總營業收入：9,369萬美元 (按年跌1.6%)，主要由於燃油附加費及其他收入減少。

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13
or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2026

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______

 

001-42035

(Commission File Number)

 

PROFICIENT AUTO LOGISTICS, INC.

(Exact name of registrant as specified in its charter)

 

 Delaware   93-1869180
 (State or other jurisdiction of

incorporation or organization)   (I.R.S. Employer

Identification No.)
 

 

 12276 San Jose Blvd.

Suite 426

Jacksonville, Florida   32223
 (Address of principal executive offices)   (Zip Code)
 

 

(904) 506-7918

(Registrant’s telephone number, including
area code)

 

Securities registered pursuant to Section 12(b)
of the Act:

 

 Title of each class   Trading Symbol(s)   Name of each exchange on which registered
 Common stock, par value $0.01 per share   PAL   The Nasdaq Stock Market LLC
 

 
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or l5(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☒ No ☐

 

Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

   Large accelerated filer ☐     Accelerated filer ☐
   Non-accelerated filer ☒     Smaller reporting company ☐
         Emerging growth company ☒
 

 

If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The registrant had 27,770,074
shares of common stock outstanding at April 30, 2026.

 

 

 

 
 

 
 

 

 

Index

 

 
  
 Page

 
 PART I - FINANCIAL INFORMATION:
  

 
 Item 1. Condensed Consolidated Financial Statements (Unaudited):
  

 
  
  

 
 Proficient Auto Logistics, Inc. and Subsidiaries
  

 
 Condensed Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025
 1

 
 Condensed Consolidated Statement of Operations for the three months ended March 31, 2026 and the three months ended March 31, 2025 (unaudited)
 2

 
 Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2026 and the three months ended March 31, 2025 (unaudited)
 3

 
 Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2026 and the three months ended March 31, 2025 (unaudited)
 4

 
 Notes to Condensed Consolidated Financial Statements (unaudited)
 5

 
  
  

 
 Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition
 22

 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 34

 
 Item 4. Controls and Procedures
 35

 
  
  

 
 PART II - OTHER INFORMATION:
 36

 
 Item 1. Legal Proceedings
 36

 
 Item 1A. Risk Factors
 36

 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities
 36

 
 Item 3. Defaults Upon Senior Securities
 36

 
 Item 4. Mine Safety Disclosures
 36

 
 Item 5. Other Information
 36

 
 Item 6. Exhibits
 37

 

 

 
i

 
 

 

 

PROFICIENT AUTO LOGISTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 
   
 March 31,

 2026  
 December 31, 

2025 

 
 Assets 
    
   

 
 Current assets: 
    
   

 
 Cash and cash equivalents 
 $9,755,547  
 $14,285,745 

 
 Accounts receivable, less allowance for credit losses (2026 - $1,079,746; 2025 - $826,740) 
  49,011,373  
  42,188,909 

 
 Net investment in leases, current portion 
  101,362  
  126,730 

 
 Maintenance supplies 
  1,833,880  
  1,714,238 

 
 Assets held for sale 
  10,000  
  28,500 

 
 Income tax receivable 
  1,266,663  
  1,791,544 

 
 Prepaid expenses and other current assets 
  7,629,465  
  11,261,497 

 
 Total current assets 
  69,608,290  
  71,397,163 

 
 Property and equipment, net of accumulated depreciation and amortization (2026 - $50,809,076; 2025 - $43,500,044) 
  109,007,448  
  115,850,061 

 
 Operating lease right-of-use assets 
  12,023,542  
  12,633,834 

 
 Net investment in leases, less current portion 
  5,592  
  21,781 

 
 Deposits 
  6,154,989  
  6,124,946 

 
 Goodwill 
  148,643,673  
  148,476,407 

 
 Intangible assets, net (2026 - $17,903,862; 2025 - $17,615,109) 
  120,390,138  
  122,804,891 

 
 Other long-term assets 
  602,336  
  668,426 

 
 Total Assets 
 $466,436,008  
 $477,977,509 

 
   
     
    

 
 Liabilities, and Stockholders’ Equity 
     
    

 
 Current liabilities: 
     
    

 
 Accounts payable 
 $9,900,722  
 $8,305,255 

 
 Accrued liabilities 
  33,495,656  
  33,030,001 

 
 Finance lease liabilities, current portion 
  —
  
  8,758 

 
 Operating lease liabilities, current portion 
  2,425,617  
  2,249,651 

 
 Long-term debt, current portion 
  19,692,275  
  20,303,077 

 
 Total current liabilities 
  65,514,270  
  63,896,742 

 
   
     
    

 
 Long-term liabilities: 
     
    

 
 Operating lease liabilities, less current portion 
  10,041,385  
  10,689,839 

 
 Long-term debt, less current portion 
  49,384,284  
  54,026,968 

 
 Deferred tax liability, net 
  32,688,452  
  34,900,440 

 
 Other long-term liabilities 
  3,073,049  
  3,073,049 

 
 Total Liabilities 
  160,701,440  
  166,587,038 

 
   
     
    

 
 Commitments and contingencies (Note 15) 
   
  
   
 

 
   
     
    

 
 Stockholders’ Equity: 
     
    

