EX-99.2 3 ex99-2.htm

 

Exhibit 99.2

 

Pro Forma Financial Information.

 

The following unaudited pro forma combined balance sheet has been derived from the unaudited consolidated balance sheet of Transportation and Logistics Systems, Inc. and Subsidiaries. (the “Company” or “we”) on June 30, 2022, and adjusts such information to give the effect of 1) the acquisition of Freight Connections, Inc. (“Freight Connections”), as if it would have existed on June 30, 2022. The unaudited pro forma combined balance sheets gives effect to the share exchange agreement between the Company and the sole shareholder of Freight Connections.

 

The following unaudited pro forma combined statements of operations for the year ended December 31, 2022 and 2021, and for the six months ended June 30, 2022 have been derived from the consolidated statement of operations of Transportation and Logistics Systems, Inc. and Subsidiaries. The following unaudited pro forma combined statements of operations for the period from January 1, 2022 to September 16, 2022 (date of acquisition), for the year ended December 31, 2021, and for the six months ended June 30, 2022 have been derived from the statement of operations of Freight Connections.

 

Freight Connections offers an array of transportation, warehousing, consolidating, distribution, and local cartage services throughout the New York tri-state area. Freight Connections was founded in 2016 and is a privately held transportation and logistics carrier headquartered in Ridgefield Park, New Jersey. The Company currently operates with 30 power units and 50 trailers, including dry vans, pups, flatbeds, step decks, and double drop trailers out of three buildings in the area with 200,000 square feet of warehouse and cross dock space, strategically located within one mile of each other. Freight Connections offers customers an array of services including truckload, LTL, and consolidating of cartage, construction-trade, air, and rail freight, as well as warehousing and distribution services.

 

The unaudited pro forma combined balance sheet and unaudited combined statements of operations are presented for informational purposes only and do not purport to be indicative of the combined financial condition that would have resulted if the acquisition would have existed on June 30, 2022 and December 31, 2021.

 

1

 

 

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES

 UNAUDITED PRO FORMA COMBINED BALANCE SHEETS

June 30, 2022

 

   Transportation and Logistics Systems, Inc.   Freight             
   and Subsidiaries   Connections, Inc.             
   June 30,   June 30,   Pro Forma Adjustments   Pro Forma 
   2022   2022   Dr   Cr   Balances 
                     
ASSETS                         
CURRENT ASSETS:                         
Cash  $5,778,706   $22,060   $-(1)  $1,525,000   $4,275,766 
Accounts receivable, net   473,640    2,157,495    -    -    2,631,135 
Prepaid expenses and other current assets   355,129    197,179    -    -    552,308 
                          
Total Current Assets   6,607,475    2,376,734    -    1,525,000    7,459,209 
                          
OTHER ASSETS:                         
Security deposit   39,585    220,825    -    -    260,410 
Property and equipment, net   229,424    811,860    -    -    1,041,284 
Goodwill   -    -(1)   1,628,237    -    1,628,237 
Intangible assets   1,695,852    -(1)   7,407,080(2)   598,755    8,504,177 
                          
Total Other Assets   1,964,861    1,032,685    9,035,317    598,755    11,434,108 
                          
TOTAL ASSETS  $8,572,336   $3,409,419   $9,035,317   $2,123,755   $18,893,317 
                          
LIABILITIES AND SHAREHOLDERS’ EQUITY                         
                          
CURRENT LIABILITIES:                         
Notes payable, current portion, net of debt discount  $-   $195,012   $-   $-   $195,012 
Accounts payable   301,684    209,135    -    -    510,819 
Accrued expenses   368,800    147,187    -    -    515,987 
Insurance payable   140,679    141,713    -    -    282,392 
Income taxes payable   -    598,755(2)   598,755    -    - 
Accrued compensation and related benefits   59,813    31,835    -    -    91,648 
                          
Total Current Liabilities   870,976    1,323,637    598,755    -    1,595,858 
                          
LONG-TERM LIABILITIES:                         
Notes payable, net of current portion   -    518,459    -(1)   4,544,671    5,063,130 
                          
Total Long-term Liabilities   -    518,459    -    4,544,671    5,063,130 
                          
Total Liabilities   870,976    1,842,096    598,755    4,544,671    6,658,988 
                          
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; No shares issued and outstanding at June 30, 2022 (Liquidation value $0)   -    -    -    -    - 
Series E convertible preferred stock, par value $0.001 per share; 562,250 shares designated; 51,605 shares issued and outstanding at June 30, 2022 ($13.34 per share liquidation value)   21    -    -    -    21 
Series G convertible preferred stock, par value $0.001 per share; 1,000,000 shares designated; 617,500 shares issued and outstanding at June 30, 2022 ($10.00 per share liquidation value)   618    -    -    -    618 
Series H convertible preferred stock, par value $0.001 per share; 35,000 shares designated; 0 shares and 32,374 proforma shares issued and outstanding at June 30, 2022, respectively (No per share liquidation value)   -    -    -(1)   32    32 
Common stock, par value $0.001 per share; 10,000,000,000 shares authorized; 3,396,601,092 shares and 3,575,512,936 proforma shares issued and outstanding at June 30, 2022, respectively   3,396,601    -    (1)   178,912    3,575,513 
Additional paid-in capital   126,282,689    -    -(1)(3)   4,354,025    130,636,714 
Accumulated deficit   (121,978,569)   1,567,323(3)   1,567,323    -    (121,978,569)
                          
