Proficient Auto Logistics, Inc (PAL)

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Special Note Regarding Forward-Looking Statements

The following discussion
and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes and our
Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”).

Unless otherwise indicated,
the terms the “Company,” “we,” “us” and “our” refer to Proficient Auto Logistics, Inc.
and its subsidiaries as a whole, after giving effect to the Combinations (as defined below) and recent acquisitions.

This Quarterly Report contains
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial
risks and uncertainties. Forward-looking statements generally relate to possible or assume future results of our business, financial
condition, results of operations, liquidity, plans and objectives. You can generally identify forward-looking statements because
they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“could,” “intends,” “target,” “projects,” “contemplates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other
similar expressions that concern our expectations, strategy, plans or intentions. We have based these forward-looking statements
largely on our current expectations and projections regarding future events and trends that we believe may affect our business, financial
condition and results of operations. The outcome of the events described in these forward-looking statements is subject to risks,
uncertainties and other factors described in the section entitled “Risk Factors” in this Quarterly Report and the Annual Report,
and elsewhere in this Quarterly Report and the Annual Report. Accordingly, you should not rely upon forward-looking statements as
predictions of future events. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements
will be achieved or occur, and actual results, events or circumstances could differ materially from those projected in the forward-looking statements.
Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements regarding:

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We
caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report. In addition,
in light of certain risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly
Report may not occur. The forward-looking statements made in this document relate only to events as of the date on which the statements
are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of unanticipated events. We may not actually achieve the plans, intentions or
expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.
We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or
otherwise, except as required by law.

Business Overview

We
are a leading specialized freight company focused on providing auto transportation and logistics services. Formed in connection with the
IPO through the combination of five industry-leading operating companies, we operate one of the largest auto transportation fleets in
North America with an operating fleet with approximately 800 owned assets and employing 698 dedicated employees as of March 31, 2026.
From our 57 strategically located facilities across the United States, we offer a broad range of auto transportation and logistics services,
primarily focused on transporting finished vehicles from automotive production facilities, marine ports of entry or regional rail yards
to auto dealerships around the country. We have developed a differentiated business model due to our scale, breadth of geographic coverage
and embedded customer relationships with leading auto original equipment manufacturing companies (“OEMs”). Our customers include
nearly all of the global auto manufacturing companies who participate in the North American market. Additional customers include auto
dealers, auto auctions, rental car companies and auto leasing companies.

Description of the Combinations

On
December 21, 2023, Proficient Auto Logistics, Inc. entered into agreements to acquire in multiple, separate acquisitions, five operating
businesses and their respective affiliated entities, as applicable: (i) Delta, (ii) Deluxe, (iii) Sierra, (iv) Proficient Transport, and(v)
Tribeca (collectively, the “Founding Companies”). On May 13, 2024, the Company completed the IPO of its common stock, and
in connection with the closing of the IPO, the Company also completed the acquisitions of all of the Founding Companies (the “Combinations”).
Thereafter, on August 16, 2024, the Company acquired Auto Transport Group, LC, (“ATG,” which was converted to a limited liability
company after closing), and on November 1, 2024, the Company acquired Utah Truck & Trailer Repair, LLC, (“UTT,” which
subsequently converted into Proficient Repair Services LLC),a repair facility located at the ATG headquarters terminal in Ogden, Utah.
On April 1, 2025, the Company acquired Brothers Auto Transport, LLC, (“Brothers”), located in Wind Gap, Pennsylvania and on
May 27, 2025, the Company acquired PVT Truck &Trailer Repair, LLC, (“PVT”) a repair facility located at the Brothers headquarters.
These acquisitions expanded the Company’s geographic presence and services offered. The Combinations and subsequent acquisitions
are accounted for as business combinations under ASC 805. Under this method of accounting, Proficient Auto Logistics, Inc. is treated
as the “accounting acquirer”.

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Financial Statement Components

Revenue

We
generate revenue by transporting autos for our customers in OEM contract and spot arrangements, secondary market auto moves, and contract
services arrangements. Our OEM contract and spot arrangements provide auto transportation and logistics services through movements of
autos over routes across the United States. Secondary market auto moves are for customers other than OEMs. Our contract services
offering uses Company-owned equipment to service specific customers and provides services through long-term contracts. Our business
provides services that are geographically diversified but have similar economic and other relevant characteristics, as they all provide
transportation and logistics of automobiles.

We
are typically paid a predetermined rate per unit for our services. Consistent with industry practice, our typical customer contracts do
not guarantee load levels or tractor availability. This gives us and our customers a certain degree of flexibility in response to changes
in auto demand and truck capacity.

Generally,
we receive fuel surcharges on the miles moved for which we are compensated by customers. Fuel surcharges revenue mitigates the effect
of price increases over a negotiated base rate per gallon of fuel; however, these revenues may not fully protect us from all fuel price
volatility, particularly in times of rapid fuel price increases, due to the lag of the increased price being reflected in fuel surcharges
recovery.

Operating
Expenses

Our
most significant operating expenses vary with miles traveled and include (i) fuel and fuel taxes, (ii) driver related expenses,
such as salaries, wages, benefits, training and recruitment, (iii) the cost of purchased transportation that we pay independent contractors
and to third-party carriers and (iv) maintenance of our fleet. Expenses that have both fixed and variable components include
maintenance and truck expenses and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but
also have a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs include depreciation
of long-term assets, such as revenue equipment and leasing costs for our service center facilities, the compensation of non-driver personnel
and other general and administrative expenses.

We monitor key operating metrics
including the volume of units delivered, average revenue per unit and adjusted operating ratio, as applicable to the portions of our business
that contract on each of these bases.

Critical Accounting Policies and Estimates

In
the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations
and financial position in the preparation of our financial statements in conformity with GAAP. Actual results could differ significantly
from those estimates under different conditions. We believe that the following discussion addresses our most critical accounting policies,
which are those that are most important to the portrayal of our financial condition and results of operations and require

[Excerpt truncated for page length; source filing is linked above.]

Item
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The
following discussion should be read in conjunction with the consolidated financial statements and the notes to those statements included
in Part II, Item 8, “Financial Statements and Supplementary Data” in this Annual Report. This Management’s Discussion
and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See Part I, “Forward-Looking
Statements” and Part I, Item 1A, “Risk Factors” for a discussion of the uncertainties, risks, and assumptions associated
with these statements. Actual results could differ materially from the results referenced in forward-looking statements.

Business
Overview

We
are a leading specialized freight company focused on providing auto transportation and logistics services. Formed in connection with
the IPO through the combination of five industry-leading operating companies, we operate one of the largest auto transportation fleets
in North America with an operating fleet of approximately 800 owned assets and employing 825 dedicated employees as of December 31, 2025.
From our 57 strategically located facilities across the United States, we offer a broad range of auto transportation and logistics services,
primarily focused on transporting finished vehicles from automotive production facilities, marine ports of entry or regional rail yards
to auto dealerships around the country. We have developed a differentiated business model due to our scale, breadth of geographic coverage
and embedded customer relationships with leading auto original equipment manufacturing companies (“OEMs”). Our customers
include nearly all of the global auto manufacturing companies who operate in the U.S. market. Additional customers include auto dealers,
auto auctions, rental car companies and auto leasing companies.

Description
of the Combinations

On
December 21, 2023, Proficient Auto Logistics, Inc. entered into agreements to acquire in multiple, separate acquisitions five operating
businesses and their respective affiliated entities, as applicable: (i) Delta, (ii) Deluxe, (iii) Sierra, (iv) Proficient
Transport, and (v) Tribeca. On May 13, 2024, the Company completed its IPO of its common stock, and in connection with the closing
of the IPO, the Company also completed the acquisitions of all of the Founding Companies. The Founding Companies were acquired for approximately
$177.4 million in cash and 6,978,191 shares of our common stock (provided, that 541,866 of these shares of common stock were held back
and were not be issued at the closing of the Combinations to satisfy the indemnification obligations of certain of the Founding Companies
for a period of twelve months following the closing of the Company’s IPO). Thereafter, on August 16, 2024, the Company acquired
ATG for approximately $28.4 million in cash and 1,069,346 shares of our common stock. Subsequently on November 1, 2024, the Company acquired
Utah Truck & Trailer Repair, LLC, (“UTT”), a repair facility located at the ATG headquarters terminal in Ogden, Utah
for $4.5 million in cash. These acquisitions expanded the Company’s geographic presence and services offered. On April 1, 2025,
the Company acquired Brothers Auto Transport (“Brothers”), for approximately $12.4 million in cash and 395,322 shares of
our common stock. Then on May 27, 2025, the Company acquired PVT Truck & Trailer Repair, LLC, a repair facility located at the Brothers
headquarters terminal in Wind Gap, Pennsylvania for $1.0 million in cash. The Combinations and subsequent acquisitions are accounted
for as business combinations under ASC 805. Under this method of accounting, Proficient Auto Logistics, Inc. is treated as the “accounting
acquirer.”

Proficient
Auto Logistics, Inc. has been identified as the designated accounting acquirer (“Successor”) of each of the Founding Companies
and Proficient Transport has been identified as the designated accounting predecessor (“Predecessor”) to the Company. As
a result, the Management’s Discussion and Analysis of Results of Operations and Financial Condition for the twelve months ended
December 31, 2025 and 2024 for each of Proficient and Proficient Transport are included in this Annual Report. A black-line between the
Successor and Predecessor periods has been placed in the financial tables below to highlight the lack of comparability between these
two periods. Please refer to Note 3, “Business Combinations.”

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Financial
Statement Components

Revenue

We
generate revenue by transporting autos for our customers in OEM contract and spot arrangements, secondary market auto moves, and contract
services arrangements. Our OEM contract and spot arrangements provide auto transportation and logistics services through movements of
autos over routes across the United States. Secondary market auto moves are for customers other than OEMs. Our contract services
offering uses Company-owned equipment to service specific customers and provides services through long-term contracts. Our business
provides services that are geographically diversified but have similar economic and other relevant characteristics, as they all provide
transportation and logistics of automobiles.

We
are typically paid a predetermined rate per unit for our services. Consistent with industry practice, our typical customer contracts
do not guarantee load levels or tractor availability. This gives us and our customers a certain degree of flexibility in response to
changes in auto demand and truck capacity.

Generally,
we receive fuel surcharges on the miles moved for which we are compensated by customers. Fuel surcharges revenue mitigates the effect
of price increases over a negotiated base rate per gallon of fuel; however, these revenues may not fully protect us from all fuel price
volatility.

We
monitor as key operating metrics the volume of units delivered, average revenue per unit and adjusted operating ratio, as applicable
to the portions of our business that contract on each of these bases.

Operating
Expenses

Our
most significant operating expenses vary with miles traveled and include (i) fuel and fuel taxes, (ii) driver related expenses,
such as salaries, wages, benefits, training and recruitment, (iii) the cost of purchased transportation that we pay independent
contractors and to third-party carriers and (iv) maintenance of our fleet. Expenses that have both fixed and variable components
include maintenance and truck expenses and our total cost of insurance and claims. These expenses generally vary with the miles we travel,
but also have a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs include depreciation
of long-term assets, such as revenue equipment and leasing costs for our service center facilities, the compensation of non-driver personnel
and other general and administrative expenses.

