Transportation and Logistics Systems, Inc. Announces Financial Results for the Second Quarter Ended June 30, 2022

·15 min read
Transportation & Logistics Systems

Company Adds JFK Cartage in the Third Quarter

JUPITER, FL / ACCESSWIRE / August 12, 2022 / Transportation and Logistics Systems, Inc. (OTCQB:TLSS), ("TLSS", or the "Company"), a logistics service provider, announced that today the Company filed its Form 10-Q, Quarterly Report for the second quarter ended June 30, 2022.

Sebastian Giordano, Chairman and CEO of TLSS, commented, "Second quarter results were in line with our expectations, so we believe that the Company continues to move in the right direction and is getting closer to our goal of profitability, as we have recently begun closing target acquisitions."

Financial Results for the Three Months Ended June 30, 2022

Revenue for the three months ended June 30, 2022 decreased $170,000, or 10.8%, to $1,405,000 as compared to $1,575,000 for same prior year period. This decrease was primarily a result of decreases in revenue attributable to: (i) the Company's former operations of Shypdirect's mid-mile and long-haul business with Amazon of $413,000; (ii) Shyp FX business of $52,000; and (iii) other customers of $9,000, which were partially offset by an increase in revenues generated from Cougar Express of $303,000.

The Company had a loss from operations of $1,004,000 for the three months ended June 30, 2022 as compared to a loss from operations of $1,719,000 for the comparable prior year period.

The Company had net loss of $709,000 for the three months ended June 30, 2022 due to: (i) the loss from operations of $1,004,000; (ii) interest expense of $2,000 and (iii) settlement gain of less than $1,000, which were offset and exceeded by a gain on the sale of Shyp FX assets of $297,000. This compared to net income of $3,683,000 for the comparable prior year period.

The Company had a net loss attributable to TLSS common shareholders of $816,000 for the three months ended June 30, 2022 after accounting for the effect of deemed dividends related to beneficial conversion features, and accrued dividends of $107,000 as compared to net income attributable to TLSS common shareholders of $5,527,000 for the comparable prior year period.

Financial Results for the Six Months Ended June 30, 2022

Revenue for the six months ended June 30, 2022 decreased $402,000, or 13.1%, to $2,664,000 as compared to $3,066,000 for same prior year period. This decrease was primarily a result of decreases in revenue attributable to: (i) the Company's former operations of Shypdirect's mid-mile and long-haul business with Amazon of $1,568,000; (ii) other customers of $46,000; and (iii) Shyp FX business of $15,000, which were partially offset by an increase in revenues generated from Cougar Express of $1,226,000.

The Company had a loss from operations of $2,805,000 for the six months ended June 30, 2022, as compared to a loss from operations of $3,356,000 for the comparable prior year period.

The Company had a net loss of $2,746,000 for the six months ended June 30, 2022 due to: (i) the loss from operations of $2,805,000; (ii) settlement expense of $228,000 and (iii) interest expense of $10,000, which were offset and exceeded by a gain from the sale of Shyp FX assets of $297,000. This compared to net income of $1,414,000 for the comparable prior year period.

The Company had a net loss attributable to TLSS common shareholders of $2,962,000 for the six months ended June 30, 2022 after accounting for the effect for deemed dividends related to beneficial conversion features, and accrued dividends of $216,000 as compared to net income attributable to TLSS common shareholders of $428,000 for the comparable prior year period.

Subsequent Events

On August 4, 2022, with an effective date of July 31, 2022, the Company, through its wholly owned subsidiary, Cougar Express, Inc. acquired 100% of the outstanding stock of JFK Cartage, Inc., a business located approximately six (6) miles from JFK International Airport with annual revenues of $3.6 million in 2021 and approximately $2.0 million for the first six months of 2022. for a total purchase price after closing adjustments was $1,098,487. Pursuant to the Stock Purchase and Sale Agreement dated May 24, 2022, the purchase price was $1,700,000. In connection thereto, the Company: (i) paid $401,552 in cash at closing and (ii) entered into a $696,935 promissory note with the Seller, $98,448 of which is payable weekly, in the amount of 25% of accounts receivable collected, but in any event, no later than October 4, 2022, with the remaining balance of $598,487, payable in three annual installments of $199,496, with interest at five (5%) percent per annum on July 31, 2023, 2024 and 2025, respectively. Additionally, Cougar Express assumed and agreed to pay (i) a $503,065 Small Business Administration ("SBA") loan and (ii) $151,389 of accrued liabilities of the Seller.

For accounting purposes, the total purchase consideration paid, after closing adjustments, was deemed to be $1,098,487 for the cash paid of $401,552 plus the promissory note of $696,935. The purchase consideration amount did not include the SBA loan of $503,065 and accrued liabilities and other notes payable of $151,389 which were treated as assumed liabilities in the purchase price allocation.

About Transportation and Logistics Systems, Inc.

TLSS, through its wholly owned operating subsidiaries, Cougar Express, Inc. and JFK Cartage, Inc., operates as a full-service logistics and transportation company. For more information, visit the Company's website, www.tlss-inc.com.

