UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
|
[X] |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For
the quarterly period ended June 30, 2020
|
[ ] |
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
[X] 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 [X] 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 [X] |
Smaller
reporting company [X] |
|
|
|
|
|
|
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
[X]
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 August 14, 2020 |
|
Common
Stock, $0.001 |
|
1,263,686,663 |
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC.
FORM
10-Q
June
30, 2020
INDEX
PART I. FINANCIAL
INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
|
TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND
SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
|
|
June
30, |
|
|
December
31, |
|
|
|
|
2020 |
|
|
2019 |
|
| |
|
(Unaudited) |
|
|
|
|
| |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,431,173 |
|
|
$ |
50,026 |
|
|
Accounts
receivable, net |
|
|
923,535 |
|
|
|
963,771 |
|
|
Prepaid
expenses and other current assets |
|
|
1,769,895 |
|
|
|
1,246,555 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets |
|
|
4,124,603 |
|
|
|
2,260,352 |
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS: |
|
|
|
|
|
|
|
|
|
Security
deposit |
|
|
207,250 |
|
|
|
76,500 |
|
|
Property
and equipment, net |
|
|
672,772 |
|
|
|
240,406 |
|
|
Right of
use assets, net |
|
|
1,621,290 |
|
|
|
1,750,430 |
|
| |
|
|
|
|
|
|
|
|
|
Total
Other Assets |
|
|
2,501,312 |
|
|
|
2,067,336 |
|
| |
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
6,625,915 |
|
|
$ |
4,327,688 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
|
Convertible notes
payable, net of put premium of $0 and $385,385 and debt discounts
of $2,275,670 and $2,210,950, respectively |
|
$ |
4,126,079 |
|
|
$ |
3,634,344 |
|
|
Notes
payable, current portion, net of debt discount of $0 and $762,112,
respectively |
|
|
4,252,538 |
|
|
|
2,425,003 |
|
|
Note
payable - related party |
|
|
500,000 |
|
|
|
500,000 |
|
|
Accounts
payable |
|
|
1,000,450 |
|
|
|
1,517,082 |
|
|
Accrued
expenses |
|
|
624,261 |
|
|
|
627,990 |
|
|
Insurance
payable |
|
|
3,201,872 |
|
|
|
2,948,261 |
|
|
Contingency
liability |
|
|
440,000 |
|
|
|
440,000 |
|
|
Lease
liabilities, current portion |
|
|
353,575 |
|
|
|
333,126 |
|
|
Derivative
liability |
|
|
62,813,098 |
|
|
|
2,135,939 |
|
|
Due to
related parties |
|
|
222,322 |
|
|
|
325,445 |
|
|
Accrued
compensation and related benefits |
|
|
1,233,565 |
|
|
|
886,664 |
|
| |
|
|
|
|
|
|
|
|
|
Total
Current Liabilities |
|
|
78,767,760 |
|
|
|
15,773,854 |
|
| |
|
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES: |
|
|
|
|
|
|
|
|
|
Notes
payable, net of current portion |
|
|
510,766 |
|
|
|
- |
|
|
Lease
liabilities, net of current portion |
|
|
1,300,180 |
|
|
|
1,440,258 |
|
| |
|
|
|
|
|
|
|
|
|
Total
Long-term Liabilities |
|
|
1,810,946 |
|
|
|
1,440,258 |
|
| |
|
|
|
|
|
|
|
|
|
Total
Liabilities |
|
|
80,578,706 |
|
|
|
17,214,112 |
|
| |
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies (See Note 9) |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
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; 1,700,000 shares issued and outstanding at June
30, 2020 and December 31, 2019, respectively (Liquidation value
$1,700 and $1,700, respectively) |
|
|
1,700 |
|
|
|
1,700 |
|
|
Series C
preferred stock, par value $0.001 per share; 1 shares designated;
No shares issued and outstanding at June 30, 2020 and December 31,
2019, respectively |
|
|
- |
|
|
|
- |
|
|
Common
stock, par value $0.001 per share; 4,000,000,000 shares authorized;
499,900,491 and 11,832,603 shares issued and outstanding at June
30, 2020 and December 31, 2019, respectively |
|
|
499,900 |
|
|
|
11,833 |
|
|
Common
stock issuable, par value $0.001 per share; 0 and 25,000
shares |
|
|
- |
|
|
|
25 |
|
|
Additional
paid-in capital |
|
|
75,966,151 |
|
|
|
47,715,878 |
|
|
Accumulated
deficit |
|
|
(150,420,542 |
) |
|
|
(60,615,860 |
) |
| |
|
|
|
|
|
|
|
|
|
Total
Shareholders’ Deficit |
|
|
(73,952,791 |
) |
|
|
(12,886,424 |
) |
| |
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders’ Deficit |
|
$ |
6,625,915 |
|
|
$ |
4,327,688 |
|
|
See
accompanying notes to unaudited condensed consolidated financial
statements. |
|
TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND
SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
(Unaudited) |
| |
|
For the
Three Months Ended |
|
|
For the
Six Months Ended |
|
| |
|
June
30, |
|
|
June
30, |
|
| |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
|
$ |
8,558,815 |
|
|
$ |
8,101,412 |
|
|
$ |
17,193,875 |
|
|
$ |
13,904,619 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES |
|
|
6,997,856 |
|
|
|
7,522,973 |
|
|
|
14,853,605 |
|
|
|
13,072,675 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT |
|
|
1,560,959 |
|
|
|
578,439 |
|
|
|
2,340,270 |
|
|
|
831,944 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related benefits |
|
|
662,503 |
|
|
|
3,608,670 |
|
|
|
1,404,548 |
|
|
|
7,717,214 |
|
|
Legal and
professional fees |
|
|
2,487,896 |
|
|
|
566,242 |
|
|
|
2,902,706 |
|
|
|
1,071,082 |
|
|
Rent |
|
|
175,261 |
|
|
|
86,406 |
|
|
|
339,611 |
|
|
|
185,237 |
|
|
General
and administrative expenses |
|
|
196,368 |
|
|
|
930,203 |
|
|
|
441,651 |
|
|
|
1,595,535 |
|
|
Impairment
loss |
|
|
- |
|
|
|
1,724,591 |
|
|
|
- |
|
|
|
1,724,591 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses |
|
|
3,522,028 |
|
|
|
6,916,112 |
|
|
|
5,088,516 |
|
|
|
12,293,659 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS |
|
|
(1,961,069 |
) |
|
|
(6,337,673 |
) |
|
|
(2,748,246 |
) |
|
|
(11,461,715 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
(EXPENSES) INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(1,940,912 |
) |
|
|
(1,377,051 |
) |
|
|
(4,987,639 |
) |
|
|
(2,597,443 |
) |
|
Interest
expense - related parties |
|
|
(22,438 |
) |
|
|
(121,078 |
