | | | |
Interest accrued | |
| | |
| |
Other current assets | |
| | |
| |
Total Prepaid expenses and other current assets | | $ | | | $ | |
The balance of $
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NOTE 6 — PLANT AND EQUIPMENT
Plant and equipment consists of the following:
| | As of August 31, | | As of November 30, | ||
| | 2026 | | 2025 | ||
| | (Unaudited) | | (Audited) | ||
Vehicles | | $ | | | $ | |
Subtotal | |
| | |
| |
Less: accumulated depreciation | |
| ( | |
| ( |
Plant and equipment | | $ | | | $ | |
As of October 25, 2024, upon closing of the JAR Acquisition, the Successor revalued its vehicles to a fair value of $
Depreciation expense was $
NOTE 7 — ACQUISITION
On September 16, 2024, the Company entered into a Stock Purchase Agreement (“Purchase Agreement”) to acquire
The Company and JAR were unrelated parties. There was no common control between the Company and JAR prior to the JAR Acquisition. Immediately after the JAR Acquisition, the Company took control of JAR in accordance with the Purchase Agreement. No former owners of JAR remain in governance or management positions in the Company post-acquisition. Based on the above factors, the Company assessed the appropriate accounting treatment under ASC 805 and concluded that the Company is the accounting acquirer. JAR became a
As part of the transaction structure, certain assets and liabilities, including cash, accounts receivable, and outstanding debt, were excluded from the acquisition and remained the responsibility of the sellers of JAR. The Acquisition was accounted for as a business combination using the acquisition method of accounting. In accordance with ASC 805, the purchase price was allocated to the acquired assets and assumed liabilities based on their estimated fair values at the acquisition date.
The Company completed the initial purchase price allocation for the acquisition of JAR as of October 25, 2024. Assets (vehicles) acquired were recorded at estimated fair values as of the acquisition date based on management’s estimates, available information, and supportable assumptions that management considered reasonable.
As part of the purchase price allocation, a deferred tax liability (“DTL”) was recognized for the basis difference in the acquired identifiable intangible asset—customer relationships. In accordance with ASC 805-740-25-3,
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The allocation of the purchase price to the major classes of assets as of October 25, 2024 is as follows:
Plant and equipment | | | |
Customer relationship |
| | |
Deferred tax liabilities |
| | ( |
Goodwill |
| | |
Total purchase consideration | | $ | |
The fair value of customer relationship was determined using assumptions that are representative of those typically used by a market participant in estimating fair value.
The fair value of the identified intangible asset, i.e. customer relationship, and its estimated average useful life as of August 31, 2026 are as follows:
| | | | | | Average | ||
| | As of August 31, | | As of November 30, | | Useful Life | ||
| | 2026 | | 2025 | | (in Years) | ||
Customer relationship | | $ | | | $ | |
| |
Less: accumulated amortization | |
| ( | |
| ( |
| |
Total intangible assets | | $ | | | $ | |
| |
Amortization expense was $
NOTE 8 — OTHER PAYABLES AND OTHER CURRENT LIABILITIES
A summary of the Company’s other payables and other liabilities:
| | As of August 31, | | As of November 30, | ||
| | 2026 | | 2025 | ||
| | (Unaudited) | | (Audited) | ||
Compensation payable | | $ | | | $ | |
Credit card payable |
| | |
| | |
Other accrued expense |
| | |
| | |
Total other payables and other liabilities | | $ | | | $ | |
Compensation payable represents salaries, wages and related payroll obligations earned by employees but not yet paid as of the balance sheet date.
Credit card payable represents outstanding corporate credit card balances, which are settled in the ordinary course of business.
Other accrued expenses consist primarily of professional service fees payable, including audit, tax, legal and consulting fees, which are accrued as incurred and settled in the ordinary course of business. The decrease in other payables and other current liabilities from $
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NOTE 9 — INSURANCE PREMIUM FINANCING PAYABLE
A summary of the Company’s insurance premium financing payable is listed as follows:
Lender | | As of August 31, 2026 | | As of November 30, 2025 | | Interest rate |
| ||
| | (Unaudited) | | (Audited) | | |
| ||
First Insurance Funding | | $ | | | $ | |
| | % |
Total Insurance premium financing payable | | $ | | | $ | |
| — | |
On August 21, 2026, the Company entered into a premium finance agreement with First Insurance Funding, whereby the Company was loaned a total principal amount of $
Interest Expense on Insurance Premium Financing Payable
During the three months ended August 31, 2026 and 2025, the Company recognized $nil and $nil interest expense associated with its insurance premium financing payable, respectively.
During the nine months ended August 31, 2026 and 2025, the Company recognized $
NOTE 10 — INCOME TAXES
The Company and JAR are subject to the tax law of the United States. The Company elected to file income taxes as a corporation for the tax year ended November 30, 2024.
(i)The components of the income tax provision were as follows:
| | For the Three Months | | For the Nine Months | ||||||||
| | Ended August 31, | | Ended August 31, | ||||||||
| | 2026 | | | 2025 | | 2026 | | 2025 | |||
| | (Unaudited) | | | (Unaudited) | (Unaudited) | | (Unaudited) | ||||
Current tax provision |
| | | | | |
| | |
| | |
Federal | | $ | — | | $ | — | | $ | — | | $ | — |
State | |
| — | | | | |
| | |
| |
| |
| — | | | | |
| | |
| |
Deferred tax provision (benefit) | |
| | | | | |
| | |
| |
Federal | |
| — | | | | |
| — | |
| ( |
State | |
| — | | | | |
| — | |
| ( |
| |
| — | | | | |
| — | |
| ( |
Income tax provision (benefit) | | $ | — | | $ | | | $ | | | $ | ( |
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(ii)Reconciliations of the statutory income tax rate to the effective income tax rate were as follows:
| | For the Three Months | | For the Nine Months |
| ||||||||
| | Ended August 31, | | Ended August 31, |
| ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 |
| ||||
| | (Unaudited) | | (Unaudited) | | | (Unaudited) | | | (Unaudited) |
| ||
Federal statutory tax rate |
| | | % | | | % | | | % | | | % |
Permanent Items | | $ | — | % | $ | — | % | $ | — | % | $ | — | % |
State statutory tax rate |
| | | % | | ( | % | | | % | | | % |
Non-deductible expenses |
| | — | % | | ( | % | | — | % | | ( | % |
Return to Provision | | | — | % | | — | % | | — | % | | — | % |
DTA True Up | | | | % | | — | % | | | % | | — | % |
Other | | | — | % | | — | % | | — | % | | — | % |
Change in valuation allowance | | | ( | % | | — | % | | ( | % | | — | % |
Effective tax rate |
| $ | — | % | $ | ( | % | $ | ( | % | $ | | % |
(iii)Deferred tax liabilities were composed of the following:
| | As of August 31, | | As of November 30, | ||
| | 2026 | | 2025 | ||
| | (Unaudited) | | (Audited) | ||
Deferred tax assets: |
| | |
| | |
Net operating loss carry-forwards |
| | |
| | |
Depreciation expense |
| | — |
| | — |
Less: Valuation allowance |
| | ( |
| | ( |
Total deferred tax assets |
| | |
| | |
| | | | | | |
Deferred tax liabilities: |
| | |
| | |
Customer relationship recognized upon JAR Acquisition |
| | ( |
| | ( |
Depreciation expense |
| | ( |
| | ( |
Total deferred tax liabilities |
| | ( |
| | ( |
Total deferred tax assets (liabilities) | | $ | | $ | | |
Valuation Allowance
The Company recognizes income taxes using the asset and liability method. Management establishes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of assets and liabilities, using the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are also recognized for tax attributes such as net operating loss carryforwards. Realization of the Company’s gross deferred tax asset depends on its ability to generate sufficient taxable income of the appropriate character within the carryforward periods of the jurisdictions in which the net operating and capital losses, deductible temporary differences and credits are generated. In assessing its ability to realize deferred tax assets, the Company considers all available evidence and records valuation allowances to reduce deferred tax assets to the amounts that management concludes are more-likely-than-not to be realized. As of August 31, 2026 and November 30, 2025, the Company believes that a valuation allowance is required.
Uncertain Tax Position
The Company recognizes income tax benefits associated with uncertain tax positions, when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more likely than not recognition threshold, management initially and subsequently measures the tax benefit as the largest amount judged to have a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority. The Company has concluded that there are
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State Income Tax
To the extent there is state nexus based on sales, location of employees, inventory, and/or other property, a tax provision is prepared and recorded. In 2026, the Company identified nexus in California.
For the three months ended August 31, 2026, the Company recorded a tax provision of $
NOTE 11 — CONCENTRATIONS
Credit risk
As of August 31, 2026 and November 30, 2025, $
As of August 31, 2026 and November 30, 2025, $
Accounts receivable are unsecured and derived entirely from revenue earned under the Company’s ISP Agreement with FedEx.