 
 Common stock, $0.01 par value; 50,000,000 shares authorized; 27,852,951 and 27,834,799 shares issued and 27,770,074 and 27,834,799 shares outstanding as of March 31, 2026 and December 31, 2025, respectively 
  278,529  
  278,347 

 
 Additional paid in capital 
  357,531,687  
  356,179,787 

 
 Accumulated deficit 
  (51,557,764) 
  (45,067,663)

 
 Treasury stock at cost 82,877 and 0 shares, as of March 31, 2026 and December 31, 2025, respectively 
  (517,884) 
  —
 

 
 Total Stockholders’ Equity 
  305,734,568  
  311,390,471 

 
 Total Liabilities and Stockholders’ Equity 
 $466,436,008  
 $477,977,509 

 

 

The accompanying notes to the condensed consolidated
financial statements are an integral part of these statements.

 

 
1

 
 

 

 

PROFICIENT AUTO LOGISTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 
   
 Three months
 ended
 March 31, 2026  
 Three months
 ended
 March 31, 2025 

 
 Operating Revenue 
    
   

 
 Revenue, before fuel surcharge 
 $86,196,954  
 $87,615,128 

 
 Fuel surcharge and other reimbursements 
  5,664,451  
  5,427,840 

 
 Other Revenue 
  1,104,200  
  1,305,745 

 
 Lease Revenue 
  724,064  
  857,308 

 
 Total Operating Revenue 
  93,689,669  
  95,206,021 

 
   
     
    

 
 Operating Expenses 
     
    

 
 Salaries, wages and benefits 
  20,892,844  
  19,288,103 

 
 Stock-based compensation 
  1,352,082  
  1,183,009 

 
 Fuel and fuel taxes 
  6,875,998  
  6,065,255 

 
 Purchased transportation 
  44,614,009  
  47,208,843 

 
 Truck expenses 
  7,230,793  
  5,849,846 

 
 Depreciation 
  7,607,007  
  6,488,579 

 
 Intangible amortization 
  2,414,753  
  2,415,830 

 
 (Gain) Loss on sale of equipment 
  (10,263) 
  8,781 

 
 Insurance premiums and claims 
  5,287,345  
  4,958,679 

 
 General, selling, and other operating expenses 
  4,359,655  
  4,101,602 

 
 Total Operating Expenses 
  100,624,223  
  97,568,527 

 
 Operating Loss 
  (6,934,554) 
  (2,362,506)

 
 Other income and expense 
     
    

 
 Interest expense 
  (1,397,021) 
  (1,570,920)

 
 Acquisition Costs 
  —
  
  (37,102)

 
 Other income, net 
  33,827  
  76,222 

 
 Total other expense, net 
  (1,363,194) 
  (1,531,800)

 
 Loss before income taxes 
  (8,297,748) 
  (3,894,306)

 
 Income tax benefit 
  (1,807,647) 
  (702,621)

 
 Net Loss 
 $(6,490,101) 
 $(3,191,685)

 
   
     
    

 
 Loss Per Share 
     
    

 
 Basic & Diluted 
 $(0.23) 
 $(0.12)

 
   
     
    

 
 Weighted Average Shares 
     
    

 
 Basic & Diluted 
  27,826,452  
  27,069,114 

 

 

The accompanying notes to the condensed consolidated
financial statements are an integral part of these statements.

 

 
2

 
 

 

 

PROFICIENT AUTO LOGISTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 

(unaudited)

 

 
   
 Common Stock  
 Additional Paid  
 Accumulated  
 Total 

 
   
 Shares  
 Amount  
 in Capital  
 Deficit  
 Equity 

 
 Balance, December 31, 2024 
  27,069,114  
 $270,691  
 $346,756,929  
 $(9,048,097) 
 $337,979,523 

 
 Stock-based compensation 
  —
  
  —
  
  1,183,009  
  —
  
  1,183,009 

 
 Net loss 
  —  
  —
  
  —
  
  (3,191,685) 
  (3,191,685)

 
 Balance, March 31, 2025 
  27,069,114  
 $270,691  
 $347,939,938  
 $(12,239,782) 
 $335,970,847 

 

 

 
   
 Common Stock  
 Additional Paid in  
 Accumulated  
 Treasury  
 Total 

 
   
 Shares  
 Amount  
 Capital  
 Deficit  
 Stock  
 Equity 

 
 Balance, December 31, 2025 
  27,834,799  
 $278,347  
 $356,179,787  
 $(45,067,663) 
 $—
  
 $311,390,471 

 
 Stock-based compensation 
  18,152  
  182  
  1,351,900  
  —
  
  —
  
  1,352,082 

 
 Net loss 
  —  
  —
  
  —
  
  (6,490,101) 
  —
  
  (6,490,101)

 
 Repurchase of Shares 
  —  
  —
  
  —
  
  —
  
  (517,884) 
  (517,884)

 
 Balance, March 31, 2026 
  27,852,951  
 $278,529  
 $357,531,687  
 $(51,557,764) 
 $(517,884) 
 $305,734,568 

 

 

The accompanying notes to the condensed consolidated
financial statements are an integral part of these statements.

 

 
3

 
 

 

 

PROFICIENT AUTO LOGISTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 
   
 Three months
 ended
 March 31,
 2026  
 Three months
 ended
 March 31,
 2025 

 
 Cash flows from operating activities: 
    
   

 
 Net Loss 
 $(6,490,101) 
 $(3,191,685)

 
 Adjustments to reconcile net loss to net cash flows provided by operating activities: 
     
    

 
 Stock-based compensation 
  1,352,082  
  1,183,009 

 
 Provision for credit losses 
  282,305  
  142,310 

 
 Depreciation and amortization expense 
  10,021,760  
  8,904,409 

 
 (Gain) Loss on sale of equipment 
  (10,263) 
  8,781 

 
 Interest income 
  (3,339) 
  (12,396)

 
 Amortization of debt issuance costs 
  15,235  
  18,914 

 
 Deferred income tax benefit 
  (2,211,988
) 
  (851,174)

 
 Operating lease expense 
  881,454  
  484,959 

 
   
     
    

 
 Change in operating assets and liabilities: 
     
    

 
 Accounts receivable 
  (7,124,570) 
  (9,909,431)

 
 Net investment in leases 
  44,896  
  79,332 

 
 Maintenance supplies 
  (119,642) 
  (81,273)

 
 Income tax receivable 
  524,881  
  (25,130)

 
 Prepaid expenses and other assets 
  3,698,122  
  2,602,440 

 
 Deposits 
  (47,543) 
  (116,284)

 
 Accounts payable 
  1,448,002  
  3,447,164 

 
 Accrued liabilities 
  465,655  
  (614,558)

 
 Operating lease liabilities 
  (743,650) 
  (436,363)

 
 Net cash flows provided by operating activities 
  1,983,296  
  1,633,024 

 
   
     
    

 
 Cash flows from investing activities: 
     
    

 
 Proceeds from sale of equipment 
  66,380  
  251,735 

 
 Purchases of property and equipment 
  (784,511) 
  (2,641,766)

 
 Net cash flows used in investing activities 
  (718,131) 
  (2,390,031)

 
   
     
    

 
 Cash flows from financing activities: 
     
    

 
 Proceeds from line of credit 
  —
  
  2,000,000 

 
 Repayments of line of credit 
  —
  
  (1,000,000)

 
 Repayments of long-term debt 
  (5,268,721) 
  (4,709,580)

 
 Repayments of finance lease obligations 
  (8,758) 
  (21,302)

 
 Repurchase of common stock 
  (517,884) 
  —
 

 
 Net cash flows used in financing activities 
  (5,795,363) 
  (3,730,882)

 
 Net change in cash 
  (4,530,198) 
  (4,487,889)

 
 Cash and cash equivalents, beginning of period 
  14,285,745  
  15,398,714 

 
 Cash and cash equivalents, end of period 
 $9,755,547  
 $10,910,825 

 
   
     
    

 
 Supplemental disclosure of cash flow information: 
     
    

 
 Cash paid for interest 
 $1,403,054  
 $1,558,106 

 
 Cash paid for taxes 
 $31,500  
 $—
 

 
   
     
    

 
 Noncash investing and financing activity: 
     
    

 
 Equipment and Services financed through long-term debt 
 $—
  
 $588,226 

 

 

The accompanying notes to the condensed consolidated
financial statements are an integral part of these statements.

 

 
4

 
 

 

 

PROFICIENT AUTO LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 — Nature of operations

 

AH Acquisition Corp. was formed
on June 13, 2023, pursuant to the laws of the State of Delaware to become a holding company for the consolidation of several operating
companies within the automobile transportation industry. Subsequently, on October 17, 2023, AH Acquisition Corp. legally changed
its name to Proficient Auto Logistics, Inc (“Proficient,” the “Company,” or “we”).

 
Proficient is an industry
leading specialized freight company focused on providing auto transportation and logistics services. The Company offers 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 range from large, global auto companies, to electric vehicle (“EV”) producers.
Additional customers include auto dealers, auto auctions, rental car companies, and auto leasing companies. Proficient operates an asset-based
Company Drivers service (“Company Drivers”) on behalf of the manufacturers. In addition, Proficient serves OEMs and other
customers through independent contractors and third-party carriers under an asset-light freight model (“Subhaulers”).

 

Note 2 — Summary of significant
accounting policies

 

Basis of Presentation —
The condensed consolidated financial statements and footnotes have been prepared in conformity with accounting principles generally accepted
in the United States of America (“U.S. GAAP”).

 

Principles of Consolidation — The
condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated. The condensed consolidated financial statements include the impact of push-down accounting
with acquisition related costs pushed down to the corresponding reporting entity.
 

Seasonality — In
our industry, results of operations generally follow a seasonal pattern. Volumes in the first quarter are typically lower due to less
consumer demand, customers reducing shipments following year end, and inclement winter weather. At the same time, operating expenses generally
increase, and tractor productivity of the Company's fleet and independent contractors decreases during the winter months due to decreased
fuel efficiency, increased cold-weather-related equipment maintenance and repairs, and increased insurance claims and costs attributed
to higher accident frequency from weather conditions. These factors typically lead to lower operating profitability, as compared to other
parts of the year. Additionally, beginning in the latter half of the third quarter and continuing into the fourth quarter, the Company
typically experiences surges in volumes from customers pushing to move units before year end. Additionally, macroeconomic trends and cyclical
changes in the auto haul industry, including imbalances in supply and demand, can override the seasonality faced in the industry.

