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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended December 31, ~~2021~~2022


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

For the transition period from ______________ to _____________

Commission file number 000-54218

EVO Transportation & Energy Services, Inc.

(Exact name of registrant as specified in its charter)


Delaware		37-1615850
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
2075 West Pinnacle Peak Rd. Suite 130 Phoenix, AZ 85027
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 877-973-9191

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

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

Common Stock, $0.0001 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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, smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

~~State~~The ~~the~~ aggregate market value of the voting and non-voting common equity held by non-affiliates ~~computed~~as byof ~~reference to~~ the ~~price~~last atbusiness ~~which~~day of the ~~common~~Registrant’s ~~equity~~2023 second fiscal quarter was ~~last~~approximately ~~sold,~~$36.8 ormillion based on the ~~average~~price ~~bid~~of ~~and~~$.10 ~~asked~~per share, the price ofat ~~such~~which the Registrant’s common equity, was last sold as of the last business day of the ~~registrant~~Registrant’s ~~most~~2023 ~~recently completed~~ second fiscal quarter as reported on the OTC Expert Market.

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last business day of the Registrant’s 2021 second fiscal quarter was approximately $15.2 million based on the price of $7.00 per share, the price at which the Registrant’s common equity was last sold as of the last business day of the Registrant’s 2021 second fiscal quarter as reported on the OTC Pink Marketplace.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of ~~June~~November 2716, ~~2022~~2023, there were 16435,~~387~~200,~~944~~219 shares of the registrant’s common stock, par value $0.0001, outstanding.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS		ii
PART I		1
	ITEM 1. BUSINESS	1
	ITEM 1A. RISK FACTORS	5
	ITEM 1B. UNRESOLVED STAFF COMMENTS	1819
	ITEM 2. PROPERTIES	1819
	ITEM 3. LEGAL PROCEEDINGS	19
	ITEM 4. MINE SAFETY DISCLOSURE	19
PART II		20
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	20
	ITEM 6. SELECTED FINANCIAL DATA	20
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3028
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	3129
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	3231
	ITEM 9A. CONTROLS AND PROCEDURES	3231
	ITEM 9B. OTHER INFORMATION	3433
PART III		3534
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	3534
	ITEM 11. EXECUTIVE COMPENSATION	4138
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	4643
	ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	5249
	ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	5650
PART IV		5752
	ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	5752
EXHIBIT INDEX		5853
SIGNATURES		6663

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. ~~Forward~~All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, ~~reflect~~including without limitation: any projections of earnings, revenues, or other financial items; our growth strategy and potential acquisition candidates; our relationship with the United States Postal Service; gasoline, diesel and natural gas prices; management’s ~~current~~expectations ~~view~~regarding ~~about~~market ~~future~~trends ~~events~~and competition in the transportation industry, government tax credits and other incentives, insurance and environmental and safety considerations; and any statements of belief and any statements of assumptions underlying any of the foregoing. When used in this report, the words “anticipate”, “will”, “believe”, “expects”, “intends”, “estimates”, “projects”, “target”, “goals”, “plans”, “objectives”, “should”, “future,”, “seek”, “may”, “could”, “likely” or similar expressions or the negative of these terms may identify forward-looking statements as they relate to EVO Transportation & Energy Services, Inc., a Delaware corporation (“EVO,” the “Company,” “we,” “us” or “our”), its subsidiaries or management. The forward-looking statements in this report generally relate to: EVO’s growth strategy and potential acquisition candidates, EVO’s relationship with the United States Postal Service, gasoline, diesel, and natural gas prices, management’s expectations regarding market trends and competition in the transportation industry, government tax credits and other incentives, insurance, and environmental and safety considerations.

Forward-looking statements are based on information available to management at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause EVO’s results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements. Such statements reflect the current view of management with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section entitled “Risk Factors” of this report) relating to the Company’s industry, its operations and results of operations, and any businesses that may be acquired by it. These factors include, among other factors:

•

Our ability to recruit and retain qualified drivers;

•

Future equipment (including tractor and box truck) prices, our equipment purchasing plans, and our equipment turnover (including expected tractor trade-ins);

•

The expected freight environment, including freight demand and volumes;

•

Future third-party service provider relationships and availability;

•

Future contracted pay rates with independent contractors and compensation arrangements with drivers;

•

Future supply, demand, use and prices of crude oil, gasoline, diesel, natural gas and other vehicle fuels, such as electricity, hydrogen, renewable diesel, biodiesel and ethanol;

•

Our expectations regarding the market’s perception of the benefits of conventional and renewable natural gas relative to gasoline and diesel and other alternative vehicle fuels and electronically powered vehicles, including with respect to factors such as supply, cost savings, environmental benefits and safety;

•

The competitive environment in which we operate, and the nature and impact of competitive developments in our industry;

•

Potential adoption of government policies or programs that favor vehicles or vehicle fuels other than natural gas, including long-standing support for gasoline and diesel-powered vehicles and growing support for electric and hydrogen-powered vehicles;

•

The impact of, or potential for changes to, emissions requirements applicable to vehicles powered by gasoline, diesel, natural gas or other vehicle fuels, as well as emissions and other environmental regulations and pressures on crude oil and natural gas drilling, production, importing or transportation methods and fueling stations for these fuels;

•

Developments in our products and services offering, including any new business activities we may pursue in the future;

•

The success and importance of any acquisitions, divestitures, investments or other strategic relationships or transactions;

•

The general strategies adopted by the USPS with respect to its third party surface transportation suppliers;

•

The impacts of the COVID-19 global pandemic;

•

General political, regulatory, economic and market conditions;

•

Our need for and access to additional capital to fund our business or repay our debt, through selling assets or pursuing equity, debt or other types of financing; and

•

The flexibility of our model to adapt to market conditions.

The preceding list is not intended to be an exhaustive list of all of the topics addressed by our forward-looking statements and should be read in conjunction with other cautionary statements that are included herein or elsewhere. Although the forward-looking statements in this report reflect our good faith judgment based on available information, they are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause or contribute to such differences include, among others, those discussed in this report in Item 1A. Risk Factors. In addition, we operate in a competitive and rapidly evolving industry in which new risks emerge from time to time, and it is not possible for us to predict all of the risks we may face, nor can we assess the impact of all factors on our business or the extent to which any factor or combination of factors could cause actual results to differ from our expectations. As a result of these and other potential risks and uncertainties, our forward-looking statements should not be relied on or viewed as predictions of future events. All forward-looking statements in this report are made only as of the date of this document and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements for any reason, including to conform these statements to actual results or to changes in our expectations. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission (the “SEC”) after the date we file this report.

We qualify all of our forward-looking statements by this cautionary note.

iii

PART I

Item 1. Business.

Our Business

EVO Transportation & Energy Services, Inc. (“EVO” and, together with its direct and indirect subsidiaries, the “Company”) is a ~~transportation~~truckload ~~provider~~carrier serving the United States Postal Service (“USPS”) and other customers. We believe EVO is ~~the~~one ~~second~~of the largest surface transportation ~~company~~companies serving the USPS, with a diversified fleet of tractors, straight trucks, and other vehicles that currently operate on either diesel fuel, gasoline or compressed natural gas (“CNG”). InEVO ~~certain~~also ~~markets,~~operates wea ~~fuel~~brokerage ~~our~~unit ~~vehicles~~that atsupports ~~one~~the oftruckload ~~our~~business ~~three~~and ~~CNG~~services ~~stations that serve~~ other ~~customers~~corporate ~~as well~~customers. WeIn ~~are~~select ~~actively engaged in reducing CO2 emissions by operating on CNG~~cases, ~~pursuing~~EVO ~~opportunities~~may tosubcontract ~~use other alternative fuels, and by optimizing~~ the ~~routing~~transportation ~~efficiency~~ of ~~our~~certain ~~operations~~loads to ~~reduce~~third-party ~~fuel usage~~carriers. We operate from our headquarters in Phoenix, Arizona and from 10numerous ~~main~~ terminals ~~located~~ throughout the United States.

~~EVO~~Historically, ~~has~~we have grown primarily through acquisitions, and we have ~~completed seven acquisitions since our initial business combination in 2016. We have~~ also grown organically by obtaining new contracts from the USPS and other customers. In 2021, we generated $270.7 million in revenue, which includes $34.8 million of nonrecurring revenue. We have been actively integrating the acquisitions we have made under common leadership and technology and are now operating under a single umbrella brand.

Service and Product Offering

Mail Transportation

We transport ~~mail and~~ freight ~~by truck~~ for the USPS and ~~other~~believe ~~customers~~we are one of its largest ground transportation suppliers. We competitively bid on transportation contracts that ~~procure and~~ specify the movement of ~~mail~~freight between processing facilities, distribution centers and ~~destination~~other ~~post~~postal ~~offices~~locations. Customer contracts with the USPS are typically two to four years in term and ~~most~~may ~~often~~be ~~are~~ renewed with the incumbent supplier if appropriate service has been performed in accordance with contract requirements including, but not limited to, USPS performance standards, McNamara-O’Hara Service Contract Act (“SCA”) requirements, Department of Transportation (“DOT”) regulations (federal and state), and all other applicable local and state regulations and if the supplier continues to meet the requirements of the USPS.

As of December 31, ~~2021~~2022, we held over ~~250~~200 contracts with the USPS. Of these contracts, 15 were Dynamic Route Optimization (“DRO”) contracts and EVO believes it is one of the ~~remainder~~largest ~~were~~service ~~traditional~~providers ~~highway~~of ~~route~~this ~~contracts~~contract type. Our mail transportation operations generated $~~270~~278.75 million in revenue in ~~2021 (which includes $34.8 million of nonrecurring revenue)~~2022, or 8990% of our total revenues.

Freight and Brokerage Services

In addition to our USPS mail transportation and delivery services, we provide freight and brokerage services to ~~various~~a variety of corporate customers. Our freight and brokerage services generated $3331.02 million of revenues in ~~2021~~2022, or 1110% of our total revenues.

Compressed Natural Gas Fueling

We own three CNG fueling stations that serve our fleet and other customers. Those stations are located in Fort Worth, TX, Oak Creek, WI, and Tolleson, AZ and accommodate class 8 trucks and trailers. We have two additional CNG fueling stations located in Jurupa Valley, CA and San Antonio, TX that are no longer operational. Most of our CNG customers fuel at our stations under long term contracts and we have a small number of retail customers. Our CNG fueling operations generated $0.4 million of revenues in 2021, or less than 1% of our total revenues.

History

The Company was incorporated in the State of Delaware on October 22, 2010 under the name “Minn Shares Inc.” From December 2010 until November 2016, Minn Shares Inc. was considered a public “shell” company and dedicated its operations to seeking a potential merger or acquisition partner. On November 22, 2016, ~~the~~Minn ~~Company~~Shares Inc. and Titan CNG LLC, a Delaware limited liability company in the business of owning and operating compressed natural gas fueling stations (“Titan”), entered into an agreement and plan of securities exchange whereby the members of Titan acquired approximately 90% of ~~the~~Minn ~~Company’s~~Shares Inc. outstanding shares. Following the closing, the business plan of Titan became the business plan of ~~the~~Minn ~~Company~~Shares Inc. and all former officers of ~~the~~Minn ~~Company~~Shares Inc. resigned and were replaced by officers designated by Titan. On August 31, 2017, the Company changed its name from “Minn Shares Inc.” to “EVO Transportation & Energy Services, Inc.”

Following the November 2016 public shell reverse merger transaction, the Company’s primary strategy was to seek growth through acquisitions. The Company completed the following acquisitions subsequent to November 2016:

•

On February 1, 2017, ~~the~~EVO ~~Company~~ acquired Environmental Alternative Fuels, LLC and its wholly owned subsidiary, EVO CNG, LLC. EVO CNG, LLC is engaged in the business of operating compressed natural gas fueling stations.

•

On June 1, 2018, ~~the~~EVO ~~Company~~ acquired Thunder Ridge Transport, Inc. (“Thunder Ridge”). Thunder Ridge is based in Springfield, Missouri and is engaged in the ~~business~~truckload ofcarrier ~~fulfilling government contracts for freight trucking services, as well as providing freight trucking services to non-government entities~~business.

•

On November 16, 2018, ~~the~~EVO ~~Company~~ acquired W.E. Graham, Inc., a trucking company based in Memphis, Tennessee and is engaged in the ~~business~~truckload ofcarrier ~~fulfilling government contracts for freight trucking services~~business.

On January 2, 2019, the Company acquired Sheehy Mail, Inc. (“Sheehy”). Sheehy is based in Waterloo, Wisconsin and is engaged in the business of fulfilling government contracts for freight trucking services, as well as providing freight trucking services to non-government entities.1

•

On ~~February~~January 12, 2019, ~~the~~EVO ~~Company~~ acquired ~~Ursa~~Sheehy ~~Major~~Mail, ~~Corporation (“Ursa”) and J~~Inc.B. ~~Lease Corporation~~ (“~~JB Lease~~Sheehy”). ~~Ursa~~Sheehy ~~and~~is ~~JB Lease are~~ based in ~~Oak Creek~~Waterloo, Wisconsin and ~~are~~is engaged in the ~~business~~truckload ofcarrier ~~fulfilling government contracts for freight trucking services, as well as providing freight trucking services to non-government entities~~business.

•

On ~~July~~February 151, 2019, ~~the~~EVO ~~Company~~ acquired ~~Courtlandt~~Ursa ~~and~~Major ~~Brown~~Corporation ~~Enterprises L.L.C.~~ (“~~Courtlandt~~Ursa”) and ~~Finkle~~J.B. ~~Transport~~Lease ~~Inc.~~Corporation (“~~Finkle~~JB Lease”). ~~Finkle~~ Ursa and ~~Courtlandt~~JB Lease are based in ~~Newark~~Oak Creek, ~~New~~Wisconsin ~~Jersey~~ and are engaged in the ~~business~~truckload ofcarrier ~~fulfilling government contracts for freight trucking services, as well as providing freight trucking services to non-government entities~~business.

•

On ~~September~~July 1615, 2019, ~~the Company, through its wholly-owned subsidiary~~ EVO ~~Holding~~acquired ~~Company,~~Courtlandt ~~LLC,~~and ~~acquired~~Brown ~~John~~Enterprises WL. ~~Ritter, Inc~~L. ~~(“JWR”), Ritter Transportation Systems, Inc~~C. (“~~Ritter Transportation~~Courtlandt”), ~~Ritter~~and Finkle Transport, Inc. (“~~Ritter Transport~~Finkle”)~~, and Johmar Leasing Company, LLC (“Johmar,” and together with JWR, Ritter Transportation, and Ritter Transport, the “Ritter Companies”)~~. ~~The~~Finkle ~~Ritter~~and ~~Companies~~Courtlandt are based in ~~Laurel~~Newark, ~~Maryland~~New Jersey and are engaged in the ~~business~~truckload ofcarrier ~~fulfilling government contracts for freight trucking services, as well as providing freight trucking services to non-government entities~~business.

•

On September 16, 2019, EVO acquired John W. Ritter, Inc. (“JWR”), Ritter Transportation Systems, Inc. (“Ritter Transportation”), Ritter Transport, Inc. (“Ritter Transport”), and Johmar Leasing Company, LLC (“Johmar,” and together with JWR, Ritter Transportation, and Ritter Transport, the “Ritter Companies”). The Ritter Companies are based in Laurel, Maryland and are engaged in the truckload carrier business.

Strategy

InTwo ~~2014,~~of the top USPS ~~announced~~priorities ~~that~~for itits ~~intends~~supply tobase ~~significantly~~are ~~reduce~~on-time ~~its~~service ~~supplier~~scores ~~base~~and ~~from~~safety ~~over~~performance. ~~4,000~~The ~~surface~~USPS ~~transportation~~demands ~~contractors~~a to95% ~~less~~on-time ~~than~~service ~~1,000~~score byfor ~~2022.~~its Assuppliers ~~part~~and ofa ~~this~~satisfactory ~~consolidation~~safety ~~effort~~rating, ~~the~~including real-time reporting requirements for accidents. EVO’s USPS ~~began~~strategy ~~implementing~~is ~~the~~anchored ~~Dynamic~~around ~~Route~~high-performance ~~Optimization~~execution ~~(“DRO”)~~in ~~program~~both ~~and~~of ~~consolidating~~these ~~contracts,~~areas: ~~which~~providing isflawless ~~designed~~operational toexcellence ~~manage~~and ~~fewer~~minimizing ~~relationships~~omitted trips and ~~work~~performing with ~~larger~~a ~~prime~~best-in-class ~~contractors~~safety record. We ~~Although~~have ~~the~~a ~~DRO~~dedicated ~~program~~contracting ~~has~~team ~~evolved~~focused ~~since~~not ~~its~~only ~~announcement~~on ~~and~~bidding ~~now~~on ~~operates~~new contracts but more ~~like~~importantly, ~~traditional~~providing ~~static~~concierge ~~USPS~~level ~~contracts,~~service weand ~~expect~~responding ~~additional~~to any and all inquiries from the USPS ~~contracts~~on toa ~~come~~real-time ~~available~~basis. We inbelieve ~~the~~that ~~next~~by ~~several~~executing ~~years~~on asthese ~~the~~priorities, ~~USPS~~EVO ~~continues~~will continue to ~~consolidate~~be ~~contracts~~a favored USPS supplier, maximizing new bid opportunities and contract renewal prospects.

WeOver ~~believe~~the past few years the USPS has consolidated the number of carriers it utilizes and EVO isexpects ~~well~~further ~~positioned~~consolidation toof ~~take~~this ontransportation ~~more~~supplier ~~business~~base ~~with~~as the USPS asredesigns its network under its “Delivering for America” plan. As the ~~postal~~USPS ~~service~~affects ~~consolidates~~a ~~vendors~~number of contracting, technology and ~~solicits~~programmatic ~~larger~~changes ~~contracts~~and ~~for~~requirements, ~~which~~we ~~bigger~~believe ~~suppliers~~it ~~are~~may ~~better~~become ~~equipped~~more difficult for suppliers to ~~bid~~meet the raised USPS standards. We ~~have~~believe aEVO’s ~~dedicated~~scale ~~team~~and ~~focused~~resources onsurpass ~~bidding~~many onof ~~new~~our ~~contracts~~competitors and ~~responding~~best position us to ~~any~~successfully ~~inquiries~~bid ~~from~~on ~~the~~large ~~USPS~~and onmore ~~existing~~complex ~~contracts~~solicitations. EVO Wehas ~~believe~~invested wesignificantly ~~have~~in aninformation ~~industry-leading~~systems ~~ability~~and personnel that allow us to ~~provide~~better ~~the~~manage our USPS ~~with~~contracts and generate data to support day-to-day operations. For example, implementation of a transportation management system (TMS) and a telematics platform has allowed us to meet the ~~information~~scheduling and ~~service~~reporting ~~levels~~needs ~~they~~of ~~desire~~the USPS. These capabilities are likely to only grow in criticality as wethe ~~bid~~USPS oncontinues ~~new~~to ~~contracts,~~upgrade and wetransition ~~intend~~its systems into the future. EVO plans to continue to ~~expand~~invest ~~both~~in ~~organically~~solutions ~~and~~that ~~through~~allow ~~acquisitions~~us to ~~provide~~better ~~greater~~compete ~~coverage~~for toadditional ~~the~~ USPS business currently provided by other suppliers.

WeThe ~~have~~USPS ~~invested~~adopted ~~meaningfully~~a inrobust ~~information~~environmental ~~systems~~sustainability ~~and~~plan ~~personnel~~that ~~which~~includes wea ~~believe~~stated ~~will~~commitment ~~allow us~~ to bereducing ~~effective~~greenhouse ingas ~~managing~~emissions ~~DRO/consolidation~~through ~~and~~increased ~~other~~procurement ~~USPS contracts. For example, continuing implementation~~ of aservices ~~transportation~~from ~~management~~alternative ~~system~~fuels ~~has~~carriers. We ~~allowed~~intend us to ~~meet~~continue ~~the~~to ~~scheduling~~evaluate ~~and~~additional ~~reporting~~vehicles ~~needs~~powered ofby ~~the~~alternative ~~USPS~~energy, ~~under~~including ~~its~~electrically ~~DRO~~powered ~~and other programs~~vehicles. ~~Our~~We ~~acquisitive~~believe ~~growth~~our ~~strategy~~shared ~~has~~commitment ~~also~~with ~~enabled~~the usUSPS to ~~achieve~~reducing aemissions ~~greater~~positions ~~scale~~the ~~than~~Company ~~many~~to ofgrow our ~~regional~~business ~~and~~relationship ~~local~~with ~~competitors,~~the ~~which~~USPS ~~gives~~in us the ~~ability to competitively bid on a high percentage of available contracts~~future.

~~Our largest customer~~Additionally, the ~~USPS,~~Company ~~adopted~~was aan ~~robust~~early ~~environmental~~participant ~~sustainability~~in ~~plan~~the ~~that~~DRO ~~includes~~(now aLRO) ~~stated~~program ~~commitment~~with tothe ~~reducing greenhouse gas emissions through increased procurement of services from alternative fuels carriers~~USPS. We ~~have~~believe ~~a dedicated focus on reducing emissions through operating routes as efficiently as possible as well as by operating vehicles on CNG. In addition, in certain markets we fuel~~ our ~~vehicles~~existing atrelationship ~~one~~with ofthe ~~our~~USPS ~~three~~and ~~operating~~experience ~~CNG~~with ~~stations~~the ~~that~~LRO ~~serve~~program ~~other~~provide ~~customers~~the asCompany ~~well. We intend to continue to acquire~~ additional ~~vehicles~~competitive ~~powered~~advantages bywhen ~~alternative~~bidding ~~fuels,~~on ~~including~~these ~~electrically powered~~ contracts.

2In addition to serving the USPS, EVO plans to accelerate its customer diversification efforts, both organically and inorganically through M&A activity. Utilizing our technology platform, fleet, and network, EVO plans to grow its non-USPS business through new customer acquisition and growth of existing customer accounts. By having a more balanced customer base, EVO will be able to better redeploy its capacity and minimize the impact of any losses of USPS contracts or another individual customer’s business.

vehicles. We believe our shared commitment with the USPS to reducing emissions positions the Company to grow our business relationship with the USPS in the future.

We intend to leverage our infrastructure to serve additional customers beyond the USPS. By utilizing our technology platform, network of terminals, and in some cases an ability to offer freight products with similar next day options, we are able to offer transportation services to corporate customers at competitive rates while also improving margins. We will continue to invest in our technology solutions in order to offer industry-leading service to our customers.

We also plan to continue our focus on sustainable operations, both by continuing to utilize our company owned CNG stations and developing transit lanes utilizing CNG trucks near our CNG stations and by acquiring additional vehicles powered by alternative fuels, including electrically powered vehicles. Since January 2019, we completed the acquisition of Sheehy of Waterloo, Wisconsin, which operates the largest fleet of CNG trucks servicing the USPS. We also completed the acquisition of Ursa in 2019, which is based one mile from our Oak Creek CNG station.

Market Overview

Competition

~~The~~In ~~U.S.~~fiscal ~~mail~~year ~~surface~~2022, ~~transportation~~our ~~industry~~largest iscustomer, ~~estimated~~the toUSPS ~~represent~~spent anover ~~approximately~~ $56 billion ~~subset~~on ofground ~~the~~transportation ~~broader~~and transportation ~~market~~services. The USPS ~~trucking~~ground transportation industry is highly competitive and fragmented. As Inof ~~2014~~2022, the USPS had ~~active contracts with~~ over 41,~~000~~800 ~~transportation~~local ~~contractors,~~distribution and itprocessing ~~publicly~~network ~~announced~~transportation ~~its goal to reduce that number to below 1,000 by 2022~~suppliers. EVO ~~Although~~competes ~~the~~primarily ~~DRO~~with ~~program~~other ~~has~~transportation ~~evolved~~companies since its announcement and now operates more like traditional static USPS contracts, we expect additional USPS contracts to come available in the next several years as the USPS continues to consolidate contracts.

The Company competes primarily with other transportation companies for contracts with the USPS. We also compete with other motor carriers for the services of drivers, independent contractors and management employees. Our largest customer, the USPS, typically awards its contracts competitively and often renews contracts with incumbent service providers if appropriate services have been performed. The Company believes that the principal differentiating factors in its business, relative to competition, are service, efficiency, pricing, and its focus on alternative fuels, which aligns with the USPS’s stated preference for contractors who prioritize alternative energy options. Additionally, the Company was an early adopter of the DRO program with the USPS. We believe our existing relationship with the USPS and experience with the DRO program provide the Company an additional competitive advantage when bidding on these contracts.2

for contracts with the USPS, including both asset and asset-light companies. We believe the USPS is looking to further reduce the number of counterparties it transacts with.

The USPS awards its contracts through a competitive bid process and often opts to renew contracts with incumbent service providers if appropriate services have been performed and pricing is competitive with the market. The Company believes that the principal differentiating factors in its business relative to competition, are service, efficiency, technology, pricing, and alternative fuels capabilities. Additionally, the Company was an early participant in the DRO (now LRO) program with the USPS. We believe our existing relationship with the USPS and experience with the LRO program provide the Company additional competitive advantages when bidding on these contracts.

More generally, EVO also competes with other trucking and asset light freight companies for the business of non-USPS freight customers.

Our Target Customers

The USPS is our primary ~~target~~ customer, but we also seek to provide ~~freight~~truckload ~~trucking~~ and brokerage services to ~~various~~other non-USPS corporate clients. While EVO will continue to bid on new USPS contract solicitations, it is focused strategically on adding new customers and growing its non-USPS revenue base to create a more balanced book of business.

Principal Customers and Suppliers

The USPS is the Company’s primary customer, and for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, the USPS accounted for approximately 8990% and 87%, respectively, of the Company’s revenue. As a result, the Company’s trucking operations are highly dependent on the USPS. For a discussion of the risks associated with the possible loss of the USPS as a customer or a significant reduction in the Company’s relationship with the USPS, refer to Item 1A. Risk Factors of this report.

Safety and Risk Management

The Company considers ~~Safety~~safety, ~~Risk~~risk and ~~Regulatory~~regulatory compliance to be a key focus of all operations. Through this focus, the Company is consistently identifying risks, developing a proactive approach to improving overall ~~Safety~~safety performance and reducing employee injuries. Of the many tools used by the ~~company~~Company, items such as on-board cameras, trucks equipped with accident-avoidance devices, and training on defensive driving continue to be effective in reducing vehicle accidents and injuries.

Because the Company’s primary business is transportation on public roadways, we are regulated by the Federal Motor Carrier Safety Administration (“FMCSA”), a division of the ~~US Department of Transportation (~~DOT), and the Occupational Safety and Health Administration (“OSHA”). The Company operates its business to exceed the requirements of these agencies, and currently maintains a Satisfactory rating with the FMCSA.

The primary safety related risks associated with the transportation industry consist of damage to Company equipment or third parties involved in a vehicle accident, personal injury to others involved in an accident, and injuries sustained to employees. The Company maintains insurance coverage for all operations to exceed the requirements of the FMCSA, and reviews its coverage on an annual basis.

3To the extent that the Company subcontracts any portion of its business to third-party trucking companies, those companies operate under their own DOT authority, and provide their own liability and workers compensation insurance, which the Company has the right to audit. All third-party trucking companies contracted with the Company must meet the Company's insurance and safety requirements. All third-party trucking companies must also list the Company as additional insured on all insurance policies and contain a Waiver of Subrogation on their workers' compensation policies.

The Company maintains insurance coverage for all operations to exceed the requirements of the FMCSA, and consistently reviews its coverage on an annual basis.

To the extent that the Company subcontracts any portion of its business to third party trucking companies, those companies operate under their own DOT authority, and provide their own liability and workers compensation insurance, which the Company has the right to audit from time to time. All third-party trucking companies contracted with the Company must meet the Company's insurance requirements and safety requirements by being rated as Satisfactory by the FMCSA. All third-party trucking companies must also list the Company as additional insured on all insurance policies and contain a Waiver of Subrogation on their workers compensation policy.

Fuel

In ~~2021~~2022, we used approximately 79.750 million gallons of diesel and approximately 1.350 million gas gallon equivalents (“GGEs”) of CNG. Our fuel costs are typically passed on to customers. In addition, we qualified for a retroactive tax credit of $0.50 per GGE for roughly 0.7 million of the GGEs utilized in 2021 and a tax credit of $0.30 per GGE for the remaining approximately 0.635 million GGES utilized in 2021. These tax credits expired on December 31, 2021.

The Company actively manages its fuel purchasing network in an effort to maintain adequate fuel supplies and reduce its fuel costs. The Company primarily purchases its fuel through a network of retail truck ~~stops~~chains with which it has negotiated volume purchasing discounts. The Company seeks to reduce its fuel costs by routing its drivers to truck stops with which the Company has negotiated volume purchase discounts when fuel prices at such stops are lower than the bulk rate paid for fuel at the Company’s terminals. The Company stores fuel in ~~aboveground~~above-ground storage tanks at some of its facilities. As of December 31,

The Company believes the most effective protection against fuel cost increases is to maintain a fuel-efficient fleet by incorporating fuel efficiency measures and focusing on alternative fuel vehicles, particularly CNG vehicles that can leverage the Company’s current and future CNG fueling stations. The Company may periodically enter into various commodity hedging instruments to mitigate a portion of the effect of fuel price fluctuations. As of December 31, 2021 and 2020, the Company had no liabilities related to commodity hedging instruments recorded in the accompanying consolidated balance sheets. Shortages of fuel, increases in fuel prices, or rationing of petroleum products could have a material adverse effect on the Company’s operations and profitability.3

2022 and 2021, the Company had no liabilities related to commodity hedging instruments recorded in the accompanying consolidated balance sheets. Shortages of fuel, increases in fuel prices, or rationing of petroleum products could have a material adverse effect on the Company’s operations and profitability.

Operations

Fleet

We operate aan ~~substantial~~active fleet of ~~tractors,~~over ~~trailers,~~900 ~~straight~~power ~~trucks,~~units and ~~local~~1,500 ~~delivery~~trailers ~~vehicles. We~~with ~~own~~ a ~~significant~~mix ~~portion~~ of ~~our~~owned ~~fleet,~~and ~~but~~leased assets and we also utilize ~~leases and~~ short-term rental agreements for some of our ~~vehicles and trailers~~fleet. Our vehicles currently operate on either diesel fuel, orgasoline and CNG, and we are also pursuing opportunities to introduce other alternative fuel vehicles, including electric vehicles, into our fleet. We intend to continue to replace our existing fleet with more efficient diesel, CNG and other alternative fuel vehicles.

Operations Centers

We manage regional operations centers with major centers of operations in Oak Creek, Wisconsin, Austin, Texas, Laurel, Maryland, and Newark, New Jersey. Other significant operations centers include Des Moines, Iowa, Columbus, Ohio, St. Louis, Missouri, Madison, Wisconsin, Atlanta, Georgia and ~~Milwaukee~~Indianapolis, ~~Wisconsin~~Indiana.

Technology

We utilize a suite of systems for transportation management, electronic logging, customer relationship management, brokerage, maintenance, accounting, recruiting, HR, payroll and camera systems. These systems include Omnitracs, Salesforce, NetSuite, Ten Street, APlus, Lytx, and others. ~~We expect these systems to provide increased operational efficiencies and revenue maximization.~~

Seasonality

~~Due~~During the fourth quarter, the Company typically experiences surges pertaining to ~~seasonal~~online ~~increases~~holiday inshopping ~~USPS~~the ~~volume,~~length of the holiday season (shopping days between Thanksgiving and Christmas) and benefits from holiday surge pricing on USPS contracts. The Company’s ~~truck~~freight ~~utilization~~trucking operations and, ~~revenue~~in ~~typically~~general, ~~increase~~the ~~during~~transportation industry, experience slower seasonal activity in the ~~last~~first quarter. ofFreight ~~each~~revenues ~~calendar~~in ~~year~~the first quarter are typically lower due to less consumer demand, fewer revenue earning days, consumers reducing shipments following the holiday season and inclement weather. ~~Correspondingly~~At the same time, operating ~~expenses~~costs generally increase, ~~fuel~~and ~~efficiency~~tractor ~~declines~~productivity ~~because~~decreases ofduring ~~engine~~the ~~idling~~winter months due to decreased fuel efficiency, ~~and~~increased ~~harsh~~cold weather-related ~~creates~~equipment ~~higher~~maintenance ~~accident~~and ~~frequency~~repairs, and increased accident claims, and costs due to higher ~~equipment~~accident ~~repair~~frequency ~~expenditures~~from adverse road conditions.

Government Regulation and Environmental Matters

The Company’s operations are regulated and licensed by various federal, state, and local government agencies. The Company and its drivers must comply with the safety and fitness regulations of the DOT and the agencies within the states that regulate transportation, including those regulations relating to operating authority, safety, drug- and alcohol-testing, hours-of-service, hazardous materials transportation, financial reporting, testing and specification of equipment, and product-handling requirements. Weight and equipment dimensions also are subject to government regulations. The Company ~~also~~is ~~may become~~ subject to ~~new or more restrictive~~ regulations relating to fuel emissions, environmental protection, drivers’ hours-of-service, driver eligibility requirements, on-board reporting of operations, collective bargaining, ergonomics and other matters affecting safety, insurance and operating methods. Other agencies, such as the United States Environmental Protection Agency (“EPA”) and the United States Department of Homeland Security (“DHS”), also regulate the Company’s equipment, operations, drivers and the environment.

The DOT, through the ~~Federal Motor Carrier Safety Administration (“~~FMCSA”), imposes safety and fitness regulations on the Company and its drivers, including rules that restrict ~~driver~~drivers' hours-of-service. The FMCSA has adopted a data-driven Compliance, Safety and Accountability (~~the~~ “CSA”) program as its safety enforcement and compliance model. The CSA program holds motor ~~carries~~carriers and drivers accountable for their role in safety by evaluating and ranking fleets and individual drivers on certain safety-related standards. To promote improvement in all CSA categories, including those both over and under the established scoring threshold, the Company has procedures in place to address areas where it has exceeded the thresholds and the Company periodically reviews all safety-related policies, programs and procedures for their effectiveness and revises them, as necessary, to establish improvement targets. The Company believes its established policies, programs and procedures are adequate to address safety-related concerns but can give no assurance these measures will be effective. The FMCSA issues three categories of safety ratings: satisfactory, conditional, and unsatisfactory. All operating authorities granted by the DOT that are operated by the Company currently have a “satisfactory” FMCSA rating.

The Company is also subject to various labor laws and regulations. The contracts that the Company holds with USPS are subject to the McNamara-O’Hara Service Contract Act (“SCA”) that is administered by the Department of Labor. The SCA, among other things, requires that the Company pay its drivers a minimum hourly wage as determined by the DOL as well as provide a bona fide fringe benefit package to its drivers. 4

The Company is also subject to various labor laws and regulations. The contracts that the Company holds with USPS are subject to the SCA that is administered by the Department of Labor (the “DOL”). The SCA, among other things, requires that the Company pay its drivers a minimum hourly wage as determined by the DOL as well as provide a bona fide fringe benefit package to its drivers.

The Company is also subject to various environmental laws and regulations governing, among other matters, the operation of fuel storage tanks, release of emissions from its vehicles (including engine idling) and facilities, and adverse impacts to the environment, including to the soil, groundwater and surface water. The Company has implemented programs designed to monitor and address identified environmental risks. Historically, the Company’s environmental compliance costs have not had a material adverse effect on its results of operations.

Employees

As of December 31, ~~2021~~2022, the Company had ~~approximately~~ 1,~~744~~760 employees, consisting of ~~approximately~~ 1,~~272~~200 full-time employees and ~~approximately~~560 ~~472~~ part-time employees. The Company employed ~~approximately~~ 1,~~494~~491 drivers as of December 31, ~~2021~~2022. ~~The Company is not a party to any collective bargaining agreements.~~

Company Website

The Company’s website may be accessed at www.evotransinc.com. All of our filings with the Securities and Exchange Commission can be accessed free of charge through our website as soon as reasonably practicable after filing. This includes annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports filed or furnished on Form 8-K and all related amendments.

Item 1A. Risk Factors.

Risks Related to the Company

If we do not ~~obtain~~generate ~~sufficient~~substantial ~~additional~~revenue ~~capital~~ or ~~generate~~obtain ~~substantial~~sufficient ~~revenue~~additional capital, we may be unable to pursue our objectives. This raises substantial doubt related to our ability to continue as a going concern.

As disclosed in the notes to our consolidated financial statements included in this annual report, numerous factors raise substantial doubt about our ability to continue as a going concern. Specific factors include the following:

•

our historical operating losses, net losses and cash used in operations;

•

5continued net losses during 2021 and 2022 after excluding the nonrecurring revenue that resulted from the USPS settlement agreements and the nonrecurring gains that resulted from the extinguishment of certain debt obligations;

•

continued ~~net~~cash ~~losses~~used ~~during~~in ~~2020,~~operations ~~as well as~~ during 2021 and 2022 after excluding the nonrecurring ~~revenue~~cash receipts that resulted from the USPS settlement agreements ~~and the nonrecurring gains that resulted from the extinguishment of certain debt obligations~~;

•

continued ~~cash~~working ~~used~~capital indeficit ~~operations~~and ~~during~~stockholders’ ~~2020,~~deficit as ~~well~~of asSeptember ~~during~~30, ~~2021 after excluding the nonrecurring cash receipts that resulted from the USPS settlement agreements~~2023;

•

~~continued~~the ~~working~~structure ~~capital deficit and stockholders’ deficit as~~ of ~~March~~our ~~31,~~factoring ~~2022~~arrangement;

•

~~the~~existing ~~structure~~defaults on certain of our ~~factoring~~debt ~~arrangement~~obligations; and

•

~~existing defaults on certain of our debt obligations; and~~ uncertainty regarding our ability to obtain additional financing in the future.

If we are unable to improve our liquidity position, we might be unable to continue as a going concern. This could significantly reduce or eliminate the value of our investors’ investment in the Company.

~~The~~Our ~~Company’s~~ level of indebtedness could adversely affect ~~its~~our financial condition and ~~its~~our ability to fulfill ~~its~~our obligations and operate ~~its~~our business.

~~The~~We ~~Company~~have ~~has~~ incurred significant liabilities, and ~~the~~our ~~Company’s~~ ongoing capital needs are extensive relative to ~~its~~our current cash position. Unless ~~the~~we ~~Company~~are is able to restructure some or all of ~~its~~our outstanding debt and/or raise sufficient capital to fund ~~its~~ continued operations and ~~its~~our debt obligations, ~~the~~we ~~Company~~may ~~will~~ be unable to pay these obligations as they become due. ~~The~~In ~~Company~~the ~~has~~past, we have been unable to pay ~~its~~our obligations ~~under its liabilities~~ as they have become due ~~in the past~~.

~~The~~We ~~Company~~have isa ~~heavily~~history ~~reliant~~of onlosses ~~its factoring arrangement,~~ and ~~any~~may ~~reductions~~incur toadditional ~~the~~losses ~~Company’s~~in ~~ability to obtain credit under its factoring arrangement could significantly impact~~ the ~~Company’s liquidity~~future.

~~The~~In ~~Company~~2022, ~~obtains~~we ~~liquidity~~incurred ~~under~~a annet ~~accounts~~loss ~~receivable~~of ~~factoring~~$18.2 ~~arrangement~~million, ~~with~~which included a ~~financial~~$5.3 ~~institution~~million ~~(the~~pre-tax ~~“Factor”). Pursuant~~loss toon the ~~terms~~extinguishment of ~~the~~certain ~~agreement,~~debt ~~the~~obligations. ~~Company,~~In ~~from time to time~~2021, ~~sells~~we toreported ~~the~~net ~~Factor~~income ~~certain~~ of ~~its~~$14.3 ~~accounts~~million, ~~receivable~~which ~~balances~~included on$34.8 amillion ~~recourse~~of ~~basis~~nonrecurring ~~for~~pre-tax ~~approved~~revenue ~~accounts. The~~resulting ~~Factor~~from ~~may~~the ~~also~~USPS ~~advance~~settlement ~~payment~~agreements, inas ~~its~~well ~~discretion,~~as ~~for~~a ~~unearned future contract amounts~~$11.0 ~~The~~million ~~Factor~~pre-tax ~~remits~~gain ~~95%~~on of the ~~purchased~~extinguishment ~~accounts~~of ~~receivable~~certain ~~balance~~debt ~~and~~obligations. ~~accepted~~We ~~unearned~~may ~~future~~continue ~~contract amounts for a given month~~ to ~~the~~incur ~~Company~~losses, (the ~~“Advance~~amount ~~Amount”)~~of ~~with~~our ~~the~~losses ~~remaining~~may ~~balance~~increase, ~~less~~and ~~fees,~~we tomay benever ~~forwarded~~achieve ~~once~~or ~~the~~sustain ~~Factor~~profitability, ~~collects~~any ~~the~~of ~~full~~which ~~accounts~~would ~~receivable~~adversely ~~balance~~affect orour ~~unearned future contract amount~~business, asprospects ~~applicable,~~and ~~from~~financial ~~the~~condition ~~customer.~~and ~~This~~may iscause ~~one~~the ofprice ~~our primary sources~~ of ~~liquidity.~~

The Factor has no obligation to purchase the full amount of accounts receivable balances or unearned future contract amounts that the Company offers to sell, and there can be no assurance that the Factor will continue to purchase accounts receivable or unearned future contract amounts at the same levels as it has in the past. If the Factor determines in its sole discretion to decrease the amount it advances under the factoring arrangement or to terminate the factoring agreement entirely and we are unable to obtain a replacement source of credit on substantially similar terms, it would significantly decrease the Company’s liquidity, which would likely have a material adverse effect on our business, operating results, and financial condition.5

WeEVO's ~~have~~common astock ~~limited~~to ~~operating~~fall. ~~history~~In onaddition, ~~which~~to try to ~~base~~achieve anor ~~investment~~sustain ~~decision~~profitability, we may take actions that result in material costs or material asset or goodwill impairments.

~~EVO~~We ~~did~~have ~~not~~identified ~~begin~~seven ~~trucking~~material ~~operations~~weaknesses ~~until~~in ~~June~~our ~~2018.~~internal ~~Thus,~~control weover ~~are~~financial ~~subject~~reporting toand ~~all~~may ~~the~~identify ~~risks~~additional ~~associated~~material ~~with~~weaknesses ~~any~~in ~~business~~the ~~enterprise~~future ~~with~~or aotherwise ~~limited~~fail ~~operating~~to ~~history.~~maintain ~~Our~~an ~~prospects~~effective ~~must~~system ~~be considered in light~~ of ~~the~~internal ~~risks~~control, ~~expenses~~which ~~and~~may ~~difficulties~~result ~~frequently encountered by companies~~ in ~~their~~material ~~early~~misstatements ~~stages~~ of ~~operation. When evaluating~~ our ~~business~~financial ~~and~~statements ~~prospects,~~or ~~you~~cause ~~must~~us ~~consider~~to ~~the~~fail ~~risks,~~to ~~expenses~~meet ~~and~~our ~~difficulties~~periodic ~~that~~reporting ~~we may encounter as a company that acquired substantially all of its operations in the past three years~~obligations.

