Transportation & Logistics Systems, Inc 10-Q for FY2022 Q1

Transportation & Logistics Systems, Inc. (TLSSD)

10-Q 2022-05-13 For: 2022-03-31

Added on April 06, 2026

About this 10-Q

Transportation & Logistics Systems, Inc filed this 10-Q on May 13, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.26M; down 15.6% from $1.49M a year earlier
Net loss: $2.04M; compared with a net loss of $2.27M a year earlier

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Nevada		26-3106763
(State or Other Jurisdiction		IRS Employer
of Organization)		Identification Number

5500 Military Trail, Suite 22-357
Jupiter, Florida		33458
(Address of principal executive offices)		(Zip code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Large accelerated filer ☐	Accelerated filer ☐	Non accelerated filer ☒	Smaller reporting company ☒

Emerging growth company ☐

Class		Outstanding as of May 13, 2022
Common Stock, $0.001		3,266,359,058

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets - As of March 31, 2022 (unaudited) and December 31, 2021	3
	Condensed Consolidated Statements of Operations - For the Three Months Ended March 31, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit) – For the Three Months Ended March 31, 2022 and 2021 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 2022 and 2021 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		41

	March 31,			December 31,
	2022			2021
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	6,063,241		$	6,067,692
Accounts receivable, net		461,575			481,734
Prepaid expenses and other current assets		210,459			197,336

Total Current Assets		6,735,275			6,746,762

OTHER ASSETS:
Security deposit		39,495			33,340
Property and equipment, net		530,872			577,205
Intangible assets, net		2,032,572			2,177,382

Total Other Assets		2,602,939			2,787,927

TOTAL ASSETS	$	9,338,214		$	9,534,689

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Notes payable, current portion	$	315		$	283,141
Accounts payable		310,871			312,772
Accrued expenses		607,634			212,975
Insurance payable		34,563			98,255
Accrued compensation and related benefits		78,139			98,964

Total Current Liabilities		1,031,522			1,006,107

LONG-TERM LIABILITIES:
Notes payable, net of current portion		-			12,455

Total Long-term Liabilities		-			12,455

Total Liabilities		1,031,522			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; 700,000 and 700,000 shares issued and outstanding at March 31, 2022 and December 31, 2021, 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 March 31, 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; 31,658 and 51,605 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively ($13.34 per share liquidation value)		32			52
Series G preferred stock, par value $0.001 per share; 1,000,000 shares designated; 710,000 and 615,000 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively ($10.00 per share liquidation value)		710			615
Preferred stock		710			615
Common stock, par value $0.001 per share; 10,000,000,000 shares authorized; 3,187,771,983 and 2,926,528,666 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		3,187,772			2,926,529
Additional paid-in capital		126,280,247			124,604,718
Accumulated deficit		(121,162,769	)		(119,016,487	)

Total Shareholders’ Equity		8,306,692			8,516,127

Total Liabilities and Shareholders’ Equity	$	9,338,214		$	9,534,689

	2022			2021
	For the Three Months Ended
	March 31,
	2022			2021

REVENUES	$	1,259,333		$	1,491,699

COST OF REVENUES		971,002			1,898,778

GROSS PROFIT (LOSS)		288,331			(407,079	)

OPERATING EXPENSES:
Compensation and related benefits		1,356,410			368,609
Legal and professional fees		349,494			530,538
Rent		101,337			133,955
General and administrative expenses		281,943			196,203

Total Operating Expenses		2,089,184			1,229,305

LOSS FROM OPERATIONS		(1,800,853	)		(1,636,384	)

OTHER INCOME (EXPENSES):
Interest expense		(7,867	)		(83,509	)
Interest expense - related parties		-			(22,192	)
Gain on debt extinguishment, net		-			59,853
Settlement expense		(228,511	)		-
Other income		-			108,035
Derivative expense		-			(694,983	)

Total Other Income (Expenses)		(236,378	)		(632,796	)

LOSS BEFORE INCOME TAXES		(2,037,231	)		(2,269,180	)

Provision for income taxes		-			-

NET LOSS		(2,037,231	)		(2,269,180	)

Deemed dividends related to beneficial conversion features, and accrued dividends		(109,051	)		(829,836	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(2,146,282	)	$	(3,099,016	)

NET LOSS PER COMMON SHARE - BASIC AND DILUTED
Basic and diluted	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		3,040,797,022			1,747,413,151

	Shares		Amount		Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Equity
	Preferred Stock Series B				Preferred Stock Series E						Preferred Stock Series G				Common Stock				Additional Paid-in			Accumulated			Total Shareholders’
	Shares		Amount		Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance, December 31, 2021		700,000	$	700		51,605		$	52			615,000	$	615		2,926,528,666	$	2,926,529	$	124,604,718		$	(119,016,487	)	$	8,516,127

Common stock issued for warrant exercise		-		-		-			-			-		-		24,571,429		24,571		221,143						245,714

Common stock issued for services and future services		-		-		-			-			-		-		161,671,888		161,672		88,328			-			250,000

Accretion of stock-based compensation		-		-		-			-			-		-		-		-		586,133			-			586,133

Sales of Series G preferred share units		-		-		-			-			95,000		95		-		-		854,905			-			855,000

Common stock issued for conversion of Series E preferred shares		-		-		(19,947	)		(20	)		-		-		75,000,000		75,000		(74,980	)		-			-

Dividends accrued		-		-		-			-			-		-		-		-		-			(109,051	)		(109,051	)

Net loss		-		-		-			-			-		-		-		-		-			(2,037,231	)		(2,037,231	)

Balance, March 31, 2022		700,000	$	700		31,658		$	32			710,000	$	710		3,187,771,983	$	3,187,772	$	126,280,247		$	(121,162,769	)	$	8,306,692

	●	Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

	●	Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

	●	Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

	For the Three Months ended March 31, 2022		For the Three Months ended March 31, 2021
Balance at beginning of period	$	-	$	4,181,187
Change in fair value included in derivative gain expense		-		694,983
Balance at end of period	$	-	$	4,876,170

	March 31, 2022		March 31, 2021
Stock warrants		1,280,150,966		716,906,678
Stock options		80,000		80,000
Convertible debt		-		148,793,952
Series B convertible preferred stock		700,000		700,000
Series E convertible preferred stock		42,231,772		555,436,300
Series G convertible preferred stock		710,000,000		-
Antidilutive securities excluded from computation of earnings per share		2,033,162,738		1,421,916,930

	DDTI			Cougar Express			Total
Assets acquired:
Cash	$	-		$	10,031		$	10,031
Accounts receivable		-			265,175			265,175
Other assets		-			40,874			40,874
Transportation vehicles		209,585			-			209,585
Equipment		20,000			27,831			47,831
Right of use assets		44,388			-			44,388
Other receivable		-			622,240			622,240
Non-compete agreement		-			150,000			150,000
Customer relations		373,449			2,123,768			2,497,217
Total assets acquired at fair value		647,422			3,239,919			3,887,341
Liabilities assumed:
Notes payable		(103,034	)		(16,184	)		(119,218	)
PPP loan payable		-			(622,240	)		(622,240	)
Accounts payable		-			(132,155	)		(132,155	)
Accrued expenses		-			(40,059	)		(40,059	)
Lease liabilities		(44,388	)		-			(44,388	)
Total liabilities assumed		(147,422	)		(810,638	)		(958,060	)
Net asset acquired	$	500,000		$	2,429,281		$	2,929,281
Purchase consideration paid:
Cash paid	$	100,000		$	2,033,146		$	2,133,146
Acquisition payable		-			46,135			46,135
Promissory notes		400,000			350,000			750,000
Total purchase consideration paid	$	500,000		$	2,429,281		$	2,929,281

	March 31, 2022		December 31, 2021
Accounts receivable	$	461,575	$	481,734
Allowance for doubtful accounts		-		-
Accounts receivable, net	$	461,575	$	481,734

	Useful Life	March 31, 2022			December 31, 2021
Delivery trucks and vehicles	3 - 5 years	$	747,889		$	747,889
Equipment	1 - 5 years		51,301			51,301
Subtotal			799,190			799,190
Less: accumulated depreciation			(268,318	)		(221,985	)
Property and equipment, net		$	530,872		$	577,205

Year ending March 31:	Amount
2023	$	579,236
2024		553,303
2025		454,754
2026		445,279
Total	$	2,032,572

	2021
Expected dividend rate		-
Expected term (in years)		0.75 to 5.00
Volatility		275.4% to 367.0%
Risk-free interest rate		0.07% to 0.87%

	March 31, 2022			December 31, 2021
Principal amounts	$	315		$	295,596
Less: current portion of notes payable		(315	)		(283,141	)
Notes payable – long-term	$	-		$	12,455

	●	Each holder of Series E has the right to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series E held by such holder are convertible as of the applicable record date.

	●	Unless prohibited by Nevada law governing distributions to stockholders, for a period of one-year beginning with the Original Issuance Date, as defined, the Corporation shall have the right but not the obligation to redeem all outstanding Series E (and not any part of the Series E) at a price equal to 115% of (i) the Stated Value per share plus (ii) all unpaid dividends thereon. If the Company fails to redeem all outstanding Series E on the redemption date, it shall be deemed to have waived its redemption right.

	●	Each holder of Series G has the right to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series G held by such holder are convertible as of the applicable record date.

	●	Unless prohibited by Nevada law governing distributions to stockholders, for a period of one-year beginning with the Original Issuance Date, as defined, the Corporation shall have the right but not the obligation to redeem all outstanding Series G (and not any part of the Series G) at a price equal to 115% of (i) the Stated Value per share plus (ii) all unpaid dividends thereon. If the Company fails to redeem all outstanding Series G on the redemption date, it shall be deemed to have waived its redemption right.

	Number of Non-Vested Shares			Weighted Average Grant Date Fair Value
Non-vested, December 31, 2021		-		$	-
Granted		138,944,615			0.011
Shares vested		(34,736,153	)		(0.011	)
Non-vested, March 31, 2022		104,208,462		$	0.011

	Number of Shares Issuable Upon Exercise of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Balance Outstanding December 31, 2021		1,190,722,395		$	0.015		4.7	$	3,831,380
Granted		114,000,000			0.010
Exercises		(24,571,429	)		0.010
Balance Outstanding March 31, 2022		1,280,150,966		$	0.014		4.5	$	1,002,471
Exercisable, March 31, 2022		1,280,150,966		$	0.014		4.5	$	1,002,471

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Balance Outstanding December 31, 2021		80,000	$	8.85		3.3	$	-
Granted/Cancelled		-		-
Balance Outstanding March 31, 2022		80,000	$	8.85		2.3	$	-
Exercisable, March 31, 2022		60,000	$	8.85		2.3	$	-

	September 7, 2021
Liabilities deconsolidated:
Notes payable (a)	$	3,908,050
Accounts payable		1,242,421
Accrued expenses		314,927
Insurance payable		1,678,556
Contingency liabilities		3,311,272
Lease liabilities, current portion		1,263,494
Accrued compensation and related benefits		827,753
Total liabilities deconsolidated		12,546,473
Assets deconsolidated:
Cash		21,679
Accounts receivable		1,078
Property and equipment, net		96,496
Total assets deconsolidated		119,253
Gain on deconsolidation of subsidiaries		12,427,220
Less: additional cash payments made on behalf of deconsolidated subsidiaries		(63,771	)
Gain on deconsolidation of subsidiaries	$	12,363,449

	For the Three Month Ended March 31,
	2022			2021
Revenues	$	1,259,333		$	1,491,699
Cost of revenues		971,002			1,898,778
Gross profit (loss)		288,331			(407,079	)
Operating expenses		2,089,184			1,229,305
Loss from operations		(1,800,853	)		(1,636,384	)
Other income (expenses), net		(236,378	)		(632,796	)
Net loss		(2,037,231	)		(2,269,180	)
Deemed dividends related to beneficial conversion features and accrued dividends		(109,051	)		(829,836	)
Net loss attributable to common shareholders	$	(2,146,282	)	$	(3,099,016	)

	For the Three Months Ended March 31,
	2022		2021
Compensation and related benefits	$	1,356,410	$	368,609
Legal and professional fees		349,494		530,538
Rent		101,337		133,955
General and administrative expenses		281,943		196,203
Total Operating Expenses	$	2,089,184	$	1,229,305

	For the Three Months Ended March 31,
	2022			2021
Interest expense	$	(7,867	)	$	(83,509	)
Interest expense – related parties		-			(22,192	)
Gain on debt extinguishment		-			59,853
Settlement expense		(228,511	)		-
Other income		-			108,035
Derivative expense, net		-			(694,983	)
Total Other (Expenses) Income, net	$	(236,378	)	$	(632,796	)

	1)	The Company lacks segregation of duties;

	2)	There is a lack of segregation of duties and monitoring controls regarding accounting because there are only a few accountants maintaining the books and records;

	○	Implementation of cash management and banking policy which includes increasing the controls related to individuals banking capabilities, utilization of a daily cash model and forecast, and policy to move cash receipts from customers to ACH.
	○	Implementation of formalized payment and accounting transaction review and sign-off by the CFO.
	○	Centralization of accounts payable and cash control at the corporate level including the receipt of invoices to a newly created email address and process to get authorized approval for invoices prior to input into system.
	○	Implementation and completion of a formal and detailed 2022 budget and forecast for the consolidated Company.
	○	Implemented a formal monthly business review process to discuss budget vs actual variances, and other operational issues to be presented to the Company’s CEO and Board of Directors.

Exhibits:
3.1		Certificate of Designation of Preferences, Rights and Limitations of Series E Preferred Stock of the Company, filed on October 6, 2020 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K dated October 9, 2020).
3.2		Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series E Preferred Stock of the Company, filed on December 28, 2020 (incorporated by reference to Exhibit 10.28 to our Form S-1/A dated February 10, 2021).
3.3		Certificate of Amendment to the Amended and Restated Articles of Incorporation of Transportation and Logistics Systems, Inc., effective as of April 13, 2021 (incorporated by reference to Exhibit 3.5 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on November 15, 2021).
3.4		Certificate of Designation of Preferences, Rights and Limitations of Series G Preferred Stock of the Company, filed on December 28, 2021 (incorporated by reference to Exhibit 3.14 to our Form S-1 dated January 28, 2022).
4.1		Form of Common Stock Purchase Warrant in Series G Offering (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 3, 2022).
10.1		Form of Securities Purchase Agreement related to Series G Preferred (incorporated by reference to Exhibit 10.1 to our Form 8-K dated January 3, 2022).
10.2		Form of Warrant Agreement related to Series G Preferred (incorporated by reference to Exhibit 10.2 to our Form 8-K dated January 3, 2022).
10.3		Form of Registration Rights Agreement for Series G Warrants (incorporated by reference to Exhibit 10.5 to our Form S-1 dated January 28, 2022).

10.4		Form of Common Stock Purchase Warrant in Warrant Offering (incorporated by reference to Exhibit 4.1 to our Form S-1 dated January 28, 2022).
10.5		Form of Registration Rights Agreement for Series G Convertible Preferred Stock (incorporated by reference to Exhibit 10.6 to our Form S-1 dated January 28, 2022).
10.6		Offer Letter, dated November 10, 2021, between TLSS and Mr. James Giordano (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 7, 2022).
10.7		Employment Agreement, dated January 4, 2022, between TLSS and Mr. Sebastian Giordano (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 7, 2022).
31.1*		Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
31.2*		Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
*32.1^#**		Certification of Chief Executive Officer Under Section 1350 as Adopted Pursuant Section 906 of the Sarbanes-Oxley Act.
*32.2^#**		Certification of Chief Financial Officer Under Section 1350 as Adopted Pursuant Section 906 of the Sarbanes-Oxley Act.
101.INS*		Inline XBRL Instance Document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

	TRANSPORTATION & LOGISTICS SYSTEMS, INC.

Dated: May 13, 2022	By:	/s/ Sebastian Giordano
		Sebastian Giordano
		Chief Executive Officer (Principal Executive Officer) and Director

1.	I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022 of Transportation and Logistics Systems, Inc. (the “registrant”);

2.	Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	I am the only certifying officer responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, 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;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.