Proficient Auto Logistics, Inc (PAL) FY 2024 MD&A

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 based upon information obtained from leadership of
the Auto Haulers Association of America, utilizing roughly 1,145 auto transport vehicles and trailers on a daily basis, including approximately
845 Company-owned transport vehicles and trailers, and employing 671 dedicated employees as of December 31, 2024. Prior to the completion
of the IPO, we had not operated as a combined company. From our 50 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 OEMs. Our customers
range from large, global auto companies, such as General Motors, BMW, Stellantis, and Mercedes-Benz, to EV producers, such as Tesla and
Rivian. 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
$178.5 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 $28.9 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. 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, 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 our OEM contract and spot arrangements, secondary market auto moves, and our
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 devotes the use of equipment to 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 Company Drivers 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
increases.

We
monitor as key operating metrics average revenue per unit and average revenue per loaded mile, 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 to third-party carriers
and (iv) maintenance of our fleet. Expenses that have both fixed and variable components include maintenance and tire expense 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 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 condensed consolidated financial statements of the Company for additional information
about our critical accounting policies and estimates.

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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 less than the economic lives.

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 on 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 expects to complete the final fair value determination of the assets acquired and liabilities assumed 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 reportable segments, Company Drivers and Brokered. The Company Drivers segment offers automobile transport
and contract services under an asset-based model. The Company’s dedicated service offering devotes the use of equipment to
specific customers and provides transportation services through long-term contracts. The Company’s Brokered 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 our OEM contract and spot arrangements, secondary
market auto moves, and our 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 devotes the use of equipment to 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 contain fixed terms and rates
and are often used by our customers with high-service and high-priority freight. We continually strive to increase our revenues
derived from contracts as a percentage of total revenue by continuing to build upon our existing relations and acquire new relations
with OEMs.

Our
contracts with customers in the Company Drivers segment generally include a fuel surcharge to account for fluctuating fuel prices. Built
into our 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 our condensed 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 tire expense 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 substantial capital expenditures for 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 will be impacted by changes in the percentage of
our revenue equipment acquired in any given year.

Brokered
Segment

In
our Brokerage Segment, we generate revenue by utilizing our independent owner operators (who run under our DOT) and independent third-party
carriers to assist in transporting autos for our 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 Brokered segment are our customers’ excess inventory needs, the rates we obtain from customers,
the auto volumes we ship through the brokered segment and our ability to secure these carriers. We generally do not have contracted long-term rates
for the cost of third-party carriers, and we cannot assure that our results of operations will not be adversely impacted in the future
if our ability to obtain third-party carriers changes or the rates of such providers increase.

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The
most significant expense of our Brokered segment, which is primarily variable, is the cost of purchased transportation that we pay to
third-party carriers and is included in the “Purchased transportation” line item. This expense generally varies directly
with the amount of Brokered revenue, rates charged by 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 (which are recorded in
the “Salaries, wages and benefits” line item).

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

Our
Brokered segment does not require significant capital expenditures and is not asset-intensive like our Company Drivers segment.

Non-GAAP Financial
Measures

We
report our financial results in accordance with 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) and depreciation expense and
intangible amortization expense.

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

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 and amortization of intangibles 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, 2024 (Successor), Period from January 1, 2024 to May 12, 2024 (Predecessor), Twelve Months Ended
December 31, 2023 (Predecessor), and Twelve Months Ended December 31, 2022 (Predecessor)

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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 third-party carriers (Brokered). 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. Brokered 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 Brokered 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, were primarily due to the Successor period including revenues from the acquired entities from
May 13, 2024 to December 31, 2024

In 2024, approximately 49.6%
of the Company’s operating revenue was derived from its four largest customers, General Motors, Glovis (the logistics arm of Hyundai
and Kia), BMW and Ford.

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, 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 to replace historical brokered lanes and secured new contracts, along with contract renewal
pricing increases.

