by Transportation and Logistics Systems, Inc. Announces Financial Results for the Year Ended December 31, 2022
Late 2022 Acquisitions Spark
41% Year-Over-Year Revenue Growth and
1,961% Gross Profit Margin Improvement
JUPITER, FL / ACCESSWIRE / March 31, 2022 / Transportation and Logistics Systems, Inc. (OTC PINK:TLSS) (“TLSS” or the “Company”), the parent company of certain wholly-owned operating subsidiaries, which together, provide a suite of logistics and transportation services, announced today, March 31, 2023, it timely filed its Annual Report on Form 10-K for the calendar year ended December 31, 2022.
Sebastian Giordano, Chairman and CEO of TLSS, commented, “As expected, given our acquisition and divestiture activity, building a management team and other foundational initiatives, 2022 was the year we transitioned out of restructuring mode and commenced our initial growth phase. While the 2022 10-K does not yet reflect the full impact of the acquisitions we completed in 2022 and obviously not the most recent Severance Trucking acquisition completed in Q1 2023, the 2022 financial results are indicative of the progress our operating subsidiaries are beginning to produce, as evidenced by the fact that 43.6%, or $3,380,000 of our 2022 annual revenue was generated in the fourth quarter of 2022, despite a fourth quarter trucking industry slowdown according to most industry experts. Moreover, the Company’s 2022 gross profit margin percentage increased 1,961% to 32.6% as compared to 1.6% in 2021. While we are currently evaluating a number of options available to us to refinance existing acquisition seller notes and provide the capital necessary to fund our continued growth plans, we are continuing to assess numerous strategic acquisition targets, implement operational and cost saving integration opportunities as well as roll out organic growth initiatives, such as recently opening a new service area based upon our latest acquisition. As such, I am still expecting 2023 to be a breakout year.”
Financial Results for the Year Ended December 31, 2022
Revenues for the year ended December 31, 2022, increased $2,249,000, or 40.9%, to $7,744,000, as compared to $5,495,000 for the year ended December 31, 2021, due primarily to the acquisitions of JFK Cartage and Freight Connections in the latter part of the third quarter 2022.
The Company’s net loss for the year ended December 31, 2022, was $8,076,000, primarily consisting of: (i) a loss from operations of $8,038,000, which included a $2,100,000 impairment expense; (ii) settlement expense of $238,000; and (iii) interest expense of $126,000, all of which were partially offset by: (i) a gain on sale of a subsidiary of $294,000 and (ii) interest income of $31,000. This compared to net income of $6,255,000 for the year ended December 31, 2021, primarily consisting of: (i) a gain on deconsolidation of subsidiaries of $12,363,000; (ii) derivative income of $3,284,000; (iii) gain on debt extinguishment of $1,714,000; and (iv) other income of $195,000, all of which were partially offset by: (i) a loss from operations of $6,445,000; (ii) warrant exercise inducement expense of $4,432,000 and (iii) interest expense of $425,000.
Net loss attributable to common shareholders for the year ended December 31, 2022, totaled $8,494,000 as compared to net income attributable to common shareholders of $3,605,000 for the same period in 2021 due to deemed dividend related to accrued dividends and beneficial conversion features of $418,000 and $2,650,000 in 2022 and 2021, respectively.
Subsequent to December 31, 2022, the Company, through its newly-formed wholly-owned subsidiary, TLSS-STI, Inc., closed on an acquisition of 100% of the outstanding stock of Severance Trucking Co., Inc., Severance Warehousing, Inc. and McGrath Trailer Leasing, Inc. (collectively, “Severance”) headquartered in Dracut, Massachusetts, with an additional warehouse location in North Haven, Connecticut, that was effective date as of the close of business on January 31, 2023.
About Transportation and Logistics Systems, Inc.