Concentrations
The Company’s sole customer, FedEx, accounted for
NOTE 12 — STOCKHOLDERS’ EQUITY
Common Stock
The Company was incorporated on April 3, 2024 under the laws of the State of Delaware. Under the Company’s amended and restated certificate of incorporation on December 19, 2024, the total authorized number of shares of common stock is
On August 27, 2024, the Company entered into
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During the period from October 26, 2024 to November 30, 2024, the Company received a capital contribution of $
During the year ended November 30, 2025, the Company received capital contributions of $
On August 22, 2025, the Company closed its IPO of
On March 10, 2026, the Company entered into Stock Purchase Agreements with
Reverse Stock Split
On December 19, 2024, the Company’s board of directors approved and adopted the Amended and Restated Certificate of Incorporation, pursuant to Sections 242 and 245 of the Delaware General Corporation Law (DGCL), which authorized a reverse stock split at a ratio of one share of new common stock for each six shares of old common stock. The Company subsequently filed the Amended and Restated Certificate of Incorporation with the State of Delaware, and the Reverse Stock Split became effective at 12:00 AM, Eastern Time, on December 23, 2024. All share information included in the financial statements has been retrospectively adjusted to reflect the Reverse Stock Split as if it had occurred at the beginning of the earliest period presented. Immediately after the reverse stock split, there were
As of August 31, 2026, there were
NOTE 13 — COMMITMENTS AND CONTINGENCIES
Lease commitments
The total future minimum lease payments of short-term lease under the non-cancellable operating lease with respect to the office as of August 31, 2026 are payable as follows:
| | | |
| | Lease Commitment | |
Within 1 year | | $ | |
Contingencies
From time to time, the Company may be a party to various legal actions arising in the ordinary course of business. The Company accrues expenses associated with these matters when they become probable and the amount can be reasonably estimated. Legal expenses incurred in connection with loss contingencies are expensed as incurred.
In February 2025, Pablo Aguero (a former employee of JAR, the “Applicant”) filed a workers’ compensation claim with the California Workers’ Compensation Appeals Board (the “WCAB”) (WCAB Case No: ADJ20520242). This claim relates to his employment in or around May 2023, prior to the acquisition of JAR. While the WCAB filing does not specify a monetary demand, the Applicant previously issued a pre-litigation demand letter asserting claims totaling approximately $
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Accordingly, the claim is currently being handled by the sellers and legal counsel designated by JAR’s employment practices liability insurance carrier. The Company has requested their assistance in responding to subpoenas issued in connection with the WCAB proceeding, which seek personnel and payroll records related to the Applicant, and they are currently in the process of providing the requested documents. Based on the information available to date, the Company does not anticipate that the outcome of this proceeding will have a material impact on the Company’s business or financial condition.
In June 2025, Rafael Perez Linarez (a former employee of JAR) filed a workers’ compensation claim with the California Workers’ Compensation Appeals Board (WCAB Case No: unassigned). This claim relates to his employment from around July 2020 to June 2022, prior to the Company’s acquisition of JAR. Pursuant to the terms of the stock purchase agreement for the acquisition of JAR, liabilities arising from pre-closing employment matters remain the responsibility of the sellers. The Company has requested their assistance in responding to subpoenas issued in connection with the WCAB proceeding, which seek personnel and payroll records related to the Rafael Perez Linarez, and they are currently in the process of providing the requested documents. Based on the information available to date, the Company does not anticipate that the outcome of this proceeding will have a material impact on the Company’s business or financial condition.
In June 2025, Elma Asusena Oliveros filed a workers’ compensation claim with the California Workers’ Compensation Appeals Board (WCAB Case No: ADJ21112337). This claim relates to her employment from around May 2025. As of the date of this report, this matter has been referred to the Company’s workers’ compensation insurance carrier and no cost estimates are currently available.
In July 2025, Joseph McNeal (a former employee of JAR) filed a workers’ compensation claim with the California Workers’ Compensation Appeals Board (WCAB Case No: ADJ21061503). This claim relates to his employment from October 2024 to April 2025. The Company has responded to related subpoenas. No cost estimates are currently available.
In January 2026, the Company received a demand letter from a former employee of JAR, asserting certain employment-related claims. No legal proceeding has been initiated in connection with this matter. The Company has reached an agreement in principle to settle the claims. The Company does not believe this matter is material to its financial condition or results of operations.
In February 2026, a former employee of JAR filed a wage claim with the California Labor Commissioner (State Case No. WC-CM-1110021). The claim relates to employment from approximately November 2024 to July 2025. The Company was served with the notice in March 2026 and is evaluating the matter. The Company does not believe the matter will have a material adverse effect on its financial condition or results of operations.
As of August 31, 2026, the Company did not have any other material legal claims or litigation that, individually or in aggregate, could have a material adverse impact on the Company’s audited condensed consolidated financial position, results of operations, and cash flows.
NOTE 14 — RELATED PARTY TRANSACTIONS
a. Nature of relationship with related parties
Name | | Relationship with the Company |
Mr. Huan Liu | | Chairman of the Board of Directors |
Centurion Tech Holdings Limited | | Stockholder |
Eternal Blessing Holdings Limited | | Stockholder |
Grand Bright International Holdings Ltd | | Stockholder |
During the three months ended August 31, 2026, the Company had no related party transactions required to be disclosed in accordance with ASC 850, Related Party Disclosures. There were
20
NOTE 15 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events through October 14, 2026, the date the condensed consolidated financial statements were available to be issued, and has determined that, other than the matters described below, no material subsequent events require recognition or disclosure.
On August 28, 2026, the Company filed a registration statement on Form S-3 (File No. 333-298648) with the U.S. Securities and Exchange Commission (the “SEC”), as amended on October 9, 2026 (the “Form S-3”). The Form S-3 is an unallocated universal shelf registration statement under which the Company may offer and sell, following effectiveness, from time to time in one or more offerings, up to an aggregate offering price of $
On September 2, 2026, the Company held its 2026 Annual Meeting of Stockholders (the “2026 Annual Meeting”). At the 2026 Annual Meeting, the Company’s stockholders (i) re-elected Huan Liu, Yidan Chen, Huaqin He, Jianing Lu and Huanhuan Tian as directors, each to serve until the Company’s next annual meeting of stockholders or until their respective successors are duly elected or appointed; (ii) ratified the appointment of Audit Alliance LLP as the Company’s independent registered public accounting firm for the fiscal year ending November 30, 2026; and (iii) approved the Elite Express Holding Inc. 2026 Stock Incentive Plan.
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q.
Forward-Looking Statements
This quarterly report on Form 10-Q contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “project,” or “anticipate,” and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth under “Item 1A. Risk Factors” in the Annual Report on Form 10-K (File No. 001-42811) (the “Annual Report”), which was filed with the SEC on February 27, 2026, as amended on March 18, 2026.
Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed in this quarterly report. We do not intend, and undertake no obligation, to update any forward-looking statement, except as required by law.
The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this quarterly report on Form 10-Q.
22
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a holding company incorporated in Delaware. Through our wholly owned subsidiary, JAR, a California-based operating entity, we specialize in last-mile delivery services within California. Our core business focuses on retrieving packages from distribution hubs and ensuring their prompt and secure delivery to recipients’ doorsteps. Committed to innovation and efficiency, our mission is to optimize last-mile logistics by providing efficient, reliable, and innovative delivery solutions.
As of the date of this report, we employ approximately 29 full-time staff, including approximately 23 drivers. Our fleet consists of approximately 22 trucks and trailers. We provide exclusive pickup and delivery services within our designated service area, covering approximately 1,665.28 square miles. We utilize GroundCloud, a leading logistics software, in the course of our business, for route optimization, driver management, and compliance monitoring. Additionally, we are actively expanding our investment in advanced technologies to enhance our scalability, automate our operations, and drive our data-driven decision-making. On average, we complete between 1,100 and 1,700 stops, facilitating the pickup and delivery of approximately 1,800 to 2,500 packages. During peak seasons, our daily stops rise to an estimated 2,000, allowing us to meet heightened demand with efficiency and reliability.
Currently, we pick up packages from the distribution hubs of FedEx and deliver them to recipients within designated service areas. While FedEx has been our only customer under an Independent Service Provider (“ISP”) agreement, we are actively exploring opportunities to expand our customer base, diversify our revenue streams and strengthen our market presence.
The holding company, prior to the acquisition of JAR on October 25, 2024 (the “Acquisition Date”), did not have any active business operations.