Forward-Looking Statements

Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not directly or exclusively relate to historical facts. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expects," "plans," "anticipates," "intend," "plan," "goal," "seek," "strategy," "future," "likely," "believes," "estimates," "projects," "forecasts," "predicts," "potential," or the negative of those terms, and similar expressions and comparable terminology. These include, but are not limited to, statements relating to future events or our future financial and operating results, plans, objectives, expectations, and intentions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not be achieved. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to known and unknown risks, uncertainties and other factors outside of our control that could cause our actual results, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. In addition to the risks described above, these risks and uncertainties include: our ability to successfully execute our business strategies, including integration of acquisitions and the future acquisition of other businesses to grow our company; customers' cancellation on short notice of master service agreements from which we derive a significant portion of our revenue or our failure to renew such master service agreements on favorable terms or at all; our ability to attract and retain key personnel and skilled labor to meet the requirements of our labor-intensive business or labor difficulties which could have an effect on our ability to bid for and successfully complete contracts; the ultimate geographic spread, duration and severity of the coronavirus outbreak and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or ameliorate its effects; our failure to compete effectively in our highly competitive industry could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance; our ability to adopt and master new technologies and adjust certain fixed costs and expenses to adapt to our industry's and customers' evolving demands; our history of losses, deficiency in working capital and stockholders' equity and our ability to achieve sustained profitability; remaining weaknesses in our internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; our remaining liabilities and indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations; unanticipated and materially adverse developments in our few remaining litigations; the impact of new or changed laws, regulations or other industry standards that could adversely affect our ability to conduct our business; and changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.

These forward-looking statements represent our estimates and assumptions only as of the date of this release and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this letter. Given these uncertainties, you should not place undue reliance on these forward-looking statements and should consider various factors, including the risks described, among other places, in our most recent Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q, as well as any amendments thereto, filed with the Securities and Exchange Commission.

Investor Relations Contact
Landon Capital
Keith Pinder
(404) 995-6671
kpinder@landoncapital.net
www.landoncapital.net

TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


June 30

December 31,


2022

2021


(Unaudited)


ASSETS



CURRENT ASSETS:



Cash

$

5,778,706

$

6,067,692

Accounts receivable, net

473,640

481,734

Prepaid expenses and other current assets

355,129

197,336


Total Current Assets

6,607,475

6,746,762


OTHER ASSETS:

Security deposit

39,585

33,340

Property and equipment, net

229,424

577,205

Intangible assets, net

1,695,852

2,177,382


Total Other Assets

1,964,861

2,787,927


TOTAL ASSETS

$

8,572,336

$

9,534,689


LIABILITIES AND SHAREHOLDERS' EQUITY


CURRENT LIABILITIES:

Notes payable, current portion

$

-

$

283,141

Accounts payable

301,684

312,772

Accrued expenses

368,800

212,975

Insurance payable

140,679

98,255

Accrued compensation and related benefits

59,813

98,964


Total Current Liabilities

870,976

1,006,107


LONG-TERM LIABILITIES:

Notes payable, net of current portion

-

12,455


Total Long-term Liabilities

-

12,455


Total Liabilities

870,976

1,018,562


Commitments and Contingencies (See Note 11)

-


SHAREHOLDERS' EQUITY:

Preferred stock, par value $0.001; authorized 10,000,000 shares:

Series B convertible preferred stock, par value $0.001 per share; 1,700,000 shares designated; 0 and 700,000 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively (Liquidation value $700 and $700, respectively)

-

700

Series D preferred stock, par value $0.001 per share; 1,250,000 shares designated; no shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively ($6.00 per share liquidation value)

-

-

Series E preferred stock, par value $0.001 per share; 562,250 shares designated; 21,418 and 51,605 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively ($13.34 per share liquidation value)

21

52

Series G preferred stock, par value $0.001 per share; 1,000,000 shares designated; 617,500 and 615,000 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively ($10.00 per share liquidation value)

618

615

Preferred stock

618

615

Common stock, par value $0.001 per share; 10,000,000,000 shares authorized; 3,396,601,092 and 2,926,528,666 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

3,396,601

2,926,529

Additional paid-in capital

126,282,689

124,604,718

Accumulated deficit

(121,978,569

)

(119,016,487

)


Total Shareholders' Equity

7,701,360

8,516,127


Total Liabilities and Shareholders' Equity

$

8,572,336

$

9,534,689

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


2022

2021

2022

2021


For the Three Months Ended

For the Six Months Ended


June 30,

June 30,


2022

2021

2022

2021






REVENUES

$

1,404,560

$

1,574,494

$

2,663,893

$

3,066,193


COST OF REVENUES

1,013,550

1,345,538

1,984,552

3,244,316


GROSS PROFIT (LOSS)

391,010

228,956

679,341

(178,123

)


OPERATING EXPENSES:

Compensation and related benefits

693,343

344,053

2,049,753

712,662

Legal and professional fees

339,003

452,915

688,497

983,453

Rent

110,957

233,601

212,294

367,556

General and administrative expenses

252,167

301,732

534,110

497,935

Loss on lease abandonment

-

616,074

-

616,074


Total Operating Expenses

1,395,470

1,948,375

3,484,654

3,177,680


LOSS FROM OPERATIONS

(1,004,460

)

(1,719,419

)

(2,805,313

)

(3,355,803

)


OTHER INCOME (EXPENSES):

Interest expense

(1,895

)

(135,450

)

(9,762

)

(218,959

)

Interest expense-related parties

-

(22,438

)

-

(44,630

)

Gain on debt extinguishment, net

-

1,505,088

-

1,564,941

Gain on sale of subsidiary's assets

296,689

-

296,689

-

Settlement income (expense)

700

-

(227,811

)

-

Other income

-

75,787

-

183,822

Gain related to derivative liabilities

-

3,979,289

-

3,284,306


Total Other Income (Expenses)

295,494

5,402,276

59,116

4,769,480


(LOSS) INCOME BEFORE INCOME TAXES

(708,966

)

3,682,857

(2,746,197

)

1,413,677


Provision for income taxes

-

-

-

-


NET (LOSS) INCOME

(708,966

)

3,682,857

(2,746,197

)

1,413,677


Deemed dividends related to beneficial conversion features, and accrued dividends

(106,834

)

(156,097

)

(215,885

)

(985,933

)


NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(815,800

)

$

3,526,760

$

(2,962,082

)

$

427,744


NET (LOSS) INCOME PER COMMON SHARE - BASIC AND DILUTED

Basic

$

(0.00

)

$

0.00

$

(0.00

)

$

0.00

Diluted

$

(0.00

)

$

0.00

$

(0.00

)

$

0.00


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

3,316,885,235

2,125,141,567

3,179,603,803

1,937,320,808

Diluted

3,316,885,235

2,539,874,797

3,179,603,803

2,352,054,038

TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


2022

2021


For the Six Months Ended


June 30,


2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES:



Net (loss) income

$

(2,746,197

)

$

1,413,677

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization expense

377,500

293,616

Amortization of debt discount to interest expense

-

83,548

Stock-based compensation

1,040,167

-

Stock-based professional fees

8,333

-

Gain from sale of subsidiary's assets

(296,689

)

-

Gain related to derivative liabilities, net

-

(3,284,306

)

Non-cash portion of gain on extinguishment of debt, net

-

(1,564,941

)

Non-cash portion of gain on settlement

(700

)

Loss on lease abandonment

616,074

Rent expense

-

2,119

Bad debt recovery

-

(11,240

)

Other non-cash gain

-

(11,808

)

Change in operating assets and liabilities:

Accounts receivable

8,094

226,268

Prepaid expenses and other current assets

(156,126

)

34,917

Security deposit

(6,245

)

61,000

Accounts payable and accrued expenses

(50,014

)

264,692

Insurance payable

42,424

(14,720

)

Accrued compensation and related benefits

(39,151

)

(28,330

)


NET CASH USED IN OPERATING ACTIVITIES

(1,818,604

)

(1,919,434

)


CASH FLOWS FROM INVESTING ACTIVITIES:

Cash acquired in acquisition

-

10,031

Cash used for acquisitions

-

(2,133,146

)

Cash proceeds from sale of subsidiary assets

748,500

-


NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

748,500

(2,123,115

)


CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from sale of series E preferred share units

-

3,590,500

Payment of liquidated damages on Series E preferred shares

(24,000

)

-

Net proceeds from sale of series G preferred share units

855,000

-

Proceeds from exercise of warrants

245,714

685,714

Repayment of notes payable

(295,596

)

(195,697

)

Net proceeds (payments) of related party advances

-

14,630


NET CASH PROVIDED BY FINANCING ACTIVITIES

781,118

4,095,147


NET (DECREASE) INCREASE IN CASH

(288,986

)

52,598


CASH, beginning of period

6,067,692

579,283


CASH, end of period

$

5,778,706

$

631,881


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for:

Interest

$

9,762

$

67,839

Income taxes

$

-

$

-


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Conversion of debt and accrued interest for common stock

$

-

$

543,457

Reclassification of due to related parties to accrued expenses

$

-

$

94,000

Deemed dividend related to price protection and beneficial conversion features

$

-

$

882,043

Conversion of Series E preferred stock to common stock

$

31

$

-

Conversion of Series G preferred stock and accrued dividends to common stock

$

21,226

$

-

Accrual of preferred stock dividends

$

215,885

$

-

Issuance of common stock for future services

$

5,000

$

-


ACQUISITIONS:

Assets acquired:

Accounts receivable

$

-

$

265,175

Prepaid expenses

-

7,534

Property and equipment

-

257,416

Right of use assets

-

44,388

Other receivable

-

622,240

Security deposits

-

33,340

Total assets acquired

-

1,230,093

Less: liabilities assumed:

Accounts payable

-

132,155

Accrued expenses

-

79,138

Notes payable

-

1,491,458

Lease liabilities

-

44,388

Total liabilities assumed

-

1,747,139

Increase in intangible assets - non-cash

$

-

$

517,046

SOURCE: Transportation & Logistics Systems



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