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10/14/2026 | Press release | Distributed by Public on 10/14/2026 14:03

Quarterly Report for Quarter Ending August 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q.

Forward-Looking Statements

This quarterly report on Form 10-Q contains "forward-looking statements." All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "plan," "project," or "anticipate," and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth under "Item 1A. Risk Factors" in the Annual Report on Form 10-K (File No. 001-42811) (the "Annual Report"), which was filed with the SEC on February 27, 2026, as amended on March 18, 2026.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed in this quarterly report. We do not intend, and undertake no obligation, to update any forward-looking statement, except as required by law.

The information included in this Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this quarterly report on Form 10-Q.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a holding company incorporated in Delaware. Through our wholly owned subsidiary, JAR, a California-based operating entity, we specialize in last-mile delivery services within California. Our core business focuses on retrieving packages from distribution hubs and ensuring their prompt and secure delivery to recipients' doorsteps. Committed to innovation and efficiency, our mission is to optimize last-mile logistics by providing efficient, reliable, and innovative delivery solutions.

As of the date of this report, we employ approximately 29 full-time staff, including approximately 23 drivers. Our fleet consists of approximately 22 trucks and trailers. We provide exclusive pickup and delivery services within our designated service area, covering approximately 1,665.28 square miles. We utilize GroundCloud, a leading logistics software, in the course of our business, for route optimization, driver management, and compliance monitoring. Additionally, we are actively expanding our investment in advanced technologies to enhance our scalability, automate our operations, and drive our data-driven decision-making. On average, we complete between 1,100 and 1,700 stops, facilitating the pickup and delivery of approximately 1,800 to 2,500 packages. During peak seasons, our daily stops rise to an estimated 2,000, allowing us to meet heightened demand with efficiency and reliability.

Currently, we pick up packages from the distribution hubs of FedEx and deliver them to recipients within designated service areas. While FedEx has been our only customer under an Independent Service Provider ("ISP") agreement, we are actively exploring opportunities to expand our customer base, diversify our revenue streams and strengthen our market presence.

The holding company, prior to the acquisition of JAR on October 25, 2024 (the "Acquisition Date"), did not have any active business operations.

Key Factors Affecting Our Results of Operations

Our results of operations are influenced by several interrelated factors that reflect the dynamic nature of our business environment. The following are the key factors that impact our performance:

●

E-Commerce Growth: We believe the rapid growth of e-commerce is a driving force behind the increased demand for last-mile delivery services. As consumer habits continue to shift toward online shopping, we anticipate benefitting from rising delivery volumes. Meeting customer expectations for fast and reliable service requires ongoing investments in technology and operational capacity.

●

Labor Costs and Workforce Management: Labor costs are one of the largest components of our cost structure, accounting for approximately 50% or more of our total costs of revenue for both the three and nine months ended August 31, 2026 and 2025. Retaining a skilled and motivated workforce is critical to maintaining service quality. We strive to mitigate these challenges by optimizing staffing models, including employing part-time and gig workers during peak demand periods, and investing in workforce training and retention programs to improve driver efficiency and reduce turnover.

●

Fuel Costs and Operational Efficiency: Fuel costs are another significant component of our cost of revenue and fluctuations in fuel prices can directly affect our profitability. We managed fuel expenses through standard route planning and operational adjustments on or prior to the Acquisition Date. To further enhance efficiency, we have implemented route optimization strategies aimed at reducing mileage and improving fuel efficiency. In addition, we are exploring the integration of electric vehicles to reduce our reliance on traditional fuel sources and align with our sustainability objectives.

●

Seasonal Demand and Resource Scaling: Peak seasons, such as the holiday period, account for a substantial portion of our annual revenue. Managing this demand requires precise planning and execution, including the temporary hiring of additional drivers, flexible routing strategies, and leveraging the FedEx DRO system, a predictive tool to anticipate delivery patterns. Successfully navigating these high-demand periods is essential to maintaining our reputation and customer relationships.

●

Technology Investments: We utilize GroundCloud, a leading logistics software, for route optimization, driver management, and compliance monitoring. While we continue to leverage GroundCloud for route optimization, driver management, and compliance monitoring, we are also expanding our investments in advanced technologies to enhance operational scalability, data-driven decision-making, and automation. By continuously evaluating and adopting innovative solutions, we aim to enhance efficiency, improve service reliability, and optimize operational costs. These ongoing investments in logistics technology are expected to strengthen our capacity to manage growing delivery volumes and position us for long-term success.

●

Customer Concentration and Diversification: As of the date of this report, 100% of our revenue is derived from FedEx. While this partnership provides operational stability, it also exposes us to risks associated with customer dependency. To mitigate these risks, we are actively exploring opportunities to partner with additional carriers and expand our customer base, which we believe will diversify our revenue streams and reduce dependency on a single client.

●

Capital Investments in Infrastructure: Sustained growth depends on strategic investments in vehicles, the transition to electric vehicles, and operational infrastructure, which includes tools and software that support our operations. We focused primarily on maintaining existing operations prior to the Acquisition Date. Since the Acquisition Date, we have adopted a more proactive investment strategy to expand capacity, enhance efficiency, and integrate advanced logistics solutions. These investments support our ability to scale operations, meet customer expectations, and enhance operational efficiency. While these expenditures may impact short-term profitability, they are essential for long-term success.

Results of Operations

Comparison of Results of Operations for the Three Months and Nine Months ended August 31, 2026 and August 31, 2025:



		For the Three Months															For the Nine Months
		Ended August 31,															Ended August 31,
		2026					2025					Change					2026					2025					Change
		Amount			%		Amount			%		Amount			%		Amount			%		Amount			%		Amount			%
Revenue		$	766,422		100.0	%	$	633,865		100.0	%	$	132,557		20.9	%	$	2,298,549		100.0	%	$	1,956,258		100.0	%	$	342,291		17.5	%
Cost of Revenue
Cost of service			76,902		10.0	%		56,974		9.0	%		19,928		35.0	%		235,198		10.2	%		176,984		9.0	%		58,214		32.9	%
Cost of labor			357,790		46.7	%		347,945		54.9	%		9,845		2.8	%		1,088,724		47.4	%		1,085,885		55.5	%		2,839		0.3	%
Fuel			114,408		14.9	%		94,654		14.9	%		19,754		20.9	%		336,674		14.6	%		304,600		15.6	%		32,074		10.5	%
Maintenance and repairs			91,291		11.9	%		63,143		10.0	%		28,148		44.6	%		223,248		9.7	%		207,709		10.6	%		15,539		7.5	%
Depreciation and amortization			30,272		3.9	%		64,332		10.1	%		(34,060)		(52.9)	%		80,544		3.5	%		188,668		9.6	%		(108,124)		(57.3)	%
Total cost of revenue			670,663		87.4	%		627,048		98.9	%		43,615		7.0	%		1,964,388		85.4	%		1,963,846		100.3	%		542		0.0	%

Gross Profit (Loss)			95,759		12.6	%		6,817		1.1	%		88,942		(1,304.7)	%		334,161		14.6	%		(7,588)		(0.3)	%		341,749		4,503.8	%

General and administrative expenses			1,017,024		132.7	%		151,600		23.9	%		865,424		570.9	%		2,187,702		95.2	%		576,981		29.5	%		1,610,721		279.2	%
R&D expenses			-		-	%		-		-	%		-		-	%		2,150,000		93.5	%		-		-	%		2,150,000		100.0	%
Total operating expenses			1,017,024		132.7	%		151,600		23.9	%		865,424		570.9	%		4,337,702		188.7	%		576,981		29.5	%		3,760,721		651.8	%

Loss from Operations			(921,265)		(120.1)	%		(144,783)		(22.8)	%		(776,482)		536.3	%		(4,003,541)		(174.1)	%		(584,569)		(29.8)	%		(3,418,972)		584.9	%

Other Income (Expense)
Interest income, net			161,127		21.0	%		2,248		0.4	%		158,879		7,067.6	%		575,965		25.1	%		2,248		0.1	%		573,717		(25,521.2)	%
Other income, net			-		-	%		-		-	%		-		-	%		25,992		1.1	%		21,285		1.1	%		4,707		22.1	%
Total other income, net			161,127		21.0	%		2,248		0.4	%		158,879		7,067.6	%		601,957		26.2	%		23,533		1.2	%		578,424		(2,457.9)	%

Loss before Income Tax Expense			(760,138)		(99.1)	%		(142,535)		(22.4)	%		(617,603)		433.3	%		(3,401,584)		(147.9)	%		(561,036)		(28.6)	%		(2,840,548)		(506.3)	%