 

 
5

 
 

 

 

Accounts Receivable — Accounts
receivable represents customer obligations due under normal trade terms. The Company reviews accounts receivable on a continuing basis
to determine if any receivables are potentially uncollectible. The Company writes off uncollectible receivables based on specifically
identified amounts determined to be uncollectible. Based on the information available, the Company recorded an allowance for credit losses
of approximately $1,079,746 and $826,740 at March 31, 2026 and December 31, 2025, respectively. Actual write-offs could differ from management’s
estimate.

 
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, 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 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 with the assessment date of November 30th, or upon an occurrence of an event or
changes in circumstances that indicate that the carrying value may not be recoverable.

 

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. As part of the Company’s impairment
analysis, fair value of a reporting unit is generally determined using the income and market approaches. The income approach requires
management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections,
anticipated future cash flows and discount rates. The market approach estimates fair value using comparable marketplace fair value data
from within a comparable industry grouping, as well as recent guideline transactions. The determination of the fair value of the reporting
units requires the Company to make significant estimates and assumptions with respect to the business and financial performance of the
Company’s reporting units. These estimates and assumptions primarily include, but are not limited to, the selection of appropriate
peer group companies, control premiums appropriate for acquisitions in the industry in which we compete, discount rates, terminal growth
rates, forecasts of revenue, operating income, working capital requirements, and capital expenditures.

 
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.

 

Intangible Assets,
Net — The Company’s intangible assets consist of acquired customer relationships and trade names. Intangible assets with finite
lives are amortized over their estimated useful lives using the straight-line method. Intangible assets historically have been acquired
through business combinations and recorded at their purchase date estimated fair value.

 

When determining the fair
value of acquired intangible assets, management makes significant estimates and assumptions, including, but not limited to, expected long-term
market growth, customer retention, future expected operating expenses, costs of capital and appropriate discount rates. Finite-lived intangible
assets are amortized using the straight-line method over their respective estimated useful lives. The Company amortizes its intangible
assets using the straight-line method over their estimated useful lives of 15 years for customer relationships, and 10 years for trade
names.  

 

 
6

 
 

 

 
Stock-Based Compensation — Restricted Stock Units (“RSUs”) have been granted to eligible employees and independent board members of the Company. The Company has recorded the compensation expense within stock-based compensation in the consolidated statement of operations. In accounting for stock-based compensation awards, the Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on the grant date fair value of those awards. Compensation expense for time-vesting awards is recognized ratably using the straight-line attribution method over the vesting period, which is considered to be the requisite service period. The estimated fair value of the RSUs was determined using the fair value of the Company’s common stock on the grant date. 

 

Fair Value Measurements — The Company
determines fair value based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, as determined by either the principal market or the most advantageous market in which
it transacts. The Company applies fair value accounting for all the financial assets and liabilities that are recognized or disclosed
at fair value in the consolidated financial statements on a recurring basis. The Company applies the following fair value hierarchy, which
prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest
level of input that is available and significant to the fair value measurement:

 

  
Level 1 – Observable inputs such as unadjusted, quoted prices
in active markets for identical assets or liabilities at the measurement date;

 

  
Level 2 – Observable inputs other than Level 1 prices, such
as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

  
Level 3 – Unobservable inputs that are supported by little
or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on the Company’s
own assumptions about current market conditions and require significant management judgment or estimation.

 

As of March 31, 2026 and December 31, 2025, the
carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and other current assets and
liabilities approximates fair value due to the short maturities of these instruments. Interest rates on borrowings under long-term debt
and finance lease obligations approximate the interest rates that would currently be available to the Company under similar terms, and
as such, carrying value approximates fair value. Certain assets, including goodwill, intangible assets and other long-lived assets, are
also subject to measurement at fair value on a nonrecurring basis (1) when they are acquired during a business combination as discussed
in Note 3, and (2) if they are deemed to be impaired as a result of an impairment review.

 

 
7

 
 

 

 

Segment Reporting — In
accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise for which separate
financial information is available and are regularly reviewed by the chief operating decision maker (“CODM”) in deciding how
to allocate resources and in assessing performance. The CODM primarily evaluates performance based on operational results from the services
provided by Company Drivers and Subhaulers. The Company’s CODM has been identified to collectively include the Company’s
Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer.

 

The CODM uses the Segment Operating profit or
loss measure to evaluate the profitability and operational efficiency of each segment, identify areas for improvement, and make informed
decisions about resource allocation, strategic planning, and performance targets. This measure of segment profit or loss is consistent
with the measurement principles used in the consolidated financial statements. The CODM reviews the segment Operating profit or loss on
a quarterly basis during executive meetings and uses this information to assess segment performance (analyzing margins, revenue changes,
and expense management), allocate resources (capital deployment and personnel allocation to executive strategic initiatives), strategic
planning (setting short and longer term goals for expansion), and performance targets (establishing key performance indicators, monitoring
progress, and revising plans).

