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Item 9A. Controls and Procedures

2024-03-13 compared with 2023-03-10 · 46 added, 74 removed, 128 unchanged (48% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2022, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on management’s evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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There were no changes in our internal control over financial reporting that occurred during the last quarter of the period covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management ’

s Report on Internal Control Over Financial Reporting

Management ’ s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f).

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2023.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 excluded the subsidiaries created in conjunction with the acquisition of substantially all of the assets of Metropolitan Trucking, Inc.

and related entities acquired on June 14, 2022.

The results of these subsidiaries have been included in our consolidated financial statements since June 14, 2022.

These subsidiaries represented 14.1% of consolidated total assets as of December 31, 2022, and represented 5.7% of operating revenue for the twelve months ended December 31, 2022.

The exclusion of these subsidiaries is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from the scope in the year of acquisition.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

6 unchanged sentences

Transportation Services, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2022, and our report dated March 10, 2023 expressed an unqualified opinion on those financial statements.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated March 13, 2024, expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting (“Management’s Report”).

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

4 unchanged sentences

We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of the wholly-owned subsidiaries created in conjunction with the acquisition of substantially all of the assets of Metropolitan Trucking, Inc.

and related entities acquired on June 14, 2022, whose financial statements reflect total assets and revenues constituting fourteen and six percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.

As indicated in Management’s Report, the Company formed wholly owned subsidiaries to acquire substantially all of the assets of Metropolitan Trucking, Inc.

and related entities on June 14, 2022.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Met Express, Inc.

and Costar Equipment, Inc.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/S/ GRANT THORNTON LLP

Tulsa, Oklahoma

4 unchanged sentences

Not Applicable

Portions of the information required by Part III of Form 10-K are, pursuant to General Instruction G-(3) of Form 10-K, incorporated by reference from our definitive proxy statement to be filed pursuant to Regulation 14A for our Annual Meeting of Stockholders to be held on April 27, 2023.

We will, within 120 days of the end of our fiscal year, file with the Securities and Exchange Commission a definitive proxy statement pursuant to Regulation 14A.

Portions of the information required by Part III of Form 10-K are, pursuant to General Instruction G-(3) of Form 10-K, incorporated by reference from our definitive proxy statement which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the end of our fiscal year 2023.

Directors, Executive Officers and Corporate Governance.

The information presented under the captions “Election of Directors,”

“Executive Compensation,”

“Delinquent Section 16(a) Reports,”

“Corporate Governance –

Code of Ethics,”

“Corporate Governance –

Director Nominating Process”

and “Corporate Governance –

Board Committees,”

in the proxy statement is incorporated herein by reference.

The information presented under the captions “Election of Directors,” “Executive Compensation,” “Delinquent Section 16(a) Reports,” “Corporate Governance – Code of Ethics,” “Corporate Governance – Director Nominating Process” and “Corporate Governance – Board Committees,” in the proxy statement is incorporated herein by reference.

Executive Compensation.

The information presented under the captions “Executive Compensation,”

“Corporate Governance –

Compensation Committee Interlocks and Insider Participation,”

and “Compensation Committee Report”

in the proxy statement is incorporated herein by reference.

The information presented under the captions “Executive Compensation,” “Corporate Governance – Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in the proxy statement is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information presented under the caption “Security Ownership of Certain Beneficial Owners and Management”

in the proxy statement is incorporated herein by reference.

The information presented under the caption “Security Ownership of Certain Beneficial Owners and Management” in the proxy statement is incorporated herein by reference.

Equity Compensation Plan Information

13 unchanged sentences

equity compensation

plans (excluding

securities reflected in

Equity Compensation Plans approved by Security Holders

2 unchanged sentences

Certain Relationships and Related Transactions, and Director Independence.

The information presented under the captions “Transactions with Related Persons”

and “Corporate Governance –

Director Independence”

in the proxy statement is incorporated here by reference.

The information presented under the captions “Transactions with Related Persons” and “Corporate Governance – Director Independence” in the proxy statement is incorporated here by reference.

Principal Accounting Fees and Services.

The information presented under the caption “Independent Public Accountants –

Principal Accountant Fees and Services”

in the proxy statement is incorporated here by reference.

The information presented under the caption “Independent Public Accountants – Principal Accountant Fees and Services” in the proxy statement is incorporated here by reference.

Exhibits, Financial Statement Schedules.

5 unchanged sentences

Consolidated Statements of Operations - Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Stockholders’

Equity - Years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows - Years ended December 31, 2023, 2022 and 2021

4 unchanged sentences

Asset Purchase Agreement by and among Metropolitan Trucking, Inc., Metropolitan Freight Management, Inc., Kiwi Leasing, LLC, Hoya Leasing, LLC, Mangino Holding Corp., Met Express, Inc.

and Costar Equipment, Inc., dated June 14, 2022 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on June 17.

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2002, filed on May 15, 2002)

Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant, filed with the Secretary of State of the State of Delaware on April 30, 2020 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 1, 2020)

Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on December 11, 2007)

First Amendment to Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on January 7, 2020)

Second Amendment to Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.3 of the Company’s Current Report on Form 8-K filed on August 5, 2020)

Third Amendment to the Amended and restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on March 10, 2021)

and Costar Equipment, Inc., dated June 14, 2022 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on June 17.

Second Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on February 22, 2024)

Description of Capital Stock of the Registrant

Employment Agreement between the Registrant and Joseph A.

Vitiritto, dated August 4, 2020 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on August 5, 2020)

Employment Agreement between the Registrant and Lance K.

Stewart, dated July 7, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 13, 2023)

Separation and Consulting Agreement between the Registrant and Allen W.

West, dated July 7, 2023 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 13, 2023)

Employment Agreement between the Registrant and Allen W.

West, dated March 7, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 11, 2019)

2014 Amended and Restated Stock Option and Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 23, 2014)

West, dated March 7, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 11, 2019)

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on August 2, 2023)

2014 Amended and Restated Stock Option and Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 23, 2014)

Second Amended and Restated Loan Agreement, dated August 12, 2020 by and among P.A.M.

Transport, Inc., First Horizon Bank (formerly First Tennessee Bank National Association) and the Company (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed on November 6, 2020)

Fifth Amended and Restated Consolidated Revolving Credit Note, dated January 25, 2019, by P.A.M.

Transport, Inc.

in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on January 31, 2019)

Amended and Restated Security Agreement dated March 28, 2016 by between P.A.M.

Transport, Inc.

and First Tennessee Bank National Association (incorporate by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K filed on April 1, 2016)

First Amendment to Amended and Restated Security Agreement, dated January 25, 2019, by and between P.A.M.

Transport, Inc.

and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.6 to the Company’s Current Report on Form 8-K filed on January 31, 2019)

Fifth Amended and Restated Guaranty Agreement of the Company, dated January 25, 2019, in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit 4.7 to the Company’s Current Report on Form 8-K filed on January 31, 2019)

and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.6 to the Company’s Current Report on Form 8-K filed on January 31, 2019)

Subsidiaries of the Registrant

3 unchanged sentences

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

Clawback Policy of the Registrant

Inline XBRL Instance Document

4 unchanged sentences

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* The disclosures schedules and exhibits in the Asset Purchase Agreement have been omitted pursuant to Item 605(a)(5) of Regulation S-K.

21 unchanged sentences

March 13, 2024

Pete Montaño

PETE MONTAÑO, Director

March 13, 2024

9 unchanged sentences

Vice President-Finance, Chief Financial Officer

Secretary and Treasurer

and Treasurer

(principal financial and accounting officer)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures