10-K 1 us1k2009.txt US1 10K FOR PERIOD ENDING 12/31/2009 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K _X_ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2009. ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-8129 US 1 INDUSTRIES, INC. _________________________________ (Exact name of registrant as specified in its charter) Indiana 95-3585609 _______________________ __________________________________ (State of Incorporation) I.R.S. Employer Identification No. 336 W. US Hwy 30, Valparaiso, Indiana 46385 ________________________________________ _________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (219) 476-1300 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered __________________________ _________________________________________ Common Stock, no par value None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes___ No_X__ Indicate by check mark if the registrant is not required to file reports pursuant to section 13 or 15(d) of the Securities Act. Yes___ No_X__ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(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_X__ No___ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files. Yes___ No___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ___ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, an accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (check one): Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer ___ Smaller reporting company _X__ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes___ No_X__ The aggregate market value of the voting stock held by non-affiliates of the registrant was $12,569,392 (based on the per share closing price on June 30, 2009, the last business day of the Company's second fiscal quarter.) For purposes of the forgoing statement, directors, officers and 10% shareholders of the registrant have been assumed to be affiliates. On March 20, 2009, there were 14,243,409 shares of registrant's common stock outstanding. TABLE OF CONTENTS PART I............................................................4 Item 1. Business.......................................4 Item 1A. Risk Factors..................................7 Item 1B. Unresolved Staff Comments.....................10 Item 2. Properties.....................................10 Item 3. Legal Proceedings..............................11 Item 4. Reserved.......................................11 PART II...........................................................12 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities..............................12 Item 6. Selected Financial Data........................13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..14 Item 7A. Quantitative and Qualitative Diclosures about Market Risk.............................27 Item 8. Financial Statements and Supplementary Data...........................................27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.........49 Item 9A(T). Controls and Procedures.......................49 Item 9B. Other Information.............................50 PART III..........................................................52 Item 10. Directors, Executive Officers and Corporate Governance.....................................52 Item 11. Executive Compensation.........................53 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters............................55 Item 13. Certain Relationships, Related Transactions, and Director Independence......................56 Item 14. Principal Accountant Fees and Services.........58 PART IV...........................................................59 Item 15. Exhibits and Financial Statement Schedules.....59 SIGNATURES........................................................62 PART I Item 1. Business US 1 Industries, Inc., is a holding company that owns subsidiary operating companies, most of which are interstate trucking companies operating in 48 states. For descriptive purposes herein, US 1 Industries, Inc. may hereinafter be referred to, together with its subsidiaries, as "US 1" or the "Company" and we refer to the subsidiaries that operate the trucking business as the "Operating Subsidiaries." The Company's business consists principally of truckload operations, for which the Company, through its subsidiaries, obtains a significant percentage of its business through independent agents, who then arrange with independent truckers to haul the freight to the desired destinations. US 1 was incorporated in California under the name Transcon Incorporated on March 3, 1981. In March 1994, the Company changed its name to US 1 Industries, Inc. In February 1995, the Company was merged with an Indiana corporation for purposes of re-incorporation under the laws of the state of Indiana. The Company's subsidiaries consist of Antler Transport, LLC, AFT Transport, LLC, ARL, LLC (60% owned subsidiary), Blue and Grey Brokerage, Inc., Blue and Grey Transport, Inc., Bruin Motor Express, LLC, Cam Transport, Inc., Carolina National Logistics, Inc. (60% owned subsidiary), Carolina National Transportation, LLC, Five Star Transport, LLC, Freedom 1 LLC (formerly known as Freedom Logistics, LLC), Friendly Transport, LLC, Gulf Line Brokerage, Inc., Gulf Line Transportation, LLC, Harbor Bridge Intermodal Inc., Keystone Lines, Corp., Keystone Logistics, Inc., Liberty Transport, Inc., Patriot Logistics, Inc., Risk Insurance Services, LLC, TC Services, Inc., Thunderbird Logistics, LLC, Thunderbird Motor Express, LLC, Transport Leasing, Inc., Unity Logistics Services Inc., and US1 Logistics, LLC (60% owned subsidiary). Most of these subsidiaries operate under authority granted by the United States Department of Transportation (the "DOT") and various state agencies. The Company's operating subsidiaries generally maintain separate offices, have their own management teams, officers and directors, and are run independently of the parent and each other. Operations The Operating Subsidiaries carry virtually all forms of freight transported by truck, including specialized trucking services such as containerized, refrigerated, and flatbed transportation. The Operating Subsidiaries conduct primarily a non-asset based business, contracting with independent truckers who generally own the trucks they drive and independent agents who own the terminals from which they operate. The Operating Subsidiaries pay the independent truckers and agents a percentage of the revenue received from customers for the transportation of goods. The expenses related to the operation of the trucks are the responsibility of the independent contractors, and the expenses related to the operation of the terminals are the responsibility of the agents. Certain Operating Subsidiaries also subcontract ("broker") freight loads to other unaffiliated transportation companies. Consequently, short-term fluctuations in operating activity have less of an impact on the Company's net income than they have on the net income of truck transportation companies that bear substantially all of the fixed cost associated with the ownership of the trucks. Like other truck transportation companies, however, US 1's revenues are affected by competition and the state of the economy and its impact on the customers and the collections of the Company. Marketing and Customers The Operating Subsidiaries conduct the majority of this business through a network of independent agents who are in regular contact with shippers at the local level. The agents have facilities and personnel to monitor and coordinate shipments and respond to shippers' needs in a timely manner. These agents are typically paid a commission of 6% to 13% of the Company's revenues from the agents' trucking operations. During 2009, Operating Subsidiaries, utilized the services of approximately 168 agents. No agent has accounted for more than 10% of revenue during 2009, 2008 or 2007. The Company, through its subsidiaries, shipped freight for approximately 1,000 customers in 2009, none of which accounted for more than 10% of the Company's revenues. Independent Contractors The independent contractors (persons who own the trucks) used by the Company, through its subsidiaries, enter into standard equipment operating agreements. The agreements provide that independent contractors must bear most of the costs of operations, including drivers' compensation, maintenance costs, fuel costs, collision insurance, taxes related to the ownership and operation of the vehicle, licenses, and permits. These independent contractors are paid 71% to 78% of the charges billed to the customer. The Company, through its subsidiaries, requires independent contractors to maintain their equipment to standards established by the DOT, and the drivers are subject to qualification and training procedures established by the DOT. The Operating Subsidiaries are required to conduct random drug testing, enforce hours of service requirements, and monitor maintenance of vehicles. Employees At December 31, 2009, the Operating Subsidiaries had approximately 89 full-time employees. The Company's employees are not covered by a collective bargaining agreement. Competition The trucking industry is highly competitive. The Operating Subsidiaries compete for customers primarily with other nationwide carriers, some of which have company-owned equipment and company drivers, and many of which have greater volume and financial resources. The Operating Subsidiaries also compete with private carriage conducted by existing and potential customers. In addition, the Operating Subsidiaries compete with other modes of transportation including rail. The Company also faces competition for the services of independent trucking contractors and agents. Agents routinely do business with a number of carriers on an ongoing basis. The Company has attempted to develop a strong sales agent network by maintaining a policy of prompt payment for services rendered and providing advanced computer systems. Competition is based on several factors such as cost, timely availability of equipment, and quality of service. Insurance The Operating Companies purchase auto liability insurance coverage of up to $1.0 million per occurrence with a $5,000 to $50,000 deductible for the operation of the trucks. They also buy cargo insurance coverage of up to $250,000 per occurrence with up to a $50,000 deductible. The companies also purchase commercial general liability insurance with a $2 million combined single limit and no deductible. The current insurance market is volatile with significant rate changes that could adversely affect the cost and availability of coverage. In addition, the insurance coverage that the companies purchase may, given the recent trend toward exorbitant jury verdicts, not be sufficient to cover losses experienced by the companies. One of the insurance providers to the Operating Subsidiaries, American Inter-Fidelity Exchange (AIFE), is managed by Lex Venditti, a director of the Company. One of the Company's subsidiaries has an investment of $0.1 million in AIFE. AIFE provides liability and cargo insurance to several subsidiaries of the Company as well as other entities, some of which are related to the Company by common ownership. For the years ended December 31, 2009, 2008 and 2007, cash paid to AIFE for insurance premiums and deductibles was approximately $3.9 million, $4.9 million, and $6.1 million, respectively. Neither Operating Subsidiaries exercise control over the operations of AIFE. As a result, the Company recorded its investment in AIFE under the cost method of accounting for each of the three years ended December 31, 2009, 2008, and 2007. Under the cost method, the investment in AIFE is reflected at its original amount and income is recognized only to the extent of dividends paid by AIFE. There were no dividends declared by AIFE for the years ended December 31, 2009, 2008 and 2007. For the years ended December 31, 2009, 2008 and 2007, a subsidiary insurance agency of the Company, recorded commission income of $0.7 million, $0.7 million and $0.4 million, respectively, related to premiums with AIFE. This commission income is reflected as a reduction of insurance expense in the consolidated financial statements of the Company for the years ended December 31, 2009, 2008 and 2007, respectively. If AIFE incurs a net loss, the loss may be allocated to the various policyholders based on each policyholder's premium as a percentage of the total premiums of AIFE for the related period. There was no such loss assessment for any of the three years ended December 31, 2009, 2008, and 2007. In addition, Michael Kibler, the Chief Executive Officer and a director of the Company, Harold Antonson, the Chief Financial Officer and a director of the Company, and Mr. Venditti are the sole shareholders of American Inter- Fidelity Corporation (AIFC), which serves as the attorney in fact of AIFE. AIFC is entitled to receive a management fee from AIFE. AIFE incurred management fees of approximately $0.5 million for each of the years ended December 31, 2009, 2008, and 2007, respectively. These management fees are available to be paid as dividends to these officers and directors of the Company. Independent Contractor Status From time to time, various legislative or regulatory proposals are introduced at the federal or state levels to change the status of independent contractors' classification to employees for either employment tax purposes (withholding, social security, Medicare and unemployment taxes) or other benefit purposes. Currently, most individuals are classified as employees or independent contractors for employment tax purposes based on 20 "common-law" factors rather than any definition in the Internal Revenue Code or the regulations promulgated there under. In addition, under Section 530 of the Revenue Act of 1978, taxpayers that meet certain criteria may treat similarly situated workers as employees, if they have received a ruling from the Internal Revenue Service or a court decision affirming their treatment, or if they are following a long-standing recognized practice. Although management is unaware of any proposals currently pending to change the employee/independent contractor classification, the costs associated with potential changes, if any, in the employee/independent contractor classification could adversely affect the Company's results of operations if the Company were unable to reflect them in its fee arrangements with the independent contractors and agents or in the prices charged to its customers. Regulation The Operating Subsidiaries are common and contract motor carrier regulated by the DOT and various state agencies. Among other things, this regulation imposes requirements on the Company, and its subsidiaries, with regard to the agreements that it has with owner-operators and the terms of payment to them. The Company's independent contractor drivers also must comply with the safety and fitness regulations promulgated by the DOT, including those relating to drug and alcohol testing and hours of service. The Company and its subsidiaries are subject to various federal, state, and local environmental laws and regulations, implemented principally by the Environmental Protection Agency (EPA) and similar state regulatory agencies, governing the management of hazardous wastes, other discharge of pollutants into the air and surface and underground waters, and the disposal of certain substances. Management believes that its operations are in compliance with current laws and regulations and does not know of any existing condition that would cause compliance with applicable environmental regulations to have a material effect on the Company's earnings or competitive position. Environmental Regulation Neither the Company nor its subsidiaries have any known environmental violations against it. Item 1A. Risk Factors The Company makes forward-looking statements in this document and in other materials it files with the SEC or otherwise makes public. In addition, senior management of the Company might make forward-looking statements orally to analysts, investors, the media and others. Statements concerning the Company's future operations, prospects, strategies, financial condition, future economic performance (including growth and earnings) and demand for our services, and other statements of the Company's plans, beliefs, or expectations, are forward-looking statements. In some cases these statements are identifiable through the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "should," "will," "would" and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements the Company makes are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. These factors include, among others, those set forth in the following paragraphs and in the other documents that the Company files with the SEC. The Company expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Factors That May Affect Future Results and/or Forward-Looking Statements Insurance Limits. The Operating Subsidiaries currently purchases insurance coverage for commercial trucking claims with limits of up to $1.0 million per occurrence. Liability associated with accidents in the trucking industry is severe (sometimes in excess of $1.0 million) and occurrences are unpredictable. If a claim for an amount in excess of $1.0 million was successful, it could have a material adverse effect on US 1 and its subsidiaries, including its results of operations and financial condition. Increased severity or frequency of accidents and other claims. Potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. While the Company's subsidiaries generally retain deductibles ranging from $5,000 to $50,000 per occurrence, a material increase in the frequency or severity of accidents or cargo claims, or the unfavorable development of existing claims, could have a material adverse effect through increased insurance costs on US 1 and its subsidiaries, which would adversely affect its results of operations and financial condition. Dependence on third-party insurance companies. The cost of insurance coverage for commercial trucking varies dramatically, but is expensive. Further, the ability of US 1 to purchase coverage for losses in excess of $1.0 million is very limited. AIFE is managed by Lex Venditti, a director of the Company. AIFE, in turn, retains some of the risk and reinsures the remainder. Dependence on independent commission agents. As noted above in Item 1, "Business," the Operating Subsidiaries market their services primarily through independent commission agents. Currently, they have a network of approximately 168 agents. During 2009, 56 of these agents generated revenue for US 1 of at least $1.0 million, and no one agent generated more than $10.0 million of US 1's total revenue. The Operating Subsidiaries compete with motor carriers and other third parties for the services of these independent agents. The Operating Subsidiaries contract with these agents typically are terminable upon 30-days notice by either party and do not restrict the ability of a former agent to compete with US 1 following a termination. The loss of some of the agents or a significant decrease in volume generated by these agents could have a materially adverse effect on US 1, including its results of operations and revenue. Dependence on third-party owner operators. As noted above in Item 1, "Business," the Operating Subsidiaries do not generally own trucks and rely on owner/operators who operate as independent contractors and unrelated trucking companies to transport freight for its customers. Operating Subsidiaries compete with other motor carriers and third parties for the services of owner/operators. Almost all of the freight hauled by the Company, through its subsidiaries, is by these owner/operators. A significant decrease in available capacity provided by either of these parties could have a material adverse effect on US 1, including its results of operations and revenue. Dependence on key personnel. The Company is dependent on the services of its officers, particularly the officers of its subsidiaries. All of these officers are free to leave the Company and start competing operations. None have agreed to any covenant not to compete. Given the nature of the relationship with the agents and owner/operators, as described above, it would be relatively easy for the Company to lose a substantial amount of business if one or more of these key people left and set up a competing operation. This in turn could have a material adverse effect on the Company, including its results of operations and revenue. In October 2006, the Company and the general manager of Patriot Logistics, Inc., a wholly owned subsidiary of the Company, entered into an agreement under which the Company granted the individual the option to purchase 100% of the outstanding stock of Patriot for a purchase price equal to the book value of Patriot. This option terminates in October 2010 or upon a change in control of the Company. The option is immediately exercisable and may be exercised in whole (not in part) at anytime prior to October 2010. The fair value of this option was determined to be deminimis. Patriot Logistics' revenue was $26.4 million for the year ended December 31, 2009 and $33.1 million for the year ended December 31, 2008. Patriot Logistics had pre-tax income of approximately $0.03 million and $0.6 million for the years ended December 31, 2009 and 2008, respectively. Disruptions or failures in the Company's computer systems. The Company's information technology systems used in connection with its operations are located in South Bend, IN and Valparaiso, IN. US 1 and its subsidiaries rely, in the regular course of business, on the proper operation of its information technology systems to link its network of customers, agents and owner operators. These systems in turn are dependent on operation of the Internet. Any significant disruption or failure of these systems could significantly disrupt the Company and its subsidiaries' operations and impose significant costs on the Company. Status of Owner/Operators. From time to time, various legislative or regulatory proposals are introduced at the federal or state levels to change the status of owner/operators' classification to employees (from independent contractors) for either employment tax purposes (withholding, social security, Medicare and unemployment taxes) or other benefit purposes. Currently, most individuals are classified as employees or independent contractors for employment tax purposes based on 20 "common-law" factors rather than any definition found in the Internal Revenue Code or the regulations there under. In addition, under Section 530 of the Revenue Act of 1978, taxpayers that meet certain criteria may treat similarly situated workers as employees, if they have received a ruling from the Internal Revenue Service or a court decision affirming their treatment, or if they are following a long-standing recognized practice. The Operating Subsidiaries treat their owner/operators as independent contractors. The classification of owner/operators as independent contractors does require significant analysis of the facts relating to their service to the Operating Subsidiaries. Although management is unaware of any proposals currently pending to change the employee/independent contractor classification, the costs associated with potential changes, if any, in the employee/independent contractor classification could adversely affect the Company's results of operations if the Company were unable to reflect them in its fee arrangements with the owner/operators and agents or in the prices charged to its customers. Credit Facility and Economic Financial Environment. Our credit facility with US Bank contains a number of financial covenants that require us to meet certain financial ratios and tests. If we fail to comply with the obligations in the credit agreement, we would be in default under the credit agreement. If an event of default is not cured or waived, it could result in acceleration of any outstanding indebtedness under our credit agreement, which could have a material adverse effect on our business. Additionally, our credit facility expires in October 2010. If we are unable to extend the credit facility with US Bank or obtain a new credit facility with a new lender, this inability to obtain financing could have a material adverse effect on our business. The recent global financial crisis affecting the banking system and financial markets and the going concern threats to investment banks and other financial institutions have resulted in a tightening in the credit markets. There could be a number of follow-on effects from the global financial crisis and resulting economic slowdown on our business, including payment delays by customers and/or customer insolvencies, delays in accessing our current credit facilities or obtaining new credit facilities on terms we deem commercially reasonable, and an inability of US Bank to fulfill their funding obligations. Any further deterioration of economic conditions would likely exacerbate these adverse effects and could result in a wide-ranging and prolonged impact on general business conditions, thereby negatively impacting our operations, financial results and/or liquidity. As of December 31, 2009, financial covenants included: maximum total debt service coverage ratio and prohibition of additional indebtedness without prior authorization. At December 31, 2009, the Company, and its subsidiaries, was non-compliant with these covenants. The Company's lender has issued a waiver of these violations and the Company anticipates that it will meet its covenant requirements in the future. At December 31, 2008, the Company, and its subsidiaries were in compliance with these financial covenants. Stock Price. The Company's stock price is affected by a number of factors, including quarterly variations in revenue and operating income, low trading volume, general economic and market conditions. As a result, the Company's common stock may experience significant fluctuations in market price. Item 1B. Unresolved Staff Comments None. Item 2. Properties The Company leases its administrative offices of approximately 7,000 square feet from an independent owner at 336 W. US Hwy 30, Valparaiso, Indiana for $7,500 monthly. Patriot Logistics, Inc. leases a truck terminal in Fort Smith, AR of approximately 13,250 square feet on a month-to-month basis for $2,618 from Fort Smith Property, LLC which is owned by Michael E. Kibler, the President and Chief Executive Officer and a director of the Company, Harold E. Antonson, the Chief Financial Officer, Treasurer and a director of the Company, and Edwis Selph Sr., the terminal manager of Patriot Logistics, Inc. In addition, the Company's subsidiaries lease office space and land in several locations throughout the United States, as summarized below:

Management believes that the Company's leased properties are adequate for its current needs and can be retained or replaced at acceptable cost. Item 3. Legal Proceedings The Company and its subsidiaries are involved in certain litigation matters in the normal course of its business. Management intends to vigorously defend these cases. In the opinion of management, any negative outcome from litigation now pending will not have a material adverse affect on the consolidated financial statements of the Company. Item 4. Reserved Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Shares of Common Stock of the Company are listed and traded on the NASD Electronic "bulletin board market" under the symbol "USOO." As of December 31, 2009, there were approximately 3,000 holders of record of the Company's Common Stock. The Company has not paid and, for the foreseeable future, does not anticipate paying any cash dividends on its Common Stock. The Company's current credit agreement prohibits the payment of dividends. Equity Compensation Plan Informaiton

(1) On December 18, 2008, in conjunction with the acquisition of ARL, the Company granted stock options to the CEO and CFO of ARL. The Company does not have any other equity compensation plans or arrangements. (2) The Company does not currently have any active equity compensation plans or arrangements. During 2007, the Company purchased 595,248 shares of its common stock for $952,513. These shares are reflected as treasury stock in the Company's balance sheet and statement of shareholders' equity as of and for the year ended December 31, 2008 and 2009. The following table sets forth for the periods indicated the high and low bid prices per share of the Common Stock as reported from quotations provided by North American Quotations and reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not represent actual transactions.

Item 6. Selected Financial Data The selected consolidated financial data presented below have been derived from the Company's consolidated financial statements. The consolidated financial statements for the years ended December 31, 2009, 2008, and 2007 have been audited by the Company's registered independent certified public accountants, whose report on such consolidated financial statements are included herein under Item 8. The information set forth below should be read in conjunction with the consolidated financial statements and notes thereto under Item 8 and "Management's Discussion and

(A)- In the fourth quarter of 2009 the Company recorded a non-cash charge of $3.0 million for the impairment of goodwill related to ARL. The test as of December 31, 2009 indicated that the book value of ARL exceeded the fair value of the business. (B)- On January 1, 2009, we adopted ASC 810 - "Consolidation". As required by ASC 810 -"Consolidation", prior period results have been recast to conform with the new pronouncement. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Purchased transportation represents the amount an independent contractor is paid to haul freight and is primarily based on a contractually agreed-upon percentage of revenue generated by the haul for truck capacity provided by independent contractors. Because the Operating Subsidiaries generally do not own their own trucks, purchased transportation is the largest component of the Company's operating expenses and increases or decreases in proportion to the revenue generated through independent contractors. Commissions to agents and brokers are similarly based on contractually agreed-upon percentages of revenue. A majority of the Company's insurance expense, through its subsidiaries, is based on a percentage of revenue and, as a result, will increase or decrease with the Company's revenue. Potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. A material increase in the frequency or severity of accidents or the unfavorable development of existing claims could adversely affect the Company's operating income. Historically salaries, wages, fringe benefits, and other operating expenses had been principally non-variable expenses and remained relatively fixed with slight changes in relationship to revenue. However, since the Company, through its subsidiaries, has added certain operations, which utilize employees rather than independent agents, these non-variable expenses may not be directly comparable. The following table set forth the percentage relationships of expense items to operating revenue for the periods indicated:

2009 Compared to 2008 The Company's operating revenues for the 2009 fiscal year were $180 million, an increase of $7.0 million, or 4.1%, from operating revenue for the 2008 fiscal year. The increase is largely attributable to the acquisition of ARL in December 2008. The Operating Subsidiaries experienced a decrease in load volume from various larger customers, which we believe is attributable to the general slowing economy. This was offset by an increase in volume from the ARL acquisition. Without the volume of ARL, the Company incurred approximately a 25% decline in revenue on a year over year basis. However, in December 2008, the Company acquired 60% of ARL Transport, which generated revenues of $50.0 million in 2009. This, in turn, offset the decline in sales. Purchased transportation and agent commission expense generally increase or decrease in proportion to the revenue generated through independent contractors. Many agents negotiate a combined percentage payable for purchased transportation and commission. Purchased transportation and commissions in total remained consistent at 83.3% of operating revenue in both fiscal 2009 and 2008. Purchased transportation decreased by 2.0% of operating revenue in fiscal 2009 compared to the same period of time in 2008. This decrease was offset by in increase in commissions of 2.0% of operating revenues for fiscal 2009 compared to fiscal 2008. The mix between the amounts of purchased transportation paid versus commissions paid may vary slightly based on agent negotiations with independent owner operators. In addition, pay on certain types of revenue may be higher than for other types of revenue. Thus a change in the mix of revenue can cause some variation in the percentage paid out for purchased transportation and commission. However, in total, commissions and purchased transportation would typically be expected to remain relatively consistent as a percentage of revenue. One of the Company's subsidiaries uses employees to staff the terminals rather than independent sales agents. As a result, this operation has higher operating expenses relative to revenue than the Company's other operations. This operation accounted for approximately 15% and 19% of the Company's consolidated operating revenues in 2009 and 2008, respectively. Salaries expense is not directly variable with revenue. However, salaries expense increased in dollar amount from $11.2 million for the fiscal year 2008 to $12.8 million for fiscal year 2009. The increase in salaries expense is attributable to a $2.1 million increase due to the acquisition of ARL in December 2008 offset by subsidiaries of the Company that have closed offices and restructured the work loads in order to cut costs. Salaries expense is partially fixed and, therefore, as a percentage of revenue, will increase as revenue decreases. Insurance and claims decreased in 2009 to 2.7% of operating revenue compared to 2.9% of operating revenue for 2008. A majority of the Company's insurance expense is based on a percentage of revenue and, as a result, will tend to increase or decrease on a consolidated basis with the Company's revenue. Potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. A material increase in the frequency or severity of accidents or the unfavorable development of existing claims could adversely affect the Company's operating income. The 0.2% decrease in the percentage of operating revenue represented by insurance and claims between 2009 and 2008 can be attributed to favorable claims experienced for the fiscal year 2009. The Company obtains some of its auto liability and cargo insurance from AIFE, an affiliated entity (see Note 6 to consolidated financial statements). Other operating expenses increased to 7.7% as a percentage of operating revenue for the fiscal year 2009 compared to 4.9% as a percentage of operating revenue for fiscal year 2008. While not all operating expenses are directly variable with revenues, the increased revenue can directly impact several components of operating expenses. In the fourth quarter of 2009, the Company recorded a non-cash charge of $3.0 million for the impairment of goodwill related to ARL. The test as of December 31, 2009 indicated that the book value of ARL exceeded the fair value of the business. The impairment increased operating expenses by 1.7% of operating revenue. The Company incurred additional rent expense in 2009 due to the ARL acquisition of approximately $0.6 million and the start up of a new operation under its Patriot division of $0.4 million. Based on the changes in revenue and expenses discussed above, operating income decreased $5.5 million from 2008 to 2009. For the year ended December 31, 2009, the Company had an operating loss of (0.8%) of operating revenues compared to income of 2.4% of operating revenues for 2008. Interest expense increased $0.5 million from $0.2 million for the year ended December 31, 2008 to $0.7 million for the year ended December 31, 2009. This increase in interest expense is primarily attributable to an increase in outstanding borrowings related to the ARL acquisition in December 2008. Under the amended line of credit agreement, the interest rate is based upon certain financial covenants and may range from "One Month LIBOR" plus 3.35% to "One Month LIBOR" plus 4.35%. As of December 31, 2009 the interest rate on this line of credit was 4.60%. Other income includes income from rental property, storage and equipment usage fees. Other income remained consistent at 0.1% of operating revenues for the years ended December 31, 2009 and 2008. Federal and state income tax expense increased $0.7 million from ($0.1 million) for the year ended December 31, 2008 to $0.6 million for the year ended December 31, 2009. The Company had carry-forwards of approximately $1.2 million as of December 31, 2009. The Company's effective tax rate differed from the statutory rate primarily due to the impact of state income taxes and the non-deductible goodwill impairment in 2009 and a reduction in the valuation reserve related to net operating loss carryforwards in 2008. Assuming that the Company's business returns to historical levels of performance in 2010, the Company will be required to commence paying Federal income tax. The Company also allocated $0.3 million and $1.3 million of income to the noncontrolling interest holders relating to their portion of its subsidiaries', ARL Transport, LLC, Carolina National Transportation, LLC and US 1 Logistics, LLC, net income for the years ended December 31, 2009 and 2008, respectively. ARL Transport, LLC, Carolina National Transportation, LLC and US 1 Logistics LLC are each 60% owned subsidiaries of the Company. As a result of the factors outlined above, net loss attributed to US 1 Industries, Inc. in 2009 was ($2.6 million) compared to net income attributed to US 1 Industries, Inc. of $3.1 million in 2008. 2008 Compared to 2007 The Company's operating revenues for the 2008 fiscal year were $173 million, a decrease of $12.0 million, or 6.5%, from operating revenue for the 2007 fiscal year. The decrease is attributable to the closing of an office at one of the Operating Subsidiaries and a decrease in load volume from various larger customers, which we believe is attributable to the general slowing economy. Purchased transportation and commission expense generally increase or decrease in proportion to the revenue generated through independent contractors. Many agents negotiate a combined percentage payable for purchased transportation and commission. Purchased transportation and commissions in total averaged 83.3% of operating revenue in fiscal 2008 versus 83.8% of operating revenue in fiscal 2007. This is a combined decrease of 0.5% of operating revenue. Purchased transportation decreased 1.1% of operating revenue in fiscal 2008 compared to the same period of time in 2007. This decrease was somewhat offset by in increase in commissions of 0.6% of operating revenues for fiscal 2008 compared to fiscal 2007. The mix between the amounts of purchased transportation paid versus commissions paid may vary slightly based on agent negotiations with independent owner operators. In addition, pay on certain types of revenue may be higher than for other types of revenue. Thus a change in the mix of revenue can cause some variation in the percent paid out for purchased transportation and commission. However, in total, commissions and purchased transportation would typically be expected to remain relatively consistent as a percentage of revenue. A factor contributing to the decrease in purchased transportation was the closing of one of the Company's offices that paid out purchased transportation at a higher rate than is customary. The increase in commission as a percentage of operating revenue is partially due to commissions paid to a particular manager for increased profitability in 2008. One of the Company's subsidiaries uses employees to staff the terminals rather than independent sales agents. As a result, this operation has higher operating expenses relative to revenue than our other operations. This operation accounted for approximately 19% and 21% of the Company's consolidated operating revenues in 2008 and 2007, respectively. Salaries expense is not directly variable with revenue. However, salaries expense decreased in dollar amount from $11.3 million for the fiscal year 2007 to $11.2 million for fiscal year 2008. The decrease in salaries expense is attributable to subsidiaries of the Company that have closed offices and restructured the work loads in order to cut costs. Insurance and claims decreased in 2008 to 2.9% of operating revenue compared to 3.2% of operating revenue for 2007. A majority of the Company's insurance expense is based on a percentage of revenue and, as a result, will tend to increase or decrease on a consolidated basis with the Company's revenue. Potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. A material increase in the frequency or severity of accidents or the unfavorable development of existing claims could adversely affect the Company's operating income. The 0.3% decrease in the percentage of operating revenue represented by insurance and claims between 2008 and 2007 can be attributed to favorable claims experience for the fiscal year 2008. The Company's subsidiaries obtain some of their auto liability and cargo insurance from AIFE, an affiliated entity (see Note 6 to consolidated financial statements). Other operating expenses increased to 4.9% as a percentage of operating revenue for the fiscal year 2008 compared to 4.2% as a percentage of operating revenue for fiscal year 2007. While not all operating expenses are directly variable with revenues, the decreased revenue can directly impact several components of operating expenses. During 2008, one of the Company's subsidiaries closed several offices. As a result of closing these offices, the subsidiary experienced a decrease in rent expense of approximately $0.3 million, and operating supplies and expenses, excluding rent, of approximately $0.2 million. However, the Company incurred additional operating expenses in 2008 in an effort to become Sarbanes Oxley compliant. While some components of operating expenses did decrease, such decreases were more than offset by increases in bad debt expense of approximately $1.1 million, Company wide. The increased bad debt expense is largely due to the closing of certain subsidiaries of the Company that carried accounts receivable the Company deemed uncollectable. Based on the changes in revenue and expenses discussed above, operating income decreased $0.8 million from 2007 to 2008. For the year ended December 31, 2008, the Company, through its subsidiaries, had operating income of 2.4% of operating revenues compared to 2.7% of operating revenues for 2007. Interest expense decreased $0.6 million from $0.8 million for the year ended December 31, 2007 to $0.2 million for the year ended December 31, 2008. This decrease in interest expense is primarily attributable to a decrease in interest rates on the Company's outstanding borrowings and the conversion of approximately $4 million of shareholder debt into common stock during September 2007. Prior to the December 18, 2008 loan amendment, the interest rate was based upon certain financial covenants and ranged from prime to prime less .75%. Under the amended line of credit agreement, the interest rate is based upon certain financial covenants and may range from "One Month LIBOR" plus 3.35% to "One Month LIBOR" plus 4.35%. As of December 31, 2008 the interest rate on this line of credit was 4.28%. Other income includes income from rental property, storage and equipment usage fees. Other income remained consistent at 0.1% of operating revenues for the years ended December 31, 2008 and 2007. Federal and state income tax expense decreased $0.5 million from $0.4 million for the year ended December 31, 2007 to ($0.1 million) for the year ended December 31, 2008. The Company had net operating loss carry-forwards of approximately $1.6 million as of December 31, 2008. The Company's effective tax rate differed from the statutory rate primarily due to a reduction in the valuation reserve. The Company also allocated $1.3 million and $1.2 million of income to the noncontrolling interest holders relating to their portion of its subsidiaries', Carolina National Transportation, LLC and US 1 Logistics, LLC, net income for the years ended December 31, 2008 and 2007, respectively. Carolina National Transportation, LLC and US 1 Logistics LLC are each 60% owned subsidiaries of the Company. As a result of the factors outlined above, net income attributed to US1 Industries, Inc. in 2008 was $3.1 million compared with $2.9 million in 2007. Critical Accounting Policies and Estimates US 1's financial statements reflect the selection and application of accounting policies, which require management to make significant estimates and assumptions. The Company believes that the evaluation of allowance for doubtful accounts, the estimates related to contingencies and litigation are the more critical accounting policies as they involve more significant estimates and assumptions. Preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues, and expenses and related contingent liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenues, bad debts, income taxes, valuation of goodwill and intangible assets, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company records an allowance for doubtful accounts based on (1) specifically identified amounts that it believes to be un-collectable and (2) an additional allowance based on certain percentages of its aged receivables, which are determined based on historical collection experience and (3) our assessment of the general financial conditions affecting our customer base. At December 31, 2009, the allowance for doubtful accounts was $1.1 million or approximately 4.1% of total trade accounts receivable. If actual collections experience changes, revisions to the Company's allowance may be required. After reasonable attempts to collect a receivable have failed, the receivable is written off against the allowance. In addition, US 1 reviews the components of other receivables, consisting primarily of advances to drivers and agents, and writes off specifically identified amounts that it believes to be un- collectable. Revenue for freight is recognized upon delivery. The Company accounts for its revenue on a gross basis in accordance with Emerging Issues Task Force ("EITF") 99-19, "Reporting Revenues Gross as a Principal Versus Net as an Agent", which was primarily codified into ASC 605. Amounts payable for purchased transportation, commissions and insurance are accrued when incurred. The Company, and its subsidiaries, follow guidance of this standard and record revenues at the gross amount billed to customers because the Company (1) determined it operates as the primary obligor, (2) typically is responsible for damages to goods and (3) bears the credit risk. The Company and its subsidiaries are involved in litigation in the normal course of its business. Management intends to vigorously defend these cases. In the opinion of management, any negative outcome from litigation now pending will not have a material adverse affect on the consolidated financial statements of the Company. Management evaluates the likelihood of a potential loss from the various litigation matters on a quarterly basis. When it is probable that a loss will occur from litigation and the amount of the loss can be reasonably estimated, the loss is recognized in the Company's financial statements. If a potential loss is not determined to be both probable and reasonably estimated, but there is at least a reasonable possibility that a loss may be incurred, the litigation is not recorded in the Company's financial statements but this litigation is disclosed in the footnotes of the financial statements. The Company's subsidiaries carry insurance for auto liability, property damage, and cargo loss and damage through various programs. The Company's insurance liabilities are based upon the best information currently available and are subject to revision in future periods as additional information becomes available. Management believes it has adequately provided for insurance claims. AIFE is managed by Lex Venditti, a director of the Company. The Company has an investment of $0.1 million in AIFE. AIFE provides auto liability, property damage, and cargo loss and damage insurance coverage to several subsidiaries of the Company as well as other entities related to the Company by common ownership. For the years ended December 31, 2009, 2008 and 2007, cash paid to AIFE for insurance premiums and deductibles was approximately $3.9 million, $4.9 million, and $6.1 million, respectively. The Company exercises no control over the operations of AIFE. As a result, the Company recorded its investment in AIFE under the cost method of accounting for each of the three years in the period ended December 31, 2009. Under the cost method, the investment in AIFE is reflected at its original amount and income is recognized only to the extent of dividends paid by AIFE. There were no dividends declared by AIFE for the years ended December 31, 2009, 2008 and 2007. If AIFE incurs a net loss, the loss may be allocated to the various policyholders based on each policyholder's premium as a percentage of the total premiums of AIFE for the related period. There has been no such loss assessment for each of the three years ending December 31, 2009, 2008, and 2007. Deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory rates applicable to future years to differences between the financial statements carrying amounts and the tax basis of existing assets and liabilities. The Company establishes a valuation allowance when it determines it is more likely than not that future tax benefits related to the deferred tax assets will not be realized. The Company has no valuation allowance as of December 31, 2009 as it is considered more likely than not that the deferred tax assets will be fully utilized based on our current expectations of future taxable income. At December 31, 2009 and 2008, the Company has a net deferred tax asset of approximately $2.1 million and $2.2 million, respectively. In December 2008, the Company completed the acquisition of a 60% membership interest in ARL, LLC. As a result of this acquisition, the Company recorded intangible assets of approximately $3.7 million and goodwill of approximately $4.8 million. The identifiable intangible asset relates primarily to relationships with established independent agents and is being amortized over its expected life of 7 years. Goodwill represents the purchase price in excess of the fair value of net assets acquired in business combinations. ASC 350-20, "Goodwill and Other Intangible Assets", requires the Company to assess goodwill for impairment at least annually in the absence of an indicator of possible impairment and immediately upon an indicator of possible impairment. Currently, all goodwill is related to our 60% owned subsidiary ARL and this subsidiary is determined to be the reporting unit at which the goodwill is evaluated for impairment. The Company's annual impairment assessment date is December 31st. As part of the annual impairment, the Company estimates the fair value of the reporting unit. The determination of fair value is subject to various judgmental assumptions including assumptions about future cash flows and growth rates. We use our internal forecasts, customer and industry projections of demand and other market information, as well as the current cost of delivery to estimate future cash flows. If the ARL reporting unit does not meet our performance expectations, we may be required to record goodwill impairment charges in the future. As of December 31, 2009, our net book value (i.e., shareholders' equity) was approximately $17.4 million, and our market capitalization was approximately $13.7 million. We believe that, when assessing whether an asset impairment may exist, the difference between the net book value and market capitalization as of December 31, 2009 is reasonable when market- based control premiums are applied and in light of the volatility in the economy and equity markets throughout 2009. We do not believe that this situation suggests the possibilities of additional 2009 impairments. Liquidity and Capital Resources During fiscal 2009, the Company's financial position deteriorated as shareholders' equity decreased by approximately $3.2 million from $20.6 million at December 31, 2008 to $17.4 million at December 31, 2009. Net cash provided by operating activity increased $4.7 million from $1.2 million for the year ended December 31, 2008 to $5.9 million for the year ended December 31, 2009. Non-working capital provided $3.5 million for the year ended December 31, 2009 compared to $6.2 million for the year ended December 31, 2008. A decline in net income of $6.7 million from $4.4 million for the twelve months ended December 31, 2008 to ($2.3) million for the twelve months ended December 31 2009, primarily resulting from the Company's $3.0 million non-cash charge of impairment of goodwill. Working capital items provided cash of $2.5 million during fiscal 2009 compared to using cash of $5.0 million during fiscal 2008. During fiscal 2008 the Company used its line of credit to fund the payment of certain liabilities of ARL. The Company, and its subsidiaries, experienced a decrease in accounts receivable of $2.4 million for the year ended December 31, 2009. This decrease is largely due to an overall reduction of volume of business when considering the impact of the ARL acquisition. Accounts payable used $0.4 million in cash for the year ended December 31, 2009. For the year ended December 31, 2008 the Company's accounts payable used $6.9 million associated with the pay down of ARL trade payables after its acquisition Net cash used in investing activities was $0.4 million for the year ended December 31, 2009 compared to $2.2 million for the year ended December 31, 2008. Net cash used in investing activities increased for the year ended December 31, 2008 primarily due to the acquisition of ARL. The activity for the year ended December 31, 2009 was primarily due to additions to fixed assets. On December 18, 2008, the Company completed its acquisition of a 60% membership interest (the "Membership Interest") in ARL Transport, LLC ("ARL"). Prior to the completion of the transaction, ARL, acquired substantially all of the assets of, and assumed certain liabilities of, ARL, Inc. and Aficionado Transport, Inc. Pursuant to the terms of the Membership Purchase Agreement by and among the Company, ARL, Inc., Aficionado Transport, Inc. and Ronald K. Faherty (the "Agreement"), the Company paid approximately $1.59 million at closing for the Membership Interest. ARL also consolidates a variable interest entity in which ARL is the primary beneficiary and guarantor of certain debt of the related entity. ARL has evaluated its contractual and economic relationships with Stoops Ferry, LLC ("Stoops") and has concluded that Stoops is a variable interest entity. ARL has also concluded that it is the primary beneficiary of Stoops, in that ARL absorbs a majority of Stoops' expected losses and/or, received a majority of Stoops' expected residual returns, as a result of contractual or other financial interests in Stoops. Accordingly, ARL is consolidating the assets, liabilities, equity and financial results of Stoops in the Company's combined financial statements. Stoops had total assets of approximately $0.8 million at December 31, 2008 and $0.4 million at December 31, 2009. Total liabilities for Stoops were approximately $1.2 million at December 31, 2008 and $0.9 million at December 31, 2009. Net cash provided by financing activities was $0.9 million for the year ended December 31, 2008 compared to $5.6 million used in financing activities for the year ended December 31, 2009. The bank overdraft used net cash of $1.5 million for the year ended December 31, 2009 compared to providing net cash of $2.3 million for the year ended December 31, 2008. For the year ended December 31, 2009, net repayments under the lines of credit were $1.7 million, compared to $0.3 million for 2008. For the year ended December 31, 2009, the Company distributed $0.9 million to the minority shareholders of the Company's majority owned subsidiaries, Carolina National Transportation, LLC. and US1 Logistics, LLC compared to $1.0 million for the same period in 2008 to minority shareholders. Management believes that cash provided by operations and availability on credit agreements is sufficient to meet cash flow requirement for the next twelve months. The Company and its subsidiaries have a $17.5 million line of credit that was amended on July 24, 2009. The amendment included (1) a reduction of the Revolving Line of Credit from $22.0 million to $17.5 million, (2) the imposition of a fee with respect to the unused portion of the line, (3) a restriction on distributions to noncontrolling interest holders, (4) temporary replacement of certain financial covenants, and (5) the addition of a limitation on current maturities of long term debt other than debt to the Company's lender. This line of credit matures on October 1, 2010. Historically the revolving line of credit has been extended prior to maturity and management anticipates that this will occur in 2010. Advances under this revolving line of credit are limited to 75% of eligible accounts receivable. Unused availability under the amended line of credit was $7.9 million at December 31, 2009. Under the amended line of credit agreement, the Company's interest rate is based upon certain financial covenants and may range from "One Month LIBOR" plus 3.35% to "One Month LIBOR" plus 4.35%. As of December 31, 2009, the interest rate on this line of credit was 4.60%. The Company's accounts receivable, property, and other assets are collateral under the agreement. Borrowings up to $3.0 million are guaranteed by the Chief Executive Officer and Chief Financial Officer of the Company. At December 31, 2009, the outstanding borrowings on this line of credit were $9.6 million. This line of credit is subject to termination upon various events of default, including failure to remit timely payments of interest, fees and principal, any adverse change in the business of the Company or failure to meet certain financial covenants. As of December 31, 2009, financial covenants include: maximum total debt service coverage ratio and prohibition of additional indebtedness without prior authorization. At December 31, 2009, the Company, and its subsidiaries, was non-compliant with these covenants. On March 11, 2010, the Company's lender issued a permanent waiver of these violations and amended the Company's line of credit. The amendment included (1) limitation on capital expenditures, (2) an additional restriction on distributions to noncontrolling shareholders, (3) a reduction in the minimum debt service ratio covenant, and (4) an increase in the current maturities of indebtedness limitation. The Company anticipates that it will meet its covenant requirements in the future. At December 31, 2008, the Company, and its subsidiaries were in compliance with financial covenants. The balance outstanding under this line of credit agreement is classified as a current liability at December 31, 2009 and 2008. Historically the revolving line of credit has been extended prior to maturity. On January 15, 2009, the Company and its subsidiaries entered into a no cost Interest Rate Swap Agreement with U.S. Bank effective February 2, 2009 through February 1, 2012. This agreement is in the notional amount of $10.0 million from February 2, 2009 through January 31, 2010, then $7.0 million from February 1, 2010 through January 31, 2011, then $4.0 million from February 1, 2011 to February 1, 2012. The agreement provides for the Company to pay interest at an annual rate of 1.64% times the notional amount of the swap agreement, and U.S. Bank pay interest at the LIBOR rate times the notional amount of the swap. Neither the Company nor its subsidiaries entered into this agreement for speculative purposes. The fair value of the interest rate swap was minimal at December 31, 2009. Environmental Liabilities Neither the Company nor its subsidiaries is a party to any Super-fund litigation and does not have any known environmental claims against it. Inflation Changes in freight rates charged by the Company, and its subsidiaries, to their customers are generally reflected in the cost of purchased transportation and commissions paid by the Company to independent contractors and agents, respectively. Therefore, management believes that future-operating results of the Company, and its subsidiaries, will be affected primarily by changes in the volume of business. Rising fuel prices are generally offset by a fuel surcharge the Company passes onto its customers. However, due to the highly competitive nature of the truckload motor carrier industry, it is possible that future freight rates, cost of purchased transportation, as well as fuel prices may fluctuate, affecting the Company's profitability. Recently Issued Accounting Standards In June 2009, the Financial Accounting Standards Board ("FASB") issued FAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting," which was primarily codified into ASC Topic 105 - "Generally Accepted Accounting Standards." This standard represents the last numbered standard issued by the FASB under the old (pre-Codification) numbering system, and amends the GAAP hierarchy. On July 1, 2009, FASB launched FASB's new Codification (i.e. the Accounting Standards Codification "ASC"). The Codification supersedes existing GAAP for nongovernmental entities. The Company has revised its financial statement disclosure in compliance with the new codification system effective with its third quarter ended September 30, 2009. In December 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141R, a revision of SFAS No. 141, "Accounting for Business Combinations," which was primarily codified into Accounting Standards Codification ("ASC") Topic 805 - "Business Combinations." The standard establishes requirements for the recognition and measurement of acquired assets, liabilities, goodwill, and non-controlling interests. It also provides disclosure requirements related to business combinations. This guidance is effective for fiscal years beginning after December 15, 2008. Should any acquisitions occur, the Company will apply this guidance prospectively to business combinations with an acquisition date on or after the effective date. In April 2008, the FASB issued FASB Staff Position ("FSP") No. 142-3, Determination of the Useful life of Intangible Assets ("FSP 142-3"), which was primarily codified into ASC Topic 350. This standard amends the factors that should be considered in developing assumptions about renewal or extension used in estimating the useful life of a recognized intangible asset under ASC 350, and expands the disclosure requirements of ASC 350. The provisions of this guidance are effective for the Company as of January 1, 2009. The provisions of this guidance for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets recognized as of, and subsequent to, the effective date. The adoption of this staff position did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2009, the Company adopted FASB Staff Position No. 157-2, "Effective Date of FASB Statement No. 157" ("FSP 157-2"), which was primarily codified into ASC Topic 820, which delayed the effective date of SFAS No. 157 "Fair Value Measurements" for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis such as reporting units measured at fair value for goodwill impairment, indefinite-lived intangible assets measured at fair value for impairment assessment, nonfinancial assets and liabilities initially measured at fair value in a business combination, or nonfinancial long-lived assets measured at fair value for impairment assessment. The adoption of this standard did not have a material impact on the Company's results of operations or financial condition. Effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 160, "Noncontrolling Interests in Consolidated Financial Statements," which was primarily codified into ASC Topic 810 - "Consolidation". ASC 810 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the accounting for future ownership changes with respect to those subsidiaries. This standard defines a noncontrolling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS No. 160 requires, among other items, that a noncontrolling interest be included in the consolidated balance sheet within equity separate from the parent's equity; consolidated net income to be reported at amounts inclusive of both the parent's and noncontrolling interest's shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statements of income; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. The Company applied the provisions of SFAS No. 160 retrospectively. As a result, noncontrolling interests of $846,443 were reclassified from the liability section to equity in the December 31, 2008 balance sheet. Certain reclassifications have been made to prior period amounts to conform to the presentation of the current period under SFAS No. 160. In May 2009, the FASB issued SFAS No. 165, "Subsequent Events, "which was primarily codified into ASC Topic 855 - "Subsequent Events." It establishes general standards of accounting and disclosure for events that occur after the balance sheet date but before the financial statements are issued. This new standard was effective for interim or annual periods beginning after June 15, 2009. The adoption did not have an impact on the Company's consolidated financial position, results of operations or cash flows. Effective June 30, 2009, we adopted a new accounting standard included in ASC 820, Fair Value Measurements and Disclosures, formerly FASB Staff Position No. 157-4, "Determining Fair Value When The Volume and Level of Activity For The Asset or Liability Have Significantly Decreased and Identifying Transactions That are Not Orderly, which provides additional guidance for estimating fair value in accordance with ASC 820 when the volume and level of activity for the asset or liability have significantly decreased. This accounting standard also includes guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of this standard did not have a material impact on our results of operations or financial condition. Effective June 30, 2009, we adopted a new accounting standard included in ASC 820, formerly FASB Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. The adoption of this standard did not have a material impact on our results of operations or financial condition. In August 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) -Measuring Liabilities at Fair Value, which provides guidance on how to measure liabilities at fair value in circumstance in which a quoted price in an active market for the identical liability is not available. This update is effective for the first reporting period, including interim periods, beginning after issuance. We have no material liabilities that are governed by this update but will apply its provisions in the future as applicable. In October 2009, the FASB issued ASU No. 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. It requires reporting entities to evaluate former qualifying special purpose entities for consolidation, changes the approach to determining a VIE's primary beneficiary from a quantitative assessment to a qualitative assessment designed to identify a controlling financial interest, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a VIE. It also clarifies, but does not significantly change, the characteristics that identify a VIE. This ASU also requires additional year-end and interim disclosures and is effective for fiscal years commencing after November 15, 2009. We are assessing the potential impact of adoption of this standard. Off-Balance Sheet Arrangements Some of the Company's subsidiaries obtained their auto liability and cargo insurance from AIFE. For the years ended December 31, 2009, 2008, and 2007, cash paid to AIFE for insurance premiums and deductibles was approximately $3.9 million, $4.9 million, and $6.1 million, respectively. If AIFE incurs a net loss, the loss may be allocated to the various policyholders based on each policyholder's premium as a percentage of the total premiums of AIFE for the related period. There has been no such loss assessment for each of the years ended December 31, 2009, 2008, and 2007, respectively. The Company currently accounts for the majority of the premium revenue of AIFE. The Company has no other off-balance sheet arrangements that potentially could be material. Contractual Obligations and Commitments We had the following contractual obligations and commitments for debt and non-cancelable lease payments:

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk The Company and its subsidiaries have a revolving line of credit with U.S. Bank which currently bears interest at the "One Month LIBOR" plus 3.85% (at December 31, 2009 the interest rate was 4.60%). The interest rate was based on certain financial covenants. A one percentage point change in the LIBOR rate would result in approximately $0.1 million in additional expense annually. On January 15, 2009, the Company and its subsidiaries entered into a no cost Interest Rate Swap Agreement with U.S. Bank effective February 2, 2009 through February 1, 2012. This agreement is in the notional amount of $10.0 million from February 2, 2009 through January 31, 2010, then $7.0 million from February 1, 2010 through January 31, 2011, then $4.0 million from February 1, 2011 to February 1, 2012. The agreement provides for the Company to pay interest at an annual rate of 1.64% times the notional amount of the swap agreement, and receive interest at the LIBOR rate times the notional amount of the swap. Neither the Company nor its subsidiaries entered into this agreement for speculative purposes. The fair value of the interest rate swap was minimal at December 31, 2009. Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders US 1 Industries, Inc. Valparaiso, Indiana We have audited the accompanying consolidated balance sheets of US 1 Industries, Inc. and Subsidiaries as of December 31, 2009 and 2008 and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. In connection with our audits of the financial statements, we have also audited the financial statement schedule listed in the accompanying index under Item 15(a) (2). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of US 1 Industries, Inc. at December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respect, the information set forth therein. As disclosed in Note 3 to the consolidated financial statements, effective January 1, 2009, the Company retrospectively changed its method of accounting for noncontrolling interests in consolidated financial statements and effective January 1, 2007, the Company changed its method of accounting for uncertain income tax positions, both in compliance with new accounting standards. /s/ BDO Seidman, LLP Chicago, Illinois March 15, 2010 US 1 INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2009 AND 2008

US 1 INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2009 AND 2008

US 1 INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2009, 2008, AND 2007

US 1 INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2009, 2008, and 2007

US 1 INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

US 1 INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007 1. OPERATIONS US1 Industries, Inc. (the Company), through its subsidiaries, is primarily an interstate truckload carrier of general commodities, which uses independent agents and owner-operators to contract for and haul freight for its customers in 48 states. No one agent accounted for more than 10% of the Company's operating revenue for the years ended December 31, 2009, 2008 and 2007. The Company, through its subsidiaries, shipped freight for approximately 1,000 customers in 2009, none of which accounted for more than 10% of the Company's revenues. On December 18, 2008, the Company completed its acquisition of a 60% membership interest (the "Membership Interest") in ARL Transport, LLC ("ARL"). Prior to the completion of the transaction, ARL, acquired substantially all of the assets of, and assumed certain liabilities of, ARL, Inc. and Aficionado Transport, Inc. Pursuant to the terms of the Membership Purchase Agreement by and among the Company, ARL, Inc., Aficionado Transport, Inc. and Ronald K. Faherty (the "Agreement"), the Company paid approximately $1.59 million at closing for the Membership Interest. ARL also consolidates a variable interest entity in which ARL is the primary beneficiary and guarantor of certain debt of the related entity. ARL has evaluated its contractual and economic relationships with Stoops Ferry, LLC ("Stoops") and has concluded that Stoops is a variable interest entity. ARL has also concluded that it is the primary beneficiary of Stoops, in that ARL absorbs a majority of Stoops' expected losses and/or, received a majority of Stoops' expected residual returns, as a result of contractual or other financial interests in Stoops. Accordingly, ARL is consolidating the assets, liabilities, equity and financial results of Stoops in the Company's combined financial statements. Stoops had total assets of approximately $0.8 million at December 31, 2008 and $0.4 million at December 31, 2009. Total liabilities for Stoops were approximately $1.2 million at December 31, 2008 and $0.9 million at December 31, 2009. 2. RECLASSIFICATIONS Certain reclassifications have been made to the previously reported 2008 and 2007 financial statements to conform to the 2009 presentation. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation--The consolidated financial statements include the accounts of US 1 Industries, Inc. and its majority-owned subsidiaries. ARL, LLC, a 60% owned subsidiary of the Company, also consolidates Stoops Ferry, LLC, a variable interest entity, in accordance with ASC 810. All intercompany accounts and transactions have been eliminated. Fair Value of Financial Instruments-The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments. The carrying amount of outstanding borrowings approximates fair value as a variable interest rate is charged on the outstanding balance. Allowance for Doubtful Accounts--The subsidiaries record an allowance for doubtful accounts based on specifically identified amounts that they believe to be uncollectible. The Company also records an additional allowance based on percentages of aged receivables, which are determined based on historical collections experience and an assessment of the general financial conditions affecting its customer base. If actual collections experience changes, revisions to the allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Revenue Recognition-- Revenue for freight is recognized upon delivery. The Company accounts for its revenue in accordance with Emerging Issues Task Force ("EITF") 99-19, "Reporting Revenue Gross as a Principal Versus Net as an Agent," which was primarily codified into ASC topic 605. Amounts payable for purchased transportation, commissions and insurance are accrued when incurred. The Company follows guidance of this standard and records revenues at the gross amount billed to customers because the Company (1) determined it operates as the primary obligor, (2) typically is responsible for damages to goods and (3) bears the credit risk. Fixed Assets--Fixed assets are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to eight years. Long-Lived Assets--The Company assesses the realizability of its long- lived assets including finite lived intangible assets in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", which was primarily codified into ASC 810. The Company reviews long-lived assets for impairment when circumstances indicate that the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the asset. No impairment was necessary as of December 31, 2009, 2008 and 2007, Goodwill-- Goodwill represents the purchase price in excess of the fair value of net assets acquired in business combinations. ASC 350-20, "Goodwill and Other Intangible Assets", requires the Company to assess goodwill for impairment at least annually in the absence of an indicator of possible impairment and immediately upon an indicator of possible impairment. All goodwill is related to our 60% owned subsidiary ARL and this subsidiary is determined to be the reporting unit at which the goodwill is evaluated for impairment. The Company's annual impairment assessment date is December 31st. As part of the annual impairment assessment, the Company estimates the fair value of the reporting unit. The determination of fair value is subject to various judgmental assumptions including assumptions about future cash flows and growth rates. We use our internal forecasts, customer and industry projections of demand and other market information, as well as the current cost of delivery to estimate future cash flows. If the ARL reporting unit does not meet our performance expectations, we may be required to record goodwill impairment charges in the future, in addition to the charges recorded in 2009. Accounting Estimates--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Income Taxes--Deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets. In addition, the amounts of any future tax benefits are reduced by a valuation allowance to the extent such benefits are not expected to be fully utilized. Earnings Per Common Share --The Company computes earnings per share under SFAS No. 128 "Earnings Per Share", which was primarily codified into ASC 260. The statement requires presentation of two amounts, basic and diluted earnings per share. Basic earnings per share are computed by dividing income attributable to US 1 Industries, Inc.'s common stockholders by the weighted average common shares outstanding. Dilutive earnings per share would include all dilutive common stock equivalents. There were no dilutive common stock equivalents December 31, 2009, 2008 or 2007. Business Segments--SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", which was primarily codified into ASC 280, requires public enterprises to report certain information about reporting segments in financial statements. As the Company's operating segments exhibit similar economic characteristics and meet the aggregation criteria of SFAS 131, they are reported in one segment. Recent Accounting Pronouncements In June 2009, the Financial Accounting Standards Board ("FASB") issued FAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting," which was primarily codified into ASC Topic 105 - "Generally Accepted Accounting Standards." This standard represents the last numbered standard issued by the FASB under the old (pre-Codification) numbering system, and amends the GAAP hierarchy. On July 1, 2009, FASB launched FASB's new Codification (i.e. the Accounting Standards Codification "ASC"). The Codification supersedes existing GAAP for nongovernmental entities. The Company has revised its financial statement disclosure in compliance with the new codification system effective with its third quarter ended September 30, 2009. In December 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141R, a revision of SFAS No. 141, "Accounting for Business Combinations," which was primarily codified into Accounting Standards Codification ("ASC") Topic 805 - "Business Combinations." The standard establishes requirements for the recognition and measurement of acquired assets, liabilities, goodwill, and non-controlling interests. It also provides disclosure requirements related to business combinations. This guidance is effective for fiscal years beginning after December 15, 2008. Should any acquisitions occur, the Company will apply this guidance prospectively to business combinations with an acquisition date on or after the effective date. In April 2008, the FASB issued FASB Staff Position ("FSP") No. 142-3, Determination of the Useful life of Intangible Assets ("FSP 142-3"), which was primarily codified into ASC Topic 350. This standard amends the factors that should be considered in developing assumptions about renewal or extension used in estimating the useful life of a recognized intangible asset under ASC 350, and expands the disclosure requirements of ASC 350. The provisions of this guidance are effective for the Company as of January 1, 2009. The provisions of this guidance for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets recognized as of, and subsequent to, the effective date. The adoption of this staff position did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2009, the Company adopted FASB Staff Position No. 157-2, "Effective Date of FASB Statement No. 157" ("FSP 157-2"), which was primarily codified into ASC Topic 820, which delayed the effective date of SFAS No. 157 "Fair Value Measurements" for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis such as reporting units measured at fair value for goodwill impairment, indefinite-lived intangible assets measured at fair value for impairment assessment, nonfinancial assets and liabilities initially measured at fair value in a business combination, or nonfinancial long-lived assets measured at fair value for impairment assessment. The adoption of this standard did not have a material impact on the Company's results of operations or financial condition. Effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 160, "Noncontrolling Interests in Consolidated Financial Statements," which was primarily codified into ASC Topic 810 - "Consolidation". ASC 810 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the accounting for future ownership changes with respect to those subsidiaries. This standard defines a noncontrolling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS No. 160 requires, among other items, that a noncontrolling interest be included in the consolidated balance sheet within equity separate from the parent's equity; consolidated net income to be reported at amounts inclusive of both the parent's and noncontrolling interest's shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statements of income; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. The Company applied the provisions of SFAS No. 160 retrospectively. As a result, noncontrolling interests of $846,443 were reclassified from the liability section to equity in the December 31, 2008 balance sheet. Certain reclassifications have been made to prior period amounts to conform to the presentation of the current period under SFAS No. 160. In May 2009, the FASB issued SFAS No. 165, "Subsequent Events," which was primarily codified into ASC Topic 855 - "Subsequent Events." It establishes general standards of accounting and disclosure for events that occur after the balance sheet date but before the financial statements are issued. This new standard was effective for interim or annual periods beginning after June 15, 2009. The adoption did not have an impact on the Company's consolidated financial position, results of operations or cash flows. Effective June 30, 2009, we adopted a new accounting standard included in ASC 820, Fair Value Measurements and Disclosures, formerly FASB Staff Position No. 157-4, "Determining Fair Value When The Volume and Level of Activity For The Asset or Liability Have Significantly Decreased and Identifying Transactions That are Not Orderly, which provides additional guidance for estimating fair value in accordance with ASC 820 when the volume and level of activity for the asset or liability have significantly decreased. This accounting standard also includes guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of this standard did not have a material impact on our results of operations or financial condition. Effective June 30, 2009, we adopted a new accounting standard included in ASC 820, formerly FASB Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. The adoption of this standard did not have a material impact on our results of operations or financial condition. In August 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)-Measuring Liabilities at Fair Value, which provides guidance on how to measure liabilities at fair value in circumstance in which a quoted price in an active market for the identical liability is not available. This update is effective for the first reporting period, including interim periods, beginning after issuance. We have no material liabilities that are governed by this update but will apply its provisions in the future as applicable. In October 2009, the FASB issued ASU No. 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. It requires reporting entities to evaluate former qualifying special purpose entities for consolidation, changes the approach to determining a VIE's primary beneficiary from a quantitative assessment to a qualitative assessment designed to identify a controlling financial interest, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a VIE. It also clarifies, but does not significantly change, the characteristics that identify a VIE. This ASU also requires additional year-end and interim disclosures and is effective for fiscal years commencing after November 15, 2009. We are assessing the potential impact of adoption of this standard. 4. ACQUISITIONS On December 18, 2008, the Company completed the acquisition of a 60% membership interest in ARL for $1.59 million. In addition, the prior shareholder of ARL can receive up to an additional $2.9 million in cash consideration if ARL achieves certain revenue and earnings goals through 2012. No additional consideration was earned during 2009 and therefore only $2.2 million remains available to be earned. The acquisition was recorded using the purchase method of accounting, and on the date of the acquisition, the Company assessed the fair value of the acquired assets and assumed liabilities and allocated purchase price accordingly. The assets acquired and liabilities assumed based on a preliminary allocation are as follows: Accounts receivable $ 9,688,022 Other accounts receivable 1,542,041 Other current assets 1,116,978 Property and equipment 1,245,669 Intangible asset - agent relationships 3,636,000 Goodwill 4,756,943 ___________ Total assets acquired 21,985,653 Lines of credit (10,017,885) Accounts payable and accrued expenses (8,199,016) Capital lease obligations (156,700) Long-term debt (1,729,704) ___________ Total liabilities assumed (20,103,305) Net assets acquired 1,882,348 Less acquisition costs (292,348) __________ Cash paid for purchase price $ 1,590,000 ==========

The Company has allocated $3.6 million of the ARL purchase price to agent relationships which is an identifiable intangible asset with a finite life, currently estimated at 7 years. At the date of the acquisition of ARL, the book value attributable to the noncontrolling interest shareholder was a deficit, which the shareholder was not required to fund. As a result, the noncontrolling interest at the date of the acquisition was recorded at zero and the amount allocated to goodwill was increased by the deficit attributable to the noncontrolling interest. The resulting goodwill recorded on the date of the acquisition was approximately $4.8 million. The Company's goodwill is subject to an annual impairment assessment of its carrying value. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. Fair values of the reporting units is estimated using an earnings model and a discounted cash flow valuation model. The discounted cash flow model incorporates the Company's estimates of future cash flows, future growth rates and management's judgment regarding the applicable discount rates used to discount those estimated cash flows. The Company performed its annual impairment assessment as of December 31, 2009 in accordance with ASC No. 350-20, using the expected present value of future cash flows and determined that the fair value of its goodwill was less than the carrying value due to deterioration in the general business environment. This evaluation has resulted in recognition of a $3.0 million goodwill impairment charge for the year ended December 31, 2009, leaving a $1.8 million goodwill balance at that date. The results of ARL have been included in the consolidated financial statements of the Company for the period subsequent to the acquisition; the following unaudited pro forma financial information presents the consolidated operations of the Company as if the acquisition of ARL had been made on January 1, 2007. The Company made adjustments primarily for the amortization of intangible assets and non-controlling interest expense. The unaudited pro forma financial information is provided for informational purposes only and does not project the Company's results of operations for any future period: Unaudited pro forma results of operations for the years ended December 31, 2008 and 2007 for the Company assuming the acquisition of ARL had taken place on January 1, 2007 are as follows: Year Ended December 31, 2008 2007 ____________________________________________________________________________________ Revenue As Reported $172,674,648 $184,677,131 Pro-forma 238,305,310 245,286,780 Net Income attributable to US 1 Industries, Inc. As Reported 3,057,840 2,852,982 Pro-forma 1,136,961 118,473 Basic and Diluted Earning Per Share attributable to US 1 Industries, Inc. As Reported 0.21 0.23 Pro-forma 0.08 0.01

In addition, on December 23, 2008, ARL acquired certain other agent relationships with an ascribed value of $100,000. The value of these relationships has been included in the carrying value of the ARL agent relationships. The carrying value of the ARL agent relationships were as follows: December 31, 2009 December 31, 2008 ~~Agent relationships $3,736,000 $3,736,000 Accumulated amortization (923,328) - __________ __________ Intangible assets, net $2,812,672 $3,736,000~~

Intangible assets amortization expense for 2009 was $923,328. Estimated annual amortization expense for these intangibles is as follows: Year ending December 31, ~~2010 $ 766,642 2011 631,535 2012 551,547 2013 436,366 2014 280,187 Thereafter 146,395 __________ Total $2,812,672~~

5. NOTES RECEIVABLE The Company, through its subsidiaries, makes advances under notes receivable to certain agents and owner operators in the normal course of its business. These notes bear interest at rates ranging from 0% to 12.0% with weekly payments ranging from approximately $125 - $8,333. Maturity on these notes receivable ranges from January 2010 through April 2014. The balance of these notes was approximately $1.5 million and $2.6 million at December 31, 2009 and December 31, 2008, respectively. The current portion of these notes receivable was approximately $0.7 million and $1.5 million at December 31, 2009 and December 31, 2008, respectively, and is classified in other receivables. There are 35 notes outstanding as of December 31, 2009. 6. RELATED PARTY TRANSACTIONS One of the Company's subsidiaries provides safety, management, and accounting services to companies controlled by the Chief Executive Officer and Chief Financial Officer of the Company. These services are priced to cover the cost of the employees providing the services. Charges related to those services were approximately $0.04 million, $0.06 million and $0.07 million in 2009, 2008, and 2007, respectively. Other receivables due from entities affiliated through common ownership was $0.9 million and $1.0 million as of December 31, 2009 and 2008. One of the subsidiaries' insurance providers, American Inter- Fidelity Exchange ("AIFE"), is managed by a director of the Company and the Company has an investment of $0.13 million in the provider. AIFE provides auto liability and cargo insurance to several subsidiaries of the Company as well as other entities related to the Company by common ownership. For the years ended December 31, 2009, 2008 and 2007, cash paid to AIFE for insurance premiums and deductibles was approximately $3.9 million, $4.9 million, and $6.1 million, respectively. The subsidiaries exercised no control over the operations of AIFE. As a result, the Company recorded its investment in AIFE under the cost method of accounting for each of the three years in the period ended December 31, 2009. Under the cost method, the investment in AIFE is reflected at its original amount and income is recognized only to the extent of dividends paid by the investee. There were no dividends declared by AIFE for the years ended December 31, 2009, 2008 and 2007. If AIFE incurs a net loss, the loss may be allocated to the various policyholders based on each policyholder's premium as a percentage of the total premiums of AIFE for the related period. There has been no such loss assessment for any of the three years in the period ended December 31, 2009. The Company's subsidiaries currently account for the majority of the premiums of AIFE. For the years ended December 31, 2009, 2008 and 2007, a subsidiary insurance agency of the Company, recorded commission income of $0.7 million, $0.7 million and $0.4 million, respectively, related to premiums with AIFE. This commission income is reflected as a reduction of insurance expense in the consolidated financial statements of the Company for the years ended December 31, 2009, 2008 and 2007, respectively. In addition, the Chief Executive Officer and a director of the Company, the Chief Financial Officer and a director of the Company, as well as another director of the Company, are the sole shareholders of American Inter-Fidelity Corporation ("AIFC"), which serves as the attorney in fact of AIFE. AIFC is entitled to receive a management fee from AIFE. AIFE incurred management fees of approximately $0.5 million for each of the years ended December 31, 2009, 2008, and 2007, respectively. These management fees are available to be paid as dividends to these officers and directors of the Company. In 2009, 2008 and 2007, the Company paid consulting fees of $0.05 million, $0.03 million and $0.03 million, respectively, to two of its directors, relating to insurance and other services. The Company had notes payable due to its Chief Executive Officer and Chief Financial Officer that were converted into 2,668,918 shares of common stock of the Company in September 2007. (See Note 10). 7. LEASES Operating Leases The Company leases its administrative offices in Indiana from an independent owner under an operating lease expiring on March 31, 2012. In addition, the Company's subsidiaries lease office space and land in Mississippi, Pennsylvania, Texas, Tennessee, South Carolina, Georgia, Missouri, North Carolina, Indiana, California, Arkansas, and Florida under operating leases ranging from one to sixteen years. Rent expense under these operating leases was $2.0 million, $1.0 million, and $1.3 million for the years ended December 31, 2009, 2008, and 2007, respectively. Future commitments under these operating leases are as follows: ~~Future Commitments 2010 $ 856,141 2011 627,679 2012 259,624 2013 225,912 2014 225,912 2015-2025 2,267,785 __________ $4,463,053~~

Capital Leases Stoops leases equipment under agreements accounted for as capital leases. The agreements expire at various dates through 2011 and are collateralized by all equipment under the leases. The net book value of equipment under capital leases at December 31, 2009 was approximately $11,592. Future minimum capital lease payments as of December 31, 2009 are as follows: Capital Lease obligations - Monthly payments ranging from $813 to $8,567, including interest ranging from 6.75% to 15.5%, maturing through July 2011 $86,487 Less: Current Portion 30,246 ________ $56,241 ========

Future minimum capital lease payments as of December 31, 2009 are as follows: ~~2010 $31,862 2011 57,343 ________ Total 89,205 Less amount representing interest (2,718) ________ Present value of payments $86,487 ========~~

8. BANK LINE OF CREDIT The Company and its subsidiaries have a $17.5 million line of credit that was amended on July 24, 2009. The amendment included (1) a reduction of the Revolving Line of Credit from $22.0 million to $17.5 million, (2) the imposition of a fee with respect to the unused portion of the line, (3) a restriction on distributions to noncontrolling interest holders, (4) temporary replacement of certain financial covenants, and (5) the addition of limitation on current maturities of long term debt other than debt to the Company's lender. This line of credit matures on October 1, 2010. Historically the revolving line of credit has been extended prior to maturity and management anticipates that this will occur in 2010. Advances under this revolving line of credit are limited to 75% of eligible accounts receivable. Unused availability under the amended line of credit was $7.9 million at December 31, 2009. Under the amended line of credit agreement, the Company's interest rate is based upon certain financial covenants and may range from "One Month LIBOR" plus 3.35% to "One Month LIBOR" plus 4.35%. As of December 31, 2009, the interest rate on this line of credit was 4.60%. The Company's accounts receivable, property, and other assets are collateral under the agreement. Borrowings up to $3.0 million are guaranteed by the Chief Executive Officer and Chief Financial Officer of the Company. At December 31, 2009, the outstanding borrowings on this line of credit were $9.6 million. This line of credit is subject to termination upon various events of default, including failure to remit timely payments of interest, fees and principal, any adverse change in the business of the Company or failure to meet certain financial covenants. As of December 31, 2009, financial covenants include: maximum total debt service coverage ratio and prohibition of additional indebtedness without prior authorization. At December 31, 2009, the Company, and its subsidiaries, was non-compliant with these covenants. On March 11, 2010, the Company's lender issued a permanent waiver of these violations and amended the Company's line of credit. The amendment included (1) limitation on capital expenditures, (2) an additional restriction on distributions to noncontrolling interest holders, (3) a reduction in the minimum debt service ratio covenant, and (4) an increase in the current maturities of indebtedness limitation. The Company anticipates that it will meet its covenant requirements in the future. At December 31, 2008, the Company, and its subsidiaries were in compliance with financial covenants. On January 15, 2009, the Company and its subsidiaries entered into a no cost Interest Rate Swap Agreement with U.S. Bank effective February 2, 2009 through February 1, 2012. This agreement is in the notional amount of $10.0 million from February 2, 2009 through January 31, 2010, then $7.0 million from February 1, 2010 through January 31, 2011, then $4.0 million from February 1, 2011 to February 1, 2012. The agreement provides for the Company to pay interest at an annual rate of 1.64% times the notional amount of the swap agreement, and U.S. Bank pay interest at the LIBOR rate times the notional amount of the swap. The Company did not enter into this agreement for speculative purposes. The fair value of the interest rate swap was minimal at December 31, 2009. 9. LONG TERM DEBT As a part of the ARL acquisition, certain equipment notes payable were assumed with monthly payments at varying rates and interest at rates ranging from 3.5%-14.3%. All of the long-term debt is collateralized by the property and equipment associated with the debt. Of this total debt, $0.5 million relates to a Variable Interest Entity, "Stoops Ferry", of which $0.4 million is current. Long-term debt consists of the following at December 31, 2009: Future Minimum debt payments as of December 31,2009 are as follows: ~~2010 $642,413 2011 98,146 2012 28,056 2013 14,220 2014 6,456 _________ $789,291~~

10. CONVERTIBLE SUBORDINATED DEBT In November 2006, the long-term debt Payable to the Chief Executive Officer and Chief Financial Officer was exchanged for new notes payable with revised terms. In addition, the unpaid accrued interest of approximately $1.2 million was rolled into the new notes payable balance. As a result, the principal balance of the new notes payable net of unamortized discount of $0.3 million was approximately $3.6 million as of December 31, 2006. These new notes payable accrued interest at a rate of prime less 1% with interest payable quarterly. These notes payable also had a conversion feature at the option of the holder into common stock of the Company at a conversion price of $1.48 per share. The conversion feature was exercised and the outstanding balance of this debt was converted into 2.7 million common shares on the maturity date of September 22, 2007. Interest expense on this related party debt was $0.2 million in 2007. In 2006, based on the guidance under Emerging Issue Task Force Issue 96-19, "Debtor's Accounting for Modification or Exchange of Debt Instruments", which was primarily codified into ASC 470, the Company determined the revision of this debt to be a modification of the debt. As a result, the fair value of the conversion option, estimated at $0.4 million, was reflected as a discount on the debt and accreted as additional interest expense over the term of the debt. 11. EQUITY TRANSACTIONS During 2008 and 2009, the Company had 300,000 outstanding options to purchase common stock, which have been excluded from the calculation of diluted earnings per share because the effect would be anti-dilutive. During the year ended December 31, 2007, the Company had outstanding convertible debt which was converted into 2,668,918 shares of common stock in September 2007. Prior to conversion, these shares were excluded from the calculation of diluted earnings per share because the effect was anti- dilutive. (a) In December 2008, as part of the acquisition of ARL, the Company granted two employees a total of 300,000 options to purchase shares of common stock at an exercise price of $0.80 per share. These options vest over 4 years: however 150,000 options vested early in 2009 due to one employee's termination. All options expire by December 18, 2018. The fair value of these options of $0.1 million was calculated using a Black Scholes model with the following assumptions: ~~Dividend yield 0.0% Risk-free rate 2.7% Volatility 44.0% Expected life (years) 7~~

The fair value is being expensed over the vesting period with $60,000 recorded in 2009 and the remainder to be recorded through 2012. The Company has no other options or warrants to purchase common stock outstanding as of December 31, 2009, 2008 or 2007. (b) In September 2007, the Company's Chief Executive Officer and Chief Financial Officer elected to exercise the conversion feature on certain convertible debt held by these individuals. As a result, the debt with a principal value of $4.0 million was converted into 2,668,918 shares of the Company's common stock. (c) During 2007, in an effort to increase the value of the Company to the outstanding shareholders, the Company purchased 595,248 shares of its common stock for a total of $1.0 million. These shares are reflected as treasury stock in the Company's balance sheet and statement of shareholders' equity. 12. INCOME TAXES The composition of income tax expense (benefit) is as follows:

The following summary reconciles income taxes at the maximum federal statutory rate, based upon (loss) income before income taxes after deducting income attributable to noncontrolling interests, with the effective rates for 2009, 2008, and 2007: December 31, 2009 2008 2007 ___________________________________________________________________________________________________ Income tax expense at statutory rate ($ 678,600) $1,033,000 $1,095,214 State income tax expense, net of federal tax benefit 331,226 323,879 292,835 Adjustment of valuation allowance - (1,191,112) (1,019,812) Non-deductible goodwill impairment 803,760 Permanent differences 134,043 (273,005) - __________ __________ __________ $ 590,429 ($107,238) $ 368,237 __________ __________ __________

The Company and its wholly-owned subsidiaries file a consolidated federal income tax return. Carolina National, LLC, ARL, LLC and US1 Logistics, LLC the Company's 60% owned subsidiaries file separate federal income tax returns.

At December 31, 2009 and 2008, the Company has realized a net deferred tax asset of $2.1 million and $2.2 million respectively, as it is more likely than not that this amount will be realized as a result of anticipated future taxable income to be generated by the Company The Company has net operating loss carry-forwards of approximately $0.9 million at December 31, 2009. These carry-forwards are available to offset taxable income in future years and substantially all of these carry- forwards will expire in 2010. The Company also has an AMT credit carry- forward of $0.3 million available to reduce future federal income tax. This credit may be carried forward indefinitely and can be used to reduce the Company's federal tax liability. The Company adopted FIN 48, which primarily codified into ASC 740, on January 1, 2007, and recorded the cumulative effect of a change in accounting principle by recording an increase in the liability for uncertain tax positions of $0.7 million that was accounted for as a credit to opening retained earnings. The liability for uncertain tax positions and related interest and penalties at December 31, 2009 and 2008 totaled $0.7 million. This liability is recorded in the Company's balance sheet in accrued expenses. No uncertain tax position reserves were reversed or settled during 2009 or 2008. The entire amount of this consolidated liability for uncertain tax positions would affect the Company's effective tax rate upon favorable resolution of the uncertain tax positions. Absent new experience in defending these uncertain tax positions in the various jurisdictions to which they relate, the Company cannot currently estimate a range of possible change of the December 31, 2009 liability over the next twelve months. The Company files a consolidated U.S. income tax return and tax returns in various state and local jurisdictions. In the U.S., all tax years from 2004 through the present are subject to tax authority audits. In various states and local jurisdictions all tax years from 2000 through the present are subject to tax authority audits. Interest and penalties related to tax positions taken in the Company's tax returns are recorded in income tax expense in the consolidated statements of operations. 13. COMMITMENTS AND CONTINGENCIES Litigation The Company and its subsidiaries are involved in certain litigation in the normal course of its business. Management intends to vigorously defend these cases. In the opinion of management, the other litigation now pending will not have a material adverse affect on the consolidated financial statements of the Company. Other In October 2006, the Company and the general manager of Patriot entered into an agreement under which the Company granted the individual the option to purchase 100% of the outstanding stock of Patriot for a purchase price equal to the book value of Patriot. This option to purchase Patriot currently terminates in October 2010 or upon a change in control of the Company. The option is immediately exercisable and maybe exercised in whole (not in part) at anytime prior to October 2010. The fair value of this option was determined to be deminimis. Patriot's revenue for the years ended December 31, 2009, 2008 and 2007 was $26.4 million, $33.1 million, and $39.3 million, respectively. Patriot had pre-tax income of $0.28 million, $0.59 million and $0.50 million for the years ended December 31, 2009, 2008 and 2007, respectively. 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

US1 INDUSTRIES, INC. VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 2007, 2008, AND 2009 Schedule II

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A(T). Controls and Procedures The Company and its subsidiaries maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost- benefit relationship of possible controls and procedures. As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes policies and procedures for maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for the preparation of our financial statements; providing reasonable assurance that receipts and expenditures of the Company are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Management, including the Company's Chief Executive Officer and the Company's Financial Officer, conducted an evaluation of the effectiveness of the internal controls over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2009. Based on management's assessment and those criteria, management believes that the internal control over financial reporting was effective. This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's internal control report was not subject to attestation by the Corporation's independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Corporation to provide only management's report. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Exhibit 10.8 Seventh Amendment to Amended and Restated Loan Agreement and Twelfth amendment to Revolving Loan Note with US Bank, US 1 Industries, Inc. Submission of Matters to a Vote of Security Holders On November 26, 2008, the Company held an Annual Meeting of Shareholders to elect five (5) directors to constitute the Board of Directors and to approve the reverse/forward/stock split. The nominees for director included Mr. Harold Antonson, Mr. Brad James, Mr. Michael Kibler, Mr. Robert Scissors, and Mr. Lex Venditti. All of the nominees were elected as directors for US1 Industries, Inc. and will hold their position until the next Annual Meeting and until their successors are elected and qualified. The second proposal that the shareholders were asked to vote on was to approve and adopt an amendment to US1's Articles of Incorporation to effect between a one-for-three hundred and one-for- five hundred reverse stock split of all of the US1 Industries outstanding shares of common stock. Immediately after the "Reverse Stock Split", the Company wanted a "Forward Stock Split". This would take all shares less than between three hundred and five hundred shares of common stock that are owned by a shareholder and convert the shares into a cash payment in an amount equal to $.87 per share, and share- holders of a greater amount of shares would receive a cash payment for their fractional shares. As of March 15, 2010, the Company has not executed the approved stock split but expects to complete the stock split shortly. The results of the votes were as follows: Results of voting - Director nominees For Withheld Mr. Antonson 9,618,645 1,035,025 Mr. James 10,624,781 28,889 Mr. Kibler 9,629,845 1,023,825 Mr. Scissors 9,654,245 999,425 Mr. Venditti 9,563,093 1,090,577 Results of voting - Reverse / Forward Split For Against Abstaining 9,482,049 1,141,046 30,575

PART III Item 10. Directors, Executive Officers and Corporate Governance DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The directors and executive officers of the Company as of March 15, 2010 were as follows: NAME AGE POSITION ___________________ ___ _________ Michael E. Kibler 69 President, Chief Executive Officer, and Director Harold E. Antonson 70 Chief Financial Officer, Treasurer, and Director Lex Venditti 57 Director Robert I. Scissors 76 Director Brad James 54 Director Walter Williamson 75 Director

Name Office and Experience __________________ _______________________ Michael E. Kibler Mr. Kibler is President and Chief Executive Officer of the Company and has held these positions since September 13, 1993 and has been a director since 1993. He also has been President of Enterprise Truck Lines, Inc., an interstate trucking company engaging in operations similar to the company's, since 1972. Mr. Kibler is a partner of August Investment Partnership and is also a shareholder of American Inter-Fidelity Corporation, the attorney-in-fact of AIFE, an entity that provides auto liability and cargo insurance to the Company. Harold E. Antonson Mr. Antonson is Chief Financial Officer of the Company, a position he has held since March 1998. Mr. Antonson is a certified public accountant. Prior to joining the Company, he was Secretary/Treasurer of AIFE. Mr. Antonson is also a partner in August Investment Partnership. Mr. Antonson was elected a director and Treasurer of the Company in November 1999. Mr. Antonson is also a shareholder of American Interfidelity Corporation, the attorney-in-fact of AIFE, an affiliated entity that provides auto liability and cargo insurance to the Company. Lex Venditti Mr. Venditti has served as a director of the Company since 1993. Mr. Venditti is the General Manager of AIFE, an insurance reciprocal located in Indiana. Mr. Venditti is also a shareholder of AIFC, the attorney-in-fact of AIFE, an entity that provides auto liability and cargo insurance to the Company. Robert I. Scissors Mr. Scissors has been a director of the Company since 1993. Mr Scissors began his career in the Insurance Industry in 1957. In 1982, Mr. Scissors joined a brokerage firm called Alexander/ Alexander where he worked until retiring in 1992. Mr. Scissors currently works as an insurance consultant and broker. Brad James Mr. James is the President of Seagate Transportation Services, Inc. since 1982. Mr. James graduated from Bowling Green University with a Bachelors Degree in Business Administration. He has been in the trucking industry since 1977. Mr. James was elected a director of the Company in 1999. Walter Williamson Mr. Williamson became a director of the Company in 2009. Mr. Williamson has been in the trucking industry since 1955. He was President of Land Container, a trucking company engaging in operations similar to the Company's, from 1990 to 2008.

