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

Company is in Final Stages of Restructuring as it Shifts to Growth through Acquisition Strategy

JUPITER, FL / ACCESSWIRE / August 16, 2021 / Transportation and Logistics Systems, Inc. (OTC PINK:TLSS), (“TLSS”, or the “Company”), a leading eCommerce fulfillment service provider, today announced that on August 13, 2021, the Company had timely filed its Quarterly Report on Form 10-Q, for the three and six months ended June 30, 2021.

John Mercadante, Chairman and CEO of TLSS, commented, “We believe that we are in the final stages of our highly successful restructuring efforts that commenced in the first quarter of 2020. During the second quarter of 2021, we continued the shutdown of operations of the subsidiaries, Prime EFS, LLC (“Prime”) and Shypdirect LLC (“Shypdirect”), while simultaneously achieving the first full quarter of positive results from our two acquisitions, Shyp FX, Inc. and Cougar Express, Inc. which were completed in Q1. Moreover, the Company is in ongoing discussions with potential sources of financing for its proposed acquisition of SalSon Logistics, while continuing to evaluate a number of other potential acquisition opportunities.”

Financial Results for the Three Months Ended June 30, 2021

Revenue for the three months ended June 30, 2021 decreased $6,984,000, or 81.6%, to $1,575,000 as compared to $8,559,000 for same prior year period. Such decrease was due primarily to the termination of the Company’s Prime subsidiary’s former Amazon Delivery Service Provider (“Amazon DSP”) business as of September 30, 2020 and cessation of Shypdirect’s Amazon Relay Carrier (“Amazon Relay”) business.

The Company had a loss from operations of $1,719,000 for the three months ended June 30, 2021 as compared to a loss from operations of $1,961,000 for the comparable prior year period.

The Company had net income of $3,683,000 for the three months ended June 30, 2021 due to: (i) the loss from operations of $1,719,000 and (ii) interest expense of $158,000, which were offset and exceeded by: (i) derivative income of $3,979,000; (ii) a gain from extinguishment of debt of $1,505,000 and (iii) other income of $76,000. This compared to a net loss of $67,655,000 for the comparable prior year period.

The Company had a net income attributable to TLSS common shareholders of $3,527,000 for the three months ended June 30, 2021 after accounting for the effect of deemed dividends related to ratchet adjustment, beneficial conversion features, and accrued dividends of $156,000 as compared to a net loss attributable to TLSS common shareholders of $67,655,000 for the comparable prior year period.

Financial Results for the Six Months Ended June 30, 2021

Revenue for the six months ended June 30, 2021 decreased $14,128,000, or 82.2%, to $3,066,000 as compared to $17,194,000 for comparable prior year period due to the termination of its Prime subsidiary’s former Amazon DSP business as of September 30, 2020 and cessation of Shypdirect’s Amazon Relay business.

The Company had a loss from operations of $3,356,000 for the six months ended June 30, 2021, as compared to a loss from operations of $2,748,000 for the comparable prior year period.

The Company had net income of $1,414,000 for the six months ended June 30, 2021 due to: (i) the loss from operations of $3,356,000 and (ii) interest expense of $263,000, which were offset and exceeded by: (i) derivative income of $3,284,000, (ii) a gain from extinguishment of debt of $1,565,000 and (iii) other income of $184,000. This compared to a net loss of $71,109,000 for the comparable prior year period.

The Company had net income attributable to TLSS common shareholders of $428,000 for the six months ended June 30, 2021 after accounting for the effect for deemed dividends related to ratchet adjustment, beneficial conversion features, and accrued dividends of $986,000 as compared to a net loss attributable to TLSS common shareholders of $89,805,000 for the comparable prior year period including deemed dividends related to ratchet adjustment, beneficial conversion features, and accrued dividends of $18,696,000.

Subsequent Events

During the period from July 1, 2021 to August 6, 2021, the Company issued 115,412,571 shares of its common stock and received proceeds of $1,153,683 from the exercise of 115,412,571 previously outstanding warrants (“Existing Warrants”) at $0.01 per share. To inducethe exercise of Existing Warrants, the Company issued new warrants (“New Warrants”) to buy in total 50% of the number of shares acquired by exercise of the Existing Warrants. The New Warrants are exercisable for five years following issuance at an exercise price per share of $0.01.

About Transportation and Logistics Systems, Inc.

TLSS, through its wholly-owned operating subsidiaries, Shyp FX, Inc. and Cougar Express, 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

	June 30			December 31,
	2021			2020
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	631,881		$	579,283
Accounts receivable, net		423,069			372,922
Prepaid expenses and other current assets		416,027			443,410

Total Current Assets		1,470,977			1,395,615

OTHER ASSETS:
Security deposit		66,340			94,000
Property and equipment, net		796,872			598,807
Intangible assets, net		2,460,326			–
Right of use assets, net		676,811			1,445,274

Total Other Assets		4,000,349			2,138,081

TOTAL ASSETS	$	5,471,326		$	3,533,696

LIABILITIES AND SHAREHOLDERS’ 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		4,626,661			3,919,544
Note payable – related party		500,000			500,000
Accounts payable		1,409,557			1,104,263
Accrued expenses		500,552			424,595
Insurance payable		1,971,173			1,985,893
Contingency liabilities		3,311,272			3,311,272
Lease liabilities, current portion		422,161			380,843
Derivative liability		–			4,181,187
Due to related parties		218,322			297,692
Accrued compensation and related benefits		894,066			922,396