) |
|
|
(129,576 |
) |
|
|
(147,639 |
) |
|
Loan
fees |
|
|
|
|
|
|
(601,121 |
) |
|
|
|
|
|
|
(601,121 |
) |
|
Gain on
debt extinguishment, net |
|
|
5,968,560 |
|
|
|
43,823,897 |
|
|
|
6,243,594 |
|
|
|
43,917,768 |
|
|
Other
income |
|
|
107,137 |
|
|
|
- |
|
|
|
174,968 |
|
|
|
- |
|
|
Derivative
expense, net |
|
|
(69,806,610 |
) |
|
|
(41,653,345 |
) |
|
|
(69,661,771 |
) |
|
|
(55,037,605 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other (Expenses) Income |
|
|
(65,694,263 |
) |
|
|
71,302 |
|
|
|
(68,360,424 |
) |
|
|
(14,466,040 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
CONTINUING OPERATIONS |
|
|
(67,655,332 |
) |
|
|
(6,266,371 |
) |
|
|
(71,108,670 |
) |
|
|
(25,927,755 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
discontinued operations |
|
|
- |
|
|
|
(695,087 |
) |
|
|
- |
|
|
|
(681,426 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS |
|
|
(67,655,332 |
) |
|
|
(6,961,458 |
) |
|
|
(71,108,670 |
) |
|
|
(26,609,181 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed
dividend related to ratchet adjustment |
|
|
- |
|
|
|
- |
|
|
|
(18,696,012 |
) |
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
ATTRIBUTABLE TO COMMON SHAREHOLDERS |
|
$ |
(67,655,332 |
) |
|
$ |
(6,961,458 |
) |
|
$ |
(89,804,682 |
) |
|
$ |
(26,609,181 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON
SHARE - BASIC AND DILUTED |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
from continuing operations |
|
$ |
(0.26 |
) |
|
$ |
(0.63 |
) |
|
$ |
(0.66 |
) |
|
$ |
(3.42 |
) |
|
Loss from
discontinued operations |
|
|
(0.00 |
) |
|
|
(0.07 |
) |
|
|
(0.00 |
) |
|
|
(0.09 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
per common share - basic and diluted |
|
$ |
(0.26 |
) |
|
$ |
(0.70 |
) |
|
$ |
(0.66 |
) |
|
$ |
(3.51 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE
COMMON SHARE OUTSTANDING: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
261,417,292 |
|
|
|
9,891,525 |
|
|
|
136,885,211 |
|
|
|
7,573,522 |
|
|
See
accompanying notes to unaudited condensed consolidated financial
statements. |
|
TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND
SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’
DEFICIT |
|
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND
2019 |
|
(Unaudited) |
| |
|
Preferred
Stock |
|
|
Preferred
Stock |
|
|
|
|
|
Common
Stock |
|
|
Additional |
|
|
|
|
|
Total |
|
| |
|
Series
A |
|
|
Series
B |
|
|
Common
Stock |
|
|
Issuable |
|
|
Paid-in |
|
|
Accumulated |
|
|
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 |
) |
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,453,338 |
) |
|
|
(3,453,338 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance,
March 31, 2020 |
|
|
- |
|
|
|
- |
|
|
|
1,700,000 |
|
|
|
1,700 |
|
|
|
17,123,009 |
|
|
|
17,123 |
|
|
|
25,000 |
|
|
|
25 |
|
|
|
55,906,801 |
|
|
|
(82,765,210 |
) |
|
|
(26,839,561 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cancellation
of issuable shares |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(25,000 |
) |
|
|
(25 |
) |
|
|
25 |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reduction
of put premium upon conversion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
311,660 |
|
|
|
- |
|
|
|
311,660 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for debt conversion, accrued interest and
fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
412,573,593 |
|
|
|
412,573 |
|
|
|
- |
|
|
|
- |
|
|
|
2,317,667 |
|
|
|
- |
|
|
|
2,730,240 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion effect related to debt conversions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,531,703 |
|
|
|
- |
|
|
|
15,531,703 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued for cashless warrant exercise |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
70,203,889 |
|
|
|
70,204 |
|
|
|
- |
|
|
|
- |
|
|
|
(70,204 |
) |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,963,291 |
|
|
|
- |
|
|
|
1,963,291 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion
of stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,208 |
|
|
|
- |
|
|
|
5,208 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(67,655,332 |
) |
|
|
(67,655,332 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2020 |
|
|
- |
|
|
$ |
- |
|
|
|
1,700,000 |
|
|
$ |
1,700 |
|
|
|
499,900,491 |
|
|
$ |
499,900 |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
75,966,151 |
|
|
$ |
(150,420,542 |
) |
|
$ |
(73,952,791 |
) |
| |
|
Preferred
Stock Series A |
|
|
Preferred
Stock Series B |
|
|
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, 2018 |
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
- |
|
|
|
- |
|
|
|
4,220,837 |
|
|
|
4,220 |
|
|
|
- |
|
|
|
- |
|
|
|
7,477,422 |
|
|
|
(15,222,936 |
) |
|
|
(7,737,294 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued in connection with debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
63,581 |
|
|
|
- |
|
|
|
63,581 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
effect adjustment for change in derivative accounting |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
453,086 |
|
|
|
453,086 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,670,688 |
|
|
|
2,671 |
|
|
|
- |
|
|
|
- |
|
|
|
2,748,137 |
|
|
|
- |
|
|
|
2,750,808 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(19,647,723 |
) |
|
|
(19,647,723 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance,
March 31, 2019 |
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
- |
|
|
|
- |
|
|
|
6,891,525 |
|
|
|
6,891 |
|
|
|
- |
|
|
|
- |
|
|
|
10,289,140 |
|
|
|
(34,417,573 |
) |
|
|
(24,117,542 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for debt and warrant modifications |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
700,000 |
|
|
|
700 |
|
|
|
700,000 |
|
|
|
700 |
|
|
|
17,932,600 |
|
|
|
- |
|
|
|
17,934,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares
issued for conversion of preferred shares |
|
|
(4,000,000 |
) |
|
|