Key Factors Affecting Our Results of Operations
Our results of operations are influenced by several interrelated factors that reflect the dynamic nature of our business environment. The following are the key factors that impact our performance:
| ● | E-Commerce Growth: We believe the rapid growth of e-commerce is a driving force behind the increased demand for last-mile delivery services. As consumer habits continue to shift toward online shopping, we anticipate benefitting from rising delivery volumes. Meeting customer expectations for fast and reliable service requires ongoing investments in technology and operational capacity. |
| ● | Labor Costs and Workforce Management: Labor costs are one of the largest components of our cost structure, accounting for approximately 50% or more of our total costs of revenue for both the three and nine months ended August 31, 2026 and 2025. Retaining a skilled and motivated workforce is critical to maintaining service quality. We strive to mitigate these challenges by optimizing staffing models, including employing part-time and gig workers during peak demand periods, and investing in workforce training and retention programs to improve driver efficiency and reduce turnover. |
| ● | Fuel Costs and Operational Efficiency: Fuel costs are another significant component of our cost of revenue and fluctuations in fuel prices can directly affect our profitability. We managed fuel expenses through standard route planning and operational adjustments on or prior to the Acquisition Date. To further enhance efficiency, we have implemented route optimization strategies aimed at reducing mileage and improving fuel efficiency. In addition, we are exploring the integration of electric vehicles to reduce our reliance on traditional fuel sources and align with our sustainability objectives. |
| ● | Seasonal Demand and Resource Scaling: Peak seasons, such as the holiday period, account for a substantial portion of our annual revenue. Managing this demand requires precise planning and execution, including the temporary hiring of additional drivers, flexible routing strategies, and leveraging the FedEx DRO system, a predictive tool to anticipate delivery patterns. Successfully navigating these high-demand periods is essential to maintaining our reputation and customer relationships. |
23
| ● | Technology Investments: We utilize GroundCloud, a leading logistics software, for route optimization, driver management, and compliance monitoring. While we continue to leverage GroundCloud for route optimization, driver management, and compliance monitoring, we are also expanding our investments in advanced technologies to enhance operational scalability, data-driven decision-making, and automation. By continuously evaluating and adopting innovative solutions, we aim to enhance efficiency, improve service reliability, and optimize operational costs. These ongoing investments in logistics technology are expected to strengthen our capacity to manage growing delivery volumes and position us for long-term success. |
| ● | Customer Concentration and Diversification: As of the date of this report, 100% of our revenue is derived from FedEx. While this partnership provides operational stability, it also exposes us to risks associated with customer dependency. To mitigate these risks, we are actively exploring opportunities to partner with additional carriers and expand our customer base, which we believe will diversify our revenue streams and reduce dependency on a single client. |
| ● | Capital Investments in Infrastructure: Sustained growth depends on strategic investments in vehicles, the transition to electric vehicles, and operational infrastructure, which includes tools and software that support our operations. We focused primarily on maintaining existing operations prior to the Acquisition Date. Since the Acquisition Date, we have adopted a more proactive investment strategy to expand capacity, enhance efficiency, and integrate advanced logistics solutions. These investments support our ability to scale operations, meet customer expectations, and enhance operational efficiency. While these expenditures may impact short-term profitability, they are essential for long-term success. |
Results of Operations
Comparison of Results of Operations for the Three Months and Nine Months ended August 31, 2026 and August 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months | | | | | | | For the Nine Months | | | | | |
| ||||||||||||||||
| | Ended August 31, | | | | | | | Ended August 31, | | | | | |
| ||||||||||||||||
| | 2026 | | 2025 | | Change | | 2026 | | 2025 | | Change |
| ||||||||||||||||||
| | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % |
| ||||||
Revenue | | $ | 766,422 | | 100.0 | % | $ | 633,865 | | 100.0 | % | $ | 132,557 | | 20.9 | % | $ | 2,298,549 |
| 100.0 | % | $ | 1,956,258 |
| 100.0 | % | $ | 342,291 |
| 17.5 | % |
Cost of Revenue | |
| | | | |
| | | | |
| | | | |
| |
| | |
| |
| | |
| |
| | |
Cost of service | |
| 76,902 | | 10.0 | % |
| 56,974 | | 9.0 | % |
| 19,928 | | 35.0 | % |
| 235,198 |
| 10.2 | % |
| 176,984 |
| 9.0 | % |
| 58,214 |
| 32.9 | % |
Cost of labor | |
| 357,790 | | 46.7 | % |
| 347,945 | | 54.9 | % |
| 9,845 | | 2.8 | % |
| 1,088,724 |
| 47.4 | % |
| 1,085,885 |
| 55.5 | % |
| 2,839 |
| 0.3 | % |
Fuel | |
| 114,408 | | 14.9 | % |
| 94,654 | | 14.9 | % |
| 19,754 | | 20.9 | % |
| 336,674 |
| 14.6 | % |
| 304,600 |
| 15.6 | % |
| 32,074 |
| 10.5 | % |
Maintenance and repairs | |
| 91,291 | | 11.9 | % |
| 63,143 | | 10.0 | % |
| 28,148 | | 44.6 | % |
| 223,248 |
| 9.7 | % |
| 207,709 |
| 10.6 | % |
| 15,539 |
| 7.5 | % |
Depreciation and amortization | |
| 30,272 | | 3.9 | % |
| 64,332 | | 10.1 | % |
| (34,060) | | (52.9) | % |
| 80,544 |
| 3.5 | % |
| 188,668 |
| 9.6 | % |
| (108,124) |
| (57.3) | % |
Total cost of revenue | |
| 670,663 | | 87.4 | % |
| 627,048 | | 98.9 | % |
| 43,615 | | 7.0 | % |
| 1,964,388 |
| 85.4 | % |
| 1,963,846 |
| 100.3 | % |
| 542 |
| 0.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Profit (Loss) | |
| 95,759 | | 12.6 | % |
| 6,817 | | 1.1 | % |
| 88,942 | | (1,304.7) | % |
| 334,161 |
| 14.6 | % |
| (7,588) |
| (0.3) | % |
| 341,749 |
| 4,503.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative expenses | |
| 1,017,024 | | 132.7 | % |
| 151,600 | | 23.9 | % |
| 865,424 | | 570.9 | % |
| 2,187,702 |
| 95.2 | % |
| 576,981 |
| 29.5 | % |
| 1,610,721 |
| 279.2 | % |
R&D expenses | | | — | | — | % | | — | | — | % | | — | | — | % | | 2,150,000 | | 93.5 | % | | — | | — | % | | 2,150,000 | | 100.0 | % |
Total operating expenses | |
| 1,017,024 | | 132.7 | % |
| 151,600 | | 23.9 | % |
| 865,424 | | 570.9 | % |
| 4,337,702 |
| 188.7 | % |
| 576,981 |
| 29.5 | % |
| 3,760,721 |
| 651.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss from Operations | |
| (921,265) | | (120.1) | % |
| (144,783) | | (22.8) | % |
| (776,482) | | 536.3 | % |
| (4,003,541) |
| (174.1) | % |
| (584,569) |
| (29.8) | % |
| (3,418,972) |
| 584.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other Income (Expense) | |
| | | | |
| | | | |
| | | | |
| |
| | |
| |
| | |
| |
| | |
Interest income, net | |
| 161,127 | | 21.0 | % |
| 2,248 | | 0.4 | % |
| 158,879 | | 7,067.6 | % |
| 575,965 |
| 25.1 | % |
| 2,248 |
| 0.1 | % |
| 573,717 |
| (25,521.2) | % |
Other income, net | |
| — | | — | % |
| — | | — | % |
| — | | — | % |
| 25,992 |
| 1.1 | % |
| 21,285 |
| 1.1 | % |
| 4,707 |
| 22.1 | % |
Total other income, net | |
| 161,127 | | 21.0 | % |
| 2,248 | | 0.4 | % |
| 158,879 | | 7,067.6 | % |
| 601,957 |
| 26.2 | % |
| 23,533 |
| 1.2 | % |
| 578,424 |
| (2,457.9) | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss before Income Tax Expense | |
| (760,138) | | (99.1) | % |
| (142,535) | | (22.4) | % |
| (617,603) | | 433.3 | % |
| (3,401,584) |
| (147.9) | % |
| (561,036) |
| (28.6) | % |
| (2,840,548) |
| (506.3) | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income Tax Provision (Benefit) | |
| — | | — | % |
| 43,346 | | 6.80 | % |
| (43,346) | | 100.0 | % |
| 1,600 |
| 0.1 | % |
| (62,552) |
| (3.2) | % |
| 64,152 |
| (102.6) | % |
Net Loss | | $ | (760,138) | | (99.1) | % | $ | (185,881) | | (29.2) | % | $ | (574,257) | | 308.9 | % | $ | (3,403,184) |
| (148.0) | % | $ | (498,484) |
| (25.4) | % | $ | (2,904,700) |
| 582.7 | % |
Revenue
Our revenue is structured into two main categories: (i) fixed revenue, which includes weekly service charges, branding-related reimbursements, and peak season surcharges, and (ii) activity-based revenue, which includes charges based on the number of stops, packages delivered, e-commerce orders, fuel surcharges, and other variable components.