Critical
Accounting Policies and Estimates

In
the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations
and financial position in the preparation of our financial statements in conformity with GAAP. Actual results could differ significantly
from those estimates under different conditions. We believe that the following discussion addresses our most critical accounting policies,
which are those that are most important to the portrayal of our financial condition and results of operations and require management’s
most subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently
uncertain. See Note 2 of the accompanying consolidated financial statements of the Company for additional information about our
critical accounting policies and estimates.

Property
and equipment

Property
and equipment are carried at cost. Depreciation of property and equipment is computed using the straight-line method for financial
reporting purposes and accelerated methods for tax purposes over the estimated useful lives of the related assets (net of estimated salvage
value or trade-in value). We generally use estimated useful lives of five to ten years for trucks and trailers, classified
as transportation equipment. The depreciable lives of our revenue equipment represent the estimated usage period of the equipment, which
may be more or less than the economic lives.

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Periodically,
we evaluate the useful lives and salvage values of our revenue equipment and other long-lived assets based upon, but not limited
to, our experience with similar assets including gains or losses upon dispositions of such assets, conditions in the used equipment market
and prevailing industry practices. Changes in useful lives or salvage value estimates, or fluctuations in market values that are not
reflected in our estimates, could have a material impact on our financial results. We review our property and equipment whenever events
or circumstances indicate the carrying amount of the asset may not be recoverable. An impairment loss equal to the excess of carrying
amount over fair value would be recognized if the carrying amount of the asset is not recoverable.

Business
Combinations — The Company accounts for business combinations using the acquisition method pursuant to ASC 805, Business
Combinations. For each acquisition, the Company recognizes the assets acquired and liabilities assumed at their respective fair values
as of the acquisition date. Valuations of certain assets acquired, including customer relationships, developed technology and trade names
involve significant judgment and estimation. The Company uses independent valuation specialists to help determine fair value of certain
assets and liabilities. Valuations utilize significant estimates, such as forecasted revenues and profits. Changes in these estimates
could significantly impact the value of certain assets and liabilities. ASC 805 establishes a measurement period to provide the Company
with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination
and cannot extend beyond one year from the acquisition date. Measurement period adjustments are recognized in the reporting period in
which the adjustments are determined and calculated as if the accounting had been completed as of the acquisition date. The Company completes
the final fair value determination of the assets acquired and liabilities assumed for each acquired business as soon as practicable within
the measurement period, but not to exceed one year from the acquisition date.

Goodwill —
Goodwill is recorded when the purchase price paid in a business combination exceeds the fair value of assets acquired and liabilities
assumed. Goodwill is reviewed for impairment on an annual basis, or upon an occurrence of an event or changes in circumstances that indicate
that the carrying value may not be recoverable. In the absence of any indications of potential impairment, the evaluation of goodwill
is performed during the fourth quarter of each year.

Goodwill
impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of
goodwill. When testing goodwill for impairment, the Company may first perform a qualitative assessment to determine whether the fair
value of a reporting unit is less than its carrying amount. The Company then completes a quantitative impairment test if the qualitative
assessment indicates that it is more likely than not that the reporting unit’s fair value is less than the carrying value of its
assets. If the estimated fair value of the reporting unit exceeds the carrying value, goodwill is not considered impaired, and no additional
steps are needed. If, however, the fair value of the reporting unit is less than its carrying value, then the amount of the impairment
loss is the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Income
taxes — Income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense
in the period that includes the enactment date.

We
evaluate the need for a valuation allowance on deferred tax assets based on whether we believe that it is more likely than not all deferred
tax assets will be realized. A consideration of future taxable income is made as well as on-going prudent feasible tax planning
strategies in assessing the need for valuation allowances. In the event it is determined all or part of a deferred tax asset would not
be able to be realized, management would record an adjustment to the deferred tax asset and recognize a charge against income at that
time.

Our
estimates of the potential outcome of any uncertain tax issue is subject to our assessment of relevant risks, facts and circumstances
existing at that time. We account for uncertain tax positions in accordance with Accounting Standards Codification (“ASC”)
740, Income Taxes, and record a liability when such uncertainties meet the more likely than not recognition threshold. Potential accrued
interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.

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Reportable
Segments

Our
business is organized into two operating segments, Company Drivers and Subhaulers, which represent the Company’s reportable segments.
The Company Drivers segment offers automobile transport and contract services under an asset-based model. The Company’s contract
service offering uses Company-owned equipment to service specific customers and provides transportation services through long-term contracts.
The Company’s Subhaulers segment offers transportation services utilizing an asset-light model focusing on outsourcing transportation
of loads to third-party carriers.

Company
Drivers Segment

In
our Company Drivers segment, we generate revenue by transporting autos for our customers in OEM contract and spot arrangements, secondary
market auto moves, and contract services arrangements. Our OEM contract and spot arrangements provide auto transportation and logistics
services through movements of autos over routes across the United States. Secondary market auto moves are for customers other than
OEMs. Our contract services offering uses Company-owned equipment to service specific customers and provides services through long-term contracts.
Our Company Drivers segment provides services that are geographically diversified but have similar economic and other relevant
characteristics, as they all provide Company Drivers carrier services of automobiles. The main factors that affect operating revenue
in the Company Drivers Segment are the average revenue per unit received from customers and the number of vehicles transported.

We
are typically paid a predetermined rate per unit for our Company Drivers services. Our executed contracts generally contain fixed terms
and rates and are often used by our customers with high-service and high-priority freight. We strive to increase our revenues
derived from contracts by delivering a high-quality service and continuing to build upon our relationships and reputation with OEMs.

Our
contracts with customers generally include fuel surcharge to account for fluctuating fuel prices. Built into the predetermined contract
rates with each customer is a baseline fuel price and when fuel prices rise above this baseline price, our customers compensate us for
the variance in the form of additional revenue. If fuel prices drop below the baseline price, we may in turn owe our customers this variance
and record a discount. This additional revenue/discount is represented on the Fuel Surcharge and Other Reimbursements line in the consolidated
financial statements.