(4,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
2,600,000 |
|
|
|
2,600 |
|
|
|
- |
|
|
|
- |
|
|
|
1,400 |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
and cancellation of shares for disposal of Save On |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,000,000 |
) |
|
|
(1,000 |
) |
|
|
|
|
|
|
|
|
|
|
57,987 |
|
|
|
- |
|
|
|
56,987 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options granted |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
700,816 |
|
|
|
- |
|
|
|
700,816 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued in connection with debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
672,864 |
|
|
|
- |
|
|
|
672,864 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
230,000 |
|
|
|
230 |
|
|
|
- |
|
|
|
- |
|
|
|
2,465,270 |
|
|
|
- |
|
|
|
2,465,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,961,458 |
) |
|
|
(6,961,458 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2019 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
9,421,525 |
|
|
$ |
9,421 |
|
|
|
700,000 |
|
|
$ |
700 |
|
|
$ |
32,120,077 |
|
|
$ |
(41,379,031 |
) |
|
$ |
(9,248,833 |
) |
|
See
accompanying notes to unaudited condensed consolidated financial
statements. |
|
TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND
SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(Unaudited) |
| |
|
For the
Six Months Ended |
|
|
|
|
June
30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(71,108,670 |
) |
|
$ |
(26,609,181 |
) |
|
Adjustments to
reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense |
|
|
28,144 |
|
|
|
617,632 |
|
|
Amortization of debt
discount to interest expense |
|
|
2,768,270 |
|
|
|
2,310,580 |
|
|
Amortization of debt
discount to interest expense - related party |
|
|
- |
|
|
|
26,383 |
|
|
Stock-based
compensation and consulting fees |
|
|
1,999,749 |
|
|
|
5,216,308 |
|
|
Stock-based
compensation and consulting fees - discontinued
operations |
|
|
- |
|
|
|
700,816 |
|
|
Non-cash
loan fees |
|
|
- |
|
|
|
601,121 |
|
|
Other
non-cash interest and fees |
|
|
8,180 |
|
|
|
- |
|
|
Interest
expense related to debt default |
|
|
1,531,335 |
|
|
|
- |
|
|
Derivative
expense, net |
|
|
69,661,771 |
|
|
|
55,037,605 |
|
|
Non-cash
portion of gain on extinguishment of debt, net |
|
|
(6,296,141 |
) |
|
|
(44,031,110 |
) |
|
Rent
expense |
|
|
9,511 |
|
|
|
14,112 |
|
|
Loss on
disposal of property and equipment |
|
|
- |
|
|
|
47,022 |
|
|
Impairment
loss |
|
|
- |
|
|
|
1,724,591 |
|
|
Change in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
40,236 |
|
|
|
(486,226 |
) |
|
Prepaid
expenses and other current assets |
|
|
(523,340 |
) |
|
|
(81,662 |
) |
|
Assets of
discontinued operations |
|
|
- |
|
|
|
(53,193 |
) |
|
Due from
related party |
|
|
- |
|
|
|
(81,489 |
) |
|
Security
deposit |
|
|
(130,750 |
) |
|
|
(34,350 |
) |
|
Accounts
payable and accrued expenses |
|
|
19,411 |
|
|
|
1,420,925 |
|
|
Insurance
payable |
|
|
253,611 |
|
|
|
294,702 |
|
|
Liabilities of
discontinued operations |
|
|
- |
|
|
|
10,954 |
|
|
Accrued
compensation and related benefits |
|
|
346,901 |
|
|
|
238,622 |
|
| |
|
|
|
|
|
|
|
|
|
NET CASH
USED IN OPERATING ACTIVITIES |
|
|
(1,391,782 |
) |
|
|
(3,115,838 |
) |
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Decrease
in cash from disposal of subsidiary |
|
|
- |
|
|
|
(5,625 |
) |
|
Purchase
of property and equipment |
|
|
(460,510 |
) |
|
|
(51,256 |
) |
|
Proceeds
from sale of property and equipment |
|
|
- |
|
|
|
81,000 |
|
| |
|
|
|
|
|
|
|
|
|
NET CASH
(USED IN) PROVIDED BY INVESTING ACTIVITIES |
|
|
(460,510 |
) |
|
|
24,119 |
|
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds
from convertible notes payable - related party |
|
|
- |
|
|
|
2,500,000 |
|
|
Proceeds
from convertible notes payable |
|
|
1,880,000 |
|
|
|
- |
|
|
Repayment
of convertible notes payable |
|
|
(257,139 |
) |
|
|
(273,579 |
) |
|
Net
proceeds from notes payable |
|
|
4,479,662 |
|
|
|
6,631,020 |
|
|
Repayment
of notes payable |
|
|
(2,765,961 |
) |
|
|
(5,697,856 |
) |
|
Net
proceeds from notes payable - related party |
|
|
- |
|
|
|
255,000 |
|
|
Repayment
of notes payable - related party |
|
|
- |
|
|
|
(495,000 |
) |
|
Net
payments on related parties advances |
|
|
(103,123 |
) |
|
|
(3,793 |
) |
| |
|
|
|
|
|
|
|
|
|
NET CASH
PROVIDED BY FINANCING ACTIVITIES |
|
|
3,233,439 |
|
|
|
2,915,792 |
|
| |
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH |
|
|
1,381,147 |
|
|
|
(175,927 |
) |
| |
|
|
|
|
|
|
|
|
|
CASH,
beginning of period |
|
|
50,026 |
|
|
|
296,196 |
|
| |
|
|
|
|
|
|
|
|
|
CASH, end
of period |
|
$ |
1,431,173 |
|
|
$ |
120,269 |
|
| |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
|
Cash paid
for: |
|
|
|
|
|
|
|
|
|
Interest |
|
$ |
1,107,788 |
|
|
$ |
2,239,463 |
|
|
Income
taxes |
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Debt
discounts recorded |
|
$ |
262,872 |
|
|
$ |
1,222,986 |
|
|
Increase
in derivative liability and debt discount |
|
$ |
1,702,473 |
|
|
$ |
- |
|
|
Increase
in right of use asset and lease liability |
|
$ |
- |
|
|
$ |
631,723 |
|
|
Conversion
of debt and accrued interest for common stock |
|
$ |
3,063,579 |
|
|
$ |
- |
|
|
Reclassification of
accrued interest to debt |
|
$ |
89,262 |
|
|
$ |
- |
|
|
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 |
|
$ |
18,696,012 |
|
|
$ |
- |
|
|
See
accompanying notes to unaudited condensed consolidated financial
statements. |
TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND
SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
NOTE
1 – ORGANIZATION AND BUSINESS OPERATIONS
Transportation
and Logistics Systems, Inc. (“TLSS” or the
“Company”), formerly PetroTerra Corp., was incorporated
under the laws of the State of Nevada, on July 25, 2008. The
Company operates through its subsidiaries as a leading logistics
and transportation company specializing in ecommerce fulfillment,
last mile deliveries, two-person home delivery and line haul
services for predominantly online retailers.