During the first quarter of
2025, market conditions and other competitive pressures resulted in the cessation of business by one of the Company’s largest competitors.
The immediate result of this development has been a redistribution among market participants of a significant amount of OEM contract business.
New contract business in place at the Company is expected to ramp during 2025 to a run rate that would represent an approximate 15% increase
to pro forma combined revenue in 2024 and with contribution margins consistent with the remainder of the contract portfolio.

In the Brokered 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 Brokerage
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 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.

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.

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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, trends in the development factors used in the Company’s
actuarial accruals and developments in large, 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 was primarily
due to Predecessor not incurring any stock compensation expense or intangible amortization expense. See “Non-GAAP Financial Measure”
section for the Company’s calculation of Adjusted EBITDA.

Results of Operations for
the Period from June 13, 2023 (Inception) through December 31, 2023 (Successor)

Results of Operations

Revenue — Proficient
did not generate any revenue for the period from June 13, 2023 through December 31, 2023.

Operating Expenses
— Proficient’s general and administrative expenses for the period from June 13, 2023 through December 31, 2023 totaled $0.6
million. The expenses were incurred for various legal and accounting services in preparation of this offering and the Combinations.

Net Loss — Proficient’s
net loss was $0.6 million for the period from June 13, 2023 through December 31, 2023.

Liquidity and Capital Resources
—Proficient’s source of funding was capital raises of $0.9 million of cash through December 31, 2023 from a small group
of investors. Proficient may obtain additional financing as needed.

Net cash used in operating
activities totaled $0.5 million for the period from June 13, 2023 through December 31, 2023, which resulted in $0.4 million of the cash
capital raise left on hand as of December 31, 2023.

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Proficient Transport’s Results of Operations
for the years ended December 31, 2023 to 2022

The following table sets forth
items derived from Proficient Transport’s Consolidated Statements of Comprehensive Income for the years ended December 31,
2023 and 2022 presented as a percentage of operating revenues:

Fiscal year 2023 compared to Fiscal year 2022

Operating Revenue — Proficient
Transport generates revenue from two primary sources: transporting freight for its customers (including related fuel surcharge revenue
and other reimbursements) and arranging for the transportation of customer freight by third-party carriers. Proficient Transport has two
reportable segments: its Truckload segment and its Brokerage segment. Truckload revenue, before fuel surcharges and other reimbursements,
is primarily generated through trucking services provided by Proficient Transport’s two Truckload service offerings: OEM transports
and contract. Brokerage 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 Proficient Transport earns based on mileage driven and
other reimbursable costs incurred for which it is compensated by its customers.

Proficient Transport’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 our marketing
and sales efforts and the availability of drivers and third-party carriers.

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

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The increases in total operating
revenue and revenue before fuel surcharge, were primarily due to the increases in volume of activity (in the Truckload Segment) and secondarily
due to increases in Proficient Transport’s contract pricing. In 2023, Proficient Transport delivered 296,352 units (174,434 Truckload
Segment) compared to 297,204 units (168,938 in the Truckload Segment) in 2022. The increases in volume in the Truckload Segment were primarily
driven by the reduction in backlog of undelivered cars that had built up over 2021 and 2022. In 2021, Proficient Transport’s OEMs
experienced significant microchip supply shortages which resulted in new automobiles being only partially manufactured and not ready for
shipment. This shortage continued, albeit to a lesser extent, into 2022. Once the microchip supply shortages were resolved, OEMs completed
the production of unfinished cars, creating a need to deliver the excess automobile inventory. Proficient Transport serviced the OEMs’
excess inventory through company-owned vehicles as well as Proficient Transport’s Brokerage segment.

In 2023, approximately 81.5%
of Proficient Transport’s operating revenue was derived from its four largest customers, General Motors, Glovis (the logistics arm
of Hyundai and Kia), Ford and Mercedes Benz.