Income Tax Provision (Benefit)			-		-	%		43,346		6.80	%		(43,346)		100.0	%		1,600		0.1	%		(62,552)		(3.2)	%		64,152		(102.6)	%
Net Loss		$	(760,138)		(99.1)	%	$	(185,881)		(29.2)	%	$	(574,257)		308.9	%	$	(3,403,184)		(148.0)	%	$	(498,484)		(25.4)	%	$	(2,904,700)		582.7	%

Revenue

Our revenue is structured into two main categories: (i) fixed revenue, which includes weekly service charges, branding-related reimbursements, and peak season surcharges, and (ii) activity-based revenue, which includes charges based on the number of stops, packages delivered, e-commerce orders, fuel surcharges, and other variable components.

For the three months ended August 31, 2026, we generated total revenue of $766,422, representing an increase of $132,557, or 20.9%, compared with $633,865 for the three months ended August 31, 2025. These increases were primarily attributable to higher weekly service charges under our updated service contract and higher volume-based activity revenue, including fuel surcharge revenue.

For the nine months ended August 31, 2026, we generated total revenue of $2,298,549, representing an increase of $342,291, or 17.5%, compared with $1,956,258 for the nine months ended August 31, 2025. These increases were primarily attributable to higher weekly service charges, higher volume-based activity revenue, particularly from e-commerce deliveries and fuel surcharge revenue.

The table below sets forth a breakdown of revenue components for the periods indicated:



		For the Three Months												For the Nine Months
		Ended August 31,												Ended August 31,
		2026				2025				Change				2026				2025				Change
		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
Fixed:
Weekly service charges		$	206,150	26.9	%	$	146,221	23.1	%	$	59,929	41.0	%	$	559,380	24.3	%	$	438,182	22.4	%	$	121,198	27.7	%
Branding-related			10,080	1.3	%		9,423	1.5	%		657	7.0	%		30,790	1.3	%		26,729	1.4	%		4,061	15.2	%
Subtotal:			216,230	28.2	%		155,644	24.6	%		60,586	38.9	%		590,170	25.6	%		464,911	23.8	%		125,259	26.9	%
Activity-based:
Stops			119,213	15.6	%		102,705	16.2	%		16,508	16.1	%		338,129	14.7	%		306,607	15.7	%		31,522	10.3	%
Packages			17,065	2.2	%		15,795	2.5	%		1,270	8.0	%		48,957	2.1	%		45,509	2.3	%		3,448	7.6	%
E-Commerce			273,032	35.6	%		269,965	42.6	%		3,067	1.1	%		875,409	38.1	%		836,884	42.8	%		38,525	4.6	%
Large packages			18,278	2.4	%		19,543	3.1	%		(1,265)	(6.5)	%		56,420	2.5	%		55,583	2.8	%		837	1.5	%
Fuel Surcharge			118,291	15.4	%		69,697	11.0	%		48,594	69.7	%		319,096	13.9	%		212,816	10.9	%		106,280	49.9	%
Surge Stops			-	-	%		-	-	%		-	-	%		41,328	1.8	%		29,983	1.5	%		11,345	37.8	%
Subtotal:			545,879	71.2	%		477,705	75.4	%		68,174	14.3	%		1,679,339	73.1	%		1,487,382	76.0	%		191,957	12.9	%

Other Pickup and Delivery (P&D)			4,313	0.6	%		516	0.3	%		3,797	735.9	%		29,040	1.3	%		3,965	0.2	%		25,075	632.4	%

Total Revenue		$	766,422	100.0	%	$	633,865	100.0	%	$	132,557	20.9	%	$	2,298,549	100.0	%	$	1,956,258	100.0	%	$	342,291	17.5	%

On February 21, 2026, we renewed our agreement with FedEx. The new contract is valid until January 1, 2027. Under the new contract, the weekly service charge within the fixed fees has increased, while the fee standards for certain types of services under the activity-based model have decreased. This has resulted in varying degrees of increase and decrease across the components of our revenue.