Total Shareholders’ Equity   7,701,360    1,567,323    1,567,323    4,532,969    12,234,329 
                          
Total Liabilities and Shareholders’ Equity  $8,572,336   $3,409,419   $2,166,078   $9,077,640   $18,893,317 

 

See accompanying notes to unaudited pro forma combined financial statements.

 

2

 

 

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

 

   Transportation and Logistics Systems, Inc.   Freight             
   and Subsidiaries   Connections, Inc.             
   For the Year   For the Period From             
   Ended December 31,   January 1, 2022 to September 16,   Pro Forma Adjustments   Pro Forma 
   2022   2022   Dr   Cr.   Balances 
                     
SALES  $7,744,477   $7,044,250   $-   $-   $14,788,727 
                          
COST OF SALES   5,216,839    3,339,993    -    -    8,556,832 
                          
GROSS PROFIT   2,527,638    3,704,257    -    -    6,231,895 
                          
OPERATING EXPENSES:                         
Compensation and related benefits   3,742,676    658,473    -    -    4,401,149 
Legal and professional fees   1,327,172    20,250    -    -    1,347,422 
Rent   1,398,401    1,712,474    -    -    3,110,875 
General and administrative expenses   1,806,686    208,887    -    -    2,015,573 
Contingency loss   200,000    -    -    -    200,000 
Impairment loss   2,090,567    -    -    -    2,090,567 
                          
Total Operating Expenses   10,565,502    2,600,084    -    -    13,165,586 
                          
(LOSS) INCOME FROM OPERATIONS   (8,037,864)   1,104,173    -    -    (6,933,691)
                          
OTHER INCOME (EXPENSES):                         
Interest income   31,166    -    -    -    31,166 
Interest expense   (125,382)   (75,390)   -    -    (200,772)
Gain on sale of subsidiary   293,975    -    -    -    293,975 
Settlement expense   (237,961)   -    -    -    (237,961)
                          
Total Other Income (Expenses)   (38,202)   (75,390)   -    -    (113,592)
                          
INCOME BEFORE PROVISION FOR INCOME TAXES   (8,076,066)   1,028,783    -    -    (7,047,283)
                          
INCOME TAXES   -    

(308,635

)   -    -    (308,635)
                          
NET INCOME   (8,076,066)   720,148    -    -    (7,355,918)
                          
Deemed dividends, beneficial conversion features, and accrued dividends   (417,546)   -    -    -    (417,546)
                          
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS  $(8,493,612)  $720,148   $-   $-   $(7,773,464)
                          
NET INCOME PER COMMON SHARE:                         
Basic  $(0.00)                 $(0.00)
Diluted  $(0.00)                 $(0.00)
                          
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                         
Basic   3,359,982,502                   3,486,446,217 
Diluted   3,359,982,502                   3,486,446,217 

 

See accompanying notes to unaudited pro forma combined financial statements.

 

3

 

 

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

 

   Transportation and Logistics Systems, Inc.   Freight             
   and Subsidiaries   Connections, Inc.             
   For the Six Months   For the Six Months             
   Ended June 30,   Ended June 30,   Pro Forma Adjustments   Pro Forma 
   2022   2022   Dr   Cr.   Balances 
                     
                     
SALES  $2,663,893   $4,963,899   $-   $-   $7,627,792 
                          
COST OF SALES   1,984,552    2,315,979    -    -    4,300,531 
                          
GROSS PROFIT   679,341    2,647,920    -    -    3,327,261 
                          
OPERATING EXPENSES:                         
Compensation and related benefits   2,049,753    451,301    -    -    2,501,054 
Legal and professional fees   688,497    12,463    -    -    700,960 
Rent   212,294    1,091,673    -    -    1,303,967 
General and administrative expenses   534,110    246,412    -    -    780,522 
                          
Total Operating Expenses   3,484,654    1,801,849    -    -    5,286,503 
                          
(LOSS) INCOME FROM OPERATIONS   (2,805,313)   846,071    -    -    (1,959,242)
                          
OTHER INCOME (EXPENSES):                         
Interest expense   (9,762)   (34,046)   -    -    (43,808)
Gain on sale of subsidiary’s asset   296,689    -    -    -    296,689 
Settlement expense   (227,811)   -    -    -    (227,811)
                          
Total Other Income (Expenses)   59,116    (34,046)   -    -    25,070 
                          
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES   (2,746,197)   812,025    -    -    (1,934,172)
                          
INCOME TAXES   -    (243,608)   -    -    (243,608)
                          
NET (LOSS) INCOME   (2,746,197)   568,417    -    -    (2,177,780)
                          
Preferred Stock Dividend and Deemed Dividend   (215,885)   -    -    -    (215,885)
                          
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS  $(2,962,082)  $568,417   $-   $-   $(2,393,665)
                          
NET LOSS PER COMMON SHARE:                         
Basic  $(0.00)                 $(0.00)
Diluted  $(0.00)                 $(0.00)
                          
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                         
Basic   3,179,603,803                   3,358,515,647 
Diluted   3,179,603,803                   3,358,515,647 

 

See accompanying notes to unaudited pro forma combined financial statements.

 

4

 

 

TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

 

   Transportation and Logistics Systems, Inc.   Freight             
   and Subsidiaries   Connections, Inc.             
   For the Year   For the Year             
   Ended December 31,   Ended December 31,   Pro Forma Adjustments   Pro Forma 
   2021   2021   Dr   Cr.   Balances 
                     
SALES  $5,495,146   $8,919,377   $-   $-   $14,414,523 
                          
COST OF SALES   5,408,143    4,820,965    -    -    10,229,108 
                          
GROSS PROFIT   87,003    4,098,412    -    -    4,185,415 
                          
OPERATING EXPENSES:                         
Compensation and related benefits   1,403,311    702,577    -    -    2,105,888 
Legal and professional fees   2,160,081    -    -    -    2,160,081 
Rent   599,820    1,362,016    -    -    1,961,836 
General and administrative expenses   1,115,187    596,890    -    -    1,712,077 
Contingency loss   30,000    -    -    -    30,000 
Loss on lease abandonment   1,223,628    -    -    -    1,223,628 
                          
Total Operating Expenses   6,532,027    2,661,483    -    -    9,193,510 
                          
(LOSS) INCOME FROM OPERATIONS   (6,445,024)   1,436,929    -    -    (5,008,095)
                          
OTHER INCOME (EXPENSES):                         
Interest expense   (349,544)   (41,461)   -    -    (391,005)
Interest expense - related parties   (74,959)   -    -    -    (74,959)
Warrant exercise inducement expense   (4,431,853)   -    -    -    (4,431,853)
Gain on debt extinguishment, net   1,564,941    82,504    -    -    1,647,445 
Gain on debt extinguishment - related party   148,651    -    -    -    148,651 
Other income   194,823    -    -    -    194,823 
Gain on deconsolidation of subsidiaries   12,363,449    -    -    -    12,363,449 
Derivative income, net   3,284,306    -    -    -    3,284,306 
                          
Total Other Income (Expenses)   12,699,814    41,043    -    -    12,740,857 
                          
INCOME BEFORE PROVISION FOR INCOME TAXES   6,254,790    1,477,972    -    -    7,732,762 
                          
INCOME TAXES   -    (443,392)   -    -    (443,392)
                          
NET INCOME   6,254,790    1,034,580    -    -    7,289,370 
                          
Deemed dividends, beneficial conversion features, and accrued dividends   (2,650,217)   -    -    -    (2,650,217)
                          
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS  $3,604,573   $1,034,580   $-   $-   $4,639,153 
                          
NET INCOME PER COMMON SHARE:                         
Basic  $0.00                  $0.00 
Diluted  $0.00                  $0.00 
                          
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                         
Basic   2,341,907,998                   2,520,819,842 
Diluted   3,728,170,026                   3,907,081,870 

 

See accompanying notes to unaudited pro forma combined financial statements.

 

5

 

 

Notes to Unaudited Pro Forma Combined Financial Statements

 

Effective September 16, 2022, the Company’s newly formed wholly-owned subsidiary, TLSS-FC, closed on an acquisition of all outstanding stock of Freight Connections, a company offering an array of transportation, warehousing, consolidating, distribution, and local cartage services throughout the New York tri-state area. Joseph Corbisiero, the sole shareholder of Freight Connections, from whom the shares were acquired (the “Freight Connections Seller”). Freight Connections was founded in 2016 and is a transportation and logistics carrier headquartered in Ridgefield Park, New Jersey. Freight Connections currently operates with 30 power units and 50 trailers, including dry vans, pups, flatbeds, step decks, and double drop trailers out of three buildings in the area with 200,000 square feet of warehouse and cross dock space, strategically located within one mile of each other. Freight Connections offers customers an array of services including truckload, LTL, and consolidating of cartage, construction-trade, air, and rail freight, as well as warehousing and distribution services. Prior to the closing, the Company, TLSSA and Freight Connections Seller entered into an amendment to their Stock Purchase and Sale Agreement, dated as of May 23, 2022 (the “Amended SPA”), and TLSSA assigned its interest in the Amended SPA to TLSS-FC. Pursuant to the Amended SPA, the total purchase price was $9,365,000, subject to certain adjustment. TLSS-FC: (i) paid $1,525,000 in cash at closing, (ii) Freight Connections entered into a $4,544,671 secured promissory note with the Freight Connections Seller, with interest accruing at the rate of 5% per annum and then 10% per annum as of March 1, 2023 (The entire unpaid principal under the note, together with all accrued and unpaid interest thereon and all other amounts payable thereunder, shall be due and payable in one balloon payment on December 31, 2023, unless paid sooner. The promissory note is secured solely by the assets of Freight Connections), and (iii) assumed certain debt. The Company issued to the Freight Connections Seller 178,911,844 shares of the Company’s common stock and 32,374 shares of the Company’s Series H preferred stock which is convertible into an aggregate of 323,740,000 shares of the Company’s common stock based on a conversion of 10,000 shares of common stock for each share of Series H preferred stock outstanding. The common stock and the as if converted number of Series H preferred stock were valued at $0.0059 per share based on the quoted closing price of the Company’s common stock on the measurement date, for an aggregate fair value of $2,965,646. The number of shares was calculated as follows: (a) shares of common stock of the Company equal to no more than 4.99% of the number of shares of common stock outstanding immediately after such issuance, and (b) the balance of the shares in Series H Convertible Preferred Stock, a new series of non-voting, convertible preferred stock issuable to sellers in connection with acquisitions or strategic transactions approved by a majority of the directors of the Company. TLSS-FC agreed to pay certain accrued liabilities and other notes payable that existed on the books of Freight Connections and agreed to pay the $4,544,671 secured promissory note which was assumed by Freight Connections. For accounting purposes, the total purchase consideration paid, after closing adjustments, was deemed to be $9,035,317 which includes (i) cash paid of $1,525,000, (ii) the aggregate fair value of common shares and Series H preferred shares issued to Freight Connections Seller of $2,965,646, and (iii) the $4,544,671 secured promissory note in the name of Freight Connections. The purchase consideration amount does not include accrued liabilities and other notes payable which were treated as assumed liabilities in the purchase price allocation.

 

We have derived the Company’s historical financial data on June 30, 2022 and for the six months ended June 30, 2022 from its unaudited consolidated financial statements contained in Form 10-Q as filed with the Securities and Exchange Commission, and for the year ended December 31, 2022 and 2021 from its audited consolidated financial statements contained in Form 10-K as filed with the Securities and Exchange Commission, respectively.

 

We have derived Freight Connection’s historical financial statements as of June 30, 2022, for the six months ended June 30, 2022, and for the period from January 1, 2022 to September 16, 2022 (date of acquisition) from Freight Connection’s unaudited financial statements, and for the year ended December 31, 2021 from Freight Connection’s audited financial statements contained in this Report on Form 8-K/A.

 

6

 

 

The unaudited combined pro forma balance sheet on June 30, 2022 gives effect to 1) the issuance of 178,911,844 common shares for the acquisition of 100% of Freight Connections, 2) the issuance of 32,374 Series H shares of preferred stock, 3) the issuance of a note payable to the seller of Freight Connections in the amount of $4,544,671, and 4) the payment of cash of $1,525,000, and includes the following pro forma adjustments:

 

   Debit   Credit 
On June 30, 2022          
1) To reflect the issuance of 178,911,844 shares of common stock and 32,374 shares of Series H preferred stock at fair value, and the issuance of a promissory note for the acquisition of Freight Connections           
Intangible assets   7,407,080      
Goodwill   1,628,237      
Cash        1,525,000 
Series H preferred stock, par value        32 
Common stock, par value         178,912 
Additional paid-in capital        2,786,702 
Note payable        4,544,671 
           
2) To reverse income tax payable not assumed in acquisition          
Income taxes payable   598,755      
Intangible assets        598,755 
           
3) To net out retained earnings to additional paid-in capital upon acquisition          
Retained earnings   1,567,323      
Additional paid-in capital        1,567,323 

 

The information presented in the unaudited pro forma combined financial statements does not purport to represent what our financial position or results of operations would have been had the Share Exchange Agreement and related Merger and all related transactions occurred as of the dates indicated, nor is it indicative of our future combined financial position or combined results of operations for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience after the Share Exchange Agreement and all related transactions.

 

These unaudited pro forma combined financial statements should be read in conjunction with the accompanying notes and assumptions and the historical financial statements and related notes of the Company and Freight Connections.

 

7