Part I [Business](index=7&type=section&id=Item%201.%20Business) Toppoint Holdings Inc. specializes in recycling export truckload services, holding significant market share and expanding its geographic and service offerings - The company holds a significant market share in the waste paper export drayage market, accounting for approximately **34% of volumes through New Jersey's ports** and **30% through Philadelphia's ports**[29](index=29&type=chunk) - Toppoint serves a growing client base that includes Fortune 500 waste companies and over **280 recycling centers**, with the number of clients growing at a **CAGR of approximately 53.17% from 2016 to 2023**[30](index=30&type=chunk)[31](index=31&type=chunk) - The company is expanding its geographic footprint, having entered markets in Florida, Maryland, and Mexico in 2023-2024, with plans to explore Canada, the UK, and Australia[29](index=29&type=chunk)[50](index=50&type=chunk) [Key Performance Indicators (Waste Paper) - 2023 vs. 2024](index=8&type=section&id=Item%201.%20Business%20-%20Recent%20Developments) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Orders Completed** | ~2,576 | ~2,831 | | **Loads Completed (NLC)** | 16,641 | 18,094 | | **Tons Transported** | ~465,948 | ~506,632 | [Recent Developments](index=8&type=section&id=Item%201.%20Business%20-%20Recent%20Developments) Recent strategic developments include new partnerships, Latin American expansion, and cold-chain logistics, aiming to boost future revenue and efficiency - Secured a new import drayage partnership expected to generate over **$1 million in additional revenue in 2025**[33](index=33&type=chunk) - Expanded into Ensenada, Mexico, through a new trucking partnership to enhance non-ferrous metal exports[33](index=33&type=chunk) - Launched cold-chain logistics services to diversify revenue streams[33](index=33&type=chunk) - Strengthened its partnership with Waste Management, adding **1,000 new loads** and up to **$2 million in additional annual revenue for 2025**[33](index=33&type=chunk) [Growth Strategies](index=14&type=section&id=Item%201.%20Business%20-%20Growth%20Strategies) The company's growth strategy is centered on deepening relationships with existing clients to increase wallet share, expanding physical infrastructure, enhancing IT capabilities, and exploring strategic alliances - Focus on increasing business from current national and global clients by servicing more of their markets[58](index=58&type=chunk) - Plan to invest in storage and warehousing capabilities to support fleet growth and potentially enter new trucking segments[58](index=58&type=chunk) - Continue to improve IT infrastructure to optimize operations and enhance data analytics[58](index=58&type=chunk) - Selectively explore strategic alliances, investments, and acquisitions to accelerate growth[58](index=58&type=chunk) [Regulations](index=16&type=section&id=Item%201.%20Business%20-%20Regulations) Operating in a highly regulated industry, the company faces compliance challenges, particularly with new DOL rules potentially reclassifying independent contractors as employees, increasing costs - The company and its owner-operators must comply with safety and fitness regulations from the DOT and FMCSA, including CSA, drug and alcohol testing, and hours-of-service rules[69](index=69&type=chunk) - A new Department of Labor rule, effective March 11, 2024, implements an "economic reality test" to determine worker classification, making it more likely that independent contractors could be classified as employees[70](index=70&type=chunk) - If independent contractor drivers are reclassified as employees, the company could face significant additional costs related to taxes, workers' compensation, unemployment benefits, and other employee-related liabilities[70](index=70&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, legal, and stock ownership risks, including intense competition, reliance on owner-operators, potential driver reclassification, and stock price volatility [Operational and Industry Risks](index=18&type=section&id=Item%201A.%20Risk%20Factors%20-%20Operational%20and%20Industry%20Risks) Operational risks include intense competition, customer concentration, reliance on owner-operators, fuel price volatility, and cybersecurity threats, all impacting business stability - The company operates in a highly competitive and fragmented truckload industry, facing pressure on freight rates and competition from larger carriers with greater resources[77](index=77&type=chunk)[80](index=80&type=chunk) - A significant portion of revenue is concentrated in a small number of large customers, with the top ten accounting for approximately **58% of total revenue in fiscal year 2024**[102](index=102&type=chunk)[49](index=49&type=chunk) - The business model relies heavily on owner-operators, exposing the company to risks of driver turnover and competition for attracting and retaining independent contractors[90](index=90&type=chunk)[91](index=91&type=chunk) - The company is dependent on its information technology systems, and a cybersecurity breach could cause significant business disruption[118](index=118&type=chunk)[119](index=119&type=chunk) [Legal and Compliance Risks](index=21&type=section&id=Item%201A.%20Risk%20Factors%20-%20Legal%20and%20Compliance%20Risks) Legal and compliance risks are significant, primarily due to potential reclassification of independent contractor drivers as employees, exacerbated by a class-action lawsuit and new DOL rules - A class action lawsuit was filed on January 12, 2024, against the company's subsidiary, Toppoint Inc., alleging misclassification of truck drivers as independent contractors[94](index=94&type=chunk) - The Department of Labor's rule, effective March 11, 2024, makes it more likely that a worker will be classified as an employee, which could adversely affect the company's business model and financial condition if its independent contractors are reclassified[95](index=95&type=chunk)[96](index=96&type=chunk) - The company is subject to extensive regulation by the DOT and FMCSA, and increased costs of compliance or violations could materially harm the business[140](index=140&type=chunk) [Risks Related to Ownership of Our Common Stock](index=34&type=section&id=Item%201A.%20Risk%20Factors%20-%20Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Stock ownership risks include extreme price volatility due to small public float, management's discretion over IPO proceeds, no anticipated dividends, and potential dilution from future issuances - The company has loaned a substantial portion (**$6 million**) of its IPO proceeds to a third-party borrower as a long-term debt investment, subjecting the company to credit risk and limiting capital flexibility[153](index=153&type=chunk) - As a company with a small public float, the stock price may experience extreme volatility unrelated to operating performance[150](index=150&type=chunk) - The company does not anticipate paying dividends in the foreseeable future, meaning returns for shareholders will depend on stock price appreciation[154](index=154&type=chunk) - Bylaws designate the Eighth Judicial District Court of Clark County, Nevada as the exclusive forum for most stockholder disputes, which could limit a stockholder's ability to choose a judicial forum[171](index=171&type=chunk) [Cybersecurity](index=40&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity framework, overseen by the board and CFO, includes risk assessments and security measures, with no material incidents reported to date - The Board of Directors oversees cybersecurity risk, while the Chief Financial Officer is primarily responsible for its assessment and management[182](index=182&type=chunk)[183](index=183&type=chunk) - The company's risk management strategy includes regular risk assessments, two-factor authentication, user role-based security, and plans for data encryption and employee training[180](index=180&type=chunk) - As of the report date, the company has not identified any known cybersecurity threats or experienced any incidents that have had a material impact on its operations or financial condition[181](index=181&type=chunk) [Properties](index=41&type=section&id=Item%202.%20Properties) The company leases its principal executive office from the CEO and operates various leased properties in New Jersey, Maryland, and Florida for parking and office space - The principal executive office at 1250 Kenas Road, North Wales, PA is leased from CEO Hok C Chan for **$5,500 per month**[186](index=186&type=chunk) - A key operational property is a **2-acre site at 697 Doremus Avenue, Newark, NJ**, rented for **$54,000 per month**, used for parking and providing discounted parking to owner-operators[187](index=187&type=chunk) - The company prepaid **$300,000** for a three-year office lease in Miami Beach, FL, covering the entire term from October 2022 to October 2025[188](index=188&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently aware of any legal proceedings or claims expected to have a material adverse effect on its business, financial condition, or operating results - The company states it is not currently aware of any legal proceedings that would have a material adverse effect on its business[190](index=190&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=43&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock began trading on NYSE American in January 2025 following its IPO, which generated $8.28 million in net proceeds, with $6 million allocated to a temporary debt investment - The company completed its IPO on January 23, 2025, selling **2,500,000 shares at $4.00 per share**, resulting in net proceeds of approximately **$8.28 million**[198](index=198&type=chunk) - Of the IPO proceeds, approximately **$6 million** was used for a temporary debt investment scheduled for repayment between January 2026 and January 2028 with a **7% annual interest rate**[206](index=206&type=chunk)[153](index=153&type=chunk) - The company's common stock began trading on the NYSE American under the symbol "TOPP" on January 22, 2025[194](index=194&type=chunk)[197](index=197&type=chunk) - The company does not expect to pay any cash dividends on its common stock in the foreseeable future, intending to retain earnings for business operations and growth[208](index=208&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2024, revenue decreased 11% to $16.0 million due to lower scrap paper export volume, leading to a 68% drop in net income and a 6.3% decline in loads completed [Results of Operations](index=46&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20-%20Results%20of%20Operations) Revenue decreased 11% to $16.0 million in 2024 due to scrap paper market downturns, while increased G&A expenses led to an operating loss and a 68% drop in net income [Financial Performance Comparison (2024 vs. 2023)](index=46&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20-%20Results%20of%20Operations) | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | **Revenues** | $16,039,513 | $18,035,532 | (11)% | | **Gross Profit** | $2,337,802 | $2,649,153 | (12)% | | **Gross Margin** | 15% | 15% | 0% | | **Income (Loss) from Operations** | ($645,751) | $774,316 | (183)% | | **Net Income** | $174,871 | $542,351 | (68)% | - The **11% revenue decline in 2024** was mainly attributed to an industry-wide decrease in scrap paper export volume, which is the company's core commodity[215](index=215&type=chunk) - General and administrative expenses increased by **59% ($1.1 million)** in 2024, primarily due to higher accrued compensation, accounting fees, bad debt expense, and a **$150,000 litigation settlement**[223](index=223&type=chunk) [Other Performance Indicator (NLC)](index=48&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20-%20Other%20Performance%20Indicator) Total Number of Loads Completed (NLC) decreased by 6.3% in 2024 to 22,665, primarily driven by an 8.0% drop in Waste Paper loads due to industry downturns [Number of Loads Completed (NLC) by Commodity (2024 vs. 2023)](index=48&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20-%20Other%20Performance%20Indicator) | Commodity | NLC 2024 | NLC 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Waste Paper | 16,641 | 18,094 | (8.0)% | | Waste Metal | 1,243 | 1,336 | (6.9)% | | Forestry | 271 | 340 | (20.3)% | | Import | 4,057 | 4,109 | (1.3)% | | Others | 453 | 310 | 46.1% | | **Total** | **22,665** | **24,189** | **(6.3)%** | - The total NLC decreased by **1,524 loads (6.3%) in 2024**, primarily due to significant decreases in the Waste Paper, Forestry, and Waste Metal segments[232](index=232&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20-%20Liquidity%20and%20Capital%20Resources) Cash decreased significantly to $557,619 by year-end 2024, driven by negative operating cash flow and increased investing activities, partially offset by financing proceeds [Summary of Cash Flow (2024 vs. 2023)](index=49&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20-%20Liquidity%20and%20Capital%20Resources) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash from operating activities** | ($593,734) | $2,008,219 | | **Net cash from investing activities** | ($1,211,981) | ($1,091,226) | | **Net cash from financing activities** | $907,358 | ($205,870) | | **Net (decrease) increase in cash** | ($898,357) | $711,123 | | **Cash at end of period** | $557,619 | $1,455,976 | - Cash from operating activities decreased by approximately **$2.6 million**, primarily due to lower net income and unfavorable changes in operating assets and liabilities[235](index=235&type=chunk) - Cash used in investing activities increased, mainly due to **$1.2 million in purchases of property and equipment in 2024**[236](index=236&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2024, due to a lack of robust financial reporting policies for SEC requirements - Management concluded that disclosure controls and procedures were not effective as of the end of the period covered by the report[257](index=257&type=chunk) - The ineffectiveness is due to the company not having robust and formal financial reporting policies and procedures in place to address SEC disclosure requirements[258](index=258&type=chunk) - As a newly public company, the annual report does not include a management assessment or auditor attestation on internal control over financial reporting[259](index=259&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=55&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's leadership includes CEO Hok C Chan and CFO John Feliciano III, with a five-member board comprising three independent directors overseeing key committees and ethical conduct [Directors and Executive Officers](index=55&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) | Name | Age | Position | | :--- | :--- | :--- | | Hok C Chan | 40 | Chief Executive Officer, Chairman | | John Feliciano III | 38 | Chief Financial Officer, Director | | Jimmy M. Wong | 69 | Independent Director | | Pablo A Santana | 38 | Independent Director | | Tan Ying Lo | 30 | Independent Director | - The Board has three independent directors who comprise the entirety of the Audit, Compensation, and Nominating and Corporate Governance committees[277](index=277&type=chunk)[279](index=279&type=chunk)[281](index=281&type=chunk) - The board has determined that Jimmy M. Wong qualifies as the "audit committee financial expert"[277](index=277&type=chunk) [Executive Compensation](index=60&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for 2024 included CEO's salary and CFO's commission-based pay, with 2,250,000 shares available under the equity incentive plan and no director compensation [Summary Compensation Table (2024)](index=60&type=section&id=Item%2011.%20Executive%20Compensation) | Name and Principal Position | Year | Salary ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Hok C Chan, CEO | 2024 | 309,615 | - | 309,615 | | John Feliciano III, CFO | 2024 | - | 147,733* | 147,733* | - *CFO John Feliciano III's 2024 compensation was a **10% commission ($147,733)** earned by his company, 4 John Trucking, on consulting fees paid by Toppoint[291](index=291&type=chunk) - The company established the Toppoint Holdings Inc. 2022 Equity Incentive Plan, authorizing **2,250,000 shares** for issuance[298](index=298&type=chunk)[309](index=309&type=chunk) - No director compensation was paid for the fiscal year ended December 31, 2024[297](index=297&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=65&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of April 15, 2025, directors and executive officers collectively own 42.9% of common stock, with CEO Hok C Chan as the largest beneficial owner, and 2,250,000 shares available for future equity issuance [Beneficial Ownership as of April 15, 2025](index=65&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) | Name of Beneficial Owner | Number of Shares | Percent of Class | | :--- | :--- | :--- | | **Directors and Executive Officers** | | | | Hok C Chan | 7,500,000 | 42.9% | | All executive officers and directors (5 persons) | 7,500,000 | 42.9% | | **Other Principal Shareholders** | | | | Heung Ling Chan | 5,700,000 | 32.6% | - The company's 2022 Equity Incentive Plan has **2,250,000 shares** of common stock available for future issuance, with no awards outstanding as of December 31, 2024[334](index=334&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=66&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company engages in various related-party transactions, including leases, service agreements with the CFO's company, and significant loans to the CEO, while maintaining three independent directors - The company rents its principal executive office from CEO Hok C Chan and another office from his relative[335](index=335&type=chunk)[340](index=340&type=chunk) - A services agreement is in place with 4 John Trucking, a company controlled by CFO John Feliciano III, for which a service fee of **$147,733** was paid in 2024[340](index=340&type=chunk) - In 2024, the company issued a promissory note to CEO Hok C Chan for advances totaling **$1.1 million**, bearing an interest rate of **36.88%**, which increases to **55% after maturity**[340](index=340&type=chunk) - In 2024, the company paid **$628,200** to a family member of the CEO for dispatch services and purchased **$1,174,855** of truck chassis from the same related party[340](index=340&type=chunk) [Principal Accountant Fees and Services](index=68&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) TAAD LLP served as the principal accountant, billing $234,311 for audit services in 2024 and $177,710 in 2023, with no other services provided or billed [Independent Auditor Fees (TAAD LLP)](index=68&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | $234,311 | $177,710 | | Audit-Related Fees | - | - | | Tax Fees | - | - | | All Other Fees | - | - | | **Total** | **$234,311** | **$177,710** | - All fees for 2024 and 2023 were for audit services, with no fees for audit-related, tax, or other services[339](index=339&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=70&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section provides an index to the consolidated financial statements and a comprehensive list of exhibits filed with the Form 10-K, including corporate and material agreements - Lists all financial statements, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows[351](index=351&type=chunk) - Includes a detailed index of all exhibits filed with the report, such as corporate governance documents, material agreements (e.g., Underwriting Agreement, employment agreements), and required certifications[354](index=354&type=chunk)[355](index=355&type=chunk) Consolidated Financial Statements [Report of Independent Registered Public Accounting Firm](index=73&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) TAAD, LLP issued an unqualified opinion on the financial statements, emphasizing subsequent events including the January 2025 IPO and a $6 million loan to Golden Bridge Capital Management - The auditor, TAAD, LLP, provided an unqualified opinion on the financial statements[361](index=361&type=chunk) - An "Emphasis of a Matter" was included to draw attention to subsequent events, specifically the January 2025 IPO and a **$6 million loan receivable agreement** with Golden Bridge Capital Management[365](index=365&type=chunk) [Financial Statements Data](index=74&type=section&id=Financial%20Statements%20Data) The financial statements show a decrease in 2024 net income to $174,871, stable total assets, reduced cash, and negative cash flow from operations, reflecting operational challenges [Consolidated Balance Sheet Highlights (As of Dec 31)](index=74&type=section&id=Financial%20Statements%20Data) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $2,247,285 | $2,833,828 | | **Total Assets** | $4,985,912 | $4,956,307 | | **Total Current Liabilities** | $1,778,344 | $1,597,948 | | **Total Liabilities** | $2,444,038 | $2,589,304 | | **Total Shareholders' Equity** | $2,541,874 | $2,367,003 | [Consolidated Statement of Operations Highlights (Year Ended Dec 31)](index=74&type=section&id=Financial%20Statements%20Data) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Revenues** | $16,039,513 | $18,035,532 | | **Income (loss) from operations** | ($645,751) | $774,316 | | **Net income** | $174,871 | $542,351 | | **Basic and diluted EPS** | $0.01 | $0.04 | [Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31)](index=74&type=section&id=Financial%20Statements%20Data) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash from operating activities** | ($593,734) | $2,008,219 | | **Net cash used in investing activities** | ($1,211,981) | ($1,091,226) | | **Net cash from financing activities** | $907,358 | ($205,870) | [Notes to Consolidated Financial Statements](index=78&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail operations, accounting policies, legal matters including a driver classification lawsuit, extensive related-party transactions, and subsequent events like the January 2025 IPO and a $6 million loan - Revenue is recognized at a point in time when goods are delivered to the final destination, as this is when the performance obligation is met and control is transferred to the customer[247](index=247&type=chunk)[391](index=391&type=chunk) - The company settled a lawsuit with Trend Intermodal Chassis Leasing LLC for **$150,000** and is defending a class-action lawsuit alleging misclassification of truck drivers as independent contractors[419](index=419&type=chunk) - Subsequent to year-end, the company completed its IPO in January 2025, raising net proceeds of approximately **$8.28 million**, and subsequently lent **$6 million** to Golden Bridge Capital Management[434](index=434&type=chunk)[436](index=436&type=chunk)[439](index=439&type=chunk) - The company has numerous related-party transactions, including leases with the CEO and his family, service agreements with the CFO's company, and loans to/from the CEO[423](index=423&type=chunk)[424](index=424&type=chunk)[427](index=427&type=chunk)