For the three months ended August 31, 2026, total fixed revenue was $216,230, accounting for approximately 28.2% of total revenue, representing an increase of $60,586, or 38.9%, compared to the fixed revenue of $155,644, or approximately 24.6% of total revenue for the three months ended August 31, 2025. For the nine months ended August 31, 2026, total fixed revenue was $590,170, accounting for approximately 25.6% of total revenue, representing an increase of $125,259, or 26.9%, compared to the fixed revenue of $464,911, or approximately 23.8% for the nine months ended August 31, 2025. The increase was primarily due to higher weekly service charges under our renewed ISP agreement with FedEx, effective February 21, 2026.

For the three months ended August 31, 2026, total activity-based revenue was $545,879, or 71.2% of total revenue, compared with $477,705, or 75.4% of total revenue in the same period of the prior year, driven by a $48,594 increase in fuel surcharge revenue reflecting higher market fuel prices and a $16,508 increase in stop revenue as delivery activities increased. For the nine months ended August 31, 2026, total activity-based revenue was $1,679,339, or 73.1% of total revenue, compared with $1,487,382, or 76.0% of total revenue in the same period of the prior year. This growth was primarily driven by an increase in the number of parcels we handled and higher fuel surcharge revenue resulting from increased market fuel prices.

Among all revenue categories, E-commerce deliveries and weekly service charges were the two major contributors to our total revenue for both the three and nine months ended August 31, 2026 and August 31, 2025.

●

E-commerce deliveries generated $273,032 in revenue during the three months ended August 31, 2026, or 35.6% of total revenue, compared with $269,965, or 42.6%, during the three months ended August 31, 2025. The increase of $3,067, or 1.1%, reflected higher e-commerce delivery volumes, which more than offset a decrease in the per-unit e-commerce service rate under our renewed ISP agreement. E-commerce deliveries generated $875,409 in revenue during the nine months ended August 31, 2026, or 38.1% of total revenue, compared with $836,884, or 42.8%, during the nine months ended August 31, 2025. The increases were primarily driven by sustained residential delivery demand within our assigned FedEx service areas, E-commerce deliveries represented the largest revenue component in all reported periods.

●

Weekly service charges totaled $206,150, or 26.9% of total revenue, for the three months ended August 31, 2026, compared with $146,221, or 23.1%, during the three months ended August 31, 2025. Weekly service charges totaled $559,380, or 24.3% of total revenue, for the nine months ended August 31, 2026, compared with $438,182, or 22.4%, during the nine months ended August 31, 2025. The increases in both periods, $59,929, or 41.0% during the third quarter of 2026 and $121,198, or 27.7% during the nine months ended August 31, 2026, were primarily attributable to the increase in the baseline contractual rates under our updated ISP agreement with FedEx. Under the renewed ISP agreement effective February 21, 2026, the higher weekly service charges are expected to continue contributing stable fixed revenue and to help offset any seasonal decline in activity-based revenue during the off-season.

Cost of Revenue

The table below summarizes the total cost of revenue and its components for the interim periods presented:



		For the Three Months												For the Nine Months
		Ended August 31,												Ended August 31,
		2026				2025				Change				2026				2025				Change
		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
Cost of service		$	76,902	11.5	%	$	56,974	9.0	%	$	19,928	35.0	%	$	235,198	12.0	%	$	176,984	9.0	%	$	58,214	32.9	%
Cost of Labor			357,790	53.3	%		347,945	55.5	%		9,845	2.8	%		1,088,724	55.4	%		1,085,885	55.4	%		2,839	0.3	%
Fuel			114,408	17.1	%		94,654	15.1	%		19,754	20.9	%		336,674	17.1	%		304,600	15.5	%		32,074	10.5	%
Maintenance and repairs			91,291	13.6	%		63,143	10.1	%		28,148	44.6	%		223,248	11.4	%		207,709	10.6	%		15,539	7.5	%
Depreciation and amortization			30,272	4.5	%		64,332	10.3	%		(34,060)	(52.9)	%		80,544	4.1	%		188,668	9.5	%		(108,124)	(57.3)	%
Total Cost of Revenue		$	670,663	100.0	%	$	627,048	100.0	%	$	43,615	7.0	%	$	1,964,388	100.0	%	$	1,963,846	100.0	%	$	542	0.03	%

For the three months ended August 31, 2026, our cost of revenue was $670,663, or 87.4% of total revenue, compared with $627,048, or 98.9%, for the three months ended August 31, 2025. This increase was primarily due to a $28,148 increase in maintenance and repair expense, a $19,928 increase in cost of service and a $19,754 increase in fuel expense, partially offset by a $34,060 decrease in depreciation and amortization.

