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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
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(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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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 July 14, 2026, there were
Elite Express Holding Inc.
Form 10-Q
For the Quarterly Period Ended May 31, 2026
Contents
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Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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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 May 31, |
As of November 30, |
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2026 |
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2025 |
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(UNAUDITED) |
(AUDITED) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable |
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Loans receivable |
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Prepaid D&O insurance |
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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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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
$ |
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$ |
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Insurance premium financing payable |
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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 |
$ |
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$ |
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*
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
For the Three Months Ended |
For the Six Months Ended |
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May 31, |
May 31, |
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2026 |
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2025 |
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2026 |
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2025 |
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REVENUE |
$ |
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$ |
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$ |
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$ |
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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 |
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— |
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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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— |
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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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— |
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NET LOSS |
$ |
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$ |
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$ |
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$ |
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Loss per common share - basic and diluted |
$ |
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$ |
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$ |
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$ |
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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 SIX MONTHS ENDED MAY 31, 2026 AND 2025
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Common Stock* |
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Class A |
Class B |
Additional |
Total |
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Common |
Common |
paid-in |
Accumulated |
Stockholders’ |
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stock |
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Amount |
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stock |
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Amount |
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capital |
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Deficit |
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Equity |
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Balance, November 30, 2024 |
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$ |
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$ |
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Capital Contributions from a stockholder |
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— |
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Net loss for the period |
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Balance, February 28, 2025 |
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$ |
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$ |
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$ |
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$ |
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Capital Contributions from a stockholder |
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Net loss for the period |
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Balance, May 31, 2025 |
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$ |
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$ |
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$ |
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*
Common Stock |
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Class A |
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Class B |
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Additional |
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Total |
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Common |
Common |
paid-in |
Accumulated |
Stockholders’ |
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stock |
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Amount |
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stock |
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Amount |
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capital |
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Deficit |
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Equity |
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Balance, November 30, 2025 |
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$ |
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$ |
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$ |
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Net loss for the period |
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Balance, February 28, 2026 |
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$ |
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$ |
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$ |
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Advances from Stock Issuance |
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Net loss for the period |
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— |
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( |
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Balance, May 31, 2026 |
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$ |
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$ |
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$ |
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$ |
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$ |
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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 Six Months Ended |
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May 31, |
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2025 |
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Cash flows from operating activities: |
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Net loss |
$ |
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$ |
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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 |
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Accrued interest income |
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Deferred tax (benefit) |
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Accrued current income tax expense |
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Changes in operating assets and liabilities: |
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Decrease in accounts receivable |
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Decrease 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 |
( |
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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 from loans to non-related companies |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Proceeds from issuance of common stock under private placement agreement |
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— |
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Payment for deferred listing cost |
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Repayments made to a related party |
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( |
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Capital contributions from a shareholder |
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Repayment to premium finance |
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( |
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— |
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Net cash provided by financing activities |
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Net increase (decrease) in cash |
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( |
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Cash, beginning of period |
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Cash, end of period |
$ |
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$ |
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Supplemental cash flow information |
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Cash paid for interest |
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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:
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Date of |
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State of |
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Name of Entity |
Incorporation |
Incorporation |
Ownership |
Principal Activities |
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Elite Express Holding Inc. |
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April 3, 2024 |
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Delaware |
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Parent |
Holding company |
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Subsidiary of the parent: |
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JAR Transportation Inc |
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May 27, 2020 |
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California |
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% |
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.
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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:
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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.
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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 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 May 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 |
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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. |
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| ● | 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 May 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.
8
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. |
9
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
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 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.
10
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 six months ended May 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
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.
11
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 combined financial statements.
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, Intangibles-Goodwill and Other-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 with early adoption permitted. 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 – 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 periods beginning after December 15, 2028 and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2025-10 will have on its consolidated financial statements.
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. ASU 2025-11 is effective for public entities for interim periods in fiscal years beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating the impact the standard will have to the 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 May 31, |
|
As of November 30, |
|||
2026 |
2025 |
|||||
(Unaudited) |
(Audited) |
|||||
Accounts receivable |
$ |
|
$ |
|
||
As of the issuance date of this report, the May 31, 2026 and November 30, 2025 accounts receivable balances have been fully collected.
NOTE 4 — LOANS RECEIVABLE
Loans receivable consists of the following:
|
As of May 31, |
As of November 30, |
||||
2026 |
|
2025 |
||||
(Unaudited) |
(Audited) |
|||||
Working funds to third party companies-principal |
$ |
|
$ |
|
||
Loans receivable |
$ |
|
$ |
|
||
12
During fiscal year 2025, the Company entered into short-term loan agreements with
During the six months ended May 31, 2026, the Company received principal repayments totaling $
Subsequent to May 31, 2026, the Company renewed the loan agreements, extending the maturity date of the remaining outstanding loans to November 30, 2026. Under extended terms, the loans bear interest at an annual rate of
NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
As of May 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 $
The increase in professional services prepayments from $
13
NOTE 6 — PLANT AND EQUIPMENT
Plant and equipment consists of the following:
|
As of May 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 purchase 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,
14
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 May 31, 2026 are as follows:
Average |
||||||||
As of May 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 May 31, |
As of November 30, |
|||||
|
2026 |
|
2025 |
|||
(Unaudited) |
(Audited) |
|||||
Compensation payable |
$ |
|
$ |
|
||
Credit card |
|
|
|
|
||
Other accrued expense |
|
|
|
|
||
Total other payables and other liabilities |
$ |
|
$ |
|
||
NOTE 9 — INSURANCE PREMIUM FINANCING PAYABLE
A summary of the Company’s insurance premium financing payable is listed as follows:
Lender |
|
As of May 31, 2026 |
|
As of November 30, 2025 |
|
Interest rate |
|
||
(Unaudited) |
(Audited) |
|
|||||||
First Insurance Funding |
$ |
— |
$ |
|
|
|
% |
||
Total Insurance premium financing payable |
$ |
— |
$ |
|
|
— |
|||
On August 26, 2025, 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 May 31, 2026 and 2025, the Company recognized $
15
During the six months ended May 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 Six Months |
|||||||||||
Ended May 31, |
Ended May 31, |
|||||||||||
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||
Current tax provision |
|
|
|
|
|
|
||||||
Federal |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
||||
State |
|
— |
|
|
|
|
|
|||||
|
— |
|
|
|
|
|
||||||
Deferred tax provision (benefit) |
|
|
|
|
|
|||||||
Federal |
|
— |
— |
|
— |
|
( |
|||||
State |
|
— |
— |
|
— |
|
( |
|||||
|
— |
— |
|
— |
|
( |
||||||
Income tax provision (benefit) |
$ |
— |
$ |
|
$ |
|
$ |
( |
||||
(ii)Reconciliations of the statutory income tax rate to the effective income tax rate were as follows:
For the Three Months |
For the Six Months |
|
|||||||||||
Ended May 31, |
Ended May 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 May 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) |
$ |
— |
$ |
— |
||
16
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 May 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
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 May 31, 2026, the Company recorded a tax provision of $
NOTE 11 — CONCENTRATIONS
Credit risk
As of May 31, 2026 and November 30, 2025, $
As of May 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
17
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
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 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
18
As of May 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 May 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 $
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.
19
As of May 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 |
|
Mr. Raymond June |
Former President and former stockholder of JAR |
|
Centurion Tech Holdings Limited |
Stockholder |
|
Eternal Blessing Holdings Limited |
Stockholder |
|
Grand Bright International Holdings Ltd |
Stockholder |
During the three months ended May 31, 2026, the Company had no related party transactions required to be disclosed in accordance with ASC 850, Related Party Disclosures. There were
NOTE 15 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events from May 31, 2026 through July 14, 2026. Based on this evaluation, the Company has determined that no subsequent events have occurred that require recognition or disclosure in the consolidated financial statements for the three months ended May 31, 2026, except (i) as disclosed in Note 13 with respect to the service of process received in March 2026 in connection with the California Labor Commissioner wage claim; and (ii) as set forth below.
On March 10, 2026, the Company entered into Stock Purchase Agreements with
On June 1, 2026, the Company entered into extension agreements to its outstanding loan agreements with the borrowers, extending the maturity date of the remaining outstanding principal balance to November 30, 2026 with an interest at an annual rate of
On July 10, 2026, the Company received aggregate interest payments of $
On July 10, 2026, the Company entered into a Software Development Agreement with Leyan Management Ltd. (the “Developer”) for the phased development, upgrade and customization of the Company’s AI-enabled logistics operations platform, which is currently under development. The total consideration under the agreement is $
20
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. 001-41761) (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.
21
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, during our course of 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 an average day, we complete between 1,100 to 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 through May 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. |
22
| ● | Technology Investments: We utilize GroundCloud, a leading logistics software, for route optimization, driver management, and compliance monitoring. While continuing to leverage this system, 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 vehicle, and operational infrastructure, which includes tools and software that support our operations. We focused primarily on maintaining existing operations prior to the Acquisition Date. Following the Acquisition Date, we are adopting 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 Six Months ended May 31, 2026 and May 31, 2025:
|
For the Three Months |
For the Six Months |
|
||||||||||||||||||||||||||||
Ended May 31, |
Ended May 31, |
|
|||||||||||||||||||||||||||||
2026 |
2025 |
2026 |
2025 |
|
|||||||||||||||||||||||||||
(Successor) |
(Predecessor) |
Change |
(Successor) |
(Predecessor) |
Change |
|
|||||||||||||||||||||||||
|
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
|
||||||||
Revenue |
$ |
726,829 |
|
100.0 |
% |
$ |
630,250 |
|
100.0 |
% |
$ |
96,579 |
|
15.3 |
% |
$ |
1,532,127 |
|
100.0 |
% |
$ |
1,322,393 |
|
100.0 |
% |
$ |
209,734 |
|
15.9 |
% |
|
Cost of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cost of service |
|
67,041 |
|
9.2 |
% |
|
49,851 |
|
7.9 |
% |
|
17,190 |
|
34.5 |
% |
|
158,296 |
|
10.3 |
% |
|
120,010 |
|
9.1 |
% |
|
38,286 |
|
31.9 |
% |
|
Cost of labor |
|
343,973 |
|
47.3 |
% |
|
347,132 |
|
55.1 |
% |
|
(3,159) |
|
(0.9) |
% |
|
730,934 |
|
47.7 |
% |
|
737,940 |
|
55.8 |
% |
|
(7,006) |
|
(0.9) |
% |
|
Fuel |
|
117,157 |
|
16.1 |
% |
|
102,033 |
|
16.2 |
% |
|
15,124 |
|
14.8 |
% |
|
222,266 |
|
14.5 |
% |
|
209,946 |
|
15.9 |
% |
|
12,320 |
|
5.9 |
% |
|
Maintenance and repairs |
|
83,877 |
|
11.5 |
% |
|
51,064 |
|
8.1 |
% |
|
32,813 |
|
64.3 |
% |
|
131,957 |
|
8.6 |
% |
|
144,566 |
|
10.9 |
% |
|
(12,609) |
|
(8.7) |
% |
|
Depreciation and amortization |
|
33,744 |
|
4.6 |
% |
|
62,168 |
|
9.9 |
% |
|
(28,424) |
|
(45.7) |
% |
|
50,272 |
|
3.3 |
% |
|
124,336 |
|
9.4 |
% |
|
(74,064) |
|
(59.6) |
% |
|
Total cost of revenue |
|
645,792 |
88.7 |
% |
|
612,248 |
|
97.2 |
% |
|
33,544 |
|
5.5 |
% |
|
1,293,725 |
|
84.4 |
% |
|
1,336,798 |
|
101.1 |
% |
|
(43,073) |
|
(3.2) |
% |
||
Gross Profit (Loss) |
|
81,037 |
|
11.3 |
% |
|
18,002 |
|
2.8 |
% |
|
63,035 |
|
350.2 |
% |
|
238,402 |
|
15.6 |
% |
|
(14,405) |
|
(1.1) |
% |
|
252,807 |
|
1,755.0 |
% |
|
General and administrative expenses |
|
706,072 |
|
97.1 |
% |
|
141,762 |
|
22.5 |
% |
|
564,310 |
|
398.1 |
% |
|
1,170,678 |
|
76.4 |
% |
|
425,381 |
|
32.2 |
% |
|
745,297 |
|
175.2 |
% |
|
R&D expenses |
2,150,000 |
295.8 |
% |
— |
— |
% |
2,150,000 |
100.0 |
% |
2,150,000 |
140.3 |
% |
— |
— |
% |
2,150,000 |
100.0 |
% |
|||||||||||||
Total operating expenses |
|
2,856,072 |
|
392.9 |
% |
|
141,762 |
|
22.5 |
% |
|
2,714,310 |
|
1,914.7 |
% |
|
3,320,678 |
|
216.7 |
% |
|
425,381 |
|
32.2 |
% |
|
2,895,297 |
|
680.6 |
% |
|
Loss from Operations |
|
(2,775,035) |
|
(381.6) |
% |
|
(123,760) |
|
(19.7) |
% |
|
(2,651,275) |
|
2,142.3 |
% |
|
(3,082,276) |
|
(201.1) |
% |
|
(439,786) |