Total Current Liabilities		13,853,764			18,006,901

LONG-TERM LIABILITIES:
Notes payable, net of current portion		446,620			437,594
Lease liabilities, net of current portion		911,029			1,102,617

Total Long-term Liabilities		1,357,649			1,540,211

Total Liabilities		15,211,413			19,547,112

Commitments and Contingencies (See Note 10)		–			–

SHAREHOLDERS’ 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 June 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 June 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; 108,150 and 105,378 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively ($13.34 per share liquidation value)		108			105
Common stock, par value $0.001 per share; 10,000,000,000 shares authorized; 2,485,934,060 and 1,733,847,494 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		2,485,934			1,733,848
Additional paid-in capital		109,966,487			104,872,991
Accumulated deficit		(122,193,316	)		(122,621,060	)

Total Shareholders’ Deficit		(9,740,087	)		(16,013,416	)

Total Liabilities and Shareholders’ Deficit	$	5,471,326		$	3,533,696

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	2021			2020			2021			2020
	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020

REVENUES	$	1,574,494		$	8,558,815			3,066,193		$	17,193,875


COST OF REVENUES		1,345,538			6,997,856			3,244,316			14,853,605

GROSS PROFIT (LOSS)		228,956			1,560,959			(178,123	)		2,340,270

OPERATING EXPENSES:
Compensation and related benefits		344,053			662,503			712,662			1,404,548
Legal and professional fees		452,915			2,487,896			983,453			2,902,706
Rent		233,601			175,261			367,556			339,611
General and administrative expenses		301,732			196,368			497,935			441,651
Loss on lease abandonment		616,074			–			616,074			–

Total Operating Expenses		1,948,375			3,522,028			3,177,680			5,088,516

LOSS FROM OPERATIONS		(1,719,419	)		(1,961,069	)		(3,355,803	)		(2,748,246	)

OTHER (EXPENSES) INCOME:
Interest expense		(135,450	)		(1,940,912	)		(218,959	)		(4,987,639	)
Interest expense – related parties		(22,438	)		(22,438	)		(44,630	)		(129,576	)
Gain on debt extinguishment, net		1,505,088			5,968,560			1,564,941			6,243,594
Other income		75,787			107,137			183,822			174,968
Derivative (expense) income, net		3,979,289			(69,806,610	)		3,284,306			(69,661,771	)

Total Other (Expenses) Income		5,402,276			(65,694,263	)		4,769,480			(68,360,424	)

INCOME (LOSS) BEFORE INCOME TAXES		3,682,857			(67,655,332	)		1,413,677			(71,108,670	)

Provision for income taxes		–			–			–			–
					.
NET INCOME (LOSS)		3,682,857			(67,655,332	)		1,413,677			(71,108,670	)

Deemed dividends related to ratchet adjustment, beneficial conversion features, and accrued dividends		(156,097	)		–			(985,933	)		(18,696,012	)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	3,526,760		$	(67,655,332	)	$	427,744		$	(89,804,682	)

NET INCOME (LOSS) PER COMMON SHARE – BASIC AND DILUTED
Basic	$	0.00		$	(0.26	)	$	0.00		$	(0.66	)
Diluted	$	0.00		$	(0.26	)	$	0.00		$	(0.66	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		2,125,141,567			261,417,292			1,937,320,808			136,885,211
Diluted		2,539,874,797			261,417,292			2,352,054,038			136,885,211

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	2021			2020
	For the Six Months Ended
	June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	1,413,677		$	(71,108,670	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense		293,616			28,144
Amortization of debt discount to interest expense		83,548			2,768,270
Stock-based compensation and consulting fees		–			1,999,749
Other non-cash interest and fees		–			8,180
Interest expense related to debt default		–			1,531,335
Derivative (income) expense, net		(3,284,306	)		69,661,771
Non-cash portion of gain on extinguishment of debt, net		(1,564,941	)		(6,296,141	)
Loss on lease abandonment		616,074			–
Rent expense		2,119			9,511
Bad debt recovery		(11,240	)		–
Other non-cash gain		(11,808	)		–
Change in operating assets and liabilities:
Accounts receivable		226,268			40,236
Prepaid expenses and other current assets		34,917			(523,340	)
Security deposit		61,000			(130,750	)
Accounts payable and accrued expenses		264,692			19,411
Insurance payable		(14,720	)		253,611
Accrued compensation and related benefits		(28,330	)		346,901

NET CASH USED IN OPERATING ACTIVITIES		(1,919,434	)		(1,391,782	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		–			(460,510	)
Cash acquired in acquisition		10,031			–
Cash used for acquisitions		(2,133,146	)		–

NET CASH USED IN INVESTING ACTIVITIES		(2,123,115	)		(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		–			1,880,000
Proceeds from exercise of warrants		685,714			–
Repayment of convertible notes payable		–			(257,139	)
Net proceeds from notes payable		–			4,479,662
Repayment of notes payable		(195,697	)		(2,765,961	)
Net proceeds (payments) on related party advances		14,630			(103,123	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		4,095,147			3,233,439

NET INCREASE IN CASH		52,598			1,381,147

CASH, beginning of period		579,283			50,026

CASH, end of period	$	631,881		$	1,431,173

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	67,839		$	1,107,788
Income taxes	$	–		$	–

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt discounts recorded	$	–		$	262,872
Increase in derivative liability and debt discount	$	–		$	1,702,473
Conversion of debt and accrued interest for common stock	$	543,457		$	3,063,579
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

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		$	–