WeAs of December 31, 2022, we identified seven deficiencies in internal control that are considered to be material weaknesses and other deficiencies that are considered to be significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies in internal controls, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will ~~need~~not ~~substantial~~be ~~additional~~prevented, ~~capital~~or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to ~~fund~~merit attention by those charged with governance. In addition, management has concluded that our ~~growth~~disclosure ~~plans~~controls and ~~operate~~procedures were not effective as of December 31, 2022 due to the material weaknesses in our internal control over financial reporting described in Item 9A of this Annual Report on Form 10-K. As a result, we will be required to expend significant resources to develop the necessary documentation and testing procedures required by Section 404, and there is a risk that we will not comply with all of the necessary requirements. The material weaknesses may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations. Additionally, if we cannot remediate the material weaknesses in internal controls or if we identify additional material weaknesses in internal controls that cannot be remediated in a timely manner, investors and others with whom we do business may lose confidence in the reliability of our financial statements, and in our ability to obtain equity or debt financing could suffer.

WeIn ~~require~~addition, ~~substantial~~while ~~additional~~we ~~capital~~expend tosignificant ~~fund~~resources ~~our~~in ~~capital~~developing ~~expenditures~~the ~~and~~necessary ~~debt~~documentation ~~service to achieve profitability~~ and totesting ~~otherwise~~procedures ~~execute~~required onby ~~our~~Section ~~business~~404 ~~plan. The most likely sources~~ of ~~such~~the ~~additional~~Sarbanes-Oxley ~~capital include private placements and public offerings of shares of our capital stock~~Act, ~~including~~there ~~shares~~is ofa ~~our~~risk ~~common~~that ~~stock~~we ~~or securities convertible into or exchangeable for our common stock, debt financing or funds from potential strategic transactions. We~~ may ~~seek~~not ~~additional~~be ~~capital~~able ~~from~~to ~~available~~comply ~~sources,~~timely ~~which~~with ~~may~~all ~~include hedge funds, private equity funds, venture capitalists, lenders/banks and other financial institutions, as well as additional private placements. Any financings in which we sell shares~~ of ~~our~~the ~~capital~~requirements ~~stock~~imposed ~~will~~by ~~likely~~this ~~be dilutive to our current stockholders~~rule. If we ~~raise~~are ~~additional~~unable ~~capital by incurring debt, a portion of our cash flow would have~~ to betimely ~~dedicated~~comply towith ~~the~~all ~~payment~~ of ~~principal~~these ~~and interest on such indebtedness. In addition~~requirements, ~~typical~~potential ~~loan~~investors ~~agreements also~~ might ~~contain~~deem ~~restrictive covenants that may impair~~ our ~~operating~~financial ~~flexibility.~~statements ~~Such~~to ~~loan~~be ~~agreements,~~unreliable ~~loans,~~and orour ~~debentures~~ability ~~would also provide for default under certain circumstances, such as failure~~ to ~~meet~~obtain ~~certain~~additional ~~financial~~capital ~~covenants. A default under a loan agreement~~ could ~~result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such~~ suffer.

We are heavily reliant on our factoring arrangement, and any reductions to our ability to obtain credit under the factoring arrangement could significantly impact our liquidity.

We obtain liquidity under an accounts receivable factoring arrangement with Triumph Business Capital (the "Factor"). Pursuant to the terms of the agreement, from time to time, we sell to the Factor certain of our accounts receivable balances on a recourse basis for approved accounts. The Factor remits 95% of the contracted accounts receivable balance for a given month to us with the remaining balance, less fees, to be forwarded once the Factor collects the full accounts receivable balance from the factoring customer. This is one of our primary sources of liquidity.

The Factor has no obligation to purchase the full amount of accounts receivable balances or unearned future contract amounts that we offer to sell, and there can be no assurance that the Factor will continue to purchase accounts receivable or unearned future contract amounts at the same levels as it has in the past. If the Factor determines in its sole discretion to decrease the amount it advances under the factoring arrangement or to terminate the factoring agreement entirely and we are unable to obtain a replacement source of credit on substantially similar terms, it would significantly decrease our liquidity, which would likely have a material adverse effect on our business, operating results and financial condition.

We may need substantial additional capital to fund our growth plans and operate our business.

We may require substantial additional capital to fund our capital expenditures, service our debt, refinance existing debt, fund strategic relationships, respond to competitive pressures and to otherwise execute on our business plan. The most likely sources of such additional capital are private placements and public offerings of shares of our capital stock, including shares of EVO’s common stock or securities convertible into or exchangeable for EVO’s common stock, debt financing or funds from potential strategic transactions. We may seek additional capital from available sources, which may include hedge funds, private equity funds, venture capitalists, lenders/banks and other financial institutions, as well as additional private placements. Any financings in which we sell shares of our capital stock will likely be dilutive to our current stockholders. If we raise additional capital by incurring debt, a portion of our cash flow would have to be dedicated to the payment of principal and interest on such indebtedness. In addition, typical loan agreements also might contain restrictive covenants that may impair our operating flexibility. Such loan agreements, loans or debentures would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to the rights of our stockholders. A

~~lender which would be senior to the rights of our stockholders. A~~ judgment creditor would have the right to foreclose on any of our assets resulting in a material adverse effect on our business, operating results or financial condition.

Our ability to raise additional capital may depend in part on our success in meeting sales and operating goals. We currently have no committed sources of additional capital and there is no assurance that additional financing will be available in the amounts or at the times required, or if it is, on terms acceptable or favorable to us. If we are unable to obtain additional financing when and if needed, our business will be materially impacted and our investors may lose the value of their entire investment.

~~Potential~~In ~~inquiries~~the ~~into~~event of an economic downturn or ~~audits~~disruption in the credit markets, our indebtedness could place us at a competitive disadvantage in terms of our ~~Paycheck~~ability ~~Protection~~to ~~Program~~raise ~~loan~~additional capital to fund our operations, aslimit ~~well~~our asability ~~the~~to ~~results~~react ofto ~~any~~changes ~~such~~in ~~inquiries~~the economy or ~~audits~~our industry, ~~could~~and ~~have~~prevent aus ~~significant~~from ~~adverse~~meeting ~~effect~~our ondebt usobligations ~~and~~compared to our ~~financial~~competitors ~~condition~~that are less leveraged.

WeThis ~~applied~~could ~~for~~have ~~and~~negative ~~received~~consequences athat ~~$10~~include: ~~million Paycheck Protection Program~~ (~~"PPP"~~i) ~~loan~~increased ~~under~~vulnerability ~~the~~to ~~CARES~~adverse ~~Act.~~economic, Onindustry ~~May~~or 8,competitive ~~2020,~~developments; we(ii) ~~received~~cash aflows ~~letter~~ from ~~the~~operations ~~Select~~that ~~Subcommittee~~are oncommitted ~~the~~to ~~Coronavirus~~payment ~~Crisis~~ of ~~the~~principal ~~U.S.~~and ~~House~~interest, ofthereby ~~Representatives~~reducing ~~demanding~~our ~~that~~ability ~~we return the PPP loan. We elected not~~ to ~~return~~use ~~the~~cash ~~PPP~~for ~~loan proceeds as requested and~~ our ~~PPP loan was subsequently forgiven. Also~~operations, ~~the~~capital ~~United~~expenditures ~~States~~and ~~Small~~future ~~Business~~business ~~Administration~~opportunities; (~~"SBA"~~iii) ~~has~~increased ~~stated~~interest rates that itwould ~~intends~~affect toour ~~audit~~variable ~~the~~rate ~~PPP~~debt; ~~loan~~(iv) ~~application~~potential ofnoncompliance ~~any~~with ~~company,~~financial ~~like us~~covenants, ~~that~~borrowing ~~received~~conditions ~~PPP~~and ~~loan~~other ~~proceeds~~debt ofobligations, ~~more~~where ~~than~~applicable; $2(v) ~~million.~~lack ~~Our decision to retain the PPP loan may require members~~ of ~~our~~financing ~~management~~for ~~team~~working ~~to devote attention to future correspondence and requests from the Select Subcommittee~~capital, ~~the~~capital ~~SBA~~expenditures, orproduct ~~other regulators~~development, ~~which~~debt ~~would~~service ~~reduce~~requirements ~~the~~and ~~amount~~general ofcorporate ~~time~~or ~~available~~other topurposes; ~~management~~and to(vi) ~~focus~~limits on our ~~operations~~flexibility ~~and strategic initiatives. If we are later determined~~ to ~~have~~plan ~~violated~~for, ~~any of the laws~~ or ~~governmental~~react ~~regulations that apply~~ to, uschanges in ~~connection~~our ~~with~~business, ~~the~~market ~~PPP~~conditions ~~loan,~~ or itin ~~is otherwise determined that we were ineligible to receive~~ the ~~PPP loan, we may be subject to penalties, including significant civil, criminal and administrative penalties~~economy.

We have a history of losses and may incur additional losses in the future.

In 2021, we reported net income of $14.3 million that included $34.8 million of nonrecurring pre-tax revenue resulting from the USPS settlement agreements, as well as a $11.0 million pre-tax gain on the extinguishment of certain debt obligations. In 2020, we incurred a net loss of $46.8 million. We may continue to incur losses, the amount of our losses may increase, and we may never achieve or sustain profitability, any of which would adversely affect our business, prospects and financial condition and may cause the price of our common stock to fall. In addition, to try to achieve or sustain profitability, we may take actions that result in material costs or material asset or goodwill impairments.

We may experience impairment of our long-lived assets and our goodwill.

Long-lived assets, including property, plant and equipment, are tested for impairment whenever circumstances indicate that the carrying value of these assets may not be recoverable. Long-lived assets are considered impaired if the carrying value of the asset exceeds the sum of the future expected undiscounted cash flows to be derived from the asset. We also periodically evaluate our goodwill for potential impairment. When we perform the quantitative goodwill impairment test, we compare the fair value of the reporting unit to the carrying value, which includes goodwill. If the carrying value is higher than the fair value, the goodwill is considered impaired. Once an asset is considered impaired, an impairment loss is recorded within operating expense for the difference between the asset’s carrying value and its fair value. For assets held and used in the business, management generally determines fair value using estimated future cash flows to be derived from the asset, discounted to a net present value using an appropriate discount rate. For assets held for sale or for investment purposes, management determines fair value by estimating the proceeds to be received upon sale of the asset, less disposition costs.

We may incur significant costs to comply with public company reporting requirements and other costs associated with being a public company.

We may incur significant costs associated with our public company reporting requirements and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costlier. As a public company, we are required to comply with rules and regulations of the SEC, including expanded disclosure and more complex accounting rules. We will need to implement additional finance and accounting systems, procedures and controls to satisfy these reporting requirements. In addition, we may need to hire additional legal and accounting staff to enable us to comply with these reporting requirements. These costs could have an adverse effect on our financial condition and limit our ability to realize our objectives.

We may not be able to meet the internal control reporting requirements imposed by the SEC.

As directed by Section 404 of the Sarbanes-Oxley Act, the SEC adopted rules requiring each public company to include a report of management on the company’s internal controls over financial reporting in its annual reports. While we expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404 of the

Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely with all of the requirements imposed by this rule. If we are unable to timely comply with all of these requirements, potential investors might deem our financial statements to be unreliable and our ability to obtain additional capital could suffer.

We have identified seven material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

The Company identified seven deficiencies in internal control that it considered to be material weaknesses and other deficiencies that it considered to be significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies in internal controls, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. In addition, the Company’s management has concluded that our disclosure controls and procedures were not effective as of December 31, 2021 due to the material weaknesses in our internal control over financial reporting described in Item 9A of this Annual Report on Form 10-K. As a result, we will be required to expend significant resources to develop the necessary documentation and testing procedures required by Section 404, and there is a risk that we will not comply with all of the necessary requirements. The material weaknesses may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations. Additionally, if we cannot remediate the material weaknesses in internal controls or if we identify additional material weaknesses in internal controls that cannot be remediated in a timely manner, investors and others with whom we do business may lose confidence in the reliability of our financial statements, and in our ability to obtain equity or debt financing could suffer.

We partially funded the construction of certain of our fueling stations using grant funds that we are required to repay if we do not satisfy certain operational metrics.

EVO CNG, LLC received grants in the amounts of $0.4 million and $0.1 million to assist in the construction and equipping of our San Antonio and Fort Worth fueling stations, respectively. The grants must be repaid if EVO CNG, LLC sells, transfers, destroys or otherwise loses title, possession, ownership or control of the equipment funded with the grants during the terms of the respective grant agreements. Our San Antonio fueling station is not operating, which might increase the risk that we will lose title, possession, ownership or control of the equipment at that station and that we will be required to repay the grant we received related to that station.

We depend on certain key personnel, and our operating performance may be adversely impacted by the loss of any such key personnel.

Our ability to execute our business plans and objectives depends, in large part, on our ability to attract and retain qualified personnel. Competition for personnel is intense and there can be no assurance that we will be able to attract and retain personnel. In particular, we are dependent upon the services of our management team. Our inability to utilize and retain the services of our management team members could have an adverse effect on us and there would likely be a difficult transition period in finding replacements for any of them. The execution of our strategic plan will place increasing demands on our management and operations. If we lose or are unable to obtain the services of key personnel, our ability to manage our business and implement our strategic plan could be delayed or hindered, which could have a material adverse effect on our business, financial condition and results of operations.

We are controlled by our ~~current~~principal ~~executive~~stockholder, ~~officers~~Antara Capital Master Fund LP, and it appointed two directors ~~and~~to ~~principal~~the ~~stockholders~~EVO board of directors.

Our ~~executive officers, directors and~~ principal ~~stockholders~~stockholder beneficially ~~own~~owns a substantial majority of our outstanding common stock. ~~Accordingly,~~and ~~our~~it ~~executive~~appointed ~~officers,~~two directors ~~and~~to ~~principal~~the ~~stockholders~~EVO ~~will~~board ~~have~~in June 2022. Accordingly, it has the ability to exert substantial influence over our business affairs, including electing directors, appointing officers, determining officers’ compensation, issuing additional equity securities or ~~incurring additional debt, effecting or preventing a merger, sale of assets or other corporate transaction and amending our articles of incorporation.~~

incurring additional debt, effecting or preventing a merger, sale of assets or other corporate transaction and amending our articles of incorporation.

We incur significant costs to comply with public company reporting requirements and other costs associated with being a public company.

We incur significant costs associated with our public company reporting requirements and other rules implemented by the Securities and Exchange Commission. Compliance with such rules and regulations increases our administrative costs and make some activities more time-consuming and costlier as compared to our peers that are not subject to public company reporting requirements. As a public company, we are required to comply with rules and regulations of the SEC, including expanded disclosure and more complex accounting rules. We also must implement additional finance and accounting systems, procedures and controls to satisfy these reporting requirements. In addition, we hire additional legal and accounting staff and consultants to enable us to comply with these reporting requirements. These costs could have an adverse effect on our financial condition and could limit our ability to realize our objectives.

Risks Related to the Company’s Operations

We derive substantially all of our revenue from one customer, the loss of which would have a material adverse effect on our business.

Approximately 90% of our 2022 revenue was generated from the USPS. The loss or reduction of business from this customer would have a material adverse effect on our business.

Economic conditions may adversely affect the USPS and its ability to remain solvent. The United States Government Accountability Office has in the past described the USPS’s financial condition as “deteriorating and unsustainable.” The USPS’s financial difficulties can negatively impact our results of operations and financial condition and our ability to comply with the covenants in our debt agreements, especially if the USPS were to delay or default on payments to us.

There can be no assurance that our relationship with the USPS will continue as presently in effect. In 2021, the USPS announced its “Delivering for America” plan to transform the USPS. If we are not able to achieve its business objectives while adhering to the USPS’s initiatives under that plan, there would likely be a material adverse effect on our business, operating results and financial condition.

Additionally, our contracts with the USPS are terminable for convenience by the USPS upon advance notice ranging from 60 days for some contracts to 180 days for DRO contracts. A default in performance by us under one USPS contract can constitute a cross-default allowing the USPS to terminate some or all of our other contracts with the USPS. A reduction in, or termination of, our services by the USPS would have a material adverse effect on our business, operating results and financial condition.

We have significant ongoing capital expenditure requirements. If we are unable to obtain additional capital on favorable terms or at all, we may not be able to execute on our business plans and our business, financial condition, results of operations, cash flows and prospects may be adversely affected.

Our business is capital intensive. Capital expenditures focus primarily on equipment replacement and, to a lesser extent, facilities, equipment growth and investments in information technology. We also expect to devote substantial financial resources to grow our operations and fund our acquisition activities. As a result of our funding requirements, we may need to raise funds through the sale of additional equity or debt securities or seek additional financing through other arrangements to increase our cash resources. Any sale of additional equity or debt securities may result in dilution to its stockholders. Public or private financing may not be available in amounts or on terms acceptable to us, if at all.

If we are unable to obtain additional financing, we may be required to delay, reduce the scope of or eliminate our growth initiatives or future acquisition activities, which could adversely affect its business, financial condition and operating results. In such case, we may also operate our existing equipment (including tractors and trailers) for longer periods, which would result in increased maintenance costs, which would in turn reduce our operating income.

We may not successfully manage our recent and planned growth.

We have expanded our business through acquiring additional companies that provide contract trucking services to the USPS and leveraging our expanded operations to bid on additional USPS trucking contracts. We plan to continue to expand through acquisitions, bidding on additional USPS trucking contracts, and expanding both our freight and brokerage operations in the future. Any expansion of operations we have undertaken or may undertake entail and will entail risks and such actions may involve specific operational activities that may negatively impact our profitability. Consequently, investors must assume the

future. Any expansion of operations we have undertaken or may undertake entail and will entail risks and such actions may involve specific operational activities that may negatively impact our profitability. Consequently, investors must assume the risk that (i) such expansion may ultimately involve expenditures of funds beyond the resources available to us at that time, and (ii) management of such expanded operations may divert management’s attention and resources away from its existing operations. These factors may have a material adverse effect on our present and prospective business activities.

~~Risks~~We ~~Related~~may tonot make acquisitions in the ~~Company’s~~future, ~~Operations~~which could impede growth, or if we do, we may not be successful in integrating any acquired businesses, either of which could have a material adverse effect on our business.

~~The~~Historically, ~~Company~~a ~~derives~~key ~~substantially~~component ~~all~~of our growth strategy has been to pursue acquisitions of ~~its~~complementary ~~revenue~~businesses. ~~from~~Our ~~one~~growth ~~customer~~could be impeded if we do not make any acquisitions. If we make acquisitions, ~~the~~we ~~loss~~can ofmake ~~which~~no ~~would~~assurances ~~have~~that awe ~~material~~will ~~adverse~~be ~~effect~~successful onin negotiating, consummating or integrating the ~~Company’s~~acquisitions. If we succeed in consummating future acquisitions, our business., financial condition and results of operations, may be materially adversely affected because:

•

~~Substantially~~some ~~all~~ of the ~~Company’s~~acquired ~~revenue~~businesses ismay ~~generated~~not ~~from~~achieve ~~the~~anticipated ~~USPS~~revenue, ~~the~~earnings ~~loss~~ or ~~reduction~~cash ~~of which would have a material adverse effect on the Company’s business.~~flows;

•

~~Economic~~we ~~conditions~~ may ~~adversely~~assume ~~affect~~liabilities ~~the USPS and its ability to remain solvent. The United States Government Accountability Office described the USPS’s financial condition as “deteriorating and unsustainable” and reported~~ that the USPS lost approximately $69 billion from fiscal years 2007 through 2018. The USPS’s financial difficulties can negatively impact the Company’s results of operations and financial condition and the Company’s ability to comply with the covenants in its debt agreements, especially if the USPS were tonot ~~delay~~disclosed ~~or default on payments~~ to us. There can be no assurance that the Company’s relationship with the USPS will continue as presently in effect. Additionally, the Company’s contracts with the USPS are terminable for convenience by the USPS upon advance notice ranging from 60 days for some contracts to 180 days for DRO contracts. A default in performance by the Company under one USPS contract can constitute a cross-default allowing the USPS to terminate some or ~~all~~otherwise ofexceed ~~the~~our Company’s other contracts with the USPS. A reduction in, or termination of, the Company’s services by the USPS would have a material adverse effect on the Company’s business and operating results.estimates;

•

~~The~~we ~~Company~~may ~~has~~be ~~significant ongoing capital expenditure requirements. If the Company is~~ unable to ~~obtain~~integrate ~~additional~~acquired ~~capital~~businesses onsuccessfully, ~~favorable terms~~ or at all, itand ~~may~~realize ~~not~~anticipated beeconomic, ~~able~~operational toand ~~execute~~other onbenefits ~~its~~in ~~business~~a ~~plans~~timely ~~and~~manner, ~~its~~which ~~business,~~could ~~financial~~result ~~condition,~~in ~~results~~substantial ofcosts ~~operations,~~and ~~cash~~delays ~~flows~~or ~~and~~other ~~prospects~~operational, ~~may~~technical beor ~~adversely~~financial ~~affected.~~problems;

•

~~The~~acquisitions ~~Company’s~~could ~~business~~disrupt isour ~~capital~~ongoing ~~intensive. Its capital expenditures focus primarily on equipment replacement and~~business, todistract aour ~~lesser~~management ~~extent, facilities, equipment growth,~~ and ~~investments~~divert inour ~~information technology. The Company also expects to devote substantial financial~~ resources to grow its operations and fund its acquisition activities. As a result of the Company’s funding requirements, it likely will need to raise funds through the sale of additional equity or debt securities or seek additional financing through other arrangements to increase its cash resources. Any sale of additional equity or debt securities may result in dilution to its stockholders. Public or private financing may not be available in amounts or on terms acceptable to the Company, if at all.;

•

Ifwe ~~the Company is unable to obtain additional financing, it~~ may beexperience ~~required~~difficulties ~~to delay, reduce the scope of, or eliminate future acquisition activities or growth initiatives, which could adversely affect its business, financial condition and~~ operating ~~results.~~in Inmarkets ~~such~~in ~~case, the Company may also operate its equipment (including tractors and trailers) for longer periods,~~ which ~~would~~we ~~result~~have inhad ~~increased~~no ~~maintenance~~or ~~costs,~~only ~~which~~limited ~~would~~direct ~~in turn reduce its operating income.~~experience;

•

~~The~~we ~~Company’s~~may ~~trucking~~incur ~~business~~transactions iscosts ~~affected by general economic~~ and ~~business~~acquisition-related ~~risks~~integration ~~that are largely beyond its control.~~costs;

•

~~The~~we ~~Company’s~~could ~~trucking~~lose ~~business~~customers, isemployees ~~cyclical~~ and isdrivers ~~dependent on a number~~ of ~~factors,~~any ~~many~~acquired of which are beyond our control. The Company believes that some of the most significant of these factors are economic changes that affect supply and demand in transportation markets in general, including excess tractor capacity in comparison with shipping demand and recessionary economic cycles.company;

•

~~The~~we ~~Company~~may ~~also~~incur isadditional ~~subject~~indebtedness; to cost increases outside of its control that could materially reduce its profitability if it is unable to increase its rates sufficiently. Such cost increases include, but are not limited to, increases in fuel prices, driver wages, subcontractor rates, interest rates, taxes, tolls, license and ~~registration fees, insurance, equipment and healthcare for its employees.~~

•

~~The~~we ~~Company’s suppliers’ business levels also~~ may beissue ~~negatively~~additional ~~affected~~shares byof ~~adverse~~EVO’s ~~economic~~common ~~conditions or financial constraints~~stock, which ~~could~~would ~~lead~~dilute ~~to disruptions in~~ the ~~supply~~ownership ~~and availability~~ of ~~equipment,~~our ~~parts~~then-existing ~~and services critical to its operations~~stockholders. ~~A significant interruption in the Company’s normal supply chain could disrupt its operations, increase its costs and negatively impact its ability to serve its customers.~~

Failure to successfully implement our cost and revenue initiatives could cause our future financial results to suffer.

We are implementing various cost and revenue initiatives to further increase our profitability, including advanced pricing analytics and revenue management tools, cross-selling to strategic accounts, process improvements, workforce productivity and further back-office optimization. If we are not able to successfully implement these cost and revenue initiatives, our future financial results may suffer.

Our business is affected by general economic and business risks that are largely beyond our control.

The trucking industry is cyclical and is dependent on a number of factors, many of which are beyond our control. We believe that some of the most significant of these factors are economic changes that affect supply and demand in transportation markets in general, including excess tractor capacity in comparison with shipping demand and recessionary economic cycles.

We are also subject to cost increases outside of our control that could materially reduce our profitability if we are unable to increase our rates sufficiently. Such cost increases include, but are not limited to, increases in fuel prices, driver wages, subcontractor rates, interest rates, taxes, tolls, license and registration fees, insurance, equipment and healthcare for our employees.

Our suppliers’ business levels also may be negatively affected by adverse economic conditions or financial constraints, which could lead to disruptions in the supply and availability of equipment, parts and services critical to our operations. A significant interruption in the normal supply chain for equipment or parts could disrupt our operations, increase our costs and negatively impact our ability to serve our customers.

Additional events outside of our control, such as strikes or other work stoppages at our facilities or at customer, port, border or other shipping locations, or actual or threatened armed conflicts or terrorist attacks, efforts to combat terrorism, military action against a foreign state or group located in a foreign state, or heightened security requirements could lead to reduced economic demand, reduced availability of credit or temporary closing of the shipping locations or U.S. borders. Such events or enhanced security measures in connection with such events could impair our operating efficiency and productivity and result in higher operating costs.

InThe ~~addition,~~trucking ~~events~~industry ~~outside~~is ~~the~~highly ~~Company’s~~competitive ~~control,~~and ~~such as strikes or other work stoppages at its facilities or at customer~~fragmented, ~~port,~~and ~~border~~our orbusiness ~~other~~and ~~shipping~~results ~~locations,~~of oroperations ~~actual~~may orsuffer ~~threatened~~if ~~armed~~we ~~conflicts~~are orunable ~~terrorist attacks, efforts~~ to ~~combat~~adequately ~~terrorism,~~address ~~military~~downward ~~action~~pricing against a foreign state or group located in a foreign state, or heightened security requirements could lead to reduced economic demand, reduced availability of credit or temporary closing of the shipping locations or United States borders. Such events or enhanced security measures in connection with such events could impair the Company’s operating efficiency and ~~productivity~~other ~~and~~competitive ~~result in higher operating costs~~pressures.

~~The~~We ~~trucking~~compete ~~industry~~with ismany ~~highly~~truckload ~~competitive~~carriers ~~and~~of ~~fragmented~~varying sizes, ~~and~~including ~~the~~some ~~Company’s~~that ~~business~~may ~~and~~have ~~results~~greater ofaccess ~~operations~~to ~~may~~equipment, ~~suffer~~a ifwider itrange isof ~~unable~~services, togreater ~~adequately~~capital ~~address~~resources, ~~downward~~less ~~pricing~~indebtedness ~~and~~or other competitive ~~pressures~~advantages. We also compete with smaller, regional service providers that cover specific shipping lanes or that offer niche services. Numerous competitive factors could impair our ability to maintain or improve profitability. These factors include the following:

•

~~The Company competes with~~ many ~~truckload carriers~~ of ~~varying~~our ~~sizes,~~competitors ~~including~~periodically ~~some~~reduce ~~that~~their ~~may~~freight ~~have~~rates ~~greater access~~ to ~~equipment~~gain business, aespecially ~~wider~~during ~~range~~times of ~~services,~~reduced ~~greater~~growth ~~capital~~in ~~resources~~the economy, ~~less~~which ~~indebtedness~~may orlimit ~~other~~our ~~competitive~~ability ~~advantages.~~to ~~The~~maintain ~~Company~~or ~~also~~increase ~~competes~~freight ~~with smaller~~rates, ~~regional~~may ~~service~~require ~~providers~~us ~~that~~to ~~cover~~reduce ~~specific~~our ~~shipping~~freight ~~lanes~~rates or ~~that~~may ~~offer~~limit ~~niche~~our ~~services. Numerous competitive factors could impair the Company’s~~ ability to maintain or ~~improve~~expand ~~its~~our ~~profitability. These factors include the following:~~business;

•

~~many~~some ofshippers, including the ~~Company’s competitors periodically reduce their freight rates to gain business~~USPS, ~~especially~~have ~~during times of~~ reduced ~~growth~~or ~~in the economy, which~~ may ~~limit~~reduce the ~~Company’s~~number ~~ability~~of tocarriers ~~maintain~~they oruse ~~increase~~by ~~freight~~selecting ~~rates,~~core ~~may~~carriers ~~require~~as ~~the~~approved ~~Company~~service toproviders ~~reduce~~and ~~its~~in ~~freight~~some ~~rates~~instances orwe may ~~limit~~not ~~its~~be ~~ability to maintain or expand its business~~selected;

•

~~some~~many ~~shippers~~customers, including the USPS, ~~have~~solicit ~~reduced~~bids orfrom ~~may~~multiple ~~reduce the number of~~ carriers ~~they~~for ~~use~~their byshipping ~~selecting~~needs, ~~core~~which ~~carriers~~may asdepress ~~approved~~freight ~~service~~rates ~~providers~~or ~~and~~result in ~~some~~a ~~instances~~loss ~~the~~of ~~Company~~business ~~may~~to ~~not be selected~~competitors;

•

~~many~~the ~~customers,~~continuing ~~including~~trend ~~the~~toward ~~USPS,~~consolidation ~~periodically~~in ~~solicit~~the ~~bids~~trucking ~~from~~industry ~~multiple~~may ~~carriers~~result ~~for~~in ~~their~~more ~~shipping~~large ~~needs,~~carriers ~~which~~with ~~may~~greater ~~depress~~financial ~~freight~~resources ~~rates~~and orother ~~result~~competitive inadvantages, aand ~~loss~~we ofmay ~~business~~have todifficulty ~~competitors~~competing with them;

•

~~the~~advances ~~continuing~~in ~~trend~~technology ~~toward~~may ~~consolidation~~require inus ~~the~~to ~~trucking~~increase ~~industry~~investments ~~may result~~ in ~~more~~our ~~large~~equipment ~~carriers~~and ~~with~~systems ~~greater~~in ~~financial~~order ~~resources~~to ~~and~~remain ~~other~~ competitive ~~advantages~~, and ~~the~~our ~~Company~~customers may ~~have~~not ~~difficulty~~be ~~competing~~willing ~~with~~to ~~them~~accept higher freight rates to cover the cost of these investments;

•

~~advances~~we ~~in technology~~ may ~~require~~have ~~the~~higher ~~Company~~exposure to ~~increase~~litigation ~~investments~~risks inas ~~order~~compared to ~~remain~~smaller ~~competitive,~~carriers; and ~~its customers may not be willing to accept higher freight rates to cover the cost of these investments;~~

•

~~the~~smaller ~~Company~~carriers may ~~have~~build ~~higher~~economies ~~exposure~~of toscale ~~litigation~~with ~~risks~~procurement asaggregation ~~compared~~providers, towhich may improve the smaller carriers;’ ~~and~~abilities to compete with us.

~~smaller~~Driver ~~carriers~~shortages ~~may~~and ~~build~~increases ~~economies~~in ofdriver ~~scale~~compensation ~~with~~could ~~procurement~~adversely ~~aggregation~~affect ~~providers,~~our ~~which~~profitability ~~may~~and ~~improve~~ability ~~the smaller carriers’ abilities~~ to ~~compete~~maintain ~~with~~or ~~the~~grow ~~Company~~our business.

Driver shortages could require us to spend more to attract and ~~increases~~retain indrivers. The market for qualified drivers is intensely competitive, which may subject us to increased payments for driver compensation. Also, because of the competition for drivers, we may face difficulty maintaining or increasing our number of drivers. Compliance and enforcement initiatives included in the CSA program implemented by the FMCSA and regulations of the DOT relating to driver time and safety and fitness could ~~adversely~~also ~~affect~~reduce the ~~Company’s~~availability of qualified drivers. In addition, we experience regular driver turnover, which requires us to continually recruit a substantial number of drivers in order to operate our existing equipment. If we are unable to continue to attract and retain a sufficient number of drivers, we could be required to operate with fewer trucks and face difficulty meeting customer demands or be forced to forego business that would otherwise be available to us, which could adversely affect our profitability and ability to maintain or grow ~~its~~our ~~trucking~~ business.

~~Driver~~Increased ~~shortages~~prices ~~could require the Company to spend more to attract and retain drivers. The market~~ for ~~qualified drivers is intensely competitive~~, ~~which may subject the Company to increased payments for driver compensation. Also, because of the competition for drivers, the Company may face difficulty maintaining~~ or ~~increasing~~decreases ~~its number of drivers. Compliance and enforcement initiatives included~~ in the ~~CSA program implemented by the FMCSA and regulations of the DOT relating to driver time and safety and fitness could also reduce the~~ availability of, ~~qualified~~new ~~drivers. In addition~~equipment, ~~the~~design ~~Company~~changes ~~experiences~~of ~~regular~~new ~~driver turnover~~engines, ~~which~~future ~~requires~~use ~~the~~of ~~Company~~autonomous totractors ~~continually~~and ~~recruit~~volatility ~~a substantial number of drivers~~ in ~~order to operate existing equipment. If~~ the ~~Company~~value ~~is unable to continue to attract and retain a sufficient number~~ of ~~drivers,~~used itequipment could ~~be required to operate with fewer trucks and face difficulty meeting customer demands or be forced to forego business that would otherwise be available to it, which could~~ adversely affect ~~its~~our ~~profitability~~results ~~and~~of ~~ability~~operations toand ~~maintain~~cash ~~or grow its business~~flows.

~~Increased~~We are subject to risk with respect to higher prices for, ornew ~~decreases~~tractors and trailers. We have at times experienced an increase in prices for new tractors and trailers and the ~~availability~~resale value of the tractors have not always increased to the same extent. Prices have increased and may continue to increase, ~~new~~due, ~~equipment~~in part, to (i) government regulations applicable to newly manufactured tractors and ~~decreases~~diesel engines, (ii) increases in commodity prices, (iii) shortages of component parts, such as semiconductors, and (iv) and due to the ~~value~~pricing discretion of ~~used~~equipment manufacturers in periods of high demand. Compliance with EPA regulations has increased the cost of our new tractors and could impair equipment productivity, result in lower fuel mileage and increase our operating expenses. These adverse effects, combined with the uncertainty as to the reliability of the vehicles equipped with the newly designed diesel engines and the residual values realized from the disposition of these vehicles, could increase our costs or otherwise materially adversely affect ~~the~~our ~~Company’s~~business, financial condition and results of operations as the regulations become effective. Furthermore, future use of autonomous tractors could increase the price of new tractors and ~~cash~~decrease ~~flows~~the value of used non-autonomous tractors.

~~Investment~~A indepressed ~~new~~market ~~equipment~~for isused aequipment ~~significant~~could ~~part~~require ofus ~~the~~to ~~Company’s~~trade ~~annual~~our ~~capital~~revenue ~~expenditures,~~equipment ~~and~~at ~~the~~depressed ~~Company’s~~values ~~trucking~~or ~~business~~to ~~operates~~record ~~optimally~~losses ~~with~~on andisposal ~~available~~or ~~supply~~impairments of ~~tractors and trailers from equipment manufacturers to operate and grow its business. In recent years, manufacturers have raised~~ the ~~prices~~carrying values of ~~new~~our revenue equipment ~~significantly~~that ~~due~~is tonot ~~increased~~protected ~~costs~~by ofresidual ~~materials~~value ~~and parts shortages~~arrangements. IfUsed ~~new~~ equipment prices ~~increase~~are ~~more~~subject ~~than anticipated, the Company could incur higher depreciation and rental expenses than anticipated. If the Company is unable~~ to ~~fully~~substantial ~~offset~~fluctuations ~~any~~based ~~such~~on ~~increases in expenses with~~ freight ~~rate increases and/or improved fuel economy~~demand, ~~its~~supply ~~results~~ of ~~operations~~new and ~~cash~~used ~~flows~~equipment, ~~could be adversely affected.~~

~~The~~availability ~~Company~~and ~~may~~terms ~~also~~of ~~face~~financing, ~~difficulty~~the inpresence ~~purchasing~~of ~~new~~buyers ~~equipment~~for ~~due~~export to ~~decreased~~foreign ~~supply.~~countries ~~From time to time, some original equipment manufacturers (OEM) of tractors~~ and ~~trailers~~commodity ~~may~~prices ~~reduce their manufacturing output due to lower demand~~ for ~~their~~scrap ~~products~~metal. inIf ~~economic~~there ~~downturns~~is or a ~~shortage~~deterioration of ~~component~~resale ~~parts. Component suppliers may either reduce production or be unable to increase production to meet OEM demand~~prices, ~~creating~~it ~~periodic~~could ~~difficulty~~have ~~for OEMs to react in~~ a ~~timely~~material ~~manner~~adverse toeffect ~~increased~~on ~~demand~~our for new equipment and/or increased demand for replacement components as economic conditions change. The COVID-19 pandemic and resulting supply chain disruptions have particularly limited OEMs' ability to satisfy demand. In those situationsbusiness, ~~the~~financial ~~Company~~condition ~~may face reduced supply levels~~ and ~~increased~~results ~~acquisition costs. An inability to continue to obtain an adequate supply~~ of ~~new tractors or trailers for its~~ operations. ~~could~~We have seen a ~~material~~softening ~~adverse effect on its business, results~~ of ~~operations~~the ~~and~~used ~~financial~~equipment ~~condition~~market recently.

~~During~~Certain ~~prolonged periods~~ of ~~decreased~~our ~~tonnage~~revenue ~~levels,~~equipment ~~the~~financing ~~Company~~arrangements ~~and~~have ~~other~~balloon ~~trucking~~payments ~~companies~~at ~~may make strategic fleet reductions, which could result in an increase in~~ the ~~supply~~end of ~~used equipment. When~~ the ~~supply~~finance ~~exceeds~~terms ~~the~~equal ~~demand~~to ~~for used equipment,~~ the ~~general~~values ~~market~~we ~~value~~expect ofto ~~used~~be ~~equipment~~able ~~decreases. Used equipment prices are also subject~~ to ~~substantial~~obtain ~~fluctuations~~in ~~based~~the onused ~~availability of financing and commodity prices for scrap metal~~market. ATo ~~depressed~~the ~~market~~extent ~~for~~the used ~~equipment~~market ~~could~~values ~~require~~are ~~the~~lower ~~Company~~than tosuch ~~trade~~balloon ~~its~~payments, ~~equipment~~we atmay ~~depressed~~be ~~values~~forced or to ~~record~~sell ~~losses on disposal or an impairment of~~ the ~~carrying values of its~~ equipment ~~that is not protected by residual value arrangements. Trades~~ at ~~depressed~~a ~~values~~loss and ~~decreases~~our inresults ~~proceeds under equipment disposals and impairment~~ of ~~the~~operations ~~carrying~~would ~~values~~be ofmaterially ~~its equipment could~~ adversely ~~affect its results of operations and financial condition~~affected.

~~Seasonality~~Insurance and ~~the~~claims ~~impact~~expenses ofcould ~~weather~~significantly ~~and~~reduce ~~other~~our ~~catastrophic events adversely affect the Company’s trucking operations and~~ profitability.

~~The~~We ~~Company’s~~are ~~tractor~~exposed ~~productivity~~to ~~decreases~~claims ~~during~~related ~~the~~to ~~winter~~cargo ~~season~~loss ~~because~~and ~~inclement~~damage, ~~weather~~property ~~impedes~~damage, ~~operations.~~personal Atinjury, ~~the~~workers’ ~~same time~~compensation, ~~operating~~group ~~expenses~~health ~~increase~~and ~~due~~group ~~to,~~dental. ~~among~~We ~~other~~have ~~things~~insurance coverage with third-party insurance carriers, abut ~~decline~~we inassume ~~fuel~~a ~~efficiency~~significant ~~because~~portion of ~~engine~~the ~~idling~~risk ~~and~~associated ~~harsh~~with ~~weather~~these ~~that~~claims ~~creates~~due ~~higher~~to ~~accident~~our ~~frequency,~~self-insured ~~increased~~retention ~~claims~~ and ~~higher~~deductibles, ~~equipment~~which ~~repair~~can ~~expenditures.~~make ~~The~~our ~~Company~~insurance ~~also~~and ~~may~~claims ~~suffer~~expense ~~from~~higher ~~weather-related~~ or ~~other~~more ~~events~~volatile. Additionally, ~~such~~we asface ~~tornadoes,~~the ~~hurricanes,~~risks ~~blizzards,~~of ~~ice~~increasing ~~storms,~~premiums ~~floods,~~and ~~fires,~~collateral ~~earthquakes~~requirements and ~~explosions,~~the ~~which~~risk ~~may~~of ~~disrupt~~carriers ~~fuel~~or ~~supplies,~~underwriters ~~increase~~leaving ~~fuel~~the ~~costs~~transportation sector, ~~disrupt~~which ~~freight~~may ~~shipments~~materially oraffect ~~routes,~~our ~~affect~~insurance ~~regional~~costs ~~economies,~~or ~~destroy~~make ~~its~~insurance ~~assets~~more ordifficult ~~the~~to ~~assets~~find, ofas ~~its~~well ~~customers~~as orincrease ~~otherwise~~our ~~adversely~~collateral ~~affect~~requirements. ~~the~~We ~~business~~could orexperience ~~financial~~increases ~~condition~~in ofour ~~its~~insurance ~~customers,~~premiums ~~any~~in ofthe ~~which~~future ~~could~~if ~~adversely~~we ~~affect~~decide ~~its~~to ~~results~~increase our coverage or ~~make~~if ~~its~~our ~~results~~claims ~~more~~experience ~~volatile~~deteriorates.

~~The~~In ~~trucking~~addition, ~~industry~~we isare ~~highly~~subject ~~regulated~~to changing conditions and ~~changes~~pricing in ~~existing~~the ~~laws~~insurance ormarketplace ~~regulations,~~and the cost or ~~liability~~availability ~~under~~of ~~existing~~various ortypes of insurance may change dramatically in the future. ~~laws~~If our insurance or ~~regulations~~claims expense increases, ~~could~~and ~~have~~we aare ~~material~~unable ~~adverse~~to ~~effect~~offset onthe ~~its~~increase with higher freight rates, our results of operations could be materially and ~~profitability~~adversely affected. Our results of operations may also be materially and adversely affected if we experience a claim in excess of our coverage limits, a claim for which coverage is not provided or a covered claim for which our insurance company fails to perform.

~~The~~If ~~Company~~we ~~operates~~are inrequired ~~the United States pursuant~~ to ~~operating~~accrue ~~authority~~or ~~granted~~pay byadditional ~~the~~amounts ~~DOT.~~because ~~The~~claims ~~Company,~~prove asto ~~well~~be asmore ~~its~~severe ~~company~~than ~~and~~our ~~leased~~recorded ~~labor drivers~~liabilities, ~~must~~our ~~also~~financial ~~comply~~condition ~~with governmental regulations regarding safety, equipment, environmental protection~~ and ~~operating~~results ~~methods. Examples include regulation~~ of ~~equipment weight, equipment dimensions, fuel emissions, driver hours-of-service, driver eligibility requirements, and on-board reporting of~~ operations. ~~The Company~~ may ~~become~~be ~~subject~~materially toadversely new or more restrictive regulations relating to such matters that may require changes in its operating practices, influence the demand for transportation services or require it to incur significant additional costsaffected. ~~Possible changes to laws and regulations include:~~

~~increasingly~~We ~~stringent~~accrue ~~environmental~~the ~~laws~~costs of the uninsured portion of pending claims based on estimates derived from our evaluation of the nature and ~~regulations~~severity of individual claims and an estimate of future claims development based upon historical claims development trends. Actual settlement of our retained claim liabilities could differ from our estimates due to a number of uncertainties, including ~~changes~~evaluation ~~intended~~of severity, legal costs and claims that have been incurred but not reported. Due to ~~address~~our ~~fuel~~high ~~efficiency~~retained amounts, we have significant exposure to fluctuations in the number and ~~greenhouse~~severity ~~gas~~of ~~emissions~~claims. ~~that~~If we are ~~attributed~~required to ~~climate~~accrue ~~change;~~or pay additional amounts because our estimates are revised or the claims ultimately prove to be more severe than originally assessed, our financial condition and results of operations may be materially adversely affected.

~~restrictions,~~We ~~taxes~~face orlitigation ~~other~~risks ~~controls~~that could have a material adverse effect on ~~emissions;~~the operation of our business.

~~regulation~~Our ~~specific~~business is subject to the ~~energy~~risk ~~market~~of litigation by employees, applicants, subcontractors, customers, vendors, government agencies, stockholders and ~~logistics~~other ~~providers~~parties through private actions, class actions, administrative proceedings, regulatory actions and other processes. We and our peers are subject to lawsuits alleging violations of various federal and state wage and hour laws regarding, among other things, minimum wage, meal and rest periods, overtime eligibility and failure to pay for all hours worked. A number of these lawsuits have resulted in the ~~industry;~~payment of substantial settlements or damages by other carriers.

~~changes~~The cost to defend, settle and resolve litigation may be significant. Not all claims are covered by our insurance (including wage and hour claims), and there can be no assurance that our coverage limits will be adequate to cover all amounts in dispute. To the ~~hours-~~extent we experience claims that are uninsured, exceed our coverage limits, involve significant aggregate use of~~-service~~ ~~regulations~~our retention amounts, ~~which~~or ~~govern~~cause increases in future premiums, the ~~amount~~resulting ofexpenses ~~time~~could have a ~~driver~~material ~~may~~adverse ~~drive~~effect inon ~~any~~our ~~specific~~business, ~~period;~~financial condition and results of operations.

~~driver~~We may be subject, and ~~vehicle~~have ~~ELD~~been ~~requirements;~~subject in the past, to litigation resulting from trucking accidents. The number and severity of litigation claims may be worsened by distracted driving by both truck drivers and other motorists. These lawsuits have resulted, and may result in the future, in the payment of substantial settlements or damages and increases of our insurance costs.

~~requirements~~We ~~leading~~rely tosignificantly ~~accelerated~~on ~~purchases~~our ofinformation ~~new~~technology ~~tractors~~systems, ~~trucks~~a disruption, failure or ~~trailers;~~security breach of which or an inability to keep pace with technological advances could have a material adverse effect on our business.

~~mandatory~~We ~~limits~~rely on ~~vehicle~~information ~~weight~~technology throughout all areas of our business to initiate, track and ~~size~~complete deliveries; process financial and nonfinancial data; compile results of operations for internal and external reporting; and achieve operating efficiencies and growth. Each of our information technology systems may be susceptible to various interruptions, including equipment or network failures, failed upgrades or replacement of software, user error, power outages, natural disasters, cyber-attacks, theft or misuse of data, terrorist attacks, computer viruses, hackers, or other security breaches. We may in the future experience security breaches and other interruptions of our information technology systems despite our best efforts to prevent

driver hiring restrictions;

increased bonding or insurance requirements; and

security requirements imposed by the DHS.

~~require~~them. ~~capital~~Our ~~expenditures~~efforts orto ~~adversely~~mitigate ~~impact~~exposure to these risks through the ~~recruitment~~establishment and maintenance of ~~drivers~~technology security programs and disaster recovery plans may not be sufficient. ~~The~~A ~~Company~~significant ~~also~~disruption, failure or security breach in our information technology systems, or those of our technology and communications services vendors, could ~~lose~~have ~~revenue~~a ifmaterial ~~its~~adverse ~~customers~~effect ~~divert~~on our business, ~~from~~which itcould ~~because~~include itoperational ~~has~~disruptions, ~~not~~loss ~~complied~~of ~~with~~confidential ~~their~~information, ~~sustainability~~external ~~requirements~~reporting delays or errors, legal claims or damage to our business reputation.

~~Safety-~~We also could experience an inability to keep pace with technological advances, resulting in our information technology platforms becoming obsolete or our competitors developing related ~~evaluations~~or ~~and~~similar ~~rankings~~service ~~under~~offerings ~~the~~more ~~CSA~~effective ~~program~~than ~~could~~ours. Furthermore, ~~adversely~~we ~~impact~~make ~~the~~strategic ~~Company’s~~investments ~~relationships~~in ~~with~~technology ~~its~~that ~~trucking~~naturally ~~customers~~entail risks and ~~its~~uncertainties, ~~ability~~some of which are beyond our control. For example, we may not be able to ~~maintain~~derive value from strategic investments or ~~grow~~we ~~its~~may ~~fleet~~incur higher than expected costs in realizing a return on such investments or overestimate the benefits that we receive or realize from such investments. Therefore, ~~each~~we cannot provide assurance that any of ~~which~~our ~~could~~strategic ~~have~~investments awill ~~material~~generate ~~adverse~~anticipated ~~effect~~financial onreturns. ~~its~~If our strategic investments fail to meet our expectations, our business and results of operations ~~and~~may ~~profitability~~be adversely impacted.

~~The~~In ~~Compliance~~addition, ~~Safety~~we ~~and~~are ~~Accountability~~currently ~~(the~~dependent ~~“CSA”)~~on ~~program~~a ~~includes~~single ~~compliance~~vendor ~~and~~platform ~~enforcement initiatives designed~~ to ~~monitor~~support ~~and~~certain ~~improve~~information ~~commercial~~technology ~~motor~~functions. ~~vehicle~~If ~~safety by measuring~~ the ~~safety~~stability ~~record~~or capability of ~~both~~such ~~the~~vendor ~~motor~~is ~~carrier~~compromised and ~~the~~we ~~driver.~~were ~~These~~forced ~~measurements are scored and used by the FMCSA~~ to ~~identify~~migrate ~~potential safety risks and~~ to ~~direct~~a ~~enforcement~~new ~~action.~~platform, ~~The~~it ~~FMCSA~~could ~~issues~~materially ~~three~~adversely ~~categories~~affect ofour ~~safety ratings: satisfactory~~business, ~~conditional,~~financial condition and ~~unsatisfactory.~~results As of ~~December 31, 2020, all DOT operating authority numbers operated by the Company currently have a “satisfactory” FMCSA rating~~operations.

~~The~~Some ~~Company’s~~of ~~CSA~~our ~~scores~~employees ~~are~~work ~~dependent upon its safety and compliance experience~~remotely, which ~~could~~may ~~change~~increase ~~at any time. In addition,~~ the ~~safety~~cybersecurity ~~standards~~risks ~~prescribed in the CSA program or the underlying methodology used by the FMCSA~~ to ~~determine~~our ~~a carrier’s safety rating could change and~~business, asincluding ~~a result, the Company’s ability to maintain~~ an ~~acceptable~~increased ~~score~~demand ~~could~~for beinformation ~~adversely~~technology ~~impacted. If the FMCSA adopts rulemakings in the future that revise the methodology used to determine a carrier’s safety rating in a manner that incorporates more stringent standards~~resources, ~~then~~increased ~~the~~risk ~~Company’s~~of ~~CSA scores could be adversely affected. If the Company receives an unacceptable CSA score~~phishing, ~~its~~and ~~relationships~~other ~~with~~cybersecurity ~~customers could be damaged, which could result in a loss of business or otherwise adversely affect the Company~~attacks.

~~The~~We ~~CSA~~have, ~~program affects drivers because their safety performance~~ and ~~compliance~~will ~~impact~~continue ~~their~~to ~~safety records and~~have, ~~while working for~~ a ~~carrier,~~portion ~~will~~of ~~impact~~our ~~their~~employee ~~carrier’s~~population ~~safety~~that ~~record.~~works ~~The~~from ~~methodology~~home ~~for~~full-time ~~determining~~or aunder ~~carrier’s~~flexible ~~DOT~~work ~~safety~~arrangements, ~~rating~~and ~~relies~~we ~~upon~~have ~~implementation~~provided ofassociates ~~Behavioral~~with ~~Analysis~~expanded ~~and~~remote ~~Safety~~network ~~Improvement~~access ~~Categories~~options ~~(“BASIC”)~~which ~~applicable~~enable them to ~~the~~work ~~on-road~~outside ~~safety performance~~ of ~~the~~our ~~carrier’s~~corporate ~~drivers~~infrastructure and, ~~certain~~in ofsome ~~those~~cases, ~~rating~~use ~~results~~their ~~are~~own ~~provided~~personal ondevices, ~~the~~which ~~FMCSA’s~~exposes ~~Carrier~~us ~~Safety~~to ~~Measurement~~additional ~~System~~cybersecurity ~~website~~risks. AsOur aemployees ~~result,~~working ~~certain~~remotely ~~current and potential drivers~~ may noexpose ~~longer~~us ~~be eligible~~ to ~~drive~~cybersecurity ~~for~~risks ~~the~~through: ~~Company,~~(i) ~~the~~unauthorized ~~Company’s~~access ~~fleet~~to ~~could~~sensitive beinformation ~~ranked poorly~~ as ~~compared~~a toresult ~~its~~of ~~peer~~increased ~~firms~~remote access, ~~and~~including ~~the~~our ~~Company~~employees’s ~~safety~~use ~~rating could be adversely impacted. The occurrence~~ of ~~future~~Company-owned ~~deficiencies~~and ~~could~~personal ~~affect~~devices ~~driver recruiting~~ and ~~retention~~videoconferencing byfunctions ~~causing~~and ~~high-quality~~applications ~~drivers~~ to ~~seek~~remotely ~~employment~~handle, ~~(in~~access, ~~the~~discuss, ~~case~~or oftransmit ~~company~~confidential ~~drivers~~information, (ii) orincreased ~~contracts~~exposure ~~(in~~to ~~the~~phishing ~~case~~and ofother ~~third~~scams ~~party~~as ~~drivers)~~cybercriminals ~~with~~may, among other ~~carriers~~things, orinstall ~~could~~malicious ~~cause~~software ~~the~~on ~~Company’s~~our ~~customers~~systems toand ~~direct~~equipment ~~their~~and ~~business~~access ~~away~~sensitive ~~from~~information, ~~the Company~~ and to(iii) ~~carriers~~violation ~~with~~of ~~better~~international, ~~fleet~~federal ~~safety~~or ~~rankings,~~state-specific ~~either~~privacy oflaws. ~~which~~We ~~would~~believe ~~adversely~~that ~~affect~~ the ~~Company’s~~increased ~~results~~number of ~~operations~~employees ~~and~~working ~~productivity.~~remotely ~~Additionally,~~has ~~the~~incrementally ~~Company~~increased ~~may~~our ~~incur~~cyber ~~greater~~risk ~~than~~profile, ~~expected~~but ~~expenses~~we inare ~~its~~unable ~~attempts~~ to ~~improve~~predict ~~its~~the ~~scores~~extent asor aimpacts ~~result~~ of ~~poor~~those ~~rankings.~~risks ~~Those~~at ~~carriers~~this ~~and~~time. ~~drivers~~A ~~identified~~significant ~~under~~disruption ~~the~~of ~~CSA~~our ~~program~~information astechnology ~~exhibiting~~systems, ~~poor~~unauthorized ~~BASIC~~access ~~scores~~to ~~are~~or ~~prioritized~~loss ~~for~~of ~~interventions~~confidential information, ~~such~~or aslegal ~~warning~~claims ~~letters~~resulting ~~and~~from ~~roadside~~our ~~investigations,~~violation ~~either~~ of ~~which~~privacy ~~may~~laws ~~adversely~~could ~~affect~~each ~~the~~have ~~Company’s~~a ~~results~~material ofadverse ~~operations~~effect on our business.

~~The~~Our ~~requirements~~agreements ~~of CSA could also shrink the trucking industry’s pool of drivers if drivers~~ with ~~unfavorable~~subcontracted ~~scores~~operators ~~leave~~expose ~~the~~us ~~industry. As a result, the costs~~ to ~~attract,~~risks ~~train~~that ~~and~~we ~~retain~~do ~~qualified~~not ~~drivers~~face ~~could~~with ~~increase.~~our Acompany ~~shortage of qualified~~ drivers ~~could also increase driver turnover, decrease asset utilization, limit growth and adversely impact the Company’s results of operations and profitability~~.

~~The~~We ~~Company~~rely, isin ~~subject~~part, upon independent subcontractors to ~~environmental~~perform ~~and~~the ~~worker~~services ~~health~~for ~~and~~which ~~safety~~we ~~laws~~contract ~~and~~with ~~regulations~~customers. ~~that~~Our ~~may~~reliance ~~expose~~on itsubcontractors creates numerous risks for our business. If our subcontractors fail to ~~significant~~meet ~~costs~~our ~~and~~contractual ~~liabilities~~obligations ~~and~~or ~~have~~otherwise fail to perform in a ~~material~~manner ~~adverse~~consistent ~~effect~~with our requirements, we may be required to utilize alternative service providers at potentially higher prices or with some degree of disruption of the services that we provide to customers. If we fail to deliver on ~~its~~time, ~~results~~if our contractual obligations are not otherwise met, or if the costs of ~~operations~~our services increase, ~~competitive~~then ~~position~~our profitability and ~~financial~~customer ~~condition~~relationships could be harmed.

The ~~Company~~financial iscondition ~~subject to stringent~~ and ~~comprehensive~~operating ~~federal,~~costs ~~state,~~of ~~and~~our ~~local~~subcontractors ~~environmental~~are ~~and~~affected ~~worker~~by ~~health~~conditions and ~~safety~~events ~~laws~~that ~~and~~are ~~regulations~~beyond ~~governing,~~our ~~among~~control ~~other matters, the operation of fuel storage tanks, release of emissions from its vehicles (including engine idling)~~ and ~~facilities,~~may ~~the~~also ~~health~~be ~~and~~beyond ~~safety~~their ofcontrol. ~~its~~Adverse ~~workers~~changes in ~~conducting operations, and adverse impacts to~~ the ~~environment.~~financial ~~Under~~condition ~~certain~~of ~~environmental laws,~~ the ~~Company~~subcontractors ~~could~~or beincreases ~~subject~~in totheir ~~strict~~equipment ~~liability, without regard to fault~~ or ~~legality~~operating ofcosts ~~conduct,~~could ~~for~~cause ~~costs~~them ~~relating~~ to ~~contamination~~seek athigher ~~facilities~~revenues ~~the Company owns~~ or ~~operates~~to orcease ~~previously~~their ~~owned~~business orrelationships ~~operated and at third-party sites where the Company disposed of waste, as well as costs associated~~ with ~~the clean-up of releases arising from accidents involving the Company’s vehicles~~us. The ~~Company~~prices ~~often~~we ~~operates~~charge inour ~~industrial~~customers ~~areas,~~could ~~where~~be ~~truck~~impacted ~~terminals~~by ~~and~~such ~~other industrial activities are located~~issues, ~~and where soil, groundwater or other forms of environmental contamination have occurred from historical or recent releases and for~~ which ~~the Company~~ may ~~incur~~in ~~remedial~~turn orlimit ~~other~~pricing ~~environmental~~flexibility ~~liabilities.~~with ~~The~~customers, ~~Company~~resulting ~~also~~in ~~maintains~~fewer ~~aboveground~~customer ~~fuel~~contracts ~~storage tanks at some of its facilities~~ and ~~vehicle~~decreasing ~~maintenance~~our ~~operations at certain of its facilities~~revenues. The Company’s operations involve the risks of fuel spillage or seepage into the environment, environmental damage and unauthorized hazardous material spills, releases or disposal actions, among others.

~~Increasing~~If ~~efforts~~one toof ~~control~~our ~~air~~subcontractors ~~emissions,~~is ~~including~~subject ~~greenhouse~~to ~~gases~~negative publicity, ~~may~~it ~~have~~could anreflect ~~adverse effect~~ on ~~the~~us ~~Company. Federal~~ and ~~state lawmakers~~ have ~~implemented~~a ~~various~~material ~~climate-change~~adverse ~~initiatives~~effect ~~and~~on ~~greenhouse~~our ~~gas~~business, ~~regulations~~brand and ~~may~~financial ~~implement~~performance. ~~additional~~Under ~~initiatives~~certain ~~in the future~~laws, ~~all~~we ofcould ~~which~~also ~~could~~be ~~increase~~subject ~~the~~to ~~cost~~allegations of ~~new~~liability ~~tractors,~~for ~~impair productivity and increase~~ the ~~Company’s~~activities ~~operating~~of ~~expenses.~~our subcontractors.

Subcontractors are third-party service providers, as compared to company drivers who are employed by us. As independent business owners, the subcontractors may make business or personnel decisions that conflict with our best interests. For example, if a load is unprofitable, route distance is too far from home or personal scheduling conflicts arise, a subcontractor may deny loads of freight from time to time. In these circumstances, we must be able to timely deliver the freight in order to maintain relationships with our customers.

~~Compliance~~If ~~with~~our ~~environmental~~employees ~~laws~~were ~~and~~to regulations may also increase the price of the Company’s equipment and otherwise affect the economics of the Company’s trucking business by requiring changes in operating practices or by influencing the demand forunionize, orour the costs of providing, transportation services. For example, regulations issued by the EPA and various state agencies that require progressive reductions in exhaust emissions from diesel engines have resulted in higher prices for tractors and diesel engines and increased operating ~~and maintenance~~ costs. ~~Also,~~could inincrease ~~order to reduce exhaust emissions, some states~~ and ~~municipalities~~our ~~have~~ability ~~begun~~ to ~~restrict~~compete ~~the locations and amount of time where diesel-powered tractors, such as the Company’s, may idle. These restrictions~~ could force the Company to alter its drivers’ behavior, purchase on-board power units that do not require the engine to idle or face a decrease in productivity. The Company is also subject to potentially stringent rulemaking related to sustainability practices, including conservation of resources by decreasing fuel consumption. This increased focus on sustainability practices may result in new regulations and/or customer requirements that could adversely impact the Company’s business. Historically, the Company’s environmental compliance costs have not had a material adverse effect on its results of operations; however, there can be ~~no assurance that such costs will not be material in the future or that future compliance will not have a material adverse effect on the Company’s business and operating results~~impaired.

IfNone ~~the~~of ~~Company~~our ~~has~~employees ~~operational~~are ~~spills~~currently orrepresented ~~accidents or if it is found to be in violation of, or otherwise liable~~ under, ~~environmental~~a orcollective ~~worker~~bargaining ~~health~~agreement; ~~or safety laws or regulations~~however, ~~the~~we ~~Company~~always ~~could~~face ~~incur significant costs and liabilities. Those costs and liabilities may include~~ the ~~assessment~~risk ofthat ~~sanctions,~~our ~~including~~employees ~~administrative,~~will ~~civil~~try ~~and~~to ~~criminal~~unionize. ~~penalties~~Further, ~~the~~Congress ~~imposition~~or ofone ~~investigatory, remedial~~ or ~~corrective~~more ~~action~~states ~~obligations,~~could ~~the~~approve ~~occurrence~~legislation ~~of delays in permitting~~ and/or ~~performance of projects, and~~ the ~~issuance~~National ofLabor ~~orders~~Relations ~~enjoining~~Board ~~performance of some or all of~~ (the ~~Company’s~~“NLRB”) ~~operations~~could inrender adecisions ~~particular area. The occurrence of any one~~ or ~~more~~implement ofrule ~~these~~changes ~~developments~~that could ~~have~~significantly aaffect ~~material~~our ~~adverse~~business ~~effect~~and on our ~~results~~relationship ofwith ~~operations~~employees, ~~competitive~~including ~~position~~actions ~~and~~that ~~financial~~could ~~condition.~~substantially ~~Environmental~~liberalize ~~and~~the ~~worker~~procedures ~~health~~for ~~and~~union ~~safety~~organization. ~~laws~~In ~~are~~addition, ~~becoming~~we ~~increasingly more stringent and there~~ can beoffer no ~~assurances~~assurance that ~~compliance~~the ~~with,~~Department orof ~~liabilities~~Labor ~~under,~~will ~~existing~~not oradopt ~~future~~new ~~environmental~~regulations ~~and~~or ~~worker~~interpret ~~health~~existing orregulations ~~safety~~in ~~laws~~a ormanner ~~regulations~~that ~~will~~would ~~not~~favor ~~have~~the aagenda ~~material~~of ~~adverse~~unions. ~~effect~~We onbelieve the ~~Company’s~~applicability ~~business,~~of ~~financial~~the ~~condition,~~SCA ~~results~~to ofour ~~operations,~~employees ~~cash~~reduces ~~flows~~the orlikelihood ~~prospects~~of organizational activity.

~~Insurance~~Any attempt to organize by our employees could result in increased legal and ~~claims~~other ~~expenses~~associated costs and divert management attention, and if we entered into a collective bargaining agreement, the terms could ~~significantly~~negatively ~~reduce~~affect our costs, efficiency and ability to generate acceptable returns on the ~~Company’s~~affected ~~profitability~~operations. In particular, the unionization of our employees could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects because:

•

~~The~~restrictive ~~Company~~work isrules exposed to claims related to cargo loss and damage, property damage, personal injury, workers’ compensation, group health and group dental. The Company has insurance coverage with third-party insurance carriers, but it assumes a significant portion of the risk associated with these claims due to its self-insured retention and deductibles, which can make its insurance and claims expense higher or more volatile. Additionally, the Company faces the risks of increasing premiums and collateral requirements and the risk of carriers or underwriters leaving the transportation sector, which may materially affect its insurance costs or make insurance more difficult to find, as well as increase its collateral requirements. The Company could ~~experience~~hamper ~~increases~~our inefforts ~~its insurance premiums in the future if it decides~~ to ~~increase~~improve ~~its coverage or if its claims experience deteriorates. In addition, the Company is subject to changing conditions~~ and ~~pricing~~sustain inoperating ~~the~~efficiency ~~insurance marketplace~~ and the cost or availability of various types of insurance may change dramatically in the future. If the Company’s insurance or claims expense increases, and the Company is unable to offset the increase with higher freight rates, its results of operations could beimpair ~~materially~~our ~~and~~service ~~adversely~~reputation ~~affected. The Company’s results of operations may also be materially~~ and ~~adversely~~limit ~~affected~~our ifability ~~it experiences a claim in excess of its coverage limits, a claim for which coverage is not provided or a covered claim for which its insurance company fails~~ to ~~perform.~~provide next-day services;

•

~~Difficulty~~a instrike ~~obtaining~~or ~~goods~~work ~~and~~stoppage ~~services~~could ~~from~~negatively ~~the~~impact ~~Company’s~~our ~~vendors~~profitability and ~~suppliers~~ could ~~adversely~~damage ~~affect~~customer ~~the~~and ~~Company’s~~employee ~~business.~~relationships; and

•

~~The~~an ~~Company~~election ~~is dependent upon its vendors~~ and ~~suppliers,~~bargaining ~~including~~process ~~equipment~~could ~~manufacturers,~~divert ~~for~~management’s ~~tractors,~~time ~~trailers~~ and ~~other~~attention ~~products and materials. The Company believes that it has positive vendor and supplier relationships and is generally able to obtain favorable pricing and other terms~~ from ~~such~~our ~~parties.~~overall Ifobjectives ~~the Company fails to maintain amenable relationships with its vendors~~ and ~~suppliers,~~impose orsignificant if its vendors and suppliers are unable to provide the products and materials the Company needs or undergo financial hardship, the Company could experience difficulty in obtaining needed goods and services, and subsequently, its business and operations could be adversely affectedexpenses.

~~The~~Higher ~~Company’s~~health ~~contractual~~care ~~agreements~~costs ~~with~~and ~~its~~labor ~~sub-contracted~~costs ~~operators~~could ~~expose~~adversely itaffect toour ~~risks~~financial ~~that~~condition itand ~~does~~results ~~not~~of ~~face with its company drivers~~operations.

~~The~~With ~~Company~~the ~~relies,~~passage in ~~part~~2010 of the United States Patient Protection and Affordable Care Act (the “PPACA”), ~~upon~~we ~~independent~~are ~~sub~~required to provide health care benefits to all full-~~contractors~~time employees who meet certain minimum requirements of coverage and affordability, or otherwise be subject to ~~perform~~a payment per employee based on the ~~services~~affordability ~~for~~criteria ~~which~~set itforth ~~contracts~~in ~~with~~the ~~customers~~PPACA. Additionally, some states and localities have passed laws mandating the provision of certain levels of health benefits by some employers. The ~~Company’s~~PPACA ~~reliance~~also onrequires ~~sub-contractors~~individuals ~~creates~~to ~~numerous~~obtain ~~risks~~coverage ~~for~~or face individual penalties, so employees who are currently eligible but have elected not to participate in the ~~Company’s~~health ~~business~~care plans offered by us may ultimately find it more advantageous to do so. It is also possible that by making changes or failing to make changes in the health care plans we offer, we will have difficulty attracting and retaining employees, including drivers. The costs and other effects of these healthcare requirements may significantly increase our health care coverage costs and could materially adversely affect our financial condition and results of operations.

IfSeasonality ~~the~~and ~~Company’s sub-contractors fail to meet~~ the ~~Company’s~~impact contractual obligations or otherwise fail to perform in a manner consistent with the Company’s requirements, the Company may be required to utilize alternative service providers at potentially higher prices or with some degree of ~~disruption~~weather ofand ~~the~~other ~~services~~catastrophic ~~that~~events ~~the~~adversely ~~Company~~affect ~~provides~~our totrucking ~~customers.~~operations ~~If the Company fails to deliver on time, if its contractual obligations are not otherwise met, or if the costs of its services increase, then the Company’s profitability~~ and ~~customer relationships could be harmed~~profitability.

13Our tractor productivity decreases during the winter season because inclement weather impedes operations. At the same time, operating expenses increase due to, among other things, a decline in fuel efficiency because of engine idling and adverse road conditions that creates higher accident frequency, increased accident claims and higher cold weather-related equipment maintenance and repair expenditures. We may also suffer from weather-related or other events, such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes and explosions, which may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, destroy our assets or the assets of our customers or otherwise adversely affect the business or financial condition of our customers, any of which could adversely affect our results or make our results more volatile.

The ~~financial condition and operating costs of the Company’s sub~~COVID-~~contractors~~19 ~~are~~pandemic, ~~affected~~other bysimilar ~~conditions~~outbreaks and ~~events~~government ~~that~~responses ~~are~~thereto ~~beyond the Company’s control and~~ may ~~also~~have bea ~~beyond~~material ~~their~~adverse ~~control.~~impact ~~Adverse~~on ~~changes~~our inbusiness, ~~the~~ financial condition of the Company’s sub-contractors or increases in their equipment or operating costs could cause them to seek higher revenues or to cease their business relationships with the Company. The prices the Company charges its customers could be impacted by such issues, which may in turn limit pricing flexibility with customers, resulting in fewer customer contracts and ~~decreasing~~results ~~the~~of ~~Company’s revenues~~operations.

~~Sub-contractors~~The ~~typically~~continued ~~use~~spread ~~tractors,~~and ~~trailers~~impact ~~and~~of ~~other~~novel ~~equipment~~coronavirus ~~bearing~~(“COVID-19”) ~~the~~and ~~Company’s~~government ~~trade~~responses ~~names~~thereto ~~and~~might ~~trademarks.~~materially Ifnegatively ~~one~~impact ofour ~~the~~future ~~Company’s~~results ~~sub-contractors~~of isoperations ~~subject~~and tofinancial ~~negative~~condition. ~~publicity~~COVID-19 has created, itand ~~could~~any ~~reflect~~other onoutbreaks ~~the~~of ~~Company~~similar ~~and~~contagious ~~have~~diseases aor ~~material~~other adverse ~~effect~~public onhealth ~~the~~developments ~~Company’s~~could ~~business~~create, ~~brand~~significant volatility, uncertainty and ~~financial~~economic ~~performance~~disruption. ~~Under~~COVID-19 ~~certain~~or ~~laws,~~another ~~the~~similar ~~Company~~outbreak could ~~also~~negatively beimpact ~~subject~~our tobusiness ~~allegations~~in ofnumerous ~~liability~~ways, ~~for~~including, ~~the~~but ~~activities~~not oflimited ~~its~~to, ~~sub-contractors.~~the following:

•

Sub-contractors are third-party service providers, as compared to company drivers who are employed by the Company. As independent business owners, the Company’s sub-contractors may make business or personnel decisions that conflict with the Company’s best interests. For example, if a load is unprofitable, route distance is too far from home or personal scheduling conflicts arise, a sub-contractor may deny loads of freight from time to time. In these circumstances, the Company must be able to timely deliver the freight in order to maintain relationships with customers.

If the Company’s sub-contractors are deemed by regulators or judicial process to be employees, the Company’s business and results of operations could be adversely affected.

Tax and other regulatory authorities have in the past sought to assert that sub-contractors in the trucking industry are employees rather than independent contractors. Taxing and other regulatory authorities and courts apply a variety of standards in their determination of independent contractor status. If the Company’s sub-contractors are determined to be its employees, it would incur additional exposure under federal and state tax, workers’ compensation, unemployment benefits, labor, employment, and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings.

The Company is dependent on computer and communications systems, and a systems failure or data breach could cause a significant disruption to its business.

The Company’s business depends on the efficient and uninterrupted operation of its computer and communications hardware systems and infrastructure. The Company currently maintains its computer systems at multiple locations, including several of its offices and terminals and third-party data centers, along with computer equipment at each of its terminals. The Company’s operations and those of its technology and communications service providers are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure, terrorist attacks, internet failures, computer viruses, data breaches (including cyber-attacks or cyber intrusions over the internet, malware and the like) and other events generally beyond its control. Although the Company believes that it has robust information security procedures and other safeguards in place, as cyber threats continue to evolve, it may be required to expend additional resources to continue to enhance its information security measures and investigate and remediate any information security vulnerabilities. A significant cyber incident, including system failure, security breach, disruption by malware or other damage, could interrupt or delay the Company’s operations, damage its reputation, cause a loss of customers, agents or third party capacity providers, expose the Company to a risk of loss or litigation, or cause the Company to incur significant time and expense to remedy such an event, any of which could have a material adverse impact on its results of operations and financial position.

If the Company’s employees were to unionize, the Company’s operating costs could increase and its ability to compete could be impaired.

None of the Company’s employees are currently represented under a collective bargaining agreement; however, the Company always faces the risk that its employees will try to unionize. Further, Congress or one or more states could approve legislation and/or the National Labor Relations Board (the NLRB) could render decisions or implement rule changes that could significantly affect the Company’s business and its relationship with employees, including actions that could substantially liberalize the procedures for union organization. For example, in December 2014, the NLRB implemented a final rule amending the agency’s representation-case proceedings that govern the procedures for union representation. Pursuant to this amendment, union elections can now be held within 10 to 21 days after the union requests a vote, which makes it easier for unions to successfully organize all employees, in all industries. In addition, the Company can offer no assurance that the Department of Labor will not adopt new regulations or interpret existing regulations in a manner that would favor the agenda of unions. The Company believes the applicability of the SCA to Company employees reduces the likelihood of organizational activity.

Any attempt to organize by the Company’s employees could result in increased legal and other associated costs and divert management attention, and if the Company entered into a collective bargaining agreement, the terms could negatively affect its costs, efficiency and ability to generate acceptable returns on the affected operations. In particular, the unionization of the

Company’s employees could have a material adverse effect on its business, financial condition, results of operations, cash flows and prospects because:

restrictive work rules could hamper the Company’s efforts to improve and sustain operating efficiency and could impair the Company’s service reputation and limit the Company’s ability to provide next-day services;

a strike or work stoppage could negatively impact the Company’s profitability and could damage customer and employee relationships; and

an election and bargaining process could divert management’s time and attention from the Company’s overall objectives and impose significant expenses.

Higher health care costs and labor costs could adversely affect the Company’s financial condition and results of operations.

With the passage in 2010 of the United States Patient Protection and Affordable Care Act (the PPACA), the Company is required to provide health care benefits to all full-time employees that meet certain minimum requirements of coverage and affordability, or otherwise be subject to a payment per employee based on the affordability criteria set forth in the PPACA. Many of these requirements have been phased in over a period of time, with the majority of the most impactful provisions affecting the Company having begun in the second quarter of 2015. Additionally, some states and localities have passed state and local laws mandating the provision of certain levels of health benefits by some employers. The PPACA also requires individuals to obtain coverage or face individual penalties, so employees who are currently eligible but have elected not to participate in the Company’s health care plans may ultimately find it more advantageous to do so. It is also possible that by making changes or failing to make changes in the health care plans the Company offers it will have difficulty attracting and retaining employees, including drivers. The costs and other effects of these healthcare requirements may significantly increase the Company’s health care coverage costs and could materially adversely affect its financial condition and results of operations.

The COVID-19 pandemic and other similar outbreaks may have a material adverse impact on our business, financial condition, and results of operations in the future.

The continued spread and impact of novel coronavirus (COVID-19) might materially negatively impact our future results of operations and financial condition. COVID-19 has created, and any other outbreaks of similar contagious diseases or other adverse public health developments could create, significant volatility, uncertainty and economic disruption. COVID-19 or another similar outbreak could negatively impact our business in numerous ways, including, but not limited to, the following:

our revenue may be reduced due to a decrease in demand for our services or the transportation markets in general as a result of the global economic downturn;

•

our operations may be disrupted or impaired if a significant portion of our drivers or other employees are unable to work due to illness;

•

we may experience a loss of business or increased costs resulting from supply chain disruptions and changing transportation needs caused by the nationwide emergency response to the pandemic;

•

we may experience workforce issues and incur severance payments as a result of adjusting our workforce to market conditions, and we may subsequently experience retention issues and driver shortages;

•

our management may be distracted as they are focused on mitigating the effects of COVID-19 on our business operations while protecting the health of our workforce, which has required, and will continue to require, a large investment of time and resources; and

•

we may be at greater risk for cybersecurity issues, as digital technologies may become more vulnerable and experience a higher rate of cyberattacks in the current and continuing environment of remote connectivity.

The extent to which the COVID-19 pandemic impacts ~~the~~us ~~Company~~ will depend on numerous evolving factors and future developments that we are not able to predict, including: the geographic scope, severity, and duration of the pandemic; governmental, business and other actions in response to the pandemic (which could include limitations on ~~the~~our ~~Company’s~~ operations or mandates to provide services in a specified manner); the impact of the pandemic on economic activity; the response of the overall economy and the financial markets; expenses we have incurred and may incur in the future in connection with our response to the pandemic; the health of and the effect on our workforce and our ability to meet staffing needs; and the potential effects on our internal controls, including those over financial reporting, as a result of changes in working environments. In 2020, services ~~the~~we ~~Company~~provide ~~provides~~the USPS were deemed “essential” such that ~~the~~we ~~Company~~were ~~was~~ required to continue operations during “lockdowns” and similar restrictive measures limiting business activity generally.

15In response to the spread of COVID-19, we modified our business practices for the continued health and safety of our employees. Specifically, we implemented measures to enhance the sanitization process of our equipment and properties, increased the social distancing of our employees by working remotely where possible, and provided driving associates with personal protective equipment (“PPE”). We may take further actions, or be required to take further actions, that are in the best interests of our employees in the future. The implementation of health and safety practices, including federal or state vaccine mandates and similar measures, could impact our productivity and costs, which could have a material adverse impact on our business, financial condition and results of operations. In addition, the focus on managing and mitigating the impacts of COVID-19 on our business may cause us to divert or delay the application of our resources toward existing or new initiatives or investments, which could have a material adverse impact on our results of operations.

In response to the spread of COVID-19, we modified our business practices for the continued health and safety of our employees. Specifically, we implemented measures to enhance the sanitization process of the Company’s equipment and properties, increased the social distancing of our employees by working remotely where possible, and provided driving associates with personal protective equipment (PPE). We may take further actions, or be required to take further actions, that are in the best interests of our employees in the future. The implementation of health and safety practices, including federal or state vaccine mandates and similar measures, could impact our productivity and costs, which could have a material adverse impact on our business, financial condition, and results of operations. In addition, the focus on managing and mitigating the impacts of COVID-19 on our business may cause us to divert or delay the application of our resources toward existing or new initiatives or investments, which could have a material adverse impact on our results of operations.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also exacerbate many of the other risks set forth in this Annual Report on Form 10-K, including those relating to our financial performance and debt obligations. There are no comparable recent events that provide guidance as to the effect the COVID-19 global pandemic may have, and as a result, the ultimate impact of the pandemic is highly uncertain and subject to change.

~~The~~We ~~Company~~ may be adversely affected by fluctuations in the price or availability of ~~CNG and~~ diesel fuel and gasoline.

Fuel is one of ~~the~~our ~~Company’s~~ largest operating expenses. Fuel prices fluctuate greatly due to factors beyond ~~the~~our ~~Company’s~~ control, such as political events, price and supply decisions by oil producing countries and cartels, terrorist activities, environmental laws and regulations, armed conflicts, depreciation of the dollar against other currencies, world supply and demand imbalances, and hurricanes and other natural or man-made disasters, each of which may lead to an increase in the cost of fuel. Such events may lead not only to increases in fuel prices, but also to fuel shortages and disruptions in the fuel supply chain. Because ~~the~~our ~~Company’s~~ operations are dependent upon fuel, significant fuel cost increases, shortages or supply disruptions could materially and adversely affect ~~its~~our results of operations and financial condition. Although ~~the~~our ~~Company's~~ customers generally reimburse itus for fuel expenses, the calculations of those reimbursements ~~are~~ typically atlag ~~fuel~~the ~~prices~~change ~~applicable~~in to the ~~preceding~~Department ~~month~~of Energy's fuel index. As a result, those reimbursements might be for amounts lower than ~~the~~our ~~Company's~~ fuel costs as fuel prices fluctuate.

~~Our~~Costs associated with our use of natural gas vehicles (“NGVs”) ~~might not produce expected competitive advantages, and costs associated with using NGVs~~ could exceed the related benefits that we are able to realize, ~~both of~~ which could adversely affect ~~the~~our ~~Company’s~~ results of operations and cash flows.

WeHigher ~~operate NGVs because we believe our use of NGVs provides us with a competitive advantage when bidding on USPS and other freight contracts. However, higher~~ costs associated with purchasing and repairing NGVs might exceed any benefits attributable to our use of NGVs. For example, there are a limited number of original equipment manufacturers of NGVs and the engines, fuel tanks and other equipment required to upfit a gasoline or diesel engine to run on natural gas, which can increase costs related to purchasing and repairing NGVs as well limit the supply of NGVs available to purchase and therefore our ability to add to our fleet. Also, some of the higher costs of owning and operating NGVs have historically been offset by federal and state government incentives, including those that offset part or all of the additional up-front cost to acquire NGVs or convert vehicles to run on natural gas, those that waive vehicle weight limits for NGVs, and those that offer tax credits. However, those incentives may not continue. If those government incentives are discontinued or not renewed, our operating costs could significantly increase.

In addition to potential increases in expenses and other operating costs related to our use of NGVs, if technologies are developed that either reduce the emissions in gasoline and diesel-powered vehicles or improve the operating capabilities of electric, solar, or other alternative fuel technology vehicles, the benefits of NGVs could be significantly reduced. Any such reduction could adversely affect our ability to retain existing freight contracts when they are up for renewal and receive new contracts, which would adversely impact our financial performance.14

~~Risks~~In ~~Related~~addition to ~~Our~~potential ~~Securities~~increases in expenses and other operating costs related to our use of NGVs, if technologies are developed that either reduce the emissions in gasoline and diesel-powered vehicles or improve the operating capabilities of electric, solar or other alternative fuel technology vehicles, the benefits of NGVs could be significantly reduced. Any such reduction could adversely affect our ability to retain existing freight contracts when they are up for renewal and receive new contracts, which would adversely impact our financial performance.

~~There~~Risks isRelated noto ~~established~~Regulatory ~~trading market for our common stock,~~ and ~~our~~Governmental ~~stockholders may be unable to sell their shares.~~Matters

~~There~~The istrucking noindustry ~~established~~is ~~market,~~highly ~~private~~regulated ~~or public, for any of our securities~~ and ~~there~~changes ~~can~~in beexisting nolaws ~~assurance that a trading market will ever develop~~ or, ~~if developed~~regulations, ~~that~~or itliability ~~will~~under beexisting ~~maintained.~~or ~~There~~future ~~can~~laws beor noregulations, ~~assurance~~could ~~that~~have ~~the~~a ~~Company’s~~material ~~stockholders~~adverse ~~will~~effect ~~ever~~on beour ~~able~~results toof ~~resell~~operations ~~their~~and ~~shares~~profitability.

~~Our~~We ~~common~~operate ~~stock~~in isthe ~~subject~~United States pursuant to operating authority granted by the ~~“penny~~DOT. ~~stock”~~We, ~~rules~~along with our leased labor drivers, must also comply with governmental regulations regarding safety, equipment, environmental protection and operating methods. Examples include regulation of ~~the~~equipment ~~SEC~~weight, ~~which~~equipment ~~restrict~~dimensions, ~~transactions~~fuel inemissions, ~~our~~driver ~~stock~~hours-of-service, driver eligibility requirements and on-board reporting of operations. We may ~~reduce~~become ~~the~~subject ~~value~~to ofnew anor ~~investment~~more restrictive regulations relating to such matters that may require changes in our ~~stock~~operating practices, influence the demand for transportation services or require us to incur significant additional costs. Possible changes to laws and regulations include:

•

~~Our~~increasingly ~~common~~stringent ~~stock~~environmental islaws ~~currently regarded as a “penny stock” because our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States~~ and ~~our~~regulations, ~~common~~including ~~stock~~changes ~~has~~intended ~~a market price less than $5.00 per share. The penny stock rules require a broker-dealer~~ to ~~deliver~~address afuel ~~standardized~~efficiency ~~risk~~and ~~disclosure~~greenhouse ~~document~~gas ~~prepared~~emissions bythat ~~the~~are ~~SEC,~~attributed to climate change;

•

restrictions, taxes or other controls on emissions;

•

regulation specific to the energy market and logistics providers to the industry;

•

changes in the hours-of-service regulations, which govern the amount of time a driver may drive in any specific period;

•

driver and vehicle electronic logging device requirements;

•

requirements leading to accelerated purchases of new tractors, trucks or trailers;

•

mandatory limits on vehicle weight and size;

•

driver hiring restrictions;

•

increased bonding or insurance requirements; and

•

security requirements imposed by the DHS.

From time to time, various legislative proposals are introduced, including proposals to increase federal, state or local taxes, including taxes on motor fuels and emissions, which may increase our or our subcontracted providers’ operating costs, require capital expenditures or adversely impact the recruitment of drivers. In addition, we could lose revenue if our customers divert business from us because we have not complied with their sustainability guidelines or requirements.

Safety-related evaluations and rankings under the CSA program could adversely impact our relationships with our customers and our ability to maintain or grow our fleet, either of which could have a material adverse effect on our results of operations and profitability.

The CSA program includes compliance and enforcement initiatives designed to monitor and improve commercial motor vehicle safety by measuring the safety record of both the motor carrier and the driver. These measurements are scored and used by the FMCSA to identify potential safety risks and to direct enforcement action. The FMCSA issues three categories of safety ratings: satisfactory, conditional and unsatisfactory. As of December 31, 2022, all DOT operating authority numbers operated by us currently have a “satisfactory” FMCSA rating.