On
March 30, 2017 (the “Closing Date”), TLSS and Save On
Transport Inc. (“Save On”) entered into a Share Exchange
Agreement, dated as of the same date (the “Share Exchange
Agreement”). Pursuant to the terms of the Share Exchange
Agreement, on the Closing Date, Save On became a wholly-owned
subsidiary of TLSS (the “Reverse Merger”). Save On was
incorporated in the state of Florida and started business on July
12, 2016. This transaction was treated as a reverse merger and
recapitalization of Save On for financial reporting purposes
because the Save On shareholders retained an approximate 80%
controlling interest in the post-merger consolidated entity. Save
On was considered the acquirer for accounting purposes, and the
Company’s historical financial statements before the Reverse Merger
were replaced with the historical financial statements of Save On
before the Reverse Merger. The balance sheets at their historical
cost basis of both entities were combined at the Closing Date and
the results of operations from the Closing Date forward include the
historical results of Save On and results of TLSS from the Closing
Date forward. On May 1, 2019, the Company entered into a share
exchange agreement with Save On and Steven Yariv, whereby the
Company returned all of the stock of Save On to Steven Yariv in
exchange for Mr. Yariv conveying 1,000,000 shares of common stock
of the Company back to the Company. In addition, the Company
granted an aggregate of 80,000 options to certain employees of Save
On. On April 16, 2019, Mr. Yariv ceased to be an officer or
director of the Company.
On
June 18, 2018 (the “Acquisition Date”), the Company
completed the acquisition of 100% of the issued and outstanding
membership interests of Prime EFS, LLC, a New Jersey limited
liability company (“Prime EFS”), from its members pursuant
to the terms and conditions of a Stock Purchase Agreement entered
into among the Company and the Prime EFS members on the Acquisition
Date (the “SPA”). Prime EFS is a New Jersey based
transportation company with a focus on deliveries for on-line
retailers in New York, New Jersey and Pennsylvania.
On
July 24, 2018, the Company formed Shypdirect LLC
(“Shypdirect”), a company organized under the laws of New
Jersey. Shypdirect is a transportation company with a focus on
tractor trailer and box truck deliveries of product on the east
coast of the United States from one distributor’s warehouse to
another warehouse or from a distributor’s warehouse to the post
office.
On
June 19, 2020, Amazon Logistics, Inc. (“Amazon”) notified
Prime EFS in writing (the “Prime EFS Termination Notice”),
that Amazon does not intend to renew its Delivery Service Partner
(DSP) Agreement with Prime EFS when that agreement (the
“In-Force Agreement”) expires. In the Prime EFS Termination
Notice, Amazon stated that the In-Force Agreement expires on
September 30, 2020.
Additionally,
on July 17, 2020, Amazon notified Shypdirect that Amazon had
elected to terminate the Amazon Relay Carrier Terms of Service (the
“Program Agreement”) between Amazon and Shypdirect effective
as of November 14, 2020 (the “Shypdirect Termination
Notice”). On August 3, 2020, Amazon offered to withdraw the
Shypdirect Termination Notice and extend the term of the Program
Agreement to and including May 14, 2021, conditioned on Prime EFS
executing, for nominal consideration, a separation agreement with
Amazon under which Prime EFS agrees to cooperate in an orderly
transition of its Amazon last-mile delivery business to other
service providers, Prime EFS releases any and all claims it may
have against Amazon, and Prime EFS covenants not to sue Amazon (the
“Aug. 3 Proposal”). On August 4, 2020, the Company, Prime
EFS and Shypdirect accepted the Aug. 3 Proposal.
Approximately
59.3% and 39.4% (for a total of 98.7%) of the Company’s revenue of
$17,193,875 for the six months ended June 30, 2020 was attributable
to Prime EFS’s last-mile DSP business and Shypdirect’s mid-mile and
long-haul business with Amazon, respectively. The termination of
the Amazon last-mile business will have a material adverse impact
on the Company’s business in the 4th fiscal quarter of 2020 and
thereafter. If the Amazon mid-mile and long-haul business is
discontinued after May 14, 2021 it would have a material adverse
impact on the Company’s business in 2nd fiscal quarter of 2021 and
thereafter.
While
the Company will seek to replace its last-mile DSP Amazon business
and supplement its mid-mile and long-haul Amazon business, such
initiatives are consistent with its already existing business plan
to: (i) seek new last-mile, mid-mile and long-haul business with
other, non-Amazon, customers; (ii) explore other strategic
relationships; and (iii) identify potential acquisition
opportunities, while continuing to execute our restructuring plan,
commenced in February 2020.