 

Accounting Pronouncements
Not Yet Adopted – 

 

In September 2025, the FASB
issued ASU 2025-06, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40), which removes project development
stages when developing internal use software. The ASU is effective for fiscal years beginning after December 15, 2027, while early adoption
is permitted. The Company is currently assessing any changes to capitalization that may be required.

 

Note 3 — Business combinations

 

Acquisition of the Founding Companies

 
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 to found the Company, as applicable: (i) Delta Automotive Services, Inc. (which converted to Delta Automotive Services,
LLC in an F-reorganization on April 29, 2024), doing business as Delta Auto Transport (“Delta”), (ii) Deluxe Auto Carriers,
Inc. (“Deluxe”), (iii) Sierra Mountain Group, Inc. (“Sierra”), (iv) Proficient Auto Transport, Inc. (“Proficient
Transport”), and (v) Tribeca Automotive Inc. (“Tribeca” and, together with Delta, Deluxe, Sierra, and Proficient Transport,
the “Founding Companies”). The closing of the acquisitions occurred concurrently with the closing of the Company’s IPO
of its common stock on May 13, 2024. Each of Deluxe, Sierra, Proficient Transport and Tribeca converted into a limited liability company
on December 31, 2025.

 

The various agreements to acquire the Founding
Companies are briefly described below:

 

 
  
 ●
 The Company entered into a Membership Interest Purchase Agreement and a Contribution Agreement to acquire all of the outstanding equity of Delta for cash and shares of common stock. Delta’s main business is transporting vehicles for automobile manufacturers to their dealers from the manufacturing site, marine port or rail hub, but it also derives a non-insignificant portion of its revenue from delivering used cars from and to auction companies, leasing companies, automobile dealers, manufacturers and individuals, primarily in the Southeast and East Coast of the United States.

 
 

   ● The Company entered into a Stock Purchase Agreement and a Merger Agreement to acquire all of the outstanding equity of Deluxe for cash, shares of common stock and contingent consideration in the form of an earn-out provision. The earn-out provision which provided that the Company would make earn-out payments, fifty percent (50%) in cash and fifty percent (50%) in shares of common stock, to Deluxe under certain terms and conditions related to Deluxe’s EBITDA for the period commencing on January 1, 2024 and ending on December 31, 2024. No earnout payment was ultimately due under this agreement. Deluxe’s primary business is transporting vehicles for automobile manufacturers to their dealers from the manufacturing site, marine port or rail hub, but it also derives a non-insignificant portion of its revenue from delivering used cars from and to auction companies, leasing companies, automobile dealers, manufacturers and individuals, primarily in the West Coast and South of the United States.
 

 

 
8

 
 

 

 

 
  
 ●
 The Company entered into a Stock Purchase Agreement and a Contribution Agreement to acquire all of the outstanding equity of Proficient Transport for cash and shares of common stock. Proficient Transport’s primary business is transporting vehicles for automobile manufacturers to their dealers from the manufacturing site, marine port or rail hub, but it also derives a non-insignificant portion of its revenue from delivering used cars from and to auction companies, leasing companies, automobile dealers, manufacturers and individuals, primarily in the South, Southeast and East Coast of the United States.

 
 

 
  
 ●
 The Company entered into a Stock Purchase Agreement and a Merger Agreement to acquire all of the outstanding equity of Sierra for cash and shares of common stock. Sierra’s primary business is transporting vehicles for automobile manufacturers to their dealers from the manufacturing site, marine port or rail hub, but it also derives a non-insignificant portion of its revenue from delivering used cars from and to auction companies, leasing companies, automobile dealers, manufacturers and individuals, primarily in the West Coast and the Midwest of the United States.

 

  

 
  
 ●
 The Company entered into a Stock Purchase Agreement and a Contribution Agreement to acquire all of the outstanding equity of Tribeca for cash and shares of common stock. Tribeca’s primary business is transporting vehicles for automobile manufacturers to their dealers from the manufacturing site, marine port or rail hub, but it also derives a non-insignificant portion of its revenue from delivering used cars from and to auction companies, leasing companies, automobile dealers, manufacturers and individuals, primarily in the East Coast and Southeast of the United States.

 
 
The acquisitions were accounted
for using the acquisition method of accounting, in accordance with ASC 805, Business Combinations. Proficient Auto Logistics, Inc.
was the accounting acquirer. The tables below present the consideration transferred and the allocation of the total consideration to tangible
and intangible assets acquired and liabilities assumed from the acquisition of the Founding Companies based on the respective fair values
as of May 13, 2024.

  

The preliminary purchase price allocation was
based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period
(defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of
the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the tables below.
Adjustments were primarily made to property and equipment, operating lease right-of-use assets, goodwill, and deferred income taxes.