There are no family relationships between any director or executive officer of the Company. Code of Ethics The Company has adopted a Code of Ethics that applies to Mr. Kibler, the Chief Executive Officer and Mr. Antonson, the Chief Financial Officer, a copy of which was filed as Exhibit 14.1 to the Company's 2003 Form 10-K. Audit Committee and Audit Committee Financial Expert The Company has an audit committee consisting of Lex Venditti, Robert Scissors and Walter Williamson. The Company's Board of Directors has determined that Mr. Venditti is an "audit committee financial expert" as defined under SEC rules. However, because of his position as general manager of AIFE and as a shareholder of American Inter-Fidelity Corporation, Mr. Venditti is not considered an independent director as defined under Rule 10A-3(b) of the Exchange Act. In addition, Mr. Scissors receives fees for consulting services provided to the Company and is also not considered an independent director. The audit committee is responsible for selecting the Company's independent auditors and approving the scope, fees and terms of all audit engagements and permissible non-audit services provided by the independent auditor, as well as assessing the independence of the Company's independent auditor from management. The audit committee also assists the Board in oversight of the Company's financial reporting process and integrity of its financial statements, and also reviews other matters with respect to the Company's accounting, auditing and financial reporting practices as it may find appropriate or may be brought to its attention. Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors, executive officers and persons who own more than 10% of the outstanding common stock of the Company to file with the Securities and Exchange Commission reports of changes in ownership of the common stock of the Company held by such persons. Officers, directors and greater than 10% shareholders are also required to furnish the Company with copies of all forms they file under this regulation. There were no late filings during 2009. To the Company's knowledge based solely on a review of the copies of such reports furnished to the Company, and representations that no other reports were required, during the year ended December 31, 2009, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% shareholders were complied with. Director Nomination Procedures The Company will consider nominations for directors submitted by shareholders of the Company. Shareholders who wish to make a nomination for director should send the name and biographical information with respect to such nominee to the Secretary of the Company along with a certification by such nominee that he or she will serve as a director of the Company if elected. There have not been any changes to this process in the past year. Item 11. Executive Compensation Overview of Executive Compensation Program The Company does not have a formalized program for determining executive compensation. Any executive compensation changes are taken before the Board of Directors for approval. In general, our executive officers receive compensation consisting of a salary and on occasion, there have been stock bonuses issued. Executive officers participate in the same group health insurance program as the Company's full-time employees. The Company has not used, nor intend to use, an outside consultant in connection with making compensation decisions. Objectives of Compensation Program The Company's compensation of executive officers is intended to provide requisite compensation to the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"). Because the CEO and CFO are large shareholders of the Company, the CEO and CFO should be motivated to act in the best interest of the Company's shareholders. Current Executive Officers The Company currently has two executive officers, Michael Kibler, our CEO, and Harold Antonson, our CFO. The following Summary Compensation Table sets forth compensation paid by the Company during the years ended December 31, 2009, 2008 and 2007 to Mr. Michael E. Kibler, Chief Executive Officer and Mr. Harold Antonson, Chief Financial Officer, where applicable. No other executive officer of the Company earned in excess of $0.1 million. Summary Compensation Table

Option exercises and option values No stock options have been issued to Mr. Michael E. Kibler, Chief Executive Officer or Mr. Harold Antonson, Chief Financial Officer for the years ended December 31, 2009, 2008 or 2007 and they hold no such options as of December 31, 2009. Compensation of Directors Directors who are also employees of the Company receive no additional compensation for their services as directors. In 2009 and 2008, the Company paid consulting fees of $0.05 million and $0.03 million to two directors of the Company. No other compensation was paid to our non- executive board members during 2009, 2008 or 2007. The Company will reimburse its directors for travel expenses and other out-of-pocket costs incurred in connection with the Company's board of directors' meetings. Compensation Committee The Company does not have a compensation committee. The current members of the Board of Directors (Harold Antonson, Brad James, Michael Kibler, Robert Scissors, Lex Venditti and Walter Williamson) participated in deliberation concerning the Company's executive officer compensation, although the Chief Financial Officer, Harold Antonson and Chief Executive Officer, Michael Kibler abstain from all votes. There are no compensation committee interlocks. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security Ownership of Management The following table sets forth the number and percentage of shares of Common Stock that as of March 15, 2010 are deemed to be beneficially owned by each director of the Company and director nominee, by each executive officer of the Company and by all directors and executive officers of the Company as a group.

Security Ownership of Certain Beneficial Owners The following table sets forth the number and percentage of shares of Common Stock beneficially owned as of March 5, 2010 by any person who is known to the Company to be the beneficial owner of more than five percent of the outstanding shares of Common Stock:

13. Certain Relationships, Related Transactions, and Director Independence One of the Company's subsidiaries provides safety, management, and accounting services to companies controlled by the Chief Executive Officer and Chief Financial Officer of the Company. These services are priced to cover the cost of the employees providing the services. Charges related to those services were approximately $0.04 million, $0.06 million and $0.07 million in 2009, 2008, and 2007, respectively. Other receivables due from entities affiliated through common ownership were $0.8 million and $1.0 million as of December 31, 2009 and 2008. One of the Operating Subsidiaries insurance providers, American Inter-Fidelity Exchange ("AIFE"), is managed by Mr. Venditti, a director of the Company and the Company has an investment of $0.1 million in the provider. AIFE provides auto liability and cargo insurance to several subsidiaries of the Company as well as other entities related to the Company by common ownership. For the years ended December 31, 2009, 2008 and 2007, cash paid to AIFE for insurance premiums and deductibles was approximately $3.9 million, $4.9 million, and $6.1 million, respectively. The Operating Subsidiaries exercised no control over the operations of AIFE. As a result, the Company recorded its investment in AIFE under the cost method of accounting for each of the three years in the period ended December 31, 2009. Under the cost method, the investment in AIFE is reflected at its original amount and income is recognized only to the extent of dividends paid by the investee. There were no dividends declared by AIFE for the years ended December 31, 2009, 2008 and 2007. If AIFE incurs a net loss, the loss may be allocated to the various policyholders based on each policyholder's premium as a percentage of the total premiums of AIFE for the related period. There has been no such loss assessment for any of the three years in the period ended December 31, 2009. The subsidiaries currently account for the majority of the premiums of AIFE. For the years ended December 31, 2009, 2008 and 2007, a subsidiary insurance agency of the Company, recorded commission income of $0.7 million, $0.7 million and $0.4 million, respectively, related to premiums with AIFE. This commission income is reflected as a reduction of insurance expense in the consolidated financial statements of the Company for the years ended December 31, 2009, 2008 and 2007, respectively. In addition, Mr. Kibler, the Chief Executive Officer and a director of the Company, Mr. Antonson, the Chief Financial Officer and a director of the Company, as well as Mr. Venditti, a director of the Company, are the sole shareholders of American Inter-Fidelity Corporation ("AIFC"), which serves as the attorney in fact of AIFE. AIFC is entitled to receive a management fee from AIFE. AIFE incurred management fees of approximately $0.5 million for each of the years ended December 31, 2009, 2008, and 2007, respectively. These management fees are available to be paid as dividends to these officers and directors of the Company. In each of 2009, 2008 and 2007, the Company paid consulting fees of $0.05 million, $0.03 million and $0.03 million, respectively, to two of its directors, Robert Scissors and Walter Williamson, relating to insurance and other services. The Company had notes payable due to its Chief Executive Officer and Chief Financial Officer that were converted into 2,668,918 shares of common stock of the Company in September 2007. The Company's Board of Directors are advised of all related party transactions and reviews these transactions as deemed appropriate. The Company's directors are identified in response to Item 10 above. The Company considers Messrs. James and Scissors to be independent. In making this determination, the Company has applied the NASDAQ definition of independence. Item 14. Principal Accountant Fees and Services The following table shows the fees paid or accrued by the Company for the audit and other services provided by BDO Seidman, LLP 2009 2008 _________________________ Audit Fees (1) $245,000 $338,630 Audit-Related Fees (2) $ - $134,022 Tax Fees (3) $ - $ - All Other Fees (4) $ - $ - _________________________ Total $245,000 $472,652 (1) Audit fees include fees associated with the annual audit of our consolidated financial statements, audit of internal control over financial reporting for 2008, and reviews of our quarterly reports on Form 10-Q. (2) Audit-related fees include fees associated with the historical audits and quarterly reviews in conjunction with the acquisition of ARL. (3) There were no tax fees. (4) There were no other fees.

The Audit Committee must pre-approve audit-related and non-audit services not prohibited by law to be performed by the Company's independent registered public accounting firm. PART IV Item 15. Exhibits and Financial Statement Schedules (a) (1) Financial Statements: Report of Independent Registered Public Accounting Firm..................................................23 Consolidated Balance Sheets as of December 31, 2009 and 2008............................................ 24-25 Consolidated Statements of Operations for the years ended December 31, 2009, 2008, and 2007..............26 Consolidated Statements of Shareholders' Equity for the years ended December 31, 2009, 2008, and 2007....27 Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007.............28 Notes to Consolidated Financial Statements ..............................................................30 (a)(2) Financial Statement Schedules: Schedule of Valuation and Qualifying Accounts............................................................42 Other schedules are not included because of the absence of the conditions under which they are required or because the required information is included in the consolidated financial statements or notes thereto.

(a)(3) List of Exhibits The following exhibits, numbered in accordance with Item 601 of Regulation S-K, are filed as part of this report: Exhibit 3.1 Articles of Incorporation of the Company (incorporated herein by reference to the Company's Proxy Statement of November 9, 1993) Exhibit 3.2 By-Laws of the Company (incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994) Exhibit 10.1 Amended and Restated Loan Agreement with US BANK and Carolina National Transportation Inc., Gulfline Transport Inc., Five Star Transport, Inc., Cam Transport, Inc., Unity Logistic Services, Inc., ERX, Inc., Friendly Transport, Inc., Transport Leasing, Inc., Harbor Bridge Intermodal, Inc., Patriot Logistics, Inc., Liberty Transport, Inc., Keystone Lines Corporation, and US 1 Industries, Inc. (incorporated by reference to the Company's Form 10-Q for the nine months ended September 30, 2005 filed on November 11, 2005) Exhibit 10.2 Amendment to Amended and Restated Loan Agreement with US BANK and Carolina National Transportation Inc., Gulfline Transport Inc., Five Star Transport, Inc., Cam Transport, Inc., Unity Logistic Services, Inc., ERX, Inc., Friendly, Transport, Inc., Transport Leasing, Inc., Harbor Bridge Intermodal, Inc., Patriot Logistics, Inc., Liberty Transport, Inc., Keystone Lines Corporation, and US 1 Industries, Inc. (incorporated by reference to the Company's Form 10-Q for the nine Months ended September 30, 2005 filed on November 11, 2005) Exhibit 10.3 Second Amendment to Amended and Restated Loan Agreement with US BANK and Carolina National Transportation Inc., Gulfline Transport Inc., Five Star Transport, Inc., Cam Transport, Inc., Unity Logistic Services, Inc., ERX, Inc., Friendly, Transport, Inc., Transport Leasing, Inc., Harbor Bridge Intermodal, Inc., Patriot Logistics, Inc., Liberty Transport, Inc., Keystone Lines Corporation, and US 1 Industries, Inc. (incorporated by reference to the Company's Form 10-Q for the nine months ended September 30, 2005 filed on November 11, 2005) Exhibit 10.4 Amendment to Amended and Restated Loan Agreement with US BANK and Carolina National Transportation LLC, Gulfline Transport Inc., Five Star Transport, Inc., Cam Transport, Inc., Unity Logistic Services, Inc., ERX, Inc., Friendly, Transport, Inc., Transport Leasing, Inc., Harbor Bridge Intermodal, Inc., Patriot Logistics, Inc., Liberty Transport, Inc., Keystone Lines Corporation, TC Services, Inc., Freedom Logistics, LLC, Thunderbird Logistics, LLC, Thunderbird Motor Express, LLC, US1 Logistics, LLC, and US 1 Industries, Inc. . (incorporated by reference to the Company's Form 10-Q for the six months ended June 30, 2007 filed on August 14, 2007) Exhibit 10.5 Amendment to Amended and Restated Loan Agreement with US BANK and Blue and Grey Brokerage, Inc., Cam Transport, Inc., Carolina National Logistics, Inc., Carolina National Transportation, LLC, Five Star Transport, LLC, Friendly Transport, LLC, Gulf Line Transportation, LLC, Harbor Bridge Intermodal Inc., Keystone Lines, Corp., Keystone Logistics, Inc., Liberty Transport, Inc., Patriot Logistics, Inc., Risk Insurance Services, LLC, TC Services, Inc., Transport Leasing, Inc., Unity Logistics Services Inc., and US1 Logistics, LLC. (incorporated by reference to the Company's Form 10-Q for the six months ended June 30, 2007 filed on August 14, 2007) Exhibit 10.6 Amendment to Amended and Restated Loan Agreement with US BANK and Blue and Grey Brokerage, Inc., Cam Transport, Inc., Carolina National Logistics, Inc., Carolina National Transportation, LLC, Five Star Transport, LLC, Friendly Transport, LLC, Gulf Line Transportation, LLC, Harbor Bridge Intermodal Inc., Keystone Lines, Corp., Keystone Logistics, Inc., Liberty Transport, Inc., Patriot Logistics, Inc., Risk Insurance Services, LLC, TC Services, Inc., Thunderbird Logistics, LLC, Thunderbird Motor Express, LLC, Transport Leasing, Inc., Unity Logistics Services Inc., and US1 Logistics, LLC. (incorporated by reference to the Company's Form 8-K announcing the completion of the Acquisition or Disposition of Assets filed on December 24, 2008) Exhibit 10.7 Amendment to Amended and Restated Loan Agreement with US BANK and Blue and Grey Brokerage, Inc., Cam Transport, Inc., Carolina National Logistics, Inc., Carolina National Transportation, LLC, Five Star Transport, LLC, Friendly Transport, LLC, Gulf Line Transportation, LLC, Harbor Bridge Intermodal Inc., Keystone Lines, Corp., Keystone Logistics, Inc., Liberty Transport, Inc., Patriot Logistics, Inc., Risk Insurance Services, LLC, TC Services, Inc., Thunderbird Logistics, LLC, Thunderbird Motor Express, LLC, Transport Leasing, Inc., Unity Logistics Services Inc., and US1 Logistics, LLC. (incorporated by reference to the Company's Form 8-K announcing the Sixth Amendment to Amended and Restated Loan Agreement and Eleventh Amendment to Revolving Loan Note with US Bank, US1 Industries, Inc. as filed on July 29, 2009) Exhibit 10.8 Amendment to Amended and Restated Loan Agreement with US BANK and AFT Transport, LLC, ARL Transport, LLC, Cam Transport, Inc., Carolina National Logistics, Inc., Carolina National Transportation, LLC, Five Star Transport, LLC, Friendly Transport, LLC, Gulf Line Transportation, LLC, Harbor Bridge Intermodal Inc., Keystone Lines, Corp., Keystone Logistics, Inc., Liberty Transport, Inc., Patriot Logistics, Inc., Risk Insurance Services, LLC, TC Services, Inc., Thunderbird Logistics, LLC, Thunderbird Motor Express, LLC, Transport Leasing, Inc., Unity Logistics Services Inc., and US1 Logistics, LLC. as filed with the Company's Form 10-K, this item announces the Seventh Amendment to Amended and Restated Loan Agreement and Twelfth Amendment to Revolving Loan Note with US Bank, US1 Industries, Inc. as included in the Company's Form 10-K for the fiscal year ended December 31, 2009. Exhibit 14.1 US 1 Industries, Inc. Code of Ethics (incorporated by reference to the Company's Form 10-K for the year ended December 31, 2003 filed on March 26, 2005 Exhibit 21.1 Subsidiaries of the Registrant Exhibit 31.1 Rule 13a-14(a)\15d-14a(a) Certifications Exhibit 32.1 Section 1350 Certifications

SIGNATURES Pursuant to the requirements of Sections 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. Date: March 15, 2010 US 1 INDUSTRIES, INC. By: /s/ Michael E. Kibler _______________________________________ Michael E. Kibler President & Chief Executive Officer (Principal Executive Officer) Date: March 15, 2010 By: /s/ Harold Antonson _______________________________________ Harold Antonson Chief Financial Officer & Treasurer (Principal Financial & Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 15, 2010 /s/ Michael E. Kibler ________________________________ Michael E. Kibler, Director Date: March 15, 2010 /s/ Robert I. Scissor ________________________________ Robert I. Scissors, Director Date: March 15, 2010 /s/ Lex L. Venditti ________________________________ Lex L. Venditti Date: March 15, 2010 /s/ Brad James ________________________________ Brad James, Director Date: March 15, 2010 /s/ Walter Williamson ________________________________ Walter Williamson, Director Date: March 15, 2010 /s/ Harold Antonson ________________________________ Harold Antonson, Director

Exhibit 10.8 SEVENTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT This Seventh Amendment to Amended and Restated Loan Agreement ("Amendment"), dated as of March 11, 2010 is between GULF LINE TRANSPORT LLC., an Indiana limited liability company, formerly known as Gulf Line Transport, Inc. ("Gulf Line"); FIVE STAR TRANSPORT, LLC., an Indiana limited liability company, formerly known as Five Star Transport, Inc. ("Five Star"); CAM TRANSPORT, INC., an Indiana corporation ("CAM"); UNITY LOGISTIC SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an Indiana corporation ("ERX"); FRIENDLY TRANSPORT, LLC, an Indiana limited liability company, formerly known as Friendly Transport, Inc. ("Friendly"); TRANSPORT LEASING, INC., an Arkansas corporation ("Transport Leasing"); KEYSTONE LINES, a California corporation ("Keystone Lines"); HARBOR BRIDGE INTERMODAL, INC., an Indiana corporation ("Harbor"); PATRIOT LOGISTICS, INC., an Indiana corporation ("Patriot"); LIBERTY TRANSPORT, INC., an Indiana corporation ("Liberty"); KEYSTONE LINES CORP., an Indiana corporation, formerly known as Keystone Lines Corporation ("Keystone"), TC SERVICES, INC., an Indiana corporation ("TC Services"); KEYSTONE LOGISTICS, INC., an Indiana corporation ("Keystone Logistics"); CAROLINA NATIONAL TRANSPORTATION LLC, an Indiana limited liability company ("Carolina National"); CAROLINA NATIONAL LOGISTICS, INC., an Indiana corporation ("Carolina Logistics"); FREEDOM 1 LLC, an Indiana limited liability company, formerly known as Freedom Logistics, LLC ("Freedom"); THUNDERBIRD LOGISTICS, LLC, an Indiana limited liability company ("Thunderbird Logistics"); THUNDERBIRD MOTOR EXPRESS, LLC, an Indiana limited liability company ("Thunderbird Motor"); US 1 LOGISTICS, LLC, an Indiana limited liability company ("US 1 Logistics") US 1 INDUSTRIES, INC., an Indiana corporation ("Industries"), ARL TRANSPORT LLC, a Delaware limited liability company ("ARL") and AFT TRANSPORT LLC, a Delaware limited liability company ("AFT"). (Gulf Line, Five Star, CAM, Unity, ERX, Friendly, Transport Leasing, Keystone Lines, Harbor, Patriot, Liberty, Keystone, TC Services, Keystone Logistics, Carolina National, Carolina Logistics, Freedom, Thunderbird Logistics, Thunderbird Motor, US 1 Logistics, Industries, ARL and AFT are hereinafter each referred to each as a "Borrower Entity", and collectively as the "Borrower"); and U.S. BANK, a national banking association ("Lender"). Capitalized terms not defined herein have the meanings ascribed to them in the Existing Loan Agreement, as that term is defined herein. PRELIMINARY STATEMENT: All Borrower Entities have previously entered into an Amended and Restated Loan Agreement with Lender dated as of March 10, 2005, as amended by (i) that certain Amendment to Amended and Restated Loan Agreement dated as of May 5, 2005, (ii) that certain Second Amendment to Amended and Restated Loan Agreement dated as of September 30, 2005, (iii) that certain Third Amendment to Amended and Restated Loan Agreement dated July 12, 2007, (iv) that certain Fourth Amendment to Amended and Restated Loan Agreement dated March 25, 2008, (v) that certain Fifth Amendment to Amended and Restated Loan Agreement dated December 18, 2008, and (vi) that certain Sixth Amendment to Amended and Restated Loan Agreement dated July 24, 2009 (the Amended and Restated Loan Agreement as so amended, the "Existing Loan Agreement," and, as amended by this Amendment, the "Loan Agreement"). Borrower has violated certain financial covenants under the Loan Agreement, and Lender has agreed to waive the violations in consideration for the following changes be made to the Loan Facility: redefinition of the minimum debt service ratio; a covenant that the Borrower's current maturities of long term debt other than debt to the Lender will not exceed $700,000 as of December 31, 2009, and thereafter. NOW THEREFORE, it is hereby agreed as follows: 1. All capitalized terms used herein but not defined herein shall have the same meaning as ascribed to such terms in the Loan Agreement. 2. Lender hereby waives Borrower's violation of Section 7.20 and 7.23 as of December 31, 2009. 3. Section 7.6 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "Capital Expenditures. In any year, make or incur , any Capital Expenditures in excess of $600,000. 4. Section 7.5 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "Dividends and Distributions. Make any dividends, distributions or other expenditures with respect to Borrower's capital stock ownership interests if same would cause a violation of any of the terms or conditions of this Agreement or make any repurchases of or redemptions of capital stock or make any other distribution by reduction of capital without the prior written consent of Lender" 5. Section 7.20 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "Fail to maintain a minimum debt service ratio for US 1 Industries, Inc. ("Industries") and its subsidiaries (on a consolidated basis) of 1.15:1 based on a rolling four (4) quarter average, to be calculated as follows: (1) the sum of: (x) Net Income before (i) taxes, (ii) minority interest expense, (iii) depreciation and (iv) amortization expense, (v) cash payment of interest, (vi) rent and lease expense (vii) loss from the sale of assets,and (Vii) any one time non-cash loss approved by lender less (y) CapEx, taxes paid, distributions made, gain on the sale of assets and cash dividends paid divided by (2) the sum of: (i) principal payments over the preceding 12 months on Indebtedness from Borrowed Money (excluding principal payments on the Revolving Loan), (ii) cash payment of interest, and (iii) rent and lease expense. For purposes of this Section 7.20, CapEx shall mean 50% of depreciation expense for Industries and its subsidiaries (on a consolidated basis). For the purposes of testing the minimum debt service ratio, "rent and lease expense" shall mean all amounts payable to any landlords and lessors by any Borrower Entity for the use of any real or personal property." 6. Section 7.23 of the existing Loan Agreement is amended and restated in its entirety to read as follows: "Permit Borrower's current maturities of Indebtedness for Borrowed Money other than the Revolving Loan to exceed $700,000 as of December 31, 2009, or at any time thereafter." 7. Except for the violation of 7.20 and 7.23 of the Loan Agreement, which have been waived by Lender herein, each Borrower Entity represents and warrants that no Event of Default or Incipient Default (as defined in the Loan Agreement) exists or will occur as a result of the execution of and performance under this Amendment and that each of their representations and warranties set forth in the Loan Instruments (as the definition of that term is amended by this Amendment) is true and correct as of the date hereof, except to the extent that any such representations or warranties speak exclusively to an earlier date. 8. By their execution hereof, Harold Antonson and Michael Kibler hereby reaffirm their Limited Guaranties of the Revolving Loan and other obligations under the Loan Agreement and Note 9. Except as expressly amended hereby, the terms and conditions of the Loan Agreement as originally set forth therein shall remain in full force and effect. 10. All references to the "Loan Agreement" and other terms defined in the Existing Loan Agreement shall be deemed to take account of the Existing Loan Agreement, as amended by this Amendment. 11. Borrower shall reimburse Lender for all of Lender's out-of- pocket costs related to the transaction contemplated herein, including, without limitation, public record searches ordered by Lender or its counsel both prior and subsequent to the closing of the transactions contemplated herein, as well as legal fees incurred by Lender in connection with the preparation of documents, due diligence review or closing regarding the transaction contemplated herein, or the enforcement of the terms hereof or of any of the Loan Instruments. 12. From time to time, Borrowers shall execute and deliver to Lender such additional documents as Lender reasonably may require to carry out the purposes of this Amendment and the Loan Instruments and to protect Lender's rights hereunder and thereunder, and shall not take any action inconsistent with the purposes of the Loan Instruments. 13. Except as expressly amended hereby, the terms and conditions of the Existing Loan Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned Borrowers and Lender have signed this Amendment to Amended and Restated Loan Agreement as of the date first above written. CAROLINA NATIONAL LOGISTICS, INC. an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ GULF LINE TRANSPORT LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ FIVE STAR TRANSPORT, LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ CAM TRANSPORT, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ UNITY LOGISTIC SERVICES INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ ERX, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ FRIENDLY TRANSPORT, LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ TRANSPORT LEASING, INC., an Arkansas corporation By: _____________________________ Name: ___________________________ Title: __________________________ HARBOR BRIDGE INTERMODAL, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ KEYSTONE LINES, a California corporation By: _____________________________ Name: ___________________________ Title: __________________________ PATRIOT LOGISTICS, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ LIBERTY TRANSPORT, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ KEYSTONE LINES CORP., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ TC SERVICES, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ KEYSTONE LOGISTICS, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ CAROLINA NATIONAL TRANSPORTATION LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ FREEDOM 1, LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ THUNDERBIRD LOGISTICS, LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ THUNDERBIRD MOTOR EXPRESS, LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ US 1 LOGISTICS, LLC, an Indiana limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ US 1 INDUSTRIES, INC., an Indiana corporation By: _____________________________ Name: ___________________________ Title: __________________________ ARL TRASPORT LLC, a Delaware limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ AFT TRANSPORT LLC, a Delaware limited liability company By: _____________________________ Name: ___________________________ Title: __________________________ _________________________________ Harold Antonson _________________________________ Michael Kibler U.S. BANK a national banking association By: _____________________________ Name: Ben Coscarart Title: Vice President

US 1 INDUSTRIES INC 10-K