Transportation and Logistics Systems, Inc. Announces Financial Results for the First Quarter Ended March 31, 2020
Restructuring Efforts to Reduce Debt and Improve Results Continue
JUPITER, FL - (NewMediaWire) - June 30, 2020 - Transportation and Logistics Systems, Inc. (OTC:TLSS), (“TLSS", or the “Company”), a leading eCommerce fulfillment service provider, announced today that on June 29, 2020, it filed its Form 10-Q, Quarterly Report for the first quarter ended March 31, 2020.
John Mercadante, Chairman and CEO of TLSS, commented, "While the first quarter 2020 results reflect, what we believe was, a most challenging time financially for the Company, we are encouraged by the progress we continue to make with the restructuring efforts we began implementing in late March 2020. We remain intent on cleaning up our balance sheet and improving operating results to better position the Company for future growth, the goal of which is to increase shareholder value.”
Financial Results for the First Quarter Ended March 31, 2020
Revenue for the three months ended March 31, 2020 increased $2,832,000, or 48.8%, to $8,635,000, as compared to $5,803,000, for the same period in 2019. Such increase was due primarily to: (i) the Company’s expansion into new markets in Florida, Georgia, Ohio and Tennessee that were not operational during the first quarter of 2019; (ii) securing new business; (iii) a full quarter of its box-truck line of business that commenced in February 2019; and (iv) an increase in deliveries for the Company’s primary customer, most likely as a result of more online ordering related to the COVID-19 pandemic.
The Company generated a net loss attributable to common shareholders for the three months ended March 31, 2020 of $22,149,000, as compared to a net loss attributable to common shareholders of $19,648,000 for the same period last year. This quarter’s results were comprised of: (i) a loss from operations of $787,000; (ii) interest expense of $3,154,000 and (iii) non-cash deemed dividend related to ratchet adjustment of $18,696,000; and which were partially offset by: (i) other income $68,000; (ii) gain from extinguishment of debt of $275,000 and (iii) non-cash derivative gain of $145,000.
On June 19, 2020, Amazon Logistics, Inc. (“Amazon”) notified Prime EFS in writing, that Amazon does not intend to renew its Delivery Service Partner (DSP) Agreement with Prime EFS when that agreement (the “In-Force Agreement”) expires. Amazon stated that it believes the In-Force Agreement expires on September 30, 2020. Prime EFS, however, strongly disagrees with Amazon’s position in this regard and believes it has a strong argument that the In-Force Agreement does not expire, by its specific terms, until March 31, 2021, at the earliest. If Amazon disagrees with the forgoing, Prime EFS intends to arbitrate this issue through the American Arbitration Association; however, the Company cannot make give any assurances as to the success of its position.
Approximately 74% of the Company’s approximately $32 million of revenue reported in its recent Form 10-K Annual Report for the calendar year ended December 31, 2019 was attributable to Prime EFS’s last-mile DSP business with Amazon. Even if it lost the Amazon last-mile business, the Company intends to generate significant revenues from its mid-mile and long-haul business. While a termination of the Amazon last-mile business will have a material adverse impact on the Company’s business, the Company will continue to: (i) seek to expand its last-mile business with other non-Amazon customers, which includes having recently begun working with one of the largest delivery companies in the world; (ii) explore other strategic relationships; and (iii) identify potential acquisition opportunities, while continuing to execute our restructuring plan, commenced in February 2020.
About Transportation and Logistics Systems, Inc.
TLSS operates as a leading logistics and transportation company specializing in eCommerce fulfillment, last mile, two-person home delivery and line haul services for predominantly online retailers through its wholly-owned operating subsidiaries, PrimeEFS, LLC and ShypDirect, LLC. For more information about the Company and its subsidiaries, visit the Company’s website, www.tlss-inc.com.
Forward Looking Statements
Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not directly or exclusively relate to historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “intend,” “plan,” “goal,” “seek,” “strategy,” “future,” “likely,” “believes,” “estimates,” “projects,” “forecasts,” “predicts,” “potential,” or the negative of those terms, and similar expressions and comparable terminology. These include, but are not limited to, statements relating to future events or our future financial and operating results, plans, objectives, expectations and intentions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not be achieved. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to known and unknown risks, uncertainties and other factors outside of our control that could cause our actual results, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. In addition to the risks described above, these risks and uncertainties include: our ability to successfully execute our business strategies, including integration of acquisitions and the future acquisition of other businesses to grow our company; customers’ cancellation on short notice of master service agreements from which we derive a significant portion of our revenue or our failure to renew such master service agreements on favorable terms or at all; our ability to attract and retain key personnel and skilled labor to meet the requirements of our labor-intensive business or labor difficulties which could have an effect on our ability to bid for and successfully complete contracts; the ultimate geographic spread, duration and severity of the coronavirus outbreak and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or ameliorate its effects; our failure to compete effectively in our highly competitive industry could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance; our ability to adopt and master new technologies and adjust certain fixed costs and expenses to adapt to our industry’s and customers’ evolving demands; our history of losses, deficiency in working capital and a stockholders’ deficit and our ability to achieve sustained profitability; material weaknesses in our internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; our substantial indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations; the impact of new or changed laws, regulations or other industry standards that could adversely affect our ability to conduct our business; and changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.
These forward-looking statements represent our estimates and assumptions only as of the date of this release and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this letter. Given these uncertainties, you should not place undue reliance on these forward-looking statements and should consider various factors, including the risks described, among other places, in our most recent Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q, as well as any amendments thereto, filed with the Securities and Exchange Commission.