Our CSA scores are dependent upon our safety and compliance experience, which could change at any time. In addition, the safety standards prescribed in the CSA program or the underlying methodology used by the FMCSA to determine a carrier’s safety rating could change and, as a result, our ability to maintain an acceptable score could be adversely impacted. If the FMCSA adopts rulemakings in the future that revise the methodology used to determine a carrier’s safety rating in a manner that incorporates more stringent standards, then our CSA scores could be adversely affected. If we receive an unacceptable CSA score, our relationships with customers could be damaged, which could result in a loss of business or otherwise adversely affect our business.

The CSA program affects drivers because their safety performance and compliance impact their safety records and, while working for a carrier, will impact their carrier’s safety record. The methodology for determining a carrier’s DOT safety rating relies upon implementation of Behavioral Analysis and Safety Improvement Categories (“BASIC”) applicable to the on-road safety performance of the carrier’s drivers and certain of those rating results are provided on the FMCSA’s Carrier Safety Measurement System website. As a result, certain current and potential drivers may no longer be eligible to drive for us, our fleet could be ranked poorly as compared to our peers, and our safety rating could be adversely impacted. The occurrence of future deficiencies could affect driver recruiting and retention by causing high-quality drivers to seek employment (in the case of company drivers) or contracts (in the case of third-party drivers) with other carriers, or could cause our customers to direct their business away from us and to carriers with better fleet safety rankings, either of which would adversely affect our results of operations and productivity. Additionally, we may incur greater than expected expenses in our attempts to improve our scores as a result of poor rankings. Those carriers and drivers identified under the CSA program as exhibiting poor BASIC scores are prioritized for interventions, such as warning letters and roadside investigations, either of which may adversely affect our results of operations.

The requirements of CSA could also shrink the trucking industry’s pool of drivers if drivers with unfavorable scores leave the industry. As a result, the costs to attract, train and retain qualified drivers could increase. A shortage of qualified drivers could also increase driver turnover, decrease asset utilization, limit growth and adversely impact our results of operations and profitability.

We are subject to environmental and worker health and safety laws and regulations that may expose us to significant costs and liabilities and have a material adverse effect on our results of operations, competitive position and financial condition.

We are subject to stringent and comprehensive federal, state and local environmental and worker health and safety laws and regulations governing, among other matters, the operation of fuel storage tanks, release of emissions from our vehicles (including engine idling) and facilities, the health and safety of our workers in conducting operations and adverse impacts to the environment. Under certain environmental laws, we could be subject to strict liability, without regard to fault or legality of conduct, for costs relating to contamination at we own or operate or previously owned or operated and at third-party sites where we disposed of waste, as well as costs associated with the clean-up of releases arising from accidents involving our vehicles. We often operate in industrial areas, where truck terminals and other industrial activities are located, and where soil, groundwater or other forms of environmental contamination have occurred from historical or recent releases and for which we may incur remedial or other environmental liabilities. We also maintain aboveground fuel storage tanks at some of our facilities and vehicle maintenance operations at certain of our facilities. Our operations involve the risks of fuel spillage or seepage into the environment, environmental damage and unauthorized hazardous material spills, releases or disposal actions, among others.

Increasing efforts to control air emissions, including greenhouse gases, may have an adverse effect on us. Federal and state lawmakers have implemented various climate change initiatives and greenhouse gas regulations and may implement additional initiatives in the future, all of which could increase the cost of new tractors, impair productivity and increase our operating expenses.

Compliance with environmental laws and regulations may also increase the price of our equipment and otherwise affect the economics of our business by requiring changes in operating practices or by influencing the demand for, or the costs of providing, transportation services. For example, regulations issued by the EPA and various state agencies that require progressive reductions in exhaust emissions from diesel engines have resulted in higher prices for tractors and diesel engines and increased operating and maintenance costs. Also, in order to reduce exhaust emissions, some states and municipalities have begun to restrict the locations and amount of time where diesel-powered tractors may idle. These restrictions could require us to alter our drivers’ behavior, purchase on-board power units that do not require the engine to idle or face a decrease in productivity. We are also subject to potentially stringent rulemaking related to sustainability practices, including conservation of resources by decreasing fuel consumption. This increased focus on sustainability practices may result in new regulations and/or customer requirements that could adversely impact our business. Historically, our environmental compliance costs have not had a material adverse effect on our results of operations; however, there can be no assurance that such costs will not be material in the future or that future compliance will not have a material adverse effect on our business and operating results.

If we have operational spills or accidents or if we are found to be in violation of, or otherwise liable under, environmental or worker health or safety laws or regulations, we could incur significant costs and liabilities. Those costs and liabilities may include the assessment of sanctions, including administrative, civil and criminal penalties, the imposition of investigatory, remedial or corrective action obligations, the occurrence of delays in permitting or performance of projects, and the issuance of orders enjoining performance of some or all of our operations in a particular area. The occurrence of any one or more of these developments could have a material adverse effect on our results of operations, competitive position and financial condition. Environmental and worker health and safety laws are becoming increasingly more stringent and there can be no assurances that compliance with, or liabilities under, existing or future environmental and worker health or safety laws or regulations will not have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects.

~~provide~~If aour ~~customer~~subcontractors ~~with~~are ~~additional~~deemed ~~information~~by ~~including~~regulators ~~current~~or ~~bid~~judicial ~~and~~process ~~offer~~to ~~quotations~~be ~~for the penny stock~~employees, ~~the~~our ~~compensation~~business ~~of the broker-dealer~~ and ~~its~~results ~~salesperson in the transaction, monthly account statements showing the market value~~ of ~~each~~operations ~~penny~~could stock held in the customer’s account, to make a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction. To the extent these requirements may be ~~applicable; they will reduce the level of trading activity in the secondary market for our common stock and may severely and~~ adversely ~~affect the ability of broker-dealers to sell our common stock~~affected.

WeTax and other regulatory authorities have in the past sought to assert that subcontractors in the trucking industry are anemployees ~~“emerging~~rather ~~growth~~than ~~company”~~independent contractors. Taxing and other regulatory authorities and courts apply a ~~"smaller~~variety ~~reporting~~of ~~company,"~~standards ~~and~~in ~~the~~their ~~reduced~~determination ~~disclosure~~of ~~requirements~~independent ~~applicable~~contractor status. If our subcontractors are determined to ~~emerging~~be ~~growth~~employees, ~~companies~~we would incur additional exposure under federal and ~~smaller~~state ~~reporting~~tax, ~~companies~~workers’ ~~may~~compensation, ~~make~~unemployment ~~our~~benefits, ~~common~~labor, ~~stock~~employment ~~less~~and ~~attractive~~tort tolaws, ~~investors~~including for prior periods, as well as potential liability for employee benefits and tax withholdings.

Potential inquiries into or audits of our Paycheck Protection Program loan, as well as the results of any such inquiries or audits, could have a significant adverse effect on us and our financial condition.

We applied for and received a $10 million Paycheck Protection Program (“PPP”) loan under the CARES Act. On May 8, 2020, we received a letter from the Select Subcommittee on the Coronavirus Crisis of the U.S. House of Representatives demanding that we return the PPP loan. We elected not to return the PPP loan proceeds as requested and our PPP loan was subsequently forgiven. Also, the United States Small Business Administration (“SBA”) has stated that it intends to audit the PPP loan application of any company, like us, that received PPP loan proceeds of more than $2 million. Our decision to retain the PPP loan may require members of our management team to devote attention to future correspondence and requests from the Select Subcommittee, the SBA, or other regulators, which would reduce the amount of time available to management to focus on our operations and strategic initiatives. If we are later determined to have violated any of the laws or governmental regulations that apply to us in connection with the PPP loan, or it is otherwise determined that we were ineligible to receive the PPP loan, we may be subject to penalties, including significant civil, criminal and administrative penalties.

Risks Related to Our Securities

Shares of EVO's common stock are thinly-traded on OTC-Expert, and our stockholders may be unable to sell their shares.

The shares of EVO’s common stock are thinly-traded on OTC-Expert, meaning that the number of persons interested in purchasing our shares of common stock at or near ask prices at any given time may be relatively small or non-existent. There can be no assurance that a broader or more active trading market will ever develop or, if developed, that it will be sustained. There can be no assurance that EVO’s stockholders will ever be able to resell their shares at or near ask prices or at all.

The price of EVO's common stock could be highly volatile.

EVO’s common stock will be subject to price volatility, low volumes of trades and large spreads in bid and ask prices quoted by market makers. Due to the low volume of shares traded on any trading day, persons buying or selling in relatively small quantities may easily influence prices of EVO’s common stock. This low volume of trades could also cause the price of our stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of EVO’s common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. If high spreads between the bid and ask prices of EVO’s common stock exist at the time of a purchase, the stock would have to appreciate substantially on a relative percentage basis for an investor to recoup their investment. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of EVO’s common stock. No assurance can be given that an active market in EVO’s common stock will develop or be sustained. If an active market does not develop, holders of EVO’s common stock may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

EVO’s common stock is subject to the “penny stock” rules of the SEC, which restrict transactions in our stock and may reduce the value of an investment in our stock.

EVO's common stock is currently regarded as a “penny stock” because our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States and EVO's common stock has a market price less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide a customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer’s account, to make a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction. To the extent these requirements may be applicable; they will reduce the level of trading activity in the secondary market for EVO's common stock and may severely and adversely affect the ability of broker-dealers to sell EVO's common stock.

We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make EVO's common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, as well as a smaller reporting company. For so long as we remain an emerging growth company and/or a smaller reporting company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies or smaller reporting companies. These exemptions include:

•

being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

•

not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting of Section 404(b) of the Sarbanes-Oxley Act;

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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

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reduced disclosure obligations regarding executive compensation; and

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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We cannot predict whether investors will find ~~our~~EVO's common stock less attractive if we rely on these exemptions. If some investors find ~~our~~EVO's common stock less attractive as a result, we will experience greater difficulty raising equity capital, there may be a less active trading market for ~~our~~EVO's common stock, and ~~our~~the stock price may be more volatile.

We have never paid and do not expect to pay cash dividends on our shares.

We have never paid cash dividends, and we anticipate that any future profits received from operations will be retained for operations. We do not anticipate the payment of cash dividends on our capital stock in the foreseeable future and any decision to pay dividends will depend upon our profitability, available cash and other factors. Therefore, no assurance can be given that there will ever be any cash dividend or distribution in the future.

We may in the future issue additional shares of ~~our~~EVO's common stock which would reduce investors’ ownership interests in ~~the~~EVO ~~Company~~ and which may dilute ~~our~~EVO's share value.

~~Our~~EVO's certificate of incorporation authorizes the issuance of ~~110~~610,000,000 shares consisting of: (i) ~~100~~600,000,000 shares of common stock, par value $0.0001 per share; and (ii) 10,000,000 shares of preferred stock, par value $0.0001 per share. The future issuance of all or part of our remaining authorized common stock or preferred stock may result in substantial dilution in the percentage of ~~our~~EVO's common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for ~~our~~EVO's common stock.

17EVO's certificate of incorporation permits the board of directors to issue stock with terms that may subordinate the rights of common stockholders or discourage a third party from acquiring us in a manner that might result in a premium price to stockholders.

~~The~~EVO’s ~~Company~~board of directors, without any action by its stockholders, may amend EVO’s certificate of incorporation ~~permits~~from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of stock that EVO has authority to issue. The board of directors may also classify or reclassify any unissued common stock or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to ~~issue~~dividends or other distributions, qualifications and terms or conditions of redemption of any class or series of stock. Thus, the board of directors could authorize the issuance of preferred stock with terms and conditions that ~~may~~could ~~subordinate~~have a priority as to distributions and amounts payable upon liquidation over the rights of the holders of EVO’s common ~~stockholders~~stock. orFor ~~discourage~~example, athe ~~third~~Series ~~party~~C ~~from~~Preferred ~~acquiring~~Stock authorized by the ~~Company~~board of directors in March 2022 and the Series D Preferred Stock authorized by the board of directors in July 2022 rank senior in preference and priority to EVO's common stock with respect to dividend and liquidation rights and, generally votes with the common stock on an as converted basis on all matters presented for a ~~manner~~vote of the holders of common stock. See Part II, Item 8, Notes to Consolidated Financial Statements, Note 1, Description of Business and Summary of Significant Accounting Policies. The Series C Preferred Stock and the Series D Preferred Stock, as well as any other series of preferred stock that ~~might~~the ~~result~~board of directors may authorize in the future could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price tofor ~~the~~holders ~~Company~~of EVO’s ~~stockholders~~common stock.

The Company’s board of directors, without any action by the Company’s stockholders, may amend the Company’s certificate of incorporation from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of stock that the Company has authority to issue. The board of directors may also classify or reclassify any unissued common stock or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption of any class or series of stock. Thus, the board of directors could authorize the issuance of preferred stock with terms and conditions that could have a priority as to distributions and amounts payable upon liquidation over the rights of the holders of the Company’s common stock. For example, the Series A Preferred Stock authorized by the board of directors in April 2018, the Series B Preferred Stock authorized by the board of directors in March 2020, and the Series C Preferred Stock authorized by the board of directors in March 2022 all rank senior in preference and priority to the Company’s common stock with respect to dividend and liquidation rights and, generally votes with the common stock on an as converted basis on all matters presented for a vote of the holders of common stock, including directors, and entitle the holders of Series A Preferred Stock to fifteen votes for each share of Series A Preferred Stock held and the holders of Series B Preferred Stock to four votes for each share of Series B Preferred Stock held. Upon certain triggering events, the holder of our Series C preferred Stock is entitled to exercise a majority vote on all matters presented for a vote of the holders of common stock and to appoint a majority of our board of directors. The Series A Preferred stock, Series B Preferred stock, and Series C Preferred Stock, as well as any other series of preferred stock that the board of directors may authorize in the future could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for holders of the Company’s common stock.18

Item 1B. Unresolved Staff Comments.

As a smaller reporting company, ~~the~~EVO ~~Company~~ is not required to provide disclosure under this item.

Item 2. Properties.

Our principal corporate office is located at 2075 West Pinnacle Peak Rd. Suite 130, Phoenix, AZ 85027 and consists of 6,359 square feet of space. We occupy this office under a 65-month office lease agreement dated November 27, 2019 with monthly rental payments increasing from $12,188 to $13,248 over the initial term of the lease.

We also lease the following properties as main terminals for our trucking ~~segment~~operations:

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We lease property in ~~Des Moines~~Grimes, IA for a maintenance shop, truck storage, and parking for monthly rent of approximately $610,000. The lease term expires in June ~~2023~~2028.

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We lease property in Laurel, MD for office and maintenance shop space, truck storage, and parking under multiple leases for aggregate monthly rent of approximately $30,000. The lease terms expire in February ~~and~~2028 ~~April of 2023~~ and August of 2029.

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We lease property in ~~St.~~Hazelwood ~~Louis~~and Springfield, MO for office and maintenance shop space, truck storage, and parking for monthly rent of approximately $65,000 and $3,700, respectively. The lease ~~term~~terms ~~expires~~expire in October 2024 and July 2026, respectively.

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We lease property in Newark, NJ for office and maintenance shop space, truck storage, and parking for monthly rent of ~~approximately~~ $6570,000. The lease term expires in March ~~2023~~2028.

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We lease property in Columbus, OH for office and maintenance shop space, truck storage, and parking for monthly rent of $25,~~900~~145. The lease term expires in June ~~2022~~2027.

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We lease property ~~at two locations~~ in Austin, TX for office and maintenance shop space, truck storage, and parking for monthly rent of $~~15,270 and $~~19,000~~, respectively~~. The lease ~~terms~~term ~~expire~~expires in ~~December 2024 and~~ April 2027~~, respectively~~.

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We lease property at two locations in Madison, WI for office and maintenance shop space, truck storage, and parking for aggregate monthly rent of approximately $614,~~060~~000. The lease ~~term~~terms ~~expires~~expire in August 2024 and January 2029.

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We lease property in ~~Milwaukee~~Oak Creek, WI for office and maintenance shop space, truck storage, and parking ~~pursuant~~for tomonthly ~~the~~rent ~~Equipment Lease described in Note 1, Description~~ of ~~Business~~approximately ~~and Summary of Significant Accounting Policies~~$17,000. The lease term expires in ~~2023~~January 2029.

18We lease various additional properties throughout the United States for our trucking operation, none of which are individually material, for operating sites, remote offices, and parking facilities.

WeThrough ~~lease~~our ~~property~~subsidiaries, inTitan ~~Oak~~and ~~Creek~~EAF, WIwe ~~for~~also ~~office~~own ~~and~~or ~~maintenance~~lease ~~shop~~six ~~space,~~natural ~~truck~~gas ~~storage~~fueling stations located in California, ~~and~~Texas, ~~parking~~Arizona ~~for~~and ~~monthly~~Wisconsin, ~~rent~~three of ~~$16,760.~~which ~~The~~were ~~lease~~operating ~~term~~as ~~expires~~of inDecember ~~January~~31, ~~2029~~2022.

We lease various additional properties throughout the United States for our trucking segment, none of which are individually material, for operating sites, remote offices, and parking facilities.

Through our subsidiaries, Titan and EAF, we also own or lease six natural gas fueling stations located in California, Texas, Arizona and Wisconsin, three of which are currently operating.

We believe all of our properties are suitable and adequate for current operating needs.

Item 3. Legal Proceedings.

OnSee ~~March~~Part 19II, ~~2018,~~Item ~~Whisler Holdings~~8, ~~LLC,~~Note ~~Mitesh Kalthia~~10, Commitment and ~~Jean M. Noutary~~Contingencies, ~~the owners of the property leased by El Toro for the Company’s El Toro station, initiated a lawsuit in the Superior Court of Orange County, California, related~~ to the ~~lease~~Consolidated ~~agreement~~Financial ~~for~~Statements the El Toro station. The complaint alleges breach of contract and sought money damages, costs, attorneys’ fees and other appropriate relief. On October 11, 2018, the court issued a default judgement in favor of the plaintiff in the amount of approximately $0.2 million, which the Company has fully reserved for and is included ~~in Accrued expenses on the accompanying consolidated balance sheets at December 31, 2021 and 2020~~herein. ~~No payments have been made to date.~~

The Company is involved in litigation and claims primarily arising in the normal course of business, which include claims for personal injury, employment-related, or property damage incurred in relation to the transportation of mail and freight. The Company’s insurance program for liability, physical damage, cargo damage and workers’ compensation involves self-insurance with varying risk retention levels. Claims in excess of these risk retention levels are covered by insurance in amounts that management considers to be adequate. Based on its knowledge of the facts and the advice of outside counsel, the Company believes the resolution of claims and pending litigation will not have a material adverse effect on it, taking into account existing reserves.

Item 4. Mine Safety Disclosure.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Common Stock

~~Our~~EVO's certificate of incorporation authorizes the issuance of up to ~~100~~600,000,000 shares of common stock, par value $0.0001 per share. ~~Our~~EVO's common stock trades under the symbol “EVOA” on the OTC Expert Market maintained by the OTC Markets Group Inc.; however, no public market has yet developed for our common stock.

As of ~~June~~November 2716, ~~2022~~2023, there were ~~188~~192 holders of record of our common stock.

Dividend Policy

~~The~~EVO ~~Company~~ has not paid any cash dividends since inception and does not anticipate or contemplate paying dividends in the foreseeable future. Dividends accrue onand ~~our~~are ~~Series~~payable Aon ~~Preferred~~our ~~Stock and~~ Series BC Preferred Stock ~~on a cumulative basis but are payable upon declaration of the board of directors. Nominal dividends also accrue~~ and ~~are payable on our~~ Series CD Preferred Stock. It is the present intention of management to utilize all available funds for the development of the Company’s business. See Part II, Item 8, Note 6, Temporary Equity, Stockholders' Deficit and Warrants, to the Consolidated Financial Statements included herein.

Recent Sales of Unregistered Securities

~~None~~Refer to the heading “Securities Purchase Agreement” within Note 1, Description of Business and Summary of Significant Accounting Policies, for information regarding the warrants issued to Antara, Exchanging Creditors, two former board members and to key equityholders and members of management in connection with the Recapitalization Transactions.

Securities Authorized for Issuance under Equity Compensation Plans

See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Item 6. Selected Financial Data.

As a smaller reporting company, ~~the~~EVO ~~Company~~ is not required to provide disclosure under this item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management's discussion and analysis of financial condition and results of operations should be read together with “Business” in Part I, Item 1 of this Annual Report, as well as the consolidated financial statements and accompanying footnotes in Part II, Item 8 of this Annual Report. This discussion contains forward-looking statements as a result of many factors, including those set forth under Part I, Item 1A. “Risk Factors” and Part I “Forward-looking Statements” of this Annual Report, and elsewhere in this report. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those discussed.

Company Overview

EVO Transportation & Energy Services, Inc. is a ~~transportation~~truckload ~~provider~~carrier serving the USPS and other customers. We believe weEVO ~~are~~is ~~the~~one ~~second~~of the largest surface transportation ~~company~~companies serving the USPS, with a diversified fleet of tractors, straight trucks, and other vehicles that currently operate on either diesel fuel, gasoline or CNG. InEVO ~~certain~~also ~~markets,~~operates wea ~~fuel~~brokerage ~~our~~unit ~~vehicles~~that atsupports ~~one~~the oftruckload ~~our~~business ~~three~~and ~~CNG~~services ~~stations~~other ~~that~~corporate ~~serve~~customers. ~~other~~In ~~customers~~select ascases, ~~well~~EVO may subcontract the transportation of certain loads to third-party carriers. We operate from our headquarters in Phoenix, Arizona and from 10numerous ~~main~~ terminals ~~strategically located~~ throughout the United States.

WeHistorically, we have grown primarily through acquisitions, and we have ~~completed seven acquisitions since our initial business combination in 2016. We have~~ also grown organically by obtaining new contracts from the USPS and other customers. ~~We have been actively integrating the acquisitions we have made under common leadership and technology and are now operating under a single brand.~~

Key Trends & Anticipated Future Trends

~~The~~Under ~~USPS~~its ~~has~~“Delivering for ~~more~~America ~~than~~Plan,” ~~100~~the ~~years~~USPS ~~contracted~~is ~~with~~undergoing ~~private~~a ~~carriers~~massive totransformation ~~transport~~of ~~mail among~~ its ~~processing~~transportation ~~plants and between such plants and post office locations~~network. A Inkey ~~2016,~~component ~~the~~of ~~USPS~~this ~~began~~is ~~implementing~~ a ~~new~~reorganization ~~Dynamic~~around ~~Route~~regional ~~Optimization~~processing ~~("DRO")~~and ~~initiative~~distribution ~~to retool its private carrier contracting strategy~~centers. In ~~For decades~~addition, the USPS ~~hired~~has ~~private~~transitioned ~~carriers~~most toof ~~transport mail over specific routes on a set schedule at fixed prices under~~ its ~~Highway~~air ~~Contract~~freight ~~Routes ("HCR") program. The DRO initiative aims~~ to ~~replace~~ground ~~fixed-price HCR contracts with rate-per-mile DRO contracts that have varying departure times, lines of travel, and mail types transported based on mail volume~~networks. We Bybelieve ~~“optimizing” its routes,~~ the USPS ~~seeks~~will tofavor ~~reduce~~larger ~~mileage~~ and ~~lower~~more ~~its~~reliable ~~transportation~~suppliers ~~costs.~~that ~~The~~can ~~DRO~~ensure ~~program~~continued ~~has~~high ~~evolved~~service ~~since~~performance ~~conception~~ and ~~now~~continuity ~~operates~~during ~~more~~this ~~like the HCR program~~transition.

~~Nonetheless,~~EVO wefurther ~~believe~~expects ~~the USPS’s distribution strategy under the DRO initiative is causing~~ a ~~fundamental~~more ~~change~~active ~~to its contracting activity with private carriers. Historically, HCR contracts often were awarded to smaller carriers capable of performing under a limited number of fixed~~market-~~price,~~based ~~-route,~~approach and -cost contracts. In 2014, the USPS had contracts with more than 4,000 carriers, many servicing the same or overlapping territories. With the implementation of the DRO program, the USPS stated the goal to ~~manage fewer relationships and reduce its number of carriers to fewer than 1,000 by 2022. The~~ USPS ~~has stated that it is aiming to consolidate many contracts within a defined geographical area into one contract with a single carrier~~renewals. We ~~Accordingly,~~believe ~~DRO~~this ~~contracts~~approach ~~are~~favors ~~being awarded to carriers with~~ larger ~~service~~suppliers ~~territories~~like EVO that ~~have~~can ~~the~~provide ~~capacity~~competitive topricing ~~increase~~by orleveraging ~~reduce~~scale ~~services~~and topricing ~~adjust for changes in mail volume~~analytics.

WeThe ~~expect the~~ USPS tohas ~~continue~~also ~~its~~started ~~contract~~evaluating ~~consolidation~~insourcing ~~efforts~~opportunities inand ~~the~~transitioning ~~foreseeable~~contracts ~~future.~~to Inmore ~~its five~~asset-~~year~~light ~~strategic~~companies. ~~plan~~We ~~for~~believe ~~fiscal~~outsourced ~~years~~asset-based ~~2020~~ground ~~through~~transportation ~~2024,~~suppliers ~~the~~will ~~USPS reported it intends to~~ continue to ~~deploy~~service ~~dynamic~~the ~~routing~~vast ~~technologies~~majority ~~and~~of ~~processes~~USPS ~~for~~contracts. In ~~plant-to-plant~~addition, ~~and~~we ~~plant-to-post~~believe ~~office~~any ~~transportation~~shift ~~and~~in business to ~~expand~~these ~~carrier~~threats ~~relationships~~is ~~where~~more ~~best~~likely ~~aligned~~ to ~~improve~~come ~~service~~from ~~reliability,~~the ~~lower~~smaller ~~costs,~~suppliers ~~and~~who ~~increase~~are ~~capabilities.~~unable Weto ~~believe~~compete ~~the~~as ~~USPS’s~~cost ~~consolidation~~effectively ~~efforts~~over ~~can help~~ the ~~Company grow organically through new contracting opportunities~~long-term.

We ~~believe~~intend ~~that~~to ~~the~~continue bidding on new and existing USPS’s ~~intent~~contract toopportunities ~~increase~~as ~~its~~they ~~reliance~~arise. onUSPS ~~surface~~contracts ~~transportation~~are ~~providers~~bid ~~will~~competitively ~~also~~and ~~help~~performed ~~the~~in ~~Company~~accordance ~~grow~~with ~~organically.~~various Inrequirements, ~~its~~including, ~~ten-year~~but ~~strategic~~not ~~plan~~limited ~~announced~~to inrequirements ~~March~~under the Service Contract Act, Department of ~~2021~~Transportation regulations (federal and state), ~~the~~and ~~USPS~~other ~~outlined~~applicable ~~its~~local ~~intent~~and tostate ~~shift~~regulations. aThe ~~portion~~USPS ofevaluates ~~its~~the ~~mail~~bids ~~and~~based ~~package~~on ~~volume~~price, ~~from~~past ~~air~~performance, ~~transport~~operational toplans, ~~surface~~financial ~~transportation. Specifically~~resources, ~~over~~safety scores and the ~~next~~use ~~ten~~of ~~years~~innovation ~~the~~or alternative fuels. EVO's USPS ~~intends~~contracts totypically ~~shift~~have uptwo toor ~~43%~~four ofyear ~~its~~terms ~~first~~and ~~class~~can ~~mail~~be ~~volume~~renewed ~~that~~with isthe ~~transported~~incumbent bycarrier ~~air~~after toexpiration ~~surface~~of ~~transportation~~the initial term.

WeEVO ~~intend~~believes tothat ~~continue~~freight ~~bidding~~market onrates ~~new~~peaked ~~and~~during ~~existing~~COVID, ~~USPS~~reaching ~~contract~~multi-year ~~opportunities~~highs. asRates ~~they~~have ~~arise.~~since ~~USPS~~reversed ~~contracts~~and ~~are~~EVO ~~bid~~believes ~~competitively~~they ~~and~~will ~~performed~~continue into ~~accordance~~remain ~~with~~challenging ~~various~~during ~~requirements,~~2023. ~~including,~~We ~~but~~believe ~~not~~this ~~limited~~may tocreate ~~requirements~~new ~~under~~business ~~the~~opportunities ~~Service~~as ~~Contract~~the ~~Act,~~USPS ~~Department~~looks ofto ~~Transportation~~resolicit ~~regulations~~many ~~(federal~~of ~~and~~its ~~state),~~contracts and ~~other~~that ~~applicable~~larger, ~~local~~more ~~and~~cost-efficient ~~state~~carriers ~~regulations.~~are ~~The~~well ~~USPS~~positioned ~~evaluates~~to ~~the~~gain ~~bids~~market ~~based~~share. onIn ~~price~~addition, ~~past~~we ~~performance,~~believe ~~operational~~the ~~plans,~~USPS ~~financial~~will ~~resources,~~be ~~and~~heavily ~~the~~focused ~~use~~on ofservice ~~innovation~~performance orand ~~alternative~~that ~~fuels.~~those ~~USPS~~suppliers ~~contracts~~who ~~typically~~cannot ~~have~~achieve ~~four-year~~high ~~terms,~~on ~~but~~time ~~can~~service ~~range~~scores ~~from~~will ~~two~~fall toout ~~six~~of ~~years,~~favor. ~~and~~We ~~often~~believe ~~are~~this ~~renewed~~also ~~with~~creates ~~the~~significant ~~incumbent~~opportunity ~~carrier~~for ~~after~~EVO ~~expiration~~in of the ~~initial term~~future.

In addition to ~~organic~~growing ~~growth~~the USPS business, the Company expects to further ~~increase~~diversify its ~~footprint~~revenue ~~into~~base ~~the~~both ~~transportation~~organically ~~industry~~through bynew ~~acquiring,~~sales ~~owning,~~and business development efforts and ~~operating~~also ~~transportation~~through ~~companies.~~M&A transactions. The ~~Company~~strategy ~~intends~~of toacquiring ~~target~~USPS ~~acquisition~~carriers ~~candidates~~will ~~that~~be ~~have~~deemphasized ~~won~~as ~~contracts~~the Company looks to create a more balanced business.

to provide trucking services for the USPS. Our CNG business complements this expansion strategy since fueling our CNG trucks at our own stations in cases where our routes are located near our CNG facilities will allow us to implement cost saving strategies that will increase profitability and increase our presence in this space.

We experienced significant growth in USPS contract revenue through acquisitions and organic growth from 2018 through 2021. We obtained a total of 237 USPS contracts pursuant to our acquisitions of Thunder Ridge on June 1, 2018, Graham on November 18, 2018, Sheehy Mail on January 2, 2019, Ursa and JB Lease on February 1, 2019, Courtlandt and Finkle on July 15, 2019, and the Ritter Companies on September 16, 2019.

Sources of Revenue

Our USPS trucking operations generates revenue for our trucking segment from transportation services under multi-year contracts with the USPS, generally on a rate per mile basis that adjusts monthly for fuel pricing indexes.

Our freight trucking operations generates revenue for our trucking segment by providing both irregular and dedicated route and cross-border transportation services of various products, goods, and materials for a diverse customer base.

Our CNG station revenue is derived predominately pursuant to contractual fuel purchase commitments. These contracts typically include a stand-ready obligation to supply natural gas daily. The CNG stations are also open to individual consumers. In addition to revenue earned from our customers, we may also earn alternative fuel tax credits through certain federal programs. These programs are generally short-term in nature and require legislation to be passed extending the term.

Results from Operations

Year Ended December 31, ~~2021~~2022, Compared to Year Ended December 31, ~~2020~~2021

Trucking ~~Segment~~revenue: The majority of trucking revenue is derived from the USPS. The remainder of the revenue is primarily derived from corporate freight customers. USPS contracts are typically four years in duration and include a monthly fuel adjustment. Trucking revenue was $309.5 million and $268.9 million during the years ended December 31, 2022 and 2021, respectively. The $40.6 million, or 15.1%, increase in trucking revenue from 2021 to 2022 is primarily due to revenue from new USPS contracts, along with increased fuel surcharge revenue as a result of increased fuel prices.

Trucking revenue: The majority of Trucking revenue is derived from the USPS. The remainder of the revenue is primarily derived from corporate freight hauling. The USPS contracts are typically four years in duration with pricing varying by contract. The vast majority of the USPS contracts include a monthly fuel adjustment. Trucking revenue was $268.9 million and $228.3 million during the years ended December 31, 2021 and 2020, respectively. The $40.6 million, or 17.8%, increase in trucking revenue from 2020 to 2021 is primarily due to revenue from new USPS contracts, along with increased fuel surcharge revenue as a result of fuel prices increasing throughout 2021.21

Other revenue: During the first quarter of 2021, the Company entered into agreements with the USPS to settle claims submitted by the Company seeking additional compensation for transportation services provided under certain DRO contracts. The Company received a total of $28.5 million related to these claims and also renegotiated the contractual rates per mile and total paid miles for some of its DRO contracts on a prospective basis. In addition, amounts totaling $6.3 million that were previously paid by the USPS to the Company during 2020 became subject to the terms of the settlement agreements and were recognized as a deferred gain as of December 31, 2020. The aforementioned amounts totaling $34.8 million were recognized as other revenue during the first quarter of 2021 in the consolidated statement of operations. Such amounts are for transportation services provided during 2020 and prior years, are not subject to refund, and are not contingent upon the Company providing future transportation services. Refer to Note 1, Description of Business and Summary of Significant Accounting Policies, for further discussion.

Payroll, benefits and related: ~~Of the Company’s approximately 1~~Payroll,~~700~~ ~~employees~~benefits atand ~~year-end,~~related ~~approximately~~includes ~~1,500~~total ~~were~~compensation of drivers. ~~Driver wages are fixed per contract with USPS~~ and ~~are eligible for renegotiation with USPS on a bi~~non-~~annual basis~~drivers. InIncluded ~~addition~~in todriver ancompensation ~~hourly wage that~~ is ~~set by the Department of Labor, drivers also earn~~ an incremental hourly rate for benefits. Payroll, benefits and related expense was $98131.32 million and $~~105~~107.54 million during the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively. ~~Despite~~The ~~a 17~~$23.8 million, or 22.2%, increase in ~~trucking revenue from 2020 to 2021,~~ payroll, benefits and related expense ~~was~~is ~~substantially~~primarily ~~flat~~due ~~from 2020~~ to ~~2021~~the ~~due~~15.1% toincrease ain ~~$29.9~~Trucking ~~million,~~revenue orcombined ~~76.9%,~~with an increase in ~~purchased~~the ~~transportation~~use ~~expense~~of ~~from~~employee ~~2020~~drivers toversus ~~2021~~third-party subcontractors.

Purchased transportation: Purchased transportation represents payments to subcontracted third-party companies. These contracts are typically negotiated on a rate per mile basis and the subcontracting company is responsible for supplying all resources to perform the service including, but not limited to labor, equipment, fuel and associated expenses. Purchased transportation expense was $6846.84 million and $3868.98 million during the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively. The $2922.94 million, or 7632.96%, ~~increase~~decrease in purchased transportation expense ~~from 2020 to 2021~~ is primarily due to ~~the~~an increased use of ~~subcontracted~~employee ~~third-party~~drivers ~~company~~versus ~~resources to service the aforementioned new USPS contracts that generated the increase in revenue from 2020 to 2021~~subcontractors.

Fuel: Fuel expense is comprised of diesel, gasoline and CNG fuel required to operate the fleet. The Company manages fuel cost by negotiating volume discounts from rack fuel rates with select vendors. Fuel expense was $48.2 million and $28.2 million during the years ended December 31, 2022 and 2021, respectively. The $20.0 million, or 70.9%, increase in fuel expense is due primarily to the 15.1% increase in Trucking revenue, 32.6% decrease in purchased transportation and an increase in the average DOE fuel price from $3.28 to $5.00 per gallon.

Equipment rent: The Company rents and leases a portion of its trucks and trailers through a combination of short-term rental arrangements and long-term lease arrangements. Equipment rent expense was $14.6 million and $13.4 million during the years ended December 31, 2022 and 2021, respectively. The $1.2 million, or 9.0%, increase in equipment rent expense is primarily due to the need to service new USPS contracts by acquiring additional trucks and trailers via new leasing and rental arrangements.

Maintenance and Supplies: Maintenance and supplies expense primarily includes the costs to maintain the fleet. Maintenance and supplies expense was $15.8 million and $10.9 million during the years ended December 31, 2022 and 2021, respectively. The $4.9 million, or 45.0%, increase in maintenance and supplies expense is primarily due to an increase in the size of the fleet combined with increased maintenance costs for the existing fleet, which the Company is in process of refreshing with newer equipment.

Operating supplies and expenses: Operating and supplies expenses include all other direct costs in the Trucking operation. Operating supplies and expenses was $14.3 million and $15.3 million during the years ended December 31, 2022 and 2021, respectively. The $1.0 million, or 6.5%, decrease in operating supplies and expenses is primarily due to more cost efficient completion of certain routes.

General and administrative: General and administrative expense was $18.0 million and $16.3 million during the years ended December 31, 2022 and 2021, respectively. The $1.7 million, or 10.4%, increase is primarily due to an increase in professional fees and board of director fees and expenses.

Depreciation and amortization: Depreciation and amortization expense was $16.2 million and $15.2 million during the years ended December 31, 2022 and 2021, respectively. The increase is due to an increase in finance lease right-of-use asset amortization expense, partially offset by a decrease in depreciation expense.

Interest expense: Interest expense was $33.7 million and $12.7 million during the years ended December 31, 2022 and 2021, respectively. The $21.0 million, or 165.4%, increase in interest expense is primarily due to interest expense of $11.9 million associated with the issuance of warrants and the amortization of the debt discount related to the warrants in connection with the Bridge Loan Agreement, dated March 11, 2022. The increase is further due to a $7.7 million charge to interest expense

~~Fuel:~~associated ~~Fuel~~with ~~expense~~the ispurchase ~~comprised~~ of ~~diesel~~warrants ~~and~~by ~~CNG~~Antara ~~fuel~~Capital ~~required~~in toconnection ~~operate~~with the ~~truck~~recapitalization ~~fleet.~~of ~~The~~the ~~Company~~company ~~manages~~in ~~fuel~~September ~~cost~~2022. byIn ~~negotiating~~addition, ~~volume~~the ~~discounts~~increase ~~from~~is ~~rack~~due ~~fuel~~to ~~rates~~$1.6 ~~with~~million ~~select~~of ~~vendors.~~finance ~~Fuel~~fees ~~expense~~and ~~was~~additional ~~$28.2~~debt ~~million~~issued ~~and~~of $~~22.~~9 million ~~during~~in ~~the~~connection ~~years~~with ~~ended~~the ~~December~~Bridge 31Loan, ~~2021~~ and ~~2020,~~an ~~respectively. The $5.3 million, or 23.1%,~~ increase in ~~fuel~~the ~~expense~~interest ~~from~~rate ~~2020~~on tocertain ~~2021~~floating israte ~~primarily~~debt. ~~due~~Refer to ~~the~~Note ~~17.8%~~5, ~~increase~~Debt, inand ~~trucking~~Note ~~revenue~~6, ~~combined~~Temporary ~~with~~Equity, anStockholders’ ~~increase~~Deficit inand ~~the~~Warrants ~~average~~for ~~DOE~~further ~~fuel price to $3~~discussion.~~28 per gallon in 2021 from $2.56 per gallon in 2020.~~

~~Equipment~~Gain ~~rent~~/ loss on extinguishment of debt: The ~~Company~~$5.3 ~~rents~~million ~~and~~loss ~~leases~~on aextinguishment ~~portion~~ of ~~its~~debt ~~trucks~~during ~~and~~the ~~trailers~~year ~~through~~ended aDecember ~~combination~~31, of2022 ~~short-term~~is ~~rental~~primarily ~~arrangements~~due ~~and~~to ~~long-term~~the ~~lease arrangements~~$5.2 ~~Equipment~~million ~~rent~~loss ~~expense~~on ~~was~~the extinguishment of the four promissory notes with an aggregate principal amount of $139.45 million ~~and~~as a result of the Convertible Note Amendments, dated March 11, 2022. The $1011.70 million gain on extinguishment of debt during the ~~years~~year ended December 31, 2021 is due to: (1) the $10.1 million gain on extinguishment of the outstanding principal and ~~2020~~accrued interest on the Paycheck Protection Program Loan, ~~respectively.~~which ~~The~~was forgiven by the SBA in July 2021; (2) the $2.75 million, orgain 25on the partial extinguishment of the $4.~~2%,~~0 ~~increase~~million inSecured ~~equipment~~Convertible ~~rent~~Promissory ~~expense~~Notes ~~from~~during ~~2020~~March toand April 2021; isand ~~primarily~~(3) ~~due~~the to$1.7 million loss on extinguishment resulting from using all of the ~~need~~net toproceeds ~~service~~from the ~~aforementioned~~Main ~~new~~Street ~~USPS~~Loan ~~contracts~~to ~~that~~pay ~~generated~~down the ~~increase~~aggregate inprincipal ~~revenue~~amount due under the Financing Agreement (including capitalized interest) from ~~2020~~$33.6 million to $16.7 million during the first quarter of 2021. Refer to Note 5, Debt, for further discussion.

~~Maintenance~~Change ~~and~~in ~~Supplies:~~fair ~~Maintenance~~value ~~and~~of ~~supplies~~embedded ~~expense~~derivative ~~primarily~~liability: ~~includes~~The ~~the~~Financing ~~costs~~Agreement tocontains ~~maintain~~a ~~the~~mandatory ~~fleet.~~prepayment ~~Maintenance~~feature ~~and~~that ~~supplies expense~~ was ~~$10.9~~determined ~~million~~to ~~and~~be ~~$10.2~~an ~~million~~embedded ~~during~~derivative, ~~the~~requiring ~~years~~bifurcation ~~ended~~and ~~December~~fair ~~31,~~value ~~2021~~recognition ~~and~~for ~~2020,~~the ~~respectively~~derivative liability. The ~~$0.7~~fair ~~million,~~value orof ~~6.9%,~~this ~~increase~~derivative inliability ~~maintenance~~is ~~and~~remeasured ~~supplies~~at ~~expense~~each ~~from~~reporting ~~2020~~period, towith ~~2021~~changes isin ~~primarily~~fair ~~due~~value torecognized ~~an increase~~ in the ~~size~~consolidated statement of ~~the~~operations. ~~fleet~~Refer ~~combined~~to ~~with~~Note ~~increased~~5, ~~maintenance~~Debt, ~~costs~~and ~~for~~Note ~~the existing fleet~~8, ~~which~~Fair ~~the~~Value ~~Company~~Measurements, isfor infurther ~~process of refreshing with newer equipment~~discussion.

~~Insurance~~Change ~~and~~in ~~claims:~~fair ~~Insurance~~value ~~and~~of ~~claims~~warrant isliabilities: ~~comprised~~EVO ofpreviously ~~auto~~issued ~~liability~~certain ~~and~~warrants ~~physical~~that ~~damage~~are ~~and~~not ~~workers~~considered ~~compensation~~indexed ~~expense~~to ~~related~~EVO's tocommon ~~the~~stock ~~trucking~~and, ~~segment~~therefore, ofare ~~the~~required ~~business.~~to ~~Insurance~~be classified as liabilities and ~~claims~~measured ~~expense~~at ~~was~~fair ~~$8.9~~value ~~million~~at ~~and~~each ~~$9.8~~reporting ~~million~~date ~~during~~with the ~~years~~change ~~ended~~in ~~December~~fair ~~31,~~value ~~2021~~being ~~and~~recognized ~~2020,~~in ~~respectively.~~the ~~The~~Company's ~~$0.9~~results ~~million,~~of oroperations 9during each reporting period.~~2%,~~ ~~decrease~~The change in ~~insurance~~fair ~~and~~value ~~claims~~of ~~expense~~substantially ~~from~~all ~~2020~~of tothe ~~2021~~warrants classified as liabilities is ~~primarily~~recognized ~~due~~in other income (expense). Refer to ~~lower~~Note ~~premiums~~6, Stockholders' Deficit and ~~fewer~~Warrants, ~~significant~~and Note 8, ~~nonrecurring~~Fair ~~claims~~Value Measurements, for further discussion.

Operating supplies and expenses: Operating supplies and expenses include all other direct costs in the trucking segment. Operating supplies and expenses were $15.3 million and $16.1 million during the years ended December 31, 2021 and 2020, respectively. The $0.8 million, or 5.0%, decrease in operating supplies and expenses from 2020 to 2021 is primarily due to more cost efficient completion of certain routes.

CNG Fueling Stations Segment

CNG revenue: Revenue for the CNG stations was $0.4 million and $1.0 million during the years ended December 31, 2021 and 2020, respectively.

CNG operating expenses: CNG operating expense is comprised of natural gas, electricity, federal excise tax, vendor use fuel tax and credit card fees. CNG operating expense was $0.3 million and $0.5 million during the years ended December 31, 2021 and 2020, respectively.

Impairment of long-lived assets: Long-lived assets impairment expense was $0 and $2.3 million during the years ended December 31, 2021 and 2020, respectively. Substantially all of the impairment expense during the year ended December 31, 2020 is related to the CNG fueling stations segment and is due primarily to the compression of commodity prices.

EVO Consolidated

General and administrative: General and administrative expense was $25.5 million and $18.5 million during the years ended December 31, 2021 and 2020, respectively. The $7.0 million, or 37.8%, increase in general and administrative expense from 2020 to 2021 is primarily due to the increases in compensation and benefits of $3.9 million and accounting and auditing professional fees by $2.2 million.

Depreciation and amortization: Depreciation and amortization expense was $15.2 million and $14.8 million during the years ended December 31, 2021 and 2020, respectively. The slight increase is due to an increase in finance lease right-of-use asset amortization expense being substantially offset by a decrease in depreciation expense.

Interest expense: Interest expense was $12.7 million and $15.0 million during the years ended December 31, 2021 and 2020, respectively. The $2.3 million, or 15.3%, decrease in interest expense from 2020 to 2021 is primarily due to during the first quarter of 2021 the Company using all of the net proceeds of the Main Street Loan to pay down the aggregate principal amount due under the Antara Financing Agreement, including capitalized interest, from $33.6 million to $16.7 million. Refer to Note 6, Debt, for a description of these activities.

Gain / loss on extinguishment of debt: The $11.0 million gain on extinguishment of debt during the year ended December 31, 2021 is due to: (1) the $10.1 million gain on extinguishment of the outstanding principal and accrued interest on the Paycheck Protection Program Loan, which was forgiven by the SBA in July 2021; (2) the $2.5 million gain on the partial extinguishment of the $4.0 million Secured Convertible Promissory Notes during March and April 2021; and (3) the $1.7 million loss on extinguishment resulting from using all of the net proceeds from the Main Street Loan to pay down the aggregate principal amount due under the Antara Financing Agreement (including capitalized interest) from $33.6 million to $16.7 million during the first quarter of 2021. The $10.0 million loss on extinguishment of debt during the year ended December 31, 2020 is primarily due to the $10.1 million loss on extinguishment of debt relating to the Company's March 31, 2020 Waiver and Agreement to Issue Warrant (the “Waiver Agreement”) with Antara Capital and the collateral agent. The Waiver Agreement modified a certain affirmative covenant and waived another affirmative covenant in the Antara Financing Agreement and, in exchange, the Company agreed to issue to Antara Capital a warrant to purchase up to 3,250,000 shares of the Company’s Common Stock at an exercise price of $2.50 per share as an incentive. Refer to Note 6, Debt, for further discussion.

Change in fair value of embedded derivative liability: The Antara Financing Agreement contains a mandatory prepayment feature that was determined to be an embedded derivative, requiring bifurcation and fair value recognition for the derivative liability. The fair value of this derivative liability is remeasured at each reporting period, with changes in fair value recognized in the consolidated statement of operations. Refer to Note 6, Debt, and Note 9, Fair Value Measurements, for further discussion.

Change in fair value of warrant liabilities: The Company previously issued certain warrants that are not considered indexed to the Company's common stock and, therefore, are required to be classified as liabilities and measured at fair value at each reporting date with the change in fair value being recognized in the Company's results of operations during each reporting period. The change in fair value of substantially all of the warrants classified as liabilities is recognized in other income (expense). Refer to Note 7, Stockholders' Deficit and Warrants, and Note 9, Fair Value Measurements, for further discussion.

Liquidity and Capital Resources

Year Ended December 31, 2021, Compared to Year Ended December 31, 2020

Changes in Liquidity

Cash and Cash Equivalents. Cash and cash equivalents were $714.34 million and $~~26.~~6.3 million at December 31, ~~2021~~2022 and ~~2020~~2021, respectively. The ~~decrease~~increase is primarily attributable to cash ~~used~~provided inby ~~financing~~operating activities during the year ended December 31, 2021, which includes the Company using the proceeds received from its borrowings under the Main Street Priority Loan Program during the fourth quarter of 2020 to pay down the aggregate principal amount due to Antara, including capitalized interest, from $332022.~~6 million to $16.7 million during the first quarter of 2021.~~

Operating Activities. Net cash provided by operating activities was $2310.56 million during the year ended December 31, ~~2021, which included $28~~2022.5 ~~million of nonrecurring cash receipts from the USPS settlement agreements.~~ Net cash ~~used~~provided inby operating activities was $1023.05 million during the year ended December 31, ~~2020.~~2021 ~~For~~which ~~the~~included ~~years~~$28.5 ~~ended~~million ~~December~~of ~~31,~~nonrecurring ~~2021~~cash ~~and~~receipts ~~2020,~~from the ~~Company~~USPS ~~had~~settlement agreements. The decrease in net ~~income~~cash ofprovided was primarily attributable to a $1432.35 million ~~and~~increase ain net loss, ofpartially offset by a $4620.81 million, ~~respectively.~~increase in accounts receivable collected.

~~For~~Investing ~~2021, the net income included $18~~Activities.0 ~~million~~Net ~~in adjustments for non-~~cash ~~items and $8.7 million of cash~~ used ~~by changes~~ in ~~working~~investing ~~capital.~~activities ~~Non-cash~~was ~~items primarily consisted of~~ $150.21 million ~~in depreciation~~ and ~~amortization,~~ $67.01 million infor ~~non-cash~~the ~~interest~~years ~~expense,~~ended ~~non-cash~~December ~~lease~~31, ~~expense~~2022 ofand ~~$4.0 million~~2021, ~~the $2~~respectively.5 ~~million~~The ~~change~~net incash ~~fair~~used ~~value~~in ofinvesting ~~warrant~~activities ~~liabilities,~~during the ~~amortization~~years ofended ~~debt~~December ~~discount and debt issuance costs of $1.1 million~~31, ~~$0.2~~2022 ~~million~~and ~~loss on sale of assets~~2021, ~~and~~is ~~stock-based~~primarily ~~compensation~~related ~~expense~~to of $0.61 million, ~~partially~~and ~~offset by a~~ $117.04 million ~~gain on extinguishment~~ of ~~debt,~~capital ~~the $0.8 million change in fair value of embedded derivative liability~~expenditures, ~~and a $0~~respectively.~~1 million adjustment for deferred income taxes.~~

Financing Activities. Net cash used in financing activities was $2.4 million and $35.7 million for the years ended December 31, 2022 and 2021, respectively. The cash used in financing activities during the year ended December 31, 2022 primarily consisted of $258.8 million in payments on factoring arrangements, $5.4 million in payments of debt principal, and $8.8 million in payments on finance lease liabilities, partially offset by $247.5 million in advances from factoring receivables, $9.6 million of proceeds from the issuance of debt and $13.8 million of proceeds from the issuance warrants. The cash used in financing activities during the year ended December 31, 2021 primarily consisted of $225.8 million in payments on factoring arrangements, $24.1 million in payments of debt principal, and $5.9 million in payments on finance lease liabilities, partially offset by $214.3 million in advances from factoring receivables and $6.5 million of proceeds from the issuance of debt.

For 2020, the net loss included $40.2 million in adjustments for non-cash items and $3.4 million of cash provided by changes in working capital. Non-cash items primarily consisted of $14.8 million in depreciation and amortization, $10.0 million in loss on extinguishment of debt, $5.5 million in non-cash interest expense, $2.3 million in impairment charges, non-cash lease expense of $4.5 million, amortization of debt discount and debt issuance costs of $2.1 million, $1.3 million loss on sale of assets, and stock option and warrant-based compensation expense of $0.5 million, partially offset by a $0.4 million adjustment for deferred income taxes.

Investing Activities. Net cash used in investing activities was $7.1 million for the year ended December 31, 2021. Net cash provided by investing activities was $0.9 million for the year ended December 31, 2020. The net cash used in investing activities during 2021 is primarily related to $7.4 million of capital expenditures. The net cash provided by investing activities during 2020 is related to $1.0 million proceeds from the sale of fixed assets offset by $0.1 million of capital expenditures.

Financing Activities. Net cash used in financing activities was $35.7 million for the year ended December 31, 2021 and net cash provided by financing activities was $32.5 million for the year ended December 31, 2020. The cash used in financing activities during 2021 primarily consisted of $225.8 million in payments on factoring arrangements, $24.1 million in payments of debt principal, and $5.9 million in payments on finance lease liabilities, partially offset by $214.3 million in advances from factoring receivables and $6.5 million of proceeds from the issuance of debt. The cash provided by financing activities during 2020 primarily consisted of $185.4 million in advances from factoring receivables, proceeds of $32.8 million from the issuance of debt, and $6.2 million in proceeds from the sale of common stock, preferred stock and warrants, partially offset by $180.8 million in payments on factoring arrangements, $6.8 million in payments of debt principal, and $3.6 million in payments on finance lease liabilities.

Sources of Liquidity

Our primary historical and future sources of liquidity are cash on hand ($714.34 million at December 31, ~~2021~~2022), the incurrence of additional indebtedness, the sale of ~~the Company~~EVO’s common stock or preferred stock, and advances under our accounts receivable factoring arrangements. However, there can be no assurance that we will be able to obtain additional financing in the future via the incurrence of additional indebtedness or the sale of ~~the Company~~EVO’s common stock or preferred stock.

Uses of Liquidity

Our business requires substantial amounts of cash for operating activities, including salaries and wages paid to our employees, contract payments to independent contractors, and payments for fuel, maintenance and supplies, and other expenses. We also use large amounts of cash and credit for principal and interest payments, as well as operating and finance lease liabilities and capital expenditures to fund the replacement and/or growth in our tractor and trailer fleet.

Going Concern

As of December 31, ~~2021~~2022, we had a cash balance of $714.34 million, a working capital deficit of $9367.42 million, stockholders’ deficit of $5015.97 million, and material debt and lease obligations of $~~114~~105.46 million, which included term loan borrowings under a financing agreement with Antara Capital. During the year ended December 31, ~~2021~~2022, we reported cash provided by operating activities of $2310.56 million ~~that included $28.5 million of nonrecurring cash receipts from the USPS settlement agreements~~ and net ~~income~~loss of $1418.32 million that included ~~$34.8 million of pre-tax nonrecurring revenue from the USPS settlement agreements and~~ a $115.03 million ~~pre-tax~~loss ~~gain~~ on extinguishment of debt.

The following significant transactions and events affecting the Company’s liquidity occurred during the year ended December 31, ~~2021~~2022:

•

~~During~~On ~~the~~March ~~fourth~~11, ~~quarter~~2022, ofEVO ~~2020,~~and ~~one~~certain subsidiary guarantors of the Company entered into a Senior Secured Loan and Executive Loan Agreement (the "Bridge Loan Agreement") with Antara Capital and Thomas J. Abood, EVO's ~~subsidiaries~~former ~~borrowed~~chief ~~$17~~executive officer, Damon R.0 ~~million~~Cuzick, ~~under~~EVO's ~~the~~former ~~Main~~chief ~~Street~~operating ~~Priority~~officer, ~~Loan~~Bridgewest ~~Program~~Growth ~~authorized~~Fund byLLC, ~~Section~~an 13entity affiliated with Billy (3Trey) ofPeck ~~the~~Jr., ~~Federal~~EVO's ~~Reserve~~executive ~~Act~~vice president - business development, and Batuta Capital Advisors LLC (~~the~~"Batuta" ~~“Main~~and ~~Street~~together ~~Loan”)~~with Mr. Abood, Mr. Cuzick and ~~during~~Bridgewest Growth Fund LLC, the ~~first~~"Executive ~~quarter~~Lenders"), ofan ~~2021~~entity ~~used~~affiliated ~~all~~with Alexandre Zyngier, a member of EVO's board of directors (the ~~net~~“Board”). ~~proceeds~~Pursuant to ~~pay~~the ~~down~~Bridge ~~the~~Loan ~~aggregate~~Agreement, ~~principal~~EVO obtained a bridge loan in the amount ~~due~~of ~~under~~$9.0 million (the "Bridge Loan") from Antara ~~Financing~~Capital and also borrowed $0.8 million (the "Executive Loans") from the Executive Lenders. Refer to Note 5, Debt, for further discussion. Pursuant to the Bridge Loan Agreement, ~~including~~on ~~capitalized~~March ~~interest~~11, ~~from~~2022, ~~$33~~Antara Capital appointed Michael Bayles as a member of EVO's Board, effective immediately.6 ~~million~~Mr. Bayles was appointed to ~~$16.7~~fill ~~million~~a newly-created vacancy on the Board.

•

~~During~~On March 11, 2022, and pursuant to the ~~first~~Bridge ~~quarter~~Loan Agreement, EVO filed a Certificate of ~~2021,~~Designations ~~the~~of ~~Company~~Series ~~entered~~C ~~into~~Non-Participating ~~agreements~~Preferred ~~with~~Stock (the ~~USPS~~"Series toC ~~settle~~Certificate ~~claims~~of ~~submitted~~Designations") bywith the ~~Company~~Secretary ~~seeking~~of ~~additional~~State ~~compensation~~of ~~for~~the ~~transportation~~State ~~services~~of ~~provided~~Delaware, ~~under~~which ~~certain~~authorized ~~DRO~~EVO ~~contracts.~~to ~~The~~issue ~~Company~~up ~~received~~to aone ~~total~~share of ~~$28.5~~Series ~~million~~C ~~related~~Preferred toStock, ~~these~~and ~~claims~~issued ~~and~~to ~~also~~Antara ~~renegotiated~~Capital ~~the~~one ~~contractual~~share ~~rates~~of ~~per~~Series ~~mile~~C ~~for~~Preferred ~~some~~Stock. ofRefer ~~its~~to ~~DRO~~Note ~~contracts~~6, onTemporary aEquity ~~prospective~~for ~~basis~~further discussion.

•

~~During~~On ~~the~~March ~~first~~11, ~~quarter of 2021~~2022, ~~the~~EVO ~~Company~~ entered into anamendments ~~agreement~~to ~~with~~certain ~~the~~secured ~~Factor~~convertible ~~(as~~promissory ~~defined~~notes in ~~Note~~the 5,aggregate ~~Factoring~~principal ~~Arrangements)~~amount ~~related~~of $9.5 million to ~~the~~permit ~~application~~immediate conversion of ~~$17.5~~those ~~million~~notes, and $the holders converted those notes into warrants to purchase 7.1,533,750 ~~million~~shares of ~~proceeds~~EVO's ~~received~~common ~~from~~stock at an exercise price of $0.01 per share.

•

25On May 31, 2022, EVO, Antara Capital and the Executive Lenders entered into a Loan Extension Agreement that extended the Bridge Loan maturity date from May 31, 2022 to June 30, 2022 and the Executive Loans maturity date from June 3, 2022 to July 7, 2022.

•

~~the~~On ~~USPS~~June ~~in February and January of 2021~~30, ~~respectively~~2022, ~~arising out of the settlement agreements described above. Pursuant to the agreement~~EVO, ~~the~~Antara ~~parties~~Capital ~~acknowledged~~and ~~that~~ the ~~Factor~~Executive ~~previously~~Lenders ~~applied~~entered ~~approximately~~into ~~$1.6 of the $7.1 million of proceeds received in January 2021 plus approximately $0.6 million of funds held in reserve against~~ a ~~balance~~Second ofExtension ~~$3.0~~Agreement ~~million for advances~~ that ~~the~~extended ~~Factor made to~~ the ~~Company~~Bridge inLoan ~~September~~maturity ~~2020~~date ~~(the~~from ~~“Gross~~June ~~Purchase~~30, ~~Advance~~2022 ~~Facility”) and agreed that the Factor would remit $11.0 million of net proceeds~~ to ~~the~~July ~~Company~~8, ~~and~~2022 ~~that the Factor would retain approximately $6.9 million of net proceeds~~ and ~~apply that amount to reduce~~ the ~~outstanding~~Executive ~~principal~~Loans ~~amount~~maturity ofdate ~~the~~from ~~Company’s~~July factoring advances. The parties further agreed that the Company will repay the remaining balance of approximately $6.9 million due under the factoring arrangement in 48 equal monthly installments beginning January 17, 2022 ~~and that the Factor would apply funds held in reserve against the approximately $0.8 million remaining balance of the Gross Purchase Advance Facility. The parties also agreed~~ to ~~work~~July ~~together to wind down their factoring relationship~~15, ~~including waiver of any applicable termination fees~~2022.

•

~~During~~On ~~the~~July ~~first~~8, ~~and~~2022, ~~second~~EVO, ~~quarters~~Antara ofCapital ~~2021,~~and the ~~Company~~Executive Lenders entered into ~~agreements~~a ~~with~~Third ~~certain~~Extension ~~noteholders~~Agreement tothat ~~purchase~~extended ~~promissory~~the ~~notes~~Bridge ~~previously~~Loan ~~issued~~maturity bydate ~~the~~from ~~Company~~July in8, ~~the~~2022 ~~principal~~to ~~amount~~July of15, ~~$4.0~~2022 ~~million~~and bythe ~~paying~~Executive ~~$0.6~~Loans ~~million~~maturity indate ~~cash~~from ~~and~~July ~~issuing~~15, ~~warrants~~2022 to ~~purchase~~July an22, ~~aggregate~~2022. ofIn ~~up to 1~~addition,~~481,453~~ ~~shares~~the ofThird ~~the~~Extension ~~Company’s~~Agreement ~~common~~stipulated ~~stock~~that aton aor ~~price~~before ofJuly ~~$0.01~~13, ~~per~~2022, ~~share.~~the ~~The~~Board ~~Company~~of ~~also~~Directors ~~agreed~~of toEVO ~~exchange~~shall ~~the~~have ~~warrant,~~duly ~~previously~~approved ~~issued~~and tofiled awith ~~noteholder,~~the toSecretary ~~purchase~~of upState toof ~~1,200,000~~the ~~shares~~State of ~~common~~Delaware ~~stock~~a Certificate of Designations to evidence the ~~Company~~issuance atof a ~~price~~new series of Series D Non-Participating Preferred Stock, $20.500001 ~~per~~par ~~share~~value, ~~for~~that ~~(i)~~will, aupon ~~warrant~~issuance, toentitle ~~purchase~~Antara upCapital to(in ~~950,000~~its ~~shares~~capacity ofas ~~common~~sole ~~stock~~holder of the ~~Company~~Series atD aNon-Participating ~~price~~Preferred ofStock) ~~$2.50~~to ~~per~~vote ~~share~~such ~~and~~number ~~(ii)~~of avotes ~~warrant~~per toshare ~~purchase~~that upwill toallow ~~250,000~~Antara ~~shares~~Capital ofto ~~common~~exercise ~~stock~~51% of the ~~Company~~voting atcapital astock ~~price~~ of $0EVO.~~01 per share.~~

•

~~During~~On ~~the~~July ~~second~~13, ~~quarter of 2020~~2022, ~~the~~and ~~Company~~pursuant ~~obtained~~to ~~a loan in~~ the ~~amount~~Third ofExtension ~~$10.0~~Agreement ~~million~~dated ~~under~~July ~~the~~8, ~~Paycheck~~2022, ~~Protection~~EVO ~~Program~~filed ~~(the~~a ~~“PPP”)~~Certificate of ~~the~~Designations ~~Coronavirus~~of ~~Aid,~~Series ~~Relief,~~D ~~and~~Non-Participating ~~Economic~~Preferred ~~Security~~Stock (~~“CARES”)~~the ~~Act.~~"Series ~~The~~D ~~Company~~Certificate ~~used~~of Designations") with the ~~entire~~Secretary ~~loan~~of ~~amount~~State ~~for~~of ~~qualifying~~the ~~expenses,~~State ~~and~~of ~~the~~Delaware, ~~entire~~which ~~amount~~authorized ~~borrowed~~EVO ~~under~~to ~~the~~issue ~~loan,~~up ~~including~~to ~~all~~one ~~accrued~~share ~~interest,~~of ~~was~~Series ~~forgiven~~D byNon-Participating ~~the~~Preferred ~~United~~Stock. ~~States~~Refer ~~Small~~to ~~Business~~Note ~~Administration~~6, ~~(“SBA”)~~Stockholders' inDeficit ~~July~~for ~~2021~~further discussion.

~~The following significant transactions and events affecting the Company’s liquidity occurred following the year ended December 31, 2021:~~24

~~During~~The ~~the~~issuance ~~first~~of ~~quarter~~one share of ~~2022~~Series D Non-Participating Preferred Stock to Antara Capital on July 13, ~~the~~2022 ~~Company~~resulted ~~obtained~~in a ~~Bridge~~change ~~Loan~~of ~~and~~control ~~Executive~~of ~~Loans~~the Company, ~~both~~with asAntara ~~described~~Capital inhaving ~~Note~~voting ~~14,~~control ~~Subsequent~~on ~~Events~~Series D Shareholder Matters. The consideration for the issuance of Series D Non-Participating Preferred Stock to Antara Capital was Antara Capital's agreement to enter into the Third Extension Agreement, inand the ~~aggregate~~Company ~~amount~~did ofnot ~~approximately~~receive ~~$9.8~~any ~~million~~cash consideration.

•

~~During~~On ~~the~~July ~~first~~15, ~~quarter of~~ 2022, ~~the~~EVO, ~~Company~~Antara ~~entered~~Capital ~~into~~and ~~amendments~~the toExecutive ~~certain~~Lenders ~~secured~~entered ~~convertible~~into ~~promissory~~a ~~notes~~Fourth inExtension ~~the~~Agreement ~~aggregate~~that ~~principal~~extended ~~amount~~the ofBridge ~~$9.5~~Loan ~~million~~maturity todate ~~permit~~from ~~immediate~~July ~~conversion~~15, of2022 ~~those~~to ~~notes~~August 15, 2022 and the ~~holders~~Executive ~~representative~~Loans ~~converted~~maturity ~~those~~date ~~notes~~from ~~into~~July ~~warrants~~22, 2022 to ~~purchase~~August 722,~~553,750~~ ~~shares of common stock of the Company at a price of $0~~2022.~~01 per share.~~

•

AsOn aAugust ~~result~~12, ~~of these circumstances~~2022, ~~the Company believes its existing cash~~EVO, ~~together~~Antara ~~with~~Capital ~~any~~and ~~positive~~the ~~cash~~Executive ~~flows~~Lenders ~~from~~entered ~~operations,~~into ~~may~~a ~~not~~Fifth beExtension ~~sufficient~~Agreement tothat ~~support~~extended ~~working~~the ~~capital~~Bridge ~~and~~Loan ~~capital~~maturity ~~expenditure~~date ~~requirements~~from ~~for~~August ~~the~~15, ~~next~~2022 12to ~~months~~September 15, 2022 and the ~~Company~~Executive ~~may~~Loans bematurity ~~required~~date tofrom ~~seek~~August ~~additional~~22, ~~financing~~2022 ~~from~~to ~~outside~~September ~~sources~~22, 2022.

•

On September 8, 2022, EVO, Antara Capital and the Executive Lenders, in contemplation of the Securities Purchase Agreement discussed below, entered into a Sixth Extension Agreement that extended the Bridge Loan maturity date from September 15, 2022 to December 29, 2023 and the Executive Loans maturity date from September 22, 2022 to January 5, 2024.

•

On September 8, 2022, EVO and Antara Capital entered into a Securities Purchase Agreement and consummated certain transactions involving the recapitalization of the Company. This includes the sale and issuance of new equity by EVO and the cancellation of certain indebtedness in exchange for equity of EVO and/or its subsidiaries. For more information regarding the Securities Purchase Agreement and the transactions, refer to the heading “Securities Purchase Agreement” within Note 1, Description of Business and Summary of Significant Accounting Policies.

•

On December 23, 2022, Antara Capital, the Executive Lenders, Corbin ERISA Opportunity Fund Ltd ("CEOF") and Hudson Park amended and restated the Bridge Loan to reflect the assigned portions of the Bridge Loan to CEOF and Hudson Park. No changes were made to the Bridge Loan in connection with the assignment to CEOF and Hudson Park and no payments were made to the holders of the debt. This event is a transaction among debt holders.

Despite the occurrence of the Recapitalization Transactions, the Company believes its existing cash, together with any positive cash flows from operations, may not be sufficient to support working capital and capital expenditure requirements for the next 12 months, and the Company may be required to seek additional financing from outside sources.

In evaluating the Company’s ability to continue as a going concern and its potential need to seek additional financing from outside sources, management also considered the following conditions:

•

The counterparty to the Company’s accounts receivable factoring arrangement is not obligated to purchase the Company’s accounts receivable or make advances to the Company under such arrangement;

•

~~The~~As of December 31, 2022, the Company is ~~currently~~not in ~~default~~compliance onwith certain ofcovenants in its debt ~~obligations~~agreements (Refer to Note 65, Debt, for further discussion); and

•

There can be no assurance that the Company will be able to obtain additional financing in the future via the incurrence of additional indebtedness or via the sale of ~~the Company~~EVO’s common stock or preferred stock.

As a result of the circumstances described above, the Company may not have sufficient liquidity to make the required payments on its debt, factoring or leasing obligations; to satisfy future operating expenses; to make capital expenditures; or to provide for other cash needs.

Management’s plans to mitigate the Company’s current conditions include:

•

Negotiating with related parties and 3rd parties to refinance existing debt and lease obligations;

Potential future public or private debt or equity offerings;

Acquiring new profitable contracts and negotiating revised pricing for existing contracts;

Profitably expanding trucking revenue;

Cost reduction efforts;

•

Improvements to operations to gain driver efficiencies;

•

Purchases of trucks and trailers to reduce purchased transportation and truck rental expenses; ~~and~~

•

Replacement of older trucks with newer trucks to lower the overall cost of ownership and improve cash flow through reduced maintenance and fuel costs.;

•

~~Notwithstanding~~Negotiating ~~management’s~~with ~~plans,~~related ~~there~~parties ~~can be no assurance that the Company will be successful in its efforts to address its current liquidity~~ and ~~capital~~third ~~resource~~parties ~~constraints. These conditions raise substantial doubt about the Company's ability~~ to ~~continue~~refinance asexisting adebt going concern for the next twelve months from the issuance of these consolidated financial statements within the Company’s Form 10-K. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and ~~classification~~lease ~~of assets or the amounts and classifications of liabilities that may result if the Company is unable to continue as a going concern.~~obligations;

Refer to Notes 1, 5, 6 and 10 to the consolidated financial statements for further information regarding our debt, factoring, and lease obligations, including the future maturities of such obligations. Refer to Note 14, Subsequent Events, to the consolidated financial statements for further information regarding changes in our debt obligations and liquidity subsequent to December 31, 2021.25

•

Potential future public or private debt or equity offerings;

•

Acquiring new profitable contracts and negotiating revised pricing for existing contracts; and

•

Profitably expanding trucking revenue.

Notwithstanding management’s plans, there can be no assurance that the Company will be successful in its efforts to address its current liquidity and capital resource constraints. These conditions raise substantial doubt about the Company's ability to continue as a going concern for the next 12 months from the issuance of these consolidated financial statements within EVO’s Form 10-K. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result if the Company is unable to continue as a going concern.

Refer to Notes 1, 4, 5 and 9 to the consolidated financial statements for further information regarding our debt, factoring, and lease obligations, including the future maturities of such obligations.

Off-Balance Sheet Arrangements

Refer to Note 1110, Commitments and Contingencies – Off Balance Sheet Arrangements – Captive Insurance.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“USU.S. GAAP”). The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses recorded during the reporting periods.

On a periodic basis we evaluate our estimates based on historical experience and various other assumptions we believe are reasonable under the circumstances. Actual results could differ from those estimates under different assumptions or conditions. For further information on our significant accounting policies, refer to Note 1, Description of Business and Summary of Significant Accounting Policies, to our consolidated financial statements included in this report.

We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our consolidated financial statements.

Purchase Accounting

We are required to estimate the fair value of the assets acquired and liabilities assumed in business combinations as of the acquisition date, including identified intangible assets. The amount of purchase price paid in excess of the net assets acquired is recorded as goodwill. The fair values are estimated in accordance with accounting standards which define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair values of the net assets acquired are determined primarily using Level 3 inputs (inputs that are unobservable to the marketplace participant).

The most significant fair value estimates include intangible assets (customer relationships and trade names) subject to amortization that were determined based primarily on the acquiree’s projected cash flows. The projected cash flows include various assumptions, including estimated revenue growth rates, operating margins, customer attrition rates, royalty rates, and the appropriate risk-adjusted discount rates used to discount the projected cash flows.

Goodwill

We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell all or a portion of a reporting unit. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis. All of the Company’s goodwill is recorded in its Trucking reporting unit.

Goodwill is reviewed for impairment utilizing either a qualitative assessment or a quantitative goodwill impairment test. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. When we perform the quantitative goodwill impairment test, we compare the fair value of the reporting unit to the carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, the difference would be recognized as an impairment loss.

The impairment test process requires valuation of the reporting unit, which we determine using primarily the income, or discounted cash flows, approach. The assumptions about future cash flows and growth rates are based on the reporting unit's long-term forecast and are subject to review and approval by senior management. A reporting unit’s discount rate is a risk-adjusted weighted average cost of capital, which we believe approximates the rate from a market participant's perspective. The estimated fair value could be impacted by changes in market conditions, interest rates, growth rates, tax rates, costs, pricing and capital expenditures. The fair value determination is categorized as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.

During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, the annual impairment test did not result in an impairment of goodwill.

Long-Lived Assets

The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The fair value is measured based on quoted market prices, if available.

If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. The assumptions about future cash flows and growth rates are based on the asset group’s long-term forecast and are subject to review and approval by senior management. An asset group’s discount rate is a risk-adjusted weighted average cost of capital, which we believe approximates the rate from a market participant's perspective. The estimated fair value could be impacted by changes in market conditions, interest rates, growth rates, tax rates, costs, pricing and capital expenditures. The fair value determination is categorized as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.

Impairment expense of $2.3 million was recorded during the year ended December 31, 2020 related to the CNG Fueling Stations asset group.

Fair Valuation of Common Stock, Preferred Stock, Warrants and Stock Options

Our executive officers, directors and principal stockholders beneficially own a substantial majority of ~~the Company~~EVO’s outstanding common stock. ~~The Company~~EVO’s common stock does not have an observable quoted market price on the OTC Expert Market because the stock is thinly traded and is not eligible for proprietary broker-dealer quotations. As a result, we must utilize an alternative method to estimate the fair value of our common stock, including when ~~the~~EVO ~~Company~~ issues other equity instruments for which the common stock is the underlying security. We first use primarily the income, or discounted cash flows, approach to determine the estimated fair value of our total equity. The assumptions about future cash flows and growth rates are based on the Company's long-term forecast and are subject to review and approval by senior management. The discount rate utilized is a risk-adjusted weighted average cost of capital, which we believe approximates the rate from a market participant's perspective. We then use the option-pricing equity allocation method to allocate the estimated total equity value to our common stock and preferred stock. The inputs and assumptions used in the option-pricing model include: (1) the discount rate; (2) the estimated time to liquidity; (3) ~~the Company~~EVO's expected stock price volatility; (4) the estimated discount for the lack of marketability; and (5) the risk-free interest rate. The estimated fair value could be impacted by changes in market conditions, interest rates, growth rates, tax rates, costs, pricing and capital expenditures. The fair value determination is categorized as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs. The estimated fair value of EVO’s common stock is a key assumption in the fair valuation of the preferred stock, warrants and stock options EVO issues.

The estimated fair value of the Company’s common stock is a key assumption in the fair valuation of the preferred stock, warrants and stock options the Company issues.

Stock-Based Compensation

The Company accounts for stock-based compensation awards based on the fair value of the award as of the grant date, which is calculated using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the use of subjective assumptions, including the estimated fair value of ~~the Company~~EVO’s common stock, the expected term of the award, the expected stock price volatility, expected dividend yield and the risk-free interest rate for the expected term of the award. The expected term represents the period of time the awards are expected to be outstanding. Due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the awards, we use the simplified method to estimate the expected term for our stock-based compensation awards. Under the simplified method, the expected term of an award is presumed to be the mid-point between the vesting date and the end of the contractual term. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected term of the awards. We assume no dividend yield because dividends on our common stock are not expected to be paid in the near future, which is consistent with our history of not paying dividends on our common stock.

Deferred Income Tax Assets and Liabilities

The carrying values of deferred income tax assets and liabilities reflect the application of our income tax accounting policies in accordance with applicable accounting standards and are based on management’s assumptions and estimates regarding future operating results and levels of taxable income, as well as management’s judgment regarding the interpretation of the provisions of applicable accounting standards. The carrying values of liabilities for income taxes currently payable are based on management’s interpretations of applicable tax laws and incorporate management’s assumptions and judgments regarding the use of tax planning strategies in various taxing jurisdictions. The use of different estimates, assumptions and judgments in connection with accounting for income taxes may result in materially different carrying values of income tax assets and liabilities and results of operations.

We evaluate the recoverability of these deferred tax assets by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely heavily on estimates. We use our historical experience and our short and long-term business forecasts to provide insight. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. As of December 31, 2021, the Company had federal and state net operating losses of approximately $44.7 million and $30.2 million, respectively. As of December 31, 2020, the Company had federal and state net operating losses of approximately $50.5 million and $30.1 million, respectively. As of December 31, 2021, the Company has approximately $3.6 million of federal net operating losses available to offset future taxable income for 20 years and will begin to expire in 2036. The remaining $41.1 million of federal net operating losses are carried forward indefinitely to offset future taxable income up to an 80% limitation of taxable income in the year of use. The state net operating losses began to expire in 2022. These federal and state net operating loss carryforwards are reserved with a full valuation allowance because, based on the available evidence, we believe it is more likely than not that we would not be able to utilize those deferred tax assets in the future. If the actual amounts of taxable income differ from our estimates, the amount of our valuation allowance could be materially impacted. 27

29use of tax planning strategies in various taxing jurisdictions. The use of different estimates, assumptions and judgments in connection with accounting for income taxes may result in materially different carrying values of income tax assets and liabilities and results of operations.

We evaluate the recoverability of these deferred tax assets by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely heavily on estimates. We use our historical experience and our short and long-term business forecasts to provide insight. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. As of December 31, 2022, the Company had federal and state net operating losses of approximately $38.4 million and $26.7 million, respectively. As of December 31, 2021, the Company had federal and state net operating losses of approximately $44.7 million and $30.2 million, respectively. As of December 31, 2022, the Company has approximately $0.7 million of federal net operating losses available to offset future taxable income for 20 years and will begin to expire in 2036. The remaining $37.7 million of federal net operating losses are carried forward indefinitely to offset future taxable income up to an 80% limitation of taxable income in the year of use. The state net operating losses began to expire in 2022. These federal and state net operating loss carryforwards are reserved with a full valuation allowance because, based on the available evidence, we believe it is more likely than not that we would not be able to utilize those deferred tax assets in the future. If the actual amounts of taxable income differ from our estimates, the amount of our valuation allowance could be materially impacted.

Recently Issued Accounting Pronouncements

Refer to Note 1, Description of Business and Summary of Significant Accounting Policies, to our consolidated financial statements included in this report.

Seasonality and Inflation

Due to increased USPS volume associated with the holiday rush from the end of November through year end, the Company’s revenue and business activity typically increase during the last quarter of each calendar year. AtIn the ~~same~~winter ~~time~~months, operating expenses generally increase and fuel efficiency declines because of engine idling and harsh weather creating higher accident frequency, increased claims and higher equipment repair expenditures. The Company also may suffer from weather-related or other events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes and explosions. These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, destroy the Company’s assets or adversely affect the business or financial condition of customers, any of which could adversely affect the Company’s results or make the Company’s results more volatile.

ToThe ~~some~~Company ~~extent,~~also wemay ~~experience~~suffer ~~seasonality~~from ~~with~~weather-related ~~the~~or ~~CNG~~other ~~business.~~events ~~Natural~~such ~~gas~~as ~~vehicle~~tornadoes, ~~fuel~~hurricanes, ~~amounts~~blizzards, ~~consumed~~ice bystorms, ~~some~~floods, offires, ~~our~~earthquakes ~~customers~~and ~~tend~~explosions. toThese beevents ~~higher~~may indisrupt ~~summer~~fuel ~~months~~supplies, ~~when~~increase ~~fleet vehicles use more~~ fuel tocosts, ~~power~~disrupt ~~their~~freight ~~air~~shipments ~~conditioning~~or ~~systems.~~routes, ~~Natural~~affect ~~gas~~regional ~~commodity~~economies, ~~prices~~destroy ~~tend to be higher in~~ the ~~fall~~Company’s ~~and~~assets ~~winter~~or ~~months~~adversely ~~due~~affect ~~to increased overall demand for natural gas for heating during these periods. With~~ the ~~USPS~~business ~~contracts~~or ~~the~~financial ~~trucking~~condition ~~segment~~of ~~experiences~~customers, aany ~~significant~~of ~~increase~~which incould ~~business~~adversely ~~from~~affect the ~~last~~Company’s ~~week~~results ofor ~~November~~make ~~through~~ the ~~end~~Company’s ofresults ~~December~~more volatile.

~~Since~~The ~~our~~Company ~~inception,~~has ~~inflation~~experienced ~~has~~inflationary ~~not~~pressures ~~significantly~~in ~~affected~~the ~~our~~normal ~~operating~~course ~~results.~~of ~~However,~~business ~~costs~~including ~~for~~cost ~~construction,~~of ~~repairs~~equipment, ~~maintenance~~driver wages, ~~electricity~~healthcare and benefits, insurance, ~~are~~parts ~~all~~and ~~subject~~supplies toand ~~inflationary~~fuel. ~~pressures,~~While ~~which~~the ~~could~~Company ~~affect~~receives ~~our~~some ~~ability~~revenue tooffsets ~~maintain~~from ~~our~~the ~~stations~~USPS ~~adequately,~~for ~~build~~costs ~~new~~like ~~stations,~~wage ~~expand~~inflation ~~our~~and ~~existing~~fuel, ~~facilities~~periods orwith ~~pursue~~inflationary ~~additional~~pressures ~~CNG production projects, or~~ could ~~materially~~adversely ~~increase~~affect our ~~operating~~financial ~~costs~~results.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, ~~the~~EVO ~~Company~~ is not required to provide disclosure under this item.

3028

Item 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm		F-1
Report of Independent Registered Public Accounting Firm [PCAOB ID Number 248]		F-1
Consolidated Balance Sheets		F-2
Consolidated Statements of Operations		F-3
Consolidated Statements of Changes in Stockholders’ Deficit		F-4
Consolidated Statements of Cash Flows		F-5
Notes to Consolidated Financial Statements		F-6

3129

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and ~~Shareholders~~Stockholders

EVO Transportation & Energy Services, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of EVO Transportation & Energy Services, Inc. ~~and subsidiaries~~ (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, ~~2021~~2022 and ~~2020~~2021, the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, ~~2021~~2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2021~~2022 and ~~2020~~2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2021~~2022, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the financial statements, the Company’s current liabilities exceeded its current assets by $9367.42 million and its total liabilities exceeded its total assets by $4215.17 million as of December 31, ~~2021~~2022. These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2021.

