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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission File No. 001-34970

 

Transportation and Logistics Systems, Inc.

(Exact name of registrant as specified in its charter)

 

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)

 

(833) 764-1443

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report.)

 

Securities registered pursuant to Section 12(b) of the Act:

 

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

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

Class   Outstanding as of November 15, 2021
Common Stock, $0.001   2,865,770,438

 

 

 


 

 

 

TRANSPORTATION AND LOGISTICS SYSTEMS, INC.

FORM 10-Q

September 30, 2021

 

INDEX

 

    Page
PART I. FINANCIAL INFORMATION
     
Item 1. Financial Statements 3
  Condensed Consolidated Balance Sheets - As of September 30, 2021 (unaudited) and December 31, 2020 3
  Condensed Consolidated Statements of Operations - For the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited) 4
  Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit) – For the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited) 5
  Condensed Consolidated Statements of Cash Flows - For the Nine Months Ended September 30, 2021 and 2020 (unaudited) 6
  Notes to Unaudited Consolidated Financial Statements 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 46
Item 3. Quantitative and Qualitative Disclosures About Market Risk 62
Item 4. Controls and Procedures 62
     
PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 63
Item 1A. Risk Factors 70
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 70
Item 3. Defaults Upon Senior Securities 70
Item 4. Mine Safety Disclosures 70
Item 5. Other Information 70
Item 6. Exhibits 71
Signatures 72

 

2

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

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 
Preferred stock          
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 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3

 

 

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 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4

 

 

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Unaudited)

 

                                                        
   Preferred Stock Series B   Preferred Stock Series E   Common Stock   Common Stock Issuable   Additional
Paid-in		   Accumulated  

 

Total
Shareholders’

 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Deficit 
Balance, December 31, 2020   700,000   $700    105,378   $105    1,733,847,494   $1,733,848    -   $-   $104,872,991   $(122,621,060)  $(16,013,416)
                                                        
Common stock issued for debt conversion   -    -    -    -    15,454,546    15,454    -    -    154,546    -    170,000 
                                                        
Sales of Series E preferred share units   -    -    310,992    311    -    -    -    -    3,257,689    -    3,258,000 
                                                        
Deemed dividend related to beneficial conversion features and accrued dividends   -    -    -    -    -    -    -    -    777,510    (829,836)   (52,326)
                                                        
Net loss   -    -    -    -    -    -    -    -    -    (2,269,180)   (2,269,180)
                                                        
Balance, March 31, 2021   700,000    700    416,370    416    1,749,302,040    1,749,302    -    -    109,062,736    (125,720,076)   (14,906,922)
                                                        
Common stock issued for debt conversion   -    -    -    -    44,282,163    44,282              329,174    -    373,456 
                                                        
Sales of Series E preferred share units   -    -    32,126    32    -    -    -    -    332,468    -    332,500 
                                                        
Common stock issued for conversion of Series E preferred shares   -    -    (340,346)   (340)   571,296,287    571,296    -    -    (570,956)   -    - 
                                                        
Common stock issued for warrant exercise   -    -    -    -    121,053,570    121,054    -    -    564,660    -    685,714 
                                                        
Beneficial conversion effect related to debt conversions   -    -    -    -    -    -    -    -    143,872    -    143,872 
                                                        
Deemed dividend related to beneficial conversion features and accrued dividends   -    -    -    -    -    -    -    -    104,533    (156,097)   (51,564)
                                                        
Net income   -    -    -    -    -    -    -    -    -    3,682,857    3,682,857 
                                                        
Balance, June 30, 2021   700,000    700    108,150    108    2,485,934,060    2,485,934    -    -    109,966,487    (122,193,316)   (9,740,087)
                                                        
Common stock issued for conversion of Series E preferred shares   -    -    (17,135)   (17)   25,725,519    25,726    -    -    (25,709)   -    - 
                                                        
Common stock issued for warrant exercise   -    -    -    -    325,539,430    325,539    -    -    2,929,416    -    3,254,955 
                                                        
Warrant exercise inducement expense   -    -    -    -    -    -    -    -    4,193,134    -    4,193,134 
                                                        
Deemed dividend related to beneficial conversion features and accrued dividends   -    -    -    -    -    -    -    -    -    (21,386)   (21,386)
                                                        
Net income   -    -    -    -    -    -    -    -    -    6,254,930    6,254,930 
                                                        
Balance, September 30, 2021   700,000   $700    91,015   $91    2,837,199,009   $2,837,199    -    -   $117,063,328   $(115,959,772)  $3,941,546 

 

   Preferred Stock Series B   Preferred Stock Series E   Common Stock   Common Stock Issuable   Additional
Paid-in		   Accumulated   Total
Shareholders’		 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Deficit 
Balance, December 31, 2019   1,700,000   $1,700    -    -    11,832,603   $11,833    25,000   $25   $47,715,878   $(60,615,860)  $(12,886,424)
                                                        
Reduction of put premium upon conversion   -    -    -    -    -    -    -    -    73,725    -    73,725 
                                                        
Common stock issued for debt conversion   -    -    -    -    5,290,406    5,290    -    -    336,229    -    341,519 
                                                        
Beneficial conversion effect related to debt conversions   -    -    -    -    -    -    -    -    172,720    -    172,720 
                                                        
Relative fair value of warrants issued in connection with convertible debt   -    -    -    -    -    -    -    -    262,872    -    262,872 
                                                        
Accretion of stock-based compensation   -    -    -    -    -    -    -    -    31,250    -    31,250 
                                                        
Reclassification of warrants from equity to derivative liabilities   -    -    -    -    -    -    -    -    (11,381,885)   -    (11,381,885)
                                                        
Deemed dividend related to price protection   -    -    -    -    -    -    -    -    18,696,012    (18,696,012)   -