TLSS
and its wholly-owned subsidiaries, Prime EFS and Shypdirect are
hereafter referred to as the “Company”.
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF
PRESENTATION
Basis
of presentation and principles of consolidation
The
condensed consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting
principles in the United States of America (“U.S. GAAP”) and
the rules and regulations of the United States Securities and
Exchange Commission for interim financial information. Accordingly,
they do not include all the information and disclosures necessary
for comprehensive presentation of financial position, results of
operations or cash flow. However, these unaudited condensed
consolidated financial statements reflect all adjustments,
consisting of normal recurring adjustments, which, in the opinion
of management, are necessary for fair presentation of the
information contained therein. It is suggested that these unaudited
interim condensed consolidated financial statements be read in
conjunction with the financial statements of the Company for the
year ended December 31, 2019, and notes thereto included in the
Company’s annual report on Form 10-K, filed on May 29,
2020.
The
Company follows the same accounting policies in the preparation of
its annual and interim reports. The results of operations in
interim periods are not necessarily an indication of operating
results to be expected for the full year.
The
unaudited condensed consolidated financial statements of the
Company include the accounts of TLSS and its wholly owned
subsidiaries, Save On (through April 30, 2019), Prime EFS and
Shypdirect. All intercompany accounts and transactions have been
eliminated in consolidation.
On
May 1, 2019, the Company entered into a Share Exchange Agreement
with Save On and Steven Yariv, whereby the Company returned all of
the stock of Save On to Steven Yariv in exchange for Mr. Yariv
conveying 1,000,000 shares of common stock of the Company back to
the Company. Pursuant to Accounting Standard Codification
(“ASC”) 205-20-45, the financial statement in which net
income or loss of a business entity is reported shall report the
results of operations of the discontinued operation in the period
in which a discontinued operation either has been disposed of or is
classified as held for sale. Accordingly, beginning in the second
quarter of 2019, the period that Save On was disposed of, the
Company reflects Save On as a discontinued operation and such
presentation is retroactively applied to all periods presented in
the accompanying condensed consolidated financial
statements.
Going
concern
The
accompanying condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities and
commitments in the normal course of business. As reflected in the
accompanying condensed consolidated financial statements, for the
six months ended June 30, 2020, the Company had a net loss of
$71,108,670 and net cash used in operations was $1,391,782.
Additionally, the Company had an accumulated deficit, shareholders’
deficit, and a working capital deficit of $150,420,542, $73,952,791
and $74,643,157, respectively, at June 30, 2020. Furthermore, the
Company failed to make required payments of principal and interest
on certain of its convertible debt instruments and notes payable
(see Note 6).
On
June 19, 2020, Amazon notified Prime EFS by the Prime EFS
Termination Notice that it does not intend to renew the In-Force
Agreement when that agreement expires. In the Prime EFS Termination
Notice, Amazon stated that the In-Force Agreement expires on
September 30, 2020. Additionally, on July 17, 2020, pursuant to the
ShypdDirect Termination Notice, Amazon notified Shypdirect that
Amazon had elected to terminate the Program Agreement between
Amazon and Shypdirect effective as of November 14, 2020 (see Note
1). However, on August 3, 2020, Amazon offered pursuant to the Aug.
3 Proposal to withdraw the Shypdirect Termination Notice and extend
the term of the Program Agreement to and including May 14, 2021,
conditioned on Prime EFS executing, for nominal consideration, a
separation agreement with Amazon under which Prime EFS agrees to
cooperate in an orderly transition of its Amazon last-mile delivery
business to other service providers, Prime EFS releases any and all
claims it may have against Amazon, and Prime EFS covenants not to
sue Amazon. On August 4, 2020, the Company, Prime EFS and
Shypdirect accepted the Aug. 3 Proposal. It is management’s opinion
that these factors raise substantial doubt about the Company’s
ability to continue as a going concern for a period of twelve
months from the issuance date of this report. In April 2020, the
Company’s subsidiaries, Prime EFS and Shypdirect, entered into
Paycheck Protection Program promissory notes with M&T Bank in
the aggregate amount of $3,446,152 (see Note 7). Management cannot
provide assurance that the Company will ultimately achieve
profitable operations, become cash flow positive, or raise
additional debt and/or equity capital.
The
Company will continue to: (i) seek to replace its last-mile DSP
Amazon business and supplement its mid-mile and long-haul Amazon
business with other, non-Amazon, customers; (ii) explore other
strategic relationships; and (iii) identify potential acquisition
opportunities, while continuing to execute our restructuring plan,
commenced in February 2020. The Company is seeking to raise capital
through additional debt and/or equity financings to fund its
operations in the future. Although the Company has historically
raised capital from sales of common shares and from the issuance of
convertible promissory notes and notes payable, there is no
assurance that it will be able to continue to do so. If the Company
is unable to replace its Amazon business, to raise additional
capital or secure additional lending in the near future, management
expects that the Company will need to curtail its operations. These
consolidated financial statements do not include any adjustments
related to the recoverability and classification of assets or the
amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going
concern.
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
Use
of estimates
The
preparation of the condensed consolidated financial statements, in
accordance with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates. Significant
estimates included in the accompanying unaudited condensed
consolidated financial statements and footnotes include the
valuation of accounts receivable, the useful life of property and
equipment, the valuation of intangible assets, the valuation of
right of use assets and related liabilities, assumptions used in
assessing impairment of long-lived assets, estimates of current and
deferred income taxes and deferred tax valuation allowances, the
fair value of non-cash equity transactions, the valuation of
derivative liabilities, and the value of claims against the
Company.
Fair
value of financial instruments
The
Financial Accounting Standards Board (“FASB”) issued ASC 820
— Fair Value Measurements and Disclosures, which defines
fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. ASC 820 requires
disclosures about the fair value of all financial instruments,
whether or not recognized, for financial statement purposes.
Disclosures about the fair value of financial instruments are based
on pertinent information available to the Company on June 30, 2020.