Tulsa, Oklahoma

~~June~~November 3016, ~~2022~~2023

F-1

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Consolidated Balance Sheets

	December 31,
($ in thousands, except share and per share data)	~~2021~~2022			~~2020~~2021
Assets
Current assets
Cash	$	714,~~329~~429		$	266,~~644~~325
Accounts receivable - trade, net		2211,~~697~~704			1322,~~033~~697
Alternative fuels tax credit receivable		~~287~~263			~~1,054~~287
Due from related party		10			40
Prepaids and other current assets		5,840			2,160
Prepaids and other current assets		2,150			2,205
Total current assets		32,236			31,469
Total current assets		32,473			42,976
Non-current assets
Property and equipment, net		2720,~~962~~307			2827,~~240~~962
Goodwill		23,837			23,837
Intangible assets, net		43,~~180~~317			54,~~087~~180
Operating lease right-of-use assets, net		7,~~155~~527			107,~~473~~155
Finance lease right-of-use assets, net		2431,~~391~~086			2724,~~913~~391
Deposits and other long-term assets		67,~~516~~411			37,~~797~~520
Total non-current assets		9493,~~041~~485			9995,~~347~~045
Total assets	$	~~126~~125,~~514~~721		$	~~142~~126,~~323~~514
Liabilities, Temporary Equity and Stockholders’ Deficit
Current liabilities
Accounts payable	$	1614,~~245~~738		$	1116,~~698~~245
Accrued expenses and other current liabilities		1918,~~744~~091			1819,~~589~~744
Accrued interest - related party		2,743			2,249
Accrued interest - related party, current portion		1,033			2,743
Embedded derivative liability		1,~~513~~552			21,~~278~~513
Warrant liabilities		~~13,784~~199			1113,~~264~~784
Advances under factoring arrangements, current portion		92,~~073~~103			249,~~397~~073
Current portion of long-term debt		22,135			12,727
Long-term debt, current portion		20,445			22,135
Current portion of long-term debt - related party		33,164			50,252
Long-term debt - related party, current portion		30,041			33,164
Operating lease liabilities, current portion		32,~~045~~201			3,~~801~~045
Finance lease liabilities, current portion		49,~~448~~009			4,~~597~~448
Total current liabilities		~~125~~99,~~894~~412			~~141~~125,~~852~~894
Non-current liabilities
Advances under factoring arrangements, less current portion		53,~~202~~586			—5,202
Long-term debt, less current portion		74,~~455~~316			247,~~737~~455
Long-term debt, less current portion - related party		4,023			3,379
Long-term debt - related party, less current portion		6,133			4,023
Operating lease liabilities, less current portion		4,114			6,553
Long-term accrued interest - related party, less current portion		95			—
Finance lease liabilities, less current portion		21,790			24,884
Operating lease liabilities, less current portion		5,420			4,114
Deferred tax liability		97			17
Finance lease liabilities, less current portion		22,232			21,790
Total non-current liabilities		42,681			59,570
Deferred tax liability		208			97
Total liabilities		168,575			201,422
Total non-current liabilities		41,990			42,681
Commitments and contingencies (Note 11)
Total liabilities		141,402			168,575
Commitments and contingencies (Note 10)
Temporary Equity
Series A Redeemable Convertible Preferred stock, $0.0001 par value; 10,000,000 shares authorized, 100,000 shares issued and outstanding, includes accrued and undeclared dividends $134 (December 31, 2021) and $98 (December 31, 2020) liquidation preference $434 (December 31, 2021) and $398 (December 31, 2020)		434			398
Series A Redeemable Convertible Preferred stock, $0.0001 par value; 10,000,000 shares authorized, 0 (December 31, 2022) and 100,000 (December 31, 2021) shares issued and outstanding, includes accrued and undeclared dividends of $0 (December 31, 2022) and $134 (December 31, 2021) and liquidation preference of $0 (December 31, 2022) and $434 (December 31, 2021)		—			434
Series B Redeemable Convertible Preferred stock, $0.0001 par value; 3,075,000 shares authorized, 2,050,000 shares issued and outstanding, includes accrued and undeclared dividends $1,090 (December 31, 2021) and $475 (December 31, 2020) liquidation preference $7,240 (December 31, 2021) and $6,625 (December 31, 2020)		7,240			6,625
Series B Redeemable Convertible Preferred stock, $0.0001 par value; 3,075,000 shares authorized, 0 (December 31, 2022) and 2,050,000 (December 31, 2021) shares issued and outstanding, includes accrued and undeclared dividends of $0 (December 31, 2022) and $1,090 (December 31, 2021) and liquidation preference of $0 (December 31, 2022) and $7,240 (December 31, 2021)		—			7,240
Redeemable common stock, at redemption value; 2,240,000 (December 31, 2021 and 2020)		1,200			1,200
Series C Redeemable Preferred stock, $0.0001 par value; 1 (December 31, 2022) and 0 (December 31, 2021) share authorized, issued and outstanding, includes accrued and undeclared dividends of $0 (December 31, 2022 and December 31, 2021) and liquidation preference of $0 (December 31, 2022 and December 31, 2021)		—			—
Redeemable common stock, at redemption value; 0 (December 31, 2022) and 2,240,000 (December 31, 2021)		—			1,200
Stockholders’ deficit
Common stock, $0.0001 par value; 100,000,000 shares authorized; 12,973,145 (December 31, 2021) and 12,972,815 (December 31, 2020) shares issued and outstanding		2			2
Series D Non-Redeemable Preferred stock, $0.0001 par value; 1 (December 31, 2022) and 0 (December 31, 2021) share authorized, issued and outstanding, includes liquidation preference of $0 (December 31, 2022 and December 31, 2021)		—			—
Common stock subscribed and not yet issued 0 (December 31, 2021) and 80 (December 31, 2020)		—			—
Common stock, $0.0001 par value; 600,000,000 (December 31, 2022) and 100,000,000 (December 31, 2021) shares authorized; 436,270,505 (December 31, 2022) and 15,213,145 (December 31, 2021) shares issued and outstanding		43			2
Common stock issuable		43,~~390~~474			34,~~474~~390
Additional paid-in capital		3286,~~039~~394			3032,~~821~~039
Accumulated deficit		(87105,~~366~~592	)		(~~101~~87,~~619~~366	)
Total stockholders’ deficit		(5015,~~935~~681	)		(6750,~~322~~935	)
Total liabilities, temporary equity, and stockholders’ deficit	$	~~126~~125,~~514~~721		$	~~142~~126,~~323~~514

See notes to consolidated financial statements.

F-2

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Consolidated Statements of Operations

	For the Years EndedDecember 31,
($ in thousands, except share and per share data)	~~2021~~2022			~~2020~~2021
Revenue
Trucking	$	~~268~~309,~~913~~476		$	~~228~~268,~~276~~913
Other		~~34,758~~287			—35,134
CNG		376			999
Total revenue		309,763			304,047
Total revenue		304,047			229,275
Operating expenses
Payroll, benefits and related		98131,~~294~~211			~~105~~107,~~480~~417
Purchased transportation		6846,~~765~~368			3868,~~889~~765
Fuel		2848,~~155~~198			2228,~~881~~155
General and administrative		2517,~~465~~983			1816,~~501~~342
Operating supplies and expenses		1514,~~252~~256			1615,~~110~~252
Depreciation and amortization		1516,~~234~~176			1415,~~760~~234
Equipment rent		1314,~~401~~578			1013,~~746~~401
Maintenance and supplies		1015,~~850~~755			10,~~227~~850
Insurance and claims		8,~~938~~815			98,~~767~~938
Impairment of long lived assets		—			2,302
Loss on sale of fixed assets		54			154
Loss on sale of fixed assets		154			1,269
Other		146			253
Change in fair value of contingent consideration		—			296
Total operating expenses		313,540			284,761
CNG expenses		253			498
Operating income (loss)		(3,777	)		19,286
Total operating expenses		284,761			251,726
Operating income (loss)		19,286			(22,451	)
Other income (expense)
Interest expense		(1233,~~745~~710	)		(1412,~~982~~745	)
Change in fair value of embedded derivative liability		~~765~~(39	)		~~(1,257~~765	)
Change in fair value of warrant liabilities		(225,~~520~~207	)		1(2,~~975~~520	)
Gain (loss) on extinguishment of debt		10(5,~~953~~318	)		(910,~~994~~953	)
Other miscellaneous income		5773			6757
Total other expense		(313,~~490~~787	)		(243,~~191~~490	)
Income (loss) before income taxes		15(17,~~796~~564	)		~~(46~~15,~~642~~796	)
(Provision) benefit for income taxes		(1,543	)		(206	)
Income tax expense		(662	)		(1,543	)
Net income (loss)	$	14(18,~~253~~226	)	$	~~(46~~14,~~848~~253	)
Earnings per share:
Earnings (loss) per share:
Basic	$	(0.4511	)	$	(20.2645	)
Diluted	$	(0.4411	)	$	(20.2644	)
Weighted average shares outstanding:
Basic		30171,~~507~~700,~~308~~395			2130,~~176~~507,~~453~~308
Diluted		33171,~~376~~700,~~075~~395			2133,~~176~~376,~~453~~075

See notes to consolidated financial statements.

F-3

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Consolidated Statements of Changes in Stockholders’ Deficit

For the Years Ended December 31, ~~2021~~2022 and ~~2020~~2021

	Common Stock					Common StockSubscribed						Common Stock			AdditionalPaid-in			Accumulated			TotalStockholders’
	Preferred Stock					Common Stock						Common Stock			AdditionalPaid-in			Accumulated			TotalStockholders’
($ in thousands, except share data)	Shares			Amount		Shares			Amount			Issuable			Capital			Deficit			Deficit
Balance - December 31, 2019		14,333,834		$	1		8,664		$	12		$	3,474		$	38,611		$	(54,771	)	$	(12,673	)
Balance - December 31, 2020		—		$	—		15,212,815		$	2		$	3,474		$	30,821		$	(101,619	)		(67,322	)
Reclassification of warrants from equity classified to liability classified		—			—		—			—			—			(7,648	)		—			(7,648	)
Common stock issued for accrued interest		8,664			—		(8,664	)		(12	)		—			12			—			—
Issuance of common stock for cash - related party		1,260,000			—		—			—			—			3,150			—			3,150
Redemption of common stock for Series B redeemable preferred stock - related party		(1,260,000	)		—		—			—			—			(3,150	)		—			(3,150	)
Issuance of warrants as deemed dividend - related party		—			—		—			—			—			(455	)		—			(455	)
Common stock issued for Finkle contingent consideration liability		870,317			1		—			—			—			296			—			297
Common stock issued for services - related party		—			—		80			—			—			—			—			—
Stock-based compensation expense		—			—		—			—			—			536			—			536
Series A redeemable preferred stock dividend		—			—		—			—			—			(57	)		—			(57	)
Series B redeemable preferred stock dividend		—			—		—			—			—			(474	)		—			(474	)
Net loss		—			—		—			—			—			—			(46,848	)		(46,848	)
Balance - December 31, 2020		15,212,815			2		80			—			3,474			30,821			(101,619	)		(67,322	)
Obligation to issue common stock - related party		—			—		—			—			916			—			—			916
Issuance of warrants to extinguish debt		—			—		—			—			—			1,292			—			1,292
Common stock issued for services - related party		~~330~~—			—		~~(80~~330	)		—			—			—			—			—
Stock-based compensation expense		—			—		—			—			—			577			—			577
Series A redeemable preferred stock dividend		—			—		—			—			—			(36	)		—			(36	)
Series A Redeemable Preferred stock dividend		—			—		—			—			—			(36	)		—			(36	)
Series B redeemable preferred stock dividend		—			—		—			—			—			(615	)		—			(615	)
Series B Redeemable Preferred stock dividend		—			—		—			—			—			(615	)		—			(615	)
Net income		—			—		—			—			—			—			14,253			14,253
Balance - December 31, 2021		~~15,213,145~~—		$	2—		—15,213,145		$	—2		$	4,390		$	32,039		$	(87,366	)	$	(50,935	)
Issuance of common stock - related party		—			—		1,174,800			—			(916	)		916			—			—
Conversion of convertible notes into warrants		—			—		—			—			—			9,708			—			9,708
Reclassification of warrants from liability classified to equity classified		—			—		—			—			—			1,258			—			1,258
Issuance of Series D Non-Redeemable Preferred stock		1			—		—			—			—			750			—			750
Exercise of warrants into common stock		—			—		417,216,922			41			—			20,691			—			20,732
Issuance of equity classified warrants		—			—		—			—			—			3,074			—			3,074
Restructuring gain from related parties		—			—		—			—			—			8,954			—			8,954
Reclassification of redeemable common stock		—			—		—			—			—			1,200			—			1,200
Stock-based compensation expense		—			—		—			—			—			130			—			130
Series A Redeemable Preferred stock dividend		—			—		—			—			—			(18	)		—			(18	)
Series B Redeemable Preferred stock dividend		—			—		—			—			—			(305	)		—			(305	)
Conversion of Series A Redeemable Preferred stock into common stock		—			—		150,597			—			—			452			—			452
Conversion of Series B Redeemable Preferred stock into common stock		—			—		2,515,041			—			—			7,545			—			7,545
Net loss		—			—		—			—			—			—			(18,226	)		(18,226	)
Balance - December 31, 2022		1		$	—		436,270,505		$	43		$	3,474		$	86,394		$	(105,592	)	$	(15,681	)

See notes to consolidated financial statements.

F-4

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Consolidated Statements of Cash Flows

	For the Years Ended December 31,
($ in thousands)	~~2021~~2022			~~2020~~2021
Cash flows from operating activities
Net income (loss)	$	14(18,~~253~~226	)	$	~~(46~~14,~~848~~253	)
Adjustments to reconcile net loss to net cash used in operating activities
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		1516,~~234~~176			1415,~~760~~234
Non-cash lease expense		3,~~964~~766			43,~~462~~964
Loss on sale of assets		~~154~~54			~~1,269~~154
Amortization of debt discount and debt issuance costs		110,~~103~~246			21,~~066~~103
Deferred income taxes		80111			~~(358~~80	)
Stock-based compensation expense		~~577~~130			~~536~~577
Impairment of long-lived assets		—			2,302
Non-cash interest expense		15,422			5,996
Non-cash interest expense		5,996			5,536
Bad debt expense		638			79
Bad debt expense		79			82
Change in fair value of embedded derivative liability		39			(765	)
Change in fair value of embedded derivative liability		(765	)		1,257
Change in fair value of warrant liabilities		(25,207	)		2,520
Change in fair value of warrant liabilities		2,520			(1,975	)
Restructuring gain (loss) on Recapitalization Transaction		(212	)		—
Change in fair value of contingent consideration		—			296
(Gain) loss on extinguishment of debt		5,318			(10,953	)
(Gain) loss on extinguishment of debt		(10,953	)		9,994
Changes in assets and liabilities
Accounts receivable - trade		(910,~~741~~354	)		(19,~~433~~741	)
Alternative fuels tax credit receivable		~~766~~24			~~1,388~~766
Due from related party		30(5	)		—30
Other assets		(2,~~664~~321	)		(~~922~~2,664	)
Accounts payable		4(2,~~545~~009	)		(4,~~562~~545	)
Accrued expenses and other current liabilities		(1,~~705~~052	)		51,~~708~~705
Accrued interest - related party		1,494			~~767~~494
Operating lease liabilities		(34,~~829~~187	)		(43,~~347~~829	)
Net cash provided by (used in) operating activities		23,548			(10,022	)
Net cash provided by operating activities		10,553			23,548
Cash flows from investing activities
Purchases of equipment		(~~7,430~~136	)		(927,430	)
Proceeds from sale of assets		~~315~~43			~~1,030~~315
Net cash provided by (used in) investing activities		(7,115	)		938
Net cash used in investing activities		(93	)		(7,115	)
Cash flows from financing activities
Proceeds from sale of common stock, preferred stock and warrants		—13,756			~~6,150~~—
Proceeds from issuance of debt		~~6,469~~—			266,~~692~~469
Payments of principal on debt		(5,~~496~~161	)		(5,~~880~~496	)
Proceeds from issuance of debt - related party		—9,625			~~6,150~~—
Payments of principal on debt - related party		(~~18,594~~272	)		(~~966~~18,594	)
Payment of prepayment penalty fees - related party		(777	)		—
Debt extinguishment costs		(225	)		(777	)
Advances from factoring arrangements		~~214~~247,~~343~~542			~~185~~214,~~438~~343
Payments on factoring arrangements		(~~225~~258,~~798~~820	)		(~~180~~225,~~811~~798	)
Debt issuance costs		—			~~(674~~—	)
Payments on finance lease liabilities		(58,~~895~~801	)		(35,~~645~~895	)
Net cash provided by (used in) financing activities		(35,748	)		32,454
Net cash used in financing activities		(2,356	)		(35,748	)
Net increase in cash		(19,315	)		23,370
Net increase (decrease) in cash and restricted cash		8,104			(19,315	)
Cash - beginning of year		26,644			3,274
Cash and restricted cash - beginning of year		7,329			26,644
Cash - end of year	$	7,329		$	26,644
Cash and restricted cash - end of year	$	15,433			7,329
Supplemental disclosures of cash flow information:
Income tax paid	$	12,~~122~~066		$	911,122
Interest paid	$	~~689~~3,909		$	~~3,409~~689
Supplemental schedule of non-cash investing and financing activities:
Fair value of warrants and common stock issued in connection with financing arrangements	$	2,208		$	1,370
Right-of-use assets obtained in exchange for finance lease liabilities	$	12,463		$	—
Held-for-sale assets sold for noncash consideration	$	—		$	450
Right-of-use assets obtained in exchange for operating lease liabilities	$	3,556		$	—
Restructuring gain from Recapitalization Transactions in additional paid-in capital	$	8,954		$	—
Fair value of warrants and common stock issued in connection with financing arrangements	$	12,782		$	2,208

See notes to consolidated financial statements.

F-5

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

Note 1 - Description of Business and Summary of Significant Accounting Policies

Description of Business

EVO Transportation & Energy Services, Inc. is(“EVO” aand, ~~transportation~~together ~~provider~~with ~~serving~~its ~~the~~direct ~~United~~and ~~States~~indirect ~~Postal~~subsidiaries, ~~Service~~the (“~~USPS~~Company”) is a truckload carrier serving the USPS and other customers. We believe EVO ~~serves~~is one of the largest surface transportation companies serving the USPS, with a diversified fleet of tractors, straight trucks, and other vehicles that currently operate on either diesel fuel, gasoline or ~~compressed natural gas (“~~CNG”). InEVO ~~certain~~also ~~markets,~~operates wea ~~fuel~~brokerage ~~our~~unit ~~vehicles at one of our three CNG stations~~ that ~~serve~~supports ~~other~~the ~~customers~~truckload asbusiness ~~well. In addition to our USPS mail transportation~~ and ~~delivery~~ services, weother ~~provide freight and brokerage services to various~~ corporate customers. In ~~connection~~select ~~with~~cases, ~~providing~~EVO ~~our~~may ~~mail~~subcontract ~~transportation and delivery services to~~ the ~~USPS and our freight services to other corporate customers, we outsource the~~ transportation of certain loads to third-party carriers. We operate from our headquarters in Phoenix, Arizona and from 10numerous ~~main~~ terminals ~~located~~ throughout the United States.

~~Going~~Securities ~~Concern~~Purchase Agreement

AsOn ofSeptember ~~December~~8, 312022, ~~2021~~EVO, EVO ~~the~~Holding Company, ~~had~~LLC a(“EVO ~~cash balance of $7.3 million~~Holding”), a ~~working~~subsidiary ~~capital deficit~~ of ~~$93.4 million~~EVO, ~~stockholders’ deficit of $50.9 million,~~ and ~~material~~Antara ~~debt~~Capital ~~and~~Master ~~lease~~Fund ~~obligations~~LP of(“Antara ~~$114.4~~Capital”) ~~million,~~entered ~~which~~into ~~included term loan borrowings under~~ a ~~financing~~Securities ~~agreement~~Purchase ~~with~~Agreement ~~Antara Capital. During~~ (the ~~year~~“SPA”) ~~ended~~and ~~December~~consummated ~~31,~~certain ~~2021,~~transactions weinvolving ~~reported~~the ~~cash~~recapitalization ~~provided by operating activities~~ of ~~$23.5~~the ~~million~~Company ~~that~~(collectively ~~included $28.5 million of nonrecurring cash receipts from~~ the ~~USPS~~“Recapitalization ~~settlement agreements and net income of $14~~Transactions”).3 ~~million~~This ~~that~~ included ~~$34.8 million of nonrecurring pre-tax revenue from~~ the ~~USPS settlement agreements and a $11.0 million pre-tax gain on extinguishment of debt.~~following:

•

~~The~~EVO ~~following~~adopted ~~significant~~an ~~transactions~~amendment ~~and~~to ~~events~~the ~~affecting~~certificate of incorporation to effect the ~~Company’s~~increase ~~liquidity~~in ~~occurred~~the ~~during~~number of authorized shares of its common stock, par value $0.0001, from 100 million to 600 million (the ~~year~~“Charter ~~ended~~Amendment”). ~~December~~See 31Note 6, ~~2021:~~Temporary Equity, Stockholders' Deficit and Warrants, for more information.

•

~~During~~Antara ~~the~~Capital ~~fourth~~agreed ~~quarter~~to pay EVO $13.5 million to purchase 22,353,696 immediately exercisable warrants to purchase 22,353,696 shares of ~~2020~~common stock of EVO at an exercise price of $0.0001 per share, ~~one~~319,213,143 warrants to purchase 319,213,143 shares of common stock of EVO at an exercise price of $0.0001 per share that was exercisable following the adoption of the Charter Amendment, and 1 convertible preferred membership interest in EVO Holding. The Company's ~~subsidiaries~~recorded ~~borrowed~~a $177.07 million ~~under~~loss to interest expense for the ~~Main~~three ~~Street~~and ~~Priority~~nine ~~Loan~~months ~~Program~~ended ~~authorized~~September by30, ~~Section~~2022 ~~13(3)~~in connection with the issuance of the ~~Federal~~warrants. ~~Reserve~~Upon ~~Act~~exercise (of the ~~“Main~~warrants, ~~Street~~which ~~Loan”)~~occurred ~~and~~in ~~during~~November 2022, Antara Capital owned approximately 69% of the ~~first~~Company ~~quarter~~on a fully diluted basis. The preferred interest is convertible into 99% of ~~2021~~the ~~used~~common ~~all~~membership interests of EVO Holding, if the ~~net~~Company ~~proceeds~~fails to ~~pay~~meet ~~down~~certain financial conditions, at Antara Capital’s election during the ~~aggregate~~Conversion ~~principal~~Period, ~~amount~~defined ~~due~~below under the ~~Antara~~heading ~~Financing~~“Amended and Restated Limited Liability Company Operating Agreement.” EVO Holding maintains the Company’s ownership interests in John W. Ritter Trucking, ~~including~~Inc. ~~capitalized~~and ~~interest~~its related companies (the "Ritter Companies"), ~~from~~which ~~$33~~provide a material portion of our Trucking revenue.6 ~~million~~During tothe ~~$16~~years ended December 31, 2022 and 2021, Ritter provided approximately 18% and 20% of our Trucking revenue, respectively.7 ~~million~~See Note 6, Stockholders’ Deficit and Warrants, for more information regarding the issued warrants.

•

~~During~~In ~~the~~connection ~~first~~with ~~quarter~~the ~~of 2021~~SPA, ~~the~~EVO ~~Company~~ entered into exchange agreements (the “Exchange Agreements”) with certain creditors, defined in Note 3, Related Party Transactions. Pursuant to the ~~USPS~~Exchange Agreements, the creditors agreed to ~~settle~~exchange ~~claims~~promissory ~~submitted~~notes byin the ~~Company~~aggregate ~~seeking~~amount ~~additional~~of ~~compensation~~principal and accrued interest of approximately $18.3 million for ~~transportation~~71,324,670 ~~services~~warrants ~~provided~~to ~~under~~purchase ~~certain~~common ~~Dynamic~~stock ~~Route~~and ~~Optimization~~new ~~(“DRO”)~~promissory ~~contracts.~~notes ~~The~~in ~~Company~~the ~~received~~aggregate aprincipal ~~total~~amount of approximately $283.57 million ~~related~~(the to“Takeback ~~these~~Notes”). ~~claims~~See ~~and~~Note ~~also~~3, ~~renegotiated~~Related ~~the~~Party ~~contractual~~Transactions, ~~rates~~Note ~~per~~5, ~~mile~~Debt, ~~for~~and ~~some~~Note of6, ~~its~~Stockholders’ ~~DRO~~Deficit ~~contracts~~and onWarrants, afor ~~prospective~~more ~~basis~~information.

•

~~During~~EVO ~~the~~issued ~~first~~warrants ~~quarter~~to ofpurchase ~~2021~~4,754,978, ~~the Company entered into an agreement with the Factor (as defined in Note 5~~9,509,956 ~~Factoring Arrangements) related to the application of $17.5 million~~ and ~~$7.1 million of proceeds received from the USPS in February and January of 2021~~3, ~~respectively~~000,000 ~~arising~~shares ~~out~~ of ~~the~~EVO's ~~settlement~~common ~~agreements~~stock ~~described~~at ~~above.~~exercise ~~Pursuant~~prices ~~to the agreement, the parties acknowledged that the Factor previously applied approximately $1.6~~ of ~~the~~ $~~7.1 million of proceeds received in January 2021 plus approximately $~~0.60001, ~~million of funds held in reserve against a balance of~~ $3.0 ~~million for advances that the Factor made to the Company in September 2020 (the “Gross Purchase Advance Facility”) and agreed that the Factor would remit $11~~.053 ~~million of net proceeds to the Company~~ and ~~that the Factor would retain approximately~~ $61.950 ~~million~~per ofshare, ~~net~~respectively, ~~proceeds and apply that amount~~ to ~~reduce~~two ~~the~~former ~~outstanding~~board ~~principal amount of the Company’s factoring advances~~members. ~~The~~See ~~parties~~Note ~~further agreed that the Company will repay the remaining balance of approximately $~~6.9, ~~million~~Stockholders’ ~~due~~Deficit ~~under~~and ~~the factoring arrangement in 48 equal monthly installments beginning January 1~~Warrants, ~~2022~~for ~~and~~more ~~that~~information ~~the~~regarding ~~Factor would apply funds held in reserve against~~ the ~~approximately~~issued $0warrants.8 million remaining balance of the Gross Purchase Advance Facility. The parties also agreed to work together to wind down their factoring relationship, including waiver of any applicable termination fees.

•

~~During~~EVO ~~the first and second quarters of 2021, the Company entered into agreements with certain noteholders to purchase promissory notes previously~~ issued ~~by the Company in the principal amount of $4.0 million by paying $0.6 million in cash and issuing~~ warrants to purchase ~~an aggregate of up to 1~~23,~~481~~224,~~453~~117 shares of ~~the Company’~~EVO's common stock at aan exercise price of $0.0163 per share. ~~The~~to ~~Company~~key ~~also~~equity ~~agreed~~holders toand ~~exchange~~members ~~the~~of ~~warrant,~~management. ~~previously~~Each warrant issued tomay abe ~~noteholder,~~exercised tofor ~~purchase~~cash upor toon ~~1,200,000~~a ~~shares~~cashless ofbasis, ~~common~~pursuant ~~stock~~to of the ~~Company~~terms ~~at a price~~ of ~~$2.50~~such ~~per~~warrants, ~~share~~ for ~~(i)~~ a ~~warrant~~period ~~to purchase up to 950,000 shares~~ of ~~common~~five ~~stock~~years offrom the ~~Company~~date ~~at a price~~ of $2issuance.50 ~~per~~See ~~share~~Note ~~and~~6, ~~(ii)~~Stockholders’ aDeficit ~~warrant~~and ~~to purchase up to 250~~Warrants,~~000~~ ~~shares~~for ofmore ~~common~~information ~~stock~~regarding of the ~~Company~~issued ~~at a price of $0~~warrants.~~01 per share.~~

F-6

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

~~During~~Amended ~~the second quarter of 2020, the Company obtained a loan in the amount of $10.0 million under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief,~~ and ~~Economic~~Restated ~~Security~~Limited ~~(“CARES”)~~Liability ~~Act. The~~ Company ~~used~~Operating the entire loan amount for qualifying expenses, and the entire amount borrowed under the loan, including all accrued interest, was forgiven by the United States Small Business Administration (“SBA”) in July 2021.Agreement

~~The~~In ~~following~~connection ~~significant~~with ~~transactions~~the SPA, EVO, Antara Capital, and ~~events~~EVO ~~affecting~~Holding ~~the~~entered into an Amended and Restated Limited Liability Company Operating Agreement (the “A&R LLC Agreement”) for EVO Holding. Pursuant to the A&R LLC Agreement and the SPA, EVO Holding issued one convertible preferred membership interest in EVO Holding (the “Preferred Interest”) to Antara Capital. The Preferred Interest is convertible at Antara Capital’s ~~liquidity~~election ~~occurred~~during ~~following~~the Conversion Period into 99% of the ~~year~~common ~~ended~~membership ~~December~~interests 31of EVO Holding. The Conversion Period is defined as each date of determination on which (i) Consolidated EBITDA for EVO and its subsidiaries for the most recently completed fiscal quarter that is the first, ~~2021:~~second or third fiscal quarter is less than $6.0 million, with such determination initially being made with respect to the second fiscal quarter of 2023, (ii) Consolidated EBITDA for EVO and its subsidiaries for the most recent fourth fiscal quarter that is one of the two most recently completed fiscal quarters is less than $9.0 million, (iii) EVO or any of its subsidiaries fails to pay any principal or interest due in respect of any debt with an outstanding aggregate principal amount in excess of $1.0 million when due, subject to certain cure rights, (iv) any debt of EVO or any of its subsidiaries with an outstanding aggregate principal amount in excess of $1.0 million becomes due prior to its stated maturity, (v) EVO has failed to deliver unaudited quarterly financial statements with certain prescribed time periods, or (vi) EVO has failed to deliver audited annual financial statements within certain prescribed time periods.

~~During~~Going ~~the first quarter of 2022, the Company obtained a Bridge Loan and Executive Loans, both as described in Note 14, Subsequent Events, in the aggregate amount of approximately $9.8 million.~~Concern

~~During~~As ~~the~~of ~~first~~December ~~quarter~~31, of 2022, the Company ~~entered~~had ~~into~~a ~~amendments~~cash tobalance ~~certain~~of ~~secured~~$14.4 ~~convertible~~million, ~~promissory~~a ~~notes~~working incapital ~~the~~deficit ~~aggregate~~of ~~principal~~$67.2 ~~amount~~million, stockholders’ deficit of $915.57 million, toand ~~permit~~material ~~immediate~~debt ~~conversion~~and lease obligations of ~~those~~$105.6 ~~notes~~million, ~~and~~which ~~the~~included ~~holders~~term ~~representative~~loan ~~converted~~borrowings ~~those~~under ~~notes~~a ~~into~~financing ~~warrants~~agreement towith ~~purchase~~Antara 7Capital. During the year ended December 31,~~553~~ 2022,~~750~~ ~~shares~~the ofCompany ~~common~~reported ~~stock~~cash provided by operating activities of ~~the~~$10.6 ~~Company~~million atand anet ~~price~~loss of $18.2 million that included a $05.013 ~~per~~million ~~share~~loss on extinguishment of debt.

AsThe afollowing ~~result~~significant oftransactions ~~these circumstances, the Company believes its existing cash, together with any positive cash flows from operations, may not be sufficient to support working capital~~ and ~~capital~~events ~~expenditure~~affecting ~~requirements for~~ the ~~next~~Company’s 12liquidity ~~months,~~occurred ~~and~~during the ~~Company~~year ~~may~~ended beDecember ~~required~~31, ~~to seek additional financing from outside sources.~~2022:

•

On March 11, 2022, EVO and certain subsidiary guarantors of the Company entered into a Senior Secured Loan and Executive Loan Agreement (the "Bridge Loan Agreement") with Antara Capital and Thomas J. Abood, EVO's former chief executive officer, Damon R. Cuzick, EVO's former chief operating officer, Bridgewest Growth Fund LLC, an entity affiliated with Billy (Trey) Peck Jr., EVO's executive vice president - business development, and Batuta Capital Advisors LLC ("Batuta" and together with Mr. Abood, Mr. Cuzick and Bridgewest Growth Fund LLC, the "Executive Lenders"), an entity affiliated with Alexandre Zyngier, a member of EVO's board of directors (the “Board”). Pursuant to the Bridge Loan Agreement, EVO obtained a bridge loan in the amount of $9.0 million (the "Bridge Loan") from Antara Capital and also borrowed $0.8 million (the "Executive Loans") from the Executive Lenders. Refer to Note 5, Debt, for further discussion. Pursuant to the Bridge Loan Agreement, on March 11, 2022, Antara Capital appointed Michael Bayles as a member of EVO's Board, effective immediately. Mr. Bayles was appointed to fill a newly-created vacancy on the Board.

•

On March 11, 2022, and pursuant to the Bridge Loan Agreement, EVO filed a Series C Certificate of Designations of Series C Non-Participating Preferred Stock with the Secretary of State of the State of Delaware, which authorized EVO to issue up to one share of Series C Preferred Stock, and issued to Antara Capital one share of Series C Preferred Stock. Refer to Note 6, Temporary Equity, Stockholders' Deficit and Warrants for further discussion.

•

On March 11, 2022, EVO entered into amendments to certain secured convertible promissory notes in the aggregate principal amount of $9.5 million to permit immediate conversion of those notes, and the holders converted those notes into warrants to purchase 7,533,750 shares of EVO's common stock at an exercise price of $0.01 per share.

•

On May 31, 2022, EVO, Antara Capital and the Executive Lenders entered into a Loan Extension Agreement that extended the Bridge Loan maturity date from May 31, 2022 to June 30, 2022 and the Executive Loans maturity date from June 3, 2022 to July 7, 2022.

•

On June 30, 2022, EVO, Antara Capital and the Executive Lenders entered into a Second Extension Agreement that extended the Bridge Loan maturity date from June 30, 2022 to July 8, 2022 and the Executive Loans maturity date from July 7, 2022 to July 15, 2022.

•

On July 8, 2022, EVO, Antara Capital and the Executive Lenders entered into a Third Extension Agreement that extended the Bridge Loan maturity date from July 8, 2022 to July 15, 2022 and the Executive Loans maturity date from July 15, 2022 to July 22, 2022. In addition, the Third Extension Agreement stipulated that on or before July 13, 2022, the Board of Directors of EVO shall have duly approved and filed with the Secretary of State of the State

F-7

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

of Delaware a Certificate of Designations to evidence the issuance of a new series of Series D Participating Preferred Stock, $0.0001 par value (the “Series D Preferred”) that will, upon issuance, entitle Antara Capital (in its capacity as sole holder of the Series D Preferred) to vote such number of votes per share that will allow Antara Capital to exercise 51% of the voting capital stock of EVO.

•

On July 13, 2022, and pursuant to the Third Extension Agreement dated July 8, 2022, EVO filed a Certificate of Designations of Series D Non-Participating Preferred Stock with the Secretary of State of the State of Delaware, which authorized EVO to issue up to one share of Series D Non-Participating Preferred Stock. Refer to Note 6, Stockholders' Deficit and Warrants for further discussion.

The issuance of one share of Series D Non-Participating Preferred Stock to Antara Capital on July 13, 2022 resulted in a change of control of the Company, with Antara Capital having voting control on Series D Shareholder Matters. The consideration for the issuance of Series D Non-Participating Preferred Stock to Antara Capital was Antara Capital's agreement to enter into the Third Extension Agreement, and the Company did not receive any cash consideration.

•

On July 15, 2022, EVO, Antara Capital and the Executive Lenders entered into a Fourth Extension Agreement that extended the Bridge Loan maturity date from July 15, 2022 to August 15, 2022 and the Executive Loans maturity date from July 22, 2022 to August 22, 2022.

•

On August 12, 2022, EVO, Antara Capital and the Executive Lenders entered into a Fifth Extension Agreement that extended the Bridge Loan maturity date from August 15, 2022 to September 15, 2022 and the Executive Loans maturity date from August 22, 2022 to September 22, 2022.

•

On September 8, 2022, EVO, Antara Capital and the Executive Lenders, in contemplation of the SPA discussed above, entered into a Sixth Extension Agreement that extended the Bridge Loan maturity date from September 15, 2022 to December 29, 2023 and the Executive Loans maturity date from September 22, 2022 to January 5, 2024.

•

On September 8, 2022, EVO and Antara Capital entered into the SPA and consummated the Recapitalization Transactions. For more information regarding the SPA and the Recapitalization Transactions, refer to the heading “Securities Purchase Agreement” above.

•

On December 23, 2022, Antara Capital, the Executive Lenders, CEOF and Hudson Park amended and restated the Bridge Loan to reflect the assigned portions of the Bridge Loan to CEOF and Hudson Park. No changes were made to the Bridge Loan in connection with the assignment to CEOF and Hudson Park and no payments were made to the holders of the debt. This event is a transaction among debt holders.

In evaluating the Company’s ability to continue as a going concern and its potential need to seek additional financing from outside sources, management also considered the following conditions:

•

The counterparty to the Company’s accounts receivable factoring arrangement is not obligated to purchase the Company’s accounts receivable or make advances to the Company under such arrangement;

•

Management’s plans to mitigate the Company’s current conditions include:

•

Negotiating with related parties and 3rd parties to refinance existing debt and lease obligations;

Potential future public or private debt or equity offerings;

Acquiring new profitable contracts and negotiating revised pricing for existing contracts;

Profitably expanding trucking revenue;

Cost reduction efforts;

•

Improvements to operations to ~~gain~~improve driver ~~efficiencies~~productivity;

•

Purchases of trucks and trailers to reduce purchased transportation and rental vehicles; ~~and~~

•

Replacement of older trucks with newer trucks to lower the overall cost of ownership and improve cash flow through reduced maintenance and fuel costs.;

•

~~F-7~~Potential future public or private debt or equity offerings;

F-8

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

•

~~Refer~~Acquiring tonew ~~Notes~~profitable 5,contracts 6, and 10negotiating torevised ~~the~~pricing ~~consolidated financial statements~~ for ~~further~~existing ~~information~~contracts; ~~regarding the Company’s factoring, debt,~~ and lease obligations, including the future maturities of such obligations. Refer to Note 14, Subsequent Events, to the consolidated financial statements for further information regarding changes in the Company’s debt obligations and liquidity subsequent to December 31, 2021.

•

Profitably expanding trucking revenue.

Refer to Notes 4, 5, and 9 to the consolidated financial statements for further information regarding our factoring, debt, and lease obligations, including the future maturities of such obligations. Refer to Note 13, Subsequent Events, for further information regarding changes in the Company’s debt obligations and liquidity subsequent to December 31, 2022.

Consolidation

The accompanying consolidated financial statements include the accounts of ~~the~~EVO ~~Company~~ and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Pushdown Accounting

As described in Note 5, Debt, on July 13, 2022, Antara Capital was issued one share of Series D Non-Participating Preferred Stock of EVO. With the issuance of Series D Non-Participating Preferred Stock, Antara Capital obtained voting control on shareholder matters resulting in a change of control of the Company. Antara Capital elected to not apply pushdown accounting.

Reclassifications

Certain reclassifications have been made to prior period's financial information to conform to the current period presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the ~~United States of America (“~~U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The consolidated financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to goodwill and long-lived asset valuations, purchase price allocations related to the Company’s business combinations, valuation allowance on deferred income tax assets, and the valuation of our common stock, preferred stock, warrants and stock-based awards.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts where accounts may exceed federally insured limits at times. There were no cash equivalents as of December 31, ~~2021~~2022 and ~~2020~~2021.

Restricted Cash

We had restricted cash of $1.0 million as of December 31, 2022 and 2021 which represents cash required to be set aside by a standby letters of credit related to workers’ compensation and general liabilities accrued in our condensed consolidated financials. Restricted cash is included in deposits and other long-term assets on our condensed consolidated balance sheet. See Note 10, Commitments and Contingencies, for further details around the letters of credit.

Accounts Receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of the accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts estimated in determining the allowance. Receivable balances are written off against the allowance for doubtful accounts when, in the judgment of management, they are considered uncollectible.

~~Federal Alternative Fuels Tax Credit Receivable~~F-9

Federal Alternative Fuels Tax Credit (“AFTC”) (formerly known as Volumetric Excise Tax Credit) receivable are the excise tax refunds to be received from the Federal Government on CNG fuel sales.

Concentrations of Credit Risk

The Company grants credit in the normal course of business to customers in the United States. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.

As of December 31, 2021 and 2020, the USPS accounted for 47% and 69% of the consolidated trade accounts receivable balance, respectively. During the years ended December 31, 2021 and 2020, the USPS generated revenue representing 89% and 88%, respectively, of total trucking revenue and 89% and 87%, respectively, of the Company’s consolidated revenue. The USPS is operated by the United States Federal government; therefore, the Company does not believe there is significant credit risk related to the accounts receivable balance due from the USPS. If the Company were to lose its relationship, or is unable to renew existing contracts, with the USPS, it would have a material adverse effect on the Company’s financial condition and results of operations.

F-8

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

possible that the Company’s estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts estimated in determining the allowance. Receivable balances are written off against the allowance for doubtful accounts when, in the judgment of management, they are considered uncollectible.

Concentrations of Credit Risk

As of December 31, 2022 and 2021, the USPS accounted for 51% and 47% of the consolidated trade accounts receivable balance, respectively. During the years ended December 31, 2022 and 2021, the USPS generated revenue represented 90% and 89%, respectively, of total trucking revenue and 90% and 89%, respectively, of the Company’s consolidated total revenue. The USPS is operated by the United States Federal government; therefore, the Company does not believe there is significant credit or collections risk related to the accounts receivable balance due from the USPS. If the Company were to lose its relationship, or is unable to renew existing contracts, with the USPS, it would have a material adverse effect on the Company’s financial condition and results of operations.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair expenditures are charged to expense as incurred. Gains and losses on disposals of ~~revenue~~ equipment are included in operations as they are a normal, recurring component of our operations. Depreciation is provided utilizing the straight-line method over the following estimated useful lives.

	Years
Tractors	4 - 10	7
Trailers	4 - 14	14
Equipment	5 - 10	5
Buildings		35
Leasehold improvements	5 - 10
Leasehold improvements		5

Goodwill

Goodwill represents the excess of the purchase price of a business acquisition over the net fair value of assets acquired and liabilities assumed. We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell all or a portion of a reporting unit. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis. All of the Company’s goodwill is recorded in the Trucking reporting unit, which has a negative carrying value as of December 31, ~~2021~~2022 and ~~2020~~2021.

The Company performed its annual goodwill impairment tests for ~~2021~~2022 and ~~2020~~2021 by completing quantitative impairment analyses of the Trucking reporting unit goodwill, and management concluded the goodwill was not impaired.

Intangible Assets

The Company's intangible assets consist of customer relationships, trade names and non-competition agreements. The Company carries these intangible assets at cost, less accumulated amortization. Amortization is recorded on a straight-line basis over the estimated useful lives of the respective assets. Management reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. There were no indefinite-lived intangible assets at December 31, ~~2021~~2022 and ~~2020~~2021.

Assets Held for Sale

The Company classifies assets as being held for sale when the following criteria are met: Management, having the authority to approve the action, commits to a plan to sell the asset; The asset is available for immediate sale in its present condition; An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-Lived Assets

We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets.

F-910

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

~~The~~which ~~Company~~the ~~recorded~~carrying ~~long-lived~~amount of the asset ~~impairment~~exceeds ~~charges~~the offair $0value ~~and~~of $2the asset.3 ~~million~~For ~~during~~long-lived ~~the~~assets ~~years~~held ~~ended~~for ~~December 31~~sale, ~~2021~~assets ~~and~~are ~~2020~~written down to fair value, ~~respectively.~~less ~~Substantially~~cost ~~all~~to ofsell. ~~the~~Fair ~~impairment~~value ~~charge~~is ~~during~~determined ~~the~~based ~~year~~on ~~ended~~discounted ~~December~~cash 31flows, ~~2020~~appraised isvalues ~~related~~or tomanagement's estimates, depending upon the ~~CNG~~nature ~~fueling~~of ~~stations~~the ~~segment~~assets. ~~Refer~~There towas ~~Note~~no 9,impairment ~~Fair~~of ~~Value~~long-lived ~~Measurements~~assets during the years ended December 31, ~~for~~2022 ~~further~~and ~~details~~2021.

Debt Issuance Costs

Certain fees and costs incurred to obtain long-term financing are capitalized and included as a reduction in the carrying value of the related debt in the consolidated balance sheets, net of accumulated amortization. These costs are amortized to interest expense using the effective interest method over the term of the related debt.

Fair Valuation of Common Stock, Preferred Stock, Warrants and Stock Options

Our executive officers, directors and principal stockholders beneficially own a substantial majority of ~~the Company~~EVO’s outstanding common stock. ~~The Company~~EVO’s common stock does not have an observable quoted market price on the OTC Expert Market because the stock is thinly traded and is not eligible for proprietary broker-dealer quotations. As a result, we must utilize an alternative method to estimate the fair value of our common stock, including when ~~the~~EVO ~~Company~~ issues other equity instruments for which the common stock is the underlying security. We first use primarily the income, or discounted cash flows, approach to determine the estimated fair value of our total equity. The assumptions about future cash flows and growth rates are based on the Company's long-term forecast and are subject to review and approval by senior management. The discount rate utilized is a risk-adjusted weighted average cost of capital, which we believe approximates the rate from a market participant's perspective. We then use the option-pricing equity allocation method to allocate the estimated total equity value to our common stock and preferred stock. The inputs and assumptions used in the option-pricing model include: (1) the discount rate; (2) the estimated time to liquidity; (3) ~~the Company~~EVO's expected stock price volatility; (4) the estimated discount for the lack of marketability; and (5) the risk-free interest rate. The estimated fair value could be impacted by changes in market conditions, interest rates, growth rates, tax rates, costs, pricing and capital expenditures. The fair value determination is categorized as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs. The estimated fair value of ~~the Company~~EVO’s common stock is a key assumption in the fair valuation of the preferred stock, warrants and stock options ~~the~~EVO ~~Company~~ issues.

Stock-Based Compensation

The Company accounts for stock-based compensation awards based on the fair value of the award as of the grant date, which is calculated using the Black-Scholes option pricing model. The Company recognizes stock-based compensation expense on a straight-line basis over the awards’ vesting period and accounts for forfeitures as they occur.