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

In the Truckload segment,
operating revenues increased by $3.8 million, or 9.7%, to $43.4 million in 2023 compared to $39.6 million in 2022. Average
revenue per unit increased to $220 from $197 in 2022. The increase in the Truckload segment’s revenue was driven by a $5.2 million
increase in truckload services and a $1.4 million decrease in fuel surcharges and other reimbursements. The $5.2 million increase
in truckload services was comprised of contractual increases in revenue per unit hauled and the utilization of additional owner operators.
The decrease in Proficient Transport’s Truckload fuel surcharge and other reimbursements primarily related to the decrease in fuel
prices, which resulted in lower fuel surcharge compensation from Proficient Transport’s customers, as well as fewer reimbursements
Proficient Transport earned from the contracts that expired mid-year.

In the Brokerage segment,
operating revenues increased by $1.7 million, or 1.9%, to $92.4 million in 2023 compared to $90.6 million in 2022. The
increase in the Brokerage segment’s revenue was driven by a $5.1 million increase in brokerage services offset by a $3.4 million
decrease in fuel surcharges and other reimbursements. The primary factors driving the increase in brokerage services revenue was Proficient
Transport’s ability to expand services under its contract service arrangements to third-party carriers as well as the need for timely
transportation of the excess inventory of Proficient Transport’s OEMs.

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 includes 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
decreased by $2.5 million, or 10.7%, to $20.4 million in 2023 compared to $22.9 million in 2022. The decrease is primarily
related to Proficient Transport’s smallest contract expiring in June of 2023, which resulted in the termination of approximately
30 drivers. Additionally, approximately 20 drivers transitioned from company drivers to owner-operators during 2023.

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

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Fuel and fuel taxes decreased
by $2.7 million, or 38.2%, to $4.5 million in 2023 compared to $7.2 million in 2022. The decrease in fuel and fuel taxes
was driven primarily by the decrease in price per gallon for diesel fuel, which declined from an annual average of $4.99 per gallon in
2022 to $4.21 per gallon in 2023, according to the Department of Energy. For 2023, the average cost of fuel per mile was $0.79 compared
to $1.11 in 2022 and the total number of miles driven in 2023 was 10 million compared to 9.2 million in 2022. Additionally,
the expiration of Proficient Transport’s smallest fleet contract mid-year resulted in less fuel being purchased in 2023.

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

Purchased transportation increased
by $13.5 million, or 19.2%, to $83.8 million in 2023 compared to $70.3 million in 2022. The increase in purchased transportation
was driven by two factors: Proficient Transport had approximately 20 company drivers become owner-operators during 2023 and Proficient
Transport added third-party carriers to its contract service arrangement.

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.

Operating expenses and supplies
are primarily affected by the age of Proficient Transport’s company-owned and leased fleet of trucks and trailers, the number of
miles driven in a period and driver turnover. Truck expenses decreased 0.4% to $7.0 million in 2023 compared to $7.1 million
in 2022. Truck expenses as a percentage of operating revenue decreased from 5.4% in 2022 to 5.2% in 2023 due to the disproportional increase
in Brokerage segment activity, which operates under an asset-light model and does not incur truck expenses.

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 Proficient Transport’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 $0.1 million, or 4.9%, to $2.3 million in 2023 compared to $2.2 million
in 2022. The increase in depreciation and amortization and the gain on sale of equipment was driven by an increase in the average depreciation
offset by gains recognized on sold equipment.

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 Proficient Transport’s insurance
premiums and claims are the frequency and severity of accidents, trends in the development factors used in Proficient Transport’s
actuarial accruals and developments in large, 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 Proficient Transport’s financial condition and results of operations.

Insurance premiums and claims
increased by $0.6 million, or 23.8%, to $3.2 million in 2023 compared to $2.6 million in 2022. The increase in insurance
premiums and claims was driven by an increase in Proficient Transport’s premiums.

Operating taxes and licenses — Operating
taxes and licenses consist of property and use taxes. Operating taxes and licenses increased by $114,599 or 83.5%, to $251,789 in 2023
compared to $137,190 in 2022. The increase in operating taxes and licenses was driven by the increase in operating revenue.

General, selling, and other
operating expenses — General, selling, and other operating expenses consist primarily of legal and professional services
fees, general and administrative expenses, and other costs. General, selling, and other operating expenses increased by $0.8 million,
or 27.6%, to $3.9 million in 2023 compared to $3.0 million in 2022. The increase in general, selling, and other operating expenses
was primarily due to increased legal fees, as well as the overall increase in general expenses such as repairs and maintenance at our
owned facility, operations, and utilities.

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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 decreased by $0.2 million, or 18.0%, to $1.0 million in 2023 compared to $1.2 million in 2022. The
decrease was primarily due to the interest income earned from the Lease to Purchase program with our owner-operators.

Operating ratio — Operating
ratio is calculated as total operating expenses as a percentage of operating revenue. Proficient Transport’s operating ratio increased
by 3.7% to 92.4% in 2023 as compared to 88.7% in 2022. The increase in costs was primarily due to the increase in purchase transportation
activity in Proficient Transport’s Brokerage segment.

EBITDA — EBITDA
decreased by $4.1 million, or 24.2%, to $12.9 million in 2023 compared to $17.0 million in 2022. The decrease was primarily
due to the $3.2 million decrease in net income as well as the $0.9 million decrease in income taxes, which is an add back for
the EBITDA calculation. See “Non-GAAP Financial Measure” section below for Proficient Transport’s calculation of EBITDA.

Non-GAAP Financial Measure

EBITDA

EBITDA is a supplemental non-GAAP
financial measure used by management of Proficient Transport. Proficient Transport defines EBITDA as net income (loss) before (i) interest
expense, net, (ii) tax expense (benefit), and (iii) depreciation and amortization expense. Proficient Transport believes that EBITDA is
useful because it provides a more effective evaluation of Proficient Transport’s operating performance and allows comparison of
Proficient Transport’s results of operations from period to period without regard to Proficient Transport’s financing methods
or other items that impact comparability of financial results from period to period such as fluctuations in interest expense or effective
tax rates, levels of depreciation and amortization, or any unusual items. EBITDA should not be considered as an alternative to, or more
meaningful than, net income, operating ratio, or any other measure as determined in accordance with GAAP. Proficient Transport’s
computation of EBITDA may not be comparable to EBITDA of other companies. Proficient Transport presents EBITDA because management believes
these metrics provide useful information regarding the factors affecting Proficient Transport’s operations.

The following table presents
a reconciliation of EBITDA to the GAAP financial measure of net income for each of the periods indicated.

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 $5 - $10 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 delivery volume away from subhaulers
in favor of company drivers 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 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.

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Sources
of liquidity

In
May 2024, we raised money in the capital markets through an IPO and then subsequently in June 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 2025. For any new capital expenditures in 2025 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
Loan Agreement

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.

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, commencing with the fiscal quarter ending March 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. As of December 31, 2024, there was $16.0 million
outstanding under the Loan Agreement.

Cash
Flows

For
the twelve months ended December 31, 2024, cash flows from operating activities of $ 10,718,960, was down slightly from the twelve months
ended December 31, 2023.

For
the twelve months ended December 31, 2024, cash flows used in investing activities was $(205,033,308). This decrease of $(205,227,563)
compared to December 31, 2023 is mainly due to the cash paid to acquire the Founding Companies, ATG and UTT as discussed above in Note
3 — Business Combinations.

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For
the twelve months ended December 31, 2024, cash flows provided by financing activities was $209,254,829, which was an increase of $220,181,913
compared to the twelve months ended December 31, 2023. This increase is due to our issuance of common stock in the Company’s IPO
plus proceeds from debt.

Contractual
obligations

The
table below summarizes the Company’s contractual obligations as of December 31, 2024:

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 Quarterly 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.

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