For the nine months ended August 31, 2026, our cost of revenue was substantially unchanged, increasing $542, or 0.03%, while revenue increased $342,291, or 17.5%, such that cost of revenue declined from 100.3% to 85.4% of revenue. The improvement was primarily due to a $108,124 decrease in depreciation and amortization, reflecting the full depreciation of a portion of our fleet, partially offset by a $58,214 increase in cost of service, a $32,074 increase in fuel expense and a $15,539 increase in maintenance and repair expense.

The cost of revenue consists of labor, fuel, depreciation and amortization, service and maintenance related expenses. Each component of our cost of revenue impacted the overall cost structure during the three and nine months ended August 31, 2026 and August 31, 2025, as discussed below:

●

Cost of Service: Service expenses totaled $76,902, or 11.5% of total cost of revenue, during the three months ended August 31, 2026, compared with $56,974 or 9.0% during the three months ended August 31, 2025. For the nine months ended August 31, 2026 and August 31, 2025, service expenses totaled $235,198, or 12.0% of total cost of revenue, and $176,984 or 9.0% of total cost of revenue respectively. These increases were primarily attributable to higher insurance premiums and the cost of renting additional vehicles needed to fulfill our delivery volume obligations.

●

Cost of Labor: Cost of labor expenses remained the largest component of our costs of revenue, totaling $357,790, or 53.3% during the three months ended August 31, 2026, an increase of $9,845, or 2.8%, compared with the three months ended August 31, 2025. Labor expenses for the nine months ended August 31, 2026 totaled $1,088,724, or 55.4% of total cost of revenues, compared with $1,085,885, or 55.4%, of total cost of revenues for the nine months ended August 31, 2025. Cost of labor remained substantially flat, increasing $9,845, or 2.8%, and $2,839, or 0.3%, respectively. The increase reflected higher average wage rates for a more experienced driver base, which was largely offset by a reduction in driver headcount as we handled higher delivery volumes with fewer, more productive drivers.

●

Maintenance and Repair: Maintenance and repair expense increased by $28,148, or 44.6%, to $91,291 during the three months ended August 31, 2026, compared with $63,143 for the three months ended August 31, 2025. This increase was primarily due to an annual major overhaul program performed on vehicles that have exceeded their depreciable lives but remain in service. Maintenance and repair expense increased by $15,539, or 7.5% to $223,248 during the nine months ended August 31, 2026, compared with $207,709 for the nine months ended August 31, 2025, due to the overhaul activity described above, partially offset by lower maintenance costs during the first half of fiscal 2026 relative to the prior-year period, when many vehicles assumed in the JAR Acquisition required significant repairs.

●

Depreciation and Amortization: Depreciation and amortization expenses totaled $30,272 during the three months ended August 31, 2026, a decrease of $34,060, or 52.9%, compared with $64,332 for the three months ended August 31, 2025. For the nine months ended August 31, 2026, depreciation and amortization expense totaled $80,544, down $108,124 or 57.3%, compared with $188,668 for the nine months ended August 31, 2025. The decrease was primarily due to the full depreciation of a portion of our fleet and the disposal of certain vehicles, partially offset by depreciation on vehicles placed in service during the period.

●

Fuel: Fuel expense increased by $19,754, or 20.9%, to $114,408 for the three months ended August 31, 2026. The increase in fuel costs was primarily driven by the increase in fuel prices, partially offset by our improved energy management and route planning improvement. For the nine months ended August 31, 2026, fuel expense increased by $32,074, or 10.5%, to $336,674 primarily due to higher market fuel prices and higher delivery volumes, which were partially offset by improved route planning and driver operating practices that reduced average mileage per route, and by the introduction of electric trucks during fiscal 2026.

Gross Profit

For the three months ended August 31, 2026, we recorded our gross profit of $95,759, or 12.6% of total revenue, compared with a gross profit of $6,817, or 1.1%, for the three months ended August 31, 2025. The increase of $88,942 was primarily driven by increased revenue.

For the nine months ended August 31, 2026, we recorded a gross profit of $334,161, or 14.6% of total revenue, compared with a gross loss of $7,588, or 0.3% of total revenue for the nine months ended August 31, 2025. The increase of $341,749 was primarily driven by an increase in revenue.

