TRANSPORTATION & LOGISTICS SYSTEMS, INC. : Entering a Material Definitive Agreement, Financial Statements and Supporting Documentation (Form 8-K)

Section 1.01 Entering into a Material Definitive Agreement.

Transportation and Logistics Systems, Inc. (OTCQB: TLSS), (“TLSS” or the “Company”), a logistics service provider, announced that, the May 23, 2022its 100% subsidiary, TLSS Acquisition, Inc. (the “Acquisition Subcontractor”) entered into a Share Purchase Agreement dated May 23, 2022 (“SPA”), to acquire all of the outstanding shares of Freight Connections, Inc.a New JerseyNew York-based, full-service logistics provider specializing in pickup, warehousing and delivery services in the tri-state area (“Freight Connections”).

Freight Connections is a full-service transportation company that has been in operation for approximately 10 years and provides transportation, warehousing, consolidation, distribution and local trucking services to a diverse base of over 500 business accounts.

It uses its own fleet of trucks, warehouse/driver/office staff and independent contractors on call from its three convenient and secure facilities. New Jersey
locations comprising approximately 200,000 square feet of warehouse space, allowing it to pick up and deliver throughout the tri-state area.

The SPA provides for a purchase price equal to approximately $7,000,000 based on the following formula: five (5) times the trailing twelve (12) months verifiable earnings before interest, tax, depreciation and amortization (“EBITDA”), to be adjusted to exclude any expenses related to the selling shareholder or one-time, more or less, as the case may be, the excess or deficiency of Freight Connections net working capital at closing against a target equal to the month-end average net working capital for each of the 12 months preceding fence.

The total consideration will be payable as follows: (i) $4,000,000 payable in cash, at closing; (ii) a 4 year warranty. 5% promissory note in the amount of
$500,000, subject to reduction for any debt assumed by the purchaser, and convertible after one year at the holder’s option into common stock of TLSS at the average closing price of such common stock on the five trading days prior to closing; and (iii) the balance in TLSS common stock, but the net cash working capital adjustment.

The sole selling shareholder of Freight Connections will also enter into an employment agreement to continue with the company and a non-compete agreement.

The Transaction shall close approximately 60 days after the signing of the Agreement, subject to the completion of satisfactory due diligence by TLSS to confirm the accuracy of all representations and warranties of Freight Connection in the SPA and that Freight Connections has not suffered a material change in its operations, and also subject to Freight Connections obtaining acceptable landlord consent to Freight Connections’ assignment of the leases for its warehouse operating facilities to the acquiring subsidiary, and also subject to TLSS obtaining financing for the cash portion of the acquisition.

The Company’s primary strategy has been to become a leader in the transportation industry by providing high quality, on-time pick-up, transportation and delivery services. The Company plans to achieve this objective, in part, by pursuing strategic acquisitions as a means of adding new markets in United States, expanding its transportation and logistics service offerings, adding talented management and operations employees, expanding and upgrading its technology platform, and developing operational best practices. Additionally, a factor in evaluating acquisition opportunities is the potential for subsequent post-acquisition organic growth.

The Company believes that the acquisition of Freight Connections is a good fit with its current business given its demographics, services offered and diverse customer base, and given that it would provide the Company with a profitable and well-managed operation for a long period of time. date. In addition, the Company believes that, because Freight Connections is strategically based in New Jersey
and serves the tri-state area, organic growth opportunities will be available to expand its footprint in the company’s main base of operations near
the New York one JFK Airportas well as efficiencies that could be achieved by leveraging the operational capabilities of the Company’s existing Cougar Express subsidiary.

Item 9.01 Financial statements and supporting documents.

(d) Exhibits



Exhibit No.   Description

10.1+           Stock Purchase and Sale Agreement, dated as of May 23, 2022,
              between TLSS Acquisition, Inc. (a wholly owned subsidiary of the
              Company) and Freight Connections, Inc.
104           Cover Page Interactive Data File (embedded within the Inline XBRL
              document)

+ Disclosure schedules and other related schedules are omitted.

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