TLSS is a publicly-traded holding company. Its wholly-owned operating subsidiaries, Cougar Express, Inc., Freight Connections, Inc., JFK Cartage, Inc. and Severance Trucking Co., Inc., together provide a full suite of logistics and transportation services. 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 a stockholders’ deficit and our historical inability to achieve sustained profitability; material weaknesses in our internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; our substantial indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations; 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
[email protected]
www.landoncapital.net
TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
|
ASSETS |
||||||||
|
CURRENT ASSETS: |
||||||||
|
Cash |
$ | 1,470,807 | $ | 6,067,692 | ||||
|
Accounts receivable, net |
2,059,326 | 481,734 | ||||||
|
Prepaid expenses and other current assets |
613,035 | 197,336 | ||||||
|
Total Current Assets |
4,143,168 | 6,746,762 | ||||||
|
OTHER ASSETS: |
||||||||
|
Security deposits |
377,107 | 33,340 | ||||||
|
Property and equipment, net |
1,607,212 | 577,205 | ||||||
|
Right of use assets, net |
8,457,083 | – | ||||||
|
Goodwill |
2,105,879 | – | ||||||
|
Intangible assets, net |
4,601,677 | 2,177,382 | ||||||
|
Total Other Assets |
17,148,958 | 2,787,927 | ||||||
|
TOTAL ASSETS |
$ | 21,292,126 | $ | 9,534,689 | ||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
|
CURRENT LIABILITIES: |
||||||||
|
Notes payable, current portion |
$ | 4,953,078 | $ | 283,141 | ||||
|
Accounts payable |
472,701 | 312,772 | ||||||
|
Accrued expenses |
837,170 | 212,975 | ||||||
|
Insurance payable |
137,477 | 98,255 | ||||||
|
Lease liabilities, current portion |
2,081,099 | – | ||||||
|
Accrued compensation and related benefits |
65,103 | 98,964 | ||||||
|
Total Current Liabilities |
8,546,628 | 1,006,107 | ||||||
|
LONG-TERM LIABILITIES: |
||||||||
|
Notes payable, net of current portion |
831,499 | 12,455 | ||||||
|
Lease liabilities, net of current portion |
6,413,937 | – | ||||||
|
Total Long-term Liabilities |
7,245,436 | 12,455 | ||||||
|
Total Liabilities |
15,792,064 | 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 December 31, 2022 and 2021, respectively (Liquidation value $0 and $700, respectively) |
– | 700 | ||||||
|
Series D convertible preferred stock, par value $0.001 per share; 1,250,000 shares designated; no shares issued and outstanding at December 31, 2022 and 2021, respectively ($6.00 per share liquidation value) |
– | – | ||||||
|
Series E convertible preferred stock, par value $0.001 per share; 562,250 shares designated; 21,418 and 51,605 shares issued and outstanding at December 31, 2022 and 2021, respectively ($13.34 per share liquidation value) |
21 | 52 | ||||||
|
Series G convertible preferred stock, par value $0.001 per share; 1,000,000 shares designated; 575,000 and 615,000 shares issued and outstanding at December 31, 2022 and 2021, respectively ($10.00 per share liquidation value) |
575 | 615 | ||||||
|
Series H convertible preferred stock, par value $0.001 per share; 35,000 shares designated; 32,374 and 0 shares issued and outstanding at December 31, 2022 and 2021, respectively (No per share liquidation value) |
32 | – | ||||||
|
Preferred stock value |
32 | – | ||||||
|
Common stock, par value $0.001 per share; 10,000,000,000 shares authorized; 3,636,691,682 and 2,926,528,666 shares issued and outstanding at December 31, 2022 and 2021, respectively |
3,636,692 | 2,926,529 | ||||||
|
Additional paid-in capital |
129,372,841 | 124,604,718 | ||||||
|
Accumulated deficit |
(127,510,099 | ) | (119,016,487 | ) | ||||
|
Total Shareholders’ Equity |
5,500,062 | 8,516,127 | ||||||
|
Total Liabilities and Shareholders’ Equity |
$ | 21,292,126 | $ | 9,534,689 | ||||
TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2022 | 2021 | |||||||
|
REVENUES |
$ | 7,744,477 | $ | 5,495,146 | ||||
|
COST OF REVENUES |
5,216,839 | 5,408,143 | ||||||
|
GROSS PROFIT |
2,527,638 | 87,003 | ||||||
|
OPERATING EXPENSES: |
||||||||
|
Compensation and related benefits |
3,742,676 | 1,403,311 | ||||||
|
Legal and professional fees |
1,327,172 | 2,160,081 | ||||||
|
Rent |
1,398,401 | 599,820 | ||||||
|
General and administrative expenses |
1,806,686 | 1,115,187 | ||||||
|
Contingency loss |
200,000 | 30,000 | ||||||
|
Impairment loss |
2,090,567 | – | ||||||
|
Loss on lease abandonment |
– | 1,223,628 | ||||||
|
Total Operating Expenses |
10,565,502 | 6,532,027 | ||||||
|
LOSS FROM OPERATIONS |
(8,037,864 | ) | (6,445,024 | ) | ||||
|
OTHER INCOME (EXPENSES): |
||||||||
|
Interest income |
31,166 | – | ||||||
|
Interest expense |
(125,382 | ) | (349,544 | ) | ||||
|
Interest expense – related parties |
– | (74,959 | ) | |||||
|
Warrant exercise inducement expense |
– | (4,431,853 | ) | |||||
|
Gain on debt extinguishment, net |
– | 1,564,941 | ||||||
|
Gain on debt extinguishment – related party |
– | 148,651 | ||||||
|
Gain on sale of subsidiary |
293,975 | – | ||||||
|
Gain on deconsolidation of subsidiaries |
– | 12,363,449 | ||||||
|
Settlement expense |
(237,961 | ) | – | |||||
|
Other income |
– | 194,823 | ||||||
|
Derivative income |
– | 3,284,306 | ||||||
|
Total Other Income (Expenses) |
(38,202 | ) | 12,699,814 | |||||
|
(LOSS) INCOME BEFORE INCOME TAXES |
(8,076,066 | ) | 6,254,790 | |||||
|
Provision for income taxes |
– | – | ||||||
|
NET (LOSS) INCOME |
(8,076,066 | ) | 6,254,790 | |||||
|
Deemed dividends related to beneficial conversion features, and accrued dividends |
(417,546 | ) | (2,650,217 | ) | ||||
|
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS |
$ | (8,493,612 | ) | $ | 3,604,573 | |||
|
NET (LOSS) INCOME PER COMMON SHARE – BASIC AND DILUTED |
||||||||
|
Basic |
$ | (0.00 | ) | $ | 0.00 | |||
|
Diluted |
$ | (0.00 | ) | $ | 0.00 | |||
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||
|
Basic |
3,359,982,502 | 2,341,907,998 | ||||||
|
Diluted |
3,359,982,502 | 3,728,170,026 | ||||||
TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2022 | 2021 | |||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
|
Net (loss) income |
$ | (8,076,066 | ) | $ | 6,254,790 | |||
|
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
||||||||
|
Depreciation and amortization expense |
1,134,037 | 685,644 | ||||||
|
Amortization of debt discount to interest expense |
– | 83,548 | ||||||
|
Stock-based compensation |
1,386,570 | – | ||||||
|
Stock-based professional fees |
10,000 | – | ||||||
|
Impairment loss |
2,090,567 | – | ||||||
|
Non-cash gain from sale of subsidiary |
(296,689 | ) | – | |||||
|
Non-cash gain from deconsolidation of subsidiaries |
– | (12,448,899 | ) | |||||
|
Derivative income, net |
– | (3,284,306 | ) | |||||
|
Non-cash portion of gain on extinguishment of debt, net |
– | (1,564,941 | ) | |||||
|
Non-cash portion of gain on extinguishment of debt – related party |
– | (148,651 | ) | |||||
|
Non-cash portion of gain on settlement |
(700 | ) | – | |||||
|
Loss on lease abandonment |
– | 1,223,628 | ||||||
|
Warrant exercise inducement expense |
– | 4,431,853 | ||||||
|
Rent expense |
37,953 | 1,680 | ||||||
|
Bad debt expense (recovery) |
162,400 | (11,201 | ) | |||||
|
Other non- cash gain |
– | (11,806 | ) | |||||