|
(33.3) |
% |
|
(2,642,490) |
|
600.9 |
% |
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Interest income, net |
|
216,101 |
|
29.7 |
% |
|
— |
|
— |
% |
|
216,101 |
|
— |
% |
|
414,838 |
|
27.1 |
% |
|
— |
|
— |
% |
|
414,838 |
|
— |
% |
|
Other income, net |
|
25,992 |
|
3.6 |
% |
|
16,556 |
|
2.6 |
% |
|
9,436 |
|
57.0 |
% |
|
25,992 |
|
1.7 |
% |
|
21,285 |
|
1.6 |
% |
|
4,707 |
|
22.1 |
% |
|
Total other income, net |
|
242,093 |
|
33.3 |
% |
|
16,556 |
|
2.6 |
% |
|
225,537 |
|
1,362.3 |
% |
|
440,830 |
|
28.8 |
% |
|
21,285 |
|
1.6 |
% |
|
419,545 |
|
(1,971.1) |
% |
|
Loss before Income Tax Expense |
|
(2,532,942) |
|
(348.3) |
% |
|
(107,204) |
|
(17.1) |
% |
|
(2,425,738) |
|
2,262.7 |
% |
|
(2,641,446) |
|
(172.3) |
% |
|
(418,501) |
|
(31.7) |
% |
|
(2,222,945) |
|
(531.2) |
% |
|
Income Tax Provision (Benefit) |
|
— |
|
— |
% |
|
400 |
|
0.10 |
% |
|
(400) |
|
100.0 |
% |
|
1,600 |
|
0.1 |
% |
|
(105,898) |
|
(8.0) |
% |
|
107,498 |
|
(101.5) |
% |
|
Net Loss |
$ |
(2,532,942) |
|
(348.3) |
% |
$ |
(107,604) |
|
(17.2) |
% |
$ |
(2,425,338) |
|
2,253.9 |
% |
$ |
(2,643,046) |
|
(172.4) |
% |
$ |
(312,603) |
|
(23.7) |
% |
$ |
(2,330,443) |
|
745.5 |
% |
|
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 May 31, 2026, we generated total revenue of $726,829, representing an increase of $96,579, or 15.3%, compared with $630,250 for the three months ended May 31, 2025. These increases were primarily attributable to increased weekly service charge standard under our updated service contract and higher volume-based activity revenue contributed by fuel surcharge payment.
23
For the six months ended May 31, 2026, we generated total revenue of $1,532,127, representing an increase of $209,734, or 15.9%, compared with $1,322,393 for the six months ended May 31, 2025. These increases were primarily attributable to higher volume-based activity revenue, particularly from e-commerce deliveries and fuel surcharges payment driven by an increasing population and the expansion of commercial activity in the areas we serve.
The table below sets forth a breakdown of revenue components for the periods indicated:
|
For the Three Months |
For the Six Months |
|||||||||||||||||||||||||||||
Ended May 31, |
Ended May 31, |
|
|||||||||||||||||||||||||||||
2026 |
2025 |
Change |
2026 |
2025 |
Change |
|
|||||||||||||||||||||||||
|
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
|
||||||||
Fixed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weekly service charges |
$ |
203,541 |
|
28.0 |
% |
$ |
147,717 |
|
23.4 |
% |
$ |
55,824 |
|
37.8 |
% |
$ |
353,230 |
|
23.1 |
% |
$ |
291,961 |
|
22.1 |
% |
$ |
61,269 |
|
21.0 |
% |
|
Branding-related |
|
10,792 |
|
1.5 |
% |
|
8,756 |
|
1.4 |
% |
|
2,036 |
|
23.3 |
% |
|
20,710 |
|
1.4 |
% |
|
17,306 |
|
1.3 |
% |
|
3,404 |
|
19.7 |
% |
|
Subtotal: |
214,333 |
|
29.5 |
% |
|
156,473 |
|
24.8 |
% |
|
57,860 |
|
37.0 |
% |
373,940 |
|
24.5 |
% |
|
309,267 |
|
23.4 |
% |
|
64,673 |
|
20.9 |
% |
|||
Activity-based: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Stops |
|
108,596 |
|
14.9 |
% |
|
103,031 |
|
16.3 |
% |
|
5,565 |
|
5.4 |
% |
|
218,916 |
|
14.3 |
% |
|
203,902 |
|
15.4 |
% |
|
15,014 |
|
7.4 |
% |
|
Packages |
|
16,607 |
|
2.3 |
% |
|
15,928 |
|
2.5 |
% |
|
679 |
|
4.3 |
% |
|
31,892 |
|
2.1 |
% |
|
29,714 |
|
2.2 |
% |
|
2,178 |
|
7.3 |
% |
|
E-Commerce |
|
253,840 |
|
34.9 |
% |
|
263,757 |
|
41.8 |
% |
|
(9,917) |
|
(3.8) |
% |
|
602,377 |
|
39.3 |
% |
|
566,919 |
|
42.9 |
% |
|
35,458 |
|
6.3 |
% |
|
Large packages |
|
19,374 |
|
2.7 |
% |
|
19,017 |
|
3.0 |
% |
|
357 |
|
1.9 |
% |
|
38,142 |
|
2.5 |
% |
|
36,040 |
|
2.7 |
% |
|
2,102 |
|
5.8 |
% |
|
Fuel Surcharge |
|
113,706 |
|
15.6 |
% |
|
69,093 |
|
11.0 |
% |
|
44,613 |
|
64.6 |
% |
|
200,805 |
|
13.1 |
% |
|
143,119 |
|
10.8 |
% |
|
57,686 |
|
40.3 |
% |
|
Surge Stops |
|
— |
|
— |
% |
|
— |
|
— |
% |
|
— |
|
— |
% |
|
41,328 |
|
2.7 |
% |
|
29,983 |
|
2.3 |
% |
|
11,345 |
|
37.8 |
% |
|
Subtotal: |
|
512,123 |
|
70.4 |
% |
|
470,826 |
|
74.6 |
% |
|
41,297 |
|
8.8 |
% |
|
1,133,460 |
|
74.0 |
% |
|
1,009,677 |
|
76.3 |
% |
|
123,783 |
|
12.3 |
% |
|
Other Pickup and Delivery (P&D) |
|
373 |
|
0.1 |
% |
|
2,951 |
|
0.7 |
% |
|
(2,578) |
|
(87.4) |
% |
|
24,727 |
|
1.6 |
% |
|
3,449 |
|
0.3 |
% |
|
21,278 |
|
616.9 |
% |
|
Total Revenue |
$ |
726,829 |
|
100.0 |
% |
$ |
630,250 |
|
100.0 |
% |
$ |
96,579 |
|
15.3 |
% |
$ |
1,532,127 |
|
100.0 |
% |
$ |
1,322,393 |
|
100.0 |
% |
$ |
209,734 |
|
15.9 |
% |
|
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 May 31, 2026, total fixed revenue was $214,333, accounting for approximately 29.5% of total revenue, representing an increase of $57,860, or 37.0%, compared to the fixed revenue of $156,473, or approximately 24.8% of total revenue for the three months ended May 31, 2025. For the six months ended May 31, 2026, total fixed revenue was $373,940, accounting for approximately 24.5% of total revenue, representing an increase of $64,673, or 20.9%, compared to the fixed revenue of $309,267, or approximately 23.4% for the six months ended May 31, 2025. The increase primarily due to the increase of weekly service charge standard under our updated service contract from February 2026.
For the three months ended May 31, 2026, total activity-based revenue accounted for $512,123, or 70.4% of total revenue up from $470,826, or 74.6% of total revenue in the same period of the prior year. For the six months ended May 31, 2026, total activity-based revenue accounted for $1,133,460, or 74.0% of total revenue up from $1,009,677, or 76.3% 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 increased fuel surcharge payment as a result of general increasing fuel price.
Among all revenue categories, e-commerce deliveries and weekly service charges continued to be the two largest contributors to our total revenue for both three months and six months ended May 31, 2026 and May 31, 2025.
| ● | E-commerce deliveries generated $253,840 in revenue during the three months ended May 31, 2026, or 34.9% of total revenue, compared with $263,757, or 41.8%, during the three months ended May 31, 2025. The decrease was mainly due to decreased service unit price from early 2026, together with the increase of fixed price increase. E-commerce deliveries generated $602,377 in revenue during the six months ended May 31, 2026, or 39.3% of total revenue, compared with $566,919, or 42.9%, during the six months ended May 31, 2025. The increases were primarily driven by sustained residential delivery demand within our assigned FedEx service areas and the ever-increasing proficiency and professionalism of our staff in their delivery work. E-commerce deliveries represented the largest revenue component in all reported periods. |
24
| ● | Weekly service charges totaled $203,541, or 28.0% of total revenue, for the three months ended May 31, 2026, compared with $147,717, or 23.4%, during the three months ended May 31, 2025. Weekly service charges totaled $353,230, or 23.1% of total revenue, for the six months ended May 31, 2026, compared with $291,961, or 22.1%, during the six months ended May 31, 2025. The increases in both periods, $55,824, or 37.8% during the second quarter of 2026 and $61,269, or 21.0% during the six months ended May 31, 2026, was 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 increased weekly service charge standard is 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 Six Months |
|
||||||||||||||||||||||||||||
Ended May 31, |
Ended May 31, |
|
|||||||||||||||||||||||||||||
2026 |
2025 |
Change |
2026 |
2025 |
Change |
|
|||||||||||||||||||||||||
|
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
|
||||||||
Cost of service |
$ |
67,041 |
|
10.4 |
% |
$ |
49,851 |
|
8.1 |
% |
$ |
17,190 |
|
34.5 |
% |
$ |
158,296 |
|
12.2 |
% |
$ |
120,010 |
|
9.0 |
% |
$ |
38,286 |
|
31.9 |
% |
|
Cost of Labor |
|
343,973 |
|
53.3 |
% |
|
347,132 |
|
56.7 |
% |
|
(3,159) |
|
(0.9) |
% |
|
730,934 |
|
56.5 |
% |
|
737,940 |
|
55.3 |
% |
|
(7,006) |
|
(0.9) |
% |
|
Fuel |
|
117,157 |
|
18.1 |
% |
|
102,033 |
|
16.7 |
% |
|
15,124 |
|
14.8 |
% |
|
222,266 |
|
17.2 |
% |
|
209,946 |
|
15.7 |
% |
|
12,320 |
|
5.9 |
% |
|
Maintenance and repairs |
|
83,877 |
|
13.0 |
% |
|
51,064 |
|
8.3 |
% |
|
32,813 |
|
64.3 |
% |
|
131,957 |
|
10.2 |
% |
|
144,566 |
|
10.8 |
% |
|
(12,609) |
|
(8.7) |
% |
|
Depreciation and amortization |
|
33,744 |
|
5.2 |
% |
|
62,168 |
|
10.2 |
% |
|
(28,424) |
|
(45.7) |
% |
|
50,272 |
|
3.9 |
% |
|
124,336 |
|
9.2 |
% |
|
(74,064) |
|
(59.6) |
% |
|
Total Cost of Revenue |
$ |
645,792 |
|
100.0 |
% |
$ |
612,248 |
|
100.0 |
% |
$ |
33,544 |
|
5.5 |
% |
$ |
1,293,725 |
|
100.0 |
% |
$ |
1,336,798 |
|
100.0 |
% |
$ |
(43,073) |
|
(3.2) |
% |
|
For the three months ended May 31, 2026, our cost of revenue was $645,792, or 88.7% of total revenue, compared with $612,248, or 97.2%, for the three months ended May 31, 2025. This increase was primarily due to increased maintenance and repair fees and cost of service arising from the rental of additional vehicles to fulfill our delivery volume obligations.
For the six months ended May 31, 2026, our cost of revenue was $1,293,725, or 84.4 % of total revenue, compared with $1,336,798, or 101.1%, for the six months ended May 31, 2025. The decrease in the cost of revenue, as well as the cost as a percentage of revenue, was mainly driven by lower maintenance and repair expenses, and depreciation expenses as certain fleets been fully depreciated, partially offset by increase in cost of service and fuel expenses.