Some of ~~the Company~~EVO’s currently outstanding awards provide for the acceleration of vesting of all shares underlying the award upon the occurrence of the Company completing an aggregate of at least $30 million of any combination of debt and/or equity financing transactions after the date of grant. Since such financing transactions are outside the Company’s control, the Company does not deem the performance condition to be probable of achievement until the cumulative financing transactions have been completed. Once the cumulative financing transactions have been completed and the vesting of the awards is accelerated, the Company accelerates its recognition of stock-based compensation expense and records any previously unrecognized compensation cost associated with the affected awards on such date.

F-1011

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

Earnings (Loss) per Share of Common Stock

Basic earnings (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards, warrants and convertible notes payable and preferred stock using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net loss per share of common stock attributable to common stockholders when their effect is dilutive.

The following table presents the computation of basic and diluted earnings (loss) per share (amounts in thousands, except share data):

	For the Years EndedDecember 31,
	2021			2020
	2022			2021
Numerator:
Net income (loss)	$	14(18,~~253~~226	)	$	~~(46~~14,~~848~~253	)
Accrued and undeclared preferred stock dividends in arrears		(~~651~~323	)		(~~532~~651	)
Issuance of warrants as deemed dividend - related party		—			(455	)
Inducement to convert preferred stock into common stock		(153	)		—
Net income (loss) available to common stockholders - numerator for basic EPS		13(18,~~602~~702	)		~~(47~~13,~~835~~602	)
Effect of dilutive securities:
$4.0 million Secured Convertible Promissory Notes		~~285~~—			—285
Redeemable Series A Preferred stock		36			—
Series A Redeemable Convertible Preferred stock		—			36
Redeemable Series B Preferred stock		615			—
Series B Redeemable Convertible Preferred stock		—			615
Subtotal		~~936~~—			—936
Adjusted net income (loss) available to common stockholders - numerator for diluted EPS	$	14(18,~~538~~702	)	$	~~(47~~14,~~835~~538	)
Denominator:
Denominator for basic EPS - weighted average common shares outstanding		30171,~~507~~700,~~308~~395			2130,~~176~~507,~~453~~308
Effect of dilutive securities:
$4.0 million Secured Convertible Promissory Notes		~~527,736~~—			—527,736
Redeemable Series A Preferred stock		132,647			—
Series A Redeemable Convertible Preferred stock		—			132,647
Redeemable Series B Preferred stock		2,208,384			—
Series B Redeemable Convertible Preferred stock		—			2,208,384
Subtotal		~~2,868,767~~—			—2,868,767
Denominator for diluted EPS - adjusted weighted average common shares outstanding		33171,~~376~~700,~~075~~395			2133,~~176~~376,~~453~~075
Basic EPS	$	(0.4511	)	$	(20.2645	)
Diluted EPS	$	(0.4411	)	$	(20.2644	)

FThe following table presents the potentially dilutive shares that were excluded from the computation of diluted earnings (loss) per share of common stock attributable to common stockholders, because either their effect was anti-11dilutive or they are contingently issuable shares that were not issuable assuming the end of the reporting period was the end of the contingency period:


	For the Years Ended December 31,
	2022		2021
Stock options		9,627,942		10,920,249
Warrants		72,011,885		12,606,255
Common stock to be issued upon conversion of Four convertible promissory notes with an aggregate principal amount of $9.5 million		—		7,516,250
Common stock and warrant to be issued for purchase of fixed assets		2,348,000		2,348,000
Total		83,987,827		33,390,754

F-12

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

The following table presents the potentially dilutive shares that were excluded from the computation of diluted earnings (loss) per share of common stock attributable to common stockholders, because either their effect was anti-dilutive or they are contingently issuable shares that were not issuable assuming the end of the reporting period was the end of the contingency period:

	For the Years EndedDecember 31,
	2021		2020
Stock options		10,920,249		9,539,249
Warrants		12,606,255		12,106,255
Common stock to be issued upon conversion of $4.0 million Secured Convertible Promissory Notes		—		1,751,542
Common stock to be issued upon conversion of Redeemable Series A Preferred stock		—		132,647
Common stock to be issued upon conversion of Redeemable Series B Preferred stock		—		2,208,384
Common stock to be issued upon conversion of Four convertible promissory notes with an aggregate principal amount of $9.5 million		7,516,250		7,411,250
Common stock and warrant to be issued for purchase of fixed assets		2,348,000		2,348,000
Total		33,390,754		35,497,327

Revenue Recognition

~~Trucking~~USPS – USPS trucking operations generates revenue from transportation services under multi-year contracts with the USPS.

•

USPS – USPS trucking operations generates revenue from transportation services under multi-year contracts with the USPS, generally on a rate per mile basis that adjusts monthly for fuel pricing indexes.

Contract Identification – Although the Company has master agreements with the USPS, these master agreements only establish general terms. Each delivery represents a distinct service that is a separately identified performance obligation for each contract. A single delivery may comprise multiple stops prior to completion. Therefore, a legally enforceable contract is executed by both parties at the first point of pickup for each delivery.

•

Performance Obligations – The Company’s performance obligation arises from the annualized contract to transport USPS freight and is satisfied upon completion of each delivery. The Company’s delivery, accessorial, and dedicated truck capacity represent a bundle of services that are highly interdependent and have the same pattern of transfer to the customer. These services are not capable of being distinct from one another. Thus, the Company’s only performance obligation of USPS trucking operations is transportation services.

•

Transaction Price – The transaction price is based on the awarded agreement for the multi-year contract. The prices are based on miles travelled that adjust monthly for fuel pricing indexes. Depending on the contract, the total transaction price may consist of mileage revenue, fuel adjustments, accessorial fees and fees for additional deliveries outside of the scope of the annual contract. There is no significant financing component in the transaction price, as the USPS generally pays within the contractual payment terms of 30 to 60 days.

•

Allocating Transaction Price to Performance Obligations – The transaction price is allocated in its entirety to transportation services, as this is the only performance obligation.

•

Revenue Recognition – Revenues are recognized over time as satisfaction of the promised contractual delivery agreements are completed, in an amount that reflects the fixed price or the rate per mile set in the contract. Generally, the Company does not have material revenue in transit at period end.

Freight

•

Contract Identification – A legally enforceable contract is executed by both parties at the point of pickup at the shipper’s location, as evidenced by a bill of lading. Although the Company may have master agreements with its customers, these master agreements only establish general terms. There is no financial obligation until the load is tendered/accepted and the Company takes possession of the load.

•

Performance Obligations – The Company’s only performance obligation for freight trucking operations is transportation services. The Company’s delivery, accessorial, and dedicated truck capacity represent a bundle of services that are highly interdependent and have the same pattern of transfer to the customer. These services are not capable of being distinct from one another and the Company does not offer them on a stand-alone basis.

•

~~F-12~~Transaction Price – Depending on the contract, the total transaction price may consist of mileage revenue, fuel adjustments, and accessorial fees. There is no significant financing component in the transaction price, as the customers generally pay within the contractual payment terms of 30 to 120 days.

•

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

Transaction Price – Depending on the contract, the total transaction price may consist of mileage revenue, fuel adjustments, and accessorial fees. There is no significant financing component in the transaction price, as the customers generally pay within the contractual payment terms of 30 to 90 days.

Allocating Transaction Price to Performance Obligations – The transaction price is allocated in its entirety to transportation services, as this is the only performance obligation.

•

Revenue Recognition – Revenues are recognized over time as satisfaction of the promised contractual delivery agreements are completed. Generally, the Company does not have material revenue in transit at period end.

~~CNG~~In ~~Fueling~~accordance ~~Stations~~with Accounting Standards Codification ("ASC") 606-10-50, the Company disaggregates Trucking revenue from contracts with its customers between USPS revenue and Freight revenue as follows:

The Company’s CNG is sold predominately pursuant to contractual commitments. These contracts typically include a stand-ready obligation to supply natural gas daily.


	December 31,
($ in thousands)	2022		2021
USPS revenue	$	278,262	$	235,926
Freight revenue		26,213		26,578
Other revenue		5,001		6,409
Total Trucking revenue	$	309,476	$	268,913

Contract Identification – A legally enforceable contract is executed by both parties at the time a customer pumps the fuel from the station. Although the Company may have contractual agreements, these agreements only establish general terms. There is no financial obligation until the customer receives and consumes the benefits provided by the Company’s performance as the stand-ready obligations are being satisfied.

Performance Obligations – The Company’s performance obligation arises from the sale of fuel to the customer. Thus, the Company’s only performance obligation of CNG operations is CNG sales.

Transaction Price – The transaction price is based on the stand-alone selling price for fuel. The primary method used to estimate the stand-alone selling price for fuel is observable stand-alone sales.

Allocating Transaction Price to Performance Obligations – The transaction price is allocated in its entirety to CNG sales, as this is the only performance obligation.

Revenue Recognition – The Company recognizes revenue for fuel sales at the point in time the customer receives and consumes the benefits.

Management has determined that that the Company acts as the principal (rather than the agent) with respect to its Trucking and CNG operations because it is primarily responsible for fulfilling the promise to provide the specified good or service and has discretion in establishing the price for the specified good or service. Accordingly, the Company recognizes revenue on a gross basis. In accordance with ASC 606-10-50, the Company disaggregates Trucking revenue from contracts with its customers between USPS revenue and Freight revenue as follows:

	December 31,
($ in thousands)	2021		2020
USPS revenue	$	235,926	$	200,494
Freight revenue		26,578		26,179
Other revenue		6,409		1,603
Total Trucking revenue	$	268,913	$	228,276

United States Postal Service Settlement

On January 19, 2021, the Company and the USPS entered into a settlement agreement whereby the USPS agreed to pay approximately $7.1 million to one of ~~the Company~~EVO’s subsidiaries as additional compensation for transportation services provided to the USPS under certain DRO contracts. Subsequently, on February 19, 2021, the Company and the USPS entered into an additional settlement agreement whereby the USPS agreed to pay approximately $17.5 million to certain other Company subsidiaries as additional compensation for transportation services provided to the USPS under other DRO contracts. In connection with the settlement agreements, the Company and the USPS agreed to make certain adjustments to the Company’s DRO contracts, including rate adjustments effective for the fourth quarter of 2020 and future periods. As a result of those adjustments, the USPS agreed to pay an additional $3.8 million to the Company for transportation services provided in the fourth quarter of 2020. The USPS has made all payments associated with these settlement agreements and they were received by the Factor (as defined in Note 5, Factoring Arrangements) on behalf of the Company during the first quarter of 2021. In addition, amounts totaling $6.3 million that were previously paid by the USPS to the Company during 2020 became subject to the terms of the settlement agreements and were recognized as a deferred gain as of December 31, 2020. All aforementioned amounts totaling $34.8 million were recognized as other revenue during the first quarter of 2021 in the consolidated statement

F-13

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

USPS under certain DRO contracts. Subsequently, on February 19, 2021, the Company and the USPS entered into an additional settlement agreement whereby the USPS agreed to pay approximately $17.5 million to certain other Company subsidiaries as additional compensation for transportation services provided to the USPS under other DRO contracts. In connection with the settlement agreements, the Company and the USPS agreed to make certain adjustments to the Company’s DRO contracts, including rate adjustments effective for the fourth quarter of 2020 and future periods. As a result of those adjustments, the USPS agreed to pay an additional $3.8 million to the Company for transportation services provided in the fourth quarter of 2020. The USPS has made all payments associated with these settlement agreements and they were received by the Factor (as defined in Note 4, Factoring Arrangements) on behalf of the Company during the first quarter of 2021. In addition, amounts totaling $6.3 million that were previously paid by the USPS to the Company during 2020 became subject to the terms of the settlement agreements and were recognized as a deferred gain as of December 31, 2020. All aforementioned amounts totaling $34.8 million were recognized as other revenue during the first quarter of 2021 in the consolidated statement of operations. Such amounts are for transportation services provided during 2020 and prior years, are not subject to refund, and are not contingent upon the Company providing future transportation services.

Segment Reporting

The Company uses the "management approach" to determine its operating and reportable segments. The management approach focuses on the financial information that the Company's chief operating decision maker uses to evaluate performance and allocate resources to the Company's operations. Historically, the Company had two reportable segments—Trucking and CNG Fueling Stations. Effective January 1, 2022, the Company determined that its business operates as one reportable segment because: (i) the Company measures profit and loss as a whole; (ii) the principal decision makers do not review information based on any operating segment; (iii) the Company has not chosen to organize its business around different products and services; (iv) the Company has not chosen to organize its business around geographic areas; and (v) the revenues, profits, assets and liabilities of the CNG Fueling Stations are immaterial for all periods presented.

Loss Contingencies

From time to time, we are involved in litigation, claims, contingencies and other legal matters. We record a charge equal to at least the minimum estimated liability for a loss contingency borne by the Company when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) the range of the loss can be reasonably estimated. We expense legal costs, including those legal costs expected to be incurred in connection with a loss contingency, as incurred.

Income Taxes

Deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income.

In evaluating the ultimate realization of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. Management establishes a valuation allowance if it is more likely than not that all or a portion of the deferred income tax assets will not be utilized. The ultimate realization of deferred income tax assets is dependent on the generation of future taxable income, which must occur prior to the expiration of the net operating loss carryforwards.

The Company accounts for uncertainty in income taxes by recognizing the tax benefit or expense from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits and expenses recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company has not identified any material uncertain tax positions as of December 31, ~~2021~~2022 and ~~2020~~2021, respectively. Interest and penalties associated with tax positions are recorded within income tax expense. Tax years that remain subject to examination include ~~2018~~2019 through the current year for federal and generally ~~2017~~2018 through the current year for state purposes.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The adoption of this guidance on January 1, 2021 did not have a material impact on the Company’s consolidated financial statements.

Accounting Pronouncements to be Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The new guidance changes the accounting for estimated credit losses pertaining to certain types of financial instruments including, but not limited to, trade and lease receivables. This pronouncement will be effective for fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating and assessing the impact this guidance will have on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method be applied for all convertible

F-14

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

~~instruments.~~Recently ~~ASU~~Issued ~~2020-06~~Accounting is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. Adoption of the standard requires using either the modified retrospective or the retrospective approach. The Company is currently evaluating and assessing the impact this guidance will have on its consolidated financial statements.Pronouncements

InAccounting ~~May~~Pronouncements 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Topic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40), which clarifies existing guidance for freestanding written call options which are equity classified and remain so after they are modified or exchanged in order to reduce diversity in practice. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating and assessing the impact this guidance will have on its consolidated financial statements.Adopted

In May 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Topic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40), which clarifies existing guidance for freestanding written call options which are equity classified and remain so after they are modified or exchanged in order to reduce diversity in practice. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this guidance on January 1, 2022 did not have a material impact on the Company’s consolidated financial statements.

Accounting Pronouncements to be Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The new guidance changes the accounting for estimated credit losses pertaining to certain types of financial instruments including, but not limited to, trade and lease receivables. This pronouncement will be effective for fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018. The Company does not believe this standard will have a material impact on its consolidated financial statements.

Note 2 - Balance Sheet Disclosures

Accounts receivable are summarized as follows:

	December 31,
($ in thousands)	~~2021~~2022			~~2020~~2021
Accounts receivable – trade	$	2213,~~794~~595		$	1322,~~091~~794
Allowance for doubtful accounts		(971,891	)		(5897	)
	$	2211,~~697~~704		$	1322,~~033~~697

Property and equipment consist of the following:

	December 31,
($ in thousands)	~~2021~~2022			~~2020~~2021
Tractors, trailers and other vehicles	$	46,~~483~~332		$	3846,~~845~~483
Equipment		2,~~204~~170			12,~~006~~204
Land		976			976
Leasehold improvements		181			~~343~~181
Computer equipment		115			48115
Office equipment		108			71108
		50,067			41,289
		49,882			50,067
Less accumulated depreciation		(2229,~~105~~575	)		(1322,~~049~~105	)
	$	2720,~~962~~307		$	2827,~~240~~962

Depreciation expense for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, was $87.27 million and $98.02 million, respectively.

Intangible assets consist of the following:

	December 31, 2021							December 31, 2020
($ in thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Customer relationships	$	4,604	$	(2,063	)	$	2,541	$	4,604	$	(1,499	)	$	3,105
Trade names		2,416		(917	)		1,499		2,416		(640	)		1,776
Non-competition agreements		325		(185	)		140		325		(119	)		206
	$	7,345	$	(3,165	)	$	4,180	$	7,345	$	(2,258	)	$	5,087

Amortization expense for the years ended December 31, 2021 and 2020, was $0.9 million and $1.0 million, respectively. The weighted-average remaining useful life of the finite-lived intangible assets was 8.0 years as of December 31, 2021, of which the weighted-average remaining useful life for the customer relationships was 8.0 years, for the trade names was 8.4 years, and for the non-competition agreements was 2.3 years.

F-15

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

Intangible assets consist of the following:


	December 31, 2022							December 31, 2021
($ in thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Customer relationships	$	4,604	$	(2,616	)	$	1,988	$	4,604	$	(2,063	)	$	2,541
Trade names		2,416		(1,163	)		1,253		2,416		(917	)		1,499
Non-competition agreements		325		(249	)		76		325		(185	)		140
	$	7,345	$	(4,028	)	$	3,317	$	7,345	$	(3,165	)	$	4,180

Amortization expense for the years ended December 31, 2022 and 2021 was $0.9 million and $0.9 million, respectively. The weighted-average remaining useful life of the finite-lived intangible assets was 7.8 years as of December 31, 2022, of which the weighted-average remaining useful life for the customer relationships was 8.0 years, for the trade names was 7.8 years and for the non-competition agreements was 1.4 years.

Future amortization expense will be approximately as follows:

Year Ending December 31,
($ in thousands)
2022	$	873
2023	$	768
2023		768
2024		545
2025		321
2026		321
Thereafter		1,352
2027		297
	$	4,180
Thereafter		1,065
	$	3,317

Goodwill consists of the following:

	December 31,
($ in thousands)	~~2021~~2022		~~2020~~2021
Beginning balance	$	23,837	$	23,837
Acquisitions		—		—
Impairment		—		—
	$	23,837	$	23,837

All of the Company's goodwill is included in its Trucking reporting unit.

Accrued expenses and other current liabilities consist of the following:

	December 31,
($ in thousands)	~~2021~~2022		~~2020~~2021
Purchased transportation	$	95,~~300~~929	$	29,~~158~~300
Compensation, related taxes and benefits		64,~~811~~769		6,~~751~~811
Deferred revenue		—		6,337
Insurance		3,874		—
Other		3,~~633~~519		3,~~343~~633
	$	1918,~~744~~091	$	1819,~~589~~744

Note 3 - Segment Reporting

The Company uses the "management approach" to determine its operating and reportable segments. The management approach focuses on the financial information that the Company's chief operating decision maker uses to evaluate performance and allocate resources to the Company's operations. The Company’s two operating and reportable segments are Trucking and CNG Fueling Stations. Corporate and Unallocated represents expenses that are not allocated to a reportable segment including corporate general and administrative expenses and other corporate costs such as change in fair value of warrant liabilities, change in fair value of embedded derivative liability, gain (loss) on extinguishment of debt, and interest expense on certain debt obligations.

Trucking. The Company’s Trucking segment provides surface transportation services to the USPS and other customers.

CNG Fueling Stations. We own three CNG fueling stations that serve our fleet and other customers. Those stations are located in Fort Worth, TX, Oak Creek, WI, and Tolleson, AZ and accommodate class 8 trucks and trailers. We have two additional CNG fueling stations located in Jurupa Valley, CA and San Antonio, TX that are no longer operational.

The following tables present the Company’s financial information by segment. Management does not use assets by segment to evaluate performance or allocate resources. Therefore, we do not disclose assets by segment.

F-16

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

	Year Ended December 31, 2021
($ in thousands)	Trucking			CNG			Corporate andUnallocated			Total
Revenue	$	303,671		$	376		$	—		$	304,047
Operating expenses, excluding depreciation, amortization, and impairment	$	(249,322	)	$	(1,120	)	$	(19,085	)	$	(269,527	)
Depreciation and amortization	$	(15,234	)	$	—		$	—		$	(15,234	)
Operating income (loss)	$	39,115		$	(744	)	$	(19,085	)	$	19,286

Note 3 - Related Party Transactions

	Year Ended December 31, 2020
($ in thousands)	Trucking			CNG			Corporate andUnallocated			Total
Revenue	$	228,276		$	999		$	—		$	229,275
Operating expenses, excluding depreciation, amortization, and impairment	$	(222,140	)	$	(1,045	)	$	(11,479	)	$	(234,664	)
Depreciation and amortization	$	(14,575	)	$	(179	)	$	(6	)	$	(14,760	)
Impairment	$	—		$	(2,302	)	$	—		$	(2,302	)
Operating loss	$	(8,442	)	$	(2,527	)	$	(11,482	)	$	(22,451	)

F-17

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

Note 4 - Related Party Transactions

Accounts Payable - Related Party

On February 15, 2019, the Company entered into an agreement to lease software technology for operations from a company owned by an individual who served as one of the Company’s officers until October 2020. Under the agreement, the Company paid a monthly fee for this technology based on the number of devices installed across the Company’s fleet. The agreement was terminated in September 2022. During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, the Company recognized expense of approximately $0.6 million and $10.16 million, respectively, related to this software technology, and $0.1 million and $0.1 was owed as of December 31, ~~2021~~2022 and ~~2020~~2021, respectively.

~~Accrued~~Sheehy ~~Interest~~Settlement -Agreement ~~Related Party~~

~~The~~On ~~Company’s~~September ~~accrued~~27, ~~interest~~2022, -EVO, ~~related~~Sheehy ~~party~~Mail ~~consists~~Contractors, ofInc. ~~the~~("Sheehy"), ~~accrued~~Sheehy ~~interest~~Enterprises, ~~payments~~Inc. on(“SEI”), ~~stockholders’~~North American Dispatch Systems, LLC (“NADS”), John Sheehy (“J. Sheehy”), Robert Sheehy (“R. Sheehy” and, ~~related~~together ~~party~~with ~~debt~~SEI, NADS, and J. ~~Accrued~~Sheehy, ~~interest~~the -“Sheehy ~~related~~Parties”) ~~party~~entered ~~was~~into a Settlement Agreement (the “Sheehy Settlement Agreement”) which consummated the following: (i) terminated the services agreement with NADS with the receipt of $20.71 million over multiple installments through August 31, 2023; (ii) Sheehy agreed to pledge $0.8 million in cash collateral held in the SEI captive insurance member account, under the CSPA, on or before March 1, 2024; (iii) modified an equipment lease between Sheehy and SEI; and (iv) SEI waived and agreed to not exercise the $21.2 million asput right with the receipt of $0.1 million over multiple installments through December 31, 2023. Accordingly, EVO is no longer obligated to redeem the common stock held by SEI. As of December 31, 2022 and December 31, 2021, redeemable common stock was $0 and ~~2020~~$1.2 million, respectively.

Off Balance Sheet Arrangements - Collateral Security Pledge Agreement

On January 2, 2019 ~~the~~EVO ~~Company~~ acquired all of the outstanding equity interests in Sheehy ~~Mail Contractors, Inc~~. ("Sheehy~~").~~ ~~Sheehy~~ is engaged in the business of fulfilling government contracts for freight trucking services, as well as providing freight trucking services to non-government entities. On January 31, 2019, the Company entered into a letter agreement with ~~a related party,~~ SEI, to satisfy the Sheehy captive insurance security deposit requirement for 2019 (see Note 1110, Commitments and Contingencies – Off Balance Sheet Arrangements – Captive Insurance). The letter agreement references a Collateral Security Pledge Agreement among SEI, Sheehy and the insurance captive (“CSPA”). ~~Under~~In ~~the~~connection ~~CSPA,~~with ~~SEI~~the ~~has~~Sheehy ~~pledged~~Settlement aAgreement, ~~total~~Sheehy ofpledged $0.98 million in cash ~~and~~collateral ~~investments~~ held in the SEI captive insurance member account., ~~The~~under ~~pledged collateral remains~~ the ~~exclusive~~CSPA, ~~property of SEI and any interest earned~~ on ~~the pledged collateral during the term of the agreement will accrue exclusively to the benefit of SEI. The Company has no claim to the pledged collateral~~ or ~~any~~before ~~accrued interest. The letter agreement expired on~~ March 1, ~~2020~~2024, ~~however,~~and ~~the~~SEI ~~CPSA~~agreed ~~requires the consent of the Company in order for it~~ to becontinue ~~terminated~~its ~~and~~collateral ~~the~~pledge ~~Company~~until ~~has~~that ~~not to date granted its consent~~time.

Creditor Exchange Agreements

As noted in Note 5, Debt, Danny Cuzick, John and Ursula Lampsa and Billy (Trey) Peck Jr. exchanged historical promissory notes issued by EVO and its subsidiaries for (i) warrants to purchase shares of common stock of EVO; (ii) a $75,000 payment and (iii) the Takeback Notes resulting in a restructuring gain of approximately $9.0 million recorded within additional paid-in-capital as of December 31, 2022.

Amendments to Leases

In connection with the Recapitalization Transactions, Ursa Major Corporation, a wholly-owned subsidiary of EVO (“Ursa”), entered into two separate lease amendments with Ursa Oak Creek LLC and Ursa Group LLC. The amendments provided that the monthly “offset payments” under Ursa’s leases will continue until the earliest of (i) September 8, 2027, (ii) the date that the Takeback Note issued to John and Ursula Lampsa is satisfied in full, and (iii) the date the lease is terminated other than for Ursa’s breach. See Note 5, Debt, for further information regarding the Takeback Notes.

Purchase of Fixed Assets

On October 15, 2019, ~~the~~EVO ~~Company~~ entered into an agreement with an existing stockholder to purchase used CNG tractors in exchange for 1,174,800 shares of ~~the Company~~EVO’s common stock and a warrant to purchase 1,174,800 shares of ~~the Company~~EVO’s common stock at an exercise price of $2.50 per share. Although the ~~Company~~transaction ~~has~~was ~~taken possession of the tractors, the issuance of the common stock and the warrant has~~ not ~~yet occurred. Accordingly~~consummated, the Company ~~has~~ recorded $3.5 million related to the tractors within property and equipment, net on its consolidated balance sheets included in this annual report, with an associated $3.5 million related to ~~the Company~~EVO’s obligation to issue the common stock and the warrant to purchase common stock within common stock issuable. In October 2023, EVO, the stockholder and his affiliated company entered into a settlement agreement to mutually rescind the transaction.

For information regarding additional related- party transactions, see Note 65, Debt, and Note 76, Stockholders’ Deficit and Warrants ~~and Note 14, Subsequent Events~~.

~~Note 5 – Factoring Arrangements~~F-17

~~Certain~~EVO ofTRANSPORTATION ~~the~~& ~~Company’s~~ENERGY wholly-owned subsidiaries have entered into accounts receivable factoring arrangements with a financial institution (the “Factor”) with termination dates that started in September 2021 but automatically renew for successive one-year periods (absent either party's written election to terminateSERVICES, ~~which has not occurred)~~INC. Pursuant to the terms of the agreements, the Company, from time to time, sells to the Factor certain of its accounts receivable balances on a recourse basis for credit-approved accounts. The Factor remits 95% of the contracted accounts receivable balance for a given month to the Company (the “Advance Amount”) with the remaining balance, less fees, to be forwarded once the Factor collects the full accounts receivable balance from the customer.

~~For~~Notes long-term contracts with credit worthy customers, the Factor may advance, at their discretion, unearned future contract amounts. Unearned advances are secured by all factored and non-factored long-term contract cash receipts, which are remitted directly to ~~the~~Consolidated ~~Factor~~Financial ~~by the customer. Earned and unearned components included in Advances from factoring arrangement are as follows:~~Statements

Note 4 – Factoring Arrangements

Certain of EVO’s wholly-owned subsidiaries have entered into accounts receivable factoring arrangements with Triumph Business Capital (the “Factor”) with termination dates that started in September 2021 but automatically renew for successive one-year periods (absent either party's written election to terminate, which has not occurred). Pursuant to the terms of the agreements, each factoring subsidiary, from time to time, sells to the Factor certain of its accounts receivable balances on a recourse basis for credit-approved accounts. The Factor remits 95% of the contracted accounts receivable balance for a given month to the factoring subsidiary (the “Advance Amount”) with the remaining balance, less fees, to be forwarded once the Factor collects the full accounts receivable balance from the factoring customer.

On March 9, 2021, the Company and the Factor entered into a Letter-of-Intent and Memo of Understanding related to the application of certain proceeds received from the USPS in the first quarter of 2021, arising out of the settlement agreements described in Note 1, Description of Business and Summary of Significant Accounting Policies. Pursuant to the agreement, the parties agreed that the Factor would retain and apply approximately $6.9 million of net proceeds plus funds held in reserve to the outstanding principal amount of the overadvances. The parties further agreed that the Company will repay the remaining overadvances balance of approximately $6.9 million in 48 equal monthly installments beginning January 1, 2022 and that the Factor would apply funds held in reserve against the approximately $0.8 million remaining balance of advances made to the Company during September 2020. Components included in Advances from the factoring arrangements are as follows:


	December 31,
($ in thousands)	2022		2021
Purchased accounts receivable	$	525	$	7,390
Overadvances		5,164		6,885
Total	$	5,689	$	14,275

The Factor may require, at its discretion at any time, the Company to repay unearned future contract advances or purchased accounts receivable that have not been paid by the customer. Financing costs are primarily comprised of an interest rate of Prime (subject to a 4% floor) plus 2.0% (resulting in a rate of 9.5% and 6.0% as of December 31, 2022 and 2021, respectively). There is also a factor fee of 0.25% of the face amount of the invoice factored and an associated penalty increase for purchased accounts that remain unpaid for 31 days. Total interest and financing fees for factored receivables for the years ended December 31, 2022 and 2021 were $1.5 million and $1.3 million, respectively. The fees are included in interest expense in the consolidated statements of operations.

F-18

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

	December 31,
($ in thousands)	2021		2020
Purchased accounts receivable	$	7,390	$	7,924
Unearned future contract advances		6,885		16,473
Total	$	14,275	$	24,397

Note 5 - Debt

On March 9, 2021, the Company and the Factor entered into a Letter-of-Intent and Memo of Understanding related to the application of proceeds received from the USPS in the first quarter of 2021, arising out of the settlement agreements described in Note 1, Description of Business and Significant Accounting Policies. Pursuant to the agreement, the parties agreed that the Factor would remit $11.0 million of net proceeds to the Company and that the Factor would retain approximately $6.9 million of net proceeds and apply that amount to reduce the outstanding principal amount of the Company’s factoring advances. The parties further agreed that the Company will repay the remaining balance of approximately $6.9 million due under the factoring arrangement in 48 equal monthly installments beginning January 1, 2022 and that the Factor would apply funds held in reserve against the approximately $0.8 million remaining balance of advances made to the Company during September 2020. The parties also agreed to work together to wind down their factoring relationship, including waiver of any applicable termination fees.

The Factor may require, at their discretion at any time, the Company to repay unearned future contract advances or purchased accounts receivable that have not been paid by the customer. Financing costs are primarily comprised of an interest rate of Prime (subject to a 4% floor) plus 2.0% (resulting in a rate of 6% as of December 31, 2021 and 2020). There is also a factor fee of 0.25% of the face amount of the invoice factored and an associated penalty increase for purchased accounts that remain unpaid for 31 days. Total interest and financing fees for factored receivables for the years ended December 31, 2021 and 2020 were $1.3 million and $1.7 million, respectively. The fees are included in interest expense in the consolidated statements of operations.

F-19

Note 6 - Debt

Antara Financing Agreement

On September 16, 2019, ~~the~~EVO ~~Company~~ entered into a $24.5 million financing agreement (the “Financing Agreement”) among ~~the Company~~EVO, each subsidiary of ~~the Company~~EVO, various lenders from time to time party thereto, and Cortland Capital Market Services LLC, as administrative agent and collateral agent. Pursuant to the Financing Agreement, the Company initially borrowed $22.4 million and borrowed the remaining $2.1 million during October 2019 (the “Term Loan”). All of ~~the Company~~EVO’s subsidiaries were originally guarantors under the Financing Agreement. The Term Loan is secured by all assets of ~~the~~EVO ~~Company~~ and its subsidiaries, including pledges of all equity in ~~the Company~~EVO’s subsidiaries and is not subject to registration rights. The Financing Agreement contains covenants, subject to specific exceptions, that limit (i) the making of investments, (ii) the incurrence of additional indebtedness, (iii) the incurrence of liens, (iv) payments and asset transfers with restricted junior loan parties or subsidiaries, including dividends, (v) transactions with ~~shareholders~~stockholders and affiliates, and (vi) asset dispositions and acquisitions, among others. The Term Loan bears interest at 12% per annum and had an original maturity date of September 16, 2022. Until December 31, 2019, interest on the Term Loan was paid in kind and capitalized as additional principal, and the Company had the option to pay interest on the capitalized interest in cash or in kind. After December 31, 2019, monthly interest payments were due in cash, and all outstanding principal and interest will be due on the maturity date. The Term Loan may be prepaid at any time, subject to payment of a prepayment premium of (1) 7% for each early payment made or coming due on or prior to September 16, 2020, (2) after September 16, 2020, 5% for each early payment made or coming due on or prior to September 16, 2021, and (3) thereafter, no premium shall be due. Proceeds were ~~to be~~ used to (i) to effect the Ritter acquisition, (ii) to refinance and retire existing indebtedness, and (iii) for general working capital needs.

Concurrently, and in connection with the Financing Agreement, ~~the~~EVO ~~Company~~ issued two warrants (the “$0.01 Warrant” and the “$2.50 Warrant” and collectively, the “Antara Warrants”) to Antara Capital to purchase an aggregate of 4,375,000 shares of EVO's common stock ~~of the Company~~ (the “Antara Warrant Shares”). The $0.01 ~~Antara~~ Warrant grants Antara Capital the right to purchase up to 3,350,000 Antara Warrant Shares at an exercise price of $0.01 per share and is exercisable for five years from the date of issuance. The $2.50 ~~Antara~~ Warrant grants Antara Capital the right to purchase up to 1,025,000 Antara Warrant Shares at an exercise price of $2.50 per share, subject to adjustment for certain distributions, stock splits, and issuances of common stock, and is exercisable for ten years from the date of issuance. If the fair market value of the Antara Warrant Shares is greater than the related exercise price at the end of the exercise period (the Antara Warrant Shares are “in the money”), then any outstanding Antara Warrants that are in the money will be automatically deemed to be exercised immediately prior to the end of the exercise period. Pursuant to the Antara Warrants, ~~the~~EVO ~~Company~~ granted Antara Capital preemptive rights to purchase its pro rata share, determined based on the number of shares held by Antara Capital or into which Antara Capital’s Antara Warrants are exercisable, of capital stock issued by ~~the~~EVO ~~Company~~ after the issuance date of the Antara Warrants, subject to certain excepted issuances.

~~The~~EVO ~~Company~~ issued a warrant for 1,500,000 shares of EVO's common stock to Antara at an exercise price of $0.01 per share (the “Side Letter Warrant”) subject to the Company's potential acquisition of LoadTrek, a GPS system designed for the trucking industry, owned by a related party. IfHad the Company ~~were to~~ successfully ~~complete~~completed an acquisition of certain assets of LoadTrek or ~~meet~~met financial performance metrics set forth in the warrant agreement, all or a portion of the shares underlying the Side Letter Warrant were subject to cancellation. The Company did not acquire the LoadTrek assets nor did it meet the financial performance metrics and the Side Letter Warrant was subsequently amended to remove the cancellation provision and, therefore, none of the shares underlying the warrant were cancelled.

FSince the Term Loan, Antara Warrants and Side Letter Warrant were negotiated in contemplation of each other and executed within a short period of time, the Company evaluated the debt and warrants as a combined arrangement. Since the Antara Warrants and Side Letter Warrants are liability classified we recorded these items at their fair value and the residual proceeds were allocated to the Term Loan. The non-20lender fees incurred to establish the financing arrangement were allocated to the Term Loan and capitalized on the Company’s balance sheet as debt issuance costs, which are amortized using the effective interest method into interest expense over the term of the Term Loan.

The Term Loan was further evaluated for the existence of embedded features to be bifurcated from the amount allocated to the debt component. The Term Loan agreement contains a mandatory prepayment feature that was determined to be an embedded derivative, requiring bifurcation and fair value recognition for the derivative liability. The fair value of this derivative liability is remeasured at each reporting period, with changes in fair value recognized in the consolidated statement of operations. Any changes in the assumptions used in measuring the fair value of the derivative liability could result in a material increase or decrease in its carrying value. The allocation of the proceeds to the debt component and the bifurcation of the embedded derivative liability resulted in a $9.0 million debt discount that is amortized to interest expense over the term of the Term Loan.

F-19

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

Since the Term Loan, Antara Warrants, and Side Letter Warrant were negotiated in contemplation of each other and executed within a short period of time, the Company evaluated the debt and warrants as a combined arrangement. Since the Antara Warrants and Side Letter Warrants are liability classified we recorded these items at their fair value and the residual proceeds were allocated to the Term Loan. The non-lender fees incurred to establish the financing arrangement were allocated to the Term Loan and capitalized on the Company’s balance sheet as debt issuance costs, which are amortized using the effective interest method into interest expense over the term of the Term Loan.

Forbearance Agreement and Incremental Amendment to Financing Agreement

During February 2020, the Company entered into a Forbearance Agreement and Incremental Amendment to Financing Agreement (the “Incremental Amendment”), pursuant to which the Company obtained an additional $3.2 million of term loan commitments (the “Incremental Term Loans”) and borrowed $3.2 million from Antara Capital on the same terms as its existing term loan commitments provided under the Financing Agreement. The Incremental Term Loans bear interest at 12% per annum, with monthly interest payments due in cash and all outstanding principal and interest due on the maturity date. The Incremental Term Loans may be prepaid at any time, subject to payment of a prepayment premium equal to (i) 7% of each prepayment made on or prior to September 16, 2020, and (ii) 5% of each prepayment made after September 16, 2020, but on or prior to September 16, 2021, with no premium due after September 16, 2021. Pursuant to the Incremental Amendment, the collateral agent and other lenders agreed to forbear from exercising certain rights, remedies, powers, privileges, and defenses under the Financing Agreement and the other related loan documents during the forbearance period with respect to certain events of default and/or expected or anticipated events of default arising under the Financing Agreement. The Incremental Amendment also suspended the accrual of interest at the post-default rate until the end of the forbearance period. The Company paid a 2% financing fee in connection with its entry into the Incremental Amendment. The Company also reimbursed the Collateral Agent for $0.1 million of fees, costs, and expenses previously accrued under the Financing Agreement and in addition paid fees, costs, and expenses of the Collateral Agent and the lenders newly incurred in connection with the Incremental Amendment.

In connection with the Incremental Amendment, ~~the~~EVO ~~Company~~ issued a warrant (the “Antara Warrant 2020”) to Antara Capital to purchase 3,650,000 shares (the “Antara Warrant Shares 2020”) of ~~the Company~~EVO’s common stock at an exercise price of $2.50 per share, subject to adjustment for certain distributions, stock splits, and issuances of common stock, as an incentive. The issuance of this warrant results in an additional debt discount that is amortized to interest expense over the term of the debt using the effective interest method. The Antara Warrant 2020 is exercisable for ten years from the date of issuance. If the fair market value of the Antara Warrant Shares 2020 is greater than $2.50 at the end of the exercise period, then the Antara Warrant 2020 will be deemed to be exercised automatically and immediately prior to the end of the exercise period. Pursuant to the Antara Warrant 2020, ~~the~~EVO ~~Company~~ granted Antara Capital preemptive rights to purchase its pro rata share, determined based on the number of shares held by Antara Capital or into which warrants held by Antara Capital (including the Antara Warrant 2020) are exercisable, of capital stock issued by ~~the~~EVO ~~Company~~ after the issuance date of the Antara Warrant 2020, subject to certain excepted issuances.

The Company accounted for the Incremental Amendment as a modification of the Financing Agreement. The Company capitalized the estimated fair value of the Antara Warrant 2020 and fees paid to Antara Capital on its balance sheet as a discount on the Incremental Term Loans, which is amortized using the effective interest method into interest expense over the term of the Incremental Term Loans.

Amendment to Forbearance Agreement and Second Incremental Amendment to Financing Agreement

During March 2020, the Company entered into an amendment to forbearance agreement and second incremental amendment to financing agreement (the “Second Incremental Amendment”), pursuant to which the Company obtained an additional $3.1 million in term loan commitments (the “Second Incremental Term Loans” and together with the Term Loan and the Incremental Term Loans, the "EVO Term Loans") and borrowed $3.1 million from Antara Capital on the same terms as its existing term loan commitments provided under the Financing Agreement. The Second Incremental Term Loans bear interest at 12% per annum, with monthly interest payments due in cash and all outstanding principal and interest due on the maturity date. The Second Incremental Term Loans may be prepaid at any time, subject to payment of a prepayment premium equal to (i) 7% of each prepayment made on or prior to September 16, 2020 and (ii) 5% of each prepayment made after September 16, 2020 but on or prior to September 16, 2021, with no premium due after September 16, 2021. The Second Incremental Amendment also suspends the accrual of interest at the post-default rate until the end of the forbearance period. The forbearance period was scheduled to terminate on the earliest of (a) September 30, 2020, (b) the occurrence of any event of default other than the specified defaults, or (c) the date on which any breach of any of the conditions or agreements, including without limitation the affirmative covenants, provided in the Incremental Amendment or Second Incremental Amendment occurs. The Company paid all fees, costs and expenses of the collateral agent and the lenders incurred in connection with the Incremental Amendment and the Second Incremental Amendment.

~~F-21~~The Company accounted for the Second Incremental Amendment as a modification of the Financing Agreement. The Company capitalized the fees paid to Antara Capital on its balance sheet as a discount on the Second Incremental Term Loans, which is amortized using the effective interest method into interest expense over the term of the Second Incremental Term Loans.

Waiver and Agreement to Issue Warrant

F-20

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

~~premium~~covenant ~~equal~~in tothe ~~(i)~~Financing 7%Agreement ~~of each prepayment made on or prior to September 16~~and, ~~2020~~in ~~and (ii) 5% of each prepayment made after September 16~~exchange, ~~2020~~EVO ~~but~~agreed onto orissue ~~prior~~ to ~~September~~Antara ~~16,~~Capital ~~2021,~~a ~~with~~warrant noto ~~premium~~purchase ~~due~~up ~~after September 16, 2021. The Second Incremental Amendment also suspends the accrual of interest at the post-default rate until the end of the forbearance period. The forbearance period was scheduled~~ to ~~terminate on the earliest of (a) September 30~~3, ~~2020~~250,000 ~~(b)~~shares ~~the occurrence~~ of ~~any~~EVO’s ~~event~~common ofstock ~~default~~at ~~other~~an ~~than~~exercise ~~the~~price ~~specified defaults, or (c) the date on which any breach~~ of ~~any~~$2.50 ofper ~~the~~share ~~conditions~~as oran ~~agreements, including without limitation the affirmative covenants, provided in the Incremental Amendment or Second Incremental Amendment occurs~~incentive. The Company ~~paid~~accounted ~~all~~for ~~fees,~~this ~~costs,~~issuance ~~and~~to ~~expenses~~Antara ofCapital ~~the~~as ~~collateral~~an ~~agent~~extinguishment ~~and~~of the ~~lenders~~existing ~~incurred~~debt inand ~~connection with~~ the ~~Incremental~~execution ~~Amendment~~of ~~and~~a ~~the~~new ~~Second~~debt ~~Incremental Amendment~~instrument.