 

Total Acquisition Date Amounts Recognized as of May 12, 2025

 

 
   
 Delta  
 Deluxe  
 Proficient
 Transport  
 Sierra  
 Tribeca  
 Total 

 
 Purchase consideration 
    
    
    
    
    
   

 
 Cash consideration paid 
 $31,580,792  
 $35,597,237  
 $82,185,183  
 $17,442,396  
 $10,685,499  
 $177,491,107 

 
 Stock consideration issued 
  32,888,947  
  20,907,990  
  26,575,928  
  13,949,040  
  9,000,055  
  103,321,960 

 
 Contingent consideration – earn-out 
  -
  
  3,095,114  
  -
  
  -
  
  -
  
  3,095,114 

 
 Total purchase price 
 $64,469,739  
 $59,600,341  
 $108,761,111  
 $31,391,436  
 $19,685,554  
 $283,908,181 

 
   
     
     
     
     
     
    

 
 Allocation of purchase price 
     
     
     
     
     
    

 
 Fair value of net assets acquired 
 $36,911,739  
 $25,470,641  
 $50,428,659  
 $20,321,662  
 $9,255,115  
 $142,387,816 

 
 Goodwill 
 $27,558,000  
 $34,129,700  
 $58,332,452  
 $11,069,774  
 $10,430,439  
 $141,520,365 

 

 

 
9

 
 

 

 

The Company recognized intangible assets as follows:

 

    Useful Life  Delta   Deluxe   Proficient
 Transport   Sierra   Tribeca   Total 
 Customer relationships  15 years  $34,200,000   $16,700,000   $32,600,000   $16,800,000   $2,200,000   $102,500,000 
 Trade names  10 years   1,800,000    2,600,000    4,300,000    2,400,000    1,300,000    12,400,000 
 Total     $36,000,000   $19,300,000   $36,900,000   $19,200,000   $3,500,000   $114,900,000 
 

 

The Combinations resulted
in $141.5 million of goodwill consisting largely of the expected synergies from combining operations as well as the value of the
workforce. As a result of the types of acquisitions in which the Company engaged for the period April 1 to May 12, 2024, asset, stock
acquisitions, and stock acquisitions with a 338(h)(10) election made, the Company expects approximately $120.6 million of the total
goodwill reported will be tax deductible. During the measurement period, which is up to one year from the acquisition date, the Company
may record adjustments to the fair value of assets acquired and liabilities assumed with the corresponding offset to goodwill. At December
31, 2025, the values of the Founding Companies are complete. Any subsequent adjustments will now be recorded to earnings. The Company
recorded remeasurement adjustments of the Founding Companies as indicated in the respective entity table columns above.

 

On August 8, 2024, PAL Stock
Acquiror, Inc. and PAL Merger Sub, LLC, subsidiaries of the Company, executed an Agreement and Plan of Merger (the “Merger Agreement”)
with Auto Transport Group, LC, (“ATG,” which was converted to a limited liability company after closing) pursuant to which
the Company acquired all of the outstanding equity of ATG to expand the Company’s geographic presence and services offered (“ATG,”
which was converted to a limited liability company after closing). ATG provides vehicle transportation and shipping services in the Mountain
Western region. The transaction closed on August 15, 2024. The acquisition was accounted for using the acquisition method of accounting,
in accordance with ASC 805, Business Combinations. Proficient Auto Logistics, Inc. was the accounting acquirer, and the Company
elected to apply pushdown accounting. The table below presents the consideration transferred and the allocation of the total consideration
to tangible and intangible assets acquired and liabilities assumed from the acquisition of ATG based on the respective fair values as
of December 31, 2024 as well as the measurement period adjustments recorded as of August 16, 2025:

  

 
   
 December 31, 
 2024  
 Adjustment  
 August 16,
 2025 

 
 Purchase consideration 
    
    
   

 
 Cash consideration paid 
 $28,938,295  
  (500,000) 
 $28,438,295 

 
 Stock consideration issued 
  20,542,136  
  -
  
  20,542,136 

 
 Total purchase price 
 $49,480,431  
  (500,000) 
 $48,980,431 

 
   
     
     
    

 
 Allocation of purchase price 
     
     
    

 
 Fair value of net assets acquired 
 $24,886,502  
  218,438  
 $25,104,940 

 
 Goodwill 
 $24,593,929  
  (718,438) 
 $23,875,491 

 

 

The Company recognized intangible assets as follows:

 

    Useful Life  Auto
 Transport
 Group 
 Customer relationships  15 years  $22,200,000 
 Trade names  10 years   1,100,000 
 Total     $23,300,000 
 

 

 
10

 
 

 

 

The acquisition of ATG resulted in $23,875,491
of goodwill, consisting largely of the expected synergies from combining operations, as well as the value of the workforce. In this asset
acquisition, no portion of the total goodwill reported will be tax deductible. During the measurement period, which is up to one year
from the acquisition date, the Company may record adjustments to the fair value of assets acquired and liabilities assumed with the corresponding
offset to goodwill. At December 31, 2025, the value of ATG acquisition is complete. Any subsequent adjustments will now be recorded to
earnings.

 

Utah Truck & Trailer Acquisition

 

On November 1, 2024, PAL Stock Acquiror, Inc.
purchased Utah Truck & Trailer Repair, LLC, (“UTT”), a repair facility located at the ATG headquarters terminal in Ogden,
Utah. The Company purchased UTT for $4,515,004 in an all-cash transaction to expand the Company’s ability to maintain its revenue
generating fleet in the Western region of the country. In connection with this acquisition, the Company recognized $155,458 in net
tangible assets and $4,359,546 in goodwill consisting largely of the expected synergies from combining operations as well as the
value of the workforce. As a result of this asset acquisition, the Company expects all of the goodwill reported will be tax deductible.
At December 31, 2025, the value of UTT acquisition is complete. Any subsequent adjustments will now be recorded to earnings.