The cost of revenue consists of labor, fuel, depreciation and amortization, service and maintenance related expenses. Overall, our cost of main operations has been well managed compared to revenue growth, reflecting our continuously improving operational management capabilities. Each component of our cost of revenue impacted the overall cost structure during the three and six months ended May 31, 2026 and May 31, 2025, as discussed below:
| ● | Cost of Service: Service expenses totaled $67,041, or 10.4 % of total cost of revenue, during the three months ended May 31, 2026, compared with $49,851 during the three months ended May 31, 2025. For the six months ended May 31, 2026 and May 31, 2025, service expenses totaled $158,296, or 12.2% of total cost of revenue, and $120,010 or 9.0% of total cost of revenue respectively. These increases were primarily attributable to higher insurance premiums and rental of more vehicles to complete the parcel delivery tasks. |
| ● | Cost of Labor: Cost of labor expenses remained the largest component of our costs of revenue, totaling $343,973, or 53.3% during the three months ended May 31, 2026, a decrease of $3,159, or 0.9%, compared with the three months ended May 31, 2025. Labor expenses for the six months ended May 31, 2026 totaled $730,934, or 56.5% of total cost of revenues, compared with $737,940, or 55.3%, of total cost of revenues for the six months ended May 31, 2025. The decrease of cost of labor, coupled with an increase in revenue, was primarily due to the higher proportion of skilled drivers in our workforce. This enabled us to handle the growing volume of parcel deliveries with fewer drivers. Using fewer, more skilled drivers to deliver the same and even more volume of parcels reduces costs and ensures a higher standard of service. This is the objective and driving force behind our ongoing driver training and efforts to improve operational management. |
| ● | Maintenance and Repair: Maintenance and repair expense increased by $32,813, or 64.3%, to $83,877 during the three months ended May 31, 2026, compared with $51,064 for the three months ended May 31, 2025. This increase occurred primarily as a result of route and scheduling improvements annually. Some of our vehicles have exceeded their depreciation period but are still in service, so we have carried out an annual major overhaul on them. The maintenance costs for this quarter are primarily due to repairs carried out on these vehicles. Maintenance and repair expense decreased by $12,609, or 8.7% to $131,957 during |
25
| the six months ended May 31, 2026, compared with $144,566 for the six months ended May 31, 2025. The high vehicle maintenance costs in the first half of 2025 were mainly due to the poor condition of many of the vehicles when we first took them over, with a number of them requiring major repairs. This situation did not arise in the first half of 2026, however, resulting in a reduction in maintenance costs. |
| ● | Depreciation and Amortization: Depreciation and amortization expenses totaled $33,744 during the three months ended May 31, 2026, a decrease of $28,424, or 45.7%, compared with $62,168 for the three months ended May 31, 2025. For the six months ended May 31, 2026, depreciation and amortization expense totaled $50,272, down $74,064 or 59.6%, compared with $124,336 for the six months ended May 31, 2025. The decrease was primarily due to a reduction resulting from vehicles being written off and an overall reduction in the size of the vehicle fleet. |
| ● | Fuel: Fuel expense increased by $15,124, or 14.8%, to $117,157 for the three months ended May 31, 2026. The increase of fuel, compared with the activity-based decrease of revenue, was primarily driven by the increasing price level of fuel, partially offset by our improved energy management and toute improvement. For the six months ended May 31, 2026, fuel expense increased by $12,320, or 5.9%, to $222,266 primarily due to improved energy management and improved route planning and enhanced driver operations, which contributed to more efficient fuel utilization and lower average mileage per route, and the introduction of new electric trucks into operations beginning this fiscal quarter against the background of an overall increase in fuel prices. |
Gross Profit
For the three months ended May 31, 2026, we recorded our gross profit of $81,037, or 11.3% of total revenue, compared with a gross profit of $18,002, or 2.8%, for the three months ended May 31, 2025. The increase of $63,035 was primarily driven by increased revenue.
For the six months ended May 31, 2026, we recorded a gross profit of $238,402, or 15.6% of total revenue, compared with a gross loss of $14,405, or 1.1 % of total revenue for the six months ended May 31, 2025. The increase of $252,807 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 Six Months |
|
||||||||||||||||||||||||||||
Ended May 31, |
Ended May 31, |
|
|||||||||||||||||||||||||||||
2026 |
2025 |
Change |
2026 |
2025 |
Change |
|
|||||||||||||||||||||||||
|
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
|
||||||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Professional fees |
$ |
170,948 |
|
24.2 |
% |
$ |
55,636 |
39.2 |
% |
$ |
115,312 |
207.3 |
% |
$ |
426,356 |
|
36.4 |
% |
$ |
261,206 |
|
61.4 |
% |
$ |
165,150 |
|
63.2 |
% |
|||
Payroll Expense |
|
277,683 |
|
39.3 |
% |
|
80,986 |
|
57.1 |
% |
|
196,697 |
242.9 |
% |
|
431,237 |
|
36.8 |
% |
|
151,689 |
|
35.7 |
% |
|
279,548 |
|
184.3 |
% |
||
Franchise Tax |
200,000 |
28.3 |
% |
— |
— |
% |
200,000 |
100.0 |
% |
200,000 |
17.1 |
% |
— |
— |
% |
200,000 |
100.0 |
% |
|||||||||||||
Others |
|
57,441 |
|
8.1 |
% |
|
5,140 |
3.7 |
% |
|
52,301 |
1,017.5 |
% |
|
113,085 |
|
9.7v |
% |
|
12,486 |
|
2.9 |
% |
|
100,599 |
|
805.7 |
% |
|||
Total general and administrative expenses |
$ |
706,072 |
|
100.0 |
% |
$ |
141,762 |
|
100.0 |
% |
$ |
564,310 |
398.1 |
% |
$ |
1,170,678 |
|
100.0 |
% |
$ |
425,381 |
|
100.0 |
% |
$ |
745,297 |
|
175.2 |
% |
||
For the three months ended May 31, 2026, general and administrative expenses were $706,072, compared with $141,762 for the three months ended May 31, 2025, representing an increase of $564,310, or 398.1%. The increase in administrative expenses was primarily due to higher management and staff remuneration following the Company’s listing, increased expenditure on various professional services and higher compensation expenses, and increased franchise tax as a result of becoming a listed company.
For the six months ended May 31, 2026, general and administrative expenses were $1,170,678, compared with $425,381 for the six months ended May 31, 2025, representing an increase of $745,297, or 175.2%. The increase in administrative expenses was primarily due to higher management and staff remuneration following the Company’s listing, increased expenditure on various professional services, human resources expenses and higher insurance costs, and increased franchise tax as a result of becoming a listed company.
26
Other Income (Expenses)
Interest income
Interest income was $216,101 and $414,838, respectively, for the three and six months ended May 31, 2026, compared with an interest expense of $nil and $nil, respectively, for the three and six months ended May 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 May 31, 2026, compared with an income tax provision of $400 for the three months ended May 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 six months ended May 31, 2026, compared with a benefit of $105,898 for the six months ended May 31, 2025. The realization of a tax benefit was mainly driven by the loss before income taxes we incurred during the six months ended May 31, 2026.
Net Loss
As a result of the above factors, for the three months ended May 31, 2026, we reported a net loss of $2,532,942, compared with a net loss for the three months ended May 31, 2025 of $107,604. For the six months ended May 31, 2026, we reported a net loss of $2,643,046, compared with a net loss for the six months ended May 31, 2025 of $312,603.
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 May 31, 2026, we reported cash of $5,235,991 and working capital of $17,275,349, attributable primarily to our IPO completed in August 2025. Working capital as of May 31, 2026 is composed principally of $9,649,811 in loans receivable that mature in May 2026, 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 in May 2026 and intend to redeploy those proceeds in accordance with the intended uses set forth in our prospectus. As of the issuance date of this report, $150,000 of the outstanding balance has been received. In the period between the balance sheet date and the expected May 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 20, 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 its efforts to expand business with its current client and to acquire additional businesses. 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.
27
Cash Flows for the Six Months ended May 31, 2026 and May 31, 2025
The following table summarizes our cash flows for the periods presented:
For the Six Months |
For the Six Months |
|||||
|
Ended May 31, 2026 |
|
Ended May 31, 2025 |
|||
Net cash used in operating activities |
$ |
(4,344,650) |
$ |
(294,052) |
||
Net cash provided by investing activities |
|
343,582 |
|
— |
||
Net cash provided by financing activities |
|
7,928,530 |
|
178,922 |
||
Net increase in cash |
$ |
3,927,462 |
$ |
(115,130) |
||
Operating Activities
Net cash used in operations was $4,344,650 for the six months ended May 31, 2026, compared with net cash used in operations of $294,052 during the six months ended May 31, 2025. The increase in operating cash outflows was primarily attributable to the following factors: (i) a $1,201,361 increase in prepaid expenses and other current assets, primarily reflecting advance payments made for professional services (representing approximately $723,000 of the increase) and ongoing research and development service costs in connection with our market expansion and potential acquisition activities; (ii) a $28,682 decrease in other payables and current liabilities, primarily due to the settlement of accrued compensation and other operating obligations carried from the prior fiscal year; and (iii) $225,552 in interest income on our loans receivable portfolio that was accrued during the period but not yet received in cash.
Investing Activities
Net cash provided by investing activities was $343,582 for the six months ended May 31, 2026, reflecting repayments received on short-term loans extended in the prior fiscal year. For the six months ended May 31, 2025, net cash from investing activities was $nil.
Financing Activities
Net cash provided by financing activities amounted to $7,928,530 for the six months ended May 31, 2026, mainly attributable to proceeds from issuance of common stock under private placement agreement.
Net cash used in financing activities amounted to $178,922 for the six months ended May 31, 2025, consisting of $480,000 capital contribution from a shareholder, and $296,078 payment for deferred listing cost.
Contractual Obligations and Other Commitments
We have no long-term fixed contractual obligations or commitments as of May 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.
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with the accounting principles generally accepted in the U.S. (“U.S. GAAP”), which require us to make judgments, estimates, and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and assumptions in the past fiscal year, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.
28
We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our consolidated financial statements.
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 May 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
29
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.
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 income.
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 six months ended May 31, 2026 and May 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. |
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
30
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 May 31, 2026 and identified one material weakness and two significant deficiencies in our internal control over financial reporting as of May 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 May 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.
Lack of Dedicated Personnel with Specialized US 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
31
have dedicated personnel with specialized expertise in U.S. Generally Accepted Accounting Principles (“US GAAP”) financial statement preparation and disclosure, particularly with respect to complex accounting standards. This deficiency arises from recent personnel changes in the finance function, including the resignation of the Chief Financial Officer, and 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 robust 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 May 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
32
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 17, 2026.
Item 1A. Risk Factors
The following risk factors supplements 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 May 31, 2026 and November 30, 2025, $5.01 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 $4.9 million and $nil as of May 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, based upon the closing bid price of our listed securities for the previous 30 consecutive business days, we were not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. The deficiency letter provided us with 180 calendar days, or until April 29, 2026, to regain compliance.
On April 30, 2026, we received a notification from Nasdaq advising us that, although we had not regained compliance with the minimum bid price requirement, Nasdaq had determined that we were eligible for an additional 180 calendar days, or until October 26, 2026, to regain compliance. Nasdaq’s determination was based on our meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market, other than the bid price requirement, and our written notice of our intention to cure the deficiency during the second compliance period, if necessary, by effecting a reverse stock split.
If at any time during the second compliance period the closing bid price of our listed securities is at least $1.00 per share for a minimum of 10 consecutive business days, subject to Nasdaq’s discretion under the Nasdaq Listing Rules, Nasdaq will provide written confirmation of compliance and the matter will be closed. The notification has no immediate effect on the listing or trading of our Class A common stock on The Nasdaq Capital Market.
We intend to continue monitoring the bid price of our listed securities and will consider available options to regain compliance with Nasdaq Listing Rule 5550(a)(2), including, if necessary, effecting a reverse stock split at a ratio within the range previously approved by our stockholders. If we do not regain compliance by October 26, 2026, Nasdaq will provide written notification that our securities will be subject to delisting. Although we intend to use all reasonable efforts to regain compliance with Nasdaq Listing Rule 5550(a)(2), there can be no assurance that we will regain compliance during the second compliance period or otherwise maintain compliance with Nasdaq’s continued listing requirements. A delisting of our Class A common stock could substantially decrease trading in our Class A
33
common stock, adversely affect the liquidity and market price of our Class A common stock, 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.
Use of Proceeds
The following “Use of Proceeds” information relates to the registration statement on Form S-1, as amended (File Number 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 $0.4 million has been used for working capital; and (ii) approximately $9.9 million has been lent to unrelated third parties pursuant to short-term loan agreements at an annual interest rate of 8%, as further described in Note 4 to the condensed consolidated financial statements. The short-term loans represent a change from the use of net proceeds described in our prospectus. Our prospectus contemplated that net proceeds not immediately deployed for their designated purposes would be invested in short-term, interest-bearing bank deposits or debt instruments. Management determined that the short-term loans, which are each secured by irrevocable personal guarantees, provided a more favorable return on the net proceeds while maintaining liquidity in advance of the planned deployment. The loans matured in May 2026 and were extended for six months. The remainder of the net proceeds is held in cash accounts.
As of the date of this report, we have not yet deployed any net proceeds toward the equity or asset acquisitions, fleet upgrades, or mobile application development 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 May 31, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company
On June 8, 2026, the Company appointed Mr. Ye Hua as Chief Financial Officer of the Company, effective the same date. In connection with his appointment, Mr. Hua entered into an Employment Agreement and an Indemnification Agreement with the Company. Ms. Yidan Chen, who had served as the Company’s Interim Chief Financial Officer, ceased to hold that position upon Mr. Hua’s appointment and continues to serve as Chief Executive Officer, President, and Director of the Company.