The Company accounted for the Second Incremental Amendment as a modification of the Financing Agreement. The Company capitalized the fees paid to Antara on its balance sheet as a discount on the Second Incremental Term Loans, which is amortized using the effective interest method into interest expense over the term of the Second Incremental Term Loans.

Waiver and Agreement to Issue Warrant

Effective March 31, 2020, the Company entered into a Waiver and Agreement to Issue Warrant (the “Waiver Agreement”) with Antara Capital and the collateral agent, which modified a certain affirmative covenant and waived another affirmative covenant in the Financing Agreement and, in exchange, the Company agreed to issue to Antara Capital a warrant to purchase up to 3,250,000 shares of the Company’s Common Stock at an exercise price of $2.50 per share as an incentive. The Company accounted for this issuance to Antara as an extinguishment of the existing debt and the execution of a new debt instrument. The Company recorded a $10.1 million loss on extinguishment of debt related to unamortized debt discount and debt issuance costs, which was recorded within gain (loss) on extinguishment of debt in the consolidated statement of operations for the year ended December 31, 2020.

Second Amendment to Forbearance Agreement and Omnibus Amendment to Loan Agreement

During October 2020, the Company entered into a second amendment to forbearance agreement and omnibus amendment to loan documents (the “Omnibus Amendment”). The Omnibus Amendment (i) extended the forbearance period until December 31, 2020, (ii) ~~joined~~added EVO Holding ~~Company, LLC~~ as a borrower under the Financing Agreement, (iii) authorized ~~the~~EVO ~~Company~~ and/or its subsidiaries to incur unsecured indebtedness of up to $10,000,000 under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act, (the “CARES Act”) and (iv) extended the timelines under which ~~the~~EVO ~~Company~~ and its subsidiaries are required to comply with certain affirmative covenants set forth in the Financing Agreement, Incremental Amendment, and Second Incremental Amendment.

The Omnibus Amendment contained the following additional covenants:

•

~~The~~EVO ~~Company~~ was required to either (a) fully consummate the acquisition by EVO Equipment Leasing, LLC of 89 used CNG tractors on or before January 3, 2021 or (b) issue 1,174,800 shares of ~~the Company~~EVO’s common stock to the lenders. The Company did not fully consummate the acquisition of the used CNG tractors by January 3, 2021 and became obligated on that date to issue the 1,174,800 shares of ~~the Company~~ EVO’s common stock to the lenders.

•

~~The~~EVO ~~Company~~ was required to issue to each of the lenders ratably warrants authorizing each such lender to, on or after January 1, 2021, purchase its ratable share of up to 500,000 shares of ~~the~~EVO's ~~voting~~ common stock ~~of the Company~~ at the price of $0.01 per share with a 10 year expiration. If ~~the~~EVO ~~Company~~ or any of its subsidiaries had not repaid or partially repaid the obligations with the net proceeds (in the amount of at least $25.0 million) of a financing under the “Main Street Lending Program” on or before December 31, 2020, then ~~the~~EVO ~~Company~~ was required to issue an additional 1,000,000 warrants to the lenders. The Company had not repaid the $25.0 million by December 31, 2020. Therefore, ~~the~~EVO ~~Company~~ was required to issue warrants to purchase an aggregate of 1,500,000 shares of ~~the Company~~EVO’s common stock to the lenders.

•

All warrants previously issued to the lenders, at the election of ~~the~~each lender holding same, ~~will~~were be exchanged without any cash consideration for warrants to purchase for $0.01 per share ~~voting~~of EVO's common stock ~~of the Company~~ at the rate of 0.64 warrants ~~for~~per ~~shares~~share of ~~voting~~EVO's common stock ~~of the Company~~. As a result, warrants to purchase an aggregate of 7,925,000 shares of ~~the Company~~EVO’s common stock at a price of $2.50 per share were exchanged for an aggregate of 5,072,000 shares of ~~the Company~~EVO’s common stock at a price of $0.01 per share.

The Company accounted for the Omnibus Amendment as a modification of the Financing Agreement. The Company capitalized the estimated fair value of the warrants to purchase 500,000 shares of ~~the~~EVO's ~~voting~~ common stock ~~of the Company~~ at the price of $0.01 per share, the change in fair value resulting from the warrant exchange, and the fees paid to Antara Capital on its balance sheet as an additional discount on the Financing Agreement, which is amortized using the effective interest method into interest expense over the term of the Financing Agreement. The Company recognized the estimated fair value of the 1,174,800 shares of EVO's common stock as interest expense during the first quarter of 2021.

~~F-22~~The Paycheck Protection Program loan (the “PPP Loan”) was forgiven by the Small Business Adminstration (the “SBA”) in July 2021, which resulted in a $10.1 million gain on extinguishment of debt in July 2021.

Second Omnibus Amendment to Loan Documents

On December 14, 2020, the Company entered into a second omnibus amendment to loan documents (the “Second Omnibus Amendment”) to, among other things, authorize EVO Holding, Ritter Transport, Inc., John W. Ritter Trucking, Inc., Johmar Leasing Company, LLC, and Ritter Transportation Systems, Inc., each of which is a subsidiary owned directly or indirectly by the Company, to obtain a Main Street Loan in the amount of up to $17.0 million under the Main Street Priority Loan Program authorized by Section 13(3) of the Federal Reserve Act. Pursuant to the Second Omnibus Amendment, the forbearance period was terminated and the collateral agent and other lenders agreed to waive all existing defaults or events of default under the Financing Agreement that occurred and were continuing as of the date of the Second Omnibus Amendment. The Second Omnibus Amendment also removed or revised certain covenants contained in the Financing Agreement and prior amendments to the Financing Agreement, including the EBITDA-based financial covenant included in the Financing Agreement, and extended the maturity date of the term loans under the Financing Agreement to the earlier of (1) March 15, 2026 or (2) the date that is ninety-one days after the date of payment in full in cash of all obligations in respect of the Main Street Loan. Under the Second Omnibus Amendment, interest on the term loans under the Financing Agreement is payable in kind at the rate of 14.5% per annum for the first eight full or partial calendar quarters following the effective date of the Second Omnibus Amendment and is payable in cash, subject to satisfaction of certain unrestricted cash availability requirements, at the rate of 12.0% per

F-21

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

~~balance~~annum ~~sheet~~commencing aswith anthe ~~additional~~ninth ~~discount~~calendar onquarter following the ~~Financing~~effective ~~Agreement~~date. As a result of the Main Street Loan, ~~which~~the isSecond ~~amortized~~Omnibus ~~using~~Amendment, and related agreements, payment of the ~~effective~~principal ~~interest~~balance ~~method~~of ~~into~~the ~~interest~~EVO ~~expense~~Term ~~over~~Loans is subject and subordinate to the ~~term~~prior payment in full of all obligations under the ~~Financing~~Main ~~Agreement~~Street Loan. The Company ~~recognized~~accounted for the ~~estimated~~Second ~~fair~~Omnibus ~~value~~Amendment as a modification of the ~~1,174,800~~Financing ~~shares~~Agreement. As of the ~~Company's~~date ~~common~~of ~~stock~~this asfiling, interest ~~expense~~is ~~during~~still ~~the~~being ~~first~~paid ~~quarter~~in ofkind ~~2021~~at 14.5%.

Second Omnibus Amendment to Loan Documents

On December 14, 2020, the Company entered into a second omnibus amendment to loan documents (the “Second Omnibus Amendment”) to, among other things, authorize EVO Holding Company, LLC, Ritter Transport, Inc., John W. Ritter Trucking, Inc., Johmar Leasing Company, LLC, and Ritter Transportation Systems, Inc., each of which is a subsidiary owned directly or indirectly by the Company, to obtain a Main Street Loan in the amount of up to $17.0 million under the Main Street Priority Loan Program authorized by Section 13(3) of the Federal Reserve Act. Pursuant to the Second Omnibus Amendment, the forbearance period was terminated and the collateral agent and other lenders agreed to waive all existing defaults or events of default under the Financing Agreement that occurred and were continuing as of the date of the Second Omnibus Amendment. The Second Omnibus Amendment also removed or revised certain covenants contained in the Financing Agreement and prior amendments to the Financing Agreement, including the EBITDA-based financial covenant included in the Financing Agreement, and extended the maturity date of the term loans under the Financing Agreement to the date that is ninety-one days after the fifth anniversary of the closing date of the Main Street Loan or the date that is ninety-one days after the date of payment in full in cash of all obligations in respect of the Main Street Loan, whichever occurs first. Under the Second Omnibus Amendment, interest on the term loans under the Financing Agreement is payable in kind at the rate of 14.5% per annum for the first eight full or partial calendar quarters following the effective date of the Second Omnibus Amendment and is payable in cash at the rate of 12.0% per annum commencing with the ninth calendar quarter following the effective date. As a result of the Main Street Loan, Second Omnibus Amendment, and related agreements, payment of the principal balance of the term loans is subject and subordinate to the prior payment in full of all obligations under the Main Street Loan. The Company accounted for the Second Omnibus Amendment as a modification of the Financing Agreement.

Paycheck Protection Program Loan

On April 15, 2020, the Company obtained a loan (the “Loan”) from BOKF, N.A. (dba Bank of Oklahoma) in the amount of $10.0 million under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The Loan, which is memorialized by a Note dated April 15, 2020 issued by the Company, was scheduled to mature on April 15, 2022 and bore interest at a rate of 1.00% per annum, payable monthly commencing on November 15, 2020. The Company was able to prepay the Note at any time prior to maturity with no prepayment penalties. The principal amount of the Loan and accrued interest were eligible for forgiveness after eight weeks if the Company used the Loan proceeds for qualifying expenses, including payroll, rent, and utilities and the Company maintained its payroll levels. The Company used the entire Loan amount for qualifying expenses, and the entire amount borrowed under the Loan was forgiven by the SBA in July 2021, which was recognized as a $10.1 million gain on extinguishment of debt in the consolidated statement of operations for the year ended December 31, 2021.

Main Street Priority Loan Program Facility with Commerce Bank of Arizona, Inc.

On December 29, 2020, EVO Holding ~~Company~~, ~~LLC,~~ Ritter Transport, Inc., John W. Ritter Trucking, Inc., Johmar Leasing Company, LLC, and Ritter Transportation Systems, Inc. (collectively, the “Borrowers”), each of which is a subsidiary owned directly or indirectly by the Company, entered into a Loan Agreement dated December 14, 2020 (the “Loan Agreement”) and related documents (together with the Loan Agreement, the “Loan Documents”) for a loan in the amount of up to $17.0 million (the “Main Street Loan”) serviced by Commerce Bank of Arizona, Inc. (the “Bank”) as lender under the Main Street Priority Loan Program authorized by Section 13(3) of the Federal Reserve Act. The Borrowers and the Bank subsequently entered into a Modification Agreement to the Loan Agreement dated December 22, 2020 (the “Modification Agreement”) and a Second Modification Agreement to the Loan Agreement dated December 23, 2020 (the “Second Modification Agreement”). During the first quarter of 2021, the Borrowers used all of the net proceeds of the Main Street Loan to refinance a portion of the amount outstanding under the Financing Agreement discussed above under the caption “Forbearance Agreement and Incremental Amendment to Financing Agreement” and to pay related prepayment premiums.

The Main Street Loan has a five-year term and bears interest at a rate equal to the sum of (i) 3% percent per year plus (ii) the rates per year quoted by Bank as Bank’s three -month LIBOR rate based upon quotes of the London Interbank Offered Rate, as quoted for U.S. Dollars by Bloomberg, or other comparable services selected by the Bank (the “LIBOR Index”). Such interest rate will change once every third month on the fifth day of the month and will be the LIBOR Index on the day which is two banking days prior to the date the change becomes effective.

Accrued but unpaid interest on the Main Street Loan for loan year one (i.e., the period of December 14, 2020 to December 14, 2021) will be added to the principal amount of the Main Street Loan on December 14, 2021. Following the end of loan year one, interest on the Main Street Loan will be payable quarterly on the 14th day of the last month of each calendar quarter (i.e., March 14, June 14, September 14 and December 14 of each year), with the first interest payment due on March 14, 2022. In addition, on December 14, 2023 and December 14, 2024, the Borrowers must make an annual payment of principal plus accrued but unpaid interest with the principal in an amount equal to 15% of the Main Street Loan amount plus capitalized interest. The entire outstanding principal balance of the Main Street Loan, together with all accrued and unpaid interest, is due and payable in full on December 14, 2025. The Borrowers may prepay the Main Street Loan at any time without incurring any prepayment penalties.

The Loan Documents contain customary events of default, including, among others, those relating to a failure to make payment, bankruptcy, cross default under other credit facilities, breaches of representations and covenants, and the occurrence of certain events. The Loan Documents also contain customary remedies for a facility of this type, exercisable following the occurrence of an event of default, including, among others, the rights to terminate the Bank’s commitment under Loan Agreement, accelerate the maturity date, foreclose the liens and security interests securing the Main Street Loan, and all other rights and remedies available under the Loan Documents and applicable law. As security for the Main Street Loan, the Borrowers granted the Bank a security interest in and to substantially all of their respective properties, and the Company guaranteed the payment and performance of the Borrower’s obligations under the Loan Documents.

In connection with the Main Street Loan, EVO contributed 100% of the issued and outstanding equity of Environmental Alternative Fuels, LLC (“EAF”) to EVO Holding with the consent of Danny Cuzick as the holder of certain previously disclosed promissory notes that are secured in part by the assets of EAF. In consideration of Danny Cuzick’s consent to the contribution, the Company agreed to (a) indemnify Danny Cuzick for up to $0.5 million in connection with Danny Cuzick’s guaranty of certain obligations of EVO and its subsidiaries to Mercedes-Benz Financial Services USA LLC and (b) issue to Danny Cuzick a warrant (the “Cuzick Warrant”) to purchase up to 1,000,000 shares of EVO's common stock at the cost of $0.01 per share. Danny Cuzick is a former member of EVO’s Board. The Company capitalized the estimated fair value of the Cuzick Warrant on its balance sheet as a discount on the Main Street Loan, which is amortized using the effective interest method into interest expense over the term of the Main Street Loan.

Bridge Loan and Executive Loans

On March 11, 2022, EVO and certain subsidiary guarantors of the Company entered into the Bridge Loan Agreement with Antara Capital and the Executive Lenders.

F-22

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

Pursuant to the Bridge Loan Agreement, the Company borrowed $9 million from Antara Capital and had the ability to borrow up to an additional $3 million from Antara Capital prior to May 31, 2022, and also borrowed $0.8 million from the Executive Lenders. $0.2 million of the amount the Company borrowed from the Executive Lenders was borrowed in exchange for Batuta's surrender of a Secured Convertible Note in the principal amount of $0.2 million dated August 8, 2018 that Batuta previously purchased from Dane Capital Fund LP. The Bridge Loan bears interest at 14% per annum and had an original maturity date of the earlier of (i) demand by Antara Capital at any time prior to the date on which a collateral agent designated by Antara Capital has been granted a valid and enforceable, perfected, first priority lien on the collateral described in the Bridge Loan Agreement, subject only to permitted liens, on terms reasonably acceptable to Antara Capital, and (ii) May 31, 2022. The Executive Loans bear interest at 14% per annum and had an original maturity date of June 3, 2022 (although all payments in respect of the Executive Loans are subordinated in right and time of payment to all payments in respect of the Bridge Loan). Interest on the Bridge Loan and Executive Loans will accrue until the principal balances are repaid. No principal and interest payments are due until maturity. Refer to Note 13, Subsequent Events, for discussion regarding the subsequent assignment of certain amounts owed to Antara Capital.

In the event of a default, the lenders have the right to terminate their obligations under the Bridge Loan Agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans. As defined in the Bridge Loan Agreement, events of default include, but are not limited to: failure by the Company to pay any amount due under the Bridge Loan Agreement when due; default by EVO or any of its subsidiaries for failure to pay amounts due and payable under any indebtedness in an amount in excess of $0.1 million if the effect of such default is to accelerate the maturity of any such indebtedness; and any representation or warranty made in connection with the Bridge Loan Agreement being materially false.

In connection with the Bridge Loan Agreement, and as a condition to the Company drawing the Bridge Loan pursuant to the Bridge Loan Agreement, on March 11, 2022, EVO granted Antara Capital 11,969,667 warrants to purchase EVO's common stock at an exercise price of $0.01 per share and granted the Executive Lenders an aggregate of 1,097,219 warrants to purchase EVO's common stock at an exercise price of $0.01 per share (collectively, the "Bridge Loan Warrants"), subject to certain adjustments. Each Bridge Loan Warrant may be exercised for cash or on a cashless basis, pursuant to the terms of such warrants, for a period of five years from the date of issuance. The estimated fair value of the liability-classified Bridge Loan Warrants upon issuance was $12.8 million and a) the Company capitalized $9.6 million on its balance sheet as a discount on the Bridge Loan and Executive Loans, which is amortized into interest expense over the term of the Bridge Loan and Executive Loans; b) the Company immediately recorded $2.9 million as interest expense, which represents the estimated fair value of the Bridge Loan Warrants in excess of the principal due on the Bridge Loan and Executive Loans; and c) the Company recorded a $0.2 million loss on extinguishment of the Batuta Secured Convertible Note.

Amendments to Bridge Loan and Executive Loans

On June 30, 2022, the Company, Antara Capital and the Executive Lenders entered into a Second Extension Agreement that extended the Bridge Loan maturity date from June 30, 2022 to July 8, 2022 and the Executive Loans maturity date from July 7, 2022 to July 15, 2022.

On July 8, 2022, the Company, Antara Capital and the Executive Lenders entered into a Third Extension Agreement that extended the Bridge Loan maturity date from July 8, 2022 to July 15, 2022 and the Executive Loans maturity date from July 15, 2022 to July 22, 2022. In addition, the Third Extension Agreement stipulated that on or before July 13, 2022, the Board of Directors of EVO shall have duly approved and filed with the Secretary of State of the State of Delaware a Certificate of Designation to evidence the issuance of a new series of Series D Non-Participating Participating Preferred Stock, $0.0001 par value, that will, upon issuance, entitle Antara Capital (in its capacity as sole holder of the Series D Non-Participating Preferred Stock) to vote such number of votes per share that will allow Antara Capital to exercise 51% of the voting capital stock of EVO.

On July 13, 2022, pursuant to the Third Extension Agreement, EVO filed the Series D Certificate of Designations with the Secretary of State of the State of Delaware, which authorized EVO to issue up to one share of Series D Non-Participating Preferred Stock.

Under the Series D Certificate of Designations, prior to a Bridge Loan Triggering Event and on and following the Bridge Loan Discharge Date, the holders of Series D Non-Participating Preferred Stock will vote together with the holders of EVO's common stock as a single class on any Series D Shareholder Matter, and the holders of Series D Non-Participating Preferred Stock will be entitled to cast a number of votes on any Series D Shareholder Matter equal to the total number of votes of all non-holders of Series D Non-Participating Preferred Stock entitled to vote on any such Series D Shareholder Matter plus 10. From the occurrence of a Bridge Loan Triggering Event to (but excluding) the Bridge Loan Discharge Date, the holders of Series D Non-Participating Preferred Stock (in their capacity as such) will have no voting rights except as otherwise required by law. In addition, the Series D Certificate of Designations provides that governance mechanisms that could have the effect of limiting,

F-23

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

~~Accrued~~reducing ~~but~~or ~~unpaid~~adversely ~~interest~~affecting on the ~~Main~~Series ~~Street~~D ~~Loan~~Non-Participating ~~for~~Preferred ~~loan~~Stock ~~year~~holders’ ~~one~~voting ~~(i.e.,~~rights ~~the~~under ~~period of December 14, 2020 to December 14, 2021) will be added to~~ the ~~principal~~Series ~~amount~~D ofCertificate ~~the Main Street Loan on December 14, 2021. Following the end~~ of ~~loan~~Designations ~~year one, interest on the Main Street Loan~~ will berequire ~~payable quarterly on~~ the ~~14th~~consent ~~day~~ of the ~~last~~Series ~~month~~D ~~of each calendar quarter (i~~Majority.~~e.,~~ ~~March~~The ~~14,~~Series ~~June~~D ~~14,~~Majority ~~September~~may ~~14,~~elect ~~and~~to ~~December~~waive 14or ofdecline each year), with the first interest payment due on March 14, 2022. In addition, on December 14, 2023 and December 14, 2024, the Borrowers must make an annual payment of principal plus accrued but unpaid interest in an amount equal to ~~fifteen~~exercise ~~percent~~any ~~(15%)~~or ofall ~~the~~voting ~~outstanding~~rights ~~principal~~granted ~~balance~~under of the ~~Main~~Series ~~Street~~D ~~Loan.~~Certificate ~~The entire outstanding principal balance~~ of ~~the Main Street Loan~~Designations, ~~together~~in ~~with~~whole ~~all~~or ~~accrued~~in ~~and unpaid interest~~part, ~~is due and payable in full~~ on ~~December~~either ~~14,~~a ~~2025.~~revocable ~~The~~or ~~Borrowers~~irrevocable ~~may prepay the Main Street Loan at any time without incurring any prepayment penalties~~basis.

The ~~Loan~~issuance ~~Documents~~of ~~contain~~one ~~customary~~share ~~events~~ of ~~default,~~Series ~~including,~~D ~~among~~Non-Participating ~~others,~~Preferred ~~those relating~~ to aAntara ~~failure~~Capital toon ~~make~~July ~~payment~~13, ~~bankruptcy~~2022, ~~cross~~resulted ~~default~~in ~~under other credit facilities, breaches of representations and covenants, and the occurrence of certain events. The Loan Documents also contain customary remedies for~~ a ~~facility~~change of ~~this~~control ~~type, exercisable following the occurrence~~ of ~~an event of default, including, among others,~~ the ~~rights to terminate the Bank’s commitment under Loan Agreement~~Company, ~~accelerate~~with ~~the~~Antara ~~maturity~~Capital ~~date,~~having ~~foreclose~~voting ~~the~~control ~~liens~~on ~~and~~Series ~~security~~D ~~interests~~Shareholder ~~securing the Main Street Loan, and all other rights and remedies available under the Loan Documents and applicable law~~Matters. AsThe ~~security~~consideration for the ~~Main~~issuance ~~Street~~of ~~Loan,~~Series ~~the~~D ~~Borrowers~~Non-Participating ~~granted~~Preferred ~~the~~Stock ~~Bank~~to aAntara ~~security~~Capital ~~interest~~was inAntara ~~and~~Capital's agreement to ~~substantially~~enter ~~all~~into ofthe ~~their~~Third ~~respective~~Extension ~~properties~~Agreement, and the Company ~~guaranteed~~did ~~the~~not ~~payment~~receive ~~and~~any ~~performance~~cash ~~of the Borrower’s obligations under the Loan Documents~~consideration.

InOn ~~connection~~July ~~with~~15, ~~the Main Street Loan~~2022, the Company, ~~contributed~~Antara ~~100%~~Capital ~~of the issued~~ and ~~outstanding equity of Environmental Alternative Fuels, LLC (“EAF”) to EVO Holding Company, LLC (“EVO Holding”) with~~ the ~~consent~~Executive ofLenders ~~Danny~~entered ~~Cuzick~~into asa ~~the~~Fourth ~~holder~~Extension ofAgreement ~~certain previously disclosed promissory notes~~ that ~~are~~extended ~~secured in part by~~ the ~~assets~~Bridge ofLoan ~~EAF.~~maturity Indate ~~consideration~~from ofJuly ~~Danny~~15, ~~Cuzick’s~~2022 ~~consent~~ to ~~the~~August ~~contribution~~15, ~~the~~2022 ~~Company agreed to (a) indemnify Danny Cuzick for up to $0.5 million in connection with Danny Cuzick’s guaranty of certain obligations of the Company~~ and ~~its subsidiaries to Mercedes-Benz Financial Services USA LLC and (b) issue to Danny Cuzick a warrant (~~the ~~“Cuzick~~Executive ~~Warrant”)~~Loans tomaturity ~~purchase~~date upfrom toJuly 122,~~000,000~~ ~~shares~~2022 ofto ~~common~~August stock of the Company at the cost of $0.01 per share. Danny Cuzick is a member of the Company’s Board. The Company capitalized the estimated fair value of the Cuzick Warrant on its balance sheet as a discount on the Main Street Loan22, ~~which is amortized using the effective interest method into interest expense over the term of the Main Street Loan~~2022.

~~Debt~~On ~~(with~~August ~~unrelated~~12, ~~parties)~~2022, ~~consists~~the ~~of:~~Company, Antara Capital and the Executive Lenders entered into a Fifth Extension Agreement that extended the Bridge Loan maturity date from August 15, 2022 to September 15, 2022 and the Executive Loans maturity date from August 22, 2022 to September 22, 2022.

	December 31,
($ in thousands)	2021				2020
(a) Main Street Loan	$	17,552		(1)	$	17,033
(b) PPP Loan		—				10,000
(c) $1.3 million note payable		544				683
(d) $4.0 million Secured Convertible Promissory Notes (“Secured Convertible Notes”)		538				1,099		(2)
(e) $0.3 million note payable		74				149
(f) Thunder Ridge supplier advance		833				881
(g) Various notes payable acquired from JB Lease		564				1,726
(h) $0.8 million note payable		604				504
(i) $3.8 million note payable		1,703				2,403
(j) Failed sale-leaseback obligations		5,131				484
(k) Notes payable to three financing companies		1,704				1,082
(l) Finkle equipment notes		1,535				2,907
Total before debt issuance costs and debt discount		30,782				38,951
Debt issuance costs		(919	)			(1,147	)
Debt discount		(273	)			(340	)
		29,590				37,464
Less current portion		(22,135	)			(12,727	)
Long-term debt, less current portion	$	7,455			$	24,737

On September 8, 2022, the Company, Antara Capital and the Executive Lenders, in contemplation of the SPA discussed below, entered into a Sixth Extension Agreement that extended the Bridge Loan maturity date from September 15, 2022 to December 29, 2023 and the Executive Loans maturity date from September 22, 2022 to January 5, 2024.

~~(1)~~Amended ~~Classified~~and asRestated aBridge ~~current liability as of December 31, 2021 due to the existence of one or more covenant violations.~~Loan

~~(2)~~On ~~Classified~~December as23, 2022, Antara Capital, CEOF, and Hudson Park entered into a ~~current~~Master ~~liability~~Assignment asand Assumption agreement pursuant to which Antara Capital sold and assigned its rights and obligations in a portion of ~~December~~the 31Bridge Loan and warrants with an exercise price per share of $0.01 and $0.0001 to CEOF and Hudson Park. On the same date, ~~2020~~Antara ~~due~~Capital, the Executive Lenders, CEOF and Hudson Park amended and restated the Bridge Loan to reflect the ~~existence~~assigned portions of ~~one~~the orBridge ~~more~~Loan ~~covenant~~to ~~violations~~CEOF and Hudson Park. No changes were made to the Bridge Loan in connection with the assignment to CEOF and Hudson Park and no payments were made to the holders of the debt. This event is a transaction among debt holders.

~~Main~~Amendments ~~Street~~to ~~Loan~~and Conversion of Secured Convertible Promissory Notes

On March 11, 2022, EVO entered into amendments (the "Convertible Note Amendments") to certain secured convertible promissory notes (the "Convertible Notes") dated February 1, 2017 with Danny Cuzick, individually and as holders representative on behalf of each of Damon Cuzick, Thomas Kiley and Theril Lund. The Convertible Note Amendments permitted the holder of each note and Danny Cuzick in his capacity as holders representative to convert the full amount of outstanding principal and accrued interest, without limitation related to trading volume of EVO's common stock, into either shares of EVO's common stock or warrants to purchase shares of EVO's common stock at an exercise price of $0.01 per share. On March 11, 2022, Danny Cuzick, individually and as holders representative on behalf of each of Damon Cuzick, Thomas Kiley and Theril Lund, exercised the right to convert the Convertible Notes into warrants to purchase shares of EVO's common stock at an exercise price of $0.01 per share. As a result, EVO granted Messrs, Cuzick, Cuzick, Kiley and Lund an aggregate of 7,533,750 warrants to purchase EVO's common stock at $0.01 per share (collectively, the "Convertible Note Warrants"). Each Convertible Note Warrant may be exercised for cash or on a cashless basis, pursuant to the terms of such warrants, for a period of five years from the date of issuance.

The Company accounted for the Convertible Note Amendments as an extinguishment of the existing debt and the execution of a new debt instrument. As a result, the Company recorded a $5.2 million loss on extinguishment of debt, which represents the $9.0 million estimated fair value of the amended Convertible Notes in excess of the $3.8 million carrying value of the original Convertible Notes. The Company accounted for the issuance of the Convertible Note Warrants as an extinguishment of the new debt instrument. As a result, the Company recorded the $9.0 million carrying value of the amended Convertible Notes and the $0.7 million of accrued interest as an increase in additional paid-in capital.

Creditor Exchange Agreements

In connection with the Recapitalization Transactions, EVO and certain of its subsidiaries, EAF and EVO Equipment Leasing, LLC (collectively, the “EVO Parties”), entered into Exchange Agreements with each of Danny Cuzick, John and Ursula Lampsa, Billy (Trey) Peck Jr., Mohsin Meghji, and Robert Mendola (collectively, the “Exchanging Creditors”). The Exchange Agreements permitted the Exchanging Creditors to exchange existing promissory notes issued by EVO and its subsidiaries for the issuance and delivery of (i) warrants to purchase shares of EVO's common stock at an exercise price of $0.0001 per share that will be exercisable following the adoption of the Charter Amendment, (ii) warrants to purchase shares of EVO's common

F-24

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

~~The~~stock ~~$17.6 million loan bears interest~~ at aan ~~rate~~exercise ~~equal~~price toof 3%$0.53 ~~percent~~ per ~~year~~share ~~plus~~that ~~the~~will ~~LIBOR~~be ~~Index.~~exercisable ~~Beginning~~following ~~December~~the ~~14,~~adoption ~~2022,~~of the ~~Borrowers~~Charter ~~must~~Amendment, ~~make~~(iii) ~~quarterly~~new ~~interest~~promissory ~~payments,~~notes and ~~the~~(iv) ~~Borrowers must make payments equal~~ to ~~15%~~certain ofExchanging ~~the outstanding principal balance plus capitalized interest on each of December 14~~Creditors, ~~2023~~a ~~and~~specified ~~December~~cash ~~14, 2024~~payment. ~~The~~Refer ~~entire~~to ~~outstanding~~Note ~~principal balance~~6, ~~together~~Stockholders’ ~~with~~Deficit ~~all accrued~~ and ~~unpaid interest~~Warrants, isfor ~~due~~discussion ~~and~~regarding ~~payable~~the inCharter ~~full on December 14, 2025~~Amendment.

~~The~~Pursuant ~~Company~~to ~~classified~~the Exchange Agreements, the ~~$17.6~~Exchanging ~~million~~Creditors ~~unpaid~~exchanged ~~principal~~promissory ~~balance,~~notes ~~which~~issued ~~includes~~by ~~$0.6~~EVO ~~million~~and ofits ~~capitalized~~subsidiaries ~~interest,~~in asthe aaggregate ~~current~~amount ~~liability~~of asprincipal and accrued interest of ~~December~~approximately ~~31,~~$18.3 ~~2021~~million ~~due~~for (i) warrants to ~~the~~purchase ~~existence~~47,549,779 shares of ~~one~~EVO's orcommon ~~more~~stock ~~covenant~~at ~~violations~~$0.0001 Asper ofshare, ~~December~~(ii) ~~31,~~warrants ~~2021~~to ~~and~~purchase ~~2020~~23,774,891 ~~the~~shares ~~unamortized~~of ~~debt~~EVO's ~~discount~~common ~~was~~stock at $0.353 ~~million~~per ~~and~~share ~~$0.3 million~~(collectively, ~~respectively~~the “Exchanging Creditors Warrants”), and (iii) new promissory notes in the ~~unamortized~~aggregate ~~debt~~principal ~~issuance~~amount ~~costs~~of ~~were~~approximately $03.97 million (the “Takeback Notes”) and (iv) a cash payment of $10.1 million, ~~respectively~~to certain Exchanging Creditors.

~~PPP~~Each ~~Loan~~warrant issued to the Exchanging Creditors at an exercise price of $0.0001 per share may be exercised for cash or on a cashless basis, pursuant to the terms of such warrants, for a period of thirty days following October 24, 2022, the date EVO’s Board adopted the Charter Amendment. Each warrant issued to the Exchanging Creditors at an exercise price of $0.53 per share may be exercised for cash or on a cashless basis, pursuant to the terms of such warrants, for a period of five years from the date of issuance. The fair value of the warrants, calculated using the Black-Scholes option pricing model, was $2.9 million.

The ~~$10.0~~Takeback ~~million~~Notes ~~PPP~~bear ~~Loan~~interest ~~was~~at ~~scheduled~~3% toper ~~mature~~annum, onare ~~April 15~~unsecured, ~~2022~~ and ~~bore~~have ~~interest at~~ a ~~rate~~maturity date of ~~1.00%~~September ~~per~~8, ~~annum~~2027. ~~The~~ ~~principal~~Interest ~~amount~~on of the ~~Loan~~Takeback ~~and~~Notes ~~accrued~~is ~~interest~~payable ~~were~~in ~~eligible~~cash ~~for~~or ~~forgiveness~~in ~~after~~kind, ~~eight~~at ~~weeks~~EVO’s ifoption, the ~~Company~~first ~~used~~day of each January, April, July and October. If any amount of the ~~Loan~~Takeback ~~proceeds~~Notes is ~~for~~not ~~qualifying~~paid ~~expenses~~when due, ~~including~~then ~~payroll,~~all ~~rent,~~amounts ~~and~~outstanding ~~utilities~~shall ~~and~~accrue ~~the~~interest ~~Company~~at ~~maintained~~4% ~~its~~per ~~payroll~~annum ~~levels~~("default date") and shall be payable on demand. ~~The~~EVO ~~Company~~may, ~~used~~at ~~the~~any ~~entire~~time ~~Loan~~and ~~amount~~from ~~for~~time ~~qualifying~~to ~~expenses~~time without premium or penalty, ~~and~~prepay ~~the~~all ~~entire~~or ~~amount~~any ~~borrowed~~portion ~~under~~of the ~~Loan~~outstanding principal, including accrued and unpaid interest, ~~was~~on ~~forgiven by~~ the ~~SBA~~Takeback inNotes ~~July~~("optional ~~2021~~prepayment").

$1In the event of a default, the Exchanging Creditors have the right to terminate their obligations under the Takeback Notes and to accelerate the payment on any unpaid principal amount of all outstanding loans ("mandatory prepayment").3 ~~million~~As ~~note~~defined ~~payable~~in the Takeback Notes, events of default include, but are not limited to: failure by EVO to pay any amount due under the Takeback Notes when due; a voluntary or involuntary case or other proceeding commenced by or against EVO seeking liquidation, reorganization or bankruptcy.

The ~~$1.3~~Company ~~million~~concluded ~~note~~that ~~payable~~the ~~was~~default ~~issued December 31, 2014, with~~ interest ~~adjusted to the SBA LIBOR base~~ rate, ~~plus~~optional ~~2.35%.~~prepayment ~~The note matures March 2024, is secured by substantially all of Titan’s business assets~~ and ismandatory ~~personally~~prepayment ~~guaranteed~~features bydo ~~certain~~not ~~former~~require ~~members~~bifurcation ofbased ~~Titan~~on ~~including~~the aderivative ~~member~~accounting ofscope ~~our~~exception ~~board~~in ofASC ~~directors~~815 ~~and~~for certain ofcontracts ~~his~~involving ~~relatives,~~an ~~and~~entity’s ~~beneficial~~own ~~owners of more than 5% of our undiluted shares of common stock~~equity. ~~The note is a co-borrower arrangement between Titan and El Toro with the proceeds received by El Toro.~~

~~$4.0~~The ~~million~~Creditor ~~Secured~~Exchange ~~Convertible~~Amendments ~~Promissory~~constitutes ~~Notes~~as ~~(“Secured~~a ~~Convertible~~troubled ~~Notes”~~debt restructuring ("TDR") under ASC 470-60, Troubled Debt Restructuring, because the Company is experiencing financial difficulty and a concession has been granted by each Exchanging Creditor. As the TDR involves a partial settlement of debt through transfer of assets and grant of an equity interest, the carrying amount of the original debt is reduced by the cash paid and the fair value of the equity interests. When the reduced net carrying value of the debt exceeds the future undiscounted cash flows, the carrying amount is reduced to the amount of future undiscounted cash flows, including amounts contingently payable. A restructuring gain is recognized and is reduced by any third-party restructuring costs. Future cash payments will be recorded as reductions in the carrying amount of the debt. No further interest expense will be recognized, unless required in connection with contingent payments.

The ~~Secured~~Company ~~Convertible~~recorded ~~Notes~~a ~~were~~total ~~issued~~restructuring ~~during~~gain ~~August~~of ~~2018~~approximately $9.2 million. The Company ~~paid~~calculated ~~debt~~the ~~issuance~~restructuring ~~costs~~gain by comparing the carrying value of the debt, $018.52 million, inreduced ~~connection~~by ~~with~~$0.2 ~~the~~million ~~Secured~~paid ~~Convertible~~in ~~Notes~~cash and $3.1 ~~They~~million ~~bear~~of ~~interest~~equity atinstruments ~~9%,~~issued ~~compounded~~to ~~quarterly~~the Exchanging Creditors, with ~~principal~~the ~~due~~undiscounted ~~two~~future ~~years~~cash ~~after~~flows ~~issuance~~of ~~and~~the ~~are~~Takeback ~~secured~~Notes. When bydetermining ~~all~~ the ~~assets~~undiscounted future cash flows of the Takeback Notes, the Company. ~~The~~assumed ~~holder~~that ~~may~~all ~~agree,~~interest atthrough ~~its~~the ~~discretion,~~life toof ~~add~~the ~~accrued~~Takeback ~~interest~~Notes will be paid in ~~lieu~~kind, included contingent payments of ~~payment~~$0.8 million, and other sweeteners paid to the ~~principal~~Exchanging ~~balance~~Creditors. The ofCompany reduced the ~~Secured~~restructuring ~~Convertible~~gain ~~Notes~~by on$0.4 ~~the~~million ~~first~~for ~~day~~legal offees ~~each~~related ~~calendar~~to ~~quarter.~~the TDR.

~~The~~As ~~Secured~~three ~~Convertible~~of ~~Notes~~the ~~are~~Exchanging ~~convertible~~Creditors ~~into~~are ~~shares~~considered ~~(the~~Related ~~“Note~~Parties, ~~Shares”)~~we ofrecorded the ~~Company’s~~restructuring ~~common~~gain ~~stock~~associated atwith these parties as a ~~conversion~~capital ~~rate~~contribution ofresulting in $29.500 ~~per~~million ~~share~~ of ~~common stock at~~ the ~~Holder’s~~restructuring ~~option:~~gain 1)recorded atwithin ~~any~~additional ~~time~~paid-in-capital ~~after~~as ~~the first anniversary~~ of December ~~the~~31, ~~date~~2022. ofThe ~~issuance~~remaining or $0.2) atmillion ~~any~~was ~~time~~recorded ~~within~~as ~~90 days after~~ a ~~“triggering~~restructuring ~~event,”~~gain ~~including~~in aother ~~sale,~~miscellaneous ~~reorganization,~~income ~~merger,~~for ~~or similar transaction where~~ the ~~Company~~year isended ~~not~~December ~~the~~31, ~~surviving entity~~2022. The ~~Secured~~per ~~Convertible~~share ~~Notes~~effect ~~are also subject to mandatory conversion at any time after the first anniversary~~ of the ~~date~~restructuring ofgain ~~issuance~~on ifboth ~~the~~basic ~~average~~and ~~volume~~diluted ofearnings ~~shares~~per of common ~~stock~~share ~~traded~~was onimmaterial for the ~~Nasdaq~~year ~~Capital~~ended ~~Market~~December 31, ~~NYSE~~2022. ~~American~~Refer ~~Market~~to orNote a3, ~~higher~~Related ~~tier~~Party ~~of either exchange is 100~~Transactions,~~000~~ orregarding ~~more for~~ the 10Exchanging ~~trading~~Creditors ~~days~~that ~~prior~~are torelated ~~the applicable date~~parties. ~~Such a mandatory conversion has not occurred.~~

~~The~~Amendment ~~Secured~~to ~~Convertible~~Loan ~~Notes~~Agreement ~~also provide that the Company will prepare and file with the Securities and Exchange Commission~~ (~~“SEC”),~~Clean as promptly as reasonably practical following the issuance date of the Secured Convertible Notes, but in no event later than 45 days following the issuance date, a registration statement on Form S-1 (the “Registration Statement”Energy) covering the resale of the common stock and the warrant shares and as soon as reasonably practical thereafter to effect such registration. The Company is required to pay liquidated damages of 1% of the outstanding principal amount of the Secured Convertible Notes each 30 days if the Registration Statement is not declared effective by the SEC within 180 days of the filing date of the Registration Statement. During the years ended December 31, 2021 and 2020, the Company incurred $0.2 million and $0.5 million, respectively, and paid $0 and $0.1 million, respectively, in liquidated damages to noteholders.

AsOn ~~additional~~September ~~consideration~~2, ~~for~~2022, ~~the~~EVO, ~~Secured~~Thunder ~~Convertible~~Ridge ~~Notes~~Transport, ~~the Company issued warrants to the Holders to purchase 1~~Inc.,~~602,000~~ ~~shares~~a ofwholly-owned ~~common~~subsidiary ~~stock at an exercise price~~ of ~~$2.50~~EVO ~~per~~(“Thunder ~~share~~Ridge”), ~~exercisable~~Billy ~~for~~(Trey) ~~ten~~Peck ~~years~~Jr. ~~from~~and ~~the~~Clean ~~date~~Energy ofentered ~~issuance.~~into ~~The~~a ~~fair~~First ~~value~~Amendment ofto ~~the~~Loan ~~warrants~~and ~~issued~~Security ~~determined~~Agreement ~~using~~ (the ~~Black~~“Clean ~~Scholes~~Energy ~~pricing~~Amendment”) ~~model~~that ~~was~~amended ~~$0.7~~the ~~million,~~Loan ~~calculated~~and ~~with~~Security aAgreement ~~ten-year~~between ~~term;~~Thunder ~~65%~~Ridge ~~volatility; 2.89%, 2.85% or 3.00% discount rates~~ and ~~the~~Clean ~~assumption~~Energy ofdated noAugust ~~dividends.~~31,

F-25

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Notes to Consolidated Financial Statements

In2017. ~~March~~The ~~and~~Clean ~~April~~Energy ~~2021,~~Amendment ~~the~~extended ~~Company entered into certain Note Purchase Agreements and Releases (~~the ~~“Note~~maturity ~~Purchase~~date ~~Agreements”) between the Company and certain holders (the “Holders”)~~ of the ~~Secured~~loan ~~Convertible~~from ~~Notes~~Clean inEnergy ~~the~~to ~~principal~~Thunder ~~amount~~Ridge offrom ~~$0.6~~July ~~million. The Note Purchase Agreements provide for various releases by the Holders and their respective representatives~~31, ~~successors,~~2022 ~~and assigns, including releases arising out of or related~~ to ~~the~~March ~~Secured~~

Filing Compare · EVO Transportation & Energy Services, Inc.