For the three months ended August 31, 2026, we generated total revenue of $766,422, representing an increase of $132,557, or 20.9%, compared with $633,865 for the three months ended August 31, 2025. These increases were primarily attributable to higher weekly service charges under our updated service contract and higher volume-based activity revenue, including fuel surcharge revenue.
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For the nine months ended August 31, 2026, we generated total revenue of $2,298,549, representing an increase of $342,291, or 17.5%, compared with $1,956,258 for the nine months ended August 31, 2025. These increases were primarily attributable to higher weekly service charges, higher volume-based activity revenue, particularly from e-commerce deliveries and fuel surcharge revenue.
The table below sets forth a breakdown of revenue components for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months | | | | | | | For the Nine Months | | | | | | | ||||||||||||||||
| | Ended August 31, | | | | | | | Ended August 31, | | | | | |
| ||||||||||||||||
| | 2026 | | 2025 | | Change | | 2026 | | 2025 | | Change |
| ||||||||||||||||||
| | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % |
| ||||||
Fixed: |
| | |
| |
| | |
| |
| | |
| |
| | |
| |
| | |
| |
| | |
| | |
Weekly service charges | | $ | 206,150 | | 26.9 | % | $ | 146,221 | | 23.1 | % | $ | 59,929 | | 41.0 | % | $ | 559,380 |
| 24.3 | % | $ | 438,182 |
| 22.4 | % | $ | 121,198 |
| 27.7 | % |
Branding-related | |
| 10,080 | | 1.3 | % |
| 9,423 | | 1.5 | % |
| 657 | | 7.0 | % |
| 30,790 |
| 1.3 | % |
| 26,729 |
| 1.4 | % |
| 4,061 |
| 15.2 | % |
Subtotal: | | | 216,230 | | 28.2 | % |
| 155,644 | | 24.6 | % |
| 60,586 | | 38.9 | % | | 590,170 |
| 25.6 | % |
| 464,911 |
| 23.8 | % |
| 125,259 |
| 26.9 | % |
Activity-based: | |
| | | | |
| | | | |
| | | | |
| |
| | |
| |
| | |
| |
| | |
Stops | |
| 119,213 | | 15.6 | % |
| 102,705 | | 16.2 | % |
| 16,508 | | 16.1 | % |
| 338,129 |
| 14.7 | % |
| 306,607 |
| 15.7 | % |
| 31,522 |
| 10.3 | % |
Packages | |
| 17,065 | | 2.2 | % |
| 15,795 | | 2.5 | % |
| 1,270 | | 8.0 | % |
| 48,957 |
| 2.1 | % |
| 45,509 |
| 2.3 | % |
| 3,448 |
| 7.6 | % |
E-Commerce | |
| 273,032 | | 35.6 | % |
| 269,965 | | 42.6 | % |
| 3,067 | | 1.1 | % |
| 875,409 |
| 38.1 | % |
| 836,884 |
| 42.8 | % |
| 38,525 |
| 4.6 | % |
Large packages | |
| 18,278 | | 2.4 | % |
| 19,543 | | 3.1 | % |
| (1,265) | | (6.5) | % |
| 56,420 |
| 2.5 | % |
| 55,583 |
| 2.8 | % |
| 837 |
| 1.5 | % |
Fuel Surcharge | |
| 118,291 | | 15.4 | % |
| 69,697 | | 11.0 | % |
| 48,594 | | 69.7 | % |
| 319,096 |
| 13.9 | % |
| 212,816 |
| 10.9 | % |
| 106,280 |
| 49.9 | % |
Surge Stops | |
| — | | — | % |
| — | | — | % |
| — | | — | % |
| 41,328 |
| 1.8 | % |
| 29,983 |
| 1.5 | % |
| 11,345 |
| 37.8 | % |
Subtotal: | |
| 545,879 | | 71.2 | % |
| 477,705 | | 75.4 | % |
| 68,174 | | 14.3 | % |
| 1,679,339 |
| 73.1 | % |
| 1,487,382 |
| 76.0 | % |
| 191,957 |
| 12.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other Pickup and Delivery (P&D) | |
| 4,313 | | 0.6 | % |
| 516 | | 0.3 | % |
| 3,797 | | 735.9 | % |
| 29,040 |
| 1.3 | % |
| 3,965 |
| 0.2 | % |
| 25,075 |
| 632.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Revenue | | $ | 766,422 | | 100.0 | % | $ | 633,865 | | 100.0 | % | $ | 132,557 | | 20.9 | % | $ | 2,298,549 |
| 100.0 | % | $ | 1,956,258 |
| 100.0 | % | $ | 342,291 |
| 17.5 | % |
On February 21, 2026, we renewed our agreement with FedEx. The new contract is valid until January 1, 2027. Under the new contract, the weekly service charge within the fixed fees has increased, while the fee standards for certain types of services under the activity-based model have decreased. This has resulted in varying degrees of increase and decrease across the components of our revenue.
For the three months ended August 31, 2026, total fixed revenue was $216,230, accounting for approximately 28.2% of total revenue, representing an increase of $60,586, or 38.9%, compared to the fixed revenue of $155,644, or approximately 24.6% of total revenue for the three months ended August 31, 2025. For the nine months ended August 31, 2026, total fixed revenue was $590,170, accounting for approximately 25.6% of total revenue, representing an increase of $125,259, or 26.9%, compared to the fixed revenue of $464,911, or approximately 23.8% for the nine months ended August 31, 2025. The increase was primarily due to higher weekly service charges under our renewed ISP agreement with FedEx, effective February 21, 2026.
For the three months ended August 31, 2026, total activity-based revenue was $545,879, or 71.2% of total revenue, compared with $477,705, or 75.4% of total revenue in the same period of the prior year, driven by a $48,594 increase in fuel surcharge revenue reflecting higher market fuel prices and a $16,508 increase in stop revenue as delivery activities increased. For the nine months ended August 31, 2026, total activity-based revenue was $1,679,339, or 73.1% of total revenue, compared with $1,487,382, or 76.0% of total revenue in the same period of the prior year. This growth was primarily driven by an increase in the number of parcels we handled and higher fuel surcharge revenue resulting from increased market fuel prices.
Among all revenue categories, E-commerce deliveries and weekly service charges were the two major contributors to our total revenue for both the three and nine months ended August 31, 2026 and August 31, 2025.
| ● | E-commerce deliveries generated $273,032 in revenue during the three months ended August 31, 2026, or 35.6% of total revenue, compared with $269,965, or 42.6%, during the three months ended August 31, 2025. The increase of $3,067, or 1.1%, reflected higher e-commerce delivery volumes, which more than offset a decrease in the per-unit e-commerce service rate under our renewed ISP agreement. E-commerce deliveries generated $875,409 in revenue during the nine months ended August 31, 2026, or 38.1% of total revenue, compared with $836,884, or 42.8%, during the nine months ended August 31, 2025. The increases were primarily driven by sustained residential delivery demand within our assigned FedEx service areas, E-commerce deliveries represented the largest revenue component in all reported periods. |
25
| ● | Weekly service charges totaled $206,150, or 26.9% of total revenue, for the three months ended August 31, 2026, compared with $146,221, or 23.1%, during the three months ended August 31, 2025. Weekly service charges totaled $559,380, or 24.3% of total revenue, for the nine months ended August 31, 2026, compared with $438,182, or 22.4%, during the nine months ended August 31, 2025. The increases in both periods, $59,929, or 41.0% during the third quarter of 2026 and $121,198, or 27.7% during the nine months ended August 31, 2026, were primarily attributable to the increase in the baseline contractual rates under our updated ISP agreement with FedEx. Under the renewed ISP agreement effective February 21, 2026, the higher weekly service charges are expected to continue contributing stable fixed revenue and to help offset any seasonal decline in activity-based revenue during the off-season. |
Cost of Revenue
The table below summarizes the total cost of revenue and its components for the interim periods presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months | | | | | | | For the Nine Months | | | | | |
| ||||||||||||||||
| | Ended August 31, | | | | | | | Ended August 31, | | | | | |
| ||||||||||||||||
| | 2026 | | 2025 | | Change | | 2026 | | 2025 | | Change |
| ||||||||||||||||||
| | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % |
| ||||||
Cost of service | | $ | 76,902 | | 11.5 | % | $ | 56,974 | | 9.0 | % | $ | 19,928 | | 35.0 | % | $ | 235,198 |
| 12.0 | % | $ | 176,984 |
| 9.0 | % | $ | 58,214 |
| 32.9 | % |
Cost of Labor | |
| 357,790 | | 53.3 | % |
| 347,945 | | 55.5 | % |
| 9,845 | | 2.8 | % |
| 1,088,724 |
| 55.4 | % |
| 1,085,885 |
| 55.4 | % |
| 2,839 |
| 0.3 | % |
Fuel | |
| 114,408 | | 17.1 | % |
| 94,654 | | 15.1 | % |
| 19,754 | | 20.9 | % |
| 336,674 |
| 17.1 | % |
| 304,600 |
| 15.5 | % |
| 32,074 |
| 10.5 | % |
Maintenance and repairs | |
| 91,291 | | 13.6 | % |
| 63,143 | | 10.1 | % |
| 28,148 | | 44.6 | % |
| 223,248 |
| 11.4 | % |
| 207,709 |
| 10.6 | % |
| 15,539 |
| 7.5 | % |
Depreciation and amortization | |
| 30,272 | | 4.5 | % |
| 64,332 | | 10.3 | % |
| (34,060) | | (52.9) | % |
| 80,544 |
| 4.1 | % |
| 188,668 |
| 9.5 | % |
| (108,124) |
| (57.3) | % |
Total Cost of Revenue | | $ | 670,663 | | 100.0 | % | $ | 627,048 | | 100.0 | % | $ | 43,615 | | 7.0 | % | $ | 1,964,388 |
| 100.0 | % | $ | 1,963,846 |
| 100.0 | % | $ | 542 |
| 0.03 | % |
For the three months ended August 31, 2026, our cost of revenue was $670,663, or 87.4% of total revenue, compared with $627,048, or 98.9%, for the three months ended August 31, 2025. This increase was primarily due to a $28,148 increase in maintenance and repair expense, a $19,928 increase in cost of service and a $19,754 increase in fuel expense, partially offset by a $34,060 decrease in depreciation and amortization.
For the nine months ended August 31, 2026, our cost of revenue was substantially unchanged, increasing $542, or 0.03%, while revenue increased $342,291, or 17.5%, such that cost of revenue declined from 100.3% to 85.4% of revenue. The improvement was primarily due to a $108,124 decrease in depreciation and amortization, reflecting the full depreciation of a portion of our fleet, partially offset by a $58,214 increase in cost of service, a $32,074 increase in fuel expense and a $15,539 increase in maintenance and repair expense.
The cost of revenue consists of labor, fuel, depreciation and amortization, service and maintenance related expenses. Each component of our cost of revenue impacted the overall cost structure during the three and nine months ended August 31, 2026 and August 31, 2025, as discussed below:
| ● | Cost of Service: Service expenses totaled $76,902, or 11.5% of total cost of revenue, during the three months ended August 31, 2026, compared with $56,974 or 9.0% during the three months ended August 31, 2025. For the nine months ended August 31, 2026 and August 31, 2025, service expenses totaled $235,198, or 12.0% of total cost of revenue, and $176,984 or 9.0% of total cost of revenue respectively. These increases were primarily attributable to higher insurance premiums and the cost of renting additional vehicles needed to fulfill our delivery volume obligations. |
| ● | Cost of Labor: Cost of labor expenses remained the largest component of our costs of revenue, totaling $357,790, or 53.3% during the three months ended August 31, 2026, an increase of $9,845, or 2.8%, compared with the three months ended August 31, 2025. Labor expenses for the nine months ended August 31, 2026 totaled $1,088,724, or 55.4% of total cost of revenues, compared with $1,085,885, or 55.4%, of total cost of revenues for the nine months ended August 31, 2025. Cost of labor remained substantially flat, increasing $9,845, or 2.8%, and $2,839, or 0.3%, respectively. The increase reflected higher average wage rates for a more experienced driver base, which was largely offset by a reduction in driver headcount as we handled higher delivery volumes with fewer, more productive drivers. |
| ● | Maintenance and Repair: Maintenance and repair expense increased by $28,148, or 44.6%, to $91,291 during the three months ended August 31, 2026, compared with $63,143 for the three months ended August 31, 2025. This increase was primarily due to an annual major overhaul program performed on vehicles that have exceeded their depreciable lives but remain in service. Maintenance and repair expense increased by $15,539, or 7.5% to $223,248 during the nine months ended August 31, 2026, compared with $207,709 for the nine months ended August 31, 2025, due to the overhaul activity described above, partially offset by lower maintenance costs during the first half of fiscal 2026 relative to the prior-year period, when many vehicles assumed in the JAR Acquisition required significant repairs. |
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| ● | Depreciation and Amortization: Depreciation and amortization expenses totaled $30,272 during the three months ended August 31, 2026, a decrease of $34,060, or 52.9%, compared with $64,332 for the three months ended August 31, 2025. For the nine months ended August 31, 2026, depreciation and amortization expense totaled $80,544, down $108,124 or 57.3%, compared with $188,668 for the nine months ended August 31, 2025. The decrease was primarily due to the full depreciation of a portion of our fleet and the disposal of certain vehicles, partially offset by depreciation on vehicles placed in service during the period. |
| ● | Fuel: Fuel expense increased by $19,754, or 20.9%, to $114,408 for the three months ended August 31, 2026. The increase in fuel costs was primarily driven by the increase in fuel prices, partially offset by our improved energy management and route planning improvement. For the nine months ended August 31, 2026, fuel expense increased by $32,074, or 10.5%, to $336,674 primarily due to higher market fuel prices and higher delivery volumes, which were partially offset by improved route planning and driver operating practices that reduced average mileage per route, and by the introduction of electric trucks during fiscal 2026. |
Gross Profit
For the three months ended August 31, 2026, we recorded our gross profit of $95,759, or 12.6% of total revenue, compared with a gross profit of $6,817, or 1.1%, for the three months ended August 31, 2025. The increase of $88,942 was primarily driven by increased revenue.
For the nine months ended August 31, 2026, we recorded a gross profit of $334,161, or 14.6% of total revenue, compared with a gross loss of $7,588, or 0.3% of total revenue for the nine months ended August 31, 2025. The increase of $341,749 was primarily driven by an increase in revenue.
General and Administrative Expenses
The following table sets forth the breakdown of our general and administrative expenses for the periods presented.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months | | | | | | | For the Nine Months | | | | | |
| ||||||||||||||||
| | Ended August 31, | | | | | | | Ended August 31, | | | | | |
| ||||||||||||||||
| | 2026 | | 2025 | | Change | | 2026 | | 2025 | | Change |
| ||||||||||||||||||
| | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % | | Amount | | % |
| ||||||
General and administrative expenses |
| | |
| |
| | |
| |
| | |
| | | | |
| |
| | |
| |
| | |
| | |
Professional fees | | $ | 190,786 | | 18.8 | % | $ | 53,449 | | 35.3 | % | $ | 137,337 | | 256.9 | % | $ | 617,142 |
| 28.2 | % | $ | 314,655 |
| 54.5 | % | $ | 302,487 |
| 96.1 | % |
Payroll Expense | |
| 663,105 | | 65.2 | % |
| 76,853 | | 50.7 | % |
| 586,252 | | 762.8 | % |
| 1,094,342 |
| 50.0 | % |
| 228,542 |
| 39.6 | % |
| 865,800 |
| 378.8 | % |
Franchise Tax | | | 120,108 | | 11.8 | % | | — | | — | % | | 120,108 | | 100.0 | % | | 320,108 | | 14.6 | % | | — | | — | % | | 320,108 | | 100.0 | % |
Others | |
| 43,025 | | 4.2 | % | | 21,298 | | 14.0 | % | | 21,727 | | 102.0 | % | | 156,110 | | 7.1 | % | | 33,784 | | 5.9 | % | | 122,326 | | 362.1 | % |
Total general and administrative expenses | | $ | 1,017,024 | | 100.0 | % | $ | 151,600 | | 100.0 | % | $ | 865,424 | | 570.9 | % | $ | 2,187,702 |
| 100.0 | % | $ | 576,981 |
| 100.0 | % | $ | 1,610,721 |
| 279.2 | % |
For the three months ended August 31, 2026, general and administrative expenses were $1,017,024, compared with $151,600 for the three months ended August 31, 2025, representing an increase of $865,424, or 570.9%. The increase in administrative expenses was primarily due to higher management and staff remuneration following the Company’s IPO, increased expenditure on various professional services and higher compensation expenses, and increased franchise tax as a result of becoming a public company.
For the nine months ended August 31, 2026, general and administrative expenses were $2,187,702, compared with $576,981 for the nine months ended August 31, 2025, representing an increase of $1,610,721, or 279.2%. The increase in administrative expenses was primarily due to higher management and staff remuneration following the Company’s IPO, increased expenditure on various professional services, human resources expenses and higher insurance costs, and increased franchise tax as a result of becoming a public company.
R&D expenses
We incurred no research and development expenses during the three months ended August 31, 2026 and August 31, 2025. For the nine months ended August 31, 2026, research and development expenses were $2,150,000, or 93.5% of total revenue and 49.6% of total operating expenses, compared with $nil for the nine months ended August 31, 2025. The expenses were incurred in the second quarter of fiscal 2026 and relate entirely to the continued development, upgrade and regional adaptation of our proprietary ROUTE X last-mile delivery platform.
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Other Income (Expenses)
Interest income, net
Interest income, net was $161,127 and $575,965, respectively, for the three and nine months ended August 31, 2026, compared with an interest income of $2,248 and $2,248, respectively, for the three and nine months ended August 31, 2025. This increase in interest income was primarily attributable to interest earned on funds lent to unrelated third parties on a short-term basis to optimize the return on proceeds raised through our IPO, before allocating and utilizing those funds in accordance with the purposes set forth in the prospectus.
Income Tax Expense (Benefit)
Our income tax provision was $nil for the three months ended August 31, 2026, compared with an income tax provision of $43,346 for the three months ended August 31, 2025 due to the tax provision adjustment in the third quarter of fiscal year 2025 related to nondeductible IPO-related costs.
We recorded a tax provision of $1,600 for the nine months ended August 31, 2026, compared with a benefit of $62,552 for the nine months ended August 31, 2025.
Net Loss
As a result of the above factors, for the three months ended August 31, 2026, we reported a net loss of $760,138, compared with a net loss for the three months ended August 31, 2025 of $185,881. For the nine months ended August 31, 2026, we reported a net loss of $3,403,184, compared with a net loss for the nine months ended August 31, 2025 of $498,484.
Liquidity and Capital Resources
In assessing our liquidity, we monitor and analyze our cash on hand, our ability to generate sufficient revenue, the collection of our accounts receivable, our ability to obtain additional financial support in the future, and our operating and capital expenditure commitments. As of August 31, 2026, we reported cash of $3,003,589 and working capital of $16,548,682, attributable primarily to our IPO completed in August 2025 and the private placement that closed in June 2026. Working capital as of August 31, 2026 is composed principally of $11,549,811 in loans receivable that mature in November 2026 or later, with cash and other current assets comprising the remainder. Our near-term liquidity is therefore dependent primarily on the timely collection of the outstanding loan balances upon their maturity. Each loan is secured by an irrevocable personal unlimited joint and several liability guarantee provided by the shareholders or chief executive officers of the respective borrowing parties. We expect to collect substantially all outstanding loan principal upon maturity around November 2026 and intend to redeploy those proceeds in accordance with the intended uses set forth in our prospectus. In the period between the balance sheet date and the expected November 2026 loan maturities, we expect to fund ongoing operating requirements through a combination of cash on hand, operating revenues, and any advance repayments received from borrowers prior to maturity.
In August 2024, we sold 1,000,000 shares of Class A common stock at a price of $0.90 per share. The gross proceeds amounted to $0.9 million. All proceeds were received prior to November 30, 2024.
On August 22, 2025, we completed our IPO resulting in net proceeds of approximately $13.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us.
Our future capital requirements will depend on many factors, including the rate of revenue growth, the timing and amount of cash received from customers, the expansion of sales and marketing activities, the timing and cost of new service efforts, and the success of our efforts to expand business with our current client and to acquire additional businesses. The Company believes its balances of cash, cash equivalents and marketable securities, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond. If additional resources are required, we may issue additional equity or debt securities. The sale of additional equity or equity-linked securities could result in further dilution to stockholders. Incurring additional debt would increase our debt service obligations and could impose operating and financial covenants that may limit our operations. Further, financing may not be available in amounts or on terms that are acceptable to us, or it may not be available at all.
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Cash Flows for the Nine Months ended August 31, 2026 and August 31, 2025
The following table summarizes our cash flows for the periods presented:
| | | | | | |
| | For the Nine Months | | For the Nine Months | ||
| | Ended August 31, 2026 | | Ended August 31, 2025 | ||
Net cash used in operating activities | | $ | (4,741,858) | | $ | (640,210) |
Net cash used in investing activities | |
| (1,556,418) | |
| (79,908) |
Net cash provided by financing activities | |
| 7,993,336 | |
| 14,103,098 |
Net increase in cash | | $ | 1,695,060 | | $ | 13,382,980 |
Operating Activities
Net cash used in operations was $4,741,858 for the nine months ended August 31, 2026, compared with net cash used in operations of $640,210 during the nine months ended August 31, 2025. The increase in operating cash outflows was primarily attributable to the following factors: (i) a $2,904,700 increase in our net loss, from $498,484 to $3,403,184, which accounted for approximately 70.8% of the increase in cash used in operations; and (ii) a $1,001,587 increase in the net cash consumed by changes in operating assets and liabilities. The major changes in operating assets and liabilities during the nine months ended August 31, 2026, as presented in our condensed consolidated statements of cash flows, was prepaid expenses and other current assets, which increased by $1,065,788, primarily reflecting a $1,150,000 increase in prepayments made for research and development services in connection with the development and regional adaptation of our ROUTE X application, as further discussed under “Research and Development Expenses”, partially offset by a $94,192 decrease in prepaid professional services and a $21,469 decrease in other current assets.
Investing Activities
Net cash used in investing activities was $1,556,418 for the nine months ended August 31, 2026, compared with $79,908 for the nine months ended August 31, 2025. The increase of $1,476,510 was primarily due to a net $1,550,000 increase in our loans receivable, as we disbursed $1,900,000 under new short-term loan agreements with unrelated third parties and received $350,000 of principal repayments from borrowers. All of this activity occurred during the nine months ended August 31, 2026. In addition, we used $6,418 to purchase property and equipment, compared with $79,908 for the nine months ended August 31, 2025.
Financing Activities
Net cash provided by financing activities amounted to $7,993,336 for the nine months ended August 31, 2026, mainly attributable to proceeds from issuance of common stock under private placement agreement. Net cash provided by financing activities during the nine months ended August 31, 2026 consisted of $8,000,000 of gross proceeds from the issuance of 32,000,000 shares of our Class A common stock to eight non-U.S. investors at a purchase price of $0.25 per share, which closed on June 4, 2026 and was conducted in offshore transactions pursuant to Rule 903 of Regulation S under the Securities Act of 1933, as amended, and $141,897 of insurance premium financing, partially offset by $107,131 of repayments under our insurance premium financing arrangements and $41,430 of deferred offering costs paid in connection with the registration statement on Form S-3 we filed on August 28, 2026
Net cash provided by financing activities amounted to $14,103,098 for the nine months ended August 31, 2025, mainly consisting of $13,717,940 net proceeds from our IPO, partially offset by payments for deferred offering costs.
Contractual Obligations and Other Commitments
We have no long-term fixed contractual obligations or commitments as of August 31, 2026.
Off-Balance Sheet Arrangements
We did not have during the period presented, and we do not currently have, any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
29
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2025.
Uses of estimates
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for credit losses of accounts receivables, useful lives of plant and equipment, the recoverability of long-lived assets, impairment of goodwill, and revenue recognition. Actual results could differ from those estimates.
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of input used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, due to a related party, other payables and other current liabilities, approximate the fair value of the respective assets and liabilities as of August 31, 2026 and November 30, 2025, based upon the short-term nature of the assets and liabilities.
Business Combinations
Business combinations are accounted for using the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. The accounting for business combinations requires estimates and judgment in determining the fair value of assets acquired, liabilities assumed, and contingent consideration transferred, if any, regarding expectations of future cash flows of the acquired business, and the allocation of those cash flows to the identifiable intangible assets. The determination of fair value is based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If actual results differ from these estimates, the amounts recorded in the financial statements could result in a possible impairment of intangible assets and goodwill. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. Acquisition-related expenses are expensed when incurred.
Income Taxes
Income taxes are accounted for using the asset and liability method, as prescribed under ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.
Prior to JAR Acquisition, as an S-Corporation, the Predecessor was not subject to federal corporate income taxation, and its taxable income, deductions, and credits were passed through to its stockholders. The Predecessor was subject to the California corporate franchise tax under RTC § 23802, which requires S-Corporations to pay the greater of a minimum tax of $800 or 1.5% of net taxable income derived from California sources. In accordance with ASC 740-10-15-4, deferred tax assets and liabilities were recognized for state-level temporary differences and net operating loss (“NOL”) carryforwards. Following the JAR Acquisition, the Predecessor became a wholly owned subsidiary of the Company, and a C-Corporation, and is subject to corporate income taxation under the Internal Revenue Code and applicable state tax laws.
30
ASC 740 requires a tax position to meet a recognition threshold before it is recognized in the financial statements. We assess uncertain tax positions based on management’s evaluation of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. This assessment includes consideration of any potential appeals or litigation processes based on the technical merits of the tax position. Because significant assumptions and judgments are involved in determining whether a tax benefit is more likely than not to be sustained, actual results may differ from estimates under different assumptions or conditions. We recognize interest and penalties related to unrecognized tax benefits as part of the income tax provision in the consolidated statements of operations.
Impairment of Long-Lived Assets
We review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If an impairment indicator is present, we evaluate recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of the asset group. If the carrying amount exceeds the recoverable amount, an impairment loss is measured as the amount by which the carrying amount exceeds the fair value of the asset. We estimate fair value using the expected future cash flow discounted at a rate consistent with the risks associated with the recovery of the assets. Based on the above analysis, no impairment loss was recognized for three months and nine months ended August 31, 2026 and August 31, 2025.
Revenue recognition
ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration it expects to receive in exchange for those goods or services as performance obligations are satisfied. ASC 606 applies a five-step model for revenue recognition, which requires the Company to: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The Company is engaged in providing last-mile delivery services as an Independent Service Provider (ISP) for FedEx and provides logistics solutions primarily in the United States. The Company coordinates with FedEx for the transport of goods pursuant to FedEx’s instructions and the end-recipient’s designated destination (the end-recipient is FedEx’s customer, not the Company’s). Once the goods arrive at the end-recipient’s designated destination, the end-recipient acknowledges the delivery note—this confirmation serves as evidence of the Company’s completion of delivery services for FedEx, and the transfer of control of the service obligation to FedEx is deemed complete, marking the successful fulfillment of the logistics services for FedEx. The Company derives all revenue from both fixed service charges and activity-based charges under its ISP Agreement with FedEx. Performance obligations under the ISP Agreement include (i) weekly continuous service coverage for designated service areas (fixed weekly service charges), (ii) execution of delivery and pickup stops for FedEx (stop charges and e-commerce stop charges), (iii) handling and delivering packages for FedEx (package charges, including e-commerce and large package deliveries), and (iv) compliance with FedEx’s brand and branding requirements (apparel and vehicle branding fees). Revenue is recognized as follows:
| ● | Over Time: Fixed weekly service charges and branding-related revenue (e.g., apparel and vehicle branding) are recognized evenly over the contractual service period, as the Company satisfies the performance obligation of continuous service coverage and branding compliance over time for FedEx. |
| ● | Point-in-Time: Activity-based revenue, including stop charges, package charges, and fuel surcharges, is recognized upon completion of the respective performance obligation (e.g., completing a delivery or pickup stop for FedEx and obtaining the end-recipient’s delivery confirmation). Recognition of this revenue is further subject to verification and confirmation of the actual completed activity volume by FedEx via its proprietary systems, consistent with the terms of the ISP Agreement. |
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Each service task assigned by FedEx (including stop execution and package delivery) is a distinct component of the overall performance obligations under the ISP Agreement; the aggregate of these tasks constitutes the single ongoing performance obligation of providing last-mile delivery services to FedEx as an ISP. The transaction price under the ISP Agreement is determined based on mutually negotiated fixed and variable charges (Negotiated Charges) between the Company and FedEx, documented in the ISP Agreement’s Schedule C and related attachments. The fixed component (weekly service charges) is set at the inception of the rate term; the variable component (activity-based charges) is tied to the actual volume of services completed (e.g., number of stops, packages handled) and includes fuel surcharges that adjust weekly based on market fuel prices. There are no rebates, returns, or other material variable consideration provisions outside of the agreed activity-based charges. As FedEx is the Company’s sole counterparty, there is no prepayment requirement from customers; the Company and FedEx settle service fees based on FedEx’s official confirmation of the actual completed service volume for each settlement period. Since the fixed and activity-based charges under the ISP Agreement are explicitly tied to separate, distinct performance obligations (continuous service coverage vs. per-unit activity execution), no allocation of the transaction price is required under ASC 606. For activity-based revenue, it is recognized at a point in time when control of the service (for FedEx) is transferred and the delivery is completed to the end-recipient’s designated destination, as evidenced by the end-recipient’s signature on the delivery note and subsequent verification by FedEx. Transit periods for individual delivery tasks typically do not exceed one month, and the Company and FedEx settle all service fees on a regular contractual basis. The Company has a contractual credit term with FedEx for service fee settlement, with standard payment terms of one week.
Revenue is presented on a gross basis, as the Company acts as the principal in the transaction with FedEx. This conclusion is based on the following considerations: i) the Company manages all aspects of the last-mile delivery process for FedEx and exercises full control over the delivery service before transferring the completed service to FedEx; ii) the Company has the contractual right to negotiate all fixed and activity-based charges (Negotiated Charges) with FedEx and bears the operational and market risks associated with service delivery (e.g., fluctuations in labor, fuel, and equipment costs); iii) The Company is primarily responsible for fulfilling the promise to provide delivery services in meeting FedEx’s service requirements and FedEx’s customer (end-recipient) delivery expectations, including resolving delivery-related complaints and assuming liability for service failures.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, we are not required to provide this information.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of August 31, 2026 and identified one material weakness and two significant deficiencies in our internal control over financial reporting as of August 31, 2026. Based on the evaluation described above and in light of the material weakness and significant deficiencies identified, management has concluded that our disclosure controls and procedures were not effective as of August 31, 2026. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A “significant deficiency” is a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the Company’s financial reporting. The material weakness and significant deficiencies identified are as follows:
Insufficient Management Review Controls Over Financial Reporting Processes. The Company lacks sufficient management review controls to monitor the execution of financial reporting processes and to detect and prevent potential material misstatements in the financial statements. This material weakness relates to the Company’s lack of an adequate internal review function to monitor control execution, which may lead to material audit adjustments to the financial statements.
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Lack of Dedicated Personnel with Specialized U.S. GAAP Reporting Expertise. The Company’s finance team includes personnel with Certified Public Accountant (“CPA”) credentials and extensive financial reporting experience; however, the Company does not currently have dedicated personnel with specialized expertise in U.S. GAAP financial statement preparation and disclosure, particularly with respect to complex accounting standards. This deficiency arises from personnel changes in the finance function, including changes in the Company’s principal accounting officers, as well as the Company’s size and resource constraints as a small business.
Inability to Obtain SOC 2 Report from FedEx. The Company’s revenue recognition process, financial reporting, and operational activities are fully dependent on proprietary systems owned and maintained by FedEx (the Company’s key counterparty), including FedEx Software, leased Scanners, and the My Ground Biz Account platform. These systems are critical to the Company’s ability to track service activity, confirm workload, verify pricing, and fulfill its financial reporting obligations. As of the end of the reporting period, the Company has been unable to obtain a Service Organization Control (“SOC”) 2 report from FedEx. A SOC 2 report assesses the effectiveness of FedEx’s controls over the security, availability, and confidentiality of its systems—controls that are critical to ensuring the reliability of the data generated by FedEx’s systems and used by the Company in its financial reporting. This deficiency impairs the Company’s ability to independently verify the effectiveness of FedEx’s controls over the systems that are core to the Company’s financial reporting process. Without a SOC 2 report, the Company cannot fully assess the security, availability, or confidentiality of FedEx’s systems, which increases the risk of: (i) inaccurate, incomplete, or untimely data (e.g., workload counts, pricing information) used in revenue recognition and financial reporting; (ii) system outages or data breaches that disrupt the Company’s financial reporting process; and (iii) the Company’s independent registered public accounting firm being unable to obtain sufficient appropriate audit evidence regarding the reliability of FedEx system-generated data, which could result in a scope limitation in the audit of the Company’s financial statements.
Neither of the two significant deficiencies has resulted in a material misstatement of the Company’s consolidated financial statements for the reporting period.
Following the identification of the material weakness and two significant deficiencies described above, we are taking comprehensive remedial measures to strengthen our internal control over financial reporting. The Company’s finance team is in the process of developing and implementing financial procedures and entity-level controls designed to achieve and maintain effective internal control over financial reporting. These efforts include the design and execution of financial closing policies and procedures, as well as the institution of an effective internal review process to monitor control execution. The Company is also actively engaging with FedEx to request access to Service Organization Control (SOC) 1 and SOC 2 reports to obtain independent assurance over controls supporting FedEx’s systems that affect the Company’s revenue recognition process; however, there is no guarantee that FedEx will provide such reports in a timely manner, or at all. To further strengthen our financial reporting function and control framework, the Company plans to implement additional remedial measures as necessary, including (i) enhancing U.S. GAAP accounting and financial reporting training for its accounting and financial reporting personnel; (ii) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience; and (iii) engaging an external consulting firm to assist our assessment of Sarbanes-Oxley compliance requirements and improvement of our overall internal control.
In addition, Mr. Huaqin He, one of the Company’s independent directors, is a professor at the College of Life Sciences of Fujian Agriculture and Forestry University with a major expertise in data analytics and systematic research, which can support the Company’s development in digital logistics, operational optimization, and technology-driven decision-making. Another independent director, Ms. Huanhuan Tian, has extensive experience in financial management, auditing, IPO preparation, and corporate compliance.
The implementation of the remedial measures described above may not fully address the material weakness or significant deficiencies in our internal control over financial reporting. Our failure to correct these control deficiencies could result in inaccuracies in our financial statements and could impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.
Internal Control Over Financial Reporting
Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as the term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended August 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Elite Express Holding Inc.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments in the legal proceedings previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2025, filed with the SEC on February 27, 2026, as amended on March 18, 2026.
Item 1A. Risk Factors
The following risk factors supplement and should be read in conjunction with the risk factors previously disclosed in the Annual Report. Except as set forth below, there have been no material changes to our previously disclosed risk factors.
Risks Related to Our Cash Deposits at Financial Institutions in Hong Kong
As of August 31, 2026 and November 30, 2025, $2.9 million and $0.1 million, respectively, of the Company’s cash was deposited in U.S. dollar accounts in financial institutions in Hong Kong. Per Hong Kong regulations, bank deposits may be insured by up to HKD 800,000 (approximately $102,085) for each financial institution. The Company’s total uninsured cash held in Bank of China (Hong Kong) Limited amounted to $2.8 million and $nil as of August 31, 2026 and November 30, 2025, respectively. As of the date of this quarterly report, the Company has not experienced any losses in such accounts.
However, because the Company does not otherwise conduct business operations in Hong Kong, the placement of a substantial portion of its cash in that jurisdiction exposes it to additional risks associated with the political, legal, and economic environment of a foreign country. These include risks arising from potential changes in Hong Kong’s financial system, banking regulations, capital controls, or its relationship with the People’s Republic of China, as well as the possible impact of international sanctions, foreign exchange restrictions, or governmental interventions. In the event of adverse political developments, sovereign actions, or a deterioration in the financial condition of the relevant institutions, the Company may experience delays or difficulties in accessing its funds, or incur losses that are not covered by deposit insurance. Any such events could materially and adversely affect the Company’s liquidity, financial condition, and results of operations.
Risks Related to Our Continued Listing Status
As previously disclosed, on October 31, 2025, we received a deficiency letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we were not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2). Nasdaq initially provided us until April 29, 2026 to regain compliance and, on April 30, 2026, granted an additional compliance period through October 26, 2026.
On August 6, 2026, we received written notification from Nasdaq that Nasdaq had determined that we regained compliance with Nasdaq Listing Rule 5550(a)(2) by maintaining a closing bid price of our Class A common stock of at least $1.00 per share for 10 consecutive business days and that the matter was closed.
Although the previously disclosed minimum bid price deficiency has been resolved, there can be no assurance that we will continue to satisfy Nasdaq’s continued listing requirements in the future. Any future failure to maintain compliance could result in additional deficiency notices and, ultimately, delisting proceedings.
A delisting of our Class A common stock could substantially decrease trading in our Class A common stock, adversely affect its liquidity and market price, impair our ability to raise additional capital, and result in a loss of investor confidence.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
On March 10, 2026, the Company entered into stock purchase agreements with eight non-U.S. investors, pursuant to which the Company agreed to issue and sell in a private placement an aggregate of 32,000,000 shares of the Company’s Class A common stock, par value $0.000001 per share, at a purchase price of $0.25 per share, for aggregate gross proceeds of $8,000,000. The offering was conducted in offshore transactions pursuant to Rule 903 of Regulation S under the Securities Act of 1933, as amended. On June 4, 2026, the transaction closed, and 32,000,000 shares of Class A common stock were issued pursuant to this private placement.
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Use of Proceeds
The following “Use of Proceeds” information relates to the registration statement on Form S-1, as amended (File No. 333-286965), for our IPO, which was declared effective by the SEC on August 20, 2025. On August 22, 2025, we completed our IPO, in which we issued and sold an aggregate of 3,800,000 shares of Class A common stock at a public offering price of $4.00 per share for aggregate gross proceeds of approximately $15.2 million. Dominari Securities LLC was the representative of the underwriters of our IPO.
We incurred approximately $1,482,060 in expenses in connection with our IPO, which included approximately $1,064,000 in underwriting discounts, approximately $152,000 in non-accountable expenses paid to the underwriters, and approximately $266,060 in other expenses. None of the transaction expenses included payments to directors or officers of our Company or their associates, persons owning 10% or more of our equity securities, or our affiliates. None of the net proceeds we received from the IPO were paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities, or our affiliates.
The net proceeds raised from the IPO were approximately $13.7 million, after deducting underwriting discounts and the offering expenses payable by us. As of the date of this report, we have deployed the net proceeds as follows: (i) approximately $3.3 million has been used to fund research and development activities relating to the development, upgrade and regional adaptation of our ROUTE X application; (ii) approximately $0.4 million has been used for working capital; and (iii) approximately $9.9 million has been lent to unrelated third parties pursuant to short-term loan agreements, as further described in Note 4. The remainder of the net proceeds is held in cash accounts, a portion of which is denominated in Hong Kong dollars.
As of the date of this report, we have not yet deployed any net proceeds toward the equity or asset acquisitions, or fleet upgrades described in our prospectus.
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Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended August 31, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company
On September 2, 2026, the Company held its 2026 Annual Meeting of Stockholders. At the meeting, the Company’s stockholders approved the Elite Express Holding Inc. 2026 Stock Incentive Plan (the “2026 Incentive Plan”), which had previously been adopted by the Company’s board of directors on July 10, 2026, subject to stockholder approval. The 2026 Incentive Plan provides for grants of stock options, restricted stock, restricted stock units and other cash- or stock-based awards to eligible employees, directors and consultants, with an initial share reserve of 6,000,000 shares of Class A common stock and 2,000,000 shares of Class B common stock, subject to annual increases and other adjustments provided under the plan.
Item 6. Exhibits
The exhibits listed below are filed or incorporated by reference as part of this quarterly report on Form 10-Q, as indicated.
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Index to Exhibits
Incorporated by Reference | ||||||||||
Exhibit | | Exhibit Title | | Form | | File | | Exhibit | | Filing Date |
3.1 | Amended and Restated Certificate of Incorporation | S-1 | 333-286965 | 3.1 | May 5, 2025 | |||||
| | | | | | | | | | |
3.2 | Amended and Restated Bylaws | S-1 | 333-286965 | 3.2 | May 5, 2025 | |||||
| | | | | | | | | | |
10.1 | Director Offer Letter dated December 2, 2025 by and between Huanhuan Tian and the Company | | 8-K | | 001-42811 | | 10.1 | | December 4, 2025 | |
| | | | | | | | | ||
10.2 | Indemnification Agreement dated December 2, 2025 by and between Huanhuan Tian and the Company | | 8-K | | 001-42811 | | 10.2 | | December 4, 2025 | |
| | | | | | | | | ||
10.3 | Resignation Agreement dated December 15, 2025 by and between the Company and Robert Cook | | 8-K | | 001-42811 | | 10.1 | | December 16, 2025 | |
| | | | | | | | | | |
10.4 | | Form of Stock Purchase Agreement, dated as of March 10, 2026, by and between Elite Express Holding Inc. and certain purchasers. | | 8-K | | 001-42811 | | 10.1 | | March 11, 2026 |
| | | | | | | | | | |
10.5 | | Employment Agreement, dated June 8, 2026, by and between Elite Express Holding Inc. and Ye Hua | | 8-K | | 001-42811 | | 10.1 | | June 8, 2026 |
| | | | | | | | | | |
10.6 | | Indemnification Agreement, dated June 8, 2026, by and between Elite Express Holding Inc. and Ye Hua | | 8-K | | 001-42811 | | 10.2 | | June 8, 2026 |
| | | | | | | | | | |
10.7 | | Software Development Agreement, dated July 10, 2026, by and between Elite Express Holding Inc. and Leyan Management Ltd. | | 10-Q | | 001-42811 | | 10.7 | | July 14, 2026 |
| | | | | | | | | | |
10.8 | | Elite Express Holding Inc. 2026 Stock Incentive Plan | | 8-K | | 001-42811 | | 10.1 | | September 8, 2026 |
| | | | | | | | | | |
31.1 | | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | — | | — | | — | | Filed herewith |
| | | | | | | | | | |
31.2 | | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | — | | — | | — | | Filed herewith |
| | | | | | | | | |
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32.1* | | Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | — | | — | | — | | Furnished herewith |
| | | | | | | | | | |
32.2* | | Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | — | | — | | — | | Furnished herewith |
| | | | | | | | | |
|
101.INS | | Inline XBRL Instance Document | | — | | — | | — | | Filed herewith |
| | | | | | | | | |
|
101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | — | | — | | — | | Filed herewith |
| | | | | | | | | |
|
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101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | — | | — | | — | | Filed herewith |
| | | | | | | | | |
|
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | — | | — | | — | | Filed herewith |
| | | | | | | | | |
|
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | — | | — | | — | | Filed herewith |
| | | | | | | | | |
|
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | — | | — | | — | | Filed herewith |
| | | | | | | | | |
|
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | — | | — | | — | | Filed herewith |
*In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 14, 2026
| Elite Express Holding Inc. | |
|
|
|
| By: | /s/ Yidan Chen |
|
| Yidan Chen |
|
| Chief Executive Officer, President and Director |
| | (Principal Executive Officer) |
| | |
| Elite Express Holding Inc. | |
| | |
| By: | /s/ Ye Hua |
| | Ye Hua |
| | Chief Financial Officer |
| | (Principal Accounting Officer) |
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