Accordingly, the estimates presented in these financial statements
are not necessarily indicative of the amounts that could be
realized on disposition of the financial instruments. ASC 820
specifies a hierarchy of valuation techniques based on whether the
inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect market
assumptions. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurement) and the lowest priority to unobservable
inputs (Level 3 measurement).
The
three levels of the fair value hierarchy are as follows:
|
|
● |
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. |
The
Company measures certain financial instruments at fair value on a
recurring basis. Assets and liabilities measured at fair value on a
recurring basis are as follows at June 30, 2020 and December 31,
2019:
| |
|
At June
30, 2020 |
|
|
At
December 31, 2019 |
|
|
Description |
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Derivative
liabilities |
|
|
— |
|
|
|
— |
|
|
$ |
62,813,098 |
|
|
|
— |
|
|
|
— |
|
|
$ |
2,135,939 |
|
A
roll-forward of the level 3 valuation financial instruments is as
follows:
|
|
|
For the
Six Months ended
June 30, 2020 |
|
|
For the
Six Months ended
June 30, 2019 |
|
|
Balance at
beginning of period |
|
$ |
2,135,939 |
|
|
$ |
7,888,684 |
|
|
Initial
valuation of derivative liabilities included in debt
discount |
|
|
1,702,474 |
|
|
|
- |
|
|
Initial
valuation of derivative liabilities included in derivative
expense |
|
|
14,892,068 |
|
|
|
- |
|
|
Gain on
extinguishment of debt related to April 9, 2019
modifications |
|
|
-
|
|
|
|
(61,841,708
|
) |
|
Gain on
extinguishment of debt related to repayment/conversion of
debt |
|
|
(22,068,971 |
) |
|
|
(246,110 |
) |
|
Reclassification of
warrants from equity to derivative liabilities |
|
|
11,381,885 |
|
|
|
- |
|
|
Cumulative
effect adjustment for change in derivative accounting |
|
|
- |
|
|
|
(838,471 |
) |
|
Change in
fair value included in derivative (gain) expense |
|
|
54,769,703 |
|
|
|
55,037,605 |
|
|
Balance at
end of period |
|
$ |
62,813,098 |
|
|
$ |
- |
|
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
The
Company accounts for its derivative financial instruments,
consisting of certain conversion options embedded in our
convertible instruments and warrants, at fair value using level 3
inputs. The Company determined the fair value of these derivative
liabilities using the Black-Scholes option pricing model, binomial
lattice models, or other accepted valuation practices. When
determining the fair value of its financial assets and liabilities
using these methods, the Company is required to use various
estimates and unobservable inputs, including, among other things,
expected terms of the instruments, expected volatility of its stock
price, expected dividends, and the risk-free interest rate. Changes
in any of the assumptions related to the unobservable inputs
identified above may change the fair value of the instrument.
Increases in expected term, anticipated volatility and expected
dividends generally result in increases in fair value, while
decreases in the unobservable inputs generally result in decreases
in fair value.
ASC
825-10 “Financial Instruments”, allows entities to
voluntarily choose to measure certain financial assets and
liabilities at fair value (fair value option). The fair value
option may be elected on an instrument-by-instrument basis and is
irrevocable, unless a new election date occurs. If the fair value
option is elected for an instrument, unrealized gains and losses
for that instrument should be reported in earnings at each
subsequent reporting date. The Company did not elect to apply the
fair value option to any outstanding instruments.
The
carrying amounts reported in the condensed consolidated balance
sheets for cash, accounts receivable, accounts payable and accrued
expenses approximate their fair values based on the short-term
maturity of these instruments. The carrying amount of the Company’s
convertible notes payable and promissory note obligations
approximate fair value, as the terms of these instruments are
consistent with terms available in the market for instruments with
similar risk.
Cash
and cash equivalents
For
purposes of the consolidated statements of cash flows, the Company
considers all highly liquid instruments with a maturity of three
months or less at the purchase date and money market accounts to be
cash equivalents. At June 30, 2020 and December 31, 2019, the
Company did not have any cash equivalents.
The
Company maintains its cash in bank and financial institution
deposits that at times may exceed federally insured limits. At June
30, 2020, cash balances in excess of FDIC insured levels amounted
to approximately $1,014,000. There were no balances in excess of
FDIC insured levels as December 31, 2019. The Company has not
experienced any losses in such accounts through June 30,
2020.
Accounts
receivable
Accounts
receivable are presented net of an allowance for doubtful accounts.
The Company maintains allowances for doubtful accounts for
estimated losses. The Company reviews the accounts receivable on a
periodic basis and makes general and specific allowances when there
is doubt as to the collectability of individual balances. In
evaluating the collectability of individual receivable balances,
the Company considers many factors, including the age of the
balance, a customer’s historical payment history, its current
credit-worthiness and current economic trends. Accounts are written
off after exhaustive efforts at collection.
Property
and equipment
Property
are stated at cost and are depreciated using the straight-line
method over their estimated useful lives of five to six years.
Leasehold improvements are depreciated over the shorter of the
useful life or lease term including scheduled renewal terms.
Maintenance and repairs are charged to expense as incurred. When
assets are retired or disposed of, the cost and accumulated
depreciation are removed from the accounts, and any resulting gains
or losses are included in income in the year of disposition. The
Company examines the possibility of decreases in the value of these
assets when events or changes in circumstances reflect the fact
that their recorded value may not be recoverable.
Intangible
asset
Intangible
assets are carried at cost less accumulated amortization, computed
using the straight-line method over the estimated useful life, less
any impairment charges.
Leases
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The
updated guidance requires lessees to recognize lease assets and
lease liabilities for most operating leases. In addition, the
updated guidance requires that lessors separate lease and non-lease
components in a contract in accordance with the new revenue
guidance in ASC 606. The updated guidance is effective for interim
and annual periods beginning after December 15, 2018.
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
On
January 1, 2019, the Company adopted ASU No. 2016-02, applying the
package of practical expedients to leases that commenced before the
effective date whereby the Company elected to not reassess the
following: (i) whether any expired or existing contracts contain
leases and; (ii) initial direct costs for any existing leases. For
contracts entered into on or after the effective date, at the
inception of a contract the Company assessed whether the contract
is, or contains, a lease. The Company’s assessment is based on: (1)
whether the contract involves the use of a distinct identified
asset, (2) whether it obtains the right to substantially all the
economic benefit from the use of the asset throughout the period,
and (3) whether it has the right to direct the use of the asset.
The Company will allocate the consideration in the contract to each
lease component based on its relative stand-alone price to
determine the lease payments. The Company has elected not to
recognize right-of-use assets and lease liabilities for short-term
leases that have a term of 12 months or less.
Operating
lease ROU assets represents the right to use the leased asset for
the lease term and operating lease liabilities are recognized based
on the present value of the future minimum lease payments over the
lease term at commencement date. As most leases do not provide an
implicit rate, the Company uses an incremental borrowing rate based
on the information available at the adoption date in determining
the present value of future payments. Lease expense for minimum
lease payments is amortized on a straight-line basis over the lease
term and is included in general and administrative expenses in the
condensed consolidated statements of operations.
Impairment
of long-lived assets
In
accordance with ASC Topic 360, the Company reviews long-lived
assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully
recoverable, or at least annually. The Company recognizes an
impairment loss when the sum of expected undiscounted future cash
flows is less than the carrying amount of the asset. The amount of
impairment is measured as the difference between the asset’s
estimated fair value and its book value.
Segment
reporting
The
Company uses “the management approach” in determining reportable
operating segments. The management approach considers the internal
organization and reporting used by the Company’s chief operating
decision maker for making operating decisions and assessing
performance as the source for determining the Company’s reportable
segments. The Company’s chief operating decision maker is the chief
executive officer of the Company, who reviews operating results to
make decisions about allocating resources and assessing performance
for the entire Company. On May 1, 2019, the Company disposed of its
Save On business segment and the results of operations of Save On
are included in discontinued operations. Accordingly, during the
three months ended June 30, 2020 and 2019, the Company believes
that it operates in one operating segment related to deliveries for
on-line retailers in New York, New Jersey, Pennsylvania and other
areas, and tractor trailer and box truck deliveries of product on
the east coast of the United States from one distributor’s
warehouse to another warehouse or from a distributor’s warehouse to
the post office.
Derivative
financial instruments
The
Company has certain financial instruments that are embedded
derivatives associated with capital raises. The Company evaluates
all of its financial instruments to determine if those contracts or
any potential embedded components of those contracts qualify as
derivatives to be separately accounted for in accordance with ASC
815-10-05-4, Derivatives and Hedging and 815-40,
Contracts in Entity’s Own Equity. This accounting treatment
requires that the carrying amount of any embedded derivatives be
recorded at fair value at issuance and marked-to-market at each
balance sheet date. In the event that the fair value is recorded as
a liability, as is the case with the Company, the change in the
fair value during the period is recorded as either other income or
expense. Upon conversion, exercise or repayment, the respective
derivative liability is marked to fair value at the conversion,
repayment or exercise date and then the related fair value amount
is reclassified to other income or expense as part of gain or loss
on extinguishment.
In
July 2017, FASB issued ASU No. 2017-11, Earnings Per Share
(Topic 260); Distinguishing Liabilities from Equity (Topic
480); Derivatives and Hedging (Topic 815): (Part I)
Accounting for Certain Financial Instruments with Down Round
Features. These amendments simplify the accounting for certain
financial instruments with down-round features. The amendments
require companies to disregard the down-round feature when
assessing whether the instrument is indexed to its own stock, for
purposes of determining liability or equity classification. The
guidance was adopted as of January 1, 2019 and the Company elected
to record the effect of this adoption retrospectively to
outstanding financial instruments with a down round feature by
means of a cumulative-effect adjustment to the condensed
consolidated balance sheet as of the beginning of 2019, the period
which the amendment is effective. In accordance with the guidance
presented in the ASU 2017-11, the fair value of derivative
liabilities associated with certain convertible notes as of
December 31, 2018 of $838,471 and the offsetting effect of
reclassifying such debt to stock-settled debt for which the Company
recorded a put premium liability of $385,385 was reclassified by
means of a cumulative-effect adjustment to opening accumulated
deficit as of January 1, 2019 in the amount of $453,086.
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
Revenue
recognition and cost of revenue
The
Company adopted ASC 606, Revenue from Contracts with Customers
(Topic 606), which supersedes the revenue recognition requirements
in Accounting Standards Codification (ASC) Topic 605, Revenue
Recognition. This ASC is based on the principle that revenue is
recognized to depict the transfer of goods or services to customers
in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
This ASC also requires additional disclosure about the nature,
amount, timing, and uncertainty of revenue and cash flows arising
from customer service orders, including significant
judgments.
For
the Company’s Prime EFS and Shypdirect business activities, the
Company recognizes revenues and the related direct costs of such
revenue which generally include compensation and related benefits,
gas costs, insurance, parking and tolls, truck rental fees, and
maintenance fees as of the date the freight is delivered which is
when the performance obligation is satisfied. In accordance with
ASC Topic 606, the Company recognizes revenue on a gross basis. Our
payment terms are net seven days from acceptance of delivery. The
Company does not incur incremental costs obtaining service orders
from its Prime EFS and Shypdirect customers, however, if the
Company did, because all of Prime EFS and Shypdirect customer
contracts are less than a year in duration, any contract costs
incurred would be expensed rather than capitalized. The revenue
that the Company recognizes arises from deliveries of packages on
behalf of the Company’s customers. Primarily, the Company’s
performance obligations under these service orders correspond to
each delivery of packages that the Company makes under the service
agreements. Control of the package transfers to the recipient upon
delivery. Once this occurs, the Company has satisfied its
performance obligation and the Company recognizes
revenue.
For
the Company’s Save On business activities, through the date of
disposition on May 1, 2019, the Company recognized revenues and the
related direct costs of such revenue which included carrier fees
and dispatch costs as of the date the freight was delivered by the
carrier which was when the performance obligation is satisfied.
