Transportation and Logistics Systems, Inc. Announces Financial Results for the Three and Nine Months Ended September 30, 2021

Rhea-AI Summary

Transportation and Logistics Systems (TLSS) reported significant progress in improving its financial position as of September 30, 2021. The company reduced total liabilities from approximately $32 million in Q1 2020 to about $2.4 million. Despite this, revenue for Q3 2021 fell 80.9% year-over-year to $1.2 million, largely due to the end of its Amazon DSP business. However, TLSS achieved a net income of $6.3 million for the quarter, driven by gains from deconsolidation of subsidiaries. This marks a decline compared to $35.6 million in net income from the prior year.

Positive

• Total liabilities decreased from $32 million in Q1 2020 to approximately $2.4 million.
• Net income of $6.3 million for Q3 2021 compared to a net loss of $54.2 million for the same period last year.
• Gains from deconsolidation of subsidiaries contributed significantly to net income.

Negative

• Revenue dropped 80.9% to $1.2 million in Q3 2021, primarily due to the cessation of the Amazon DSP business.
• Loss from operations increased to $1.9 million in Q3 2021, up from $1.2 million in the prior year.

• Significant Debt Reduction and Improved Liquidity
• Highlight Continuing Progress in Financial Condition

JUPITER, FL / ACCESSWIRE / November 16, 2021 / Transportation and Logistics Systems, Inc. (OTCQB:TLSS), ("TLSS", or the "Company"), a growing logistics service provider, today announced that on November 15, 2021, the Company had timely filed its Quarterly Report on Form 10-Q, for the three and nine months ended September 30, 2021.

John Mercadante, Chairman and CEO of TLSS, commented, "The Company continues to make significant progress in shedding debt and positioning the Company for growth. When the restructuring plan commenced in Q1 2020, the Company had reported approximately $32,000,000 in total liabilities on its March 31, 2020 Quarterly Report on Form 10-Q. At September 30, 2021, total liabilities were approximately $2.4 million, which included approximately $1.6 million in debt and accrued interest. In addition to the restructuring measures taken since last year, the decrease in total liabilities during the third quarter 2021 were due, in large part, to the deconsolidation of its former subsidiaries, Prime and Shypdirect, related to the recent filing of Deeds of Assignment for the Benefit of Creditors and the loss of control of these subsidiaries. Moreover, during and after the second quarter, the Company strengthened its balance sheet by raising approximately $3,900,000 from the exercise of warrants, a portion of which was used, subsequent to September 30, 2021, to further reduce debt and accrued interest by approximately $840,000. Meanwhile, the Company continues to evaluate a number of potential acquisition opportunities."

Financial Results for the Three Months Ended September 30, 2021
Revenue for the three months ended September 30, 2021, decreased $5,102,000, or 80.9%, to $1,207,000 as compared to $6,310,000 for same prior year period. Such decrease was due primarily to the cessation of the Company's Amazon DSP business amidst its notification in July 2020 of the termination of such Amazon DSP agreement as of September 30, 2020.

The Company had a loss from operations of $1,895,000 for the three months ended September 30, 2021, as compared to a loss from operations of $1,172,000 for the same prior year period. Such increase was due primarily to a loss on lease abandonment of $608,000.

The Company had net income of $6,255,000 for the three months ended September 30, 2021, due to: (i) a gain on deconsolidation of subsidiaries of $12,427,000 and (ii) other income of $11,000, which were partially offset by (i) warrant exercise inducement expense of $4,193,000; (ii) the loss from operations of $1,895,000 and (iii) interest expense of $95,000. This compared to net income $35,602,000 for the same prior year period. The Company had net income attributable to TLSS common shareholders of $6,234,000 for the three months ended September 30, 2021, as compared to net income attributable to TLSS common shareholders of $35,602,000 for the same prior year period.

Financial Results for the Nine Months Ended September 30, 2021
Revenue for the nine months ended September 30, 2021, decreased $19,230,000, or 81.8%, to $4,273,000 as compared to $23,503,000 for same prior year period due primarily to the cessation of the Amazon DSP business during the third quarter, as discussed above.

The Company had a loss from operations of $5,251,000 for the nine months ended September 30, 2021, as compared to a loss from operations of $3,920,000 for the same prior year period. Such increase was due primarily to a loss on lease abandonment of $1,224,000.

The Company had net income of $7,669,000 for the nine months ended September 30, 2021, due to: (i) a gain on deconsolidation of subsidiaries of $12,427,000, (ii) derivative income of $3,284,000; (iii) a gain from extinguishment of debt of $1,565,000 and (iv) other income of $195,000, which were partially offset by (i) the loss from operations of $5,251,000; (ii) warrant exercise inducement expense of $4,193,000; and (iii) interest expense of $358,000. This compared to a net loss of $35,506,000 for the same prior year period. The Company had net income attributable to TLSS common shareholders of $6,661,000 for the nine months ended September 30, 2021, as compared to a net loss attributable to TLSS common shareholders of $54,202,000 for the same prior year period.

About Transportation and Logistics Systems, Inc.
TLSS, through its wholly owned operating subsidiaries, Cougar Express, Inc and Shyp FX, 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 a stockholders' deficit and our ability 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:
Phone: 833.764.1443
Email: info@tlss-inc.com

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

		September 30,				December 31,
		2021				2020
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash		$	2,668,329			$	579,283
Accounts receivable, net			474,318				-
Prepaid expenses and other current assets			291,802				75,951
Assets subject to assignment for benefit of creditors, current portion			-				740,381
Total Current Assets			3,434,449				1,395,615
OTHER ASSETS:
Security deposit			33,340				-
Property and equipment, net			562,990				472,670
Intangible assets, net			2,322,190				-
Right of use assets, net			27,276				-
Assets subject to assignment for benefit of creditors			-				1,665,411
Total Other Assets			2,945,796				2,138,081
TOTAL ASSETS		$	6,380,245			$	3,533,696
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Convertible notes payable, net of debt discounts of $0 and $83,548, respectively		$	-			$	979,216
Notes payable, current portion, net of debt discount of $0 and $0, respectively			511,788				85,207
Note payable - related party			500,000				500,000
Accounts payable			369,812				465,581
Accrued expenses			247,606				254,095
Insurance payable			183,892				26,794
Lease liabilities, current portion			18,910				-
Derivative liability			-				4,181,187
Due to related parties			241,007				173,692
Accrued compensation and related benefits			78,333				2,670
Liabilities subject to assignment for benefit of creditors, current portion			-				11,338,459
Total Current Liabilities			2,151,348				18,006,901
LONG-TERM LIABILITIES:
Notes payable, net of current portion			278,985				290,215
Lease liabilities, net of current portion			8,366				-
Liabilities subject to assignment for benefit of creditors			-				1,249,996
Total Long-term Liabilities			287,351				1,540,211
Total Liabilities			2,438,699				19,547,112
Commitments and Contingencies (See Note 11)
SHAREHOLDERS' EQUITY (DEFICIT):
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; 700,000 and 700,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (Liquidation value $700 and $700, respectively)			700				700
Series D preferred stock, par value $0.001 per share; 1,250,000 shares designated; no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively ($6.00 per share liquidation value)			-				-
Series E preferred stock, par value $0.001 per share; 562,250 shares designated; 91,015 and 105,378 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively ($13.34 per share liquidation value)			91				105
Common stock, par value $0.001 per share; 10,000,000,000 shares authorized; 2,837,199,009 and 1,733,847,494 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively			2,837,199				1,733,848
Additional paid-in capital			117,063,328				104,872,991
Accumulated deficit			(115,959,772	)			(122,621,060	)
Total Shareholders' Equity (Deficit)			3,941,546				(16,013,416	)
Total Liabilities and Shareholders' Equity (Deficit)		$	6,380,245			$	3,533,696

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

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
REVENUES		$	1,207,305			$	6,309,509				4,273,498			$	23,503,384
COST OF REVENUES			1,178,113				5,978,265				4,422,429				20,831,870
GROSS PROFIT (LOSS)			29,192				331,244				(148,931	)			2,671,514
OPERATING EXPENSES:
Compensation and related benefits			351,908				551,306				1,064,570				1,955,854
Legal and professional fees			487,473				621,105				1,470,926				3,523,811
Rent			154,132				156,738				521,688				496,349
General and administrative expenses			323,658				173,680				821,593				615,331
Loss on lease abandonment			607,554				-				1,223,628				-
Total Operating Expenses			1,924,725				1,502,829				5,102,405				6,591,345
LOSS FROM OPERATIONS			(1,895,533	)			(1,171,585	)			(5,251,336	)			(3,919,831	)
OTHER INCOME (EXPENSES):
Interest expense			(71,939	)			(2,028,958	)			(290,898	)			(7,016,597	)
Interest expense - related parties			(22,685	)			(22,686	)			(67,315	)			(152,262	)
Warrant exercise inducement expense			(4,193,134	)			-				(4,193,134	)			-
Gain on debt extinguishment, net			-				907,447				1,564,941				7,151,041
Other income			11,001				91,950				194,823				266,918
Gain on deconsolidation of subsidiaries			12,427,220				-				12,427,220				-
Derivative (expense) income, net			-				37,826,129				3,284,306				(31,835,642	)
Total Other Income (Expenses)			8,150,463				36,773,882				12,919,943				(31,586,542	)
INCOME (LOSS) BEFORE INCOME TAXES			6,254,930				35,602,297				7,668,607				(35,506,373	)
Provision for income taxes			-				-				-				-
							.
NET INCOME (LOSS)			6,254,930				35,602,297				7,668,607				(35,506,373	)
Deemed dividends related to ratchet adjustment, beneficial conversion features, and accrued dividends			(21,386	)			-				(1,007,319	)			(18,696,012	)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	6,233,544			$	35,602,297			$	6,661,288			$	(54,202,385	)
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED
Basic		$	0.00			$	0.03			$	0.00			$	(0.11	)
Diluted		$	0.00			$	0.00			$	0.00			$	(0.11	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic			2,600,758,966				1,136,231,561				2,160,897,037				472,432,161
Diluted			2,899,703,458				2,506,145,678				2,506,656,853				472,432,161

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

		For the Nine Months Ended
		September 30,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	7,668,607			$	(35,506,373	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense			498,876				42,101
Amortization of debt discount to interest expense			83,548				4,664,605
Stock-based compensation and consulting fees			-				1,999,749
Other non-cash interest and fees			-				9,080
Interest expense related to debt default			-				1,531,335
Derivative (income) expense, net			(3,284,306	)			31,835,642
Non-cash portion of gain on extinguishment of debt, net			(1,564,941	)			(7,203,589	)
Non-cash portion of gain on deconsolidation of subsidiaries			(12,448,899	)			-
Loss on lease abandonment			1,223,628				-
Warrant exercise inducement expense			4,193,134				-
Rent expense			1,680				12,911
Bad debt recovery			(11,240	)			-
Other non-cash gain			(11,806	)			-
Change in operating assets and liabilities:
Accounts receivable			173,941				628,378
Prepaid expenses and other current assets			159,142				(216,181	)
Security deposit			94,000				(129,750	)
Accounts payable and accrued expenses			500,908				(12,623	)
Insurance payable			(123,445	)			(250,961	)
Accrued compensation and related benefits			(16,310	)			226,415
NET CASH USED IN OPERATING ACTIVITIES			(2,863,483	)			(2,369,261	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			-				(460,510	)
Proceeds from sale of property and equipment			3,451				-
Cash acquired in acquisition			10,031				-
Cash used for acquisitions			(2,133,146	)			-
NET CASH USED IN INVESTING ACTIVITIES			(2,119,664	)			(460,510	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of series E preferred share units			3,590,500				-
Proceeds from convertible notes payable			-				1,912,382
Proceeds from exercise of warrants			3,940,669				-
Repayment of convertible notes payable			-				(257,139	)
Net proceeds from notes payable			-				4,479,662
Repayment of notes payable			(496,291	)			(2,956,366	)
Net proceeds (payments) on related party advances			37,315				(80,438	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			7,072,193				3,098,101
NET INCREASE IN CASH			2,089,046				268,330
CASH, beginning of period			579,283				50,026
CASH, end of period		$	2,668,329			$	318,356
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest		$	288,533			$	1,051,418
Income taxes		$	-			$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt discounts recorded		$	-			$	262,872
Increase in derivative liability and debt discount		$	-			$	1,702,471
Conversion of debt and accrued interest for common stock		$	543,457			$	7,362,182
Reclassification of accrued interest to debt		$	-			$	89,262
Reclassification of due to related parties to accrued expenses		$	94,000			$	-
Decrease in put premium and paid-in capital		$	-			$	385,385
Reclassification of warrant value from equity to derivative liabilities		$	-			$	11,381,885
Deemed dividend related to price protection and beneficial conversion features		$	882,043			$	18,696,012
Conversion of debt and accrued interest for Series D preferred stock		$	-			$	586,012
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			86,194				-
Notes payable			1,491,458				-
Lease liabilities			44,388				-
Total liabilities assumed			1,754,195
Increase in intangible assets - non-cash		$	524,102			$	-

SOURCE: Transportation & Logistics Systems

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FAQ

What was the revenue of TLSS for Q3 2021?

The revenue for TLSS in Q3 2021 was $1.2 million, a decrease of 80.9% compared to the same period last year.

How much did TLSS reduce its total liabilities?

TLSS reduced its total liabilities from approximately $32 million in Q1 2020 to about $2.4 million by September 30, 2021.

Did TLSS report a net income or loss for Q3 2021?

TLSS reported a net income of $6.3 million for Q3 2021, in contrast to a net income of $35.6 million for the same period last year.