General and Administrative Expenses

The following table sets forth the breakdown of our general and administrative expenses for the periods presented.



		For the Three Months												For the Nine Months
		Ended August 31,												Ended August 31,
		2026				2025				Change				2026				2025				Change
		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
General and administrative expenses
Professional fees		$	190,786	18.8	%	$	53,449	35.3	%	$	137,337	256.9	%	$	617,142	28.2	%	$	314,655	54.5	%	$	302,487	96.1	%
Payroll Expense			663,105	65.2	%		76,853	50.7	%		586,252	762.8	%		1,094,342	50.0	%		228,542	39.6	%		865,800	378.8	%
Franchise Tax			120,108	11.8	%		-	-	%		120,108	100.0	%		320,108	14.6	%		-	-	%		320,108	100.0	%
Others			43,025	4.2	%		21,298	14.0	%		21,727	102.0	%		156,110	7.1	%		33,784	5.9	%		122,326	362.1	%
Total general and administrative expenses		$	1,017,024	100.0	%	$	151,600	100.0	%	$	865,424	570.9	%	$	2,187,702	100.0	%	$	576,981	100.0	%	$	1,610,721	279.2	%

For the three months ended August 31, 2026, general and administrative expenses were $1,017,024, compared with $151,600 for the three months ended August 31, 2025, representing an increase of $865,424, or 570.9%. The increase in administrative expenses was primarily due to higher management and staff remuneration following the Company's IPO, increased expenditure on various professional services and higher compensation expenses, and increased franchise tax as a result of becoming a public company.

For the nine months ended August 31, 2026, general and administrative expenses were $2,187,702, compared with $576,981 for the nine months ended August 31, 2025, representing an increase of $1,610,721, or 279.2%. The increase in administrative expenses was primarily due to higher management and staff remuneration following the Company's IPO, increased expenditure on various professional services, human resources expenses and higher insurance costs, and increased franchise tax as a result of becoming a public company.

R&D expenses

We incurred no research and development expenses during the three months ended August 31, 2026 and August 31, 2025. For the nine months ended August 31, 2026, research and development expenses were $2,150,000, or 93.5% of total revenue and 49.6% of total operating expenses, compared with $nil for the nine months ended August 31, 2025. The expenses were incurred in the second quarter of fiscal 2026 and relate entirely to the continued development, upgrade and regional adaptation of our proprietary ROUTE X last-mile delivery platform.

Other Income (Expenses)

Interest income, net

Interest income, net was $161,127 and $575,965, respectively, for the three and nine months ended August 31, 2026, compared with an interest income of $2,248 and $2,248, respectively, for the three and nine months ended August 31, 2025. This increase in interest income was primarily attributable to interest earned on funds lent to unrelated third parties on a short-term basis to optimize the return on proceeds raised through our IPO, before allocating and utilizing those funds in accordance with the purposes set forth in the prospectus.

Income Tax Expense (Benefit)

Our income tax provision was $nil for the three months ended August 31, 2026, compared with an income tax provision of $43,346 for the three months ended August 31, 2025 due to the tax provision adjustment in the third quarter of fiscal year 2025 related to nondeductible IPO-related costs.

We recorded a tax provision of $1,600 for the nine months ended August 31, 2026, compared with a benefit of $62,552 for the nine months ended August 31, 2025.

Net Loss

As a result of the above factors, for the three months ended August 31, 2026, we reported a net loss of $760,138, compared with a net loss for the three months ended August 31, 2025 of $185,881. For the nine months ended August 31, 2026, we reported a net loss of $3,403,184, compared with a net loss for the nine months ended August 31, 2025 of $498,484.

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash on hand, our ability to generate sufficient revenue, the collection of our accounts receivable, our ability to obtain additional financial support in the future, and our operating and capital expenditure commitments. As of August 31, 2026, we reported cash of $3,003,589 and working capital of $16,548,682, attributable primarily to our IPO completed in August 2025 and the private placement that closed in June 2026. Working capital as of August 31, 2026 is composed principally of $11,549,811 in loans receivable that mature in November 2026 or later, with cash and other current assets comprising the remainder. Our near-term liquidity is therefore dependent primarily on the timely collection of the outstanding loan balances upon their maturity. Each loan is secured by an irrevocable personal unlimited joint and several liability guarantee provided by the shareholders or chief executive officers of the respective borrowing parties. We expect to collect substantially all outstanding loan principal upon maturity around November 2026 and intend to redeploy those proceeds in accordance with the intended uses set forth in our prospectus. In the period between the balance sheet date and the expected November 2026 loan maturities, we expect to fund ongoing operating requirements through a combination of cash on hand, operating revenues, and any advance repayments received from borrowers prior to maturity.

In August 2024, we sold 1,000,000 shares of Class A common stock at a price of $0.90 per share. The gross proceeds amounted to $0.9 million. All proceeds were received prior to November 30, 2024.

On August 22, 2025, we completed our IPO resulting in net proceeds of approximately $13.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

Our future capital requirements will depend on many factors, including the rate of revenue growth, the timing and amount of cash received from customers, the expansion of sales and marketing activities, the timing and cost of new service efforts, and the success of our efforts to expand business with our current client and to acquire additional businesses. The Company believes its balances of cash, cash equivalents and marketable securities, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond. If additional resources are required, we may issue additional equity or debt securities. The sale of additional equity or equity-linked securities could result in further dilution to stockholders. Incurring additional debt would increase our debt service obligations and could impose operating and financial covenants that may limit our operations. Further, financing may not be available in amounts or on terms that are acceptable to us, or it may not be available at all.

Cash Flows for the Nine Months ended August 31, 2026 and August 31, 2025

The following table summarizes our cash flows for the periods presented:



		For the Nine Months			For the Nine Months
		Ended August 31, 2026			Ended August 31, 2025
Net cash used in operating activities		$	(4,741,858)		$	(640,210)
Net cash used in investing activities			(1,556,418)			(79,908)
Net cash provided by financing activities			7,993,336			14,103,098
Net increase in cash		$	1,695,060		$	13,382,980

Operating Activities

Net cash used in operations was $4,741,858 for the nine months ended August 31, 2026, compared with net cash used in operations of $640,210 during the nine months ended August 31, 2025. The increase in operating cash outflows was primarily attributable to the following factors: (i) a $2,904,700 increase in our net loss, from $498,484 to $3,403,184, which accounted for approximately 70.8% of the increase in cash used in operations; and (ii) a $1,001,587 increase in the net cash consumed by changes in operating assets and liabilities. The major changes in operating assets and liabilities during the nine months ended August 31, 2026, as presented in our condensed consolidated statements of cash flows, was prepaid expenses and other current assets, which increased by $1,065,788, primarily reflecting a $1,150,000 increase in prepayments made for research and development services in connection with the development and regional adaptation of our ROUTE X application, as further discussed under "Research and Development Expenses", partially offset by a $94,192 decrease in prepaid professional services and a $21,469 decrease in other current assets.

Investing Activities

Net cash used in investing activities was $1,556,418 for the nine months ended August 31, 2026, compared with $79,908 for the nine months ended August 31, 2025. The increase of $1,476,510 was primarily due to a net $1,550,000 increase in our loans receivable, as we disbursed $1,900,000 under new short-term loan agreements with unrelated third parties and received $350,000 of principal repayments from borrowers. All of this activity occurred during the nine months ended August 31, 2026. In addition, we used $6,418 to purchase property and equipment, compared with $79,908 for the nine months ended August 31, 2025.

Financing Activities

Net cash provided by financing activities amounted to $7,993,336 for the nine months ended August 31, 2026, mainly attributable to proceeds from issuance of common stock under private placement agreement. Net cash provided by financing activities during the nine months ended August 31, 2026 consisted of $8,000,000 of gross proceeds from the issuance of 32,000,000 shares of our Class A common stock to eight non-U.S. investors at a purchase price of $0.25 per share, which closed on June 4, 2026 and was conducted in offshore transactions pursuant to Rule 903 of Regulation S under the Securities Act of 1933, as amended, and $141,897 of insurance premium financing, partially offset by $107,131 of repayments under our insurance premium financing arrangements and $41,430 of deferred offering costs paid in connection with the registration statement on Form S-3 we filed on August 28, 2026

Net cash provided by financing activities amounted to $14,103,098 for the nine months ended August 31, 2025, mainly consisting of $13,717,940 net proceeds from our IPO, partially offset by payments for deferred offering costs.

Contractual Obligations and Other Commitments

We have no long-term fixed contractual obligations or commitments as of August 31, 2026.

Off-Balance Sheet Arrangements

We did not have during the period presented, and we do not currently have, any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2025.

Uses of estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for credit losses of accounts receivables, useful lives of plant and equipment, the recoverability of long-lived assets, impairment of goodwill, and revenue recognition. Actual results could differ from those estimates.

Fair value of financial instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of input used to measure fair value are as follows:

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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.

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Level 3 - inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Company's financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, due to a related party, other payables and other current liabilities, approximate the fair value of the respective assets and liabilities as of August 31, 2026 and November 30, 2025, based upon the short-term nature of the assets and liabilities.

Business Combinations

Business combinations are accounted for using the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. The accounting for business combinations requires estimates and judgment in determining the fair value of assets acquired, liabilities assumed, and contingent consideration transferred, if any, regarding expectations of future cash flows of the acquired business, and the allocation of those cash flows to the identifiable intangible assets. The determination of fair value is based on management's estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If actual results differ from these estimates, the amounts recorded in the financial statements could result in a possible impairment of intangible assets and goodwill. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. Acquisition-related expenses are expensed when incurred.

Income Taxes

Income taxes are accounted for using the asset and liability method, as prescribed under ASC 740, Income Taxes ("ASC 740"). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.

Prior to JAR Acquisition, as an S-Corporation, the Predecessor was not subject to federal corporate income taxation, and its taxable income, deductions, and credits were passed through to its stockholders. The Predecessor was subject to the California corporate franchise tax under RTC § 23802, which requires S-Corporations to pay the greater of a minimum tax of $800 or 1.5% of net taxable income derived from California sources. In accordance with ASC 740-10-15-4, deferred tax assets and liabilities were recognized for state-level temporary differences and net operating loss ("NOL") carryforwards. Following the JAR Acquisition, the Predecessor became a wholly owned subsidiary of the Company, and a C-Corporation, and is subject to corporate income taxation under the Internal Revenue Code and applicable state tax laws.

ASC 740 requires a tax position to meet a recognition threshold before it is recognized in the financial statements. We assess uncertain tax positions based on management's evaluation of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. This assessment includes consideration of any potential appeals or litigation processes based on the technical merits of the tax position. Because significant assumptions and judgments are involved in determining whether a tax benefit is more likely than not to be sustained, actual results may differ from estimates under different assumptions or conditions. We recognize interest and penalties related to unrecognized tax benefits as part of the income tax provision in the consolidated statements of operations.

Impairment of Long-Lived Assets

We review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If an impairment indicator is present, we evaluate recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of the asset group. If the carrying amount exceeds the recoverable amount, an impairment loss is measured as the amount by which the carrying amount exceeds the fair value of the asset. We estimate fair value using the expected future cash flow discounted at a rate consistent with the risks associated with the recovery of the assets. Based on the above analysis, no impairment loss was recognized for three months and nine months ended August 31, 2026 and August 31, 2025.

Revenue recognition

ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration it expects to receive in exchange for those goods or services as performance obligations are satisfied. ASC 606 applies a five-step model for revenue recognition, which requires the Company to: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

The Company is engaged in providing last-mile delivery services as an Independent Service Provider (ISP) for FedEx and provides logistics solutions primarily in the United States. The Company coordinates with FedEx for the transport of goods pursuant to FedEx's instructions and the end-recipient's designated destination (the end-recipient is FedEx's customer, not the Company's). Once the goods arrive at the end-recipient's designated destination, the end-recipient acknowledges the delivery note-this confirmation serves as evidence of the Company's completion of delivery services for FedEx, and the transfer of control of the service obligation to FedEx is deemed complete, marking the successful fulfillment of the logistics services for FedEx. The Company derives all revenue from both fixed service charges and activity-based charges under its ISP Agreement with FedEx. Performance obligations under the ISP Agreement include (i) weekly continuous service coverage for designated service areas (fixed weekly service charges), (ii) execution of delivery and pickup stops for FedEx (stop charges and e-commerce stop charges), (iii) handling and delivering packages for FedEx (package charges, including e-commerce and large package deliveries), and (iv) compliance with FedEx's brand and branding requirements (apparel and vehicle branding fees). Revenue is recognized as follows:

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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.

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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 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.

Elite Express Holding Inc. published this content on October 14, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 14, 2026 at 20:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]