On July 10, 2026, the Company entered into a Software Development Agreement with Leyan Management Ltd. (the “Developer”) for the phased development, upgrade and customization of the Company’s AI-enabled logistics operations platform, which is currently under development. The total consideration under the agreement is $3.3 million. The Developer will deliver the software, source code and related documentation on a milestone basis, subject to the Company’s testing and acceptance. The Company will own all intellectual property and work product developed under the agreement. The Company may terminate the agreement at any time upon written notice, subject only to payment obligations for completed and accepted deliverables.
Item 6. Exhibits
The exhibits listed below are filed as part of this quarterly report on Form 10-Q.
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Index to Exhibits
Incorporated by Reference |
||||||||||
Exhibit |
|
Exhibit Title |
|
Form |
|
File |
|
Exhibit |
|
Filing Date |
3.1 |
S-1 |
333-286965 |
3.1 |
May 5, 2025 |
||||||
3.2 |
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 |
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 |
— |
— |
— |
Filed herewith |
||||||
31.1 |
— |
— |
— |
Filed herewith |
||||||
31.2 |
— |
— |
— |
Filed herewith |
||||||
|
||||||||||
32.1* |
— |
— |
— |
Furnished herewith |
||||||
32.2* |
— |
— |
— |
Furnished herewith |
||||||
|
||||||||||
101.INS |
Inline XBRL Instance Document |
— |
— |
— |
Filed herewith |
|||||
|
||||||||||
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
— |
— |
— |
Filed herewith |
|||||
|
||||||||||
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
— |
— |
— |
Filed herewith |
|||||
|
||||||||||
36
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.
37
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: July 14, 2026
|
Elite Express Holding Inc. |
|
|
|
|
|
By: |
/s/ Yidan Chen |
|
|
Yidan Chen |
|
|
Chief Executive Officer, President and Director |
(Principal Executive Officer) |
||
38
Exhibit 10.7
SOFTWARE DEVELOPMENT AGREEMENT
(Elite Express Holding Route X 2.0)
THIS SOFTWARE DEVELOPMENT AGREEMENT (the “Agreement”) is made and entered into as of July 10, 2026 by and between Elite Express Holding Inc., a Delaware corporation (“Customer”) and Leyan Management Ltd (“Developer”).
RECITALS
WHEREAS, Leyan Management Ltd is a software developer who specializes in mobile application development;
WHEREAS, Customer is engaged in logistics and transportation operations, and is developing Route 2.0, an enterprise-grade, AI-enabled logistics operations intelligence platform, including modules for driver management, dispatch, fleet and operations analytics, cost and route-level profitability analysis, compliance document management, and AI managerical insights.
WHEREAS, Customer possesses an existing initial version of the Route X application and desires that Developer assume responsibility for, further develop, upgrade, and customize the platform and related software functionality to support Customer’s business operations (the “Software”);
WHEREAS, Developer is willing to develop the customized software for Customer, subject to the terms and conditions outlined herein;
NOW THEREFORE, Developer and Customer agree as set forth below:
Long-Term Development. This Agreement is intended to be a long-term development arrangement. The Project will be delivered in phases, and the Parties agree that the scope, deliverables, and payment will be managed through milestone-based execution and acceptance.
Platform Scope. The Project is intended to support the Customer’s development of an AI-enabled logistics operations intelligence platform, including interface design, system functionality, driver and dispatch management, fleet and operations dashboards, data visualization, operational monitoring, cost and route-level profitability analysis, compliance and document management, API integration, and AI-based operational reporting and insights, as applicable to the relevant milestone. The Project may include functionality supporting Customer’s internal logistics operations and, consistent with Customer’s long-term product strategy.
ARTICLE I DEVELOPMENT AND PAYMENT
1.1Development Plan.
This Agreement is for the development of the Software as more fully described in Exhibit A attached hereto and incorporated herein by reference (the “Elite Express Holding Route X Development Plan” or the “Development Plan”).
Developer shall furnish and supervise all labor, services, project management, coordination, technical resources, and administration necessary to perform the development services contemplated by the Development Plan.
The Development Plan is intended to describe the anticipated scope, objectives, functionality, development roadmap, technical requirements, implementation priorities, and related project documentation for the Software.
1.2Payment.
(a) |
Total Contract Price. The total contract price for the complete development of the Software, covering all phases, shall be US$3,300,000. |
(b) |
Payment in Full. Customer has paid, and Developer acknowledges receipt of, the full contract price of US$3,300,000, which constitutes payment in full for all phases (Phase 0 through Phase 5) of the development of the Software. |
ARTICLE II TEST AND EVALUATION
2.1Acceptance Testing of Software.
Immediately upon completion of each milestone or Deliverable, Developer shall deliver the applicable milestone or Deliverable, together with all related documentation, source code, deployment instructions, and other materials required under the Development Plan. Customer shall have thirty (30) days following such delivery to inspect, test, and evaluate the applicable milestone or Deliverable to determine whether it satisfies the applicable acceptance criteria set forth in the Development Plan.
No Acceptance, No Payment. Customer is not required to make payment for any milestone unless the milestone has been reviewed and accepted by Customer.
Material Defects. Customer may reject any milestone if there are material defects, security risks, or misalignment with Customer’s product direction.
If any milestone or Deliverable does not satisfy the applicable acceptance criteria, Customer shall provide Developer with written notice describing the deficiencies. Developer shall have ten (10) days from the receipt of such notice to correct any deficiencies pointed out by Customer. Customer shall then have ten (10) days to inspect, test and reevaluate the applicable Deliverable. If the applicable Deliverable still does not satisfy the acceptance criteria, Customer shall have the option of either:
(1) repeating the procedure set forth above, or
(2) terminating this Agreement pursuant to the section of this Agreement entitled “Termination.”
Upon Customer’s determination that the applicable milestone or Deliverable satisfies the applicable acceptance criteria, such milestone or Deliverable shall be deemed accepted by Customer.
ARTICLE III TIMING
3.1Development Timing.
Developer shall use commercially reasonable efforts to complete each milestone and Deliverable in accordance with the schedule set forth in the Development Plan.
Any delay resulting from Customer’s failure to perform its obligations under this Agreement shall not entitle Developer to any increase in fees.
If Developer fails to deliver any milestone or Deliverable in accordance with the applicable schedule, Customer may withhold payment for the affected milestone or Deliverable until such milestone or Deliverable has been completed and accepted by Customer.
ARTICLE IV CHANGES TO SOFTWARE
4.1Changes to Software.
Customer, without invalidating this Agreement, may request additions, deletions, or modifications to the Software. Any changes to the Software, Deliverables, Project scope, milestones, timelines, or fees shall be made by mutual written agreement of the Parties.
ARTICLE V REPRESENTATION AND WARRANTY
5.1Customer’s Responsibility.