 

Brothers Auto Transport Acquisition

 
On April 1, 2025, PAL Stock
Acquiror, Inc. purchased all the outstanding equity of Brothers Auto Transport, LLC, (“Brothers”), which provides vehicle
transportation and shipping services in the Northeast and MidAtlantic regions of the country. Brothers was purchased for $12,448,011,
a combination of cash and stock. In connection with this acquisition, the Company recognized $6,507,610 in net tangible assets which includes
$6,338,899 in equipment notes, and $2,220,000 in intangible assets and $3,720,401 in goodwill consisting largely of the expected
synergies from combining operations as well as the value of the workforce. As a result of this acquisition, the Company expects all of
the goodwill reported will be tax deductible. At March 31, 2026, the value of Brothers acquisition is complete. Any subsequent adjustments
will now be recorded to earnings.

 

PVT Truck and Trailer Acquisition

 

On May 27, 2025, Proficient Repairs Services,
LLC purchased PVT Truck & Trailer Repair, LLC, (“PVT”), a repair facility located at the Brothers headquarters terminal
in Wind Gap, Pennsylvania. The Company purchased PVT for $1,032,995 in an all-cash transaction to expand the Company’s ability
to maintain its revenue generating fleet in the Northeast and MidAtlantic regions of the country. In connection with this acquisition,
the Company recognized $310,129 in net tangible assets and $722,866 in goodwill consisting largely of the expected synergies
from combining operations as well as the value of the workforce. As a result of this asset acquisition, the Company expects all of the
goodwill reported will be tax deductible. During the measurement period, which is up to one year from the acquisition date, the Company
may record adjustments to the fair value of assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the
conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

 

 
11

 
 

 

 

Note 4 — Goodwill

 

Goodwill is evaluated for
impairment annually as of November 30, or more frequently if an event occurs or circumstances change that would more likely than not reduce
the fair value of a reporting unit below its carrying value.

 

As of November 30, 2025, the
Company completed a quantitative impairment analysis for goodwill related to its Company Drivers and Subhauler reporting units during its
annual assessment. Based on this analysis, the Company recognized goodwill impairment of $25.6 million within its Subhauler reporting
unit, reflected in Goodwill & Intangibles Impairment within the Consolidated Statements of Operations. Downward revisions to forecasts
in the analysis was the primary reason for the impairment charge As of November 30, 2025, the Company believes the carrying value of the
Subhauler reporting unit approximates its fair value. As of November 30, 2025, the carrying value of goodwill within the Subhauler reporting
unit was $57.8 million.

 

As part of the Company’s
impairment analyses, fair value of the reporting units were determined using both the income and market approach. The income approach
requires management to estimate a number of factors, including the projected future operating results, economic projections, anticipated
future cash flow and discount rates. The market approach estimates fair value using comparable marketplace fair value data from within
a comparable industry grouping as well as recent guideline transactions.

 

The determination of the fair
value of the reporting unit requires the Company to make significant estimates and assumptions related to the business and financial performance
of the Company’s reporting units. These estimates and assumptions primarily include but are not limited to; the selection of appropriate
peer group companies, control premiums appropriate for acquisitions in the industry which the Company competes, discount rates, terminal
growth rates, forecasts of revenue, operating income, depreciation, amortization, working capital requirements and capital expenditures.
Future increases in discount rates or deterioration in the observable prices for guideline companies could result in further goodwill
impairment in subsequent periods.

 

The changes in the carrying amount of goodwill and allocation
to reportable segment are as follows:

 

 
   
 Company
 Drivers  
 Subhaulers  
 Consolidated 

 
 Balance – December 31, 2024 
 $87,434,455  
 $81,622,220  
 $169,056,675 

 
 Additions 
  3,391,969  
  884,032  
  4,276,001 

 
 Adjustments 
  (121,280) 
  820,011  
  698,731 

 
 Impairment 
  -
  
  (25,555,000) 
  (25,555,000)

 
 Balance – December 31, 2025 
 $90,705,144  
 $57,771,263  
 $148,476,407 

 
 Adjustments 
  142,176  
  25,090  
  167,266 

 
 Balance – March 31, 2026 
 $90,847,320  
 $57,796,353  
 $148,643,673 

 

 

Note 5 — Intangible assets, net

 

 
   
 March 31, 2026 

 
   
 Gross
 carrying
 amount  
 Accumulated
 amortization  
 Net
 carrying
 amount 

 
 Customer relationships 
 $124,577,000  
 $(15,368,079) 
 $109,208,921 

 
 Trade names 
  13,717,000  
  (2,535,783) 
  11,181,217 

 
 Total 
 $138,294,000  
 $(17,903,862) 
 $120,390,138 

 

 

 
   
 December 31, 2025 

 
   
 Gross
 carrying
 amount  
 Accumulated
 amortization
 and
 impairment  
 Net
 carrying
 amount 

 
 Customer relationships 
 $126,703,000  
 $(15,422,261) 
 $111,280,739 

 
 Trade names 
  13,717,000  
  (2,192,848) 
  11,524,152 

 
 Total 
 $140,420,000  
 $(17,615,109) 
 $122,804,891 

 

 

 
12

 
 

 

 

In the three months ended
March 31, 2026 and 2025, respectively, amortization expense was $2,071,831 and $2,078,330 for Customer relationships and $342,922
and $337,500 for Trade names. Amortization expense related to finite lived intangible assets is included in intangible amortization
expenses in the consolidated statement of operations.

 

As of March 31, 2026, the
expected amortization expense associated with the Company’s identifiable intangible assets with estimable useful lives over the
next five years was as follows:

 

 
 2026 
 $7,244,255 

 
 2027 
  9,658,998 

 
 2028 
  9,658,998 

 
 2029 
  9,658,998 

 
 2030 
  9,658,998 

 
 Thereafter 
  74,509,891 

 
 Total 
 $120,390,138 

 

 

As of March 31, 2026, the
weighted average amortization period for all intangible assets was 12.7 years, with 13.2 years for Customer relationships and 8.2 years
for Trade names.

 

Note 6 — Property and equipment

 

Property and equipment, at
cost, consist of the following as of:

 

 
   
 March 31, 2026  
 December 31, 2025 

 
 Land 
 $2,220,000  
 $2,220,000 

 
 Buildings and improvements 
  1,584,136  
  1,715,459 

 
 Furniture and equipment 
  304,535  
  306,705 

 
 Machinery and equipment 
  1,171,630  
  1,176,430 

 
 Software and computer equipment 
  1,191,500  
  1,156,458 

 
 Transportation equipment 
  153,344,723  
  152,775,053 

 
   
  159,816,524  
  159,350,105 

 
 Less accumulated amortization and depreciation 
  (50,809,076) 
  (43,500,044)

 
 Property and equipment, net 
 $109,007,448  
 $115,850,061 

 

 

The Company recorded a gain
on the disposal of equipment of $10,263 and loss on the disposal of equipment of $8,781 in the condensed consolidated statements of operations
for the three months ended March 31, 2026 and March 31, 2025, respectively.

 

Note 7 — Accrued liabilities

 

Accrued liabilities consist
of the following as of:

 

 
   
 March 31, 2026  
 December 31,
 2025 

 
 Claims, insurance and litigation reserves 
 $10,515,735  
 $10,758,083 

 
 Deferred leased to purchase payments 
  9,333,309  
  8,497,950 

 
 Salaries, wages and benefits 
  4,597,937  
  3,779,342 

 
 Accrued purchased transportation 
  4,022,148  
  3,351,017 

 
 Owner operator deposits 
  2,368,566  
  2,504,336 

 
 Escrow payments 
  994,013  
  994,012 

 
 Other accrued expenses 
  1,663,948  
  3,145,261 

 
 Accrued liabilities 
 $33,495,656  
 $33,030,001 

 

 

Note 8 — Income taxes 

 

The effective tax rates for
the three months ended March 31, 2026 and March 31, 2025 were 21.8% and 18.0%, respectively. The effective rates differ from the statutory
rates primarily due to state tax adjustments, state minimum taxes, and permanent differences such as disallowed stock-based compensation.

 

The Company has no uncertain
tax positions.

 

 
13

 
 

 

 

Note 9 — Line of credit

 
On November 8, 2024, Proficient
entered into a credit facility with a commercial bank that includes up to $25 million in term debt and up to another $20 million in a
revolving line of credit with a maturity date of November 8, 2029. The term debt portion bears interest at the Secured Overnight Financing
Rate (“SOFR”), plus 2.50%, with interest only payments for the first six months and the balance at the end of six months with
principal amortizing over the ensuing five years with 60 monthly payments. Drawn balances from the revolving line of credit bear interest
at SOFR, plus 2.20%, with all principal and interest to be repaid at the end of five years. The amount available to be drawn from the
line of credit at any point in time is based on a percentage of consolidated accounts receivable and inventory reported by Proficient
and its subsidiaries subject to certain conditions, including limitations on the aging of invoices over 90 days, and maximum customer
concentration. The amount available to be drawn under the line of credit was $20 million on March 31, 2026. The term debt includes financial
covenants that include maximum leverage (debt / adjusted EBITDA) and debt service coverage ratio (total principal and interest / adjusted
EBITDA). As of March 31, 2026, Proficient was in compliance with its debt covenants. Collateral for the facility includes Accounts Receivable
balances owed to the Company and truck maintenance inventory. Upon closing of the credit facility, 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. In April 2025, the
Company drew an additional $9 million from the available term debt to fund the cash portion of the acquisition of Brothers. At March 31,
2026, there were no outstanding borrowings on the revolving line of credit and the ending balance on the term debt was $20,765,768.

 

Note 10 — Long-term debt

 

    March 31,
  2026   December 31,
 2025 
 Equipment and vehicle notes payable to financial institutions, requiring monthly principal and interest payments totaling $1,595,370. The notes bear interest ranging from 3.47% to 10.8%, mature between April 2026 and November 2031, and are secured by the Company’s transportation equipment and vehicles  $48,572,608   $52,595,562 
            
 Term Debt to Pinnacle Bank, requiring principal payments of $415,255 per month commencing June 2025. The notes bear interest at SOFR (Currently 3.67%) +2.5% margin per month and mature Ap