In
our Company Drivers segment, our most significant operating expenses vary with miles traveled and include (i) fuel, and (ii) driver-related
expenses, such as wages, benefits, training and recruitment. Expenses that have both fixed and variable components include maintenance
and truck expenses and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have
a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs include depreciation of long-term assets,
such as trucks and trailers (to which we refer as revenue equipment) and service center facilities, the compensation of non-driver personnel
and other general and administrative expenses.

Our
Company Drivers segment requires capital expenditures for the purchase of new revenue equipment. We use a combination of financing leases
and secured long-term debt to acquire revenue equipment. When we finance revenue equipment acquisitions with either finance leases
or long-term debt, the asset and liability are recorded on our consolidated balance sheet, and we record expense under “Depreciation”
and “Interest expense”. We expect our depreciation and interest expense to increase by changes in the quality and value of
our revenue equipment acquired in any given year.

The primary performance indicator in our Company Drivers segment is
operating margin (Company Driver operating revenue, less Company Driver operating expenses, as a percentage of Company Driver operating
revenue). Operating margin can be impacted by the rates charged to customers, Company Driver pay, fuel, trucking and maintenance expense.

Subhaulers
Segment

In
our Subhaulers segment, we generate revenue by independent owner operators (who run under our DOT authority) and independent third-party
carriers, which assist in transporting autos for customers in our OEM contract and spot arrangements, and secondary market auto
moves. We maintain the customer relationship, including billing and collection, but outsource the transportation of the loads. The main
factors that affect operating revenue in our Subhaulers segment are our customers’ excess inventory needs, the rates we obtain
from customers, the auto volumes we ship through the Subhaulers segment and our ability to secure capacity using independent contractors
and carriers.

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The
most significant expense of our Subhaulers segment, which is primarily variable, is the cost of purchased transportation that we pay
to independent contractors and third-party carriers and is included in the “Purchased transportation” line item. This
expense generally varies directly with the amount of Subhauler revenue, rates paid to independent contractors and third party carriers
and current demand and customer shipping needs. Other operating expenses are generally fixed and primarily include the compensation and
benefits of non-driver personnel supporting this segment (which are recorded in the “Salaries, wages and benefits” line
item).

The
primary performance indicator in our Subhaulers segment is operating margin (Subhauler operating revenue, less Subhauler operating expenses,
as a percentage of Subhauler operating revenue). Operating margin can be impacted by the rates charged to customers and the rates paid
to third-party carriers.

Non-GAAP Financial
Measures

We
report our financial results in accordance with US generally accepted accounting principles (“GAAP”). However, management
believes that EBITDA and Operating Ratio provide useful information in measuring our operating performance, generating future operating
plans and making strategic decisions regarding allocation of capital. Management believes this information presents helpful comparisons
of financial performance between periods by excluding the effect of certain non-recurring items.

EBITDA
and Operating Ratio do not have a standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled
measures presented by other companies, and it should not be considered in isolation from, or as a substitute for, financial information
prepared in accordance with GAAP.

EBITDA
is defined as net income (loss) for the period adjusted for interest expense, income tax expense (benefit), depreciation expense and
intangible amortization expense.

Adjusted
EBITDA represents net income (loss) plus interest expense, income tax expense (benefit), depreciation expense, intangible amortization
expense, share-based compensation expenses, restructuring costs and goodwill and intangible impairment.

The
following table provides a reconciliation of net income, the most closely comparable GAAP financial measure, to EBITDA and Adjusted EBITDA:

Operating
Ratio is calculated as total operating expenses as a percentage of operating revenue.

Adjusted
Operating Ratio is calculated as total operating expenses reduced for share-based compensation expense, amortization of intangibles and
goodwill and intangible impairment as a percentage of operating revenue.

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The
following table provides a reconciliation of total operating revenue and operating (loss) income, to operating margin and adjusted operating
margin:

Results
of Operations for the Twelve Months Ended December 31, 2025 and 2024 (Successor), Period from January 1, 2024 to May 12, 2024 (Predecessor),
and Twelve Months Ended December 31, 2023

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Operating
Revenue — The Company generates revenue from two primary sources: transporting freight for customers, including related
fuel surcharge revenue and other reimbursements (Company Drivers), and arranging for the transportation of customer freight by independent
contractors and third-party carriers (Subhaulers). Company Drivers revenue, before fuel surcharges and other reimbursements, is
primarily generated through trucking services provided by the Company’s Company Drivers service offerings to OEMs and the secondary
market. Subhaulers revenue before fuel surcharges and other reimbursements is primarily generated through brokering freight to third-party carriers.
Fuel surcharges and other reimbursements represent additional revenue the Company earns based on mileage driven and other reimbursable
costs incurred for which it is compensated by its customers.

The
Company’s total operating revenue is affected by, among other things, the general level of economic activity in the United States,
customer inventory levels, specific customer demand, the level of capacity in the truckload and brokerage industry, the success of its
marketing and sales efforts and the availability of drivers and third-party carriers.

The
Company disaggregates revenue from contracts with its customers for Company Drivers and Subhaulers operations between (1) revenue,
before fuel surcharges and reimbursements and (2) fuel surcharges and reimbursements. A summary of the Company’s revenue generated
by type for the periods indicated is as follows:

The
increases in total operating revenue and revenue before fuel surcharge for Successor between 2025 and 2024 was primarily due to 2025
showing a full year of the companies acquired in 2024 plus acquisition of Brothers in 2025.

In
2025, approximately 59 % of the Company’s operating revenue was derived from its five largest customers.

A
summary of the Company’s revenue generated by segment for the periods indicated is as follows:

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Results
of Operations for the years ended December 31, 2025 and 2024 (Successor)

In
the Company Driver segment, operating revenues increased by $67.3 million, or 77%, to $154.6 million for the year ended December 31,
2025, compared to $87.3 million for the same period last year. The increase in the Company Drivers segment’s revenue is driven
by 2024 only showing a partial year of revenues for the acquired companies and our Brothers acquisition, which occurred in the second
quarter of 2025.

In the Subhaulers segment, operating revenues increased by $122.2 million,
or 80%, to $275.8 million for the year ended December 31, 2025, compared to $153.6 million for the same period last year. The increase
in the Subhaulers segment’s revenue is driven by 2024 only showing a partial year of revenues for the acquired companies and our
Brothers acquisition, which occurred in the second quarter of 2025. The independent owner operators contributed 33% and 32% of the total
Subhauler revenue and fuel surcharge and other reimbursements for the years ended December 31, 2025 and 2024, respectively, with the remainder
coming from independent third-party carriers.

Salaries,
wages and benefits — Salaries, wages, and benefits consist primarily of compensation for all employees. Salaries, wages, and benefits
are primarily affected by the amount paid to company drivers, which is a function of the amount of freight hauled and units delivered.
Salaries, wages and benefits are also affected by employee benefits such as health care and workers’ compensation, and to a lesser
extent by the number of, and compensation and benefits paid to, non-driver employees.

Salaries,
wages and benefits increased by $39.6 million, or 86.8%, to $85.2 million for the year ended December 31, 2025, compared to $45.6 million
for the same period last year. This increase was primarily driven by 2024 including only seven and a half months of salary expenses for
the acquired companies, as well as additional hires on our Corporate Leadership Team to ensure we have the expertise and experience necessary
to support our growth as a public company.

Stock-based
compensation — Stock-based compensation consists primarily of compensation for certain employees, officers, and directors as a
key component of our overall compensation strategy. This non-cash expense reflects the amortization of RSU grants over the term specified
in each grant.

Stock-based
compensation decreased by $3.4 million or 37.8%, to $5.5 million for the year ended December 31, 2025, compared to $8.9 million for the
same period last year. The prior year included a one-time $6 million expense related to the issuance of restricted stock units to the
current CEO as an inducement to join the Company leading up to its IPO.

Fuel
and fuel taxes — Fuel and fuel taxes consist primarily of diesel fuel expense and fuel taxes for the Company’s company-owned
equipment. The primary factors affecting the Company’s fuel and fuel taxes expense are the cost of fuel per mile and the number
of miles driven by company drivers. As noted above, our contracts with customers generally include a fuel surcharge to account for fluctuating
fuel prices. Any additional revenue/discount is represented on the Fuel Surcharge and Other Reimbursements line in the consolidated financial
statements.

Fuel
and fuel taxes increased by $9.6 million, or 59.7%, to $25.7 million for the year ended December 31, 2025, compared to $16.1 million
for the same period last year. This increase was primarily driven by 2024 including only seven and a half months of fuel expenses for
the acquired companies.

Purchased
transportation — Purchased transportation consists of the payments the Company makes to owner-operators and third-party carriers.
Purchased transportation increased by $95.2 million, or 79.4%, to $215.2 million in for the year ended December 31, 2025, compared to
$120.0 million for the same period last year. This increase was primarily driven by 2024 including only seven and a half months of expenses
for the acquired companies.

Truck
Expenses — Truck expenses consist of operating expenses and supplies incurred for ordinary vehicle repairs and maintenance costs,
driver on-the-road expenses and tolls.

Truck
expenses and supplies are primarily affected by the age of the Company’s owned and leased fleet of trucks and trailers, the number
of miles driven in a period and driver turnover. Truck expenses increased 97.3% to $25.5 million for the year ended December 31, 2025,
compared to $13.0 million for the same period last year. This increase was primarily driven by 2024 including only seven and a half months
of expenses for the acquired companies.

Depreciation
and amortization — Depreciation and amortization consist primarily of depreciation for owned trucks and trailers and to a lesser
extent computer software amortization. The primary factors affecting these expense items include the size and age of the Company’s
truck and trailer fleets, the cost of new equipment and the relative percentage of owned revenue equipment and equipment acquired through
debt or finance leases.

Depreciation
and amortization and the gain on sale of equipment increased by $13.8 million, or 88.1%, to $29.5 million for the year ended December
31, 2025, compared to $15.7 million in the same period last year. This increase was primarily driven by 2024 including only seven and
a half months of depreciation for the acquired companies and assets purchased during 2025.

39

Intangible
Amortization — Intangible amortization is the amortization of our intangible assets, including customer relationships and trade
names, recognized during each acquisition, as applicable.

Intangible
amortization increased by $4.1 million to $9.8 million for the year ended December 31, 2025, compared to $5.7 million for the same period
as last year. This increase was primarily driven by 2024 including only seven and a half months of amortization for the acquired companies.

Goodwill
and Intangibles Impairment – In 2025, the company performed our annual goodwill evaluation which resulted in a subhauler segment
impairment charge of $27.8 million.

Insurance
premiums and claims — Insurance premiums and claims consist primarily of retained amounts for liability (personal injury and property
damage), physical damage and cargo damage, as well as insurance premiums. The primary factors affecting the Company’s insurance
premiums and claims are the frequency and severity of accidents, and developments in prior year claims. The number of accidents tends
to vary with the miles we travel. With our significant retained amounts, insurance claims expense may fluctuate significantly and impact
the cost of insurance premiums and claims from period-to-period, and any increase in frequency or severity of claims or adverse loss
development of prior period claims would adversely affect the Company financial condition and results of operations.

In
August 2025, we consolidated our auto liability, general liability and worker’s compensation insurance plans into a single policy
and then in November 2025 we consolidated our cargo insurance plans into a single plan. These consolidations will benefit the Company
by not only providing cost savings relative to similar coverage levels spread across numerous carriers, but also simplifying administration,
streamlining the claims process, and ensuring better coverage consistency.

Insurance
premiums and claims increased by $10.8 million, or 80.7% to $24.2 million for the year ended December 31, 2025, compared to $13.4 million
for the same period last year. This increase was primarily driven by 2024 including only seven and a half months of expenses for the
acquired companies.

General,
selling, and other operating expenses — General, selling, and other operating expenses consist primarily of legal and professional
services fees, occupancy and other costs. General, selling, and other operating increased by $6.9 million, or 65.3% to $17.5 million
for the year ended December 31, 2025, compared to $10.6 million in the same period last year. This increase was primarily driven by 2024
including only seven and a half months of expenses for the acquired companies.

Interest
expense, net — Interest expense, net consists of cash interest, amortization of deferred financing fees, net of any interest income
received from financial institutions. Interest expense, net increased by $2.6 million, or 64.4%, to $6.6 million for the year ended December
31, 2025, compared to $4.0 million for the same period last year. This increase was primarily driven by 2024 including only seven and
a half months of expenses for the acquired companies and the term loan entered into in November 2024.

Operating
ratio — Operating ratio is calculated as total operating expenses as a percentage of operating revenue. The Company’s operating
ratio increased to 108.2% for the year ended December 31, 2025, compared to 103.3% for the period last year. This increase can be attributed
to costs incurred by the Company to achieve synergies across all operating companies, which should reduce the operating ratio over time.
See “—Non-GAAP Financial Measures” above for the Company’s calculation of operating ratio and adjusted operating
ratio.

Adjusted
Operating ratio — Adjusted Operating ratio is calculated as adjusted total operating expenses as a percentage of operating revenue.
Adjusted total operating expenses are operating expenses adjusted for stock-based compensation and intangible amortization. The Company’s
adjusted operating ratio increased slightly to 98.2% for the year ended December 31, 2025, compared to 97.2% for the period last year.
See “—Non-GAAP Financial Measures” section for the Company’s calculation of adjusted operating ratio.

EBITDA
— EBITDA decreased by $13.0 million, or 83.1%, to $2.7 million for the year ended December 31, 2025 compared to $15.7 million for
the same period last year. This decrease was primarily driven by a goodwill and intangibles impairment charge of $27.8 million recorded
in 2025. See “—Non-GAAP Financial Measures” above for the Company’s calculation of EBITDA.

Adjusted
EBITDA — Adjusted EBITDA represents net income (loss) plus interest expense, income tax expense (benefit), depreciation expense,
intangible amortization expense, share-based compensation expenses and non-recurring items. Adjusted EBITDA increased by $12.6 million,
or 51.4%, to $37.2 million for the year ended December 31, 2025 compared to $24.6 million for the period same period last year. This
increase was primarily driven by 2024 including only seven and a half months of revenue and expenses. See “—Non-GAAP Financial
Measures” above for the Company’s calculation of Adjusted EBITDA.

40

Results
of Operations for the years ended December 31, 2024 (Successor) and 2023 (Predecessor)

In
the Company Driver segment, operating revenues increased by $43.9 million, or 101.1%, to $87.3 million in 2024 compared to $43.4 million
in 2023. The increase in the Company Driver segment’s revenue was driven by the Successor period including revenue from the acquired
entities. Additionally, we leveraged our expanded company drivers and secured new contracts, along with contract renewal pricing increases.

In
the Subhaulers segment, operating revenues increased by $61.2 million, or 66.3%, to $153.6 million in 2024 compared to $92.4 million
in 2023. The increase in the Subhaulers segment’s revenue was driven by the Successor period including revenue from the acquired
entities, as well as synergies from sharing subhauler resources, new contracts and spot buy opportunities. Salaries, wages and benefits
— Salaries, wages, and benefits consist primarily of compensation for all employees.

Salaries,
wages, and benefits are primarily affected by the amount paid to company drivers, which is a function of the amount of freight hauled
and units delivered. Salaries, wages and benefits are also affected by employee benefits such as health care and workers’ compensation,
and to a lesser extent by the number of, and compensation and benefits paid to, non-driver employees.

Salaries,
wages and benefits increased by $25.2 million, or 123.5%, to $45.6 million in 2024 compared to $20.4 million in 2023. The increase is
primarily related to the Successor period which includes expenses from the acquired entities. Additionally, we expanded our Corporate
Leadership Team to ensure we have the expertise and experience needed to support our growth as a public company.

Stock-based
compensation— Stock-based compensation consists primarily of compensation for certain employees, officers, and directors as a key
component of our overall compensation strategy. Stock-based compensation increased to $8.9 million in 2024 compared to $0 in 2023. The
increase is due to the result of stock-based compensation being offered as part of and following the Company’s IPO during 2024.

Fuel
and fuel taxes — Fuel and fuel taxes consist primarily of diesel fuel expense and fuel taxes for the Company’s company-owned
equipment. The primary factors affecting the Company’s fuel and fuel taxes expense are the cost of fuel per mile and the number
of miles driven by company drivers.

Fuel
and fuel taxes increased by $11.6 million, or 257.8%, to $16.1 million in 2024 compared to $4.5 million in 2023. The increase in fuel
and fuel taxes was driven primarily by the Successor period including expenses from the acquired entities.

Purchased
transportation — Purchased transportation consists of the payments the Company makes to owner-operators and third-party carriers.

Purchased
transportation increased by $36.1 million, or 43.1%, to $119.9 million in 2024 compared to $83.8 million in 2023. The increase in purchased
transportation was driven by the Successor period includes expenses from the acquired entities, as well as the expansion of our subhauler
database, revenue from new contracts and spot buy opportunities.

Truck
Expenses — Truck expenses consist of operating expenses and supplies incurred for ordinary vehicle repairs and maintenance costs,
driver on-the-road expenses and tolls.

Truck
expenses and supplies are primarily affected by the age of the Company’s company-owned and leased fleet of trucks and trailers,
the number of miles driven in a period and driver turnover. Truck expenses increased 85.7% to $13.0 million in 2024 compared to $7.0
million in 2023. This is primarily due to the Successor period including expenses from the acquired entities.

Depreciation
and amortization — Depreciation and amortization consist primarily of depreciation for owned trucks and trailers and to a lesser
extent computer software amortization. The primary factors affecting these expense items include the size and age of the Company’s
truck and trailer fleets, the cost of new equipment and the relative percentage of owned revenue equipment and equipment acquired through
debt or finance leases.

41

Depreciation
and amortization and the gain on sale of equipment increased by $13.2 million, or 528.0%, to $15.7 million in 2024 compared to $2.5 million
in 2023. The increase in depreciation and amortization and the gain on sale of equipment was driven by the Successor period including
expenses from the acquired entities.

Intangible
Amortization — Intangible amortization is the amortization of our intangible assets, including customer relationships and trade
names, recognized during each acquisition, as applicable.

Intangible
amortization increased $5.7 million in 2024 compared to $0 in 2023. This is due to the Predecessor not having any intangible assets.

Insurance
premiums and claims — Insurance premiums and claims consist primarily of retained amounts for liability (personal injury and property
damage), physical damage and cargo damage, as well as insurance premiums. The primary factors affecting the Company’s insurance
premiums and claims are the frequency and severity of accidents, and developments in prior year claims. The number of accidents tends
to increase with the miles we travel. With our significant retained amounts, insurance claims expense may fluctuate significantly and
impact the cost of insurance premiums and claims from period-to-period, and any increase in frequency or severity of claims or adverse
loss development of prior period claims would adversely affect the Company financial condition and results of operations.

Insurance
premiums and claims increased by $10.2 million, or 318.8%, to $13.4 million in 2024 compared to $3.2 million in 2023. The increase in
insurance premiums and claims was driven by the Successor period includes expenses from the acquired entities. We are working toward
consolidating our insurance plans into a single policy, which will benefit the company by not only providing cost savings relative to
similar coverage levels spread across numerous carriers, but also simplifying administration, streamlining the claims process, and ensuring
better coverage consistency.

General,
selling, and other operating expenses — General, selling, and other operating expenses consist primarily of legal and professional
services fees, occupancy and other costs. General, selling, and other operating expenses increased by $6.5 million, or 158.6%, to $10.6
million in 2024 compared to $4.1 million in 2023. The increase in general, selling, and other operating expenses was primarily due to
the Successor period includes expenses from the acquired entities.

Interest
expense, net — Interest expense, net consists of cash interest, amortization of deferred financing fees, net of any interest income
received from financial institutions. Interest expense, net increased by $3.0 million, or 300.0%, to $4.0 million in 2024 compared to
$1.0 million in 2023. The increase was primarily due to the Successor period includes interest expense from the acquired entities.

Operating
ratio — Operating ratio is calculated as total operating expenses as a percentage of operating revenue. The Company’s operating
ratio increased by 10.9% to 103.3% in 2024 as compared to 92.4% in 2023. The increase in costs was primarily due to expenses that the
Predecessor did not incur, including stock compensation expense ($8.9 million) and intangible amortization expense ($5.7 million). Excluding
these expenses, the operating ratio for 2024 would be 97.2%. We are working to achieve synergies across all operating companies, which
should help reduce the operating ratio over time. See “Non-GAAP Financial Measure” section for the Company’s calculation
of operating ratio.

EBITDA
— EBITDA increased by $2.8 million, or 21.7%, to $15.7 million in 2024 compared to $12.9 million in 2023. The increase was due
to the Successor period having more revenue from the acquired entities. See “Non-GAAP Financial Measure” section for the
Company’s calculation of EBITDA. Adjusted EBITDA — Adjusted EBITDA represents net income (loss) plus interest expense, income
tax expense (benefit), depreciation expense, intangible amortization expense, and share-based compensation expenses.

Adjusted
EBITDA increased by $11.7 million, or 90.7%, to $24.6 million in 2024 compared to $12.9 million in 2023. The increase was due to the
Successor period having more revenue from the acquired entities. See “Non-GAAP Financial Measure” section for the Company’s
calculation of Adjusted EBITDA.

42

Liquidity
and Capital Resources

Overview

Our business requires substantial amounts of cash to cover operating
expenses as well as to fund capital expenditures, working capital changes, principal and interest payments on our debt obligations, lease
payments and tax payments when we generate taxable income. Recently, we have financed our capital requirements with cash flows from operating
activities, direct equipment financing, and proceeds from our IPO. We intend to spend between $10 to $15 million per year on new revenue
equipment to maintain our desired average age of the fleet. We plan to finance the purchases through a combination of operating cash flows
and direct equipment financing. Additional purchases of revenue equipment in a given year will depend on new business added as well as
management’s desire to shift the mix of delivery to have higher volume in the Company Drivers segment which will require growth
in the aggregate fleet.

We
believe we can fund our expected cash needs in the short-term, including debt repayment and the capital purchases described above, with
projected cash flows from operating activities, borrowings under our credit facility and direct debt and lease financing that we believe
to be available for at least the next 12 months. Over the long-term, we expect that we will continue to have significant capital
requirements, which may require us to seek additional borrowings or lease financing. The availability of financing will depend upon our
financial condition and results of operations as well as prevailing market conditions.

Sources
of Liquidity

In
May 2024, we raised money in the capital markets through an IPO and then subsequently in June 2024 sold additional shares through an
over-allotment option. The approximately $30 million remaining after acquiring the Founding Companies was used to support operations
for 2024 and to partially fund strategic acquisitions. We anticipate that our cash flows from operations and available direct equipment
financing will provide adequate liquidity for our planned capital expenditures during fiscal year 2026. For any new capital expenditures
in 2026 and beyond that exceed our cash flow from operations, we have negotiated credit agreements with financial institutions in amounts
sufficient to fund planned purchases. While we generally control the timing and extent of our capital expenditures, there is no assurance
that we can obtain financing arrangements on terms acceptable to the Company.

Pinnacle
LOC

On
November 8, 2024, the Company and certain of its subsidiaries, as borrowers, entered into a Loan and Security Agreement (the “Loan
Agreement”) with Pinnacle Bank, as lender (the “Lender”). The Loan Agreement provides for (i) a delayed draw term loan
facility of up to an aggregate principal amount of $25 million (the “Term Loan Facility”) and (ii) a revolving credit facility
of up to an aggregate principal amount of $20 million at any time outstanding (the “Revolving Credit Facility”), in each
case, subject to the terms of the Loan Agreement. Proceeds of the Term Loan Facility may be used to refinance existing indebtedness of
the Company, to finance certain permitted acquisitions and fees and expenses related thereto, and to pay fees and transaction expenses
associated with the Loan Agreement. Proceeds of the Revolving Credit Facility may be used for general working capital, to pay the fees
and transaction expenses associated with the Loan Agreement, and to pay any of the Company’s obligations thereunder. The loans
under the Loan Agreement may be voluntarily prepaid at any time, in whole or in part, without premium or penalty. The maturity date of
the Term Loan Facility is May 8, 2031, and the maturity date of the Revolving Credit Facility is November 8, 2029.

43

Borrowings
under the Loan Agreement bear interest at a rate per annum equal to Term SOFR for an interest period equal to one month plus a margin
of (x) 2.50% per annum with respect to any loan under the Term Loan Facility and (y) 2.20% per annum with respect to any loan under the
Revolving Credit Facility. In addition, the Company is required to pay an unused line fee on the unutilized commitments with respect
to the Revolving Credit Facility at the rate of 0.15% per annum.

The
Loan Agreement contains customary affirmative and negative covenants, including covenants that restrict the ability of the Company and
its subsidiaries to, among other things, incur debt, grant liens on their respective assets, engage in mergers and other fundamental
changes, make investments, enter into transactions with affiliates, pay dividends and make other restricted payments, prepay other indebtedness
and sell assets, in each case subject to certain exceptions set forth in the Loan Agreement. The Loan Agreement also requires the Company
to maintain (i) a Fixed Charge Coverage Ratio (as defined in the Loan Agreement) of greater than or equal to 1.25 to 1.00 and (ii) a
Funded Debt to Adjusted EBITDA Ratio (as defined in the Loan Agreement) of less than or equal to 3.00 to 1.00, in each case, as of the
end of each fiscal quarter. The Company was in compliance with its debt covenants as of December 31, 2025.

All
obligations under the Loan Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security
interest on substantially all of the property of the Company and its subsidiaries.

Upon
closing, the Company drew $16.0 million from the available term debt, a portion of which was used to repay and terminate the Proficient
Transport line of credit. On April 1, 2025, the Company drew $9.0 million to fund the cash portion of the Brothers Auto Transport, LLC
acquisition. On December 31, 2025, the amount outstanding on the term debt facility was approximately $22 million and there was no drawn
balance on the line of credit.

Cash
Flows

For
the twelve months ended December 31, 2025, cash flows from operating activities of $33.2 million compared to $10.7 million for the twelve
months ended December 31, 2024. The increase was primarily driven by adjusted operating income of $35.6 million, compared to $18.4 million
in the prior period, after accounting for non-cash adjustments. Additionally, we saw a $5.3 million increase in working capital, further
contributing to the overall improvement in operating cash flows.

For
the twelve months ended December 31, 2025, cash flows used in investing activities was $11.5 million when compared to $205.0 million for
the twelve months ended December 31, 2024. This decrease is mainly due to the cash paid to acquire the Founding Companies, ATG and UTT
as discussed below in Note 3 — Business Combinations.

For the twelve months ended December 31, 2025, cash flows used in financing
activities was $22.8 million, which was a decrease compared to last year’s cash used in financing activities of $209.3 million.
In 2024 we issued $212.2 million in common stock to finance the Company’s IPO offset and proceeds from debt.

44

Contractual
obligations

The
table below summarizes the Company’s contractual obligations as of December 31, 2025:

Emerging
Growth Company Status

We
qualify as an “emerging growth company,” as defined in the JOBS Act. As an emerging growth company, we may take advantage
of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions
include: (i) reduced disclosure about our executive compensation arrangements; (ii) not being required to hold advisory votes on
executive compensation or to obtain stockholder approval of any golden parachute arrangements not previously approved; (iii) an
exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the
Sarbanes-Oxley Act of 2002; and (iv) an exemption from compliance with the requirements of the Public Company Accounting
Oversight Board regarding the communication of critical audit matters in the auditor’s report on the financial statements.

We may take advantage of these exemptions for up to five years
or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that
is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or
more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of the IPO; (iii) the
date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the
date on which we are deemed to be a large accelerated filer under the rules of the SEC. We may choose to take advantage of some but
not all of these exemptions. We have taken advantage of reduced reporting requirements in this Annual Report. Accordingly, the information
contained herein may be different from the information you receive from other public companies in which you hold stock. Additionally,
the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised
accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, while we are an emerging
growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public
companies that are not emerging growth companies. As a result of this election, our financial statements may not be comparable to those
of other public companies that comply with new or revised accounting pronouncements as of public company effective dates. We may choose
to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.