Customer agrees to cooperate and make every reasonable effort to assist Developer during the course of development.
5.2Developer’s Representations and Warranties.
Developer represents and warrants that:
Developer shall not include any backdoors, hidden access, or unauthorized remote control mechanisms in the Software.
(a) the Work Product developed by Developer under this Agreement is original and does not infringe upon or violate any intellectual property rights, proprietary rights, or other rights of any third parties;
(b) the Work Product is free from any liens, claims, encumbrances, or other restrictions that may limit Customer’s ownership or use thereof;
(c) Developer shall execute any additional documents reasonably necessary to perfect
Customer’s ownership rights in the Work Product, including but not limited to assignments of intellectual property rights.
ARTICLE VI INTELLECTUAL PROPERTY AND INDEMNIFICATION
6.1Ownership and Intellectual Property Rights.
Upon payment of the applicable milestone payment by Customer, Customer shall exclusively own all rights, title, and interest in and to any and all work products created, developed, or delivered by Developer under this Agreement (“Work Product”), including but not limited to all patents, copyrights, trade secrets, source code, UI/UX designs, documentation, and any other proprietary rights associated therewith.
Third-Party Components. Developer shall provide Customer a written list of all third-party libraries, open-source components, and licenses used in the Work Product.
6.2Infringement Indemnity.
Developer shall hold Customer harmless, defend, and indemnify Customer and its affiliates (including Customer’s directors, officers, employees, and subsidiaries) against any claim that the Work Product infringes a copyright or patent or other intellectual property right, provided that:
(a) Customer notifies Developer in writing within fifteen (15) days of the claim; and
(b) Customer provides Developer with the assistance, information and authority necessary to perform Developer’s obligations under this Section.
If the Work Product is held or is believed by Developer to infringe, Developer shall have the option, at its expense, to:
(a) modify the Work Product to be non-infringing; or
(b) obtain for Customer a license to continue using the Work Product; and
(c) pay any fees, penalties reasonably related to, generate from, or resulting from such infringement.
ARTICLE VII TERMINATION
7.1Termination by Customer.
Termination by Customer (Anytime). Customer may terminate this Agreement at any time for any reason by providing written notice to Developer.
Upon termination, Developer shall promptly deliver to Customer all Deliverables and Work Product for which Customer has paid the applicable fees.
Customer shall be obligated to pay only for milestones or Deliverables that have been completed, accepted by Customer,and invoiced as of the effective date of termination. Customer shall have no obligation to pay for any incomplete, unaccepted, or future milestones or Deliverables.
Ownership of any unpaid Deliverables or Work Product shall remain with Developer unless otherwise agreed in writing by the Parties.
Developer further acknowledges that, upon termination, Customer shall have no further payment obligations, and Developer shall not be entitled to any additional fees, penalties, lost profits, damages, or other compensation arising from such termination.
ARTICLE VIII CONFIDENTIALITY
8.1Confidentiality.
Developer shall not, without the prior written consent of Customer, disclose the terms and provisions of this Agreement or the existence or consummation of the transactions contemplated hereby to any third party, except to those of its employees, attorneys, accountants, or professional advisors who have a need to know such information for purposes of performing this Agreement and who are bound by confidentiality obligations no less restrictive than those contained herein.
Developer shall treat and hold as confidential any information concerning the Software, Customer, or the business operations of Customer (“Confidential Information”); provided, however, that Confidential Information shall not include any information that (i) is or becomes generally available to the public through no wrongful act or breach of this Agreement, or (ii) is rightfully obtained from a third party without breach of any confidentiality obligation.
Following termination of this Agreement, Developer shall continue to maintain the confidentiality of the Confidential Information and shall use reasonable care to prevent any unauthorized use, disclosure, or dissemination of such Confidential Information, including the terms and provisions of this Agreement.
ARTICLE IX GENERAL PROVISIONS
9.1Assignment.
Except as expressly permitted by the terms hereof, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties without the prior written consent of the other Parties.
9.2Severability.
If any provision of this Agreement, or the application thereof to any person or circumstance, is held invalid or unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable.
9.3Choice of Law; Consent to Jurisdiction.
All disputes, claims or controversies arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby shall be governed by and construed in accordance with the internal Laws of the State of California, without regard to its rules of conflict of laws.
9.4Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTIES MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9.5Amendment and Waiver.
This Agreement may be amended or modified by the parties by an instrument in writing signed on behalf of each of the parties at any time.
9.6No Agreement Until Executed.
Irrespective of negotiations among the parties or the exchanging of drafts of this Agreement, this Agreement shall not constitute or be deemed to evidence a contract, agreement, arrangement or understanding among the parties unless and until this Agreement is executed and delivered by all of the Parties listed on the signature page.
9.7Headings.
The headings and titles of the paragraphs used herein are used for convenience only, and shall have no effect upon the construction or interpretation of this Agreement.
9.8Counterparts; Language.
This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
9.9Entire Agreement.
This Agreement constitutes the entire Agreement of the parties with respect to the subject matter and supersedes all prior negotiations, understandings, and agreement between them.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have duly executed this Software Development Agreement as of the date first above written.
CUSTOMER:
ELITE EXPRESS HOLDING INC.
Signature: |
/s/ Yidan Chen |
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Name: |
Yidan Chen |
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Title: |
CEO |
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Date: |
07/10/2026 |
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DEVELOPER:
LEYAN MANAGEMENT LTD
Signature: |
/s/ Yang Leyan |
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Name: |
Yang Leyan |
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Title: |
Director |
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Date: |
July 10, 2026 |
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Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Yidan Chen, certify that:
1. I have reviewed this report on Form 10-Q of Elite Express Holding Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 14, 2026
/s/ Yidan Chen |
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Yidan Chen |
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Chief Executive Officer, President and Director |
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(Principal Executive Officer) |
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Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ye Hua, certify that:
1. I have reviewed this report on Form 10-Q of Elite Express Holding Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 14, 2026
/s/ Ye Hua |
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Ye Hua |
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Chief Financial Officer |
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(Principal Accounting and Financial Officer) |
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Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certifies, in her capacity as an officer of Elite Express Holding Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of her knowledge:
(1) The Quarterly Report of the Company on Form 10-Q for the three and six months ended May 31, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: July 14, 2026
/s/ Yidan Chen |
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Yidan Chen |
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Chief Executive Officer, President and Director |
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(Principal Executive Officer) |
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certifies, in his capacity as an officer of Elite Express Holding Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1) The Quarterly Report of the Company on Form 10-Q for the three and six months ended May 31, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: July 14, 2026
/s/ Ye Hua |
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Ye Hua |
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Chief Financial Officer |
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(Principal Accounting and Financial Officer) |
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.