|
Change in operating assets and liabilities: |
||||||||
|
Accounts receivable |
450,715 | 166,486 | ||||||
|
Prepaid expenses and other current assets |
110,606 | 253,608 | ||||||
|
Security deposit |
20,185 | 94,000 | ||||||
|
Accounts payable and accrued expenses |
(218,364 | ) | 393,641 | |||||
|
Insurance payable |
(130,590 | ) | (209,082 | ) | ||||
|
Accrued compensation and related benefits |
(102,983 | ) | 4,321 | |||||
|
NET CASH USED IN OPERATING ACTIVITIES |
(3,422,359 | ) | (4,085,687 | ) | ||||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
|
Purchase of property and equipment |
(143,948 | ) | (56,174 | ) | ||||
|
Proceeds from sale of property and equipment |
– | 3,451 | ||||||
|
Increase in note receivable |
(255,000 | ) | – | |||||
|
Cash acquired in acquisitions |
196,527 | 10,031 | ||||||
|
Cash used for acquisitions |
(1,930,712 | ) | (2,133,146 | ) | ||||
|
Cash proceeds from sale of subsidiary |
748,500 | – | ||||||
|
NET CASH USED IN INVESTING ACTIVITIES |
(1,384,633 | ) | (2,175,838 | ) | ||||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
|
Net proceeds from sale of series E preferred share units |
– | 3,590,500 | ||||||
|
Net proceeds from sale of series G preferred share units |
855,000 | 5,479,560 | ||||||
|
Payment of liquidated damages on Series E preferred shares |
(24,000 | ) | – | |||||
|
Proceeds from exercise of warrants |
245,714 | 4,226,383 | ||||||
|
Proceeds from notes payable |
108,395 | – | ||||||
|
Repayment of notes payable |
(975,002 | ) | (991,468 | ) | ||||
|
Repayment of note payable – related party |
– | (500,000 | ) | |||||
|
Net proceeds (payments) of related party advances |
– | (55,041 | ) | |||||
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
210,107 | 11,749,934 | ||||||
|
NET (DECREASE) INCREASE IN CASH |
(4,596,885 | ) | 5,488,409 | |||||
|
CASH, beginning of year |
6,067,692 | 579,283 | ||||||
|
CASH, end of year |
$ | 1,470,807 | $ | 6,067,692 | ||||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
||||||||
|
Cash paid for: |
||||||||
|
Interest |
$ | 125,382 | $ | 445,383 | ||||
|
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 |
$ | – | $ | 2,509,345 | ||||
|
Decrease in property and equipment and notes payable, net |
$ | – | $ | 31,241 | ||||
|
Conversion of Series E preferred stock to common stock |
$ | 31 | $ | 396 | ||||
|
Conversion of Series G preferred stock and accrued dividends to common stock |
$ | 39,317 | $ | – | ||||
|
Accrual of preferred stock dividends |
$ | 417,546 | $ | 140,872 | ||||
|
Issuance of common stock for future services |
$ | 5,000 | $ | – | ||||
|
ACQUISITIONS: |
||||||||
|
Assets acquired: |
||||||||
|
Accounts receivable |
$ | 2,190,707 | $ | 265,175 | ||||
|
Prepaid expenses |
271,305 | 7,534 | ||||||
|
Property and equipment |
1,341,813 | 257,416 | ||||||
|
Right of use assets |
9,084,594 | 44,388 | ||||||
|
Other receivable |
– | 622,240 | ||||||
|
Security deposits |
363,952 | 33,340 | ||||||
|
Total assets acquired |
13,252,371 | 1,230,093 | ||||||
|
Less: liabilities assumed: |
||||||||
|
Accounts payable |
433,461 | 132,155 | ||||||
|
Accrued expenses |
190,798 | 86,194 | ||||||
|
Insurance payable |
169,812 | – | ||||||
|
Accrued compensation and related benefits |
69,122 | – | ||||||
|
Notes payable |
6,355,588 | 1,491,458 | ||||||
|
Lease liabilities |
9,084,594 | 44,388 | ||||||
|
Total liabilities assumed |
16,303,375 | 1,754,195 | ||||||
|
Fair value of shares for acquisitions |
2,965,646 | |||||||
|
Increase in intangible assets – non-cash |
$ | 6,016,650 | $ | 524,102 | ||||
SOURCE: Transportation & Logistics Systems