Customer payments received prior to delivery were recorded as a
deferred revenue liability and related carrier fees if paid prior
to delivery were recorded as a deferred expense asset. In
accordance with ASC Topic 606, the Company recognized revenue on a
gross basis. Our payment terms for corporate customers were net 30
days from acceptance of delivery and individual customers generally
were required to pay in advance. The Company did not incur
incremental costs obtaining service orders from its Save On
customers, however, if the Company did, because all of the Save On
customer’s contracts were less than a year in duration, any
contract costs incurred were expensed rather than capitalized. The
revenue that the Company recognized arose from service orders it
received from its Save On customers. The Company’s performance
obligations under these service orders corresponded to each
delivery of a vehicle that the Company made for its customer under
the service orders; as a result, each service order generally
contained only one performance obligation based on the delivery to
be completed.
Management
has reviewed the revenue disaggregation disclosure requirements
pursuant to ASC 606 and determined that no further disaggregation
disclosure is required to be presented.
Basic
and diluted loss per share
Pursuant
to ASC 260-10-45, basic loss per common share is computed by
dividing net loss attributable to common shareholders by the
weighted average number of shares of common stock outstanding for
the periods presented. Diluted loss per share is computed by
dividing net loss attributable to common shareholders by the
weighted average number of shares of common stock, common stock
equivalents and potentially dilutive securities outstanding during
the period. Potentially dilutive common shares consist of common
stock issuable for stock warrants (using the treasury stock method)
and shares issuable for convertible debt (using the as-if converted
method). These common stock equivalents may be dilutive in the
future.
Potentially
dilutive common shares were excluded from the computation of
diluted shares outstanding as they would have an anti-dilutive
impact on the Company’s net losses and consisted of the
following:
|
|
|
June 30,
2020 |
|
|
June 30,
2019 |
|
|
Stock
warrants |
|
|
561,568,464 |
|
|
|
1,442,434 |
|
|
Stock
options |
|
|
80,000 |
|
|
|
- |
|
|
Convertible
debt |
|
|
698,058,084 |
|
|
|
4,415,776 |
|
|
Series A
convertible preferred stock |
|
|
- |
|
|
|
8,333,333 |
|
|
Series B
convertible preferred stock |
|
|
1,700,000 |
|
|
|
- |
|
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
Stock-based
compensation
Stock-based
compensation is accounted for based on the requirements of ASC 718
– “Compensation – Stock Compensation”, which requires
recognition in the financial statements of the cost of employee,
director, and non-employee services received in exchange for an
award of equity instruments over the period the employee, director,
or non-employee is required to perform the services in exchange for
the award (presumptively, the vesting period). The ASC also
requires measurement of the cost of employee, director, and
non-employee services received in exchange for an award based on
the grant-date fair value of the award. The Company has elected to
recognize forfeitures as they occur as permitted under ASU 2016-09
Improvements to Employee Share-Based Payment.
Recent
Accounting Pronouncements
In
July 2017, FASB issued ASU No. 2017-11, Earnings Per Share
(Topic 260); Distinguishing Liabilities from Equity (Topic
480); Derivatives and Hedging (Topic 815): (Part I)
Accounting for Certain Financial Instruments with Down Round
Features. These amendments simplify the accounting for certain
financial instruments with down-round features. The amendments
require companies to disregard the down-round feature when
assessing whether the instrument is indexed to its own stock, for
purposes of determining liability or equity classification. The
guidance was adopted as of January 1, 2019 and the Company elected
to record the effect of this adoption retrospectively to
outstanding financial instruments with a down round feature by
means of a cumulative-effect adjustment to the condensed
consolidated balance sheet as of the beginning of 2019, the period
which the amendment is effective. In accordance with the guidance
presented in the ASU 2017-11, the fair value of derivative
liabilities associated with certain convertible notes as of
December 31, 2018 of $838,471 and the offsetting effect of
reclassifying such debt to stock-settled debt for which the Company
recorded a put premium liability of $385,385 was reclassified by
means of a cumulative-effect adjustment to opening accumulated
deficit as of January 1, 2019 in the amount of $453,086.
In
August 2018, the FASB issued ASU 2018-13 to modify the disclosure
requirements on fair value measurements. The amendments are
effective for years beginning after December 15, 2019. An entity is
permitted to early adopt any removed or modified disclosures and
delay adoption of the additional disclosures until the effective
date. Most amendments should be applied retrospectively, but
certain amendments will be applied prospectively. The adoption of
this standard did not have an impact on the Company’s consolidated
financial position, results of operations and cash
flows.
There
are currently no other accounting standards that have been issued
but not yet adopted that we believe will have a significant impact
on our consolidated financial position, results of operations or
cash flows upon adoption.
NOTE
3 – DISCONTINUED OPERATIONS
On
May 1, 2019, the Company entered into a Share Exchange Agreement
with Save On and Steven Yariv, whereby the Company returned all of
the stock of Save On to Steven Yariv in exchange for Mr. Yariv
conveying 1,000,000 shares of common stock of the Company back to
the Company. In addition, the Company granted an aggregate of
80,000 options to certain employees of Save On. Mr. Yariv ceased to
be an officer or director of the Company effective with the filing
of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2018 as filed with the Securities and Exchange
Commission on April 16, 2019.
Pursuant
to ASC 205-20-45, the financial statement in which net income or
loss of a business entity is reported shall report the results of
operations of the discontinued operation in the period in which a
discontinued operation either has been disposed of or is classified
as held for sale. Accordingly, the Company reflects Save On as
discontinued operations beginning in the second quarter of 2019,
the period that Save On was disposed of and retroactively for all
periods presented in the accompanying condensed consolidated
financial statements. The business of Save On are considered
discontinued operations because: (a) the operations and cash flows
of Save On were eliminated from the Company’s operations; and (b)
the Company has no interest in the divested operations. As of June
30, 2020 and December 31, 2019, the Company did not have any
remaining assets and liabilities classified as discontinued
operations in the Company’s condensed consolidated financial
statements as of June 30, 2020 and December 31, 2019.
TRANSPORTATION
AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2020
The
summarized operating result of discontinued operations included in
the Company’s condensed consolidated statements of operations is as
follows: