Toppoint Holdings Inc.

The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our,” the “Company,” “Toppoint Holdings,” and “our company” refer to the consolidated operations of Toppoint Holdings Inc., a Nevada corporation. “Common stock” refers to the Company’s common stock, par value $0.0001 per share.

Note Regarding Forward-Looking Statements

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A. “Risk Factors” of our most recent annual report on Form 10-K. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Overview

We are a truckload services and solutions provider focused on the recycling export supply chain. We have become a key player in the New Jersey and Pennsylvania regional trucking market for waste paper. In addition to waste paper, our portfolio also includes the shipment of scrap metal and wooden logs from large waste companies, recycling centers and commodity traders to the ports of Newark, NJ, and Philadelphia, PA. We also provide import transportation services at these ports, transporting cargo-filled containers from the ports to our customers’ designated delivery locations. We continue to expand our footprints domestically and internationally and have ventured into the recycling export transport markets in Tampa, Jacksonville, and Miami, FL, and Baltimore, MD, in 2023, and Ensenada, Mexico in 2024, and Houston, Texas in 2025. We intend to explore the international market in Latin America, including Chancay, Peru, in the near future.

Our client base includes some of the largest Fortune 500 waste companies and over 207 recycling centers and commodity traders that operate in nearly 1,077 locations. Our growing client base relies on us as their partner to provide a “white glove service” to ensure their time-sensitive, ultra-high throughput commodities are safely loaded and delivered right to container ships. In addition, capitalizing on our know-how in developing logistics solutions over the years, we are able to propose integrated transportation solutions that cover loading, transport, port drayage and unloading.

Recent Developments 

We have continued to expand our operations by securing additional clients, introducing new service offerings, growing partnerships with existing clients and entering new geographic markets. To this end, we recently expanded our services to the Houston Port in Texas.

Emerging Growth Company Status and Smaller Reporting Company Status

We are an emerging growth company, as defined in the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards. We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (i) irrevocably elect to opt out of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. We will continue to remain an emerging growth company until the earliest of the following: (1) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

Results of Operations

Comparison of Three Months Ended June 30, 2026 and 2025

The following table sets forth key components of our results of operations during the three months ended June 30, 2026 and 2025, together with the corresponding period-over-period changes.

Revenue 

Revenue for the three months ended June 30, 2026 and 2025 was $4,640,068 and $3,968,924, respectively, representing an increase of $671,144 or 17%. The revenue increase in the second quarter of 2026 was mainly due to our expansion into new markets, a substantial increase in import revenue, as well as service price increases in response to market changes.

Our revenue consisted of the following during the three months ended June 30, 2026, and 2025:

Waste Paper. Revenue attributable to the transportation of waste paper rose to $2,225,573 for the three months ended June 30, 2026, a 6.9% change from $2,082,560 in the prior-year period. The slight increase was principally attributed to load price improvements per order due to increased export demand.

Import. Import-related revenue increased to $1,635,998 compared with $1,231,751 in the three-month period ended June 30, 2025, representing a 32.8% increase. The increase was primarily attributable to a shift toward higher-value loads and higher rates realized on import container movements, together with increased production volume driven by our ability to service additional import containers with new, versatile equipment.

Metal. Revenue derived from the movement of ferrous and non-ferrous scrap metals grew to $606,267 as compared to $467,353 in the prior-year quarter, a period-over-period increase of 29.7%. The increase largely reflects growth in customer production volumes, together with strong global demand for recycled non-ferrous material. Elevated commodity prices have increased the value of scrap feedstock, and constrained domestic outlets for certain grades have continued to support export flows.

Log. Log-hauling revenue totaled $139,125, up 6.5% from $130,605 in the three months ended June 30, 2025. The modest increase reflects generally stable customer volumes during the period, with revenue per load supported by higher fuel surcharges.  

Plastic. Revenue from the plastic commodity vertical reached $33,105, a period-over-period decrease of 41.6% compared with $56,655 in the prior-year quarter. The decrease reflects the continued contraction of export markets for recovered plastics, as key Southeast Asian destinations have implemented import restrictions and low virgin resin prices have reduced demand for recycled feedstock. Plastics represent a non-core vertical for the Company and an immaterial portion of total revenue.

Cost and expenses

Costs of revenue Our cost of revenue includes all directly related costs to deliver our services, which includes independent contractor drivers, insurance, truck maintenance costs, equipment rental, parking rent expense, dispatch service fees, depreciation and amortization expense, and other directly related costs. Our costs of revenue for the three months ended June 30, 2026 and 2025 were $4,262,551 and $3,996,855, respectively, representing an increase of 7%.

Gross profit As a result of the foregoing, our gross profit increased by $405,448 or 1,452% to $377,517 for the three months ended June 30, 2026 from $(27,931) for the three months ended June 30, 2025. As a percentage of revenue, gross profit margin increased to 8% for the three months ended June 30, 2026, as compared to (0.7)% for the three months ended June 30, 2025. 

General and administrative expenses Our general and administrative expenses consist primarily of automobile, office, insurance, payroll and rent expenses. Our general and administrative expenses decreased by $843,039 or 54% to $718,143 for the three months ended June 30, 2026 from $1,561,182 for the three months ended June 30, 2025. This change primarily results from a substantial decrease in professional fees incurred during the three months ended June 30, 2026 as well as stock-based compensation of $985,550 recognized during the three months ended June 30, 2025.

Income tax expense

We recorded a provision for income benefits of $0 for the three months ended June 30, 2026, as compared to $108,819 for the three months ended June 30, 2025.

Net loss

Net loss for the three months ended June 30, 2026 and 2025 was $306,711 and $1,531,523, respectively. The decrease in net loss was primarily due to a reduction in the general and administrative expenses, partially offset by an increase in costs of revenue.

Comparison of Six Months Ended June 30, 2026 and 2025

The following table sets forth key components of our results of operations during the six months ended June 30, 2026 and 2025, together with the corresponding period-over-period changes.

Revenue 

Revenue for the six months ended June 30, 2026 and 2025 was $8,747,011 and $7,780,534, respectively, representing an increase of $966,477 or 12%. The revenue increase during 2026 was mainly due to our expansion into new markets, a substantial increase in import and metal revenue which have a higher average revenue per load, as well as service price increases in response to market changes.

Our revenue consisted of the following during the six months ended June 30, 2026, and 2025:

Waste Paper. Revenue attributable to the transportation of waste paper fell to $4,290,590 for the six months ended June 30, 2026, a 8.1% decrease from $4,670,575 in the prior-year period. The decrease was principally attributable to a lower volume of outbound loads originating from recycling plants, as new domestic containerboard capacity absorbed a greater share of recovered fiber and reduced export-bound volumes. The decline was concentrated in the first quarter of 2026 and was partially offset in the second quarter by improved load pricing per order. 

Import. Import-related revenue increased to $3,045,081 compared with $2,102,465 in the six-month period ended June 30, 2025, representing a 44.8% increase. The increase was primarily attributable to a shift toward higher-value loads and higher rates realized on import container movements, together with increased production volume driven by new import client acquisition and our ability to service additional import containers with new, versatile equipment. 

Metal. Revenue derived from the movement of ferrous and non-ferrous scrap metals grew to $1,171,914 compared with $680,996 in the six-month period ended June 30, 2025, a period-over-period increase of 72.1%. The increase largely reflects growth in customer production volumes, together with strong global demand for recycled non-ferrous material. Elevated commodity prices have increased the value of scrap feedstock, and constrained domestic outlets for certain grades have continued to support export flows.

Log. Log-hauling revenue totaled $199,053, down 7.0% from $214,053 in the six months ended June 30, 2025. The decrease reflects the normalization of volumes following the elevated shipping activity that preceded 2025 trade actions affecting forestry products. The decline was concentrated in the first quarter of 2026, with second-quarter revenue per load supported by higher fuel surcharges.  

Plastic. Revenue from the plastic commodity vertical reached $40,373, a period-over-period decrease of 64.1% compared with $112,445 in the prior-year period. The decrease reflects the continued contraction of export markets for recovered plastics, as key Southeast Asian destinations have implemented import restrictions and low virgin resin prices have reduced demand for recycled feedstock. Plastics represent a non-core vertical for the Company and an immaterial portion of total revenue.

Cost and expenses

Costs of revenue Our cost of revenue includes all directly related costs to deliver our services, which includes independent contractor drivers, insurance, truck maintenance costs, equipment rental, parking rent expense, dispatch service fees, depreciation and amortization expense, and other directly related costs. Our costs of revenue for the six months ended June 30, 2026 and 2025 were $8,536,607 and $7,698,332, respectively, representing an increase of 11%.

Gross profit As a result of the foregoing, our gross profit increased by $128,202 or 156% to $210,404 for the six months ended June 30, 2026 from $82,202 for the six months ended June 30, 2025. As a percentage of revenue, gross profit margin increased to 2.4% for the six months ended June 30, 2026, as compared to 1.3% for the six months ended June 30, 2025. 

General and administrative expenses Our general and administrative expenses consist primarily of automobile, office, insurance, payroll and rent expenses. Our general and administrative expenses decreased by $813,333 or 39% to $1,265,099 for the six months ended June 30, 2026 from $2,078,432 for the six months ended June 30, 2025. This change primarily results from a substantial decrease in professional fees incurred during the six months ended June 30, 2026 as well as stock-based compensation of $985,550 recognized during the six months ended June 30, 2025.

Income tax expense

We recorded a provision for income benefits of $0 for the six months ended June 30, 2026, as compared to $15,159 for the six months ended June 30, 2025.

Net loss

Net loss for the six months ended June 30, 2026 and 2025 was $960,443 and $2,059,997, respectively. The decrease in net loss was primarily due to a reduction in the general and administrative expenses, partially offset by an increase in costs of revenue.

Other Performance Indicator

We use Number of Loads Completed, or NLC, as a key performance indicator to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. This measure may be used by other companies in our industry who may calculate it differently than we do, limiting its usefulness as a comparative measure. Therefore, NLC may have limitations as an analytical tool.

We define NLC as the total number of loads delivered during a period. As our fleet exclusively offers full truckload shipping, tracking NLC is straightforward. We recognize a completed load when our dispatch team receives the receipt paperwork from the driver at the port or other destination. We simultaneously notify the client of the delivery. We use our proprietary analytics system to record NLC.

The NLC information has been prepared by, and is the responsibility of, the Company’s management. Such information has not been audited, reviewed, examined, compiled or applied agreed-upon procedures by our auditor.

The table below shows both the total NLCs and a breakdown of NLCs by commodity type during the six months ended June 30, 2026 and 2025. Our revenue generation directly corresponds to NLC but is also impacted by the rates charged to customers.

For the six months ended June 30, 2026, the NLC for Waste Paper declined by 1,220, or 17.6%, to 5,695, from 6,915 for the six months ended June 30, 2025. The decrease was primarily attributable to lower export volumes of recovered fiber industry-wide, as new domestic containerboard capacity continued to absorb a greater share of available material. The impact of the volume decline on revenue was partially offset by improved pricing per load.

For the six months ended June 30, 2026, the NLC for Metal increased by 469, or 58.0%, to 1,278, from 809 for the six months ended June 30, 2025. The increase was primarily attributable to consistent order volume from scrap metal customers acquired in 2024, together with sustained export demand for non-ferrous material as constrained domestic outlets for certain grades continued to direct scrap toward export channels. 

For the six months ended June 30, 2026, the NLC for Log decreased by 18, or 9.4%, to 173, from 191 for the six months ended June 30, 2025. The decrease primarily reflects an elevated prior-year comparison, as shippers accelerated volumes in the first half of 2025 in response to trade developments affecting forestry products, including the suspension of U.S. log imports by China in March 2025 and the subsequent redirection of material to alternative Asian destinations. Volumes in the current period have largely normalized. 

For the six months ended June 30, 2026, the NLC for Import increased by 703, or 25.3%, to 3,478, from 2,775 for the six months ended June 30, 2025. The increase was primarily attributable to consistent order volume from new import customers, together with added versatility from import-focused equipment that permits multi-use of a single container and improves the Company’s ability to work through congestion at the ports it services. A portion of the increase reflects customers advancing inbound shipments in anticipation of tariff changes, and the Company does not expect that activity to recur at the same level. Import customer acquisition remains a strategic priority for the Company. 

For the six months ended June 30, 2026, the NLC for Plastic decreased by 103, or 70.5%, to 43, from 146 for the six months ended June 30, 2025. The decrease was primarily attributable to the continued contraction of export markets for recovered plastics, which represent a non-core vertical for the Company.

For the six months ended June 30, 2026, the total NLC decreased by 170, or 1.6%, to 10,667, from 10,836 for the six months ended June 30, 2025. The modest decline in total load count was accompanied by a shift in volume mix toward the Company’s import and metal verticals, which carry higher revenue per load, and total revenue increased over the comparable prior-year period notwithstanding the lower load count. The Company’s recently acquired equipment permits double usage of a single container across import and export movements, which the Company believes will support reduced idle time, improved asset utilization and a stronger competitive position in high-volume port operations.

Liquidity and Capital Resources

As of June 30, 2026 and December 31, 2025, we had cash of $4,698,480 and $1,202,395, respectively. To date, we have financed our operations primarily through revenue generated from operations as well as our proceeds received from our IPO in January 2025, and net proceeds from our June 2026 private placement.

During the six months ended June 30, 2026, we had a net loss of $960,443 and net cash used in operations of $918,415. During 2026, we have begun to expand our business operations to certain new territories and have raised service prices in response to market changes. Additionally, approximately of $2 million of our outstanding loan receivable are expected to be collected in 2026 and will be used in our operations. Currently, we are working to improve our liquidity and capital sources. In order to fully implement our business plan and sustain continued growth. We may, however, in the future require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional loans. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. At the present time, however, we do not have commitments of funds from any lenders or potential investors. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

Summary of Cash Flow

The following table provides detailed information about our net cash flow for the six months ended June 30, 2026 and 2025:

Operating Activities

Cash used in operating activities decreased by approximately $221,161 for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to lower working capital outflows, including reduced increases in contract assets of approximately $344,791 and prepaid assets of approximately $268,492, as well as the absence of deferred tax impacts recognized in the prior-year period. These changes were partially offset by higher accounts receivable balances and decreases in accounts payable.

Investing Activities

Investing activities provided cash of $500,000 during the six months ended June 30, 2026, and used a net of $6,712,944 during the six months ended June 30, 2025. The change was primarily attributable to lower purchases of property and equipment, a receipt of $500,000 related to deposits on property and equipment – related party, and the absence of $5,700,000 note receivable advances made during the prior-year period.

Financing Activities

Financing activities provided cash of $3,914,500 during the six months ended June 30, 2026, and provided a net of $8,782,257 during the six months ended June 30, 2025. Cash from financing activities decreased by $4,867,757. The change is primally due to $4,329,232 decrease in the issuance of common stock, an increase of $28,872 of finance lease payments and a net of $181,153 decrease in repayments of loans payable.

Cash Requirements  from Known Contractual and Other Obligations

The following table summarizes our contractual obligations as of June 30, 2026 and as for the 12 months thereafter:

We intend to fund our contractual obligations with working capital.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

The following discussion relates to critical accounting policies for our company. The preparation of financial statements in conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

Revenue Recognition

The Company’s revenue recognition policy is based on the revenue recognition criteria established under the Financial Accounting Standards Board (“FASB”) – Accounting Standards Codification 606 ”Revenue From Contracts With Customers” (“ASC 606”), which has established a five-step process to govern contract revenue and satisfy each element is as follows: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as you satisfy a performance obligation. The Company records the revenue once all the above steps are completed and services are performed.

The Company’s contracts with customers only include one performance obligation, which is to provide the delivery of truckload services. Revenue is recognized in the gross amount at a point in time when the service is completed and the benefit of our services has been transferred to the customer. This has been determined to be when the goods are delivered to its final destination point. At this point in time, the Company has a present right to payment, and the performance obligation has been met. It is not until delivery is completed that the Company completed its performance obligation. The customer is not simultaneously receiving and consuming the benefit of the performance until the delivery to its final destination. The Company has determined that during transit, which is typically within twenty four hours, it would be impractical for another entity to complete its performance obligation due to various circumstances which would not lend it to be feasible. Additionally, every performance obligation of the Company is related to a unique order number between the customer and the final destination point. If that specific order cannot be completed, the Company or another provider would need to go through a process change of receiving a new order number due to homeland security and customs restrictions which results in the customer not simultaneously receiving benefits during transit time. The Company is primarily responsible for fulfilling the promise to provide the specified service to its customers. In addition, the Company has discretion in establishing the price for the specified services and bears risk of loss of goods until delivery is completed. Transport time from pick up to the delivery of truckloads is typically within the same day. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for those services. Because revenue is recognized at the point in time services are sold to customers, there are no contract liability balances except for when an amount is billed before the service is performed, however there may be contract asset balances for any services provided that were not billed. The Company’s revenue recognition is the same for whether the Company engages independent contractors or its brokerage model for owner operators.

Accounts Receivable, Net

Accounts receivable represent revenue earned for which the Company has not yet received payment. Accounts receivable are recorded at the invoiced amount and adjusted for amounts management expects to collect from balances outstanding at period-end. The Company adopts the current expected credit loss model (“CECL model”) to estimate the expected credit losses, which is determined by multiplying the probability of default. The Company estimates the allowance for credit loss based on an analysis of specific accounts and an assessment of the customer’s ability to pay, among other factors. The allowance for credit losses was $123,371 as of June 30, 2026 and December 31, 2025.

Income Taxes

Historically and through December 31, 2021, the Company elected, by consent of its stockholders, to be taxed under the provisions of Subchapter S of the Internal Revenue Code and applicable state statutes. The Company made a qualified Subchapter S subsidiary election with the Internal Revenue Service and accordingly the Company’s income is to be included in the Parent’s income tax return for Federal tax purposes. The Company has also elected S Corporation status for Pennsylvania State tax purposes. The Company revoked its Subchapter S election with the Internal Revenue Service and Pennsylvania as of January 1, 2022.

As of January 1, 2022, the Company accounts for income taxes utilizing the asset and liability approach. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes generally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from the differences between the financial and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for anticipated tax audit issues based on the Company’s estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the liabilities are no longer determined to be necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

The Company evaluates uncertain income tax positions taken or expected to be taken in a tax return for recognition in its consolidated financial statements. The Company was not required to recognize any amounts from uncertain tax positions as of June 30, 2026 and December 31, 2025. The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof, as well as other factors. Generally, federal, state and local authorities may examine the Company’s tax returns for three years from the date of filing.